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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Fourth Quarter and Full Fiscal Year 2022 Financial Results Q&A Session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for queueing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes.
I would like to turn the conference over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. Heffernan, you may begin.
Thank you, and good afternoon. Joining me on today's call is John Forsyth, Cirrus Logic's Chief Executive Officer; and Venk Nathamuni, Chief Financial Officer. Today, we announced our financial results for the fourth quarter and full fiscal year 2022 at approximately 4:00 p.m. Eastern. The shareholder letter discussing our financial results, the earnings press release, along with the webcast of this Q&A session, are all available on the company's Investor Relations website -- company.
Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that may exclude certain items. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company's Investor Relations website.
Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information the company expressly disclaims any obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise.
Please refer to the press release and the shareholder letter issued today, which are available on the Cirrus Logic website, and the latest 10-K form as well as other corporate filings registered with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from current expectations.
I will now turn the call over to John.
Thank you, Chelsea. First, let me say welcome to Venk, who's joining us for his first earnings call with Cirrus Logic. Many of you on the call today know Venk already and are aware of his considerable experience and background in the semiconductor industry, and we are certainly all very excited about what he brings to the team here at Cirrus.
I'd also like to take this opportunity to thank Thomas Case for his dedication and contribution to Cirrus Logic's growth and progress over the past 21 years.
As you've seen in the press release, Cirrus Logic delivered outstanding results with record revenue and earnings per share in fiscal Q4 and for the full fiscal year 2022. Before we discuss the details of those results, I'd like to take a moment to recap the three key pillars of the strategy driving the momentum and success that we are now seeing.
These are: One, maintaining our leadership position in smartphone audio by continuing to deliver world class products and expanding execution with the strongest customers in the market; two, broadening sales of audio components in key profitable applications beyond smartphones; and three, leveraging our world-class mixed-signal engineering expertise in order to build a growing footprint of products outside of audio in the area we call our high-performance mixed signal product lines. We believe this area will yield significant opportunities, both within smartphones and beyond.
We executed on this three-pronged strategy very successfully in fiscal year 2022, delivering both strong results and we believe laying the foundation for further future growth. In audio, we maintained our leadership position in smartphones and grew laptop revenue compared to the prior year. In high performance mixed signal, we shipped our first-generation power conversion and control IC, increase the attach rate of our camera controllers, began shipping our latest generation haptic driver in a leading Android smartphone and broadened our product portfolio with the addition of fast charging solutions.
Looking ahead, we're developing intellectual property and underlying advanced technologies today that not only push the boundaries of performance, power, latency and size, but are also important for the execution of our long-term road map in all of these product areas. With our growing investments around high performance mixed signal in areas such as power and charging, we are optimistic about our ability to create greater shareholder value through product diversification and long-term growth.
I would also like to touch briefly on the supply chain environment. We continue to experience significant constraints as demand continues to outstrip supply. And our supply chain team has done a tremendous job of navigating these challenges, including those associated with the recent COVID-19 shutdowns in China.
Finally, I want to thank all of our employees and our partners for their significant contributions in achieving our record results.
And with that, let me now turn the call to Venk to provide an overview of our financial results for fiscal Q4, 2022 as well as guidance for fiscal Q1 2023.
Thank you, John. First, let me say how excited I am to be part of Cirrus Logic. I really look forward to supporting and helping shape the company's strategic vision and our plan for long-term growth in both revenue and profitability. I believe we have a great opportunity to drive compelling returns and shareholder value.
Now Q4 was a record fourth quarter with stronger-than-expected results that drove record revenue and EPS for fiscal '22. Fourth quarter revenue was $490 million, up 67% from a year ago. For the full year, revenue was a record $1.78 billion, a 30% increase from a year ago. These outstanding results were driven by high-performance mixed-signal content gains in smartphones, and to a lesser extent, sales of fast-charging ICs in smartphones as well as audio products in laptops.
Non-GAAP gross profit in the quarter was $259 million or 52.9% of revenue. Gross margin was roughly flat sequentially and but up 240 basis points year-over-year. The year-over-year increase in gross margin was driven by higher ASPs, which were partially offset by supply chain cost increases. Going forward, we expect gross margin to moderate towards our long-term model, and I'll cover this topic more in the guidance section.
Non-GAAP operating expenses in the quarter were $123 million, up approximately $8 million sequentially. The sequential increase was primarily due to higher employee expense and to a lesser extent, an increase in product development costs. For the full fiscal year, non-GAAP operating expenses were $456 million or 26% of revenue.
Non-GAAP operating income was $136 million in the fourth quarter or 28% of revenue representing a record for the quarter. Full year operating income was $472 million or 27% of revenue. Non-GAAP net income in the fourth quarter was $118 million, or $2.01 per share. For fiscal year '22, non-GAAP net income was $408 million or $6.90 per share.
Let me now turn to the balance sheet. Our balance sheet is strong, and we ended fiscal year '22 with $444 million in cash and cash equivalents. This was up roughly $173 million from the prior quarter due to strong cash flow generation. We have no debt outstanding.
Inventory was $138 million, down $10 million sequentially; and days of inventory was 55 days in Q4, up three days sequentially.
Turning to the cash flow. Cash flow from operations was $258 million in the quarter. And free cash flow for the quarter was $250 million and for the full year was $95 million as we used $277 million in cash for the Lion acquisition as well as $255 million for wafer purchase commitments.
We are pleased with the results of our capital return activities during the year. We repurchased roughly $75 million of our common stock in fiscal Q4 and a total of $167.5 million during the full fiscal year. As of the end of fiscal year '22, we have $192.5 million remaining in our current share repurchase authorization.
And now on to the guidance. For the first fiscal quarter of 2023, we expect revenue in the range of $350 million to $390 million. On a year-over-year basis, our expected revenue growth is primarily driven by anticipated increases in demand for certain components, shipping and smartphones and to a lesser extent higher ASPs compared to the prior year.
As I alluded to earlier, we expect gross margins to normalize around a long-term model of 50% as we ship inventory built at higher cost compared to Q4 fiscal '22. As a result, in the June quarter, we expect gross margin to range from 49% to 51%.
Non-GAAP R&D and SG&A is expected to be flat sequentially, in the range of $117 million to $123 million. We anticipate a tight labor market in fiscal 2023 with associated inflationary pressures on wages.
On the tax front, due primarily to a tax rule effective this year that requires companies to capitalize and amortize R&D expenses rather than deduct them in the current year, we expect our fiscal '23 non-GAAP effective tax rate to increase to approximately 23% to 25%. However, we anticipate that under this rule, our effective tax rate will decrease and may return to a normalized range in about five years as additional years of R&D expenses are amortized for tax purposes. There appears to be strong legislative support for delaying or eliminating this rule, which we’re watching closely. I'd note that without the impact of this rule, our non-GAAP effective tax rate would be in our more typical mid-teens range.
In closing, we had an outstanding fiscal Q4 and fiscal year 2022. Going forward, we will focus on the best opportunities to enable the company to continue to grow both revenue and profitability over the long term.
Finally, I want to thank Thurman for his leadership and contributions to Cirrus over the past two decades and for building a world-class finance organization.
And before we begin the Q&A, I'd like to note that while we understand there is intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we will not discuss specifics about our business relationship.
With that, let me turn the call to Chelsea to start the Q&A session.
Thanks, Venk. We will now start the Q&A portion of the call. [Operator Instructions] Operator, we are now ready to take questions.
Thank you, Ms. Chelsea. [Operator Instructions] Our first question comes from the line of Tore Svanberg of Stifel, Nicolaus & Company. Your line is open.
Yes. Thank you. Congratulations on the strong results. And Venk, congratulations to you and look forward to working with you. My first question is on seasonality. So we all know that this year, the seasonality is a little bit off, especially in the first half of the year. I was just hoping you can maybe talk a little bit about some of the puts and takes for the seasonality for the second half. Obviously, you're not going to give us annual guidance, but just given the seasonality was so weird here in the first half of this year, how do you expect it to trend in the second half?
Yeah. Thank you, Tore. This is John. Well, we've certainly seen a very strong March quarter. And then, as you can see, very strong guidance for the June quarter. It's -- we're not going to guide further out at this point, and it's difficult for us to provide much more color on that. I think one of the big benefits of our business is that we ship multiple products into multiple generations of our customers' devices. But given that and given the fact that supply is still really running as hard as it can just to catch up with demand for current generation devices almost by definition all visibility is very limited.
Very good. And as my follow-up; and you mentioned a little bit in the shareholder letter, the sound wire technology being a very important trend for your business. I assume it's still very early days in your penetration into the laptop market. But I was hoping perhaps you could address that in a bit more detail. What does SoundWire really do for the market opportunity? And then I assume as a follow-up, you'll also get perhaps some power products in the notebook as well.
Thank you, Tore. Yeah. The sound wire opportunity that we referred to is specifically around laptop computers. And in particular, a shift that we anticipate there towards SoundWire-connected boosted amplifiers and potentially some codec products with SoundWire capability as well.
That's an evolution of the laptop architecture and is really what we've been shooting at in our approach to the laptop market. That was the transition that we saw coming in the laptop space a couple of years ago, believed it was going to make laptops look more and more like smartphones architecturally, and thereby give us a great opportunity to leverage a lot of IP that we've deployed very successfully in audio in the smartphone space, where we've obviously got a leadership position, and leverage that into the laptop market as a relatively close adjacency.
It is early days there. So we saw some good revenue in the laptop space driven by legacy products really as a result of the -- what happened during COVID. But the longer-term strategic story for us is around new products, boosted amplifiers based on SoundWire, codecs and so on.
And that’s really -- we’re still, as you say, in early innings. That’s really something we’ll start to see be more meaningful once we get out to FY ‘24 also.
Thank you, Tore. Look forward to working with you as well. And operator, we’ll take the next question.
Our next question comes from the line of Matt Ramsay of Cowen and Company. Please your question.
Hey, this is Joshua Buchalter on behalf of Matt. Congratulations on the great results and guidance. And thank you for taking my question. I guess I just wanted to start with, I guess, the near-term results in June guidance. You took a pretty conservative tone last quarter and clearly, there have been a lot of moving parts. But things are coming in better than you initially expected despite some -- a choppy smartphone backdrop. I guess I'm just wondering, if we look back a couple of months, what changed? What's allowing you the much higher confidence in that June quarter as we sit here in May, I guess, versus a couple of months ago? Thank you.
Yeah. Thanks, Josh. Well, when we guided the March quarter and provided that commentary on the June quarter, we anticipated a stronger than normal March quarter with a demand pause coming in June. And that was based on everything that we could see and believed at the time.
As you can see from both the results for the March quarter and the June guidance that we're giving now, demand has frankly continued to be stronger than we expected. So the step down from March to June on a sequential basis is still larger than we would typically see, based on normal seasonality. But really, the story here is a very strong customer demand and our continuing efforts to fulfill that on the back of a very successful product cycle.
Understood. Thank you. And then congratulations as well on your respective transitions. Venk, I know it's only been a few weeks, but anything you could share of your observation in the new role? And things [indiscernible] from the balance sheet? And any initial thoughts there on best ways to deploy that? Thank you.
Yeah. Thank you, Josh, and look forward to working with you as well. So a great question. So in terms of what I've seen, and obviously, it's been a couple of weeks. But clearly, Cirrus has a tremendous track record of both technology and product innovation as well as operational excellence to basically meet and deliver on all the customer requirements. And that's demonstrated amply with the great success that the company has had, not only with their marquee customer, but across the board, and in terms of just expanding the market opportunity that the company has delivered over the last few years with diversification into high-performance mix solutions and such. And also we have very good finance team that I'm happy to be a part of.
And as it relates to your question about what we see with regards to use of cash and so forth, as you pointed out, we have a very strong balance sheet. And the company has had a pretty good track record of generating significant amounts of cash flow on a consistent basis.
So as it relates to how we look at the opportunities ahead, we still see quite a bit of opportunities to invest in R&D. There's a significant pipeline of opportunities that the company was to pursue. And we intend to do that. We clearly will be very focused on, on operational excellence. And to the extent that we can have leverage on the SG&A side, we will deliver that.
And as it relates to just use of cash, you've seen us be a very frequent buyer of our stock. And also, we have the flexibility to do opportunistic M&A. And as it relates to M&A, we want to be disciplined, we want to identify what the strategic fit is and ensure that we fill portfolio gaps on an as-needed basis. But we will be very focused on the strategy on the fit and ensure that we pay a decent valuation for it as well. So lots of things to do. But overall, the company is in a great position, outstanding opportunities that we still see ahead of us. And lots of optionality in terms of how we deploy the cash. Thank you.
You are next, Blayne Curtis of Barclays. Please ask your question.
Good afternoon. This is Tom O'Malley on for Blayne Curtis. How you guys doing. I just wanted to -- noise in the background there. I'm not sure what that is. I just wanted to ask a first question. You're normally pretty good in some bread crumbs in the release looks like you mentioned the next-generation device that will further future performance enhancement both and converter and processing capability. Could you just talk about what that product will be focused on? I think you mentioned it for CSC. What is the ASP uptick in my get with that? Where it might go?
Tom, we had a little difficulty following the audio there, but I will take a run at it and hopefully get near the mark. It sounds like you were asking about some commentary we gave on next-generation camera controller device that we have in line for second half product launches this year.
Yeah, that's an evolutionary upgrade from for existing camera controller devices. As you know, in that area, we have differential attach rate across SKUs, across generations. And then this maybe adds a little to the complexity as well by being a second variant of the camera closed-loop controller in there. It will give us a small bump in blended ASP on the camera side. I think the bigger picture, as I've said, is that I believe we have the ability to continue to grow the camera-related content year-on-year for the foreseeable future as we continue to support the customers' ambitions to deliver outstanding user experiences there.
So we're -- other than that, I don't want to get into talking about our customers' products.
Thank you. And forgive the feedback here. I'm not sure what that -- just one more. There's been talk about next gen auto focus proliferating in motor largest customer and others. Could you just talk about what that means? [Indiscernible] you guys address that in any particular way that you could be another content increase for you or another socket?
Well, in general, there are certain camera features where we really want to enable our customers to continue pushing the performance envelope. So we're concentrating very hard on that. So when we take advantage of being on very advanced geometries, advanced process nodes for mixed signal, it allows us to build more and faster processing into the camera controller chip. That will -- basically, as you know today, one of the things that we're doing is driving autofocus. One of the things that we're doing is driving is optical image stabilization. And so more processing, faster processing, translates into better performance for those features.
Thanks, Tom. Do you have a follow-up?
That's all. Thank you, guys
Thank you, Tom. Thank you.
Our next question comes from the line of Christopher Rolland from Susquehanna. Your line is open.
Hey, guys. Thanks for the question. And welcome, Venk. I wanted to review your expectations versus your results, or at least the guidance for the June quarter. I know you guys said it was units in your release. But I guess I'm trying to understand what your expectations were, and why such a difference for June? It seems like the seasonality in June is much more normal, and we would have expected this. Why did you think it was going to be different?
Chris, I think I've given that answer. We base our -- we didn't guide, but we gave -- we did give some commentary given that at the time, based on everything we could see, which is obviously based on all the interactions we have with our customer and through the supply chain, that we anticipated the demand pause is coming during the June quarter. And so as I said, while step down between March and June is more than you'd typically see between the March and June quarters on a sequential basis, it's obviously still the case that we have a very strong June, which is just indicative of the underlying very strong demand that we're seeing.
Okay. Thanks, John. And then secondly, we've been looking at some teardowns recently, and you guys have been making some progress in Android, which is great. I was wondering if maybe you could give us some expectations for Android perhaps for this year. Is this an inflection year in Android? Maybe talk about your outlook.
Yeah, thanks. We’ve been making good progress in Android both in the boosted amplifier space which is obviously be a part of our strategy to maintain our smartphone audio leadership and in Haptics, we’ve seen our latest generation Haptics device come to market in an Android flagship very recently.
We don't break it out. We don't break Android out and break it out quarter-by-quarter. But I can give you a little color that fiscal '22 was very strong, certainly relative to fiscal ’21 and fiscal ’20. So we have good momentum there. I would, though, also say it's been supply constrained. And I would envisage that will be the case to all of fiscal ’23. I don’t think that’s going to change during that timeframe.
Thanks, John.
Yeah thanks.
Operator, we have time for one more question.
Our last question comes from the line of Tore Svanberg of Stifel. Please ask your follow up.
Yes. I had a follow-up on your power products. You mentioned the 22-nanometer process, obviously, the 45 that allows you to do more programmability. I was just wondering, are you able to do programmability both in power and battery management? Or would be one or the other?
So just to pull apart a couple of threads there, Tore. In general, as we go down the nodes, we can pack in more digital processing. That's appropriate for some of our products. It's more appropriate for some than others. Right now, our power products are typically on 55-nanometer, or in the case of fast charging, on higher nodes.
But overtime, we believe that there will be more digital control logic in the power products. So that -- and that would be on -- that would cover battery management, battery health, charging components and so on. And that is, I believe, a reason why having investment in advanced nodes for mixed signal that we have today and doing the kind of heavy lifting to get our power IP on those nodes is going to pay dividends in the long run.
Thanks, Tore. Do you have a follow-up?
Thank you, operator. With that, we will end the Q&A session. And I will turn the call back to John for his final remarks.
Thank you, Chelsea. In summary, in the March quarter, Cirrus Logic delivered record fourth quarter revenue and earnings per share, driven by strong execution across our three strategic pillars, those being: Maintaining our leadership position in audio; broadening sales of audio components in key profitable applications beyond smartphones; and third, applying our mixed signal expertise to expand into new adjacent markets. We're excited about the opportunities we see ahead, and we thank you for your continued interest in Cirrus Logic.
Before we close, I'd also like to note that we'll be participating in the Cowen conference on June 1 in New York, and the Stifel conference on June 7 in Boston. Please check our investor website for the details.
If you have any questions that were not addressed, you can submit them to us via the Ask the CEO section of our investor website. I’d like to thank everyone for participating today. Goodbye.
This concludes today's conference call. Thank you again for participating. You may now disconnect.
Goodbye.