Synaptics Incorporated

Good day, and thank you for standing by. Welcome to the Synaptics, Inc. Fourth Quarter Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are in 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mujal Shah, Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon, and thank you for joining us today on Synaptic's fourth quarter fiscal 2024 conference call. My name is Mujal Shah, and I am the Head of Investor Relations. With me on today's call are Michael Holston, our President and CEO, Ken Rizvi, our CFO, and Matt Patfield, our Vice President of Finance. 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. 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 cost, and certain other non-cash or recurring 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, which can be accessed from the investor relations section of the company's website at Synaptics.com. 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, and business. 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 quality report on Form 10-Q 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 everybody to today's call. We just closed our 2024 fiscal year and while for the most part it didn't play out as we planned, we were able to accomplish some of our most important goals. During the year, we stabilized revenue and began to show incremental growth, though at a slower rate versus our prior expectations due to muted end demand recovery. In addition, we were able to get largely clear of the inventory issues that plagued us for the last six quarters or so. Finally, Core IoT is on the right track, showing significant, albeit somewhat inconsistent growth after bottoming in the fourth quarter of last year. As we enter fiscal 2025, we are in a better place overall to drive revenue and earnings growth. Moving to the June quarter, revenue was slightly above the midpoint of our guidance range with enterprise products incrementally above forecast. Non-gap gross margin came in at roughly the midpoint of our guidance while non-GAAP OpEx was below target, resulting in non-GAAP EPS above the forecast provided in May. This quarter marked more success in our core IoT products, which grew 63% year over year, primarily driven by wireless. We taped out our first broad market device that features a more than 50% power reduction and a 40% decrease in die size as compared to a similar high performance device. Even with these advances, we maintain our overall throughput and interoperability advantages, thereby delivering the best overall solution in this product category. The chip is on track to sample to customers toward the end of the calendar year with revenue contribution expected to start in the middle of calendar 2025. Our first Wi-Fi 7 device is slightly ahead of schedule, and we expect to be sampling customers toward the end of this coming quarter. In addition, Demand for our shipping, Wi-Fi, Bluetooth combos, and GPS products continues to improve. Pre-production has started on several of our key design wins in product categories such as drones, sound systems, wearables, and OTT streamers. We have had success adding new module partners in Japan, Korea, and China, though progress to high volume shipments has been slower than expected. We expect wireless revenue to continue to improve and while quarter-over-quarter growth rates may vary, we continue to believe that double-digit increases will occur on a year-over-year basis. We are also making progress with our smart embedded processors. Following a successful launch last quarter, Astra, our embedded AI-enabled line of MPUs and MPCUs, has generated interest from a broad set of customers in product categories such as navigation devices, appliances, and security systems. Initial demand for Makina RDKs exceeded expectations, and we are ramping production for commercial availability. We made our software generally available, making it easier for customers to integrate, lowering barrier to adoption. Finally, we are building relationships with system integrators and system-on-module partners who enable us to scale significantly faster. In the quarter, we started sampling our SR series of smart MCUs for vision-based use cases. In addition, we are driving synergies in our compute and wireless portfolios and are sampling our first Astra connected processor in a package combining our Wi-Fi 660 device with our quad core A55 processors. While Astra's customer traction is ahead of schedule, we haven't changed our outlook, and the products won't contribute materially until the second half of our fiscal 2026. While our smart embedded processors are the future, our operator solutions product family continues to generate revenue today. Our recently announced wins have started to ramp and over the last quarter, we added new customers in Japan with production launches expected in calendar 2025. Moving to our enterprise and automotive products, revenue improved 7% on quarter driven by improvement in our video interface and PC products. In PCs, we're gaining market share at multiple OEMs and driving higher content with larger touchpads and haptics technology. We do think the PC TAM continues to grow as adoption of AI PCs and ARM-based platforms drives a refresh cycle. Our user presence detection solution has been awarded both mid-board and camera module platforms that are a major customer, stepping up our share in model year 2025. We are working to sell these AI-based devices to additional customers and expect further adoption given the system's power savings they can deliver translating to longer PC battery life. While we were able to grow enterprise product sales sequentially, we continue to be disappointed at the rate of recovery. IT spending on personal hardware remains well below historic norms as capital is being allocated toward AI infrastructure. In automotive, the overall market softness is slowing the adoption of new technology. This has been good for us as our existing TDI solutions are expected to remain in production longer. However, uptake of our new SmartBridge product is being pushed out, limiting our content gains near term. In addition, our legacy DDIC devices continue to moderate as production shifts away from older models. In mobile, our touch controllers are aligned with the high end of the Android market, which is seeing normal seasonal trends. We do see an opportunity for TAM expansion as flexible OLED displays come down in price and capture a higher percentage of the volume at a given OEM. Our technical advantages in extracting signal from a very noisy environment give us more than sufficient differentiation to garner high market share, both in China and Korea. We had multiple ramps and design wins across major Android smartphone OEMs this quarter. We remain confident in our market position, and starting next year, we expect our mobile products to largely track the high-end Android market. To conclude, we continue to be excited about our core IoT opportunity, particularly on processors and wireless. Through new product ramps and customer engagements, we have set ourselves up for a bright future. In addition, we have cleared most of the inventory problems that plagued our enterprise products for the last few quarters, and positioned us for a steadier phase of growth. We've set the company up for earnings and cash flow growth in 2025 and beyond. Before I turn the call over to Matt for a review of our fourth quarter financial results and our first quarter outlook, let me take a second to introduce our new CFO, Ken Rizvi. I'm pleased to have Ken join the team, and I'm looking forward to getting his help in driving profitable growth for Synaptics. He's a seasoned finance and semiconductor executive having previously served as CFO of a public company. Ken, can you make a few comments?