Cirrus Logic Reports Strong Q3 FY25 Earnings Despite Revenue Drop

Cirrus Logic announced better-than-expected earnings for Q3 FY25. The company reported revenue of $555.7 million, exceeding analyst expectations. However, year-over-year revenue declined, raising concerns for investors.

Date: 05-02-2025

AI Rating: 6

Earnings Performance: Cirrus Logic reported Non-GAAP earnings per share (EPS) of $2.51, which surpassed analyst expectations of $2.04. This indicates positive investor sentiment as EPS exceeding projections is generally well-received.

Revenue Growth: The company's revenue of $555.7 million was above the analyst consensus of $510 million. Despite this positive outcome, the revenue reflects a decrease of 10.2% compared to $619 million in Q3 FY24, raising concerns about potential growth sustainability.

Profit Margins: Cirrus Logic improved its gross margin to 53.6% from 51.4% year-over-year, indicating operational efficiency and effective cost management.

Free Cash Flow (FCF): The firm's free cash flow was reported at $211.9 million, down 23.4% from $276.7 million in the previous year, which might concern investors regarding cash availability for investments or dividends.

Risks and Market Dependencies: Cirrus Logic's continued reliance on Apple for 87% of its sales presents a significant risk. Any change in Apple's procurement strategy could substantially impact Cirrus Logic's revenue, enhancing volatility.

Future Outlook: The company provided cautious guidance for Q4 FY25, projecting revenue between $350 million and $410 million, which indicates potential seasonal declines. Investors should carefully monitor the company's developments in the High-Performance Mixed-Signal (HPMS) sector and management's handling of dependencies on major customers to assess long-term viability.

Stocks: CRUS AAPL