Financial Data and Key Metrics Changes - Total company revenue increased by 13% year-over-year to $302.5 million, marking the fifth consecutive quarter of double-digit growth [6][16] - Non-GAAP earnings per share rose by 32% year-over-year to $1.21 [6][17] - Non-GAAP gross margin for Q2 was 53.6%, slightly above guidance [17] Business Line Data and Key Metrics Changes - Core IoT product revenues surged by 53% year-over-year, driven by strong performance in wireless connectivity products [16][17] - Enterprise and automotive product revenues increased modestly year-over-year, while mobile touch product revenues grew by 3% [16][17] Market Data and Key Metrics Changes - The revenue mix for Q2 was 31% from core IoT, 53% from enterprise and automotive, and 16% from mobile touch products [16] - The company is seeing early traction in robotics and humanoids, indicating a growing market for its intelligent sensing portfolio [8][9] Company Strategy and Development Direction - The company is focusing on Physical and Edge AI, aligning its product strengths with market trends [7][14] - Synaptics is expanding its partner ecosystem in industrial markets and enhancing its product offerings, including the Astra multimodal microprocessors [9][10] - The integration of processors and connectivity teams aims to accelerate the roadmap for delivering integrated solutions [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the premium tier mobile market despite supply chain challenges [24][25] - The company anticipates meaningful revenue contributions from the Astra product line starting in calendar 2027, which is expected to positively impact gross margins [29][30] - The outlook for Q3 includes expected revenues of approximately $290 million, with a focus on maintaining gross margins around 53.5% [20][21] Other Important Information - The company ended Q2 with approximately $437.4 million in cash and cash equivalents, down from the previous quarter due to share repurchases [18] - Inventory levels increased to $158 million, reflecting a strategic decision to purchase inventory ahead of demand [19] Q&A Session Summary Question: Concerns about supply issues in mobile and PC businesses - Management indicated that the premium tier mobile market remains stable and is less affected by supply pressures compared to the broader market [24][25][26] Question: Timing for Astra products to contribute to revenue - Management expects Astra products to start contributing meaningfully to revenue in calendar 2027, with positive impacts on gross margins [29][30] Question: Guidance on gross margins for the upcoming quarter - Management confirmed guidance for gross margins in the mid-53% range for Q3, influenced by product mix and volume [32][33] Question: Update on automotive business performance - Automotive remains a small portion of the business, with focus shifting towards enterprise and core IoT markets [42] Question: Insights on channel inventory levels - Channel inventories are reported to be lean, indicating a healthy demand-supply balance [78]

Financial Data and Key Metrics Changes - Total company revenue increased by 13% year-over-year to $302.5 million, marking the fifth consecutive quarter of double-digit growth [7][17] - Non-GAAP earnings per share rose by 32% year-over-year to $1.21 [7][18] - Non-GAAP gross margin for Q2 was 53.6%, slightly above guidance [18] - Non-GAAP operating margin improved to 19.2%, up approximately 190 basis points year-over-year [18] Business Line Data and Key Metrics Changes - Core IoT product revenues surged by 53% year-over-year, driven by strong wireless connectivity products [17][18] - Enterprise and automotive product revenues increased modestly year-over-year, slightly ahead of expectations [18] - Mobile touch product revenues grew by 3% year-over-year, despite ongoing supply challenges [18] Market Data and Key Metrics Changes - The revenue mix for Q2 was 31% from core IoT, 53% from enterprise and automotive, and 16% from mobile touch products [17] - The company is seeing early traction in robotics and humanoids, indicating a growing market for its intelligent sensing portfolio [9][10] Company Strategy and Development Direction - The company is focusing on Physical and Edge AI, aligning its product strengths with market trends [8][15] - Synaptics is expanding its partner ecosystem in industrial markets and enhancing its Edge AI portfolio with new products [11][12] - The integration of processors and connectivity teams aims to accelerate the roadmap for delivering integrated solutions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the premium tier mobile market, indicating resilience against supply pressures [25][26] - The company anticipates meaningful revenue contributions from its Astra product line starting in calendar 2027, which is expected to improve gross margins [30][31] - Management highlighted a strong backlog and healthy bookings levels, indicating a positive outlook for the upcoming quarters [59] Other Important Information - The company ended Q2 with approximately $437.4 million in cash and cash equivalents, down from the previous quarter due to share repurchases [19] - Cash flow from operations was $30 million, with capital expenditures of $11.6 million for the quarter [19] Q&A Session Summary Question: Supply issues in mobile and PC business - Management noted that the premium tier mobile business is stable and not significantly affected by supply pressures, particularly in memory costs [25][26][27] Question: Astra product line and revenue contribution - Management confirmed that Astra products are expected to contribute meaningfully to revenue and gross margins starting in 2027 [30][31] Question: Guidance and gross margins - Management indicated that gross margins are expected to remain in the mid-53% range for Q3, influenced by product mix and volume [34] Question: Automotive business performance - Automotive remains a small portion of the business, with focus shifting towards enterprise and core IoT markets [42] Question: Channel inventory levels - Management stated that channel inventories are lean and aligned with end market demand, indicating no significant headwinds [78]

Second Quarter Fiscal 2026 Earnings Supplemental Slides February 5, 2026 © 2026 Synaptics Incorporated 1 Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the safe harbors created under the Securities Act of 1933, as amended, and the Securities Act of 1934, as amended. Such forward-looking statements include words such as "expect," "anticipate," "intend," "believe," "estimate," "plan," "target," "strateg ...

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Financial Data and Key Metrics Changes - The company reported record revenues of $12.3 billion and non-GAAP earnings per share (EPS) of $3.50 for fiscal Q1 2026, with non-GAAP EPS at the high end of guidance [6][16] - QCT revenues reached a record $10.6 billion, driven by strong performance in automotive and IoT segments [6][16] - Licensing business revenues were $1.6 billion, with an EBT margin of 77%, reflecting higher units and favorable mix [16] Business Line Data and Key Metrics Changes - QCT handset revenues reached a record $7.8 billion, benefiting from recently launched flagship smartphones [16] - QCT IoT revenues grew 9% year-over-year to $1.7 billion, driven by demand across consumer and networking products [16] - QCT Automotive revenues grew to $1.1 billion, up 15% year-over-year, driven by increased demand for Snapdragon Digital Chassis platforms [17] Market Data and Key Metrics Changes - Global consumer demand for handsets, particularly in the premium and high-tier segments, exceeded expectations, with healthy sell-through observed [6][7] - The handset industry is expected to face constraints due to memory availability and pricing, particularly DRAM, as suppliers redirect capacity to meet AI data center demand [7][18] - The company anticipates that the overall size of the handset market will be defined by memory availability throughout the fiscal year [39][69] Company Strategy and Development Direction - The company is focused on expanding its presence in the premium and high-tier smartphone segments, with a dual flagship product strategy that has been well received [8][42] - The company is investing in AI-native smartphones and intelligent wearables, positioning Snapdragon platforms as the choice for the industry [8][12] - The company aims to strengthen its leadership in automotive and robotics, with multiple design wins and collaborations with major automakers [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the handset business despite near-term challenges related to memory supply [18][39] - The company expects to return to prior growth trajectories for QCT handset revenues once memory supply conditions normalize [18] - Management remains optimistic about the long-term growth potential in automotive and IoT, with combined growth expected to outpace long-term revenue targets [21][22] Other Important Information - The company returned $3.6 billion to stockholders, including $2.6 billion in stock repurchases and $949 million in dividends [17] - The company completed the acquisition of Alphawave Semi, enhancing its data center solutions [14] Q&A Session Summary Question: What factors are driving the weakness in handset outlook beyond memory pricing? - Management indicated that the weakness is entirely related to memory availability, with strong microeconomic indicators and handset demand observed [26][27] Question: Is the automotive revenue growth driven by ADAS wins? - Management confirmed that the automotive pipeline continues to translate into revenue, with new car launches contributing to record revenues [30] Question: How is the company progressing with data center customers? - Management reported positive progress with customers, including shipping to Humane and engagement with major hyperscalers [34] Question: What is the company's strategy regarding memory shortages? - Management clarified that they do not purchase memory directly but work with customers who do, ensuring flexibility in memory sourcing [67][69] Question: How does the company plan to navigate the memory allocation challenges with larger OEMs? - Management acknowledged that larger OEMs may have better access to memory but emphasized that the issue is industry-wide and not limited to specific customers [73]

Financial Data and Key Metrics Changes - The company reported record revenues of $12.3 billion and non-GAAP earnings per share (EPS) of $3.50 for fiscal Q1 2026, with non-GAAP EPS at the high end of guidance [5][17] - QCT revenues reached a record $10.6 billion, with strong year-over-year growth across automotive and IoT segments [17] - Licensing business revenues were $1.6 billion, with an EBT margin of 77%, driven by higher units and favorable mix [17] Business Line Data and Key Metrics Changes - QCT handset revenues reached a record $7.8 billion, benefiting from recently launched flagship smartphones [17] - QCT IoT revenues grew 9% year-over-year to $1.7 billion, driven by demand across consumer and networking products [17] - QCT Automotive revenues grew to $1.1 billion, up 15% year-over-year, reflecting increased demand for Snapdragon Digital Chassis platforms [17] Market Data and Key Metrics Changes - Global consumer demand for handsets, particularly in the premium and high-tier segments, exceeded expectations, with healthy sell-through observed [5] - The handset industry is expected to face constraints due to memory availability and pricing, particularly DRAM, as suppliers redirect capacity to meet AI data center demand [5][6] Company Strategy and Development Direction - The company is focused on expanding its presence in the premium and high-tier smartphone segments, with a dual flagship product strategy that has seen broad OEM adoption [6][7] - The company is also investing in AI-native smartphones and intelligent wearables, positioning Snapdragon platforms as the choice for the industry [7][8] - In automotive, the company aims to reinforce its technology leadership with multiple design wins and collaborations with major automakers [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the handset business despite near-term challenges related to memory supply and pricing [19] - The company anticipates returning to prior growth trajectories for QCT handset revenues once memory supply normalizes [19] - Management remains optimistic about the long-term growth potential in automotive and IoT, with expectations for continued revenue acceleration [21] Other Important Information - The company completed the acquisition of Alphawave Semi, enhancing its high-speed wire connectivity technologies [15] - The company is actively engaging with leading hyperscalers and cloud service providers to develop data center solutions [14] Q&A Session Summary Question: What factors are driving the weakness in handset outlook beyond memory pricing? - Management indicated that the weakness is entirely related to memory availability, with strong microeconomic indicators and handset demand observed [26][27] Question: Is the automotive revenue growth driven by ADAS wins? - Management confirmed that the automotive pipeline continues to translate into revenue, with new car launches contributing to record revenues [29][30] Question: How is the company managing the memory supply situation? - Management clarified that they do not purchase memory directly but work closely with customers who do, ensuring flexibility with various memory providers [69][70] Question: What is the outlook for the data center business? - Management stated that progress is on track, with positive feedback from engagements with hyperscalers and cloud service providers [35][36] Question: How does the company view the impact of memory shortages on the overall handset market? - Management emphasized that the size of the handset market will be determined by memory availability, with expectations for premium and high-tier segments to remain resilient [40][76]

Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for the second quarter, with a Non-GAAP EPS of $0.04, both within guidance range [4][15] - Year-over-year growth was noted when excluding the major Smart Grid customer, Gridspertise, with profitability supported by gross margin expansion and cost optimization initiatives [4][15] - GAAP gross margin was 43.6%, down from 44.8% in the previous quarter but up from 42.6% a year ago [15][16] - GAAP net loss improved to $1.3 million, or $0.03 per share, compared to a loss of $2.4 million, or $0.06 per share in the prior year [17] Business Line Data and Key Metrics Changes - The drone business showed significant growth, with revenue expectations raised to $8 million-$12 million for fiscal 2026, up from $5 million-$10 million [11][20] - The company is focusing on unmanned systems, with a strong pipeline of customer engagements moving from development to broader deployment [6][10] - Critical infrastructure monitoring is also a key area, with ongoing deployments expected to expand into additional high-value applications [12][13] Market Data and Key Metrics Changes - The U.S. defense budget for fiscal 2026 includes over $13 billion allocated for unmanned systems, indicating a favorable environment for the company's drone initiatives [5][6] - The company is positioned to capture a growing share of defense modernization spending, particularly in unmanned and AI-enabled platforms [6][10] Company Strategy and Development Direction - The company is transitioning from a component supplier to a platform partner, focusing on reducing integration complexity and development risk for customers [8][10] - The Edge AI strategy is central to the company's growth, with a focus on combining embedded compute and connectivity across various markets [14][20] - The company aims to leverage its position in the drone market to create deeper customer relationships and capture long-term growth opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a short-term slowdown in purchasing activity due to a government shutdown but expressed confidence in the company's execution and recovery [5][44] - The company anticipates continued growth in the drone business and expects it to represent 15%-20% of total revenue in fiscal 2027 [20][27] - Management is optimistic about the future, citing a disciplined approach and a clear path for growth across multiple verticals [20][21] Other Important Information - The company generated positive operating cash flow of nearly $2.2 million during the quarter and reduced outstanding debt to approximately $9.7 million [18][19] - The company is actively exploring M&A opportunities to enhance margins and expand its software offerings [55] Q&A Session Summary Question: What happened with IoT systems and solutions? - Management noted a sequential decline in IoT systems due to a government shutdown affecting federal purchasing, but they executed well to mitigate the impact [23][32] Question: Can you provide insights on drone revenue contribution? - The company raised its drone revenue outlook for fiscal 2026 to $8 million-$12 million, with expectations for continued growth in fiscal 2027 [26][27] Question: What is the impact of the government shutdown and supply constraints? - Management indicated that the government shutdown caused some friction but did not significantly hinder overall performance, and they are proactively managing supply chain issues [44][45] Question: How should we think about gross margin profiles moving forward? - Management expects gross margins to slightly increase in the long term as software services become a larger part of the business, but no significant changes are anticipated in the near term [46][47]

Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for the second quarter, with a Non-GAAP EPS of $0.04, both within guidance range [4][16] - Year-over-year growth was experienced when excluding the MER Smart Grid customer, Gridspertise, with profitability supported by gross margin expansion and cost optimization initiatives [4][16] - GAAP gross margin was 43.6%, down from 44.8% in the previous quarter but up from 42.6% a year ago [16][17] - Non-GAAP gross margin was 44%, compared to 45.3% last quarter and 43.2% in the prior year quarter [17] - GAAP net loss improved to $1.3 million, or $0.03 per share, compared to a loss of $2.4 million, or $0.06 per share in the year-ago quarter [18] Business Line Data and Key Metrics Changes - The drone business showed significant growth, with revenue expectations raised to $8 million-$12 million for fiscal 2026, up from $5 million-$10 million [11][21] - The company is focusing on Group One and Two short-range reconnaissance drones, which align with current unmanned funding [7][11] - The critical infrastructure monitoring segment is progressing, with a focus on expanding applications beyond monitoring generators [12][13] Market Data and Key Metrics Changes - The U.S. defense budget for fiscal 2026 includes over $13 billion allocated for unmanned systems, indicating a supportive funding environment for the drone market [5][6] - The company is positioned to capture a growing share of defense modernization spending, particularly in unmanned and AI-enabled platforms [6][10] Company Strategy and Development Direction - The company is transitioning from a component supplier to a platform partner, focusing on reducing integration complexity and development risk for customers [8][10] - The Edge AI strategy is driving customer adoption across multiple end markets, with a focus on drones, critical infrastructure, and enterprise connectivity [14][15] - The company aims to create a unified platform for real-time video analytics and intelligent connectivity, expanding its addressable market [14] Management's Comments on Operating Environment and Future Outlook - Management noted a short-term slowdown in purchasing activity due to a government shutdown but expressed confidence in the company's execution and results [5][21] - The company anticipates continued growth through fiscal 2027, with drones expected to represent 15%-20% of total revenue [21][22] - Management highlighted the importance of maintaining a disciplined cost structure while expanding recurring revenue [21] Other Important Information - The company generated positive operating cash flow of nearly $2.2 million during the quarter and paid down approximately $1 million of outstanding debt [19][20] - The company is actively working to mitigate supply chain issues related to memory shortages, ensuring product availability for customers [48] Q&A Session Summary Question: Commentary on IoT systems and drone contribution - Management acknowledged a sequential decline in IoT systems due to a government shutdown but expressed optimism about future transitions and drone revenue contributions [24][33] Question: Details on the Drone Dominance Program - Management confirmed participation in the Drone Dominance Program and highlighted strong positioning with multiple partners [25][32] Question: Impact of government shutdown and supply constraints - Management indicated that the government shutdown affected IoT system sales but noted successful execution despite challenges [45][47] Question: Gross margin outlook with increasing software revenue - Management expects gross margins to improve in the long term as software services grow, but no significant near-term changes are anticipated [49][50]

Financial Data and Key Metrics Changes - The company reported revenue of $29.8 million for Q2 2026, with a Non-GAAP EPS of $0.04, both within guidance range [4][16] - Year-over-year growth was experienced when excluding the MER Smart Grid customer, Gridspertise, indicating strong underlying performance [4][16] - GAAP gross margin was 43.6%, slightly down from 44.8% in the previous quarter but up from 42.6% a year ago [16][17] - Non-GAAP gross margin was 44%, compared to 45.3% last quarter and 43.2% in the prior year quarter [17] - GAAP net loss improved to $1.3 million, or $0.03 per share, compared to a loss of $2.4 million, or $0.06 per share in the year-ago quarter [18] Business Line Data and Key Metrics Changes - The drone business saw significant growth, with revenue expectations raised to $8 million-$12 million for fiscal 2026, up from $5 million-$10 million [11][21] - The company is focusing on Group One and Two short-range reconnaissance drones, aligning with current unmanned funding [7][11] - The critical infrastructure monitoring segment is progressing, with revenue recognized from a tier one U.S. mobile network operator [12][14] Market Data and Key Metrics Changes - The U.S. defense budget for fiscal 2026 includes over $13 billion allocated for unmanned systems, indicating a favorable environment for the company's drone initiatives [5][6] - The company is positioned to capture a growing share of future defense modernization spending, particularly in unmanned and AI-enabled platforms [6][10] Company Strategy and Development Direction - The company is transitioning from a component supplier to a platform partner, focusing on reducing integration complexity and development risk for customers [8][10] - The Edge AI strategy is driving customer adoption across multiple end markets, with a focus on drones, critical infrastructure, and enterprise connectivity [15][21] - The company aims to create a unified platform for real-time video analytics and intelligent connectivity, expanding its addressable market [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown caused a short-term slowdown in purchasing activity from federal agency customers, but solid execution led to strong results [5][19] - The company expects continued growth through the remainder of fiscal 2026 and into fiscal 2027, with drones projected to represent 15%-20% of total revenue in fiscal 2027 [21][28] - Management expressed confidence in the durability and scale of the drone opportunity, supported by a disciplined cost structure and expanding recurring revenue [21][28] Other Important Information - The company generated positive operating cash flow of nearly $2.2 million during the quarter and paid down approximately $1 million of outstanding debt [19] - The company is actively working to mitigate supply chain issues related to memory shortages, ensuring adequate product supply for new business areas [46][47] Q&A Session Summary Question: Can you provide commentary on IoT systems and the December quarter's contribution? - Management acknowledged a sequential decline in IoT systems due to the government shutdown but noted strong execution in other areas [24][33] Question: What is the expected growth rate for the core business in fiscal 2027? - Management indicated that the overall business is expected to grow, with the drone business showing high double-digit growth rates [40] Question: What impact did the government shutdown have in the December quarter? - Management stated that the shutdown caused some friction but overall execution was strong, allowing the company to make up for lost time [45][46] Question: How should we think about the gross margin profile moving forward? - Management expects margins to remain near current levels in the near term but anticipates slight increases as software services grow [48][49]

Core Insights - Lantronix Inc. reported strong financial results for Q2 FY2026, with net revenue of $29.8 million and a non-GAAP EPS of $0.04, reflecting continued momentum in their Edge AI strategy and customer engagement [4][5]. Management Commentary - The company emphasized disciplined execution and the advancement of customer programs from development to initial production, particularly in the unmanned systems industry [2]. - Lantronix's technology is increasingly being relied upon by OEMs in defense and autonomous applications, positioning the company as a platform partner rather than just a component supplier [2]. - The inclusion of partners in the Department of War's Drone Dominance initiative highlights the relevance of Lantronix's platform in the defense ecosystem [2]. Financial Results - Q2 FY2026 highlights include: - Net Revenue: $29.8 million - GAAP EPS: ($0.03) - Non-GAAP EPS: $0.04 - Cash and Cash Equivalents: $23.0 million - Increased FY26 Drone Revenue Expectation: $8 million-$12 million, up from $5 million-$10 million [4][5]. Product and Partnership Developments - Lantronix partnered with Trillium Engineering for gimbaled imaging systems, validating the performance of its Edge AI architecture [5]. - The company secured a design win with Flock Safety in the Drone-as-First Responder category, expanding its Edge AI capabilities into public safety applications [5]. - Collaboration with Safe Pro Group aims to enhance AI-enabled threat detection for real-time identification of hazards [5]. Industry Recognition - Lantronix received several awards for innovation in Edge AI and IoT, including being named a Top 100 Edge Computing Leader by CRN for 2025 [6]. - The company won the 2025 IoT Edge Computing Excellence Award for its Open-Q™ System-on-Module portfolio [6]. Financial Outlook - The company provided guidance for Q3 FY2026, projecting revenue between $28.5 million and $32.5 million, with a midpoint of $30.5 million and non-GAAP EPS between $0.03 and $0.06 [6].