Cirrus Logic Reports Record Revenue of $619.0 Million for Fiscal Third Quarter

2/6/24 4:00:00 PM ET

Semiconductors

Technology

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Cirrus Logic, Inc. (NASDAQ:CRUS) today posted on its website at investor.cirrus.com the quarterly Shareholder Letter that contains the complete financial results for the third quarter fiscal year 2024, which ended December 30, 2023, as well as the company's current business outlook.

"Cirrus Logic delivered record revenue and earnings per share in the December quarter," said John Forsyth, Cirrus Logic president and chief executive officer. "In addition to our outstanding financial results, we achieved key milestones in the production of our next-generation audio components while also making exciting advances in our process technology and foundry strategy. Furthermore, customer engagement with our laptop solutions was strong, and we made excellent progress on a number of R&D programs in our high-performance mixed-signal business. With a compelling roadmap of products and an amazing track record of execution, we believe we are well-positioned to grow long-term shareholder value."

Reported Financial Results – Third Quarter FY24

Revenue of $619.0 million;
GAAP gross margin of 51.3 percent and non-GAAP gross margin of 51.4 percent;
GAAP operating expenses of $149.9 million and non-GAAP operating expenses of $125.6 million;
GAAP earnings per share of $2.50 and non-GAAP earnings per share of $2.89; and
Cash and cash equivalents balance of $587.0 million.

A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY24

Revenue is expected to range between $290 million and $350 million;
GAAP gross margin is expected to be between 49 percent and 51 percent; and
Combined GAAP R&D and SG&A expenses are anticipated to range between $138 million and $144 million, including approximately $22 million in stock-based compensation expense and $2 million in amortization of acquisition intangibles, resulting in a non-GAAP operating expense range between $114 million and $120 million.

Cirrus Logic will host a live Q&A session at 5 p.m. EST today to discuss its financial results and business outlook. Participants may listen to the conference call on the investor relations website at investor.cirrus.com. A replay of the webcast can be accessed on the Cirrus Logic website approximately two hours following its completion or by calling (647) 362-9199 or toll-free at (800) 770-2030 (Access Code: 95424).

About Cirrus Logic, Inc.

Cirrus Logic is a leader in low-power, high-precision mixed-signal processing solutions that create innovative user experiences for the world's top mobile and consumer applications. With headquarters in Austin, Texas, Cirrus Logic is recognized globally for its award-winning corporate culture.

Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Use of non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, the company has provided non-GAAP financial information, including non-GAAP net income, diluted earnings per share, operating income and profit, operating expenses, gross margin and profit, tax expense, tax expense impact on earnings per share, effective tax rate, free cash flow, and free cash flow margin. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this news release contain forward-looking statements including our statements about our ability to grow long-term shareholder value; and our estimates for the fourth quarter fiscal year 2024 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, and amortization of acquisition intangibles. In some cases, forward-looking statements are identified by words such as "expect," "anticipate," "target," "project," "believe," "goals," "opportunity," "estimates," "intend," and variations of these types of words and similar expressions. In addition, any statements that refer to our plans, expectations, strategies, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, and assumptions and are subject to certain risks and uncertainties that could cause actual results to differ materially, and readers should not place undue reliance on such statements. These risks and uncertainties include, but are not limited to, the following: the level and timing of orders and shipments during the fourth quarter of fiscal year 2024, customer cancellations of orders, or the failure to place orders consistent with forecasts; changes with respect to our current expectations of future smartphone unit volumes; any delays in the timing and/or success of customers' new product ramps; and the risk factors listed in our Form 10-K for the year ended March 25, 2023 and in our other filings with the Securities and Exchange Commission, which are available at www.sec.gov. The foregoing information concerning our business outlook represents our outlook as of the date of this news release, and we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Summary Financial Data Follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data; unaudited)

	Three Months Ended									Nine Months Ended
	Dec. 30,			Sep. 23,			Dec. 24,			Dec. 30,			Dec. 24,
	2023			2023			2022			2023			2022
	Q3'24			Q2'24			Q3'23			Q3'24			Q3'23
Audio	$	378,597		$	282,855		$	347,297		$	857,258		$	939,604
High-Performance Mixed-Signal		240,387			198,208			243,285			559,805			585,191
Net sales		618,984			481,063			590,582			1,417,063			1,524,795
Cost of sales		301,520			234,467			293,877			693,616			754,170
Gross profit		317,464			246,596			296,705			723,447			770,625
Gross margin		51.3	%		51.3	%		50.2	%		51.1	%		50.5	%

Research and development		112,672			104,205			118,063			323,092			343,250
Selling, general and administrative		37,604			34,323			37,262			107,306			115,502
Restructuring costs		(360	)		2,319			—			1,959			—
Total operating expenses		149,916			140,847			155,325			432,357			458,752

Income from operations		167,548			105,749			141,380			291,090			311,873

Interest income		4,889			3,729			2,777			13,218			4,367
Other expense		(337	)		(70	)		(3,716	)		(30	)		(2,915	)
Income before income taxes		172,100			109,408			140,441			304,278			313,325
Provision for income taxes		33,377			34,001			36,964			74,548			82,953
Net income	$	138,723		$	75,407		$	103,477		$	229,730		$	230,372

Basic earnings per share	$	2.57		$	1.38		$	1.87		$	4.22		$	4.13
Diluted earnings per share:	$	2.50		$	1.34		$	1.83		$	4.09		$	4.02

Weighted average number of shares:
Basic		54,016			54,503			55,239			54,449			55,748
Diluted		55,592			56,278			56,583			56,160			57,280

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(not prepared in accordance with GAAP)

Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

	Three Months Ended									Nine Months Ended
	Dec. 30,			Sep. 23,			Dec. 24,			Dec. 30,			Dec. 24,
	2023			2023			2022			2023			2022
Net Income Reconciliation	Q3'24			Q2'24			Q3'23			Q3'24			Q3'23
GAAP Net Income	$	138,723		$	75,407		$	103,477		$	229,730		$	230,372
Amortization of acquisition intangibles		1,972			2,170			8,807			6,312			24,429
Stock-based compensation expense		23,067			21,331			20,487			67,113			59,108
Restructuring costs		(360	)		2,319			—			1,959			—
Acquisition-related costs		—			939			3,176			4,105			9,504
Investment write off		—			—			2,746			—			2,746
Adjustment to income taxes		(2,769	)		(604	)		(2,936	)		(9,001	)		(11,371	)
Non-GAAP Net Income	$	160,633		$	101,562		$	135,757		$	300,218		$	314,788

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	2.50		$	1.34		$	1.83		$	4.09		$	4.02
Effect of Amortization of acquisition intangibles		0.04			0.04			0.15			0.11			0.43
Effect of Stock-based compensation expense		0.41			0.38			0.36			1.20			1.03
Effect of Restructuring costs		(0.01	)		0.04			—			0.04			—
Effect of Acquisition-related costs		—			0.01			0.06			0.07			0.17
Effect of Investment write off		—			—			0.05			—			0.05
Effect of Adjustment to income taxes		(0.05	)		(0.01	)		(0.05	)		(0.16	)		(0.20	)
Non-GAAP Diluted earnings per share	$	2.89		$	1.80		$	2.40		$	5.35		$	5.50

Operating Income Reconciliation
GAAP Operating Income	$	167,548		$	105,749		$	141,380		$	291,090		$	311,873
GAAP Operating Profit		27.1	%		22.0	%		23.9	%		20.5	%		20.5	%
Amortization of acquisition intangibles		1,972			2,170			8,807			6,312			24,429
Stock-based compensation expense - COGS		395			361			309			1,041			898
Stock-based compensation expense - R&D		16,771			15,472			14,710			48,195			41,530
Stock-based compensation expense - SG&A		5,901			5,498			5,468			17,877			16,680
Restructuring costs		(360	)		2,319			—			1,959			—
Acquisition-related costs		—			939			3,176			4,105			9,504
Non-GAAP Operating Income	$	192,227		$	132,508		$	173,850		$	370,579		$	404,914
Non-GAAP Operating Profit		31.1	%		27.5	%		29.4	%		26.2	%		26.6	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	149,916		$	140,847		$	155,325		$	432,357		$	458,752
Amortization of acquisition intangibles		(1,972	)		(2,170	)		(8,807	)		(6,312	)		(24,429	)
Stock-based compensation expense - R&D		(16,771	)		(15,472	)		(14,710	)		(48,195	)		(41,530	)
Stock-based compensation expense - SG&A		(5,901	)		(5,498	)		(5,468	)		(17,877	)		(16,680	)
Restructuring costs		360			(2,319	)		—			(1,959	)		—
Acquisition-related costs		—			(939	)		(3,176	)		(4,105	)		(9,504	)
Non-GAAP Operating Expenses	$	125,632		$	114,449		$	123,164		$	353,909		$	366,609

Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	317,464		$	246,596		$	296,705		$	723,447		$	770,625
GAAP Gross Margin		51.3	%		51.3	%		50.2	%		51.1	%		50.5	%
Stock-based compensation expense - COGS		395			361			309			1,041			898
Non-GAAP Gross Profit	$	317,859		$	246,957		$	297,014		$	724,488		$	771,523
Non-GAAP Gross Margin		51.4	%		51.3	%		50.3	%		51.1	%		50.6	%


	Three Months Ended									Nine Months Ended
	Dec. 30,			Sep. 23,			Dec. 24,			Dec. 30,			Dec. 24,
	2023			2023			2022			2023			2022
Effective Tax Rate Reconciliation	Q3'24			Q2'24			Q3'23			Q3'24			Q3'23
GAAP Tax Expense	$	33,377		$	34,001		$	36,964		$	74,548		$	82,953
GAAP Effective Tax Rate		19.4	%		31.1	%		26.3	%		24.5	%		26.5	%
Adjustments to income taxes		2,769			604			2,936			9,001			11,371
Non-GAAP Tax Expense	$	36,146		$	34,605		$	39,900		$	83,549		$	94,324
Non-GAAP Effective Tax Rate		18.4	%		25.4	%		22.7	%		21.8	%		23.1	%

Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.60		$	0.60		$	0.65		$	1.33		$	1.45
Adjustments to income taxes		0.05			0.01			0.05			0.16			0.20
Non-GAAP Tax Expense	$	0.65		$	0.61		$	0.70		$	1.49		$	1.65

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)

	Dec. 30,			Mar. 25,			Dec. 24,
	2023			2023			2022
ASSETS
Current assets
Cash and cash equivalents	$	483,931		$	445,784		$	434,544
Marketable securities		32,842			34,978			28,373
Accounts receivable, net		217,269			150,473			270,493
Inventories		256,675			233,450			152,426
Prepaid wafers		84,854			60,638			—
Other current assets		109,814			92,533			127,649
Total current Assets		1,185,385			1,017,856			1,013,485

Long-term marketable securities		70,260			36,509			44,784
Right-of-use lease assets		140,993			128,145			150,938
Property and equipment, net		167,579			162,972			156,602
Intangibles, net		31,677			38,876			133,032
Goodwill		435,936			435,936			435,936
Deferred tax asset		34,116			35,580			8,630
Long-term prepaid wafers		73,492			134,363			154,575
Other assets		77,675			73,729			67,907
Total assets	$	2,217,113		$	2,063,966		$	2,165,889

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	56,231		$	81,462		$	117,406
Accrued salaries and benefits		44,352			50,606			42,187
Lease liability		19,906			18,442			14,024
Acquisition-related liabilities		—			21,361			18,195
Other accrued liabilities		58,105			44,469			36,737
Total current liabilities		178,594			216,340			228,549

Non-current lease liability		138,415			122,631			143,252
Non-current income taxes		52,247			59,013			72,267
Other long-term liabilities		47,097			7,700			5,501
Total long-term liabilities		237,759			189,344			221,020

Stockholders' equity:
Capital stock		1,735,824			1,670,141			1,639,056
Accumulated earnings (deficit)		66,633			(9,320	)		80,865
Accumulated other comprehensive loss		(1,697	)		(2,539	)		(3,601	)
Total stockholders' equity		1,800,760			1,658,282			1,716,320
Total liabilities and stockholders' equity	$	2,217,113		$	2,063,966		$	2,165,889

Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)

	Three Months Ended

	Dec. 30,			Dec. 24,
	2023			2022
	Q3'24			Q3'23
Cash flows from operating activities:
Net income	$	138,723		$	103,477
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,732			18,624
Stock-based compensation expense		23,067			20,487
Deferred income taxes		9,723			10,886
Loss on retirement or write-off of long-lived assets		10			3
Other non-cash charges		668			2,832
Restructuring costs		(360	)		—
Net change in operating assets and liabilities:
Accounts receivable, net		54,048			34,053
Inventories		72,257			12,145
Prepaid wafers		15,596			—
Other assets		17,973			6,458
Accounts payable and other accrued liabilities		(32,123	)		(20,521	)
Income taxes payable		1,378			(10,656	)
Acquisition-related liabilities		—			3,160
Net cash provided by operating activities		313,692			180,948
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities		5,176			3,691
Purchases of available-for-sale marketable securities		(32,334	)		(3,433	)
Purchases of property, equipment and software		(9,813	)		(6,777	)
Investments in technology		—			(831	)
Net cash used in investing activities		(36,971	)		(7,350	)
Cash flows from financing activities:
Payment of acquisition-related holdback		—			(30,949	)
Issuance of common stock, net of shares withheld for taxes		50			393
Repurchase of stock to satisfy employee tax withholding obligations		(13,722	)		(13,541	)
Repurchase and retirement of common stock		(56,923	)		(50,000	)
Net cash used in financing activities		(70,595	)		(94,097	)
Net increase in cash and cash equivalents		206,126			79,501
Cash and cash equivalents at beginning of period		277,805			355,043
Cash and cash equivalents at end of period	$	483,931		$	434,544

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)

Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.

	Twelve Months Ended			Three Months Ended

	Dec. 30,			Dec. 30,			Sep. 23,			Jun. 24,			Mar. 25,
	2023			2023			2023			2023			2023
	Q3'24			Q3'24			Q2'24			Q1'24			Q4'23

Net cash provided by (used in) operating activities (GAAP)	$	299,414		$	313,692		$	(22,731	)	$	(39,813	)	$	48,266
Capital expenditures		(42,285	)		(9,813	)		(8,527	)		(12,310	)		(11,635	)
Free Cash Flow (Non-GAAP)	$	257,129		$	303,879		$	(31,258	)	$	(52,123	)	$	36,631

Cash Flow from Operations as a Percentage of Revenue (GAAP)		17	%		51	%		(5	)%		(13	)%		13	%
Capital Expenditures as a Percentage of Revenue (GAAP)		2	%		2	%		2	%		4	%		3	%
Free Cash Flow Margin (Non-GAAP)		14	%		49	%		(6	)%		(16	)%		10	%

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in millions; unaudited)
(not prepared in accordance with GAAP)

		Q4 FY24
		Guidance
Operating Expense Reconciliation
GAAP Operating Expenses		$138 - 144
Stock-based compensation expense		(22)
Amortization of acquisition intangibles		(2)
Non-GAAP Operating Expenses		$114 - 120

View source version on businesswire.com: https://www.businesswire.com/news/home/20240206115787/en/

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Recent Analyst Ratings for

$CRUS

Date	Price Target	Rating	Analyst
2/2/2026	$130.00	Buy → Hold	Loop Capital
2/5/2025		Hold → Buy	The Benchmark Company
11/12/2024	$130.00	Buy	Loop Capital
10/10/2024	$140.00 → $120.00	Overweight → Equal Weight	Barclays
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5/8/2024	$100.00 → $115.00	Buy	TD Cowen
2/7/2024	$90.00 → $100.00	Outperform	TD Cowen
11/1/2023	$83.00 → $100.00	Hold → Buy	Loop Capital

More analyst ratings

Cirrus Logic Reports Record Revenue of $619.0 Million for Fiscal Third Quarter

2/6/24 4:00:00 PM ET

$CRUS

Semiconductors

Technology

Get the next $CRUS alert in real time by email

Reported Financial Results – Third Quarter FY24

Revenue of $619.0 million;
GAAP gross margin of 51.3 percent and non-GAAP gross margin of 51.4 percent;
GAAP operating expenses of $149.9 million and non-GAAP operating expenses of $125.6 million;
GAAP earnings per share of $2.50 and non-GAAP earnings per share of $2.89; and
Cash and cash equivalents balance of $587.0 million.

A reconciliation of GAAP to non-GAAP financial information is included in the tables accompanying this press release.

Business Outlook – Fourth Quarter FY24

Revenue is expected to range between $290 million and $350 million;
GAAP gross margin is expected to be between 49 percent and 51 percent; and
Combined GAAP R&D and SG&A expenses are anticipated to range between $138 million and $144 million, including approximately $22 million in stock-based compensation expense and $2 million in amortization of acquisition intangibles, resulting in a non-GAAP operating expense range between $114 million and $120 million.

About Cirrus Logic, Inc.

Cirrus Logic, Cirrus and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. All other company or product names noted herein may be trademarks of their respective holders.

Use of non-GAAP Financial Information

Safe Harbor Statement

Summary Financial Data Follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data; unaudited)

	Three Months Ended									Nine Months Ended
	Dec. 30,			Sep. 23,			Dec. 24,			Dec. 30,			Dec. 24,
	2023			2023			2022			2023			2022
	Q3'24			Q2'24			Q3'23			Q3'24			Q3'23
Audio	$	378,597		$	282,855		$	347,297		$	857,258		$	939,604
High-Performance Mixed-Signal		240,387			198,208			243,285			559,805			585,191
Net sales		618,984			481,063			590,582			1,417,063			1,524,795
Cost of sales		301,520			234,467			293,877			693,616			754,170
Gross profit		317,464			246,596			296,705			723,447			770,625
Gross margin		51.3	%		51.3	%		50.2	%		51.1	%		50.5	%

Research and development		112,672			104,205			118,063			323,092			343,250
Selling, general and administrative		37,604			34,323			37,262			107,306			115,502
Restructuring costs		(360	)		2,319			—			1,959			—
Total operating expenses		149,916			140,847			155,325			432,357			458,752

Income from operations		167,548			105,749			141,380			291,090			311,873

Interest income		4,889			3,729			2,777			13,218			4,367
Other expense		(337	)		(70	)		(3,716	)		(30	)		(2,915	)
Income before income taxes		172,100			109,408			140,441			304,278			313,325
Provision for income taxes		33,377			34,001			36,964			74,548			82,953
Net income	$	138,723		$	75,407		$	103,477		$	229,730		$	230,372

Basic earnings per share	$	2.57		$	1.38		$	1.87		$	4.22		$	4.13
Diluted earnings per share:	$	2.50		$	1.34		$	1.83		$	4.09		$	4.02

Weighted average number of shares:
Basic		54,016			54,503			55,239			54,449			55,748
Diluted		55,592			56,278			56,583			56,160			57,280

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands, except per share data; unaudited)
(not prepared in accordance with GAAP)

Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. As a note, the non-GAAP financial information used by Cirrus Logic may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

	Three Months Ended									Nine Months Ended
	Dec. 30,			Sep. 23,			Dec. 24,			Dec. 30,			Dec. 24,
	2023			2023			2022			2023			2022
Net Income Reconciliation	Q3'24			Q2'24			Q3'23			Q3'24			Q3'23
GAAP Net Income	$	138,723		$	75,407		$	103,477		$	229,730		$	230,372
Amortization of acquisition intangibles		1,972			2,170			8,807			6,312			24,429
Stock-based compensation expense		23,067			21,331			20,487			67,113			59,108
Restructuring costs		(360	)		2,319			—			1,959			—
Acquisition-related costs		—			939			3,176			4,105			9,504
Investment write off		—			—			2,746			—			2,746
Adjustment to income taxes		(2,769	)		(604	)		(2,936	)		(9,001	)		(11,371	)
Non-GAAP Net Income	$	160,633		$	101,562		$	135,757		$	300,218		$	314,788

Earnings Per Share Reconciliation
GAAP Diluted earnings per share	$	2.50		$	1.34		$	1.83		$	4.09		$	4.02
Effect of Amortization of acquisition intangibles		0.04			0.04			0.15			0.11			0.43
Effect of Stock-based compensation expense		0.41			0.38			0.36			1.20			1.03
Effect of Restructuring costs		(0.01	)		0.04			—			0.04			—
Effect of Acquisition-related costs		—			0.01			0.06			0.07			0.17
Effect of Investment write off		—			—			0.05			—			0.05
Effect of Adjustment to income taxes		(0.05	)		(0.01	)		(0.05	)		(0.16	)		(0.20	)
Non-GAAP Diluted earnings per share	$	2.89		$	1.80		$	2.40		$	5.35		$	5.50

Operating Income Reconciliation
GAAP Operating Income	$	167,548		$	105,749		$	141,380		$	291,090		$	311,873
GAAP Operating Profit		27.1	%		22.0	%		23.9	%		20.5	%		20.5	%
Amortization of acquisition intangibles		1,972			2,170			8,807			6,312			24,429
Stock-based compensation expense - COGS		395			361			309			1,041			898
Stock-based compensation expense - R&D		16,771			15,472			14,710			48,195			41,530
Stock-based compensation expense - SG&A		5,901			5,498			5,468			17,877			16,680
Restructuring costs		(360	)		2,319			—			1,959			—
Acquisition-related costs		—			939			3,176			4,105			9,504
Non-GAAP Operating Income	$	192,227		$	132,508		$	173,850		$	370,579		$	404,914
Non-GAAP Operating Profit		31.1	%		27.5	%		29.4	%		26.2	%		26.6	%

Operating Expense Reconciliation
GAAP Operating Expenses	$	149,916		$	140,847		$	155,325		$	432,357		$	458,752
Amortization of acquisition intangibles		(1,972	)		(2,170	)		(8,807	)		(6,312	)		(24,429	)
Stock-based compensation expense - R&D		(16,771	)		(15,472	)		(14,710	)		(48,195	)		(41,530	)
Stock-based compensation expense - SG&A		(5,901	)		(5,498	)		(5,468	)		(17,877	)		(16,680	)
Restructuring costs		360			(2,319	)		—			(1,959	)		—
Acquisition-related costs		—			(939	)		(3,176	)		(4,105	)		(9,504	)
Non-GAAP Operating Expenses	$	125,632		$	114,449		$	123,164		$	353,909		$	366,609

Gross Margin/Profit Reconciliation
GAAP Gross Profit	$	317,464		$	246,596		$	296,705		$	723,447		$	770,625
GAAP Gross Margin		51.3	%		51.3	%		50.2	%		51.1	%		50.5	%
Stock-based compensation expense - COGS		395			361			309			1,041			898
Non-GAAP Gross Profit	$	317,859		$	246,957		$	297,014		$	724,488		$	771,523
Non-GAAP Gross Margin		51.4	%		51.3	%		50.3	%		51.1	%		50.6	%


	Three Months Ended									Nine Months Ended
	Dec. 30,			Sep. 23,			Dec. 24,			Dec. 30,			Dec. 24,
	2023			2023			2022			2023			2022
Effective Tax Rate Reconciliation	Q3'24			Q2'24			Q3'23			Q3'24			Q3'23
GAAP Tax Expense	$	33,377		$	34,001		$	36,964		$	74,548		$	82,953
GAAP Effective Tax Rate		19.4	%		31.1	%		26.3	%		24.5	%		26.5	%
Adjustments to income taxes		2,769			604			2,936			9,001			11,371
Non-GAAP Tax Expense	$	36,146		$	34,605		$	39,900		$	83,549		$	94,324
Non-GAAP Effective Tax Rate		18.4	%		25.4	%		22.7	%		21.8	%		23.1	%

Tax Impact to EPS Reconciliation
GAAP Tax Expense	$	0.60		$	0.60		$	0.65		$	1.33		$	1.45
Adjustments to income taxes		0.05			0.01			0.05			0.16			0.20
Non-GAAP Tax Expense	$	0.65		$	0.61		$	0.70		$	1.49		$	1.65

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)

	Dec. 30,			Mar. 25,			Dec. 24,
	2023			2023			2022
ASSETS
Current assets
Cash and cash equivalents	$	483,931		$	445,784		$	434,544
Marketable securities		32,842			34,978			28,373
Accounts receivable, net		217,269			150,473			270,493
Inventories		256,675			233,450			152,426
Prepaid wafers		84,854			60,638			—
Other current assets		109,814			92,533			127,649
Total current Assets		1,185,385			1,017,856			1,013,485

Long-term marketable securities		70,260			36,509			44,784
Right-of-use lease assets		140,993			128,145			150,938
Property and equipment, net		167,579			162,972			156,602
Intangibles, net		31,677			38,876			133,032
Goodwill		435,936			435,936			435,936
Deferred tax asset		34,116			35,580			8,630
Long-term prepaid wafers		73,492			134,363			154,575
Other assets		77,675			73,729			67,907
Total assets	$	2,217,113		$	2,063,966		$	2,165,889

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	56,231		$	81,462		$	117,406
Accrued salaries and benefits		44,352			50,606			42,187
Lease liability		19,906			18,442			14,024
Acquisition-related liabilities		—			21,361			18,195
Other accrued liabilities		58,105			44,469			36,737
Total current liabilities		178,594			216,340			228,549

Non-current lease liability		138,415			122,631			143,252
Non-current income taxes		52,247			59,013			72,267
Other long-term liabilities		47,097			7,700			5,501
Total long-term liabilities		237,759			189,344			221,020

Stockholders' equity:
Capital stock		1,735,824			1,670,141			1,639,056
Accumulated earnings (deficit)		66,633			(9,320	)		80,865
Accumulated other comprehensive loss		(1,697	)		(2,539	)		(3,601	)
Total stockholders' equity		1,800,760			1,658,282			1,716,320
Total liabilities and stockholders' equity	$	2,217,113		$	2,063,966		$	2,165,889

Prepared in accordance with Generally Accepted Accounting Principles

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands; unaudited)

	Three Months Ended

	Dec. 30,			Dec. 24,
	2023			2022
	Q3'24			Q3'23
Cash flows from operating activities:
Net income	$	138,723		$	103,477
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,732			18,624
Stock-based compensation expense		23,067			20,487
Deferred income taxes		9,723			10,886
Loss on retirement or write-off of long-lived assets		10			3
Other non-cash charges		668			2,832
Restructuring costs		(360	)		—
Net change in operating assets and liabilities:
Accounts receivable, net		54,048			34,053
Inventories		72,257			12,145
Prepaid wafers		15,596			—
Other assets		17,973			6,458
Accounts payable and other accrued liabilities		(32,123	)		(20,521	)
Income taxes payable		1,378			(10,656	)
Acquisition-related liabilities		—			3,160
Net cash provided by operating activities		313,692			180,948
Cash flows from investing activities:
Maturities and sales of available-for-sale marketable securities		5,176			3,691
Purchases of available-for-sale marketable securities		(32,334	)		(3,433	)
Purchases of property, equipment and software		(9,813	)		(6,777	)
Investments in technology		—			(831	)
Net cash used in investing activities		(36,971	)		(7,350	)
Cash flows from financing activities:
Payment of acquisition-related holdback		—			(30,949	)
Issuance of common stock, net of shares withheld for taxes		50			393
Repurchase of stock to satisfy employee tax withholding obligations		(13,722	)		(13,541	)
Repurchase and retirement of common stock		(56,923	)		(50,000	)
Net cash used in financing activities		(70,595	)		(94,097	)
Net increase in cash and cash equivalents		206,126			79,501
Cash and cash equivalents at beginning of period		277,805			355,043
Cash and cash equivalents at end of period	$	483,931		$	434,544

Prepared in accordance with Generally Accepted Accounting Principles

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in thousands; unaudited)

Free cash flow, a non-GAAP financial measure, is GAAP cash flow from operations (or cash provided by operating activities) less capital expenditures. Capital expenditures include purchases of property, equipment and software as well as investments in technology, as presented within our GAAP Consolidated Condensed Statement of Cash Flows. Free cash flow margin represents free cash flow divided by revenue.

	Twelve Months Ended			Three Months Ended

	Dec. 30,			Dec. 30,			Sep. 23,			Jun. 24,			Mar. 25,
	2023			2023			2023			2023			2023
	Q3'24			Q3'24			Q2'24			Q1'24			Q4'23

Net cash provided by (used in) operating activities (GAAP)	$	299,414		$	313,692		$	(22,731	)	$	(39,813	)	$	48,266
Capital expenditures		(42,285	)		(9,813	)		(8,527	)		(12,310	)		(11,635	)
Free Cash Flow (Non-GAAP)	$	257,129		$	303,879		$	(31,258	)	$	(52,123	)	$	36,631

Cash Flow from Operations as a Percentage of Revenue (GAAP)		17	%		51	%		(5	)%		(13	)%		13	%
Capital Expenditures as a Percentage of Revenue (GAAP)		2	%		2	%		2	%		4	%		3	%
Free Cash Flow Margin (Non-GAAP)		14	%		49	%		(6	)%		(16	)%		10	%

RECONCILIATION BETWEEN GAAP AND NON-GAAP FINANCIAL INFORMATION
(in millions; unaudited)
(not prepared in accordance with GAAP)

		Q4 FY24
		Guidance
Operating Expense Reconciliation
GAAP Operating Expenses		$138 - 144
Stock-based compensation expense		(22)
Amortization of acquisition intangibles		(2)
Non-GAAP Operating Expenses		$114 - 120

View source version on businesswire.com: https://www.businesswire.com/news/home/20240206115787/en/

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