Q2 2024 Synaptics Inc Earnings Call

Operator: All right. Thank you. Thank you. Good day, and thank you for standing by. Welcome to the Synaptics Inc. Second Quarter Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode.

Okay.

Speaker Change: Good day and thank you for standing by welcome to the Synaptics, Inc. Second quarter fiscal year 2024 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during this session.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star-one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star-one-one again. Please advise that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Moon Ja Sha, Vice President of Investor Relations. Thank you, Josh.

Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, when John Shaw, Vice President Investor Relations.

John Shaw: Thank you Josh and good afternoon, and thank you for joining us today on Synaptics second quarter fiscal 2024 conference call. My name is Lynn Jolliffe shop, and I'm head of Investor Relations.

Munjab Shah: Good afternoon, and thank you for joining us today on Synaptics' second quarter of fiscal 2024 conference call. My name is Munjab Shah, and I'm head of invest... With me on today's call are Michael Hurlston, President and CEO, and Dean Butler, our Chairman. This call is being broadcast live over the web and can be accessed from the Investor Relations section of the website. Synaptics, In addition to a supplemental slide presentation... We have posted a copy of these prepared remarks on our university website.

On today's call are Michael Holston, our president and CEO and Dean Butler our CFO.

Call is being broadcast live over the web and can be accessed from the Investor Relations section of the company's website.

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John Shaw: In addition to a supplemental slide presentation, we have posted a copy of these prepared remarks.

Relations website.

Munjab Shah: In addition to the company's GAAP results, management will provide supplementary results on a non-GAAP basis. Share-Based Compensation, Acquisition-Related Costs, and certain other non-cash or non-recurring expenses Please refer to the press release issued after the market close today for a detailed reconciliation of GAAP and non-GAAP financial measures, which can be accessed from the investor's website. Additionally, we would like to remind you that during the course of this conference call, Synaptics will make forward-looking, forward-looking statements about your current expectations and projections relating to financial conditions. Plan Objective Feature Performance, Although Synaptics believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond its control, and may prove to be inactive. Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward. Thank you for the company's current and periodic reports filed with the FDA, www.synapticsinc.com. Synap Now, turn the car over.

In addition to the company's GAAP results management will provide supplementary results on a non-GAAP basis, which excludes share based compensation acquisition related costs and certain other noncash or recurring or nonrecurring items.

John Shaw: Please refer to the press release issued after the market close today for a detailed reconciliation of GAAP and non-GAAP results, which can be accessed from the Investor Relations section of the company's website at Synaptics dotcom.

Additionally, we would like to remind you that during the course of this conference call Synaptics will make forward looking statements.

Forward looking statements current expectations and projections relating to our financial condition results of operation.

Plans objectives future performance and business.

John Shaw: Synaptics believes our estimates and assumptions to be reasonable they are subject to a number of risks and uncertainties beyond our control and may prove.

Prove to be inaccurate.

Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward looking statements.

We refer you to the company's current and periodic reports filed with the SEC, including our most recent annual report on Form 10-K.

Quarterly report on Form 10-Q for important risk factors that could cause actual results to differ materially from those contingent any forward looking statement.

John Shaw: <unk> expressly disclaims any obligation to update this forward looking information.

Michael E. Hurlston: Thanks, y'all. I'd like to welcome everybody to today's earnings call. Synaptics delivered earnings that were largely in line with... March. This is a period marked by industry widening. The Bulletproof Executive 2013, We recognized these issues about a year ago and took actions to align ourselves with the market environment. Well, that resulted in significantly lower top line revenue. By investing in our core IoT, in fact, we can now see a path to sustained growth in Coriolis. We continue to believe we are at the bottom of our cycle and should not proceed further. However, the shape and timing of the recovery...

Now turning to cause them to Michael.

Michael: Thank you Vishal I'd like to welcome everybody to today's call.

Optics delivered earnings that were largely in line with expectations, a small achievement in a period marked by industry wide uncertainty reduced overall demand and accumulation of inventory.

We recognize these issues about a year ago and took actions to align ourselves to the market environment.

Michael: All that resulted in significantly lower topline revenue.

Intend to use the downturn to position ourselves for the future by investing in our core Iot products.

In fact, we can now see a path to sustained growth in core Iot, particularly in wireless.

We continue to believe we're at the bottom of our cycle and do not foresee further decreases from this point forward.

However, the shape and timing of the recovery remains uncertain.

Michael E. Hurlston: Turning to the December quarter, revenue was slightly above the midpoint of our guidance. Class, compared to the prior. Our gross margin. Our guidance, despite an unfavorable product, Headlined by Mobile Performing Better, spending was lower than, resulting in non-gap EPS towards the high end. All right.

Turning to the December quarter revenue was slightly above the midpoint of our guidance range and flat compared to the prior three months.

Our gross margins were at the midpoint of our guidance, despite an unfavorable product mix.

<unk> by mobile performing better than initially forecast.

Our spending was lower than we originally expected, resulting in non-GAAP EPS toward the high end of the guidance range.

For the past few quarters, we've been consciously working down inventory throughout our supply chain.

Michael E. Hurlston: Thank you. Thank you, www.larryweaver.com. All right, wireless and mobile products, stocking levels are at or very high. On the other hand, we still have some work to do in enterprise, where inventories are moving slower. I'd like to attribute this to a slowdown in enterprise IT spending, which has affected higher margin areas. Enterprise, The Ultimate Parody Site!

As a result.

Our PC wireless and mobile product areas stocking levels are at or very near historic norms on.

Michael: On the other hand, we still have some work to do in enterprise, where inventories are moving slower than expected.

We continue to attribute this to a slowdown in enterprise it spending which has impacted higher margin areas of our business such as docking stations enterprise telephony and high end headsets.

Michael E. Hurlston: As we outlined last fall, we are focusing our investments in CORE IOT. Thank you. Thank you. Thank you.

As we outlined last fall, we are focusing our investments in core Iot, which contains our wireless and processor products.

Michael E. Hurlston: The Bulletproof Executive 2013, Seeing the first signs of success in our wireless area with the normalization of channel now, sequential revenue growth starting with 80% growth reflected in our March, While processors will be a longer... We're coming off a C.E.A. We have increased customer engagement around both our general purpose low-end and the high-end, both of which feature AI. Customers to deploy their, Our wireless success is driven first by a return to normal, and it should be further bolstered by new design. For example, our lead module partner has begun shipping our first wireless automotive design. While initially hesitant about the automotive as an end market for core IoT products, we're getting pulled into customization, and perhaps more... Our Wireless Sales Funnel. We have new wins for our high-performance products and audio equipment. Security and Action. On the product front, our new cost-effective, high-performance, one-by-one device, 7-1-1, for joining Initial Success. Home Appliance

We're seeing the first signs of success in our wireless area with the normalization of channel inventory.

We now expect to see consistent sequential revenue growth in wireless starting with the nearly 20% growth reflected in our March guidance.

While processors will be a longer road to measurable success, we're coming off of CES, where we had increased customer engagement around both our general purpose low end, MCU and higher and <unk>, both of which feature AI engines, which enable customers to deploy their own computer vision use cases.

Michael: Our wireless success is driven first by a return to normal inventory levels and a resumption of shipments to existing customers.

Michael: But should be further bolstered by new design wins.

For example, our lead module partner has begun shipping our first wireless automotive design win for in car infotainment systems.

While initially hesitant about automotive as an end market for core Iot products were getting pulled into customer engagement and see perhaps more opportunity than we thought.

Our wireless sales funnel continues to increase and we have new wins for our high performance products and audio equipment consumer security and action cameras.

Michael: On the product front, our new cost effective high performance one by one device to 43 711 isn't.

Michael: He is enjoying initial success in home appliances, smart speakers industrial qualified modules and security cameras.

Michael E. Hurlston: Mark Speakers, Industrial Qualified Modu- https://www.gallagher.com sample both the first Wi-Fi 7 device for IoT applications and our first broad market, by the 4th Corp. We've ramped our second module partner, one that we discussed on the last call, and they have already... We've done taken product from us and are shipping pre-production. Core IoT Processor, We recently announced our after-platform The platform also offers a full-featured software toolkit designed with the intent to simplify AI adoption. IIT Dubai.

We remain on track to sample both the first Wi Fi seven device for Iot applications, and our first broad market ship by the fourth quarter of 2024.

Michael: In addition, we have ramped our second module partner one that we discussed on the last call and they have already been begun taking product from us and our shipping preproduction quantities to their customers.

And core Iot processors, we recently announced our Astral platform.

Astra encompasses a family of processors ranging from high end Mcu's to octa core embedded M. P is the.

The platform also offers a full featured software toolkit designed with the intent to simplify AI adoption in various Iot devices.

Michael E. Hurlston: It accepts commonly used customer frames, Developers, and AI Integration. He asked, and there was tremendous interest. Particularly from customers and partners, for a simple A.I.U. Rather than relying on, we are extending our customer reach beyond our core process into Deeply Embedded Output. Industrial. Near term, our process of products is seeing traction with our traditional operators. And we expect those wins to translate to revenue. As stated earlier, our enterprise product has been largely characterized by, For more information, call 1-800-433-9233. The Bulletproof Executive 2013, As we look at the different products that compose The Bulletproof Executive 2013, and our historic touchpad and fingerprint devices for clients.

It accepts commonly used customer frameworks to speed developers AI integration and Iot products.

At CES, there was tremendous interest in Astra, particularly from customers and partners that want to deploy simple AI use cases at the edge of the network rather than relying on models running in the data center.

We are extending our customer reach beyond our core processing customers and into deeply embedded applications, such as appliances industrial and video conferencing.

Near term our processor products, we're seeing traction our traditional operator space and we expect those wins to translate to revenue in fiscal year 2025.

As stated earlier, our enterprise products have been largely characterized by persistent inventory and weaker than expected it spending.

As we look at the different products that compose enterprise two are worthy of further discussion.

Michael: And our historic Touchpad and fingerprint devices for client Pcs, we have worked through customer and channel inventories and believe we are shipping on par with end demand.

Michael E. Hurlston: We have worked through customers, You're shipping on par with... While the notebook PC market has normalized, predicted growth has yet to materialize, some optimism around both a four-year COVID refresh and AI PCs driving marketing. The second half of the calendar. We have yet to see anything that would indicate strong resistance.

The notebook PC market has normalized predicted growth has yet to materialize. There's some optimism around both a four year COVID-19 refresh and AIP sees driving market increases in the second half of the calendar year.

We have yet to see anything that would indicate strong resurgence, but continue to control what we can by driving share, particularly at the high end of the market.

Michael E. Hurlston: We continue to control what we can by driving share, https://www.youtube.com.uk. The second area to touch on is our User Presence Detection technology. Some of you were able to see this in action at CES, but its potential for... Privacy Empowered. We are set to deliver our first chip for this application, specifically designed to drive our differentiated suite of AI algorithms in extremely low-power, with both the Tune device and the latest set of algorithms.

The second area to touch on is our user presence detection technology. Some of you were able to see this in action at CES and its potential for ease of use privacy and power savings.

We're set to deliver our first chip for this application, which is specifically designed to drive our differentiated suite of AI algorithms and extremely low power levels.

With both the tune device and the latest set of algorithms, we expect to increase share at our current lead customer penetrate additional PC Oems.

Michael E. Hurlston: We expect to increase share at our current lead customer, penetrate additional and Roy Bialik. Automotive Products, Transcription by CastingWords, EI plays out. I. Julet Held, who are seeing a sharper fall-off in legacy. The Bulletproof Executive 2013, Our aggregate automotive revenue will likely be choppy as the two curves cross over. We do well with our TDEI products, having recently won at multiple OEMs. Tomorrow's News, for Although early in the design cycle, our new Smart Bridge product is central to our automotive strategy, adding a second product to the portfolio, giving us additional differentiation. System Costs, while also helping defend.

And drive the application into accessory devices.

Automotive products are continuing to do reasonably well is the transition from discrete touch and legacy <unk>.

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Adoption of TDI based solutions is still a tailwind but we.

We're seeing a sharper falloff in legacy <unk> products than initially forecast.

Our aggregate automotive revenue will likely be choppy is the two curves cross over in the next couple of quarters.

We continue to do well with our TDI products, having recently won at multiple Oems, including new models of Toyota Porsche.

Although early in the design cycle, our new Smart bridge product is central to our automotive strategy.

Adding a second product to the portfolio, giving us additional differentiation and delivering system cost savings, while also helping defend our TDI position.

Michael E. Hurlston: Our mobile products had a strong quarter driven by improved demand across our Chinese customers, as well as the launch of our new design win for the Samsung Galaxy. With the GF24Win, we've still solidified our leadership position in touch controllers for the high-end Android handsets. Thank you, sir. Good job.

Our mobile products had a strong quarter driven by improved demand across our Chinese customer base as well as the ramp of our new design win for the Samsung Galaxy S 24.

With the G 24, when we sell solidified our leadership position in touch controllers for the high end Android handset market.

Michael: As we look into the future, we see opportunities to maintain our differentiation at the high end.

Michael E. Hurlston: Haynard, Customers are. The new display, driving a higher signal-to-noise ratio for a Precision Analog. We are seeing opportunities for a touch product in areas outside Amazon. In general, we believe our mobile inventories have normalized, and we expect our shipments to line up and track. As we said last quarter, our business has hit the bottom of the cycle. To a large extent, inventory is now clear. I believe some of our businesses are at... However, enterprise spending has presents, or a higher-margin product.

Customers are looking to introduce new displays that are even thinner.

Driving higher signal to noise ratios, which are precision analog circuits can resolve.

In addition, we are seeing opportunities for our touch products in areas outside of handsets such as gaming.

In general we believe our mobile inventories have normalized and we expect our shipments to align and track end market demand.

As we said last quarter, our business has hit the bottom of the cycle and continues to stabilize to a large extent inventory has now cleared and we believe some of our businesses are at or near steady state.

Michael: However, enterprise spending has been significantly reduced which presents a new impediment to our higher margin products, keeping our overall topline revenue flat and margins below our outlined targets.

Michael E. Hurlston: We're keeping our overall top line revenue flat and margins below our outline target. In the near term, we'll see puts and takes in enterprises before it returns to steady state and tracks. The good news story was our core ISO...

Near term, we will see puts and takes in enterprise and automotive before it returns to steady state and tracks to sustained growth.

The good news story was our core Iot business led by our wireless product line, which will increase nearly 20% quarter on quarter and should show sustained growth from this point forward.

Dean Butler: Led by our product line. Yearly 20% Quarterly. SHOW IS THE SAME. Overall, we're still confident in the long-term targets we outlined in our... Now, let me turn the call over to our financial results for the second quarter. The Bulletproof Executive 2013, Thanks, Michael, and good afternoon to everyone. I will first review the financial results for our recently completed quarter and then provide our current quarter outcomes. Revenue for the December quarter was $237,000.

Overall, we're still confident in the long term targets, we outlined at our analyst day in September.

Now, let me turn the call over to Dean for a review of our second quarter financial results and third quarter outlook.

Dean: Thanks, Michael and good afternoon to everyone I will first review the financial results for our recently completed quarter and then provide our current quarter outlook.

Dean: Revenue for the December quarter was $237 million, which was slightly above the midpoint of our prior guidance.

Dean Butler: Slightly above the midpoint of our prior, revenue from CORE IOT, Enterprise & Automotive, and Mobil were 16% www.larryweaver.com. Thank you. Year-over-year, consolidated December quarter revenue was down 33%, but more importantly, Aim for 1, on a consolidated basis. Our distribution channel inventory continues to decline, although some products... Hi.

Dean: Revenue from core Iot enterprise, and automotive and mobile were 16%, 58% and 26% respectively.

Dean: Year over year consolidated December quarter revenue was down 33%, but more importantly, we continue to stabilize the business sequentially.

On a consolidated basis, our distribution channel inventory continued to decline in the quarter. Although some products continued to experience high stock and slower inventory turns while other products are beginning to see new.

Dean Butler: Lower Inventory, while other products are being or IoT revenues, roughly flat sequential and down 46% year-over-year. Over the last three quarters, we have worked tirelessly to Access Inventories Where Possible. I believe we are finally reaching the point where we can expect a return to growth, third quarter. Enterprise and Automotive. December quarter revenue was down 12% sequentially and down 40% year over year.

Restocking orders.

Core Iot revenue was roughly flat sequentially and down 46% year over year open.

Over the last three quarters, we have worked tirelessly to deplete excess inventories where possible and believe we are finally, reaching the point, where we can expect to return to growth in our third quarter fiscal 2024.

And enterprise and automotive December quarter revenue was down 12% sequentially and down 40% year over year here. Many customers began their slow down two to three quarters. After we began experiencing declines in our core Iot products.

Dean Butler: This year, many customers began their slowdown. Thank you to all of our supporters after we began experiencing declines in our core IoT products. It leaves us to believe that enterprise may require, The mobile product revenue was up 42% sequentially and up 10% year over year. This marks one of the strongest mobile quarterly sequences are fiscal 2022. We are experiencing strength across Android, as well as ramps from new flagship smart... At this point, it's unclear whether the strength is due to fundamentally strong end-market demand or if it's merely channel restocking ahead of the holiday season. Can you expect a mobile sale? Subject to Normal Seasonality Patterns.

Which leads us to believe that enterprise may require some additional patients.

Mobile product revenue was up 42% sequentially in the December quarter, and up 10% year over year.

Dean: This marks one of the strongest mobile quarterly sequential increases since our fiscal 2022.

We are experiencing strength across the Android ecosystem in China, as well as ramps from new flagship smartphones.

At this point, it's unclear whether the strength is due to fundamentally strong end market demand or if it's merely channel restocking ahead of the Chinese new year.

We continue to expect our mobile sales to remain subject to normal seasonality patterns.

Dean Butler: During the quarter, we had two customers greater than 10%... at approximately. For the December quarter, our GAAP growth margin was 46%, which included $14.4 million.

During the quarter, we had two customers greater than 10% of revenue at approximately 13% and 10%.

For the December quarter, our GAAP gross margin was 46%, which includes $14 4 million of intangible asset amortization and $1 1 million of share based compensation costs.

Dean Butler: $1.1 million of share, December quarter, non-gap growth market. 1952.5, towards the midpoint of our guidance. For more information, visit www. FEMA.gov, 9 8.1, Tangible Asset Amortization December quarter, non-gap, operating, was down $4.7 million, which is below our guidance.

Dean: December quarter non-GAAP gross margin was 52, 5%, which was the midpoint of our guidance range.

GAAP operating expenses in the December quarter were $126 9 million, which includes share based compensation of $28 1 million and intangible asset amortization of $3 9 million December.

December quarter, non-GAAP operating expense of $92 million was down $4 7 million from the preceding quarter and below our guidance range.

Dean Butler: The Bulletproof Executive 2013, Our cash bonus program now reflects a reverse, Benefiting Upper Nation. During the quarter, we recorded a Gap Cat. We maintained our expected non-gap tax from. For more information, visit www. FEMA.gov or a gap net lock here.

We continue to maintain vigilant expense control and given our expectations that returned to a more normal sales level will likely take longer than previously expected. Our cash bonus program now reflects a reversal benefiting operating expense in the December quarter.

During the quarter, we recorded a GAAP tax benefit of $15 million and maintained our expected non-GAAP tax rate of 17% or $4 6 million expense.

Dean: December quarter, GAAP net loss was $9 million or a GAAP net loss of 23 per basic share.

Dean Butler: Now I'm gaffing that in. 22.5, with an increase of 11% from the prior 75% The Bulletproof Executive 2013 non-GAAP earnings per diluted share of $57,000, near the high end of our guide. Now turning to the ballot. At the end of the quarter, there was $849 million of cash, cash of, I'm going to be back in one second. Capital expenditures were $10.4 million.

non-GAAP net income in the December quarter was $22 5 million, an increase of 11% from the prior quarter and a 75% decrease from the same quarter a year ago.

non-GAAP earnings per diluted share of <unk> 57.

It was near the high end of our guidance range.

Now turning to the balance sheet.

We ended the quarter with $849 million of cash cash equivalents and short term investments on hand.

3% sequential increase.

Dean: Cash flow from operations was $39 million.

Capital expenditures were $10 4 million and depreciation for the quarter was $6 8 million.

Dean Butler: Appreciation for the quarter. The Bulletproof Executive 2013, days of sales out Inventory Balance, 85.1 Down 6.3. All right. Thank you. Art Images, Calculated Days of Inventory on our balance sheet. All right, at the 105.

Receivables at the end of December.

$126 6 million and days of sales outstanding were 48 days, an increase of six days from last quarter.

Ending inventory balance was $125 1 million down $6 6 million as we continue to cautiously reduced our inventory purchases.

Our calculated days of inventory on our balance sheet also declined to 99 compared to 105 at the end of the prior quarter.

Dean Butler: Subs by www.zeoranger.co.uk Now let me turn to our March quarter outlook. We are seeing stabilization at the current levels and plan to further... The Slow Corporate Idea, While we remain hopeful of a return to higher and more normalized, Timing and Shape of Recovery. At a consolidated level, we anticipate revenue in the March quarter to be in the range of $225 million. http://TheBusinessProfessor.com The Bulletproof Executive 2013, Inventory appears to have largely bottomed for our core IoT products, and we expect the March quarter revenue to be up nearly 20%.

Now, let me turn to our March quarter outlook.

We are seeing stabilization at the current levels and plan to further reduce distributor inventories, particularly in enterprise focused products given the slow corporate it spending.

While we remain hopeful of a return to higher and more normalized run rates, the timing and shape of recovery remains uncertain.

At a consolidated level, we anticipate the revenue in the March quarter to be in the range of $220 million to $250 million similar to the December quarter.

Inventory appears to have largely bottomed for our core Iot products and we expect the March quarter revenue to be up nearly 20% sequentially.

Dean Butler: Enterprise and Automotive Products have not yet fully bottomed, and we believe they will continue to climb into the market. Mobile is expected to decline due to seasonality, lack of customers, and Given these dynamics, we expect our revenue... The Bulletproof Executive 2013, The mobile product, be a part. 7, 24.

Enterprise and automotive products have not yet fully bottomed and we believe will continue to decline into the March quarter.

Mobile is expected to decline due to seasonality and lack of customer ramps in the coming quarter.

Given these dynamics, we expect our revenue mix from core Iot enterprise and automotive and mobile products in the March quarter to be approximately 19%.

Dean Butler: 24. 24. We expect GAAP's growth margin in the March quarter to be in the range of 43.5% to 46.5. Non Bia!

57% and 24% respectively.

Dean: We expect GAAP gross margin in the March quarter to be in the range of 43, 5% to 46, 5%. We expect non-GAAP gross margin in the range of 52% to 54% a small improvement from the December quarter.

Dean Butler: Fa Fa in the range of. This is a small improvement from the December quarter. We expect Gap Operating... March quarter to be in the range of $130 million to $135 million. Includes intangible amortization, and non-gap in the range of 94 million. Gap net loss per basic share for the March quarter is expected to be in the range of 80 cents; $10,000.00 non-GAAP net income per diluted share is anticipated to be in the range of $0.35.

We expect GAAP operating expenses in the March quarter to be in the range of $130 million to $135 million, which includes intangibles amortization and share based compensation.

Dean: We expect non-GAAP operating expense in the March quarter to be in the range of $94 million to $98 million.

Dean: GAAP net loss per basic share for our March quarter is expected to be in the range of 80 to $1.10.

And non-GAAP net income per diluted share is anticipated to be in the range of 35.

Dean Butler: $1.75 per share on an estimated $40 million fully diluted share. We expect both GAAP and non-GAAP next, you have possibly. This wraps up our prepared remarks. I'd like to now turn the call over to the Operator to start the Q&A. Operator.

$2 65 per share on an estimated $40 million fully diluted shares.

We expect both GAAP and non-GAAP net interest expense to be approximately $6 million in the March quarter.

This wraps up our prepared remarks, I'd like to now turn the call over to the operator to start the Q&A session operator.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: Thank you.

Speaker Change: Minder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Operator: One moment for questions. Our first question comes from Quinn Bolton with Needham & Company. You may proceed.

Our first question comes from Quinn Bolton with Needham <unk> Company you May proceed.

Dean Butler: Hey guys, thanks for taking my question and thanks for all the details, sort of, segment by segment in terms of where you think you are in the inventory process. I guess my first question, trying to get a sense of, in a number of your product segments, you said you think you have kind of reached normalized inventory levels, and you'll start to ship in line with consumption. I guess my question is, do you think you're currently shipping at end consumption, or does that return to end consumption imply growth over the next some number of quarters as you come back to shipping in line with consumption? And I guess a sort of related question is just, you know, as you look across all of your businesses, do you still think you're under shipping consumption rates by as, say, much as $100 million a quarter down here at the roughly $2 Yeah, Quinn, good question, and I'll take a stab and let Michael add on. I would say, in general, it's actually a mixed bag across the different product groups.

Hey, guys. Thanks for taking my question and thanks for all the details sort of.

Segment by segment in terms of where you think you are in the inventory process. I guess first question trying to get a sense of.

In a number of your product segments. You've said you think you have kind of reached normalized inventory levels and youll start to ship in line with consumption. I guess my question is do you think you are currently shipping at end consumption or does that return to end consumption imply growth.

Over the next some number of quarters as you come back to shipping in line with consumption and I guess sort of related.

Question is just as you look across all of your businesses do you still think you're under shipping consumption rates by as much as $100 million a quarter down here at the roughly $2 $32 million to $35 million a quarter.

Speaker Change: Revenue level.

Yes.

Good question.

Take a stab and I'll, let Michael the add on.

Speaker Change: I would say in general it's actually a mixed bag across the different product groups.

Dean Butler: Look, I think, overall, we're probably still under-shipping overall consumption. However, it differs across the different... For example, Core IoT really was plagued with a lot of inventory. We've been working on that for three straight quarters. This is our fourth quarter now. Guiding into the March quarter, it looks like we've depleted a large portion of that. I mean, there are still pockets within individual products.

Look I think overall, we're probably still under shipping overall consumption. However, it differs across the different groups. For example, core Iot really was plagued with a lot of inventory we've been working that for three straight quarters as our fourth quarter now.

Diving into the March quarter up it looks like we've depleted a large portion of that I mean, there are still pockets within individual product even within core Iot.

Dean Butler: For example, in mobile... Related customers, largely that inventory is resolved, now we're just shipping back to end demand, choppy mobile thing Please see the complete disclaimer at https://sites.google.com or at www.google.com, and then probably Enterprise, which is the most... I'm clear at this point. We're certainly still in the channel, we're probably under shipping, but I think the demand has sort of fundamentally shifted there, just given corporate IT spending, down, and it looks like, at least in the near term, it's unlikely to come back up. www.synapticsinc.com. I hope that helps. Yeah, it does.

For example, in mobile and PC related customers largely that inventories resolved now we're just shipping that to end demand as you know Pcs, maybe a little choppy mobile seeing more recent strength and.

Then probably enterprise, which is the most.

Unclear at this point is Theres certainly still inventory in channel, we're probably under shipping, but I think the demand is sort of fundamentally shifted there just given corporate it spending is down and it looks like at least in the near term is unlikely to come back up and any sort of rapid pace.

Hope that helps Glenn.

Yes, it does.

Dean Butler: Go ahead, Quint. I don't have a lot to add to what Dean said. I was just, you know, I guess I was going to ask, it sounds like, especially on the enterprise side of things, that if demand has sort of softened with a slow corporate IT spending environment, that prior thoughts that you may be under shipping demand by as much as $100 million, it sounds like we may need to temper that just given the sort of weaker macro environment, you know, as we think about where the revenue run rate might normalize as you finally clear Yeah, I think that's generally true, Quinn. Look, I think we're, you know, there's two factors in enterprise. One is that there is still Filthing, Inventory, and Plot.

Go ahead quite I don't have a lot to add to what Dean said, Oh I was just.

I guess going to ask it sounds like especially on the enterprise side of things that if demand is sort of softened with a slow corporate it spending environment.

Prior thoughts that you may be under shipping demand by as much as $100 million sounds like we may need to temper that just just given the sort of weaker macro environment.

Think about where the revenue run rate might normalize as you finally clear the inventory in enterprise.

Like that that's probably the way we should be thinking about it.

Yes, I think Thats generally that's right when look I think we're there.

There's two factors in enterprise one is that there.

There is still inventory I mean, we're still seeing inventory in pockets and then two is as we've kind of worked through the inventory we realize that the demand is lower than perhaps we thought so those two factors are kind of leading us to where we are I still think that.

Dean Butler: And then two is, as we've kind of worked through the inventory, we realize that the demand is lower than perhaps we thought. Leading us to where we are, but I still think that demand is going to return and, obviously, we're going to clear out these inventory levels. I think the statement, The Bulletproof Executive 2013, Enterprise Spending, and once that happens, I think we're back. Got it.

Demand is going to return and of obviously, we're going to clear out these inventory levels. So I think the statement.

Remains consistent but it's tied to that increase in enterprise spending and once that happens I think we're back in business.

Dean Butler: And then, you know, you guys, I think in the script said a couple of times, you think you've reached the bottom for revenue, which is great to hear. I understand that the pace of recovery is uncertain. But, you know, I think you have put the line in the sand that you don't think sales will go down from here. So we've got the bottom in the reds, but your gross margin also looks like you may be bottoming your 52 and a half in December guided to 53 in the March quarter. Can we also sort of infer that you think you've probably hit the bottom and gross margins in this range of call it 52 and a half to 53 that you saw in December and March? Yeah, I think that's right, Quinn.

Got it got it understood and then.

Speaker Change: You guys I think in the script set a couple of times you think you've reached the bottom for revenue, which is which is great to hear I understand that the pace of recovery is uncertain, but.

Speaker Change: At least.

Put the line in the sand that you don't think sales go down from here. So we've got the bottoming of revs, but gross margin also looks like you may be bottoming, you're 52, and a half in December guided to 53.

Speaker Change: <unk>.

In the March quarter is can we also sort of infer that you think you've probably hit the bottom in gross margins in this range of call. It 52 553 that you saw in December March yes.

I think that's right Glenn.

Dean Butler: Look at 52 and a half. You were into December; we're guiding up into March. So we do think that, even on the margin front. It should work up from here. I mean, again, as Enterprise sort of recovers, it may take a little bit longer, but I think the worst is behind us. Thanks a lot. Thank you, guys.

A 52 and a half where we ended December we're guiding up into March. So we do think that that even on the margin fronts hit its low point.

Good work up from here I mean again as enterprise sort of recovers may take a little bit longer, but I think the worst is behind us on the margin front.

Excellent. Thank you guys.

Thanks Quinn.

Michael E. Hurlston: Thank you. One moment for questions. Our next question comes from Christopher Rolland with Susquehanna. You may proceed. Hey guys, thanks for the question. You had some nice commentary on wireless IoT, and so I'd like kind of your thoughts more longer term here. Is this really, this kind of snapback we're seeing, is this kind of inventory-related, or is there, you know, through your visibility on design wins or engagements, is this a bonafide bottom, and would you expect a strong, sustained rebound from here? Yeah, Chris, we think we've bottomed, and we think that we have a sustained rebound. So the snapback, I think, is almost entirely due to getting the inventory out. We're not all the way there. I mean, there are actually, Dean said it in one of his comments, there's still even pockets in wireless, largely through that, the snapback that you characterized is largely resumptive.

Thank you.

One moment for questions.

Our next question comes from Christopher Roland with Susquehanna You May proceed.

Hey, guys. Thanks for the question.

Christopher Rolland: You had some nice commentary on wireless.

Iot.

Christopher Rolland: And so.

I'd like kind of your thoughts more longer term here.

Is this really kind of snap back. We're seeing is this kind of inventory related or is there through your visibility on design wins or engagements is this a bonafide bottom.

Would you expect a strong sustained rebound from here.

Yes, Chris.

We think we bottomed and we think that we have a sustained rebound. So the snap back I think is almost entirely due to getting the inventory out.

Not all the way there I mean, there are actually Dean said it in one of his comments are still even pockets in wireless, but I think we're largely through that so the snapback that you characterized is largely a resumption of of shipping too.

Michael E. Hurlston: Shipping and Demand. I think on top of that, as I said in my remarks, we are seeing a bunch of design wins that characterize the analyst as the size of the funnel, and The funnel is very, very strong here, and we've actually converted a bunch of design wins, one of which we alluded to in the prepared remarks around automotive. So we feel like there's going to be another layer here, right? We're building toward a billion-dollar target in wireless, and I think that there, right now, it's almost entirely a return to normal demand, but I think we're going to start soon seeing a layering in of all the design activities that we've had for the last, Uh, thank you, Michael. Uh, and then, um...

Speaker Change: And Matt I think on top of that as I said in my remarks, we are seeing a bunch of design wins.

Can't characterize the analyst day, the size of the funnel.

The final is very very strong here and we've actually converted a bunch of design wins, one of which we alluded to in the in the prepared remarks around automotive.

So we feel like there's going to be another layer here right. We're building toward this billion dollar target in wireless and I think that there is.

Right now it's almost entirely just returned to normal demand, but I think we're going to start soon seeing a layering in of all the design activity that we've had for the last year to 18 months.

Thank you Michael and then.

Michael E. Hurlston: Mobile, obviously, a great quarter here, looks like it takes maybe a small step back next quarter. But longer term, are we getting something going here? Can you broaden at Samsung beyond the GS24?

Mobile.

Obviously, a great quarter here it looks like it takes maybe a small step back next quarter.

But longer term or are we getting something going here can you broaden that Samsung beyond the <unk> 24.

Michael E. Hurlston: How are the other OEMs and engagements there? I think Novotec's been talking up this market a little bit. I don't know if you have a similar kind of thought for the rest of the year.

How are the other Oems and engagements there I think Nova tech spend talking up the market a little bit I don't know if you have a similar kind of thought for the rest of the year.

Michael E. Hurlston: You know, I would say, you know... Not a lot of upside opportunity. I mean, we are, one of the things I think that I alluded to is sort of areas outside mobile. You know, we've done a good job, I think, capturing the High End of the Market. We do see, Chris, some opportunity in the mid-tier, and we're looking at that to see what we can do. And we think we can do that at appropriate margin levels. But I'd say, generally speaking, you know, we don't see a heck of a lot of upside in mobile from where we are. Understood. Thank you again.

Yeah, I would say.

Not a lot of upside opportunity I mean, we are one of the things I think that I alluded to is sort of areas outside mobile.

We've done a good job I think capturing.

The high end of the market, we do see Chris some opportunity in mid tier and we're looking at that to see what we can do.

And we think we can do that at appropriate margin levels, but I would say generally speaking we don't see a heck of a lot of upside in mobile from where we are today.

Understood. Thank you guys.

Operator: Thank you. One moment for questions. Our next question comes from Peter Penn with J.P. Morgan. You may proceed.

Thank you.

One moment for questions.

Our next question comes from Peter paying with Jpmorgan you May proceed.

Michael E. Hurlston: Hey guys, thanks for taking my question just on the enterprise and automotive. So just based on the mix guys, it's kind of implying a low single digit. So do you think that we're kinda at the bottom for the last quarter and so there's more stability going forward – and how should we think about the situation? Yeah, I think you actually got it right.

Peter: Hey, guys. Thanks for taking my question just on the enterprise and automotive so just based on the mix guidance kind of implying a low single digit.

Q on Q decline, so we kind of factor in the PC seasonality your traditional enterprise that seems like it's.

Bottoming are declining at a slower pace. So do you think that we're kind of at the bottom for the March quarter, and so it's more stability going forward, how should we think about the puts and takes that.

You actually got it right we're forecasting in.

Michael E. Hurlston: We're forecasting the... PC Market to be down, sort of high single digits. So that's the biggest contributor. The other areas are coming back a bit. I mean, I think you got a right net couple of percent.

The PC market to be down sort of high single digits. So that's the biggest contributor the other areas are coming back a bit I mean, I think you've got it right net couple of percent.

Michael E. Hurlston: So I think we're at the bottom, I think we're still trying to figure out when we will see increases in that business. And I think it is tied, as Dean said, to enterprise IT spending. We feel pretty good, I think, for the second quarter in a row about declaring the absolute bottom, and the numbers are starting to reflect that, and And then for just kind of on Kristen's comment about the snapback and the core LTE, that's in the wireless portion of the business, which was a 200 million dollar revenue run rate kind of business. Do you think that you can kind of get back to those levels sometime in this calendar year, or Yeah, look, we feel very good about it. I mean, I think that the line of sight to getting back to par here is... Uh, much closer.

So I think we are at the bottom.

Peter: I think we are.

We're still trying to figure out when we see.

Peter: Increases in that business and I think it is tied as Dean said to the enterprise it spending, but we feel pretty good I think for the second quarter ROE about declaring absolute bottom of numbers are starting to reflect that.

Okay.

And then Kurt just kind of.

Christmas comment on the snapback in the core <unk>.

In the wireless portion that what's the $200 million revenue run rate kind of business do you think that you can kind of get back to those levels at some time in this calendar year or is this more of a first half 2025 calendar year kind of.

Trajectory look we feel very good about it I mean, I think that line of sight to getting back to par here is <unk>.

Much closer I don't think we have necessarily perfect visibility on the timing, but we feel very good that that's closer in then.

Michael E. Hurlston: I don't think we necessarily have perfect visibility on the timing, but we feel very good that that's closer in and, The Bulletproof Executive 2013, It feels very good. Our confidence is generally very high. Thank you, guys. Thank you. One moment for questions. Our next question comes from Chris Sankar with TVTalent. You may proceed. Hi, thanks for taking my question.

Some of these other things in terms of the inventory levels and then again, we are expecting to layer design wins on top of that so our wireless business feels very good our confidence is generally very high.

Okay. Thank you guys.

Thank you.

One moment for questions.

Our next question comes from Krish Shankar with TD Cowen you May proceed.

Yes, hi, Thanks for taking my question I told them Michael just on the last question on your answer so.

Michael E. Hurlston: I told them, Michael, just on the last question in your answer, looks like you're guiding, you know, the wireless code IoT is growing 20% sequentially. And I'm not looking for guidance, but is it fair to assume that kind of a growth rate is sustainable through the remaining quarters this year? You know, again, we feel pretty good about the business. And I would say, certainly, we're going to see double digits, sequentially from here, quarter over quarter.

It looks like Youre guiding the wireless code Iot growing 20% sequentially and I'm not looking for guidance, but is it fair to assume that kind of growth rate is sustainable through the remaining quarters. This year.

Again, we feel pretty good about the business and I would say certainly we're going to see double digits.

Sequentially from here quarter over quarter. So I think we feel really really good about where that business is.

Michael E. Hurlston: So I think we feel really, really good about where that business is. We're really just trying to get it back, as I think the previous questioner asked, at a $200 million level, and we think that that's relatively close, and then growth from there. So I think it's fair for us to say that this level, or somewhere in the double digits, sequentially, is very, very possible.

We're really just trying to get it back is I think the previous questioner asked to that $200 million level, and we think that that's relatively close in.

And then growth from there. So I think it's fair fair for us to say that.

This level or somewhere in the kind of the.

Double digits sequentially is very very possible over the next few quarters.

Dean Butler: Got it. Got it. And then a follow-up for Dean, you know, when I look at your March quarter guidance, you guys kind of gave the product mix, and it looks like three quarters of your product, you know, are more than should be in the high 50% gross margin range if you're guiding more to like 52 to 54. So I'm kind of curious, I understand Enterprise also has some inventory, but what are the one or two biggest overhangs on the Is it volume? Is it funding, pricing, any color that would be helpful?

Got it got it and then a follow up for Dean even when I look at your March quarter guidance.

You guys kind of gave the product mix and it looks like three quarters of your products.

Automotive that should be in the high 50% gross margin range. If you are guiding more to like 52 to 54. So I wanted to curious I understand enterprise at their highest.

Inventory, but what are the one or two biggest overhang on the gross margin side is it volume is.

Is it foundry pricing any any color on that would be helpful.

Dean Butler: Yeah, I mean, there's obviously many variables in that question, and there's absorption, you know, at your current revenue levels, there's, you know, there's always some prices improving on the supply side, some actually going the opposite way, but more than any of that actually happens to be the product. You know, generally, you know, our enterprise bucket, you tend to have a higher gross margin mix of its own product. Even sort of within products, and I think Michael sort of touched on it a little bit in his prepared remarks, some of our sort of best gross margin applications that go into like docking stations or high-end audio headsets are seeing some of the most hesitation from corporate I.T. buy-in So that sort of contributed to where we are on the margin.

Yes, I mean, there is.

Obviously, many variables in that question there is absorption.

At current revenue levels. There is there's always.

Some prices improving on the supply side, there's some actually going the opposite way.

But more than any of that actually happens to be the product mix.

Generally our enterprise bucket.

Tends to have a higher gross margin mix of its own products, even sort of within products and I think Michael sort of touched on it a little bit in his prepared remarks, some of our sort of best gross margin applications that go into like docking stations are high end audio headsets.

Peter: Are seeing some of the most sought.

Hesitation from corporate buying and so that sort of contributed to where we are on margin mix. However, we're starting to see upside into Iot and as core Iot grows that that is actually also helpful modulus everything else moving around.

Dean Butler: However, we're starting to see an upside to IOT. And as Core IoT grows, that is actually also helpful, modulus everything else. Thank you all. Yeah, no problem.

Angela.

Yes, no problem Krish.

Michael E. Hurlston: Thank you. One moment for questions. Our next question comes from Gary Mobley with Wells Fargo; you may proceed. Hey guys, thanks for taking my question. If I'm hearing you guys correctly, it sounds like perhaps structurally the market size or revenue potential in enterprise might be a little bit smaller than what you were thinking on your panel day, at least in the minimum pushed out further to the right, and therefore the question is, is that causing you to sort of re-evaluate the long-term gross margin target of 57%, which I believe is highly contingent on that very healthy margin mix from enterprise? Yeah, And that is why we see it as a push out, nothing more.

Speaker Change: Thank you.

One moment for questions.

Our next question comes from Gary Mobley with Wells Fargo. You May proceed.

Hey, guys. Thanks for taking my question.

If I'm hearing you guys correctly, it sounds like perhaps structurally the market size or revenue potential in enterprise might.

It might be a little bit smaller than what you were thinking that your analyst day at least the minimum pushed out further to the right.

Speaker Change: Therefore, the question is.

Is that causing you to sort of reevaluate the long term gross margin target of.

57%, which I believe is highly contingent upon that very healthy margin mix from enterprise.

Yes, Gary I think you've got one one phrase the question right and that we see it as a push out and nothing more so.

Michael E. Hurlston: So, you know, I think that we feel good about the market sizes for our enterprise business. Thanks, guys. We certainly realize that behind some of the inventory, there is a current depressed demand environment due to enterprise IT spending.

I think that we feel good about the market sizes for our enterprise business.

Thank you.

Certainly realize that behind some of the inventory there is a current depressed demand environment due to the enterprise it spending, but we actually don't substantively believes that the demand profile in those long term has changed right, we've actually gone out and in a huge way to the <unk>.

Michael E. Hurlston: But we actually don't substantially believe that the demand profile in those long-term has changed, right? We've actually gone out in a huge way to the enterprise customers to sort of assess and feel out, hey, what is the long-term demand in these businesses? And that has not changed.

Enterprise customers to sort of SaaS and feel out hey, what is the long term demand in these businesses and that has not changed so everybody is still bullish about docking station consumption enterprise telephony. In fact, we've got a bunch of new refreshes coming on both of those areas both in dock and <unk>.

Michael E. Hurlston: So everybody is still bullish about docking station consumption and enterprise telephony. In fact, we've got a bunch of new refreshes coming in both of those areas, both in docking and enterprise telephony that'll be arriving in the second half of this year and enterprise headsets. So all three of those segments, which are definitely pronounced down due to the enterprise IT spending, and big drivers of our margin line, I don't think that there's any change. I'm wrong, and that sort of changes our view of the overall situation.

Enterprise telephony that'll be kicking in in the second half of this year and enterprise headset. So all three of those segments, which are definitely pronounced down due to the enterprise.

It spending.

Big drivers of our margin line I don't think that Theres any change I mean do you can correct me if I'm wrong in sort of our view of the overall markets no. Yes, I don't think there's a market destruction, if thats, what youre sort of going forward Gary the second part of your question was.

Michael E. Hurlston: No, yeah, I don't think there's a market destruction if that's... for Gary, the second part of your question. Dependence on that enterprise mix to drive the Long-Term Target. We are dependent on Enterprise actually performing well and coming back to a more normal level. I think what you will see is we're going to, on it, and that timing.

Speaker Change: Dependence on that enterprise next to drive, 57%, which is the long term target for the company on gross margin, we are dependent on enterprise actually performing well and coming back to a more normal level.

Speaker Change: I think what you will see is we're going to continue to be dependent on it and that means the timing to achieve 57%.

Dean Butler: 7% is probably a little bit longer and really is predicated on, Enterprise, spending for the coming back. Thank you guys for that. Dean, you understand on the OPEC side, by roughly 6%, sounded like that was more variable versus structural in terms of op-ex reduction. Correct me if I'm wrong there, but I'm most curious about how we should model and think about op-ex.

Is probably a little bit longer and really is predicated on the enterprise spending sort of coming back.

Got it thank you guys for that.

Dean you Underspent on the Opex side in the December quarter by roughly 6%.

Sounded like that was more variable versus structural in terms of opex.

Reduction correct me, if I'm wrong there.

But I'm most curious about how we should model and think about the opex when revenue normalizes when you actually start to ship in aggregate and demand less call it $300 million per quarter plus in revenue.

Dean Butler: When revenue normalizes, when you actually start to shift in aggregate to end demand, let's call it $300 million per quarter plus in revenue. Yeah, so first on the December quarter, you picked it up exactly right, Gary. It was, under our guidance and actually under the prior quarter, really from a one-time, variable. We're guiding into the March quarter so that that doesn't reoccur, so that it sort of goes back, As you know, our Submitted Level on Operating Expenses, then. $100 million a quarter or below.

Yeah. So first on the December quarter, you picked it up exactly right Gary.

It was under our guidance and actually under the prior quarter really from a onetime on variable expense.

We're guiding into the March quarter that that doesn't reoccur.

Sort of goes back to where it sort of.

Run rate spend level is.

Speaker Change: As you know are committed level on operating expenses than $100 million a quarter are below and we've done a pretty good job sort of keep it maintained inside that range now.

Dean Butler: Good job, by Now, if you start to think about, hey, what does the company look like at a higher level? We do anticipate that we would likely... The Bulletproof Executive 2013, The way I think about it, Gary, it's probably something like... 5% adder on operating expense, mid, maybe high single-digit. Likely to go up, as revenue companies. And you will see at the beginning of our fiscal year every year, there's sort of a little bit of a recess on your variable comp. Merit Cycles, etc.

Now if you start to think about Hey, what does the company look like at a higher revenue base, we do anticipate that we would likely need to spend.

Bit more than that from here.

But I wouldn't say that it's monumentally more.

I think about it Gary it's probably something like a.

5% adder on operating expense kind of this mid maybe high single digit that we would likely go up.

You will see in the beginning of our fiscal year every year, there's sort of a little bit of resets on variable.

Speaker Change: Comp the merit cycles et cetera, Just reminder, junior and so that's kind of start to hit in the September quarter for us.

Dean Butler: All right. Thank you. We'll be right back.

Got it alright.

Right.

It does thank you.

Operator: Thank you. One moment for questions. Our next question comes from Vijay Rakesh with Mizuho. You may proceed. Yeah, hi Michael and Dean. Good to hear the business is being bought and sold.

Thank you.

One moment for questions.

Our next question comes from Vijay Rakesh with Mizuho you May proceed.

Yeah, Hi, Michael good to hear.

Business has bottomed.

Michael E. Hurlston: Just wondering, just looking at the rest of 24... Just wondering how the seasonality plays out for you through 2024. Do you expect to get back to kind of that 300 million level by the end of the year? Yeah, Vijay, good question. The one thing I would say is kind of the calendar 2024.

Rajvindra S. Gill: So just wondering just looking at the rest of 'twenty four.

Just wondering how the seasonality plays out for you.

Through 2024.

Expect to get back to kind of that 300 million level exiting the year or something so.

Yes, Vijay good question. The one thing I would say is kind of calendar 2024, it's really tough for us to tell like what is going to happen from here look we're sort of bottom where coming up core Iot is growing nicely. However, PC and mobile type applications are very seasonal.

Michael E. Hurlston: It's really tough for us to tell, like, what is going to happen from here. Look, we're sort of bottoming out, we're coming up, core IoT is growing nicely. However, PC and mobile type applications are very seasonal.

Michael E. Hurlston: I think actually, this is why people are trying to get a handle on, hey, how does a sequential sort of move from... I think the most comfort I have is that we're likely to move higher, almost unlike, It's higher, and I think you see more sequential growth, sort of, led by CORE IOT. Enterprise is less clear for us. It's just tough for us to confirm, CJ, on exactly seasonality and what that pattern will look like. Core IoT right now is probably what we probably have the most. Got it. And then on the AI PC side, any thoughts on how many PCs you expect? I know you had a pretty good demo at the HCS, but with the Astra and that family of products into the AI PCs. How many PCs do you think we will see in 2024 with Synaptics?

I think actually industry wide people are trying to get a handle on hey, how does the sequential sort of moved from here I think the most comfort I have is.

We're likely to move higher.

Almost unlikely to go lower so it's higher than I think you'd see more sequential growth sort of continually led by core Iot enterprise is less clear for us. It's just tough for us to confirm Vijay on exactly seasonality and what that pattern will look like core.

<unk> right now is what we probably have the most comprehensive behind.

Got it and then on the IPC side any talk on.

How many.

And a piece as you expect.

Is it.

You had a pretty good.

And a demo at CES, but with the AST.

That family of products into the IPC, how many pieces.

I think we see in 2024.

With Synaptics on it.

Michael E. Hurlston: Look, we're, I mean, on our PC line, Vijay, we're forecasting, you know, very, very modest growth. You can certainly hear all this stuff about AIPC. Our customers keep talking about AIPCs, and our customers are also talking about a pretty pronounced refresh in the back half of the year. Everybody bought COVID years ago.

Look I mean on our PC line Vijay we're forecasting very very modest growth in the number of units. We certainly hear all this stuff about AIP sees our customers keep talking about AI Pcs and our customers are also talking about a pretty pronounced.

Ounce refresh in the back half of the year given.

Everybody bought new Pcs four years ago with with Covid at the onset of Covid.

Michael E. Hurlston: Our numbers are much more muted. We certainly don't. We're not baking any of that in. If it hits, look, it'll be very helpful to see what we've done and what we're focusing on over the next couple of quarters. Share. Where we are continuing to be excited, you touched on this in a slightly different area, is... The whole user presence detection that we have, and with one of the PC customers. We're very AI-centric, and we intend to take that product and make it more of a general purpose product that will enable us in the aftermarket to have a general purpose product. With AI capability,

Our numbers are much more muted we certainly don't.

We're not baking any of that in any of that enthusiasm if it hits look it'll be very helpful. Because I think what we've done and what we're focusing on over the next couple of quarters is sure.

Where we are continuing to decided you touched on it is a slightly different area is.

The whole user presence detection that we have.

With one of the PC customers.

Rajvindra S. Gill: Very AI centric and we intend to take that product and make it more of a general purpose product that will enable us in the Astra area to have a general purpose MCU.

With AI capability. So our customers are pretty excited I mean, they've seen this out we talked about in the prepared remarks, they've seen the sample of this AI MCU daily.

Michael E. Hurlston: So, our customer is pretty excited. I mean, they've seen the sample we talked about in the prepared remarks. They've seen the sample of this AI NGU. They like it, and they think, The Bulletproof Executive 2013, It'll start shipping at the end of the calendar year and into next year, and if things go well for us, we expect to see a pretty big bounce on that product that adds to what we're currently selling. And one last question, if I can sneak it in. On the handset side, you had a pretty good pickup in the last quarter. Obviously, a big win with S24 as well.

They like it and I think it's incredible in terms of the level of performance and differentiation. It brings it will start shipping at the end of the calendar year and into next year and if things go well for US we expect to see a pretty big bounce on that product that adds to what we're currently selling into the PC platform.

Got it and one last question, if we're going to sneak it in on the handset side, you had a pretty good pick up in the last quarter.

Obviously, a big win with this 24 as well.

Michael E. Hurlston: I missed one of your comments, but were you thinking that handset business was mostly flat through the year, or how are you looking at that trending? Thanks. Yeah, I mean, I think it's seasonal.

I missed one of the company's book value.

Thinking that penta business, mostly flat to the yellow how are you looking at that training.

I think it's seasonal I mean, theres going to be some seasonality in <unk> talk to that and one of the questions.

Michael E. Hurlston: I mean, there's going to be some seasonality. Dean talked about that in one of the questions. I'd say for where we are, there's limited upside. I don't think there's a lot of downsides where we are from as a share, just given the performance of the IC and things of that nature. But our attach rate is very high in China and in Samsung at this point. Like I said, we think we can get to more handsets in the mid-tier at Samsung. That's definitely possible, given... www.synapticsinc.com www.youtube.com.uk, significant, significant share gain.

I'd say for where we are.

There is Theres limited upside I don't I don't think Theres a lot of downside from where we are from a share just given the performance of the IC and things of that nature, but our attach rate is very high in China and at Samsung at this point.

We said, we think we can get some more handsets in the mid tier at Samsung that's definitely possible given the work that the team has done but on balance on balance I think we're going to kind of track.

Android handset shipments at this point and significant significant share gains will be more difficult.

Got it thank you.

Operator: Thank you. One moment for questions. Our next question comes from Kevin Cassidy with Rosenblatt Securities. You may proceed. Yeah, thanks for taking my question. Congratulations on the results.

Thank you.

One moment for questions.

Our next question comes from Kevin Cassidy with Rosenblatt Securities You May proceed.

Yes, Thanks for taking my question and congratulations on the results.

Kevin Edward Cassidy: You know, there's been a lot of weakness in IoT, and you're calling the bottom and seeing it coming back. Can you talk about the design activity? Maybe try to relate it to the past cycle?

Just there's been a lot of weakness in Iot and Youre, calling the bottom end.

Coming back can you talk about the design activity.

Maybe try to relate it to the past cycle as this activity up tremendously and then also what what are you are you are.

Michael E. Hurlston: Is this activity up tremendously? And then also, you know, what are your MCUs and Wi-Fi getting combined in these designs, or are you getting some leverage on your Wi-Fi parts? Thanks. Yeah, Kevin, I mean, first, thanks for the thanks for the nice words. I'm on core IoT.

Rajvindra S. Gill: Mcu's Wi Fi getting combined and these designs are kind of are you getting some leverage on your Wi Fi parts.

Okay.

Yes, Kevin I mean, so first thanks for the thanks for the nice words Oncor Iot, Yes. We are excited I mean, I think that we've talked to a lot of you about design traction and now it's starting to hit again very early innings right, we're still not happy with the overall revenue.

Michael E. Hurlston: Yeah, we are excited. I mean, I think that we've talked to a lot of you about design traction, and now it's starting to hit again, very early innings, right?

Numbers because.

Michael E. Hurlston: We're still not happy with the overall revenue numbers. As the previous questioner pointed out, we're still... well below the 200 million mark, but we get there just based on what we had before, and then these design wins start to layer in. Well, across the board, our wireless product highlighted a new area for us, which is automotive. As we think about processors, those ones are kind of along the road. So they are, yes, they are pulling through our wireless in every... We're trying to package up our wireless and our processors and Afra, which we had kind of a very, very soft launch before the end of the calendar year. We definitely lump in our wireless drivers in that software offering, so it pulls.

Previous questioner pointed out we're still well below the 200 million Mark, but we think we get there.

Just based on what we had before and then these design wins start to layer in and we're doing well across the ecosystem with our wireless products, we highlighted a new area for us which is automotive.

As we think about the processors.

Those ones are.

And have a longer road. So they are yes. They are pulling through our wireless in every instance, we're trying to package up.

Our wireless and our processors and <unk>.

<unk>, which we had kind of a very very soft launch before the end of the calendar year.

<unk> definitely lump in our wireless drivers in that software offerings. So it so it pulls through what we have seen is slower than expected customer ramps. All of these cut new wins, we have are taking more time than before largely because our customers have.

Michael E. Hurlston: What we have is a slower than expected customer ramp. All of these new wins we have are taking more time than before, largely because our customers have kind of cut their engineering budgets, and so the ramp-up time has been slower than we've historically seen. We're baking in now, in our thinking, in our numbers, generally slower ramp times, Kevin. All right. Thank you. The Bulletproof Executive 2013, But we don't think that any of these are lost, just ramping up a little bit slower. I see. Great. Okay.

Rajvindra S. Gill: Kind of cut their engineering budgets and so the ramp up time has been slower than we've historically seen where we're baking in now in our thinking and our numbers generally slower ramp times, Kevin then than we saw before and we've historically been used to.

But we don't think that any of these are losses at this point in time, we just think it's ramping a little bit slower than we'd initially forecast.

Operator: Thank you. Thank you. One moment for questions. Our next question comes from Martin Young with Oppenheimer.

I would say great. Okay. Thank you.

Thank you.

One moment for questions.

Our next question comes from Martin Yang with Oppenheimer You May proceed.

Martin Young: You may proceed. Hi, thank you for taking my question. I have one question on enterprise and automotive.

Hi, Thank you for taking my question I have one question on enterprise and automotive.

Michael E. Hurlston: Have you started speaking with our customers regarding this year's annual budget cycle for enterprise spending? Do you get a feel that, adjusting for inventory differences, 20 under 24 will be, you know, flat down, slightly up on a yearly basis? Yeah, Martin. I mean, I think 24 is generally better than 23.

Have you.

Speaking with our customers regarding this years.

And your purchase cycle for enterprise spending do you get a feel that adjusting for inventory differences.

'twenty calendar 'twenty four would be flat down slightly up on a year over year basis.

Yes, Mark I mean, I think 24 is generally better than 23. So it's still it's still an issue. We're obviously early in the year, we're staying close to the customers and.

Michael E. Hurlston: So it's still an issue. We're obviously, you know, early in the year; we stay close to the customer. You know, their customers are getting forecasts or one step removed from both, you know, let's say, Dell and HP. Anyway, everybody's hopeful for the second half. I mean, I think there's a lot of optimism built into the second half. You know, we see that, I think, as we said in the prepared remarks, I think we're working through the inventory situation. And although it's still there in pockets, as Dean said... Generally now, it's... What's the demand? You know, what's the demand for in enterprise?

Their customers are giving forecast so we're one step removed.

From both.

Say Dell and HP everybody is hopeful for the second half I mean, I think there's a lot of optimism built into the second half and.

We see that I think as we said in the prepared remarks, I think we're working through the inventory situation.

And although it's still there in pockets as Dean said.

Generally now it's going to be what's the demand whats the demand in enterprise.

Definitely optimism in the second half we think that.

Rajvindra S. Gill: The signals, we're getting but we're one step removed as I said, so it's still a picture is still a bit cloudy.

Michael E. Hurlston: Definitely optimism in the second half. The signals we're getting are one step removed, as I said, so the picture is still a bit cloudy. Thank you. That's it for me.

Got it. Thank you that's it from me.

Thanks Martin.

Thank you I would now like to turn the call back over to Michael <unk> for any closing remarks.

I'd like to thank all of you for joining US today, we certainly look forward to speaking to you at our upcoming Investor conferences and again next quarter. Thanks a lot.

Michael E. Hurlston: Thanks, Martin. Thank you. I would now like to turn the call back over to Michael Hurlston for any closing remarks. I'd like to thank all of you for joining us today. We look forward to speaking to you at our upcoming investor conferences and again next quarter. Thanks a lot. Thank you for your participation. You may now disconnect.

Thank you for your participation you may now disconnect.

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Rajvindra S. Gill: So.

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Operator: The Ultimate Parody Site! Copyright 2019 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Pete.

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