SYNA - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Synaptics, Inc.

First Quarter Fiscal Year 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Instructions]. [Operator

Investor this hand being your the Munjal Head reminder, now I host, call you Shah, to Shah, like conference of conference a begin. recorded. is would Mr. may As now Mr. Relations. over to

Munjal Shah

afternoon, XXXX me Butler, Michael Dean the our Thank fiscal Financial Hurlston, be Head our for at and President joining first being section call. of and on over I'm CEO; My are name call synaptics.com. Investor thank us you, and you With on This today's live today call accessed Relations also website web Chief is Krisa. the Investor Synaptics' Shah, and Officer. can Relations. Good company's conference of from broadcast quarter is the Munjal and

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

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

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

our the impacts expectations business -- and industry. objectives, chain performance financial results of business the plans, condition, COVID-XX the semiconductor give regarding on and future our shortages our potential pandemic current including business, global the of component Forward-looking currently projections and disruption our our to affecting relating statements supply of and operations, expectations

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

Michael Hurlston

in and growth great to continued was three today's last to guidance IoT above for Thanks, Munjal. our start welcome achieve to a fiscal the by September the our what Revenue months. had call. were year pleased to I'd driven with the everyone We in of products. like we XXXX I able mid-point quarter am our

revenue of resulting margin mix gross quarter. margin record to again, to in record and non-GAAP turn non-GAAP IoT operating Two Higher contributing Our GAAP in the our success. levels EPS and in and revenue improved gross factors non-GAAP the drove are margin.

generally exceeding performance and are expectations. able content, customer shift increasing we improve solutions. been we First, base, market by multiple our have lines mix delivering sell products ASPs more X cross customers our tier working upward In with product whose higher integrated our are existing to and

the new revenue. Second, We new quarter on selling had customers. saw totally into we impact several had in meaningful have which success ramps

every portfolio of dramatic revenues YoY. area our win has increased and Most design IoT momentum. XX% experienced growth Our IoT

networked fitness be equipment. combo to scanners piece the portfolio Our WiFi-Bluetooth in handheld such which as seeing of our are devices of new fastest traction number continues growing applications and

as them of our piece we our IoT example an to Our almost wireless cross-selling portfolio. are other of success every attach can devices

networking for be the out use new full and generation a now automation multiple plan offer to including to stack device protocol latest family wireless and products wireless our technologies of recently that We on primarily taped solution applied a labs qualification. will Bluetooth, in XXX.XX.X Wi-Fi Triple-Combo now single This in cases. has XXX.XX.X. in-home Our is combines an engine. XE, industrial and Thread industry Thread standard is back

same We home be products, Docking of stations these we vendors premium also interface and we XX our the a Matter on months. have replication able by continue support the Zigbee doubling and at are to will to devices in now docks flexible office of first over circuit. strong by In revenues silicon and is be Omdia, next Synaptics will seeing the offering for integrated one triple-combo a see strong long-tail sampling. market to experienced giving confidence we the our to achieve Wireless the will and video seeing demand our applications design-win traction target In customer begin general, products as us in increase of both According we again configurations. of interest believing for are increased again solutions. customers docking up TAM our expected set across inflection XXXX. commercial workplace driven

In docking increasing content addition, stations. successful in have we in been

design-win DisplayPort OEM a with both customer technology have at combines a DisplayLink. we top example, that For our traditional

the and converter market XX protocol adapter is than more into starting design-wins. fruit with expansion to Our bear

on units. production are use customers and selected designs. addressable reference Our also at GPU device for in area, million for we converters to to us CPU is next-generation market and this multiple incremental Spyder, industry-leading XX be and up that adapters estimate in an Protocol now was

the market. of and to market is expand Virtual and reach our our Another mobile taking technology TAM success in our utilizing Reality them drivers our ability core display highest-end example our applying to

in We and in XX leader is billion category. we technology Synaptics who are Virtual using market investment leadership in this area in today today Reality leading all the market area. including this recently almost announced Synaptics enjoy platforms models shipping devices, incredible this $XX a share shipping the with over undisputed traction seeing

given mobile, go These about details had given Reality proximity distinct been the differentiators in key their the are eye. Virtual the which application sector. in refresh rates in display resolution financial display we growth of in headset reclassification Our the include important correctly and historically extremely further together them products now to classifying into both but lumped a fast his Dean and section. are our IoT potential, will human

Our $XXX achieve goal are million annual momentum seeing products of to automotive on-track the our XXXX. revenue remain continued end by and fiscal

We have executed devices generations now have well multiple production design and both in OEMs. major on automotive most our and TDDI all in at

to of revenue be While goal. confidence coming today, quarters, our stated our a automotive small can exceed more we or percentage us we a in revenue TDDI meet meaningful expect part products giving the mix that

announced our is solution products Moving algorithms. noise on our AudioSmart with a integrated to single-chip AI-enabled highly of Edge AI family recently processors, cancellation

already solution for multiple reduces systems which are cost this preproduction We in integrating external premium components. by previously headset also

enabling power reduces extended battery life. significantly it importantly, More consumption,

Our have the with seen products Microsoft a shipping of Teams and advent audio Zoom boost certifications.

headsets Here, have well with gain grade we to in strength wired conferencing. and headsets should we strong as see to of of our Coupled performance portfolio. DSPG, share part the in able been significant presence in enjoy professional a as addition continue used video advantage the gaming in this

now addition, production with of early dedicated capabilities to this advantage shipping. show is platform, taking first customer, beginning In Katana platform the AI full our positive of signs our focused

is development Edge partnerships time addition, increasing for we are for learning the still In early its support numbers ecosystem at the faster of to with expanding expect by The but we Katana in market our new applications are AI indicators. machine to market infancy, our and around customers. encouraged

in moving which A from in but factor was Let palm resulted example which a Synaptics and business. of design AI showing several notebook commercial Last is our strong, better stable This our toward the innovation for plays the and focus cursor. PC two best high-end platforms. the Microsoft’s notebooks technology is year, customer form far on more me of which our is has their prevent The second our experience PC our believe more touches demand normalize. being uses years to growth, business is large is precision likely to products. its the on which Forcepad rejection in move of now in Studio demand touchpads Chromebook market mix strength results, example biased haptics. to on unintentional the with will Surface Touch After larger OEMs features we designed high-end at strong demand enables current with

we Mobile, in to progress made am base. I pleased that in say have diversifying Finally, our customer

June our and Almost our all technology As we the expected are nadir we the mobile products. quarter that OLED in handset be manufacturers on September Korean panels. as touch to to shipping our we their the had indeed has flexible be the Chinese proven said quarter. revenue sequentially leading for now revenue previously, That Android case increased

and shipping is advances performance in significantly noise which particularly this in choice, China. controller, product second-generation earlier the of year now environments, Our started high

calendar hit are qualifications driver these display OLED XXXX. we flexible to to well high-end in expect wins continue new Our progressing and production

chain quickly, I already the Overall, you is expanding product across we let and quick are all pressure an market status. supply are give constraints full supply IoT a constraints winning adding most tight situation portfolio. conclude, prevalent our still with Before me The our in products, very difficult where on update our to our share environment.

able continue through working I garner supply in challenges extremely some our places expect conclude, are am to have incremental XXXX. been small all calendar with though select to that happy partners we We strength growth. and broad To I progress portfolio of positioning the for made the have sustained us opportunities pleased our with our grow ahead lie to business. of in the and we company very the am with of

Synaptics positive be of on-track year. happy that the to will potential have we by the on report combined to merger plus end opportunities that pending the a remain and Group to close continue We DSP calendar

results our Now, over Dean let quarter provide outlook. to me first review financial turn our the to call and

Dean Butler

Thanks afternoon Michael, everyone. good to and

our our this built quarter classification found accurate site. inclusive be reflect reporting historically change over Virtual our our a and as are leading products for to of market our products. growing supplemental IoT Mobile deck unrelated forward. more has rapidly to emerging begin, can been until available products now here our grouping. focused been better The our change phones. Reality Mobile has which in quarter part classified is for of of part revenue the from this of and of market results to we Virtual Synaptics Reality was long-term reporting category today, relations simplified secular like poised growth first on Starting as is reconciliation I realigning investor A our slide Virtual I’d going purpose of Before Reality This core and set go technology

quarter to Moving sequentially, continue the driven component XX% on was quarter face sequentially Mobile And, for results, our in first the more June was focus our guidance. in design-wins our areas was our revenue revenue our X% sequentially and by in revenue, from XX% growth respectively, was PC, to and and to to as XX%, September our September the IoT, year-over-year slightly by despite of as up XX% up and Mobile shipping. the and almost above continued from highlighted, began up September up revenue across up many as revenue quarter was up up reflecting sequentially year-ago grew XX% our decline previously XX%, quarter we in million, demand and strong as Revenue all area offset Revenue bottomed peers. with IoT compared a opportunities. September the products $XXX PC of our quarter PC, IoT, IoT we was as business fiscal had all our of several Revenue products continuing Mobile quarter. toward Year-over-year, XX% in outpace the the customers sequentially. our quarter IoT efforts Mobile XX%, momentum the attractive revenue XX% this partially in constraints. continues product were midpoint

had restructuring-related of amortization gross asset XX.X%, XX% the share-based quarter at compensation we $XX.X transaction of than and GAAP million the million amortization includes million. costs and our $XXX.X costs, and includes of in greater of operating of margin of costs XX% was consisting intangibles were million development company XX% quarter, of which record of million, $X customers During which GAAP million compensation and costs. a expenses two prepaid For revenue $X.X of September at September intangible $XX.X related costs million, the quarter $X.X amortization $XX.X share-based acquisition

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

non-GAAP results. turning to our Now,

prioritize at Our strong and gross XX% responsible of guidance value a as products margin reflecting high-end the we September September customers. a our non-GAAP range, record quarter of continued company highest was mix in our spending to $XX.X quarter our non-GAAP below capabilities balancing up engineering million guidance of invest expenses quarter were operating while levels. the slightly mid-point our from million, at we and as the $X.X preceding

operating the on a our at was record Synaptics. of highest in the As margin result, non-GAAP XX.X% quarter

increase in $XX.X and non-GAAP XX% which was expense prior net quarter from tax an had the is quarter. the the continues We to same ago; non-GAAP year EPS an of of income our million, the from growth share on September of for earnings $XXX.X a million was non-GAAP profitable increase Our for quarter quarter our shareholders. as $X.XX per drive XX% diluted focus positive

to operations XX September $XX of million outstanding up were $XXX from We the end on was the days million a the million convertible from were days, million balance hand, of ended quarter Now down the Cash we paid of with last quarter. of from zero. sheet. Receivables sales million flow balance $XXX $XXX outstanding slightly of cash turning the to quarter. and XX the our decrease preceding as $XXX notes bringing quarter during at

XX, down and XX last inventory quarter, million. inventories Our days ending from $XX of was were

desired remains and were our was million. constraints. for supply $X.X the continued However, million level due $X.X Capital chain to inventory expenditures below depreciation quarter

customers’ in service the last are high limiting demand Similar the our start We backlog anticipate quarter of quarter, above backlog the Before excludes demand. continues the remain million we like from guidance to acquisition. to end pending range supply $XXX any ability provide range for for $XXX our the impact million. our strong. Customer as be for to the still DSPG of and our our December I products revenue that at December of our constrained, remind outlook our our extremely was guidance everyone to quarter quarter, full to to I’d

revenue our and IoT, December XX% mix the expect and products in from We to approximately be respectively. PC Mobile XX%, quarter XX%,

follow an XX% faster growing Our year-over-year outlook expectation will outlook. faster the of IoT our GAAP with all and basis, market I broader products a significantly start non-GAAP peers. incorporates IoT with focused will estimated than on our and than

in XX%. our GAAP We range the the XX% December for of expect margin gross to to quarter be

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

GAAP to rate We approximately to our expect XXXX fiscal be XX%. XX% tax

net expected per $X.XX GAAP income our our is range for in Finally, be share of quarter to $X.XX. to the December

Now, our quarter. the outlook for non-GAAP December

quarter. We expect our non-GAAP gross into December margin momentum to continue the

increasingly continue deliver of and and XX.X%, gross XX.X% constraints as navigating We prices. expect positive supply the margin while mix in range changing input chain non-GAAP prioritize to we to to an

continue We $XX engineering expect be revenue expense trajectory. long-term further our operating quarter our December which $XX our non-GAAP in of to as growth to million the in into the the we of drivers million investing business range

expect December be million our the We to in expense quarter. interest net $X approximately non-GAAP

XX in December an estimated net XX% shares. XXXX our diluted be our $X.XX expect share, the fiscal up for tax wraps remarks. prepared on million to Non-GAAP be of for the range We to continue long-term per of range non-GAAP to to fully in to XX%. This income rate per $X.XX is the anticipated diluted share quarter

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

Operator

[Operator Instructions].

first Your of line of Christopher from Rolland the Susquehanna. question comes

Unidentified Analyst

for Could This about support contracts is this? talk have to IoT And an you [Steven] on when integrated connectivity, might connectivity long-term any Chris. platform? plus you for demand wafer

Michael Hurlston

very the question I the first strong. demand. Yes. is Obviously, very, it's -- around

relative long-term from of contracts some with don't our well create with to Our that that where processor is that's very Bluetooth track This platform much the very supply Group And we do. try WiFi merger at we partner. have but ability key the good that really seen ship. been backlog projected. we're AI-enabled a our course, edge goal platform, compute, On to of supply, what We long-term our partners. really we've working edge is DSP we've of network. foundry is about with to to or any is any an talked IoT outpacing to something on our our combined had the one areas We have foundry significantly certainly support guarantee outsized with the

platforms of on plan, our announced remains certainly haven't and specific our much pace. there, but We any part development very that long-term

Unidentified Analyst

for What follow-up. quick a the is in just OLED shipping And timetable production TDDI?

Michael Hurlston

Yes.

of in expect first be half to in XXXX. We production the

Operator

of Your line from question comes Raji next the Needham. of Gill

Rajvindra Gill

wanted excellent speak reality market. I the the little to on virtual bit momentum. Congratulations a Michael, about

historically you're that it get away into revenue to maybe segmenting little there's from into Wanted IoT a you mobile -- IoT. part mobile IoT. you are from a and shuffle gave, or You in numbers going if it that it you if could taking what bit putting sense as of a look was because quantify the of

market, you when the of to headsets? looking VR? your wanted the enabling get of display this technology going adoption And just or I you're sense reality helping do rate the a is the virtual forward, And of side at magnitude. adoption how how see So on

Michael Hurlston

Yes.

me been to Let breakout. around I'll thinking about We're of piece quite this have this talk a market. a lot second there's before the obviously and half, breakout take been while Raji, Dean the this around news first for super segment. We've about the excited particular revenue

fortunate So little future. a we see about particularly it have to growth focal really have really, bit become because meaningful, your good long very in eye. remarks, prepared front this that's I for technology as you specific We market the it's more really you we very creates that coincidence. time a it's never specific display right had in said revenue, the but point a face, specific as a We And wasn't of for focuses have look we I out and it mean just back. meaningful the and really have in technology that products developed that. a -- talked something prospects

XK happening got, display new a into more and do invested to those to driver x types. market, One you're standpoint A, is XK Micro x difficult OLED other are in certain dense displays product really, the we some OLED, getting you've mini-LED. XK, of cases, really we've And XK that then online that which in coming goggles; expect Raji, on things actually from display be that's also in areas.

core both got and think content. in we we outsized on we've types out the technology future, kind So of different display the lead then a pretty different as But dimension. look

good pretty us we So Maybe take the Dean can feel breakout. about through it.

Dean Butler

that numbers. to on gives actually we our just In but supplementary actually we reconciliation, make table have tried everybody's deck Raji, Relations lives the Yes. a sort for of $XX give this significantly a our In X.X pretty million to so $X XXXX, That's course million Investor the you years. simple. site, quick the was fiscal the year, over about some last quarter. grown of

just This we million concluded was quarter. $XX in the quarter,

is a annualized of given run virtual a sort roughly is think million probably ton So forward going the of that marketplace, just $XX today. there's on getting in It's reality started. area. potential in And really rate of this just sort where we

Rajvindra Gill

Michael, you -- are seeing selling growth the more your Triple on How Or just you of then Is me Can the it? bolting you Triple you it And it discrete the more on Combo Combo? pure your on help a the is lot that just -- applications? wireless SoC? the on are AI of Triple-Combo about thinking Triple strategy is discrete kind embedded Combo this devices? it on there just you of think combining edge Are what protocols, bundling processor? Perfect. XE, Okay. with Are XXX. about Bluetooth, context different in

Michael Hurlston

perfect hate edge -- for platform the I think connectivity AI to the mean XXX.XX.X, to is for do both. connected have It's edge processors. this be a standards big I because protocol going cop-out, -- it's leading be we AI you a of that one Yes. Thread but

rates not standalone about range, going combination part as platforms. edge right? Because question, data a got AI be lower well. of second demand But the these right bandwidth, with on of You've there's big but of to to also talking your you're the lot

to Our that an same mechanism processing, often in protocol. to are applications, platform, and come the may through XXX.XX.X well core customers they're control video connect WiFi, of combos, Bluetooth looking types controls which high-bandwidth

of So we and keeps differentiator in pretty think competition. gives markets it even us nice us ahead core a our

Operator

question of next comes Karl from Cowen. the line Ackerman Your of

Karl Ackerman

above wafer may. Last since high was also backlog I Dean, partner received then, that indicated from by stated you've you XX% your you allocation Broadcom this your that of order if foundry revenue for the questions, end like fiscal quarter, your asset. XXXX And greater Two backlog. But guide. supported legacy December it expected for sounds is

in My also I much about 'XX, that does the fiscal clearly, not perhaps have, question but quarter you fiscal backlog IoT perhaps from the XX% better. So December is, supports just helpful. would -- order just talk move but proliferating does higher guide, order 'XX, you be If not anchoring that that that here? just think across backlog that WiFi, much, number could very the

Dean Butler

Yes, Karl, you're remembering correctly.

had we've imagine. really, might continued momentum, So you as

quarter Our in backlog at we has higher coverage XX% gone of this from what last here quarter. said

signaling winning through supply that quite We the have chain for time in some been we're our marketplace.

with Our slowly we've continues demand capability. customers. to momentum And been growing supply outstrip alignment therefore, is trying customer the our clearly but improve the to supply

still XX% So a us we're up, for there's catch gap Karl. certainly better, still or but to

Karl Ackerman

but Very driven If my appears gains a color primary may, next you by opportunities maybe for follow-up, could segment? I more your bit I be a spoke what and quarter, about enterprise. PC mix towards growth just peer ask simply provide your to moderation in your for because new touchpads on share helpful. greater

helpful. anything be that could very you would So add

Michael Hurlston

the your one biggest We toward reason is is I understanding the right. better our Karl, the commercial. think, We for mix probably of more typically outlook -- competitors our do feel again, there. than like optimistic

in But we probably think So that, subtext I are think headline. winning. the that's I do

the needle. -- meaningful share. say we in able a to but way, we We feel a couple percentage of are taking we've I points, like move been wouldn't

little the driver a is towards say mix notebook. commercial but So the bit biggest the both, overall I'd it's of

Operator

Instructions]. [Operator

of BMO question next Capital Markets. line Srivastava Your of Ambrish the comes from

Jitendra Chelamalasetty

demand if Could it? Asia by would as peers, Good growth in This in your mobile business term? recorded is the some sequential be weakness should of impacting -- of in your Asia think in about talk the the the see market about recent handset we business. so, And near the for Ambrish. how to Jitendra market back you any

Michael Hurlston

Yes. the the of pull design overriding for wins. number think I I mean, us is

biggest thing happened is shift to marketplace Android flexible for the that's us displays. in OLED So the the

able share frankly, that been shift gain gain has to and As happened, we've revenue.

there's that's our churn that, really think There's the Certainly, market. -- India, in supply of is I in then big gaining some is think sorts rumors all there's I our that share. we're like headline. So market. dominant fact constraints underneath, long We're that one, the but markets that and and about drops pull winning in that

So some in got of to is it the be apparent less else balanced than somebody or position. us underneath more noise is might to flat who's a

Jitendra Chelamalasetty

That helps.

the As to for on hear a the order follow-up, $XXX for revenues track great million the about year.

TDDI wins products about part like today? how various do driving and you a briefly today. on the Could are grow technologies you mix talked You see over And of small go design your time? that being them

Michael Hurlston

Yes.

Our primary is really discrete today drivers. display business

really you're growing. on is drivers. by predominantly display for that as That time, but and timing traction mean bit touch, able know. Touch a discrete well, because controller as what's drivers in today likely dominated discrete mix our piece to display circuit have gain very is win Over there's I a is represents you with the We TDDI. TDDI of a pull us content design our

TDDI discrete drivers meaningfully display in circuits. then vastly are have And discrete in a a touch more really, or maybe we of can have there supply competitive TDDI. X is that handful way solutions. position we're We stronger fairly share. one there's We where X, think content. of a outsized suppliers our lot outsized market winning think relatively we're There that So

And becomes to to as in sort the technology put choice we're why revenue really, feel we're all going feel and Dean this Munjal feel we do that able that really of there. good, hit to well. out like of be we target we and So automotive, that that's good going

Operator

this questions like time. I would to showing Michael. back conference am I to no further the turn at

You may proceed.

Michael Hurlston

to you thank you our upcoming Thanks We at quarter. joining conferences forward during look I'd of a us like to investor for lot. to the today. speaking all

Operator

a participation, concludes you wonderful conference This today's Thank for your call. have and day.

You disconnect. may now

Synaptics (SYNA) 5 Nov 212022 Q1 Earnings call transcript