Synaptics Incorporated (Nasdaq: SYNA), today reported financial
results for its first quarter of fiscal 2025 ended
September 28, 2024.
Net revenue for the first quarter of fiscal 2025 was $257.7
million. GAAP net loss for the first quarter of fiscal 2025 was
$23.1 million, or a loss of $0.58 per basic share. Non-GAAP net
income for the first quarter of fiscal 2025 was $32.5 million, or
$0.81 per diluted share.
“Fiscal year 2025 had a solid start with first quarter revenues
increasing sequentially and year-over-year. The headwinds from
inventory are significantly reduced, our new designs are beginning
to ramp, and we are seeing opportunities for share gains. Our Core
IoT products grew 55% year-over-year in the first quarter and have
posted double-digit sequential growth for three consecutive
quarters. We continue to make progress with our strategic
initiatives and are positioning the company for long-term,
sustainable growth,” said Michael Hurlston, Synaptics’ President
and CEO.
Business OutlookKen Rizvi, CFO of Synaptics,
added, “Our guidance for the second quarter of fiscal 2025 shows
continued sequential revenue growth. While some markets are seeing
gradually improving trends, forward visibility continues to remain
limited. Our strong balance sheet enables us to support our growth
initiatives while also allocating a portion of our cash toward
share repurchases.”
For the second quarter of fiscal 2025, the company expects:
|
|
|
|
|
GAAP |
Non-GAAP Adjustment |
Non-GAAP |
|
|
|
|
Revenue |
$265M ± $15M |
N/A |
N/A |
|
|
|
|
Gross Margin* |
45.0 percent ±1.5 percent |
$23M |
53.5 percent ± 1.0 percent |
|
|
|
|
Operating Expense** |
$136M ± $4M |
$40M ± $2M |
$96M ± $2M |
|
|
|
|
Earnings (loss) per share*** |
($0.45) ± $0.20 |
$1.30 |
$0.85 ± $0.20 |
|
|
|
|
* Projected Non-GAAP gross margin excludes
intangible asset amortization and share-based compensation.
** Projected Non-GAAP operating expense excludes
share-based compensation, restructuring costs, and acquisition and
integration related costs.*** Projected Non-GAAP
earnings per share excludes share-based compensation, restructuring
costs, acquisition and integration related costs, and other
non-cash and Non-GAAP tax adjustments.
Earnings Call and Supplementary Materials The
Synaptics first quarter 2025 teleconference and webcast is
scheduled to begin at 2:00 p.m. PT (5:00 p.m. ET), on Thursday,
November 7, 2024, during which the company will provide
forward-looking information.
Speakers:
- Michael Hurlston, President and Chief Executive Officer
- Ken Rizvi, Chief Financial Officer
To participate on the live call, analysts and investors should
pre-register at Synaptics Q1 FY2025 Earnings Call
Registration.https://register.vevent.com/register/BI4bb6ef1934854068ba5157265a2136e5.
Supplementary slides, a copy of the prepared remarks, and a live
and archived webcast of the conference call will be accessible from
the “Investor Relations” section of the company’s Website at
https://investor.synaptics.com/.
About Synaptics Incorporated: Synaptics
(Nasdaq: SYNA) is changing the way humans engage with connected
devices and data, engineering exceptional experiences throughout
the home, at work, in the car and on the go. Synaptics is the
partner of choice for the world’s most innovative intelligent
system providers who are integrating multiple experiential
technologies into platforms that make our digital lives more
productive, insightful, secure and enjoyable. These customers are
combining Synaptics’ differentiated technologies in touch, display
and biometrics with a new generation of advanced connectivity and
AI-enhanced video, vision, audio, speech and security processing.
Follow Synaptics on LinkedIn, X and Facebook, or visit
synaptics.com.
Use of Non-GAAP Financial Information In
evaluating its business, Synaptics considers and uses Non-GAAP Net
Income, which we define as net income excluding share-based
compensation, acquisition-related costs, and certain other non-cash
or recurring and non-recurring items the company does not believe
are indicative of its core operating performance as a supplemental
measure of operating performance. Non-GAAP Net Income is not a
measurement of the company’s financial performance under GAAP and
should not be considered as an alternative to GAAP net income. The
company presents Non-GAAP Net Income because it considers it an
important supplemental measure of its performance since it
facilitates operating performance comparisons from period to period
by eliminating potential differences in net income caused by the
existence and timing of share-based compensation charges,
acquisition-related costs, and certain other non-cash or recurring
and non-recurring items. Non-GAAP Net Income has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for the company’s GAAP net income. The principal
limitations of this measure are that it does not reflect the
company’s actual expenses and may thus have the effect of inflating
its net income and net income per share as compared to its
operating results reported under GAAP. In addition, the company
presents components of Non-GAAP Net Income, such as Non-GAAP Gross
Margin, Non-GAAP operating expenses and Non-GAAP operating margin,
for similar reasons.
As presented in the “Reconciliation of GAAP Financial Measures
to Non-GAAP Financial Measures” tables that follow, Non-GAAP Net
Income and each of the other Non-GAAP financial measures excludes
one or more of the following items:
Acquisition and integration-related costs Acquisition and
integration-related costs primarily consist of:
- amortization of purchased intangibles, which include acquired
intangibles such as developed technology, customer relationships,
trademarks, backlog, licensed technology, patents, and in-process
technology when post-acquisition development is determined to be
substantively complete;
- inventory fair value adjustments affecting the carrying value
of inventory acquired in an acquisition;
- transitory post-acquisition incentive programs negotiated in
connection with an acquired business or designed to encourage
post-acquisition retention of key employees; and
- legal and consulting costs directly associated with
acquisitions, potential acquisitions and refinancing costs,
including non-recurring acquisition related costs and
services.
These acquisition and integration-related costs are not factored
into the company’s evaluation of its ongoing business operating
performance or potential acquisitions, as they are not considered
as part of the company’s principal operations. Further, the amount
of these costs can vary significantly from period to period based
on the terms of an earn-out arrangement, revisions to assumptions
that went into developing the estimate of the contingent
consideration associated with an earn-out arrangement, the size and
timing of an acquisition, the lives assigned to the acquired
intangible assets, and the maturity of the business acquired.
Excluding acquisition related costs from Non-GAAP measures provides
investors with a basis to compare Synaptics against the performance
of other companies without the variability and potential earnings
volatility associated with purchase accounting and
acquisition-related items.
Share-based compensation Share-based compensation expense
relates to employee equity award programs and the vesting of the
underlying awards, which includes stock options, deferred stock
units, market stock units, performance stock units, phantom stock
units and the employee stock purchase plan. Share-based
compensation settled with stock, which includes stock options,
deferred stock units, market stock units, performance stock units
and the employee stock purchase plan, is a non-cash expense, while
share-based compensation settled with cash, which includes phantom
stock units, is a cash expense. Settlement of all employee equity
award programs, whether settled with cash or stock, varies in
amount from period to period and is dependent on market forces that
are often beyond the company’s control. As a result, the company
excludes share-based compensation from its internal operating
forecasts and models. The company believes that Non-GAAP measures
reflecting adjustments for share-based compensation provide
investors with a basis to compare the company’s principal operating
performance against the performance of peer companies without the
variability created by share-based compensation resulting from the
variety of equity-linked compensatory awards used by other
companies and the varying methodologies and assumptions used.
Intangible asset impairment chargeIntangible asset impairment
charge represent the excess carrying value of an indefinite-lived
asset over its fair value. The intangible asset impairment charge
is a non-cash charge. The company excludes intangible asset
impairment charge from its internal operating forecasts and models
when evaluating its ongoing business performance. The company
believes that Non-GAAP measures, reflecting adjustments for
intangible asset impairment charge, provide investors with a basis
to compare the company’s principal operating performance against
the performance of other companies without the variability created
by the intangible asset impairment charge.
Restructuring costs Restructuring costs are costs incurred to
address cost structure inefficiencies of acquired or existing
business operations and consist primarily of employee termination,
asset disposal and office closure costs, including the reversal of
such costs. As a result, the company excludes restructuring costs
from its internal operating forecasts and models when evaluating
its ongoing business performance. The company believes that
Non-GAAP measures reflecting adjustments for restructuring costs
provide investors with a basis to compare the company’s principal
operating performance against the performance of other companies
without the variability created by restructuring costs designed to
address cost structure inefficiencies of acquired or existing
business operations.
Legal settlement accruals and otherLegal settlement accruals and
other represent our estimated cost of settling legal claims and any
obligations to indemnify a counterparty against third party claims
that are unusual or infrequent. As a result, the company will
exclude these settlement charges from its internal operating
forecasts and models when evaluating its ongoing business
performance. The company believes that non-GAAP measures reflecting
an adjustment for settlement charges provide investors with a basis
to compare the company’s principal operating performance against
the performance of other companies without the variability created
by unusual or infrequent settlement accruals designed to address
non-recurring or non-routine costs.
Other non-cash items Other non-cash items include non-cash
amortization of debt discount and issuance costs. These items are
excluded from Non-GAAP results as they are non-cash. Excluding
other non-cash items from Non-GAAP measures provides investors with
a basis to compare Synaptics against the performance of other
companies without the variability associated with other non-cash
items.
Non-GAAP tax adjustments The company forecasts its long-term
Non-GAAP tax rate in order to provide investors with improved
long-term modeling accuracy and consistency across financial
reporting periods by eliminating the effects of certain items in
our Non-GAAP net income and Non-GAAP net income per share,
including the type and amount of share-based compensation, the
taxation of post-acquisition intercompany intellectual property
cross-licensing or transfer transactions, and the impact of other
acquisition items that may or may not be tax deductible. The
company intends to evaluate its long-term Non-GAAP tax rate
annually for significant events, including material tax law changes
in the major tax jurisdictions in which the company operates,
corporate organizational changes related to acquisitions or tax
planning opportunities, and substantive changes in our geographic
earnings mix.
Forward-Looking Statements This press release
contains forward-looking statements that are subject to the safe
harbors created under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. Forward-looking
statements give our current expectations and projections relating
to our financial condition, results of operations, plans,
objectives, future performance and business, and can be identified
by the fact that they do not relate strictly to historical or
current facts. Such forward-looking statements may include words
such as “expect,” “anticipate,” “intend,” “believe,” “estimate,”
“plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,”
variations of such words, or other words and terms of similar
meaning. All forward-looking statements reflect our best judgment
and are based on several factors relating to our operations and
business environment, all of which are difficult to predict and
many of which are beyond our control. Such factors include, but are
not limited to, the risk that our business, results of operations
and financial condition and prospects may be materially and
adversely affected by the temporary reduction in demand for our
products resulting from accumulated inventories held by our
customers and channel partners; our assumptions regarding growth
and market share opportunities related to our strategic
initiatives; risks related to our ability to repurchase shares and
pay down debt; the risks as identified in the “Risk Factors,”
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Business” sections of our most recent
Annual Report on Form 10-K and our most recent Quarterly Report on
Form 10-Q; and other risks as identified from time to time in our
Securities and Exchange Commission reports. Forward-looking
statements are based on information available to us on the date
hereof, and we do not have, and expressly disclaim, any obligation
to publicly release any updates or any changes in our expectations,
or any change in events, conditions, or circumstances on which any
forward-looking statement is based. Our actual results and the
timing of certain events could differ materially from the
forward-looking statements. These forward-looking statements do not
reflect the potential impact of any mergers, acquisitions, or other
business combinations that had not been completed as of the date of
this release.
For more information contact: Munjal ShahHead
of Investor Relationsmunjal.shah@synaptics.com
|
SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (In
millions) (Unaudited) |
|
|
September 2024 |
|
June 2024 |
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
853.6 |
|
|
$ |
876.9 |
|
Accounts receivable, net |
|
135.8 |
|
|
|
142.4 |
|
Inventories, net |
|
119.6 |
|
|
|
114.0 |
|
Prepaid expenses and other current assets |
|
30.9 |
|
|
|
29.0 |
|
Total current assets |
|
1,139.9 |
|
|
|
1,162.3 |
|
Property and equipment,
net |
|
79.5 |
|
|
|
75.5 |
|
Goodwill |
|
816.4 |
|
|
|
816.4 |
|
Acquired intangibles, net |
|
263.8 |
|
|
|
288.4 |
|
Deferred tax asset |
|
358.4 |
|
|
|
345.6 |
|
Non-current other assets |
|
133.2 |
|
|
|
136.8 |
|
Total assets |
$ |
2,791.2 |
|
|
$ |
2,825.0 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Accounts payable |
$ |
83.3 |
|
|
$ |
87.5 |
|
Accrued compensation |
|
28.2 |
|
|
|
27.4 |
|
Other accrued liabilities |
|
136.4 |
|
|
|
156.3 |
|
Current portion of long-term debt |
|
6.0 |
|
|
|
6.0 |
|
Total current liabilities |
|
253.9 |
|
|
|
277.2 |
|
Long-term debt |
|
965.9 |
|
|
|
966.9 |
|
Other long-term
liabilities |
|
104.1 |
|
|
|
114.1 |
|
Total liabilities |
|
1,323.9 |
|
|
|
1,358.2 |
|
Stockholders' Equity: |
|
|
|
Common stock and additional paid-in capital |
|
1,130.7 |
|
|
|
1,107.1 |
|
Treasury stock |
|
(878.0 |
) |
|
|
(878.0 |
) |
Retained earnings |
|
1,214.6 |
|
|
|
1,237.7 |
|
Total stockholders' equity |
|
1,467.3 |
|
|
|
1,466.8 |
|
Total liabilities and stockholders' equity |
$ |
2,791.2 |
|
|
$ |
2,825.0 |
|
|
SYNAPTICS INCORPORATEDCONDENSED CONSOLIDATED STATEMENTS OF
INCOME(In millions, except per share data)(Unaudited) |
|
|
Three Months Ended |
|
September 2024 |
|
September 2023 |
Net revenue |
$ |
257.7 |
|
|
$ |
237.7 |
|
Acquisition related costs
(1) |
|
20.8 |
|
|
|
17.8 |
|
Cost of revenue |
|
116.0 |
|
|
|
112.8 |
|
Gross margin |
|
120.9 |
|
|
|
107.1 |
|
Operating expenses: |
|
|
|
Research and development |
|
81.3 |
|
|
|
86.5 |
|
Selling, general, and administrative |
|
50.0 |
|
|
|
42.3 |
|
Acquired intangibles amortization (2) |
|
3.8 |
|
|
|
5.5 |
|
Restructuring costs (3) |
|
14.2 |
|
|
|
8.0 |
|
Total operating expenses |
|
149.3 |
|
|
|
142.3 |
|
Operating loss |
|
(28.4 |
) |
|
|
(35.2 |
) |
Interest and other expense,
net |
|
(5.9 |
) |
|
|
(5.4 |
) |
Loss before (benefit)/provision for income taxes |
|
(34.3 |
) |
|
|
(40.6 |
) |
(Benefit)/provision for income
taxes |
|
(11.2 |
) |
|
|
15.0 |
|
Net loss |
$ |
(23.1 |
) |
|
$ |
(55.6 |
) |
Net loss per share: |
|
|
|
Basic |
$ |
(0.58 |
) |
|
$ |
(1.43 |
) |
Diluted |
$ |
(0.58 |
) |
|
$ |
(1.43 |
) |
Shares used in computing net
loss: |
|
|
|
Basic |
|
39.8 |
|
|
|
38.8 |
|
Diluted |
|
39.8 |
|
|
|
38.8 |
|
|
|
|
|
(1) These acquisition related costs consist primarily of
amortization associated with certain acquired intangible assets.(2)
These acquisition related costs consist primarily of amortization
associated with certain acquired intangible assets.(3)
Restructuring costs primarily include severance related costs
associated with operational restructurings. |
|
SYNAPTICS INCORPORATEDReconciliation of GAAP Financial Measures to
Non-GAAP Financial Measures(In millions, except per share
data)(Unaudited) |
|
|
Three Months Ended |
|
September 2024 |
|
September 2023 |
GAAP gross margin |
$ |
120.9 |
|
|
$ |
107.1 |
|
Acquisition and integration related costs |
|
20.8 |
|
|
|
17.8 |
|
Share-based compensation |
|
(2.7 |
) |
|
|
1.1 |
|
Non-GAAP gross margin |
$ |
139.0 |
|
|
$ |
126.0 |
|
GAAP gross margin - percentage
of revenue |
|
46.9 |
% |
|
|
45.1 |
% |
Acquisition and integration related costs - percentage of
revenue |
|
8.1 |
% |
|
|
7.5 |
% |
Share-based compensation - percentage of revenue |
|
(1.1 |
%) |
|
|
0.4 |
% |
Non-GAAP gross margin -
percentage of revenue |
|
53.9 |
% |
|
|
53.0 |
% |
GAAP research and development
expense |
$ |
81.3 |
|
|
$ |
86.5 |
|
Share-based compensation |
|
(14.5 |
) |
|
|
(15.2 |
) |
Non-GAAP research and
development expense |
$ |
66.8 |
|
|
$ |
71.3 |
|
GAAP selling, general, and
administrative expense |
$ |
50.0 |
|
|
$ |
42.3 |
|
Share-based compensation |
|
(15.4 |
) |
|
|
(16.9 |
) |
Acquisition and integration related costs |
|
(3.3 |
) |
|
|
— |
|
Legal settlement accruals and other |
|
(2.2 |
) |
|
|
— |
|
Non-GAAP selling, general, and
administrative expense |
$ |
29.1 |
|
|
$ |
25.4 |
|
GAAP operating loss |
$ |
(28.4 |
) |
|
$ |
(35.2 |
) |
Acquisition and integration related costs |
|
27.9 |
|
|
|
23.3 |
|
Share-based compensation |
|
27.2 |
|
|
|
33.2 |
|
Legal settlement accruals and other |
|
2.2 |
|
|
|
— |
|
Restructuring costs |
|
14.2 |
|
|
|
8.0 |
|
Non-GAAP operating income |
$ |
43.1 |
|
|
$ |
29.3 |
|
GAAP net loss |
$ |
(23.1 |
) |
|
$ |
(55.6 |
) |
Acquisition and integration related costs |
|
27.9 |
|
|
|
23.3 |
|
Share-based compensation |
|
27.2 |
|
|
|
33.2 |
|
Restructuring costs |
|
14.2 |
|
|
|
8.0 |
|
Legal settlement accruals and other |
|
2.2 |
|
|
|
— |
|
Other non-cash items |
|
0.6 |
|
|
|
0.6 |
|
Non-GAAP tax adjustments |
|
(16.5 |
) |
|
|
10.8 |
|
Non-GAAP net income |
$ |
32.5 |
|
|
$ |
20.3 |
|
GAAP net loss per share |
$ |
(0.58 |
) |
|
$ |
(1.43 |
) |
Acquisition and integration related costs |
|
0.70 |
|
|
|
0.60 |
|
Share-based compensation |
|
0.68 |
|
|
|
0.86 |
|
Restructuring costs |
|
0.36 |
|
|
|
0.21 |
|
Legal settlement accruals and other |
|
0.06 |
|
|
|
— |
|
Other non-cash items |
|
0.02 |
|
|
|
0.02 |
|
Non-GAAP tax adjustments |
|
(0.41 |
) |
|
|
0.28 |
|
Share adjustment |
|
(0.02 |
) |
|
|
(0.02 |
) |
Non-GAAP net income per share
- diluted |
$ |
0.81 |
|
|
$ |
0.52 |
|
|
SYNAPTICS INCORPORATED CONDENSED CONSOLIDATED CASH FLOWS (In
millions) (Unaudited) |
|
|
Year Ended |
|
September 2024 |
|
September 2023 |
Net loss |
$ |
(23.1 |
) |
|
|
(55.6 |
) |
Non-cash operating items |
|
47.5 |
|
|
|
75.2 |
|
Changes in working capital |
|
(35.8 |
) |
|
|
25.8 |
|
Net cash (used in) provided by
operating activities |
|
(11.4 |
) |
|
|
45.4 |
|
|
|
|
|
Purchase of intangible assets |
|
— |
|
|
|
(13.5 |
) |
Purchases of short-term investments |
|
— |
|
|
|
(16.6 |
) |
Advance payment on intangible assets |
|
— |
|
|
|
(116.5 |
) |
Net proceeds from maturities and sales of short-term investments
and other |
|
— |
|
|
|
3.2 |
|
Purchases of property and equipment |
|
(9.1 |
) |
|
|
(6.7 |
) |
Net cash used in investing
activities |
|
(9.1 |
) |
|
|
(150.1 |
) |
|
|
|
|
Equity compensation, net |
|
(3.6 |
) |
|
|
(16.8 |
) |
Payment of debt obligations |
|
(1.5 |
) |
|
|
(3.0 |
) |
Other |
|
1.6 |
|
|
|
1.7 |
|
Net cash used in financing
activities |
|
(3.5 |
) |
|
|
(18.1 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
0.7 |
|
|
|
(0.6 |
) |
Net decrease in cash and cash
equivalents |
|
(23.3 |
) |
|
|
(123.4 |
) |
Cash and cash equivalents,
beginning of period |
|
876.9 |
|
|
|
924.7 |
|
Cash and cash equivalents, end
of period |
$ |
853.6 |
|
|
$ |
801.3 |
|
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