Q2 2025 Synaptics Incorporated Earnings Call
Thank you for standing by and welcome to the Synaptics, Inc. Second quarter fiscal year 2025 financial results Conference call. At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.
If your question has been answered and you'd like to remove yourself from the queue simply press star one again.
Today's program is being recorded and now I'd like to introduce your host for today's program, John Shaw Vice President Investor Relations. Please go ahead.
Speaker Change: Good afternoon, and thank you for joining us today on <unk> second quarter fiscal 2025 conference call. My name is Juan Jos shot and I am the head of Investor Relations.
Speaker Change: With me on today's call are Ken Xie interim CEO and Chief Financial Officer.
Our SVP intelligent sensing division.
Speaker Change: And Chief strategy Officer.
Speaker Change: Got it.
Vikram Gupta: That's V P of wireless and Vikram Gupta SVP of processors and Chief product Officer.
Vikram Gupta: In addition to our quarterly results. We will also discuss our recent agreement with Broadcom.
Vikram Gupta: Call is being broadcast live over the web it can be accessed from the Investor Relations section of the company's website at Synaptics Dot com.
Vikram Gupta: In addition to a supplemental slide presentation, we have posted a copy of the prepared remarks on our Investor Relations website.
Vikram Gupta: In addition to the company's GAAP results management will provide supplementary results on a non-GAAP basis.
Vikram Gupta: Share based compensation acquisition related costs.
Vikram Gupta: Other noncash recurring or nonrecurring items.
Vikram Gupta: Please refer to our earnings press release issued after market close today.
Vikram Gupta: Reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures presented.
Vikram Gupta: Can be accessed from the Investor Relations section of the company's website at Synaptics Dot com.
Vikram Gupta: Additionally, we would like to remind you that during the course of this conference call Synaptics will make forward looking statements in our prepared remarks.
Vikram Gupta: Supplemental materials and May make additional forward looking statements in response to your questions.
Vikram Gupta: These forward looking statements give our current expectations and projections relating to our financial condition results of operation plans objectives future performance and business.
Vikram Gupta: Although synaptics believes the estimate that the assumptions underlying these forward looking statements to be reasonable.
Vikram Gupta: Subject to a number of risks and uncertainties beyond our control.
Vikram Gupta: Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward looking statements.
Vikram Gupta: Therefore, we refer you to the company's current and periodic reports filed with the SEC.
Vikram Gupta: <unk> 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.
Vikram Gupta: Except as required by law did not fixed expressly disclaims any obligation to update this forward looking information.
Ken Xie: I will now turn the call over to Ken.
Thanks, John I'd like to welcome everyone to today's call I had the pleasure of Vikram venkat entities, joining our call today.
Ken Xie: First I want to briefly comment on the news, we announced on Monday that Michael Harralson has stepped down as president and CEO and as a member of our board of directors to assume the role of CEO at momentum.
Ken Xie: We thank Michael for his invaluable contributions and dedication to synaptics over the last five years and wish him the best in his future endeavors.
Ken Xie: The board has commenced a CEO search and we'll be considering both internal and external candidates.
Speaker Change: To ensure seamless execution during this transition I will be serving as interim CEO and will work closely with our executive Chairman Nelson Chan, Our board and our deep bench of experienced senior leaders to drive the continued execution of our growth strategy.
Speaker Change: We have a strong foundation and leadership team in place and remain laser focused on capitalizing on the significant demand for our innovative products and solutions.
Speaker Change: Our strategy remains the same.
Speaker Change: <unk> has three key pillars.
Speaker Change: First we are investing in our core product lines within the enterprise automotive and mobile touch markets.
Speaker Change: We are confident in the growth prospects of these franchise products as we hold the leadership position as either the number one or number two player in terms of market share in many of these markets.
Speaker Change: Second.
Speaker Change: We continue to see tremendous growth opportunities in core Iot, specifically in our wireless and processor portfolio.
Speaker Change: As evidenced by our recent Broadcom agreement, our tuck in acquisition of packet craft and our Google partnership we are.
Speaker Change: Our investing both organically and inorganically to scale and expand capabilities in these high growth areas.
Speaker Change: And finally, we remain prudent in our allocation of capital.
Speaker Change: During the second quarter, we retired our term loan b with the convertible note and cash on hand.
Speaker Change: Reducing our total debt and cash interest expense, while also returning approximately $75 million of capital back to shareholders via share repurchases.
Speaker Change: Before I go through the details of our second fiscal quarter, Let me comment on our recent Broadcom agreement.
Speaker Change: This was a $198 million all cash transaction funded with cash from our balance sheet we.
Speaker Change: We expect to generate over $40 million in annualized sales and expect the transaction to be slightly accretive to our non-GAAP EPS.
Speaker Change: We have posted slides on our website outlining the transaction benefits.
Speaker Change: Let me turn you to slide four of that presentation.
Speaker Change: We believe our new agreement with Broadcom accelerates, our edge AI strategy and further strengthens our leadership in Iot connectivity.
Speaker Change: As part of the transaction, we expand our portfolio of industry, leading Wi Fi eight combo devices that include advanced Bluetooth features additional Wi Fi seven combo devices, ultra wideband or uwp intellectual property next generation GPS G NSS products.
Speaker Change: And combo front end modules.
Speaker Change: This transaction solidifies and secures our wireless roadmap for the next five plus years.
Speaker Change: The agreement also importantly expands our field of use.
Speaker Change: Allowing our Wi Fi products to compete in RBR, Android smartphones and the consumer audio markets.
Speaker Change: <unk>, increasing our serviceable market.
Speaker Change: Additionally, we are onboarding, a highly skilled team of engineers positioning us as one of the largest and most qualified teams in cutting edge wireless research and development.
Speaker Change: Moving to slide five as AI continues to evolve at the edge. We believe smartphones will serve as one of the central hubs for controlling multiple edge Iot devices.
Speaker Change: By expanding our reach into these devices. We now have the ability to enable a complete ecosystem with centralized control at the hub and seamless end to end edge connectivity.
Speaker Change: We believe we will be one of the first if not the first to market with Wi Fi technology, enabling AI at the edge.
Speaker Change: Now moving to slide six.
Speaker Change: The Broadcom agreement further strengthens our leadership in wireless connectivity expanding our portfolio of high performance in broad markets Iot applications.
Speaker Change: In addition, we now have the foundational technology for Uwp, which we can integrate into future Iot devices.
Speaker Change: Finally, our portfolio now includes next generation GPS <unk> devices.
Speaker Change: Offering greater accuracy and improved power efficiency, enabling us to further expand our position in markets, such as Wearables navigation devices and asset trackers.
Speaker Change: Moving to slide seven.
Speaker Change: As I mentioned as part of the agreement we have on boarded a great team of engineers.
Speaker Change: Since our initial acquisition of wireless assets from Broadcom in 2020, we made significant strides in establishing leadership in wireless connectivity.
Speaker Change: We started with a team of approximately 50 plus employees.
Speaker Change: And now have built a world class wireless engineering team.
Speaker Change: Our comprehensive portfolio for edge AI Iot applications spans all generation of Wi Fi devices, Bluetooth GPS DNS and uwp.
Speaker Change: We believe our cutting edge research and development pushes the limits of performance efficiency and seamless connectivity.
Speaker Change: In summary, then Ken our senior Vice President of wireless work closely with Broadcom to finalize this strategic transaction, adding multiple next generation connectivity products and technologies to our portfolio.
Speaker Change: We are excited to welcome our new team members to Synaptics and look forward to building, a bright and successful future together.
Speaker Change: Separately on the edge AI processor fund.
Speaker Change: We recently announced a collaboration between Google and Synaptics integrating Google's MLR compliant machine learning core with our industry, leading Astra processor lines.
The AI solution combines astra's neuro processing engine with Google's standard core.
Speaker Change: We expect both companies to contribute compiler expertise.
Speaker Change: Collaborate on advancing the technology roadmap.
Speaker Change: This AI solution will be incorporated into our upcoming Astra processors.
Speaker Change: One of the reasons, Google chose Synaptics as a partner is due to our AI technology that is expected to deliver industry, leading inference per watt.
Speaker Change: This partnership speaks to our credibility in this emerging industry and as a validation of the investments we've made to deliver high performance ultra low power edge AI solutions.
Speaker Change: We believe Google will be a strong partner in creating a thriving ecosystem for AI, attracting AI model developers and driving further proliferation of AI to the edge.
Speaker Change: We expect our collaboration to create opportunities in future, Google and non Google devices, serving this emerging ecosystem.
Speaker Change: Now, let me turn to December quarter results.
Speaker Change: We delivered another solid quarter of growth with revenues, increasing 4% sequentially and 13% year over year to $267 million.
Speaker Change: Which was slightly above the midpoint of our guidance range led by strength in core Iot and enterprise products.
Speaker Change: non-GAAP gross margin came in slightly above the midpoint of our guidance at 53, 6%.
Speaker Change: non-GAAP EPS increased 61% year over year to <unk> 92.
Speaker Change: It exceeded the midpoint of our guidance.
Speaker Change: In core Iot, our product sales increased 63% year over year to $61 million driven by growth in both processor and wireless products are processor demand is improving as customer and channel inventory challenges are largely behind us.
Speaker Change: <unk>, we are collaborating with content providers to develop new AI use cases for operators and ramping new design wins.
Speaker Change: In wireless we are sampling Wi Fi seven and broad market chips with customers.
Speaker Change: To advance our BLA efforts, we acquired packet craft a provider of advanced embedded BLE software packet craft offers a low latency and compact software stack, enabling energy efficiency and economically interconnected system.
Speaker Change: With our recent transactions organic development growing pipeline and design win momentum we continue to remain confident in our core Iot growth vectors.
Speaker Change: Turning to enterprise and automotive.
Speaker Change: On the enterprise side, we are seeing normal seasonal trends with customers, placing orders only win and demand materializes.
As a result, while orders and bookings continue to show improvement they do not yet indicate a refresh cycle for.
Speaker Change: For calendar year 2025, we remain optimistic about enterprise demand due to multiple factors.
Speaker Change: Contributions from new products opportunities to continue to gain market share lean customer and channel inventories and the potential for a PC refresh cycle.
Speaker Change: At CES, we showcased several new technologies, including user presence detection or PD.
Speaker Change: Our lead customer has launched new products, featuring our solution and we expect them to ramp throughout calendar year 2025.
Speaker Change: We have also secured our first <unk> design win at another major OEM reinforcing our market position we.
Speaker Change: We expect adoption and penetration of PD technology to increase as customers recognize the value and power savings privacy and security.
Speaker Change: In automotive we secured our first smart bridge design win with a customer in China. We remain encouraged by the long term potential of this technology given its system level cost savings exceptional contrast ratio and automotive displays and best in class image quality.
Speaker Change: Overall, our business has been resilient.
Speaker Change: However, we would expect to experience similar headwinds as other semiconductor suppliers within the automotive space as most of our exposures to U S and European customers.
Speaker Change: For the long term, we believe we are well positioned across major Oems globally, and we will continue to pursue and expand opportunities in China.
Speaker Change: In mobile touch we are pleased to say the headwind from our large U S. Customer is now fully behind US looking forward. Our primary focus will be on the high end Android smartphone market.
Speaker Change: In Q2, we saw revenue growth from China Oems benefiting from an increasing mix of flexible OLED screen technology the.
Speaker Change: The Android market saw solid recovery in 2024, and we expect to see continued growth in 2025, as the Android ecosystem gained share and industry incentives drive higher demand.
Speaker Change: Now, let me turn to our second quarter financial results and third quarter outlook.
Speaker Change: I will focus my remarks on our non-GAAP results, which are reconciled to GAAP financial measures in our earnings release tables found in the Investor Relations section of our website.
Speaker Change: Revenue for fiscal Q2 was $267 $2 million above the midpoint of our guidance with sequential and year over year improvement in both core Iot and enterprise and automotive Q.
Speaker Change: Q2 revenues were up 13% on a year over year basis and up 4% sequentially.
Speaker Change: Revenue mix in the second quarter was as follows 23% core Iot, 59% enterprise and automotive and 18% mobile touch products.
Speaker Change: Our Iot product revenues increased 63% year over year, and 3% sequentially enterprise and automotive product revenue improved 17% year over year and 8% sequentially.
Mobile touch product revenue was down 7% sequentially and 25% year over year as product shipments to a large U S customer have reached end of life.
Speaker Change: Second quarter non-GAAP gross margin was 53, 6% slightly above the midpoint of our guidance.
Speaker Change: Second quarter non-GAAP operating expense was $97 1 million slightly above the midpoint of our guidance range, primarily due to the inclusion of the packet craft acquisition as well as incremental variable expenses during the quarter.
Speaker Change: Our non-GAAP operating margin strengthened again in the second quarter coming in at 17, 3% up approximately 360 basis points on a year over year basis, and 60 basis points sequentially driven by improved revenue and continued operating expense controls.
Speaker Change: non-GAAP net income in Q2 was $36 6 million.
Speaker Change: non-GAAP EPS per diluted share came in above the midpoint of our guidance at <unk> 92 per share an increase of 61% on a year over year basis and 14% sequentially.
Speaker Change: Now, let me turn to the balance sheet.
Speaker Change: We ended the quarter with approximately $596 million of cash and cash equivalents down approximately $258 million from the prior quarter.
Speaker Change: We fully retired our $582 million term loan b during the quarter.
Speaker Change: The total face value of debt decreased to $850 million from $982 million at the end of the September quarter.
Speaker Change: In addition, we returned $74 5 million in capital through share repurchases this quarter.
Speaker Change: <unk> approximately 1 million shares.
Speaker Change: Cash flow from operations was $24 million.
Speaker Change: As a reminder, subsequent to the quarter end, we did use $198 million of our cash for the Broadcom transaction.
Speaker Change: Now let me provide some details on our refinancing this past quarter.
Speaker Change: In November we issued $450 million of convertible notes with a coupon of 75 basis points due in 2031, we.
Speaker Change: We also purchased a capped call to mitigate dilution and economically protect us up to a stock price of approximately $150.
Speaker Change: Table in our supplemental slides outlines the dilution mitigation benefit of this capped call.
Speaker Change: We used the proceeds from our convertible offering and cash from our balance sheet to completely retire our $582 million term loan.
Speaker Change: Capital expenditures were $4 7 million and depreciation for the quarter was $7 4 million.
Speaker Change: Receivables at the end of December were $146 $5 million and days of sales outstanding were 49 days up from 47 days last quarter.
Speaker Change: Our ending inventory balance was $119 $5 million, which was roughly in line with the prior quarter.
Speaker Change: The calculated days of inventory on our balance sheet were 87 days.
Speaker Change: Now turning to our third quarter of fiscal 2025 guidance.
Speaker Change: We expect revenues to be approximately $265 million at the midpoint plus or minus $15 million.
Speaker Change: Our guidance includes a partial quarter of contribution from our recent acquisition of Broadcom assets.
Speaker Change: Our guidance for the third quarter reflects an expected revenue mix from core Iot enterprise and automotive and mobile touch products of approximately 25, 58 and 17% respectively.
Speaker Change: We expect non-GAAP gross margin to be 53, 5% at the midpoint plus or minus 1%.
Speaker Change: non-GAAP operating expenses in the March quarter are expected to be $101 million at the midpoint of guidance plus or minus $2 million.
Speaker Change: The increase in operating expenses is primarily due to head count related expenses from our packet craft acquisition and Broadcom transaction as well as incremental variable expenses.
Speaker Change: We expect non-GAAP net interest and other expense to be approximately $1 million in the third quarter and our non-GAAP tax rate to be in the range of 13% to 15%.
Speaker Change: non-GAAP net income per diluted share is anticipated to be 85 cents per share at the midpoint plus or minus 20.
Speaker Change: On an estimated $39 5 million fully diluted shares.
Speaker Change: To conclude Synaptics has a strong portfolio of products with a leading share position in several end markets.
Speaker Change: We have an experienced leadership team that is laser focused on driving our product roadmap and business priorities our.
Speaker Change: Line and our design wins continue to improve.
Speaker Change: We are gaining market share and continue to drive innovation with new products.
Speaker Change: We remain committed to driving long term sustainable growth for the company.
Speaker Change: This wraps up our prepared remarks, I'd like to turn the call over to the operator to start the Q&A session.
Speaker Change: Certainly and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. Our first question comes from the line of Quinn Bolton from Needham <unk> Company. Your question. Please.
Speaker Change: Hey, guys, it's not frequent Paul Thanks for taking my question. So you talked about a $40 million in annualized sales from the Broadcom trash from the Broadcom transaction is that coming more into the core Iot segment are more in the mobile any color would be appreciated yes sure. Neil. Thanks. This is Ken resume thanks for the question.
Speaker Change: That will actually all fall into the core Iot segment, because its primarily wireless.
Speaker Change: Technologies.
Speaker Change: Okay, great. Thanks, and then.
Speaker Change: Any specific areas that are driving it.
Speaker Change: And bookings and orders and enterprise side.
Speaker Change: Any areas of weakness that you wanted to call out as well.
Speaker Change: Say that again.
Speaker Change: He asked the question there.
Speaker Change: Yes, sorry, so you talked about the improvement in bookings and orders within enterprise. So I was wondering if you wanted to call out any specific areas that are driving the improvement and then on the flip side any areas of weakness within enterprise.
Yes, I'd say it is fairly broad we did talk about that.
Speaker Change: Broadly speaking on the on the peripheral side, we're starting to see some good traction there and look if I just step back and think about the entire business.
Speaker Change: So much better today than maybe six months ago in terms of our visibility overall for the entire business. One we have very lean inventories overall at or below COVID-19 levels, and then to even in this kind of slower growth economic environment I definitely see it.
Speaker Change: Path for us to grow sequentially.
Speaker Change: About $10 million plus or minus.
Speaker Change: Sequentially throughout this calendar year I think we're in very good shape I see a path there could it be slightly more in any given quarter or slightly less the answer is yes, but we have a good path of growth ahead of us as we think out over the next four quarters through the end of this calendar year.
Speaker Change: So we're feeling very good about the business overall.
Speaker Change: It's inclusive of the enterprise space and.
Speaker Change: And specifically in the core Iot space, where we will see some benefit this quarter.
From the Broadcom acquisition will get the full benefit here starting in the June quarter.
Speaker Change: But we're very optimistic about the overall business. The only area I would say that that is still a bit sluggish we talked about this on the formal transcript is around the automotive space.
Speaker Change: It's embedded in the comments I just outlined.
Speaker Change: Great. Thank you.
Speaker Change: Thank you and our next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Your question. Please.
Kevin Cassidy: Yes, Thanks for taking my question and congratulations on the great quarter and a great transaction.
Speaker Change: Thanks, Tim.
Speaker Change: <unk> learned a little more about the transaction of the products you.
Speaker Change: License some of our especially the entry into the Android market and <unk> market can you say where are their designs in progress in those markets that maybe would be coming into production.
Speaker Change: Second half of this year or near term anyway.
Speaker Change: Yes, so Kevin one one thank you for the support too I think we also feel like this is a great transaction. It further extends the strength that we have in our overall core Iot segment, and specifically around our wireless portfolio.
Speaker Change: If you look at the revenue ramp we've talked about a $40 million plus opportunity about $10 million plus a quarter, we get the full benefit starting in the June quarter here.
Speaker Change: And you can you can expect us to continue to ramp.
Speaker Change: Our revenue not only with the existing customer base, but we have an ability to ramp that technology with new customers, especially as we look into calendar year 2006 and calendar year 2027.
Speaker Change: From a technology standpoint, what do we get we get a Wi Fi eight.
Speaker Change: Combo chips that we get.
Speaker Change: Advanced <unk> and GPS technology, we get IP around the U W B portfolio.
Speaker Change: And then we get front end modules. So all of these things are actually fantastic additions to our overall portfolio. In addition, we get some Wi Fi seven technology Thats. That's in production today servicing that Android related customer I don't know.
Speaker Change: <unk> do you want to add anything in terms of the context.
I think you.
Ken Xie: Hi, Ken the only other thing I would add is that we're also getting cleared it up.
Ken Xie: Our engineers as part of this transaction that will help us become one of the largest teams for the Iot segment.
Ken Xie: In the lung.
Ken Xie: Perfect.
Ken Xie: Okay.
Ken Xie: Anything else Kevin.
Kevin: Yes, sorry, I had a little trouble hearing that answer yes.
I think you've mentioned.
Kevin: Ask next about maybe what all of Us Wi Fi.
Kevin: Just say wireless connectivity.
Kevin: It will help your failure.
Kevin: Processors.
Kevin: To the.
Speaker Change: Network edge market, what percentage of would you say you are.
Kevin: Wireless connectivity customers Kevin.
Speaker Change: Adopt your processors also.
Vikram Gupta: Vikram do you want to and decrements that in case, you want to take this this call or this question.
Right, Yes, so I think the way we see it is actually this transaction helps us create a really good solutions that we can offer far.
Vikram Gupta: The Iot and edge AI space via.
Vikram Gupta: We have always been stressing the combination of our processes and connectivity together and that story actually seems to be resonating across the board.
Vikram Gupta: The wireless portfolio is definitely.
Vikram Gupta: Full position right now, but as the processes of rolling out we're seeing a full living in the other direction. So we expect this trend to actually continue as we as we look ahead.
Vikram Gupta: Okay great.
Speaker Change: Thank you and our next question comes from the line of Christian Senger from TD Cowen Your question. Please.
Christian Senger: Yeah, Hi, Thanks for taking my question and congrats on the good results and the first question I had is when I.
Speaker Change: Looking at your revenue.
Speaker Change: You've kind of been in this $250 million plus 150 million revenue run rate of almost.
Speaker Change: Eight quarters two years now.
Speaker Change: If you strip out the Broadcom deal I'm curious are we just waiting for the cycle to inflect.
Speaker Change: How do you see any kind of inflection coming imminently because I'm. Just wondering is this something synaptics can do.
Speaker Change: The formal agenda, all sorts of the cycle compared to what we had been in this kind of a lull for like two years.
Speaker Change: This is a good question and so if you if you look at where the business now is I feel very comfortable with the path ahead, obviously, we can't call things out two years, but if you look at the trajectory of the business here through calendar year 'twenty five we have much better visibility now.
Speaker Change: We did adjust even six months ago.
Speaker Change: And what I can say is I feel like we have a direct path to be able to grow the business from.
Speaker Change: From these levels, so where we guided to $265 million, but I think sequentially as we look out for the rest of this calendar year.
Speaker Change: There is definitely a path even in a low growth environment.
Speaker Change: To grow kind of $10 million or so sequentially.
Speaker Change: In calendar year Q2 into calendar year, Q3, and calendar year Q4. So I think those are great signs in terms of where the business is at and if you look even where we were a year ago.
Speaker Change: And one thing just to highlight.
Speaker Change: The business is up about 13% sequentially on a revenue basis, but our earnings which are important are up 61%. So we've been able to show good revenue growth and better earnings growth and is in a slower growth environment and I think part of our story here is that.
Speaker Change: We have a number of great franchise businesses that we highlighted where we're either number one or number two.
Speaker Change: A lot of critical markets in the enterprise space in the automotive space and in the mobile space and we have visibility beyond that to really inflect our growth.
Speaker Change: Especially as we look out into calendar year, 2006, and 2007 when do you think about our core Iot segment, the Broadcom transaction augments our growth.
Speaker Change: But.
Speaker Change: If you look at the capabilities, we have within core Iot around wireless here as we think about this year and into next year and then as we think about fiscal 2027, the ability to ramp the processor business with Astra specifically those are really great.
Speaker Change: Storylines for the company.
Speaker Change: An ability for us to grow above the market rates for our other end markets. So I feel like we're in a great position here, obviously, we went through.
Speaker Change: A very challenging period post COVID-19, the business stabilized and bottomed about a year ago and now we're on this path for steady growth here at least over the next.
Speaker Change: Three quarters through the end of this calendar year I see a direct line of growth potential here in a slow growth economic environment.
Speaker Change: If things get better, we're obviously going to do much better.
Speaker Change: And so.
Speaker Change: Very comfortable as we sit today.
Speaker Change: Gotcha Gotcha, thanks for that explanation.
Speaker Change: Just a clarification and a follow up question.
The $10 million incremental revenue in June quarter.
Speaker Change: Is that part of the $40 million run rate from the Broadcom acquisition.
Speaker Change: So there is some in there right because we do get.
Speaker Change: A full quarter of benefit this quarter, we're only going to get a partial quarter given when the transaction closed.
Speaker Change: Next year next quarter, we'll get a full quarter of benefit from June and then onward from there.
Speaker Change: And then just a question.
Speaker Change: After June yes, it will be normalized on a sequential basis. When you look at it post June it will be fully baked in.
Speaker Change: So.
Speaker Change: September December it will be everything will be organic when you look on a sequential basis and just one clarification.
Speaker Change: You said, 13% it was 13% year over year growth.
Speaker Change: Yeah, Yeah got it got it thanks, Joe and then just a follow up get back to the Google deal announced how to think about.
Speaker Change: Quarterly revenue contribution right.
Speaker Change: Contributing to your top line and along the same path, if I Beacon Broadcom and Google.
Speaker Change: Is it fair to view sequentially June should be up from March.
Speaker Change: September should we have some julien so all.
Speaker Change: Yes, So let me answer that so the Google collaboration is really about the partnership and validation of our Astral platform nothing changes in terms of of the forecast that we've outlined to investors in terms of the ramp that's still in that fiscal 2007 timeframe. This.
Speaker Change: Just further solidifies the relationship with a large partner that is proliferating AI into edge applications in the edge ecosystem.
Speaker Change: If you look at the sequential in terms of so when we think about the revenue and revenue run rate.
Speaker Change: The broadcom pieces as part of my earlier comments so in our guide here in this quarter, we have a partial.
Speaker Change: A portion of the Broadcom revenue, we'll get the full portion here starting the June quarter, and as I mentioned before as I think about it today in this lower growth environment.
Speaker Change: I would think about sequential growth from here without giving guidance.
Speaker Change: End of June.
Speaker Change: About $10 million more than another tenant into September and another 10 into December. So I think we have a good path for growth if the economic environment improves hopefully, we'll do better, but but I feel very comfortable in terms of where the business is positioned today, how the backlog is.
Speaker Change: Raping up where inventories are and.
Speaker Change: And how our product portfolio.
Speaker Change: Is shaping up for not only this year, but as we think about 2026.
Speaker Change: Awesome. Thank you Ken for the incremental color. Thank you appreciate it thank you.
Speaker Change: Yes.
Speaker Change: Thank you and our next question comes from the line of.
Christopher Rolland from Susquehanna Your question. Please.
Speaker Change: Hey, Ken Thanks for the question.
Ken Xie: So yes, I guess my first one is oh.
Ken Xie: Around the Broadcom piece I know this you've kind of talked about the Spain core Iot.
What exactly how meaningful can be over time and the reason I bring that up is there was a belief that broadcom really wasn't interested in long tail mobile customers.
Ken Xie: They were really just focused on Walden, maybe one and a half.
Ken Xie: And there could be this pretty big opportunity.
Ken Xie: For a combo chips and other across the long tail of mobile.
Ken Xie: And so I was wondering if you could weigh in on that opportunity and that's maybe three or four years from now do you think mobile will be larger from this deal or do you think corot Iot will be larger from the steel. Thank you.
Ken Xie: Chris That's a great question and if you look at our announcement one of the benefits that we received as part of this transaction is the expansion of the field of use. So we're now able to go into that <unk> segment consumer audio and then importantly, the Android smartphone segment.
Ken Xie: So going forward I think there will be significant opportunities for us as we think about 'twenty six 'twenty seven in terms of penetrating some of these other Android accounts on the smartphone side, so that will be a focus of the team.
Bill: Bill early days given that we just closed the transaction this quarter, but definitely an area of focus for us as we think about the next two to four years I know Venkat do you want to add to that yes, I think.
Bill: There are markets that we will be able to address with this technology it will be in the Iot space like automotive.
We are in classes.
Year to Biogen many other accessories. So we're just not going to be mobile, but it's also going to be more on the high end high performance segment that will be part of the Iot and our organic development in the broad markets will start to actually kick in.
2006, and 27 in calendar year, 2627 that will help us grow even bigger in the Iot wireless space.
Speaker Change: Okay, Great and I don't know if you wanted to chime in on that question about what will be bigger a few years out mobile or Iot, but I I would appreciate that and then.
Speaker Change: If you could also talk about let's say uwp that youre getting Fms deal as well I didn't know Broadcom had a great presence there.
Speaker Change: If you could maybe talk about about that opportunity and engagement and.
Speaker Change: How meaningful you think that could be on revenue as well. Thank you.
Speaker Change: So if you look at the breakout I think it's too early to call Chris between.
Speaker Change: The mobile opportunity and our existing wireless opportunity within core Iot. Obviously those are both areas will continue to look at and prosecute over the next couple of years.
You look at UW B I think that I'll, let you answer this one here, yes, Chris I think Youre WB is just an IP at this point, but the good thing about it is it isn't the advanced seven nanometer process node, which should help us, but coming up with a standalone product or integrated combo, which will.
Speaker Change: We needed for the high end Iot segment as well as the Android.
Speaker Change: Ecosystem.
Speaker Change: Youre going to integrate that into Wi Fi Bluetooth at some point.
Speaker Change: As you look at these markets I think.
Speaker Change: AWP gets more traction in the Android ecosystem, we will definitely consider that as well as building a standalone product.
Speaker Change: This actually.
Speaker Change: It would be very helpful for us to go after those markets.
Speaker Change: I think just to highlight right now if you look at it it's the it's the IP that we get as part of this transaction.
Speaker Change: So.
Speaker Change:
Speaker Change: And so thats, what we will look at developing over the next couple of years a lot of this will be dependent on where the market is and the use of this technology, but the key piece is that we get the IP and we can proliferate that with our existing team and be able to develop that over.
Speaker Change: Over the next several years.
Speaker Change: Fantastic Thanks, guys.
Speaker Change: Thank you and our next question comes from the line of David Li from Mizuho. Your question. Please.
Speaker Change: Hi, Thanks for the question I'm on for Vijay.
Speaker Change: First of all I was wondering on your Astra Google platform.
Speaker Change: Has that prior $300 million funnel.
Speaker Change: Changed.
Speaker Change: Maybe related to the recent accelerated deep sea Hyatt like smaller multiple pharma models I know you guys.
Speaker Change: Your models right now millions of parameters, but just wondering if that has accelerated.
Ken Xie: Yeah. So one of the things that thanks for the question by the way. This is Ken one of the questions.
Ken Xie: One of the items that we did talk about on our last call was the pipeline for Astra.
Ken Xie: And we talked about it being $300 million or so that continues to grow so the interest not a surprise continues to grow as people think about applications and the proliferation of AI to the.
Ken Xie: The edge. So it's we won't provide specifics on the pipeline, we'll do that once a year, but what I can say is that there continues to be strong interest across a variety of applications.
Ken Xie: And to use this astro technology.
Speaker Change: Has the chipset at the edge, but maybe Vikram do you want to comment further just on on the trends that youre seeing at a very high level.
Speaker Change: I think you've covered it the thing that I would say is that subsequent to the Google announcement, we have seen.
Speaker Change: Even more traction with our customer base. So the funnel is growing.
Speaker Change: Definitely foster and again Thats beginning of automation.
Speaker Change: Coming from a really important hyper scaler or.
Speaker Change: If our technology, which is actually helping it and just to add to your deep C comment. That's another you are actually spot on that.
Speaker Change: Given what <unk> been able to show there is going to be a proliferation of mortars going all the way from the high end down to the edge.
Speaker Change: That just benefits.
Speaker Change: And the other aspect, which is being highlighted by deep sea is the.
Speaker Change: The fact that they rely on the open source community and Thats something that Theyre also stressing the disposals of collaboration which is somewhat unique to us as a silicon player. All of this is going to definitely help capitalize.
Speaker Change: Our move into the AI space Ajay.
Speaker Change: Perfect.
Speaker Change: Thank you I guess as my follow up I wanted to ask you usually press president's at.
Speaker Change: At Delta, 10% to 15% hatch rates.
Speaker Change: Has that changed as your new win.
Speaker Change: Similar or different.
Speaker Change: Any color there would be great.
Speaker Change: So one of the things that we did highlight at CES was this <unk> technology.
Speaker Change: And so what we talked about on the formal transcript was.
Speaker Change: The fact that we've penetrated one account we don't name names.
Speaker Change: And we've now penetrated another large account.
Speaker Change: In the <unk>.
Speaker Change: Compute space and so it just is a.
Speaker Change: A data point and shows the traction that we're gaining with our <unk> technology.
Speaker Change: As we expand from one OEM.
Speaker Change: Into another very large Oems.
Speaker Change: Talk about the exact penetration rates, but I think what you can take from this is that we're continuing to expand our capabilities within that space and continuing to win market share.
Speaker Change: At New Oems I think those are both positive signs not only for the adoption of this technology, but for Synaptics as a supplier no cities. If you want to add to this.
Speaker Change: And I think you answered it appropriately.
Speaker Change: Our goal here on the PC cycle is to increase the number of confidence that the cell within the PUC and like Ken said, we are not talking about attach rate specifically here what the traction we are getting is pretty good.
Speaker Change: Bullish about the technology.
Speaker Change: Thank you.
Speaker Change: Thank you and our next question comes from the line of Peter Peng from Jpmorgan. Your question. Please.
Peter Peng: Hey, guys good job on the execution and thanks for taking my question.
Peter Peng: I want to go back to the incremental $10 million revenue per quarter, maybe if you can just rank order the top three or four things.
Speaker Change: We are giving you confidence.
Peter Peng: At this early juncture of being able to drive these kind of growth yes.
Peter Peng: Yes, sure Peter I think it's a good question right, we don't provide guidance more than one one quarter ahead, but we wanted to provide some context and color.
Peter Peng: And it's a couple of factors one I would just say if you look at the visibility we have based on backlog and bookings those continue to improve.
Peter Peng: Especially where we were from six months ago, So definitely feel much more comfortable.
Peter Peng: With the visibility that we have over the next few quarters number two I would say from an inventory standpoint, and it's one of the things that we have highlighted and talked about in the past, but inventories are very lean right now not only for us, but I think other suppliers as well and I think that's a good sign because as you think about demand trends now.
Peter Peng: Now we are now seeing those demand trends impact our revenues, whereas before some of those demand trends. We're just pulling from the distribution channel and so those are good signs for US and then the third one is just continued.
Peter Peng: Build out of our portfolio, we are starting to and continued to see ramps.
Peter Peng: Especially in the core Iot segment, and specifically around the wireless side. This goes beyond.
Peter Peng: The Broadcom acquisition, and so continuing to see momentum there as well as our other franchise businesses.
Peter Peng: The things that maybe we don't highlight enough is that we have strong number one or number two positions in a lot of key markets targeting enterprise automotive and the mobile space and so we continue to execute.
Peter Peng: On growing our share and continue to execute on new product development.
Peter Peng: And that's the that's the confidence I have as I look out over the next three quarters or so.
Peter Peng: Got it.
Peter Peng: And then.
Speaker Change: We talked a lot and talked a lot about the revenue implications of the transaction, maybe you can touch a little bit on the margin front and maybe how that is.
Is it could be beneficial impact for margin mix going forward.
Speaker Change: Yes, I think look we don't comment on that on a go forward basis, you saw the margin guide here.
For our next quarter I think the bad point right at about 53, 5%.
Speaker Change: I think thats a reasonable range a lot of this will depend on the mix and I would say even the mix within the mix right. So we're not going to forecast that margin as we think about.
Speaker Change: June September December quarters, what we wanted to try to outline is just where and how the trajectory of the businesses sequentially. As we think about the next few quarters and that's look things can change.
Speaker Change: We're in a lower growth environment, but we feel pretty.
Speaker Change: Strongly that we have a great path to grow here throughout this calendar year could there be more revenues in one quarter unless there's another absolutely, but we have a good path here and a good backlog and bookings trend to support that.
Speaker Change: Perfect. Thank you guys.
Speaker Change: Thank you.
Speaker Change: And our final question for today comes from the line of Martin Yang from Opco. Your question. Please.
Speaker Change: Hi, Thank you for taking my question I'm curious about your thoughts on immediate synergy between your positioning to high end premium touch and.
Speaker Change: The Android opportunity for wireless Broadcom brought you do you see any bundling opportunities in the near term immediate term and.
Speaker Change: Any any way for you to expand your aggregate presence among the Android Oems.
Speaker Change: Yes, so if you look at the history of the company.
Speaker Change: We have a strong presence in the touch market and a strong history, there and if you look for today's.
Speaker Change: Our growth rate and in terms of the mobile space today, we're very much focused on the high end.
Speaker Change: Android market. That's the go forward path and I think with this acquisition.
Speaker Change: The acquisition of these Broadcom assets, we're now able to have.
Speaker Change: Have a complementary portfolio of not only the touch but also Wi Fi and next generation Wi Fi, especially as we think about Wifi eight.
Speaker Change: On a go forward basis, so from a customer standpoint same types of customers that we've been servicing.
Speaker Change: For the last several years and more than a decade here in terms of the Android platforms globally.
Speaker Change: But now we have an incremental ability to service them with Wi Fi chipsets in wireless technology on a go forward basis, so very exciting for US early days right. So I want to make sure that's outlined but very exciting as we think about.
Speaker Change: 26, but really 27 and beyond in terms of our ability to prosecute those opportunities when those designs and gain further scale, but.
Speaker Change: Thank you Pat or <unk> anything else I can add right. So in general I think there was a question earlier as well you know what do we do about the long tail and touch we are shipping in the premium segment of Android phones across all of these customers and we have a presence at each of these customers and the reason we win is because of the <unk>.
Speaker Change: Differentiated technology that we have for these high end flexible OLED screens.
Speaker Change: With the wireless acquisition, we'd have similar differentiated technology. So it gives us the ability to go tackle and address these with the same set of vendors that we are already very familiar with so it presents a good opportunity for us and to expand our presence at these customers.
Speaker Change: Thank you I have one more question.
Speaker Change: On the PC market recovery.
Speaker Change: So if I assume PC.
Speaker Change: Our high Mtc demand comes back in 2026.
Speaker Change: Is there any way to.
Speaker Change: Look at the different product segments COPD.
Speaker Change: Sensors the touchpad.
Speaker Change: Do they come back in the same pace or is there any one or even video video interface included any one of the product categories.
Speaker Change: Will recover at a faster pace than market.
Speaker Change: Yes, so if I look at the overall PC space I mean, what we have seen is some seasonal trends, but looking back over the last year, we've seen a nice steady improvement in both the PC and the peripheral market I think one of the things that that we should highlight as we also continue to gain share with one of the large Oems.
Speaker Change: And so that's helped us as we think about the business there'll still be some seasonal trends.
Speaker Change: In any given quarter, but we continue to win share and continue to do.
Speaker Change: Grow the revenue base there the one thing that we did highlight on the formal presentation.
Speaker Change: Is that we still haven't seen this refresh cycle. So if you just look back typically enterprises refresh in every four years or every five years and so we haven't seen this significant upgrade that we would expect or maybe some investors expect.
Speaker Change: Could it happen later in 'twenty five the answer is it could we're just not seeing it today.
Speaker Change: But the reality is some time between 25 and 26, we would expect that a lot of the large enterprises will start to refresh.
Speaker Change: Their enterprise Pcs and along with that should come a lot of peripheral refreshes as well, but satish do you add to this can you answered very well already so.
Speaker Change: General or are you trying to gain share in that market by doing new technologies, infusing AI into touchpad fingerprints and so on but the.
Speaker Change: The effects of those will be seen later in the short I think we will continue to see and track the seasonal trends of Pcs and like Ken said sure.
Speaker Change: The refresh cycle happened, we can see an upside but right now its seasonal trends that we continue to see.
Speaker Change: Thank you very much that's it for me.
Speaker Change: Thank you. This does conclude the question and answer session as well as today's program. Thank you ladies and gentlemen for your participation you may now disconnect. Good day.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Okay.
[music].
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: Okay.