SYNA - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the Synaptics Fourth Quarter Fiscal Year 2018 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jennifer Jarman with The Blueshirt Group. Please go ahead, ma'am.

Jennifer Jarman

Brad. you, Thank thank quarter and joining today us Good XXXX you conference fourth fiscal call. Synaptics' afternoon for With me on CEO; today's call are Rick Ali, and Bergman, CFO. Wajid President and can live This of section website the being is company's from broadcast synaptics.com. call Web Investor also the and be at Relations accessed the over posted that presentation supplemental on our quick reminder a A Investor we have slide Relations website. add on SEC slides an financial exhibit current and report as earlier our also the to with furnished Form color been have filed results. The supplementary X-K on additional today, our

issued In will other addition a for share-based on basis, results, the or to of after compensation, reconciliation the non-GAAP company's detailed results. release Please or exclude noncash also a and market GAAP management items. close which certain results provide to non-recurring supplementary today and GAAP recurring acquisition-related costs refer non-GAAP press

you to statements. make the would remind of we will that Additionally, Synaptics conference forward-looking this during call, like course

and statements financial expectations Forward-looking to of business. performance our results plans, our condition, give objectives, and future current projections relating operations,

that now obligation call June materially estimates believes this performance XX, forward-looking in prove of results Rick expressly important Rick? reports the number results information. in they reasonable, the subject SEC, and to are any with for beyond Synaptics to ended to We contained Synaptics from be including statements. the said, differ for with XXXX materially that forward-looking statements. future you any the to those year and periodic Synaptics Form a factors filed update Although and Synaptics inaccurate. I'll And cautions be fiscal cause company's refer differ control turn may that XX-K current and to disclaims Bergman. over uncertainties to risk from forward-looking could actual the our may the any risks assumptions company's actual suggested our to

Richard A. Bergman

like I'd everyone to Jennifer, Thanks, to and welcome today's call.

results providing came strong a our that end high exceeded maximizing as in driven well focus in end of bottom-line has as focus expectations QX resulted fiscal our at highly our four beginning has profitability, range, portfolio. up to year a products with margins proof margin our acquisitions us note. ago, strategy leading, to to of were non-GAAP pleased that technologically clearly points. priorities this and working. a are that made of innovative on This corporate-wide The within gross on on improvement, is gross guidance it's the addition greater expansion a the and the and and exciting very for We our non-GAAP for product opportunities platform clear profits consumer Synaptics we product contribution growth a reflection of success healthy year XXX lineup basis IoT which industry of is see points launched of transformation are the enabled After the year-over-year. an gross consecutive the quarters differentiated a business by direct margin

more our transition practical growing evolution to with businesses. is maximize diversified difficult, a but greater This power, Synaptics underway. well to goal productive our company earnings also decisions Our more X.X, requires of

a leveraging to to the create mobile. ability fingerprint decided Synaptics break trends and auto with for exciting our are product our PC can over greater very even technology and to business We threshold. leadership, our therefore, the margin where does compelling change leveraging solutions. and part time, margin This from further for aspire where we in represents gross opportunities. this even market on will OLED, chip-on-film. the verticals I core and open channel offerings, to now particularly recent making fingerprint through growth greater potential have, the large multiple the to we strides is positive expansion mobile a profitable in big investments opportunity and be automotive, focus optical AR/VR Concurrently, stand discrete such due as up the to What that for TDDI audio, market clear restructure we benefit want XX%

expect the While linear we fashion pursue the attractive, we a we continue this recognize integrated such occur we to recent as market, up profitable goal. to opportunities over I'll mobile progress. as set changing I'll with to our solutions, highly into in don't clearly are and as a this then that a company turn that, can deeper on now finish and it sights realistically Wajid, With dive now our in

Wajid Ali

for in the X% mobile market diversification June that have million quarter the I $XXX course was periods Revenue note others year. in posted Thank, XXXX supply and down trends down mobile was to Synaptics and mobile X% will the quarter strategies challenging Synaptics sequentially $X.XX the the weakness of year-over-year. market Revenue solid in the general over from of better weather fiscal a fiscal chain. billion enabled year. annual our down of negative of the than and supply last far conditions Rick. X% results despite for

from with up compared XX% year-over-year sequentially. and As PC reflected in XX% products products IoT down was materials of XX%, products down PC XX% was for IoT XX%, call, revenue quarter products the sequentially. for and from was XXX%, year-over-year, presentation year-ago XX%, mobile, X% advance sequentially. mobile in approximately and the released and was this and XX% Revenue respectively. Revenue Revenue up

During XX% two the had revenue above of at XX% and customers we quarter, XX%.

which program million, of the And our for June million On of value restructuring gross GAAP $X.XX and $XXX.X million costs a $X.X million, GAAP was non-GAAP or legal consisting share. adjustment of $X.XX $XXX,XXX post-acquisition asset includes diluted XX.X% the $XXX.X end June costs from the share-based of costs, share-based quarter, $XX.X $XX.X quarter $XXX,XXX acquisition. amortization a of gross above and was mix. and $X.X the matters June above XXXX, non-GAAP loss GAAP compensation end inventory expectations fair preceding product loss June of quarter, was our fee, charges. $XXX.X of transaction-related fiscal we $X.X million, loss the primarily arbitration which million the expenses of related amortization, compensation quarter operating of in For margin of or net and the basis, non-GAAP intangibles associated approximately $X In quarter XX.X%, overall per share. high at of GAAP reflects high the were transitory quarter. loss unchanged million, our were of were range, of per diluted with net a operating consisting a of expenses had guidance prior consulting million to relatively of and margin costs of $XXX,XXX acquisition-related intangible million, our includes of and expenses compensation, June the

year-over-year fiscal as share, $XXX.X down net diluted million, decline or in QX XXXX, changes was fiscal fiscal XXXX. our year. and $XX.X was million XXXX total or per XX% a in fiscal million tax with quarter compared the Non-GAAP $X.XX year-end non-GAAP provided per income in from fiscal $X.XX for quarter income fiscal share For Non-GAAP per from was million tax $X down non-GAAP XX%, XX% diluted net per $XX.X for share, $XXX.X June or rate XX%. $X.XX last for our XXXX. fourth the of diluted share the The rate diluted

Receivables for million our an $XXX million million DSOs Inventories Capital were preceding the of balance were XX million $XX the and flow and of million. the $XX the million turns year to were year. and expenditures $XXX inventory of from June were million increase the million the $XX was X.X. for with cash, Cash quarter sheet, from at Turning for days. quarter end and was we were $X quarter. $XXX $XXX ended depreciation operations

value shareholder X.X by or continue million year. to repurchasing We commitment $XX.X this generating fiscal shares our million

for I quarter, approximately subsequent sell-in million a Based on and be bookings, $XXX outlook. in the the timing as the million. September to range mix, anticipate quarter September we as few Now, quarterly will our expected customer comments forecasts, million make backlog entering of sell-through patterns, our of product to well $XXX $XXX regarding product revenue

an to We from This increase and PC reflects products, of expect to the non-GAAP range products our data. will stock-based and $XX.X respectively. and IoT IoT sequential business XX%, due by shipments, will TDDI, XX% with in partially outlook compensation our September mix increase XX%, continued be I million and few primarily a quarter, and in on guidance follow and revenue data our charge a DDIC offset in outlook of be provide shortages mobile the GAAP chip-on-film, the anticipate sequential declines to to for We in PC businesses. now quarter in our $XX.X first the mobile, million.

non-cash quarter restructuring over September to mobile approximately Further, of charge which will fiscal to restructuring of total charge we sale. of GAAP $XX our The optical quarters business, be fingerprint cost first the related our the of in be September $XX million two addition, million million include as will charges this of be expected will indicated, of targeting reflected a intangibles fingerprint the million expenses Rick of range most amortization, and $X In in initiate primarily in quarter. products. is reflected to $XX will XXXX, approximately

our account tax year. non-GAAP of the provide September into our the expect be for fiscal gross Taking our XX% we in rate to non-GAAP XXXX fiscal XX%. XX% expect data quarter XX% in September quarter. GAAP between to for Finally, revenue we be range to mix, and outlook overall the now I for margin will

our of to is $XXX September the $X.XX in of September cash-based the long-term XX% quarter $XXX net million operating in tax non-GAAP for XXXX share. the per for diluted be We We quarter expect Non-GAAP range share to fiscal in expenses to XX%. million. to of in range per anticipate the non-GAAP be $X.XX anticipated income to be the range rate to

including revenue our Now, To anticipate PC, majority business. our is expected fiscal fingerprint OLED, driven the broader We IoT product low-single-digit the across to XXXX. TDDI, our by help for outlook offset year and for I'll increase, from in shortages have headwinds to growth turn automotive, This reduced million an $XX platforms, from of a touch, chip-on-film, lower-margin-generating be continued near-term QX contributions fiscal the as capacitive and mobile emphasis market. outlook. accounted XXXX as these headwinds estimated well already and product in fingerprint been clear, mobile

margins to bottom-line to a restructuring plan and the into reinvestments anticipate to which and profits will annual range of the XXXX initiatives $XX that, XX% operating Rick. notwithstanding in These and turn gross million earnings back savings, in year. expect our improving on back channel IoT achieve of I'll fiscal will to growth for we XX% fiscal the to year. us expect generate prior over on business. the back call our year With put We higher-growth be We fiscal focusing in approximately path

Richard A. Bergman

mobile-related of Wajid. versus somewhat product stabilized shortages mentioned, Thanks, the some our The some we QX, ability our drill Wajid to around to condition full with impacting the quarter, to are business. potential June overall specifics mobile as realize have areas. our that in I'll appears into work starting now down continue market through although certain

the Synaptics are progress, for year. this calendar the of making being LCD but lead display to solid We continues in persist expect touch second technologies to through and smartphones. That half said, trend

and been point LCD Synaptics supply, As on you phones given to resurgent evolution trend. has well price know, of the positioned capitalize OLED there this in a is and

We serious continue garnered has forge our display to high driving technology customers. smartphones, infinity bezel-free and in key ahead interest our with performance chip-on-film

have chip-on-film Our and current the meaningful the on discrete solutions appearing remain market solution achieve and TDDI in quarter. volume track begun in to as

for a touch ourselves in appreciation our OLED market Turning serving our established and touch broader expanding Synaptics leader firmly the driving has as is controllers business. OLED fresh to in position OLED,

smartphone. opportunities key renewed panels about with production excited our of powering display. customers our OLED lead with that at now manufactured along are in in in very OLED ClearView by full recently are to deploy The display on is announced driver ASUS We key to China. mission touch high-performance OLED our We model this its customers OLED one

this display ramp with to panels. demand uniquely they to OEM broad support in Our close Synaptics the relationships manufacturers positions the for as OLED lead China's market

to expect We future. from OEMs additional in near designs shipping begin multiple the

partnerships. unique to I mentioned and earlier, key As our our growing due and is solution PC strong business fingerprint

Mobile current to expected benchmark in also with industry on notebook that, we with new generation fact, ship our next the AMD in PCs, production-ready fingerprint system. Ryzen joint operating the fingerprint we for In platform, Microsoft's enterprise cycle. quarter, announced expected next-generation and with biometric on is new a PCs PC AMD, to next-generation peripheral and initiative announced Match-in-Sensor centered Windows-based based and highly-secure notebook authentication a delivering ship refresh integrations recently the consumer solution With

development now Our that with long-standing OEMs define such has and partnerships touchpads PC fingerprint key standards such in requirements security Microsoft with as leaders their leadership security, the critical biometric demand programs. in as and ultimately along FIDO, helped

(XX:XX). as let's exciting and audio continues uniquely example, we Now, voice its many pleased on digital recently continues note, appliance. consumer selected enabled in Mobile audio Synaptics' speakers from such market today. human the platform. on-the-go Kuker to and to to the as customers, DSPs technology video Synaptics both its our the from bedroom, video create for have home a Baidu smart its Market collaborated speakers, service wearables, margin voice world-class see most all-things bars, Synaptics' our And convergence voice Skyworth smart as solutions, far-field capabilities, Bixby combining Addressing is devices electronics platforms, ranging is the sound proliferate boxes. assistant voice to rapidly-growing With market them a drive products, Android-based its Far-field those remains announce by to brands, in and Synaptics a major Linekong plan kitchen global jump as for Amazon, And the as Doss, for of include to Samsung of including with this add such several consumer significant that they capitalizing of and are market, our Google, to positioned has fast-growing on and far-field a with IoT featuring wide business, opportunity, the set-top we one Baidu's partner by opportunities, technologies our of revealed Suning, voice all interface tremendous and where new voice is a rapidly others. Baidu, Baidu, long-time Synaptics growth automotive Duer On that been devices, including high even Bluetooth every audio to for technology with selected requirements. accessories. smart far-field is and applications from car. both variety have and DSPs Accessory global headphones, and technology. leader resonating voice-enabled appetite and

IoT the bring Android provider XK to of the service our their business, HD we in see TV On continue our using to global companies SOC with side VideoSmart adoption expansion Ultra subscribers. of platforms, to content multimedia

platforms. intelligence far-field In capability, adopting service enthusiasm strong conjunction addition, bringing for with provider in the the in to edge voice remains additional

continue Let's sensors, to touch progress TDDI, now our automotive on drivers, voice our we strong business, fingerprint make display controllers, and where touch leveraging technologies.

interest cameras to targeting XXXX been panels with touch automotive OEM really robust solution calendar OEM in TDDI of platforms. and interesting With of prospects application are positive and news, display very and demonstrate in door. see side-view to manufacturer in A across the in we and already platforms, is jointly regards mounted continue front In be Following that auto our replace by summary, screen validate performance technology portfolio. with leadership excited almost And continue expansive fingerprint our our and to interface design-ins two has year display and from last top major year based to momentum we OLED quarter's interior us exterior first human unique adopted every reliability. consumer by remain in our XXXX OEMs our full to displays mirrors IoT cars, to and the on a building anticipated calendar production solution, beyond we complete system XXXX. are

on focusing you the opportunities maximizing business. in articulated We by as on profitability are within for our the recent executing plan we prioritize we've quarters,

in in into have from lines favor efforts resources evolved our redirecting business. are quality and of bust boom cycles We products higher that of

us IoT an business higher gross and technology as margins. product benefit with to expanded generate a differentiated consumer example, is Our we portfolio prime unique allowing from

enabling operating we as a in profits to gross this diversified Validating in year-over-year growth us right evolution vertical focus to our strategy, company. we are within more drive continue towards a to forecast quarter. and return the Our large the remains margin markets pleased continue September serve, we improvements markets targeting on earnings to

the our we that, world the employees session. we Before the of Q&A out as over call now around thank unwavering like and With turn I'd operator, we'll all to dedication to their support. start the for Operator? year, close the

Operator

comes our this first answers. KeyBanc John for Thank we the Capital Markets. and Vinh question question floor time, you. And from At open will with

John Vinh

ask guys. question for here. Thanks letting Hey, me a

the on Can guys headwind to TDDI? guidance still is? mostly there on encountering. full-year shortages is into that still year you assume your million I later to fiscal the that question your September baked you outlook? additional around bring are maybe you've in impact quantify the what some First this you're the $XX Is And capacity, are and trying opportunities minimize to

Richard A. Bergman

Hi, John, this Rick. is

of through lot yes, So, suppliers the opportunity. in can we put these seize and you to spending imagine, Because want work working time as of I'm a fully TDDI, effort a lot and with days, we've this.

it to So, on on supply what the bringing we year get in quarter, do guns supply in with continues turn suppliers XXXX from both the well December better our calendar we existing then additional incrementally suppliers. alternative can and to as on

the as than you shortages, headwind we're through a $XX So work the million of Wajid is we and second fiscal But that a But ballpark. half lot in things improve. certainly yes, greater will there's feels that. kind know mentioned, the it hope that, continuing to of year when

John Vinh

into Can is midpoint going And follow-up obviously, when against relatively you've working you, It are expect margin flat. be to mix the What typically September, is like to then headwinds IoT you're unseasonably Thanks. your X.X%. the seems gross it down but September you relatively margins would in flat. That looks your look I to down that? And about guidance then, it maintaining is up? if still guidance some got be offsets going just I at it quarter, down about like to the my talk be for Great. you. why is, seems of IoT

Richard A. Bergman

Sure.

will this sure then I'm and Wajid in. I'll So at fill a take crack

curve corporate business more prepared back very we which pointed IoT a the this in the to you last some as quarter, dependencies a there have We pointed that still a terms so gross particular was do little in tell again, out, we're terms as there's the December this position that will on of forth. stronger so as IoT, quarter, trends terms growth a on, they the slight margin mobile yes, the number, we've worked ODM shift, over gross about diligently little so scripted of customers. on dip year-over-year, our a a opportunities, growth out, in and number. So In the the I large take in general seen. quarter, enthusiastic of from ourselves the and case, continue jump seasonality can as pushes And to sense couple given against the in you a that less margin, took remarks, we've and business in you in of our so little remarks, as then But clearly, But last expect in average. quarters in company, to stated few very the the there. rates

a of you the our mix. battling of the kind of in all mobile in stronger add, Anything against some everywhere want Wajid? it's product combination to company good work So, hard lines,

Wajid Ali

to we the I between mean, gross Yeah, XXXX, the margins. margin gross step but ago, it we functions last area. volatility couple XX% would some years. we've range the again, add, in of had XX that XX% in generally XX% for had around, months only And to in in fiscal the quarters, were the would thing year range. trending then is bounce of were in couple be It XX% but I'd we John, over a that

model we Day, hit our XXXX, to looking for we're at that XX% so, fiscal about Analyst to talked being And midterm the really XX%.

step that certainly that Rick probably gross year based on another think for but little lines. margins product this can bit, a function tighten I seeing up our mentioned, across we're everything we

John Vinh

you. Thank Great.

Operator

Thank you.

next question Cassidy from Stifel. with Our comes Kevin

John Joseph Donnelly

this taking Hi, John for my Donnelly on Thanks is question. for Kevin.

impacting difficulty With restrictions, Or your have the how is having do well? are inventory? supply you visibility sourcing they this into as customers'

Richard A. Bergman

a us visibility great question. a general get it's lot. for I say customers. concern. share But hard the thanks It's to They for don't with John, industry would our

I'm now, so OEMs particularly a lean getting calls are in talking in the our inventory. of terms running I lot customers, we're about right suspect this So, China of case pretty

John Joseph Donnelly

on And in the increasing Okay. margins have the from you year? the the shortages any at negative are costs Do calendar second of that half gross impact all?

Richard A. Bergman

on our a through of both And suppliers long-term with price the a get increase. view. same too, in Well, press the we the long-term it's we don't kind call kind directions. that other of there so been and know from of our side it, customers, in and that's when expectations with engage typically, I the a perspective, good we shortage, our likewise. direction, that there's, have bad And

shortage of we naturally say usual in OEM at maybe would the have the end long I this don't longer. is, the It point, market. customers industry, this shortage looks So, answer goes? But to that. that the helping. price supply in will That industry being a year, smartphone even We anticipate expect said, no, do that general short like the quarter's the reductions don't in general that some tightness of how the or persist and through the

John Joseph Donnelly

you. Thank

Operator

Thank you.

comes Our with & Rob next from question Cowen Company. Stone

Robert W. Stone

start an in-display guys. Is not there for market Or would I wanted sensors. margin I you? on going if the little solution? this the it's the decision Hi, or be optical price don't a to question, optical, and first some is more see then at fingerprint a you adoption, regarding adopting follow-up. color because profile That with be just it's have acceptable other and to

Richard A. Bergman

Rob. question, the for thanks Yeah, Okay.

did you ROI invariably, products really sub-$X used know I somewhat X, months in and there's quickly from clear, analysis, the an of years our And of that certain of this investment fiscal optional as in boom back, solution was going to you be big and went take prepared And that going or As our year before a it did we those the becoming phrase to fantastic. couple we and as because and provides and alternatives, to we cycles. on a starts scrub lived multi-dollar July through we it a the was bust mentioned, remarks what of best that and it's forward. that a solution. a one a our solutions few But solution degree, with optical all capacitive

And business we of company. wasn't that now the type entire highly But you we the money. good if sticky seek so, a enjoyed over period, look it differentiated as

or our would've it. somewhat from investment it hurts we perspective. be marketplace innovators industry, from investment in the a yes, ASP adoption additional It and because begun, multiple in-display so so, clearly on. erosion taken of there'll continued see we perspective and unit the suppliers the see were in And and do fingerprint the broader in But we can has

long-term to Just better have now. fish from a investment, we right fry

And so, purely decision. it was an ROI

doesn't to we we And the you going when business, true the could research would display. minimal TDDI might the – mean into to FP, across when when ready, cost, market very was solution multiple user. continue me, was the in-display the area right, we're when that in integrated think to eventually, investments we went entire stopping. into so market so From fingerprint end have be have the ultimate this the screen cost Now, truly the in beginning, we said the particular was that with we're excuse

Robert W. Stone

Great.

is expands. OLED important touch tantalized other customers thing with you when market I in as the by seeing renewed about the prepared talked The was opportunities remarks in

market touch, glove of helped pretty up about bunch roll remember talking back the and Synaptics really a a time. various controller heard day leader, We I features, long share. you where And in haven't water you was features and quiet. when resistance a been then, it's for to touch

it So, what segment? again that makes interesting in

Richard A. Bergman

question, much remarks, background great screens, deal one, touch in There's as lot I'd today have few capacitive mentioned of course, things. Clearly just experience. more is more to OLED general. a Yeah, a the It's Rob. I it. prepared you a say in as difficult with

flexible, So are obviously yet screens yet And another level. or bendable now, increases foldable is OEMs level. another which then moving it towards

a look competitive OLED challenges that if Synaptics secondly, from five suggesting provide, makeup years technology there realistically, clearly, competitors are a when there. were by then in was handful So, touch, couple is, the the that there's from the the at problem and less far share the ago, you a – does. just a screens capacitive market tens that of is harder competitors of times the the than particular you And better segment. we And leader perspective in there's

these So to invariably really years or looking we architects future OLED displays Synaptics, have this shine, engineers. seven-some-odd very it are major touch us invested to at OEMs and in when and because a chance gives point our OLED talking at solutions, top they're with

Robert W. Stone

Great. back jump I'll Thanks, queue. in the

Operator

Thank you.

question Coster next comes Paul Our with JPMorgan. from

Paul Coster

Yeah.

Just fingerprint discontinuing, that does the that business revenues you kind a fiscal what are of The going quick in prior please. one, that year represent is away?

Wajid Ali

So, revenues Paul, of I'd minimal. away. sub is range say $XX were to the going kind in fairly million million what's the $XX

more than in But plans we $XXX it, XXXX, our then you minimal bigger that have We for as million in fiscal impact is a at XXXX. at Synaptics fiscal about saw Analyst contribute and year-over-year the to fairly Day, so actual were it level. expecting

Richard A. Bergman

optical. That was for

Wajid Ali

Yes, for optical. that was

Richard A. Bergman

want Did optical, or you overall mobile? just the Paul,

Paul Coster

entire but just to you're share I welcome the wanted optical, fingerprint No, revenue. us with

Richard A. Bergman

That's much bigger.

Wajid Ali

capacitive. mean, Yeah, much there's on bigger a trend I

we've on million dealing for but capacitive the last down $XXX with business been Probably So, a standpoint, quarters. capacitive four optical that in year-over-year, declines from was be much fingerprint. smaller, we'll

business so, we And optical portion not that on focus restructuring that's a anymore. the of the of the are restructuring side. was The

Paul Coster

you Thank very Okay. much.

Wajid Ali

you. Thank

Operator

from Thank Srivastava And next BMO. you. our Ambrish comes with question [Operator Instruction]

Ambrish Srivastava

or to redirected restructuring savings clarification, you. Hi, will P&L going savings there the be I through thank clear, those the and entirely wasn't just other that. Wajid, on from any savings areas? had This towards are flow the a

Wajid Ali

so the benefit Hi, will Ambrish. will the IoT redirected savings business, be No, minimal. be fully the $XX to will million, the they be to but OpEx

Ambrish Srivastava

margin now part, gross on expect? the than of business. kind incremental a Because we for Okay. rest margin carries trajectory different of the then, bigger what business IoT, with the little bit is should a full And the year, which the bigger

how we should trajectory correct? about So, the XX%-XX%, be should of margin? the the within think And we modeling

Wajid Ali

you. The to Yeah, be right frank way the to XX% margin XX%. about with to think is will bumpy, be trajectory the model I think quite

for we slightly TDDI that, we'll first in on seeing down that fiscal back second then so QX, we'll IoT what a But that, see said, the ramping then, see like are that about bit. some or expected come quarter. some to for starts up we're in will Based we're side the quarter. maybe to But QX are our it our even again. in as margins, pressure So, programs seeing, second it'll the on fiscal fiscal ramp new up quarter, than nice on gross XX% be us, XX% better

of of it be on by be a be XX%, some but IoT. we're it'll we V on higher the then of an a and revenue, it'll trend XX% that midpoint an in where be from lower TDDI operating operating and XX% mix slower bit driven the the and and average, the That profit So, of seeing. provided a will will that's quarters the standpoint will XX% based of margin range. some reason but a by seasonality. guidance move margin it'll gross And was the quarters general lot bumpy, is to product main to stronger of around and have good driven the The

it. So, hopefully, context that around some gives

Ambrish Srivastava

helpful. very That's Thank does. That you.

Operator

Anderson you. with next Thank Charlie Instruction] question Company. our Dougherty [Operator And comes &

Charlie Lowell Anderson

the market demand still my I for commentary that online. has but about strong, been questions. Yeah, there some about bit challenges of there of I product. talk maybe OLED guys obviously, if out a OLED, could terms getting in for wonder lot little you DDIC taking in is thanks a the know

guidance. or know or general for assumptions that of of that follow-up. just if is business. revenue baked share maybe got the percent you're sort into you So And some quantify making a want the how anything much don't then I year, I've to for any to of the

Richard A. Bergman

marketplace. what Hi, expect, on you say, mass kind would clearly we're a Charlie, these of is coming as nailed production. Yes, online. mass But I additional suppliers, bringing the I suppliers, you into and seeing in OLED them as number we're yield, battling, of a bit from large these progress think seeing, moving they're – production bumpy obviously, should number are a the factories. you're And

ready poised, display in hand to requirements support our whatever we're drivers, hand we're have. working with that So, them they and with

our substantial, opportunity So, it's it's But not a for given the of still huge us. companies. size growth

less than think So, probably I is business the would ballpark. a X% of our bit right

Charlie Lowell Anderson

rate to sort then it. going any of IoT, then Got within of there? on growth XXXX. of sort on be wonder growth you some counting what likely area, fastest-growing be it's to if supply to are And I that, your imagine, put And the in could key fiscal the I you're the year? Thanks. categories Perfect. probably this – on would brackets Okay. that

Richard A. Bergman

across somewhat To start with I'll the maybe degree, it's latter So certain board. the part. a

very, obviously we service scheme have doing is growth are we there. platforms a audio that in well, Also, very Android nevertheless, of our very mentioned but well, some and whole those huge the quite business. year-over-year. So very doing solutions, as well strong not It's business, provider

So because again, a lot of devices. SoC that or there, tells high-end involves – excitement that our

fiscal XX%, overall year. as all the put should together, XX% we of in fiscal over terms growth it year rates In to business, the you anticipate

Charlie Lowell Anderson

Thanks Great. much. so

Operator

Thank you.

with Our next Mizuho. Rakesh Vijay question from comes

Vijay Raghavan Rakesh

Hi, Yeah. guys.

shortages a guide. little Just is was all looks light Just but September you the I TDDI? there's of shortages, that bit wondering on quarter it mentioned seasonal. mostly the TDDI? versus fair, shortages. if Are know any It chip-on-film question a

Wajid Ali

QX shortages to from all shortfalls out TDDI. Yeah, Hi, start chip-on-film. in well as the supply of Vijay. and few it's units quite We million off seeing were into to as any actually as in QX and into ramp, QX far we that fiscal We're going moving get well. not are able see a

Vijay Raghavan Rakesh

look IoT, as FocalTech capacity think up as of make the shortages Or a about of ends there? similar it. being talked I Because shortages? December and loss to some you any the kind the up between well, quarter, it but a chip-on-film or...? share Got see do you some at think And better-than-seasonal quarter opportunity December you

Wajid Ali

I we in chip-on-film in both general see IoT mobile Yeah, well our as upticks business. mean, should as and

capacity But as and far wafers December. we got very going But is New few idea plan have to idea, But now between quarter. the thousand see our that's to supply concerned, Chinese supply our some third capacity or we've we shortages and start right improvements look do Year. before pretty how a of come good TDDI. plus the are good As either for minus a way, a

Vijay Raghavan Rakesh

Got it. Thanks.

Operator

Thank you.

Rajvindra with from Gill comes question next Needham & Company. Our

Rajvindra S. Gill

what's that headwinds now, of that XXXX guidance provided process the thought wondering different the the tailwinds. was Yeah. Thanks Day revenue, fiscal for year about The $X taking Analyst questions. given my target around at billion all of and

Wajid Ali

Rick to off, start want maybe that I'll will Okay, and one. jump in on

the billion a that target $X So, run rate we out had put was there target.

run talked to rate. a to a get about $XXX we've trying So, quarter million

the target. intent was the that of so, And

prior calls had we that communicated well. in as think I

All and drivers As direction was display. them we far billion that as to in favorable moving had the of a drivers $X rate. to run organic, target, in one eight related the

is. line thought actually positive us. of other And And bracketed mentioned the think are target seven up negative, we've with moving kind But would end all could actually, that be earlier, where in that to in-display so, expectations. Rick originally we as what $X billion being impact drivers for we touch the

driver. of So, that actually from a red move green might terms to favorable in

is to on focused yes, we're it. target, it So a bit a continuing but stretch of be

take going to or we're I getting but on small there, a certainly think to M&A focused still it's two Rick? there. get

Richard A. Bergman

a you job. did great Nope,

Wajid Ali

right. All

Rajvindra S. Gill

Thanks. And margin a I'm then trying threshold, point. Currently understand XX% on – the perspective. shift that at it to from mix reaching some gross

then IoT, – PCs, is XX% restructuring XX% How the to your of rest other a is you've target, cost how currently, So and and How business ASPs to mobile. XX%, XX% gross that of think or so nodes. process much of going we much it the got going pricing, to that achieve better is to is is about contribute do margin? mix smaller the

Richard A. Bergman

trend if right the on level down that we're and the seeing, target. in that we what line, that can know as be based to direction, goal. quantitatively Yeah, clearly, I for to break see I don't can we're a it feel, from It's headed you continues Raj, that

is, Now, you have in of healthy business. a we pointed growth out, as higher-margin lot that

that. mix So, in big a product plays role

from going and we're more Specifically, the more within good mobile gross business, like, are a where perspective. margins even IoT example, margin for But is stronger. very to focus areas on

that be certainly drivers we the and finished just are of higher quite about, that display talking margin verticals interesting. the Now could on there's touch are end then stack, OLED OLED

it's and VR/AR compelling to a of in, time these design well, vertical have like years we filled from about investment, that once starting talked as look at finally kicking especially we long revenue a a a And after XXXX, for with And So, fiscal perspective, there's is automotive. us. pipelines wins. look one is another

Rajvindra S. Gill

headwind of And XXXX to of related you. shortages. being just of How the a being year I'm level trying just Thank sense get that better Is last share to quantified? your fiscal on level to a of Wajid, that million I'm market supply? question, based $XX certain at a understanding demand, in a is certain so trying certain customers, level that.

Wajid Ali

it busier timeframe, QX, with will what the is revenue think the fiscal second we're bracketed some orders of will fiscal demand than are of half for – that that most believe what doesn't but where effectively, No, enough getting Yeah. the and XXXX. shortage us. have would our be hit actually for some supply drive we, million to between fiscal of million going for $XX saying contracts and XXXX, projecting customers fiscal we're the and quarters from of that new we We them. $XX That we of in meet higher January we're include most QX the to our

partners. So, we it's what POs see versus actual supply from our fab

Rajvindra S. Gill

you. Thank

Operator

& Rob our question Stone Company. comes Thank last And you. Cowen from [Operator Instruction] with

Robert W. Stone

refresh now? how revenue automotive wonder us percent I of Hi. is terms you if much of total on contributing in could just

Wajid Ali

Sure. – X% of it's yeah, company. Rob, the it's sub

Robert W. Stone

you. Okay. Thank

Operator

Thank closing no back would you. remarks. to to there like questions are time, in I further management now this the conference turn over for the At queue.

Richard A. Bergman

be road. very you and Wajid much. the Thank Both myself on will out

And our call. during attending you for you the at to see hope our So, thank Bye. various conferences, meetings. or

Operator

this concludes Ladies today's and gentlemen, conference.

now may disconnect. You

Synaptics (SYNA) 9 Aug 182018 Q4 Earnings call transcript