• Revenue: $267.2 million, up 13% year over year and 4% sequentially.
• Non-GAAP Gross Margin: 53.6%, slightly above the midpoint of guidance.
• Non-GAAP EPS: $0.92, an increase of 61% year over year and 14% sequentially.
• Core IoT Product Revenue: Increased 63% year over year to $61 million.
• Enterprise and Automotive Product Revenue: Improved 17% year over year and 8% sequentially.
• Mobile Touch Product Revenue: Down 25% year over year and 7% sequentially.
• Non-GAAP Operating Margin: 17.3%, up 360 basis points year over year and 60 basis points sequentially.
• Cash and Cash Equivalents: $596 million at the end of the quarter.
• Share Repurchases: $74.5 million, approximately 1 million shares repurchased.
• Cash Flow from Operations: $24 million.
• Convertible Notes Issuance: $450 million with a 0.75% coupon due in 2031.
• Term Loan B Retirement: Fully retired $582 million term loan.
• Capital Expenditures: $4.7 million.
• Depreciation: $7.4 million.
• Inventory: $119.5 million, with 87 days of inventory.

• Warning! GuruFocus has detected 6 Warning Signs with SYNA.

Release Date: February 06, 2025

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

Positive Points

• Synaptics Inc (NASDAQ:SYNA) reported a 13% year-over-year revenue increase to $267 million, slightly above the midpoint of their guidance.
• The company announced a strategic agreement with Broadcom, expected to generate over $40 million in annualized sales and slightly accretive to non-GAAP EPS.
• Core IoT product sales increased by 63% year-over-year, driven by growth in both processor and wireless products.
• Synaptics Inc (NASDAQ:SYNA) has a strong leadership position in several markets, being either the number one or number two player in enterprise, automotive, and mobile touch markets.
• The company successfully retired its term loan B, reducing total debt and cash interest expense, while returning approximately $75 million to shareholders through share repurchases.

Negative Points

• The departure of CEO Michael Hurlston introduces uncertainty, as the company is in the process of searching for a new CEO.
• Mobile touch product revenue decreased by 25% year-over-year due to the end of life of product shipments to a large US customer.
• The automotive segment is experiencing sluggishness, with most exposure to US and European customers, potentially impacting future growth.
• Non-GAAP operating expenses increased due to the inclusion of the Packet Craft acquisition and incremental variable expenses.
• The company has not yet seen a significant refresh cycle in the enterprise space, which could impact future revenue growth.

Q & A Highlights

Q: Can you provide more details on the $40 million in annualized sales from the Broadcom transaction? Is it more related to the core IoT segment or mobile? A: The $40 million in annualized sales from the Broadcom transaction will fall into the core IoT segment as it primarily involves wireless technologies. - Ken Rizvi, Interim CEO & CFO

Q: Are there specific areas driving the improvement in bookings and orders within the enterprise segment? A: The improvement is fairly broad, with good traction on the peripheral side. Overall, we have lean inventories and see a path for sequential growth of about $10 million throughout the calendar year, despite a slower growth economic environment. The automotive space remains sluggish. - Ken Rizvi, Interim CEO & CFO

Q: Can you elaborate on the potential of the Broadcom transaction in the Android and AR/VR markets? Are there designs in progress? A: The transaction strengthens our core IoT segment, especially in wireless. We expect to ramp revenue with existing and new customers, particularly in calendar years 2026 and 2027. We acquired advanced technologies like WiFi 8 combo chipsets and UWB IP, which will help us in these markets. - Ken Rizvi, Interim CEO & CFO

Q: With the Broadcom acquisition, do you see any synergy between your high-end touch position and the Android wireless opportunity? A: We have a strong presence in the high-end Android market, and the Broadcom acquisition allows us to offer complementary WiFi technology. This presents an opportunity to expand our presence among Android OEMs. - Ken Rizvi, Interim CEO & CFO

Q: How does the Google collaboration impact your Astra platform and revenue projections? A: The Google collaboration validates our Astra platform but does not change our fiscal '27 ramp forecast. It strengthens our position in the AI edge ecosystem, and we expect sequential growth of about $10 million per quarter, with Broadcom contributing to this growth. - Ken Rizvi, Interim CEO & CFO

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