Synaptics Inc. Reports Q4 Growth and Focuses on Gradual Recovery

Synaptics Inc. Reports Fourth-Quarter Fiscal Year 2024 Financial Results

Synaptics Inc., a prominent developer of human interface solutions, has revealed its financial performance for the fourth quarter of fiscal year 2024, reporting revenues of $247.4 million, exceeding the midpoint of its guidance range. This represents a 9% increase in total revenues year-over-year and a 4% rise on a sequential basis.

The company posted a non-GAAP net income of $25.6 million for the quarter, reflecting a 22% increase from the prior quarter and a 31% increase year-over-year. For the entire fiscal year 2024, Synaptics achieved a non-GAAP net income of $89.4 million. Looking forward, the company expects first-quarter revenues for 2025 to be around $255 million, with a non-GAAP gross margin of 53.5% and a projected net income per diluted share of $0.75.

Key Takeaways

• Fourth-quarter revenue reached $247.4 million, surpassing previous guidance.
• Non-GAAP net income for the quarter was $25.6 million, indicating significant growth both sequentially and year-over-year.
• First-quarter 2025 revenue is anticipated to be approximately $255 million.
• Core IoT products, particularly in wireless, have seen remarkable growth.
• Synaptics has effectively resolved most inventory issues experienced over the past six quarters.
• In Q4, revenue contributions came from Core IoT (22%), Enterprise & Automotive (58%), and Mobile (20%).
• The company concluded the quarter with $877 million in cash and short-term investments.

Company Outlook

• Synaptics expects a slow but steady recovery across all end markets.
• There is a focus on controlling operating expenses and prioritizing capital allocation.
• CEO Michael Hurlston anticipates that Core IoT will experience a growth rate double that of typical growth, aiming for a 10-12% increase in revenue.

Challenges and Opportunities

Bearish Highlights:

• Growth has been slower than anticipated due to muted demand recovery.
• Revenue from mobile products decreased both year-over-year and sequentially.

Bullish Highlights:

• Core IoT products, particularly in wireless, demonstrated substantial growth of over 20%.
• Revenue from Enterprise & Automotive products rose both year-over-year and sequentially.
• New partnerships in the wireless business are aimed at expanding customer access.

Misses

• The company is currently undershooting its shipment levels due to subdued end demand but predicts that a recovery in demand will lead to increased shipments going forward.

Q&A Highlights

• The leadership acknowledged the relationship between limited IT budgets and increased AI spending but did not provide detailed visibility into other companies’ budgets.
• Synaptics is exploring strategies for pricing and cost reductions to enhance gross margins, with potential price increases in stronger market positions.

In summary, Synaptics Inc. has shown resilience in the fourth quarter, effectively managing inventory challenges and achieving growth in key areas. The company remains cautiously optimistic about the future, with strategic partnerships and product mix enhancements expected to support growth and improve margins.

This financial performance and forward-looking commentary position Synaptics favorably as it navigates a recovering market environment.