Synaptics Incorporated Q3 FY2025 earnings call

• Strong Q3 results: Revenue increased 12% year-over-year to $267 million, non-GAAP gross margin 53.5% in line with guidance, non-GAAP EPS grew 70% year-over-year to $0.90. - Core IoT growth: Driven by wireless and processor products; WiFi 7 launched for IoT with high throughput and efficiency; Astra platform SR-Series MCUs launched with AI-native features. - Enterprise and Automotive: PC products had market share gains; automotive faced near-term challenges but long-term opportunities with OLED screens. - Mobile Touch: Focus on high-end Android smartphones, next-gen touch controllers for foldable OLED phones. - Broadcom transaction: Spent $198 million on the transaction, returned $37.9 million via share repurchases.

Core IoT: Revenues increased 43% year-over-year to $68 million, contributing 25% to Q3 revenue. Enterprise and Automotive: Revenues improved 14% year-over-year, contributing 58% to Q3 revenue. Mobile Products: Revenues down 4% sequentially and 18% year-over-year, contributing 17% to Q3 revenue.

• Q4 2025 revenue mid-point $280 million ±$15 million. - Non-GAAP gross margin mid-point 53.5% ±1%. - Non-GAAP operating expenses mid-point $103 million ±$2 million. - Non-GAAP net income per diluted share mid-point $1.00 ±$0.20 on an estimated 39.3 million fully diluted shares.

• Impact of tariff policies on supply chain and end demand. - Uncertainty around indirect effects of tariffs on financial performance.

Q: Could you expand on what drove the strength in core IoT in both the quarter and the guide? And specifically for June, how much of that strength is coming from either the Wi-Fi 7 ramps that you've talked about previously or the -- and/or the Broadcom and Pixel-related ramp?

A: Ken Rizvi said core IoT was driven by wireless growth. WiFi 7 is a 2026 driver, and Broadcom acquisition is expected to add about $10 million a quarter.

Q: Previously, you've talked about your human presence detection win with Dell and you talked about it again in the prepared comments. Now, I believe Lenovo was able to switch from a competing FPGA-based solution to a Microsoft-based software-only solution. So, kind of two questions, do you see incremental opportunities to win versus FPGA-based solutions with that UPD? And on the other side, do you see rising competition from this software-only based solution in that application?

A: Ken Rizvi said UPD portfolio is penetrating OEMs, with lower cost and power-efficient vs FPGAs. Vikram Gupta added their software roadmap is ahead of pure software-only solutions.

Q: Given all the tariff-related macro concerns, has -- have you seen any translation into how your order book or linearity is trending in June? And if you can extrapolate how to think about beyond June, if you have any view into September or beyond?

A: Ken Rizvi said backlog and bookings are healthy, but tariff uncertainty remains.

Q: Perhaps if you could talk about the Broadcom acquisition, where we stand? I think you said $40 million of annualized revenue from the sale. Are you able to add any additional to that? Are you seeing any additional uptake, particularly on the mobile side?

A: Ken Rizvi said the Broadcom acquisition opens new SAMs in AR/VR, smartphones, consumer audio, to be prosecuted over 3-5 years.

Q: The Wi-Fi 7 low power for IoT applications, can you give us a description of what's happening in the competitive landscape? Or are they all just taking the standard Wi-Fi 7 and adding it on to and just trying to sell it to IoT companies?

A: Venkat Kodavati said Synaptics is the first to introduce Wi-Fi 7 to IoT market, using advanced process and signal processing for lower power.

Q: With the Astra platform, with the introduction of DeepSeek and other optimized LLMs, have you seen an increase in demand based on those? Or I guess, what's the drivers in that market?

A: Vikram Gupta said the pipeline of activity for the Astra platform continues to grow, with more interest in moving AI to the Edge.

Q: When would we expect more of a synchronized growth in your end markets. So if I look at just the quarter, even the guide, a lot of this is driven by your Core IoT. So maybe when we look at in the back half of the year, would we expect the growth to continue to be led by Core IoT? Or do you see some enterprise or perhaps your mobile start contributing to the sequential growth?

A: Ken Rizvi said Core IoT is growing sequentially, automotive is sluggish, and mobile is targeting high-end Android with innovation.

Q: Historically, you guys have pretty concentrated customers, and now we're going to the broad markets where there's a long tail of customers. I guess in terms of just getting the marketing and sales and working with the right distribution, where are you in that stage?

A: Ken Rizvi said still in early innings of go-to-market strategy, continuing to invest in business development and partner network.