Synaptics Incorporated Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $4.00b | Revenue (TTM) = $1.20b
Market Cap = $4.00b | Estimated Revenue = $1.31b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $4.40b | Revenue (TTM) = $1.20b
Enterprise Value = $4.40b | Forward Revenue = $1.31b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Synaptics Incorporated Stock Analysis
Analyst Opinions
19 Analysts have issued a Synaptics Incorporated forecast:
Analyst Opinions
19 Analysts have issued a Synaptics Incorporated forecast:
Synaptics Incorporated Events
Past Events
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JUN
25
ON Semiconductor Corporation, Synaptics Incorporated - M&A Call
3 months ago
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MAY
18
J.P. Morgan 54th Annual Global Technology
4 months ago
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MAY
7
Q3 2026 Earnings Call
5 months ago
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FEB
5
Q2 2026 Earnings Call
8 months ago
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DEC
10
Barclays 23rd Annual Global Technology Conference
10 months ago
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NOV
6
Q1 2026 Earnings Call
11 months ago
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StocksGuide Free
Synaptics Incorporated — ON Semiconductor Corporation, Synaptics Incorporated - M&A Call
1. Management Discussion
Thank you for standing by. Welcome to the call to discuss onsemi's acquisition of Synaptics. [Operator Instructions]
Now it's my pleasure to hand the conference over to the Vice President of Corporate Development and Investor Relations, Parag Agarwal. Please proceed.
Thank you, Carmen. Good afternoon, and thank you for joining us today to discuss onsemi's acquisition of Synaptics. I'm joined today by Hassane El-Khoury, President and CEO of onsemi; Thad Trent, CFO of onsemi; and Rahul Patel, President and CEO of Synaptics.
This call is being webcast on the Investor Relations section of our website at www.onsemi.com. A replay of this webcast, along with the accompanying slides referenced in the call, will be available on our website approximately 1 hour following this conference call, and a recorded webcast will be available for approximately 30 days following this conference call. Additional information is posted on the Investor Relations section of our website.
During the course of this conference call, we'll make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution that such statements are subject to risks and uncertainties that could cause actual results or events to differ materially from projections. Important factors that can affect our business, including factors that could cause actual results to differ materially from our forward-looking statements are described in our most recent Form 10-K, Form 10-Qs and other filings with the Securities and Exchange Commission. Our estimates or other forward-looking statements may change, and the company assumes no obligation to update forward-looking statements to reflect actual results, change assumptions or other events that may occur except as required by law.
The purpose of this call is to discuss onsemi's acquisition of Synaptics. We request that you focus your questions on the transaction and we will not be able to answer any questions on current business conditions or other topics. During this conference call, the speakers will refer to the presentation related to this transaction, which is posted on onsemi's Investor Relations website.
Now let me turn it over to Hassane. Hassane?
Thank you, Parag. Good afternoon, everyone, and thank you for joining us. Today, we are excited to announce our proposed acquisition of Synaptics. This marks the next chapter in our journey as we position ourselves to become a leading provider of intelligent systems. I'll walk you through the strategic rationale and why this is the right time for us to go down this path.
Moving to Slide 4. This combination starts with a shared mission of intelligent technologies for power and sensing for onsemi and connected devices for Synaptics. It will enable us to deliver intelligent systems to support AI applications from the data center to physical AI and provide us with the 4 key pillars needed to win. Those are power, sense and control coming from onsemi and the connected compute from Synaptics. And together, we would become a leading provider of intelligent systems expanding our total addressable market while enabling us to capture more content value per platform.
Turning to Slide 5. The technologies this combination brings together will expand our AI capabilities from AI data centers into physical AI. We anticipate it will expand our total addressable market by $30 billion to $243 billion by 2030. As we are positioned to enable AI from infrastructure all the way to the edge, and to increase the value we can deliver to our customers and our shareholders. We're integrating a differentiated Edge AI compute franchise with a strong portfolio of human-machine interface and wireless connectivity solutions.
And together with our differentiated power portfolio spanning from silicon to wide-bandgap, our image sensors and our Treo portfolio of products, we would become an industry leader positioned at the intersection of power, sense, connected compute and control addressing the 4 pillars of physical AI. We expect the transaction to be accretive within 18 months from close, strengthening our long-term financial model.
On Slide 6, you'll see our business is already well positioned across AI infrastructure ecosystem, where we are a leader in energy storage systems and AI data centers from the grid to the core, and many of our products are also used across various edge AI applications today. With Synaptics portfolio, we will be able to extend our reach and content opportunity across physical AI applications like robotics and humanoids. As a result, we believe we will address an AI TAM of $100 billion by 2030, growing at a CAGR of 25% over that period.
Now let me hand over the call to Rahul, the architect behind Synaptics' transformation. Rahul?
Thank you, Hassane. It's a pleasure to join you on today's call. We are excited about this transaction, and I share your vision of building intelligent systems and scalable platforms for customers.
First, I'd like to sincerely thank my entire One Synaptics team for their dedication and execution in reaching this important milestone.
Let me briefly introduce Synaptics on the platform that we have built. Throughout our 40-year history, Synaptics has consistently anticipated major technology shifts and capture emerging market opportunities through innovation. Today, we offer a broad portfolio of edge compute, connectivity, interface and sensing solutions. Over the past several years, we have focused on AI-native compute and connectivity while extending our leadership in human machine interfaces into new physical AI applications. As intelligence moves from the data center to the physical world, the convergence of these technologies is becoming increasingly important and we have built strong and strategic relationships with companies leading AI at the edge.
Slide 8. At the center of our strategy is the Astra platform. We have developed AI-native microprocessors and microcontrollers that integrate multiple compute engines, including a neural processing unit, Google's Coral NPU, GPU, general-purpose CPU and multimedia processors within a monolithic SoC. We have architected the platform for performance, power efficiency and scalability with an open source and developer-friendly software framework and tools that simplify deployment of AI models across a broad range of applications.
Since joining Synaptics, I have focused the company on delivering solutions that accelerate customer innovation and time to market. Through this combination with onsemi, we are advancing a shared vision, I would say, a vision that I believe is shared between Hassane and I of bringing intelligent AI systems to a broad range of markets, particularly industrial and physical AI. Additionally, onsemi's established sales organization and global distribution network will accelerate the adoption of our solutions and expand our reach.
The One Synaptics leadership team is excited to work with Hassane and onsemi team to realize the full potential of the combined company. I'd like to turn it back to Hassane.
Thank you, Rahul. You can see why we're excited about this combination and the capabilities it would bring to onsemi and how with Synaptics, we will be positioned at the intersection of the 4 pillars of physical AI. We have a long history of supporting leading customers across auto, industrial and AI data centers, giving us the right foundation to expand into the world of physical AI. With Synaptics, we expect to provide all the key building blocks required for machines to sense, decide, act and adapt to the physical world. The transaction would create a category-defining leader in intelligent systems and enabler of the physical AI world while expanding our automotive and industrial pedigree, which are already in the physical AI realm.
Together with Synaptics' strength in human machine interface, wireless connectivity solutions and connected compute, we can accelerate our strategy and expand our reach to a wide range of established and emerging markets such as autonomous vehicles, robotics and AR/VR. As these markets ramp, we will continue to be at the center of it. We're already designed into many robotics platforms via our motor drivers, power converters for motors, our position sensors and our power devices, and this acquisition would extend those capabilities.
Moving to Slide 10. The complementary portfolios enable us to unlock and drive significant value creation opportunities and deepen customer engagements. And more importantly, beyond the technology and capabilities, this combination will bring in a world-class team that has made substantial R&D investments to establish this platform, which would help us accelerate innovation and unlock new markets as a combined company.
Our onsemi global sales network can help accelerate the go-to-market for our combined business, and we have a history of moving products quickly into new markets. Also, the onsemi executive team, myself included, have firsthand experience in managing and scaling businesses from connected compute to HMI.
Now let me turn the call over to Thad to cover the financial aspects of the transaction. Thad?
Thanks, Hassane. I'm now on Slide 11. This transaction is compelling from both financial and strategic perspectives. It provides us with a market-leading technology portfolio that enables us to deliver intelligent systems to support AI applications from the data center to physical AI. From a financial perspective, we believe this combination has significant value creation opportunities to drive revenue and earnings growth with a very attractive margin profile. The combined pro forma company would be $7.8 billion in revenue in 2026 based on Street estimates.
The pro forma company on the right side of this chart includes our expected $200 million of annual run rate synergies and includes stock-based compensation for Synaptics, consistent with onsemi's non-GAAP reporting. The combined scale strengthens the financial profile with attractive gross margins and accelerates our path to our long-term model. We expect non-GAAP EPS accretion 18 months after close.
Turning to Slide 12. Let me provide a brief summary of the transaction details. The acquisition is an all-stock transaction. Synaptics shareholders will receive 1.350 onsemi shares per Synaptics share, implying a total enterprise value of approximately $7 billion. Our offer represents an approximately 19% premium to the volume-weighted average closing prices of onsemi and Synaptics over the last 10 trading days. Pro forma ownership will be 88% onsemi and 12% Synaptics. The acquisition is expected to be accretive within 18 months of closing with $200 million of synergies.
Turning to the balance sheet. We maintained flexibility with pro forma net debt of $1.2 billion as of today and net leverage well below 1. With this flexibility, we remain committed to our existing capital return policy, returning 100% of our free cash flow to shareholders through our share repurchase program between now and close. We anticipate closing the acquisition in mid-2027, and the transaction is subject to Synaptics shareholders' approval, regulatory approvals and other customary closing conditions. Also, as highlighted in today's press release, both companies are reiterating previously provided financial guidance for the current quarter.
To wrap up, this combination would expand our total addressable market and our solutions to enable AI from infrastructure all the way to the Edge, increasing the value we can deliver to our customers and our shareholders.
With that, I'll turn the call back over to Carmen to open up the call for questions.
[Operator Instructions] It comes from the line of Ross Seymore with Deutsche Bank.
2. Question Answer
Congratulations on the deal. I wanted to see what your thoughts were on revenue synergies. I can see how this diversifies the end markets for both companies, and I can see how the scale of ON could be beneficial to Synaptics. But I wondered how you thought about any revenue synergies where the actual combined company can grow faster than the 2 individual companies could.
Yes, Ross, this is Hassane. Clearly, as you can imagine, there is going to be revenue synergies. If we look at about intelligent systems as we define it, we have our core market, Synaptics has their core markets, and there's not a lot of overlap between them. So to simplify the outlook of the way we look at it, the systems we are in, where we have power, sensing both on the power conversion and control there's always a compute connected or not at the center of it. And the systems that Synaptics is very strong and where they have the architectural control from the compute side there are always parts that we are able to deliver around those same systems.
So with that, small overlap, if any, and the complementary nature of both the portfolio and the markets and the customers, the net benefit for the combined company is the revenue synergies. And that's what we're looking at. On top of that, of course, we talk about the expanding TAM that both Thad and I talked about. So you put all of these together and then you can see the excitement that we have with the combined company as we go to market together.
And I guess as a quick follow-up, the $200 million in synergies, any color? Is that -- anything in the COGS line? Or is that all in OpEx? And then the regulatory approval? Anything unique in that, do you need China?
On the $200 million of synergies, most of that is on the OpEx line. If you think about it, it's probably 85% to 90% on the OpEx line and the remainder being in the COGS line. We think most of that will come out of SG&A. And I just want to also point out that also includes the stock-based compensation. So when you think about your models, you need to adjust the Synaptics' historical reporting to include stock-based compensation.
From the regulatory, it's customary regulatory based on our -- on the work that we've done, obviously, we have to continue to do the work. We do expect China regulatory but other than that, it's very customary. And of course, we're comfortable given the complementary nature of our portfolio, as I described before, and really the benefit that all that brings to customers worldwide.
One moment for our next question. It comes from Vivek Arya with Bank of America Securities.
Hassane, as of your last earnings call, the assumption was that ON's preferred area of expansion is the cloud data center and power rather than consumer and Edge. So I'm curious, what tipped you in this direction of doing more in kind of consumer and Edge as opposed to doing more in the AI data center? I realize it's not either/or, but I imagine there is still a level of opportunity cost to expanding in this direction as opposed to kind of reemphasizing the AI data center more. So just curious to hear what kind of tipped you in this direction?
Sure. So as you know, that doesn't change our direction at all. That's what I mentioned by the complementary in nature and really the expanded nature of that combination. We have already established a very strong foundation in the -- call it, the AI data center and the AI infrastructure, what we call the AI Halo. We have a leadership position in industrial that is benefiting from AI data center. We have all of the technologies that are required and that are needed, and we are winning and have strong growth in these markets. Of course, as the market for SSDs, as you know, develops, we are already present and have the technology for those.
Going into the AI data center. We've talked about our revenue position last year and what we expect this year. We've done some of the acquisitions for capabilities already. So not to say that we have a very strong foundation already that we have built over the last few years for, call it, the AI data center and AI infrastructure. What this combination adds is a more strategic and forward looking. You can think about it as we're skating where the puck is going to be while continuing to build upon the foundation that we've done so far, and we have been very successful. So it is not one or the other. It is continue to do what we're really good at and we have built while we think about how to expand because the natural extension of AI out of the data center is into the physical realm, Which is physical AI. We see it in automotive. We see it in humanoid. Both of these markets we play in. We see it in, of course, robotics as an overall market, which includes humanoid and we see it in industrial.
So getting that complementarity with the connected compute, it strengthened the whole portfolio beyond just where we're strong at and what we've built for the last 3 years.
Got it. And for my follow-up, what do you see as the structural growth rate of Synaptics for the next few years? Because when I look at consensus right now, it's showing a 9% to 11% kind of growth rate from '26 to '28. I appreciate that parts of the business are growing faster. But regardless, as an enterprise, people see their growth rate as 9% to 11%, which is a little bit lower than ON's expected growth rate. So what do you think the market is missing and projecting Synopsys' -- Synaptics', sorry, growth rate that ON can perhaps add to in terms of revenue synergies?
Yes. So I'm going to give you the opportunity that we see as a combined company. Of course, the -- there are 2 parts for Synaptics. You have the Astra that Rahul talked about. That is growing actually much faster. You can think about, I think, 25%. That small portion of the revenue today, but that is the high growth that is at the center of what I talk about intelligent systems, that's going to accelerate growth of both the combined company and really it's a higher growth for Synaptics proper as well.
Now I think what -- there is an untapped missing concept of technology is, I think, from the human machine interface side of it, what is new and emerging is the applicability of human machine interface beyond just what we all know, including me, the touch interfaces or the touchscreen or capacitive touch screen into the sensing for humanoid and robotics in general, that is a forward-looking growth that we together because we are strong in those markets as well. We can take that part of our sensing portfolio. We already do position sensing with inductive. This brings the tactile sensing. That, I believe, is an untapped opportunity that the technology exists, Synaptics have been investing in it and the go-to-market of the combined company will help accelerate that.
[Operator Instructions] It comes from the line of Quinn Bolton with Needham & Company.
I'll offer my congratulations on the acquisition as well. Hassane maybe just wanted to get your thoughts on any potential manufacturing synergies. I know the COGS synergies are only 10% to 15%. But longer term, is there any opportunity to in-source any of the Synaptics product portfolio to your fabs or back end that might give you a longer-term COGS benefits? And then I've got a follow-up.
Sure. Obviously, we'll have a lot more once we start doing the integration planning and do a lot of that detailed work. But at a high level, I can tell you from the Astra or the advanced nodes, anything below the 65-nanometer, we don't expect that given just where our manufacturing footprint. However, from the prior answer that I gave Vivek on the human machine interface and as we push towards that road map, there's definitely potential there that we have to look at. It is very synergistic with the capabilities that we have built part of our Treo Platform, or BCD65 that we run in East Fishkill. So of course, that will be a favorable gross margin that brings it in.
And I just want to highlight that is not at an expense of capacity that will be taken away from Treo. It's actually, again, complementary to what we do. We already do the sensing with Treo, and this adds that synergistic capabilities that we can bring in. So some of the business, yes, the other, we don't plan on that.
Perfect. And then maybe for Rahul, just any thoughts. Can you give us some sense of the design win pipeline that you have for Astra and your tactile sensing in humanoid or other sort of physical AI applications? And maybe for everybody on the line, do you have a sense what your dollar content could be as a combined company, say, now in a humanoid as you bring the 2 companies together?
Well, Quinn, first, on the design pipeline, I think we haven't broken out the design pipeline. At some point, we will start sharing what our total design pipeline is. But let me go back to first Astra. Astra absolutely is seeing momentum build up better than what we had anticipated. For the year FY '26, our fiscal year ends in June. So we had anticipated a certain pipeline, and we are ahead of that plan.
On humanoids and robotics from tactile sensing point of view, last conference call that we had in May, I had indicated we have 35 engagements, 35 unique company engagements, multiple SKUs within these companies that we are engaged on, and that number has gone up even more since then. And I'll be more than happy to share with you the next level of detail at the next conference call or the next opportunity comes about. But the growth in that design pipeline has been just phenomenal in terms of where we thought it would be versus where it is right now.
And I go back to what Hassane is saying. I think the amount of momentum that we are seeing in physical AI and as a result, the new importance that is being put on the function of tactile sensing in these humanoids as they come to become not only contextually aware, but human aware and interactive to humans and machines on a forward-looking basis. The tactile sensing component has seen a lot more traction.
I had indicated on the last call that we have a major hyperscaler out of San Francisco engaging with us along with another big company that -- where we are already shipping and they have announced shipments of humanoid. And so there are inbounds coming into us before our sales guys get a chance to react to some of these opportunities. And so really excited about what the opportunity is for the combined company in the realm of physical AI.
In terms of dollar content, just for Synaptics, I had indicated on the last call, it's a few tens of dollars. You can model anywhere from $30 to $60 range for us. And so what comes together with ON is a much higher number in these platforms. So now again, they vary by the platform.
And we'll be, obviously, disclosing more on the content as we explore and expand our strategic intent here. But that goes back to what Rahul mentioned, the untapped potential for what is considered today as purely HMI and how we look at it part of this combination as enhancing the sensing portfolio that we bring into the market. And together, we will have a lot more modalities that we can address.
One moment for our next question that comes from the line of Joe Quatrochi with Wells Fargo.
Yes. Maybe first, I was curious if you could talk about how do you think about just the potential integration of some of Synaptics technology around connectivity and wireless for the Treo platform?
I think you can't think about it as a combination for the Treo platform. It is complementary to what we do because the connected compute that Synaptics does is a much different node, and it really is a much different application. How you can think about it is Synaptics' compute or connected compute at the center of an intelligent system and multiple Treo around it controlling the loads, whether it's a driver to our silicon carbide or driver to our JFET and connected to wirelessly or connected through 10BASE-T1S Ethernet, which also is on Treo.
So I just explained to you what an intelligent system in the Physical AI realm would look like and how each one of the companies and the technologies each bring into this combination will play a complementary role in achieving what the system is supposed to achieve. So we do a lot of wireless. We're leaders in the wireless -- sorry, in the wired connectivity. Leadership comes from Synaptics on the compute and wireless compute. And together, we are basically a leading force in the physical AI when it comes to intelligent systems.
And then as a follow-up, is there any way you can comment, was this a competitive bidding process?
Obviously, the nature of the combination, given the 2 public companies, just stay tuned. We'll be filing all of the appropriate filings when the time comes. So I'll leave that answer to when the filing goes publicly.
Our next question comes from Joshua Buchalter with TD Cowen.
I guess, I was hoping to understand a little better like how does this change your portfolio from a competitive standpoint? In particular, onsemi, obviously has a rich legacy in power and analog, and you're adding the assets from Synaptics which will have the Edge AI processors. But do you feel like you're inhibited by the lack of a general-purpose microcontroller business? Or like can you speak maybe more broadly to what you'll be able to offer from a processing standpoint for some of these Edge AI applications.
Yes. So I think, obviously, with every system we target, I wouldn't say we're -- we've been inhibited because this is the complementary nature of the combined companies expands the market. We've always been very consistent that our outlook and our strategy and our financial model is organic and independent of outside acceleration. We have been introducing our own compute different level than what Synaptics brings.
So what Synaptics really brings is an acceleration and a faster time to market with a much larger TAM that we talked about. So it's really an additive, if you will, not a plugging a hole that we have. And that's why the market expanded with the top line outlook expansion that they bring, plus, of course, the potential for revenue synergies that I mentioned to Ross earlier.
So that's the -- I don't look at it as lacking. I look at it as additive and a very natural additive because as we engage with these intelligent systems with our customers, there is a compute at the center of it, that we have been also very successful before this announcement. This adds that to the customer where customers now get a, you can call it, a synergistic system level that works very well together. Yes, go ahead.
If I may add, I think, to what Hassane just shared, just to be very specific, the Synaptics processing platforms include both microprocessors and microcontrollers. And they both are multi-compute fabric implementations. And they scale from an architecture point of view, depending on the end application. Obviously, the portfolio today is at a certain level in terms of scale. And with the combination, it can broaden the scale very quickly because of the architecture choices we've made, not only in silicon, but also in the software strategy, which is largely open source developer-friendly and scale across a broader ecosystem.
And that's really the exciting part of adding that capability, the way Rahul just described it with our global reach of sales and how quickly we can scale that with the engine that we have built at onsemi.
Okay. And then maybe for Thad, can you maybe walk through the rationale behind using stock instead of cash here?
Yes, Josh, I mean, if you look at the deal, right, I mean, it's a low premium deal, all stock gives us flexibility on the balance sheet. I mentioned that in my prepared remarks. So we have flexibility to continue to return capital to our shareholders through the repurchase. And I think that's the key, right, versus using cash tends to be a higher premium. We partnered with the Synaptics team, and we think there's a lot of value that we'll create for both shareholders here.
Our next question comes from the line of Christopher Rolland with Susquehanna.
Congrats on the deal. I am calling it Cypress 2.0. And with that, maybe you could describe how the playbook, is it going to be exactly the same as Cypress or do you see some differences here as to how you run that business?
No, of course, it's a very different business. You have always held the -- no 2 companies are alike. In this case, no 2 combinations are alike. The technology and the platform, call it, the Edge AI platform that Synaptics brings is much further and above what Cypress had at the time, which was a microcontroller only or traditional microcontroller. So this is beyond what that capability is. That's point number one.
Point number two is the opportunity for both the connected compute and the sensing that Synaptics has with the combination of what onsemi already has on the power sense and control, that is playing in a very different market than it was, whatever, 7, 8 years ago with Cypress.
So the market has grown tremendously. Physical AI was not a thing. AI data center was not a thing. Therefore, the content -- and that's where the TAM is exciting for us. We're playing in a much bigger pie overall. And the coverage of the combined company is much bigger slices of that larger pie. And we intend to deliver the wins and the leadership as the combined company for that larger pie with differentiated technology, way more differentiated than what it was when I was running in my past life.
Familiarity, however, with -- that adds credibility. That's why for us, it's not a deviation. It's a continuation of what we are doing at onsemi and of course, the executive team at onsemi in combination with the leadership at Synaptics is a natural technology and really a market that we can target together. That's what makes this exciting and very natural combination.
Excellent. And perhaps a question for Rahul. Hassane just mentioned the low premium. It's particularly even lower, perhaps for an all-stock deal. So what was the thinking here? Like in terms of that, the ultimate deal price, but also for your future stand-alone versus tied up, if you could maybe talk about that.
Yes, Chris, I think, look, I definitely got a chance to kind of understand onsemi's strategy on a forward-looking basis. I'm truly excited about a couple of big things. First, their strategy in itself presenting an upside potential for the Synaptics shareholders from where they are headed on their road map and their plans independent of Synaptics. Number two, the combination with onsemi presents Synaptics scale. I'll go back to something I said earlier during the presentation, the like-mindedness of building solutions, it's not point product anymore. It's solutions, all the way, taking the entire tech stack, including software capabilities into account. And so you now have a formidable platform across multiple market segments.
And the third big thing, again, going back to the revenue dimension is the scale of global reach. I have discussed on behalf of Synaptics at some point over the next 2 to 3 years, we may plan on getting our distribution setup. However, this happens on day 1 with the combination. And so with our developer-friendly open source platforms that are virally scaling through our partnership with Google and others this distribution capability that's onsemi brings to the partnership further accelerates our reach into the global markets and especially in the markets that are industrial and physical AI, the combination with onsemi. So if you net it out, it was not a difficult decision in context of coming together with onsemi to go with the all-stock deal.
Our next question is from the line of Tore Svanberg with Stifel.
From Stifel, congratulations on the deal. Hassane, my first question is on sort of the road map eventually you think about the competency that you offer in power and sensors and combining that with compute and connectivity. Should we think of sort of the products to be discrete? Or is there a potential road map here where you could develop some SoCs that contain all the IPs needed in physical AI?
Yes, of course. Look, this is day 1 of announcement. Now the team is going to shift into -- to the extent, of course, we are allowed as 2 separate companies post announcement of what we would call integration planning to understand more depth about what day 1, which is what we would call the closing day would be.
From a work that we've done, part of this process, we do see complementary technologies, whether we meet at the Board in a system or whether we meet in a package, that's yet to be defined. That's not a one-size-fits-all. It depends on the technology and what is the best thing to do for the customer to get that value that the customer will get from a system level with the combined technologies we offer.
Very good. And that's my follow-up. As you evaluated Synaptics perhaps with other companies, you may have looked at other technologies. What were some of the things that were really unique? Was it the NPU? Was it the connectivity portfolio? I mean, I assume it's a little bit all of the above, right? But I'm sure you must have looked at other technologies as well. So just curious if there was any few things that really stood out for you.
Yes. I would say, look, I mean, obviously, we chose -- for us Synaptics was the choice we've made for a lot of reasons. I will do 2 of them. One is the strategic and the obvious reasons that we announced this deal and we announced this combination. And the strategic one is you can think about getting a microcontroller or traditional microcontroller with some peripherals and getting into AI is very different than starting with an AI native and then getting into the rest of the market. So when our intent is to complement our power and sensing in the physical AI, you need an AI first microprocessor, an AI first engine. That is what Synaptics has done.
So we gravitated towards that from a strategic perspective. Of course, as we engage, we like the rest of the portfolio. I talked about the HMI. I didn't -- I see it as HMI, of course, but I also see the untapped potential that I talked about in the tactile feedback or in applications that are critical for the physical AI where tactile becomes a need of sensing. So that's more of, I would say, a positive surprise on top of the strategic intent. And of course, you add all of that with the synergies we announced and the deal being accretive.
And of course, the combination where some of that business, while you invest in the forward-looking AI platforms that I discussed, the rest of the business brings in cash flow to invest in high growth. That's always what you want in a growth business. So it's not a drag on earnings. It's actually -- you can think about it as self-funding. It's what we've done at onsemi. We've been really good at it. They have done a very similar. And that, together with our combination delivers a compelling financial profile for the combined company on top of the strategic profile that I described. So it basically clicked all of the boxes that we were looking at when we were looking for a strategic partnership.
Our next question comes from Jim Schneider with Goldman Sachs.
First question I wanted to ask is in terms of the design wins and the market share position that Synaptics has with Astra in both humanoid and maybe industrial robots, how do you sort of frame roughly what you think your market share position is with the embedded processors in that submarket, realizing that's growing very quickly. So you can either frame that in terms of today's wins or tomorrow's pipeline?
Well, I think, look, the marketplace for humanoids is still evolving. And so there is not a clear way to say what the design potentials are in terms of revenue over time. I will say this, we have a lot more HMI traction. We also have something that we didn't talk thus far on this call is interface technology as well. And so the combination of tactile sensing and interface is already in multiple platforms out there. We are shipping silicon already. There is one that is North American franchise that's been publicly talked about and the company has already indicated that they're going to have pilot humanoids by the end of this year and about 1 million unit run rate on humanoids by the end of '27. And we are in there, right?
And so without going into names because it would be prohibitive to do so at this early juncture, I would go back to the 35 designs that I had announced during the last earnings call in May. And since then, we have graduated to a newer level, which I will definitely, at some point, disclose. And so really excited about overall content dollars that we are seeing from our product portfolio, along with in many situations, gaining traction with Astra as we pull in along with tactile sensing.
I go back to what Hassane initially touched on as well with multiple sensing capabilities now in a combined portfolio, tactile, we didn't talk about, but ISP capabilities, image sensor capabilities, audio capabilities from Synaptics, wireless sensing capabilities for Synaptics, the AI native processor capability becomes a very natural hub for supporting multimodal AI inference capability right there in the functional section of the humanoid, right?
And so you can see, again, I indicated earlier, a very like-mindedness between Hassane and I as systems first -- system solution first. This effectively builds that platform equation, not only in humanoids, but many other industrial applications that would be in the realm of physical AI on a go-forward basis. So really excited as this market evolves, the potential and the like-mindedness of bringing system solutions brings the benefit for the combination.
Yes. And that's really what gets us very excited about this combination because you talked about share in market and so on. None of that is possible without a strong technology foundation that Rahul described, point number one. And point number two is, it all starts with winning with the winners and going broad as much -- as fast as you can. They've done a great job with that. We would help with the combined company with our sales and distribution network. And those are the foundation for a leadership position as a combined company that benefits the customers. So that's what gets us excited about this combination.
And just as a quick follow-up, can you talk about if you think about Synaptics customer base, roughly how many of those customers would you say are ON customers as well today?
So that's a hard one to say of how many because you have to imagine we have tens of thousands of customers. But I would say there's a complementary and there's some overlap. Obviously, we are leaders in auto and industrial. A lot of the -- Synaptics has some auto and industrial in addition to consumer and the Edge AI customers that Rahul discussed. And together, there's not a lot of overlap, but more of an expansion of a customer base. And this is where I answered the potential for revenue synergies where we would be able to support their existing customers with our portfolio and vice versa. That, I guess, the minimum overlap is what makes this also exciting and beneficial for the combined customer list that we would have together.
One moment for our next question. It comes from the line of Harlan Sur with JPMorgan.
Congratulations on the acquisition. Synaptics team has been gaining pretty solid traction, right, with the Astra AI processor and MCU platform, as you mentioned, strong growth profile. I know the Synaptics team was also focused themselves on driving higher analog, mixed signal, power, sensing content attached to deliver more systems level solutions, right? But it seems like this is where the onsemi team can really fill almost the entire system/board level form with its broad portfolio of power, power management, Treo, mixed signal and intelligent sensing portfolio. So if you look at the Astra compute reference design and platforms across different applications? Like what percentage of the entire systems BOM outside of the processor can the onsemi team address? Is it 50%, 60%, 70%, like more?
Harlan, I'll buy you a drink afterwards, but you gave me the thesis of the combination. That is exactly how we look at it. And it is like every system is different, of course. But if you think about the components of it, which is what the 4 pillars that I summarized at a high level, where if you think about the pillar being 100% of that bill of material, which is power, sense, connected compute and control, together, we're able to do 100% of the 4 pillars in a nonoverlapping manner. You mentioned the reference design. That is a good design to kind of anchor on for a lot of the customers that have that at the center.
And I would flip it around where a lot of our designs that we do with customers have a compute platform that could be beneficial for the customer for it to be Synaptics. That is exactly the -- why this combination with the complementary nature of our technologies and our portfolio is such an exciting combination for the systems that we talk about or intelligent systems.
Harlan, if I may add to what Hassane is saying, I'll just give you a customer perspective. Given the interactions with some of the companies that have been in data center, for example, a company in San Francisco, big in AI, wanting to get into the realm of physical AI, they clearly told me they would rather focus on data and not on systems. The engineering, time, expertise needed to build a system from where they would ultimately get to data and machine learning to build inference training and machine inference capabilities is a very long tenured cycle.
And if somebody can come in, provide the entire system solution and the tech stack that enables them to get jump started in this arena first with data and ML capabilities that they would invest in engineering capabilities in, it is bingo for them. And so long story short, increasingly, the partnership with onsemi portfolio and Synaptics' portfolio brings that capability of system solution delivery at the customer and effectively taking that complexity and engineering burden outside of that company or the customer.
And in the process, if you net it out, we create through system solutions, engineering economies of scale that scales across multiple customers in terms of delivering system solutions. And so that is the benefit of the combination that ultimately we'll see a tremendous dividend. And obviously, I go back to -- I said this earlier, the open developer platform and the tech stack accessibility to a broader engineering community and the customer base is very compelling in this context as well.
I appreciate that. Very insightful. Just a quick follow-up. Any dynamics or challenges in transferring the connectivity technology license between Synaptics and Broadcom to onsemi, the technology license is quite broad, right? Wi-Fi 8, UWB, GCS, et cetera. Any challenges in transferring that technology license?
Obviously, we can't discuss that -- those specifics, but we're focusing more on announcing the deal today. And obviously, the announcement of the deal is what got us -- all of us on both sides comfortable with moving forward.
One moment for our last question, please. It comes from the line of Vijay Rakesh with Mizuho.
Congratulations on the deal. Just a couple of quick questions. With -- as you combine and get this IoT business in Synaptics, do you expect to keep that as a separate reporting segment within -- after the -- post the combination? And are you seeing any divestitures? Anything that you feel is not strategic in this? And I have a follow-up.
Yes. So obviously, we intend on having Synaptics be an operating business unit within onsemi. And of course, any reporting will come when we post close of the deal. And like I said, until then, we're 2 separate companies. And we are committed to the product lines that Synaptics has. I mentioned how each one of them is strategic and the reason why it is strategic from an end market. So that is a complete deal with all completed technology. So we're excited about every segment of technology that Synaptics has invested in that they post close would bring into onsemi.
Got it. And just a quick one. Any thoughts on it -- does it need a MOFCOM approval? Or -- and any thoughts on -- is there a breakup fee in this?
So obviously, the details are all -- will be all filed, which is customary for a deal of this size for 2 public companies. And I mentioned before, this is normal regulatory approvals which includes China in this case.
Thank you. And this will conclude our Q&A session. I will turn it back to Hassane El-Khoury, President and CEO of onsemi for closing remarks.
All right. Thank you all for joining us on the call. We're very excited for the prospect of this combination and the compelling strategic and financial benefit to position the combined company at scale to win where the market is going, while maintaining our focus and success where we are winning today. Together, we would become an industry leader, positioned at the intersection of power, sense, connected compute and control addressing the 4 pillars of physical AI.
I can say it's been a pleasure working with Rahul and his team during the process. We look forward to continuing this journey together with the extended Synaptics family. I look forward to welcoming them to onsemi, and together, we will execute and deliver the value for our customers and shareholders. Thank you.
And with that, we will conclude our conference. Thank you for participating, and you may now disconnect.
Synaptics Incorporated — ON Semiconductor Corporation, Synaptics Incorporated - M&A Call
onsemi announced an all‑stock acquisition of Synaptics to build an integrated "physical AI" systems business; deal expected mid‑2027, accretive in 18 months.
🎯 Key Message
- Core idea: onsemi will buy Synaptics to combine onsemi's power/sensing with Synaptics' edge compute, human‑machine interface and connectivity to address "physical AI" (edge robotics, humanoids, AR/VR, auto).
⚡ Strategic Highlights
- Technology fit: Synaptics' Astra platform (AI‑native system‑on‑chip integrating neural processing units and CPUs) plus HMI and wireless fills edge compute and interface gaps in onsemi's portfolio.
- Market scope: Management projects total addressable market expansion (they cited +$30B to $243B by 2030) and an AI TAM of ~$100B by 2030 with ~25% CAGR for targeted physical AI segments.
- Go‑to‑market: onsemi expects to accelerate Synaptics adoption via its global sales/distribution and deliver system‑level solutions combining power, sensing, compute and control.
🔭 New Information
- Deal terms: All‑stock: Synaptics shareholders receive 1.350 onsemi shares per Synaptics share, implied enterprise value ≈ $7B; pro forma ownership ~12% Synaptics / 88% onsemi.
- Timing & approvals: Closing targeted mid‑2027, subject to Synaptics shareholder vote and customary regulatory approvals (including China).
- Financials: Pro forma revenue ~$7.8B (2026 Street est.); $200M annual run‑rate synergies; accretive to non‑GAAP EPS within ~18 months of close.
❓ Analyst Q&A
- Revenue synergies: Management expects cross‑sell and complementary markets to drive top‑line upside because overlap is small; no quantified uplift beyond TAM expansion commentary.
- Synergy split: ~$200M mostly in operating expense (~85–90%), remainder in cost of goods sold; Synaptics stock‑based comp will be incorporated into onsemi non‑GAAP metrics.
- Astra momentum: Synaptics says Astra and tactile sensing design pipeline is growing (earlier cited 35+ engagements); standalone Synaptics content per device modeled at roughly $30–$60, rising in combined platforms.
⚡ Bottom Line
- Investor impact: Synaptics shareholders get an all‑stock offer providing scale and distribution to accelerate edge AI adoption; financials target quick accretion and $200M synergies, but the deal hinges on regulatory approval (China) and successful integration of roadmaps and manufacturing decisions.
Synaptics Incorporated — J.P. Morgan 54th Annual Global Technology
1. Question Answer
All right. Good morning, and welcome to JPMorgan's 54th Annual Technology, Media and Communications Conference. My name is Harlan Sur. I'm the U.S. semiconductor and semiconductor capital equipment analyst. Also with me on stage is our SMID-cap Semiconductor Analyst, Mayur Ramdami. Very pleased to have the team from Synaptics here with us today, Rahul Patel, President and Chief Executive Officer; Munjal Shah, Vice President of Investor Relations. Rahul is going to kick us off with a brief overview of Synaptics. It's been a busy earnings season. So I've also asked the team to just give us a quick summary of the March quarter, June quarter outlook, and then we'll go ahead and kick off the Q&A. Gentlemen, thank you for joining us today.
Rahul, let me turn it over to you.
Thank you very much. Good morning, everybody. So a little bit about Synaptics, and then we'll touch on the March quarter. Synaptics is a company that's been -- is a semiconductor company that's been in existence for 40 years, and it's a very strong, formidable legacy of the company. I think when I came into the company, I -- first thing I realized is the VLSI textbook from where I learned VLSI design was -- and which is the textbook that's used across the world is authored by one of the founders of Synaptics.
And so that's how the legacy of the company is. The company came into existence first with the ClickPad in the PCs. And even now, we do a lot in the PCs with our TouchPad products. Then came the revolution about the iPhone and the touchscreen, and Synaptics was at the forefront in that arena. And then came the time where Synaptics pivoted to IoT, which is where we are right now. And the company is now focused in areas of Edge AI and Physical AI, along with everything that they've been doing. And that means the company is largely built its product -- on products on 3 pillars.
And the 3 pillars are Processing, Sensing, and Connecting. And that's what Synaptics is all about. We build semiconductor solutions targeting processors, wireless connectivity, Wi-Fi, Bluetooth, Thread capabilities, processors ranging from microprocessors to microcontrollers. Our touch-sensing capabilities, our sensing capabilities also get supplemented with fingerprint as well as video interface capabilities. And so these are the core IP capabilities in the company, along with many other things. And so this becomes the basis for us becoming a lot more focused in Physical AI and Edge AI on a forward-looking basis.
In the March quarter, we had phenomenal results. That was, I believe, a sixth quarter or seventh quarter, if I get this right? That demonstrated year-over-year growth. And we grew substantially, 30-some percent in our IoT business. Our EPS grew more than 20% year-over-year, while our revenue was in double-digits growth as well. And we also guided that this year -- our fiscal year ends in June would yield greater than 40% growth in our IoT revenues year-over-year. And so that was our quarter.
And in this quarter, we also talked about a big unveiling basically in our Physical AI play. We have been talking about a lot of the design wins and capabilities that we have demonstrated in the marketplace in Edge AI. But in Physical AI, we came out and said in the prior quarter, we had indicated we had a design in humanoids. And 90 days later, we were at 35 various OEMs engaged on Physical AI, especially in the field of robotics that range from a small robot with no display to a full humanoid. And so that was what we have reported in the March quarter.
No, that's great. And as you mentioned, it's been great to see the transformation of the business, right? Over the many years from sensing to connectivity to compute and then now being able to go after the new opportunities within Edge AI and Physical AI. And to your point, we can start off with the IoT business, which you just articulated the team expects to grow 40% year-over-year in fiscal '26. You've also outlined a path to sustained above-market growth across your core IoT and Edge AI portfolio, supported by the multiple growth drivers and product ramps.
Could you just break out those drivers by time frame? What's near term versus what's intermediary term, like specifically, how should we think about the expected contribution from some of your newer product categories such as your Astra processor, Wi-Fi 7 connectivity family of products, integrated MCUs, wireless connectivity, some of your semi-custom products and so on?
Yes. On a go-forward basis, our focus has been on Edge AI and Physical AI. And so the core elements are our Astra processor family of products and wireless connectivity, and our touch-sensing and video-bridge capabilities in this area. Astra is coming to life about now, and it's going to be the growth driver for our IoT segment in fiscal '27 and, more likely in calendar '27. And so if you look at what we have done over there, Astra is a category that is in the class of microprocessors and microcontrollers.
However, with a huge difference versus what you see from the peer sets that have been in the marketplace for a very long time. Astra is AI-Native processors. They are -- we are not building any processor without having the ability to do inference at the very far end of the edge. So it's a microprocessor or a microcontroller from Synaptics under the Astra family. It comes with in-built neural processing capability, along with other processing engines that we have.
And so within the Astra processor, last year, we in the calendar quarter 4, we started sampling our first microprocessor that we had also integrated Google's Coral NPU. NPU that we co-developed with Google Research, along with our processing engines. And so that's gone into production just about now, and it's going to see its production ramp towards the end of this calendar year and throughout 2027. We also sampled recently a Wi-Fi 7, Bluetooth 6 MCU with NPU in a monolithic die.
If you look at our peer set in the field of microprocessors and MCUs, likes of NXP, STMicro, Infineon, Microchip, Renesas, they do not have the wireless capabilities that we have. And our implementation in a monolithic die on the microcontroller that not only has a microcontroller, but also has a Native NPU for inference at the far, far end of the edge, along with wireless connectivity in a single monolithic die, is very exciting for our customers because now they have access to a power envelope that otherwise would not be easily attained, doing multi-chip implementation, a form-factor envelope that otherwise would not be attained if they have to again go multi-chip implementation.
The BOM envelope would have been also a lot more efficient with what we have implemented. And so that is -- that product is in sample stage as of now, and we anticipate that going into production in calendar '27 as well. And then the semi-custom microcontroller with Coral NPU and ISP capabilities that is targeted in the field of wearables and has been co-developed with a big customer that believes in building out software stacks and scaling software stacks on top of silicon. Their business is not to sell silicon, but their business is ultimately to drive their software stack into billions of platforms.
And that is the opportunity that is going to ramp in '27, second half of calendar '27 with the semi-custom partner of ours. And so that -- the word is semi-custom. We've developed the architecture in collaboration with this big customer so that what we compile, we implement transformers, all is done in context of what their software stack needs may be. In a power envelope, in a BOM envelope that makes sense. And so again, the word is semi-custom and what that means is although it's co-developed in many situations, we have the ability to take it to the larger marketplace.
And so that also presents us another vector of revenue realization. So all these aspects of Astra come into play in '27 -- calendar '27, and that's very exciting for us. And then towards the end of this year, we'll be having our first implementation of Wi-Fi 8 in silicon. And now you can think of likes of Broadcom and Qualcomm having Wi-Fi 8 for things like access points and phones, but when our peer set are barely having Wi-Fi 6. I don't know how they get to Wi-Fi 8 this year.
And so when I say I peer-set the likes of MCU and microprocessor players. And so that presents a nice tailwind to our business in calendar '27 and '28 as well. And so very excited about these aspects. And something that I have not included in our revenue plans, but I've talked about it as well, and I've also suggested not included in our revenue plans is our activity that's going on in Physical AI with -- especially in robotics and humanoids. That has definitely surprised us.
And I think it's also validating the technologies that we have in our sensing portfolio that is lending extremely well in the field of Physical AI. And so all of these, again, build that confidence that Edge AI and Physical AI are going to be our forward-looking growth vectors for the company.
Yes. And we'll talk a little bit more about some of the humanoid-robot programs in your pipeline. But you actually gave us several good examples of how the team goes to market, especially with your IoT business and Edge AI business, right? And you've got this really great portfolio of connectivity, touch, analog, mixed-signal, compute, as you pointed out, you -- some of these products are integrated, right?
So you're selling both compute and connectivity at the same time. Some of them are not. The team has discussed increasing content per engagement by delivering more complete solutions, leveraging things like reference designs, the broader attach. But can you just elaborate on how this strategy is progressing? And where do you see the biggest near- to mid-term opportunities?
Yes. I think -- so before I came into the company, we were 3 groups that were largely siloed, and they're operating as a processor team, as a wireless team, and as a sensing team. And so earlier this year, we consolidated processors and connectivity is one team from an engineering execution point of view as well as a go-to-market point of view. That team is going to sell processors and wireless together. And so what that means is we're going to sell solutions. We're going to build solutions.
We're going to build software platforms that ultimately help reduce the cost of engineering at the customers that help scale a lot of software capabilities that would be at a higher level of abstractions just beyond our SDKs, and also leverage our open-source, open developer platform strategy across the marketplace. And so this is where we kind of are very differentiating versus our peer set. Again, the same big names that we talked about or I have mentioned on the process side. They have a very walled-garden approach on the software side. It's their environment, it's their SDK.
And if you want something different, if a developer wants to come in and play, you have to sign license agreements, you have to get through the scrutiny of are you going to be able to consume a lot of resources or not and what is going to be meaning for support dimension for the company. All of that for us, we are open developer platform, and we let the developer community build on our platforms and the developer community in turn, supports each other basically, so that's our strategy that's very differentiating and it's going to help us go-to-market.
The traditional way to go-to-market for the microprocessors and microcontrollers is go through distribution. We believe the opportunity that we have with AI-Native capabilities in our end-products, and the developer strategy gives us a jump start very inexpensively related to developing a distribution strategy. Ultimately, when we are a lot more broader in our SKU map and capabilities and AI-Native becomes a lot more prominent in the marketplace, we will definitely go on the distribution vector, but at this point, I think the strategy that we have is yielding us really good design wins and design pipeline is building up very nicely as well as a result.
Let's focus on the humanoid-robot program at one of your major customers that you articulated in your prepared commentary. It is a great example of Physical AI, where you're supplying Touch Controller/Interface Solutions with content in the range of, call it, a few tens of dollars per unit. That customer is now on its third-generation platform and has articulated ambitions to scale to meaningful volumes.
Against that backdrop, how should we think about the opportunity to expand content in future platforms as you pursue additional sockets and additional customers, right? Such as processing, wireless connectivity, where your total content could potentially exceed like over $100 per unit?
Yes. I think it's not outside the realm of possibility, I would say that. Having said that, I think -- the one that we have publicly talked about and mentioned, and this big customer in North America has also publicly announced, they will be doing pilots at the end of this year. It's a humanoid and not the first generation of humanoids, basically that they're doing it. And so it's very well demonstrated, talked about. Our content in that platform is largely a few tens of touch controllers as well as a video-bridge implementation. And I'll talk a little bit about both.
The touch controllers are in the palm of the humanoid, and it's in the order of 10 to 20 in each palm, there's 2. So you can see where it goes. And the video bridge is a high-bandwidth bus interface from the main SoC to various subsystems, including the display. And so that itself also is fairly rich in silicon content. And so you add all these things together, and you get to a few tens of dollars. And I think we're not putting a number, largely because I personally believe this market is in the early phase. And the customer -- this big customer said they pilot at the end of '26, and they anticipate going into production end of '27.
Some reports have said the first year will be 1 million humanoids, and we'll see what that does. But coming back to the numbers, right? If you do a few tens of dollars into this million units in '28 -- calendar '28, right? I think you get a sense of where this is going with one design. And having 35-plus designs basically now in combination of sensing capabilities, our interface capabilities, our Astra product capabilities now and wireless connectivity.
I'll talk about Astra and wireless connectivity. Every subsystem in a robotic platform has its own MCU and microprocessor -- and/or microprocessor. And every subsystem has the need for machine learning as well as inference locally versus having to send it to the main CPU or GPU. And its reason for not loading the main CPU, GPU and also latency of inference basically at the edges of the humanoid of the platform. And so that itself is another $10 to $20 portion in the extra processor.
Every time you use an extra processor, it's $10 to $20 of content. And then robots or cobots or industrial platforms will need to communicate as they mobilize across platforms or even in your homes, if you have a cobot, they will need to remain connected. It would be peer-to-peer, a humanoid-to-humanoid, or humanoid-to-the-Internet, or to the data center. And that requires a certain level of wireless connectivity, a latency equation that does not deprive of the experience that the end humanoid application has to deliver. And so long story short, there's a wireless capability over there as well.
Various industry reports come out and talk about this whole market in context of trillions of dollars. And so there's a lot of forecast out there, it's not easy to say this is where the plane is going to land. And so at this point, I think we are not adding a whole lot in our financial models, just keeping our heads down and remaining engaged with these customers. Our touch controllers go from the palm to other locations of the humanoid, including the feet, because that's where some of the sensing capabilities need to reside. Our Astra processors can go from the hand to multiple other subfunctional sections of the platform, and so is our wireless connectivity, I think, largely for data communication.
So I just wanted to clarify one thing. I mean, Rahul mentioned 35 -- we have 35 engagements, and we have -- we talked about 3 additional designs this past quarter.
Yes, we started -- thank you, Munjal. We started shipping silicon to three additional other than the one that I mentioned is a large customer.
I see. So let's focus on your compute family of products. This is the newer -- I would say, as we followed Synaptics over the years, this is a new facet of technology, addition, and product addition to the portfolio. You gave us an example of the potential opportunities with the Astra processor. But the Astra product line, correct me if I'm wrong, includes processors and MCUs, but I think your SR80, SR100 are also MCU-focused SKUs that are within the Astra family of products.
One of the key differentiators, as you mentioned, is all of these, whether it's processor, like the 2600 series or the microcontrollers like SR80, SR100, they all come with the ability to process AI and machine learning workloads, right? You've got what we call neural processing engines, NPUs, right? And for your flagship 2600, 2160 platform, your NPU is called Torq, I believe that's correct. And which leverages open-source technology from Google Research and integrates a lot of hardware and software innovations and accelerations.
Outside of some of the humanoid opportunities, if I just think about all of the Edge AI, Physical AI opportunities in front of you, like where has the team with Astra been able to see the strongest market adoption for which applications, which products? And is it skewed more towards processors? Or is it skewed more towards MCUs?
It's an excellent question. Also a loaded question. I'll try to kind of operate at a higher level of abstraction in my response. So I don't take up too much time on this topic. But I think you should think of our processing engines as engines that are very differentiated versus what's available in the marketplace. Now I'll try to use examples. SL is our processor class-products. SR is our microcontroller-class products, all are AI-Native. Coral NPU is Google's NPU that's open source.
However, Torq is our architecture that encompasses multi-processing engines along with Coral NPU. These engines are general-purpose ARM CPUs. These engines are application-specific audio-processing capabilities, video-processing capabilities, ISPs, all in a single fabric that we call this Torq architecture. And the compilers that sit on top of these platforms are co-developed with Google Research. It's an MLIR compiler. And what that does is that it is intelligence in the compiler that says, if this is what the workload looks like at compilation, this is how the workload needs to be distributed in terms of where it goes for processing, given the intelligence of the design and the pipeline is available in the compiler.
So that is how this whole architecture works. Having said that, I'll share with you a few examples and then respond to the larger question of where we're seeing traction. So the first, I'll share with you 3 examples. The first example is one of us being in our family rooms basically with our television screen. Our television screen before we turn on, gets to know that I'm a Boston Celtics fan, right? And is aware that there's a Celtics game on a particular channel, ESPN, it may be NBC or whatnot. And you don't have to worry about what channel you need to scroll to.
If it is going to be aware, contextually aware of your presence, human presence and effectively aware of your preferences based on your prior viewing habits, it will take you -- the first set of eyeballs will land basically on that particular channel of choice. Now you can obviously mobilize from that position, but that is inference and being human-aware and contextually aware. If in the family room, before you turn on the television, if the television knows that here is a family with kids, it auto turns on parental control. That's being contextually aware. That's been very much of a use case that we would care for, right? I'm just giving you a couple of examples.
But you can imagine where this goes. And this is through the AI-Native microcontroller in the SR-Series of products that you mentioned. This is how AI-Native, contextually aware, human presence works in consumer applications. And I just use television as one place, but you can think of a lot of things, your doorbell, to your thermostat, to how you mobilize in the home, your security, all of that is going to see this level of inference capability that will be supported by our Astra class of products.
All of these platforms would need to be consistently communicating with various places, and that requires a certain level of wireless connectivity that's integrated in this platform. And so that's where we go. And this is, again, a consumer-class application. We recently in the last quarterly earnings call, just to highlight, Astra is also getting into medical devices. And so we highlighted a medical device that does a scan for the well-being of the mother and the child during the phase of pregnancy.
And this scan can be done at home versus being done in a hospital or a clinic. And so this ultimately has certain AI-Native capabilities that are leveraged for the experience that comes, the level of accuracy that comes to the forefront. So again, this is medical. The third area that I would highlight is industrial. We also touched on an application, and I publicly talked about -- I talked about it at the conference call, is fleet management.
Through our embedded ISP capabilities and being AI-Native, the ability to manage a fleet of vehicles basically in an industrial application is also at the forefront of what we are engaged in basically in design wins and stuff like that. And so in all of these applications, making decisions natively, after being contextually aware of what all can happen if what we are sensing is happening is what our products are capable of bringing to light. And so going back to the larger question, this is obviously the first few innings of our engagement in the Astra class of products in the marketplace.
And so like with every other market that you see in the processor world, the first set of designs that are going to turn into revenue are going to be consumer-class products. Industrials are slow to ramp, but longer to hold on the revenue front. Consumers are fast to ramp and fast to turn basically. And so that's how we see our business profiling on a forward-looking basis.
That's perfect. You talked about in your prepared commentary semi-custom projects. You secured one with a fairly large customer. You've indicated that program remains on track to begin sampling in the fall, with initial production ramping in first half '27, larger volume in second half '27. So I guess first question is how significant could this program be for the company? But as you expand into potentially more semi-custom solutions, what criteria or metrics does the team use to figure out do we pursue, do we not pursue, right? And is the team currently engaged with other customers on similar semi-custom opportunities?
It is very important for us and given my experience, very important, when you are engaging in a new market, you want to be -- especially in the semiconductor marketplace, the investment equations are fairly substantial, right? In this age, it's even more than what it was maybe 10 years back, right? And so having some customer skin in the game is -- upfront is very valuable. And that is what semi-custom presents. What semi-custom also presents is a design win that you know for sure is going to ramp into production.
And so not only that skin in the game to support the project, but also that "bit of a shorter bet" on going to production with that silicon a lot sooner than you would have to otherwise if you don't have a semi-custom partner to go with. And then the word semi in semi-custom also is that we profile what we are going to do with this partner to be able to take that design to the broader marketplace. And so those are the core principles of engaging in semi-custom, skin in the game, time-to-market, a large market opportunity with that one customer as well as the ability to scale the product into the broader marketplace.
And if there is anything like you cannot go wrong in semiconductor business, then it is a semi-custom portion, right? I think that's why it makes a lot of sense. Your second part to the question was others, basically, yes, there's -- on the core competencies of sensing, processing and wireless connectivity in all leading capacities, we draw a tremendous amount of attention from large players wanting us to do things that are very differentiating, especially when you are building contextually aware AI-Native platforms and where standard products are not available, right? We see that in data center.
You've seen players who are doing ASICs do extremely well with semi-custom ASICs in data centers. And I think the same is going to play out at the far end of the edge, and we are at the forefront of that dimension growing to being substantial. Now in going down that path, we do have opportunities that we are engaged "evaluating" not in context as much of customers having skin in the game and the ramps and all that, but also given the finite amount of resources, can we really make this into a semi-custom versus a custom -- and something that will ultimately also further our road map across broader marketplace and so those are key criteria in how we kind of go about engaging in semi-custom opportunities.
We have just under a minute here, but if you could just briefly touch on gross margins. You have several new product ramps expected to contribute to revenue over the next 12 to 18 months. So how should we think about the trajectory of gross margins as these products ramp?
Well, I think gross margin, is going to be very important dimension that is going to come to play in all semiconductor business, not just Synaptics. And we have been maintaining 53.5% gross margin, plus or minus percent. That's what we guide despite the input costs having gone up in the last few quarters. Based on my anticipation, I don't see relief on input costs in the coming quarters. And it's widely broadcasted and talked about.
And so while Astra is going to be gross margin accretive and it's going to ramp in calendar '27, I remain watchful on how this will play out on a forward-looking basis given the input cost equations and how they are trending at this point, right? And so this is a story for, I think, the entire semiconductor industry. Astra by design is going to be our growth engine for the future -- the near-term future of the company. It is going to be expected to be gross margin accretive, but there's going to be headwinds with the input cost that I can't ignore.
Perfect. Rahul, Munjal, I appreciate your participation today. Look forward to monitoring the execution of the team as the year unfolds. Thank you very much.
Thank you very much.
Synaptics Incorporated — J.P. Morgan 54th Annual Global Technology
Synaptics emphasized its shift into AI‑native Edge and Physical AI, highlighting Astra processors, Wi‑Fi 7/8, semi‑custom deals, and humanoid robotics engagements.
🎯 Key Message
- Takeaway: Synaptics is repositioning from touch/connectivity to AI‑native Edge and Physical AI built on three pillars—Processing, Sensing, Connecting—using the Astra processor family, integrated wireless, and an open developer platform to drive IoT and robotics design wins.
⚡ Strategic Highlights
- Astra ramp: Astra (AI‑native processors and microcontrollers with Neural Processing Unit (NPU) capability) is sampling now; production ramps expected in calendar 2027 with companion semi‑custom programs for wearables and consumer devices.
- Connectivity: Sampled a monolithic Wi‑Fi 7 + Bluetooth 6 MCU with NPU; first Wi‑Fi 8 silicon targeted by year‑end, positioning Synaptics ahead of typical MCU peers on integrated wireless.
- Physical AI: 35+ customer engagements in robotics/humanoids, shipping silicon to three additional designs; one large humanoid partner pilots end of 2026 and targets production end of 2027.
🔭 New Information
- Timelines: Specifics given on product timing: Astra production ramp in 2027, Wi‑Fi 8 silicon by year‑end, semi‑custom partner sampling in fall with initial production in H1 2027 and larger volume H2 2027; 35 engagements and three new shipments were disclosed.
❓ Analyst Q&A
- Content per unit: Management outlined current humanoid content in the “tens of dollars” per unit today (touch controllers, video bridge) and argued additional processors and wireless could materially increase content over time.
- Semi‑custom criteria: Company favors semi‑custom when customers provide “skin in the game,” shorten time‑to‑market, and create a path to broader market reuse; several evaluations ongoing.
- Margins: Target gross margin ~53.5% maintained; Astra expected to be margin‑accretive but industry input‑cost pressure is a notable headwind.
⚡ Bottom Line
- Verdict: Synaptics laid out credible product and customer progress that could re‑rate the business if Astra and integrated wireless ramps execute in 2027; near‑term upside depends on execution, semi‑custom commercialization, and managing input‑cost pressure.
Synaptics Incorporated — Q3 2026 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the Synaptics Third Quarter Fiscal 2026 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to turn the conference over to your first speaker today, Munjal Shah. Please go ahead.
Good afternoon, and thank you for joining us today on Synaptics' third quarter fiscal 2026 conference call. My name is Munjal Shah, and I'm the Vice President of Investor Relations. With me on today's call are Rahul Patel, our President and CEO; and Ken Rizvi, our CFO. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at synaptics.com.
In addition to a copy of our earnings press release detailing our quarterly results, a supplemental slide presentation and a copy of these prepared remarks have been posted on our Investor Relations website. Today's discussion of financial results is presented on a GAAP financial basis, along with supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs and certain other noncash or recurring or nonrecurring items. All non-GAAP financial metrics discussed are reconciled to the most directly comparable GAAP financial measures in our earnings press release and supplemental materials available on our Investor Relations website.
As a reminder, the matters we are discussing today in our prepared remarks, in our supplemental materials and in response to your questions may contain forward-looking statements. These forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. Although Synaptics believes the estimates and assumptions underlying these forward-looking statements to be reasonable, the statements are subject to a number of risks and uncertainties beyond our control.
Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward-looking statements. Therefore, we refer you to the company's earnings release issued today and our current and periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements speak only as the date hereof. Except as required by law, Synaptics expressly disclaims any obligation to update this forward-looking information.
I will now turn the call over to Rahul.
Thank you, Munjal. Good afternoon, everyone, and thank you for joining our fiscal third quarter 2026 earnings call. Fiscal third quarter marked our sixth consecutive quarter of double-digit year-over-year revenue growth, driven by 31% year-over-year increase in our core IoT products. We are seeing improving momentum and delivering consistent performance across the business. Our non-GAAP gross margin was above the midpoint of our guidance range and non-GAAP earnings per share of $1.09 was at the high end of the guidance and increased 21% year-over-year.
Let me start by highlighting the accelerating adoption we are seeing in physical AI and Edge AI with customer engagements continuing to expand. Last quarter, we announced our first humanoid design with a leading OEM for our touch controller and interface solutions. Since then, we have sampled silicon to 3 additional OEMs and our robotics pipeline has grown to more than 35 customers globally, including a leading generative AI OEM. Customers are adopting our AI-enabled touch controllers for tactile sensing. Our capacitive sensing technology measures subtle changes in compressible layer to detect force, slip and proximity, enabling robots to handle objects, maintain grip and respond in real time. This capability extends beyond the hand to other contact surfaces, including the feet.
These tactile controllers can pair with our Astra processors to aggregate sensor inputs and run AI locally, enabling real-time decision-making, improving response time and reducing the load on the robot central compute. In addition, our wireless portfolio, including Wi-Fi, Bluetooth and GPS GNSS, supports reliable connectivity as robots move and coordinate with one another and the network.
Further, our interface technology enables high bandwidth transport within a robotic system. For example, one of our customers is using it to interconnect multiple displays in a humanoid. Our content opportunity in robotics is substantially higher than in our other markets. Synaptics' broad and differentiated portfolio across processing, connectivity, sensing and interface solutions uniquely positions us to address this opportunity. New use cases continue to emerge and our engagements are expanding with a growing set of customers. While still early, I am excited about this promising growth vector for Synaptics.
This quarter, we also made solid progress in our partnership with Google, which continues to be a key driver of our Edge AI strategy. We launched next-generation Coralboard powered by our Astra SL2610 processor and featuring the industry's first implementation of Google's Coral NPU integrated with Synaptics' Torq NPU architecture. The Coralboard provides developers with a turnkey platform to move quickly from prototyping to production and bring generative AI directly onto the device.
In the coming weeks, we and our partner will showcase Astra processor technology powering Google Gemma and other leading AI models at a high-profile industry event. At this event, we will also make the platform available to developers, system architects and OEMs looking to build real-world edge AI applications.
Next, let me update you on the next generation of our Astra SR series microcontrollers, a semi-custom AI native platform targeting emerging wearable applications. We successfully taped out the SoC last month and expect to begin sampling in the fall. The platform includes Synaptics' PMIC and a microcontroller that integrates advanced power management, Google's Coral NPU, our Torq NPU and a flexible memory architecture to deliver high-performance, low-power Edge AI processing. For the initial variable application, our solution delivers up to 2 times battery life and reduces bill-of-materials by roughly 50%. Beyond this initial design, the SR-series represents a new class of AI-native microcontrollers that can extend across wearable platforms and into a broad range of Edge AI applications.
Turning to design traction, we are securing Astra processor wins across multiple applications in various end markets. Notably, our processors are designed into a new class of medical devices that bring diagnostic imaging to a patient's home, extending access to healthcare in rural and underserved regions. This customer selected Astra for its price performance, design flexibility, ease of software and hardware integration, and for the ability to run AI models locally on the device.
We also secured a win in industrial with a leading North American fleet management OEM, where our ultra-low power vision platform provides intelligent asset monitoring. Our pipeline continues to expand across consumer and industrial markets, with increasing traction in IoT hubs, gesture-driven streaming devices, industrial gateways, UAV navigation and positioning, and smart home systems. Our key differentiation lies in tightly integrating compute and connectivity into a solution-oriented, software developer friendly platform, designed to reduce system complexity while enabling scalable and high-performance Edge AI deployments.
Finally, we had a successful launch of our Astra-enabled Connected MCU at Embedded World, where it received a Best in Show award in the Microcontrollers, Microprocessors & IP category. This device is the industry's first to integrate Wi-Fi 7 and Bluetooth 6.0 connectivity with Edge AI compute in a monolithic SoC, delivering a highly differentiated solution. Customers are particularly attracted to its ability to concurrently host Bluetooth and Wi-Fi stacks, as well as the host application, enabling greater integration and efficiency. In addition, the integrated NPU in this SoC allows customers to develop and deploy differentiated AI features. We are currently sampling the product with multiple customers across a range of applications, including industrial power, home appliances, and security cameras.
Turning to Enterprise and Mobile Touch, demand from our enterprise customers continues to improve steadily. We remain focused on the premium tier of the market and will continue to closely monitor demand trends. In Mobile Touch, while some customers are navigating near-term challenges related to memory supply, we believe that we remain well positioned with some leading OEMs that are gaining share. We are currently shipping into the majority of flagship phones at a leading Korean OEM. We are also encouraged by our design wins in foldable smartphones and expect customers to launch new products in the second half of the calendar year.
While still early, broader adoption of foldable smartphones by major OEMs has the potential to drive overall market growth. To summarize, we are gaining strong traction in Physical AI and expanding our presence across a broad set of Edge AI markets. We are executing on our product roadmap, delivering highly differentiated products and solutions, and deepening our engagement with customers and ecosystem partners. These efforts position Synaptics for long-term growth and value creation.
I will now turn the call over to Ken to review our third quarter financial results and outlook for our fiscal 2026 fourth quarter.
Thank you, Rahul, and good afternoon, everyone. I will focus my remarks on our non-GAAP results which are reconciled to GAAP financial measures in the earnings release tables found in the investor relations section of our website.
Now let me turn to our financial results for the third quarter of fiscal 2026. Revenue for fiscal Q3 was $294.2 million, above the midpoint of our guidance and up 10% on a year-over-year basis driven by strength in our Core IoT products. The revenue mix in the third quarter was 30% Core IoT, 57% Enterprise and Automotive and 13% Mobile Touch products. Core IoT product revenues increased 31% year-over-year, driven primarily by continued strength in our wireless connectivity products. Enterprise & Automotive product revenues were up 9% year-over-year as we are seeing a recovery in our enterprise portfolio. And Mobile Touch product revenues decreased 16% year-over year.
Third quarter non-GAAP gross margin was 53.6%, slightly ahead of the mid-point of our guidance. Third quarter non-GAAP operating expenses were $104.6 million, better than the midpoint of our guidance. Our non-GAAP operating margin was 18.1%, up approximately 260 basis points year-over-year and non-GAAP net income in Q3 was $44.1 million. Non-GAAP EPS per diluted share came in toward the higher-end of our guidance at $1.09 per share, an increase of 21% on a year-over-year basis.
Now let me turn to the balance sheet. We ended the fiscal third quarter with approximately $404 million in cash and cash equivalents, reflecting $39 million of share repurchases in Q3. Through April of 2026, we have completed $93 million of share repurchases this fiscal year. Cash flow from operations was $21.8 million in the third fiscal quarter. Capital expenditures for the third quarter were $11.9 million and depreciation for the quarter was $7.9 million. Receivables at the end of March were $162.5 million and the days of sales outstanding were 50 days, up from 39 days last quarter. Our ending inventory balance was $161.3 million and days of inventory were 106 days, compared to 101 days at the end of the last quarter.
Now, turning to our fiscal 2026 fourth quarter guidance. For Q4, we expect revenues to be approximately $305 million at the mid-point, plus or minus $10 million. Our guidance for the fourth quarter reflects an expected revenue mix from Core IoT, Enterprise & Automotive, and Mobile Touch products of approximately 33%, 54%, and 13%, respectively. We expect our non-GAAP gross margin to be 53.5% at the mid-point, plus or minus 1% and non-GAAP operating expenses in the June quarter are expected to be $105 million at the midpoint of our guidance, plus or minus $2 million.
We expect non-GAAP net interest and other expenses to be approximately $2 million and our non-GAAP tax rate to be in the range of 13% to 15% for the fourth quarter. Non-GAAP net income per diluted share is anticipated to be $1.20 per share at the mid-point plus or minus $0.15, on an estimated 40.4 million fully diluted shares.
This wraps up our prepared remarks. I would like to turn the call over to the operator to start the Q&A session. Operator?
[Operator Instructions] Our first question comes from the line of Ross Seymore with Deutsche Bank.
2. Question Answer
A couple of questions. I guess the first one on the core IoT side of things. In the near term, it looked like it was a little weaker than you expected in the March quarter, but seems to be gaining that back in June. So in the near-term side, what's causing that volatility? And then perhaps more importantly, longer term, you rattled off a whole bunch of good wins and traction in the Astra platform. How should we think about the revenue contribution of that folding in into the second half of this year and into calendar year and into calendar '27 as well? Has that become a meaningful tailwind? And if so, when?
So Ross, maybe I'll take -- this is Ken. Thanks for the question. I'll take that first part, and then I'll turn it over to Rahul on the second piece. But on the first piece, if you look -- and if I just step back, Ross, right, for the year and for -- based on our guidance for Q4 for Core IoT, we're going to do north of $385 million for Core IoT at the midpoint. That grows by north of 40% on a year-over-year basis. And so there are always some movements quarter-to-quarter. But if I just step back, look at the business from a 30,000-foot view standpoint, we're seeing still very, very solid performance here throughout 2026 for Core IoT. And there will always be some movements here and there quarter-to-quarter. But in general, really very excited about the performance this year by the team.
Ross, this is Rahul. Regarding the IoT ramp on Astra processors. Well, I think we have stated in the past that we anticipate meaningful ramp in calendar 2027, and that remains. A couple of things. I indicated on the prepared remarks that we have taped out our semi-custom solution targeted towards end product, that's with a very large OEM. That is anticipated to go into production in the first half of calendar '27 and in the end products sometime about now next year and ramp up very nicely in the second half of '27 as well.
And regarding some of the design wins in robotics and physical AI, as you probably know, there's a lot of activity. There's a lot of market forecast. At this point, we are being very cautious in including those numbers in our plan for '27, largely because it's openly talked about as well. I think various research puts the numbers at very large quantities. However, in my opinion, it's still a greenfield. And so we're not taking a lot of that into our '27 plan.
What I will reiterate something that was in the remarks as well, that the dollar content is substantially different, materially higher than what we have seen in end products like Synaptics in the past. And so I remain excited about the opportunity in physical AI. I am seeing the conviction in the larger customer base around the capabilities, IP, product and technology that Synaptics brings to some of these platforms by virtue of the acceleration that we are seeing in our engagement and design activity with our customers and how quickly some of these engagements are turning into us shipping silicon. I mean, in one situation, in that case, pilot runs in a couple of other situations, I would be specific, maybe 3, we've shipped samples. And so all of that is TBD in terms of material revenue, but Astra family of products and connectivity, definitely looking on track for '27.
Perfect. And for my follow-up, just touching on kind of the PC-related and mobile-related side of things. Given the headwinds from the memory costs and all of that, and I fully realize you guys are at the premium end, so you might not be hit as hard. But how are you seeing your customers react to those pressures? Do you think that the market can still grow if we look kind of out over the next few quarters? Or is that something where they're going to eventually feel that pain as well and maybe it's a meaningful headwind?
Well, I think let me respond in 2 parts, right? PC, we had a good quarter. And where we are in our fiscal Q4, the current quarter, we continue to see reasonable momentum in the demand for our products. However, like you indicated and much of the market is saying as well, right, there could be headwinds in the second half of '26. We haven't seen that just yet. But like with everybody else in the marketplace, we may not be immune to that as well if it comes about. What works, like you said, Ross, favorably for us is that our participation is in the enterprise class products and premium class products. And that potentially presents us with some form of cushion buffer because the affordability is a lot better in that class of products. But you are absolutely right. Like everybody is saying, there could be headwinds in the second half, and we may not be immune to it. Now the size and the impact may be a little different than what everybody is seeing.
Regarding smartphones, as you know, there is also this challenge with memory, particularly identified in China, and we see that in our China-based smartphone shipments as a result in our touch products. However, we are gaining market share, and we're doing very well in a Korean OEM who has access to memory. And so we are a beneficiary in that situation. And so even in the Mobile Touch, I think we don't know when the memory situation recovery happens for the China OEMs. However, we are a beneficiary on the other hand, with the Korean OEM where we are gaining market share and they have access to memory.
Our next question comes from the line of Kevin Cassidy with Rosenblatt Securities.
Congratulations on the great results. And congratulations on all the new product and design activity. I just wonder if I could ask a little more about the robotics market, very exciting. But can you describe the attach rate you're getting, just kind of a range of if you had only the capacitive touch versus whether you had all your products through the connectivity products. What would be the range of the content in robotics?
Yes. Kevin, thank you for the question. I'm really personally very excited about the opportunity for Synaptics in robotics. And think of robotics as from a tactile sensing point of view, as an implementation on the backs of analog design, some localized computation that ultimately transcends the biological sensory capabilities of a human hand to a level that presents tremendous amount of robustness in adverse conditions, tremendous amount of accuracy and dexterity and also the latency of inference basically is at a different level, right? In all these vectors, you see transcending the human hand behavior basically.
And so if you kind of sum it up, that is right in the alley of what Synaptics technology is capable of delivering best-in-class touch capabilities that, again, is proven and embraced extremely well in the premium class of smartphone marketplace, our AI-native processing engines and also wireless connectivity. And so being specific to your question about silicon content, currently, majority of our shipments are concentrated on tactile sensing and bus interface technologies. And you can think of the silicon content in terms of few tens of dollars per platform, largely on backs of those 2 capabilities. We are seeing early engagements on Astra and wireless connectivity, and that is additive on top of that. And to be very clear, many platforms would have one or more capabilities from Synaptics in place. And so that's how we should think about it.
And so the diversity of our product capabilities and our technology and the leadership capability in each of the categories that we are in, sensing, processing and connecting and interface is what is being appreciated in these platforms.
Great. And maybe on the pipeline you have of 35 OEMs, how does that look geographically?
It's highly concentrated in advanced stages of engagement in North America, some in China and early stages in Europe.
Our next question comes from the line of Neil Young with Needham & Company.
So within Astra, I wanted to ask about the end markets. Are there any particular end markets where customer traction is moving fastest today? And then as those designs move toward production, should we think about the initial ramp as being concentrated in a few larger programs? Or is this more diversified across many smaller edge AI deployments?
Neil, this is Rahul. I have indicated in the past, and I think that's exactly how it's emerging in our current design activity. Consumer will ramp up first. Industrial will follow. We are seeing industrial design wins now taking shape. I described us getting into medical equipment as well. However, I think of this as equipment that would sit at the far end of the edge in people's homes. In industrial, I highlighted, I mean, one of the many designs, but the design around fleet management.
Now industrial takes a lot more in terms of validation, hardening of the platform and ramping through various regulatory "checkpoints" basically. And so it is slower to ramp than consumer and longer to hold than consumer in terms of the revenue time lines. And so that's exactly what we are seeing in our plans.
Regarding your question about is it going to be singles and doubles or there's going to be one big home run customer. Clearly, I think I've indicated we have a semi-custom design done for a very large OEM, who we are very closely partnering on multiple fronts from developing the IP around processing in our platforms for neural processing and many other things to engaging in building out the platform for the end product that is targeted for mass market consumer consumption in the first space. And so there are going to be singles and doubles, and there's going to be this big home run that will come into our calendar '27 revenue profile on Astra.
Great. That's helpful. And then I wanted to ask about gross margin as core IoT continues to become a larger mix of the business and Astra-related products begin to ramp. Should we think about the current margin level as a reasonable baseline through FY '27? Or are there other factors that can come in? Maybe just talk about where you see that going.
Neil, it's Ken. I appreciate that. So we guide 1 quarter ahead, and you can see that margin profiles in that 53.5%, plus/minus 1% for our guide. We've been at this range. I would say behind the scenes, one of the things that we've been doing well and kudos to the operations team is like other semi players, we have seen cost increases, but we've been able to absorb those and maintain very healthy gross margins.
On a longer-term basis, as we think about the core IoT business and specifically, as we think about the processing and processor capabilities, those should have a margin profile greater than the corporate average. And therefore, as that scales over time, that will help the overall mix of Synaptics.
Our next question comes from the line of Krish Sankar with TD Cowen.
First one, Ken, I had a question for you on revenues and gross margins. It seems like since early '24, your revenues have been growing roughly $10 million a quarter, and I understand it's hard to forecast. I'm just wondering, is there a hockey stick recovery ahead? Or is it going to be gradual? And on the gross margin side, I'm wondering if there's any leverage in the model from a gross margin drop-through standpoint since your gross margins have been remarkably stable around the 16.5% levels over the last several quarters despite revenues inching up slowly. And I have a follow-up for Rahul.
Perfect. Okay. Thanks for the question. So if you look at the revenues, I think one of the factors over the last several quarters has been just working through, right, from the COVID boom and coming through a more challenging inventory environment post-COVID, we've worked through that inventory levels. And so inventories in the channel, even for us have been very -- have leaned out. And now over the last couple of quarters, we've been shipping towards end demand and gaining traction, as you've seen on the core IoT piece over the last several quarters. So that should continue to fuel our growth as we think about the outer years.
From a margin standpoint, a lot of it is dependent because we are fabless, it is dependent on the mix and in some cases, the mix within the mix. And so as I mentioned on my last -- the last question, one of the things the team has done a really fantastic job on the operations side is there have been headwinds in cost. We've done a great job maintaining that margin profile and absorbing it. I think on a longer-term basis, the mix and the mix of some of our products such as in the processor category, those are going to help fuel the long-term margins of the company. And so that's kind of where we are today.
That's very helpful. And then a quick follow-up for Rahul. On the Astra SR series, when will it be deployed? And is Google just partnering with you? Or are they using other silicon designers, too?
Krishna, thank you for the question. The SR series is our microcontroller -- AI-native microcontroller platform. It is targeting a mass market along with what we are doing for one large semi-custom customer on this program. So I'm not sure whether I'm answering your question, but your ask was very specific to a particular OEM, and I'm not at the liberty of giving you that or divulge into the name of the OEM at this point.
Our next question comes from the line of Christopher Rolland with Susquehanna.
And perhaps following up on that last one. Without divulging any customer names or details, if you could update us on the semi-custom chip opportunity. I don't know if you're able to size that or not yet? And then have you received any interest from others for semi-custom chips as well?
Chris, this is Rahul. That semi-custom -- I mean, I think there was a question from Neil earlier, and I indicated, I think that semi-custom is -- the way we look at semi-custom is one that delivers a home run right off the bat, right? And I think that is how you should think about semi-custom for us. The customer has got material skin in the game, and we will build a product that differentiates their platform and ultimately uniquely takes them to the marketplace across their entire portfolio of products in that class of products, right? And so I think -- we are also in multiple discussions on semi-custom designs. However, there's not much to share at this point. But going back to the portfolio, the IP capabilities that we present, clearly, both in physical AI and edge AI, there is strong customer interest to do semi-custom opportunity. We have a very clear set of OpEx envelope to work with, and we are very judicious in how we go through and evaluate those opportunities and work through them. But there is definitely a tremendous amount of interest in doing semi-custom with Synaptics.
Excellent. And I apologize, it's a busy day if questions were asked already. I know you had some details around your Astra products, but you have a pretty extensive road map of new products coming as well, whether it's like MCU or connectivity, different flavors like Wi-Fi 7, for example. I was wondering if you could update us as to not sampling, but revenue ramps for a few of these new products. And then lastly, in the Broadcom IP purchase, I think you had -- maybe it was UWB. There was a technology, I forgot exactly what it was. I think it was UWB, it might have been something else. But you weren't sure if you were going to pursue that and put R&D resources into that. Did you ever and it seems like maybe in robotics, there could be some functionality there. Just curious what you did with that.
Yes. I think -- so 2 questions, I believe, you have. First one is the Astra revenue ramp. So we've guided this is going to be calendar '27 event. We'll start seeing the ramp towards the end of the year, calendar year and obviously, material as we progress through the year 2027. Regarding various products, we have -- right now in production, 3 Astra products and in multiple customer design engagements. One is in sample stage, which is our microcontroller with NPU or being AI native with Wi-Fi 7 Bluetooth all in a single die, and that is in sample stage. And then later this year, we will, in the fall, sample the semi-custom MCU with the Google Coral NPU embedded in it as well. And so that 3 or 4 products will ramp in calendar 2027, and that will be the Astra revenue in '27.
I think you had a second question, I lost track of it.
Yes. There was a -- it was a UWB.
Yes, with the UWB. Yes, we do have that IP in our portfolio. And we are not doing a whole lot with it right now. However, we are consistently evaluating opportunities. UWB presents an interesting use case outside of digital car key in locationing. And so that use case absolutely is something that we constantly evaluate and especially for indoor applications.
Our next question comes from the line of Martin Yang with OpCo.
First question on your engagement with robotics customers. Do you have direct relationship with all those 35 OEMs? Or are you able to leverage certain distributors or channel partners to engage those robotics customers?
Martin, this is Rahul. All our engagements are direct at this point. And in many situations, it's direct engineering to engineering engagement largely because this is a new frontier in what the end platforms are trying to accomplish. And the depth of technology, engagement, implementation details is not something that is ready to be consumed through traditional channels like distribution. And so we are very mindful of what we do. We also have a partner that we have worked with that can get into a broader marketplace. We've announced and we have indicated that on multiple marketing forums, the partner is Grinn. And we will try to bring up other partners where they can go engage with other customers that we may not be able to scale on our own, and they help us scale. So they are a scaling partner for us. However, a majority of the designs that I described in tactile sensing are direct engagement that tactile sensing and interface are direct engagements with Synaptics.
One more question on robotics. So can you maybe educate us on the advantage of capacitive approach versus other potential sensing solutions, maybe optical, maybe pressure-based. Are the robotics customers taking capacitive as the winning solution? Or are they at this stage, still evaluating different approaches for tactile sensing?
Yes. I think it's a very good question. And so something I indicated earlier, the performance along the lines of creating equivalency or transcending biological sensory capabilities of what a typical hand does on the dimension of robustness, latency of inference, the accuracy, the grip, all of that working in adverse conditions is going to, at some point, evolve requiring multimodal implementation and inference capabilities, and that's going to require more than one sensing capability. However, all of that probably is a roadmap item on these platforms.
Today, majority of them are seeing capacitive sensing in the capability that Synaptics is bringing to the forefront, the signal-to-noise ratio capabilities, the number of channels that we support, the level of accuracy, the latency of inference, the AI-enabled touch controlling implementations. I think those are the areas where Synaptics continues to excel in the eyes of customers when they bring capacitors touch sensing versus other sensing technologies in the platform.
Our next question comes from the line of Peter Peng with JPMorgan.
You guys pointed out just the cross-selling opportunities in the humanoid with your products. Maybe can you point us to some example of other end applications that you guys are working on that you have the opportunity to also cross-sell with your multiple products?
Yes. So I think, Peter, this is Rahul. No, robotics is a very broad category by itself. Humanoid is one big platform category within robotics. And in -- if you look at the dexterous hand, right, of a robot or a humanoid, you have the opportunity to combine our AI native processing capabilities along with our touch sensing capabilities and also wireless connectivity for peer-to-peer or robot-to-robot communication or robot to the network communication, right? And so I think you can see a lot of these ultimately lends to cross-selling of and pull-through of one product on the backs of the other product because we come in with a system-level solution sale, right? We come in with some pre-integrated software capabilities to the platform.
Regarding other platforms in Edge AI, absolutely. Every time there is an Astra sale, it pulls through our connectivity, right? However, I would also highlight our connectivity gets situated on many non-Synaptics processing platforms as well, and that opens the door for us to kind of ultimately bring in Astra to pair up with our connectivity. And so there's a lot of cross-selling across the company in terms of end markets going on right now.
Got it. And then just on the core IoT, I think the June quarter kind of implies kind of in this 20-ish percent year-on-year growth. Is that kind of the rate that we should expect before that big ramp in the first half of 2027? Maybe any color on whether that's a sustainable growth rate or maybe we have to wait for the first half to see further acceleration?
Peter, it's Ken. Thanks for the question. So I think if you look at the last year, right, we've actually had very nice growth on a year-over-year basis overall. So based on the midpoint of the guide, if you look at the core IoT segment, should be north of $385 million or so and call it, 40% plus type of growth on a year-over-year basis. There will always be some ebbs and flows quarter-to-quarter. But the goal that we outlined previously was on a longer-term basis, can we drive that core IoT business to be north of that 25% range overall. And so obviously, quarter-to-quarter ebbs and flows. But if you just step back, look on a holistic basis, and you look at this year and even last year, we've had really good performance in that portfolio.
This concludes our question-and-answer session. I would now like to turn it back to Rahul Patel for closing remarks.
Before we close, I want to thank our global team for their continued focus and execution. Synaptics is making solid progress on strategic priorities and expanding its position in key growth areas. Thank you all for joining us today, and we appreciate your continued support. Have a great rest of the day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Synaptics Incorporated — Q3 2026 Earnings Call
Synaptics Incorporated — Q3 2026 Earnings Call
Synaptics posts solid Q3 with double-digit growth and accelerating Edge AI momentum.
📊 Quarter at a Glance
- Revenue: $294.2M (+10% YoY)
- Core IoT growth: +31% YoY
- Gross Margin: 53.6% (non-GAAP, above guidance mid-point)
- EPS: $1.09 (non-GAAP, +21% YoY, high end of guidance)
- Momentum: Sixth straight quarter of double-digit YoY revenue growth; robotics and Edge AI momentum strengthening
🎯 What Management Says
- Edge/Physical AI momentum: accelerating adoption with 35+ robotics customers and a new humanoid design sampled to multiple OEMs
- Google collaboration: Coralboard powered by Astra SL2610, integrating Google's Coral NPU with Synaptics' Torq NPU for on-device AI
- Astra roadmap: SR-series AI-native microcontroller taped out; sampling in fall; multi-piece, high-efficiency edge AI platform designed for wearables and beyond
🔭 Outlook & Guidance
- Q4 Revenue: about $305M +/- $10M; mix ~33% Core IoT, 54% Enterprise & Automotive, 13% Mobile Touch
- Gross Margin: ~53.5% +/- 1%
- Opex: ~$105M +/- $2M
- Tax rate: 13%–15%
- EPS (Q4): ~$1.20 +/- $0.15
- Astra timing: meaningful ramp in calendar 2027, with first production in H1’27 and broader ramp in H2’27
❓ Analyst Q&A
- Astra ramp timing: management reaffirmed a calendar 2027 ramp, with pilot production in 1H’27 and broader production later in ’27
- Robotics attach rate: current silicon content largely tactile sensing and interface; Astra and wireless adds later; cross-sell potential grows as platforms mature
- Semi-custom interest: multiple discussions and strong customer interest; defined OpEx envelope; no names or timings shared yet
⚡ Bottom Line
Synaptics shows solid Q3 execution with healthy Core IoT growth and expanding Edge AI activity, while the Astra ramp remains the key long-term driver. The Google collaboration and robotics traction support a multi-year growth path, but the stock will hinge on Astra conversions and semi-custom wins into 2027.
Synaptics Incorporated — Q2 2026 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to Synaptics Second Quarter Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Munjal Shah, Vice President and Head of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today on Synaptics' Second Quarter Fiscal 2026 Conference Call. My name is Munjal Shah, and I'm the Vice President of Investor Relations. With me on today's call are Rahul Patel, our President and CEO; and Ken Rizvi, our CFO.
This call is being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at synaptics.com. In addition to a copy of our earnings press release detailing our quarterly results, a supplemental slide presentation and a copy of these prepared remarks have been posted on our Investor Relations website.
Today's discussion of financial results is presented on a GAAP financial basis, along with supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs and certain other noncash or recurring or nonrecurring items. All non-GAAP financial metrics discussed are reconciled to the most directly comparable GAAP financial measures in our earnings press release and supplemental materials available on our Investor Relations website.
As a reminder, the matters we are discussing today in our prepared remarks, in our supplemental materials and response to your questions may contain certain forward-looking statements. These forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. Although Synaptics believes the estimates and assumptions underlying these forward-looking statements to be reasonable, the statements are subject to a number of risks and uncertainties beyond our control.
Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward-looking statements. Therefore, we refer you to the company's earnings release issued today and our current and periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements speak only as of the date thereof. Except as required by law, Synaptics expressly disclaims any obligation to update this forward-looking information.
I will now turn the call over to Rahul.
Thank you, Munjal. Good afternoon, everyone, and thank you for joining our fiscal second quarter 2026 earnings call. We delivered another solid quarter with strong results and continued momentum across our business. Total company revenue increased 13% year-over-year, marking our fifth consecutive quarter of double-digit year-over-year growth. This performance was driven by 53% year-over-year growth in our core IoT products.
Disciplined execution helped deliver strong earnings growth with non-GAAP earnings per share increasing 32% year-over-year to $1.21. The Consumer Electronics Show in January was a successful event for Synaptics. We saw meaningful engagement with customers and partners as we showcased the breadth of our latest technologies and solutions. We demonstrated several use cases across our portfolio, including Google's Genie 3 model running natively on our multimodal processors, highlighted our differentiated WiFi sensing and Bluetooth channel sounding capabilities and one of our partners, GRI, demonstrated a robotic hand built using Synaptics processors, connectivity and sensing products.
We want to thank the analysts and investors who visited our booth. A defining theme at CES and across the industry is the accelerating shift towards physical and edge AI as intelligence moves closer to the device. This evolution aligns directly with Synaptics' strategic focus and core product strengths. Our portfolio is purpose-built to deliver power-efficient intelligent systems at the edge, and we believe this transition towards physical AI positions Synaptics for sustained long-term growth.
We are seeing early but meaningful traction in robotics, where Synaptics brings differentiated capabilities across processing, connectivity and sensing. One example is humanoids. Synaptics is actively engaged and sampling products with an industry leader that is building a lineup of advanced humanoids. These humanoids incorporate multiple Synaptics touch controllers designed to enable tactile sensing as well as our interface bridge product to support high-bandwidth data transport.
Touch sensing is critical for humanoids to perform physical tasks, including sensing force, proximity and surface characteristics. Our touch controllers integrate ML/AI algorithms that enable this level of dexterity, allowing a humanoid to modulate grip force ranging from delicate glassware to solid metal objects while distinguishing subtle pressure variations between plastic and paper cups. As we expand into new markets, we see growing applications for our intelligent sensing portfolio at the deep sensor edge.
More broadly in robotics, we are engaging with a growing set of new customers and entering new markets. These engagements span multiple applications that tend to benefit from physical AI and leverage our portfolio of sensing, video interface, processors and connectivity technologies. Our recently introduced Astra multimodality microprocessors are seeing strong interest from both customers and partners. They are choosing Synaptics Astra over competing platforms because of its open source architecture, developer-ready software, power efficiency and differentiated AI capabilities enabled by Synaptics' Torque neural processing architecture developed in collaboration with Google. We are engaging with customers across a wide range of industries.
For example, a leading security and controls company is evaluating our Astra processors along with our connectivity technology as a complete solution, citing our differentiation in AI and power efficiency. Smart home appliance manufacturers are also showing strong interest in Astra for its low-power AI native design. As physical AI continues to gain momentum, we expect customers to embed increasing levels of intelligence across their devices.
Our partner ecosystem for processors continues to expand across industrial markets. We are collaborating with Toradex, a leader in single-board compute solutions serving industrial automation, health care, transportation, agriculture, smart city and aerospace markets. This quarter, we also added another European partner focused on industrial applications. In addition to our Linux-based Astra microprocessors, we are gaining meaningful traction with our high-performance AI-native Astra microcontroller portfolio.
During the quarter, we secured a design with a Tier 1 consumer electronics OEM that selected Astra for its differentiated vision capabilities, enabling gesture-based system control in smart televisions. While this is one example, the Astra MCU supports a broad range of vision modalities, including presence, object detection and security. Customer engagements are continuing to broaden across multiple end markets, and we expect to share additional design wins in the coming quarters.
As our current Astra products continue to gain traction, we are executing with discipline and advancing our road map. This quarter, we are further expanding our Edge AI portfolio by sampling 2 new products. First, our Astra MCU with connectivity that combines our low-power microcontroller, neural processing technology and latest connectivity into a single monolithic system on a chip. Importantly, it is the only solution in its class to support Wi-Fi 7, Bluetooth 6 and thread, while competing solutions remain anchored to Wi-Fi 6. This device also uniquely integrates front-end touch and voice interfaces, delivering a true system-level solution, enabling meaningful bill of material savings for customers.
Second, Synaptics connectivity SoC is our latest device that supports Wi-Fi 7, Bluetooth, BLE and thread. It is a stand-alone connectivity solution that can be easily integrated into systems using non-Astra compute platforms, furthering our participation in the broader edge IoT market. We are seeing strong interest for these products from home appliance manufacturers, security camera customers, drones, robotics and broad-based IoT module makers, and we expect revenue contribution beginning in calendar 2027.
Turning to enterprise and mobile touch. We continue to focus on premium tier of the market. In enterprise, we have seen steady improvement as customers gradually upgrade their infrastructure to support return-to-office initiatives and replace an aging installed base. In Mobile touch, we secured another foldable design with a leading OEM in China, reinforcing the technology leadership we bring to this market with our next-generation touch architecture and building on the momentum established by last quarter's win with a leading Korean OEM. As we have noted previously, our content is more than 2x higher in foldables. We are actively engaged with additional smartphone OEMs and remain confident in being able to scale this technology to other large display applications.
As we continue to focus the company on edge AI solutions, I am combining our processors and connectivity teams into a single organization. This better aligns our resources and accelerates our road map to more efficiently deliver world-class integrated processor and wireless system solutions.
To summarize, we are seeing continued improvement in our financial performance with double-digit year-over-year revenue growth and operating profit growing at nearly twice the rate of revenue. We are accelerating our innovation and product road map to capitalize on growing physical and edge AI opportunity. With a differentiated platform and expanding pipeline and growing customer engagement, we believe Synaptics is well positioned for sustained long-term growth.
I will now turn the call over to Ken to review our second quarter financial results and outlook for our fiscal 2026 third quarter.
Thank you, Rahul, and good afternoon, everyone. I will focus my remarks on our non-GAAP results, which are reconciled to GAAP financial measures in the earnings release tables found in the Investor Relations section of our website. Now let me turn to our financial results for the second quarter of fiscal 2026. Revenue for fiscal Q2 was $302.5 million, above the midpoint of our guidance and up 13% on a year-over-year basis, driven by strength in our core IoT products. The revenue mix in the second quarter was in line with our expectations, 31% core IoT, 53% enterprise and automotive and 16% mobile touch products. Core IoT product revenues increased 53% year-over-year, driven primarily by continued strength in our wireless connectivity products.
Enterprise and automotive product revenues were up modestly year-over-year and slightly ahead of our expectations. Mobile touch product revenues increased 3% year-over-year. While supply constraints are improving, we still see challenges in certain areas.
Second quarter non-GAAP gross margin was 53.6%, slightly ahead of the midpoint of our guidance. Second quarter non-GAAP operating expenses were $104.2 million, better than the midpoint of our guidance. Our non-GAAP operating margin was 19.2%, up approximately 160 basis points sequentially and 190 basis points year-over-year. Non-GAAP net income in Q2 was $48.4 million. And non-GAAP EPS per diluted share came in above the midpoint of our guidance at $1.21 per share, an increase of 32% on a year-over-year basis.
Now let me turn to the balance sheet. We ended the fiscal second quarter with approximately $437.4 million in cash and cash equivalents, down $22.5 million from the prior quarter as we repurchased $36.4 million of our shares in Q2. Through fiscal Q2, we have bought a total of $43.6 million of our shares. Cash flow from operations was $30 million in the second fiscal quarter, and capital expenditures for the second quarter were $11.6 million.
Depreciation for the quarter was $7.6 million. Receivables at the end of December were $132.7 million and days of sales outstanding were 39 days, up slightly from 37 days last quarter. Our ending inventory balance was $158 million, which increased by $15 million from the previous quarter. Days of inventory were 101 days compared to 94 days at the end of the last quarter. This increase reflects our strategic decision to purchase inventory slightly ahead of demand.
Now turning to our third quarter of 2026 guidance. Our guidance is subject to ongoing macroeconomic and global trade and tariff-related uncertainty. Please refer to our safe harbor statement in the earnings release and in our supplemental materials. For Q3, we expect revenues to be approximately $290 million at the midpoint, plus or minus $10 million. And our guidance for the third quarter reflects an expected revenue mix from Core IoT, enterprise and automotive and mobile touch products of approximately 32%, 54% and 14%, respectively.
We expect non-GAAP gross margin to be 53.5% at the midpoint, plus or minus 1%. Non-GAAP operating expenses in the March quarter are expected to be approximately $106 million at the midpoint of our guidance, plus or minus $2 million. We expect non-GAAP net interest and other expenses to be approximately $2 million and our non-GAAP tax rate to be in the range of 13% to 15% for the third quarter. Non-GAAP net income per diluted share is anticipated to be $1 per share at the midpoint, plus or minus $0.15 on an estimated 40.6 million fully diluted shares. This wraps up our prepared remarks.
I would like to turn the call over to the operator to start the Q&A session.
[Operator Instructions] Our first question comes from the line of Ross Seymore of Deutsche Bank.
2. Question Answer
First question is probably a little bit of a negative spin and the second will be a little more positive. So the first question is we're seeing some of the supply -- you mentioned some of the supply issues going away in mobile, but we're seeing more pressure on that with memory cost availability, et cetera. So I guess, do you guys see any issues with that in your mobile touch business and perhaps your PC business? And are those 2 still roughly 30%, 35% of total revenues?
Ross, this is Rahul. As you know, majority of our mobile business, in fact, all of our mobile business is in the premium to high tier. And by virtue of us being in that category, we are not seeing, as of this moment, any substantial pressure on volumes that we had anticipated we were going to experience. And so relative to the rest of the mobile market, where they may be seeing some supply pressures, the premium tier seems to be a lot more stable. And it feels like it's a bit immune to the supply challenges, especially if you are referring to memory-related challenges.
Ross, this is Ken. Just to clarify, right, our comments were related to our ability to get supply for some of our products for the mobile touch market. If you recall, last quarter, we highlighted that, that's starting to ease for us, but it is specific to us getting the supply for some of those touch products for the mobile market.
The PC half of that question?
Same thing. If you look at the PC market, it's as Rahul highlighted, if you look at where we play, we play in the high end in the enterprise market. And so if you look at that demand elasticity, historically, that's a more inelastic market. If I just take a look at my own behavior for Synaptics as the CFO, if we have a new employee, I'm going to give them a PC. If that PC costs $50 or $100 more, they're going to need that PC.
So for those portions of the market where we service, which is really that premium tier, as Rahul highlighted earlier, we believe there's a bit more demand elasticity in the sense that the enterprise and high-end consumer markets will still need to purchase those PCs as we go through this upgrade cycle.
Got it. And I guess as the positive follow-up question, the Astra side, you guys had some great demos at CES. Thanks for showing those and it sounded like some good traction, design wins, engagements, those sorts of things. Rahul, when should we start to see that be a meaningful tailwind in your core IoT business? And does it also kick in on the gross margin line beyond just revenues?
Ross, we -- as you have indicated earlier, we are still on track to see meaningful revenue contribution in calendar 2027 from our Astra line of products. And they are -- Astra as a product category is very accretive to gross margin. So you can see potentially contributing not only to the top line, but also improving our gross margin contribution as well as a result.
And our next question comes from the line of Tom O'Malley of Barclays.
Mine is on the guidance and gross margins in particular. If you look at the moving pieces, mobile is down the most. Obviously, volume is coming down a little bit. So you would expect a little bit of an impact from gross margin. But just with mobile being kind of the lowest gross margin business, you would expect some tailwinds there. Anything in particular that you want to call out on gross margins into the March quarter? Is it just mix related and volume related?
Yes, Tom, thanks for the question. I think we're still in this range here in that mid-53% range, 53.5% is where we guided. Obviously, there are some boundaries around it. We'll try to do better. But for the current mix of the product and portfolio for Q3, that's where we're ending up.
Super helpful. And then maybe just a broader question on the portfolio. Where are you in the sampling process across new chips? You had kind of talked about the second half with the device with the lead customer that you kind of talked about. Any update there on timing? And what should we be paying attention to in terms of announcements, et cetera, in the coming months?
Tom, this is Rahul. So we have started to sample our microprocessor, Estra microprocessor last quarter towards the end of calendar quarter 3, early part of calendar quarter 4. And that sampling has gone just as expected, in fact, ahead of our plans. We anticipate going into production on that part end of this quarter, early part of next quarter. In my prepared remarks, I talked about 2 new products that are in early phase of sampling at this point.
The one that we talked about is the Astra product is a microcontroller that is integrating an NPU -- it's also integrating certain interface for benefiting of the bill of materials and many other things. But importantly, it is in its class, I can think of, based on what I can see from my side, the only MCU that has got Wi-Fi 7, BLE and Bluetooth 6 and Thread integrated into silicon. That is sampling right now. And we are not going to walk away from non-Astra opportunities. And so for that, we have also built a Synaptics connectivity part that is Wi-Fi 7, Bluetooth, BLE and Thread that can integrate onto non-synaptics processors as well. And so both of those products are in early phase of sampling.
And then I believe you may have hinted about the semi-custom MCU that is still for a major customer that is still on track for being taped out in early part of the next quarter, more likely April time period. And so you can see the entire lineup on Astra processors as well as connectivity, stand-alone connectivity and integrated connectivity with market-leading WiFi 7, Bluetooth 6 and BLE and Thread is coming out from Synaptics in the first half of this year, calendar year. And believe me, I think there's a lot more in the store that we are working towards delivering in the second half of the calendar year as well, more AstraClass processors. Obviously, we are doing other things in the interface business as well, and we'll talk about them as we are about to launch in the marketplace.
And our next question comes from the line of Joe Quatrochi of Wells Fargo.
This is Travis on for Joe. So I had a question on automotive. I noticed you didn't touch on it in the prepared remarks. So I was just curious on how that did during the quarter? And secondly, how should we think about this portion of the business over the long term? I remember you mentioning that you were investing in this area last quarter. So just curious on getting updated thoughts.
Travis, it's Ken. Thanks for the commentary. Yes, if you look at automotive, it is a small portion of our overall business, and it's been in this range, I would say, range bound here the last few quarters. What's really propelled that enterprise and automotive space is primarily on the enterprise side. And so as we focus going forward, more of our -- not only R&D dollars, but just focus is around the enterprise market as well as around core IoT and Edge AI specifically.
Okay. That's helpful. And then I know you guys only guide like a quarter at a time, but Ken, can you help us understand like kind of what the June quarter typically looks like from a seasonality standpoint, just kind of as we calibrate our models?
Yes, happy to. We don't provide guidance more than 1 quarter ahead, but maybe I can give you a little bit of a color here, a flavor here as we head into June. Historically, we would expect that quarter to be up a bit from the March quarter. If we look at the starting backlog as one data point, the starting backlog for Q4 compared to the same point in time for Q3 is up. Obviously, we need to continue to see progress in those trends in terms of bookings and the like, but that's at least a strong data point for us as we look to June.
Our next question comes from the line of Neil Young of Needham & Company.
I wanted to ask on Astra. So regarding the pipeline for Astra, I'm not asking you to put a number out there, but could you maybe share the rough split of that pipeline by end market?
Well, I think the way to think about Astra is our pipeline is growing really fast, right? And the benefit that Astra has is it is also having a very nice companion capability in our connectivity. And so combining the 2, it becomes a very compelling solution and a starting point for many of our customers to engage with Synaptics. And so we are really encouraged by how fast the pipeline is building up on Astra and our connectivity combining together as a solution.
Having said that, I think the nature of the market is such that the pipeline builds up fast for consumer applications and industrials follow. And I think it's just because of the design cycles and the entire decision-making process between consumer and industrial marketplaces, and that's how it's playing out. Our consumer pipeline is a lot larger than industrial, but that's how -- it is as expected in our launch of the Astra lineup in the marketplace. What's important is we have a SKU map, and that's extremely compelling to our customers.
If you notice, we have a platform play that is built on open source platforms, very friendly to developer community. And if you heard me in my prepared remarks or the question that Tom had asked earlier, we are building our SKU map out really fast, courtesy of phenomenal IP capability that we have developed in-house that allows us to create very fast turn SoCs on Astra. And I think that is being leveraged very nicely to build out a SKU map. And what that does to our engagement with our customers is makes it very compelling because their software investment can now scale across the entire SKU map very nicely.
If they are focusing on audio modalities-based MCU application, then you have Astra. If they are focusing on vision modalities-based MCU, then you have an Astra. However, your base code line and your stack for application code basically doesn't have to dramatically change as you can work within the SKU map of Synaptics' Astra MCUs and microprocessors. And so long-winded answer, Neil, but really excited about how fast the pipeline is building. Consumers definitely the lead marketplace. industry is falling right behind consumers.
Great. And then my follow-up, you talked about humanoids in your prepared remarks. As you engage with customers on these platforms, the humanoid platforms, could you help us think about the typical architecture, specifically how many processing connectivity and sensing nodes one of these humanoid robots might require and where Synaptics tends to participate within that?
Neil, in my prepared remarks, I talked about our engagement in humanoids. This has been in play for some time. What I was specifically calling out is we are now sampling silicon for pilot builds of humanoid at a major customer that's leading the marketplace and has made commitments to the marketplace to deliver pilots this year and go into production next year. This is on the backs of our touch sensory controllers and our bridge solutions that help transport high bandwidth data effectively in the humanoid. And so this is all underway.
We are in the process of working with our customer, our lead customer, building out the pilot program that they are working towards basically and delivering in the marketplace this year. We see our opportunity in humanoids extending into the larger robotics marketplace. And what it means is, from my point of view, robotics is a very broad market. It goes from home vacuum cleaner to -- all the way to humanoid and everything in between. And in situations where you would have at the furthest end of the spectrum from humanoid, like a vacuum cleaner, an MCU class product with a native AI capability and wireless connectivity, not only Wi-Fi, Bluetooth, and thread, but also GNSS and GPS, if it is on an industrial floor is very valuable. And that's the opportunity for Synaptics.
If you take it up all the way back to the humanoid, you have sensory capabilities that are required that are going to mirror not only what a typical human nervous system could do, but maybe with a higher precision. And so the number of touch controllers would vary. We have demonstrated at CES partner that has come out and built a platform using I believe, 30-odd touch controllers in the Palm of a robotic arm, combining it with Astra, combining it with a vision processor and combining it with wireless connectivity. And so as you can see, this is where the opportunity is.
And if you have a high-end humanoid, there may be a main processor, there may be a GPU, a data server type processor. However, that requires a lot of ML and AI data to be locally at a section of the humanoid level processed from the sensory inputs like a touch controller so that there's effective decision-making taking place within the tolerance of the latency that the end application may require. And so as you can see, the Synaptics portfolio scales very nicely from an MCU class AI native processing platform for a robotic and application to something that would be all the way to a humanoid. And you're seeing designs that are consuming our sensory capabilities, especially our touch interface and controller capabilities, not only in the Palm, but also in the foot of a humanoid basically.
And I think there's many things that will come about. But more importantly, again, I want to reiterate. What I was excited about in this quarter is we have started sampling our silicon for a pilot build to a company that's leading the marketplace, building multiple advanced humanoids to be delivered to the marketplace at the end of this year as pilots.
Our next question comes from the line of Christopher Rolland of Susquehanna.
So I did want to circle back on the memory issues in PC and mobile. And I know like, for example, Qualcomm was out yesterday, and they said that there's no demand destruction that they expect because they play at the high end of the market. But also at the same time, what they said was mobile vendors, in particular, were working down their inventories. It sounded like a chips, but also in process and finished inventories and that this could take as long as 6 months to kind of work through. And so I wanted to make sure that there weren't any channel effects from that perspective that could affect you guys for both the PC market and the mobile market.
Yes. So Chris, it's Ken. Thanks for that note. So a couple of things. One, if you look at just overall mobile business relative to -- on the mobile touch relative to some of the other categories, it's a small category for us, so in terms of percent of sales. Number two is even if you look at our channel inventories, -- we -- channel services for us mostly logistics for us, but we monitor that because that's the best view we have into various markets and OEMs. And that inventory is very lean and remains very lean and has over the last few quarters.
So it's tough for us to comment on other companies and their inventories and supply chains. For what we can see here, which we give guidance 1 quarter ahead, and I gave a few verbal comments in terms of how we're thinking about June. We play at that high end of the market, both on the enterprise side and on the mobile side. Obviously, it's something we'll continue to monitor and look at the memory market -- it does -- it goes into many and multiple devices, as we all know. But from what we can see for our March quarter and at least the early signs in the June quarter, we still are seeing reasonable and robust and healthy backlog and bookings levels.
And then I guess, secondly, I know mobile is smaller for you guys, but combo chips, connectivity into mobile, there can be potentially high volumes there. Is this a real opportunity, call it, '27 and beyond? Or do you think just the IoT market is really all the focus and will ultimately be all the contribution?
Chris, this is Rahul. From where we stand, let me start with connectivity. Connectivity for us is the entire SKU map. From IP development point of view to delivery of end products, we intend to build out the entire SKU map. As you probably may know, we have all the way from mobile platform class, premium mobile platform class, Wi-Fi 7, Bluetooth connectivity to an IoT class integrated into Astra processor, Wi-Fi 7, Bluetooth 6, DLE, thread connectivity kind of a portfolio of products. And obviously, we have obviously prior generations as well. We are also building out WiFi 8 as we speak and plan to sample Wi-Fi 8 by the end of this year to our customers.
And so going back to your question, generally, we start at the high end and waterfall very quickly into the IoT class products with our WiFi capabilities and Bluetooth capabilities. And so going back to your specific question about play in mobile, we are going to be remaining very opportunistic in terms of the available platforms. We are not going to go head on in a platform chipset competitive situation because it just does not bode well for us in terms of competitive landscape. And so there can be opportunities as many phone OEMs are now also choosing to build their own apps processor. However, and one of them has also gone down this path of building their own cellular modem, but many of them don't have their wireless connectivity in play.
And so opportunistically, because we are going to advance our wireless connectivity for our IoT marketplaces, we will continue to look for opportunities in smartphone where it would be a reasonable gross margin and profit contributing engagement for Synaptics. And that's how I would think of our play in mobile on a going-forward basis for wireless connectivity.
Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities.
Congratulations on the great results. Just maybe even along those same lines as putting wireless connectivity and mobile, is there opportunities in PC? And maybe in a bigger question, what do you see in the enterprise PC market? Is there a refresh coming? Or has the DRAM shortage put a stall to that?
So Kim, this is Rahul. Let me first take on the enterprise PC. -- our play in enterprise PC has benefited on 2 different vectors. First, we see the refresh gradually coming to play. Second, our team has done a phenomenal job gaining market share within the enterprise segment. And so we got 2 things working for us in the PC space at this moment versus the larger PC marketplace, especially being in enterprise.
I think you were also asking about wireless connectivity in PC. We absolutely will not go there in -- with wireless connectivity in PC, if that is what you're asking for, largely because it's a platform play, and it's a very tightly built platform by the x86 vendors. And there's -- it's not margin conducive. It's not P&L conducive to go down this path of investing in Windows at this time.
Okay. Great. Understood. And you've had tremendous growth in your wireless connectivity in the IoT market. What -- who do you see as your competitors in that market? And do you think you're outgrowing the market? It seems that it would be, but maybe if you could share some of what you see in the market.
Kevin, I can't think of any microprocessor or MCU company investing in wireless connectivity at the pace at which we are not only investing but also advancing to a newer generation of wireless connectivity. We have over 500 engineers right now working on Wi-Fi 8 at Synaptics, right? And we believe that an MCU play or processor play in absentia of wireless connectivity is depriving the customer of a solution and a starting point that is very cost effective to build the end product from basically. And I think -- that is where we are differentiating on advancing our road map being the first in the IoT world to bring wireless connectivity and also the AI native Astra processors.
Having said that, I do realize that there is this huge opportunity of non-Astra MCUs and processors in the IoT world. And so if you reflect on my prepared remarks, we are also sampling host independent, independent of what the host may be, a wireless connectivity solution, Wi-Fi 7, Bluetooth 6, BLE, Thread, SoC that can run its driver software by itself and not bother the host processor. However, make the non-Astra non-Synaptics processor platform extend with wireless connectivity very seamlessly. And so that is what we see as our SKU map doing. Competitively, I don't see any MCU or microprocessor available outside of Synaptics that has Wi-Fi 7 integrated.
The last thing I saw was Wi-Fi 6. And so competitively, we feel very strong about our position on wireless connectivity across the entire SKU map with our processors and being a wireless connectivity supplier without our processors and also where we are going on the road map with potentially bringing to life Wi-Fi 8 from Synaptics this year.
Our next question comes from the line of Robert Mertens of TD Cowen.
This is Robert on behalf of Krish Sankar. Let's see. I know we've gone over a lot of the finer points of your Astra processor platform. But maybe if you could just take a larger view in terms of the customers that you're working with and the progress that they're making with the road maps. Are you sort of expecting more of the additional demand to come from this industrial applications? Or is it a mix of both the industrial as well as consumer customers? Any sort of details of just sort of how that mix is playing out would be helpful.
Yes. I think excellent question. So I mean, if you noticed in my prepared remarks, every quarter for the last couple of quarters or last 2 or 3 quarters, I have cited examples of our designs. And those designs are generally with leading customers in that market category or that product category. On this quarterly call, in prepared remarks, I talked about our Astra processor that brings the benefit of processing out of band certain vision modalities, ultimately creating an experience for a television OEM that is very unique and differentiating from interacting with the television.
At the same time, television becoming very intelligent to understand who's in the room, what needs to be done, turning on parental control is an example, right? And so I think you will see some of these examples cited. Having said that, the scope of our engagement is a lot broader in the marketplace in terms of design activity. And majority of our initial ramp is going to be in the consumer side. There will be industrial designs that will ramp a little later than the consumer designs. At the same time, if you pull back and look at our edge IoT play, and I cited our play in humanoid, right, that in itself is an indication of where we will be going in the industrial marketplace with our product capabilities.
Now having said that, this one large important customer leading the market in humanoid has indicated to the world that they are going to pilot -- ship pilots basically this year and go into production in 2027, late 2027, indicating exactly how the industrial marketplaces play out. And so giving you a taste of us leading in the consumer space from a revenue recognition point of view in '27 and maybe in '28, calendar '28 time period, you will see some revenue coming through industrial channels.
Great. That's helpful. And then just a quick follow-up. In terms of just your view into the market, what's your current view of channel inventory? Are we more normalized levels? Or are there any areas of your business where inventory levels could be a near-term headwind still?
Yes. Thanks, Robert, it's Ken. On that front, if you look at our inventory levels in the channel, just to highlight the disti channel for us is primarily a logistics-oriented channel for us. It remains very lean for us. We went through what I classify a couple of years ago, this COVID boom and COVID bust. And over the last 3 quarters or so, we finally leaned out where we're shipping really towards end market demand. So we're in good shape across the board when we look at those inventories.
Our next question comes from the line of Peter Peng of JPMorgan.
You guys have intentions to move down to the broad market. So I guess just given the recent acquisition announcement in the space, how are you guys thinking about this part of the market now? Is it becoming I think more competitive because of potential cost advantages from the other players? Maybe just share your thoughts on that.
Peter, this is Rahul. First and foremost, we feel very strongly about the leadership that we have in certain edge IoT solutions play. We believe our portfolio in wireless connectivity from the edge IoT marketplace is bar none in the marketplace. And so we feel very strong about our position and what we are investing from a road map point of view versus everybody in this marketplace at this time, especially the MCU class and the microprocessor class products.
Having said that, if you're referring to this one company that got acquired or is in the process of getting acquired, our markets did not overlap. They were largely focused on MCU with integrated BLE with some Wi-Fi coming, but not a whole lot of WiFi in their end products. And so our play is vastly different. Our play is a lot more broader in terms of the end market participation within the larger edge IoT marketplace. And so we seem to be engaging with customers that I would think they may not be able to engage. And that's how I see our play on a going-forward basis continuing.
And a follow-up question is you talked about the semi-custom project being on track. And I think last quarter, you talked about several other engagements as well. I guess like when you think about just this opportunity, what are some of the criteria that you look for to drive the engagement, either in terms of volumes, like market success? Like maybe just give us some parameters on how you think about these certain engagements.
Yes. Peter, it's an excellent question. I believe in anchoring our road maps to certain large customers' vision and road maps. And this semi-custom opportunity with our MCU is anchored to a large OEM that believes in hybrid compute for AI. And the edge of the consumer side is where we are engaged with this large company that builds products using our semi-custom MCU implementation. What will happen is this large OEM will build a software stack upon which various applications will reside. And ultimately, we become part of their reference -- our silicon becomes part of their reference design that is not only used in that first-party product, but also in the third-party product, very analogous to what you see in the phone marketplace.
And so -- and not the iOS phone market, but the other marketplace. And so long story short, -- that is what entails a typical opportunity for semi-custom play for us on a going-forward basis. It is an opportunity that is not just point play, but it is also something that will build around the next chip that we provide to the same OEM for advancing their product as well as our road map in the process. And so along the same lines, I think in the world of humanoid and robotics, we have anchored ourselves to a very large leader in the marketplace that when the day comes, I think you will be able to say, yes, it is a large leading company in this marketplace. And so those are the things that you would see in decisions that we make when we do semi-custom play with end customers.
I'm showing no further questions at this time. I'll now turn it back to President and CEO, Rahul Patel, for closing remarks.
In closing, I want to emphasize that the Synaptics team is executing with focus as we advance our strategy. We are expanding our portfolio with new products that strengthen our leadership in Edge AI. Our financial results highlight our ability to grow the company with disciplined execution. I want to thank our global team for their hard work and dedication and to you all, our shareholders, for your continued support of Synaptics. Have a great rest of the day.
Thank you for your participation in today's conference. This concludes the program. You may now disconnect.
Synaptics Incorporated — Q2 2026 Earnings Call
Synaptics Incorporated — Barclays 23rd Annual Global Technology Conference
1. Question Answer
All right. Welcome back. I'm Tom O'Malley, semi and semi-cap analyst here at Barclays. Very pleased to have Rahul and Ken from Synaptics here. Thank you for joining guys.
Thanks for having us.
Good morning, Tom.
Well, I'd like to start with like a broader thematic because I think that most of what we hear today is around AI. Maybe start with we've seen $3 trillion plus of announced spend today. It's a big pie. People are attacking this in different ways. Some are calling this a bubble. Maybe your view on where we are in the spending trajectory. You've been around AI for a long time in various fashions. But where are we in the spending trajectory? Do you think that this is maybe an over accelerated beginning of this ramp? And how are you addressing that as a company?
Well, I think first and foremost, thanks for having us.
Thanks for being here.
And most importantly, I think this $3 trillion is all data center driven, right?
I thinks so.
And we are at the Edge. So not my place to comment where the $3 trillion are in terms of being a hype or not a hype or circular or not circular and all kinds of discussions. So we'll stay away from that. For us, the opportunities at the Edge. And even if you talk to data center companies or hyperscalers, specifically, the world is going to be needing hybrid compute for AI. And that journey is about to begin basically in terms of deployment. We are seeing the first incarnations of products in the realm of leveraging hybrid compute through some personal solutions like wearables that you've seen from Meta last week from Google and a few others in China. It's coming about.
And I think more and more, as time progresses, what I feel is the world of IoT systems is going to graduate to being agentic AI IoT systems. ultimately, some form of hybrid compute from data center coming in. And there's a good reason for that. The world of -- our personal interface solutions and personal solutions is going to evolve to being agentic AI as well. And so another place for hybrid compute to come in. And this for a few good reasons.
Number one, the latency of the experience of AI. If AI is going to be the key element for the next set of human-aware cognitive of their interface solutions, then AI is the core element in that. And so for that, you have to have that ability at the Edge, number one, you have to have a latency that's tolerable and doing everything in the data center and relying on wireless networks sometimes can be challenging. So putting everything in the data center is prohibitive to the experience.
The third big thing is privacy, privacy of data and how data is managing. So if you look at all these equations, there is going to be a need for moving from data center compute only to data center plus Edge compute. And that is what the opportunity for Synaptics is given where we are in our product cycle, given what we have in our product cycle to offer to our customer base versus our peer set in the marketplace.
And the combination of wireless connectivity with the processing architecture that we have in our Astra line of products and then the ability to provide the physical AI interfaces through our human interface products like touch, voice and vision. I think that's where our opportunity is. just earlier today, I was sharing this example. The Edge AI train has arrived at the station. And momentarily, it's going to make motion in the right direction. And I think we are one of those trains basically.
So when we've seen investment dollars so far, you acutely mentioned that this is in the data center. We've seen hundreds of billions of dollars of CapEx on a yearly basis go towards building out large systems. And you have seen this push towards the Edge. You've seen glasses introduced. You've seen smart watches, in particular, 2 of the verticals that we see most of. But there's been a limiting factor in that you haven't really seen a critical application that's really pushed everyone to move to those devices.
Generally still speaking, it's your smartphone, right? Everyone has a smartphone. And increasingly, you'll see more apps that drive more AI use cases. Now is your play one that can address the smartphone? Or are you more focused on some of these other Edge devices? And does that transition need to move away from the smartphone for you guys to have success?
Well, I think we have all come to live with and love our smartphones or in some situations, not so much love. But long story short, I think the user is going to demand a lot more cognitive deployment of the experiences basically, right? And for that, you need AI.
Today, at every turn, we look at our screen basically on the smartphone. I really think we would benefit if we don't have to do that. If we don't have to open up an app, we don't have to kind of go down a path of punching certain things in the app to get to know what exactly is happening around us. And so that's the cognitive dimension. That is human contextually aware dimension. All of those aspects are going to be addressed in the new generation of devices.
For us, the benefit that we bring in accelerating that dimension is along the lines of the belief that the developer community is key to making that progress in -- at a speed that is needed in the marketplace. We are -- on our processing platforms, I can think of the only company at the Edge that is open source and developer-friendly.
The world of AI models is developing at a rapid pace. And if you can't survive that pace if you have a walled garden approach in your software dimension basically. And I think from that angle, we bring to that marketplace advantage for the developer community to engage very easily, very quickly with our and build out their end product and experience and go to the market at the application level. And so that's where I think we need to go. And I believe we are well equipped to go there.
Along with that, we have the right products. We have a product that we have already sampled to the marketplace, which is our first generation of highly integrated AI-capable, multi-application processor core, monolithic implementation, what we call as Astra family of products, SL2600 series products. It's got a vision processor. It's got an audio processor. It's got GPU. It's got our own NPU. It's got NPU that we have integrated, that is Google's NPU, just to help integrate the transformers that ultimately will facilitate easy integration of various applications and AI algorithms that come from Google's ecosystem. And we've got general purpose CPU.
And so I think it is a platform at the far end of the Edge, which effectively enables exactly what I said. And then we're going to build out a SKU map. We are going to bring out a connected Astra, which is going to be an MCU class product imminently. That's going to have the best-in-class wireless connectivity, Wi-Fi capability, best-in-class bluetooth capability, a small NPU with some GOPS, 50, 70 GOPS and a low-power MCU. I think -- and along the lines, we'll also have a semi-custom MCU for a hyperscaler that comes about in the next few months. And so the software strategy supported by play on the processor side that is exactly what I believe the doctor order for the IoT systems to evolve to agentic AI IoT systems.
So it sounds like if you look at the portfolio, you have an MCU, then you have a processor, then you have this connected processor and then you have a semi-custom chip. Can you talk about where you're seeing the most traction amongst customers? Like are you introducing the low end because you felt like you needed the low end to get to the high end? Or are you maintaining the low end because there's a lot of volume there today?
Yes, I think excellent question. I think -- so the SL2600 family of products is capable of going into broad market basically from consumer to industrial right, because it's a performance-centric product. The MCU class of products are going to go into very battery-sensitive applications, right? It can go in your door lock. It can go into your wearable devices. It can go into your smart appliances, where a lot of processing is not needed, but it's good enough for delivering a voice interface, a human interface that otherwise would be a punch button thing, right? And so I think that is the scale of the products that we are seeing. And so power-centric implementation.
And then there is this MCU class product that goes into wearables basically, where battery life experiences along with AI are very important, right? And so not only that ability to display, ability to capture what you see and post process, all those aspects in a form factor and also a battery life envelope that's tolerable by the human experience is very important. So that's where we're going as well.
Helpful. So let's dig deeper into your relationship with the large hyperscaler. It's known to be Google. How does that originate? What has been to work like with them throughout this process here? You mentioned there's some Google IP that's in your solution as well. How does that help you go to market? Are you able to bring that IP to others? And then as you move to a more semi-custom solution, like how do you see that relationship developing over the longer term?
Yes. I think it's an excellent question. I think there's a long history with Google. our processor team has engaged with Google for a long time. I think it dates back to the days when Google was building the Chromecast stick, right? And so the first set of products that came out were based on the same processor teams product delivery.
And so recently, at the beginning of this year, we announced this deeper relationship with Google, where Google Research and Synaptics R&D partner to build out this whole strategy around the software ecosystem, the compilers, the multilevel interface, representative compilers where you have one interface, but you have multiple compilers underneath it, again, making things very user-friendly, building out the architecture on our products.
Integrating the Google Coral NPU, it's a RISC-V-based NPU into our silicon along with our NPU, putting together the entire fabric of multiprocessor engines, the one that I referred to earlier, in a way that it's less about number of TOPS. It's more about processing multiple things that you would see in the pipeline from voice, vision, GPU in a power envelope that makes sense, in a form factor that makes sense.
And so I think the entire architecture at the silicon level also was contemplated in combination of Google R&D team's interest as well as Synaptics' capabilities on R&D side. So it's a very deep relationship that started off as one from, I would say, the Chromecast days to something recently as building out the right processor software platforms for broader engagement with the marketplace. They believe in open source. We are one of the few or probably, I think, the only company at the processor front or the edge that believe in open source, and it was a perfect marriage for 2 like-minded companies. Obviously, they being the powerhouse, we being the nimble, one very anxious in driving a road map that aligns with their goals.
So you have the relationship with Google, but you also just did an acquisition with Broadcom, and I believe that it gets you kind of industry-leading Wi-Fi technology. Could you talk about how protected you are in that technology for the next couple of years? When can others step in? And why was it critical for you to kind of future-proof yourself 1 in 2 generations?
Yes. I think it's an excellent question. I think so wireless connectivity is very essential, in my opinion, if you want to deliver a processor experience. There is no 2 ways about it. Our world, be it industrial, be it consumer is going to be completely untethered, right? And if you're at the far end of the Edge, without wireless connectivity, you are going to make it very difficult for your customers to deliver a solution in a timely fashion.
You're going to make it very difficult for your customers to build a solution that is going to be not R&D intensive, right? And so as a company, we saw tremendous value in bringing a solution approach to our customers by bringing the best-in-class wireless connectivity along with our processor assets and obviously, the sensing and human interface assets. So those were the drivers for motioning in the direction of licensing the IP capabilities from Broadcom, which you know is one of the leading Wi-Fi, bluetooth, UWB, GPS/GNSS technology providers in the marketplace.
And if you look at our processor peer set in the marketplace, the big ones, right, very formidable. They have been in this business for some time. Big incumbents, not so much leaning forward in the dimension of AI, have very little to no wireless connectivity. And that's a complete differentiation that Synaptics brings to the table.
What helps us feel confident is our agreement takes us all the way to 2030. Not only does it help us on Wi-Fi 7 generation, but it also helps us on the Wi-Fi 8 generation. And many -- and maybe 1 or 2 of our peers that are doing some wireless connectivity are still stuck in Wi-Fi 6 generation. We are already on Wi-Fi 7, right.
So along with that, I think we made a strategic decision because I think licensing IP is one thing, but building derivative products that are targeted for the IoT market is very important because Broadcom, if you look at their assets, they are focused on -- largely on access point and mobile phones. And so for us to get into the realm of building products that are targeted to IoT systems was very important.
And from that point of view, we also struck the agreement to bring in about 130 engineers, wireless engineers from Broadcom into our team basically. And so not only did we get the IP, but we got the capabilities to kind of build out derivative products and products that are very much required for the IoT market right.
And just one clarification. We own that IP for that IoT market. So we can continue to prosecute that well beyond 2030 time frame because we own the design, the design databases and the ability to prosecute it.
And I think not to make some of our peers said nervous, but I come from the world of wireless, right? And so we are thinking about Wi-Fi 9 as well, right? So I think this world on wireless connectivity for the reasons of the bandwidth in congested environment, if you think and believe, and I do that the world is going to be completely untethered from an experience point of view, we are going to be needing the best-in-class wireless connectivity.
And to keep that going in the right direction, along with the need for transacting tremendous amount of AI data across wireless networks, you need not only to be able to operate in congested environments, but also deliver a bandwidth capacity that otherwise would not be easily possible, right? So wire-like wireless performance in congested wireless medium is what I envision we need to kind of continue to strive to deliver. And for that, pushing the R&D going into all the way into Wi-Fi 9 beyond 2030 is very important. And so that's where we are -- that's how important wireless connectivity is for us.
So put that all together, you've got the MCUs stretching all the way to the connected processors, what does that look like from a growth profile for your business? And then who are you increasingly running into from a competitive dynamic? You singled out a couple of things that make you very unique at the Edge. But as you move into the connected IoT realm, there are some larger players there. Who are you running up against? And what do you think kind of the TAM or growth trajectory, however you kind of want to describe it?
Yes. I think, look, if I look at the IoT market today, and I go back to one of the statements I made earlier, the IoT market today from a silicon processor point of view is about $15 billion to $20 billion a year, right? And if nothing new happens other than the fact that, that IoT market graduates itself to becoming agentic AI IoT market. That silicon market, $15 billion to $20 billion remains, right? It's a brand new market, and that's the opportunity for us.
I believe that's not going to be the case. I believe there's more that's going to come into the marketplace. As more and more IoT systems become untethered, you get the wireless TAM coming in, right? And so you add to that. As some of these newer devices, IoT devices and personal solutions, like you referred to the glasses basically. And there are many others, right? There's going to be a pendant. There's going to be another form of wearable. There's going to be another form of earbud. There's going to be another form of human interface assisted solutions like a humanoid or a robot basically.
And all of these are additive and I'm not adding to that is the opportunity for us, right? $15 billion to $20 billion is the baseline, but there's a lot more that we haven't contemplated because the time lines continue to kind of change on when they will show up. Based on our looking glass, there is a tremendous amount of activity in this area, and that's what we are excited about.
And then competition as you move into the high...
Yes. I think if I look at competition today, people mistake us for being competitive or seeing Qualcomm as our competitor because Qualcomm definitely has got really good assets at the Edge. However, they are at the -- at the higher end of the processing dimension. And we are at the furthest end of the edge basically. What Qualcomm would bring in is like multiples of tens of tops. Ours is a lot more lighter architecture, lot more suited for applications that we referred to. That's how we see.
I'm sure some of our peer set in the MCU world and microprocessor world will come in with AI. We haven't seen much from them just yet, and we'll wait. But I personally feel today, we have a minimum of 18 months to 24 months advantage in terms of time, plus this partnership that we have with this hyperscaler excites us, basically, because it continues to kind of propel our road map.
Yes. That's what I was going to ask next is in terms of timing, when do you see the elbow in the curve, you sound like you have a very good technology profile. But as that converts to dollars is when you get more interest from the market in general, is it the idea that you can do a semi-custom chip? Is it the idea that Wi-Fi 7 is more broad-based and in certain consumer applications? Like when do you see the revenue trajectory change more dramatically?
Yes. I think -- so we come from a very small base on R&D. When I say small, it's $400 million on an annual run rate. And in the last 6 quarters plus the one that we are in that we guided, we are we have grown and we are going to grow, including this quarter, on average, 50% year-over-year on a quarterly basis, right? And so -- and we've guided that we are very comfortable with 25% to 30% growth rate in IoT over the next 3 to 4 years basically.
And so our growth currently is propelled by Wi-Fi, our wireless connectivity and our leadership with Wi-Fi 7. And we are in the early phase of our processors with Edge AI seeing traction. Our growth in calendar '27 -- by the way, we are very comfortable with our stated growth projections for '26. The growth in '27 will be supported by growth of our processor business with Edge AI, right? The 3 products that I just talked about, I'm not even talking about other things on the road map, but these 3 will hit prime time or production scale in different part -- times of '27.
The one that we are sampling right now, the one that is going to be a connected Astra with Wi-Fi 7 and BLE and the third one, which is a semi-custom product. So I think that's how I would say. We're not going beyond '27 right now, but comfortable with 25%, 30% of growth rates.
Super helpful. Let's go to the other side of the business in Enterprise & Auto. So enterprise has PC inside of it. You've talked about Windows 10 end of life, PC upgrade cycles. Something that we're hearing more, and we haven't got a good soundbite on it yet in this conference, but it's memory shortages.
So generally, there is a concern that consumer applications will not receive priority in terms of memory, just given that everything is going towards data center, those guys tend to be able to pay a little bit more. Are you concerned around any kind of memory issue into 2026 from a PC perspective? Kind of what's your base case on that market there?
I think -- Ken, you can chime in because I'm hogging the mic one.
No. No. Go ahead. Go ahead.
So I think you -- the word that you use is exactly where I want to go. Everything that is going to come as headwinds because of memory is going to be in the consumer space. Our play in PC is largely on the enterprise. And I think that provides a certain level of insulation, right? At some point, if that market can also experience headwinds. But today, we believe the ability to absorb the pricing [ draws ] are much higher in enterprise than in consumer space.
And so majority of our share, in fact, all of our share rather, is in the enterprise space and the commercial space. And so we are not seeing as much of memory pricing related or supply-related headwind just yet in the enterprise marketplace as others may be seeing in the consumer marketplace. And we can -- the other good thing in that business is recently, we gained market share. So a little bit of the ability to absorb the current pricing dynamic on the memory side, plus the benefit of market share gains, I think, is playing out in our favor.
And then the other side of that business is auto. You guys have already pointed out sluggish auto trends. Any kind of sign of an inflection or an improvement there or still kind of early days?
Well, I think auto has been sluggish for us, and we don't play in China. And so majority of the upbeat commentary is coming out of China. And so I think that's going to remain the way it is right now for us, number one. Number two, I think more importantly, increasingly, auto is getting smaller in terms of our total revenue contributor, right? And so today, it's about 10%. And our IoT business continues to grow, which we -- like I stated earlier, very comfortable. It will continue to grow 25%, 30%.
Auto becomes even a lesser percentage, less than 10% share. And so at this point, I'm really encouraged by the 90% of the revenue that we have and the one that's in the -- headed in the right direction. And so auto is definitely going to be a smaller portion of our business on a going forward basis.
Last one to check the box on the business that's not the 90%, mobile, does foldable change the conversation for you guys in any way? Just to check up on the Android ecosystem. I get that question a lot. Does that change the dynamic looking forward?
Absolutely. That's an excellent question. Again, really proud of what Synaptics is all about. 40-year history, majority of it is on the backs of touch, mobile touch. And the reason why I kind of bring that up is the company -- the reason why I'm a big fan of the capability in the company is it has reinvented itself on multiple turns to take and maintain leadership position in this area, right? And so foldables is another category where Synaptics continues to take leadership position in the marketplace. We will gain market share as a result of foldables gaining market share within the smartphone market basically.
And every foldable that ships effectively has an opportunity for 2 instances of touch and greater than 2x of revenue that you would otherwise have from a phone largely because the larger screen dictates a capability that is premium quality and premium value. And so as the foldable markets increase, which has shown growth in the last year, and we anticipate it continuing to grow, us gaining market share in the foldables in the '26 cycle that kicks off in the fall, not only in Korea, but also in China, in the Android ecosystem is very encouraging for us on that front.
Ken, if you like to add anything?
No, I think that's right. We talked about a win there in our last earnings call with a Korean customer, and we have great traction all on the high-end Android market. And so very excited about that as we head into the second half of calendar year '26.
Let's switch it to capital allocation. So it sounds like over the next couple of years, you've got pretty good line of sight to not only the piece of the business that you're most excited about growing, but also around profitability improving as well. Maybe talk about how the operating model is going to change and potentially where your priorities are in terms of capital return.
Yes. So if you look at the capital allocation, I would say, first and foremost, continue to invest in the business. And even there, one of the things that we've been doing behind the scenes is reallocating capital to these higher growth segments over the last 18 months or so. And so investing in terms of AI at the Edge and Core IoT, we'll continue to do that and make adjustments within the spending envelope that we have today.
Number two is if we look on the M&A side, we've done a few of these tuck-in acquisitions on the Broadcom purchase in terms of the IP and some headcount there as well as a small BLE type of acquisition that we did last year as well. So we'll look at these ways to enhance the existing portfolio, but primarily focused on the smaller tuck-in opportunities that can enhance the scale, and for the most part, focused on that core IoT segment and AI at the Edge.
And then what you've seen over the last really 1.5 years or so is returning capital back to shareholders. So if you look at fiscal 2025, we returned about $128 million vis-a-vis share repurchases. In July, we announced another $150 million authorization. We did some of that in Q1, and we talked about doing more purchases here in Q2. So that's another avenue in terms of returning capital back to our shareholder base.
Well, we're out of time. I very much appreciate you both being here. Things sound very exciting over the next couple of years. So good luck as it goes along. Appreciate it.
Thanks, Tom.
Thank you. Thanks, everybody.
Thank you, everybody.
Synaptics Incorporated — Q1 2026 Earnings Call
1. Management Discussion
Good day, and thank you for standing by. Welcome to the Synaptics First Quarter Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Munjal Shah, Head of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today on Synaptics' first quarter fiscal 2026 conference call. My name is Munjal Shah, and I'm the Head of Investor Relations.
With me on today's call are Rahul Patel, our President and CEO; and Ken Rizvi, our CFO. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at synaptics.com. In addition to a copy of our earnings press release detailing our quarterly results, a supplemental slide presentation and a copy of these prepared remarks have been posted on our Investor Relations website.
Today's discussion of financial results is presented on a GAAP financial basis, along with supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs, and certain other noncash or recurring or nonrecurring items. All non-GAAP financial metrics discussed are reconciled to the most directly comparable GAAP financial measures in our press release and supplemental materials available on our Investor Relations website.
As a reminder, the matters we are discussing today in our prepared remarks, in our supplemental materials, and in response to your questions may contain forward-looking statements. These forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. Although Synaptics believes that estimates and assumptions underlying these forward-looking statements to be reasonable, they are subject to a number of risks and uncertainties beyond our control.
Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward-looking statements. Therefore, we refer you to the company's earnings release issued today and our current periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements speak only as of the date hereof. Except as required by law, Synaptics expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Rahul.
Thank you, Munjal. Good afternoon, everyone, and thank you for joining our fiscal Q1 2026 earnings call.
We had an outstanding start to our fiscal year, delivering strong results that reflect the continued momentum in our business. Revenue in our Core IoT portfolio grew by 74% year-over-year, driving 14% revenue growth for the company. Our strength was broad-based across both processors and wireless connectivity. We delivered strong earnings growth, with non-GAAP earnings per share up 35% year-over-year to $1.09.
As a company, we are sharpening our focus and aligning our resources to capture the growing opportunity in Edge AI. In the last quarter, we met with customers across the globe and at our Tech Day here in San Jose. Those discussions have affirmed my confidence in our ability to strengthen our leadership in this market. By bringing together our unique capabilities in analog mixed-signal, multi-core processing, and advanced wireless connectivity, we are enabling customers to bring intelligence to the Edge.
This quarter, we reached a major milestone in our Edge AI roadmap with the successful launch of our next-generation Synaptics Astra Edge AI processors. Astra introduces a new class of AI-native silicon, built from the ground up to power the next wave of intelligent devices at the Edge. These products represent a decisive leap forward in our Edge AI strategy and reflect our strong execution and firm commitment to leadership in this market. Importantly, Astra is not just a standalone product, it brings together Synaptics' integrated approach to high-performance solutions by incorporating our processing, wireless connectivity, and mixed-signal capabilities.
The response from customers, ecosystem partners, and the media has been very positive for the following reasons:
First, we developed the new generation of Astra SL2600 series to enable billions of AI devices at the Edge, from battery-powered devices to high-performance industrial systems. It delivers industry-leading price performance to enable intelligence at the far Edge. Its scalable architecture allows our customers to address a wide range of applications, including those that require multimodal human-machine interface, vision, and voice capabilities across consumer, enterprise and industrial end markets. Customers can future-proof their designs as requirements for multimodal compute, power efficiency, application features, and AI models continue to evolve.
Second, we introduced Synaptics Torq AI in the new generation of Astra processors. Torq combines a future ready neural processor architecture with open-source compilers, setting a new standard for IoT AI application development. Further, as part of our close collaboration with Google Research, we have integrated their open-source Coral NPU, a machine learning accelerator optimized for energy-efficient AI at the Edge. This silicon-level collaboration enables customers to develop innovative Edge products with AI inference across a broad range of applications.
Third, the Synaptics and Google partnership is fundamentally about creating a robust and open software development environment that elevates AI-native Edge IoT product development from a highly fragmented, proprietary ecosystem into a unified, open-source approach. Developers now have access to multiple flexible and scalable programming frameworks, comprehensive software development kits and tools, and a rich repository of resources that include pre-optimized models, multimodal AI applications, and a curated developer experience supporting a wide range of use cases.
Our lead customers have begun sampling the new Astra SL2600 devices, and we are already securing design wins. We expect initial revenue contributions to start in the second half of the calendar year 2026. This marks a significant execution milestone for our engineering and product teams, reflecting their outstanding commitment to innovation.
Looking ahead, the AI inference compute opportunity is significant as hybrid compute across the data center and the Edge is taking shape. We are already seeing strong early traction and a healthy pipeline of customer engagements. We had hundreds of customers and partners join us at our Tech Day, where we showcased Edge AI use cases such as industrial vision, fleet management, home automation, smart appliances, IoT hubs, and robotics.
Moving to our wireless connectivity portfolio, we had a solid quarter with strong execution across our strategic priorities. Our Wi-Fi 7 and broad-market solutions are starting to gain traction, and our roadmap remains firmly on schedule. Development of our wirelessly connected microcontroller with AI, all in a monolithic silicon, is advancing as planned, and we look forward to sharing more in the quarters ahead.
Across our Core IoT portfolio, we achieved multiple wireless connectivity and processor design wins spanning a diverse range of end markets, including action and sports cameras, educational and commercial tablets, point-of-sale systems, unified communication platforms, operator solutions, and wearables. We're also seeing increasing customer commitments in home security systems, Matter-enabled IoT hubs, trackers, AI-enabled wearables, and body cameras.
As we continue to invest in our roadmap, execute on our engineering goals, and deepen partnerships with our leading customers, we feel confident in our ability to deliver long-term growth across our processor and wireless connectivity portfolio centered on enabling AI at the Edge.
Let me now turn to our mixed-signal technology products. In Enterprise & Automotive, our PC products continue to show steady improvement, and our broader enterprise portfolio continues to recover. We have gained market share over the last year, and we expect the momentum to continue into the current quarter. While we continue to see softness in automotive due to subdued market demand, we are benefiting from the continuation of our existing designs and are actively investing in new innovative automotive solutions that will help increase our silicon content.
In Mobile Touch, we are seeing strong customer traction with our next-generation touch controller, which features a differentiated multi-frequency architecture designed for foldable OLED phones and other large-screen applications. This new design enables thinner and larger panels and integrates advanced sensing and filtering capabilities to effectively manage display noise. It also supports continuous time sensing, offering customers greater design flexibility and more cost-effective integration.
We have secured marquee design wins with a top Android phone OEM and we are also seeing strong interest from OEMs in China for smartphones and tablets. We expect these wins to start contributing to revenue in the next fiscal year. Notably, our content in foldable phones will be more than twice that of our current smartphone designs. As the adoption of foldable phones increases, we are optimistic about the opportunity it creates for Synaptics.
Overall, we are seeing steady improvement in our financial performance, with both revenue and EPS increasing sequentially and year-over-year. This progress reflects the strong execution across our organization, particularly from our engineering teams, who continue to deliver on our product roadmap. Our pipeline of opportunities is expanding, and we believe we are well-positioned to build on this momentum. I am confident that our focus, innovation, and disciplined execution can drive long-term growth for Synaptics.
I will now turn the call over to Ken to review our first quarter financial results and outlook for our fiscal 2026 second quarter.
Thank you, Rahul, and good afternoon, everyone. I will focus my remarks on our non-GAAP results which are reconciled to GAAP financial measures in the earnings release tables found in the investor relations section of our website.
Now let me turn to our financial results for the first quarter of fiscal 2026. Revenue for fiscal Q1 was $292.5 million, above the midpoint of our guidance and up 14% on a year-over-year basis driven by strength from our Core IoT products.
The revenue mix in the first quarter was as follows: 35% Core IoT, 51% Enterprise and Automotive, and 14% Mobile Touch products.
Core IoT product revenues increased 74% year-over-year, driven primarily by increased demand for our processor and wireless connectivity products.
Enterprise & Automotive product revenues were flat year-over-year with strength in our enterprise portfolio offset by softness in Automotive.
Mobile Touch product revenues were lower than expected, in part, due to supply chain constraints during the quarter.
First quarter non-GAAP gross margin was 53.2%, in line with our guidance range. And first quarter non-GAAP operating expense was $104 million, slightly better than the midpoint of our guidance range. Our non-GAAP operating margin was 17.6%, up approximately 110 basis points sequentially and 90 basis points year-over-year.
Non-GAAP net income in Q1 was $43.3 million. And non-GAAP EPS per diluted share came in above the midpoint of our guidance at $1.09 per share, an increase of 35% on a year-over-year basis.
Now, let me turn to the balance sheet. We ended the fiscal first quarter with approximately $459.9 million in cash, cash equivalents, and short-term investments, up approximately $7.4 million from the prior quarter. Cash flow from operations was $30.2 million in the first fiscal quarter. We repurchased $7.2 million of our shares during Q1 and a total of $15 million of our shares through today.
Capital expenditures for the first quarter were $12.2 million, in part driven by lab build-outs to support our R&D efforts. Depreciation for the quarter was $7.5 million.
Receivables at the end of September were $119.5 million and the days of sales outstanding were 37 days, down from 41 days last quarter. Our ending inventory balance was $143.1 million, which increased by $3.6 million from the previous quarter. The calculated days of inventory on our balance sheet were 94 days, essentially flat with the last quarter.
Now, turning to our second quarter of 2026 guidance. Our guidance is subject to the fluid macroeconomic global trade and tariff environment which continues to remain uncertain at this time. Please refer to our Safe Harbor Statement in the earnings release and in our supplemental materials.
For Q2, we expect revenues to be approximately $300 million at the mid-point, plus or minus $10 million. And our guidance for the second quarter reflects an expected mix from Core IoT, Enterprise & Automotive, and Mobile Touch products of approximately 31%, 53%, and 16%, respectively.
We expect non-GAAP gross margin to be 53.5% at the mid-point, plus or minus 1%. And non-GAAP operating expenses in the December quarter are expected to be $106 million at the midpoint of our guidance, plus or minus $2 million.
We expect non-GAAP net interest and other expenses to be approximately $1 million and our non-GAAP tax rate to be in the range of 13-15% for the second quarter. Non-GAAP net income per diluted share is anticipated to be $1.15 per share at the mid-point plus or minus $0.15, on an estimated 40.4 million fully diluted shares.
This wraps up our prepared remarks. I would like to turn the call over to the operator to start the Q&A session.
[Operator Instructions] Our first question comes from the line of Ross Seymore of Deutsche Bank.
2. Question Answer
I guess my first one for Rahul is a little bit of a longer-term one. Congrats on launching the Astra platform. I know you talked about significant interest and that the revenue contribution would start kind of in the second half of next year. Could you give us any idea on the metrics that we could maybe track externally as to the success of that product, whether it be the TAM opportunity down the road or the number of design wins? Any sort of color that we could monitor as to the slope of the growth that you see coming forward with that product?
Thank you, Ross, for the question. I think we are really excited about the 2600 series that we launched. As you can tell, from the opening remarks, we have now secured design wins way ahead of when we thought we would be getting award letters, right?
Clearly, there's a very wide range of designs coming into the pipeline as a result of what we are bringing in 2600 series products. And at this point, I'll share with you that the product is designed in such a way, it future-proofs IoT systems for multiple years, not only from having the ability to run a lot more capability because of the CPU complex as well as the multi-core processing capability, but also from an AI point of view.
And we have a SKU map of pin compatible devices that on the same PCB can be swapped for newer capable devices. And so that scale of technology that's been deployed here in this family of products is very compelling to a wide range of applications. We are seeing from home applications to industrial applications, from things like fleet management applications to robotics, lots of interest. And we have secured designs. And so when I say secured design, we've got a board letters already as we sample the part. I would not be surprised if we go to production sooner than what we had planned for, given the success that we are experiencing in the bring up with the product.
And given that, I would anticipate our pipeline would develop very nicely over time over the next few months. Having said that, specifically to respond to your question, at some point, we will give you an update on the pipeline in the form of the size of the funnel.
And when I say size of the funnel, I would be specifically talking about design that have been awarded to Synaptics and not the broader marketplace where people talk about the opportunity. We'll be very specific about the designs that have been awarded to Synaptics and the designs that are going into production with Synaptics through that award process.
And so that is where we are going to go in terms of giving the ability to track our success with our processor line of products. I believe we are maybe a couple of quarters away from where we can start opening up and giving you that update. The intent also is to give you this update periodically, right?
And so I'll keep you apprised of our progress on a going-forward basis. And so give us a couple of quarters or maybe a little bit less than that, and we'll get back to you with how we're going to track the method and the periodicity with which we'll be providing an update.
And I guess as my follow-up, a little bit of a nearer-term question, perhaps for Ken or Rahul for you, if you wanted to answer. But lots of intersegment volatility versus your original expectations. The Core IoT up-sided significantly, the Mobile Touch down-sided a bit. Can you just talk about what drove those and perhaps how that applies to the guidance that you're implying for the fiscal second quarter as well?
Sure, Ross. I mean it's a good question. So in the prepared remarks, we did see -- I'll touch base on the Mobile Touch products. There were some supply constraints there. So that's why you're seeing some increase here as we move from the September quarter actuals to the December quarter guide.
And then when we look at the Core IoT business, if we just step back and look over the last 7 quarters or so, I think we've been averaging something like 50% plus year-over-year growth on a quarterly basis. So we've seen very strong growth in that Core IoT segment, driven by what Rahul commented earlier, both processors and the connectivity business. And so there's always some movement from a customer dynamic standpoint that can move quarter-to-quarter.
But if you look holistically, we've done very well in terms of the growth rates on a year-over-year basis and very happy not only with the September results overall, but how we've guided in December.
Yes. Just to add to what I think, Ross, I think even in the near term, if you look at the September quarter and you extrapolate from the guide, you combine the 2 quarters and you look at the half, first half of the year versus the first half of the year -- fiscal year '25. We are north of 60% growth year-over-year.
And so a little variation here or there, but the growth remains consistent. And I would add that we feel very comfortable with our guide of 25% to 30% growth for the fiscal year '26. And so looking at all parameters and the fact that if you look at the actual dollars, we are now at a run rate of $400 million in IoT revenues on an annual basis.
It's a substantial amount of business. It is growing at a very good clip rate, and we are further excited about the opportunity that our newer products are going to bring to the table. I would also add that the road map is very solidly building out. I did talk in my prepared remarks that we are building a product that is going to be wireless connectivity processor and AI integrated in a single die.
And so this thing is going to go into multiple applications. It's going to broaden the coverage of end markets for us as a result between what we have launched in silicon as of now and what is coming in our pipeline in the next couple of quarters.
Our next question comes from the line of Neil Young of Needham & Company.
So I just wanted to follow-up. You talked about some of those end markets that you're achieving design wins in. Specifically, are you seeing any outsized strength in any of those markets that you listed? If so, what do you think is driving that? And then on the longer term, which end markets do you see becoming the largest? And then I have a follow-up.
Yes. I think our big area of focus right now is to tap into the existing markets. However, on a going-forward basis, as AI and the need for AI comes to the far end of the Edge, which we believe is "in design phases in many places," as you can tell from the AR glasses to many wearable devices to many things that you would have from home automation point of view, we see our marketplace expanding dramatically and in a place where we'll be highly differentiated.
And so I'm very excited about markets where at the far end of the Edge, where AI plays a huge role for human machine interface and multimodal processing with voice, vision, and other computes for AI inference, along with industrial applications, such as robotics, humanoids. So the gamut is fairly wide open in terms of applications as we have designed our product and software platform.
And then looking into the second quarter, if you were to force rank the sequential growth across the enterprise, PC and Auto, how do you see each of those markets shaking out? And then if you could maybe talk about what's driving the strength or weakness in each of those markets.
Yes. So I would say, as we look at -- you mentioned Enterprise, PC, Auto. So we don't break out the details in those categories. But if you look at the Enterprise and Auto market, as we highlighted on the prepared remarks, we're seeing strength in the enterprise space overall. There's been a nice recovery as we think about on a year-over-year basis, how that's trended. And as we head into the December quarter, you can look at our guide that we're expecting that enterprise and auto space to be up sequentially September through December, which shows some nice sequential growth and growth overall. So that specific area, I would say, as we look into September, more driven by the Enterprise segment, and we would expect some continued strength as we move into December.
And our next question comes from the line of Christopher Rolland of Susquehanna.
Congrats on the results. I guess probably, Rahul, for you, as it comes to mobile, you guys have, I think, one major mobile player using your combo chips. But can you talk about possibilities for more, particularly handset OEMs potentially doing their own APs or elsewhere? And how possible are these opportunities for you guys?
Yes, Chris, excellent question. And you're absolutely right on the money in terms of the opportunity ahead for us in mobile. Clearly, there are many mobile phone OEMs that are going down the path of building their own apps processor, and that effectively presents an opportunity for players like ourselves who have clearly very solid wireless connectivity product to offer; however, don't have the ability to play in a "bundle" with apps processor offering, becomes an opportunity for us with a provisioning of very differentiated market-leading wireless connectivity for phone OEMs who want to build phones and tablets and use wireless connectivity from Synaptics basically. And so we are very excited about that opportunity. We are also engaging with many OEMs in this area.
I would also add, you did not ask, but very similar connectivity product can be extended to multiple other marketplaces because of the high-performance connectivity capability it brings to the table. And so there is also leverage going into high-performance set-top boxes, automotive, and other marketplaces with that level of wireless connectivity. And so there's clearly opportunity for us to leverage our strength in wireless connectivity beyond IoT marketplace with mobile and other places basically for wireless connectivity that's going to be high performance.
And you were speaking about your road map for new products in the prior question. You also mentioned Astra that you could potentially pull that in. I think it was a 2027 high-volume timetable for shipments. But I was wondering if you could update us in terms of the status on high-volume shipments for the MCU plus combo chip product you are talking about. And perhaps I think you have a broad markets MCU on your road map as well.
Yes. I think, Chris, again, an excellent question, and thanks for asking this. The product that -- first and foremost, let me -- I think you asked about 2 products. We have what I call is a microprocessor class product, which is the product that we just launched, and it's in the hands of multiple customers in sample stages, and we are getting design awards for. That is the SL2600 series of products or family of products.
Those go into production in second half calendar 2026. That's when we start seeing the first revenue realization basically from those products. We would be seeing clearly a lot more momentum and revenue growth as we go from end of '26 -- calendar '26 into '27 and beyond. The highly integrated MCU class processor plus Wi-Fi 7 and Bluetooth integrated monolithic die implementation will sample in the second half of '26.
And more likely, you will see at the earliest revenues in the second half of calendar '27 and, obviously, it will ramp from there. And that's what I had discussed in my prepared remarks.
Having said that, the teams are building the next generation of products. We also have a semi-custom solution that is targeted for a major customer in the works, and it is expected to sample in the fall time period to that major customer. And so those are the big products that are in flight, and there are a couple of others that are in early stages of design. So the road map is building out very nicely from where we are with Astra line of products and the MCU class of products.
That semi-custom sounds interesting. You're going to have to tell us more next time.
Our next question comes from the line of Kevin Cassidy of Rosenblatt Securities.
Congratulations on the great results. Just to dig in a little more on the Core IoT and that strong growth you're seeing. On the wireless side, are you seeing -- is the growth being driven by more units? Or is it -- is there a strong upgrade cycle giving you a higher ASP?
So Kevin, excellent question. On the wireless side, we are in a ramp-up phase basically. And so the contribution to the revenue is broad-based. And so it's a lot of new designs that are going into production that are contributing. So I can't tell you exactly today there is one particular market segment that's pushing the envelope more than the other.
However, I do believe in 2 or 3 quarters from now, things would get to a steady place in terms of one marketplace emerging as a faster-growing segment than the other. And at that point, we'll be able to highlight where the growth is primarily coming from. But at this point, broad-based ramp-up stage, both in wireless as well as connectivity.
Yes, on the enterprise side, are you seeing any potential for a refresh cycle in docking stations? Or is the growth going to come just from PC components?
I think, Kevin, as we look at that overall enterprise space, I would expect actually both areas as we think about calendar year 2026. I think what we've talked about on previous calls, we haven't seen this year any step function in terms of PC and enterprise upgrades. It's been more steady in terms of the growth. It's been positive, but more steady. And I think that's the opportunity as we look into calendar year '26 if we see a significant upgrade cycle as a result of either Windows 10 or just the longevity of the PCs, which the last time we've had a significant upgrade was back in that '21, '22 period. So that's an opportunity for us as we think about calendar year '26.
Our next question comes from the line of Peter Peng of JPMorgan.
Congratulations on the results. The first question I have is just on expanding into outside your core consumer markets now into industrials, especially with the SL2600 launch and then also the broad markets. Maybe if you can just an update on the initiative there as you kind of build out that channel on that long tail of customers.
Yes. I think, Peter, first of all, thank you. And then a great question. And so one thing I would share with you is we just put up some of the demonstrations that we had on our Tech Day on our YouTube channel. And so it just probably went live yesterday. It will be great if you guys can check it out. I think you will see some of the industrial applications with our processors being demoed over there from a robotic arm that effectively is developed by a partner that has our touch controller in the palm and multiple instances of touch co1ntroller. It's got our processor, Astra processor in there and it's got our wireless connectivity as well.
And so you can see, as a result, the potential of our products. I have said this in my last quarterly call that the combination of our analog mixed signal capabilities in the company and our connectivity along with the processor presents a total solution capability that goes from human machine interface to processing with AI inference capability, and it was -- it is on display in that demo that we have at our Tech Day.
And it's a video of that demo as well on YouTube channel, along with multiple demos. We also have a demo of fleet management with our Astra processors on our YouTube channel. And so the other nature of these markets is such that consumer ramps much faster than industrial. And so we expect industrial to be lagging consumer in our ramp in the IoT business versus consumer ramps up faster and refresh cycles, refresh cycles happen much faster as well versus industrial.
And so the capability in our product line, the engagement in building out solutions to support industrial applications is absolutely underway. And engagement with our customers is also underway. It's just that the designs for industrials will come a little later in a sizable manner versus consumer.
And then maybe if you can -- I think there's a lot of optimism about smart glasses and so forth. Maybe you can just talk about your engagement and what kind of content opportunities do you think you can have in this opportunity?
Yes. I think I really don't want to kind of tip a whole lot on this topic, but you are touching a sweet spot for Synaptics' Astra line of products on a going-forward basis. With the product capabilities that I described earlier in the earlier question, clearly, the scale at which the volume needs to experience economic value is out there to be delivered by a solution supplier like Synaptics.
And that in itself is a huge opportunity for us that we have our eyes set on in not just AR glasses, but also many variable opportunities on a going-forward basis. The combination of general purpose CPU with the optimal GPU, with the optimal audio processor, with the optimal vision processor and all working with a newer processor embedded.
And also, like I said in my prepared remarks, taking the Coral NPU, open-source Coral NPU made available by Google, collaborating with Google to build out that system in the Astra 2600 series is an indication of exactly where we could be going for the variable sets of applications, AR glasses being one of them.
And we are really excited about that opportunity, largely because the economic value equations that get addressed through Astra line of products is today up for grabs basically in the marketplace.
Our next question comes from the line of Robert Mertens of TD Cowen.
This is Robert Mertens on the line for Krish Sankar. I guess, just the first one, I know we talked a lot about your strategy going into Edge AI applications. But are there any core technologies that you think you need to develop either in-house or small tuck-in acquisitions or working with partners to bring into your Edge AI portfolio to be more attractive to the broader customer base, whether it's ultra-low power processing side or integration of your connectivity suite. Just anything there would be really helpful.
Yes, Robert, excellent question. I think our strategy has been largely to enable best-in-class solution for our customers. And in many situations, it would mean that we would provide a total solution. In some situations, it would mean that we may provide a processor, and the customer may choose some other components to build out the solution. And so we are fairly open in our engagement with our customers.
Having said that, the biggest differentiation in our processor strategy is to not go down this path of building out walled gardens. We are a firm believer in open-source. Our software development platforms support multiple open-source communities.
Our ability to enable our customers to work with the vast ecosystem of models that are being developed for various applications in form of AI inference capabilities is to enable them to bring those to our platforms much more easily and with very little effort from Synaptics' team. And so, this is our strategy to operate at scale. And this strategy is developed in combination with Google Research.
And so here, you have a company that also believes in open-source and enabling the software ecosystem, supporting the Synaptics approach in the bigger picture. And so that is how we are differentiating ourselves versus some of the peer set in the marketplace that have gone down this path of owning software development platforms.
And effectively, in our opinion, it holds us back from scaling faster and enabling our customer base and the developer community as a result. And so that is our largest strategy. Having said that, we are always going to be on the lookout for opportunities to inorganically fuel our growth in IoT. And that option is definitely on the table.
If I could just have one final question. Sorry about that. Just real quick, looking into your Enterprise and Automotive business, I know you've mentioned that the channel inventories have been improving over the last couple of quarters. Backlog levels seem to be normalizing.
So just in that framework, what sort of other signs of improvement on a quarterly basis do you see there? I know you expected to rebound a bit into the December quarter. Is that something you expect to continue through the beginning of next year? Or is that more just pull-ins from various projects?
So I would say, overall, if you looked at the Enterprise and Automotive segment, within that, the Enterprise segment has done better over the last years, it has continued to improve. I think automotive has been more sluggish, but the enterprise piece has really performed nicely over the last 12 months or so. And I think as we think about and look forward into calendar year '26, which is not too far away, the one other opportunity that's out there is around some of the upgrade cycles and not only for the PCs, but as you think about RTO activities and the like and as people refresh the workstations, those are great opportunities for Synaptics as well.
So we're excited about that business in terms of the share that we have and the franchise positions we have, and there's some great opportunities ahead of us as we think about 2026.
Just to add to what Ken indicated, I think a couple of other things. In the Enterprise segment, we are gaining market share in the PC business, right? And that, despite the market being largely flat to GDP-like growth, we are seeing strength in our business and largely driven by the share gains. And it is something that goes back to our analog mixed signal capabilities in the company.
And we continue to do well in that regard versus our peer set in the marketplace. And it's also showcased extremely well in Mobile Touch as well. As in my prepared remarks, I indicated, right, clearly, our product -- our newer generation product that is targeted for the next generation of phones that would launch in the second half calendar 2026 time period showcases how different and differentiating is our analog mixed signal capability in our products and especially in touch area. And I think we continue to do well.
We continue to invest very judiciously and bring out really good products that are effectively helping us increase total silicon content in the phone as well. And so really excited about what that business is capable of bringing to the table in the second half of calendar 2026 and beyond.
I'm showing no further questions at this time. I'll now turn it back to President and CEO, Rahul Patel, for closing remarks.
Before we conclude, I would like to reiterate that the Synaptics team executed very well this quarter. We strengthened our leadership position in Edge AI with the launch of our new generation of AI-native Astra processors, and we continue to innovate on the next-generation of processors, wireless connectivity and mixed-signal products and solutions planned for delivery in calendar 2026 and beyond. Our financial results reflect our ongoing commitment to disciplined execution. I want to thank all my teammates in engineering and across Synaptics for their dedication and hard work in delivering on our commitments.
Equally importantly, I would like to thank all our shareholders for their continued support of Synaptics. I look forward to connecting with many of you at upcoming industry events and conferences. Have a great rest of the day.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Synaptics Incorporated — Q1 2026 Earnings Call
Financial data from Synaptics Incorporated
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Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 1,197 1,197 |
11%
11%
100%
|
|
| - Direct Costs | 640 640 |
13%
13%
53%
|
|
| Gross Profit | 557 557 |
9%
9%
47%
|
|
| - Selling and Administrative Expenses | 198 198 |
10%
10%
17%
|
|
| - Research and Development Expense | 382 382 |
10%
10%
32%
|
|
| EBITDA | -23 -23 |
32%
32%
-2%
|
|
| - Depreciation and Amortization | 12 12 |
26%
26%
1%
|
|
| EBIT (Operating Income) EBIT | -35 -35 |
3%
3%
-3%
|
|
| Net Profit | -491 -491 |
927%
927%
-41%
|
|
In millions USD.
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Synaptics Incorporated Stock News
Company Profile
Synaptics, Inc. engages in the development, marketing, and sale of human interface semiconductor solutions for electronic devices and products. It specializes in custom-designed human interface that enable people to interact with mobile computing, communications, entertainment, and other electronic devices. It operates through the following geographical segments: China, Japan, United States, South Korea, Taiwan, and Other. The company was founded by Federico Faggin and Carver A. Mead in March 1986 and is headquartered in San Jose, CA.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Patel |
| Employees | 1,700 |
| Founded | 1986 |
| Website | www.synaptics.com |


