Audio-chip developer Cirrus Logic (CRUS 2.03%) reported its fiscal fourth-quarter results after the market closed on May 3. Revenue and earnings surged, driven by increased demand for smart codecs and amplifiers, although Cirrus sees just modest revenue growth in fiscal 2018. The company remains highly dependent on its largest customer despite efforts to diversify, a situation that worked well during the fourth quarter but could cause problems down the road. Here's what investors need to know about Cirrus' fourth-quarter report.

Cirrus Logic results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$327.9 million

$232.0 million


GAAP net income

$35.1 million

$14.0 million






Data source: Cirrus Logic.

What happened with Cirrus Logic this quarter?

Increased demand for the company's smart codecs and boosted amplifiers drove revenue and profit higher.

  • GAAP gross margin was 50.1%, up from 49.7% in the prior-year period. GAAP operating margin was 13.6%, up from 9.6% in the prior-year period.
  • GAAP operating expenses grew by 28.5% year over year, expanding more slowly than revenue.
  • Cirrus generated 78% of its revenue from Apple, its largest customer, down from 85% during the third quarter.
  • Cirrus ended the quarter with $451 million of cash and $60 million of debt.
  • The fourth quarter closed out the third consecutive year of 25%-plus revenue growth.
Woman wearing headphones

Image source: Getty Images.

Cirrus provided the following guidance for the first quarter of fiscal 2018:

  • Revenue between $300 million and $340 million, up from $259 million during the prior-year period.
  • GAAP gross margin between 48% and 50%.
  • Combined GAAP research and development and selling, general, and administrative expenses between $118 million and $124 million.
  • Cirrus's guidance reflects strong demand for its smart codecs, hi-fi DACs, and amplifiers, offset by expected seasonal weakness in other portable audio products
  • Cirrus expects modest revenue growth in fiscal 2018.

What management had to say

Cirrus President and CEO Jason Rhode summed up fiscal 2017: "We are extremely pleased with Cirrus Logic's FY17 financial performance as we delivered outstanding revenue, operating profit and earnings-per-share growth. With a growing product line spanning the complete audio signal chain, Cirrus Logic expects to leverage our solid customer relationships and engineering execution to capitalize on our rapidly expanding growth opportunities."

In the company's letter to shareholders, Cirrus discussed its recent success getting its components into flagship and midtier Android devices: "More recently, we have experienced a considerable increase in demand for innovative components for flagship and mid-tier devices from a wide range of [original equipment manufacturers]. Focusing on this strategically important and relatively untapped growth vector, Cirrus Logic has introduced a platform of products spanning the audio signal chain that have been tailored to address the price and performance requirements of flagship and mid-tier devices, including smart codecs, boosted amplifiers and hi-fi DACs."

Looking forward

Cirrus produced another solid quarter, growing revenue and profit at a brisk pace. Despite its continued efforts to diversify, Apple still accounts for the vast majority of the company's revenue. This situation was a boon during fiscal 2017, but it also represents a major risk if sales of the tech titan's devices fall short of expectations.

Cirrus expects modest revenue growth in fiscal 2018, so the company's three-year streak of growing revenue by more than 25% may be coming to an end. Looking further forward, the smart home market is viewed as a major opportunity over the next five years. Cirrus has made investments in voice and signal processing technology, all in an effort to ensure that its products find their way into smart home devices of the future.