Synaptics Incorporated

today and thank you for standing by welcome to the synaptics incorporated second quarter fiscal year 2022 financial results conference call at this time all participants on a listen only mode after the speaker's presentation there'll be a question and answer session to ask a question during the session you'll 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 Manjal Shah, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you for joining us today on Synaptic's second quarter fiscal 2022 conference call. My name is Manjal Shah, and I'm the Head of Investor Relations. With me on today's call are Michael Holston, our President and CEO, and Dean Butler, our Chief Financial Officer. 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 close 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 operation, plans, objectives, future performance in business, including our expectations regarding the potential impacts on our business of the COVID-19 pandemic and the supply chain disruption and component shortages currently affecting the global semiconductor industry. All those synaptic beliefs are 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 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.

Thanks, Manjal. I'd like to welcome everyone to today's call. We finished calendar 2021 on a strong note, and I'm proud of what we were able to achieve. We capitalized on our market opportunities while navigating supply and logistics challenges. We delivered double-digit revenue growth in 2021, while still managing to consistently improve gross margin. Revenue for the December quarter was at the midpoint of our updated guidance with continuing strength in our IoT products. Our GAAP and non-GAAP gross margin was another record for the company. Higher revenue and gross margin in turn drove our quarterly non-GAAP operating margin and non-GAAP EPS to record levels as well. Our momentum remains strong, and we're seeing many growth drivers, particularly in IoT applications. Our design wind pipeline remains robust, and we see continued opportunities to cross-sell our products, driving our dollars per platform higher. Our customers are introducing new, digitally enhanced products that are smarter and more connected than ever. At this year's CES show, several products, such as IoT Home Hubs, smart cameras, wireless workplace configurations, smart doorbells, and smart monitors were announced and feature our semiconductor solutions. In early December, we completed the acquisition of DSP Group and welcome a talented group of unbelievably capable engineers. We expect the team to accelerate our product roadmaps in the areas of wireless, home security, and low-power edge AI. The learning that DSP Group has had on voice-enabled AI products will serve us well as we embark on tackling the even more promising long-term opportunity applying machine learning to simple computer vision applications. Our integration is on track, and we are already seeing the benefits of the two teams working together. Synaptic's larger sales force and strong customer relationships are bringing DSP Group technology into new accounts that were not previously accessible. Meanwhile, we are seeing pull-through of Synaptics technology, particularly wireless, on existing DSP Group platforms. Our IoT products are now at a milestone $1 billion annual revenue run rate, growing 60% year over year, and accounts for 62% of our total revenue. Wireless continues to be the fastest growing piece of the IoT portfolio. New sockets are being unlocked as IoT customers begin the transition to Wi-Fi 6. Wi-Fi 6 is particularly well suited for IoT devices because it allows a greater number of products to connect to the network simultaneously without any one device being starved by other high traffic units on the same network. The technology also enables low power consumption, which is particularly critical in battery-powered IoT devices. Our competitive differentiation is strongest in high bandwidth, low power applications because our Wi-Fi 6 products are 90% more power efficient compared to prior generations and 35% more efficient than competition. We have design wins across a variety of product categories, including surveillance cameras, drones, smart displays, gaming, wearables, smart speakers, and other consumer-centric devices. Our industry-first triple combo wireless device is being sampled, and we expect initial revenue toward the end of the calendar year. The product is based on the Wi-Fi 6E standard enabling devices to operate at a higher frequency band where there is less congestion. We are making organic investments to grow the business, deploying new engineering resources, and are happy to report that we now taped out two new products based on our internal efforts. With our strong momentum, we remain confident in achieving our target to double our wireless revenues again. Our video interface products continue to lead the market, and our latest innovations are creating distance to the field. Our newly announced wireless docking solution simplifies the work area and was demonstrated at CES this year by one of our largest customers. We're excited about the potential of this new class of product as it enables improved productivity for end users and flexible workplace configurations for enterprises. The solution is a prime example of our ability to cross-sell multiple technologies, in this case combining our wireless connectivity, video compression, and processor expertise. In the protocol adapter and converter market, we're seeing early traction as we enter a completely new market opportunity. We have introduced two devices in recent quarters which open up that additional TAM and now have a dozen or so design wins ramping over the next few quarters. Our differentiated solution is a single chip offering that lowers power consumption by 75% and reduces overall footprint by 60%. We're seeing terrific market traction in virtual reality headsets with continued revenue growth and design win momentum. We are winning across the board, including many VR manufacturers in China. Our display technology is the highest performing custom design for those headsets and is the first and only solution in the market that supports a total resolution of greater than 4K with refresh rates of 120 hertz. A high refresh rate is essential for smoothness of motion as it allows for higher frame rates and lower latency that are both critical to ensure a more realistic VR experience. We are continuing to invest in a future roadmap that features even higher resolutions and refresh rates as well as leading the transition to newer display technologies such as micro-OLED. The market is still in its infancy, and we feel confident about our position, market potential, and the strength of our roadmap. In automotive, we achieved our goal of $100 million in annual revenue run rate, two quarters ahead of plan. Our automotive TDDI products are now designed into more than 50 car models across 20-plus OEMs, and we are seeing production ramps at six OEMs in Europe and in Asia. We are very well positioned because our share of TDDI-based solutions is much higher than our share in a discrete implementation, and the market mix of these devices, though relatively small, is increasing rapidly. In fact, nearly all new designs are being initiated around TDDI technology. Moving on to our processor technology, we now have a complete suite of products that range from ultra-low power solutions that run simple machine learning models to complex, high-performance video decoders that feature neural networking capability. We believe every consumer edge device will become more intelligent, driving the need for task-specific processors with artificial intelligence extensions rather than general-purpose microcontrollers. Our processors are targeted at audio and video applications, event detection, and with the addition of DSP Group, low power edge AI use cases. Our AudioSmart family of processors are being designed into headsets, tablets, smart monitors, and docking stations and boast a compelling combination of integrated voice features, noise cancellation, and low power consumption. Our video smart series combines a high-performance CPU, GPU, and neural network processing unit into a single software-enriched SOC and complex applications such as smart signage, sound bars, and video conferencing systems. Finally, our Katana processors feature the ability to run both voice and vision machine learning models at very low power levels. At CES, we announced our first significant customer, Lenovo, utilizing Katana in one of its tablets. We are encouraged by continuing early indicators in the low-power edge AI market and remain excited about its long-term growth prospects. Let me move on to our PC product applications. After two years of strong growth, we expect market demand in calendar year 2022 to remain about at the same level as 2021. Within that, The expectation is for commercial market shipments to be a bigger part of the mix, which plays to our strength. We are gaining share in PCs because of our technology and innovation. At CES, we launched our latest system on chip that enables the design of larger size touchpads with haptic capability. It's the first device to comply with the NIST SP800-193 standard, and we feature 384-bit encryption, reducing external threats on the PC. We began shipping this device in the quarter and expect all our major customers to design it in during the calendar year. Finally, in mobile, many new models from Chinese smartphone manufacturers using our touch technology launched in the last few quarters, but it appears the end demand for some of the OEMs didn't materialize as expected. On the other hand, we began shipping production units of our new high-end flexible OLED display driver in the quarter, which adds yet another growth factor for Synaptics. Before I conclude, let me give a quick update on our supply chain. In general, supply remains tight. In our case, the constraints are most prevalent in newer, faster-growing areas of our portfolio, where new design wins are significantly outpacing any incremental supply we're getting. We expect challenges in all facets of the supply chain, wafers to back end, to persist through all of calendar 2022. To conclude, Q2 was yet another in a series of strong quarters for the company. We set multiple corporate financial records in the quarter, particularly around gross margins. Meanwhile, we continue to grow top-line revenue by both developing entirely new product categories and executing well in our core business. Now, let me turn the call over to Dean to review our second quarter financial results and provide our outlook.