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Introduction & Market Context
Synaptics Incorporated (NASDAQ:SYNA) released its third quarter fiscal 2025 earnings presentation on May 8, 2025, highlighting solid growth driven primarily by its expanding Core IoT business. The semiconductor solutions provider continues to position itself as a leader in high-performance IoT applications, targeting a serviceable addressable market exceeding $30 billion by FY2028.
The company’s shares responded positively to the results, with the stock rising 2.59% in after-hours trading to $61.34, building on a 2.64% gain during the regular session.
Quarterly Performance Highlights
Synaptics reported Q3 FY2025 revenue of $267 million, representing a 12% increase year-over-year, with particularly strong performance in its strategic Core IoT segment, which grew 43% compared to the same period last year and 11% sequentially.
"Our Core IoT business continues to be the primary growth driver for the company, now representing 25% of our total revenue mix, up from 20% a year ago," the company stated in its presentation.
The company’s revenue breakdown shows Core IoT at $154 million, Enterprise & Auto at $68 million, and Mobile at $45 million, as illustrated in the following chart:
Non-GAAP earnings per share reached $0.90, marking a substantial 70% increase from $0.53 in Q3 FY2024. This growth significantly outpaced revenue growth, demonstrating improved operational efficiency. The company also reported strong cash flow from operations of $74 million, a notable improvement from the cash usage reported in previous quarters.
The year-over-year growth across key financial metrics is clearly illustrated in the following comparison:
Detailed Financial Analysis
Synaptics maintained a strong margin profile with non-GAAP gross margin at 53.5% for the quarter, consistent with the company’s performance over the past year. However, GAAP gross margin declined to 43.4% from 46.5% in the same quarter last year, primarily due to acquisition-related costs and other adjustments.
The following chart shows the company’s gross margin trends over the past five quarters:
The company’s balance sheet showed some notable changes, with cash and short-term investments declining to $421.4 million from $596.1 million in the previous quarter and $876.9 million at the end of fiscal 2024. This reduction partially reflects the company’s share repurchase program, under which Synaptics bought back approximately 546,000 shares for $37.9 million during the quarter.
Inventory levels increased to $132.9 million, up from $119.5 million in the previous quarter, continuing a trend noted in earlier earnings reports. This inventory build appears strategic as the company positions itself for anticipated growth in its Core IoT business.
The comprehensive financial results comparing the current quarter with previous periods are detailed in the following table:
Strategic Initiatives & Product Portfolio
During the quarter, Synaptics continued to expand its technology leadership across its product portfolio, with several key product introductions aimed at strengthening its position in high-growth markets.
The company introduced Wi-Fi 7 devices specifically designed for IoT applications, launched broad markets wireless connectivity chips, and expanded its Astra Edge AI portfolio with high-performance adaptive MCUs. These initiatives align with the company’s Q1 FY2025 statements about sampling Wi-Fi 7 devices and focusing on IoT applications.
Additionally, Synaptics unveiled a next-generation Touch controller architecture for foldable phones and larger screens, and reported ramping multiple designs for User Presence Detection solutions at a major customer.
The following image highlights these key business developments from the quarter:
Synaptics continues to emphasize its technology leadership across multiple product categories, as illustrated in this overview of its product portfolio:
Forward-Looking Statements
Looking ahead to the fourth quarter of fiscal 2025, Synaptics provided guidance that suggests continued growth momentum. The company expects revenue of $280 million (±$15 million), representing a sequential increase of approximately 5% at the midpoint.
Non-GAAP gross margin is projected to remain stable at 53.5% (±1.0%), while non-GAAP earnings per share are expected to reach $1.00 (±$0.20), suggesting continued strong profitability.
The company also projects a shift in its revenue mix for Q4, with Core IoT expected to represent 30% of total revenue, Enterprise & Auto at 54%, and Mobile at 16%. This further emphasizes Synaptics’ strategic focus on growing its IoT business.
The detailed Q4 FY2025 guidance is presented in the following table:
Synaptics’ Q3 results and Q4 guidance demonstrate the company’s successful execution of its strategy to focus on high-growth IoT markets while maintaining strong margins. With the Core IoT segment continuing to gain momentum and new product introductions addressing expanding market opportunities, Synaptics appears well-positioned to maintain its growth trajectory through the remainder of fiscal 2025 and beyond.
Full presentation:
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