Q4 2021 SiTime Corp Earnings Call
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[music].
Good afternoon, and welcome to <unk> fourth quarter 2021 financial results Conference call.
At this time all participants are in a listen only mode at.
At the conclusion of today's conference call instructions will be given for the question and answer session.
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As a reminder, this conference call is being recorded today Wednesday February <unk> 2022.
I'd now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Please go ahead.
Thank you Liz good afternoon, and welcome to <unk> fourth quarter 2021 financial results Conference call on today's call from <unk>, Chief Executive Officer, and Art Chadwick Chief Financial Officer before we begin I would like to point out that during the course of this call. The company may make forward looking statements regarding.
Expected future results, including financial position strategy and plans future operations, the timing market and other areas of discussion. It is not possible for the company's management to predict all risks nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual.
To differ materially from those contained in any forward looking statements in light of these risks uncertainties and assumptions. The forward looking events discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied.
Neither the company nor any person assumes responsibility for the accuracy and completeness of the forward looking statements.
The company undertakes no obligation to publicly update forward looking statements for any reason at the date of this call to conform these statements to actual results or to changes in the companys expectations.
For more detailed information on risks associated with our business. We refer you to the risk factors described in the.
In the 10-K filed on February 16, 2021, as well as the company's subsequent filings with the SEC also during this call we refer to certain non-GAAP financial measures, which we consider to be an important measure of company performance. These non-GAAP financial measures are provided in addition to and not as a substitute.
For or superior to measures of financial performance prepared in accordance with U S. GAAP. The only difference between GAAP and non-GAAP results is stock based compensation expense and related payroll taxes. Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial results.
With that I'd now like to turn the call over to rich Yes. Please go ahead.
Sure.
Thank you Brad good afternoon, and thank you for joining on today's call 2021 was an exceptional year for some time with 88% year over year revenue growth.
We continue to believe these results are a new phase of sustained high growth and a fundamental acceleration that tight time.
There are a number of secular trends that have served as driving factors and we'll continue to drive revenue in our target markets.
In Q1, 2021, I had referenced our large opportunities in communications, especially in <unk> radio is in small cells.
We see growth in our comps enterprise market and have accelerated new product introduction for these applications.
In 'twenty, one we laid out our strategy to quadruple our Sam our served market by 2024 to $1 3 billion.
Through new products for the Comms enterprise market, we are on track to introduce six new products in 'twenty, two which is twice as many as in 2020 with more to come in 2023.
Some of these new products will actually start contributing to revenue this year 2022.
<unk> continues its mission to be a leader in precision timing by launching innovative new products that are category creators recently, we announced Excalibur, which is our first product for a new category that of active resonators. This opens up a market where the served market our Sam of at least.
$200 million.
Of course <unk>.
And a portion of the $4 billion resonated market Excalibur offers the advantages of performance and ease of use that customers value.
Unlike the current solutions there is no need to do circuit matching specialized testing or repeated qualifications for different frequencies, which saves the customer months of development time.
Additionally, Excalibur is also a 10% to 20 times more resin.
More reliable than existing resonators.
In Q2, 2021, I mentioned that our automotive business would generate over $100 million in a few years.
We are well on our way to that with automotive revenue is expected to double in 2022 over 2021.
Precision oscillators, and clocks are replacing passive resonators, driven by technologies, such as radar Lidar and high speed RF required to transfer data in real time at high rates in 'twenty. One we also expanded our focus to automotive semiconductor companies and here we are in.
<unk> with over 10 leaders for a variety of applications in automotive and this gives us additional visibility into trends it accelerates adoption and helps us build ever more compelling products.
In Q3, now I mentioned that data center business would grow to a $100 million.
Again, we are well on our way and datacenter revenues are expected also to more than double in 2022.
As enterprises embrace cloud application or high reliability high performance <unk> solutions are critical and increasing bandwidth and reducing latency design.
Design activity in this market is ramping and the wins in high performance computing optical modules and Nic cards are coming in.
We're also seeing new applications, such as active electrical cables with high performance electronics and precision timing is embedded inside the cable that enables high speed connectivity again here, we're expanding our engagements with semiconductor leaders and closely engaged with over 15 companies in this space.
We believe that in diversity there is trend.
And we believe <unk> has the most diverse semiconductor company to go public in the past decade and.
An example of that is that we have more than 300 applications across six segments.
Looking back at incoming opportunities in 'twenty, one the industrial segment led in the number of new opportunities while the Comms Enterprise segment had the highest annual dollar value, which is more than double the next segment.
Another aspect about the diversity of our business is that our unit price ranges from less than $1 one hundreds of dollars.
In volume, depending on the application and use case.
Diverse pipeline consists of design wins that will go into production this year.
Next year and as far out as 2024.
In the longer term there are several unique high volume mainstream applications in the future such as smart clothing health monitoring precision time, and navigation also called <unk> and T <unk> and internet of things or Iot.
There are common themes in all of these applications each of them requires higher precision smaller sizes reliable operations again in very tough or environmentally harsh conditions. All of these play to the natural strengths of <unk> solutions.
Specific to supply chain dynamics <unk> has continued to benefit at the expense of alternatives due to our fabulous model and product Programmability combined with a supportive suppliers that view side time as a strategic growth opportunity.
Over the last year, we are further partnered with the assembly and test houses, resulting in the doubling of our test capacity to meet anticipated demand for 2022 and 2023.
In closing, even when considering the tremendous growth we have achieved in the last year.
Believe that <unk> story is still in the very early innings there.
World if timing is truly enormous and there are numerous areas, we have yet to penetrate.
The only semiconductor company, which is focused exclusively on timing, we believe that <unk> is uniquely positioned to achieve outsized growth for many years to come.
With that I will now turn it over to art Chadwick our CFO .
Thanks, Jess and good afternoon, everyone.
Today I'll provide a quick financial summary of 2021, then discuss fourth quarter results and provide some guidance for the first quarter.
I'll focus my discussion on non-GAAP financial results and refer you to today's press release for a detailed description of our GAAP results as well as a reconciliation of GAAP to non-GAAP results.
To begin with 2021 was a truly great year for us.
We significantly advanced our technology expanded our product portfolio increased our worldwide workforce and generated record revenue and profit.
Revenue grew 88% from $116 million in 2000 $20 million to $219 million in 2021.
non-GAAP gross margins increased a full 14 points from 51% in 2020% to 65% in 2021, while operating margins expanded from 8% in 2020% to 30% in 2021.
In addition, we raised $460 million during the year from our two stock offerings all around a great year.
In Q4, we continued to experience exceptional strength in our business.
It was an all time record quarter on multiple fronts.
We saw continued strong revenue growth.
Increased gross margins.
Increased operating margins.
Record net income and positive cash flow.
Revenue for the quarter was $75 7 million up 20% sequentially and up 88% over the same quarter last year.
<unk> revenue increased sequentially and year over year in all three of our major market categories.
Sales into our mobile Iot and consumer segment, which consist of sales into mobile phones wearable devices and consumer products were $41 9 million or 55% of sales.
This was up 31% sequentially and up 53% over the same quarter last year.
Sales into our industrial automotive and aerospace segment, which includes sales into automotive industrial medical aerospace military and broad based sales were $22 9 million or.
30% of sales.
This was up 9% sequentially.
And up 232% year over year.
Sales into our communications and enterprise segment, which consists of wireless infrastructure, including <unk> data center and networking were $11.0 million or.
We're 15% of sales.
This was up 7% sequentially and up 80% over last year.
Sales to our largest end customer accounted for 18% of sales, which more than 90% was not in phone.
Gross margins increased again this quarter <unk>.
non-GAAP gross margins were 69, 4% up 250 basis points sequentially.
This uptick in gross margins was due primarily to some unexpected short term high margin business.
non-GAAP operating expenses were $23 $1 million comprised of $12 1 million in R&D and 11.0 million and SG&A.
non-GAAP operating margins were.
39%.
non-GAAP net income was $29 2 million or $1 32 per share.
Stock based compensation expense and related payroll taxes were $9 4 million up from $8 million in Q3, due to new hire grants and a higher stock price.
I expect stock based comp expense will increase an additional few million dollars a quarter in Q1 due to new higher and other grants.
Receivables were $38 $4 million with Dsos of 46 days inventory was $23 6 million up from $19 6 million last quarter.
In November we completed our second stock offering of the year, we sold one 3 million shares at $225 per share netting $279 million after fees.
In addition, Mega chip sold 1 million shares reducing their ownership in the company to just under 25%.
Yes.
In regards to cash flow, we generated $24 $7 million in positive cash flow from operations invested $11 $3 million in equipment and assets.
At $279 million from our stock offering and.
And ended the quarter with $559 million in cash and no bank debt.
I would now like to provide some guidance for 2022.
We expect 2022 will be another great year for the company.
Our customers continue to book orders well in advance given us excellent visibility into the year.
Market trends that require precision timing are stronger than ever including growth in <unk> data centers networking automotive medical aerospace and other markets we serve.
Given our backlog visibility.
Strong market trends and new product ramps, we believe we can grow revenue in 2022 by at least 35%.
As we have experienced in past years, we will see some seasonality in Q1.
Revenue will be less in Q4, but substantially higher than the year ago quarter.
We expect revenue in Q1 will be approximately $65 million.
Plus or minus which at that midpoint would be up 83% over the same quarter last year.
We expect Q1, non-GAAP gross margins would trend to a more normalized 65% plus or minus since we do not expect to repeat of the short term high margin business, we had in Q4.
As I mentioned on our last call wafer and other manufacturing costs will increase this year.
For example, TSMC is raising prices by 20% or more across the board on the nodes we use.
These increased costs will negatively impact gross margins by two to three points beginning in Q2.
I'd like to offer a few additional comments about gross margins.
Longer term gross margins should expand as new products become a larger portion of our overall sales since our newer products are generally higher performance higher asps.
And higher gross margin.
However in the meantime, we are targeting gross margins to be in the $60 to 65% range.
We could be more aggressive on pricing and drive margins higher but there are tradeoffs between higher gross margins and topline growth.
Our intention is to find that right balance that keeps gross margins in the low to mid sixties, while maximizing top line growth.
For Q1, we expect non-GAAP operating expenses will be between 24 and $25 million up sequentially due to increased head count and beginning of the year payroll taxes.
Basic share count in Q1 will be approximately 21.0 million shares the dilutive effect of employee <unk> will add an additional 2.0 million shares taken the total diluted share count to approximately 23.0 million shares.
Based on this guidance, we expect first quarter non-GAAP EPS will be between 65.
And <unk> 85 per share.
And with that I'd like to turn the call back to the operator for Q&A. Thank you very much.
Yes.
As a reminder, if you'd like to ask a question at this time. Please press the star and the number one key on your Touchtone telephone.
Draw your question press the pound key.
Our first question comes from Blayne Curtis with Barclays.
Good afternoon, guys. This is Tom O'malley on for Blayne Curtis really nice results I guess the first question is out.
Out of all the outstanding things you saw in Q4, the margins really stand out.
Talking about some short term business that was higher margin you talked about TSMC raising prices with a 200 to 300 bps impact, but you are guiding them down a bit more than that.
You think that Theres, some sustainability in the higher margins that.
Youre, giving yourself some cushion on or could you just walk through the puts and takes of why this shouldn't end up somewhere in the middle versus down a bit more sequentially that'd be really helpful to start.
Sure so as I as I mentioned.
Q4 was an exceptional quarter, we had some short term very high margin business that I don't expect to continue into Q1, so that kind of brings the margins back to the mid sixties.
If we were not expecting increased in wafer and other manufacturing costs I think that would be kind of what we'd be looking at through the course of the year somewhere in the mid Sixty's and as I mentioned, we could push margins higher by being more aggressive on pricing, but we think thats not the right tradeoff here. We're in high growth mode. We want to continue to be in hydro.
Mode. So we're going to maintain.
The right balance there.
That being in the mid sixties with the cost increases that drops margins by a few points and I think thats the right way to think about it now as we work through the year is very possible that we will get.
More high margin business and margins could be higher than that and what I. Also think is important and I mentioned this in my script.
Is that longer term, we do expect gross margin expansion, we've got a lot of new products that we've recently introduced we've got a lot of products in the pipeline. All of these products are much higher performance generally higher asps and higher gross margins than our current products. So as those new products become a larger and larger.
<unk> of our sales going forward and I'm talking.
Next year the year after the year after that the year after that I would expect a general expansion of our gross margins. So those are kind of the puts and takes.
We will update folks as we work through the year.
That's helpful and then just to check in.
As I've talked about the supply chain and Youre benefiting at the expense of alternatives can you talk about the traditional quartz crystal suppliers.
You've seen some struggle there or are you seeing any effort to ramp capacity there is there any.
Tangible effort there that's having success can you just talk about where you are positioned versus that traditional competition and if you think that theres any capacity coming online anytime soon.
Yes, I do think that there I anticipate I don't have any data around it but I anticipate that there'll be more capacity coming on I, particularly think that in general with the large expansion of all component capacity in China in mainland China I think they will also be expanding.
But to me.
I don't know if I think of that as competition because we our products are significantly differentiated from those products to really matter as an example, the excalibur product. The active resonated product is a very very distinct product in fact, its own category as I mentioned, so I don't.
How much that impacts us.
Directly it impacts us in the general way that.
That customers have come to us because of shortages.
Maybe that gets a little bit slower on the other hand, I think because of the products that I mentioned that we are coming out with.
The pace of new customer acquisition gets higher.
So net net I think we're in a good place.
Alright, Thanks, again and congrats guys.
Great. Thanks.
Our next question comes from John Pitzer with Credit Suisse.
Yes. Good afternoon, guys. Thanks for let me ask the question.
Im just wondering about your comments about increasing cost.
Hitting gross margins starting in the June quarter, I mean, TSMC is raising pricing kind of across the board. We're hearing that with many of their customers, but the vast majority of them are just being able to pass those costs, along I'm kind of curious given that you've exhibited perhaps stronger pricing power that a lot of other chip.
In calendar year 'twenty, one why all of a sudden this as an issue this year and why you just can't pass those cost increases along.
Yes, so I think theres a couple of pieces to the answer there first of all.
These wafer cost price increases began at the beginning of the year.
And so we did not have to worry about that last year I can't speak to 2023, because we don't know what will happen there, but in 2022 wafer prices are going up and they went up at the beginning of the year you don't see in our P&L in Q1, because essentially the.
The finished goods that were selling in Q1 is coming from wafer as we bought in Q4. So that's why it doesn't impact Q1, but it starts impacting in Q2 and Thats a real cost increase is solid it's real so.
My question is why can't we increased pricing we have increased some pricing.
As I mentioned, we can increase pricing even more.
That trade off between increasing pricing to our customers and growth and we're trying to find the right balance there and the two to three point decrease that incorporates some increased pricing.
Look at our wafer costs and other manufacturing costs going up 20%, that's more than just two or three points. So the two or three points is kind of net of price increases that we're anticipating and not all customers will accept price increases. If you just look at some of our large customers you can imagine how they would say we are really not interested in that.
So I don't know if that helps answer that but that tried to add a little flavor to it yeah and also I would add to that you said all of a sudden I don't think this is all of a sudden we've been saying this all through that the sweet spot of our gross margin is a few points lower than this because I think it's in a very appropriate trade off between.
<unk> growth and margins at the at the position that <unk> is right now in our history I think growth is paramount at very nice very solid gross margins and we'd like to.
Do that.
And remember that we are single sourced with a vast majority of our customers and I think that partnership oriented price.
Price increase is better off for the longer term then.
Just purely passing it on to our customer just because they are single source with us.
John I'll, just add a little math to help folks.
If if for example, our material cost was 30% of revenue that would be 70% material margins and if our costs did go up 20% across the board for all manufacturing costs that would be six points of margin. So my two to three points. This kind of halfway in between so that says that about half of that cost increase.
We're able to pass on and about half.
We're not passing on either by choice on our site or by choice on our customer side.
And I think longer term, what is important and I'll repeat what I said earlier, our newer products are going to be much higher margin.
Than our legacy products so longer term, we do expect further gross margin expansion a year from now two years from now three years from now and I think that's quite relevant to our long term strategy here.
That's helpful guys and then I appreciate the color on the full year revenue growth I'm wondering if you could give us a little bit more sort of qualitative.
Detail around that.
Just take the midpoint of your March guidance and grow $7 million a quarter, you kind of get to that full year growth rate of 35% I'm, assuming things arent going to be that linear, but but but maybe they are maybe if you can give us some color there and I guess importantly, as you look at the three major kind of segment categories, where do you expect growth to be sort of fastest slowest within there.
At 35% full year growth.
Sure Fair question, well first of all there's nothing in the world is totally linear.
But it is clear that the back half of this year, we expect to be higher than the first half of this year. That's been the case for the last few years and that'll be the case I believe for this year.
The growth longer term comes from.
Our comms and enterprise market, we're putting a lot of development dollars into products to address that market. As we just mentioned we've been talking about our Sam in that market of 501.
Dollars going to $1 3 billion in the next couple of years that should drive significant growth for us. Both this year and following years. So I think as a percentage that's where we expect a lot of our growth. Obviously those segments are lower amount of our total sales today.
But that's.
I think the right way to think about longer term growth and thanks for the question John .
I appreciate the asking for what.
What is the pattern of growth. So as you know the three markets that we are deeply interested in.
One is <unk> enterprise data center.
Second is automotive and the third is Mil Aero I'm happy to say that all of these three are going to grow significantly in the year.
The other three which are mobile Iot.
And consumers consume com, our consumer and.
In industrial are also going to grow and probably the slowest growth is going to be pure play consumer.
But I think if I were to rank order them as a percentage I would say.
Mil Aero.
Comms enterprise automotive.
And at the bottom would be consumer.
Yes, Thanks, that's great color I'll get back in the queue and let somebody else ask.
Alright, Thanks John .
Our next question comes from Alex <unk> with William Blair.
Hi, This is sabrina on for Alex Thanks for taking my question.
Regarding to the new product releases, you mentioned the upcoming calendar year, how should we think about the new product releases split between resonators clock Ics and oscillators and are these products targeting specific end markets.
Yes, I think the end markets point to us back in Theyre heavily focused on pumps enterprise market.
Followed by.
The Iot and mobile and mobile market. So I think we're sort of as we've talked before about sort of that products that we developed for the pumps enterprise market today are used a little bit later in automotive and a little bit later again in Mil Aero as well as industrial so in other words tank of the car.
Enterprise market is that sort of feeder for these other markets on the other side the products developed for mobile Iot.
Are also feeders into automotive feeders into consumer Peters into industrial so.
The second category that we're bringing products out for its mobile Iot as far as splitting it up by clocking.
And also <unk> the bulk of the products are oscillate, our oscillators followed by clocks.
At this point we are not.
Focusing as I said before that much.
Investment on the resonators, primarily because they are the lowest priced product.
They are typically priced below 20.
In comparison to our other products, which are anywhere from $1 to $20. So we think bank for the Buck that's the way to go.
Yes.
Thank you that's helpful.
Great. Thanks.
Thanks Sabrina.
Our next question comes from Quinn Bolton with Needham.
Yes.
Hey, guys wanted to sort of follow up on the gross margin question I realize youre not guiding beyond the March quarter, but as we think through some of the dynamics that the higher wafer.
<unk> gets sort of captured in inventory in Q1 doesn't really start to hit the income statement until Q2 as you mentioned I'm wondering does it all hit in Q2 or do you see sort of an additional pressure into the third quarter I ask because typically in the second half you noted the stronger second half revenue and you tend to see better absorption and so on.
People, usually your gross margin has a lift in the second half of the year just with revenue. So I'm just trying to think through the puts and takes for gross margin as you look into Q2 and Q3.
Yeah Fair question. So, yes, I mean, the full brunt of the cost increases hitting in Q2, because essentially we run with about a quarter's worth of inventory. So it takes about three months to go from.
Our wafer all the way to finished goods and shipment. So the full brunt in Q2, what happens in the back half of the year I don't want to be that specific yet.
Only the beginning of February but your comment is valid in that with the higher.
<unk> revenue that will give us more leverage on our manufacturing overhead so all else being equal that would argue for some improved margins in the back half of the year at least compared to Q2.
So let me let me leave it at that as we March through the year I'll be a lot more specific on our guidance and where we think it goes.
Bottom line.
Think we're too worried about gross margins again, we have got some flexibility to raise prices. If we choose to we've chosen not to in many cases I think we're looking at some very high growth rates. This year as I mentioned, we expect to grow revenue at least in our emphasize the at least 35%.
And.
And that means that it could be higher than that and that also would improve gross margins. So a couple of different concepts in there, but very very fair question.
Thanks Richard.
Just you mentioned the Excalibur active originator product line I'm wondering if you could give us some sense one.
Timing when do you think these might start to contribute to revenue and perhaps more importantly, you had mentioned I think in answer to another question that you're trying not to focus on resonators, because they tend to be lower ASP and margin I'm wondering with the Excalibur line. In fact, a directive resonators are these going to sort of meet your new product.
Margin characteristics, where they could come in actually above your corporate average.
Yes, So first of all let me be clear title, we'll do resonators as stand alone products. We already did one we are shipping one.
We're just choosing to.
Put our expenses R&D expenses into oscillators and clocks.
Because they are much higher priced and higher.
Higher dollar margin now active resonators are.
<unk>.
Call it.
Smart pay or putting way if you would to address the resonator market, while not making resonators.
The Excalibur product is a new category as I mentioned, it's an active resonator so it.
Behaves like oscillator.
But it looks and feels to the designer.
Pan out and so on as a resonator. So it gives them a backup to go get resonators for that now for that value <unk> is always always about value forward that values high time does charge, a fair price, which gives us our corporate gross margin. So we don't breakout whether one product has higher gross margin or not but suffice it.
To say that would be very difficult for us to introduce products that won't meet corporate guidelines in margin.
Our higher so I think Excalibur is going to be extremely profitable and we will start shipping. This year. This is one of those products that I said that.
You know that we have been building that will actually do well. This year. So I think we're going to be in good shape in a very very very excited about this.
Thanks Roger.
Thanks Gabe.
Our next question comes from tore Svanberg with Stifel.
Yes. Thank you congratulations on the strong results.
No need to apologize for 60% to 65% gross margins.
My first question.
On the topic that you mentioned to have Josh about partnering or working with other semiconductor companies I know you talked about that when addressing automotive I think you mentioned about 10.
Players there and then about 15 in the data center space, just just wondering what that means contextually for your business I mean does it open up the door for.
One of your customers that you may not have been able to address in the past or is there even just sort of a reference platform that to some of those engagements.
Yes, it's exactly that.
<unk> answer is that it's a leveraged it's a leverage strategy. So as we know.
People, who semiconductor companies that do chips for various markets. They build reference platforms that customers consume and by according to that so obviously a key part of the strategy is to get part to be part of that.
We have just taken it to a higher level with a significant amount of our resources are now being spent upon that.
And we have a decent sized sales force that's working on it but all of that allows us to do is not only to onshore products needs for today, but to go further upstream in time and get products that are going to be introduced in later years later in 'twenty. Two later in 'twenty. Three later in 'twenty full so it becomes important there's also okay.
Category of products, where semiconductor companies actually ship for revenue with our product not as references but ship product for revenue. So that's another category that we are playing and thats very valuable.
Where again the shortage has helped is because these companies. These semiconductor companies are experiencing shortages of timing devices just like.
And customers are so it is very helpful for us to be there for them and being semiconductor companies that see the value of our product, which is a semiconductor product over the existing solution, which of course as you know is a non semiconductor passive product. So we talked there same talk and.
We were able to solve their problems and being able to go further out in time.
Yes, thank you for that perspective.
My follow up is on supply. So there's a lot of talks about TSMC, which is what this year's silicon supplier.
But there has not been a whole lot of discussions on Mems.
Suppliers. So just just wondering how things stand there from a capacity perspective is it is it tight.
Feel like the capacity Youre getting from your partner there is in very good shape.
Yes.
So I'll answer that so just to recap right. Our Mems is manufactured at Bosch, It's our process.
We have not had any issue in getting the wafers Mems wafers that we need to support our revenue or our expected revenue. This year and TSMC of course those are the Cmos wafers that are the analog chips that are resonators get attached to again as everybody knows wafer supply is.
Tight.
But.
We are a good customer with TSMC and they've been able to satisfy our need and we believe that we will be able to get the supply we need to support our expected growth rate. This year. So bottom line, yes, it's a little bit tight out there, but we believe we're in good shape and you also have to remember.
We're not that large and we get a lot of Diana wafer the wafers that we.
Get from TSMC, we get something like 10000 die on them.
The di the Mems die that we get on our Bosch wafers are like 100000 die. So we get a lot of product with not that.
Many wafers so bottom line, we feel like we're in reasonably good shape.
Really helpful. Thank you.
Thank you Tori.
Our next question comes from <unk> Desilva with Roth capital.
Hi, Congrats on a strong 21, just another question on gross margin. If you don't mind I'm just trying to stand or are there any segments that are relatively harder or easier to pass.
The cost increases along I'm, just trying to get some color on the challenges you're having there.
Yes, I think.
Generally speaking pricing.
Ability in shortages to price high is quite high in other words.
It doesn't really go by customer.
Categories or.
Or second market, it's really goes by.
Which are the customers we want to have solid long term relationships with which is the bulk of them. So because of that I think customers understand that times are tight so the understand pricing and so on and in some cases, we chose to hold back that pricing. Some cases, we chose to be more aggressive on pricing.
<unk>.
It's really quite a case by case basis and.
Si time as a premium premium company in this market knows how to do this very well so.
I think.
While I understand the focus on the gross margin lowering.
My recommendation would be to.
Look at that as a little bit of a distraction and to focus on.
Where the growth is really coming from.
No it sounds strategic in that point definitely from a cross protection.
Also just a question on the cash balance you have a very strong cash balance now, obviously, a strong funding position and cash.
And then just can you remind us your casualty strategy acquisition strategy and if buybacks are in that in the cards or is that it's a little early for that versus organic investment.
Yes, I think buybacks are too early.
To contemplate that we just put out some more stock I think the stock can do with more more liquidity not less.
As far as acquisitions, we've talked about it.
We are.
Always looking at.
At.
Either solutions that further our product line that we don't possess technologies that we don't possess.
And going off of that or in the area of clocks are clocking I think is particularly one area, where it is dispersed among existing semiconductor companies, whose names you're very well familiar with and they are not focused on them.
It's either a cash cow or its neglected.
That makes it a bit of a challenge to do those acquisitions, but to the extent that we're able to we're certainly would like to wherever we can.
Okay very helpful. Thanks, guys.
Thanks Jody.
Our next question comes from Melissa Fairbanks with Raymond James.
Hey, guys. Thanks for taking my question I was just wondering if you might be able to give us some color on expectations by segment for the.
For the March quarter, obviously consumers probably.
Seasonally down the most but just wondering if you could give us a little bit of guidance. There and then also in the <unk>.
Recent quarters, you've been giving us kind of expectations, what the contribution from your largest customer would be just looking for any kind of color.
Sure.
Yes, I talked about the seasonality briefly.
In my discussion.
Bottom line is I think the decrease from Q4 to Q1 is going to be primarily consumer right. So that's not surprising and thats really what drives that.
The seasonality and then in terms of our largest customer they were 18% of our sales in Q4, and I think that percentage is going to stay relatively constant in Q1.
Okay, Great and then just as a quick follow up.
The short term high value revenue that you were able to capture in the December quarter.
Are you able to tell us what segment that came in on.
I would prefer not to.
Okay.
It's across all segments, but yes, I think thats, just a little more detail that we need to go into if that's okay.
No problem at all thanks, very much guys Thats all from me. Thanks, Melissa Thank you.
That concludes today's question and answer session I would like to turn the call back to management for closing remarks.
I think that we closed out absolutely stellar year in 2021.
I am looking to consolidating those gains in 2022 and growing the company significantly.
Guidance.
And I'm very very bullish on how we see the future.
So on that note I guess, we will conclude our call. Thank you everybody for spending the time, we really appreciate it. Thank you all bye bye.
This concludes today's conference call. Thank you for participating you may now disconnect.
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