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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 30, 2024

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to .

Commission file number 000-49602

SYNAPTICS INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware

77-0118518

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1109 McKay Drive

San Jose, California 95131

(Address of principal executive offices) (Zip code)

(408) 904-1100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $.001 per share

SYNA

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

As of May 2, 2024, the Company had 39,497,538 shares of Common Stock outstanding.

 

 


 

SYNAPTICS INCORPORATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 30, 2024

TABLE OF CONTENTS

Page

Part I. Financial Information

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited):

 

 

 

 

 

Condensed Consolidated Balance Sheets—March 30, 2024 and June 24, 2023

3

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations—Three and Nine Months Ended March 30, 2024 and March 25, 2023

 

4

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive (Loss) Income—Three and Nine Months Ended March 30, 2024 and March 25, 2023

 

5

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity—Three and Nine Months Ended March 30, 2024 and March 25, 2023

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows—Nine Months Ended

March 30, 2024 and March 25, 2023

8

 

 

 

 

Notes to Condensed Consolidated Financial Statements

9

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

 

 

 

 

Item 4.

Controls and Procedures

31

 

 

Part II. Other Information

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

32

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

32

 

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

 

 

 

 

Item 6.

Exhibits

47

 

 

 

 

 

 

 

Signatures

48

 

 

 

 


 

PART I—FINANCIAL INFORMATION

 

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except par value and share amounts)

(unaudited)

 

 

March

 

 

June

 

 

 

2024

 

 

2023

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

828.1

 

 

$

924.7

 

Short-term investments

 

 

0.5

 

 

 

9.6

 

Accounts receivable, net

 

 

144.7

 

 

 

163.9

 

Inventories, net

 

114.1

 

 

 

137.2

 

Prepaid expenses and other current assets

 

 

35.1

 

 

 

36.6

 

Total current assets

 

 

1,122.5

 

 

 

1,272.0

 

Property and equipment, net

 

 

74.0

 

 

 

66.4

 

Goodwill

 

 

816.4

 

 

 

816.4

 

Acquired intangibles, net

 

 

252.2

 

 

 

298.5

 

Right-of-use assets

 

 

45.9

 

 

 

49.0

 

Non-current other assets

 

 

228.7

 

 

 

109.1

 

 

$

2,539.7

 

 

$

2,611.4

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

70.9

 

 

$

45.8

 

Accrued compensation

 

 

25.5

 

 

 

45.9

 

Income taxes payable

 

 

9.7

 

 

 

54.0

 

Other accrued liabilities

 

 

98.8

 

 

 

108.4

 

Current portion of long-term debt

 

 

6.0

 

 

 

6.0

 

Total current liabilities

 

 

210.9

 

 

 

260.1

 

Long-term debt

 

 

967.7

 

 

 

972.0

 

Other long-term liabilities

 

 

125.7

 

 

 

135.9

 

Total liabilities

 

1,304.3

 

 

 

1,368.0

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred stock:

 

 

 

 

 

 

$0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

$0.001 par value; 120,000,000 shares authorized, 69,597,233 and 68,687,511 shares issued,
39,480,794 and 38,571,072 shares outstanding, at March 2024 and June 2023, respectively

 

0.1

 

 

 

0.1

 

Additional paid-in capital

 

 

1,083.7

 

 

 

1,009.2

 

Treasury stock: 30,116,439 common shares at March 2024 and June 2023, at cost

 

 

(878.0

)

 

 

(878.0

)

Accumulated other comprehensive income

 

 

0.2

 

 

 

 

Retained earnings

 

 

1,029.4

 

 

 

1,112.1

 

Total stockholders' equity

 

 

1,235.4

 

 

 

1,243.4

 

 

 

$

2,539.7

 

 

$

2,611.4

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

3


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March

 

 

March

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net revenue

 

$

237.3

 

 

$

326.6

 

 

$

712.0

 

 

$

1,127.8

 

Cost of revenue

 

 

127.0

 

 

 

154.3

 

 

 

385.6

 

 

 

513.1

 

Gross margin

 

 

110.3

 

 

 

172.3

 

 

 

326.4

 

 

 

614.7

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

83.4

 

 

 

87.9

 

 

 

251.9

 

 

 

266.7

 

Selling, general, and administrative

 

 

40.5

 

 

 

41.7

 

 

 

122.5

 

 

 

128.8

 

Acquired intangibles amortization

 

4.0

 

 

 

8.5

 

 

 

13.4

 

 

 

26.9

 

Restructuring costs

 

 

(0.2

)

 

 

 

 

 

9.1

 

 

 

 

Total operating expenses

 

 

127.7

 

 

 

138.1

 

 

 

396.9

 

 

 

422.4

 

Operating (loss) income

 

 

(17.4

)

 

 

34.2

 

 

 

(70.5

)

 

 

192.3

 

Interest and other expense, net

 

 

(5.9

)

 

 

(7.0

)

 

 

(17.4

)

 

 

(22.0

)

(Loss) income before provision for income taxes

 

 

(23.3

)

 

 

27.2

 

 

 

(87.9

)

 

 

170.3

 

Provision for income taxes

 

 

(5.2

)

 

 

16.8

 

 

 

(5.2

)

 

 

73.3

 

Net (loss) income

 

$

(18.1

)

 

$

10.4

 

 

$

(82.7

)

 

$

97.0

 

Net (loss) income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.46

)

 

$

0.26

 

 

$

(2.12

)

 

$

2.44

 

Diluted

 

$

(0.46

)

 

$

0.26

 

 

$

(2.12

)

 

$

2.41

 

Shares used in computing net (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

39.3

 

 

 

39.4

 

 

 

39.1

 

 

 

39.7

 

Diluted

 

 

39.3

 

 

 

39.9

 

 

 

39.1

 

 

 

40.3

 

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

4


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions)

(unaudited)

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

March

 

March

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net (loss) income

 

$

(18.1

)

 

$

10.4

 

 

$

(82.7

)

 

$

97.0

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized income on available-for-sale-securities

 

 

 

 

 

0.4

 

 

 

0.2

 

 

 

0.7

 

Comprehensive (loss) income

 

$

(18.1

)

 

$

10.8

 

 

$

(82.5

)

 

$

97.7

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

5


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Income

 

 

Retained Earnings

 

 

Total Stockholders' Equity

 

Balance at June 2023

 

 

68,687,511

 

 

$

0.1

 

 

$

1,009.2

 

 

$

(878.0

)

 

$

 

 

$

1,112.1

 

 

$

1,243.4

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(55.6

)

 

 

(55.6

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

Issuance of common stock for share-based award compensation plans

 

 

612,283

 

 

 

 

 

 

8.5

 

 

 

 

 

 

 

 

 

 

 

 

8.5

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(25.3

)

 

 

 

 

 

 

 

 

 

 

 

(25.3

)

Share-based compensation

 

 

 

 

 

 

 

 

33.2

 

 

 

 

 

 

 

 

 

 

 

 

33.2

 

Balance at September 2023

 

 

69,299,794

 

 

 

0.1

 

 

 

1,025.6

 

 

 

(878.0

)

 

 

0.1

 

 

 

1,056.5

 

 

 

1,204.3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9.0

)

 

 

(9.0

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

 

0.1

 

Issuance of common stock for share-based award compensation plans

 

 

104,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(4.3

)

 

 

 

 

 

 

 

 

 

 

 

(4.3

)

Share-based compensation

 

 

 

 

 

 

 

 

29.2

 

 

 

 

 

 

 

 

 

 

 

 

29.2

 

Balance at December 2023

 

 

69,404,215

 

 

 

0.1

 

 

 

1,050.5

 

 

 

(878.0

)

 

 

0.2

 

 

 

1,047.5

 

 

 

1,220.3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18.1

)

 

 

(18.1

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for share-based award compensation plans

 

 

193,018

 

 

 

 

 

 

7.4

 

 

 

 

 

 

 

 

 

 

 

 

7.4

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(4.1

)

 

 

 

 

 

 

 

 

 

 

 

(4.1

)

Share-based compensation

 

 

 

 

 

 

 

 

29.9

 

 

 

 

 

 

 

 

 

 

 

 

29.9

 

Balance at March 2024

 

 

69,597,233

 

 

$

0.1

 

 

$

1,083.7

 

 

$

(878.0

)

 

$

0.2

 

 

$

1,029.4

 

 

$

1,235.4

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

6


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except share amounts)

(unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Treasury Stock

 

 

Accumulated Other Comprehensive Loss

 

 

Retained Earnings

 

 

Total Stockholders' Equity

 

Balance at June 2022

 

 

67,745,800

 

 

$

0.1

 

 

$

924.1

 

 

$

(694.5

)

 

$

(1.8

)

 

$

1,038.5

 

 

$

1,266.4

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64.6

 

 

 

64.6

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

(0.1

)

Issuance of common stock for share-based award compensation plans

 

 

483,713

 

 

 

 

 

 

8.5

 

 

 

 

 

 

 

 

 

 

 

 

8.5

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(31.4

)

 

 

 

 

 

 

 

 

 

 

 

(31.4

)

Common stock repurchased

 

 

 

 

 

 

 

 

 

 

 

(13.4

)

 

 

 

 

 

 

 

 

(13.4

)

Share-based compensation

 

 

 

 

 

 

 

 

30.5

 

 

 

 

 

 

 

 

 

 

 

 

30.5

 

Balance at September 2022

 

 

68,229,513

 

 

 

0.1

 

 

 

931.7

 

 

 

(707.9

)

 

 

(1.9

)

 

 

1,103.1

 

 

 

1,325.1

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22.0

 

 

 

22.0

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

0.4

 

Issuance of common stock for share-based award compensation plans

 

 

229,972

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(17.7

)

 

 

 

 

 

 

 

 

 

 

 

(17.7

)

Common stock repurchased

 

 

 

 

 

 

 

 

 

 

 

(61.1

)

 

 

 

 

 

 

 

 

(61.1

)

Share-based compensation

 

 

 

 

 

 

 

 

31.4

 

 

 

 

 

 

 

 

 

 

 

 

31.4

 

Balance at December 2022

 

 

68,459,485

 

 

 

0.1

 

 

 

945.7

 

 

 

(769.0

)

 

 

(1.5

)

 

 

1,125.1

 

 

 

1,300.4

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4

 

 

 

10.4

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

0.4

 

Issuance of common stock for share-based award compensation plans

 

 

170,376

 

 

 

 

 

 

8.8

 

 

 

 

 

 

 

 

 

 

 

 

8.8

 

Payroll taxes related to net share settlement of share-based awards

 

 

 

 

 

 

 

 

(3.1

)

 

 

 

 

 

 

 

 

 

 

 

(3.1

)

Common stock repurchased

 

 

 

 

 

 

 

 

 

 

 

(25.6

)

 

 

 

 

 

 

 

 

(25.6

)

Share-based compensation

 

 

 

 

 

 

 

 

29.8

 

 

 

 

 

 

 

 

 

 

 

 

29.8

 

Balance at March 2023

 

 

68,629,861

 

 

$

0.1

 

 

$

981.2

 

 

$

(794.6

)

 

$

(1.1

)

 

$

1,135.5

 

 

$

1,321.1

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

7


 

SYNAPTICS INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

 

 

 

Nine Months Ended

 

 

 

March

 

 

 

2024

 

 

2023

 

Cash flows from operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(82.7

)

 

$

97.0

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Share-based compensation costs

 

92.3

 

 

 

91.7

 

Depreciation and amortization

 

20.8

 

 

 

20.2

 

Acquired intangibles amortization

 

59.9

 

 

 

97.4

 

Deferred taxes

 

 

(17.7

)

 

 

(22.3

)

Other

 

 

21.5

 

 

 

20.2

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

20.1

 

 

 

106.7

 

Inventories, net

 

 

8.7

 

 

 

17.2

 

Prepaid expenses and other current assets

 

 

1.5

 

 

 

(4.4

)

Other assets

 

 

2.9

 

 

 

9.0

 

Accounts payable

 

 

22.8

 

 

 

(80.7

)

Accrued compensation

 

 

(20.3

)

 

 

(47.7

)

Income taxes payable

 

 

(46.9

)

 

 

2.3

 

Other accrued liabilities

 

 

(12.0

)

 

 

(69.6

)

Net cash provided by operating activities

 

70.9

 

 

 

237.0

 

Cash flows from investing activities

 

 

 

 

 

 

Acquisition of business, net of cash and cash equivalents acquired

 

 

 

 

 

(15.5

)

Proceeds from maturity of investments

 

 

26.0

 

 

 

16.3

 

Purchases of short-term investments

 

 

(16.6

)

 

 

 

Purchases of property and equipment

 

 

(26.1

)

 

 

(29.0

)

Purchase of intangible assets

 

 

(13.5

)

 

 

(0.9

)

Advance payment on intangible assets

 

 

(116.5

)

 

 

 

Other

 

 

 

 

 

1.0

 

Net cash used in investing activities

 

 

(146.7

)

 

 

(28.1

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of shares

 

 

15.9

 

 

 

17.6

 

Payroll taxes related to net share settlement of share-based awards

 

 

(33.7

)

 

 

(52.2

)

Repurchases of common stock

 

 

 

 

 

(100.1

)

Repayment of debt

 

 

(6.0

)

 

 

(4.5

)

Other

 

 

3.4

 

 

 

5.0

 

Net cash used in financing activities

 

 

(20.4

)

 

 

(134.2

)

Effect of exchange rate changes on cash and cash equivalents

 

(0.4

)

 

 

(0.7

)

Net (decrease) increase in cash and cash equivalents

 

 

(96.6

)

 

 

74.0

 

Cash and cash equivalents, beginning of period

 

 

924.7

 

 

 

824.0

 

Cash and cash equivalents, end of period

 

$

828.1

 

 

$

898.0

 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

8


SYNAPTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

 

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, and United States generally accepted accounting principles, or U.S. GAAP. Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to SEC rules and regulations. In our opinion, the financial statements include all adjustments, which are of a normal and recurring nature and necessary for the fair presentation of the results of the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future period. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended June 24, 2023.

The condensed consolidated financial statements include our financial statements and those of our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation. Certain reclassifications have been made to the amounts for prior years in order to conform to the current year’s presentation.

Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. Our fiscal 2024 is a 53-week period ending June 29, 2024, and our fiscal 2023 was a 52-week period ending on June 24, 2023. The fiscal periods presented in this report are 13-week and 40-week periods for the three and nine months ended March 30, 2024, respectively, and 13-week and 39-week periods for the three and nine months ended March 25, 2023, respectively. For simplicity, the accompanying condensed consolidated financial statements have been shown as ending on calendar quarter end dates as of and for all periods presented, unless otherwise indicated.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates including, but not limited to, those estimates related to revenue recognition, allowance for credit losses, cost of revenue, inventories, loss on purchase commitments, product warranty, accrued liabilities, share-based compensation costs, provision for income taxes, deferred tax assets and the associated valuation allowance, uncertain tax positions, goodwill, intangible assets, investments and loss contingencies. We base our estimates on historical experience, current period developments, applicable laws and regulations, and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Prepayment of Intangible Assets and Asset Acquisition

During the first quarter of fiscal 2024, we entered into an amendment to our wireless license agreement with Avago Technologies (“Broadcom”), to license four developed technology products and to extend the exclusivity period of certain developed technologies that were previously licensed from Broadcom in July 2020. As of March 2024, we have not obtained control of the four technology products and, accordingly, the relative fair value of these technology products are presented as a non-current asset in our condensed consolidated balance sheet.

The technologies included in the agreement do not constitute a business and, as such, we have accounted for this transaction as an acquisition of an asset in accordance with the applicable guidance when we receive control of the developed technology. Refer to “Note 4. Prepayment of Intangible Assets and Asset Acquisition” for further discussion of the transaction.

Accounting Pronouncements Recently Issued

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07, “Segment Reporting: Improvements to Reportable Segment Disclosures.” This guidance requires disclosure of incremental segment information on an annual and interim basis. This amendment is effective for our fiscal year ending June 2025 and our interim periods within the fiscal year ending June 2026. We are currently assessing the impact of this guidance on our disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes: Improvements to Income Tax Disclosures.” This guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of income taxes paid by jurisdiction. This amendment is effective for our fiscal year ending June 2026. We are currently assessing the impact of this guidance on our disclosures.

 

9


SYNAPTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

2. Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to receive in exchange for those goods or services. Most of our revenue, except an inconsequential amount, is recognized at a point in time, either on shipment or delivery of the product, depending on customer terms and conditions.

Rights to our intellectual property, or IP, are either sold or licensed to customers. Revenue recognition from the licensing of our IP is dependent on the nature and terms of each agreement. We recognize revenue from the licensing of our IP upon delivery of the IP if there are no substantive future obligations to perform under the arrangement. Sales-based or usage-based royalties from the license of IP are recognized at the later of the period the sale or usage occurs, or the satisfaction of the performance obligation to which some or all of the sales-based or usage-based royalties have been allocated.

Our accounts receivable balance is from contracts with customers and represents our unconditional right to receive consideration from customers. To date, there have been no material credit loss charges recorded on accounts receivable. As of March 2024 and June 2023, contract assets recorded on our condensed consolidated balance sheets were $1.2 million and $1.3 million, respectively. Contract assets are presented as part of prepaid expenses and other current assets.

Contract liabilities and refund liabilities were $16.9 million and $40.3 million, respectively, as of March 2024, and