Synaptics(SYNA) - 2025 Q4 - Annual Results

Fiscal 2025 Fourth Quarter and Full Year Results Overview Synaptics reported strong fiscal 2025 results, driven by Core IoT growth, with positive Q4 performance and strategic focus on Edge AI Full Year Fiscal 2025 Financial Highlights Synaptics reported a strong fiscal year 2025, with overall revenue growth driven significantly by its Core IoT products. Non-GAAP diluted EPS saw a substantial increase, and the company actively managed its capital through share repurchases and debt reduction Full Year Fiscal 2025 Financial Performance | Metric | FY2025 (GAAP) | FY2025 (Non-GAAP) | FY2024 (GAAP) | FY2024 (Non-GAAP) | YoY Change (Non-GAAP) | | :-------------------------------- | :------------ | :---------------- | :------------ | :---------------- | :-------------------- | | Net Revenue | $1.07 billion | N/A | $959.4 million | N/A | +12.0% | | Gross Margin | 44.7% | 53.6% | 45.8% | 53.0% | +0.6 pp | | Net Loss / Income | ($47.8 million) | $143.9 million | $125.6 million | $89.4 million | +61% (Net Income) | | Basic EPS | ($1.22) | N/A | $3.20 | N/A | N/A | | Diluted EPS | ($1.22) | $3.62 | $3.16 | $2.25 | +61% | | Core IoT Product Sales Growth | N/A | N/A | N/A | N/A | +53% | | Shares Repurchased | N/A | N/A | N/A | N/A | $128 million (1.8 million shares) | | Gross Debt Reduction | N/A | N/A | N/A | N/A | ~14% ($134 million) | Fourth Quarter Fiscal 2025 Financial Highlights In the fourth quarter of fiscal 2025, Synaptics reported net revenue of $282.8 million. The company achieved a non-GAAP net income of $39.5 million, or $1.01 per diluted share, demonstrating solid performance in its Core IoT segment Fourth Quarter Fiscal 2025 Financial Performance | Metric | Q4 FY2025 (GAAP) | Q4 FY2025 (Non-GAAP) | Q4 FY2024 (GAAP) | Q4 FY2024 (Non-GAAP) | | :-------------------------------- | :--------------- | :------------------- | :--------------- | :------------------- | | Net Revenue | $282.8 million | N/A | $247.4 million | N/A | | Gross Margin | 43.0% | 53.5% | 45.8% | 53.4% | | Net Loss / Income | ($4.7 million) | $39.5 million | $208.3 million | $25.6 million | | Basic EPS | ($0.12) | N/A | $5.27 | N/A | | Diluted EPS | ($0.12) | $1.01 | $5.22 | $0.64 | | Core IoT Product Sales Growth | N/A | N/A | N/A | N/A | +55% vs. last year | CEO's Strategic Commentary CEO Rahul Patel expressed strong confidence in Synaptics' engineering talent, technology, and customer relationships, reaffirming the strategic focus on Core IoT, particularly Edge AI. He highlighted the 12% year-over-year revenue growth in fiscal 2025, primarily driven by a 53% increase in Core IoT products, and outlined priorities for sustainable long-term growth - CEO Rahul Patel is confident in the company's engineering talent, differentiated technology, and strong customer relationships, reinforcing the strategic focus on Core IoT and opportunities for shareholder value[5] - Fiscal 2025 revenue grew 12% year-over-year, primarily fueled by a 53% year-over-year growth in Core IoT products[5][6] - Key priorities include accelerating Core IoT growth with an emphasis on Edge AI, delivering on the product roadmap, and maintaining operational discipline to position Synaptics for sustainable, long-term growth[5] Business Outlook Synaptics provided positive Q1 fiscal 2026 guidance, reflecting improved market conditions and a strong financial position, supported by a new share repurchase program First Quarter Fiscal 2026 Guidance Synaptics provided guidance for the first quarter of fiscal 2026, anticipating approximately 13% year-over-year revenue growth at the midpoint. The outlook includes specific GAAP and Non-GAAP ranges for revenue, gross margin, operating expense, and earnings per share First Quarter Fiscal 2026 Guidance | Metric | GAAP Guidance | Non-GAAP Adjustment | Non-GAAP Guidance | | :-------------------------- | :---------------- | :------------------ | :------------------ | | Revenue | $290M ± $10M | N/A | N/A | | Gross Margin | 42.5% ± 2.0% | $32M ± $1M | 53.5% ± 1.0% | | Operating Expense | $147M ± $4M | $42M ± $2M | $105M ± $2M | | Earnings (loss) per share | ($0.54) ± $0.25 | $1.59 ± $0.10 | $1.05 ± $0.15 | - The company expects approximately 13% year-over-year revenue growth at the mid-point of its Q1 FY2026 guidance range[7] - Non-GAAP gross margin excludes $30.0 to $32.0 million in acquisition and integration-related costs and $1.0 million in share-based compensation[8] - Non-GAAP operating expense excludes $33.0 to $35.0 million in share-based compensation, $1.0 million in restructuring costs, and $6.0 to $8.0 million in acquisition and integration-related costs[9] CFO's Financial Position and Capital Allocation Commentary CFO Ken Rizvi noted improvements in order activity, backlog, and channel inventory, which are reflected in the positive Q1 fiscal 2026 guidance. He emphasized the company's strong financial position, healthy balance sheet, and solid cash flows, further supported by the Board's approval of a new $150 million share repurchase program - Order activity, backlog, and channel inventory levels have improved, contributing to the positive Q1 fiscal 2026 guidance[7] - The company maintains a strong financial position, supported by a healthy balance sheet and solid cash flows[7] - The Board approved a new share repurchase program of up to $150 million of common stock, following the expiration of the previous authorization[7] Capital Allocation Strategy Synaptics' Board of Directors authorized a new $150 million share repurchase program, reflecting a commitment to returning value to shareholders New Stock Repurchase Program Synaptics' Board of Directors authorized a new share repurchase program of up to $150 million of common stock. This program has no expiration date and allows for repurchases through open market or privately negotiated transactions, with timing and amount dependent on various market and company-specific factors - The Board of Directors authorized a new share repurchase program of up to $150 million of the Company's common stock[11] - The program has no expiration date but will be periodically reviewed based on capital allocation priorities, market conditions, balance sheet, free cash flow, and alternative investment opportunities[11] - Repurchases may occur through open market or privately negotiated transactions, subject to market conditions, legal requirements, and other factors, and the company may use Rule 10b5-1 trading plans[12] Company Information This section provides an overview of Synaptics' focus on AI at the Edge, details of the Q4 FY2025 earnings call, and investor relations contact information About Synaptics Incorporated Synaptics is a Nasdaq-listed company driving innovation in AI at the Edge, focusing on intelligent connected devices. They offer cutting-edge Synaptics Astra™ AI-Native embedded compute, Veros™ wireless connectivity, and multimodal sensing solutions to enhance digital experiences across various applications - Synaptics (Nasdaq: SYNA) is an innovator in AI at the Edge, bringing AI closer to end users and transforming engagement with intelligent connected devices[15] - The company provides Synaptics Astra™ AI-Native embedded compute, Veros™ wireless connectivity, and multimodal sensing solutions[15] - Their technology spans touch, display, biometrics, AI-enabled wireless connectivity, video, vision, audio, speech, and security processing[15] Earnings Call Details Synaptics' fourth quarter fiscal 2025 teleconference and webcast was scheduled for August 7, 2025, at 2:00 p.m. PT (5:00 p.m. ET). Participants could pre-register online, and supplementary materials were made available on the company's investor relations website - The Q4 FY2025 earnings teleconference and webcast was scheduled for August 7, 2025, at 2:00 p.m. PT (5:00 p.m. ET)[13] - Speakers included Rahul Patel (President and CEO) and Ken Rizvi (CFO)[16] - Supplementary slides, prepared remarks, and a live/archived webcast were accessible via the 'Investor Relations' section of the company's website[14] Investor Relations Contact For investor inquiries, Munjal Shah, Head of Investor Relations, can be contacted via phone or email - Contact: Munjal Shah, Head of Investor Relations[33] - Phone: +1-408-518-7639, Email: munjal.shah@synaptics.com[33] Non-GAAP Financial Measures Synaptics utilizes Non-GAAP financial measures to provide a clearer view of core operating performance by excluding specific non-cash or non-recurring items Purpose and Rationale for Non-GAAP Measures Synaptics uses Non-GAAP Net Income and its components (e.g., Gross Margin, Operating Expenses) as supplemental measures to evaluate business performance. These measures exclude specific items like share-based compensation and acquisition-related costs, which the company believes are not indicative of its core operating performance, to facilitate period-to-period comparisons and provide a clearer view of underlying business trends, despite their limitations compared to GAAP - Synaptics uses Non-GAAP Net Income, excluding share-based compensation, acquisition-related costs, and other non-cash or non-recurring items, as a supplemental measure of operating performance[16] - Non-GAAP measures facilitate operating performance comparisons by eliminating differences caused by the existence and timing of certain charges, which are not considered indicative of core operations[17] - Limitations include not reflecting actual expenses and potentially inflating net income/EPS compared to GAAP results; thus, they should not be considered in isolation or as a substitute for GAAP[17] Specific Non-GAAP Adjustments Synaptics makes several specific adjustments to GAAP figures to arrive at Non-GAAP results, each with a detailed rationale Acquisition and Integration-Related Costs These costs, including amortization of intangibles and legal fees, are excluded from Non-GAAP measures as they are not indicative of ongoing core business operations - These costs primarily include amortization of purchased intangibles, inventory fair value adjustments, transitory post-acquisition incentive programs, and legal/consulting costs directly associated with acquisitions[18][20] - Excluded from Non-GAAP measures because they are not factored into ongoing business operating performance evaluation and can vary significantly based on acquisition terms and timing[18] Share-Based Compensation Share-based compensation, related to employee equity awards, is excluded from Non-GAAP results due to its variability and non-cash nature - Relates to employee equity award programs (stock options, deferred stock units, etc.) and is excluded due to its variability, dependence on market forces, and non-cash nature (for stock-settled awards)[19][21] - Exclusion provides a basis to compare principal operating performance against peer companies without variability from different equity-linked awards and methodologies[21] Intangible Asset Impairment Charge This non-cash charge, representing excess carrying value, is excluded from Non-GAAP measures to ensure consistent comparison of operating performance - Represents the excess carrying value of an indefinite-lived asset over its fair value; it is a non-cash charge[22] - Excluded from Non-GAAP measures to allow comparison of principal operating performance without the variability created by such charges[22] Restructuring Costs Costs associated with restructuring, such as employee termination and asset disposal, are excluded from Non-GAAP results due to their non-recurring nature - Costs incurred to address cost structure inefficiencies of acquired or existing business operations, primarily employee termination, asset disposal, and office closure costs[23] - Excluded to provide a basis for comparing principal operating performance without the variability from these non-recurring or infrequent costs[23] Site Remediation Accrual An update to estimated future costs for a site contamination project is excluded from Non-GAAP measures to remove associated variability - Represents an update to estimated future costs for a site contamination project from an acquisition[24] - Excluded from Non-GAAP measures to remove variability associated with this specific accrual[24] Legal Settlement Accruals and Other Estimated costs for unusual legal claims and indemnification obligations are excluded from Non-GAAP results for consistent performance comparison - Estimated cost of settling unusual or infrequent legal claims and indemnification obligations[25] - Excluded from Non-GAAP measures to allow comparison of principal operating performance without variability from non-recurring or non-routine settlement accruals[25] Loss on Early Extinguishment of Debt This non-cash item, representing the difference in debt carrying and fair value, is excluded from Non-GAAP results to remove variability - A non-cash item representing the difference between the carrying value and fair value of extinguished debt[26][27] - Excluded from Non-GAAP results due to its non-cash nature and to remove associated variability[27] Executive Transition and Other Costs Non-recurring expenses related to the CEO transition are excluded from Non-GAAP results to enhance comparability of core operating performance - Non-recurring expenses associated with the CEO transition in fiscal 2025, primarily a one-time sign-on bonus[28] - Excluded from Non-GAAP results as they are not indicative of core operating performance and enhance comparability by removing infrequent personnel-related costs[28] Other Non-Cash Items Non-cash amortization of debt discount and issuance costs are excluded from Non-GAAP results due to their non-cash nature and to remove associated variability - Includes non-cash amortization of debt discount and issuance costs[29] - Excluded from Non-GAAP results due to their non-cash nature and to remove associated variability[29] Non-GAAP Tax Adjustments Forecasted long-term Non-GAAP tax rate adjustments improve modeling accuracy by eliminating effects of certain items in Non-GAAP net income/EPS - Forecasted long-term Non-GAAP tax rate aims to improve modeling accuracy and consistency by eliminating effects of certain items in Non-GAAP net income/EPS[30] - Adjustments account for share-based compensation, taxation of intercompany intellectual property transactions, and other acquisition-related tax impacts[30] - The long-term Non-GAAP tax rate is evaluated annually for significant events like tax law changes, corporate organizational changes, and shifts in geographic earnings mix[30] Forward-Looking Statements and Risks This section cautions readers that forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially Cautionary Statement Regarding Forward-Looking Statements This section contains forward-looking statements regarding Synaptics' financial condition, results, plans, and future performance, including Q1 fiscal 2026 guidance and growth in Core IoT and Edge AI. These statements are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, such as global macroeconomic conditions, demand variability, supply chain disruptions, and the ability to execute strategies. The company disclaims any obligation to update these statements, except as required by law - The press release contains forward-looking statements regarding financial condition, results, plans, objectives, future performance, and business, including Q1 FY2026 guidance and growth in Core IoT and Edge AI[31] - These statements are based on current expectations and assumptions but are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[31] - Key risks include global macroeconomic conditions (trade restrictions, tariffs, geopolitical tensions, inflation, interest rates), demand variability in target markets, customer concentration, supply chain risks, ability to execute strategies, and operational challenges related to CEO transition[31] Condensed Consolidated Financial Statements This section provides condensed consolidated financial statements, including balance sheets, income statements, GAAP to Non-GAAP reconciliations, and cash flow data Condensed Consolidated Balance Sheets Synaptics' balance sheet as of June 2025 shows a decrease in total assets compared to June 2024, primarily driven by a significant reduction in cash and cash equivalents. Total liabilities also decreased, while stockholders' equity saw a slight decline Condensed Consolidated Balance Sheets (In millions) | Metric (In millions) | June 2025 | June 2024 | | :-------------------------------- | :-------- | :-------- | | ASSETS | | | | Cash and cash equivalents | $391.5 | $876.9 | | Total current assets | $751.9 | $1,162.3 | | Goodwill | $872.3 | $816.4 | | Total assets | $2,584.4 | $2,825.0 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $270.9 | $277.2 | | Long-term debt | $834.8 | $966.9 | | Total liabilities | $1,189.5 | $1,358.2 | | Total stockholders' equity | $1,394.9 | $1,466.8 | | Total liabilities and stockholders' equity | $2,584.4 | $2,825.0 | Condensed Consolidated Statements of Income For the full year fiscal 2025, Synaptics reported net revenue of $1,074.3 million, an increase from the prior year. The company recorded a GAAP net loss of $47.8 million, compared to a net income in the prior year, primarily influenced by operating expenses and a lower tax benefit Condensed Consolidated Statements of Income (In millions, except per share data) | Metric (In millions, except per share data) | Three Months Ended June 2025 | Three Months Ended June 2024 | Year Ended June 2025 | Year Ended June 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :------------------- | :------------------- | | Net revenue | $282.8 | $247.4 | $1,074.3 | $959.4 | | Gross margin | $121.5 | $113.4 | $480.4 | $439.8 | | Total operating expenses | $145.7 | $144.5 | $574.5 | $541.4 | | Operating loss | ($24.2) | ($31.1) | ($94.1) | ($101.6) | | Net (loss)/income | ($4.7) | $208.3 | ($47.8) | $125.6 | | Basic Net (loss)/income per share | ($0.12) | $5.27 | ($1.22) | $3.20 | | Diluted Net (loss)/income per share | ($0.12) | $5.22 | ($1.22) | $3.16 | Reconciliation of GAAP to Non-GAAP Financial Measures The reconciliation tables detail the adjustments made from GAAP to Non-GAAP financial measures for both the quarter and full fiscal year 2025 and 2024. Key adjustments include acquisition and integration-related costs, share-based compensation, restructuring costs, and non-GAAP tax adjustments, which significantly impact gross margin, operating income, and net income, resulting in higher Non-GAAP profitability Reconciliation of GAAP to Non-GAAP Financial Measures (In millions, except per share data) | Metric (In millions, except per share data) | Q4 FY2025 GAAP | Q4 FY2025 Non-GAAP | FY2025 GAAP | FY2025 Non-GAAP | | :------------------------------------------ | :------------- | :----------------- | :---------- | :-------------- | | Gross Margin | $121.5 | $151.2 | $480.4 | $576.2 | | Gross Margin - percentage of revenue | 43.0% | 53.5% | 44.7% | 53.6% | | Operating Loss / Income | ($24.2) | $46.7 | ($94.1) | $177.5 | | Net Loss / Income | ($4.7) | $39.5 | ($47.8) | $143.9 | | Diluted Net (loss)/income per share | ($0.12) | $1.01 | ($1.22) | $3.62 | | Key Adjustments (FY2025): | | | | | | Acquisition and integration related costs | N/A | $122.5 | N/A | N/A | | Share-based compensation | N/A | $112.8 | N/A | N/A | | Non-GAAP tax adjustments | N/A | ($89.1) | N/A | N/A | Condensed Consolidated Cash Flows For fiscal year 2025, Synaptics generated $142.0 million in net cash from operating activities, a slight increase from the prior year. However, significant cash was used in investing activities, primarily for business acquisitions, and in financing activities, largely due to debt repayment and common stock repurchases, resulting in a net decrease in cash and cash equivalents Condensed Consolidated Cash Flows (In millions) | Metric (In millions) | Year Ended 2025 | Year Ended 2024 | | :------------------------------------------ | :-------------- | :-------------- | | Net (loss)/income | ($47.8) | $125.6 | | Net cash provided by operating activities | $142.0 | $135.9 | | Net cash used in investing activities | ($297.9) | ($157.7) | | Net cash used by financing activities | ($331.4) | ($25.1) | | Net decrease in cash and cash equivalents | ($485.4) | ($47.8) | | Cash and cash equivalents, end of period | $391.5 | $876.9 | - Acquisition of business, net of cash and cash equivalents acquired, used $201.1 million in investing activities for FY2025[42] - Repurchases of common stock amounted to $128.3 million in FY2025[42] - Debt repayment totaled $583.5 million in FY2025[42]