SiTime (SITM) 6 Nov 242024 Q3 Earnings call transcript

Good afternoon, and welcome to SiTime's Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Wednesday, November 6, 2024. I would now like to turn the conference over to your first speaker today, Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Thank you, Amber. Good afternoon, and welcome to SiTime's Third Quarter 2024 Financial Results Conference Call.

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

any I'd completeness this of on may nor operations, its the may the company's differ begin, the and responsibility discussion. or statements. In or financial position, the combination the expected It's date we no statements conform after of risks, actual during expectations. changes forward-looking any like events the discussed market results reason these management of adversely plans, assumes in can or risks the out including for all for impact person update point or Before company assumptions, from anticipated possible future implied. and and call any results this materially forward-looking for materially to the from in may that occur, uncertainties this light of future course results, not accuracy of those all forward-looking and call, call actual cause extent make company to timing could strategy the statements regarding to Neither forward-looking those not predict publicly during and statements nor factors the other business obligation the factor to to which of the contained assess company company to forward-looking undertakes to The statements. actual to company's differ any and results factors areas of

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

non-GAAP a include release reconciliation performance. consideration are costs acquisition certain in non-GAAP issued which results. With will non-GAAP substitute to These acquired to addition provided performance transaction measure liabilities. with amortization contingent expense, GAAP changes as fair pleasure of GAAP. includes and expenses, acquisition-related financial to certain reconciliation we considered earlier of with a between press over company's turn measures other company's today refer prepared superior in stock-based earn-out to of associated the to refer intangibles well which that, call, for U.S. the value the ahead. for SiTime's be as financial This -- not are accordance in Please GAAP business please an non-GAAP During measures Rajesh, important to measures, compensation and the or financial and estimated detailed and measures of as now financial CEO, and call to my go it's cash to

call as is Thank to electronics. This modern billion mobility it precision semiconductor automated transform uses we I'd AI like market. SiTime's as timing, Good that technology Whether you timing reliability. welcome dynamic XXXX to afternoon. networking and SiTime new precision call. and a in the timing personal vehicles, timing semiconductor you, SiTime's or well better is performance data delivers category reimagine is heartbeat of the investors to $XX infrastructure, QX the centers, in leader Brett. time existing which earnings precision IoT,

expect regions grow and of Our QX our as the XX% for third XX% segments quarter least Revenue data center, all at grew quarter to broad metrics, across to segments $XX.X to revenue. Each and with EMEA, China enterprise and the customer demonstrate of forecasted. results we financial are strength fourth communications, million, by income and Bookings regions. at triple-digits. CED and or sequentially customer quarter strong, growth net Greater continued and previously increased double-digit growing for

markets timing a our of a our and applications to time IPO, significantly SiTime building we marks November fifth high-value and have back, year commitment company. made for the XXXX public as Looking At delivered. high-growth products

We different semiconductor Since on a that applications. rates we markets businesses built at this and believe grow high-margin company. diversity have different and us and a timelines, unique makes customers with revenue, diversity of high-growth, benefits SiTime

enterprise value in has Our provider of demonstrates of more data business In by both XXXX, double. cloud QX growth, it for major QX grew or a and products. than and, FY XXX% revenue over the been will center, infrastructure. AI our driven our CED, CED in investments 'XX, driver service comms year-over-year CED QX

to Looking forward AI into out. AI are believe and servers networking of grow as XXXX, generations continue the market newer rolled we that will equipment

data to rack solving top CED switches expect SiTime's in are optical center problems lead applications timing We to products continue such modules. next and AI difficult infrastructure, An as the year. growth SiTime of

GPU CSPs, or which and utilization very applications Additionally, high-speed center, application. SiTime's use electrical in that results of as in timing providers, noise a higher these per bandwidth solutions precision we provide improving connectivity such active investing the dollar with data in are believe is precision in small content quite cloud more valuable which timing factor, cases. to form plays in is in cables. virtually immune We high-performance service

through with of the fast workloads. AI the which parallel between improves dedicated faster switch, a is GPU processing GPUs application connectivity Another direct very utilization rates

grow integrated Generators Clock acquired market are in grows. to timing precision position high-performance device. as leadership our in In from multiple role Our here with clocks this dollar Aura well, a from as key a sum, a play content expect delivering and AI single we

with vehicles, Level precise development will upon resilient Another offering an and are players clocking GNSS and autonomous and architecture. well resonators, in automotive, the aerospace depend robotaxis enhanced and This precision system cases timing advanced device Navigation we integrates and timing. Level system technology macro simplifies and integration as spoofing. such accelerates safety X, in functional Satellite a operate need to use key a extends oscillators, X or and multiple trend building and as FailSafe Such is IoT mechanisms to GNSS, automotive Such In to engaged we jamming defense consumer. In has is System, ADAS in also markets. which and X, a now optimally. GNSS industrial, Global safety are single where ADAS for mobile more

and key want volume We have to confident and to multiple shipments quantities strategy in design summary, working success expect results begin discuss companies In to Beth, in as in is our I'm the future. I results. turn the wins in first now you. detail. CFO, vehicle our delivering our over XXXX. Thank now electric more and intended with financial our call to

discuss provide details everyone. Thanks, outlook Rajesh, and our third results quarter. good and quarter afternoon, I'll the the our for fourth Today, of

in I'll reminder, financial non-GAAP press release. a results, to are the my focus As reconciled on GAAP our discussion which

financial sequential to and year-over-year to drove financial growth, as strong map. our We and model. We as are expanding product quarter we our third pleased our share with continue in operating leading per revenue, revenue profit continuing invest road results twice non-GAAP while fast over as execute earnings

Our strong while this demonstrates financial ability successfully financial performance quarter delivering in our our to results. business invest

driven revenue XX% up increased favorable year-on-year, mix. $XX.X was and Third million, product quarter by volumes

Looking related sales $XX.X the operating or gross of shift sales into XX% manufacturing of of sales, to consumer R&D sales for a market QX. mobile, at expense or million XX% by to into with up Sales gross of primarily or Operating center market and higher QX up were significant with with of lower non-GAAP XX $XX.X $XX.X XXX% sales. Non-GAAP $XX.X Total were expected, primarily profit into $X totaling the million, of and million prior SG&A million from year $XX.X year-on-year. were than year-on-year, and return margins dollars. absorption $X.X sales, were our of from improvement driven XX% R&D million. and versus points And expense million the growth by largest of increasing improved of marked up aerospace XX.X%, the market, quarter non-GAAP customer of were sequentially, profit IoT flow-through profitability sales, expenses year-on-year. to million, enterprise XX% the basis or automotive, $XX.X our XX% volumes. QX million operating operating market were communications, expense expenses XX% representing XX% million to and data industrial $XX.X the

or share. net million, XX% Third income revenue quarter $X.X non-GAAP of per was $X.XX representing

accounts receivable end quarter Accounts DSOs the was million of $XX.X accounts $XX.X million sorry, was payable inventory million. Inventory XX days. the $XX.X -- and at Turning with was quarter was million balance the to million and payable of the the end $XX.X of was sheet. at $XX.X

we $XX.X million investments. generated paid in purchases cash Aura We part the ended to $XXX cash $X.X quarter, and million operations, During from short-term the and equivalents capital in transaction invested with the of million million last cash, as year. $XX in quarter announced we

$X.X of the operating me of million million, shares. $XX to gross revenue of the now expenses for approximately million, QX, margins be in to XX.X%, million of approximately XX.X $XX and $XX review XX% expect $XX.X to outstanding we our income interest to December quarter. outlook diluted Let million non-GAAP non-GAAP shares of range In million

per we range we closing, result, driving results strong pleased EPS in be and growth. of to non-GAAP expect a profit $X.XX revenue As share. In to on remain the focused and $X.XX with are our

portfolio customers all, strategy, to is recognizing in back Our our our proposition. questions we I'd strategy the are markets, that, clearly value working. With to to products that and hand the executing product and answers. expand growing and with call like address large continues and for All differentiated our operator are our

[Operator Capital. Suji at Instructions] Our ROTH comes from first question Desilva

like you here. Congrats positions center you out, in the about content on the opportunities? can those can the on maybe. switch talk content it some today? top-of-rack years mix sounds that And What's maybe content progress expanding data maybe AI mix you and of other the the elaborate have AECs. rack, in somewhere some server to those X versus Maybe X And what's here. into growth the Rajesh, the those you places, market, of optical Curious, or of

of that. these configured. part The how the content grows that Where that we continue Thank and We the seeing particularly of -- CPU in talking is growth switches the pluggables grow in years, see well. Yes. few is about time. as But next the see forecasting for tricky as some server what in over general, all as we're they're to large quite well content you servers, substantially. will

upon see the depending market growth these I So, think we of across systems. configuration the all

similar just follow-up think maybe to there they the of about I And Or multiplier with know strong content Okay. opportunity? for for a off And in server traction there. started or a a content-wise pluggable? switch pluggables. versus you, a wondering, are server I'm you've CPU is optical

] the storage. switches, up all used probably is have for [ quite SuperNIC pluggable We that the course, used of are for least bit. the do dollar are a amount, those GPUs, in servers, The the which they compute, cards, go but

again, those are for SiTime's depending pretty a revenue. places upon, and it's sales architecture, important all So complicated but

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

may know question. wanted nice just those Wondering I follow into could content-rich dive perhaps networks the on Congratulations up AI for scale-up be think, could as outlook. in GPU networks. you a to TCXOs. others scale-up them and mentioned I little results on to your particularly the you, Suji's deeper content being the or GPU in what networks Rajesh, if

look to lot of multiple DTSOs to NVLXX you the from and NVIDIA's rack XX switching, sounds the could use there's are and If a had those that in at switch rack, X potentially like generation of latest trays it dedicated content be there, trays company.

of scale-up cases. ASICs? you networks are their opportunities on So kind are own these seeing Or with And you developing scale-up that are of just some with could if the specifically hyperscalers use wondering NVIDIA? the expand

Yes.

customers' naming many inroads made not So have hyperscalers. into without the as names, we

all. some, not We in but in have

are are -- CPUs believe we who we this people a of quite GPUs. basically I business couple of are populated we're I now the dollars. the now hundreds of And rack, still high. we So think mostly Slightly fully now started hundreds talking say, in are dollars, ago. and sub-$XXX, that less of racks seeing But are racks populated years in with but

talking So road, a switches, or talking bit of the GPU NIC cards or them. top-of-the-rack more plays in it's little dollars, middle we're for storage trays compute hundreds high about SiTime whether a of of switches we're or about whether all

some and companies in cover a as play OEMs the AECs I modules the Additionally, are are the of continue to across number you as of know large course, well of that pluggable well. in doing quite them. AEC connecting we

XXX% think that program, and I all a we I saw So that's could quarter-on-quarter. part have year-on-year why it's -- the of growth, of we mean, whole kind

across rack, And top-of-rack do. that all scale-up switches, high just hundreds confirm dollars like of that applications NIC per cards, everything AEC, cheaper include switches, that's to Rajesh, pluggables, you would that,

it's should a And yes, it I'm aggregating be all that of because, specific. bit I tricky. little that think don't

So...

guidance growth. 'XX. you Understand comments for 'XX again the expect 'XX not versus over I growth out quarter. customer the I in was lead CED? CED would question, in double of the in said what there. sensitivities in XXXX guess It I kind will the next think you're up do yet, know giving that CED of the XXX% you rate but prepared

XX% the right thinking company, well about if in to targeting is going So excess be Is year. that I next assume kind you're of XX% overall of the framework CED XXXX? for for to be that probably

Yes.

recall, the or forecasting as quarters we XX%, So, on you do take, we're give ago, that and several took Quinn, by, unusual grow of step year. looks that for this we would target to like

We sort growth ago and carry quarter still of We would also a the on XX% saying year of the beyond. this into took coming maintain the unusual step approximately that of year that.

corporate there's than always for is corporate the growth the of something And there's given that's other also our growth think is case, fair growing CED at I strength the at company, in of think the rate. growing which on which revenue, say I more the this something side, because qualifies that rate. to diversity not it's that

think itself balances I that So out can it deliver promised the we XX%. so nicely

question Our at Fairbanks from Associates. & comes Raymond Melissa James next

any have of first to the for on surprised, of Are couple the to to growth, question that going on sort give questions gets this a Beth Yes, segments? start. the guidance fourth other asked. my congratulations. is add is quarter? segment kind able the Obviously, I'm I'll of any actually lead color but you us give can normally, I for you that us CED specificity

Sure.

growth the again, at in we way. look to CED the lead expect segments, we as So

right? show board, to But aerospace, to the the I this some as continue think the at say, well, we leading should consumer look got definitely had way. but that at season well. growing IoT year. that if that as mobile across as you We've then, And growth our again, holiday we segment, I'd CED auto, well. strong good industrial, grow expect look That's as performance

OpEx maybe I is the to then, like quarter. got less CED, And the way talking Great. follow-up, I that than boring understand line, as about more R&D of Okay. December or way the a know some on this pushed boring but

conversations, of OpEx in maybe we million be then we going how Or all I a of in the couple going you've talked greater a in think these prior a are model. our of in and about modeling leverage What a dollars that forward, growth, lot maybe you new OpEx drives that forward? opportunities, should increase thinking now got OpEx? expect should we year

at the So kind for we $XX look QX, be million I'm of $XX.X million expecting OpEx quarter. to to

So that's And about I how and think to what think looking then, you're asking is XXXX for that. into QX. forward

number, there. I kind to $XXX-ish think, a a if we'll as So get again, million that then of from you annualize bit million, $XXX baseline. And grow you

to in in investing but be that As we've much expect be revenue want I to We been want much, to We about, be investing than talking OpEx, faster grow go-to-market. the investing R&D. to do we want business. in

on going than grow But those I whether or areas, see programs, I those investments. as and OpEx. to people faster make growth ROI it's So much a said, we good we're investment, revenue expect for to key again,

[Operator from Instructions] next Stifel. of Our Svanberg Tore question comes

software-defined or on is there? would vehicles potential Tore. strong industry. time be and I And does that's in great. that me segment. plays the more is content more pretty dig potential of compare the been bit into lately I how of TAM, content automotive This my to And deeply a how terms I kind you for Jeremy in add and if into your the congratulations little on wanted of traditional could a let know outlook. into very to vehicles us to something that was wondering coming insight quarter legacy more and give it opportunity your strong

Yes.

but was $XXX the went when is So starting Most that limited not which car vehicles, almost them million it substantially business about SAM, We're of are probably automotive we be innovative with when although many SAM we public to market, the companies, to like not which we more to from negligible. in have tend to something electric that, the significantly million the from comes that. connected up the $XXX of time it's EVs. have

well companies in automated lot rather volumes. car and we mind, China, do where, with really So a of driving up know, as there's that in ramped that new you have

or done automated have is X it driving, Level GPS Level some use positioning. car in ADAS in LiDAR well centered of or cameras at mostly the the those We States use around in full to that radar, also or the Level the X electric Level the X well. And done United wins X.X terms and have with these the design or is at sensors of but companies connects the that the whether case and case,

are So it's in on. that Ethernet some I really although infotainment, we that mostly we are so the in ecosystem, will say in also also and of cabling

it's mostly rolled which So our in case, safety increase want now, but pretty I that a the cars failsafe centered right around to diverse new automated as getting likely driving. out be with other are mentioned, we their to is of it's technology, used operation. And use

Great. precision quartz. look a could I step market was little if and wondering back at also versus the timing you bit

quartz even for you're decision uptake If performance versus there, you in how -- if your that or customers? can can talk versus impacts you rate give like it's it your for are timing you about us precision penetration How targeting? and maybe you segment emerging things areas whether new like can not update applications applications an that or high seeing programmability

Right.

plus, billion, in of TAM any categories. the market don't that our which but oscillators, we the other though we $X resonators, is total billion into $XX X is shipping, have products is products remaining do is which So so clocks, have divided resonator that's and couple billion, the even is $X a billion;

Our serve, but little many market by you is of or you. $XXX $X that than know, bit in SAM, a is lower And billion. revenue, our our let's a forecast say little bit as we as million billion, of $X it's range less the than

in million So from market is way really lot $X for the precision technologies very up is well. our penetration up. as timing real before, category, -- terms of SiTime's a said what data doing significantly here that our communications $X and $XXX penetration, in are The that growth we've is, are room Enterprise has makes billion of billion right now, in issue centers all and that important. very

I about of think they take over probably billion $X that.

We significantly a also think consumer business, of go industrial, defense, so military, very is IoT it large to. portion have around as well, mobile and large and of can that that that consumer you a of medical devices The rest whatever we on. aerospace, is can

we automotive. billion -- probably and are $X.X mentioned, as So around for we

that think market. $X all I $X applications different about So SAM adds we up or billion it have And inside about to billion. XXX served

So because to growth annually. it's a while by design we get of that, same we at is very a that diverse the time adds think XX% business, which strength company significant the

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

Beth, think delivering investments by the quick have last of for term, you revenue. follow-up you sort I higher-than-expected in quarter, A Obviously, nice margin new Beth. really some in the down job near done had here a tooling. was weighed guys mentioned gross

downtick the you the to Just thoughts into margin, March? thoughts seasonally? margin higher get be beyond as may you like back And decline trajectory on target? XX% then, look kind gross you seasonal wondering us able see of December quarter when a if what that revenue give gross Would or your can to on any might might latest

Sure, Quinn.

talk bit gross about a our me little margin. Let

second we basis production. to some bring as XX with back in and get expect by new we And north of I'd we still these if as be term, said, see we and them ramping continue points. getting these we you that track we're As as ramp improvement XXXX into half say, we be of production really products of Long products XX%. sequentially, to did where mark And expected to track on good expect, we in fact, on probably would we XX% kind there. the be

with again, seasonal typically we where QX. To So point, to We've be. your decline nice seen here improvement we're I track expected think on a QX sequentially. see we to

decline average I roughly XX% seasonal the think revenue. in is

XXXX, little be. a with that's quarter. headwind so But for into even a of bit track the where And March I think long-term, to on just we we're there want

comes of next Chris from Our Caso Research. Wolfe question

talk you you do what to benefit about development bit attempt is products market that? expect wonder to just a or of terms your segment? of quickly pace a that of could I little of And out you market the magnitude can penetrate there? in get penetration And timing function How the the start as your it the of that? if clock you of product penetrate sort really into for

is of by Actually, and -- of Chris. products. the Thanks, the design Yes. pace it this is win the deployment predicated the

because we but design the now still some and acquisition, already have we significant Aura So of There's products want. getting that rolled most are of out that the a getting the number wins. of products pipeline the out, in are

the rollout so that of takes these CED lot a is of then rollout call months product XX-month is equal industrial a markets, predicating which about because and the for anywhere markets, from X design months years. have which volume, another in design to automotive into the X-month it markets, what win of number win, go So X

year in long are be as and, well. not next $XXX a to think on from year of well such product our small that the we with the that, also our trajectory is to products, coming organic fact, growth clocking, with on still over coming years though clocking even we that relatively are target but revenue Chorus years, we -- clocking few much because time, the from that Aura-based And we expect both million. products in like this reach the So revenue about very recently, we launched

That's helpful.

the I of appears one a been And follow-up, market has a for now bit you, you've there stabilized. Beth. that As it a while guess, Luckily, now.

where view what longer of should What's like company kind should think margin not OpEx operating revenue for next how growth? for see what of to your but we And of the little we and sort the the we're we about quarters, grows? revenue just have you'd a it? better as And to relative a of structure the leverage dealing with think few here. see idea So out, we growth should of

Chris. Thanks,

we talked we bit again, for model about, how I've 'XX. given as thinking the that think guidance think saying, we're are much And our faster operating thoughts and recent still had I OpEx haven't than little I trajectory we of kind the about as been revenue. revenue really, as growing But about think I given can coming I and some a grow into XXXX, we So it, on OpEx. that

so or in great operating model. the good leverage And we've got

XX% you quarter, that with the bottom to profit of a This saw line. flow-through gross

so, to Melissa, as OpEx, a again, to we more good point, to make right But while ROI. do grow And leverage of OpEx, those 'XX. than we'll see telling to I continue model. strategic some at I'm least investments want see, in where we'll I we revenue want quicker the in we expect invest see do operating investments. us make lot expect And much to now, do at and flow-through

the no would like now back conference at to I questions I time. closing for management am to this showing further remarks. turn

much. you thank very Well,

Thank you very here, returned to good further We in and glad growth much. roll and on. very are to it's rate, you talking we to to forward be that detail look as the we've a quarters

call. This conference you. today's participating. Thank for concludes you Thank

disconnect. now You may