Jennifer Jarman - The Blueshirt Group, LLC Richard A. Bergman - Synaptics, Inc. Wajid Ali - Synaptics, Inc.

John Vinh - KeyBanc Capital Markets, Inc. Robert W. Stone - Cowen & Co. LLC John Joseph Donnelly - Stifel, Nicolaus & Co., Inc. Ambrish Srivastava - BMO Capital Markets (United States) Rajvindra S. Gill - Needham & Co. LLC Charlie Lowell Anderson - Dougherty & Co. LLC Jun Zhang - Rosenblatt Securities, Inc.

Good day, everyone, and welcome to the Synaptics Third Quarter Fiscal 2018 Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Jennifer Jarman. Please go ahead. Jennifer Jarman - The Blueshirt Group, LLC: Thank you, Anne. Good afternoon and thank you for joining us today on Synaptics' third quarter 2018 conference call. With me on today's call are Rick Bergman, President and CEO; and Wajid Ali, CFO. This call is also being broadcast live over the Web and can be accessed from the Investor Relations section of the company's website at synaptics.com. A quick reminder that we have posted a supplemental slide presentation on our Investor Relations website. The supplementary slides have also been furnished as an exhibit to our current report on Form 8-K filed with the SEC earlier today, and add additional color on our financial results. In addition to the company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which exclude share-based compensation, acquisition-related costs and certain other noncash or recurring or non-recurring items. Please refer to the press release issued after market close today for a detailed reconciliation of GAAP and non-GAAP results. Additionally, we would 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 in 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 24, 2017 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'll now turn the call over to Rick Bergman. Rick? Richard A. Bergman - Synaptics, Inc.: Thanks, Jennifer, and I'd like to welcome everyone to today's call. I'm pleased to report that our financial performance for the third fiscal quarter came in roughly as anticipated, despite the well-documented softness at the high end of the smartphone market. Total revenue of $394 million was in line with our projected range. On the bottomline, we posted a GAAP loss per share of $0.40, while our non-GAAP earnings per diluted share of $0.92 was above the midpoint of our projected range. We achieved strong non-GAAP gross margins of 36.8%, primarily reflecting a favorable product mix. I'm quite pleased with our margin improvement over the last few quarters, as fiscal Q3 represents our third consecutive period of gross margin expansion. The revamp towards Synaptics 3.0 is becoming more and more evident as we capitalize on new growth opportunities and the diversification of our business through a broader set of products, markets and customers. This includes the growing momentum of our consumer IoT platform as we gain traction with our voice and video-enabled products, as well as automotive and VR. Importantly, these initiatives are helping us weather a challenging mobile market, as we see in the current quarter, where we expect healthy sequential IoT growth to help offset the challenging smartphone conditions, as well as shortages in a few of our mobile-related products. In addition, the expanded breadth of our platform is enabling us to focus our growth priorities on products providing greater opportunities for gross margin contribution and profitability as we move forward. I'll now drill down on some specifics around Q3, starting with our mobile business. The trend towards XL screen aspect ratios greater than 16:9 is now fully established, with market reports indicating that these designs will make up nearly half of all phones in 2018 and comprise the bulk of our market going forward. We predicted this trend several years ago and made a substantial investment towards supporting XL designs. This includes the recent development of several new TDDI solutions. As a result, the majority of our mobile portfolio today in virtually all of our future designs will support the XL feature. I'm pleased to mention that our two new OLED DDIC solutions have reached mass production and will soon be shipping in multiple designs. These chips represent our first entrance into the OLED DDIC space. We believe OLED DDICs will provide significant value to display manufacturers, enabling powerful features on chip that were previously done by the phone's CPU. In the meantime, the LCD market remains large and there are significant growth opportunities across the market to enable OEMs to compete with cutting-edge OLED designs. At the high end, this includes the introduction of our COF (00:05:22) solutions to deliver very narrow bezels. These solutions are starting to appear in the market this quarter and are on track to achieve meaningful volume in the September quarter. In addition, our industry-leading compensation technology is supporting the introduction of curved and notched LCD panels. The fingerprint authentication market remains very competitive, and on the capacitive side, I think it's fair to say that it's no longer a growth market within mobile. This is not the case for PCs, where we see growing adoption of our fingerprint sensors at a growing number of OEMs, enabling multiple socket wins, along with our TouchPad solutions. Along with the convenience of fingerprint, OEMs are increasingly adding secure fingerprint authentication for both consumer and enterprise platforms. In the quarter, HP chose our ClickPad and fingerprint sensor for the HP Pavilion x360. HP also chose our ClickPads for the 14-inch Pavilion and 13-inch MVPCs. Acer selected our fingerprint solution for the Swift 7 and our ClickPads for the newest buyer in Switch models. Dell chose our TouchPads for three new models and our fingerprint sensors for both the Vostro and Latitude 3000. Finally, Lenovo adopted both our fingerprint and ClickPads for the 720S. The upshot here is that even in a flattish PC market, we are growing by winning more than one socket per computer. And it's a case in point for how Synaptics is channeling our focus on the highest growth and more profitable segments within our various markets. Moving to our optical technology, we are pleased to announce that our Clear ID in-display fingerprint sensors, the world's first mass production solution for smartphones, are featured on the Vivo X21 UD smartphone. The X21 UD is Vivo's second-generation smartphone featuring Clear ID, following the X20 Plus UD phone that was showcased with Synaptics technology at CES and now sold at retail. I want to acknowledge that, given current conditions within the high-end smartphone market, broader adoption of in-display fingerprint is happening more slowly than expected. However, we continue to believe in this approach as a highly-innovative feature for infinity display phones, and the phones available at retail featuring our solution have sold out quickly. I'll now move to our IoT business where the consumer appetite for all things smart home has created tremendous and rapidly-growing market opportunity. Synaptics is now uniquely positioned as the leader in both world-class audio and video technology, and this is resonating with our customers as we see the convergence of devices featuring both audio and video capabilities. We also continue to make progress in establishing our pipeline of opportunities within the auto market. During the quarter, we announced our AudioSmart far-field voice DSP solution was selected by Japan's leading mobile operator, NTT DOCOMO, for its Bluetooth-based Simple Mic wireless speaker, now shipping at retail. The Simple Mic, with Synaptics AudioSmart two-microphone DSP technology, communicates over Bluetooth to bridge DOCOMO smartphone and tablet devices with DOCOMO's voice agent service, utilizing its cloud speech recognition technology. Bluetooth speakers with integrated far-field voice empower smartphones and tablets with premium far-field speech recognition, a high-fidelity experience while listening to music, excellent communications with the agent service, and high-quality truly hands-free telephone calls. Voice-enabled Bluetooth speakers with Synaptics AudioSmart technology eliminate the requirement for a powerful applications processor in Wi-Fi SoC, thus reducing cost as well as power, which is critical in a wireless speaker. Bluetooth speakers using Synaptics AudioSmart far-field voice DSPs can also leverage other services such as Alexa, Google Assistant and Bixby running on mobile phones and tablets. We see Bluetooth as a great opportunity as we estimate that there are over 300 million units of Bluetooth speakers shipping globally today. Last quarter, we announced that our far-field voice DSPs were selected by Harman Kardon for their Allure smart speaker family. This quarter, we are pleased to highlight our solution has been adopted in China through a partnership with Harman and industry giant Tencent. Far-field voice is one of the most exciting trends in the consumer electronics market in recent years. With our AudioSmart solutions, Synaptics is well-positioned to capitalize on significant growth opportunities as voice continues to rapidly proliferate on all major global voice service platforms, including those from Amazon, Baidu, DOCOMO, Google, LINE, Microsoft, Tencent and others. Let's jump to another AudioSmart product, our digital headset solutions. Synaptics is a worldwide leader in USB-based headset technology and is well-positioned with our established portfolio and strong roadmap, ranging from entry-level codecs to feature-rich solutions such as hybrid active noise cancellation, smart voice pick-up, voice suppression solutions, as well as high fidelity codecs. We have seen attach rates growing significantly year-over-year across a range of markets from corporate IT to gaming, and we are very pleased to expand into new market with a solution for smartphones. Our second-generation digital headset SoC solution for USB Type-C headphones is now shipping in mass production with a major OEM and also designed in with multiple other smartphone makers. Leading the trend of eliminating the legacy analog 3.5-millimeter headphone jack is Huawei, who selected our latest family of solutions for its flagship P20 and P20 Pro smartphones. On the VideoSmart side of our IoT business, we continue to see the expansion of Android TV adoption in the service provider platforms. Bouygues Telecom in France launched their second-generation Android TV set-top box, the Bbox Ultym, using our multimedia SoC to bring 4K Ultra HD content to their subscribers. And as we stated last quarter, we continue to see significant sell-thorough and adoption of the Google Home Mini which utilizes our SoC. We also see strong enthusiasm for adopting far-field voice capability in conjunction with bringing additional intelligence to the edge in the service provider platforms. Let's now touch on our automotive business, where we continue to make strong progress, leveraging our touch controllers, display drivers, fingerprint sensors and voice technologies. With regard to fingerprint, we are seeing continued interest from OEMs beyond our first two design-ins that are anticipated to be in full production in calendar year 2020. Traction for touch also continues with design-ins at most major OEMs and tier 1s. And as we mentioned back in December, there was also strong interest in our integrated touch and display solution. We're now pleased to report that almost every top automotive display manufacturer is building panels with our TDDI solution to validate complete system performance and reliability, and we are jointly targeting calendar year 2020 OEM platforms. I'll now turn the call over to Wajid for a more in-depth review of our financial results and guidance. I'll then make some closing remarks before opening the call for Q&A. Wajid Ali - Synaptics, Inc.: Thanks, Rick. Revenue for the March quarter was $394 million. Third quarter revenue was down 8% sequentially, primarily reflecting the expected seasonality within our product lines. Year-over-year March quarter revenue was down 11%, reflecting declines in our mobile market (13:12) product revenues, partially offset by an increase in IoT revenue driven primarily by our acquisitions, as well as an uptick in PC revenue. A year-over-year mobile decline was primarily due to the declines in capacitive fingerprint. During the quarter, we had three customers above the 10% revenue threshold, at 11%, 11% and 17%. As reflected in the presentation materials released in advance of this call, revenue from mobile, IoT and PC were 62%, 23% and 15%, respectively, in the March quarter. Revenue for mobile products was down 6% sequentially and down 34% compared with the year ago quarter. Revenue from PC products was down 2% sequentially and up 13% year-over-year. Much of the year-over-year increase in PC was due to the adoption of capacitive fingerprint with our PC customers that Rick talked about earlier. Revenue from IoT products was down 17% sequentially and up over 300% compared with the year ago quarter. I will now provide a high level review of certain of our March quarter GAAP results and will follow with the corresponding non-GAAP results. For the March quarter, our GAAP gross margin was 31.2%, which includes $17.2 million of intangible asset amortization, $4.1 million of inventory fair value adjustment charges and $900,000 of share-based compensation costs. GAAP operating expenses in the March quarter were $135.2 million, which includes share-based compensation of $17.9 million, restructuring and severance-related costs of $2.2 million, acquisition-related costs of $5.6 million, consisting of intangibles amortization and transitory post-acquisition compensation program costs, and $2 million of costs associated with the preparation for and arbitration of matters associated with the prior acquisition. Our GAAP tax benefit for the quarter was $3.9 million. In the March quarter, we had a GAAP net loss of $13.7 million or $0.40 per share. Now, turning to certain of our March quarter non-GAAP results, our March quarter non-GAAP gross margin of 36.8% was near the top of our guidance range and primarily reflects our overall product mix. March quarter non-GAAP operating expenses came in towards the midpoint of our guidance. Non-GAAP operating expenses were $107.5 million, down $2.6 million from the preceding quarter. The decrease primarily reflects incremental savings from our November restructuring actions. Our non-GAAP tax rate was 13% for the quarter, unchanged from our guidance. Non-GAAP net income for the March quarter was $32.4 million or $0.92 per diluted share, a 15% sequential decline and down 28% year-over-year. Turning to our balance sheet, we ended the quarter with $283 million of cash, an increase of $31 million from the preceding quarter. The increase in cash during the quarter was primarily driven by $34 million of cash flow from operations. Receivables at the end of March were $258 million, and DSOs were 59 days, while inventory turns were 9.2 and inventories were $109 million. Capital expenditures for the quarter were $8 million and depreciation was $8.5 million. Now, I will make a few comments regarding our quarterly outlook. Based on our backlog of approximately $259 million entering the June quarter, subsequent bookings, customer forecasts, product sell-in and sell-through timing patterns, as well as expected product mix, we anticipate revenue for the June quarter to be in the range of $370 million to $410 million. Our guidance anticipates lower growth in the current quarter than initially expected due to the noted challenges in the smartphone market, coupled with spot shortages on a few of our DDIC and TDDI products. We expect the revenue mix from mobile, consumer IoT and PC products in the June quarter to be approximately 58%, 25% and 17%, respectively. I will now provide GAAP outlook data for our June quarter and will follow with non-GAAP outlook data. We anticipate the stock-based compensation charge in the fourth quarter to be in the range of $18.5 million to $19 million, including approximately $900,000 in cost of sales. In addition, we expect June quarter GAAP operating income will be net of noncash charges of approximately $21 million for intangibles amortization, of which, approximately $18.5 million is expected to be reflected in cost of sales. In addition, fair value inventory adjustments to be reflected in cost of sales are expected to be approximately $600,000. We anticipate our GAAP gross margins to be in the range of 31% to 32%. GAAP operating expenses in the June quarter are expected to be $125 million to $135 million and are expected to include restructuring charges in the range of $3 million to $3.8 million driven by our restructurings initiated in this fiscal year. I will now provide non-GAAP outlook data for our June quarter. We expect non-GAAP gross margin in the June quarter to be between 36% to 37%. It should be noted that the midpoint of this range represents an almost 400-basis point improvement in non-GAAP gross margins over the year ago period. We expect non-GAAP operating expenses in the June quarter to be in the range of $103 million to $107 million. Regarding our long-term non-GAAP tax rate, we will maintain our guidance in the range of 12% to 14%. We continue to evaluate global tax planning opportunities and anticipate we will complete our analysis by year end. Any impact to our non-GAAP tax rate will be shared on our June earnings call. Non-GAAP net income per diluted share for the June quarter is anticipated to be in the range of $0.80 to $1 per share. To conclude my remarks, we are pleased by the effectiveness of our diversification initiatives in offsetting what continues to be a very dynamic mobile marketplace while also paving the way for positive enhancements to our financial model. Richard A. Bergman - Synaptics, Inc.: Thanks, Wajid. As we prepare to conclude another fiscal year and begin to more fully realize the benefits of our transition into a more diversified company through our expansion into consumer IoT and the rollout of several new products leveraging the latest technology trends, we are focused on maximizing profitability as we prioritize the product profiles and opportunities within our business. We remain poised for strong growth in the second half of the calendar year based on positive seasonality and a comprehensive line-up of innovative industry-leading solutions. With that, I will now turn it over to the operator to begin the Q&A session.

Thank you. We'll take our first question from John Vinh with KeyBanc Capital Markets. John Vinh - KeyBanc Capital Markets, Inc.: Hi. Thanks for taking my question. Just some housekeeping questions to start off with. Wajid, you said the gross margin upside was driven by mix, but given the mix that you had talked about last quarter by segment, I show that you underperformed PC and IoT a little bit, while your mobile revenues were largely in line. And my understanding is that those segments tend to have higher gross margin profiles relative to mobile. I was wondering if you could just reconcile that mix versus your gross margin strength that you saw. And then, also, I'm wondering if you could provide additional color on the shortages that you referred to related to DDIC and TDDI in the quarter. Wajid Ali - Synaptics, Inc.: Sure, sure. Yeah. So, I mean, you're absolutely right. So when you take a look at it at an overall product line level, generally, our consumer IoT products have higher gross margins than our mobile products as well as our PC products. We still had a lot of sequential growth, and so, that helped provide some momentum within the quarter within consumer IoT. And within the product stack itself, there can be quite a variation of gross margins by product line. And so, during the quarter, we provided a range and we were fortunate that the demand that came through for the products within consumer IoT, and quite frankly, PC as well, was higher margin products. And so, that's what you saw. Just to take a moment on the gross margins, we've actually been seeing gross margins tick ahead of our expectations throughout the fiscal year. We had kind of set a model of 34% to 37%. And we've consistently been coming in either at the midpoint during the first two quarters of the year or actually even in the last two quarters, we've been at the higher end of that range, with this previous quarter being 36.8% and us guiding to a midpoint of 36.5%. So, there is product mix but we also pointed out that we've been seeing some really good cost efficiencies. So, it's a combination of both of those things that have kept us probably a little bit ahead of what we've been guiding from a gross margin standpoint. To your second question on the shortages, so we've been seeing quite a bit of strength in our DDIC products as well as our TDDI products, with China starting to pick up again, and that's probably impacted us in fiscal Q4 by approximately $15 million to $20 million. And so, although that's unfortunate, at this time, we're certainly working through it and we hope to have – we're working on kind of a recovery plan to get that revenue back. But based on what we see right now, we are going to see a shortfall versus the real demand out there in the market for those products. John Vinh - KeyBanc Capital Markets, Inc.: Great. Thank you. My follow-up question for Rick, you ended your prepared remarks in saying that you expect to see kind of a strong rebound in the second half of the calendar year. Wondering if you could just talk about what sort of visibility you have into the second half of the year and is it possible for you to see double-digit growth in the back half of the year on a year-over-year basis. Richard A. Bergman - Synaptics, Inc.: Well, John, as you know, we only kind of fall in the trap of giving guidance for a few quarters out there. We do have a lot of things working in our favor for the second half of the year. As Wajid mentioned, there's a bit of a shortage right now. Probably – that'll probably persist through the first few months of our fiscal 2019, but then, after that, we think, with some of the moves we're making with our supply base, that that'll certainly help add some growth there. There's a usual seasonality, which we'll see from some of our major customers that you're well acquainted with. And then, there's, of course, the seasonality that we certainly should get, especially in our fiscal Q2 with some of the very consumer holiday-oriented products, again, in the VR and in the home products that I talked a little bit in my prepared remarks. And so, I can't really quantify what that is, other than we're pretty encouraged by what we're seeing for the second half of the year and expect especially a very strong finish to the calendar year. Wajid Ali - Synaptics, Inc.: And John, just to help reconcile Rick's comments in terms of the type of growth you're talking about, the thing we've got to kind of pull out of the model is capacitive fingerprint. So last year, in the back half of the year, capacitive fingerprint was still a decent portion of our revenues on a quarterly basis, and so, we've been offsetting that with growth in all the other product lines. So, that'll hopefully help you reconcile some of the comments that Rick is making. Richard A. Bergman - Synaptics, Inc.: Just to make a little clarification, Wajid, on our mobile capacitive fingerprint. Wajid Ali - Synaptics, Inc.: Mobile capacitive, yeah. Richard A. Bergman - Synaptics, Inc.: Our PC capacitive fingerprint business has never been better. John Vinh - KeyBanc Capital Markets, Inc.: Great. Thank you.

We'll go next to Rob Stone with Cowen & Company. Robert W. Stone - Cowen & Co. LLC: Hi. I wanted to ask about the shortages, particularly in TDDI. We've been hearing about increasing activities by various competitors. Do you face a potential loss of market share or what do your customers do relative to these shortages, you think? Richard A. Bergman - Synaptics, Inc.: Yeah. Rob, let me elaborate a little bit. We actually use three Taiwanese semiconductor suppliers. We tried to spread our bets around. But the technology, in general, it's 80-nanometer or 40-nanometer, which, in the worldwide, there's a great deal of that. But for display drivers, you have to use high voltage to drive the various pixels on the screen, and there, that requires specialized equipment. And so, you just can't move, for example, 80-nanometer technology from some other product to display drivers. So to a certain degree, we, and the whole industry were caught a bit off guard when we saw this big uptick in the China smartphone market 30 days ago or so. We're able to address it with some products. We have some pin-for-pin products that we're working on that will help fill some of the gap, but we're just trying to be realistic. We'd love to have a lot more capacity right now. This is, of course, when the smartphone manufacturers start to build up inventory for the fall and the holiday period. So, not quite sure I totally answered your question there but that's kind of the color around the shortfalls that we're seeing. Robert W. Stone - Cowen & Co. LLC: Okay. A follow-up then, Rick, you mentioned being somewhat disappointed by the uptick so far in the in-display optical fingerprint sensors. Why do you think that is and when should we expect to see more activity with that product? Richard A. Bergman - Synaptics, Inc.: Well, as I mentioned in my remarks, Rob, we continue to have the design-in activity. But what I think the world is seeing globally is consumers just aren't willing to pay high premium for either flagship phones or incremental features that add a lot of costs to a phone. And unfortunately, capacitive fingerprint is rapidly approaching zero in terms of the cost points there. And there is, as we've always said, there's a big substantial premium for the optical fingerprint solution. We think it's mighty cool. But what we're starting to see is some of the flagship wins that we have is the OEMs are either delaying, or in some cases, they're now making it a incremental feature. So for example, we talked about the Vivo phone. At one point, we had hopes that it would be in every single phone that they shipped, but reality is they have one phone that has it and one phone that doesn't. Now, the ones that have it are selling extremely well, but nevertheless, we're now talking about the attach rate of our optical fingerprint. And so, if you end up with an attach rate instead of 100% down to 20%, 30% type of thing, that greatly reduces the size of the market that we can be in. So, we start to get a little bit of sense on that way back in December during our Financial Analyst Day. I know I got a couple of questions from some of the folks on the phone about why didn't – because we kind of gave an idea of where big growth was occurring – why didn't we show optical growing faster at that point or at least a higher magnitude, and to a certain degree, that was a bit of it. The smartphone manufacturers are becoming very oriented around cost at this juncture. That's their number one priority. When I go out and meet with them, they just want to talk about cost right now. Robert W. Stone - Cowen & Co. LLC: Okay. And a quick housekeeping question for Wajid, I didn't find it scanning through the materials, maybe I missed it, but what was the fully diluted weighted average share count that gets to the $0.92? And in relation to that, what are you assuming at least directionally about the share count within your guidance for the fourth quarter? Wajid Ali - Synaptics, Inc.: It was 35.2 million shares and we're assuming 35.6 million shares fully diluted for fiscal Q4. Robert W. Stone - Cowen & Co. LLC: Great. Thank you.

We'll go next to Kevin Cassidy with Stifel. John Joseph Donnelly - Stifel, Nicolaus & Co., Inc.: Hi, this is John Donnelly on for Kevin. Thanks for taking my question. Could you provide a little bit of detail on the smartphone recovery you're seeing in China and have you seen any restrictions on shipments to your customers there? Richard A. Bergman - Synaptics, Inc.: Sure. So John, thanks for the question. We certainly are starting to see an uptick. In our fiscal Q3, there was a bit of slowness that occurred that's (31:51) well documented, but now that we've moved into our Q4, we're seeing a nice pick-up in the phones. And as I mentioned kind of indirectly on the prior question, a lot of that's in what we consider the midrange part of the mix from a price point perspective. So, fairly robust demand appearing, that's starting now, and we believe will carry through the balance of the calendar year. Yes, there was one phone manufacturer. Again, it's well documented. They weren't a huge customer for Synaptics in some regards, but they did – we're in the process of designing in a lot of our latest display – infinity display products such as our in-display solution and OLED drivers. So, we're kind of disappointed because they had a heck of a flagship phone that they were planning. So unfortunately, we had to stop activities for the U.S. government and we're poised that those activities can pick back up again. But the plan that we gave you comprehended that they will not contribute to our revenue for the balance of the calendar year. John Joseph Donnelly - Stifel, Nicolaus & Co., Inc.: Okay. Thanks. And then, kind of approaching the one-year mark since the IoT acquisitions were announced, could you maybe provide an update on the expectations for seasonality there? And what are you seeing in terms of a refresh cycle for those product as the technologies continuing to evolve and improve? Richard A. Bergman - Synaptics, Inc.: Okay. I'll answer, and then, Wajid may want to contribute. So again, we had to avoid falling into the trap of projecting into our next fiscal year. Overall, we just step back and look at the current quarter that we're in. A couple things didn't go our way in terms of the smartphone marketplace. A year ago, we were 80-plus percent mobile. And to be honest, there wasn't a whole hell of a lot we could do. If the mobile phone sneezed, we got knocked over. And you kind of saw that with some of our peer companies that are kind of heavily aligned with either one product line or one market. This quarter now, with sub-60% being mobile and the balance in other products, the other ones are doing pretty well. So in some ways, I feel pretty pleased one year after the acquisitions that this is exactly the diversification that we wanted, as well as you heard from Wajid allowing us to climb that gross margin hill percent that we really want to do and continue to do in the subsequent quarters to get into shape. A kind of roundabout way of answering your question of what do we see in terms of seasonality for IoT products, we only have one under our belt, so we don't – this is the first time we're going through it in a lot of ways. So, we didn't own these products last year in calendar Q2. What our partners are telling us is it's going be pretty good. Again, we have some products especially for calendar Q4 that are aligned at stocking stuff for the smart voice type of products or the VR type of products that historically, at least in the U.S., ship around the Thanksgiving timeframe. So, we're gearing up for an exciting period for our IoT. We have a much broader breadth of products, too. We mentioned last quarter, we had over 30 design wins announced and the pace continues. And in some cases, those are lower volume, but certainly, as we get more and more of those build up, that will offset a bit of the seasonality. But it certainly helps in our longer term growth. John Joseph Donnelly - Stifel, Nicolaus & Co., Inc.: Great. Thank you.

We'll take our next question from Ambrish Srivastava with BMO. Ambrish Srivastava - BMO Capital Markets (United States): Hi. Thank you very much for letting me ask a question. Rick, I just wanted to understand the guide for – or the confidence for the back half of the calendar year. Besides the makeup that you will get from working through the shortages, and then, the normal seasonal recovery, is Clear ID not – you're not counting on that to contribute to the growth? Richard A. Bergman - Synaptics, Inc.: Well, we have a lot of positive things that's contributing to the growth and we didn't really kind of rattle those off. We talked about, call it natural seasonality. That's a given. So, that's certainly a positive. Our OLED display drivers are going to have tremendous growth from a percentage perspective and it'll be meaningful in the second half of the year as we are now seeing the new OLED display manufactures ramp up to interesting volumes. They have specific OEM design wins and so on. We mentioned the 10% number, and we'll get revenue this quarter and it'll really grow from there. There's certainly the COF activity. So again, initial revenue kind of this quarter, but really substantial in Q3 and then quite big in Q4. And in other smaller bets around VR and automotive, we put in a couple years of sweat and money to make those happen in smaller parts of our business, but after – we're at the beginning of the upward part of the hockey stick on those businesses. Now, you asked specifically about optical. Yes, it's part of our story in terms of revenue in the second half of the year. But quite frankly, we wanted to be open about it. It's not as big as we saw just three months ago due to the focus on cost that we're seeing in the marketplace, and to a certain degree, just lower shipments of those high end smartphones into the marketplace and more of a focus around infinity displays for the midrange in hitting cost points of $300 or $400 in the marketplace, not the $600, $700, $800 cost points that we previously saw. Ambrish Srivastava - BMO Capital Markets (United States): Okay. Thanks for that candor. And then, I had a quick housekeeping one for you, Wajid. Just trying to go through the filings and trying to understand the year-over-year comp for the IoT business. I know you've added roughly 24-odd million dollars from the mobile business. But what's the year-over-year number for the organic IoT business? Thank you. Wajid Ali - Synaptics, Inc.: The organic IoT business year-over-year is probably up less than 10%, probably 7% or 8%. But it's the inorganic portion has actually also grown year-over-year. Ambrish Srivastava - BMO Capital Markets (United States): Right. But the business you acquired is up less than 10%. Wajid Ali - Synaptics, Inc.: No, the business we acquired year-over-year is up 24%. Ambrish Srivastava - BMO Capital Markets (United States): Okay. Richard A. Bergman - Synaptics, Inc.: To be clear, fiscal Q4 you're talking about. Wajid Ali - Synaptics, Inc.: Fiscal Q3 versus fiscal Q3. Richard A. Bergman - Synaptics, Inc.: Okay, versus Q3. Okay. Wajid Ali - Synaptics, Inc.: Yeah. Fiscal Q3 versus for Q3, yes. Ambrish Srivastava - BMO Capital Markets (United States): Okay, got it. Thank you.

We'll go next to Rajvindra Gill with Needham & Company. Rajvindra S. Gill - Needham & Co. LLC: Yes, thanks for taking my questions. Rick, Wajid, the fact that optical in-display might not be taking off as you expected. How do you think now about your long-term revenue targets that you kind of discussed at the Analyst Day? And also, kind of given some of the changes in behavior from the Chinese handset OEMs, is that having an impact on how you think about the long-term revenue target? Wajid Ali - Synaptics, Inc.: Okay. I'll start it off, and then, Rick can kind of take over from there. I actually don't think we think any differently about the long-term revenue target than we did just a few months ago. As you saw, we had a number of drivers that we pointed to that could help us get to a run rate that would be approximately $2 billion, and we expected that there would be some pluses and minuses within that number. And so, if I think about the direction of each of those arrows, certainly in display is probably – even though we had already factored down some of the growth – is probably coming in lower than we had expected. But both OLED display drivers and chip-on-film are probably coming in stronger than we had expected. The uptick that we've seen on chip-on-film for TDDI products has been quite strong and that's actually causing some of the supply chain issues that we're seeing within this quarter and probably will see through our fiscal Q1. So, we knew there would be some pluses and minuses and we wouldn't get the math exactly right, but directionally, we were fairly confident then and we're fairly confident now as well. But like I said, the in-display is down but chip-on-film and OLED display drivers is probably up. And everything else we had on the chart, whether it be automotive or capacitive fingerprint, is tracking this year like we expected, and as we look into initial plans for next year, those are tracking as well as we had expected, too. So I think on the IoT side, at that time, we had probably not contemplated as many opportunities as we're seeing with some of our customers and some of those extend beyond 2020 quite frankly. So, that's been positive as well. Richard A. Bergman - Synaptics, Inc.: Yeah, just to add a little bit, Raj, I guess I've been in the mobile market seven years now and the only certainty is that it's difficult to predict and it throws you a lot of surprises. Yeah, and so, the nice part – and I alluded to this a few questions back – is now, Synaptics – kind of a year or two ago when our mobile revenue was well into the 80s, is kind of – they had to deal with it. There wasn't any way to turn. Now, we can shift where we invest. So, we've been pretty open. We're not going to invest in mobile capacitive fingerprint anymore. The market has dramatically deteriorated over the last 12 months. But the great part is, I just had met with the IoT team and we're going to shift investments over to some of the things that we're doing in the artificial intelligence area to make our smart audio products even smarter, so to speak. And it's great to have that luxury and grow something different that's a little higher gross margin profile and a little more profitable at the bottom line. Rajvindra S. Gill - Needham & Co. LLC: No, that's helpful. Maybe you can help me kind of reconcile something. So if the Chinese OEMs are focusing more on cost and trying to target a $300 to $400 price point, and that's the reason why they're not moving forward to in-display, then why are they then shifting to OLED display, which I would assume that the OLED build materials would be very expensive as well, as you move from LCD to OLED? But you're confident on OEMs ramping OLED production – OLED display phones. So, is the cost that much lower for OLED versus, say, in optical in-display where the Chinese OEMs are willing to move to an OLED display but don't necessarily care about an in-display fingerprint sensor? Richard A. Bergman - Synaptics, Inc.: Yeah. That's a good question, Raj, and I think there's some pretty well documented OLED display manufacturers that are running at well below 100% capacity, which would have been unfathomable a year ago, that OLED capacity would be sitting idle. I think you're even seeing a flavor of that between flexible and rigid OLED. Flexible costs quite a bit more than rigid OLED. And so, clearly, the mix is sticking with rigid. And as we look at the alternative OLED manufacturers coming online, what we're seeing is not demand so much for, say, WQHD resolutions which is more costly and flexible. Actually, there's quite a bit of demand for full HD rigid OLED displays. Leading into that also, of course, is the surge in demand that we are seeing on LCD TDDI is they're recognizing, boy, if we can do an infinity display with an LCD solution, we will, and we're seeing that. Now, there's a certain amount of just natural demand for OLED out there. So, I don't think you're going to see volumes drop with the Chinese OEMs. They're going to continue to go ahead with their OLED display plans. But certainly, I think the expectations are a bit lower than what it was in terms of the OLED marketplace and the mix within OLED is certainly different than what it was anticipated. Rajvindra S. Gill - Needham & Co. LLC: And just last question for me, auto is really we've got a lot of momentum. What percentage of revenue is auto today and what do you think it will be, I think, two, three years ago? I think you gave the statistics before but just want to clarify that. Thanks. Wajid Ali - Synaptics, Inc.: Yeah, it's about 3% of our revenue right now and it was historically probably 1% to 2% of our company revenue. Rajvindra S. Gill - Needham & Co. LLC: Got you. Richard A. Bergman - Synaptics, Inc.: It's going to have bit steady growth. If you go back to our Analyst Day slides, you'll see kind of a 2X, 3X, 4X type of number over the coming fiscal years. And as we said, it's – you got to fill the pipeline with (45:09) it's actually rewarding to see those finally turning into revenue after several years of some pretty healthy investment in terms of deployment or for people and qualifying our solutions for automotive. Rajvindra S. Gill - Needham & Co. LLC: Thank you.

We'll go next to Charlie Anderson with Dougherty & Company. Charlie Lowell Anderson - Dougherty & Co. LLC: Yeah. Thanks for taking my questions. It sounds like we have a lot of moving parts in the back half of the calendar year. I wonder, just taking that all into account, how we should think about the gross margin profile of the business as we're bringing in a bunch of new products and some are getting smaller as a portion of the mix. Any commentary, that'd be helpful. And then, I've got a follow-up. Wajid Ali - Synaptics, Inc.: Sure, sure. So, we talked a little bit about gross margins earlier in the call. Like I had mentioned at that point in time, Charlie, we set a margin model out in front for about 34% to 37%. And the kind of the first two quarters, we were hovering around the midpoint of that range. And in the last two quarters, we've been at the higher end of the range. Everything we see in front of us, despite the fact that we expect TDDI revenue and DDIC revenue to grow in the back half of the calendar year, all the product profiles we've taken a look at seem to indicate that we will continue to remain at the high end of the range that we're seeing in our fiscal Q4 probably throughout the calendar year. And so, that's quite positive for us because generally, as our TDDI volumes and our DDIC volumes ramp, that margin profile should deteriorate. But to the contrary, based on the strength that we're seeing in consumer IoT and some of our other product lines and some of the cost efficiencies we're seeing, we continue to expect the gross margin profile to be at the top end of that range as we've seen last quarter and we expect to see in fiscal Q4. Charlie Lowell Anderson - Dougherty & Co. LLC: Great. And then, just going back to the in-display fingerprint and some of the commentary there, Rick, I wonder, at a certain point, do you need to revisit this in terms of long term, do you want to be in this business? Is it worth the level of investment here? Are you reallocating investments at this point? Just kind of where things stand, are there opportunities to sort of rightsize that over time? Thanks. Richard A. Bergman - Synaptics, Inc.: Yeah. Charlie, I mean, of course, in the normal course of business, we do that. As you well know, we're a midyear financial company, so we're approaching AOP. So we would not just that particular product. We look at every product in our portfolio and look at the three, four-year horizon and how much we're investing versus the ROI we'll get out of it in terms of the market opportunity. And so, we'll certainly review it. We did absolutely that with, as I mentioned earlier, our mobile capacitive fingerprint solution and decided it was rapidly commoditizing and the market was no longer growing and there were emerging threats to that business. So, we greatly truncated that investment, and to a certain degree, we shifted some of it to our PC fingerprint business because that is certainly very compelling, where they value security, which we bring to the table and other places. So, we'll do that same thing with optical and our IoT businesses and so on. Charlie Lowell Anderson - Dougherty & Co. LLC: Great. And then, just one quick housekeeping, Wajid, would you be willing to maybe just update us on where fingerprint is as a percent of revenue these days roughly? Wajid Ali - Synaptics, Inc.: So, mobile capacitive fingerprint is probably about under 5%. And actually, what's really interesting is that our PC capacitive fingerprint is bigger than that. So moving into our fiscal Q4 this year, we'll see PC capacitive fingerprint being bigger than our mobile capacitive fingerprint business. Charlie Lowell Anderson - Dougherty & Co. LLC: Got it. Okay. Thanks so much.

We'll go next to Jun Zhang with Rosenblatt Securities. Jun Zhang - Rosenblatt Securities, Inc.: Hi. Thanks for taking my question. So, two questions. So, could you give us a little bit color on the common dollar for the new DDIC with the chip-on-film solution compared with the older product? And what kind of a gross margin of this new type of DDIC could be? And should I think about the small part of the DDIC common dollar that use that chip-on-film will be a pass-through revenue. So, that's my first question. Thanks. Richard A. Bergman - Synaptics, Inc.: Okay. We didn't quite catch – you said – it sounded like common dollar? Are you asking about the average price or content? Jun Zhang - Rosenblatt Securities, Inc.: Yeah, the common dollar of the DDIC using the chip-on-film solution... Richard A. Bergman - Synaptics, Inc.: Well, the... Jun Zhang - Rosenblatt Securities, Inc.: ...compared with the older product, yeah. Richard A. Bergman - Synaptics, Inc.: In general, it's just a rough ballpark. There's a 30%, 50% uplift for the COF type of TDDI products or DDIC products versus a standard DDI. It's a pretty – in some ways, the range is quite a bit though. It really depends on the resolution, the display type, and in certain cases, the actual flex that it's on. There's different types of flexes that actually can be quite costly depending on the density and features that you need for that particular solution. And if you want kind of a ballpark, 30% to 50% ASP uplift. Jun Zhang - Rosenblatt Securities, Inc.: Okay. And should I think of the 30% to 50% the premium you charge your clients, it's mostly pass-through revenue? You're going to paid (50:51) your content manufacturer to do the chip-on-film or are you taking most of the premium as the enjoyed (51:01) better gross margin? Richard A. Bergman - Synaptics, Inc.: Well, we don't want to kind of break down our business model for you. Just Wajid kind of elaborated where our gross margin profile is going. And for our – display products still make up a big chunk of our overall company revenue. And as you could probably anticipate, if we're heading north in gross margin percent, we're managing the gross margin, we're making on our display products as well to be successful there. Jun Zhang - Rosenblatt Securities, Inc.: Okay, great. Yeah, so second question is about the competition in your smart speaker product market. Do you see any competition from especially the Asia turnkey solution providers like MediaTek or some of the other local guys? And what kind of market you're seeing the biggest potential growth opportunity outside of smart speaker for your IoT product? Thanks. Richard A. Bergman - Synaptics, Inc.: Okay. So in terms of competition, there's kind of multiple categories that you read about, and then, the ones that are actually fielding products is – there's kind of the processor guys. You mentioned MediaTek and Qualcomm and so on. Then, there's connectivity guys. So, we're somewhat unique and that we come at it with, hey, we're the world's best voice, we're the world's best video supplier. There's really nobody else there that is uniquely positioned that way. And so, we're seeing – when I meet with customers, they don't want to know how we have great connectivity. They want to know how they get great voice and how we're able to pick up a voice in a noisy environment or how we can make a converge product that has voice and great video at the same time. So, we bring a different value proposition. In terms of do we see the Asia, we certainly – MediaTek is probably the most prominent competitor that we see from Asia. And then, we faced the – as you would expect, some of the audio companies that are based here in the U.S. as well as some of the large other SoC companies. Jun Zhang - Rosenblatt Securities, Inc.: Okay, great. And what other market you're seeing... Richard A. Bergman - Synaptics, Inc.: (53:09). Jun Zhang - Rosenblatt Securities, Inc.: Yeah, the potential – yeah. Richard A. Bergman - Synaptics, Inc.: Yeah. There's the smart speakers but (53:15) that's the Amazon Echo or the Google Mini Home. During my prepared remarks, I talked about the – and they dominate the market, there's no doubt. Fortunately, we're in the Google Home products so we get to enjoy that. On the Amazon side, we're not in the first party of branded products but we're in all the other outlying products. And it's kind of daunting because of course, there's two companies have other business models and it makes it hard for a hardware manufacturer to compete directly head-to-head in those spaces because consumers will generally just opt to buy the Google Mini or the Amazon's branded product. However, if you could move outside the U.S. and a few of the other markets, there's other players. You heard me in my prepared remarks talk about Tencent in China, as one example, and Korea. We're engaged with many of those manufacturers for smart speakers, and in Japan. The Bluetooth speaker market's a bit different and that there isn't any direct competition from the big brands. And so, we're seeing quite a bit of volume come through on those. I did talk about that. And that's almost everything else you can possibly think of that has technology we're seeing engagements on. So home appliances, air conditioners, alarm systems, camera systems and so forth. As singularly, none of them are as big as the smart speaker market but we're starting to see the volumes build up in those other markets quite nicely. And then, finally, of course, I also talked about this in my prepared remarks, you had the headset opportunity as well that leverages a lot of the same capabilities that have made us successful in the smart speaker market. Jun Zhang - Rosenblatt Securities, Inc.: Okay, great. Thanks.

And with no further questions in the queue, I would like to turn the call back over to management for any additional or closing remarks. Richard A. Bergman - Synaptics, Inc.: Okay. Well, once again, thank you, everyone. We had some great questions and appreciate the dialogue. And I certainly look forward to either seeing a number of you out on the road or our next call in August. Thank you very much.

This does conclude today's conference. We thank you for your participation. You may now disconnect.