Synaptics IncorporatedSYNA

Key highlights

• Core IoT expansion continues: Sales of core internet of things products grew 24% to $104.6 million during the quarter, making up roughly one third of the company's total sales. This group of chips for smart devices grew 43% for the full year and is the main engine helping the company shift away from older phone and laptop parts.
• Profit margins holding steady: Non-GAAP gross margin, a measure of profit after production costs that excludes one-time items, reached 54.5% for the quarter. This is up from 53.5% a year ago and sits above the company's long-term goal of 53%, showing they can keep pricing power even as the product mix changes.
• Operating efficiency improves: The company's non-GAAP operating margin reached 20%, which is the highest level in 13 quarters. This 300 basis point improvement from last year shows that management is doing a better job controlling general business expenses while still growing the top line.
• Acquisition halts future outlook: Synaptics did not provide a specific revenue or profit outlook for the next quarter because of its pending merger with onsemi. This deal, announced in June 2026, will turn Synaptics into a part of a much larger chip company and is expected to close later this year.
• Design wins in robotics: Management reported an increase in design wins, which are commitments from customers to use their chips in future products, for their new Astra platform. These wins are concentrated in the physical AI and robotics markets, which are the specific areas the company is betting on for growth over the next few years.

Our take: This was a very strong finish to the fiscal year, highlighted by the best operating margins in over three years. While a massive one-time tax charge created a large GAAP loss, the underlying business is healthy and growing exactly where it needs to. The pending sale to onsemi makes sense given this momentum, as it locks in a solid valuation for shareholders while the Core IoT business is performing at its peak.