Synaptics Incorporated

conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jason Tsai. Please go ahead, sir.

Thank you, and good afternoon, and thank you for joining us today on Synaptic's second quarter fiscal 2021 conference call. My name is Jason Tsai, and I'm the head of investor relations. With me on today's call are Michael Hurlston, our president and CEO, and Dean Butler, our CFO. This call is also being broadcast live over the web and can be accessed from the investor relations section of the company's website at Synaptics.com. In addition to a supplemental slide presentation, we have also posted a copy of these prepared remarks on our investor relations website. The supplementary slides have also been furnished as an exhibit to our current report on Form 8-K filed with the SEC earlier today and add additional color on our financial results. In addition to the company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs, and certain other non-cash or non-recurring items. Please refer to the press release issued after the market closed today for a detailed reconciliation of GAAP and non-GAAP results. Additionally, we'd like to remind you that during the course of this conference call, Synaptics will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operation, plans, objectives, future performance, and business, including our expectations regarding the potential impacts on our business of the COVID-19 pandemic. Although 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 to be inaccurate. Synaptics cautions that actual results may differ materially from any future performance adjusted in the company's forward-looking statements. We refer you to the company's current and periodic reports filed with the SEC, including Synaptics Form 10-K for the fiscal year ended June 27, 2020. for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. Synapse expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Michael.

Thanks, Jason, and I'd like to welcome everybody to today's call. We had a strong finish to 2020 as we continue to make progress in terms of delivering sustainable growth with better predictability and higher profitability. Our diversification strategy is paying dividends as IoT has become our largest business, resulting in the highest non-GAAP gross margin, net income, and EPS in Synaptic's 35-year history. Both our IoT and PC businesses individually achieve record revenue in the quarter. As we turn our attention to aggressively driving growth, we will adhere to the principles that have guided us to this point. discipline investments, tight spending control, and a focus on differentiation. We are starting the year with a strong backlog of design wins across all our businesses that puts us in position to drive growth and further improve our profitability in 2021 and beyond. Now, let me give you an update on our business. First, in IoT, now our largest business, we are seeing broad-based design wins across all segments. We now have a diverse customer base that spans consumer, enterprise, service provider, automotive, and industrial end markets. We anticipate the overall market for IoT will continue to grow at a 10% to 15% CAGR for the next few years. Based upon the strength of our design pipeline and potential share gains driven by a strong product roadmap, we believe we have the opportunity to grow at least in line but most likely outpace the overall market. In wireless connectivity, we continue to enjoy solid design wind momentum in home automation, smart displays, thermostats, smart watches, drones, home surveillance, and streaming devices. We are on track to double the run rate of this business within the next 12 months and expect significant growth to continue in fiscal 2022 and beyond. Our video interface business saw robust growth in universal and traditional docking solutions as the tailwind from the work-from-home trend continues. Our new product introductions targeted at the portable docking and protocol adapter markets are also seeing strong adoption, creating additional opportunities in this business. Further, our video and data compression and content delivery technology that stem from our DisplayLink acquisition are expanding our market beyond traditional PCs and into areas such as industrial handheld scanning systems and enterprise class control panels for video conferencing. In automotive, the first cars with our TDDI chipsets are now on the road with a premium SUV from one of the big three US automakers. We expect to have several additional vehicles come to market later this year and believe our pipeline of design wins with over 13 major OEMs will drive this business to over $100 million in annual revenue within the next three years. Finally, we secured two new service provider wins in Europe last quarter with our Edge SoC products on top of previously announced wins over the past few months. We had our initial service provider customer in Asia begin deploying the world's first Nagra Connect set-top boxes powered by our SOC, enabling best-in-class digital rights management and security. Recently, we launched our new Katana product family, targeting ultra-low-power AI applications for consumer, commercial, and industrial applications. Together with our wireless connectivity, we expect the AI-enhanced IoT market to be a meaningful market opportunity, creating an additional avenue for top and bottom line growth. Moving to our PC business, this was a record-breaking quarter for us, and we expect the momentum to continue into the March quarter and throughout 2021. We continue to benefit greatly from greatly increased TAM, higher fingerprint attach rates, and higher ASPs driven by more complex offerings. While we initially thought the strength in work and learn from home phenomenon would be short-lived, we now expect the higher run rate of this business to be more sustainable, driven by a fundamental shift away from desktops to notebooks and a realization that mobile devices cannot replace the productivity of PCs. We've also introduced new products targeted specifically for expansion into the consumer and education markets. These solutions are qualified across all the major Chromebook platforms, and we have already begun shipping to our first customer. Before I conclude, let me talk about our mobile business. We continue to see strong traction with our OLED touch products. Our primary mobile customer recently launched two new flagship handsets with our touch controller. In addition, as flexible OLED displays become increasingly prevalent, we secured multiple new wins for our on-cell touch solution with all the leading Chinese handset OEMs. I'm also excited to announce that while we've engaged with a large Korean handset OEM on multiple opportunities, we have now secured our first win and initial shipments are expected to begin in the fall. Overall, I'm very happy with how we finished 2020 despite the challenging macro environment and the tough start to the year. We've made meaningful strides in our corporate transformation and have already hit many of the financial waste points we set out just a few quarters ago. While there remains a lot more work ahead, we believe our current portfolio mix is putting us on a trajectory to deliver predictable, sustainable growth and better profitability in the long run. Now let me turn the call over to Dean to review our second quarter financials and provide our outlook. Mr. Butler.