Revenue: $266.6 million, up 12% year-over-year. Non-GAAP Gross Margin: 53.5%, in line with guidance midpoint. Non-GAAP EPS: $0.90, up 70% year-over-year. Core IoT Product Sales: $68 million, up 43% year-over-year. Non-GAAP Operating Expense: $101 million, in line with guidance. Non-GAAP Operating Margin: 15.6%, up 270 basis points year-over-year. Non-GAAP Net Income: $35.3 million. Cash and Equivalents: $421.4 million at quarter end. Cash Flow from Operations: $74 million. Share Repurchases: $37.9 million, approximately 546,000 shares. Capital Expenditures: $5.4 million. Depreciation: $7.2 million. Days of Sales Outstanding: 45 days, down from 49 days last quarter. Inventory Balance: $132.9 million, increased by $13.4 million from previous quarter. Q4 Revenue Guidance: Approximately $280 million at midpoint. Q4 Non-GAAP Gross Margin Guidance: 53.5% at midpoint. Q4 Non-GAAP Operating Expenses Guidance: $103 million at midpoint. Q4 Non-GAAP Net Income per Share Guidance: $1 per share at midpoint.

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Release Date: May 08, 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 12% year-over-year revenue increase to $267 million, slightly above the midpoint of their guidance range. Core IoT product sales increased by 43% year-over-year, driven by strong demand for wireless and processor products. Non-GAAP EPS grew 70% year-over-year to $0.90, exceeding the midpoint of their guidance. The company launched its first Wi-Fi 7 device for IoT applications, promising higher throughput and improved reliability. Synaptics Inc (NASDAQ:SYNA) expanded its Veros connectivity portfolio, opening a $3 billion market opportunity with a cost-effective solution for embedded edge IoT applications.

Negative Points

The automotive sector continues to face sluggish demand, impacting Synaptics Inc (NASDAQ:SYNA)'s enterprise and automotive product revenues. Mobile product revenues declined 18% year-over-year due to the end of life of product shipments to a large customer. The company faces uncertainty around potential indirect impacts from global trade tariffs on future demand and supply chain. Non-GAAP operating margin decreased sequentially by 170 basis points due to increased operating expenses related to the Broadcom transaction. Cash, cash equivalents, and short-term investments decreased by approximately $174.7 million from the prior quarter, partly due to the Broadcom transaction.

Q & A Highlights

Q: Could you expand on what drove the strength in Core IoT in both the quarter and the guide? Specifically, how much of that strength is coming from Wi-Fi 7 ramps or the Broadcom Pixel-related ramp? A: Ken Rizvi, Interim CEO and CFO, explained that the Core IoT business strength was driven by wireless growth and strong demand from existing products. Wi-Fi 7 is expected to be a driver in 2026. The Broadcom acquisition is contributing approximately $10 million per quarter, aligning with expectations.

Story Continues

Q: Do you see incremental opportunities to win versus FPGA-based solutions with your human presence detection (HPD)? And is there rising competition from software-only solutions? A: Ken Rizvi noted that Synaptics has gained significant share with two of the three large OEMs. Their HPD solution offers lower cost and power efficiency compared to FPGA-based solutions. Vikram Gupta, SVP and Chief Product Officer, added that their dedicated chip allows for faster feature development compared to software-only solutions.

Q: Given the tariff-related macro concerns, have you seen any impact on your order book or linearity for June? A: Ken Rizvi stated that while the fundamentals like backlog and bookings are healthy, the uncertainty around tariffs could impact end demand. However, inventory levels remain lean, and the company is monitoring the situation closely.

Q: Can you discuss the share gains in the enterprise PC product segment and how to think about it going forward? A: Ken Rizvi mentioned that Synaptics has gained share with major OEMs like Dell, HP, and Lenovo due to innovation, quality, and cost of solutions. Satish Ganesan, SVP and Chief Strategy Officer, highlighted the integration of AI elements into products, which has helped gain share.

Q: Can you describe the competitive landscape for Wi-Fi 7 in IoT applications? A: Venkat Kodavat, SVP Wireless, stated that Synaptics is the first to introduce Wi-Fi 7 to the IoT market, focusing on low power consumption for video applications. They use advanced process nodes and signal processing techniques to reduce power consumption, positioning them ahead of competitors.

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

This article first appeared on GuruFocus.

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