SYNA - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Synaptics, Inc.

Second Quarter Fiscal Year 2021 Financial Results Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jason Tsai. Please go ahead, sir.

Jason Tsai

afternoon, Second you Call. Quarter good today joining and Synaptics' on Fiscal you, and for thank us Thank XXXX Conference name and Relations. Tsai is Head My Investor of I'm the Jason Hurlston, With today's Dean our me CFO. and call Michael Butler, on CEO; our are and President from is website accessed at Investor call synaptics.com. can broadcast also over of being the This Relations and section web live be the company's the

Relations posted website. to current In with supplementary exhibit on slide a also copy our and today supplemental have remarks an of SEC additional a the also addition our report have color financial we Investor The slides as filed been on prepared these presentation, results. earlier add Form furnished X-K our to

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

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

objectives, statements our performance the current give projections plans, and to and financial our pandemic. Forward-looking COVID-XX condition, potential operations, of business, expectations our including impacts the expectations results of regarding relating on our future business

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

Michael Hurlston

to sustainable I'd strong like we delivering make and terms and finish in higher with of as predictability today's progress better Jason, continue call. Thanks, had growth, everybody to welcome to a profitability. We XXXX to

diversification record IoT largest Our history. dividends is resulting paying net and non-GAAP PC become EPS the as revenue in our gross quarter. the strategy highest Both business, and in has individually our income achieved XX-year businesses Synaptics' IoT in margin,

that this attention control As focus aggressively driving principles point: we guided us we the investments, growth, our to tight disciplined adhere turn on have to spending differentiation. to will a and

the our starting businesses design a growth are us in and in further XXXX of to profitability and all strong across beyond. We wins position backlog drive our puts that with improve year

on update you me an let give Now business. our

to in In design wireless we outpace smart XX% are business, grow in customer now in we win surveillance our believe end consumer, diverse to largest few for Based upon a IoT First, segments. we momentum have we enjoy displays, years. have the the IOT, and wins home enterprise, gains, and design to market road product continue likely design driven watches, at map, for home grow devices. seeing overall market. to of by base automation, the spans solid industrial a potential the the provider, streaming smart strong will pipeline a automotive CAGR least opportunity but broad-based thermostats, share across service now overall We at connectivity, drones, anticipate markets. line, XX% and strength all our We that next continue most

and business run beyond. rate in expect and significant months continue track double within We to the XXXX growth to XX the are of fiscal on this next

traditional the docking and Our tailwind trend in the video work-from-home from interface business solutions continues. saw as universal growth robust

scanning new into product and technology PCs areas big traditional additional our content of such business. premium seeing creating are expanding first in as now adapter protocol our the strong In Our for our beyond from Further, are this market industrial videoconferencing. from panels enterprise-class the road cars also and with that targeted stem acquisition the and systems adoption, automakers. a U.S. X and handheld docking SUV with data chipsets are opportunities TDDI delivery automotive, compression X the markets control DisplayLink portable on our at introductions video and

We to revenue will within come later OEMs wins to million market three design the our over this year, of expect to XX vehicles $XXX additional business years. next over have drive pipeline major several this and annual believe in

enabling Finally, we deploying the world's our Katana digital opportunity, best-in-class edge-SoC first AI-enhanced launched wins previously family, targeting products quarter, to Asia few wins top for in provider months. and avenue secured had service with in applications be new Together additional growth. for our two over industrial creating Recently, market commercial connectivity, of wireless top the our provider Connect an IoT initial meaningful we AI expect begin product by SoC, Europe rights we power security. last a the and our our We boxes consumer, bottom on applications. past management customer powered new and set-top announced line ultra-low with market service NAGRA

us, XXXX. into and our continue business. to This PC the quarter March we a quarter the momentum and expect to for Moving record-breaking was throughout

to attach by higher We more higher fingerprint benefit greatly rates ASPs TAM, continue increased driven from and offerings. complex greatly

expansion qualified PCs. also Chromebook specifically the first products These customer. driven be strength to have We've away introduced shift mobile realization new business begun thought be learn-from-home more we of to in that short-lived, targeted would sustainable, While work- we shipping phenomenon desktops notebooks higher fundamental and solutions replace productivity into and cannot the from our the and now platforms, devices a markets. for across consumer major expect this and education rate the by initially to the of all already we run are

about Before business. me I talk conclude, let our mobile

our products. with see We touch OLED strong continue to traction

X recently customer with handsets launched touch mobile new flagship controller. our primary Our

with are a addition, quarters transformation and win, as waypoints how hit the we've all handset we Korean meaningful flexible large with displays year. expected our ago. to made secured OEMs. increasingly multiple challenging to Chinese XXXX begin many in the also environment Overall, tough shipments the initial fall. of have touch finished very engaged while despite macro the start a in We've few In out just handset we already OEM now we wins strides have corporate and happy to set I'm financial secured our on-cell leading with the opportunities, prevalent, the that first OLED new excited on solution for multiple announce become and we I'm our

deliver it sustainable believe the While on growth in portfolio mix run. better profitability our more is and work a lot remains us trajectory ahead, to putting a long we predictable, current

financials Now second outlook. let the to me Mr. provide turn call quarter Butler? and to review our over our Dean

Dean Butler

afternoon to and good Michael, Thanks, everyone.

mobile business. I'll was sequentially, year as products, our decline for our a X% up down in review reflecting demand sequential the in included Revenue revenue fiscal start fiscal partially and our revenue Year-over-year, our million, a a by decline for First, the PC then December off quarter midpoint QX. December X%, mobile. $XXX was financial IoT prior divested a driven with our TDDI still by for offset was our current stronger now quarter for results guidance. outlook our of quarter, recently Revenue our provide completed of above

of mobile quarter, XX% above revenue business, and marks largest XX%. the defining December During company's with quarter, revenue XX% PC our moment accounted at for X XX%. XX%, accounted squarely had we quarter and for accounting the the while customers of now history, a for The in XX% IoT in

As the underway, of highlighted, and transformation our on our focused Michael growth business. are IoT is corporate well we accelerating

to better the broad predictability future. in and this and business portfolio We deliver in consistent expect products our customers of growth

with sequentially our as up Our quarter year-over-year sequentially, was XX% XX% $XXX quarter programs reported was of the record quarter business up products, record million, entire also XX% across continued for new up in by LCD portfolio. restrictions driven due PC as Huawei, IoT PC million and of and began $XX with our touch revenue to controller year up customer, potential revenue a ago XX% and a limiting to was driver This and up trade Revenue scale IoT revenue was our compared work-from-home sequentially products large XX% in shipments to and offset sales down from to display business. drive this mobile down XX% in decline to the sales year-over-year. primarily decline growth sequential mobile demand strong globally. mobile The this our

of million $X.X and of severance-related amortization, of acquisition offset costs, of was the quarter $XX.X $X.X which nonrecurring license prepaid and which XX.X%, our the million million intangibles in costs costs $XX.X million were asset of by and and million, $X.X compensation includes of restructuring of $XX.X $X.X technology step-up retention intangible GAAP of December includes the operating integration on certain million, million, assets. charges acquisition-related and back a of For expenses amortization, share-based costs costs. intangible share-based in compensation inventory $X costs $XX.X development of gross million audio legal million, million sale GAAP December $XX.X gain consisting margin quarter, and amortization integration-related

quarter, for we million income income of expense GAAP December GAAP or per share. In of the $XX.X was million, tax the had GAAP Our $X.XX a quarter. $X.X net net

non-GAAP Now results. our turning to

cost from came the quarter a end of of improvements into slightly a and now at reflects structures $XX.X acquired December continued XX.X% million businesses, $X.X are integrated the end positive IoT The which and mix quarter newly in fully the operating quarter million, the margin product high gross December range Our during of non-GAAP quarter of non-GAAP was range our up outperformed. our sales Synaptics. above reflects product preceding quarter. guidance operating high as expenses operational costs product increase of the in full below the our

December as $XX.X tax and diluted record-setting per non-GAAP We rate XX% profitable our on focus of drive had growth was for earnings income to $X.XX quarter. a the the our shareholders. share, for respectively, non-GAAP quarter and continued better for Our EPS net million

quarter We Now $XX was at balance outstanding driven and end of by days. with preceding turning of investments, the the Receivables December million operations sales quarter. cash during the cash XX million an provided and million sheet. days short-term by $XXX increase from $XX the $XXX of to our million, quarter, ended were of of

inventory was to depreciation Capital expenditures chain inventory and for days of the $X million. quarter of were Our delays largely our result $X.X million. decline XX, supply $XX million vendors. in were was at and The the dropped $XX million, ending significantly inventories

likely quarter. to anticipate quarter turning the to third mix, the sell-in prevent on of significant to from revenue upside be as well impact entering bookings, semiconductor in constraint product believe the the supply the forecasts, product reflects March in quarter. shortages is we fulfilling million pervasive as expected will additional range us and products a our subsequent across outlook customer $XXX March our approximately patterns March our chain million. This Now that for sell-through the the from supply backlog chain timing of demand We for Based industry. this million for quarter, $XXX $XXX

these Specifically of our to just for pressures. us, IoT business supply prominent new most adding many are products as additional chain are constraints in these ramp, beginning

We the March will expect in historical IoT overall broad-based quarter continued and than XX%, market. approximately to PC be reflecting wins seasonality, from and respectively. strength the products in mix the in the revenue and IoT, and PC mobile perform better PC XX% IoT XX%,

to our We decline, normal mobile consistent business this seasonality business. our to in be with expect

GAAP March outlook for outlook. provide follow quarter with our I'll Now and non-GAAP

range gross of GAAP margin to be to our the in expect XX.X% We XX.X%.

in our and to and amortization, includes to $XXX quarter stock-based of expect compensation the restructuring million, expenses charges million March development acquisition-related range $XXX operating which intangibles in prepaid be cost for We costs. GAAP the

XX% rate approximately GAAP be year-to-date We QX expect tax to our to XX%.

in Finally, to expect net $X.XX GAAP share to the for of income quarter $X.XX. per the be range we our third

Now for our quarter. March for the non-GAAP outlook

between the We be March IoT and from contributions as our XX.X% XX.X% non-GAAP drive product in mix margin improvements. expect our gross to to continues quarter

$X.XX rate $XX range XX% for and in We in the the long-term $XX non-GAAP of We continue million our from to the million. to range income quarter expect a XX%. share per fiscal on to March determine of be in non-GAAP reflecting share XXXX the operating is to outstanding for the convertible net shares the March to be to quarter XX.X estimated anticipated to the for shares impact diluted to be quarter related anticipated share of $X.XX QX, our million of higher price issuable in an per used potentially range anticipate to expenses decline Non-GAAP tax second slightly notes. diluted

or the financial exceeded guidance Lastly, last the have for update our laid the want give March Analyst I our to our and performance the on an Day. on December goals quarter target. we long-term at majority quarter, met we in Based our out of

there outpace operational our half industry-leading total significantly long-term will time, over to to XX%, IOT, from improvements and target XX% driving our margins of in improvements continue the long-term believe range Taking we our contribution believe growth We and XX% IoT with from margin to X% on target increase long-term in in With of to into non-GAAP can IoT this XX% greater revenue our of to from our financial our investments an XX%. operating growth meaningful can higher mobile be we we believe reach XX%, our contributing further revenue, longer-term long-term more we PC. for to than here. long-term potential, and gross and from improve continue non-GAAP profitability of IoT overall gross focus revenue consideration, growth model drive As will businesses, expansion other our expect company. the opportunities remains margins

We continue of long-term manage wraps target structure. of a remarks. up prepared adjusted as to X.Xx to target our This leverage capital our EBITDA

Now I'd operator session. the start call turn Operator? like to the to over to the Q&A

Operator

Instructions]. [Operator

with Kevin Cassidy first comes Rosenblatt. question Our from

Kevin Cassidy

great results. And model target stunning. is very on the new Congratulations the

but you On quarter-over-quarter, you mix, it IoT saw improvement margin was improvement related say, to the products? was the said IoT market, that there even, gross within some product

Michael Hurlston

mean, product within it actually both mix - - the IoT Kevin, other I and mix was Yes, businesses. within

been hard we've to have benefit. did from you we the our work improvements, quite know, operational of But able that within were we some we've time, also, forward. and on that we've and gain in own the been So Part continue improvements as for mix. product going improvements operational quarter a expect at made, to

Kevin Cassidy

in getting talked the in - there there down has Where the the just anyone Great. about is Or where supply even wafer Is in guess, I chain. problems relief it is? narrow packaging? starts? expanding capacity? Okay. chain coming, the problem something And the Can supply is is the everyone and you

Michael Hurlston

Yes. a wafer but We're of seeing the that's broad-based it's confluence packaging, exists you're phenomenon. starts the it I in broad-based. you're pretty It's a right, is Kevin, what problem. number - of tests. different think pretty certainly with And it And starts. exists in it linchpin, a

I think semiconductor all seeing the pretty good are demand. companies

the pocket, that an businesses air meaning we're the are We happy speed that a PC one going don't seem mobile than I really automotive a tightness - seeing most, to sector. the is the be until maybe that's with the sector, significant pocket, of air in. to the hits of segments chain - we're continue but more sector, I think demand the exist. know Until something sort picture happens supply changes pocket, to

Kevin Cassidy

PC to ask And Yes. was just to was the why Okay. one other. if going next I That's I ask about market. going

new Some notebooks in there, the of work seeing to demand content also PCs? the the getting the growth higher converting you're maybe for home from clearly, but are you and desktop, dollar from

Michael Hurlston

We talked Yes. about that.

form that more we're seeing the I new complicated. think are that factors

some pads, dollar driving You've instances, content are larger up. that got touch these in

that dollar the mentioned is up, fingerprint fingerprint Maybe I going which going attach that content. Dean attach think up. I enhances is said

long if is it's click pole the dollar us certainly volume, number. But is certainly So you look we're actually the content below, attach out. - one and the fingerprint the helping increasing

Operator

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

Rajvindra Gill

other quite the in And business. Dean, a well. could long-term Yes, how you define of the is momentum shift I Wondering financial and the us sustain term? you IoT? intend by from operational margin, the Great improvements from, you IoT congratulations other time my margins give additional do you factors? long impressive. as or to frame of of And say, competition kind that do the you gross this there kind to targets that echo outlined, how gross mainly mix if anticipate? XX% on driven Are

Dean Butler

Yes. Raji. Good question,

So line there. first as there. years we time get view just to mean, generally, on or to I this beyond three get

model of evolve really will mix actually amount that are businesses, And out expect we chase X other of time. the striving out IoT we over go and a going change that the it to given putting think I down. we're forward

that's quarter, It new we're margins a of to sort In to is target, XX% at little sustain in gross guiding the line. the bit into we just which factors, here, X, actually rough So this the X March up announced, say. December at time XX% would order I quarter.

consistent our product of differentiation take in forward. So gross the one our comes is mix, in a out. margin we new taking finally, cost and then, get structures laying of launches revenue. around the that we products, factor. there, down with IoT And and longer-term that a to that products being path been greater the going than successful market. is Once we're targets expect are that aim XX% to really key We've to And maintain continue we that's contributing high-end with higher to profitability that sort to the down

Rajvindra Gill

kind the mobile XX% follow-up my coming of sales. of And long-term of kind of to down question target is

guess, So is, a - how you I for Michael. question do this

investors an segments kind Synaptics historically, of links Is Synaptics, do markets a of clearly how overall is end that to across basis? of of PC/mobile one the change been IoT of going strategy on on kind So other convey you There has and and into kind customers to long-term cohesive of a there cohesive to all business. areas. that is together? kind kind kind But kind marketplace? you three the want of of kind kind view a there of want strategy

Michael Hurlston

a AR/VR in to think have applications apply it is from to can automotive, can we and we, There's a feed games. - crossover them products think lot emerging certainly coming Raji, glasses. to so so those PCs, clear mobile. micro-OLED our IoT We into successfully technology you We There's feed and touch applied we've AR/VR to there. we like that they come those into glasses, today. we apply of with if it, Yes. technology apply that I other of display in And mean about that sort successfully can the applied transitions where IoT-ish which our on, bucket. can display segments business you think mobile historically, of lot we micro-LED, will think a

different to we think done why mobile So markets. you intend mix we've I that's what change. the see to And in leverage end

there's but mobile think a to phones. going PC phone to not technology be that's ignore IoT intend kind the really do we some consistent and say area, apply to that's that a Now mobile still with in us that business to We for going company. way we're centered in of more

Operator

Our Karl Ackerman next from question Cowen. with comes

Karl Ackerman

how first But Two you. questions, speak bookings additional could quarters? both few your March. your Dean, your guess, for over I pricing the these visibility to seasonality customers? on next know down commentary chain dynamics typically your order commitments pressures, if in your on discussions I and appreciate are given And volume may. is driving and supply the to I you

Dean Butler

Yes.

So probably crunch, supply the a than better it there bit but vendors. is the historically, from semiconductor backlog had consistent a not us, little been only given order is visibility on other from

so our chain support demand that level deeply them. sure to we're we understand supply booking are an to to And their equivalent customers our with engaging make to

better tight limited even with see and little just extremely probably Unfortunately, the would. do this the we supply we to normally bit is chain really we now added visibility is So visibility. upside right than that a have

It's the relatively semiconductors to then in on finished is you other the out production from goods a side supply pretty flow. lead know, time As manufacturing long long. the chain and order

was a for touched happening we pricing are in it that's summarize think, you for sort there. suppliers they going what's manufacturing that our time. A try understand to while and number it, does to the as it that think new respond. I just take capital on And bit supply So to investing another upside element, I'll - broadly. probably little of see around of I There chain continue to a as of this support demand expenditures,

to we price is there pass can. to and raising on our some of look happening I those sort customers suppliers along to some extent responsibly of the we our think

Karl Ackerman

to Understood. Appreciate last a question. Maybe Raji's that. for follow-up

continue terms you despite little the both margins gross Your that, with March in mix longer-term as bit fact the to factor a here begin mobile of probably outlook. But shrinking, your impress, a hey, model? is touch to these secure are quarter nearly and is OLED being beat controllers, down getting basis. what on those XX% to guess expectations at I'm I year-over-year an despite programs new for overall really you organic accretive mobile your decent

a So margin a if does back, a of operating from is somewhat standpoint? come either gross mobile - and/or that headwind

Michael Hurlston

gross I for in And think from where better margin really I below XX% going consistent mobile extent it's I is the really the is. of significantly it it's a We gross garners not look it's CAGR and fairly margins IoT that that's our the at see here, to goal term. this mean the and with that tailwind us. where has of from longer today, significant market And compression sort XX%, business growing certainly further us. Yes. in We you is the averages. out IoT, a growing That there, to from it's you're corporate certainly that mobile line wouldn't to we at that's see headwind. XX% not range, the long-term call mean, headwind. mean, I growing for level. are which IoT if level certainly

mix, a long-term our as lower as percentage revenue you on probably go into model. future out just the So it's

Operator

Our comes from next question Christopher Susquehanna. with Rolland

Christopher Rolland

long-term from a XXXX growth a give just got idea us could is us guys update and first to see of model. around broad aspirational the Congrats I that if kind could have was number. some you you done guess about Perhaps on you for what on then see the results can wondering now the - the talk you've you've guys XXXX closed, I that this you is of side, M&A us pipeline we connectivity more double-clicking also of or question recently. DisplayLink And given as DisplayLink? and nice DisplayLink and my well?

Michael Hurlston

me DisplayLink have set we're I first numbers. the take revenue we Wi-Fi the from where asset, Dean really pleased next about seeing doubling that pipeline And said months. let in in comments, talk and the mean the the benchmark the on it we of XX the we there. that Chris, see we're that part with Yes. initially

We biggest As do are, limiter, I think, has that on in the Dean our frankly, if really, Wi-Fi probably on supply could business biggest supply. we well said, in chain really the business is Wi-Fi. quite in the side our is supply. business where challenges That's the had

on we doubling So think the supply we're modeling that based what we can get chain, out of number.

On it us. the DisplayLink again, surprised side,

then, done stations. think I really design really, pleasant as a They've set surprised to apply that the shift been dock we've with Again, universal from wins us. a of drives and notebooks of other of Within work of docking that that kind the that, some there's been of Obviously, in-room adoption that's technology, surprises. applications. But well. rate conferencing been has particularly mentioned, done we where some the leading we've to home and well DisplayLink is able systems business. industrial higher to

bit the have modulus some So we a better acquisitions both better-than-expected quite expected. than than could be it of And supply been challenges.

Dean Butler

but XX%, it's going there, forward, think it's XX%, from going range. probably of up that's I'll forward. It's And more maybe million today? like it When give we where probably we the in calendar a quantification to somewhere Chris, is today. XX% XX% year that was business, in is sustain XXXX of probably got Where you not $XXX range. million revenue $XX the And Yes. going sort just DisplayLink the

Christopher Rolland

remarks, My you expanding that that first about opportunity. to lead that go X? chances powering I there. of feel maybe they then you to guess, in go you Fantastic. to all, And of here, X had. propensity your X guys second customer prepared X decide the a SKUs for if ability X how question, about you're And service fact X that your secondly, of perhaps about the talk your customer talked of did

Michael Hurlston

of Yes. situation course, have it, is I current we X. you Chris, X mean, of exactly where the described like

of sold piece SKUs well design X And not material as it's has for think of business overall, other fanfare, One of as us. a the and I although those a projected. win not things, lot ASPs because anybody certainly has this of

kind than number. it's less think of I type a X% of

So gets a us attention but buzz lot around and day, it's lot been more of of than a not nice that. like end to things create at But that. the kind company, it the a thing the maybe of for some

touch we in go going we the shake has been forward, that that that very customer. on churn solution. our think given less with moment. lot that there concerned. it competitors how solution than custom some We're think at products But for We engaged are As it's I them that a clear custom that's to the still next is market out a for the model developed much year

Operator

Our next comes with question Barrett from Harrison Arete Research.

Harrison Barrett

be be to expect you add And base? customer when an we the acquisition then approaching to to First, of - can a I'd the market? look you area make this to this when opportunity. could can this are where sales into see like And IoT part we ask about the to significant How industrial just mix? IoT an industrial

Michael Hurlston

say things. would I Yes, two Yes.

lucky segment. we we are product, have all, our module enough that's of Wi-Fi the modularize typically and product first product, into partners where sell-through and one So to the that industrial

module So from don't partners with into out you we we're then that to that partner, sell that have and develop think partner able the force that expanding fans supply broad-based We're now module chain of module you'd there. work number a need. broad-based we sales the to and

leverage business. Wi-Fi able on to get are really we the So

done to we're we're our We those again, able businesses other a leverage that DisplayLink little of We very, in into handheld products have have SKUs talked now industrial. getting that bit these very and well. into, about some

particularly solution, ways go to I drive this industrial sales the area, that the too, sell AI finding modular to apply power a segment, up We've and in about. industrial into can emerging applying our a applications It's it We way remarks, have in us wireless that we're really we spend doesn't applications, again, we're new solution. development product, for really, we and us segment. That and doing and of whole actually new make talked up that so to AI people wide. that leverage frontier in to solution in industrial that segment. think a it my our about did segment. new. we're counting technology that's attach got So some low doesn't create a audio it's an open we really that industrial excited power it, And low types

Harrison Barrett

just Have now, other Great. the we in - touch on for That's where there that? but OLED a might market see engagements update And appreciate is you And on TDDI? very product commentary update had you any when customers? any the could with gave first an get more helpful. we

Michael Hurlston

develop Yes, good question. We, there. obviously, continue to

I for supply think what's or X opportunity were supply crunch, an us for X There's in DDICs. is, given even lot we've an probably for base DDICs opening, us OLED comments the a been current been talking a how been about today, - compressed. seen the change there OLED has

gross hasn't and consistent the in conducive margin, that and a kind near-term sort which opportunity. driver, OLED technology and market at ASPs of of with presents our apply always have We that corporate near-term is opportunity technology tactical display a to a been are true change. we That the past, see had display is to that

focused for for us into better a DDICs still actually opportunity TDDI, we kind we while out, that, So and think, on an term. of shifted near OLED we've a opportunity bit further OLED that's represent think us

Operator

Soderberg comes Colliers Our Securities. next from question Derek with

Derek Soderberg

touch mobile. on to want also I

chips. have you chips display and touch So

you give is if you're look the will traction us I'm you wondering could in And that into we of was of 'XX. display chips trending two, where wondering out? if speak then business gaining touch, when LCD sort mix that that to Now the an can indication mix think calendar you between as I base

Michael Hurlston

Yes. I Maybe certainly, the think LCD-based relatively first. has the mean, handsets LCD sort done got out, we've over last well. think essentially LCD display couple into The talked goes have on DDIC. handsets I driver customer question I that I that the calls years, think that phased about of we've the previous where in of X next right?

road. certainly, the to continue of think We And a we're to we enjoy handful going going think the So be basis, that on down we we've there's that next the enjoyed business. incumbent, business go-forward to over refreshes years. we're think that

tip is had has term, last had Certainly, question great And I a in just large the customer well a the told in just It's OEM. toward we've handset good. our the we've OVX. I years, done we've X the time in touch the handset have about We've none talked in my segment. - really then ever remarks first phenomenally sort me momentum, second seen near of touch Korea. some wins, Your in well. large done think with certainly, design Korea, Korean We controller - really, in in people

going be we're up the that, certainly, to second were half be In, do to I going opportunity. term, the we DDICs. - touch mix we significantly of OLED we to believe the very the in have a the thought it, frontier think call that's challenged to market, controllers. going that we that changed year, opening going dynamics mentioned, Today, be revenue think So - no business backward look, on tactical near but there. don't margins in see a and have we We there's our there, toward a in that as

the plays very our on into upside now, well very, customers. we touch a we bunch there. toward toward how new a you mixing right that whether view online, year. half don't Huawei now, And how And done all. on have of had there depending come in our we it's right numbers. So could remixing at great on numbers depending second back story, DDIC to a But But of depending see is baked been the Huawei out, they historically

Derek Soderberg

if question give opportunities can just opportunities? Wondering those on indication to then boxes. of set-top expect an the size Any quick a sort you And ASPs you us of on when those sourcing, ramp? Great. dual and

Michael Hurlston

box we're Yes. engaged - in area the while. I obviously, for mean, been we've a ramping set-top

just software we've or given sockets - from the one suppliers, complexity to on got dual are dual box. revenue in very we've a coming business two single So got difficult that production set-top run on sourced. - source customer may model times is long. across All exist A one The today. the model. the It's hands necessarily and way think that another lead new new here. boxes models second But that the relatively the of box, truly sourcing of doesn't these set-top - set-top another on interchangeable are we source

to a design from win year a have typically actual ramp. You

It's probably aggregate our X on order $X we the and million So first kind of and from remarks a wins such individual mean, $X is each a huge decent-sized we of ramping. can we between about the order. set are a Each million try that that across away and new and talked think but of accumulate customers, business somewhere leverage $XX I as million, design not hardware build year it's But to that win in software $XX a these business. set-top numbers, box on million. that wins about it

Operator

[Operator Instructions].

comes Yang next Our from with question Oppenheimer. Martin

Zhihua Yang

first the of into go Can target IoT? and about new details you for Katana. the heard is My the you've about applications talk some customer feedbacks question more on early maybe

Michael Hurlston

It verbal wake product trigger have going answer the audio to sorry, motion, is people going power wake second What a low differently visual second a done think lot words. trigger to in actually will it wake based going we do is object. in seeing Yes, it to we're different on words. identifying this do what trigger words, visual on we're wake that AI the is What Martin, words. a on question ask so first, let me And think of fashion will question focused have will very on we first. on - an people,

trying in previous TV in turning Turning and you're have different unique in or detect very whether off, on lot as are on a It's product, on people lot a the depending that air interested to whether turning people screens very are are demand screens has buildings. people offices, - in off we the there. people then room, because conditioning counting TV our the caller right? approach. or in of a a But a now it's one industrial asked So about, setting, of a

applying is primary and camera-based differentiator focus our So our a around the solution. really visual concept and

based got in this. inference. we and it's a really artificial can that. course, think on like can intelligence, training of we've differentiated network we it. if detection algorithms product. We train a So truly really We object have there, like we do We And neural

that and, in we engagements, for talked So cycle, be - early product us, both frankly, probably we about. based a early we're customers, in we here. with think Martin. more, a engagements or we biggie in could have, think I away frankly, some but year But market our the in again, from the It's of on segments early, this our real revenue meaningful development

Zhihua Yang

conform pretty prioritize have more I growth. different look do long-term at internally IoT goals? you do on to you different two the markets expansions another question your addressing, with you're target? to you prioritize When that long-term margin growth Or or target you neutral are

Michael Hurlston

that in outlined. and this we think disciplined, spending have in I gross And envelope my with Yes. on I opening toward remarks, the grow one, we're consistent to we and where going grow, we spending. margin mean you as that We consistent think investments, obviously that our trying touched we've gross Katana can said IC. are the stay we and margin to and

and from had numbers margin, think to hit can revenue caller there's to maintain as about the in toward XX% Dean we growth in of better on Dean is apply coming growth growers, there's the we, businesses. revenue The asked sake, And just margin be there take technology previous our we're for faster chase we that to containing there's by that some which So your And and revenue's gist think business. to piles mobile that that I out IoT growth. enough have to X% going we sense, that targets applied not of are largely - think today we outlined that still gross we going those obviously, a IoT - outlined. think is hit that, think the long-term our We question. can gross and we've

Dean Butler

have I'll in maybe the products just our generally add fairly marketplace. you that Martin, portfolios, Yes, IoT that they're at high-end if differentiation look nice

we differentiated about road margin So confines that outlined. growth how really, we can, and think about product portfolio as a we when the growing map, staying executing we're that's thinking it but within our disciplined where

Operator

showing to turn Thank any you. at further not the And questions Michael time. call this to for any I'm would Hurlston further now over remarks. like back I

Michael Hurlston

you. upcoming like to at look you speaking quarter. joining for today. Thank conference investor our of thank virtual I'd We us to forward you to the all during

Operator

Thank call. you. concludes and gentlemen, for you Ladies conference this today's Thank participating.

You may now disconnect.

Synaptics (SYNA) 5 Feb 212021 Q2 Earnings call transcript