SiTime (SITM) 8 May 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the SiTime's First Quarter Earnings Call and webcast. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Brett Perry with Shelton Group Investor Relations. Brett, please go ahead.

Kevin. you, Thank welcome Conference and First XXXX Quarter Good to Results Call. Financial afternoon, SiTime's

on SiTime Officer. Joining Chief call today's us from and Howe, Executive are Beth Chief Financial Officer; Vashist, Rajesh

out of Before risks I'd market to nor results of of all the operations, factor company's this the company its contained for position, impact future predict the cause may we to management company combination the can the strategy all those from discussion. and business possible expected in assess to actual the or forward-looking materially regarding may including factors or like point timing which call, statements begin, any on differ make It's factors results, forward-looking course not the that to extent and any statements. of areas during other financial future plans,

risks, those the call could In and for from adversely may light implied. person nor assumes occur, responsibility any events results this differ to and not company uncertainties statements of actual completeness reason the results The Neither forward-looking call the forward-looking anticipated discussed and during company these assumptions, or materially forward-looking of statements. statements obligation to or after the no in company's accuracy and expectations. this publicly the for to actual of any to changes undertakes date update conform

on refer information For filed with XXXX, the XX, to you we with factors well risks the risk subsequent more in as business, filings SEC. on XX-K February detailed the the as described the associated company's

financial financial measurement of in to the to between not superior substitute compensation financial non-GAAP addition GAAP today release of income acquisition stock-based Please issued company nor or considered to a certain to measures detailed measures, liabilities. press U.S. The onetime non-GAAP are value measure intangible be sales-based results. accordance for refer and changes estimated related for charges measures to in to an GAAP to as payable items as will we assets, GAAP. These a of in as earnout acquisition-related important non-GAAP and fair prepared well includes of to refer amortization are company's and reconciliation related provided acquisition-related call, performance with non-GAAP the expenses the consideration, During and performance. reconciliation which

it's pleasure that, call my over SiTime's the go With Rajesh, to ahead. now please turn to CEO.

Thank new as as existing you, like XXXX welcome to call. Brett. investors our Good all. afternoon, to I'd earnings QX well

In precision familiar the For of as dynamic serve with automated and new those in and electronics, reliable center, timing functioning. ensures SiTime's that timing. driving, are IoT ubiquitous leader of you are semiconductor data a XG. the not we is called AI, needs precision SiTime, solutions category timing

billion the in days transforming market. the timing early are of We $XX

back $XX were our trending the Revenue reiterate was the to as have this XXXX, margins the see SiTime expected, continued of in our a results, In our QX, growth On a And order our throughout call, In outlook. quarter high growth that and in now last earnings QX target rate. in QX gross to and few trend pickup for has forecast past inventories XX.X%. non-GAAP growth. activity. we in year were customer which resulted end those sequential QX at million, we downward months,

evidence positive continue of We to see this.

to year. center enterprise previous CED, markets: and where is diversity data One geographies every grow shows products. the expected over I end This provide will comms color shortly on strengths market end customers, XXXX, automotive the and or industrial. of SiTime's and from the X comes strength markets, more of noteworthy in

product see is growth, revenue. diverse CED the because with worldwide, in broad and always of I'm customers enduring of line, We've going of At now. use best high market stated to its a talk margins high which about the cases that ASPs we timing high one gross applications CED using precision

North such OEMs both modules providing switches, data with different infrastructure complete center America, and clocks cases. timing network or cloud optical systems and aspects AI solutions, for cables. and of optical CSPs, providers, developing We're are and many smartNICs, key enterprise active service as all customers In electrical and oscillators, use

of Our performance and such and in reliably products temperatures, high system as the common other deliver and presence uniquely high of stressors, vibration changing rapidly noise. kinds system

to solutions, harder data to grow deliver we timing. looking push expect precision and their this to these time. with optimized is closely center over increase SiTime our working customers they're timing performance, As trend to customers

develop in modules next year. in Taiwan the ODMs a optical and the and into CSPs position XXXG optical win terabit benefit with for displace that and servers key beginning In China, OEMs mainstream to we're next next many X.X generation good of and years. OEMs around terabit We're and module become X.X the We're to designs the ramp and production engaged the that also X as modules, XXXG in will of world.

on in is applications. our market telecom focus Europe, CED In the

While past generation XXXX. XG infrastructure few start next and which features ramping high we XG equipment, expect for the slowed that efficiency deployment the years, includes performance lower and in has advanced will in of power

with radio would are as engaged OEMs such key provide that XG remote units, distributed We and centralized units equipment, advanced units.

RF such Super-TCXOs, the applications. these oscillators, newest X exceptional our that believe in Elite EPIC deliver Elite as and also performance We OCXO,

especially market. for SAM, that and CED Our our presented accomplished continued market, and product we that generator will progressing clocks, or oscillator acquired products of are complementary products centers Chorus XX adds added with which market. clock the portfolio heartening we our data for of in recent of introduced said portfolio. to market portfolio the clock in XX from our serviceable is we that expand AI end success time, new we XXXX, further of would validates it the expanding integration by this our all We this well. The we we Aura Aura, strategy have to And IPO. new introduction The our as our this. clocks core breadth oscillators our at in At compelling is

most our out innovative innovative our our growing. connections customer most are customers and our strengthening solutions, seek business is As

products, the portfolio are this, of the it generate comms, all a clock While to for take we one-stop market. needs. enterprise, revenue timing offering position full precision strategy meaningful with with as product we it are shop will believe we our the validates in date With a time happy from the to progress center data in great

where market to Another we in automotive. growth expect is XXXX see

automotive of in in the While there's to EVs, particularly XXXX. in variety applications, growth electronics, current a should ADAS of help uncertainty grow us presence our in

a bodes well future just And in Our automotive products are for trend, electronics. used the of all EVs, electronics multiyear automotive revenue. which our is sensing, and computing in communications growth cars, in not

this well our we ramping products pricing be of as are some improve the new in but to see production that time, to performance beginning on will Over designs into focus XXXX reliability market electronics. expect offset with developing share. In and as automotive pressure, new this increasing market, dramatically

end The use industrial products. our most market over diverse is applications amongst that with markets our XXX all

are typically than XX years. last volume designs lower industrial in can these consumer, as While applications long as

are gas which the well of new as To cases safety; diversity give you oil, GNSS sensors industrial equipment, sense detection farming geo use seismic the a minerals; centimeter-level gas in exploration of positioning. some new our as efficient business, and for for uses markets: sensors electronics of environmental here with

we in applications these magnitude they'll these harsh well. order where an and do deliver environments performance products in better expect operate, of they Our naturally

To we off. strategy summarize, SiTime's believe paying is that

Beth We our discuss call will detail. target our the as breadth in end diversity turn our market to leverage now return product to over growth strength I'll results to and more financial in we rate.

enterprise with first quarter with second million of Thanks, as data QX, the Rajesh, and and into center our largest Sales or into markets down XX% compared good fiscal were XX% of in quarter results revenue the seasonality. market million or for were discuss $XX sales. and the to I'll in totaling of XX% of sales market XX% our was expected, with and afternoon, aerospace and customer outlook million million our consumer XXXX. million provide $X.X Sales market. $XX.X then IoT revenue everyone. sales XX% $XX.X Drilling industrial by or And $X.X into Today, sales were QX sales. into automotive, million line or mobile, typical of $XX.X the communications, sales.

Non-GAAP for and the expenses gross basis The sequentially. offset of $XX.X partially was operating points cost. were down SG&A volumes margins million. lower non-GAAP with by XX XX.X%, $XX.X favorable quarter of R&D impact million $XX Total were of million mix and expense expense

of well integration up as quarter full were higher as as FICA transaction due expenses taxes. the the operating Total Aura to expected first sequentially seasonally

million or management and income non-GAAP in while be expenses per operating The was $X.X QX share. million. continue portfolio. of in million, was We was QX to our loss net $X.X disciplined the non-GAAP Interest and other the loss $X.X $X.XX investing

days, was $XX.X receivable which quarter the DSO as to $XX.X Inventory million Accounts purchases. the with XX is Turning sequentially. flat the at were make balance sheet. to end of continue strategic of wafer we million

During quarter, we invested with the million $XXX in from and purchases in in short-term million $X cash $X.X cash cash, quarter generated the investments. operations, million and ended capital equivalents

now for outlook our me review Let QX.

last well of as the sequentially and as grow for expect As year-over-year we for well to we are XXXX. remainder quarter, noted positioned growth long-term

We are prioritize a and as absorb to growth. prudent we managing taking drive structure approach our long-term cost acquisition to investments the

we quarter. providing mind, are the following for in that outlook With the second

roughly XX% flat of to an XX% $XX with compared million. QX; million million of income of million operating expect be at $X sequentially; increase gross $XX.X revenue We least to million, to interest and to $XX expenses margins of $XX

to our expect strategy. As be earnings range to $X.XX executing share. In of per a are result, we we in closing, per on share non-GAAP the $X.XX

our are addresses value all, customers. design growth is have and growing story position the wins our proposition intact. We about market we that and strength markets, a firmly in reinforce excited All technology with our unique and our believe large of

I'd call answers. operator and like the to to With for that, back the questions hand

Svanberg question Tore first comes our Instructions] from [Operator Stifel. with

on Congratulations the recovery Yes. here. continuous

within like I you QX. bit little is sounds it coming product hoping segments. was where pretty a X can growth especially for talk about the strong Rajesh, from, maybe growth your So

Yes.

is But well, of and do equally, Tore. part That's and nice it's to consumer is going it. CED so the them, from grow. going about to industrial. So automotive is all Clearly, very

going as as Although much, it to is not to grow well. continue

So we're X growth segments. see I all to think in going

complete? certain you Or make almost say Very inventories? reducing to process levels. the continue customers is that mentioned digesting that still on Is safe it customers are good. to seeing inventory still you that, progress And

is this Beth. Tore,

think a I question. great it's

it the digestion. A behind behind And us So we to last progress seen a this we of quarter. buying end have think inventory by this the I of think, back said quarter, will lot lot quarter. the customers much are in I much pretty And patterns. normal of remainder, will pretty be as be us

comes Our from next question Needham with Company. & Quinn Bolton

up follow to my congratulations there. your offer on strong outlook. me I Beth, Let the last on answer guess,

If you the the to still Should think XX% you to through the we most customers of getting be thinking levels? by about do getting quarter do think below inventory the is XX% think we're correction of sort you XX% end second close consumption? Or the back consumption are sort as to well level here, XX% to of levels? consumption

question, emerge business, half. second half look second SiTime from of second year, especially half the year, inventory envision seasonal normal years, then into you seasonality this sees correction? as you pretty over most strength first customers half if just the And in Wondering healthy sort as the of second the in

Thanks, Quinn.

questions. those address me let So

able the As to our in patterns, I think return we versus normalized think to we're if being more about well. seeing sell-in, good as will, you see bookings that our and sell-through

about And excited so return. really that seeing

little In we expect seasonally QX to second pickup Though we a some in half. think than first than be I first stronger days is we've do stronger we QX, expect second still ago. half half. would half of here bit seasonality, that than seen stronger have a XX thought also terms do probably I think But

with question Desilva next MKM. ROTH comes Instructions] Our [Operator from Suji

recovery on longer-term Congrats question start. here. perhaps A to the

design before. the will But do going as kind back mix grow? you not a several it As as was win kind larger -- of over you larger to it be this pipeline you that you the kind consumer it's this to around with next XX% grow of assuming the blended XX%, more still that be time mix revenue have? go element And grow into think year-over-year I'm or the high. and of XX% will all a quarters, of time you

Aura communications, markets. as maintained the X we that go Thanks, always over plus enterprise new data We've the CED have the that Yes. of launched and products them last Suji. most the center years, acquisition, or into

the us that revenue So years. getting coming to for million continued market. we strong in that be expect $XXX to growth in that We see see market,

We in very get years. will which also we expect continued growth coming in number also a automotive, think high to

that continue of and to for in consumer were the products and consumer X most the industrial, of will years, grow, intended launched CED while products last those grow, while XX% industrial So automotive markets. the we

our reasonable products stickier grow higher-ASP, it's and, assume as mix automotive in in into CED, significantly to designed So industrial much to some is that extent, to higher-gross-margin, the the going the market.

Rajesh. And is success a you're you how focusing of data center the now? do coming of leveraged on what on helpful, have have to the that a from infrastructure are right Very sense hyperscalers AI build-out, the which of that? are you sense then -- Do you percent having,

and NIC business, cabling bulk cables. would it, -- pretty in given I it's of optical optical some given card say the the fact, It's -- high. optical, the much given of We pretty active the the it's modules,

there. I think are switches in there. in are There are There in all switches going there. of top-of-rack those

generation most deliberately to say, of coming wins. design of that the back, know from going in whenever significant is I next telecom days. the fashion is And is these comes out put it we But think of in telecom participate little let's SiTime are I XG there But I middle bit of say year, piece next in that's happening, to the too. worldwide. So just has a that, secured and equipment that

Wolfe next comes Our Instructions] Chris [Operator Research. question Caso from with

kind year speak next of rate, the year? reiterated that start well that context at that kind assumptions is done, forward. those that the the burn pretty Just or we growth I from of expectations looking a these of Can from question XX%. Now levels levels? of about in inventory this Rajesh. you think going Are could reasonable driving at And long-term you XX% these growth about

this but as argue a and I And call to mean XX% little I in XX% of bit days it see year. indicating the in even early towards next the SiTime I between sight. I QX, Yes. continue is even first end February, for I for QX. XX% year. in as last clearly, very line May, I early year see see earnings of But of certainly still in But that. that, continue higher was We're growth XXXX, this to potential for week in might significant

pressure, other Wonder dealing I you're where pricing if could pressure that a on remarks suggest guess, since automotive As constrained those how your follow-up, is that expand to you're you stable? with And those the you mentioned on in some you remarks, side. pricing the it? seeing segments does in that remarks auto segment,

individual driven pricing because Yes. be general, to same. it automotive clear. The think under to our this simply is we rolling I does driven which I continue price it by and going much on the in just than might is will us. -- SiTime just quarter this is ASP be aggregate, for is to some some In more of to the pressure in between which -- mix EV happen is see where and our corporate -- the by places happen quarter in pressure, past down But pricing, segment, more every pretty it's there be

it, I But do at parts to this sharing spirit in completely which not of we the our it's have is events, changing. say great that macro thoughts that to to just is like but impervious was those ameliorating transparency mix we're the just margins. is

around work pricing the getting to getting we're so And are we that through.

in years, to that are plug for to attempting market. I in portfolio build in the want coming product that new In automotive, put a we

likes we're and doing to already market I And the to significantly that CED. the never for be they think performance seen. of which going automotive I in have differentiated reliability think that's deliver

that to but to years. think going we're in take a I couple automotive, of going that's repeat

[Operator Instructions] Barclays. comes Our next O'Malley question from with Tom

is O'Malley. on for Tom Levy This Will

the 'XX, this grow Just other the trajectory a lows, of 'XX. trending is as consumer and quick margins you question and rest on well? mix in do for off segments recovering gross of see margins with If March how especially into business

Sure. take that one. I'll

And gross some levels. QX, to them be I the we of said that as see improvement they to would about we back similar QX. margins, as So think in in off kind those would roughly I expect expect half,

exiting Should there. in a close Maybe little September, we assume December? like to maybe XX the just increase granular bps XX-ish, year

some on Maybe No, I'll to gross I about appreciate. margins. give insights how you think

think trend to they evolves. gross how that So half see we'll then a go up will I as into we second number that half. There's of and have versus that into margin, things first go

big a gross is mix product our of margins. clearly, driver So

we better That We'll see as some And year. benefit how also well. go be through a play have at the the then then we absorption. we -- as grow look costs as manufacturing the we expect should would to revenue,

are thinking So kind I'd that of about about the takes half. those as I puts and second be thought

Instructions] question Stifel. next follow-up a Svanberg Tore [Operator is question with from Our

the the Rajesh, I on question had a clocks. on Aura business,

You you of talked to end expansion important addition I about the at devices. sell is XX the also SAM in how it new had but here, about strategically not products oscillator being just talked to the released year. your clocks know

you could mistaken. bit as if do as be I'm assume oscillators, as is more that? clocks launch you to XX content? new on little more too, products, those garnering pull Because not the probably just the So I a sampling far going elaborate And how

That's right.

are elements there that. to So strategic many

we can -- and a can AI telecom, our in can our precision help help Particularly customers. our is SiTime The as and clock now focus is the where believe oscillators the CED first we with and bundle. Because foremost, that in timing the even we lot. sold is being that customers biggest and a right market, we the are help needs where now, on that, right

this of it way. Think

companies to matching to Microchip to the of get few Skyworks, get to the environment to Our the a to oscillator. work. burden customers tough conditions the on then these Then under crystal they clocking as falls such performance Renesas semiconductor of and make go X portion. companies and them have make that the name today And have to very to to go

significant SiTime can as current put traction market already customers that, makes card XX my data very the as it with in focused well easy on as the NIC in we've integrate and with ones on super for subsystem. comments that. that are we're business that. that much make products and we these new a And traction launched. getting center That work it, them the on getting And on it our

we're think to I So going start.

not on focused mostly as is high focused the although as ASPs on space to space. high have XX%. much. are as higher, not CED And gross Oscillators margins are. high range. typically the the ASPs. as also in the consumer margins, $XX clocking to We're are $X are $XX. does XX% high That But go can to the margins where We close business the

Very away. good. question, Last then I'll go

you So strength now. data obviously, talked about, center

enterprise like networking? that to next Sounds as year. starting waking you well? telecom Are about up what more see But market

are. Yes, we

bottom to it Although I put little have bit. I'd say, at a the

in are are the I of now beauty where point think a as are play little now, just for to so and application the figuring you some forward, But future. that in our bit really like the think SiTime any some right with we customers different data more. in is right ride race that out I out, center there can we market, or trending telecom, of horses many

think So good pretty shape. I in we're

which doing is storage have business, also okay. We

which that's are we I high-growth highly the think And among us at I the like a that's most part And diversified makes unique about same that best time, but in companies. business. other so what SiTime

question actually, at over -- management time. one questions showing not this I'm turn back call any I'd the just to like up. pop to we have other And any for further

with a Our Quinn Bolton next from is Needham. question follow-up

for One, Semiconductor follow-ups quick Aura Two the products. me.

XX the I and get end sometimes mentioned know take to Rajesh, clocks of to You, by to production. year. wins these and things time the design out go ramp

start kind Aura used transaction, the see latest obviously, think just could Aura Cascade us revenue from to your When you you that do excluding if wondering product So originally? thoughts. the you'll give of

Yes.

portion area. So picking area, and particularly you're But mostly more little bit little up with the existing bit There it's take we SiTime long are a products and are traction. in some is a in other right, the is Quinn. pin opportunistic. the that is in compatible buffer being more CED the clocking portfolio products, does are one It that time,

-- is them. is the unlike SiTime This is thing everything That's Because about clocking SiTime SiTime, clocking do business this unique X%, business with that X% whose business. to other XXX% a companies for right?

customer traction we care, some that, that are So me-too a us level even starting we them, traction. buffers. products when as customer get even lot call such And to of have, focus, the in focus, concentration, gets of

think Possibly a that what year, we to by late single-digit kind this getting an small, indicator year, bring from business. But early I millions be of next market. of just focus should it's can

so And I yes, helps. hope that

perfect. Beth. that's you, And another No, for question

lower-margin Just consumer, thinking ramp second the think, half. the gross into I about Obviously, segment. the margin is

you Just you a about markets September? seasonality can perhaps of normal depressed segment do Or auto wondering, grow consumer faster base, in maybe CED through to the the you consumer think mixed continue the So expect as a than headwind off industrial, straight September? in in little year-end? and a think second half, do bit

sure. Quinn,

look which seasonally different fast. is though stronger a expect enterprise -- very commercial takes. and you'll QX I is the consumer growing data see as a in and markets, sorry, I the headwind, think different that center consumer, bit We at summarized So do you the of puts

as I into go think, half. half improve overall, should bit margin first little that the So we net-net versus do a will be second gross

will And see upward so of strength an half. mitigated enterprise your increasing center consumer. some in overall, But point, with gross the expect would to be margins the I think we But to second data trend.

time. at questions over further to turn closing I'd to And the this back remarks. any not for I'm management call like any showing

you all Thank No. us. for joining

Thank for us. we're this point through joining second delighted look SiTime's happy all we where the in are by you at life how we be growth very are quarter in to all We year, rest the and doing. at the can of

gentlemen, does presentation. today's this and Ladies conclude

disconnect, day. have a now may and wonderful You