Earnings Call Transcript - SYNA Q2 2025

Munjal Shah, Vice President, Investor Relations

Thank you for standing by, and welcome to the Synaptics Incorporated Second Quarter Fiscal Year 2025 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the recorded. And now I'd like to introduce your host for today's program, Munjal Shah, Vice President, Investor Relations. Please go ahead. Good afternoon, and thank you for joining us today on Synaptics' second quarter of fiscal 2025 Conference call. My name is Munjal Shah. And I am the head of investor relations. With me on today's call are Ken Rizvi, our interim CEO and Chief Financial Officer; Satish Genneson, our SVP, Intelligent Sensing Vision, and Chief Strategy Officer; Venkat Karawadi, SVP Wireless; and Vikram Gupta, SVP of IoT Processors and Chief Product Officer. In addition to our quarterly results, we will also discuss a recent agreement with Broadcom. This call is 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 posted a copy of the prepared remarks on our investor relations website. In addition to the company's GAAP results, management will provide supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs, and certain other noncash or recurring or nonrecurring items. Please refer to our earnings press release issued after market close today for a reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures presented, which can be accessed from the investor relations section of the company's website at Synaptics.com. Additionally, I would like to remind you that during the course of this conference call, Synaptics will make forward-looking statements in our prepared remarks and in our supplemental materials and may make additional forward-looking statements in response to your questions. These forward-looking statements reflect our current expectations and projections relating to our financial condition, results of operation, plans, objectives, future performance, and business. Although Synaptics believes the estimates and assumptions underlying these forward-looking statements to be reasonable, they are subject to a number of risks and uncertainties beyond our control. Synaptics cautions that actual results may differ materially from any future performance suggested in the company's forward-looking statements. Therefore, we refer you to the company's current periodic reports filed with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. Except as required by law, Synaptics expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Ken.

Ken Rizvi, Interim CEO and CFO

Thanks, Munjal. I'd like to welcome everyone to today's call. I have the pleasure of Vikram, Venkat, and Satish joining our call today. I first want to briefly comment on the news we announced on Monday that Michael Hurlston has stepped down as president and CEO and as a member of our board of directors to assume the role of CEO at Lumentum. We thank Michael for his invaluable contributions and dedication to Synaptics over the last five years and wish him the best in his future endeavors. The board has commenced a CEO search and will be considering both internal and external candidates. To ensure seamless execution during this transition, I will be serving as interim CEO and will work closely with our executive chairman, Nelson Chan, our board, and our deep bench of experienced senior leaders to drive the continued execution of our growth strategy. We have a strong foundation and leadership team in place and remain laser-focused on capitalizing on the significant demand for our innovative products and solutions. Our strategy remains the same. It has three key pillars. First, we are investing in our core product lines within the enterprise, automotive, and mobile touch markets. We are confident in the growth prospects of these franchise products as we hold a leadership position as either the number one or number two player in terms of market share in many of these markets. Second, we continue to see tremendous growth opportunities in core IoT, specifically in our wireless and processor portfolio. As evidenced by our recent Broadcom agreement, our tuck-in acquisition of Packet Craft, and our Google partnership, we are investing both organically and inorganically to scale and expand capabilities in these high-growth areas. And finally, we remain prudent in our allocation of capital. During the second quarter, we retired our Term Loan B with a convertible note and cash on hand, reducing our total debt and cash interest expense, while also returning approximately seventy-five million dollars of capital back to shareholders via share repurchases. Before I go through the details of our second fiscal quarter, let me comment on our recent Broadcom agreement. This was a one hundred and ninety-eight million dollar all-cash transaction funded with cash from our balance sheet. We expect to generate over forty million dollars in annualized sales and expect the transaction to be slightly accretive to our non-GAAP EPS. We have posted slides on our website outlining the transaction benefits. Let me turn you to slide four of that presentation. We believe our new agreement with Broadcom accelerates our Edge AI strategy and further strengthens our leadership in IoT connectivity. As part of the transaction, we expand our portfolio of industry-leading Wi-Fi eight combo devices that include advanced Bluetooth features, additional Wi-Fi seven combo devices, Ultra Wideband or UWB intellectual property, next-generation GPS GNSS products, and combo front-end modules. This transaction solidifies and secures our wireless roadmap for the next five years. The agreement also importantly expands our field of use, allowing our Wi-Fi products to compete in ARVR, Android smartphones, and the consumer audio markets, substantially increasing our serviceable market. Additionally, we are onboarding a highly skilled team of engineers, positioning us as one of the largest and most qualified teams in cutting-edge wireless research and development. Moving to slide five, as AI continues to evolve at the edge, we believe smartphones will serve as one of the central hubs for controlling multiple edge IoT devices. By expanding our reach into these devices, we now have the ability to enable a complete ecosystem of centralized control at the hub and seamless end-to-end edge connectivity. We believe we will be one of the first, if not the first, to market with Wi-Fi eight technology enabling AI at the edge. Now moving to slide six. The Broadcom agreement further strengthens our leadership in wireless connectivity, expanding our portfolio of high-performance and broad markets IoT applications. In addition, we now have the foundational technology for UWB, which we can integrate into future IoT devices. Finally, our portfolio now includes next-generation GPS GNSS devices offering greater accuracy and improved power efficiency, enabling us to further expand our position in markets such as wearables, navigation devices, and asset trackers. Moving to slide seven, as I mentioned, as part of the agreement, we have onboarded a great team of engineers. Since our initial acquisition of wireless assets from Broadcom in twenty twenty, we've made significant strides in establishing leadership in wireless connectivity. We started with a team of approximately fifty plus employees and now have built a world-class wireless engineering team. Our comprehensive portfolio for edge AI IoT applications spans all generations of Wi-Fi devices, Bluetooth, GPS, GNSS, and UWB. We believe our cutting-edge research and development pushes the limits of performance efficiency and seamless connectivity. In summary, Venkat, our Senior Vice President of Wireless, worked closely with Broadcom to finalize this strategic transaction, adding multiple next-generation connectivity products and technologies to our portfolio. We are excited to welcome our new team members to Synaptics and look forward to building a bright and successful future together. Separately, on the Edge AI processor front, we recently announced a collaboration between Google and Synaptics integrating Google's MLIR compliant machine learning core with our industry-leading Aastra processor line. The AI solution combines Astra's neuro processing engine with Google's standard core. We expect both companies to contribute compiler expertise and collaborate on advancing the technology roadmap. This AI solution will be incorporated into our upcoming Aastra processors. One of the reasons Google chose Synaptics as a partner is due to our AI technology that is expected to deliver industry-leading inference per watt. This partnership speaks to our credibility in this emerging industry and is a validation of the investments we have made to deliver high-performance ultra-low power edge AI solutions. We believe Google will be a strong partner in creating a thriving ecosystem for AI, attracting AI model developers and driving further proliferation of AI to the edge. We expect our collaboration to create opportunities in future Google and non-Google devices, serving this emerging ecosystem. Now let me turn to December quarter results. We delivered another solid quarter of growth with revenues increasing four percent sequentially and thirteen percent year over year to two hundred sixty-seven million dollars, which was slightly above the midpoint of our guidance range, led by strength in core IoT and enterprise products. Non-GAAP gross margin came in slightly above the midpoint of our guidance at fifty-three point six percent. Non-GAAP EPS increased sixty-one percent year over year to zero point nine two dollars, exceeding the midpoint of our guidance. In core IoT, our product sales increased sixty-three percent year over year to sixty-one million dollars, driven by growth in both processor and wireless products. Our processor demand is improving as customer and channel inventory challenges are largely behind us. Additionally, we are collaborating with content providers to develop new AI use cases for operators and ramping new design wins. In wireless, we are sampling Wi-Fi seven in broad market chips with customers. To advance our BLE efforts, we acquired Packet Craft, a provider of advanced embedded BLE software. Packet Craft offers a low latency and compact software stack enabling energy efficiency and economically interconnected systems. With our recent transactions, organic development, growing pipeline, and design win momentum, we continue to remain confident in our core IoT growth vectors. Turning to enterprise and automotive, on the enterprise side, we are seeing normal seasonal trends with customers placing orders only when end demand materializes. As a result, while orders and bookings continue to show improvement, they do not yet indicate a refresh cycle. For calendar year twenty twenty-five, we remain optimistic about enterprise demand due to multiple factors: contributions from new products, opportunities to continue to gain market share, lean customer and channel inventories, and the potential for a PC refresh cycle. At CES, we showcased several new technologies including user presence detection or UPD. Our lead customer has launched new products featuring our solution, and we expect them to ramp throughout calendar year twenty twenty-five. We have also secured our first UPD design win at another major OEM, reinforcing our market position. We expect adoption and penetration of UPD technology to increase as customers recognize the value in power savings, privacy, and security. In automotive, we secured our first smart bridge design win with a customer in China. We remain encouraged by the long-term potential of this technology, given its system-level cost savings, exceptional contrast ratio in automotive displays, and best-in-class image quality. Overall, our business has been resilient. However, we would expect to experience similar headwinds as other semiconductor suppliers within the automotive space as most of our exposure is to US and European customers. For the long term, we believe we are well-positioned across major OEMs globally and will continue to pursue and expand opportunities in China. In mobile touch, we are pleased to say the headwind from our large US customer is now fully behind us. Looking forward, our primary focus will be on the high-end Android smartphone market. In Q2, we saw revenue growth from Chinese OEMs, benefiting from an increasing mix of flexible OLED screen technology. The Android market saw solid recovery in twenty twenty-four, and we expect to see continued growth in twenty twenty-five as the Android ecosystem gains share and industry incentives drive higher demand.

Munjal Shah, Vice President, Investor Relations

Now let me turn to our second quarter financial results and third quarter outlook. I will focus my remarks on our non-GAAP results which are reconciled to GAAP financial measures in our earnings release tables found in the Investor Relations section of our website. Revenue for fiscal Q2 was two hundred sixty-seven point two million dollars, above the midpoint of our guidance, with sequential and year-over-year improvement in both core IoT and enterprise areas. Q2 revenues were up thirteen percent on a year-over-year basis and up four percent sequentially. Revenue mix in the second quarter was as follows: twenty-three percent core IoT, fifty-nine percent enterprise and automotive, and eighteen percent mobile touch products. Core IoT product revenues increased sixty-three percent year over year and three percent sequentially. Enterprise and automotive product revenue improved seventeen percent year over year and eight percent sequentially. Mobile touch product revenue was down seven percent sequentially and twenty-five percent year over year as product shipments to a large US customer have reached end of life. Second quarter non-GAAP gross margin was fifty-three point six percent, slightly above the midpoint of our guidance. Second quarter non-GAAP operating expense was ninety-seven point one million dollars, slightly above the midpoint of our guidance range, primarily due to the inclusion of the Packet Craft acquisition as well as incremental variable expenses during the quarter. Our non-GAAP operating margin strengthened again in the second quarter, coming in at seventeen point three percent, up approximately three sixty basis points on a year-over-year basis and sixty basis points sequentially, driven by improved revenue and continued operating expense controls. Non-GAAP net income in Q2 was thirty-six point six million dollars, with non-GAAP EPS per diluted share coming in above the midpoint of our guidance at zero point nine two dollars per share, an increase of sixty-one percent on a year-over-year basis and fourteen percent sequentially. Now let me turn to the balance sheet. We ended the quarter with approximately five hundred and ninety-six million dollars of cash and cash equivalents, down approximately two hundred fifty-eight million dollars from the prior quarter. We fully retired our five hundred eighty-two million dollar Term Loan B during the quarter. The total face value of debt decreased to eight hundred fifty million from nine hundred eighty-two million dollars at the end of the September quarter. In addition, we returned seventy-four point five million dollars in capital through share repurchases this quarter, purchasing approximately one million shares. Cash flow from operations was twenty-four million dollars. As a reminder, subsequent to the quarter end, we did use one hundred and ninety-eight million dollars of our cash for the Broadcom transaction. Let me provide some details on our refinancing this past quarter. In November, we issued four hundred fifty million dollars of convertible notes with a coupon of seventy-five basis points due in twenty thirty-one. We also purchased a cap call to mitigate dilution and economically protect us up to a stock price of approximately one hundred and fifty dollars. A table in our supplemental slides outlines the dilution mitigation benefit of this cap call. We used the proceeds from our convertible offering and cash from our balance sheet to completely retire our five hundred eighty-two million dollar Term Loan. Capital expenditures were four point seven million dollars, and depreciation for the quarter was seven point four million. Receivables at the end of December were one hundred forty-six point five million dollars, and days of sales outstanding were forty-nine days, up from forty-seven days last quarter. Our ending inventory balance was one hundred nine, which was roughly in line with the prior quarter. The calculated days of inventory on our balance sheet were eighty-seven days. Now turning to our third quarter of fiscal twenty twenty-five guidance, we expect revenues to be approximately two hundred sixty-five million dollars at the midpoint, plus or minus fifteen million dollars. Our guidance includes a partial quarter of contribution from our recent acquisition of Broadcom assets. Our guidance for the third quarter reflects an expected revenue mix from core IoT enterprise, automotive, and mobile touch products of approximately twenty-five, fifty-eight, and seventeen percent respectively. We expect non-GAAP gross margin to be fifty-three point five percent at the midpoint, plus or minus one percent. Non-GAAP operating expenses in the March quarter are expected to be one hundred one million dollars at the midpoint of guidance, plus or minus two million dollars. The increase in operating expenses is primarily due to headcount-related expenses from our Packet Craft acquisition and Broadcom transaction, as well as incremental variable expenses. We expect non-GAAP net interest and other expenses to be approximately one million dollars in the third quarter, and our non-GAAP tax rate to be in the range of thirteen percent to fifteen percent. Non-GAAP net income per diluted share is anticipated to be zero point eight five dollars per share at the midpoint, plus or minus zero point twenty dollars on an estimated thirty-nine point five million fully diluted shares. To conclude, Synaptics has a strong portfolio of products with a leading share position in several end markets. We have an experienced leadership team that is laser-focused on driving our product roadmap and business priorities. Our pipeline and our design wins continue to improve. We are gaining market share and continue to drive innovation with new products. We remain committed to driving long-term sustainable growth for the company. This wraps up our prepared remarks. I'd like to turn the call over to the operator to start the Q&A session.

Operator, Operator

Certainly. And as a reminder, ladies and gentlemen, if you do have a question, please press star one now. Our first question comes from the line of Quinn Bolton from Needham and Company. Your question, please.

Neil Young, Analyst

Hey, guys. It's Neil Young on for Quinn Bolton. Thanks for taking the question.

Ken Rizvi, Interim CEO and CFO

So you talked about the forty million in annualized sales from the Broadcom transaction. Is that coming more into the core IoT segment or more into mobile? Any color would be appreciated.

Neil Young, Analyst

Yeah. Sure. Neil, thanks. This is Ken Rizvi. Thanks for the question. That will actually all fall into the core IoT segment because it's primarily wireless technologies. Great. Thanks. And then specific areas that are driving the improvement in bookings and orders in enterprise? Dot Maybe any areas of weakness within that you wanted to call out as well?

Ken Rizvi, Interim CEO and CFO

Say that again. Reask the question there.

Neil Young, Analyst

Yeah. Sorry. So you talked about the improvement in bookings and orders within enterprise. I was wondering if you wanted to call out any specific areas that are driving the improvement. And then on the flip side, you know, any areas of weakness within enterprise.

Ken Rizvi, Interim CEO and CFO

Yeah. I would say it is fairly broad. We did talk about broadly speaking on the peripheral side. We're starting to see some good traction there. And look, Neil, if I just step back and think about the entire business, you know, I feel so much better today than maybe six months ago in terms of our visibility. Overall for the entire business. One, we have very lean inventories overall at or below COVID levels. And then two, even in this kind of slower growth economic environment, I definitely see a path for us to grow sequentially about ten million dollars plus or minus sequentially throughout this calendar year. I think we're in very good shape. See a path there. Could it be slightly more in any given quarter? Or slightly less? The answer is yes. But we have a good path of growth ahead of us. As we think out over the next four quarters through the end of this calendar year. And so we're feeling very good about the business overall. That's inclusive of the enterprise space. And specifically in the core IoT space, where we'll see some benefit this quarter from the Broadcom acquisition. We'll get the full benefit here starting in the June quarter. But we're very optimistic about the overall business. The only area I would say that is still a bit sluggish, we talked about this, on the formal transcript is around the automotive space. That's embedded in the comments I just outlined.

Neil Young, Analyst

Great. Thank you.

Operator, Operator

Thank you. And our next question comes from the line of Kevin Cassidy from Rosenblatt Securities. Your question, please.

Kevin Cassidy, Analyst

Yes. Thanks for taking my question, and congratulations on the great quarter and the and the great transaction. Makes sense. I wanted to learn a little more about the transaction of the products you have now licensed and now especially the entry into the Android market and the ARVR market. Can you say, are there designs in progress in those markets that maybe we'll be coming to production, say, in the second half of this year or near term anyway?

Ken Rizvi, Interim CEO and CFO

Yeah. So, Kevin, one one, you for the support. Two, I think we also feel like this is a great transaction It further extends the strength that we have in our overall core IoT segment specifically around our wireless portfolio. If you look at the revenue ramp, we talked about a forty million dollar plus opportunity, about ten million plus a quarter. We get the full benefits starting in the June quarter here. And you can expect us to continue to ramp our revenue, not only with the existing customer base, but we have the ability to ramp that technology with new customers, especially as we look into calendar year twenty-six and calendar year twenty twenty-seven. From a technology standpoint, what do we get? We get a Wi-Fi eight combo chipset. We get advanced GNSS and GPS technology. We get IP around the UWB portfolio. And then we get front-end modules. So all of these things are actually fantastic additions to our overall portfolio. In addition, we get some Wi-Fi seven technology that's that's in production today, servicing that Android related customer. I don't know. Venkat, do you want to add anything in terms of the context?

Kevin Cassidy, Analyst

No. I think you covered it. I'll can the only other thing I would add is that we're also getting a credit of team engineers. As part of this transaction. That will help us become one of the largest teams for IoT segment.

Ken Rizvi, Interim CEO and CFO

Anything else, Kevin?

Kevin Cassidy, Analyst

Yeah. Sorry. I had a little trouble hearing that answer, but yeah, because I think you've mentioned what I'm gonna ask next about maybe, yeah, with all this Wi-Fi just say wireless connectivity that it will help you sell your processors into the AI network edge market. And, you know, what percentage of would you say your Wireless connectivity customers can adopt your processors also?

Ken Rizvi, Interim CEO and CFO

Vikram, do you want to and Vikram and Venkat, do you want to take this this call? Or this question?

Vikram Gupta, SVP of IoT Processors

Right. Yeah. So I think the way we see it is actually, you know, this transaction helps us create really good solutions that we can offer for the IoT and the AI space. We have always been stressing the combination of our processes and connectivity together, and that story actually seems to be resonating across the board. The wireless portfolio is definitely in the full position right now. But as the processes are rolling out, we're seeing a full limit in the other direct. So we expect this trend to actually continue as we look ahead.

Kevin Cassidy, Analyst

Okay. Great. Thank you.

Operator, Operator

Thank you. And our next question comes from the line of Krish Sankar from TD Cowen. Your question please.

Krish Sankar, Analyst

Yeah. Hi. Thanks for taking my question and congrats on the good results. Ken, the first question I had is, you know, when I look at your revenue, I mean, you're kind of getting this two hundred fifty million plus or minus fifty million revenue run rate almost like eight quarters of two years now. So if we strip out this Broadcom deal, I'm curious, are we just waiting for the cycle to inflect? Or do you see any kind of infection coming imminently because I was wondering, is this something Synaptics can do to outperform or generate alpha to the cycle compared to what we've been in this kind of a lull for like two years? And then I have a follow-up. This is a good question. And so if you

Ken Rizvi, Interim CEO and CFO

if you look at where the business now is, I feel very comfortable with the path ahead. Obviously, we can't call things out two years. But if you look at the trajectory of the business here, through calendar year twenty-five, we have much better visibility now than we did just even six months ago. And what I can say is I feel like we have a direct path to be able to grow the business from these levels. So we're we guided the two hundred sixty-five million but I think, sequentially, as we look out for the rest of this calendar year, there's definitely a path even in a low growth environment to grow kind of ten million dollars or so sequentially in calendar year Q2, in the calendar year Q3, and calendar year Q4. So I think those are great signs in terms of where the business is at. And if you looked even where we were a year ago. And one thing just to highlight, you know, the business is up about thirteen percent sequentially on a revenue basis. But our earnings, which are important, are up sixty-one percent. So we've been able to show good revenue growth and better earnings growth in a slower growth environment. And I think part of our story here is that we have a number of great franchise businesses that we highlighted where we're either number one or number two in a lot of critical markets in the enterprise space, in the automotive space, and in the mobile space. And we have this ability beyond that to really inflect our growth especially as we look out in the calendar year twenty-six and twenty-seven when you think about our core IoT segment. The Broadcom transaction augments our growth but if you look at the capabilities we have within Core IoT around wireless here as we think about this year and into next year, and then as we think about fiscal twenty twenty-seven, the ability to ramp the processor business with Astra specifically. Those are really great storylines for the company. And it's an ability for us to grow above the market rates for our other end markets. So I feel like we're in a great position here. Obviously, we went through a very challenging period post COVID. The business stabilized and bottomed about a year ago. And now we're on this path for steady growth here. And at least over the next know, three quarters through the end of this calendar year, I see a direct line of growth potential here. In a slow growth economic environment. If things get better, obviously going to do much better. And so very, very comfortable as we sit today.

Krish Sankar, Analyst

Gotcha. Gotcha. Thanks for that explanation, Ken. A clarification and a follow-up question. The ten million dollars incremental revenue in June quarter is that part of the forty million dollar run rate from the Broadcom acquisition?

Ken Rizvi, Interim CEO and CFO

Yeah. So there is some in there. Right? Because we do get a full quarter of benefit. This quarter, we're only gonna get a partial quarter, given when the transaction closed. And next quarter, we'll get a full quarter of benefit from June and onward from there.

Krish Sankar, Analyst

Right. And then my just to add to that. After June, it will be normalized on a sequential basis, when you look at it, post June, it will be fully baked in. So September, December will be everything will be organic when you look at the sequential basis. And just one clarification on the comment. When you said thirteen percent, was thirteen percent year over year growth?

Kevin Cassidy, Analyst

Yeah. Yeah. Got it. Got it.

Krish Sankar, Analyst

Thanks a lot, Munjal. And then just, like, the follow-up to that is, the Google deal announced. How to think about the quarterly revenue contribution? When will it start contributing to your top line? And along the same path, if I bacon Broadcom and Google. Is it fair to assume sequentially June should be up from March? September should be up from June and so on.

Munjal Shah, Vice President, Investor Relations

Yeah. So let let me answer that. So the Google collaboration is really about the partnership and validation of our ASTRA platform. Nothing changes in terms of the forecast that we've outlined to investors in terms of the ramp. That's still in that fiscal twenty-seven time. This just further solidifies the relationship with a large partner that is proliferating AI into edge applications in the edge ecosystem.

Ken Rizvi, Interim CEO and CFO

If you look at the sequentials in terms, when we think about the revenue and revenue run rate, the Broadcom piece is part of my earlier comment. In our guide here, in this quarter, we have a partial portion of the Broadcom revenue. We'll get the full portion here starting the June quarter. And as I mentioned before, as I think about it today in this lower growth environment, I would think about sequential growth from here. Without giving guidance, end of June, you know, about ten million dollars more, and then another ten in the September and another ten into December. So I think we have a good path for growth. If the economic environment improves, hopefully, we'll do better. But I feel very comfortable in terms of where the business is positioned today how the backlog is shaping up, where inventories are, and how our product portfolio is shaping up for not only this year, but as we think about twenty twenty-six.

Krish Sankar, Analyst

Awesome. Thank you, Ken, for the incremental color. Thank you. Appreciate it.

Operator, Operator

Thank you. And our next question comes from the line of Christopher Rolland from Susquehanna. Your question please.

Christopher Rolland, Analyst

Hey, Ken. Thanks for the question. So, yeah, I guess my first one is around the Broadcom piece. I know this you've kinda talked about this being core IoT. But exactly how meaningful can mobile be over time? And the reason I bring that up is there was a belief that Broadcom really wasn't interested in long tail mobile. They were really just focused on one, maybe one and a half. And there could be this pretty big opportunity for combo chips and other across the long tail of mobile. And so I I was wondering if you could weigh in on that opportunity. And if maybe, you know, three or four years from now, do you think mobile will be larger from this deal, or do you think Core IoT will be larger from this deal? Thank you.

Ken Rizvi, Interim CEO and CFO

Hey, Chris. This is a great question. If you look at our announcement, one of the benefits that we received as part of this transaction is the expansion of the field of use. So we're now importantly able to go into that ARVR segment consumer audio and then the Android smartphone segment. So going forward, I think there will be significant opportunities for us. As we think about twenty-six and twenty-seven in terms of penetrating some of these other Android accounts on the smartphone side. So that will be a focus of the team. Still early days given that we just closed the transaction this quarter? But definitely an area of focus for us as we think about the next two to four years.

Venkat Karawadi, SVP Wireless

Yeah. I think other markets that we will be able to address with this technology will be in the IoT space like automotive and ARVR glasses and earbuds and many other accessories. So it's just not gonna be mobile, but it's also gonna be more on the high-end high-performance segment that will be part of the IoT. And our organic development in the broad markets will start to actually kick in in FY twenty-six and twenty-seven. I have a calendar year twenty-six and twenty-seven that will help us grow even bigger in the IoT wireless space.

Christopher Rolland, Analyst

Okay. Great. And I I don't know if you wanted to chime in on that question about what will be bigger a few years out. Mobile or IoT, but I I would appreciate that. And then if you could also talk about, let's say, UWB that you're getting in this deal as well. I didn't know Broadcom had a great presence there. If you could maybe talk about that opportunity and engagements and and and how meaningful you think that could be on revenue as well. Thank you.

Ken Rizvi, Interim CEO and CFO

Yeah. So if you look at the breakout, I think it's too early to call, Chris, between the mobile opportunity and our existing wireless opportunity within Core IoT. Obviously, those are both areas we'll continue to look at and prosecute over the next couple of years. If you look at UWB, I think Venkat, I'll let you answer this one here.

Venkat Karawadi, SVP Wireless

Yeah. Chris, I think UWB is just an IP at this point. But the good thing about it is it is in the advanced seven nanometer process node, which should help us both coming up with a standalone product or integrated combo which will be needed for the high-end IoT segment as well as the Android ecosystem. as well.

Ken Rizvi, Interim CEO and CFO

Yeah. And I think just to highlight, right now, if you look at it, it's the IP that we get as part of this transaction. And so that's what we will look at developing over the next couple of years. A lot of this will be dependent on where the market is. Yep. And the use of this technology. But the key piece is that we get the IP and we can proliferate that with our existing team and be able to develop that over the next several years.

Christopher Rolland, Analyst

Fantastic. Thanks, guys.

Operator, Operator

Thank you. And our next question comes from the line of David Lejoeff Mizzo. Your question, please?

David Lejoeff, Analyst

Hi. Thanks for the question. I'm on for Vijay Mizzo. First one, I I was wondering on your Aastra Google platform, has that prior three hundred million dollar funnel changed, and maybe related to the recent accelerated deep seek hype with, like, smaller, more performing models. I know you guys your your models right now are, like, millions of parameters, but just wondering if that has accelerated.

Munjal Shah, Vice President, Investor Relations

Yeah. So one of the things that thanks for the question, by the way.

Ken Rizvi, Interim CEO and CFO

One of the questions or one of the items that we did talk about on our last call was the pipeline for Astra. And we talked about it being three hundred million dollars or so. That continues to grow. So the interest, not a surprise, continues to grow as people think about applications and the proliferation of AI to the edge. So it's an it it we won't provide specifics on the pipeline. We'll do that once a year. But what I can say is that there continues to be strong interest across a variety of applications and to use this Astra technology as the chipset at the edge. But maybe, Vikram, you wanna comment further just on the trends that you're seeing at a very high level.

Vikram Gupta, SVP of IoT Processors

No. I think you've covered it. And the thing that I would say is that subsequent Google announcement, we have seen you know, even more traction with our customer base. So the funnel is growing. Definitely faster, and again, it's been a validation coming from a a really important hyperscaler offer technology, which is actually helping it. And just to add to your deep seek comment, I think that's another, you are actually spot on that, you know, given what DeepSeek has been able to show, there is gonna be a proliferation of models going all the way from the high end down to the edge and that just benefits us. And the other aspect, which is being highlighted by DeepSeek is the fact that they relied on the open source community, and that's something that they're also stressing with the Google collaboration. This is somewhat unique to us as a silicon player. All of this is going to definitely help catalyze you know, our move into the AI space.

Operator, Operator

Perfect.

David Lejoeff, Analyst

Thank you. And I guess my follow-up, I'd wanna ask your user presence at at Dell at ten to fifteen percent attach rate. Has that changed? Is your new win at the other OEM similar, different? Yeah. Any color there would be great.

Ken Rizvi, Interim CEO and CFO

Yeah. So one of the things that we did highlight at CES was this UPD technology. And so what we talked about on the formal transcript was the fact that we've penetrated one account. We don't name names. And we've now penetrated another large account in the compute space. And so it just is a data point and shows the traction that we're gaining with our UPD technology. As we expand from one OEM into another very large OEM. We won't talk about the exact penetration rates but I think what you can take from this is that we're continuing to expand our capabilities within that space and continuing to win market share at new OEMs. I think those are both positive signs not only for the adoption of this technology but for Synaptics as a supplier. I don't know. Satish, if you wanna add to this.

Satish Genneson, SVP, Intelligent Sensing Vision and Chief Strategy Officer

No, Ken. I think you answered it appropriately. Our goal here on the PC cycle is to increase the number of components that we sell within the PC. And like Ken said, we are not talking about attached to it specifically here. But the traction we are getting is pretty good. And we are bullish about the technology.

David Lejoeff, Analyst

Thank you.

Operator, Operator

Thank you. And our next question comes from the line of Peter Pank from JPMorgan. Your question please.

Peter Pank, Analyst

Hey guys. Good job on the execution and thanks for taking my question.

Ken Rizvi, Interim CEO and CFO

Wanna go back to the incremental ten million revenue per quarter. Maybe if you can just rank order the top three or four things that are giving you confidence, you know, at this early juncture of being able to drive growth? Yeah. Sure, Peter. I think it's a good question. Right? And we don't provide guidance more than one quarter ahead, but we wanted to provide some context and color. And it's a couple of factors. One, I would just say, if you look at the visibility we have based on backlog and bookings, those continue to improve, especially where we wore from six months ago. So definitely feel much more comfortable with the visibility that we have over the next few quarters. Number two, I would say from an inventory standpoint, it's one of the things that we have highlighted and talked about in the past. But inventories are very lean right now, not only for us, but I think other suppliers as well. I think that's a good sign because as you think about demand trends now, we are now seeing those demand trends impact our revenues, whereas before, some of those demand trends were just pulling from the distribution channel. And so those are good signs for us. And then the third one is just continued build-out of our portfolio. We're starting to and continue to see ramps especially in the core IoT segment and specifically around the wireless side. This goes beyond the Broadcom acquisition. And so continuing to see momentum there as well as our other franchise businesses. You know, one of the things that maybe we don't highlight enough is that we have strong number one or number two positions in a lot of key markets targeting enterprise, automotive, and the mobile space. And so we continue to execute on growing our share and continue to execute on new product development. And and that's the that's the confidence I have as I look out over the next three quarters or so.

Peter Pank, Analyst

Got it. And then we talked a lot talked a lot about the revenue implications of the transaction. Maybe you can touch a little bit on the margin front and maybe how that could be beneficial or impact, you know, your margin mix comfort?

Munjal Shah, Vice President, Investor Relations

Yeah. I think look. We don't comment on a on a go forward basis. You saw the margin guide here for our next quarter, I think the bid point right at about fifty-three point five percent. I think that that's a reasonable range. A lot of this will depend on the mix. And I would say even the mix within the mix. Right? So we're not gonna forecast that margin as we think about June, September, December quarters. We wanted to try to outline is just where and how the trajectory of the business is sequentially. As we think about the next few quarters. And that's look. Things can change. We're we're in a lower growth environment. But we feel pretty strongly that we we have a great path to grow here throughout this calendar year. Could there be more revenues in one quarter and less than another? Absolutely. But but we have a good path here and a good backlog and bookings trend to support that.

Christopher Rolland, Analyst

Perfect. Thank you, guys.

Operator, Operator

Thank you. And our final question for today comes from the line of Martin Yang from Oppco. Your question please.

Martin Yang, Analyst

Hi. Thank you for taking my question. I'm curious about your thought of immediate synergy between your position in a high-end premium touch and the Android Unity for wireless Broadcom brought you do you see any bottom-up opportunities in the near term to media term? And any way for you to expand your aggregate presence among the Android OEMs.

Ken Rizvi, Interim CEO and CFO

Yeah. So if you look at the history of the company, we have a strong presence in the touch market. And a strong history there. And if you look for today's growth rate in terms of the mobile space, today, we're very much focused on the high-end Android market. That's the go for forward path. And I think with this acquisition of these Broadcom assets, we're now able to have a complementary portfolio of not only the touch but also Wi-Fi and next-generation Wi-Fi, especially as we think about Wi-Fi eight on a go forward basis. So from a customer standpoint, same types of customers that we've been servicing for the last several years and more than a decade here in terms of the Android platforms globally. But now we have an incremental ability to service them with Wi-Fi chipsets and wireless technology on a go forward basis. So very exciting for us early days. Right? So I I I wanna make sure that's outlined, but very exciting as we think about twenty-six, but really twenty-seven and beyond in terms of our ability to prosecute those opportunities, win those designs, and gain further scale. But Venkat or Satish, any anything else?

Vikram Gupta, SVP of IoT Processors

In general, I think there was a question earlier as well, you know, what do we do about the long tail? And in touch, we are shipping in a premium segment of Android phones across all of these customers, and we have a presence at each of these customers. And the reason we win is because of the differentiated technology that we have for these high-end flexible OLED screens. I think with the wireless acquisition, we have similar differentiated technology. So it gives us the ability to go tackle and address these with the same set of vendors that we are already very familiar with. So it presents a good opportunity for us and ex to expand our presence at these customers.

Christopher Rolland, Analyst

Thank you. I have one more question on the PC market recovery. So if we're assuming PC or high NTC demand comes back in twenty-five or twenty-six, is there any way to look at the different product segments, UPD, we could bring sensors to touchpads. Do they come back in the same pace, or is there any one or even video video interface included?

Ken Rizvi, Interim CEO and CFO

Any one of the product categories will recover at a faster pace than the market.

Munjal Shah, Vice President, Investor Relations

Yeah. So if I look at the overall PC space, I mean, what we have seen is seasonal trends. But looking back over the last year, we've seen a nice steady improvement in both the PC and the peripheral market. I think one of the things that we should highlight is we also continue to gain share with one of the large OEMs. And so that's helped us as we think about the business. There will still be some seasonal trends in any given quarter. But we continue to win share and continue to grow the revenue base there. The one thing that we did highlight on the formal presentation is that we still haven't seen this refresh cycle. So if you just look back, typically, enterprises refresh in every four years or every five years. And so we we haven't seen this significant upgrade that we we would expect or maybe some investors expect. Could it happen later in twenty-five? The answer is it could. We're just not seeing it today. But the reality is sometime between twenty-five and twenty-six, we would expect that a lot of the large enterprises will start to refresh their enterprise PCs, and along with that, should come a lot of peripheral refreshes as well. But Satish, you wanna add to this?

Satish Genneson, SVP, Intelligent Sensing Vision and Chief Strategy Officer

Yeah. Ken, you answered very well already. So in general, we're trying to gain share in that market by doing new technologies and infusing AI into touchpads, fingerprints, and so on. But, you know, the effects of those will be seen later. The short term, I think we'll continue to see and track the seasonal trends of PCs. And like Ken said, should the refresh cycle happen, we can see an upside. But right now, it's seasonal trend that we continue to see.

Christopher Rolland, Analyst

Thank you very much. That's it for me.

Ken Rizvi, Interim CEO and CFO

Thank you.

Operator, Operator

This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.