Synaptics (SYNA) FY Conference Transcript

Summary of Synaptics (SYNA) FY Conference Call - May 13, 2025 Company Overview - Company: Synaptics (SYNA) - Fiscal Year: FY 2025 - Key Focus: Core IoT segment, AI native solutions, and various applications in consumer electronics and enterprise markets Key Points Financial Performance - Q3 Revenue: $267 million with earnings of approximately $0.92 per share [1] - Q4 Guidance: Midpoint revenue guidance of $280 million and earnings guidance of about $1 per share, indicating sequential and year-over-year growth [1] - Core IoT Growth: Significant year-over-year growth in the core IoT segment, expected to continue for six sequential quarters [2][4] Market Dynamics - Inventory Levels: Customer distribution inventory has leaned out and stabilized at pre-COVID levels, indicating healthy demand [4][5] - Backlog Levels: Healthy backlog entering Q4, with strong visibility into future quarters [6][10] - Tariff Impact: Minimal direct impact from tariffs on the company, as most solutions serve a global customer base [8][11] Growth Drivers - Core IoT Segment: Expected to grow over 50% year-over-year for FY 2025, driven by wireless and embedded IoT solutions [14][19] - AI Native Solutions: First AI native solution expected to generate revenue in FY 2027, focusing on low power usage for battery-powered applications [19][53] - High-Performance WiFi: Anticipated demand for WiFi 7 solutions in video-intensive applications, with an expected initial market uptake of 20% to 25% [21][22] Product Development - Broad Market Solutions: Launching a new broad market chip targeting a $3 billion serviceable available market (SAM), with early revenues expected in the latter half of FY 2025 [30][31] - Processor Solutions: Continued investment in processor technology, particularly for AI applications, with a focus on expanding market share [32][53] Enterprise and Automotive Segments - User Presence Detection Technology: Early adoption rates of 10% to 20% in PCs, with potential for growth as AI becomes more relevant [36][37] - Enterprise IT Budgets: Constrained budgets due to prioritization of AI, but potential for recovery as workforce returns to office settings [39][42] Smartphone Segment - High-End Android Focus: Transitioning focus to high-end Android smartphones after losing a major iOS customer, with new touch controller technology expected to drive revenue growth [43][44][46] Margin Outlook - Gross Margins: Expected gross margins of approximately 53.5% for June, with potential for improvement based on product mix [55][56] Long-Term Growth Strategy - Market Expansion: Plans to expand beyond top 20 customers to a broader customer base, investing in go-to-market strategies and reference designs [33][34] - Revenue Growth Targets: Aiming for core IoT growth rates of 25% to 30% over the next few years, driven by new technologies and market expansion [52][53] Additional Insights - Customer Engagement: Ongoing discussions with customers to adapt to global supply chain changes and demand fluctuations [9][10] - Investment in R&D: Continued investment in research and development to leverage new technologies across various applications [49][50] This summary encapsulates the key insights and projections from Synaptics' FY conference call, highlighting the company's financial performance, market dynamics, growth drivers, product development, and long-term strategies.