• Revenue: $257.7 million, up 8% year-over-year and 4% sequentially.
• Core IoT Revenue: Increased 55% year-over-year and 10% sequentially.
• Enterprise & Automotive Revenue: Improved 3% sequentially, down 5% year-over-year.
• Mobile Product Revenue: Up 14% year-over-year and 3% sequentially.
• Non-GAAP Gross Margin: 53.9%, above the midpoint of guidance.
• Non-GAAP Operating Income: 16.7%, up over 400 basis points year-over-year and 200 basis points sequentially.
• Non-GAAP Net Income: $32.5 million.
• Non-GAAP EPS: $0.81 per share, up 56% year-over-year and 27% sequentially.
• Cash and Cash Equivalents: $854 million, down $23 million from the prior quarter.
• Cash Used in Operations: $11.4 million.
• Capital Expenditures: $9.1 million.
• Depreciation: $7.2 million.
• Receivables: $135.8 million, with days sales outstanding at 47 days.
• Inventory: $119.6 million, with 93 days of inventory.

• Warning! GuruFocus has detected 4 Warning Sign with SYNA.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Revenue increased 8% year-over-year, driven by strong Core IoT product sales, which were up 55% compared to the prior year.
• Non-GAAP EPS grew by 56% year-over-year, indicating strong profitability improvements.
• The Core IoT design pipeline has grown nearly 30% since last year, supporting a compounded revenue growth of 25% to 30% over the next five years.
• Synaptics Inc (NASDAQ:SYNA) is on track to sample its first Wi-Fi 7 device for the IoT market, positioning itself as a leading player in the next few years.
• The company plans to return capital to shareholders through share repurchases, indicating confidence in its financial health and future prospects.

Negative Points

• Automotive product revenue declined year-over-year due to market slowdown and decline in legacy products.
• Enterprise & Automotive product revenue was down 5% on a year-over-year basis, indicating challenges in these segments.
• The video interface products, although improved, are still 40% or more below the normal run rate.
• The BLE (Bluetooth Low Energy) strategy is tracking behind expectations, which could impact future growth projections.
• Cash used in operations was $11.4 million, primarily due to a one-time cash payment related to the onshoring of intellectual property.

Q & A Highlights

Q: Can you provide updates on the road maps and timelines for new products, particularly the broad markets chip? A: Michael Hurlston, President and CEO, stated that timelines have remained consistent. The Wi-Fi 7 chip for IoT applications is on target to sample this quarter, as is the broad markets chip. The processor area is also on schedule, with a significant release expected mid-next year. The broad markets chip is projected to contribute $150 million to $200 million in revenue by 2028.

Q: Can you elaborate on the growth in the Core IoT funnel and where the growth is coming from? A: Michael Hurlston explained that near-term growth is driven by high-performance Wi-Fi. The broad markets chip will start contributing in fiscal 2026, and the processor initiative will begin contributing meaningfully in fiscal 2027. BLE is currently tracking behind expectations.

Q: How does the Wi-Fi 7 upgrade cycle compare to past cycles, and what is the market response? A: Michael Hurlston noted that the Wi-Fi 7 upgrade cycle is consistent with past cycles, with an expected rapid penetration to 20%-25% in fiscal 2026. The penetration will gradually increase to 50%-60% over time, with older standards still occupying a significant share.

Q: What are your end-market exposures for IoT Wi-Fi, and how are different segments performing? A: Michael Hurlston mentioned that Synaptics has minimal exposure to industrial and automotive markets, with a predominant focus on consumer (65%) and enterprise (35%) segments. The consumer segment is showing improvement, while industrial remains weak.

Q: How do you view the recovery profile of the Enterprise segment, and what are the margin implications? A: Michael Hurlston indicated that the recovery in Enterprise depends on IT budgets and spending. While there are signs of life, driven by new features and market share gains, the impact on margins will depend on the mix within the segment, with PC margins aligning with the corporate average.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.