Q3 2025 Cirrus Logic Inc Earnings Call

Speaker Change: Q&A session. At this time, all participants are in a listen-only mode.

Speaker Change: After a brief statement, we will open up a call for questions from analysts.

Speaker Change: Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call 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, Seros Logic's Chief Executive Officer and Ulf Habermann, our Interim Chief Financial Officer.

Speaker Change: Today at approximately 4 p.m. Eastern Time, we announced our financial results for the third quarter fiscal year 2025. The shareholder letter discussing our financial results, the earnings press release, and the webcast of this Q&A session are all available at the company's Investor Relations website.

Speaker Change: This call will feature questions from the analysts covering our company. Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that exclude certain items.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Please refer to the press release and the shareholder letter issued today, which are available on our website.

Speaker Change: and the latest Form 10-K, 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. Now I'd like to turn the call over to John.

Thank you Chelsea, and welcome to everyone joining today's call.

John Forsyth: As you've seen in the press release, in the December quarter, Cirrus Logic delivered revenue of $555.7 million, above the top end of our guidance range.

John Forsyth: In a moment, I'm going to hand the call over to Ulf to discuss the financial results for the quarter in detail, as well as our outlook for the March quarter. But before we move on to that, I'd like to make a few comments about the recent progress we've made on our company strategy.

John Forsyth: As many of you are aware, our long-term strategy for growth at SURIS is based around three principles.

First, maintaining leadership in our core flagship smartphone audio business.

John Forsyth: Second, expanding the value and range of high-performance mixed-signal functionality in which we serve our customers in smartphones and similar products.

John Forsyth: And third, leveraging that world-class expertise and IP in both audio and high-performance mixed signal areas to grow and broaden our business in new markets.

John Forsyth: I want to now speak to our recent progress in each of those areas.

John Forsyth: In our flagship smartphone audio business, during the quarter we were delighted with the success of our latest generation custom boosted amplifier and our first 22 nanometer smart codec, both of which began shipping in recent smartphones.

John Forsyth: These products represent years of engineering effort and a deep and collaborative relationship with our customer.

John Forsyth: We're proud of the crucial role they play in enhancing the power efficiency and exceptional audio quality of our customers' latest products.

John Forsyth: We also anticipate that these components will be used in multiple generations of smartphones over a number of years, giving us excellent longer-term visibility and an opportunity for sustained revenue contribution.

John Forsyth: Outside of our custom audio solutions, we also continue to engage with customers with our general market products on next generation flagship smartphones. And during the December quarter, a leading Android OEM introduced their latest flagship smartphone featuring three SiriusLogic components, including two boosted amplifiers and a haptic driver.

John Forsyth: Beyond audio, our goal is to continue to broaden our high-performance mixed-signal content in smartphones, where we see a meaningful opportunity to not only expand our addressable market, but also to grow and diversify our revenue.

John Forsyth: Our progress in this area has been demonstrated through the continued success of our camera controller product line, as the total value of our camera content has increased over the last few years.

John Forsyth: With the latest generation of devices, we are benefiting from a more favorable overall mix of smartphones on the market that include these camera controllers. And this more favorable mix contributed to today's robust results.

John Forsyth: We also believe there is significant potential to continue to grow value in this area in the future. And we are today investing in a roadmap of further products and features in pursuit of that goal.

John Forsyth: The third principle of our strategic plan is to leverage our audio and high-performance mixed-signal expertise into new applications and markets outside of smartphones, such as laptops.

John Forsyth: Although we are still in the early stages of revenue contribution from our laptop components, we were pleased with the milestones we achieved during the past few months.

John Forsyth: First, our audio solutions were featured as part of the Intel Arrow Lake reference design.

John Forsyth: Second, amid a significant number of laptop announcements at CES 2025, a leading laptop OEM introduced a high-volume commercial mainstream laptop that utilizes the Soundwire interface and features our latest PC codec and power conversion IC.

John Forsyth: Lastly, we're excited to have started sampling our next generation PC amplifier and codec, which we anticipate will broaden our portfolio further and address a wider range of the laptop market as customers seek to deliver improved performance across tiers and retail price points.

John Forsyth: While we are very excited about our potential for growth in the PC market, we also see opportunities to expand our business in other new markets.

John Forsyth: As part of this effort, during the quarter we began sampling a series of timing products designed to enable superior audio experiences in automotive and professional audio applications.

John Forsyth: We're encouraged by the early customer interest and the strategic opportunities ahead of us in these markets.

John Forsyth: Finally, before we get into the deep dive on our results, I'd like to take a moment to highlight the leadership announcement we made earlier today.

John Forsyth: We're delighted that Jeff Willard will be joining CirrusLogic as Chief Financial Officer later this month.

John Forsyth: Jeff brings considerable experience in the semiconductor industry, as well as a proven track record in finance, strategy, and M&A.

John Forsyth: I believe his deep industry knowledge and financial expertise will be a considerable asset as we continue to execute on our strategy to drive growth in our existing business while expanding into new markets.

John Forsyth: All of us at Cirrus are excited to have Jeff join the team.

John Forsyth: I would also like to take this opportunity to thank Ulf Habermann for his leadership as Interim Chief Financial Officer while we conducted this search. Ulf is an outstanding member of the Serious Logic organization and I look forward to continuing to work with him in his role as Principal Accounting Officer, Treasurer and Senior Vice President of Finance.

John Forsyth: And with that, let me now turn the call over to Ulf to provide an overview of our financial results as well as the outlook.

Ulf Habermann: Thank you, John, and good afternoon everyone. I will start with a summary of our financial results for third quarter fiscal 2025 and then provide guidance for Q4 FY25.

Ulf Habermann: In Q3 FY25, we delivered revenue of $555.7 million, significantly above the top end of our guidance range.

Ulf Habermann: It is stronger than expected demand for product shipping into smartphones.

Ulf Habermann: On a sequential basis, revenue was up 3%, primarily due to higher smartphone unit volumes.

Ulf Habermann: On a year-over-year basis, sales were down 10%, primarily driven by lower smartphone unit volumes, in part due to the timing of our fiscal quarters. This was partially offset by increased revenue associated with our latest generation products.

Ulf Habermann: Also, as we indicated in our Q2 FY25 shareholder letter, when comparing our December quarter to the equivalent quarter last year, we would note that in FY25, our December quarter began one week later.

Ulf Habermann: Thus, it encompassed one week less of the higher-volume production associated with typical seasonal product ramps.

Ulf Habermann: Additionally, in FY25, our December quarter included one less week of revenue when compared to the equivalent quarter the prior year, as FY24 was a 53-week fiscal year.

Ulf Habermann: Turning to gross profit and gross margin. Non-GAAP gross profit in the quarter was $298.1 million, and non-GAAP gross margin was 53.6%.

Ulf Habermann: On a sequential basis, the gross margin increase of 140 basis points was mostly driven by shift and mixed towards higher margin products and, to a lesser extent, lower supply chain costs.

Ulf Habermann: The 230 basis point increase year-over-year was largely due to a shift in mix with higher margin products. This was partially offset by higher inventory reserves and supply chain costs.

Now I'll turn to operating expenses.

Ulf Habermann: Non-GAAP operating expense for the third quarter was $129.2 million. On a sequential basis, OPEX was up $2.5 million, primarily due to higher employee-related expenses.

was up $3.6 million largely due to higher employee-related expenses.

This was partially offset by an increase in R&D incentives.

Ulf Habermann: Non-GAAP operating income for the quarter was $168.9 million for 30.4% of revenue.

Ulf Habermann: Turning now to taxes. For the December quarter, our non-gap tax rate was 21.8% in line with our previous guidance.

Ulf Habermann: And lastly, on the P&L, non-GAAP net income was $138.3 million, resulting in earnings per share for the December quarter of $2.51.

Let me now turn to the balance sheet.

Ulf Habermann: Our balance sheet continues to be strong, and we ended the December quarter with $816.6 million in cash and investments.

Ulf Habermann: Our ending cash and investments balance was up $110 million from the prior quarter as cash generated from operations was partially offset by share repurchases.

Ulf Habermann: We continue to have no debt outstanding and have $300 million undrawn on our revolvers.

Ulf Habermann: Inventory at the end of the third quarter was $275.6 million, up from $271.8 million in Q2 FY25.

Ulf Habermann: Days of inventory were up slightly sequentially, and we ended the quarter with approximately 98 days of inventory.

Ulf Habermann: Looking ahead in Q4 FY25, we expect an increase in inventory dollars from the prior quarter.

Ulf Habermann: We anticipate inventory will continue to increase and peak in the first half of FY26 as we continue to fulfill demand and manage our wafer purchase commitments per our long-term capacity agreement with global foundries.

Ulf Habermann: Turning to cash flow. Cash flow from operations was $218.6 million in the December quarter, and CapEx was roughly $6.7 million, resulting in a non-GAAP-free cash flow margin of roughly 38%.

Ulf Habermann: For the trailing 12-month period, cash flow from operations was $484.5 million, and CapEx was roughly $27.3 million. This resulted in a non-GAAP-free cash flow margin of roughly 25%.

Ulf Habermann: On the share buyback front in Q3, we utilized $70 million to repurchase approximately 679,000 shares of our common stock at an average price of approximately $103.

Ulf Habermann: At the end of Q3 FY25, the company had $154.1 million remaining in its share repurchase authorization.

Ulf Habermann: We expect to continue to return capital in form of stock repurchases, which we believe will provide a long-term benefit to shareholders going forward.

Ulf Habermann: Now on to the guidance. For Q4 of FY25, we expect revenue in the range of $350 million to $410 million.

Ulf Habermann: GAAP gross margin is expected to range from 51% to 53%. Non-GAAP operating expense is expected to range from $119 million to $125 million.

Ulf Habermann: We expect our FY25 non-GAAP tax rate to be approximately 22% to 24%, unchanged from our previous guidance.

Ulf Habermann: This ranges slightly higher than our FY24 tax rate, which was impacted by a favorable catch-up benefit related to updated IRS guidance on the R&D capitalization rules.

Ulf Habermann: In closing, we delivered strong results for the December quarter as we continue to execute on our strategy to grow our business and drive long-term shareholder value.

Ulf Habermann: Before we get into Q&A, I would like to note that while we understand there's intense interest related to our largest customer, in accordance with Sears Logic Company policy, we will not discuss specifics about our business relationship.

Chelsea Heffernan: With that, let me now turn the call to Chelsea to start the Q&A session.

Chelsea Heffernan: Thanks, Ulf. We will now start the Q&A portion of the earnings call. Please limit yourself to a single question and one follow-up. Operator, we are now ready to take questions.

Speaker Change: At this time, if you'd like to ask a question, simply press star followed by the number one on your telephone keypad. We'll take our first question from the line of Tors Van Berg with Stiepel. Please go ahead.

Speaker Change: and many others. Thank you for watching. I hope you enjoyed this video. If you did, please click the like button and subscribe to my channel. I'll see you in the next video.

Speaker Change: Yes, thank you, and congratulations on the results, especially the cash flows. I had a question on your timing business.

John Forsyth: John, this is obviously new, and I was just wondering, are you leveraging sort of the old MEMS IP you have here, or, you know, should I think about, you know, the technology here as being something that you have more recently developed?

Speaker Change: Thank you, Tori. Yeah, this is not Leveraging MEMS IP. When we got out of MEMS, we really did get out of MEMS. This is a new IP we've developed.

Speaker Change: with a few opportunities in mind that we we see for this technology.

Speaker Change: One of those we mentioned in a series of announcements last year around the pro audio market and then one of the other

But key target markets for that is the automotive market.

So that's very much a long-term project for us.

Speaker Change: Just given the lead time and the lag in the auto industry, so we don't expect anything material.

Speaker Change: and Timing Products for Automotive. And as in-car networks become more prevalent and there are more audio zones.

Speaker Change: and more speakers and more channels and so on, the need for low jitter clocks and great timing products increases and that's what we're serving there. So as I say, it's very much a long-term project, although that particular product or some of those products have been...

Speaker Change: already specified as part of a future platform by at least one Tier 1 OEM. So we're very optimistic about it long term, but it will be some time before it moves the needle.

Amit Shah: and Amit Shah. Thank you. Thank you. Thank you. Thank you.

Speaker Change: very good and that's my follow-up so I do know you're in a fiscal year but this is the beginning of a new calendar year obviously you know you have constant growth sort of happening

Amit Shah: you know pretty consistent every year because of the cascading effects and so on and so forth but as we think specifically about you know calendar 26 is this going to be more sort of a unit growth year or is there some more material content growth that you could potentially speak to?

Amit Shah: Yeah, I think we always stop shy of talking about unannounced customer products, obviously, but I have previously said this isn't a major content year for us on the smartphone side.

Amit Shah: That said, we always aim to be in a position to grow in a flat units environment. We don't want to be depending on units tailwinds. We can do better than that.

Amit Shah: So, we do still see some favorable tailwinds over the next year. One of those in the smartphone space, of course, is that cascading effect. In particular, we see that kind of continued year-on-year.

Amit Shah: accretion of the value of our camera content. That gives us a favorable tailwind as we go into the next cycle. And then, of course, we're we're anticipating growing momentum in the laptop space this year as well.

Speaker Change: Our next question comes from the line of Thomas O'Malley with Barclays. Please go ahead.

Thomas O'malley: consistently as the quarter went along, or did something change at some point in the quarter that got you to the better results here from a unit perspective?

Speaker Change: Yeah, Tom, thank you. That's a great question. Actually, one of the things that we saw during the December quarter was more sustained demand than would be typical for a December quarter pattern.

Speaker Change: So I've said elsewhere that it's not unusual. In fact, in the majority of years, we'd see some kind of demand modulation during the December

and its statistics.

Speaker Change: that we saw from our customer was was very steady and in fact increased slightly relative to when we guided. And then of course that was one of the factors along with you know new content from us there that drove the strong results.

Speaker Change: And then, if I look at your June quarter, as well as some of the March quarter, I know that you guys can't...

Speaker Change: tell what devices you're being shipped into, but you can see mixed particularly given that you've updated the codec in this last generation. So has there been any mixed shift to any more of the legacy product that you're shipping at the end of the December quarter or into the March quarter to this point? I just want to understand if there's any mixed dynamic that's changing here into the March quarter at all. Thank you.

Speaker Change: I don't think we've seen anything pronounced from a mixed shift perspective.

Speaker Change: We can quite clearly identify what's shipping into new devices, but when it comes to older generation devices or any products which are using

Speaker Change: devices that we're shipping that have been in the market for some time. We have a relatively low resolution view of that. We don't know exactly...

Speaker Change: you know how that breaks down but I think if you look so far as I'm aware if you look from the the December quarter through to now we didn't see anything significant change from a makeshift perspective.

Speaker Change: Our next question comes from the line of David Williams with The Benchmark Company. Go ahead.

Speaker Change: and many more. Thank you for watching. I hope you enjoyed this video. If you did, please like and subscribe. I'll see you in the next video.

David Williams: Hey, good afternoon. Thanks for taking my questions, and congrats on a really solid quarter. I guess maybe my first question is just on the gross margin side. Clearly a few different drivers there, and you pointed to some of those in the script. But if I'm not mistaken, this looks like a record high, at least as far as my model goes back. So just kind of curious what the drivers are there and how much of that is really driven by the new products, maybe into your largest customer, versus some of the products that are going into some of these other markets that you've had success in.

with

Speaker Change: Yeah, of course. So we don't break out in detail all the moving pieces associated with gross margin. It's obviously, though, a function in large part of our supply chain costs and overall product mix, and it can move around a lot, in particular in periods of introduction of new products.

Speaker Change: If you look back over the over the the whole fiscal year or over the past few quarters in fact

Speaker Change: and when we were guiding below a long run average, that was at the beginning of the ramp of new products. And you typically do see headwinds on supply chain costs at that time.

Speaker Change: And there's a huge amount of work to kind of get that yield curve, you know, progress along the yield curve.

Speaker Change: improved test times and so on and that's a big part of what the team has has focused on over the past few months since we since we started ramping these products to

Speaker Change: to do the best job we can on efficiency and driving down supply chain costs. So that obviously plays a big part along with overall product mix in driving the results that we reported.

Speaker Change: Thanks and I appreciate the color there and as a follow-up, just kind of curious if you could size the market for the laptop side, sounds like you've got some new products kind of moving down the tiers more maybe for the broader market, can you talk maybe about that, your expectations there and maybe what the laptop market could potentially be if we look at a couple of years in terms of revenue, thank you.

Speaker Change: Yeah, absolutely. So from a unit's perspective, if you take the overall laptop market and say, you know, they call it between 200 and 220 million units, depending on your research source, we think we should be able to address somewhere approaching half of that.

Speaker Change: and the products, the new products that we referenced in the shareholder letter are an important part of that strategy in supporting a wider range of price tiers and a wider range of configurations of content, different audio architectures and so on.

Speaker Change: So, we think, the way we categorize the tiers is that in really anything above the kind of $800 price point.

Speaker Change: is highly relevant to us. And of course, there'll be cases where we're aiming at products below that. But that really does put you firmly in the kind of mainstream bracket.

Speaker Change: and gives you roughly half the market to shoot for. Within that range of units, there'll be a fairly broad spectrum of different content configurations. It could be anything from...

Speaker Change: a single piece of content, maybe rounding to a dollar, up to high single digits, where we have a mixture of amplifiers, haptics, power converters, and a codec.

Speaker Change: So when we think further out about the size of the market, I'm not going to put a revenue number on a couple of years out, but we do see a kind of continued

Speaker Change: solid growth opportunity for us here. I said, you know, the previous color I've given on

Speaker Change: We were targeting low tens of millions in fiscal 25. So as I mentioned in the letter, we're tracking in line to that as we approach the kind of home straight of fiscal 25.

Speaker Change: And then we expect that to, depending on the overall demand picture, based on the designs that we have secured to date, we would expect that to roughly double during fiscal 26.

Speaker Change: and then beyond that we see a good opportunity for meaningful step ups in revenue from there in subsequent years.

Speaker Change: Our next question comes from the line of Christopher Rowland with Susquehanna. Please go ahead.

Christopher, your line might be on mute.

Thank you. Thank you, operator.

Speaker Change: So, you guys used to talk about HPMS being potentially a parity with audio as a percentage of revenue at some point in the future.

Speaker Change: You know, obviously this is a strong cycle for audio for you guys. I think audio is 62% of total.

Speaker Change: So I guess my question is, do you still expect HPMS to match audio at some point in the future? And what might be a rough time frame for this?

Speaker Change: you know, a year or two years or much more than that. And, you know, what, what has to happen for, for parity there between those segments? Thanks.

Speaker Change: Yeah, thanks, Chris. I do think so, yeah. It's not in a year, I don't think, but as we look a bit further out, you know, within our planning horizon,

Speaker Change: It is certainly something that we think is a very real opportunity. So yeah, we are in a period where actually our audio content accelerated a bit in this fiscal year.

Speaker Change: We're obviously very happy about that. So the kind of parity point was really to convey how large of an opportunity we see with HPMS. It's not that we don't want to grow audio as well, obviously, but when we look further out,

Speaker Change: Really, HPMS actually represents the larger part of the SAM that we see ahead of us. So in our investor presentation, you'll see we talk about a roughly $9 billion SAM in 2028 that we think is in front of us and

Speaker Change: Audio comes in at just a little over a third of that.

So we we see

Speaker Change: significant opportunity to expand in HPMS and that that is kind of disproportionately large relative to to audio.

Speaker Change: And as I said previously, that will be a mixture of components, whether that's a camera or haptics or power-related. We have a number of irons in the fire on the HPMS front and believe that they all represent a good opportunity to drive growth.

Speaker Change: So you spoke about a number of R&D programs for battery and power management. I guess, first of all, I was wondering if you could talk about the investment, when you think that investment in R&D might peak.

Speaker Change: And then, are these products ready for revenue today, or when might we see these products ramping for revenue?

Speaker Change: and many more. Thank you for watching. I hope you enjoyed this video. If you did, please give it a thumbs up and subscribe to my channel. I'll see you in the next video.

Speaker Change: and many more. Thank you for watching. I hope you enjoyed the video. If you did, please like, comment, and subscribe. I'll see you in the next video.

Chris: Thank you, Chris. We are shipping a range of power-related products for revenue today, both in our custom silicon business and in the general market. So power is something that we ship into both Android devices and laptops, for example. But when we talk about

the

Speaker Change: I'll call this out since you mentioned power management. Typically, we think less of conventional power management and more around power control, conversion, and sensing with.

Speaker Change: particular focus on stuff around the battery. So either either side of the battery, but really leveraging our extremely high precision sensing capability and our ability to kind of package that with a lot of

digital enabling, fine-grained control and signal processing.

Speaker Change: alongside the analog. So where we're at today in relation to those is we have some we have some great IP and silicon

Speaker Change: Some of that has been shown to customers, some of it will be shown to customers before too long. And, you know, we're kind of working the playbook, which is very familiar to us, to...

Speaker Change: take those innovations forward to Socket. So we're still, you know, we're still some way off that. And we'll obviously kind of give more color as things progress.

but we, you know, we're very familiar with the...

Speaker Change: with the process around securing high-value sockets in the HPMS domain. You're not going to win one without showing very, very innovative IP in silicon.

Speaker Change: And so at this point, we're, you know, we feel in a good spot with IP that we've got in test silicon, and we're looking forward to taking it forward from here.

Speaker Change: Our next question comes from the line of Gary Mobley with Loop Capital. Please go ahead.

Thank you. Thank you. Thank you.

Gary Mobley: Hi, everybody. Thanks for taking my question. I know you're not going to give too many details or any with respect to your largest customer, but, you know, clearly there's a lot of

Gary Mobley: early speculation that maybe that largest customer might move to a multi lens horizontal configuration for camera.

Gary Mobley: especially the premium tier, maybe some thinner designs in the lower tier, and maybe even some foldable designs and without, you know, maybe

Speaker Change: talking about your customers specifically there. Maybe if you can just talk in general about how those types of configurations and designs might affect your content in camera, haptics, power-related content, and whatnot.

Speaker Change: Well, we're certainly very, very proud of what we've done over the past few years in helping to enable innovation in cameras where the launch.

Last fall was our fifth successive generation of camera controller.

Speaker Change: of customer product shipping with our camera controllers in there. And there have been some really, really meaningful innovations in that time. I would say that's one of the areas when I look across all our engineering, that's one of the areas where we work most tightly with our customer teams.

More features.

Speaker Change: more functionality for the future, but it's clearly something that would be extremely discreet about what's involved in that. When we think about different form factors,

Speaker Change: form factor devices, devices with hinges and so on because we've you know we've we've been shipping in folding devices

Speaker Change: for several years now, for example, and what we see is that represents great opportunities.

Speaker Change: for us in certainly in audio and potentially a haptic space.

Speaker Change: because typically, well, for a variety of reasons, one would be that you don't necessarily want too much stuff going across the hinge if you can avoid it. Another would, another, another.

Speaker Change: reason why it creates opportunity is that often the devices have multiple

Speaker Change: modes of use when they're folded and when they're unfolded that leads to

Speaker Change: Quite often in the case of audio functionality, that leads to more microphones, different configurations of microphones, and requirements for processing in, you know, in different device orientations and so on. And all of that kind of drives

Speaker Change: new features and new requirements for us. That's what we've seen in kind of novel form factor devices that we've been shipping in for a few years.

Speaker Change: Okay, appreciate that. So my follow-up, I wanted to ask about the Android Win that you highlighted in your prepared remarks. I think you mentioned three audio products in use there.

Speaker Change: And I presume this is for some of your general purpose products, because I don't think you really...

Speaker Change: go into the Android market with application specific products or custom products. So, you know, my question is, you know, with this general purpose approach into the Android market, you know, are there ample opportunities and could it ever be a sizable portion of revenue for you?

Speaker Change: You know, when we think about Android, I've been pretty clear over the past couple of years that we treat that...

Speaker Change: largely on an opportunistic basis and the reason for that is that we anticipated headwinds in China largely due to geopolitical reasons.

Speaker Change: and because we feel there are larger opportunities for us elsewhere. So, for example, in the laptop space.

Speaker Change: flagship sockets in both audio and haptics with multiple Android OEMs based on products that we have today. And those are leveraging IP that we've we've developed over the years.

Speaker Change: and have shipped into many, many Android phones. So we continue to serve our customers there and...

Speaker Change: You know, grow revenue where we can and win sockets where we can and where that's kind of economically attractive to us. But the focus for our R&D investment is on growing in other markets.

And we have time for one more question.

Speaker Change: Our final question comes from the line of Tori Stanberg with Stiefel. Please go ahead.

Tori Stanberg: Thanks Chelsea. Just one follow-up. Your SG&A has been consistently around 6-7% revenue here for many, many years. I'm just wondering as you continue to venture into new markets,

Tori Stanberg: do you have to invest in sort of a new sales or the deficient or.

Tori Stanberg: You know, should we think of your, you know, entrance into the automotive market, for instance, kind of more similar to laptop where, you know, it's more, more based on a reference design where you don't need that, you know, that big of a sales force.

Tori Stanberg: I would say, Tori, you know, if you think about it,

Tori Stanberg: The SG&A level that we're at, we're pretty comfortable with. I don't see that significantly changing into the future, even if we tackle new markets. We do have opportunities to also look at where our existing investments are, reallocate that a bit, and I don't see us growing that to support those markets.

Great, thank you, Ulf.

Tori Stanberg: And with that, we will end the Q&A session, and I will now turn the call back over to John.

Thank you Chelsea.

Tori Stanberg: In summary, in Q3 Fiscal Year 25, SiriusLogic delivered outstanding results for the December quarter as we experienced strong demand for components shipping into smartphones.

Tori Stanberg: We continue to make solid progress in each of the three key areas of our long-term strategy and remain very excited about the opportunities in front of us.

Tori Stanberg: I'd like to thank you for your continued interest in our progress and to thank our employees for their incredible dedication and commitment.

Thank you for participating today. Goodbye.

Tori Stanberg: That will conclude today's call. Thank you all for joining. You may now disconnect.