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Date

Tuesday, Feb. 3, 2026, 5 p.m. ET

Call participants

  • Chief Executive Officer — John Forsyth
  • Chief Financial Officer — Jeff Woolard
  • Vice President, Investor Relations — Chelsea Heffernan

Takeaways

  • Revenue -- $580.6 million, exceeding the top end of prior guidance due to stronger-than-expected smartphone demand and favorable end-device mix.
  • Revenue change (sequential) -- Up 4% from the previous quarter, attributed to higher smartphone unit volumes, partially offset by a decline in general market sales.
  • Revenue change (year over year) -- Up 4%, primarily driven by higher smartphone volumes with partial offset from anticipated pricing reductions and lower general market revenue.
  • Non-GAAP gross profit -- $308.2 million, with gross margin at 53.1%.
  • Gross margin change (sequential) -- Up 60 basis points, reflecting a reduction in inventory reserves and some supply chain efficiencies.
  • Gross margin change (year over year) -- Down 50 basis points, primarily from anticipated pricing reductions mainly offset by cost reductions.
  • Non-GAAP operating expense -- $133 million, up $5.3 million sequentially due to higher employee-related expenses, partially offset by lower product development costs from the timing of tape outs.
  • Non-GAAP operating income -- $175.1 million, representing 30.2% of sales.
  • Non-GAAP net income -- $156.7 million, resulting in record non-GAAP earnings per share of $2.97.
  • Non-GAAP tax rate -- 15.1%, reflecting the impact of the One Big Beautiful Bill Act.
  • Cash and investments -- $1.08 billion at quarter-end, an increase of $185.9 million from the prior quarter as operating cash flow was partially offset by share repurchases.
  • Inventory -- $189.5 million at quarter-end, down from $236.4 million in the prior quarter, with days of inventory decreasing to approximately 63 days.
  • Operating cash flow (quarter) -- $290.8 million; CapEx -- $5.2 million; Non-GAAP free cash flow margin -- 49% for the quarter.
  • Trailing twelve-month operating cash flow -- $129.6 million; CapEx -- $21.6 million; Non-GAAP free cash flow margin -- 31% for this period.
  • Share repurchases -- $70 million spent to repurchase about 591,000 shares at an average price of $118.33; $344.1 million remains authorized for further buybacks.
  • Debt position -- No outstanding debt at quarter-end.
  • Q4 revenue guidance -- Expected in the $410 million to $470 million range.
  • Q4 GAAP gross margin guidance -- 51%-53% range projected.
  • Q4 non-GAAP operating expense guidance -- $124 million to $130 million expected.
  • Fiscal year 2026 non-GAAP tax rate guidance -- 16%-18% range anticipated.
  • Smartphone audio business -- Reported "very strong demand" for the latest custom boosted amplifier and 22-nanometer smart codec, supporting longer product cycles and revenue visibility.
  • PC business progress -- Initial shipments of latest amplifier and codec ramped on mainstream PC platforms ahead of new product launches, targeting expanded footprint in high-volume PCs.
  • Voice interface for AI in PCs -- Sampled new codec to PC OEMs with enhanced voice interface features for future AI-enabled PCs; management reported "strong interest" and potential for higher ASPs relative to prior generations, with revenue impact beginning in calendar years 2027 and 2028.
  • Customer concentration -- Revenue from the largest customer reached 94% of mix; general market revenue declined due to ongoing Android strategy shift and end-of-life of legacy products in automotive, industrial, prosumer, and imaging segments.
  • General market products -- New family of prosumer audio products sampled, aiming to expand addressable market and serve additional product segments.
  • Automotive haptic drivers -- New series announced, targeting real-time tactile feedback for in-cabin automotive interfaces; early stage but identified as important growth opportunity.
  • PC revenue expectations -- Management reiterated expectation that fiscal 2026 PC revenue will "roughly double" from fiscal 2025's low tens of millions.
  • SDCA (SoundWire Device Class Audio) adoption -- Management expects penetration in the PC market to approach 50% by year-end, up from 15%-20% previously; Cirrus Logic holds "about 75%" win rate in SDCA sockets.
  • Design wins in PCs -- Over 60 SDCA programs expected in fiscal 2027 versus 19 in fiscal 2025, supporting growth momentum in the category.
  • Supply chain -- No current supply constraints reported; capacity management cited as effective due to long product lifecycles.
  • Automotive serviceable addressable market (SAM) -- Management estimates automotive-related SAM for Cirrus Logic products "north of $800 million" by 2029.

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Risks

  • General market revenue decline -- John Forsyth stated that "that proportion of our revenue is very high because of the product launch from our largest customer," while "other temporary factors that have acted as headwinds in our general market business," including a "decline over time in our Android revenues" and end-of-life of legacy products.
  • Gross margin pressure from pricing reductions -- John Forsyth said, "the 50 basis points that gross margin contracted by was largely due to pricing reductions, anticipated pricing reductions," with ongoing need to offset these through cost improvements.

Summary

During the quarter, Cirrus Logic (CRUS 4.56%) delivered record non-GAAP EPS and surpassed revenue guidance on stronger smartphone demand and favorable product mix. The balance sheet strengthened with over $1 billion in cash and investments, alongside reduced inventory and a significant share buyback. Management highlighted progress on strategic diversification into PCs, voice-enabled AI products, and automotive haptics, providing indicators for future revenue expansion beyond its largest customer. Guidance signals a sequential decline in Q4 revenue and gross margin but maintains disciplined operating expense management. The company continues to execute on its roadmap to reduce customer concentration risk while enhancing growth in new addressable markets.

  • John Forsyth outlined a "healthy growth ramp for our general market business" beginning between fiscal 2026 and fiscal 2027, underpinned by recent product launches and market penetration in new segments.
  • PC revenue tied to mainstream designs is expected to double in fiscal 2027, with shifting industry standards such as SDCA adoption supporting additional opportunities.
  • Management reaffirmed no change to traditional seasonal patterns for its largest customer and reported effective risk management for supply chain capacity.
  • Automotive, PCs, and AI-enabled devices are priority growth vectors, with Cirrus Logic targeting participation sufficient to create "at least a 10% business" in any new end-market entered.

Industry glossary

  • SDCA (SoundWire Device Class Audio): An industry standard audio interface specification for PCs, enabling efficient interconnect and communication between an audio codec and main system processors.
  • SAM (Serviceable Addressable Market): The segment of a total market that a company’s products or services can serve and reach based on its capabilities and product fit.
  • Tape out: The final phase in chip design where the final layout is sent to manufacturing for production.
  • ASP (Average Selling Price): The average price at which a company's products are sold during a specific period.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third Quarter Fiscal Year 2026 Financial Results Q&A Session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. Heffernan, you may begin.

Chelsea Heffernan: Thank you, and good afternoon. Joining me on today's call is John Forsyth, Cirrus Logic's Chief Executive Officer, and Jeff Woolard, our Chief Financial Officer. Today at approximately 4 PM Eastern Time, we announced our financial results for the third quarter fiscal year 2026. The shareholder letter discussing our financial results, the earnings press release, and the webcast of this Q&A session are all available at the company's Investor Relations website. This call will feature questions from the analysts covering our company. Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that exclude certain items.

Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company's Investor Relations website. Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise.

Please refer to the press release and the shareholder letter issued today, which are available on the Cirrus Logic website and the latest Form 10-Ks, as well as other corporate filings registered with the Securities and Exchange Commission, for additional discussion of risk factors that could cause actual results to differ materially from current expectations. Now I'd like to turn the call over to John.

John Forsyth: Thank you, Chelsea, and welcome to everyone joining today's call. As you have seen in the press release, Cirrus Logic reported outstanding results for December, delivering revenue of $580.6 million, above the top end of our guidance range. This was driven by stronger than anticipated demand for components shipping into smartphones and a favorable mix of end devices. We are also proud to have delivered record GAAP and non-GAAP earnings per share in the third quarter. In a few moments, I'll hand the call over to Jeff to discuss the financial results for December in detail, along with our outlook for March.

Before we get to that, I'd like to provide an update on the recent progress we have been making across the key pillars of our strategy. As I've outlined previously, our long-term strategy for growth at Cirrus is based around three principles. First, we seek to maintain a strong leadership position in our core flagship smartphone audio business. Second, we aim to expand the value and range of high-performance mixed-signal solutions with which we serve our customers in smartphones and similar products. And third, we aim to leverage our world-class expertise in IP in both audio and high-performance mixed-signal to grow and broaden our business in new markets.

I want to say a few words now about the progress we've made in the past quarter in each of these areas. In our flagship smartphone audio business, we saw very strong demand for our latest generation custom boosted amplifier and 22-nanometer smart codec. These products are based on innovative new architectures that are designed to enable system-level improvements with each new smartphone generation, extending our product life cycles while also providing longer-term visibility and sustained revenue contribution. In our high-performance mixed-signal business, customer engagement around our camera controller roadmap remained strong during December. We are actively developing next-generation camera products that will deliver enhanced features, improved performance, and greater system efficiency.

And we are excited about the opportunities in this space for the future. We also continue to invest R&D dollars in IP and capabilities around advanced battery and power applications, where we believe there is both opportunity to enhance existing content and grow content further. Across a range of areas, we see considerable opportunity to expand our value in smartphones with HPMS solutions and believe this will be an important driver for shareholder value creation in the coming years. Our third strategic priority is to leverage our audio and high-performance mixed-signal expertise into new applications and markets outside of smartphones. We've made great progress here, particularly in PCs where we continued to build momentum.

Our progress in December included ramping the first shipments of our latest generation amplifier and codec in mainstream PC platforms, ahead of new customer product launches. An important milestone as we focus on expanding our footprint in higher volume mainstream PCs and capturing a larger share of our serviceable addressable market. During the quarter, we also sampled a new component designed to enable and enhance the use of voice as an interface for future AI-enabled PCs. And we were pleased to see strong interest in this product from several leading OEMs and PC platform vendors.

Finally, we were excited to see multiple new customer products introduced at the Consumer Electronics Show in January that use a variety of our amplifiers, codecs, and haptic drivers. These product launches included our first win with a new customer in their high-end platform that features up to six Cirrus Logic amplifiers and our latest generation codec, setting a new standard for the audio experiences end users can expect from PCs. While we are very pleased with our achievements in PCs, the company also continued to gain momentum in other applications within our general market business. A growing number of our new general market components span the professional audio, automotive, industrial, and imaging end markets.

Leveraging our world-class IP, these products typically enjoy long product life cycles and gross margins that are well above our corporate average, and hence act as a strong complement to the rest of our business. In December, we began sampling a new prosumer audio product family that will expand our addressable market by delivering solutions that span additional tiers and categories of products. This builds upon our portfolio of class-leading components that already service many of these markets today, particularly in professional audio and prosumer applications. Further, we also announced a new series of automotive haptic components that are designed to consistently deliver a range of tactile responses in real-time for applications across a wide range of in-cabin interfaces.

Although we are in the early stages of participation in the automotive haptic market, we believe this represents an important growth opportunity for Cirrus Logic. In summary, we are proud of our progress this past quarter as we continue to execute on our strategy to diversify our product portfolio and drive growth in new applications and markets. And that concludes the latest update on our long-term growth strategy. So let me now turn the call over to Jeff to provide an overview of our financial results as well as the outlook.

Jeff Woolard: Thank you, John. Good afternoon, everyone. I'll now walk through our Q3 financial results and provide guidance for Q4. In Q3 fiscal 2026, we delivered revenue of $580.6 million, which was above the top end of our guidance range driven by demand for components shipping into smartphones and a favorable mix of end devices. On a sequential basis, revenue was up 4%, due to higher smartphone unit volumes partially offset by a decline in general market sales. On a year-over-year basis, sales were also up 4%, primarily driven by higher smartphone unit volumes. This was partially offset by previously anticipated pricing reductions and lower general market sales. Turning to gross profit and gross margin.

Non-GAAP gross profit in December was $308.2 million and non-GAAP gross margin was 53.1%. On a sequential basis, the 60 basis point increase in gross margin reflects the benefit of reduction in inventory reserves and, to a lesser extent, supply chain efficiencies. On a year-over-year basis, a 50 basis point decrease in gross margin was largely due to the impact of previously anticipated pricing reductions which were mostly offset by cost reductions. Now I'll turn to operating expenses. Our non-GAAP operating expense for the third quarter was $133 million. On a sequential basis, OpEx was up $5.3 million, primarily due to higher employee-related expenses.

This was partially offset by lower product development costs largely associated with the timing of tape outs. On a year-over-year basis, operating expense was up $3.8 million, primarily due to higher employee-related expenses, and, to a lesser extent, professional expenses. This was partially offset by a decrease in product development costs associated with lower wafer and tape out expenses. Non-GAAP operating income for the quarter was $175.1 million or 30.2% of revenue. Turning now to taxes. For December, our non-GAAP tax rate was 15.1%, which incorporates the impact of the One Big Beautiful Bill Act. And lastly, on the P&L, non-GAAP net income was $156.7 million, resulting in record earnings per share for December of $2.97.

Let me now turn to the balance sheet.

Jeff Woolard: Our balance sheet continues to be strong, and we ended December with $1.08 billion in cash and investments. Our ending cash and investments balance was up $185.9 million from the prior quarter as cash generated from operations was partially offset by share repurchases. We continue to have no debt outstanding. Inventory at the end of the third quarter was $189.5 million, down from $236.4 million in the prior quarter. Days of inventory were down sequentially, and we ended the quarter with approximately sixty-three days of inventory. Turning to cash flow. Cash flow from operations was $290.8 million in December, and CapEx was $5.2 million, resulting in a non-GAAP free cash flow margin of 49%.

For the trailing twelve-month period, cash flow from operations was $129.6 million, and CapEx was $21.6 million. This resulted in a non-GAAP free cash flow margin of 31%. On the share buybacks, in Q3, we utilized $70 million to repurchase approximately 591,000 shares of our common stock at an average price of $118.33. At the end of Q3 fiscal 2026, the company had $344.1 million remaining on its share repurchase authorization. Now on to guidance. For Q4 fiscal 2026, we expect revenue in the range of $410 million to $470 million. GAAP gross margin is expected to range from 51% to 53%. Non-GAAP operating expense is expected to range from $124 million to $130 million.

The fiscal year 2026 non-GAAP effective tax rate is expected to range from 16% to 18%. In closing, we delivered strong results for December. We remain focused on executing our strategy to drive long-term growth across our business and deliver shareholder value. Before we begin the Q&A, I would like to note that while we understand there is intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we will not discuss specifics about our business relationship. With that, let me turn the call over to Chelsea to start the Q&A session.

Chelsea Heffernan: Thanks, Jeff. We will now start the Q&A portion of our earnings call. Please limit yourself to a single question and one follow-up. Operator, we are now ready to take questions.

Operator: If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tore Svanberg with Stifel. Tore, your line is open. Please go ahead.

Tore Svanberg: Yes. Thank you. Congrats on the record earnings, and especially those impressive cash flows. First question is, you came in $50 million higher for this quarter. You're guiding quite a bit better than seasonal for the quarter. So was hoping you could just add a little bit more color on what's going on. I mean, I understand, obviously, your largest customer and the higher mix. But, you know, any more color you could show us because those are pretty, pretty big beats.

Jeff Woolard: Yeah. Tore, it's Jeff. You know, I think from a seasonality perspective, it does still look like from Q3 to Q4, you know, in the range of where we've been historically transitioning between those two quarters. I think the color commentary is really while the seasonal shape is the same, we just were further away from the peak than we thought when we gave guidance last quarter. So I think the peak of units and a favorable mix is really the story there. It really is just we were not we just didn't call the peak, and we were a little further away from the top than we thought.

Tore Svanberg: Sounds good. And as my follow-up, for you, John, you mentioned some interest in the voice as an interface for AI. I mean, I assume that's primarily in the notebook market, but you know, perhaps there's some interest in other applications as well. And, you know, when should we expect to start seeing revenues from a technology like that?

John Forsyth: Yeah. Thanks, Tore. In the first instance, yes. I was referring to, in particular, a product that we've been sampling to PC OEMs, which is focused on really significantly enhancing the voice interface for interaction with conversational agents and AI through their laptop. So that's something that today is pretty limited. We believe we can bring a lot in terms of new features and performance improvements to that. We started sampling the first product targeting the PC market, which is aiming to do that, to customers. And the interest has been really strong. That obviously gives us the opportunity to grow the value of some of the products that we ship into the PC space.

Specifically, when you look at that voice product, it's a codec with a lot of smart voice features and processing capability on it. That could represent, you know, anywhere up to something of the order of double the value of the preceding generation of codec when you look at it from an ASP perspective. It also has the potential, I think, to be stickier and obviously have a direct impact on the user experience. So we're excited about that in the PC space. Us sampling it right now means that's really gonna be something that we see in calendar '27 and '28. It's obviously part of a roadmap of products that we're working on and looking at around that area.

And, yeah, to your broader point, although that's something which specifically I was referring to in the context of the PC market, I think those are features which are gonna be relevant elsewhere as well. And one of the areas where we've had some great engagement with customers is around AI devices that we're anticipating coming to market over the couple of years. And I think, again, that's a place where over time, we'd like to be bringing voice and voice-enabling features.

Operator: Your next question comes from the line of David Williams with Stonex. Oh, sorry. Just one moment here. Your next question actually comes from Christopher Rolland with Susquehanna International Group. Your line is now open.

Dylan Ollivier: Hi. Thanks for taking my question. This is Dylan Ollivier on for Chris. Congrats on the great result. So for my first question, it seems so from your shareholder letter, it seems like the revenue of your largest customer represented a higher percentage of your mix at 94%. So this would imply that your revenue outside of this flagship declined pretty significantly quarter over quarter. I was wondering if you had any color on what sort of caused that decline and if you anticipated to remain at that run rate or tick back up.

John Forsyth: Yeah. Thanks, Dylan. I'll start us off here and Jeff can chime in if he has additional commentary. But yes, definitely, this is an area we'd like to add color on. Partly, of course, that proportion of our revenue is very high because of the product launch from our largest customer. But there have been some other temporary factors that have acted as headwinds in our general market business, which we're mostly through now, but I think are worth calling out for our investor community. One of those, when you look at the strategic shift that we made away from focusing on Android a few years back, that obviously has led to a decline over time in our Android revenues.

That's the single biggest contributor to the year-over-year decline from our general market revenue perspective there. There is another factor, which is that we have a long tail of products. There's a rather large number of products which address automotive, industrial, prosumer, imaging segments where the products themselves are ten plus years old. And typically based on old process nodes, in many cases, in facilities which are no longer gonna be functioning. So, a number of those have been coming to their end of life. Which, you know, resulted in customers ordering ahead, giving us some sales momentum, but ultimately, that gets unwound as those products are end of life.

Now we've been in parallel to all that, of course, we've been strategically investing in new growth markets like the PC market, and in new product families in the past few years. That will more than make up for those headwinds. So that's the all the PC opportunity that I've talked about other opportunities in AI devices that I alluded to, and then these products, which we've been announcing periodically and sampling to customers, and beginning to ramp around ProAudio imaging timing, and so on. So I think the positive thing is that where we're at now to between FY26 and FY27 that those are the points where a lot of those new products are starting to ship.

And so when we look at over the next few years, we have a very healthy growth ramp for our general market business. Which, of course, includes the PC space, but goes well beyond that as well.

Jeff Woolard: Yeah. I think the only thing I'd add is, you know, we're still very pleased with where we're at from a PC perspective and how we're growing there per our plans and think there is a lot of runway for us to continue to grow that business. And the products that we've refreshed that John mentioned, while early, we're very pleased with the customer traction they're getting. And the design wins we're getting and think, again, there's a lot of room to grow there. And it's just against those headwinds, but we're very pleased with the progress in those segments.

Dylan Ollivier: Yeah. Thanks. That's helpful. And that's actually a nice segue for my next question. Because I wanted to pivot to the PC opportunity. So first of all, I mean, you addressed it a little bit, but I was wondering if you had any color on how you're tracking to what you've previously said for your revenue opportunity in PCs in fiscal 2026 and to see if you had any expectations for fiscal 2027.

John Forsyth: Yeah. I think it's a little early to put something on the scoreboard for fiscal 2027, and, you know, we'll see how the next quarter goes. But I previously said that we expected PC revenue in fiscal 2026 to roughly double from the low tens of millions that we saw in fiscal 2025. And, you know, I think that continues to be our ballpark expectation there. I think we'll exit the fiscal year with very good growth momentum into fiscal 2027. I don't wanna put a number on that yet, but we're feeling very good about the momentum that we've got across the customer base there.

And that's really that optimism is driven by what we see when we look at key indicators around the PC space. So firstly, we're shipping with the top six PC vendors at this point or laptop vendors, I should say. And then we also look at penetration of the mainstream category or mainstream tier. I've highlighted that as being important. In fiscal 2027, we expect that the revenue driven by mainstream platforms will roughly double for us. That'll be a very significant proportion of the overall revenue that we see from this PC space.

And then another indicator that is a really good kind of leading indicator for our market penetration, I think, is the adoption of the SDCA interface, the SoundWire device class audio. Because coming into this year, SDCA represented only about 15 to 20% of the overall PC market. By the end of this calendar year, we expect that to be closer to 50%. And that will continue to increase. And in those SDCA slots, you know, we've been winning to date somewhere of the order of 75% of the sockets.

So, certainly, you know, even if that figure gets diluted a bit as it goes more across the portfolio, it indicates how well positioned we are to take advantage of the SDCA opportunity. So we see that transition underway now at scale. And that's also visible in the sheer number of programs that we're active in the PC space. You look back to fiscal 2025, we had 19 SDCA programs that came to market. In fiscal 2027, they'll be over 60. So when we look across those indicators, and the momentum that we're exiting the fiscal year with, we feel really good about the opportunity and what's ahead of us there.

Operator: Your next question comes from the line of David Williams with Stonex. Your line is open. Please go ahead.

David Williams: Hey, good afternoon, and congrats on the really solid results here. And I guess maybe first, just kind of thinking about the guidance where you guys are, are you seeing any major supply constraints that could have impacted either the quarter or the outlook?

Jeff Woolard: We don't currently see any supply constraints. You know, I think things are tighter in the industry. And so we'll continue to manage that. You know, we do have the benefits. A lot of our products have a very long life. So if we need to shuffle things around to make sure we can manage that capacity on both sides, we're able to do that. But right now, there's no constraints.

David Williams: Okay. Great. And then, maybe a little bit longer term, but just thinking about the automotive opportunity. It sounds like the zonal architectures and just the increased haptics maybe in the in-cabin. Be a big opportunity. Is there a way to kinda think about when you could start seeing the revenue real contribution from that? And then how do you think that market plays out over the next two to three years in terms of dollar content for Cirrus? Thanks.

John Forsyth: Yeah. One of the things you're alluding to there, I think, is the quarter, we announced a family of haptic products that deliver high-definition haptics experiences for automotive. So that's part of a range of products that are either in development or announced or sampling to customers. For the automotive space covering timing, audio, haptics, telematics, and some other areas where we believe we can innovate and really bring some highly differentiated solutions to market. I haven't put a time frame or a revenue target for us out there publicly yet in the automotive market, but I'd say a couple of things.

One is that we think there's a really healthy SAM when you look across those areas that I talked about. We're in '26 today. If you look out to '29, we think the SAM is, our products, is certainly north of $800 million. And the other thing I'd say is just, you know, general philosophical and strategic point about how we approach going after new markets, we have to be able to see multiple pathways to our participation in a new market becoming at least a 10% business for us over time.

So, you know, anything that we're going after and talking about, then you can be sure that we've, you know, we've got various ideas and grounds for belief that we can ultimately build that into a 10% business or more.

Operator: A reminder, if you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Your next question comes from the line of Gary Mobley with Loop Capital. Your line is open. Please go ahead.

Alex: Hey. Thank you. This is Alex calling for Gary. My question to you is how should we think about your seasonality in fiscal '27 given your biggest customer's staggered product launch across the high end and low end of the models?

Jeff Woolard: Well, we're only giving guidance for the next quarter, but at this point in time, when we look at the long-term forecast signals we have, we don't see anything that significantly changes our historic seasonality.

Alex: Got it. Thank you for the add. And just as a quick follow-up, how do you view the rising cost of your largest customer? And how does that influence negotiations? How does that influence component pricing negotiations for you?

John Forsyth: I'm gonna assume you're referring to the much-talked-about increase in memory pricing there and, you know, what the knock-on effect might be for us. I think it comes down to this. Look. I've highlighted previously that we've been in a normalized pricing environment for some time now. So that means, yeah, we've been working collaboratively with our customers on pricing over the past several quarters. And we'll continue to do so. That's really a standard part of our business. Actually, on a year-over-year basis, as you've seen in the shareholder letter, the 50 basis points that gross margin contracted by was largely due to pricing reductions, anticipated pricing reductions.

Which are obviously greater than that, but we have to work very hard to offset those pricing reductions with cost reductions and efficiencies in our supply chain and so on. I guess I'd also say we're very much in the kind of normal pricing environment where, you know, I would say some of our larger customers are not exactly known for being gentle in price negotiations no matter what's happening with commodity prices. So this is very much, you know, business as usual for us. I think over time, as we look forward, you know, we anticipate we'll see further pricing adjustments to our products.

We'll continue to work on the supply chain to drive cost improvements that will help maintain gross margin. And, you know, the effects of that will continue to be reflected in our guidance as they have been today.

Operator: There are no further questions at this time. We will now turn the call back to Chelsea Heffernan.

Chelsea Heffernan: Thank you, operator. With that, we will end the Q&A session, and I will now turn the call back to John for his final remarks.

John Forsyth: Thank you, Chelsea. In summary, Cirrus Logic delivered outstanding results for December driven by strong demand for smartphones. We're extremely pleased with our progress on each pillar of our long-term strategy, and remain focused on executing our technology roadmap to drive profitable growth across our business and to deliver long-term shareholder value. I'd like to thank everyone for participating today. Thank you. Goodbye.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.