Synaptics’ Earnings Call: Strong Growth Amid Challenges

Synaptics ((SYNA)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call from Synaptics painted a generally positive picture, highlighting strong growth in revenue, earnings per share (EPS), and Internet of Things (IoT) products. These positive developments were bolstered by significant product innovations and market share gains in the PC sector. However, the company acknowledged ongoing challenges in the automotive market and a decline in mobile revenue, which were counterbalanced by the successes in the IoT and PC markets.

Revenue Growth

Synaptics reported a 12% year-over-year increase in revenue, reaching $267 million, which slightly exceeded the midpoint of their guidance range. This growth underscores the company’s ability to meet and surpass its financial targets, reflecting a solid performance in the current fiscal quarter.

Non-GAAP EPS Growth

The company achieved a remarkable 70% year-over-year growth in non-GAAP EPS, reaching $0.90. This figure not only surpassed the midpoint of the guidance but also highlights Synaptics’ effective cost management and operational efficiency.

Core IoT Product Sales Surge

Core IoT product sales experienced a significant surge, increasing by 43% year-over-year to $68 million. This growth was driven by strong momentum in wireless and processor products, showcasing the company’s strength in the burgeoning IoT market.

Expansion of Wireless Portfolio

Synaptics expanded its wireless portfolio by launching the first WiFi 7 device for IoT applications. This new product is designed for higher throughput and improved reliability, targeting high-bandwidth applications and further solidifying the company’s position in the IoT sector.

AI-Native Astra Platform Advancements

The company extended its Astra platform with the introduction of the SR-Series high-performance adaptive microcontrollers (MCUs). These advancements are gaining traction across consumer, automotive, and industrial markets, highlighting Synaptics’ commitment to innovation and market expansion.

PC Products Performance

PC products performed slightly better than typical seasonality, with continued market share gains and innovations in AI integration. This performance underscores Synaptics’ ability to capitalize on market trends and technological advancements.

Automotive Market Challenges

The automotive sector presented challenges for Synaptics, with sluggish demand impacting sequential revenue. This highlights a key area where the company faces headwinds, despite its overall positive performance.

Mobile Product Revenue Decline

Mobile product revenues declined by 4% sequentially and 18% year-over-year, as product shipments reached the end of their life cycle. This decline reflects the challenges in the mobile sector, contrasting with the growth seen in other areas.

Cash and Investments Decrease

The company reported a decrease in cash, cash equivalents, and short-term investments by approximately $174.7 million from the prior quarter. This decrease may indicate increased investments in growth initiatives or operational expenses.

Forward-Looking Guidance

Looking ahead, Synaptics anticipates fourth-quarter revenues to be around $280 million, with non-GAAP gross margin and operating expenses expected to maintain at 53.5% and $103 million, respectively. This guidance reflects the company’s continued focus on market expansion and technological innovation, positioning it for sustained growth.

In summary, Synaptics’ earnings call highlighted a generally positive outlook, with strong growth in revenue, EPS, and IoT products. Despite challenges in the automotive and mobile sectors, the company’s innovations and market share gains in the PC and IoT markets provide a solid foundation for future growth. Investors and market watchers will be keen to see how Synaptics navigates these challenges while capitalizing on its strengths.