Audio-chip developer Cirrus Logic (CRUS 1.29%) reported its fiscal first-quarter results after the market closed on August 2. Solid double-digit revenue growth drove a surge in the bottom line, but the company's guidance calls for a year-over-year revenue decline during the second quarter.

Cirrus will benefit from the impending launch of new iPhones, but the company's outlook leaves a lot to be desired. Here's what investors need to know about Cirrus' first-quarter report.

Cirrus Logic results: The raw numbers


Q1 2018

Q1 2017

Year-Over-Year Change


$320.7 million

$259.4 million


GAAP net income








Data source: Cirrus Logic.

A woman holding a smartphone.

Image source: Cirrus Logic.

What happened with Cirrus Logic this quarter?

  • Revenue from portable audio products rose 29.9% year over year, to $280.7 million. Revenue from non-portable audio and other products slumped 7.8% year over year, to $40.0 million.
  • GAAP gross margin was 50.4%, up from 48.8% in the prior-year period. GAAP operating margin was 15%, up from 9% in the prior-year period.
  • GAAP operating expenses grew by 9.5% year over year.
  • Cirrus generated 76% of its revenue from Apple, its largest customer, down from 78% during the fourth quarter of 2017.
  • Cirrus ended the quarter with $310 million of cash and marketable securities and no long-term debt.

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

  • Revenue is expected between $390 million and $430 million compared to $429 million during the prior-year period.
  • GAAP gross margin is expected to be between 48% and 50%.
  • Combined GAAP research and development and selling, general, and administrative expenses are expected to be between $119 million and $125 million.
  • Cirrus' guidance reflects anticipated demand for portable audio products ahead of major product launches during the second half, but warned that customers can change orders on short notice, making predictions difficult.
  • Cirrus continues to expect modest revenue growth in fiscal 2018.

What management had to say

Cirrus President and CEO Jason Rhode touted the company's strong design activity:

Cirrus Logic delivered solid results in the June quarter as demand for portable audio products was in line with expectations. We are extremely pleased as design activity remained strong across our portfolio and we achieved several new product development milestones over the past several months. As demand for innovative audio and voice solutions continues to increase across a wide range of end markets we believe our diversified product portfolio and roadmap will continue to position us for success for many years to come.

In its letter to shareholders, Cirrus discussed long-term growth drivers beyond mobile devices:

Long-term, we are enthusiastic about the opportunities that we believe the company's investment in leading-edge technologies such as voice biometrics, MEMS microphones and smart home will facilitate. While meaningful revenue contribution from these products is several years out, we are making significant technology advancements and are engaged with leading players in these markets.

Looking forward

With an iPhone refresh from Apple just around the corner, Cirrus is gearing up for a big third quarter. Notably, though, the company expects a year-over-year revenue decline, possibly a large decline if it hits the low end of its guidance. Cirrus pointed out that predicting revenue is made more difficult by possible last-minute changes to orders, but the weak guidance is something that should concern investors.

Cirrus still sees modest revenue growth in fiscal 2018, which will mark a slowdown compared to the previous few years. There are plenty of long-term growth opportunities for the company, but many of those may still be years away from producing any meaningful profit. Until then, Cirrus remains heavily dependent on the success of the iPhone.