UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):    November 1, 2022
Commission File Number

 	CIRRUS LOGIC, INC.		
(Exact name of Registrant as specified in its charter)	

Delaware	 	000-17795	 	77-0024818	
(State or Other Jurisdiction of
Incorporation or Organization)		(Commission File Number)		(IRS Employer
Identification No.)	

800 W. 6th Street	Austin,	TX		78701	
(Address of Principal Executive Offices)		(Zip Code)	
					
Registrant’s telephone number, including area code:	(512)	851-4000	
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	 	Trading Symbol	 	Name of each exchange on which registered	
Common stock, $0.001 par value		CRUS		The NASDAQ Stock Market LLC	
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

	

Item 2.02 Results of Operations and Financial Condition.

On November 1, 2022, Cirrus Logic, Inc. (“Cirrus Logic” or the “Company”) issued a press release announcing its financial results for its second quarter of fiscal year 2023. The full text of the press release is furnished as Exhibit No. 99.1 to this Current Report on Form 8-K.

Item 7.01 Regulation FD Disclosure

On November 1, 2022, in addition to issuing a press release, the Company posted on its website a shareholder letter to investors summarizing the financial results for its second quarter of fiscal year 2023. The full text of the shareholder letter is furnished as Exhibit No. 99.2 to this Current Report on Form 8-K.

Use of Non-GAAP Financial Information

To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus 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 press release 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.

The information contained in Items 2.02, 7.01, and 9.01 in this Current Report on Form 8-K and the exhibits furnished hereto contain forward-looking statements regarding the Company and cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated. In addition, this information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit            Description

Exhibit 99.1    Cirrus Logic, Inc. press release dated November 1, 2022
Exhibit 99.2    Cirrus Logic, Inc. shareholder letter dated November 1, 2022
Exhibit 104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		 	CIRRUS LOGIC, INC.		

Date:	November 1, 2022	By:	/s/ Venk Nathamuni		
		 	Name:	Venk Nathamuni		
		 	Title:	Chief Financial Officer	

EXHIBIT INDEX

Exhibit No. Description

99.1        Registrant’s press release dated November 1, 2022
99.2        Cirrus Logic, Inc. shareholder letter November 1, 2022
104        Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Exhibit 99.1

FINANCIAL NEWS

Cirrus Logic Reports Fiscal Second Quarter Revenue of $540.6 Million
 
Record Q2 Revenue and EPS Driven by Strong Demand for Smartphones

AUSTIN, Texas – Nov. 1, 2022 – 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 second quarter fiscal year 2023, which ended September 24, 2022, as well as the company’s current business outlook.
“Cirrus Logic reported Q2 revenue of $540.6 million, marking the fifth consecutive quarter in which we have set a revenue record for the corresponding fiscal period. Results were well above the top end of our guidance, as we benefited from higher unit volumes and high-performance mixed-signal content gains in smartphones,” said John Forsyth, Cirrus Logic president and chief executive officer. “In addition to these strong results, during the quarter we also made excellent progress in our audio product lines and in our strategy of expansion through adjacent high-performance mixed-signal applications. We furthered the development of our next-generation flagship smartphone audio components, continued to build momentum with our audio products in additional markets, and saw the continued growth in value of our camera controller solutions. With an extensive product portfolio and an outstanding roadmap, we believe we are positioned well to capitalize on opportunities that we believe will drive growth in the years to come.”

Reported Financial Results – Second Quarter FY23
•Revenue of $540.6 million;
•GAAP and non-GAAP gross margin of 50.2 percent;
•GAAP operating expenses of $155.1 million and non-GAAP operating expenses of $123.9 million; and
•GAAP earnings per share of $1.52 and non-GAAP earnings per share of $1.99.

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

Business Outlook – Third Quarter FY23
•Revenue is expected to range between $520 million and $580 million;
•GAAP gross margin is forecasted to be between 49 percent and 51 percent; and
•Combined GAAP R&D and SG&A expenses are anticipated to range between $153 million and $159 million, including approximately $21 million in stock-based compensation expense, $9 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.

Cirrus Logic will host a live Q&A session at 5 p.m. EDT 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).

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.

Investor Contact:                            
Chelsea Heffernan
Vice President, Investor Relations
Cirrus Logic, Inc.                            
(512) 851-4125                            
Investor@cirrus.com
2

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 capitalizing on opportunities that we believe will drive growth in the years to come, and our estimates for the third quarter fiscal year 2023 revenue, gross margin, combined research and development and selling, general and administrative expense levels, stock compensation expense, amortization of acquired intangibles and acquisition-related costs. 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 effects of the global COVID-19 outbreak and the measures taken to limit the spread of COVID-19, including any disruptions to our business that could result from measures to contain the outbreak that may be taken by governmental authorities in the jurisdictions in which we and our supply chain operate; the susceptibility of the markets we address to economic downturns, including as a result of the COVID-19 outbreak and the actions taken to mitigate the spread of COVID-19; increased industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S and overseas; the level and timing of orders and shipments during the third quarter of fiscal year 2023, customer cancellations of orders, or the failure to place orders consistent with forecasts, along with the risk factors listed in our Form 10-K for the year ended March 26, 2022 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.

3

Summary Financial Data Follows:

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS	
(in thousands, except per share data; unaudited)	
										
	Three Months Ended		Six Months Ended	
	Sep. 24,		Jun. 25,		Sep. 25,		Sep. 24,		Sep. 25,	
	2022		2022		2021		2022		2021	
	Q2'23		Q1'23		Q2'22		Q2'23		Q2'22	
Audio	$	337,811 			$	254,496 			$	300,775 			$	592,307 			$	518,130 		
High-Performance Mixed-Signal	202,763 			139,143 			165,111 			341,906 			225,009 		
Net sales	540,574 			393,639 			465,886 			934,213 			743,139 		
Cost of sales	269,288 			191,005 			230,442 			460,293 			367,749 		
Gross profit	271,286 			202,634 			235,444 			473,920 			375,390 		
Gross margin	50.2 	%		51.5 	%		50.5 	%		50.7 	%		50.5 	%	
										
Research and development	115,471 			109,716 			102,116 			225,187 			187,812 		
Selling, general and administrative	39,598 			38,642 			38,132 			78,240 			73,279 		
Total operating expenses	155,069 			148,358 			140,248 			303,427 			261,091 		
										
Income from operations	116,217 			54,276 			95,196 			170,493 			114,299 		

Interest income	1,285 			305 			35 			1,590 			796 		
Other income	295 			506 			1,859 			801 			1,617 		
Income before income taxes	117,797 			55,087 			97,090 			172,884 			116,712 		
Provision for income taxes	30,609 			15,380 			11,994 			45,989 			14,407 		
Net income	$	87,188 			$	39,707 			$	85,096 			$	126,895 			$	102,305 		
										
Basic earnings per share:	$	1.56 			$	0.71 			$	1.48 			$	2.27 			$	1.78 		
Diluted earnings per share:	$	1.52 			$	0.69 			$	1.43 			$	2.20 			$	1.72 		
										
Weighted average number of shares:										
Basic	55,726 			56,277 			57,364 			56,002 			57,473 		
Diluted	57,418 			57,804 			59,451 			57,620 			59,485 		
										
Prepared in accordance with Generally Accepted Accounting Principles	

4

																														
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		Six Months Ended	
	Sep. 24,		Jun. 25,		Sep. 25,		Sep. 24,		Sep. 25,	
	2022		2022		2021		2022		2021	
Net Income Reconciliation	Q2'23		Q1'23		Q2'22		Q2'23		Q2'22	
GAAP Net Income	$	87,188 			$	39,707 			$	85,096 			$	126,895 			$	102,305 		
Amortization of acquisition intangibles	7,787 			7,835 			7,054 			15,622 			10,052 		
Stock-based compensation expense	20,483 			18,138 			16,551 			38,621 			31,535 		
Acquisition-related costs	3,164 			3,164 			5,834 			6,328 			5,834 		
Adjustment to income taxes	(4,135)			(4,300)			(6,045)			(8,435)			(8,994)		
Non-GAAP Net Income	$	114,487 			$	64,544 			$	108,490 			$	179,031 			$	140,732 		
										
Earnings Per Share Reconciliation										
GAAP Diluted earnings per share	$	1.52 			$	0.69 			$	1.43 			$	2.20 			$	1.72 		
Effect of Amortization of acquisition intangibles	0.14 			0.14 			0.12 			0.27 			0.17 		
Effect of Stock-based compensation expense	0.35 			0.31 			0.28 			0.67 			0.53 		
Effect of Acquisition-related costs	0.05 			0.05 			0.09 			0.11 			0.09 		
Effect of Adjustment to income taxes	(0.07)			(0.07)			(0.10)			(0.14)			(0.14)		
Non-GAAP Diluted earnings per share	$	1.99 			$	1.12 			$	1.82 			$	3.11 			$	2.37 		
										
Operating Income Reconciliation										
GAAP Operating Income	$	116,217 			$	54,276 			$	95,196 			$	170,493 			$	114,299 		
GAAP Operating Profit	21.5 	%		13.8 	%		20.4 	%		18.2 	%		15.4 	%	
Amortization of acquisition intangibles	7,787 			7,835 			7,054 			15,622 			10,052 		
Stock-based compensation expense - COGS	312 			277 			272 			589 			518 		
Stock-based compensation expense - R&D	14,228 			12,592 			10,496 			26,820 			20,108 		
Stock-based compensation expense - SG&A	5,943 			5,269 			5,783 			11,212 			10,909 		
Acquisition-related costs	3,164 			3,164 			5,834 			6,328 			5,834 		
Non-GAAP Operating Income	$	147,651 			$	83,413 			$	124,635 			$	231,064 			$	161,720 		
Non-GAAP Operating Profit	27.3 	%		21.2 	%		26.8 	%		24.7 	%		21.8 	%	
										
Operating Expense Reconciliation										
GAAP Operating Expenses	$	155,069 			$	148,358 			$	140,248 			$	303,427 			$	261,091 		
Amortization of acquisition intangibles	(7,787)			(7,835)			(7,054)			(15,622)			(10,052)		
Stock-based compensation expense - R&D	(14,228)			(12,592)			(10,496)			(26,820)			(20,108)		
Stock-based compensation expense - SG&A	(5,943)			(5,269)			(5,783)			(11,212)			(10,909)		
Acquisition-related costs	(3,164)			(3,164)			(2,373)			(6,328)			(2,373)		
Non-GAAP Operating Expenses	$	123,947 			$	119,498 			$	114,542 			$	243,445 			$	217,649 		
										
Gross Margin/Profit Reconciliation										
GAAP Gross Profit	$	271,286 			$	202,634 			$	235,444 			$	473,920 			$	375,390 		
GAAP Gross Margin	50.2 	%		51.5 	%		50.5 	%		50.7 	%		50.5 	%	
Acquisition-related costs	— 			— 			3,461 			— 			3,461 		
Stock-based compensation expense - COGS	312 			277 			272 			589 			518 		
Non-GAAP Gross Profit	$	271,598 			$	202,911 			$	239,177 			$	474,509 			$	379,369 		
Non-GAAP Gross Margin	50.2 	%		51.5 	%		51.3 	%		50.8 	%		51.0 	%	
										
Effective Tax Rate Reconciliation										
GAAP Tax Expense	$	30,609 			$	15,380 			$	11,994 			$	45,989 			$	14,407 		
GAAP Effective Tax Rate	26.0 	%		27.9 	%		12.4 	%		26.6 	%		12.3 	%	
Adjustments to income taxes	4,135 			4,300 			6,045 			8,435 			8,994 		
Non-GAAP Tax Expense	$	34,744 			$	19,680 			$	18,039 			$	54,424 			$	23,401 		
Non-GAAP Effective Tax Rate	23.3 	%		23.4 	%		14.3 	%		23.3 	%		14.3 	%	
										
Tax Impact to EPS Reconciliation										
GAAP Tax Expense	$	0.53 			$	0.27 			$	0.20 			$	0.80 			$	0.24 		
Adjustments to income taxes	0.07 			0.07 			0.10 			0.14 			0.14 		
Non-GAAP Tax Expense	$	0.60 			$	0.34 			$	0.30 			$	0.94 			$	0.38 		
5

																					
CONSOLIDATED CONDENSED BALANCE SHEET	
 (in thousands; unaudited)	
							
		Sep. 24,		Mar. 26,		Sep. 25,	
		2022		2022		2021	
ASSETS							
Current assets							
Cash and cash equivalents		$	355,043 			$	369,814 			$	386,741 		
Marketable securities		23,869 			10,601 			8,152 		
Accounts receivable, net		304,546 			240,264 			280,967 		
Inventories		164,571 			138,436 			188,360 		
Other current assets		108,538 			80,900 			84,836 		
Total current Assets		956,567 			840,015 			949,056 		
							
Long-term marketable securities		49,013 			63,749 			67,726 		
Right-of-use lease assets		162,859 			171,003 			129,298 		
Property and equipment, net		158,722 			157,077 			159,480 		
Intangibles, net		141,909 			158,145 			174,852 		
Goodwill		435,936 			435,791 			437,783 		
Deferred tax asset		13,094 			11,068 			10,073 		
Long-term prepaid wafers		174,787 			195,000 			195,000 		
Other assets		71,180 			91,552 			102,892 		
 Total assets		$	2,164,067 			$	2,123,400 			$	2,226,160 		
							
LIABILITIES AND STOCKHOLDERS' EQUITY							
Current liabilities							
Accounts payable		$	118,000 			$	115,417 			$	386,699 		
Accrued salaries and benefits		59,140 			65,261 			54,919 		
Lease liability		13,583 			14,680 			14,359 		
Acquisition-related liabilities		45,984 			30,964 			— 		
Other accrued liabilities		45,658 			38,461 			44,404 		
Total current liabilities		282,365 			264,783 			500,381 		
							
Non-current lease liability		152,294 			163,162 			122,815 		
Non-current income taxes		65,255 			73,383 			79,727 		
Long-term acquisition-related liabilities		— 			8,692 			33,329 		
Other long-term liabilities		9,539 			13,563 			21,818 		
Total long-term liabilities		227,088 			258,800 			257,689 		
							
Stockholders' equity:							
Capital stock		1,618,177 			1,578,427 			1,533,557 		
Accumulated earnings (deficit)		40,927 			23,435 			(65,672)		
Accumulated other comprehensive income (loss)		(4,490)			(2,045)			205 		
Total stockholders' equity		1,654,614 			1,599,817 			1,468,090 		
Total liabilities and stockholders' equity		$	2,164,067 			$	2,123,400 			$	2,226,160 		
		  				  	
Prepared in accordance with Generally Accepted Accounting Principles	

6

															
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS	
(in thousands; unaudited)	
					
		Three Months Ended	
					
		Sep. 24,		Sep. 25,	
		2022		2021	
		Q2'23		Q2'22	
Cash flows from operating activities:					
Net income		$	87,188 			$	85,096 		
Adjustments to reconcile net income to net cash provided by operating activities:					
Depreciation and amortization		17,219 			15,812 		
Stock-based compensation expense		20,483 			16,551 		
Deferred income taxes		1,404 			294 		
Loss on retirement or write-off of long-lived assets		11 			331 		
Other non-cash charges		86 			92 		
Net change in operating assets and liabilities:					
Accounts receivable, net		(98,274)			(137,707)		
Inventories		9,799 			12,037 		
Prepaid wafers		— 			(195,000)		
Other assets		(2,491)			(94,911)		
Accounts payable and other accrued liabilities		14,229 			302,681 		
Income taxes payable		(16,829)			(9,432)		
Acquisition-related liabilities		3,164 			33,329 		
Net cash provided by operating activities		35,989 			29,173 		
Cash flows from investing activities:					
Maturities and sales of available-for-sale marketable securities		1,961 			308,478 		
Purchases of available-for-sale marketable securities		(850)			(14,194)		
Purchases of property, equipment and software		(10,211)			(3,893)		
Investments in technology		(36)			(2,034)		
Acquisition of business, net of cash obtained		— 			(275,642)		
Net cash used in investing activities		(9,136)			12,715 		
Cash flows from financing activities:					
Debt issuance costs		— 			(1,716)		
Issuance of common stock, net of shares withheld for taxes		1,011 			2,457 		
Repurchase of stock to satisfy employee tax withholding obligations		(2,156)			(1,013)		
Repurchase and retirement of common stock		(50,000)			(40,002)		
Net cash used in financing activities		(51,145)			(40,274)		
Net increase in cash and cash equivalents		(24,292)			1,614 		
Cash and cash equivalents at beginning of period		379,335 			385,127 		
Cash and cash equivalents at end of period		$	355,043 			$	386,741 		
					
Prepared in accordance with Generally Accepted Accounting Principles	
7

																																	
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 (used in) 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	
											
		Sep. 24,		Sep. 24,		Jun. 25,		Mar. 26,		Dec. 25,	
		2022		2022		2022		2022		2021	
		Q2'23		Q2'23		Q1'23		Q4'22		Q3'22	
											
Net cash provided by (used in) operating activities (GAAP)		$	232,730 			$	35,989 			$	74,365 			$	258,231 			$	(135,855)		
Capital expenditures		(29,651)			(10,247)			(7,224)			(8,456)			(3,724)		
Free Cash Flow (Non-GAAP)		$	203,079 			$	25,742 			$	67,141 			$	249,775 			$	(139,579)		
											
Cash Flow from Operations as a Percentage of Revenue (GAAP)		12 	%		7 	%		19 	%		53 	%		(25)	%	
Free Cash Flow Margin (Non-GAAP)		10 	%		5 	%		17 	%		51 	%		(25)	%	
8

Exhibit 99.2

Q2 FY23
Letter to Shareholders
November 1, 2022

November 1, 2022
Dear Shareholders,
Cirrus Logic reported record Q2 revenue and EPS, marking the fifth consecutive quarter in which we have set a revenue record for the corresponding fiscal period. In Q2 FY23, revenue was $540.6 million, well above the top end of our guidance range, and GAAP and non-GAAP earnings per share were $1.52 and $1.99, respectively. The company also made excellent progress on strategic initiatives that we believe will contribute to sustained growth. We started developing our next-generation amplifier for smartphones, began sampling the first SoundWire®-enabled codec designed specifically for laptops, and saw increased customer adoption of our camera controllers in recently-introduced devices. Our engagement with key customers around future products and opportunities remained strong throughout the quarter. With a solid lineup of existing components and our continued investment in high-performance mixed-signal (HPMS) solutions, we believe we are well-positioned to drive further growth and product diversification.

Figure A: Cirrus Logic Q2 FY23 Results

	GAAP	Adj.	Non-GAAP*	
Revenue	$540.6		$540.6	
Gross Profit	$271.3	$0.3	$271.6	
Gross Margin	50.2%		50.2%	
Operating Expense	$155.1	($31.1)	$123.9	
Operating Income	$116.2	$31.4	$147.7	
Operating Profit	21.5%		27.3%	
Interest Income	$1.3		$1.3	
Other Income	$0.3		$0.3	
Income Tax Expense	$30.6	$4.1	$34.7	
Net Income	$87.2	$27.3	$114.5	
Diluted EPS	$1.52	$0.48	$1.99	
*Complete GAAP to Non-GAAP reconciliations available on page 12
Numbers may not sum due to rounding
$ millions, except EPS

						
Q2 FY23 Letter to Shareholders	2	

Revenue and Gross Margin
Cirrus Logic revenue for the September quarter was $540.6 million, up 37 percent quarter over quarter and 16 percent year over year. On a sequential basis revenue growth was driven by higher smartphone unit volumes. The year-over-year increase in sales was driven by higher ASPs, an increase in smartphone unit volumes, and HPMS content gains. This was partially offset by lower sales of fast-charging ICs. In the December quarter, we expect revenue to range from $520 million to $580 million, up two percent sequentially and roughly flat year over year at the midpoint.
In the September quarter, revenue derived from our audio and HPMS product lines represented 62 percent and 38 percent of total revenue, respectively. One customer contributed approximately 82 percent of total revenue in Q2 FY23. Our relationship with our largest customer remains outstanding, with continued strong design activity across a wide range of products. While we understand there is intense interest in this customer, in accordance with our policy, we do not discuss specifics about this business.
Figure B: Cirrus Logic Revenue ($M) Q3 FY21 to Q3 FY23

*Midpoint of guidance as of November 1, 2022

						
Q2 FY23 Letter to Shareholders	3	

Figure C: High-Performance Mixed-Signal Revenue Contribution FY19 – FY22

									
FY19	FY22	Future	

n HPMS n Audio
Audio solutions include amplifiers and codecs. High-performance mixed-signal solutions include camera controllers, haptics and sensing, fast-charging, and power conversion and control ICs.
GAAP gross margin in the September quarter was 50.2 percent, compared to 51.5 percent in Q1 FY23 and 50.5 percent in Q2 FY22. Non-GAAP gross margin in the September quarter was 50.2 percent, compared to 51.5 percent in Q1 FY23 and 51.3 percent in Q2 FY22. The sequential decline in gross margin was primarily due to higher reserves, product mix, and increased supply chain costs. The year-over-year change in gross margin reflects an increase in supply chain costs that came into effect in January 2022, and to a lesser extent, higher reserves. This was favorably offset by the absence in the current quarter of the purchase price fair value adjustment to inventory, which was a one-time event in Q2 FY22 resulting from the acquisition of Lion Semiconductor. In the December quarter, we expect gross margin to range from 49 percent to 51 percent.

Operating Profit, EPS, and Cash
Operating profit for Q2 FY23 was approximately 21.5 percent on a GAAP basis and 27.3 percent on a non-GAAP basis. GAAP operating expense was below the midpoint of guidance at $155.1 million, due to lower-than-expected employee-related costs. This was up $6.7 million sequentially and $14.8 million year over year. The sequential increase in operating expense was primarily due to higher variable compensation and stock-based compensation. This was offset by a reduction in employee-related expenses. On a year-over-year basis, the increase reflects higher stock-based compensation, product development costs, employee-related expenses, facilities-related expenses, and variable compensation. GAAP operating expense included $20.2 million in stock-based compensation, $7.8 million in amortization of acquisition intangibles, and $3.2 million in acquisition-related costs. Non-GAAP operating expense was $123.9 million, up $4.4 million sequentially and $9.4 million year over year.
GAAP R&D and SG&A expenses for Q3 FY23 are expected to range from $153 million to $159 million, including approximately $21 million in stock-based compensation, $9 million in amortization of acquired intangibles, and $3 million in acquisition-related costs. Looking ahead, we see significant opportunities to continue our technology and product diversification across existing and new markets. We anticipate making ongoing R&D investments to address strategic opportunities, while also controlling discretionary spending. The company’s total headcount exiting Q2 FY23 was 1,634.
						
Q2 FY23 Letter to Shareholders	4	

Figure D: GAAP R&D and SG&A Expenses ($M)/Headcount Q3 FY21 to Q3 FY23

*Reflects midpoint of combined R&D and SG&A guidance as of November 1, 2022
GAAP earnings per share for the September quarter was $1.52, compared to $0.69 the prior quarter and $1.43 in Q2 FY22. Non-GAAP earnings per share for the September quarter was $1.99, versus $1.12 in Q1 FY23 and $1.82 in Q2 FY22.
Our ending cash and cash equivalents balance in the September quarter was $427.9 million, down from $453.7 million the prior quarter as we utilized $50.0 million to repurchase 582,876 shares at an average price of $85.78, partially offset by cash flow from operations of $36.0 million. At the end of Q2 FY23, the company had $586.1 million remaining in its share repurchase authorization. In August 2022, the Company established a Rule 10b5-1 trading plan for share repurchases, subject to certain provisions. Subsequent to Q2 FY23, the Company utilized $25.0 million to repurchase 376,181 shares at an average price of $66.46 under the new trading plan. We expect strong cash flow generation in FY23 and will continue to evaluate potential uses of this cash, including investing in the business to pursue organic growth opportunities, M&A, and returning capital to shareholders through share repurchases.

Taxes and Inventory
GAAP tax expense for Q2 FY23 was $30.6 million on GAAP pre-tax income of $117.8 million, resulting in an effective tax rate of 26.0 percent. Non-GAAP tax expense for the quarter was $34.7 million on non-GAAP pre-tax income of $149.2 million, resulting in a non-GAAP effective tax rate of 23.3 percent. Non-GAAP tax expense for the September quarter included the effect of higher non-GAAP income in various jurisdictions. Similar to Q1 FY23, the GAAP and non-GAAP effective tax rates for the September quarter were unfavorably impacted by a provision of the Tax Cuts and Jobs Act of 2017 effective for U.S. taxpayers
						
Q2 FY23 Letter to Shareholders	5	

this year that requires companies to capitalize and amortize R&D expenses rather than deduct them in the current year. We estimate that our FY23 non-GAAP effective tax rate will be approximately in the range of 23 percent to 25 percent. Looking beyond FY23, we continue to anticipate that under this rule, our effective tax rate will decrease sequentially as additional years of R&D expenses are amortized for tax purposes and may return to a normalized range in approximately five years, absent any other future changes that would impact our effective tax rate. We are monitoring legislative activity in this area that may result in the elimination or deferral of this tax rule before the end of FY23. Without the impact of this rule, we estimate that our FY23 non-GAAP effective tax rate would be in our more typical mid-teens range. 
Q2 FY23 inventory was $164.6 million, down from $174.4 million in Q1 FY23. In Q3 FY23, we expect inventory to decline from the prior quarter as we continue to support our customers’ new product ramps.

Company Strategy
We remain committed to our three-pronged strategy for growing our business: first, maintaining our leadership position in smartphone audio; second, broadening sales of audio components in key profitable applications beyond smartphones; and third, applying our mixed-signal engineering expertise to develop solutions in new, adjacent HPMS applications and markets. During the September quarter, the company made excellent progress on these strategic initiatives that we believe will contribute to our sustained growth. Highlights from the quarter are below.
Audio in Smartphones
In audio, demand for our amplifiers and codecs remained strong. During the quarter, we ramped a variety of custom and general market products ahead of multiple customer smartphone introductions. We also continued the development of our next-generation 22-nanometer smart codec for smartphones, which enables system design flexibility across audio, sensing, and other key signal processing applications. Furthermore, we began initial development of our next-generation custom boosted amplifier. This component features an innovative new architecture that will deliver significant power and efficiency improvements while also saving valuable board space. Given the nature of the multi-year design cycles associated with these audio components and their long lifespan in production, we believe these new product development efforts provide us with good longer-term visibility and an opportunity for sustained revenue contribution.
Audio Beyond Smartphones
Outside of smartphones, we continue to see positive design momentum and long-term opportunities in laptops. While there is near-term weakness in this market, we stand to benefit from several favorable secular trends including an increased emphasis on high-quality audio due to the shift to remote and hybrid working, a transition to thinner and lighter form factors, and an evolution towards a more smartphone-like audio architecture that leverages multiple boosted amplifiers. To capitalize on these trends and our expanding serviceable available market, which we expect to double over the span of five years, we have developed an amplifier and codec specifically optimized for laptops. We continue to actively engage customers with our amplifier, and this quarter we began sampling our first SoundWire®-enabled codec for laptops. We are encouraged by the positive feedback that we have received for both components. In addition, we are engaging OEMs that are seeking higher-quality sound and haptic
						
Q2 FY23 Letter to Shareholders	6	

feedback in AR/VR headsets, gaming devices, and wearables, and anticipate several new devices utilizing our components to be introduced over the next 12 months.
High-Performance Mixed-Signal
We continue to drive product diversification and revenue growth through our HPMS solutions. This quarter we ramped shipments of our latest camera controller ahead of a new product launch of a key customer and were delighted to see the camera technology featured as an important differentiator in the new generation of smartphone devices. In this product cycle, we also saw increased customer adoption of our camera controllers, and believe there are opportunities for further innovation and increased value with this product line in the coming years. We maintain a strong relationship with our key customer in this area and are collaborating to develop a next-generation camera controller that offers increased signal-processing bandwidth and functionality, while also improving overall system performance compared to our current generation ICs. In the area of power, we are developing new intellectual property for future products with better data converter performance and additional features, which will help streamline system design, reduce solution size, and ultimately enable customers to enhance battery subsystem performance, health and longevity. These investments positions the company to expand our footprint in this product category in the coming years. Finally, we continue to engage with a strategic customer and expect to bring a new HPMS component to market in smartphones next year.
Other Updates
We continue to experience significant wafer supply constraints, most notably with 55-nanometer high-voltage products. In light of these constraints, we continue to prioritize supply towards key customers seeking to maximize total smartphone unit volumes, resulting in varied content across models and devices. Near term, we are working with our partners to secure additional capacity where possible. Longer term, we are transitioning certain mixed-signal intellectual property from 55-nanometer to other advanced process nodes and seeking to expand foundry optionality, both of which we believe will enable us to alleviate some of these capacity constraints.

Summary and Guidance
For the December quarter we expect the following results:
•Revenue to range between $520 million and $580 million;
•GAAP gross margin to be between 49 percent and 51 percent; and
•Combined GAAP R&D and SG&A expenses to range between $153 million and $159 million, including approximately $21 million in stock-based compensation expense, $9 million in amortization of acquired intangibles, and $3 million in acquisition-related costs.
In conclusion, we delivered outstanding results in the September quarter and saw significant investment and progress in our flagship smartphone audio components while also executing on our strategy to drive end-market diversification and product expansion through our HPMS solutions. With a deep commitment to innovation, an extensive portfolio of components, and a compelling roadmap, we believe we are well-positioned to drive growth in the years to come.
						
Q2 FY23 Letter to Shareholders	7	

Sincerely,

	John Forsyth
President &
Chief Executive Officer		Venk Nathamuni
Chief Financial Officer	

Conference Call Q&A Session
Cirrus Logic will host a live Q&A session at 5 p.m. EDT today to answer questions related to its financial results and business outlook. Participants may listen to the conference call on the Cirrus Logic website.
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)
Use of Non-GAAP Financial Information
To supplement Cirrus Logic's financial statements presented on a GAAP basis, Cirrus 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. We are also providing guidance on our expected non-GAAP expected effective tax rate. We are not able to provide guidance on our GAAP effective tax rate or a related reconciliation without unreasonable efforts since our future GAAP effective tax rate depends on our future stock price and related stock-based compensation information that is not currently available.
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 shareholder letter contain forward-looking statements, including statements about our ability to deliver sustained growth and technology and product diversification across existing and new markets; our ability to continue to make ongoing R&D investments to address strategic opportunities and control discretionary spending; our ability to continue strong cash flow generation in FY23; our non-GAAP effective tax rate for the full fiscal year 2023; our expectation that our effective tax rate will decrease sequentially as additional years of R&D expenses are amortized for tax purposes and may return to a normalized range in approximately five years; our ability to maintain our leadership position in smartphone audio; our ability to broaden sales of audio components in key profitable applications beyond smartphones; our ability to apply our mixed-signal engineering expertise to develop solutions in new, adjacent HPMS applications; our ability to
						
Q2 FY23 Letter to Shareholders	8	

execute on the development of our next-generation smart codec for smartphones in the 22-nanometer process node; our expectation that new product development efforts in audio will provide us with good longer-term visibility and an opportunity for sustained revenue contribution; our ability to benefit from favorable secular trends in the laptop market; our ability to capitalize on our expanding serviceable available market for laptops; our expectation that new devices utilizing our components will be introduced to the market over the next 12 months; our ability to further innovate and increase value in our camera controller product line in the coming years; our ability to develop a next-generation camera controller that offers increased signal-processing bandwidth and functionality, while also improving overall system performance; our ability to expand our footprint in the power product category in the coming years; our ability to bring a new HPMS component to market in smartphones next year; our ability to execute on our strategy to drive end-market diversification and product expansion through our HPMS product line; and our forecasts for the third quarter of fiscal year 2023 revenue, profit, gross margin, combined research and development and selling, general and administrative expense levels, stock-based compensation expense, amortization of acquired intangibles, acquisition-related costs and inventory levels. In some cases, forward-looking statements are identified by words such as “emerge,” “expect,” “anticipate,” “foresee,” “target,” “project,” “believe,” “goals,” “opportunity,” “estimates,” “intend,” “will,” 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 third quarter of fiscal year 2023, 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; industry-wide capacity constraints that may impact our ability to meet current customer demand, which could cause an unanticipated decline in our sales and damage our existing customer relationships and our ability to establish new customer relationships; the potential for increased prices due to capacity constraints in our supply chain, which, if we are unable to increase our selling price to our customers, could result in lower revenues and margins that could adversely affect our financial results; recent significant increases in inflation in the U.S and overseas; and the risk factors listed in our Form 10-K for the year ended March 26, 2022 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.
Special Statement Concerning Risks Associated with the COVID-19 Pandemic and Our Forward-Looking Disclosures
We face risks related to global health epidemics that could impact our sales, supply chain, and operations, resulting in significantly reduced revenue or increased supply chain costs and constraints that would adversely affect our operating results.
On March 11, 2020, the World Health Organization declared a pandemic related to a novel coronavirus, commonly referred to as COVID-19. We continue to expect that COVID-19 will have an adverse effect on our business, financial condition, and results of operations and, with the pandemic ongoing, we are unable to predict the full extent and nature of these impacts at this time. The COVID-19 pandemic has and will likely continue to heighten or exacerbate many of the other risks described in the risk factors
						
Q2 FY23 Letter to Shareholders	9	

listed in our Form 10-K for the year ended March 26, 2022, and in our other filings with the Securities and Exchange Commission.
In the longer term, the COVID-19 pandemic is likely to continue to adversely affect the economies and financial markets of many countries, potentially leading to a global economic downturn, inflation, or a recession. This has and may continue to adversely affect the demand environment for our products and those of our customers, particularly consumer products such as smartphones, which may, in turn negatively affect our revenue and operating results.
Cirrus Logic, Cirrus, and the Cirrus Logic logo are registered trademarks of Cirrus Logic, Inc. SoundWire is a registered trademark of MIPI Alliance, Inc. All other company or product names noted herein may be trademarks of their respective holders.
						
Q2 FY23 Letter to Shareholders	10	

Summary of Financial Data Below:

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

	Three Months Ended		Six Months Ended	
	Sep. 24,
2022		Jun. 25,
2022		Sep. 25,
2021		Sep. 24,
2022		Sep. 25,
2021	
	Q2'23		Q1'23		Q2'22		Q2'23		Q2'22	
Audio	$	337,811 			$	254,496 			$	300,775 			$	592,307 			$	518,130 		
High-Performance Mixed-Signal	202,763 			139,143 			165,111 			341,906 			225,009 		
Net sales	540,574 			393,639 			465,886 			934,213 			743,139 		
Cost of sales	269,288 			191,005 			230,442 			460,293 			367,749 		
Gross profit	271,286 			202,634 			235,444 			473,920 			375,390 		
Gross margin	50.2 	%		51.5 	%		50.5 	%		50.7 	%		50.5 	%	
										
Research and development	115,471 			109,716 			102,116 			225,187 			187,812 		
Selling, general and administrative	39,598 			38,642 			38,132 			78,240 			73,279 		
Total operating expenses	155,069 			148,358 			140,248 			303,427 			261,091 		
										
Income from operations	116,217 			54,276 			95,196 			170,493 			114,299 		
										
Interest income	1,285 			305 			35 			1,590 			796 		
Other income	295 			506 			1,859 			801 			1,617 		
Income before income taxes	117,797 			55,087 			97,090 			172,884 			116,712 		
Provision for income taxes	30,609 			15,380 			11,994 			45,989 			14,407 		
Net income	$	87,188 			$	39,707 			$	85,096 			$	126,895 			$	102,305 		
										
Basic earnings per share:	$	1.56 			$	0.71 			$	1.48 			$	2.27 			$	1.78 		
Diluted earnings per share:	$	1.52 			$	0.69 			$	1.43 			$	2.20 			$	1.72 		
										
Weighted average number of shares:									 	
Basic	55,726 			56,277 			57,364 			56,002 			57,473 		
Diluted	57,418 			57,804 			59,451 			57,620 			59,485 		
										
Prepared in accordance with Generally Accepted Accounting Principles
						
Q2 FY23 Letter to Shareholders	11	

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		Six Months Ended	
	Sep. 24,
2022		Jun. 25,
2022		Sep. 25,
2021		Sep. 24,
2022		Sep. 25,
2021	
Net Income Reconciliation	Q2'23		Q1'23		Q2'22		Q2'23		Q2'22	
GAAP Net Income	$	87,188 			$	39,707 			$	85,096 			$	126,895 			$	102,305 		
Amortization of acquisition intangibles	7,787 			7,835 			7,054 			15,622 			10,052 		
Stock-based compensation expense	20,483 			18,138 			16,551 			38,621 			31,535 		
Acquisition-related costs	3,164 			3,164 			5,834 			6,328 			5,834 		
Adjustment to income taxes	(4,135)			(4,300)			(6,045)			(8,435)			(8,994)		
Non-GAAP Net Income	$	114,487 			$	64,544 			$	108,490 			$	179,031 			$	140,732 		
										
Earnings Per Share Reconciliation										
GAAP Diluted earnings per share	$	1.52 			$	0.69 			$	1.43 			$	2.20 			$	1.72 		
Effect of Amortization of acquisition intangibles	0.14 			0.14 			0.12 			0.27 			0.17 		
Effect of Stock-based compensation expense	0.35 			0.31 			0.28 			0.67 			0.53 		
Effect of Acquisition-related costs	0.05 			0.05 			0.09 			0.11 			0.09 		
Effect of Adjustment to income taxes	(0.07)			(0.07)			(0.10)			(0.14)			(0.14)		
Non-GAAP Diluted earnings per share	$	1.99 			$	1.12 			$	1.82 			$	3.11 			$	2.37 		
										
Operating Income Reconciliation										
GAAP Operating Income	$	116,217 			$	54,276 			$	95,196 			$	170,493 			$	114,299 		
GAAP Operating Profit	21.5 	%		13.8 	%		20.4 	%		18.2 	%		15.4 	%	
Amortization of acquisition intangibles	7,787 			7,835 			7,054 			15,622 			10,052 		
Stock-based compensation expense - COGS	312 			277 			272 			589 			518 		
Stock-based compensation expense - R&D	14,228 			12,592 			10,496 			26,820 			20,108 		
Stock-based compensation expense - SG&A	5,943 			5,269 			5,783 			11,212 			10,909 		
Acquisition-related costs	3,164 			3,164 			5,834 			6,328 			5,834 		
Non-GAAP Operating Income	$	147,651 			$	83,413 			$	124,635 			$	231,064 			$	161,720 		
Non-GAAP Operating Profit	27.3 	%		21.2 	%		26.8 	%		24.7 	%		21.8 	%	
										
Operating Expense Reconciliation										
GAAP Operating Expenses	$	155,069 			$	148,358 			$	140,248 			$	303,427 			$	261,091 		
Amortization of acquisition intangibles	(7,787)			(7,835)			(7,054)			(15,622)			(10,052)		
Stock-based compensation expense - R&D	(14,228)			(12,592)			(10,496)			(26,820)			(20,108)		
Stock-based compensation expense - SG&A	(5,943)			(5,269)			(5,783)			(11,212)			(10,909)		
Acquisition-related costs	(3,164)			(3,164)			(2,373)			(6,328)			(2,373)		
Non-GAAP Operating Expenses	$	123,947 			$	119,498 			$	114,542 			$	243,445 			$	217,649 		
										
Gross Margin/Profit Reconciliation										
GAAP Gross Profit	$	271,286 			$	202,634 			$	235,444 			$	473,920 			$	375,390 		
GAAP Gross Margin	50.2 	%		51.5 	%		50.5 	%		51 	%		50.5 	%	
Acquisition-related costs	— 			— 			3,461 			— 			3,461 		
Stock-based compensation expense - COGS	312 			277 			272 			589 			518 		
Non-GAAP Gross Profit	$	271,598 			$	202,911 			$	239,177 			$	474,509 			$	379,369 		
Non-GAAP Gross Margin	50.2 	%		51.5 	%		51.3 	%		50.8 	%		51.0 	%	
										
Effective Tax Rate Reconciliation										
GAAP Tax Expense	$	30,609 			$	15,380 			$	11,994 			$	45,989 			$	14,407 		
GAAP Effective Tax Rate	26.0 	%		27.9 	%		12.4 	%		26.6 	%		12.3 	%	
Adjustments to income taxes	4,135 			4,300 			6,045 			8,435 			8,994 		
Non-GAAP Tax Expense	$	34,744 			$	19,680 			$	18,039 			$	54,424 			$	23,401 		
Non-GAAP Effective Tax Rate	23.3 	%		23.4 	%		14.3 	%		23.3 	%		14.3 	%	
										
Tax Impact to EPS Reconciliation										
GAAP Tax Expense	$	0.53 			$	0.27 			$	0.20 			$	0.80 			$	0.24 		
Adjustments to income taxes	0.07 			0.07 			0.10 			0.14 			0.14 		
Non-GAAP Tax Expense	$	0.60 			$	0.34 			$	0.30 			$	0.94 			$	0.38 		

Q2 FY23 Letter to Shareholders	12	

CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands; unaudited)

	Sep. 24,
2022		Mar. 26,
2022		Sep. 25,
2021	
ASSETS						
Current assets						
Cash and cash equivalents	$	355,043 			$	369,814 			$	386,741 		
Marketable securities	23,869 			10,601 			8,152 		
Accounts receivable, net	304,546 			240,264 			280,967 		
Inventories	164,571 			138,436 			188,360 		
Other current assets	108,538 			80,900 			84,836 		
Total current Assets	956,567 			840,015 			949,056 		
						
Long-term marketable securities	49,013 			63,749 			67,726 		
Right-of-use lease assets	162,859 			171,003 			129,298 		
Property and equipment, net	158,722 			157,077 			159,480 		
Intangibles, net	141,909 			158,145 			174,852 		
Goodwill	435,936 			435,791 			437,783 		
Deferred tax asset	13,094 			11,068 			10,073 		
Long-term prepaid wafers	174,787 			195,000 			195,000 		
Other assets	71,180 			91,552 			102,892 		
Total assets	$	2,164,067 			$	2,123,400 			$	2,226,160 		
						
LIABILITIES AND STOCKHOLDERS' EQUITY						
Current liabilities						
Accounts payable	$	118,000 			$	115,417 			$	386,699 		
Accrued salaries and benefits	59,140 			65,261 			54,919 		
Lease liability	13,583 			14,680 			14,359 		
Acquisition-related liabilities	45,984 			30,964 			— 		
Other accrued liabilities	45,658 			38,461 			44,404 		
Total current liabilities	282,365 			264,783 			500,381 		
						
Non-current lease liability	152,294 			163,162 			122,815 		
Non-current income taxes	65,255 			73,383 			79,727 		
Long-term acquisition-related liabilities	— 			8,692 			33,329 		
Other long-term liabilities	9,539 			13,563 			21,818 		
Total long-term liabilities	227,088 			258,800 			257,689 		
						
Stockholders' equity:						
Capital stock	1,618,177 			1,578,427 			1,533,557 		
Accumulated earnings (deficit)	40,927 			23,435 			(65,672)		
Accumulated other comprehensive income (loss)	(4,490)			(2,045)			205 		
Total stockholders' equity	1,654,614 			1,599,817 			1,468,090 		
Total liabilities and stockholders' equity	$	2,164,067 			$	2,123,400 			$	2,226,160 		
Prepared in accordance with Generally Accepted Accounting Principles
						
Q2 FY23 Letter to Shareholders	13	

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

	Three Months Ended	
	Sep. 24,		Sep. 25,	
	2022		2021	
	Q2'23		Q2'22	
Cash flows from operating activities:				
Net income	$	87,188 			$	85,096 		
Adjustments to reconcile net income to net cash provided by operating activities:				
Depreciation and amortization	17,219 			15,812 		
Stock-based compensation expense	20,483 			16,551 		
Deferred income taxes	1,404 			294 		
Loss on retirement or write-off of long-lived assets	11 			331 		
Other non-cash charges	86 			92 		
Net change in operating assets and liabilities:				
Accounts receivable, net	(98,274)			(137,707)		
Inventories	9,799 			12,037 		
Prepaid wafers	— 			(195,000)		
Other assets	(2,491)			(94,911)		
Accounts payable and other accrued liabilities	14,229 			302,681 		
Income taxes payable	(16,829)			(9,432)		
Acquisition-related liabilities	3,164 			33,329 		
Net cash provided by operating activities	35,989 			29,173 		
Cash flows from investing activities:				
Maturities and sales of available-for-sale marketable securities	1,961 			308,478 		
Purchases of available-for-sale marketable securities	(850)			(14,194)		
Purchases of property, equipment and software	(10,211)			(3,893)		
Investments in technology	(36)			(2,034)		
Acquisition of business, net of cash obtained	— 			(275,642)		
Net cash (used in) provided by investing activities	(9,136)			12,715 		
Cash flows from financing activities:				
Debt issuance costs	— 			(1,716)		
Issuance of common stock, net of shares withheld for taxes	1,011 			2,457 		
Repurchase of stock to satisfy employee tax withholding obligations	(2,156)			(1,013)		
Repurchase and retirement of common stock	(50,000)			(40,002)		
Net cash used in financing activities	(51,145)			(40,274)		
Net (decrease) increase in cash and cash equivalents	(24,292)			1,614 		
Cash and cash equivalents at beginning of period	379,335 			385,127 		
Cash and cash equivalents at end of period	$	355,043 			$	386,741 		
Prepared in accordance with Generally Accepted Accounting Principles
						
Q2 FY23 Letter to Shareholders	14	

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 (used in) 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	
										
	Sep. 24,		Sep. 24,		Jun. 25,		Mar. 26,		Dec. 25,	
	2022		2022		2022		2022		2021	
	Q2'23		Q2'23		Q1'23		Q4'22		Q3'22	
Net cash provided by (used in) operating activities (GAAP)	$	232,730 			$	35,989 			$	74,365 			$	258,231 			$	(135,855)		
Capital expenditures	(29,651)			(10,247)			(7,224)			(8,456)			(3,724)		
Free Cash Flow (Non-GAAP)	$	203,079 			$	25,742 			$	67,141 			$	249,775 			$	(139,579)		
										
Cash Flow from Operations as a Percentage of Revenue (GAAP)	12 	%		7 	%		19 	%		53 	%		(25)	%	
Free Cash Flow Margin (Non-GAAP)	10 	%		5 	%		17 	%		51 	%		(25)	%	

										

Q2 FY23 Letter to Shareholders	15