0000817720-25-000115
SEC filingRevenue grew 13.5% to $292.5M driven by Core IoT, but gross margin fell to 42.6% due to IP licensing decline and acquisition amortization.
Net revenue for Q1 FY2026 was $292.5M, a 13.5% increase from $257.7M in Q1 FY2025. The growth was primarily driven by a 73.8% surge in Core IoT product applications, which benefited from the Broadcom acquisition and increased unit volumes (64.1%) and average selling prices (5.9%). Enterprise and Automotive revenue remained flat at $147.7M, while Mobile product applications declined 18.4% to $41.2M due to a decrease in IP licensing revenue and lower ASPs.
Gross margin fell to 42.6% from 46.9%, a 430 bps decline, attributed to higher amortization of acquired intangible assets from Broadcom and the mix shift away from high-margin IP licensing. Operating expenses decreased to $147.8M from $149.3M, with lower SG&A ($46.2M vs $50.0M) and restructuring costs ($2.5M vs $14.2M) offsetting higher R&D ($94.4M vs $81.3M) and acquired intangibles amortization ($4.7M vs $3.8M). As a result, operating loss improved to $23.2M from $28.4M. Net loss narrowed to $20.6M from $23.1M, aided by higher interest income and lower interest expense after the early repayment of the Term Loan Facility.
The Core IoT segment was the standout performer, contributing $103.6M (35.4% of revenue) versus $59.6M (23.1%) a year ago. The increase was driven by the Broadcom acquisition, which added new product lines and customers. Enterprise and Automotive remained the largest segment at $147.7M (50.5% of revenue), but was essentially flat as a 9.0% increase in units was offset by an 8.2% decline in ASPs. Mobile continued to shrink, falling to $41.2M (14.1% of revenue) from $50.5M (19.6%), primarily due to a $10.5M drop in IP licensing and a 15.2% ASP decline, partially offset by a 21.4% increase in unit volumes.
Management highlighted ongoing macroeconomic uncertainties, including tariffs and trade tensions, but noted limited direct exposure based on current operations. The company expects continued benefits from the Broadcom acquisition, though integration costs may persist. No specific forward guidance was provided. Cash and cash equivalents rose to $459.9M from $391.5M at June 2025, and the company has $350M available under its revolving credit facility. The focus remains on leveraging its mixed-signal and Edge AI capabilities in IoT, automotive, and enterprise markets.
As of September 27, 2025, Synaptics held $459.9M in cash and cash equivalents, up from $391.5M at June 2025, with short-term investments fully matured (zero balance). Total debt stood at $835.4M (net of $14.6M unamortized issuance costs), comprising $400M 2029 Notes (4.00%) and $450M 2031 Convertible Notes (0.75%). The estimated fair value of total debt was $821.2M, slightly below carrying. Shareholders' equity increased to $1,400.6M from $1,394.9M, driven by share-based compensation offset by net loss and stock repurchases. Inventory rose to $143.1M (raw materials and work-in-progress $72.2M, finished goods $70.9M). Accounts receivable net decreased to $119.5M, with an allowance for credit losses of $4.2M.
Purchase commitments totaled $41.1M as of September 2025, with $27.2M due within the remainder of fiscal 2026, $8.4M in FY2027, and $5.5M in FY2028. Additionally, prepaid intangible assets of $96.8M (related to Broadcom Wi-Fi technology not yet received) are recorded as non-current assets. Operating lease liabilities were $44.8M ($51.7M future payments less $6.9M interest). The company also had $42.3M in gross unrecognized tax benefits, for which settlement timing is uncertain.
Share repurchases: $7.2M of common stock was bought back during Q1 FY2026 under the $150M authorized program, leaving $142.8M available. No dividends were paid. Debt: Principal maturities are $400M in 2029 and $450M in 2031; the $600M term loan was fully repaid in fiscal 2025. No new debt was issued or repaid in Q1. Capital expenditures totaled $12.2M (4.2% of revenue), primarily for property and equipment.
Synaptics operates as a single reportable segment, but disaggregates revenue by product category and geography. In Q1 FY2026: Enterprise and Automotive revenue was $147.7M (+0.1% YoY), Core IoT surged 74% to $103.6M, and Mobile declined 18% to $41.2M. Geographically, China/Hong Kong contributed $142.1M (49%), Taiwan $94.3M (32%), Japan $27.7M, and other regions $26.3M. Three customers accounted for 18%, 12% (not disclosed separately due to rounding), and 15% of revenue, respectively.
Despite a net loss of $20.6M, operating cash flow was positive at $30.2M, driven by non-cash charges: share-based compensation ($36.7M), depreciation ($7.5M), and amortization ($35.2M). Working capital changes consumed cash: accounts receivable declined $10.8M (favorable), but inventories increased $2.9M, and accrued liabilities decreased $31.6M (unfavorable).
Capex intensity remained modest at $12.2M, representing 40% of operating cash flow. Investing cash flow was boosted by $61.0M in proceeds from investment maturities. Financing activities included $7.4M in proceeds from share issuance offset by $7.2M in repurchases and $10.6M in tax withholding on share-based awards.
Free cash flow (not explicitly stated) would approximate $18.0M (CFO minus capex), covering share repurchases 2.5x. No dividends were paid. Overall, cash generation improved sharply from the prior year's negative operating cash flow.