Financial Performance - In Q1 fiscal 2024, net revenue decreased to $237.3 million, down 27.3% from $326.6 million in Q1 fiscal 2023[129] - Revenue from Enterprise and Automotive product applications fell by 29.7% to $134.7 million, while Core IoT product applications dropped 49.3% to $47.3 million[129] - Gross margin for Q1 fiscal 2024 was $110.3 million, a decrease of 36.0% compared to $172.3 million in Q1 fiscal 2023[129] - The company reported a net loss of $18.1 million in Q1 fiscal 2024, compared to a net income of $10.4 million in Q1 fiscal 2023, representing a 274.0% decline[129] - Operating loss for Q1 fiscal 2024 was $17.4 million, a significant decrease from an operating income of $34.2 million in Q1 fiscal 2023[129] - Net revenue for the three months ended March 2024 was $237.3 million, a decrease of $89.3 million, or 27.3%, compared to $326.6 million for the same period in 2023[132] - For the nine months ended March 2024, net revenue was $712.0 million, down $415.8 million, or 36.9%, from $1,127.8 million in the same period in 2023[133] - Gross margin for the three months ended March 2024 was 46.5%, a decrease of 630 basis points from 52.8% in the same period in 2023[134] Expenses - Research and development expenses were $83.4 million, down 5.1% from $87.9 million in the prior year[129] - Research and development expenses for the three months ended March 2024 decreased to $83.4 million, down $4.5 million from $87.9 million in the same period in 2023[139] - Selling, general, and administrative expenses for the three months ended March 2024 decreased to $40.5 million, down $1.2 million from $41.7 million in the same period in 2023[141] Cash Flow and Liquidity - Cash and cash equivalents as of March 2024 were $828.1 million, a decrease of $96.6 million from $924.7 million as of June 2023[149] - Operating activities generated $70.9 million in cash for the nine months ended March 2024, compared to $237.0 million for the same period in 2023[151] - Cash used in investing activities during the nine months ended March 2024 was $146.7 million, compared to $28.1 million in the same period in 2023[153] - Cash used in financing activities for the nine months ended March 2024 was $20.4 million, a significant decrease from $134.2 million in the same period of 2023[155] - The company believes existing cash and cash equivalents, along with anticipated cash flows, will be sufficient to meet working capital needs for at least the next 12 months[163] Acquisitions and Investments - The company acquired technology assets from Broadcom for $130.0 million in July 2023[124] - The acquisition of Emza in October 2022 totaled $15.8 million, with results included in consolidated financial statements since the acquisition date[125] - The company has registered $100.0 million of common and preferred stock for issuance related to acquisitions[162] Debt and Obligations - For the nine months ended March 2024, the company paid $8.0 million in interest expense on $400.0 million of senior notes due 2029[158] - The revolving credit facility has a principal amount of up to $250 million, with no outstanding balance as of March 2024[159] - The company repaid $6.0 million of the principal on the $600.0 million term loan facility during the nine months ended March 2024[160] - Total contractual obligations as of March 2024 amounted to $1,466.2 million, with $48.8 million due within one year[165] Market Outlook - The company anticipates a rebound in demand extending into late calendar 2024, despite current macroeconomic uncertainties[127] - Elevated interest rates have increased borrowing costs, potentially limiting future acquisition financing opportunities[127] - A hypothetical 1% increase in interest rates could increase quarterly interest expense by approximately $1.5 million based on the outstanding balance of the term loan as of March 2024[169] - The undistributed earnings of foreign subsidiaries may incur state and foreign taxes if repatriated, impacting cash flows[164] Revenue Breakdown - Net revenue from Enterprise and Automotive product applications for the three months ended March 2024 was $134.7 million, representing 56.8% of total net revenue[132] - Net revenue from Mobile product applications increased to $55.3 million, or 23.3%, for the three months ended March 2024, driven by a 67.5% increase in units sold[132] Stock Repurchase - The common stock repurchase program has a cumulative authorization of $2.3 billion, with $893.9 million remaining as of March 2024[157]

[Q3'24 Financial Results and Recent Business Highlights](index=1&type=section&id=Q3%2724%20Financial%20Results%20and%20Recent%20Business%20Highlights) Synaptics reported Q3 FY2024 financial results including a net loss and non-GAAP net income, alongside strategic advancements in Core IoT with the Astra™ platform [Q3'24 Financial Performance](index=1&type=section&id=Q3%2724%20Financial%20Performance) Synaptics reported Q3 FY2024 net revenue of $237.3 million, a GAAP net loss of $18.1 million, and a Non-GAAP net income of $21.0 million Q3 FY2024 Financial Performance (In millions, except per share data) | Metric | Q3 FY2024 Value | | :----------------------- | :------------------- | | Net Revenue | $237.3 million | | GAAP Net Loss | $18.1 million | | GAAP Loss per Basic Share | $0.46 | | Non-GAAP Net Income | $21.0 million | | Non-GAAP Diluted EPS | $0.53 | [Strategic Business Highlights](index=1&type=section&id=Strategic%20Business%20Highlights) Synaptics launched its Astra™ platform for embedded edge AI, targeting a $20 billion+ market, and saw Core IoT revenue increase 26% sequentially - Successful launch of Astra™ platform, targeting a **$20 billion+ market opportunity** for embedded edge AI processors for IoT[4](index=4&type=chunk) - Core IoT revenue increased **26% sequentially**, driven by growth in the wireless product family[4](index=4&type=chunk) [Business Outlook](index=1&type=section&id=Business%20Outlook) Synaptics anticipates a modest sequential revenue increase for Q4 FY2024, with stabilizing business conditions and improving demand [Q4 FY2024 Guidance](index=1&type=section&id=Q4%20FY2024%20Guidance) Synaptics anticipates a modest sequential increase in fiscal fourth-quarter revenue, with stabilizing business conditions and improving demand, though recovery is slower than expected - Expects fiscal fourth quarter revenue to increase modestly from the prior quarter[5](index=5&type=chunk) - Business is stabilizing with supply chain inventory mostly at normal levels and improving demand conditions[5](index=5&type=chunk) Q4 FY2024 Financial Guidance (In millions, except percentages) | Metric | GAAP Range | Non-GAAP Adjustment | Non-GAAP Range | | :---------------- | :----------------- | :------------------ | :----------------- | | Revenue | $230M to $260M | N/A | N/A | | Gross Margin | 44.5% to 46.5% | $18M to $21M | 52.5% to 54.5% | | Operating Expense | $127M to $132M | $30M to $31M | $97M to $101M | [Earnings Call and Supplementary Materials](index=2&type=section&id=Earnings%20Call%20and%20Supplementary%20Materials) Details for Synaptics' Q3 FY2024 earnings call, webcast, and supplementary materials are provided [Webcast and Registration Details](index=2&type=section&id=Webcast%20and%20Registration%20Details) Synaptics' Q3 FY2024 earnings call was held on May 9, 2024, with registration required and supplementary materials available online - Q3 FY2024 earnings call held on Thursday, May 9, 2024, at 2:00 p.m. PT (5:00 p.m. ET)[8](index=8&type=chunk) - Registration for the live call was available at Synaptics Q3 FY2024 Earnings Call Registration[8](index=8&type=chunk) - Supplementary slides, prepared remarks, and webcast accessible from the 'Investor Relations' section of the company's website[8](index=8&type=chunk) [About Synaptics Incorporated](index=2&type=section&id=About%20Synaptics%20Incorporated) Synaptics specializes in human-device engagement, offering diverse technologies including AI-enhanced processing and advanced connectivity [Company Overview and Offerings](index=2&type=section&id=Company%20Overview%20and%20Offerings) Synaptics (Nasdaq: SYNA) engineers human-device engagement experiences, offering differentiated technologies in touch, display, biometrics, connectivity, and AI-enhanced processing - Synaptics engineers human engagement experiences with connected devices and data[9](index=9&type=chunk) - Offers differentiated technologies in touch, display, biometrics, advanced connectivity, and AI-enhanced processing for video, vision, audio, speech, and security[9](index=9&type=chunk) [Use of Non-GAAP Financial Information](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) Synaptics uses Non-GAAP financial measures to provide a clearer view of core operational performance by excluding specific non-recurring or non-cash items [Purpose of Non-GAAP Measures](index=3&type=section&id=Purpose%20of%20Non-GAAP%20Measures) Synaptics uses Non-GAAP measures to supplement operating performance indicators, excluding specific items not indicative of core operations for better comparisons - Non-GAAP Net Income is defined as net income excluding share-based compensation, acquisition-related costs, and certain other non-cash or recurring and non-recurring items[11](index=11&type=chunk) - Non-GAAP measures are used to facilitate operating performance comparisons by eliminating potential differences caused by specific charges and items not indicative of core operating performance[11](index=11&type=chunk) [Non-GAAP Adjustments Explained](index=3&type=section&id=Non-GAAP%20Adjustments%20Explained) The company's Non-GAAP measures exclude acquisition costs, share-based compensation, restructuring, and other non-cash items for clearer operational performance - Acquisition and integration related costs are excluded as they are not considered part of principal operations and can vary significantly[12](index=12&type=chunk) - Share-based compensation is excluded due to its non-cash nature (mostly) and variability, allowing for better comparison with peer companies[14](index=14&type=chunk) - Other exclusions include amortization of prepaid development costs, restructuring costs, site remediation accrual, other non-cash items (like debt discount amortization), and Non-GAAP tax adjustments to improve long-term modeling accuracy[15](index=15&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section outlines the disclaimer and inherent risks associated with forward-looking statements in the press release [Disclaimer and Risk Factors](index=5&type=section&id=Disclaimer%20and%20Risk%20Factors) This press release contains forward-looking statements subject to safe harbors and inherent risks, with no obligation for Synaptics to publicly update them - Forward-looking statements reflect current expectations and projections, identified by words like 'expect,' 'anticipate,' 'intend,' 'believe,' 'estimate,' 'plan,' 'target,' 'strategy,' 'continue,' 'may,' 'will,' 'should'[20](index=20&type=chunk) - Risks include temporary reduction in demand due to accumulated inventories, as well as factors identified in the company's Form 10-K and 10-Q reports[20](index=20&type=chunk) - The company disclaims any obligation to publicly release updates or changes to forward-looking statements[20](index=20&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=SYNAPTICS%20INCORPORATED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The condensed consolidated balance sheets present Synaptics' financial position as of March 2024, detailing assets, liabilities, and equity [Balance Sheet Overview](index=6&type=section&id=Balance%20Sheet%20Overview) As of March 2024, Synaptics reported total assets of $2,539.7 million, with decreases in total liabilities and relatively stable stockholders' equity Condensed Consolidated Balance Sheets (In millions) | ASSETS | March 2024 | June 2023 | | :---------------------------------- | :--------- | :-------- | | Cash and cash equivalents | $828.1 | $924.7 | | Short-term investments | $0.5 | $9.6 | | Accounts receivable, net | $144.7 | $163.9 | | Inventories, net | $114.1 | $137.2 | | Prepaid expenses and other current assets | $35.1 | $36.6 | | **Total current assets** | **$1,122.5** | **$1,272.0** | | Property and equipment at cost, net | $74.0 | $66.4 | | Goodwill | $816.4 | $816.4 | | Purchased intangibles, net | $252.2 | $298.5 | | Right-of-use assets | $45.9 | $49.0 | | Non-current other assets | $228.7 | $109.1 | | **Total Assets** | **$2,539.7** | **$2,611.4** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $70.9 | $45.8 | | Accrued compensation | $25.5 | $45.9 | | Income taxes payable | $9.7 | $54.0 | | Other accrued liabilities | $98.8 | $108.4 | | Current portion of debt | $6.0 | $6.0 | | **Total current liabilities** | **$210.9** | **$260.1** | | Long-term debt | $967.7 | $972.0 | | Other long-term liabilities | $125.7 | $135.9 | | **Total liabilities** | **$1,304.3** | **$1,368.0** | | Common stock and additional paid-in capital | $1,083.8 | $1,009.3 | | Treasury stock | $(878.0) | $(878.0) | | Accumulated other comprehensive income | $0.2 | — | | Retained earnings | $1,029.4 | $1,112.1 | | **Total stockholders' equity** | **$1,235.4** | **$1,243.4** | | **Total Liabilities and Stockholders' Equity** | **$2,539.7** | **$2,611.4** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=SYNAPTICS%20INCORPORATED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The condensed consolidated statements of operations detail Synaptics' financial performance for the three and nine months ended March 2024 [Statements of Operations Overview](index=7&type=section&id=Statements%20of%20Operations%20Overview) For Q3 FY2024, Synaptics reported net revenue of $237.3 million and a GAAP net loss of $18.1 million, a decrease from the prior year Condensed Consolidated Statements of Operations (In millions, except per share data) | Metric | Three Months Ended March 2024 | Three Months Ended March 2023 | Nine Months Ended March 2024 | Nine Months Ended March 2023 | | :---------------------------------- | :---------------------------- | :---------------------------- | :--------------------------- | :--------------------------- | | Net revenue | $237.3 | $326.6 | $712.0 | $1,127.8 | | Acquisition related costs (1) | $14.3 | $23.7 | $46.5 | $70.5 | | Cost of revenue | $112.7 | $130.6 | $339.1 | $442.6 | | Gross margin | $110.3 | $172.3 | $326.4 | $614.7 | | Operating expenses: | | | | | | Research and development | $83.4 | $87.9 | $251.9 | $266.7 | | Selling, general, and administrative | $40.5 | $41.7 | $122.5 | $128.8 | | Acquired intangibles amortization (2) | $4.0 | $8.5 | $13.4 | $26.9 | | Restructuring costs (3) | $(0.2) | — | $9.1 | — | | Total operating expenses | $127.7 | $138.1 | $396.9 | $422.4 | | Operating (loss) income | $(17.4) | $34.2 | $(70.5) | $192.3 | | Interest and other expense, net | $(5.9) | $(7.0) | $(17.4) | $(22.0) | | (Loss) income before provision for income taxes | $(23.3) | $27.2 | $(87.9) | $170.3 | | Provision for income taxes | $(5.2) | $16.8 | $(5.2) | $73.3 | | Net (loss) income | **$(18.1)** | **$10.4** | **$(82.7)** | **$97.0** | | Net (loss) income per share: | | | | | | Basic | $(0.46) | $0.26 | $(2.12) | $2.44 | | Diluted | $(0.46) | $0.26 | $(2.12) | $2.41 | | Shares used in computing net (loss) income per share: | | | | | | Basic | 39.3 | 39.4 | 39.1 | 39.7 | | Diluted | 39.3 | 39.9 | 39.1 | 40.3 | [Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures](index=8&type=section&id=SYNAPTICS%20INCORPORATED%20Reconciliation%20of%20GAAP%20Financial%20Measures%20to%20Non-GAAP%20Financial%20Measures) This section provides a reconciliation of Synaptics' GAAP financial measures to their corresponding Non-GAAP counterparts, detailing adjustments [GAAP to Non-GAAP Reconciliation](index=8&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) Synaptics reconciles GAAP to Non-GAAP financial measures, adjusting for items like acquisition costs and share-based compensation to show Non-GAAP net income and EPS Reconciliation of GAAP to Non-GAAP Financial Measures (In millions, except per share data) | Metric | Three Months Ended March 2024 | Three Months Ended March 2023 | Nine Months Ended March 2024 | Nine Months Ended March 2023 | | :------------------------------------------ | :---------------------------- | :---------------------------- | :--------------------------- | :--------------------------- | | GAAP gross margin | $110.3 | $172.3 | $326.4 | $614.7 | | Acquisition related costs | $14.3 | $23.7 | $46.5 | $70.5 | | Share-based compensation | $1.0 | $0.9 | $3.2 | $3.0 | | **Non-GAAP gross margin** | **$125.6** | **$196.9** | **$376.1** | **$688.2** | | GAAP gross margin - percentage of revenue | 46.5 % | 52.8 % | 45.8 % | 54.5 % | | Acquisition related costs - percentage of revenue | 6.0 % | 7.3 % | 6.5 % | 6.3 % | | Share-based compensation - percentage of revenue | 0.4 % | 0.2 % | 0.4 % | 0.2 % | | **Non-GAAP gross margin - percentage of revenue** | **52.9 %** | **60.3 %** | **52.8 %** | **61.0 %** | | GAAP research and development expense | $83.4 | $87.9 | $251.9 | $266.7 | | Share-based compensation | $(15.0) | $(12.1) | $(45.7) | $(39.5) | | Amortization prepaid development costs | — | $(0.8) | — | $(5.8) | | **Non-GAAP research and development expense** | **$68.4** | **$75.0** | **$206.2** | **$221.4** | | GAAP selling, general, and administrative expense | $40.5 | $41.7 | $122.5 | $128.8 | | Share-based compensation | $(13.9) | $(16.8) | $(43.4) | $(49.9) | | Acquisition and integration related costs | — | — | — | $(1.8) | | Site remediation accrual | — | — | $(1.6) | — | | **Non-GAAP selling, general, and administrative expense** | **$26.6** | **$24.9** | **$77.5** | **$77.1** | | GAAP operating (loss) income | $(17.4) | $34.2 | $(70.5) | $192.3 | | Acquisition and integration related costs | $18.3 | $32.2 | $59.9 | $99.2 | | Share-based compensation | $29.9 | $29.8 | $92.3 | $92.4 | | Restructuring costs | $(0.2) | — | $9.1 | — | | Site remediation accrual | — | — | $1.6 | — | | Amortization prepaid development costs | — | $0.8 | — | $5.8 | | **Non-GAAP operating income** | **$30.6** | **$97.0** | **$92.4** | **$389.7** | | GAAP net (loss) income | $(18.1) | $10.4 | $(82.7) | $97.0 | | Acquisition and integration related costs | $18.3 | $32.2 | $59.9 | $99.2 | | Share-based compensation | $29.9 | $29.8 | $92.3 | $92.4 | | Restructuring costs | $(0.2) | — | $9.1 | — | | Amortization prepaid development costs | — | $0.8 | — | $5.8 | | Other non-cash items | $0.6 | $0.7 | $1.9 | $2.0 | | Site remediation accrual | — | — | $1.6 | — | | Non-GAAP tax adjustments | $(9.5) | $1.4 | $(18.3) | $10.5 | | **Non-GAAP net income** | **$21.0** | **$75.3** | **$63.8** | **$306.9** | | GAAP net (loss) income per share - diluted | $(0.46) | $0.26 | $(2.12) | $2.41 | | Acquisition/divestiture and integration related costs | $0.47 | $0.81 | $1.53 | $2.46 | | Share-based compensation | $0.76 | $0.74 | $2.36 | $2.29 | | Restructuring costs | $(0.01) | — | $0.23 | — | | Amortization prepaid development costs | — | $0.02 | — | $0.15 | | Other non-cash items | $0.02 | $0.02 | $0.05 | $0.05 | | Site remediation accrual | — | — | $0.04 | — | | Non-GAAP tax adjustments | $(0.24) | $0.04 | $(0.47) | $0.26 | | Share adjustment | $(0.01) | — | — | — | | **Non-GAAP net income per share - diluted** | **$0.53** | **$1.89** | **$1.62** | **$7.62** | [Condensed Consolidated Cash Flows](index=10&type=section&id=SYNAPTICS%20INCORPORATED%20CONDENSED%20CONSOLIDATED%20CASH%20FLOWS) The condensed consolidated cash flow statements present Synaptics' cash movements across operating, investing, and financing activities [Cash Flow Overview](index=10&type=section&id=Cash%20Flow%20Overview) For the nine months ended March 2024, operating cash flow significantly decreased, while cash used in investing activities increased due to advance payments Condensed Consolidated Cash Flows (In millions) | Cash Flow Category | Nine Months Ended March 2024 | Nine Months Ended March 2023 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Net (loss) income | $(82.7) | $97.0 | | Non-cash operating items | $176.8 | $207.2 | | Changes in working capital | $(23.2) | $(67.2) | | **Provided by operating activities** | **$70.9** | **$237.0** | | Acquisition of business, net of cash and cash equivalents acquired | — | $(15.5) | | Proceeds from maturities of short-term investments | $26.0 | $16.3 | | Purchase of intangible assets | $(13.5) | $(0.9) | | Purchase of short-term investments | $(16.6) | — | | Purchase of property and equipment | $(26.1) | $(29.0) | | Advance payment on intangible assets | $(116.5) | — | | Other (investing) | — | $1.0 | | **Used in investing activities** | **$(146.7)** | **$(28.1)** | | Repurchases of common stock | — | $(100.1) | | Equity compensation, net | $(17.8) | $(34.6) | | Payment of debt obligations | $(6.0) | $(4.5) | | Other (financing) | $3.4 | $5.0 | | **Used in financing activities** | **$(20.4)** | **$(134.2)** | | Effect of exchange rate changes on cash and cash equivalents | $(0.4) | $(0.7) | | **Net change in cash and cash equivalents** | **$(96.6)** | **$74.0** | | Cash and cash equivalents at beginning of period | $924.7 | $824.0 | | **Cash and cash equivalents at end of period** | **$828.1** | **$898.0** |

Financial Data and Key Metrics Changes - Revenue for the December quarter was $237 million, slightly above the midpoint of prior guidance, but down 33% year-over-year [105] - Non-GAAP net income for the December quarter was $22.5 million, an increase of 11% from the prior quarter, but a 75% decrease from the same quarter a year ago [36] - GAAP gross margin for the December quarter was 46%, while non-GAAP gross margin was 52.5%, at the midpoint of guidance [35][114] - The company expects GAAP operating expenses in the March quarter to be in the range of $130 million to $135 million [106] Business Line Data and Key Metrics Changes - Mobile product revenue was up 42% sequentially in the December quarter and up 10% year-over-year, driven by demand in the Android ecosystem in China [1] - Core IoT revenue was roughly flat sequentially but down 46% year-over-year, with expectations for growth in the third quarter fiscal 2024 [15] - Enterprise and automotive revenue was down 12% sequentially and down 40% year-over-year, indicating a slowdown in enterprise IT spending [113] Market Data and Key Metrics Changes - The company is experiencing strength in mobile products, particularly with the Samsung Galaxy S24, solidifying its leadership in high-end Android handsets [33] - The enterprise market is characterized by persistent inventory and weaker-than-expected IT spending, impacting higher-margin products [11][23] - The wireless sales funnel is increasing, with new design wins in various sectors, including automotive [21] Company Strategy and Development Direction - The company is focusing investments in Core IoT, particularly in wireless and processor products, with expectations for consistent sequential revenue growth starting in March [20] - The company aims to clear excess inventories and position itself for future growth, particularly in the wireless segment [9][10] - Management believes the business has hit the bottom of the cycle and is stabilizing, with expectations for a gradual recovery [23][114] Management's Comments on Operating Environment and Future Outlook - Management noted that while the company is at the bottom of the cycle, the timing and shape of recovery remain uncertain [10][26] - There is optimism regarding a potential recovery in enterprise spending, but it may take longer than expected [69] - The company expects to see a return to higher and more normalized run rates, particularly in Core IoT [26][76] Other Important Information - The company ended the quarter with $849 million in cash and cash equivalents, a 3% sequential increase [25] - The calculated days of inventory on the balance sheet declined to 99 days compared to 105 days at the end of the prior quarter [25] - The company is set to deliver its first chip for user presence detection technology, which is expected to drive growth in the PC market [22] Q&A Session Summary Question: How is the mobile product demand looking? - Mobile products had a strong quarter, driven by improved demand across the Chinese customer base and the ramp of the Samsung Galaxy S24, with expectations to maintain differentiation at the high end [33] Question: What is the outlook for Core IoT revenue? - The company feels confident about returning to the $200 million revenue run rate in Core IoT, with expectations for double-digit sequential growth [43][55] Question: How is the enterprise market performing? - The enterprise market is currently experiencing a slowdown due to reduced IT spending, but management believes the long-term demand profile remains unchanged [68][70] Question: What are the expectations for gross margins? - Management believes gross margins have bottomed out and expects a sustained rebound, with guidance for non-GAAP gross margin in the March quarter to be between 52% and 54% [47][119] Question: How is the automotive segment performing? - The automotive segment is seeing a transition from legacy products to TDDI solutions, with new wins at multiple OEMs, although revenue may be choppy in the near term [104]

Safe Harbor Statement © 2024 Synaptics Incorporated 2 ___________________________ Note: As-reported Q2 fiscal year 2024, not proforma for any acquisition/divestiture activity over this timeframe See the tables at the end of this presentation for GAAP to Non-GAAP reconciliations Technology Leadership Across The Product Portfolio © 2024 Synaptics Incorporated 4 • Revenue of $237 million, down 33% YoY • Cash flow from operations of $39 million, cash and investments of $849 million on the balance sheet Q2'FY24 ...

Financial Performance - Net revenue for the first quarter of fiscal 2024 was $237.0 million, a decrease of 32.9% compared to $353.1 million in the same period last year[122]. - Net revenue for the three months ended December 2023 was $237.0 million, a decrease of $116.1 million, or 32.9%, compared to $353.1 million for the same period in 2022[125]. - For the six months ended December 2023, net revenue was $474.7 million, down $326.5 million, or 40.8%, from $801.2 million in the prior year[126]. - The company reported a net loss of $9.0 million, compared to a net income of $22.0 million in the same quarter last year, representing a 140.9% decline[122]. Revenue Breakdown - Enterprise and Automotive product applications revenue fell to $136.6 million, down 39.6% from $226.0 million year-over-year[122]. - Core IoT product applications revenue decreased by 46.3% to $37.5 million from $69.8 million in the prior year[122]. Gross Margin - Gross margin for the quarter was $109.0 million, a decline of 41.6% compared to $186.7 million in the same quarter last year[122]. - Gross margin for the three months ended December 2023 was 46.0%, down from 52.9% in the same period last year, reflecting a 690 basis point decrease[127]. Expenses - Research and development expenses were $82.0 million, down 8.2% from $89.3 million year-over-year[122]. - Research and development expenses for the three months ended December 2023 decreased to $82.0 million, down from $89.3 million in the prior year[131]. - Selling, general, and administrative expenses decreased by 6.4% to $39.7 million from $42.4 million in the previous year[122]. - Selling, general, and administrative expenses for the three months ended December 2023 decreased to $39.7 million, compared to $42.4 million for the same period in 2022[133]. Cash Flow and Liquidity - Cash and cash equivalents as of December 2023 were $846.1 million, a decrease of $78.6 million from $924.7 million as of June 2023[141]. - Operating activities generated $84.6 million in cash during the six months ended December 2023, down from $128.5 million in the same period last year[143]. - Cash used in investing activities during the six months ended December 2023 was $139.8 million, compared to $18.8 million in the prior year[145]. - Cash used in financing activities for the six months ended December 2023 was $23.9 million, a significant decrease from $115.0 million in the same period of 2022[147][148]. - The company believes existing cash, anticipated cash flows, and available credit will be sufficient to meet working capital needs for at least the next 12 months[155]. Debt and Obligations - The company paid $8.0 million in interest expense on $400.0 million senior notes due 2029 for the six months ended December 2023[150]. - As of December 2023, there was no balance outstanding under the $250 million revolving credit facility[151]. - The company repaid $4.5 million of the principal outstanding on the $600.0 million Term Loan Facility during the six months ended December 2023[152]. - Total contractual obligations as of December 2023 amounted to $1,481.2 million, with $66.1 million due within one year[157]. - A hypothetical 1% increase or decrease in interest rates would result in a quarterly interest expense change of approximately $1.5 million based on the outstanding balance of the Term Loan as of December 2023[162]. Acquisitions - The company acquired technology assets from Broadcom for $130.0 million in July 2023[116]. - The acquisition of Emza in October 2022 was completed for a total consideration of $15.8 million[117]. - The company made a $130.0 million prepayment to Broadcom to acquire developed technologies and extend product exclusivity for an additional three years[145]. - The company has registered $100.0 million of common and preferred stock for issuance related to acquisitions[154]. Future Outlook - The company anticipates a potential rebound in demand extending into late calendar 2024 and beyond due to current economic conditions[119]. Inventory and Sales - Days sales outstanding improved to 48 days from 65 days year-over-year, while annual inventory turns increased from three to four[144]. Foreign Earnings - The undistributed earnings of foreign subsidiaries may incur state and foreign taxes if repatriated, impacting cash flows[156].

© 2023 Synaptics Incorporated 15 () synaptics: Engineering Exceptional Experiences © 2023 Synaptics Incorporated 16 © 2023 Synaptics Incorporated 8 Q1'FY24 Financial Results | --- | --- | --- | --- | --- | --- | |-----------------------------|-------|-------------------------|---------|----------|-----------| | | | | | | | | $M (except EPS) | Q1'23 | Q4'23 | Q1'24 | QoQ | YoY | | Revenue | | $448.1 $227.3 $237.7 5% | | | (47%) | | GAAP Gross Margin % | 57.1% | 44.5% | 45.1% | 60 bps | -1200 bps | | GAAP Ope ...

Financial Data and Key Metrics Changes - Revenue for the September quarter was $237.7 million, a 5% increase compared to the previous quarter and above the midpoint of prior guidance [14][35] - Year-over-year revenue decreased by 47%, indicating a significant decline compared to the same quarter last year [34] - Non-GAAP net income for the September quarter was $20.3 million, a 4% increase from the prior quarter but an 85% decrease year-over-year [18][34] - GAAP net loss for the quarter was $55.6 million, translating to a GAAP net loss of $1.43 per share [18] Business Line Data and Key Metrics Changes - Core IoT revenue increased by 15% sequentially but was down 66% year-over-year, indicating a significant inventory accumulation that is nearing depletion [15] - Enterprise revenue was up 9% sequentially but down 47% year-over-year, driven by recovery in PC product shipments [35] - Mobile product revenue decreased by 15% sequentially and 10% year-over-year, with modest improvements in Android shipments [16] Market Data and Key Metrics Changes - The Enterprise & Automotive segment saw a sequential revenue increase of 9%, primarily due to improved PC product shipments [35] - The Mobile end market remains volatile, with two customers contributing over 10% of revenue [36] Company Strategy and Development Direction - The company is focused on executing Core IoT opportunities and expanding its addressable market, with multiple design wins and new product introductions [13][27] - The company anticipates a recovery starting in calendar 2024, with expectations for Enterprise inventories to normalize [13][25] - The introduction of new products, such as the SYN43756E and DVF120, is aimed at enhancing the product portfolio and addressing high-performance IoT applications [8][9] Management's Comments on Operating Environment and Future Outlook - Management believes the business has stabilized and is optimistic about a recovery in 2024, although visibility on the recovery's strength is limited [13][25] - There is confidence that Enterprise inventories will return to normal levels, which should improve overall product mix and margins [13][25] - Management noted that customer interest and design wins remain strong, indicating potential for future growth [12] Other Important Information - The company ended the quarter with $824 million in cash and short-term investments, down from the previous quarter [55] - Cash flow from operations was $45 million, with capital expenditures of $6.7 million [55] Q&A Session Summary Question: Where are the pockets of inventory in the Enterprise segment? - Management indicated that there are still high inventory levels in the Enterprise segment, particularly in docking stations and headsets, but some recovery is expected [21][60] Question: What is the outlook for gross margins? - Management stated that the current gross margin issues are primarily mix-driven, with expectations for improvement as the Enterprise segment recovers [62] Question: How does the rising PC demand correlate with Enterprise recovery? - Management confirmed that the rising PC demand is a solid indicator of Enterprise recovery, as their products are closely tied to corporate spending [72][76] Question: What is the target for inventory days? - Management indicated a target of around 75 days for inventory, but they will be cautious not to cut inventory too aggressively [69][71] Question: How is the company managing operations in Israel amid current challenges? - Management reported that less than 10% of employees have been called to military duty, and they are managing operations effectively by backfilling roles with engineers from other regions [78]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Synaptics reported a significant **47.0%** revenue decline to **$237.7 million**, leading to a **$55.6 million** net loss for the quarter Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | Sep 30, 2023 | June 24, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$2,548.7** | **$2,611.4** | | Cash and cash equivalents | $801.3 | $924.7 | | Inventories, net | $131.7 | $137.2 | | Goodwill | $816.4 | $816.4 | | **Total Liabilities** | **$1,344.4** | **$1,368.0** | | Long-term debt | $969.6 | $972.0 | | **Total Stockholders' Equity** | **$1,204.3** | **$1,243.4** | Quarterly Performance Comparison (in millions, except per share data) | Metric | Q1 FY2024 (ended Sep 30, 2023) | Q1 FY2023 (ended Sep 24, 2022) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | $237.7 | $448.1 | (47.0%) | | Gross Margin | $107.1 | $255.7 | (58.1%) | | Operating (Loss) Income | $(35.2) | $112.0 | (131.4%) | | Net (Loss) Income | $(55.6) | $64.6 | (186.1%) | | Diluted (Loss) Income per Share | $(1.43) | $1.59 | (189.9%) | Cash Flow Summary (in millions) | Cash Flow Activity | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 24, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $45.4 | $78.5 | | Net cash provided by (used in) investing activities | $(150.1) | $2.3 | | Net cash used in financing activities | $(18.1) | $(35.0) | | **Net (decrease) in cash and cash equivalents** | **$(123.4)** | **$43.8** | - A significant use of cash in investing activities was a **$116.5 million** advance payment on intangible assets and a **$13.5 million** purchase of intangible assets from Broadcom[19](index=19&type=chunk)[34](index=34&type=chunk) Net Revenue by New Product Category (in millions) | Product Category | Q1 FY2024 (ended Sep 30, 2023) | Q1 FY2023 (ended Sep 24, 2022) | | :--- | :--- | :--- | | Enterprise and Automotive | $154.8 | $294.5 | | Core IoT | $38.5 | $113.4 | | Mobile | $44.4 | $40.2 | | **Total** | **$237.7** | **$448.1** | - Effective in Q1 FY2024, the company changed its revenue product categories to Core IoT, Enterprise and Automotive, and Mobile product applications to align with its strategic focus[98](index=98&type=chunk) - During the quarter, the company paid **$130.0 million** to Broadcom to extend an exclusivity period and license technology. Of this, **$13.5 million** was recorded as an intangible asset and **$116.5 million** as a prepayment[24](index=24&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - Total debt outstanding as of September 2023 was approximately **$975.6 million**, comprising **$395.8 million** in Senior Notes and **$579.8 million** under the Term Loan Facility[46](index=46&type=chunk) - A restructuring plan was initiated in Q1 FY2024 to focus on key growth initiatives and reduce costs, resulting in **$8.0 million** in charges for the quarter, primarily for severance[104](index=104&type=chunk)[105](index=105&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **47.0%** revenue decline to broad demand reduction and inventory consumption, impacting gross margin and cash due to a **$130.0 million** intangible asset payment Revenue by Product Application (in millions) | Product Application | Three Months Ended Sep 2023 | Three Months Ended Sep 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Enterprise and Automotive | $154.8 | $294.5 | $(139.7) | (47.4%) | | Core IoT | $38.5 | $113.4 | $(74.9) | (66.0%) | | Mobile | $44.4 | $40.2 | $4.2 | 10.4% | | **Net revenue** | **$237.7** | **$448.1** | **$(210.4)** | **(47.0%)** | - The company is experiencing a broad reduction in demand as customers and channel partners consume their accumulated inventories, with the slowdown expected to potentially extend beyond 2024[124](index=124&type=chunk) - The war in Israel presents a risk due to the company's office and employees in the region, with some employees activated for military duty, which could affect project timing[126](index=126&type=chunk)[201](index=201&type=chunk) - Gross margin decreased by **1,200 basis points** YoY to **45.1%**, primarily due to an increase in the excess obsolescence reserve and a decline in average sales prices, partially offset by revenue from an IP license[130](index=130&type=chunk) - Cash and cash equivalents decreased by **$123.4 million** to **$801.3 million**, mainly due to a **$130.0 million** prepayment for intangible assets paid to Broadcom[139](index=139&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on its Term Loan Facility, with a **100 basis point** change impacting quarterly interest expense by approximately **$1.5 million** - The company is exposed to market risk from adverse changes in interest rates on its outstanding Term Loan Facility[157](index=157&type=chunk) - A hypothetical **100 basis point** increase or decrease in the interest rate would change the quarterly interest expense by approximately **$1.5 million**[158](index=158&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[160](index=160&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter[162](index=162&type=chunk) [Part II. Other Information](index=33&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management expects no material adverse effect on its financial condition or operations - The company states that ongoing legal proceedings from the ordinary course of business are not expected to have a material adverse impact[164](index=164&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including customer dependence, supply chain vulnerabilities, geopolitical impacts, substantial indebtedness, and regulatory changes - **Market & Customer Risks:** The company depends on solutions for Core IoT, Enterprise, Automotive, and Mobile markets and relies on a limited number of large customers. Sales to two customers accounted for **29%** of net revenue in Q1 FY2024[166](index=166&type=chunk)[167](index=167&type=chunk) - **Supply Chain Risks:** The company depends on third-party contract manufacturers and semiconductor fabricators, primarily in Asia, and faces risks of shortages of components and materials[187](index=187&type=chunk)[191](index=191&type=chunk) - **Operational & Geopolitical Risks:** The company has employees in Israel, and the ongoing war could disrupt operations due to office closures or employee absence for military service. A number of employees have been activated for military duty[200](index=200&type=chunk)[201](index=201&type=chunk) - **Financial & Debt Risks:** The company's indebtedness could adversely affect its financial condition. The Credit Agreement and Senior Notes contain restrictive covenants that may limit operating and financial flexibility[231](index=231&type=chunk)[233](index=233&type=chunk) - **Acquisition Risks:** The company assumed environmental liabilities from the 2017 acquisition of Conexant Systems, including remediation costs for a former property, and is at risk for future related claims[229](index=229&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Synaptics did not repurchase common stock during the quarter, with **$893.9 million** remaining authorized under its stock repurchase program until July 2025 - The company did not repurchase any shares of its common stock during the quarter ended September 2023[242](index=242&type=chunk) - As of September 2023, **$893.9 million** remained available for repurchase under the company's stock repurchase program[242](index=242&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists key exhibits filed with the Form 10-Q, including corporate documents, credit agreement amendments, and CEO/CFO certifications - Filed exhibits include amendments to the company's credit agreement and equity compensation plan, along with required CEO and CFO certifications[247](index=247&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended June 24, 2023 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-49602 SYNAPTICS INCORPORATED (Exact name of registrant as specified in its charter) Delaware 77-0118518 (State or other jurisdiction of i ...

| --- | --- | |------------------------------------------------------------------------|-------| | | | | | | | Fourth Quarter Fiscal 2023 Earnings SUPPLEMENTAL SLIDES AUGUST 3, 2023 | | This presentation contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operati ...