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Synaptics(SYNA) - 2025 Q2 - Earnings Call Transcript
SYNASynaptics(SYNA)2025-02-07 03:36
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Financial Data and Key Metrics Changes - Revenue for Q2 2025 was 267.2million,representinga4267.2 million, representing a 4% sequential increase and a 13% year-over-year increase, slightly above the midpoint of guidance [26][37] - Non-GAAP gross margin was 53.6%, slightly above the midpoint of guidance [39] - Non-GAAP EPS increased 61% year-over-year to 0.92, exceeding the midpoint of guidance [41] - Non-GAAP operating margin improved to 17.3%, up approximately 360 basis points year-over-year [40] Business Line Data and Key Metrics Changes - Core IoT product revenues increased 63% year-over-year to 61million,drivenbygrowthinbothprocessorandwirelessproducts[27][38]−Enterpriseandautomotiveproductrevenueimproved1761 million, driven by growth in both processor and wireless products [27][38] - Enterprise and automotive product revenue improved 17% year-over-year and 8% sequentially [38] - Mobile touch product revenue decreased 7% sequentially and 25% year-over-year due to the end of life for shipments to a large US customer [38] Market Data and Key Metrics Changes - The revenue mix for Q2 was 23% core IoT, 59% enterprise and automotive, and 18% mobile touch products [38] - The company is optimistic about enterprise demand for calendar year 2025, driven by new products and potential PC refresh cycles [31] Company Strategy and Development Direction - The company is focused on three key pillars: investing in core product lines, expanding in IoT, and prudent capital allocation [12][14] - The recent 198 million agreement with Broadcom is expected to generate over 40millioninannualizedsalesandisslightlyaccretivetonon−GAAPEPS[14][15]−Thecompanyaimstocapitalizeonthedemandforinnovativeproductsandsolutions,particularlyintheIoTandAIsectors[11][12]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceingrowthprospectsdespiteaslowergrowtheconomicenvironment,withapathtosequentialgrowthofapproximately40 million in annualized sales and is slightly accretive to non-GAAP EPS [14][15] - The company aims to capitalize on the demand for innovative products and solutions, particularly in the IoT and AI sectors [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growth prospects despite a slower growth economic environment, with a path to sequential growth of approximately 10 million per quarter [65][92] - The company highlighted lean inventories and improved visibility compared to six months ago, indicating a positive outlook for the business [65][92] Other Important Information - The company retired its 582milliontermloanduringthequarter,reducingtotaldebtto582 million term loan during the quarter, reducing total debt to 850 million [44] - Cash flow from operations was 24million,andthecompanyreturnedapproximately24 million, and the company returned approximately 75 million to shareholders through share repurchases [45] Q&A Session Summary Question: How will the $40 million in annualized sales from the Broadcom transaction be allocated? - Management indicated that the sales will fall into the core IoT segment, primarily due to wireless technologies [59] Question: What areas are driving improvement in bookings and orders in enterprise? - Management noted broad improvements, particularly in the peripheral side, and expressed optimism about growth in the enterprise space [60][65] Question: Are there designs in progress in the Android and ARVR markets? - Management confirmed ongoing designs and expected revenue ramp from the Broadcom transaction, particularly in the wireless portfolio [70][73] Question: How does the Google collaboration impact revenue contribution? - Management stated that the Google partnership validates the ASTRA platform but does not change the existing revenue forecast [108] Question: What is the outlook for the automotive space? - Management acknowledged sluggishness in the automotive sector but remains optimistic about long-term potential [67] Question: How does the company plan to expand its presence among Android OEMs? - Management highlighted the complementary portfolio from the Broadcom acquisition, which enhances their ability to service existing customers [172][176]