Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Synaptics Inc (SYNA, Financial) achieved a 63% year-over-year growth in core IoT products, primarily driven by wireless advancements.
- The company successfully cleared most of its inventory issues, positioning itself for steadier growth in revenue and earnings.
- Synaptics Inc (SYNA) is ahead of schedule with its first Wi-Fi 7 device, expecting to sample customers soon.
- The company has made significant progress with its smart embedded processors, generating interest from a broad set of customers.
- Synaptics Inc (SYNA) reported a non-GAAP EPS above the forecast, aided by lower-than-anticipated operating expenses.
Negative Points
- Revenue for fiscal 2024 was down 29% compared to the prior year, largely due to declines in core IoT and enterprise and automotive products.
- The recovery in enterprise product sales has been slower than expected, with IT spending on personal hardware remaining below historic norms.
- The overall market softness in automotive is slowing the adoption of new technology, affecting the uptake of new products.
- Mobile product revenue was down 6% year over year and 11% sequentially, primarily due to seasonal trends.
- Despite clearing inventory issues, the demand environment remains muted, impacting the expected level of shipments.
Q & A Highlights
Q: With enterprise spending down but inventory cleared, are there any signs of upcoming spending, particularly related to video interface revenue?
A: Michael Hurlston, CEO: We saw some improvement in the video interface business this quarter, which is encouraging. We expect to see buying patterns as IT budgets reset in late November or early December, which will give us a better handle on future growth. We believe our video interface business has bottomed and anticipate decent year-over-year growth.
Q: Regarding AI PCs, do you have more exposure to ARM-based or x86 platforms?
A: Michael Hurlston, CEO: We are generally neutral between ARM-based and x86 platforms. However, we see an opportunity to add connectivity content, particularly on non-Qualcomm ARM-based PCs, which could include our own Wi-Fi solutions.
Q: Can you provide insights on the sequential growth rates for the core IoT business, especially given its recent momentum?
A: Michael Hurlston, CEO: We expect strong sequential growth in the core IoT business. Although recent growth was off a low base, we anticipate continued growth both annually and sequentially.
Q: How significant could an AI PC upgrade cycle be for Synaptics, particularly in terms of video interface and PC products?
A: Michael Hurlston, CEO: We haven't yet seen ordering patterns consistent with a big refresh cycle. However, PC buying typically pulls through other products like docking stations and monitors, which could benefit us if a refresh cycle occurs.
Q: With inventory digestion largely complete, are you now shipping at end demand levels, or is there still a gap?
A: Michael Hurlston, CEO: We are currently shipping below end demand, as inventory in the channel has been worked down. While demand remains muted, we expect a second uptick as the demand environment recovers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
