Cirrus Logic, Inc.

Cirrus delivered a decent quarterly result with an all-around beat, driven by greater smartphone unit volumes linked to its customers’ new product launches, resulting in revenue over the high end of its target range. The company concluded the second quarter with about $428 million and had $300 million remaining on its revolver credit facility, demonstrating the continued strength of its balance sheet. In audio, they continued to develop their next-generation 22-nanometer smart codec and started the preliminary development of a next-generation custom-boosted amplifier in the face of sustained strong and oversupplied demand for their amplifiers and codecs. Furthermore, with the development of Cirrus’ 22-nm codec, audio sensing and other signal processing use cases will benefit from increased performance and power efficiency. Their next-generation boosted amplifier will also give their clients’ devices notable performance, efficiency, and design advantages. The management has been working with several customers to design their first amplifier created especially for this market. We give them a ‘Hold’ rating with a revised target price.