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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a strong outlook in Core IoT growth and design wins for the Astra platform, despite supply constraints in Mobile Touch. The Q&A highlights consistent growth in IoT, sequential growth in Enterprise and Auto, and opportunities in mobile and industrial markets. The financials indicate healthy cash flow and stable inventory. Although management was vague on some specifics, the overall sentiment and strategic initiatives suggest a positive trajectory, especially with a market cap of $3.4 billion, indicating a likely stock price increase of 2% to 8%.
Revenue Revenue for fiscal Q1 was $292.5 million, up 14% year-over-year, driven by strength from Core IoT products.
Core IoT product revenues Increased 74% year-over-year, driven primarily by increased demand for processor and wireless connectivity products.
Enterprise & Automotive product revenues Flat year-over-year, with strength in the enterprise portfolio offset by softness in Automotive.
Mobile Touch product revenues Lower than expected, in part, due to supply chain constraints during the quarter.
Non-GAAP gross margin 53.2%, in line with guidance range.
Non-GAAP operating expense $104 million, slightly better than the midpoint of guidance range.
Non-GAAP operating margin 17.6%, up approximately 110 basis points sequentially and 90 basis points year-over-year.
Non-GAAP net income $43.3 million.
Non-GAAP EPS per diluted share $1.09 per share, an increase of 35% year-over-year.
Cash, cash equivalents, and short-term investments $459.9 million, up approximately $7.4 million from the prior quarter.
Cash flow from operations $30.2 million in the first fiscal quarter.
Capital expenditures $12.2 million, in part driven by lab build-outs to support R&D efforts.
Depreciation $7.5 million for the quarter.
Receivables $119.5 million at the end of September, with days of sales outstanding at 37 days, down from 41 days last quarter.
Inventory balance $143.1 million, increased by $3.6 million from the previous quarter, with calculated days of inventory at 94 days, essentially flat with the last quarter.
Launch of Synaptics Astra Edge AI processors: Introduced a new class of AI-native silicon designed for intelligent devices at the Edge. The Astra SL2600 series supports a wide range of applications, including multimodal human-machine interfaces, vision, and voice capabilities. It integrates Synaptics' processing, wireless connectivity, and mixed-signal capabilities.
Synaptics Torq AI: Integrated into Astra processors, it combines a neural processor architecture with open-source compilers. Collaboration with Google Research has enabled the integration of Coral NPU for energy-efficient AI at the Edge.
Mobile Touch advancements: Developed a next-generation touch controller for foldable OLED phones and large-screen applications. Secured design wins with a top Android OEM and Chinese OEMs, with revenue contributions expected next fiscal year.
Core IoT portfolio growth: Revenue grew by 74% year-over-year, driven by demand for processors and wireless connectivity products. Design wins span diverse markets, including wearables, home security systems, and AI-enabled devices.
Enterprise & Automotive: Gained market share in enterprise products, with steady improvement in PC products. Automotive market remains soft, but existing designs continue to contribute.
Financial performance: Revenue increased by 14% year-over-year to $292.5 million. Non-GAAP EPS grew by 35% to $1.09. Gross margin was 53.2%, and operating margin improved by 90 basis points year-over-year.
R&D investments: Capital expenditures of $12.2 million were made, partly for lab build-outs to support R&D efforts.
Focus on Edge AI: Sharpening focus on Edge AI by leveraging capabilities in analog mixed-signal, multi-core processing, and wireless connectivity. Collaboration with Google Research aims to create an open-source ecosystem for AI-native Edge IoT development.
Partnerships and customer engagement: Strengthened partnerships with customers and ecosystem partners, showcased Edge AI use cases, and secured design wins for Astra processors.
Automotive Market Demand: Softness in automotive demand is noted, which could impact revenue from this segment. The company is relying on existing designs and investing in new solutions to counteract this.
Mobile Touch Product Revenue: Lower-than-expected revenue due to supply chain constraints during the quarter, which could affect financial performance.
Macroeconomic and Trade Environment: Uncertainty in the global macroeconomic, trade, and tariff environment is highlighted as a risk to future performance.
Inventory Levels: Inventory levels increased slightly, which could indicate potential inefficiencies or slower-than-expected sales.
Automotive Innovation Investments: Investments in new automotive solutions are ongoing, but the subdued market demand could delay returns on these investments.
Revenue Expectations: For Q2 2026, Synaptics expects revenues to be approximately $300 million at the mid-point, plus or minus $10 million. The revenue mix is anticipated to be 31% Core IoT, 53% Enterprise & Automotive, and 16% Mobile Touch products.
Gross Margin Projections: Non-GAAP gross margin for Q2 2026 is expected to be 53.5% at the mid-point, plus or minus 1%.
Operating Expenses: Non-GAAP operating expenses for Q2 2026 are expected to be $106 million at the midpoint, plus or minus $2 million.
Net Income and EPS: Non-GAAP net income per diluted share is anticipated to be $1.15 at the mid-point, plus or minus $0.15, based on an estimated 40.4 million fully diluted shares.
Core IoT Growth: Synaptics expects continued growth in its Core IoT portfolio, driven by processors and wireless connectivity products, with initial revenue contributions from the Astra SL2600 devices starting in the second half of calendar year 2026.
Edge AI and Astra Processors: The company anticipates significant opportunities in AI inference compute at the Edge, with strong early traction and a healthy pipeline of customer engagements. Astra SL2600 devices are expected to contribute to revenue in the second half of calendar year 2026.
Mobile Touch Segment: Revenue contributions from next-generation touch controllers for foldable OLED phones and large-screen applications are expected to begin in the next fiscal year. The company is optimistic about the growth potential in foldable phones.
Automotive Market: While the automotive market remains soft, Synaptics is investing in innovative automotive solutions to increase silicon content and expects momentum to continue in its enterprise portfolio.
Share Repurchase: We repurchased $7.2 million of our shares during Q1 and a total of $15 million of our shares through today.
The earnings call presents mixed signals. While there is optimism in product development, particularly in Core IoT and Mobile Touch, the Enterprise & Automotive outlook is weak. Financial guidance is strong, but the Q&A reveals uncertainties, especially regarding strategic partnerships and regulatory impacts. The lack of clarity on certain issues tempers the potential positive sentiment. Given the company's market cap, the stock is likely to remain stable with minor fluctuations, resulting in a neutral prediction.
The earnings call reveals a strong outlook in Core IoT growth and design wins for the Astra platform, despite supply constraints in Mobile Touch. The Q&A highlights consistent growth in IoT, sequential growth in Enterprise and Auto, and opportunities in mobile and industrial markets. The financials indicate healthy cash flow and stable inventory. Although management was vague on some specifics, the overall sentiment and strategic initiatives suggest a positive trajectory, especially with a market cap of $3.4 billion, indicating a likely stock price increase of 2% to 8%.
The earnings call summary and Q&A indicate strong financial performance, with significant growth in core IoT sales and strategic investments in new products like WiFi 7 and the Astra platform. The company's commitment to shareholder value through share repurchases and debt reduction is also positive. While there are some uncertainties around specific strategies, the overall outlook is optimistic with improved order activity and backlog. Given the company's market cap and these factors, a positive stock price movement of 2% to 8% is expected over the next two weeks.
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