Synaptics Incorporated

Good day and thank you for standing by. Welcome to the Synaptics Incorporated fourth quarter fiscal year 2021 financial results. At this time, all participants are in a listen-only mode. After the speaker's 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. If you require any further assistance, please press star 0. I would now like to hand the conference over to our speaker today, Steve Taronez. Please go ahead.

Good afternoon, and thank you for joining us today on Synaptic's fourth quarter fiscal 2021 conference call. 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 recurring or non-recurring items. Please refer to the press release issued after market closed today for a detailed reconciliation of GAAP and non-GAAP results. Additionally, we would 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 operations, plans, objectives, future performance in business, including our expectations regarding the potential impacts on our business of the COVID-19 pandemic and related supply chain disruption and component shortages currently affecting the global semiconductor industry. 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 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 and our most recent quarterly report for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. Synaptics expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Michael.

Great job, Steve, and welcome everyone to today's call. We had an exceptionally strong end to our fiscal year 2021, and I'm pleased with the continued execution of our strategy of IoT diversification and profitable growth. Revenue for the June quarter was higher than the midpoint of our prior guidance and was significantly above normal seasonal trends, driven by our intentional shift toward a diversified portfolio and customer base. As IoT growth continued, profitability remained strong, resulting in another record quarter for both GAAP and non-GAAP gross margins. Our non-GAAP net income and EPS exceeded the high end of our guidance range, a result of our structural portfolio improvements coupled with discipline spending. Our non-GAAP operating margin was greater than 30% in the quarter as we continue to improve upon our efficient financial model. One of the key pillars of our successful transformation strategy has been the pivot of our focus from the mobile market to IoT. we now have a broad range of market-leading products for IoT encompassing automotive, audio, video, docking, and wireless applications. As a result, our IoT business has grown significantly with revenue in this category now contributing more than 50% of our quarterly sales. Meanwhile, our mobile products, which once comprised in excess of 80% of our total revenue, now represent approximately 25% of our quarterly sales. While the development of touch and display driver technologies will continue to be important, our goal will be to operate mobile at 20 to 25% of our revenue mix. A second but equally important pillar of our strategy is to build and grow our portfolio with high-value, market-leading products. We continue to believe that gross margin provides the best correlation to product value. Over the past 24 months, our non-GAAP gross margins have increased by more than 1,800 basis points, an incredible achievement, one that we believe less than a handful of companies in any industry can claim to match. This accomplishment is all the more impressive that it was attained in a mere eight quarters. Our fundamentals have never been stronger, and we see clear avenues for organic growth in all three areas of our portfolio. Finally, I'd like to introduce our updated mission statement, one that unifies all the elements of our portfolio. To engineer exceptional experiences for consumers, whether they are at home, in the office, in their car, or on the go. I am pleased to report that our strategy of building experience-centric products has resulted in increased traction in cross-selling our full portfolio, with more than half of our top 20 customers buying three or more distinct technology categories from Synaptics. As an example, in order to count, a customer would have to buy audio, wireless, and display drivers from us. On the other hand, a customer buying three generations of touch ICs would not count. Now, let me update you on our business. In IoT, we continue to build momentum in our world-class wireless connectivity products with numerous new wins spanning a broad range of applications. Our recent efforts in establishing and expanding our sales channel utilizing our strategic module partner AMPAC has enabled us to rapidly access and support a growing customer base. Through this partnership and other ecosystem engagements, we've doubled our revenue over the past 12 months with wins in home automation, surveillance, video doorbells, wearables, and fitness-related applications to name a few. Our best-in-class Wi-Fi 6 and Bluetooth combo chipsets are seeing great traction with customers designing new solutions or upgrading their existing products. We have also secured several new design wins with our GPS solutions, particularly in wearables. Given our pace of success, we see a path to doubling once more in the next 18 months. Our audio franchise continues to be recognized for its industry-leading performance, particularly in adaptive noise cancellation and 3D sound simulation. Our feature set gives us advantages in high-fidelity headsets where we've seen significant traction over the last year with many consumers, call centers, and enterprises upgrading their audio solutions. As people return to work in a hybrid environment, we expect continued strength in our devices for high-end headsets, along with new opportunities for our certified audio solutions for collaboration environments, such as Microsoft Teams and Zoom. In automotive, our display and touch solutions are now either in production or qualified on 45 car models at more than 20 OEMs that include US, European, Korean and Japanese auto manufacturers, as well as many of the EV startups. As the center console evolves into a richer and more interactive media center, Synaptics is well positioned to capture a significant portion of this market with an anticipated increase in our silicon and dollar content per vehicle. Automotive is now one of our fastest growing product areas, And I'm pleased to update you that we are now ahead of plan by almost a full year and expect to achieve our a hundred million annual revenue goal by the end of fiscal 2022. In video interface, demand for protocol converters is strengthening with Synaptics being first to market with full support of the HDMI 2.1 standard. Our new dual chip solution combining both display link and DisplayPort technologies represents the only solution in the market offering connectivity for up to four 4K displays spanning a standard desk setups to enterprise class workspaces. Our Cayenne family, which has been successfully incorporated into several protocol adapters, is seeing new traction in notebook motherboard designs with native support for 8K resolution. As companies return to the office, we see an increased focus on flexible meeting room controllers using our technology. In addition, our universal docking solutions from DisplayLink solve many of the problems that can arise in hoteling and, as a result, continue to see strong demand. Lastly, to close out the IoT discussion, I'd like to give a brief update on our low-power edge AI initiatives. While still early in the cycle, we believe many devices in the future will continue to get smarter than they are today by incorporating machine learning and AI technologies on the device itself rather than relying on the cloud. We see opportunities and have already begun deploying advanced AI algorithms into many of our new products across all our markets, such as neural network-based fingerprint matching, advanced AI-based face detection in tablets and smartphones, and AI-assisted video compression algorithms. We are also seeing broad initial interest in our Katana platform, which is our standalone AI offering that targets low-power, battery-operated applications. It is our belief that many of these intelligent edge use cases will become a significant opportunity for Synaptics over the long term. Turning now to our PC products, we continue to benefit from growing demand as the notebook computer gets increasingly woven into our daily fabric as an essential productivity tool. As many companies focus on returning to the office, we expect to benefit from our leadership position in enterprise class notebooks. In the high-end consumer class, we are seeing Momentum Enforce and Haptics-enabled touchpads utilizing our Vulcan chipset. As previously discussed, our recent initiatives addressing the Chromebook market continue to be a greenfield growth opportunity for the company. Finally, let me give you an update on our mobile products. We are now in high volume production with our second generation OLED touch controller and are set to roll out a third generation, which will further extend our performance leadership. Our technical advantages have led to meaningful diversification of our mobile customer base, including an additional design win with a large Korean handset OEM, bringing our total with this customer to three, two of which have already begun for shipping. In addition, we continue to win the majority of new flagship designs using flexible OLED panels with Chinese handset OEMs. We have also made significant progress with our high-end OLED display driver products, having secured two wins with Chinese handset makers with expected production in calendar 2022. Overall, I'm extremely happy with the strength of our portfolio and quite optimistic about our prospects as we begin our new fiscal year. Despite the turmoil the semiconductor shortage has created, we find ourselves in an increasingly positive standing with our customer base, Our technology continues to drive design wins in the marketplace, and we've built a strong team ready to support our customers' needs. Now let me turn the call over to Dean to review our financial results and provide our outlook for the coming quarter.