Synaptics 2025 Q3 Earnings Misses Targets as Net Loss Widens 20%

Synaptics (SYNA) reported its fiscal 2025 Q3 earnings on May 08th, 2025. Synaptics missed the analyst estimate for GAAP loss per share, reporting $0.56 instead of the expected $0.45 per share. The company, however, surpassed revenue expectations with $266.6 million compared to the estimated $265.03 million. Looking forward, Synaptics has set its guidance for the upcoming quarter with revenue expectations of $280 million, plus or minus $15 million. The guidance reflects improving demand trends, aiming for both sequential and year-over-year revenue growth. Investors will closely monitor these developments in the coming months.

Revenue
Synaptics reported a total revenue increase of 12.3%, reaching $266.60 million in 2025 Q3 compared to $237.30 million in 2024 Q3. The Enterprise and Automotive product applications contributed $153.80 million, supported by Core IoT product applications generating $67.50 million. Mobile product applications accounted for $45.30 million, collectively leading to the total revenue.

Earnings/Net Income
Synaptics experienced a deeper loss in its third quarter of fiscal 2025, with losses widening to $0.56 per share from $0.46 per share in 2024 Q3. The net loss increased by 20.4%, reaching $-21.80 million, up from $-18.10 million. The earnings per share demonstrate continuing challenges in achieving profitability.

Post-Earnings Price Action Review
The strategy of buying Synaptics shares after a revenue beat and holding for 30 days resulted in notable underperformance compared to the benchmark, with a return of -7.86% over the past five years. The Sharpe Ratio of -0.04 highlights poor risk-adjusted returns, reflecting significant volatility and high risk associated with this approach. The maximum drawdown of -73.51% underscores the vulnerability of this strategy during market downturns. Investors should remain cautious, as the historical performance suggests that simple buy-and-hold strategies post-earnings beat may not yield favorable results. Instead, a more nuanced investment strategy might be required to navigate the complexities of Synaptics' financial performance and market dynamics.

CEO Commentary
"We delivered another solid quarter, with revenues increasing by over 12 percent year-over-year... driven by our Core IoT products, which grew 43% year-over-year... Our strategic initiatives in the IoT market continue to gain traction... We launched several new products including Wi-Fi 7 solutions and next-generation Touch controllers that strengthen our portfolio and position the company for long-term growth," said Ken Rizvi, Interim CEO and Chief Financial Officer. He noted a strong balance sheet and over $74 million generated in cash flow from operations, signifying the company's underlying business strength.

Guidance
For the fourth quarter of fiscal 2025, the company expects revenue of $280 million plus or minus $15 million, with a GAAP gross margin of approximately 42.5% plus or minus 2.0%. Non-GAAP gross margin is anticipated at 53.5% plus or minus 1.0%. The projected GAAP loss per share is $(0.68) plus or minus $0.30, while the Non-GAAP earnings per share is expected to be $1.00 plus or minus $0.20. The guidance reflects improving demand trends and expectations of sequential and year-over-year revenue growth.

Additional News
In recent company developments, Synaptics has been focusing on innovation and strategic expansion. The company launched its first IoT-focused WiFi 7 device, targeting applications like ultra-HD video streaming and AR/VR, showcasing its commitment to cutting-edge technology. Synaptics also introduced the SR series adaptive microcontrollers under the AI-native Astra platform, aimed at enhancing power management for edge IoT applications, gaining attention across consumer, automotive, and industrial markets. Additionally, the company repurchased approximately 546,000 shares for $37.9 million, signaling confidence in its market valuation and a commitment to returning value to shareholders. These strategic moves highlight Synaptics' focus on long-term growth and market positioning amidst an evolving technological landscape.