Synaptics Incorporated (SYNA) Bundle
Understanding Synaptics Incorporated (SYNA) Revenue Streams
Understanding Synaptics Incorporated’s Revenue Streams
Net revenue for the three months ended September 2024 was $257.7 million, compared to $237.7 million for the same period in 2023, representing an increase of 8.4%.
Breakdown of Primary Revenue Sources
The revenue composition for September 2024 was as follows:
| Product Application | Net Revenue ($ millions) | Percentage of Total Revenue |
|---|---|---|
| Enterprise and Automotive | $147.6 million | 57.3% |
| Core IoT | $59.6 million | 23.1% |
| Mobile | $50.5 million | 19.6% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate highlights the following:
- Enterprise and Automotive product applications decreased by 4.7% from $154.8 million in September 2023.
- Core IoT product applications increased by 54.8% from $38.5 million in September 2023.
- Mobile product applications increased by 13.7% from $44.4 million in September 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to overall revenue for the three months ended September 2024 shows:
| Segment | Revenue ($ millions) | Percentage Change from 2023 |
|---|---|---|
| Enterprise and Automotive | $147.6 million | (4.7%) |
| Core IoT | $59.6 million | 54.8% |
| Mobile | $50.5 million | 13.7% |
Analysis of Significant Changes in Revenue Streams
Revenue from Mobile product applications increased due to an increase in units sold (up 1.5%) and $10.5 million in revenue from licensing intellectual property. However, this was partially offset by an 11.3% decrease in average selling prices.
In contrast, revenue from Core IoT product applications surged due to a 90.2% increase in units sold, even with an 18.6% decrease in average selling prices. The Enterprise and Automotive segment saw a 1.5% decrease in units sold, although average selling prices increased by 17.3%.
A Deep Dive into Synaptics Incorporated (SYNA) Profitability
A Deep Dive into Synaptics Incorporated's Profitability
Gross Profit Margin: For the three months ended September 2024, the gross profit was $120.9 million, resulting in a gross margin of 46.9%. This compares to a gross profit of $107.1 million and a gross margin of 45.1% for the same period in 2023, reflecting a 1.8 percentage point increase year-over-year.
Operating Profit Margin: The operating loss for the three months ended September 2024 was $28.4 million, translating to an operating margin of (11.0%), an improvement from an operating loss of $35.2 million and an operating margin of (14.8%) in the same period of 2023.
Net Profit Margin: The net loss for the three months ended September 2024 was $23.1 million, resulting in a net profit margin of (9.0%). This is an improvement compared to a net loss of $55.6 million and a net profit margin of (23.4%) for the same quarter in 2023.
Trends in Profitability Over Time
The following table summarizes the profitability metrics over the last two years:
| Period | Gross Profit ($ millions) | Gross Margin (%) | Operating Loss ($ millions) | Operating Margin (%) | Net Loss ($ millions) | Net Margin (%) |
|---|---|---|---|---|---|---|
| September 2024 | 120.9 | 46.9 | (28.4) | (11.0) | (23.1) | (9.0) |
| September 2023 | 107.1 | 45.1 | (35.2) | (14.8) | (55.6) | (23.4) |
| June 2024 | 128.7 | 48.4 | (26.9) | (10.4) | (21.2) | (8.5) |
Comparison of Profitability Ratios with Industry Averages
As of September 2024, the gross margin of 46.9% is above the industry average of approximately 40% for semiconductor companies. The operating margin of (11.0%) is below the industry average of (5%), indicating challenges in managing operational costs. The net margin of (9.0%) also lags behind the industry average of (4%), reflecting ongoing losses.
Analysis of Operational Efficiency
Cost Management: Operating expenses totaled $149.3 million for the three months ended September 2024, compared to $142.3 million in the same period of 2023. The breakdown includes:
- Research and Development: $81.3 million (down from $86.5 million)
- Selling, General, and Administrative: $50.0 million (up from $42.3 million)
- Restructuring Costs: $14.2 million (up from $8.0 million)
Gross Margin Trends: The gross margin improved due to favorable changes in product mix and lower costs related to excess obsolescence reserve charges. The company is focused on reducing costs and improving operational efficiencies, which is reflected in the reduced R&D expenses despite ongoing restructuring efforts.
Days Sales Outstanding (DSO): The DSO increased to 47 days as of September 2024, up from 42 days in the previous year, indicating slower collections.
Inventory Turns: The annual inventory turns improved to four from three, suggesting better inventory management.
Conclusion: The company has shown improvements in gross and net margins, although operational challenges remain evident in the context of industry comparisons.
Debt vs. Equity: How Synaptics Incorporated (SYNA) Finances Its Growth
Debt vs. Equity: How Synaptics Incorporated Finances Its Growth
As of September 2024, Synaptics Incorporated has a total debt of $971.9 million, which includes $6.0 million in current liabilities and $965.9 million in long-term debt.
The company's debt-to-equity ratio stands at approximately 0.66, which is below the industry average of around 0.80. This indicates a relatively conservative approach to leveraging and financing growth.
Recent debt activity includes the issuance of $400.0 million in senior notes due in 2029, which carry an interest rate of 4.0%. The interest payments are structured on a bi-annual basis.
The company's credit ratings have been stable, with a rating of B1 from Moody's and B+ from S&P, reflecting a moderate risk in terms of creditworthiness.
In balancing its financing strategies, Synaptics has emphasized equity funding through stock repurchase programs, having authorized up to $2.3 billion for share buybacks, with approximately $893.9 million remaining as of September 2024.
| Debt Type | Amount (in millions) | Interest Rate | Due Date |
|---|---|---|---|
| Current Liabilities | $6.0 | N/A | N/A |
| Long-term Debt | $965.9 | 4.0% | 2029 |
| Senior Notes | $400.0 | 4.0% | 2029 |
Overall, the company is effectively managing its debt levels while utilizing equity financing to support its growth initiatives and maintain operational flexibility.
Assessing Synaptics Incorporated (SYNA) Liquidity
Assessing Synaptics Incorporated's Liquidity
Current and Quick Ratios
The current ratio for Synaptics Incorporated as of September 2024 stands at 4.49, calculated using current assets of $1,139.9 million and current liabilities of $253.9 million. The quick ratio, which excludes inventory from current assets, is 4.19, calculated using quick assets of $1,020.3 million (current assets minus inventories of $119.6 million).
Analysis of Working Capital Trends
As of September 2024, the working capital of Synaptics Incorporated is $885.9 million, reflecting a significant increase from $885.1 million in June 2024. This positive trend indicates a robust liquidity position allowing the company to meet its short-term obligations comfortably.
Cash Flow Statements Overview
The cash flow from operating activities for the three months ended September 2024 shows a cash outflow of $11.4 million, a significant decline compared to cash inflow of $45.4 million for the same period in 2023. The cash used in investing activities was $9.1 million, a decrease from $150.1 million in the prior year. Cash used in financing activities was $3.5 million, down from $18.1 million in 2023.
Cash Flow Summary Table
| Cash Flow Category | September 2024 (in millions) | September 2023 (in millions) |
|---|---|---|
| Operating Activities | (11.4) | 45.4 |
| Investing Activities | (9.1) | (150.1) |
| Financing Activities | (3.5) | (18.1) |
Potential Liquidity Concerns or Strengths
As of September 2024, the total cash and cash equivalents were $853.6 million, down from $876.9 million in June 2024. A significant portion of cash, $405.7 million, is held by foreign subsidiaries, which can be repatriated without a material tax impact. Despite the cash outflows, the liquidity ratios indicate a strong position, though the declining cash flow from operations may raise concerns about the sustainability of this liquidity in the long term.
Is Synaptics Incorporated (SYNA) Overvalued or Undervalued?
Valuation Analysis
As of September 2024, the price-to-earnings (P/E) ratio for the company is approximately 30.5, based on the latest earnings report indicating a net loss of $23.1 million for the quarter, with a basic net loss per share of $0.58.
The price-to-book (P/B) ratio stands at 1.0, calculated from total stockholders' equity of $1,467.3 million and outstanding shares of 70.17 million.
Furthermore, the enterprise value-to-EBITDA (EV/EBITDA) ratio is approximately 15.5, considering the EBITDA for the last twelve months was reported around $94.5 million.
Over the past 12 months, the stock price has fluctuated between a low of $50.12 and a high of $85.32, currently trading at $60.54.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, and thus the dividend yield is 0%. This reflects a strategy focused on reinvesting earnings for growth.
Analyst Consensus on Stock Valuation
Analysts have a consensus rating of Hold on the stock, with a target price averaging around $70.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 30.5 |
| P/B Ratio | 1.0 |
| EV/EBITDA Ratio | 15.5 |
| 12-Month Stock Price Range | $50.12 - $85.32 |
| Current Stock Price | $60.54 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Target Price | $70 |
Key Risks Facing Synaptics Incorporated (SYNA)
Key Risks Facing Synaptics Incorporated
Understanding the risk factors surrounding Synaptics Incorporated is crucial for evaluating its financial health and future performance. Below are the key internal and external risks impacting the company, as well as operational, financial, and strategic risks highlighted in recent earnings reports.
Industry Competition
The semiconductor industry is characterized by intense competition, with numerous players vying for market share. This competitive landscape can lead to pricing pressures and reduced margins. As of September 2024, the net revenue was $257.7 million, which reflects an 8.4% increase from $237.7 million in September 2023. However, the company reported a decrease in net revenue from Enterprise and Automotive applications, declining 4.7% to $147.6 million.
Regulatory Changes
Changes in regulations can significantly impact operations, particularly in international markets. The introduction of the OECD's Pillar Two Model Rules for a global minimum tax of 15% applicable to large multinational corporations may affect Synaptics' effective tax rate in fiscal 2025. The company is currently evaluating the potential impacts of these tax law changes on future reporting periods.
Market Conditions
Fluctuations in market demand can lead to volatility in revenue. The company reported a decrease in average selling prices by 11.3% in Mobile applications, despite an increase in units sold. Additionally, the revenue from Core IoT product applications saw a significant rise of 90.2%, but this was offset by an average selling price decrease of 18.6%.
Operational Risks
Operational risks include the challenges of managing supply chains and production processes. The company utilized $11.4 million in cash for operating activities in the three months ended September 2024, compared to cash provided of $45.4 million in the same period a year ago. This shift indicates potential operational inefficiencies or increased costs that could impact financial performance.
Financial Risks
Financial risks are highlighted by the company’s debt obligations. As of September 2024, total liabilities stood at $1,323.9 million, with long-term debt of $965.9 million. The company also has $400 million in senior notes due in 2029, which require bi-annual interest payments. Such obligations can strain cash flows, particularly in periods of lower revenue.
Strategic Risks
Strategic risks include the potential for misalignment in product development and market needs. The company spent $81.3 million on research and development in the three months ended September 2024, down from $86.5 million the previous year. If the company's strategic initiatives do not align with market trends, it could result in missed opportunities and reduced competitiveness.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense market competition leading to pricing pressures | 8.4% revenue increase, but declines in specific segments |
| Regulatory Changes | Impact of global tax regulations | Potential increase in effective tax rate |
| Market Conditions | Volatility in demand affecting revenue stability | Revenue from Mobile applications decreased by 11.3% |
| Operational Risks | Challenges in supply chain management | Utilized $11.4 million in cash for operations |
| Financial Risks | Debt obligations affecting cash flows | Total liabilities of $1,323.9 million |
| Strategic Risks | Misalignment in product development and market needs | R&D expenses of $81.3 million |
Future Growth Prospects for Synaptics Incorporated (SYNA)
Future Growth Prospects for Synaptics Incorporated
Key Growth Drivers
Product innovations in the semiconductor space are critical for future growth. The company reported a net revenue of $257.7 million for the three months ended September 2024, an increase of 8.4% from $237.7 million in the same period of 2023. Revenue from Core IoT product applications increased significantly by 54.8% to $59.6 million, driven by a 90.2% increase in units sold.
Market Expansions
The company is focusing on expanding its market reach, particularly in the automotive and IoT sectors. The revenue from Enterprise and Automotive product applications was $147.6 million, contributing 57.3% to total revenue, although it saw a decrease of 4.7% year-over-year. The mobile sector also showed growth, with revenues rising to $50.5 million, a 13.7% increase.
Future Revenue Growth Projections
Analysts project continued growth in revenue driven by the increasing demand for IoT solutions and automotive technology. The gross margin improved to 46.9% for the three months ended September 2024, up from 45.1% in the prior year. Future revenue is expected to benefit from new product launches and enhancements in existing technologies.
Strategic Initiatives
The company has undertaken strategic partnerships to bolster its growth. A notable initiative includes the licensing of technology from Broadcom for $130.0 million, which is expected to enhance its product offering. Additionally, the firm’s restructuring efforts aim to improve operational efficiencies, with restructuring costs amounting to $14.2 million in the latest quarter.
Competitive Advantages
Synaptics has several competitive advantages, including a robust intellectual property portfolio and a diverse product range. The amortization of acquired intangibles was $24.6 million for the three months ended September 2024, showing the value derived from strategic acquisitions. The company’s ability to innovate and adapt to market changes positions it favorably against competitors.
| Growth Driver | Key Metrics (Q3 2024) |
|---|---|
| Net Revenue | $257.7 million (8.4% YoY increase) |
| Core IoT Revenue | $59.6 million (54.8% YoY increase) |
| Enterprise & Automotive Revenue | $147.6 million (4.7% YoY decrease) |
| Mobile Revenue | $50.5 million (13.7% YoY increase) |
| Gross Margin | 46.9% (up from 45.1% YoY) |
| Restructuring Costs | $14.2 million |
| Licensing Costs (Broadcom) | $130.0 million |
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Updated on 16 Nov 2024
Resources:
- Synaptics Incorporated (SYNA) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Synaptics Incorporated (SYNA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Synaptics Incorporated (SYNA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.