Synaptics Q3 Earnings Call Highlights

Key Points

• Synaptics posted its sixth straight quarter of double-digit revenue growth, with Q3 revenue of $294.2 million, up 10% year over year, and non-GAAP EPS of $1.09 at the high end of guidance. Core IoT was the main driver, rising 31% year over year, while margins also improved.
• The company’s robotics and Edge AI pipeline is expanding rapidly, with management saying robotics engagements now exceed 35 customers globally. Synaptics is seeing adoption of its AI-enabled touch and tactile sensing technology, alongside early shipments tied to humanoid and other robotics platforms.
• Astra and the Google partnership remain central to Synaptics’ long-term growth strategy, including the launch of a new Coral Dev Board and a next-generation wearable-focused Astra microcontroller. Management expects a meaningful Astra revenue ramp in calendar 2027, with production for a major OEM beginning in the first half of that year.

Synaptics NASDAQ: SYNA reported its sixth consecutive quarter of double-digit year-over-year revenue growth in the third quarter of fiscal 2026, with management pointing to continued strength in core IoT products and expanding customer activity in Edge AI and robotics.

President and CEO Rahul Patel said fiscal third-quarter revenue growth was driven by a 31% year-over-year increase in core IoT products. He said the company is seeing “improving momentum” and “delivering consistent performance across the business.” Non-GAAP earnings per share were $1.09, at the high end of the company’s guidance range and up 21% from the prior year.

Core IoT Leads Revenue Growth

CFO Ken Rizvi said third-quarter revenue was $294.2 million, above the midpoint of Synaptics’ guidance and up 10% year over year. The company’s revenue mix for the quarter was 30% core IoT, 57% enterprise and automotive, and 13% mobile touch products.

Rizvi said core IoT revenue rose 31% year over year, primarily due to continued strength in wireless connectivity products. Enterprise and automotive revenue increased 9% year over year, reflecting a recovery in the enterprise portfolio. Mobile touch revenue declined 16% year over year.

Synaptics reported non-GAAP gross margin of 53.6%, slightly above the midpoint of guidance. Non-GAAP operating expenses were $104.6 million, better than the midpoint of guidance, while non-GAAP operating margin rose about 260 basis points year over year to 18.1%. Non-GAAP net income was $44.1 million.

Rizvi said Synaptics ended the quarter with about $404 million in cash and cash equivalents after $39 million of share repurchases during the quarter. Through April, the company had completed $93 million of share repurchases during fiscal 2026. Cash flow from operations was $21.8 million, while capital expenditures were $11.9 million.

Robotics Pipeline Expands

Patel highlighted what he described as accelerating adoption in physical AI and Edge AI. He said Synaptics previously announced its first humanoid design with a leading OEM for touch controller and interface solutions, and has since sampled silicon to three additional OEMs. The company’s robotics pipeline has grown to more than 35 customers globally, including a leading generative AI OEM, according to Patel.

Patel said customers are adopting Synaptics’ AI-enabled touch controllers for tactile sensing. He said the company’s capacitive sensing technology can detect force, slip and proximity, enabling robots to handle objects, maintain grip and respond in real time. He added that the technology can be used beyond robotic hands, including contact surfaces such as feet.

In response to an analyst question, Patel said current robotics shipments are concentrated mainly in tactile sensing and bus interface technologies. He described the silicon content as “few tens of dollars per platform” for those capabilities, with potential additional content from Astra processors and wireless connectivity. He said the company’s robotics engagements are currently direct, often engineering-to-engineering, because of the technical nature of the developing market.

Patel also said most advanced robotics engagements are concentrated in North America, with some in China and early-stage activity in Europe.

Astra and Google Partnership Remain Central to Edge AI Strategy

Synaptics also discussed progress on its Astra processor platform and its partnership with Google. Patel said the company launched the next-generation Coral Dev Board, powered by Synaptics’ Astra SL2610 processor and featuring what he called the industry’s first implementation of Google’s Coral NPU integrated with Synaptics’ Torq NPU architecture.

Patel said the Coral board gives developers a turnkey platform for moving from prototyping to production and bringing generative AI directly onto devices. He added that Synaptics and its partner plan to showcase Astra processor technology running Google Gemma and other AI models at an upcoming industry event.

The company also updated investors on the next generation of its Astra SR series microcontrollers, a semi-custom AI-native platform targeting emerging wearable applications. Patel said Synaptics successfully taped out the system-on-chip last month and expects to begin sampling in the fall. For the initial wearable application, he said the solution delivers up to two times battery life and reduces the bill of materials by roughly 50%.

During the Q&A session, Patel reiterated that Synaptics expects a meaningful Astra revenue ramp in calendar 2027. He said a semi-custom solution for a large OEM is expected to enter production in the first half of calendar 2027, with end products around the same period and a stronger ramp in the second half of that year. He said consumer applications are expected to ramp first, followed by industrial applications, which require longer validation and regulatory processes.

Enterprise Improving, Mobile Touch Faces Mixed Conditions

Patel said demand from enterprise customers continues to improve steadily, while Synaptics remains focused on the premium tier of the market. In mobile touch, he said some customers are facing near-term challenges related to memory supply, particularly China-based smartphone OEMs.

However, Patel said Synaptics is benefiting from share gains at a leading Korean OEM that has access to memory supply. He said the company is currently shipping into the majority of flagship phones at that OEM. He also cited design wins in foldable smartphones and said customers are expected to launch new products in the second half of the calendar year.

Asked about PC-related demand and memory cost pressures, Patel said Synaptics had a good quarter and continues to see reasonable momentum in the current fiscal fourth quarter. He cautioned that broader market headwinds could emerge in the second half of calendar 2026, though the company’s exposure to enterprise and premium products could provide some cushion.

Fourth-Quarter Outlook

For the fiscal fourth quarter, Synaptics expects revenue of approximately $305 million at the midpoint, plus or minus $10 million. The company expects the revenue mix to be about 33% core IoT, 54% enterprise and automotive, and 13% mobile touch.

Synaptics guided for non-GAAP gross margin of 53.5% at the midpoint, plus or minus 1 percentage point, and non-GAAP operating expenses of $105 million at the midpoint, plus or minus $2 million. The company expects non-GAAP net interest and other expenses of about $2 million and a non-GAAP tax rate of 13% to 15%.

Non-GAAP earnings per diluted share are expected to be $1.20 at the midpoint, plus or minus $0.15, based on an estimated 40.4 million fully diluted shares.

Rizvi said that for fiscal 2026, based on the fourth-quarter midpoint, core IoT revenue is expected to exceed $385 million, representing more than 40% year-over-year growth. He said the business will continue to see quarterly fluctuations, but management remains encouraged by the performance of the portfolio.

About Synaptics NASDAQ: SYNA

Synaptics Incorporated is a global developer and supplier of human interface solutions for computing, networking, communications, and entertainment devices. The company specializes in the design, development and integration of custom chips and software that enable intuitive, natural user interactions. Synaptics solutions support touch, display, audio and biometrics functions, facilitating seamless human-to-machine interfaces across a broad range of end markets.

Key product offerings include touch controllers for laptops and tablets, capacitive touchscreens and display drivers for mobile devices, fingerprint sensors and secure authentication modules, as well as advanced audio processing and voice enhancement technologies.

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