SYNAPTICS Q3 FY26 earnings call SYNA

Synaptics is experiencing accelerating adoption in physical AI and Edge AI, with customer engagements expanding across various applications. The robotics pipeline has grown to over 35 customers globally, including a leading generative AI OEM, leveraging AI-enabled touch controllers for tactile sensing. The company's comprehensive portfolio spanning processing, connectivity, sensing, and interface solutions uniquely positions it to capitalize on this growth vector, with silicon content in robotics being substantially higher than in other markets.

The partnership with Google remains a key driver of Synaptics' Edge AI strategy, exemplified by the launch of the next-generation Coralboard. This platform is powered by Synaptics' Astra SL2610 processor and features the industry's first implementation of Google's Coral NPU integrated with Synaptics' Torq NPU architecture. Additionally, the Astra SR series microcontrollers, an AI-native platform designed for emerging wearable applications, successfully taped out last month and is slated for sampling in the fall, promising significant improvements in battery life and bill-of-materials reduction.

Astra processors are securing design wins across diverse end markets, including a new class of medical devices that bring diagnostic imaging to patient homes and an industrial win with a leading North American fleet management OEM for intelligent asset monitoring. The design pipeline continues to expand across consumer and industrial sectors, with increasing traction in IoT hubs, gesture-driven streaming devices, industrial gateways, UAV navigation, and smart home systems. Synaptics' key differentiation lies in tightly integrating compute and connectivity into solution-oriented, software-developer-friendly platforms.

Synaptics successfully launched its Astra-enabled Connected MCU at Embedded World, where it received a Best in Show award. This device is notable as the industry's first to integrate Wi-Fi 7 and Bluetooth 6.0 connectivity with Edge AI compute in a monolithic SoC, offering a highly differentiated solution. Customers are particularly drawn to its ability to concurrently host Bluetooth and Wi-Fi stacks alongside the host application, enhancing integration and efficiency, while the integrated NPU enables the development of differentiated AI features. The product is currently sampling with multiple customers across various applications.

Demand from enterprise customers is showing steady improvement, with Synaptics maintaining its focus on the premium tier of the market. In the Mobile Touch segment, while some customers are navigating near-term challenges related to memory supply, the company is gaining market share with a leading Korean OEM. Synaptics is also encouraged by design wins in foldable smartphones, with new products expected to launch in the second half of the calendar year, potentially driving overall market growth through broader adoption.

Fiscal Q3 revenue reached $294.2 million, marking a 10% year-over-year increase, primarily driven by a 31% YoY growth in Core IoT products. The non-GAAP gross margin stood at 53.6%, and non-GAAP EPS was $1.09, representing a 21% increase year-over-year. For Q4 FY26, Synaptics projects revenue of approximately $305 million at the midpoint and non-GAAP EPS of $1.20 at the midpoint, with Core IoT expected to achieve over 40% year-over-year growth for the full fiscal year.