Good day. Welcome to the Synaptics Fourth Quarter Fiscal 2020 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jason Tsai. Please go ahead, sir.
Good afternoon, and thank you for joining us today on Synaptics' fourth quarter fiscal 2020 conference call. My name is Jason Tsai, and I'm the Head of Investor Relations. With me on today's call are Michael Hurlston, our President and CEO, and Dean Butler, our CFO. This call is also being broadcast live over the web and can be accessed in the investor relations section of our company's website at synaptics.com. In addition to a supplemental slide presentation, we have also posted a copy of these prepared remarks 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 to our financial results.
In addition to the company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs, and certain other non-cash or recurring or non-recurring items. Please refer to the press release issued after the market close today for a detailed reconciliation of GAAP and non-GAAP results.
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, and business, including our expectations regarding the potential impacts on our business of the COVID-19 impact, the pandemic. 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 10-K for the fiscal year ended June 29, 2019, for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. Synaptics expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Michael.
Thanks, Jason, and I'd like to welcome everyone to today's call. I'm pleased to be speaking with all of you again today and report a solid quarter despite the ongoing global uncertainty with COVID-19. Our business in the quarter performed as expected, and our continuing focus on managing things within our control has led to better gross margins and operating profitability.
Our team worked hard and executed well despite the ongoing macro challenges. During the past quarter, we taped out four new chips for IoT, secured meaningful new design wins with tier 1 customers across our different businesses, and we announced and closed two highly accretive acquisitions. This certainly was a busy quarter. Dean will go over our financials in greater detail later, but let me first share with you some of our accomplishments over the past 12 months.
Our core business, our business excluding the Broadcom and DisplayLink transactions, continues to deliver strong results, and the improvements and changes that we've put in place over the past year has really built a strong foundation for the company going forward. Over the past four quarters, gross margins are up almost 800 basis points, while operating margins are up over 1,300 basis points.
As a result, we achieved record high GAAP and non-GAAP earnings per share for fiscal 2020. We are more focused than ever before, divesting and exiting lower margin, more commoditized products such as mobile LCD TDDI, and investing in more differentiated and higher margin solutions like OLED touch, edge SoCs, and video interface. Through these more focused investments and initiatives, we are working more closely with our customers, providing more complete solutions and capabilities to further their product roadmaps, technology leadership, and innovation.
Despite the ongoing challenges around the world, we are positioned to see strong growth this quarter as we continue to benefit from these fundamental improvements in our business. As many of you saw in July, we announced and closed on two highly accretive and synergistic acquisitions that we are uniquely positioned to benefit from.
F irst, we acquired certain assets and manufacturing rights to Broadcom's wireless IoT connectivity business, adding Wi-Fi, Bluetooth, and GPS connectivity solutions to our portfolio. This equips us with the best-in-class wireless connectivity solutions for the IoT market, as well as additional roadmap products that will ensure technology leadership for years to come. Wireless connectivity is highly complementary to our existing IoT portfolio. In addition, many people at Synaptics, myself included, have intimate familiarity of the nuances of this business, and as a result, can anticipate the inevitable speed bumps while finding hidden opportunities.
Second, we acquired DisplayLink, the undisputed leader in technology enabling universal docking stations. This is a financially compelling acquisition with significantly higher gross and operating margins, and we can extract additional synergies given our own position in the market. I am extremely pleased with our team's hard work in closing both acquisitions in a short time, and I'm excited to share that we are already shipping in volume to customers in both cases. We are building a professional capability to rapidly identify and integrate acquisitions and extract synergies that ultimately generate incremental shareholder value.
Let me talk to you about our core business. As all of us spend more time at home, we are seeing a positive impact across multiple areas of our business. Our customers are aligning their investment dollars to capitalize on this macro trend. The expected near-term benefits are easily seen in the strength of our PC and video interface businesses. We are also seeing unexpected benefits with customers looking to broaden their offerings with solutions like headsets, speakers, sound bars, and smart displays that enable consumers to make more of their time at home while still connecting with friends and family.
In IoT, we taped out four platforms, including two new edge SoC solutions. This includes the AS470 for voice-enabled devices like smart speakers, and the VS640 for markets including set-top boxes, video streamers, and cameras. We are seeing strong interest for our latest edge SoCs with service providers around the world looking to offer differentiated solutions that leverage the integration of voice, video, vision, and AI capabilities that can uniquely define their products and services.
We have secured wins with two different major U.S.-based service providers, one for smart display and one for a video set-top box. We also taped out two new video interface solutions. We announced Cayenne just last month, and it has already led to a number of wins with PC OEMs and retail brands like Cable Matters for their USB-C dongle and docking station products.
The second video interface tape-out is an upgrade to our highly successful Panamera product family that addresses commercial PC docking stations and increases our lead in this space. In digital audio, our wired headset solutions have been strong as our solutions deliver premium voice and sound quality with active noise suppression. In mobile, our touch controllers for OLED smartphones continue to find success with the top handset makers in the world due to our superior performance and features.
As more smartphones adopt flexible on-cell OLED panels, we are seeing stronger demand, and the design pipeline for our touch controllers is increasing rapidly. This quarter, we have added to our already extensive customer list with several new wins at Oppo and Vivo in their upcoming smartphones. We expect to be able to talk about additional design wins at marquee customers by this time next quarter.
Separately, sales of our LCD DDIC remain stable as our key customer recently launched their highly anticipated low-end LCD smartphone last quarter, which has enjoyed widespread customer adoption. In PC, we continue to benefit from the increase in work from home, and this business achieved record revenue and profitability in the June quarter. Demand for both commercial and consumer laptops remains strong, and we believe this strength will be sustained this quarter.
Overall, I'm very pleased with our execution over both the last three months and the entire fiscal year. Our team has done an outstanding job staying focused and engaged with our customers, and we have a strong pipeline of new wins that will drive long-term growth. Our new acquisitions will create significant opportunities to increase content at our existing customers and expand the number of markets in which we play. I'm excited by both our backward-looking results and our forward-looking prospects. Now let me turn the call over to Dean to review our fourth quarter financials and provide our outlook.
Great. Thanks, Michael, and good afternoon to everyone. First, I'll start with a review of our financial results for our recently completed quarter, then provide our current outlook for our fiscal Q1. Before I begin, I'd like to remind everyone that on April 16th, at the beginning of our fourth quarter, we completed the sale of our mobile LCD TDDI business. Our results exclude any contributions from that business as of that date.
In some cases, such as comparison to prior periods, this creates an apples to oranges compare. Revenue for the fourth quarter of fiscal 2020 of $278 million was slightly above the midpoint of our guidance range, down 15% from the preceding quarter and down 6% from the same quarter last fiscal year. This is primarily due to the divestment of our TDDI business that closed early in the fourth quarter.
Adjusting for the TDDI divestment, results in our fourth quarter were up 36% on the same quarter year-over-year comparison and nearly flat on an adjusted quarter-on-quarter basis. During the quarter, we had three customers above 10% of revenue at 21%, 13%, and 10%. For the June quarter, our GAAP gross margin was 43.9% at the high end of our range and includes $8.1 million of intangible asset amortization.
GAAP operating expenses in the June quarter were $109.8 million, which includes share-based compensation of $16.2 million, intangibles amortization of $2.9 million, restructuring expenses of $6.8 million, and retention program costs of $2.9 million. GAAP other income for the quarter included a $105.1 million gain on the sale of our mobile LCD DDIC product line. We accrued a GAAP tax expense in the quarter of $21.3 million, bringing the fiscal 2020 GAAP tax rate to 24.2%.
GAAP net income for the quarter was $90 million, or net income of $2.55 per diluted share. On a non-GAAP basis, our June quarter gross margin of 46.9% was at the high end of our guidance range as we continue to execute on our ongoing cost savings initiatives and improve product mix, primarily reflecting the positive impact of our TDDI divestiture.
In the June quarter, non-GAAP operating expenses were below our guidance range at $79.8 million, and down $6.9 million from the preceding quarter, primarily reflecting the benefit of the divestment of TDDI and savings from restructuring activities initiated in the first half of the fiscal year. Our non-GAAP tax rate for the quarter and year-to-date period was 12%. Non-GAAP net income for the June quarter was $43.8 million, or $1.24 per diluted share.
A 230% increase year-over-year as we continue to focus on improved bottom-line results. Now turning to our balance sheet. We ended the quarter with approximately $763 million of cash on hand, an increase of $291 million from the prior quarter, primarily driven by the addition of $139 million from the sale of our mobile LCD TDDI product line, $100 million from the drawdown from our revolver facility, and $53 million in cash flow from operations during the quarter. Receivables at the end of the June quarter were $195 million, and DSOs were 63 days. Inventories were $102 million, and inventory days were 62. Capital expenditures for the quarter were $4.6 million, and depreciation was $4.8 million.
Before I turn to our guidance, let me make note of two post-quarter end transactions that will drive our ability to continue to improve profitability while expanding our ability to more broadly serve our customers to drive long-term growth. We closed our acquisition of certain rights to Broadcom's wireless IoT connectivity business on July 23rd.
We also closed our acquisition of DisplayLink on July 31st. Both of these transactions were closed with the available cash on our balance sheet and position us well to execute on our long-term growth targets for higher growth and profitability. Given the timing of these transactions, we will provide our outlook for both our newly consolidated business as well as our core business that excludes these two acquisitions for the September quarter. Our core business continues to be strong as new designs ramp and sales for our existing products continues to be robust.
For future quarters, we will only be providing the consolidated business results and outlook. Before I provide our outlook, let me first note that we're unable to provide a reconciliation of these forward-looking non-GAAP financial measures to their respective comparable GAAP financial measures, because without unreasonable efforts, we are unable to predict with reasonable certainty the amount or timing of certain adjustments that are used to reconcile these non-GAAP financial measures.
Our post-acquisition consolidated business outlook for the September quarter, revenue is expected to be in the range of $315 million-$335 million. We expect our two acquisitions to add about $30 million, or roughly two months of revenue, a little better than what we had forecasted when we announced the acquisitions last month. For the quarter, we expect the consolidated revenue mix from mobile, IoT, and PC products to be 42%, 32%, and 26%, respectively.
Non-GAAP gross margin is expected to be 47.5%-49.5%, reflecting the strength in our existing business and the positive impact from the newly acquired businesses. Including the additional operating expenses from the acquisitions and before any significant synergy capture, our non-GAAP operating expenses are expected to be $87 million-$90 million. We anticipate our non-GAAP tax rate post-acquisition to remain in the range of 11%-13%. Non-GAAP net income per diluted share for the September quarter is anticipated to be in the range of $1.50-$1.80 per share .
Turning to our core business. Our backlog entering the September quarter is approximately $257 million. We anticipate our core business revenue for the September quarter to be strong and be in the range of $285 million-$305 million. We continue to see near-term strength in our PC-related business with greater than 25% year-on-year growth, our mobile business growing nearly 15% sequentially, and our IoT sales beginning to stabilize.
Non-GAAP gross margins for our core business prior to the effects from our acquisitions continues to perform extremely well and is expected to between 46%-48%, reflecting continued execution on our gross margin improvement initiatives. We expect non-GAAP operating expenses for the core Synaptics in the September quarter to be in the range of $76 million-$79 million, also reflecting an active focus on controllable operating expense reductions. For core Synaptics, non-GAAP net income per diluted share for the September quarter is anticipated to contribute in the range of $1.30-$1.60 per share as our emphasis on building a more profitable business bears fruit.
In summary, the operational improvements and focus on execution resulted in a record year for earnings per share for fiscal year 2020. Building upon this foundation, we'll drive further profitability improvements across our core business as well as the newly combined business as we extract additional synergies throughout the fiscal year 2021 and beyond. [This wraps up our prepared remarks.] Now I'd like to turn the call over to the operator to start the Q&A session. Operator?
Yes, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause momentarily to allow everyone an opportunity to signal for questions. We'll take our first question from Kevin Cassidy with Rosenblatt Securities.
Hi, congratulations on the great quarter, and thanks for taking my question. I wonder if you've been able to look at your acquisitions, and do you have a seasonality for them? Is the September quarter strong seasonally? Maybe if you could just help us out with how to think about how that revenue comes in?
Yeah, Kevin. Good question. This is the first quarter we've had these acquisitions, so we're sort of still getting our hands around seasonality. Given that it's part of our IoT business and similar to many of our IoT businesses that we have today, we think that the seasonality is likely to be similar to our overall IoT business.
Okay, great. On the two wins you have with service providers, can you give us a little more details on what the timing of that would be? When would we see revenue for that?
Yeah, Kevin, those are going to be 2021 calendar events. We may see some early impact in the fourth quarter of our fiscal year, so the second calendar quarter, but I would say the majority of that revenue is going to hit in the second half of 2021.
Okay, great. Congratulations again. I'll get back in the queue.
Thanks, Kevin.
Thank you. We'll take our next question from Christopher Rolland with Susquehanna.
Hey, guys. Thanks for the question. I guess, Michael, can you talk about the market out there for new technologies that you think you may want to add to your portfolio? Also perhaps the speed at which you think you can start combining some of the assets you have in your new portfolio. Thanks.
Yeah, Chris, let me take the second one first. We've certainly begun working on the integration strategy. A set of people were already, and actually are at DisplayLink looking at how we can take and sort of create things like wireless docking solutions. That work has already begun, and I think it's relatively straightforward given the wireless asset and the drivers and things of that nature to get that combination underway. It's also relatively straightforward for us to combine the wireless products with our edge SOC. That work has already begun, and I'd say we're going gung- ho there.
In terms of what we look at for acquisitions, I don't think that we've obviously just brought in two, and we're going to spend some time absorbing those. We're excited about both of those acquisitions. As Dean said in his comments, we've been pleasantly surprised by the revenue that we've seen from both of them. It's holding up a little bit more than we expected.
I think thematically, what we've said and what I believe to be true is we're going to be looking to add depth to the portfolio, continuing to strengthen the businesses we have, rather than going wide and adding new businesses. I think the initiative that Dean has basically kicked off here is looking for things that are going to strengthen the core and add some more differentiation to the products that we have.
Yeah, perhaps one for Dean. I think in your DisplayLink PowerPoint, you said $95 million in revenue. I believe that was a 2019 number. Correct me if that assumption is wrong. As we do this merger model here, it doesn't necessarily seem like we saw this massive bump in work from home trends that I thought we would've seen in this business. Perhaps just my math is off, but if you could talk about that would be great. Thanks.
Yeah. Chris, your math is right on $95 million. That was the calendar 2019 results from DisplayLink. As far as work from home, we're seeing a little bit better strength than sort of that $95 run rate. I think the bigger bump on work from home largely occurred before we closed this acquisition, since the pandemic sort of first started. I think that the biggest wave has sort of gone past.
I would think of this similar to the PC demand, which actually was surged really strong over the last couple of quarters, and sort of continues. At some point, things do have to come back to normal, and we sort of see the DisplayLink business sort of coming back to normal run rates here at some point. We're just not sure when that tail off happens.
Yeah, Chris, just to add some color, I think what Dean said was that the two acquisitions were going to add $30 million in revenue ± over just two months. If you kind of back that out, it seems that the DisplayLink is running consistent to the levels that we talked about or a little bit more.
Yeah. That is fair. Thanks, guys. I'll also get that in queue.
Thanks, Chris.
Thank you. We'll take our next question from Rajvindra Gill with Needham & Company.
Yes, thank you, and I echo my congratulations. If we look at the difference between the core business and the total business with the acquisitions, looks like there was about $0.20 of EPS accretion, at least just going from June to September. I know in the DisplayLink slide you talked about a $1 of EPS post the synergies. Just wondering how we think about the ongoing EPS accretion, as we progress throughout the year. How should we be thinking about that in terms of the cadence and the timing?
Yeah. Raji, the $0.20 is right on the contribution from this quarter for two months, which take it roughly $0.10 a month if you just run rate it, and then extrapolate that out to a year. In order to get to what we showed in the DisplayLink acquisition slide deck, which was sort of around $1.00 in EPS accretion, that does assume that the full synergy gets captured, so that's at the full annualized run rate.
We've sort of just closed this transaction. We haven't actually captured any synergies yet. We literally just closed this thing. We did say in that announcement that it will take approximately 12 months to get all the way to that full run rate. The planning is happening. The teams are sort of working virtually together to make sure that all of those synergies happen. If you just think about how to model this, I would just likely think about layering it in sort of over the course of the four quarters.
Okay, great. Michael, in your prepared remarks, you talked about announcing some additional marquee customers in OLED touch. Just wanted to get a kind of an update in terms of what your kind of competitive positioning is right now in OLED touch as you've kind of progressed throughout the year, and how do we think about that positioning as we go into the fall and moving into calendar 2021?
Yeah. We continue to feel pretty good about it. I think we've effectively run the table on the high-end handsets in China. We feel good that we can add, as I said, a couple of additional marquee customers to our wall, that we should be able to discuss on the next call. We think it's sustainable. Wins now that we're seeing are for models that would ship next year, Raji. So the wins we're picking up now are for phones that even start production, some of them, in second calendar quarter of 2021. We continue to feel good about it. It's been a really pleasant surprise and one that we continue to see on a go-forward basis.
All right, great. Thank you.
Thank you. We'll take our next question.
Thanks, Raji
We'll take our next question from Charlie Anderson with Colliers Securities.
Yeah. Thanks for taking my questions, and Mike, congrats as well on all the great progress here. I wonder on the mobile business, you have two large components in there. You've got display chips, and you've got touch chips. I wonder if you could maybe speak to how that mix is shifting over time. I wonder if maybe you could talk about which one is larger in the current quarter, and then on a go forward, how sort of that trend, then I've got a follow-up.
Yeah. Charlie, fair question. I don't think we break it out. Directionally, I'd say the following. I think that the display driver continues to hold up as phones transition away from LCD and toward OLED, we'll see erosion in that number, but that's actually held up for a while, and it's held up better than expected. I think it's going to continue to hold up because you see refreshes, particularly from our largest customer on the LCD panel.
I don't think that that is going away anytime soon. That kind of downward glide path, though, has been offset by our touch wins, and our touch wins continue to gain momentum. As I said in the previous question, we've done very well in China. We expect to pick up a couple of key wins here going forward at other large handset makers. Our touch momentum is actually strong. Looks like it's going to maintain strength, and to the extent that we can pick up customers, I think we'll continue to do well.
Okay, great. For my follow-up on the IoT business, I think if I exclude out the revenue from acquisitions, the core IoT is maybe down kind of mid-teens year-over-year. I know it was down in the June quarter. I wonder maybe you can just kind of speak to some of the crosscurrents there and maybe how you see the trajectory of that business over time in terms of it recovering. Thanks.
Charlie, your math is right. Sort of on a year-over-year, excluding the new acquisitions, that core IoT is down about 15%, but it's actually up about 8% quarter-over-quarter. As we talked about last quarter, this is the area of our business that we feel COVID-19 has had some additional impact on, where we actually do see some headwinds there. We're actually really positive to see it just start to stabilize and sort of move up quarter-over-quarter with plus 8% on this guide relative to last quarter's actual. We do think it is starting to stabilize, but that is an area of the portfolio that probably has had the most headwinds against it, COVID-19.
Yeah. Just to add a little bit of color to what Dean said. If you look at the kind of the core sub-segments, we've had some that have done relatively well, like our video interface has done really well. I think we've talked about automotive is in there, and automotive has obviously had some weakness. The car buying cycle is significantly down. Our largest business in that grouping, in the IoT grouping, is the edge SoC, and I think Dean talked about it on the last earnings call. A lot of that is through retail channels, and with the stores closed here in the U.S., we haven't seen the pickup of our retail class products.
Now, that's not to say, as I said in my prepared remarks, we have really nice momentum in that business. It's been a focus area for us. We feel like we're clicking off now significant customer wins. Those wins aren't going to ship until next year. We're depending on the wins we have now. Those wins that we have now are subject to exactly the same phenomenon that Dean talked about.
Perfect. Thank you guys for all the color. Appreciate it.
Thank you. We'll take our next question from Harrison Barrett with Arete Research.
Hi, guys. It looks like another strong quarter in your PC business for 1Q21. How long do you expect these elevated revenues to last before you settle back into a bit more of a normal run rate? Has this normal run rate kind of pushed up a little bit?
[Yeah, I mean,] we've talked about it, I think, a little bit on prior calls. Our visibility through the end of the year looks good. We continue to see momentum in that business. We've had a couple of record-setting quarters for us in a row. I think sometime it's going to slow down. It's going to return to our sort of normal levels. I think certainly through the calendar Q4 of this year, we see continued strength, and I think that's certainly the way we're thinking about the business. I don't know, Dean, do you have any more thoughts on that?
Yeah. It seems from all the indicators that we have, both through customers, backlog, and sort of macro indicators, does seem like that it has a little bit of leg, but I think Michael's comment is right, is that at some point it has to revert back to the mean, and sort of that's our longer-term assumption.
Great, thanks. [And then,] I think we heard a little bit just now on automotive, but have you seen any push-out in models featuring the sort of fingerprint and TDDI solutions? Is there a particular geographic tilt in the sort of near-term order pipeline?
The answer is no. Our TDDI products have really yet to launch. The majority of our automotive business is still discrete touch and discrete display drivers. We are expecting the TDDI products to launch late calendar Q4 for the upcoming model year, the model year 2021. At least as far as we can tell at the moment, there's been no push-out in those design launches.
We expect automotive to be a good news story for us across our fiscal 2021, loaded to the back half. There's been no particular geographic tilt. I think the early adopters for our TDDI are European OEMs. Generally speaking, time plus or minus, we're running the table pretty effectively in that area and Japan, U.S. automakers, other Asian automakers, all should launch in the next 12-15 months.
Thanks, guys.
Thanks, Harrison.
Thank you. Our next question comes from Christopher Rolland with Susquehanna.
Hey, guys. Thanks for the follow-ups. Just two quick ones. Perhaps, Michael, for you, the win with the service providers, is that just for the SoC or is this also a Wi-Fi win for you guys? Then maybe you can clear up whether there's any gray area using Wi-Fi in a set-top box. Does it have to be only OTT if it goes through a service provider? Does that kind of violate the Broadcom agreement or not?
Then Dean, sorry for coming back to this. The hubs that I've seen out there from DisplayLink, prices for a lot of them have doubled. Also a lot of them are out of stock entirely. I would imagine there's an inventory restocking process for those parts that may still need to take place. Why would we not see that in the September quarter or even into December? Thanks.
Hey, Chris. Let me start with the first question. Both the wins certainly were in flight before we had the wireless assets. Neither of them are including wireless. They're just our edge SoC. To your second question, we're focused on these OTT streamers that have wireless content in it. There, we know we can sell in. For service provider, particularly headends, the gateways where you've got internet content coming in, the first entry point to the home, that's typically more of an access point.
There, we cannot. We can't sell into a product that would be the first entry, a DSL, a cable modem, that's the entry point to the home. Hopefully that gives you the necessary color. We've got plenty of opportunity to put together our edge SoCs and the wireless asset. We certainly, for the main kind of Broadcom class products that are in the first entry point, we're precluded from doing anything there.
Chris, let me just take your other question around DisplayLink and sort of its run rate and work from home and whether there's supply availability out there. One, the projection that we're providing for the September quarter is based on the backlog as it transferred over to us. When we actually look into the backlog, which has sort of just recently came over in the last week or so, we actually see sort of this level run rate today.
I can't speak to whether there's broad availability sort of shortage out there. We're sort of not hearing that from our customer base. I don't know if there's other components within these applications that people aren't able to get in supply that are sort of restricting the DisplayLink chipset. I can't really speak to that. As of sort of new ownership on what we see today, this is sort of the run rate we see for the next two months, right? It's sort of two months out of our quarter.
Thanks, Dean. Thanks, guys.
Thank you. As a reminder, that is star one to ask a question. We'll take our next question from Paul Chung with JPMorgan.
Hi, guys. Thanks for taking my questions and congrats on the acquisitions. Just on OpEx, as we kind of move past F1Q, where do you see that kind of quarterly OpEx run rate trending as we kind of move throughout the year? Is that $10 million in incremental F1Q OpEx, is that just two months' worth? How should we model out kind of your new amortization and stock comp, if you have any guidance there? Are we kind of done with restructuring expenses for now?
Yeah. Let me just try to summarize it here for you, Paul, for a second. First on the OpEx and sort of the run rate going forward. The $10 million incremental operating expenses roughly added for two months of the acquisition, that is only two months. You will see a full three-month, full one quarter, come the next quarter, in the December quarter.
We also have operating expenses initiatives that had been ongoing at the base Synaptics. Overall, we actually feel that the guide that we've given for the September quarter is sort of the baseline that we won't sort of be increasing, although you have three months instead of two months in the December quarter. The other way, I think one of the prior callers asked about how to think about the synergies. The synergies on what we've committed on the DisplayLink acquisition is $15 million on an annualized run rate. That I would expect to sort of layer in quarterly. You can do the math on how to sort of quarterly layer that in.
As far as other adjustments, we're actually not updating specific guidance around stock comp or specific guidance around depreciation, et cetera. We have a number of sort of purchase price accounting considerations to go through, having just closed these, that we actually wouldn't be comfortable giving you a specific guidance at this point, Paul.
Thanks. That's very helpful. Very nice free cash flow to kind of end the year. I guess as we think about next year, there are probably a lot of moving pieces as you are mentioning. How should we think about kind of overall free cash flow for fiscal year 2021? Looks like you had a nice benefit from working cap and other operating cash flow this year. Does that kind of reverse in fiscal year 2021? Where do you kind of see CapEx levels as you integrate more of the businesses?
The free cash flow for the newly combined business should be as good or sort of better. You have to think about the two acquisitions here are similar to Synaptics, where it's relatively CapEx light. I don't see a significant CapEx need to add here. In terms of just how to think about free cash flow, this is actually one of the things that Michael and I have been working toward over the last 12 months. I think you see a pretty significant increase in free cash flow over the last 12 months. We're going to be applying that same formula going forward. Specifically when you look at these two businesses that come in, they only add to incremental accretion rather than dilution. That's how I would think about it, Paul.
Thanks, guys.
Thanks, Paul.
Thank you. This concludes today's question and answer session. I would now like to turn the call over to Michael Hurlston.
I'd like to thank all of you for joining us today. We look forward to speaking to you at our upcoming investor conferences during the quarter. Thanks a lot.
Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.