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Call sheet · Q2'25

Cirrus Logic (CRUS)

Q2'25 earnings call · held November 4, 2024 · compared with the Q1'25 call · management-credibility review
7/12
Disclosure score
1 high, 4 medium, 1 low flags
Financial quality
Bottom line
The real story is cash flow deterioration disguised as a beat. Record earnings of $125M generated only $8M in operating cash as inventory surged $39M, with more builds forced through FY26 due to wafer commitments. September's beat came from calendar quirks ('one more week of higher volume production'), while December's guide suggests underlying weakness. The PC narrative remains all sizzle, no steak - still targeting 'low tens of millions' despite supposed 100+ designs. Management is burning cash to hit earnings while inventory piles up faster than they can ship it. My view changes if they can demonstrate PC design wins are converting to material revenue or if cash flow normalizes without the inventory anchor.

The 30-second version

  • Inventory building trap: CRUS forced to buy $500M+ in wafers through fiscal '26 while revenue guide suggests flat demand
  • Record September revenue ($542M) artificially boosted by calendar quirk - December guide implies underlying weakness
  • PC business overhyped: Still 'low tens of millions' in FY25 despite 100+ designs and eight chips in one laptop

What changed this quarter

MetricQ1'25Q2'25Change
Revenue$374M (+18% YoY)$542M (+13% YoY)+45% sequential beat
Non-GAAP EPS$1.12$2.25+101% record September quarter
Gross Margin50.6%52.2%+160bps on favorable product mix
Operating Income$71.2M (19%)$156.2M (28.8%)+980bps margin expansion
Cash Flow from Operations$87.2M$8.2M-91% collapse to 1% FCF margin
Inventory$232.6M (115 days)$271.8M (96 days)+$39M build with more coming
Cash Position$744.6M$706.6M-$38M on buybacks vs ops
OpEx$118M$126.8M+$8.8M on variable comp
Share Repurchases$41M (361K shares)$50M (356K shares)+$9M at higher avg price $140
Q3 Revenue Guide$490-550M$480-540MMidpoint down $10M

Accountability tracked

8 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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