Richard Bergman - President and CEO Kathleen Bayless - CFO Jennifer Jarman - The Blueshirt Group, IR

Rajvindra Gill - Needham & Company Ambrish Srivastava - BMO Capital Market Rob Stone - Cowen and Company Kevin Cassidy - Stifel, Nicolaus & Co., Inc. Paul Coster - JPMorgan Charlie Anderson - Dougherty & Company Liwen Zhang - Blaylock Beal Van Thomas Sepenzis - Northland Capital Markets Osten Bernardez - Cross Research Anthony Stoss - Craig-Hallum Capital Group

Good day and welcome to the Synaptics Third Quarter 2015 Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Jennifer Jarman. Please go ahead, ma’am.

Thank you, operator. Good afternoon and thank you for joining us today on Synaptics third quarter fiscal 2015 conference call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the Company’s Web site at www.synaptics.com. With me on today’s call are Rick Bergman, President and CEO; and Kathy Bayless, CFO. In addition to the Company’s GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share based compensation charges and certain non-cash or non-recurring items. Please refer to the press release issued after market closed today for a detailed reconciliation of non-GAAP and GAAP results. Additionally, we’d like to remind you that during the course of this conference call Synaptics will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance, and business. Although, Synaptics believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. Synaptics cautions that actual results may differ materially from any future performance suggested in the Company’s forward-looking statements. We refer you to the Company’s current and periodic reports filed with the SEC including the Synaptics Form 10-K for the fiscal year ended June 28, 2014, for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. Synaptics expressly disclaims any obligation to update this forward-looking information. And with that, I'd like to turn the call over to Rick Bergman, Rick?

Thanks, Jennifer. And I’d like to welcome everyone to today’s call. I’d like to start off by saying that the last couple of years have been transformative for Synaptics. We have significantly broadened our product portfolio and expanded our customer base within our core smartphone, tablet, and notebook markets, which has led to multiple content opportunities in each device, an exciting new high growth product offerings. As a result, we’ve enjoyed rapid growth, generating two consecutive calendar years of 50% plus top line increases, solidifying our position as the number one human interface company. We’ve continued to be the innovator in the industry, making significant investments in R&D and new technologies. We have led the industry in numerous technology advances including such innovations as in-cell, on-cell, hybrid sensing, Force and TDDI. We’ve further expanded our product portfolio through major acquisitions of market and technology leaders in fingerprint sensors and display drivers. We currently have over 1,500 patents and patent applications around the world. As the clear market leader in several key areas, such as touch and fingerprint sensors, it is imperative that we take aggressive action to ensure the protection of our valuable intellectual property. And that is the impediments [ph] behind a recent filed patent infringement actions with the U.S District of Northern California in the ITC and through which we alleged certain Goodix and BLU products infringed several of our patents. This litigation is important to Synaptics. We will take whatever steps are necessary to protect our IP and are confident that we will obtain a successful result. I’m pleased to report that during the March quarter, we delivered a record revenue, non-GAAP net income and record non-GAAP net income per share. Synaptics continues to be in execution mode. As we meet the demand within our pivotal growth market is clearly there with fingerprint and TDDI solution showing momentum along with the upside from our display driver business. We continue to focus on delivering an expanded portfolio of the most advanced solutions to meet the needs of our broad customer base within a diverse set of markets. March quarter revenue of $478 million increased from the immediately preceding quarter, despite the typically downward seasonal trend. Our performance reflects strength in the DDIC business and a steep ramp of our new fingerprint sensor. We achieved strong non-GAAP net income of $63.5 million or $1.65 per diluted share, up 162% year-over-year. And gross margins were at the midpoint of our guidance range, driving strong operating leverage. During Mobile World Congress in March, Synaptics once again demonstrated that we have the right technologies in the right markets. We are reinforcing our leadership in touch, biometrics, display drivers and display integration and reaffirming our position as a leading human interface solutions provider. A visit to the booth revealed that our touch technology continues to be prolific across today’s consumer devices from phones, tablets, and laptops to watches and cameras. The demos included the world’s first smartphone, with Synaptics touch and display driver integration. The ZTE Lux S6 as well as several Android One phones, for which we’re the only approved touch vendor. We also showcased our advanced DDIC technology at the show including our contrast control which optimizes the image by region on the display. In our content adaptive brightness control. The event also provided the opportunity to highlight our new side swipe in small area sensor fingerprint solutions. And lastly, we demonstrated exciting future concepts, such as automotive infotainment solution and introduced combined force and haptic feedback in the touch pad, thus reducing driver distractions. Our design win momentum is strong across all of our businesses. And we maintain a keen focus on executing against our product roadmaps and milestones. One of the themes we continue to emphasize is the rapid evolution of the smartphone display market and the trend towards display integration. To reiterate what I’ve said during past calls, display integration offers OEM significant benefits, thinner and brighter displays, lower overall system costs and a simplified supply chain. We continue to believe that over 50% of our smartphones will be display integrated solutions by the end of the calendar year. As a leader in touch and display driver integration, we’re seeing strong interest and adoption from LCMs and OEMs. In addition to the first TDDI phone from ZTE, new phone shipping with our ClearPad 4291 TDDI solution include the Acer Liquid Jade S and the Fareastone Smart 505. And we expect more phones to follow over the coming months. The ClearPad 4291 supports in-cell designs, eliminating the discrete touch sensor by leveraging existing layers in the LCD. Our second TDDI chip, the ClearPad 4191 is sampling to key OEMs. In addition, the first TDDI product combine Synaptics touch with RSP display technologies remains on track for later this calendar year. With the integration of RSP essentially complete and Synaptics now offers the industry’s broadest and deepest portfolio display integration solutions that enable high performance touchscreen solutions with a faster time to market in a simplified supply chain. We believe that Synaptics will continue to lead the market and deliver unmatched technical leadership and real time local engineering expertise that is highly valued by our display driver customers. By leveraging our combined sales and support infrastructure, we’re successfully expanding the customer base and market segments for our display driver products. HTC and Asus are shipping new smartphones that includes Synaptics DDICs. On the development front, our engineering team is delivering multiple new products with the highest display resolutions available today and has successfully lit up state-of-the-art ultra high-definition LCD panel for next generation products. In addition to expanding our customer base, we’re executing by leveraging our technology and complete solutions to win multiple new designs in emerging markets and to address new opportunity such as wearables. New devices in the China market now shipping in mass production includes smartphones from Huawei, ZTE, Coolpad, OPPO, Gionee, [indiscernible], Yusun, TCL and Lenovo. As of today approximately 30% of our phones in China ship with display integrated touchscreen’s and we’ve strong traction in other regions of Asia. For example, Synaptics two-chip in-cell solutions are now shipping in the HTC M9 and in multiple LG phones. As you know the wearables market has received heightened attention as of late. Synaptics is leveraging a robust improvement in touch technologies and applying them to this market with design wins in many new smartwatches. New watches now shipping in mass production with Synaptics touch tech solutions include the LG Urbane, G Watch and G Round [ph], the Sony SmartWatch 3 and others from HTC, Huawei and TCL. Moving to the biometric authentication space, the promise of strong security that is also simple and foolproof continues to accelerate consumer demand for fingerprint sensors in smartphones and tablets. The adoption of mobile payments is extending the opportunity for fingerprint sensors beyond just the high-end smartphone segment and we’re bullish on the ramp of our products. During the quarter, we announced our small area touch fingerprint sensor which I’m pleased to confirm is now available worldwide on the Samsung Galaxy S6 and Edge smartphones. This solution provides the end-user with the ability to unlock the device or authenticate with an elegant touch of the finger, streamlining access to online banking and social media portals. We expect additional phones to launch with our small area touch solution later this calendar year. We also continue to focus on developing area touch sensor solutions for smartphones in tablets with larger form factors and are investing in innovations that provide greater security. Additionally, we launched our slim slide fingerprint sensor during the quarter, which when integrated into a smartphone or tablet, enable single handed operation and thinner form factors. As a multi platform company and a leading Microsoft Windows 10 partner, we are also working to ensure ecosystem readiness for quick adoption of biometric authentication across the PC industry. This includes both SecurePad for the notebook market and our natural ID fingerprint enabled mouse for the desktop market. More expected to be launched with Windows 10. This will encompass biometric input including the fingerprint sensing for features such as Windows login. We expect there to be robust PC features to discuss as part of this initiative. The biometric background for Windows PC will increase the demand in attach rate for both Windows 10 notebook and desktop PCs. Our advocacy for improving both convenience and security by eliminating passwords is strengthened by a partnership with Microsoft, an alliance directly with our roles of founding Board member, the FIDO alliance. As mobile payments become widely adopted, consumers demand the same authentication experienced across all their devices from smartphones to notebook to desktops. Synaptics is poised to deliver this experience. Look for us to make some exciting announcements on the desktop side COMPUTEX and also notebook shipments later this year. The March quarter brought several design wins for our ClickPad solution, recently released with the HP Spectre x360, the third generation of Lenovo X1 Carbon and the third generation of the Lenovo Yoga. We also see added traction with Windows precision touchpad adoption with the shipment of the Dell XPS 13. With recent industry developments in the 3D touch, we expect adoption of our Force sensing touchpad solutions to accelerate. Synaptics has been shipping ForcePad since 2013 and its currently available on three platforms including HP’s flagship EliteBook Folio 1020 and the Folio X21011. Our second generation ForcePad is sampling to key OEMs and we believe that Force sensing enables the user experience in many devices, including smartphones, tablets and notebook PCs. Before I conclude my formal remarks, I’d like to provide a brief update on the CFO transition. The recruitment process is going very well. We hope to conclude our efforts in the near future and we will update you as soon as possible. To wrap up my section, our strong performance in the third quarter is further validation of our progress in executing across the expanding opportunities in front of us. Synaptics is a more diversified company with a broader product portfolio and increased scale to capitalize on an array of exciting growth engines including biometrics, display drivers, TDDI, and the further penetration of our solutions within emerging markets like China. Our continued innovation and systems level expertise is enabling us to drive adoption and lead the evolution of human interface technologies as we strive to be number one in each of the markets we serve. We look forward to ending the fiscal year with another strong quarter as we are well poised to achieve our robust annual revenue growth forecast of over 75%. With that, I'll turn it over to Kathy for a review of our financial results.

Thanks, Rick. As Rick indicated, we achieved record revenue, non-GAAP net income and net income per share for the March quarter as revenue of $478 million exceeded the midpoint of our guidance range. March quarter revenue increased 134% year-over-year. With the strength of our expanded product portfolio, March quarter revenue was up 3% in the December quarter -- from the December quarter despite a typical seasonal quarter. We had four customers above the 10% threshold during this period. The revenue mix from mobile and PC products was approximately 87% and 13% respectively. Revenue from mobile products was up 177% year-over-year and 5% from the December quarter and consisted predominantly of touch, fingerprint, and DDIC solutions for mobile phones. Our strong year-over-year mobile revenue growth was driven primarily by fingerprint and DDIC solutions. The growth in the fingerprint business more than doubled this quarter from last year and strong contributions from new DDIC customers and product help to offset seasonal downward trends in touch and in the ramp cycle of a large DDIC customer. DDIC solutions represented slightly under 50% of mobile revenue in the March quarter. Further, we achieved solid contributions from China-based mobile customers and expect revenue from this portion of the business to more than double from last year as we exit the fiscal year. Revenue from PC applications was up 12% from the prior year and down 8% sequentially. Synaptics continues to lead the market for notebook touch pads with our ClickPad and ForcePad solutions, contributing over 65% of PC product revenue. Non-GAAP gross margin improved to 38% and was at the midpoint of our guidance range, a 200 basis point increase from the December quarter due to overall product mix. In addition, with the completion of the integration of RSP, we incurred minimal transition costs in the March quarter compared to the December quarter. GAAP gross margins of 34.4% includes approximately $16 million of intangible amortization of which $10 million is associated with the RSP acquisition. The RSP acquisition intangibles include supplier arrangement and develop technology intangible assets. Non-GAAP operating expenses were $103.3 million, up $4.8 million from the prior quarter, primarily due to additional investments in engineering and go-to-market personnel to accelerate our TDDI solutions and broaden our infield customer support for fingerprint and DDIC. GAAP operating expenses in the March quarter were $112.5 million, including $11.2 million of share-based compensation and non-cash charges of approximately $4.7 million for intangible amortization, partially offset by a $6.7 million reduction of contingent consideration. The strong year-over-year increase in revenue and gross margin dollars in the March quarter drove a 174% increase in non-GAAP operating profit dollars. In addition, we achieved 16% non-GAAP operating margin. Our non-GAAP tax rate was 17% in the March quarter reflecting our anticipated long-term cash tax rate. Our GAAP tax rate was 38%.Third quarter non-GAAP net income was $63.5 million or $1.65 per diluted share, a 162% increase over the prior year. Turning to our balance sheet, we ended the third quarter with $381 million of cash. The cash balance increased $53 million from the prior quarter. Cash flow from operations was $128 million during the March quarter and $172 million year-to-date. Cash flow from operations in the December and March quarters were impacted by the timing of certain transactions related to the acquisition of RSP and the cut over in October from Renaissances Financial Systems and Services. These transactions primarily related to the purchase and payment of $150 million of closing day RSP inventory from Renaissance in the December quarter as well as the receipt and payment from Renaissance in the March quarter related to RSP sales in October and prior periods. The cash balance reflects the payment during the quarter of $48million for the settlement of working capital holdback liability related to the RSP acquisition. We have an additional holdback liability related to the RSP acquisition of approximately $61 million to address post closing adjustment which we expect to be settled in late fiscal 2016. Further, we use $20 million for share repurchases during the March quarter bringing our year-to-date stock repurchases to approximately $111 million for 1.5 million shares or 4.2% of our shares outstanding. The remaining share repurchase authorization is $89 million available through July 2016. Capital expenditures for the quarter were $6.6 million and depreciation was $6.7 million. Receivables at the end of March were $320 million reflecting 60 days sales outstanding and inventories were $152 million, while inventory turns were $8 million. Now I’ll make a few comments regarding our quarterly outlook. Based on our backlog of approximately $248 million entering the June quarter, customer forecast and expected product mix, we expect to have another very strong quarter. We anticipate revenue to be in the range of $460 million to $500 million, reflective of positive sequential trends in touch and fingerprint partially offset by product cycle trends in DDIC. Taking into account our overall revenue mix, we expect non-GAAP gross margin for the June quarter to be 37% to 39% consistent with Q3 and in our target range. We expect non-GAAP operating expenses in the June quarter to increase from the March quarter reflecting our continuing investment in engineering and infield customer support to expand our overall product portfolio and customer base, primarily related to our high growth opportunities in fingerprint and to accelerate our TDDI solutions into the market. We anticipate the FAS 123R charge in the June quarter to be in the range of $11.5 million to $12 million. GAAP expenses will also include non-cash charges of approximately $20 million related to intangible amortization of which approximately $15 million will be reflected in cost of sales. We anticipate our non-GAAP long term cash-based tax rate for the June quarter in the fiscal year to remain in the range of 16% to 18%. Non-GAAP net income per diluted share for the June quarter is anticipated to be in the range of $1.50 to $1.80 per share. In closing, we are extremely pleased with the financial results through the third quarter of the -- of fiscal 2015. We have already achieved record annual revenue and non-GAAP net income and we’ve one more quarter to go. With that, we'll now turn the call over to the operator to start the Q&A. Operator?

Thank you. [Operator Instructions] And we’ll go first to Rajvindra Gill of Needham & Company. Please go ahead.

Yes. Thanks for taking my questions and congrats on solid results. Just for a point of clarification, you talked about adoption of ForceTouch. Is that going to occur in the smartphones and tablet market and as well as the smartwatches, are there other markets? Maybe if you could elaborate on which markets you want to position this technology?

Sure. Thanks for the question, Raj. Right now obviously we are seeing that the Force technology from Synaptics we announced the product, so it’s been three years ago, called the ForcePad. And then that showed up in HP notebooks two years ago in kind of across the notebook product line up now are OEM based, we are seeing much greater interest levels in Force. And that’s now translating over to other market segments as well. So it certainly is smartphones, potentially smartwatches, tablets and so on. As you can imagine it’s adding a third dimension to traditional touch products, so it has a great deal of appeal out there. It's not an easy technology to implement. It’s taken us a number of years of refining it and getting it correctly, but it does hold a lot of promise more broad. I’d say automotive as well. In fact, that's probably where we see the strongest interest is in automotive, because it allows you to not have caught Force false activation, which can occur with a classic touchscreen.

And Kathy, can you talk a little bit about the puts and takes of the drivers for the revenue guidance? You talked about kind of the high-level touch in fingerprint ramping and the June quarter offset by product cycle trends in the TDDI. I wonder if you could kind of elaborate on what you’re seeing in each of those markets as we go into June.

I think you had capitalized it pretty good Raj. Basically, I mean, in the June quarter we are seeing a nice uptick in the traditional parts of the business, in the touch business. Also we’ve got in the fingerprint business; we started seeing strong ramp this quarter and into next quarter for the area based sensor solution. The DDIC business, again we expect it to be strong, but may not be quite as strong just because of product cycle ramp schedules in that particular business. But net net we expect to have very strong quarter in the fourth quarter.

And just last question for me before I get back in the queue, the gross margins being flat, you have kind of a good quarter in terms of revenue mix. I was expecting may be that the more you might be a bit higher in the gross margins, given that the Renaissance business is a lower margin business. So I was wondering if you can maybe talk a little bit about some of the puts and takes on the margin front as we kind of progress? Thank you.

As we move into -- as we look at the portfolio of the products right now, I mean, we have such a wide range, whether it's in a particular part of the business or just within skew by skew within the business. So I mean, right now the gross margin range 37 to 39, we think that's reasonable. But again we have a lot of puts and takes on pluses and minuses going on within the business.

And we will go next to Ambrish Srivastava of BMO Harris.

Hi. Thank you. First question, Rick on the end markets, there is a lot of disconnects or at least with the various companies supporting results. So if you look at your end markets, mobile and PC, how did the two behave? And I know that you said that China is supposed to grow again in the second quarter. So if you could please help us understand what you're seeing versus what some other guys might be seeing? And then on the second part of my question, little bit longer term back at Mobile World there was a lot of Anixter [ph] or what Qualcomm had announced. And I just wanted your perspective on what you think competitively of their solution versus what you have? I know you’re already sampling something similar to that in terms of functionality. Thank you.

Thanks, Ambrish. On the first half of the question, what's going on in the market, so we obviously have been listening and paying attention and I think you're correct there is called mix signals out there of strength and weaknesses. So what we are seeing is clearly China is not going to be the booming market that we’ve enjoyed in the last couple of years where it just seem to be can’t keep up with the demand out there through the course of calendar Q2. It seems to be still a growth, but more muted market in China. Now what's helping us of course is we have some new products in fingerprint and so on. So from a financial perspective as you just heard, we have a slightly uptick in terms of the overall revenue. On the PC side kind of the same thing, again Q2 is historically a strong quarter for us. There is -- kind of move back now to a year-to-year decline in the PC market from a system perspective. But we have new content in the PC such as bit higher value TouchPads as well as prospect of telling fingerprint solutions there as well. But I would say PC is consistent with what we are seeing weakness down year-over-year in the single digits type of range. Then you also talked about Qualcomm in their competitive solution which uses a different approach that they announced back at Mobile World Congress. I’d say there was a big surge of interest in that area and then it seem to dive out. Similar to what I said for anybody that was at Mobile World Congress we -- I don't see that competitive solution active in the market in terms of design wins. It does take a different approach than we’ve taken when we decided to invest in fingerprint authentication solutions. We took a broad look at various solutions out there. It really landed on what we thought was the best solution in terms of timeliness to market, overall risk, cost and then roadmap. And of course that's a capacitive touch solution today, but we will always keep our eyes open for other authentication solutions. So kind of long winded answer there, keeping our eyes in the radar for all different types of competitive solution, but we feel like we have the best technology and by far the broadest, strongest roadmap in the industry.

Okay. Very good. Thank you. Good luck.

And we’ll go next to Rob Stone of Cowen and Company.

Hi, Rick and Kathy. Wanted to start Rick with the subject of IP and in particular to focus a little bit on fingerprint, you mentioned you have in total something over 1,500 patents and patent application. Do you see potentially the need to defend your technology on the fingerprint side as well with lots of new entrants likely to be attracted to this market?

Okay. Rob, thanks -- thanks for the question. As I’m sure you or anyone else in the call can understand we are pretty limited in what we can say during the period of active litigation. That being said let me provide a little bit of color. We made big investments, whether its internally homegrown technologies such as our touch solutions or whether its inorganic approaches such as fingerprint where the IP in technology and so forth and long-term leadership is a key decision factor when we make acquisitions such as when we acquired Validity as really one of the two innovators in this overall space. And along with that if I remember correctly a 135 patents came along with that acquisition, as well as certainly we’re not sitting still since we’ve had that product line for 18 months. We continue to actively file new patents, and we’re being the innovator and leader in that market as well. And we have a process where we continue to book and review potential infringes of our technology. In this particular case we believe Goodix and BLU Products were infringing several our patents and that was more in the touch area. But we take IP very seriously as the core strength in the company. And as the innovator in the industry we’ll continue to go through that process and we’ll look at the fingerprint space, the display driver space, the touch space, wherever we continue to compete. And its our intention to continue to vigorously protect our IP around the world.

Okay. My follow-up question is also on fingerprint. You mentioned you look forward to shipping small area sensors on other products in the second half of the calendar year. What do you see is the sort of time to market roadmap for the sideswipe and are in discussions with potential customers there?

Certainly. As we’ve said the touch or the area sensors for fingerprint have gendered a lot of the excitement recently, and clearly our Samsung design win is evidence of our strength in that particular area. But we continue to see interest in swipe solutions and I believe you’ll see some coming out later in this calendar year. That will continue to help grow that businesses as well. It is a more cost effective solution and being on the side of the phone as an example, it allows you not to occupy very precious real estate on the top or back of the phone. So, we continue to see interest in that particular technology. So yes, you’ll see additional announcements through the course of this calendar year.

I’ll jump back in the queue.

And we’ll go next to Kevin Cassidy of Stifel.

Hi, thanks for taking my question and congratulations on the great results. On the RSP display drivers; can you talk about some of your cost reduction plans or -- and moving, you had mentioned that you’re getting more design wins with it outside your original customers. Can you say a little more about that progress?

Sure. Display driver tends to be a lower margin business as we’ve discussed, and its high volume which is the good news. So you have to -- but you actually have to have a pretty active cost reduction strategy. In touch we tended to waterfall our products, so that’s changing there as well, and just what become high-end became mid-range and you didn’t actively cost reduce with at least the new design. Its different with display drivers. And so, without going into too much detail on the specifics, our strategy clearly when we bring a new say resolution part out it comes out in a premium process node and then we immediately start to look at how we can cost reduce it. One of the simplest things we can do, some of the display drivers for example have memory in those and that’s a great power reduction step or technology. A cost reduction is obviously then to remove that out where you move into the more of the mid range and the LCD manufactures aren’t willing to pay that premium for having the embedded memory. And so we tend to have a family and that’s one of the reasons Kevin, why we had to do the acquisition of RSP. We just simply couldn’t keep up with the demand of all the different resolutions and follow a cost reduction roadmap as well. Now with 100s of display driver engineers we have a very broad and robust product pipeline.

Okay, great. And the diversification of the customer base?

I would say that’s going really well. So, we talked a little bit about it on the call in December, and we said that we’re actually in the March quarter we expected to see that already starting. And as we went through the March quarter and the results, we did see a substantial increase in the newer customers, newer designs in the marketplace there. So, we have actively deployed our global infield support team. We’re still building on that, and we continue to believe we’ve got a lot of opportunity ahead of us there.

Okay.

One thing Kevin that we’ve kind of brought to line that’s helped is, through the script you might have heard the comment two chip in-cell. Well previously say a year ago it was one chip or it was just our touch chip and it would ship with the competing display driver device. As an example now when I do in-cell designs we often go as with the two chip solution, of course that’s our touch solution and then there’s a separate DDIC as well that’s now often a Synaptics DDIC, and then of course we offer TDDI that moves it into a one chip solution.

All right. Good progress there. Thank you.

And we’ll go next to Paul Coster at JPMorgan.

Thanks for taking my question. Its little bit of a surprise when you don’t win a slot these days and although you had this tremendous success with the small area touch with the flagship handset recently, you lost the touch driver. It seems to go a contrary to the home notion of sort of value proposition that comes from your holistic approach and your integrated solution. So, can you explain what's happening there so we can sort of contextualize that one?

Now this sort of mix here, we’re taking about the same thing which design did you say we were claiming we lost?

I think [indiscernible] got the touch driver.

Touch. So, as we’ve discussed OEMs decision sometimes are made on a number of different factors and not always technology leadership where we believe we continue to be the only touch vendor out there that has the best technologies, kind of across the board as you pointed out, but we’re not going to win a 100%. I think we did that back in 2013 where we virtually got every single phone that was announced. But since then certain competitors can zero in on, in the regional play or certain SKU. So, we won't win a 100% of other designs out there. However I would like to point out and it kind of ties into the prior question is, so yes we did loose that socket, but you still saw our revenue grow. That points to the diversification of our products and customer base and everything else. So what would have been frankly devastating two years ago for us, its certainly a bump in the road but we’re going to get back in there fighting, and our revenue is still growing and I think our prospects are as bright as ever.

Okay. And Rick, the second question I have got is this, you previously talked to 15% to 20% growth post fiscal year ‘15 as your target, just to feel comfortable with that. And if you were to force rank the revenue growth drivers, could you sort of give us an approximate, for estimation of what that drivers are?

Yes. Paul thanks for reminding me of that goal. So, yes we’re not -- we are a growth company, so I should continue to emphasize that and our target is certainly 15 plus percent growth year-over-year. Now obviously as we’re starting to knock on the door of being a multi-billion dollar company, just mathematically that gets to be more and more challenging because the lumps have to be much bigger now to maintain that to that level of growth. But as we look forward into fiscal ’16 or calendar ’16, clearly that the same ones we’ve been talking about is growth drivers are still there. Absolutely our biometrics, our fingerprint solutions we’ve done great. As Kathy mentioned in her remarks we’re in the process of doubling our business year-over-year in that particular area and its ramping. So there’s still a lot of growth left certainly in that area. On the -- the other big one is to host TDDI. And just at the customer ramping that product, I mentioned we have one product out there in production now, another one is actually starting to ship in production although the phones haven’t appeared in the marketplace. And then we have, really the strength is yet to come which is the combined devices that use our touch technology and the display technology from the former RSP team. And once we get that full line up there later at the end of this calendar year, that will certainly be the other big driver for our growth over the next 12, 18, 24 months.

Thank you.

And we’ll go next to Charlie Anderson at Dougherty & Company.

Yes, thanks for taking my questions. I wanted to hone in on the sort of product cycle changes this year versus last year. RSP was kind of ramping through the year last year and you’re going to appear to have a down quarter in June. I wonder if you could just talk about the difference this year versus last year and maybe are there any ASP dynamics in there from product to product. And then also, what did it say to the September quarter that maybe we’re having a lower June quarter?

Well, I’ll start off and maybe we’re spoiling you, Charlie. We’re not down actually. We guided slightly up quarter-over-quarter and certainly year-over-year we’re incredibly up. I don’t remember what the percentage is, but I don’t think we’ve slowed down too much. I think what you’re pointing out is, is as I said we’ve kind of spoiled you last couple of years where we would often talk 40% to 50% sequential quarterly growth between our fiscal Q3 and Q4. Part of it is, is we have a different product line up, a different set of customers in there relatively impact of those customers on a product line up. So its no mystery like Samsung say two years ago when we won the S4 touch socket that was a big, big uplift for our company because we’re chugging along $150 million a quarter and that one socket had big impact. Now, as we move forward this year, we are a different company and there is still Samsung and certainly they are still ramping the S6 and that helps us with our fingerprint solution there. But there’s other customer out there that also drive a lot of volume where calendar Q2 is lighter. So I won't jump to any conclusion, and then Kathy mentioned our touch and biometrics solutions are growing nicely the current we’re in but there’s other areas that are going down. So our seasonal pattern is changing. We’re not obviously going to comment on the September quarter at this juncture, but we will have a different seasonal pattern as we become a more mobile company as well, it just happens that the second half of the calendar year tends to be stronger and hopefully we’ll get to enjoy some of that strength that will come along in the second half of that calendar year.

Yes, I was just going to add Charlie, I mean the -- we started talked about this again last quarter is with, the advent of the RSP business, there was the traditional Synaptics business which we had a particular seasonal pattern, we saw the strong upticks in the June quarter. And as Rick mentioned earlier there is some, China is going to be up in the June quarter, but its not the same strength that we’ve seen in the last couple of years, also the PC business it’s a little softer. So we’re out seeing the big strength necessarily in the June quarter. And again the RSP business has a different pattern overall. So, typically that pattern was very, very strong December, and in the March quarter we’ve actually brought on more DDIC, but there are some product cycles that are a little bit different in that business versus the traditional Synaptics business. But net-net I mean we’re looking for -- as we said we expect to see a more stable trend, nice strong growth as we continue to move forward.

And then just a take on, I wonder if you could speak today to your visibility for the back half of some of those large customers that you inherited from RSP?

Speak to the back half in terms of revenues or ramp rates or?

Yes, just sort of visibility in terms of design win activity, ability to retain some of the customers that you inherited?

Yes, obviously we’re not going to comment on any customer specific sockets other than we’re doing great in the DDIC business, we’re recovering some of the business that I think was lost a bit in the whole acquisition process. There was a bit of a cloud over RSP in terms of where they’re going to end up and who was going to be managing the company and just naturally that happens in a acquisition scenario. So we had to go back to some LCD manufacturers and say, hey we’re hear and we’re ready to support you in everything else, and we put the infrastructure in place. And as Kathy has mentioned, we picked up some nice business in that area and we certainly want to service the new businesses as well as the existing customers.

Great. Thanks so much.

And we’ll go next to Liwen Zhang at Blaylock Beal Van.

Thank you for taking my questions and congratulations on solid results. And the first question is regarding your litigation pace. So, obviously Goodix does not only support BLU, but why did you pick BLU Products in this case?

Well, as I mentioned we actually will kind of look across the board and decide our litigation strategy. I really can't go into really any more specifics than that other than when we took a look at the Goodix and BLU Products they were infringing our patents that we said was our belief, and we just felt we couldn’t let it go any longer and we decided to take action in that particular case.

Okay. Thank you. And my second one is, in terms of your DDIC business, your strategy to expanding customer portfolio, and what did you hear as feedback from your original customer? I mean, are they concern -- were their concerns kind of a supply constraint down the road?

Hey, could you elaborate a little more on that question or what specific area you want clarification on?

Sure. Regarding your display driver business from RSP and your strategy is expand -- right now is trying to expand the two customer portfolio to increase the demand and sales, but have you heard anything from your original customer and do they have any concerns for the supply constraints down the road?

No. So let me try to address both of the -- I think the questions we’re getting. So, the former RSP tended to focus on Sharp, JDI and LG display as their three primary customers. And they did a little business outside of those three, but it was relatively minor. One of the things we brought to the table was a different support structure in China and Taiwan, and elsewhere two supporter broader base of customers and again that’s what Kathy was talking about when we saw some nice growth in the prior quarter was starting to pick up business at some of the other LCD manufacturers. We didn’t sacrifice the original three by any strategy. Those are clearly the most important customers that we have in the DDIC space and the same support that they were accustomed to from RSP is continuing on. As you well know we didn’t talk about synergy and headcount reductions or anything with the RSP acquisition. We talked about, we’re a growth company. We’re going to actually add headcount to support these new customers and add products into our portfolio. And so there was no sacrificing of their key value proposition which was great support hands on support. So that’s, I believe that was the second half of your question, I know did I cover?

Yes, I think you covered. Thank you.

Okay.

And we’ll go next to Tom Sepenzis at Northland Capital Markets.

Hi, thanks for taking my questions. I just wanted -- I think you mentioned that you have a 2K TDDI product, one in your prepared comments. What is the highest resolution TDDI production that you have qualified right now at a display maker?

So right now the two products that we have in production are what’s called HD. So, 720p is the more common term you hear for televisions. And that was a [multiple speakers].

Sorry, so you don’t have one that’s 1920x1080 yet that’s actually been qualified, correct?

That is correct. That would be full HD and you can imagine their strong demand and you can imagine we’re certainly working on that.

Yes, I was just wondering maybe -- can you talk about timing as to when you think you might introduce 1080 and 2K?

We’re working -- but they already have those is discreet DDIC devices and they’re already in volume production at this juncture are close equivalents to those. So, clearly we have the technology and without pre-announcing products we’re going to be taking that leading display technology and combining it with our touch and that’s part of that full product roadmap that I was talking about later and this being in production later in this calendar year.

Okay.

No, Tom for -- I mean for TDDI what we said is we’re starting kind of at the mid range, so the HD products and what we’re doing is we expand the product portfolio particularly as we bring in the new chips with RSP, I mean we’ll address a wider and wider range of the solutions or the three resolutions in the marketplace. So it’s a very exciting opportunity and we’ve got a great set of DDI products out in the marketplace already addressing all of those high resolution displays.

Thank you. And then, just from a higher level, with TDDI when you get -- you get it all fully integrating the touch and the display drivers. From an ASP side is that on par with the two discreet solutions or is it higher, lower, how do you see that unfolding? I mean does it impact ASPs positively or margins positively, what's the real end game there?

Well to a certain degree we’re seeing …

Or is it just like a market -- is it just the market share grab basically, I guess, is what I’m trying to get at.

Yes, so certainly we explained out in front of us in terms of the value that we can bring, but our belief is its at least a one plus one equals two and we’re actually hoping there is above two because it brings more system value to the LCD manufacture. They can save system level cost, and there’s the other benefit’s that I articulated in the script. So there’s obviously, this is a semiconductor industry type of feedback as well as where things get integrated. So, it’s a interesting pace but as long as we continue to be the innovator and lead with new resolutions and we’ll certainly always lead with touch technology and display technology. We certainly think we’ll get a premium over the market.

And we’ll go next to Osten Bernardez at Cross Research.

Yes, good afternoon and thanks for taking my questions. Just to begin, with respect to your fingerprint sensor and unit demand there for their March and June quarters versus lets say a year ago last where you basically had a design into just one phone at a time, and this year you obviously have some sensors still shipping into some older devices as well as your new ramp to touch area sensor display -- sensor, touch area sensor, is the demand today sort of on pace with what you saw last year for the swipe. Could you sort of discuss sort of the trends that you’re seeing and how we should be picking about the seasonality’s for fingerprint into June and a little bit into the September quarter as much as you can? Thanks.

Okay. So, from an overall market perspective we were quite bullish about what biometrics or fingerprint would do in the market a year ago or even further back in October when we initially announced the Validity acquisition. And sometimes you get these wrong, sometimes you get them right. Just when I think we kind of landed on the right column, which a pretty strong ramp to the next -- at the time next couple of years, and ’15 becoming quite strong and ’16 even better. And that’s what we’re seeing. So, as noted by Kathy in her remarks we have over 2x the revenue in our fiscal Q3 with fingerprint. That gives you an idea that of course there were ramps last year, there’s ramps this year, there’s little ASP difference, but we’re seeing a stronger run rate now in the fingerprint solutions clearly from a year ago and I think quite consistent with some of the growth with the projections that we talked about. And we’re looking forward to seeing additional customers and phones rolling into the market over the course of this calendar year as well to help fuel that growth.

Okay. And then, with respect to the DDIC business, can you provide sort of a range of the magnitude of seasonality to be expected into June and to what extent are some of your new DDIC customers offsetting some of that seasonality? And also separately, Kathy could you give any color as to the RSP contribution on the EPS side for the quarter?

Well we basically, I mean -- I’ll start at the end of the question. So, I mean we definitely integrated RSP into the entire business. So I mean there isn’t a specific contribution at that level for that particular -- through the business in and off itself. So I mean the resources have all been assimilated. We have broad teams basically working on multiple different products, working on TDDI products as well as TDI and other products. Our sales team is fully integrated. So, from a specific standpoint I mean we’re not -- we don’t have any specific information related to the business, because its been fully integrated. If you’re looking, as far as the fourth -- as far as moving into the fourth quarter, we did -- in the March quarter for the last two quarters we’ve seen DDI business be about 50% in total revenue in each of those quarters. As we move into the June quarter, again we’ve got seasonal strength; we also have more strength from the fingerprint business due its ramps kicking in. So we’re expecting to see just based upon kind of normal patterns within that business that the total, the revenue will drop some into the fourth quarter. But its -- I would say its quite normal, still very strong piece of business.

Of course its our first quarter, our season going through this. Now we can look at RSP and we can look at some of the competitors in DDIC business and its clearly a first half calendar year, second half calendar year type of phenomena where the first half tends to be a little tough, and then the second half tends to be stronger. So -- but that can be very SKU in OEM depending as well. So, but that’s -- in terms of the overall market that’s the expectation.

Thank you. And we’ll take our final question from Anthony Stoss at Craig-Hallum.

Hey, Rick and Kathy, nice job for March. Maybe one of the only handset component guys that bought the trend and actually were up sequentially from March, so congrats there.

Thank you.

Rick, if you won't mind, can you give us a sense in terms of the number of RSP customers in the March quarter versus the December quarter, and how you see any limitations in terms of new customers coming online throughout the year? And then secondly Rick you talked about roughly 30% of your shipments in the China being on the TDDI solution. Where do you see that heading kind of exiting this calendar year into next? Thanks.

Okay, so let me start with the first one, and I think Kathy got a better stand on the second one. So, maybe I’ll let her take the second one. So in terms of customers, I mean the true direct customers for call it the ex RSP or DDIC product are the LCD manufacturers. And there is 10 of them around the world of substantial size, maybe a dozen. It wasn’t that RSP didn’t sell to all 10 or 12 of them. They tend to be pretty focused on the three that I mentioned earlier in the Q&A. We’re expanding that focus clearly, and so there is three good size ones in China, BOE, Tinama and truly, and then if you look to Taiwan as examples there is AUO, Innolux and then several smaller ones besides, we’re working on all of them at this juncture. Many of them we had already been working with of course with in-cell, on-cell type of technology. So allowing our sales team to have additional products in their so called bag was a great thing for them and a great thing for us. So there was 12 now roughly speaking. We’re working with all of them at this juncture. And the second question, Kathy.

Yes, Tony I think the second question was related to the comment we made as far as display integrated solutions in China. So what we said basically was display integrated solutions were about 30% of what was shipped -- of our products shipped into the China market. And again, that’s the broad category of display integrated solutions. So, today I mean that’s primarily your on-cell, single layer on-cell; your two chip in-cell solution. And again we just started shipping TDDI into that marketplace. So, again on the board range of display integrated solutions we already have nice percentage basically. They’re being shipped into China, so lot more opportunity to continue to grow the China business than to move our more advanced TDDI solutions into that market. End of Q&A

And that concludes today's question-and-answer session. At this time I will turn the conference back to the management.

Well, thank you everyone for joining us on the call today, and we look forward certainly to updating you again next quarter in July.

And that does conclude today's conference. We thank you for your participation.