Synaptics (SYNA) 8 Aug 24 2024 Q4 Earnings call transcript
AInvestFriday, Aug 9, 2024 7:00 pm ET
2min read
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In Synaptics' recent earnings call, the company provided insights into its financial performance in fiscal 2024 and outlined its expectations for fiscal 2025. The call, led by Michael Hurlston, President and CEO, and joined by Ken Rizvi, the new CFO, showcased the company's resilience in the face of challenges and its optimism for future growth.

Stabilizing Revenue and Clearing Inventory Issues

Synaptics reported a net revenue of $959 million for fiscal 2024, down 29% compared to the previous year. The decline was primarily attributed to declines in the core IoT and enterprise and automotive products, partially offset by growth from mobile products. Despite these challenges, the company managed to stabilize revenue and clear inventory issues that had been plaguing it for several quarters. Core IoT, particularly wireless, showed significant growth, with a 63% increase year-over-year. This growth was driven by the successful taping out of a new broad market device, expected to sample to customers by the end of the calendar year.

Exciting Developments in Core IoT and AI-enabled Smart Embedded Processors

Synaptics' core IoT business is on the right track, with the company's first Wi-Fi 7 device slightly ahead of schedule. The success of Astra, Synaptics' AI-enabled embedded processors, has exceeded expectations, with demand from a broad set of customers across various industries. The company is also making progress in driving synergies between its compute and wireless portfolios, as shown by the successful launch of a Wi-Fi 6/6E device with quad-core A55 processors.

Navigating Challenges in Enterprise and Automotive Products

The enterprise and automotive product segment showed an improvement, with revenue increasing by 7% on a quarterly basis. Synaptics is gaining market share in the PC market, particularly with its user presence devices, and is optimistic about the growth potential in the AI PC market. However, the company continues to face challenges in the enterprise sector, with IT spending on personal hardware remaining below historic norms. In the automotive sector, the overall market softness has slowed the adoption of new technology, but Synaptics is confident in its market position and expects its mobile products to largely track the high-end Android market.

Looking Ahead to Fiscal 2025

For fiscal 2025, Synaptics expects revenues to be approximately $255 million at the midpoint, with a revenue mix from core IoT, enterprise and automotive, and mobile products expected to be approximately 23%, 58%, and 19%, respectively. The company anticipates non-GAAP gross margin to be 53.5% at the midpoint and non-GAAP net income per diluted share to be $0.75 per share. Synaptics remains focused on managing its operating expenses and is optimistic about the growth potential in its core IoT business, particularly in processors and wireless.

Conclusion

Synaptics' earnings call provided a comprehensive overview of the company's financial performance in fiscal 2024 and its outlook for fiscal 2025. The call underscored the company's ability to navigate challenges and its optimism for future growth, particularly in its core IoT business. With the successful launch of Astra and the progress in driving synergies between its compute and wireless portfolios, Synaptics is well-positioned for a bright future. The company's focus on managing expenses and driving growth in key areas will be critical as it navigates the evolving market dynamics.

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