CRUS Q2 Earnings & Sales Top, Diversification Strategy Gains Momentum

Cirrus Logic Inc. (CRUS) reported second-quarter fiscal 2026 adjusted earnings per share (EPS) of $2.83, which surpassed the Zacks Consensus Estimate of $2.10. The company reported adjusted EPS of $2.25 in the prior-year quarter.

Cirrus Logic generated revenues of $561 million for the September quarter, hitting the high end of its guidance ($510-$570 million), driven by strong demand in its core smartphone component business. Sequentially, revenues increased 38%, reflecting higher shipments of smartphones. Year over year, sales rose 4%, mainly due to increased smartphone volumes and contributions from its latest generation products. The top line beat the Zacks Consensus Estimate by 3.9%.

The performance reflects continued adoption of its advanced mixed-signal processing technologies that enhance audio and haptic experiences in premium mobile devices. While smartphones remain the primary revenue driver, Cirrus Logic’s progress toward diversification continues to gain momentum. Management highlighted the company’s breakthroughs in the PC market, announcing its first mainstream consumer laptop design and expanding partnerships with leading PC platform vendors.

Cirrus Logic, Inc. Price, Consensus and EPS Surprise

Cirrus Logic, Inc. price-consensus-eps-surprise-chart | Cirrus Logic, Inc. Quote

Additionally, its audio and voice processing chips are being increasingly adopted in laptops and tablets. Beyond PCs, the company reported growing customer engagement across several emerging segments, such as professional audio, industrial, automotive and imaging end markets. These diversification efforts position the company for long-term growth across multiple high-value industries.

The company’s largest customer accounted for 90% of total revenues in the fiscal second quarter.

Segment Details

This Texas-based company rearranged its reportable segments and created separate categories — High-Performance Mixed-Signal and Audio — in 2021.

Cirrus Logic’s High-Performance Mixed-Signal segment includes a few of its non-audio products. It contributed 43% to total revenues in the fiscal second quarter. Revenues from the same division grew 7.8% year over year to $242.8 million. We estimated the metric to be $227.1 million.

The Audio segment’s sales inched up 0.5% to $318.2 million and contributed 57% to total revenues. Our estimate was $312.9 million for the segment.

Margins

Non-GAAP gross margin improved to 52.5% from 52.2% in the prior-year quarter, mainly due to a favorable product mix, partially offset by higher inventory reserves.

CRUS reported non-GAAP operating expenses of $127.7 million for the second quarter, below the guidance ($131-$137 million), driven by lower product development costs from project timeline shifts and reduced employee-related expenses. Sequentially, OpEx increased 6.9%, mainly led by higher variable compensation, product development costs related to tape-outs and facility expenses, partially offset by lower employee-related costs. Year over year, operating expenses rose 0.7%, primarily due to higher employee-related costs from annual merit increases, partially offset by lower product development expenses.

Non-GAAP operating income of $167 million grew 6.9% year over year.

Non-GAAP operating profit margin increased to 29.8% from 28.8%.

Balance Sheet and Cash Flow

The company exited the fiscal second quarter with cash and marketable securities of $645.9 million compared with $478.3 million as of Sept. 28, 2024.

As of Sept. 27, 2025, accounts receivable were $355.4 million.

In the fiscal second quarter, CRUS generated $92.2 million of net cash from operations compared with $8.2 million in the previous-year quarter. Free cash flow was $87.7 million in the quarter under review.

The company repurchased 362,000 shares worth $40 million in the reported quarter. As of Sept. 27, 2025, it had $414.1 million worth of shares under its existing share repurchase authorization.

Fiscal Q3 2026 Outlook: Maintaining Momentum

For the third quarter of fiscal 2026, Cirrus Logic provided a revenue outlook between $500 million and $560 million.

The GAAP gross margin is expected to be in the range of 51-53%.

Combined GAAP R&D and SG&A are anticipated to be between $151 million and $157 million.

Non-GAAP operating expenses are estimated to be in the band of $128-$134 million.

CRUS’ Zacks Rank

Cirrus Logic currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Recent Performance of Other Companies

Flex Ltd. (FLEX) reported second-quarter fiscal 2026 adjusted EPS of 79 cents, which surpassed the Zacks Consensus Estimate by 5.3%. The bottom line compared favorably with 64 cents posted in the prior-year quarter. Revenues increased 4% year over year to $6.8 billion. Also, it beat the consensus mark by 2%. The uptick was driven by strong data center growth in both the cloud and power end markets, despite a complex macroeconomic environment.

Fortive Corporation (FTV) reported third-quarter 2025 adjusted EPS of 68 cents from continuing operations, which surpassed the Zacks Consensus Estimate of 58 cents. The bottom line increased 15.3% year over year. Revenues increased 2.3% year over year to $1.03 billion. The top line beat the Zacks Consensus Estimate by 2.1%. Core revenues jumped 1.9%.

CDW Corporation (CDW) reported third-quarter 2025 non-GAAP earnings per share (EPS) of $2.71, surpassing the Zacks Consensus Estimate of $2.53. Also, the bottom line increased 3% year over year. The company’s revenues increased 4% year over year to $5.74 billion. On a constant currency (cc) basis, sales grew 3.8%, showing broad-based demand across product categories, such as notebooks/mobile devices, software, networking (netcomm) products, desktops and services, despite a slowdown in data storage and servers. Quarterly revenues also exceeded the consensus estimate of $5.7 billion.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research