Q1 2024 SiTime Corp Earnings Call

May 8, 2024

Okay.

Operator: Good day, and thank you for standing by. Welcome to SiTime's first quarter earnings call-in webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your remote control. You will then hear an automated message advising your hand. To withdraw your question, please press star 1.

Good day and thank you for standing by welcome to the <unk> first quarter earnings call earnings call and webcast.

Operator: At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session. You did press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star. One again. 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.

Operator: Please be advised, today's conference is being held. I would like to hand the conference over to your speaker today, Brett Perry with Shelton Group Investor Relations. Brett, please go ahead. Thank you, Kevin. Good afternoon, and welcome to SiTime's first quarter 2024 financial results conference call. Joining us on today's call from SiTime are Rajesh Vashist, Chief Executive Officer, and Beth Howe, Chief Financial Officer. Before we begin, I'd like to point out that during the course of this call, the company may make forward-looking statements regarding expected future results, including financial positions, strategy, and plan, future operations, the timing market, and other areas of discussion.

Operator: It's 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 results to differ materially from those contained in any forward-looking statement. 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 forward-looking statements. The company undertakes no obligation.

Brett: Brett. Please go ahead.

Brett Perry: To publicly update forward-looking statements for any reason after the date of this call to conform statements to actual results or to changes in the company's expectations. For more detailed information on risks associated with the business, we refer you to the risk factors described in the 10-K filed on February 26, 2024, as well as the company's subsequent filings with the SEC. During the call, we refer to certain non-GAAP measures which are considered to be an important measure of company performance. These non-GAAP financial measures are provided in addition to, and not as a substitute for, nor superior to, measures of financial performance prepared in accordance with US GAAP.

Speaker Change: Thank you Kevin Good afternoon, and welcome to <unk> first quarter 2024 financial results conference call joining us on today's call from Si time a rejection.

Brett Perry: Executive Officer, and Beth Howe, Chief Financial Officer, before we begin I'd 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.

Brett Perry: The gap to non-gap reconciliation includes stock-based compensation, as well as acquisition-related items related to amortization of intangible assets, one-time acquisition-related charges, and expenses or income related to changes in the estimated fair value measurement of acquisition consideration, payable, and sales-based earn-out liability. Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial measures. With that, it's now my pleasure to turn the call over to SiTime CEO Rajesh. Please go ahead. Thank you, Brett.

Rajesh: Future operations, the timing market and other areas of discussion.

Rajesh: Hospital 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 results to differ materially from those contained in any forward looking statements.

Rajesh: 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 forward looking statements.

Rajesh: <unk> undertakes no obligation.

Rajesh: Publicly update forward looking statements for any reason after the date of this call to conform statements to actual results or to changes in the company's expectations for more detailed information on risks associated with the business. We refer you to the risk factors described in the 10-K filed on February 26, 2024, as well as the company's subsequent filings.

Rajesh: With the SEC.

Rajesh: During the call we refer to certain non-GAAP measures, which are considered to be an important measure of company performance. These non-GAAP financial measures are provided in addition to and not as a substitute for nor superior to measures of financial performance prepared in accordance with U S. GAAP. The GAAP to non-GAAP reconciliation includes stock based compensation as well.

Rajesh: Acquisitions acquisition related items related to amortization of intangible assets, one time acquisition related charges and expenses or income related to changes in the estimated fair value measurement of acquisition consideration payable and sales based earn out liabilities.

Rajesh: Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial results with that it's now my pleasure to turn the call over to <unk> CEO. Please go ahead.

Rajesh Vashist: Good afternoon, all. I'd like to welcome new as well as existing investors to our Q1 2024 earnings call. For those of you that are not as familiar with SiTime, we are the leader in a dynamic new semiconductor category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning. SiTime's precision timing solutions serve the needs of AI, data center, automated driving, IoT, and 5G.

Rajesh: Thank you Brett.

Rajesh: Good afternoon, all I would like to welcome new as well as existing investors.

Rajesh Vashist: Our Q1 2024 earnings call.

Rajesh Vashist: For those of you that are not as familiar with <unk> time, we are the leader in a dynamic new semiconductor category called precision timing.

Rajesh Vashist: In electronics timing is ubiquitous and ensures reliable functioning.

Rajesh Vashist: <unk> precision timing solutions serve the needs of AI data center automated driving Iot and <unk>.

Rajesh Vashist: We are in the early days of transforming the $10 billion timing model. On our Q1 results, those who are at the high end of our outlook. Revenue for the quarter was $33 million, and non-GAAP gross margins were 57.9%.

Rajesh Vashist: We're in the early days of transforming the $10 billion timing market.

Rajesh Vashist: On our Q1 results those were at the high end of our outlook revenue for the quarter was 33 million and non-GAAP gross margins were 57, 9%.

Rajesh Vashist: In the past few months, we've continued to see a downward trend in customer inventories, as expected, which has resulted in a pickup in order activity. In our last earnings call, SiTime forecast sequential growth throughout this year in Q2, Q3, and Q4 2024, trending back to a target growth rate. And now we reiterate that growth. We continue to see positive evidence of this. One of SiTime's strengths comes from the diversity of end markets, customers, geographies, and products.

Rajesh Vashist: In the past few months, we've continued to see a downward trend in customer inventories as expected.

Rajesh Vashist: Which has resulted in a pickup in order activity.

Rajesh Vashist: Last earnings call.

Rajesh Vashist: <unk> forecast sequential growth throughout this year in Q2, Q3, and Q4 2024 trending back to a target growth rate and now we reiterate that growth.

Rajesh Vashist: We continue to see positive evidence of this one of <unk> strengths.

Rajesh Vashist: From the diversity of end markets customers geographies and products.

Rajesh Vashist: This trend shows in 2024, when every end market is expected to grow over the previous year. I will shortly provide more color on three noteworthy markets, the Coms Enterprise Data Center, or CED, and automotive and industrial. We've always stated that one of the best use cases of precision timing is in the CED market because of its high growth, high ASPs, and high gross margins with enduring revenue. At CED Customers Worldwide, we see diverse applications using a broad product line, which I'm going to talk about now. In North America, customers are developing enterprise AI systems and all aspects of data center network infrastructure, such as switches, SmartNICs, optical modules, and active electrical and optical cables.

Rajesh Vashist: This trend shows in 2024, where every end market is expected to grow over the previous year.

Rajesh Vashist: I will shortly provide more color on three noteworthy markets the columns enterprise data center or CBD.

Rajesh Vashist: In automotive and industrial.

Rajesh Vashist: We've always stated that one of the best use cases of precision timing is in the <unk> market because of its high growth high ASP and high gross margins with enduring revenue.

Rajesh Vashist: At CD customers worldwide.

Rajesh Vashist: C diverse applications using our broad product line, which I'm going to talk about now.

Rajesh Vashist: In North America customers are developing enterprise AI systems, and all aspects of data Center network infrastructure, such as switches smart mix optical modules and active electrical and optical cables.

Rajesh Vashist: We are providing key OEMs and CSPs, or cloud service providers, with complete timing solutions, both clocks and oscillators, for many different use cases. Our products uniquely reliably deliver high performance in the presence of common system stressors, such as high and rapidly changing temperatures, vibration, and other kinds of system noise. As our data center customers push harder to increase their performance, they're looking to precision timing. SiTime is working closely with these customers to deliver optimized timing solutions, and we expect this trend to grow over time. In Taiwan and China, We're engaged with many of the key ODMs and OEMs that develop optical modules and servers for CSPs and OEMs around the world.

Rajesh Vashist: We are providing key Oems and csp's or cloud service providers with complete timing solutions, both clocks and oscillators for many different use cases.

Rajesh Vashist: <unk> uniquely to reliably deliver high performance in the presence of common systems stressors, such as high and rapidly changing temperatures vibration and other kinds of system noise.

Rajesh Vashist: As our data center customers push harder to increase their performance, they're looking to precision timing.

Rajesh Vashist: <unk> is working closely with these customers to deliver optimized timing solutions and we expect this trend to grow overtime.

Rajesh Vashist: In Taiwan and China.

Rajesh Vashist: We are engaged with many of the key Oems and Oems that developed optical modules and servers for Csp's and Oems around the world. We're.

Rajesh Vashist: We're in a good position to benefit as 800G optical modules displace 400G and become mainstream in the next two years. We're also beginning to win the next generation of 1.2 terabit and 1.6 terabit module designs that will ramp into production in the next year. In Europe, our focus in the CED market is on telecom applications. While 5G infrastructure deployment has slowed in the past few years, we expect that the next generation of 5G advanced equipment, which includes features for high performance and efficiency and lower power, will start ramping up in 2025.

Rajesh Vashist: We are in a good position to benefit as 800 key optical modules displace 400 G and become mainstream in the next two years.

Rajesh Vashist: We're also beginning beginning to win the next generation of one point.

Rajesh Vashist: One two terabyte at one six terabyte module designs that will ramp into production in the next year.

Rajesh Vashist: In Europe, our focus in the CD market is on telecom applications, while <unk> infrastructure deployment has slowed in the past.

Rajesh Vashist: A few years, we expect that the next generation of five G. Advanced equipment, which includes features for high performance and efficiency and lower lower power will start ramping in 2025.

Rajesh Vashist: We are engaged with key OEMs that will provide 5G advanced equipment, such as remote radio units, distributed units, and centralized units. We also believe that our newest oscillators, such as the EPIC-OCXO, ELITE-RF, and ELITE-X SuperTCXOs, deliver exceptional performance in these applications. Our continued success in our core CED market is especially heartening as it validates the strategy that we presented at our IPO. At that time, we said we would expand a serviceable market, or SAM, with breadth in a product portfolio, and we accomplished that.

Rajesh Vashist: We are engaged with key Oems that would provide <unk> advanced equipment, such as remote radio units distributed units and centralized units.

Rajesh Vashist: We also believe that our newest oscillators, such as the epic Oce, XO elite RF and elite ex Super <unk> delivered exceptional performance.

Rajesh Vashist: In these applications.

Rajesh Vashist: Our continued success in our core CBD market, especially hardening as it validates the strategy that we presented at our IPO.

Rajesh Vashist: At that time, we said, we would expand our serviceable market, our Sam with breadth in our product portfolio and we accomplish this we introduced 17 compelling new oscillators and blocks for this market the.

Rajesh Vashist: We introduced 17 compelling new oscillators and clocks for this market. The recent introduction of a chorus clock generator for AI data centers adds to the clock products that we acquired from Aura, all of which are complementary to our oscillator portfolio. The integration of Aura products is progressing well.

Rajesh Vashist: The recent introduction of a chorus clock generator for AI data centers adds to the products that we acquired from aura.

Rajesh Vashist: All of which are complementary to our oscillator portfolio.

Rajesh Vashist: The integration of all of our products is progressing well and by the end of 'twenty 'twenty four we will have added 40, new clocks.

Rajesh Vashist: And by the end of 2024, we will have added 40 new clocks, further expanding our portfolio in this market. As our most innovative customers seek out our most innovative solutions, our customer connections are strengthening, and our business is growing. While it will take time to generate meaningful revenue from the clock products, we are happy with the progress to date as it validates our strategy of offering a full product portfolio with a one-stop shop for precision timing needs.

Rajesh Vashist: Further expanding our portfolio in this market.

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

Rajesh Vashist: While it will take time to generate meaningful revenue from the cloud products, we're happy with the progress to date as it validates our strategy of offering a full product portfolio with one stop shop for the precision timing needs.

Rajesh Vashist: With all this, we believe we're in a great position in the comms enterprise data center market. Another market where we expect to see growth in 2024 is the automotive market. While there's current uncertainty in the growth of EVs, our presence in a variety of automotive applications, particularly in ADAS electronics, should help us to grow in 2024.

Rajesh Vashist: With all this we believe we are in great position in the columns enterprise data center market.

Rajesh Vashist: Another market, where we expect to see growth in 2024 is automotive.

Rajesh Vashist: While this current uncertainty in the growth of Evs, a presence in a variety of automotive applications, particularly in Adas electronics should help us to grow in 2024.

Rajesh Vashist: Our products are used in sensing, communications, and computing in automotive electronics, and the growth of electronics in all cars, not just electric cars, is a multi-year trend that bodes well for our future automotive revenue. Over time, our focus will be on developing new products that dramatically improve the performance and reliability of automotive electronics. In this market, we are beginning to see some pricing pressure, but we expect to offset this with new designs ramping into production in 2024, as well as new markets.

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

Rajesh Vashist: Over time, our focus will be on developing new products that dramatically improve the performance and reliability of automotive electronics in this market. We are beginning to see some pricing pressure, but expect to offset this with new designs ramping into production in 2024 as well as <unk>.

Rajesh Vashist: Increasing market share.

Rajesh Vashist: The industrial market is the most diverse amongst all markets, with over 100 end applications that use a product. While industrial applications are typically lower volume than in consumer, these designs can last as long as 10 years.

Rajesh Vashist: The industrial market is our most diverse amongst all markets with over 100 and applications that use our products while industrial applications are typically lower volume than in consumer. These designs can last as long as 10 years.

Rajesh Vashist: To give you a sense of the diversity of our business, here are some new use cases in the industrial market, seismic sensors for the Geo Exploration of Oil, Gas, and Minerals, new gas detection sensors for environmental safety, as well as efficient farming equipment which uses GNSS electronics with centimeter-level positioning. Our products deliver an order of magnitude better performance in these harsh environments, in these applications where they operate, and we expect they'll do naturally well.

Rajesh Vashist: To give you a sense of the diversity of our business here are some new use cases, and the industrial markets seismic sensors.

Rajesh Vashist: <unk> exploration of oil gas and minerals.

Rajesh Vashist: <unk> gas detection sensors for environmental safety as well as efficient farming equipment, which uses GSS electronics with centimeter level positioning.

Rajesh Vashist: Yeah.

Rajesh Vashist: Our products deliver an order of magnitude better performance in these harsh environments in.

Rajesh Vashist: In these applications, where they operate and we expect they'll do naturally well.

Rajesh Vashist: To summarize, we believe that the SiTime strategy is paying off. We will leverage our strengths in end market diversity and product breadth as we return to target growth. I'll now turn the call over to Beth to discuss our financial results in more detail. Thanks Rajesh and good afternoon, everyone.

Speaker Change: To summarize.

Rajesh Vashist: We believe that <unk> strategy is paying off.

Beth: We will leverage our strengths and end market diversity in product breadth as we return to a target growth rate.

Rajesh Vashist: I'll now turn the call over to Beth to discuss our financial results in more detail.

Beth Howe: Today I'll discuss our first quarter results and then provide our outlook for the second quarter of fiscal 2024. Q1 revenue was $33 million, compared with $42.4 million in Q4, down 22% as expected, in line with typical seasonality. Drilling into revenue by market, sales into the communications enterprise and data center market were $9.9 million, or 30% of sales. Sales into the mobile, IoT, and consumer markets were $10.3 million, or 31% of sales, with sales to our largest customer totaling $6.3 million, or 19% of sales.

Beth: Thanks, Jess and good afternoon, everyone today I'll discuss our first quarter results and then provide our outlook for the second quarter of fiscal 2024.

Beth Howe: Q1 revenue was $33 million.

Beth Howe: Compared with $42 4 million in Q4 down 22% as expected in line with typical seasonality.

Beth Howe: Drilling into revenue by market sales into the communications enterprise and data center market were $9 9 million or 30% of sales.

Beth Howe: Sales into the mobile Iot and consumer market were $10 3 million or 31% of sales with sales to our largest customer totaling $6 3 million or 19% of sales.

Beth Howe: And sales into the automotive industrial and aerospace market were $12 9 million or 39% of sales.

Beth Howe: non-GAAP gross margins were 57, 9% down 40 basis points sequentially the impact of lower volumes was partially offset by favorable mix and cost.

Beth Howe: Total non-GAAP operating expenses for the quarter were $27 $4 million with R&D expense at $16 4 million and SG&A expense of $11 million.

Beth Howe: Total operating expenses were up sequentially as expected due to the first quarter, the full integration of the Aura transaction, as well as seasonally higher. We continue to be disciplined in the management of expenses while investing in our portfolio. The Q1 non-GAAP operating loss was $8.3 million.

Beth Howe: Total operating expenses were up sequentially as expected due to first quarter. The full integration of the aura transaction as well as seasonally higher FICA taxes, we continue to be disciplined in the management of expenses, while investing in our portfolio.

Beth Howe: The Q1, non-GAAP operating loss was $8 3 million.

Beth Howe: Interest and other income was $6.3 million, and the Q1 non-GAAP net loss was $1.9 million, or $0.08 per share. Turning to the balance sheet, accounts receivable were $16.8 million with a DSO of 46 days, which is flat sequentially. Inventory at the end of the quarter was $74.4 million as we continue to make strategic wafer purchases. During the quarter, we generated $1.7 million in cash from operations, invested $3 million in capital purchases, and ended the quarter with $517 million in cash, cash equivalents, and short-term investments.

Beth Howe: Interest and other income was $6 3 million and the Q1 non-GAAP net loss was $1 $9 million or <unk> <unk> per share.

Beth Howe: Turning to the balance sheet accounts receivable were $16 8 million with DSO of 46 days, which is flat sequentially.

Beth Howe: Inventory at the end of the quarter was $74 $4 million as we continue to make strategic wafer purchases.

Beth Howe: During the quarter, we generated $1 $7 million in cash from operations invested $3 million in capital purchases and ended the quarter with $517 million in cash cash equivalents and short term investments.

Beth Howe: Let me now review our outlook for Q2. As we noted last quarter, we are well-positioned for long-term growth and expect to grow sequentially as well as year-over-year for the remainder of 2024. We are taking a prudent approach to managing our cost structure as we absorb the acquisition and prioritize investments to drive long-term growth. With that in mind, we are providing the following outlook for the second quarter. We expect revenue of $40 to $42 million, an increase of 21 to 27% sequentially, and gross margins to be roughly flat compared with Q1. Operating expenses of $27.5 to $28 million and interest income of at least $5 million.

Speaker Change: Let me now review our outlook for Q2.

Beth Howe: As we noted last quarter, we are well positioned for long term growth and expect to grow sequentially as well as year over year for the remainder of 2024.

Beth Howe: We are taking a prudent approach to managing our cost structure as we absorbed the acquisition and prioritize investments to drive long term growth.

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

Beth Howe: We expect revenue of $40 million to $42 million, an increase of 21% to 27% sequentially.

Beth Howe: Gross margins to be roughly flat compared with Q1.

Beth Howe: Operating expenses of 27 $5 million to $28 million in interest income of at least $5 million. As a result, we expect non-GAAP earnings per share to be in the range of one to five cents per share.

Operator: As a result, we expect non-GAAP earnings per share to be in the range of $0.01 to $0.05 per share. In closing, we are executing on our strategy. We have a unique technology that addresses large and growing markets, and our design wins reinforce the strength of our value proposition with customers. All in all, we are excited about our market position and believe our growth story is firmly intact. With that, I'd like to hand the call back to the operator for questions and answers.

Beth Howe: In closing we are executing on our strategy.

Operator: We have a unique technology that addresses large and growing markets and our design wins reinforced the strength of our value proposition with customers.

Operator: All in all we are excited about our market position and believe our growth story is firmly intact.

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

Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 119.

Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone extra caution has been answered and wish him with yourself from the queue. Please press star one again.

Operator: We'll pause for a moment while we compile our Q&A route. Our first question comes from Tore Svanberg with Stifel. Your line is open. Yes, thank you, and congratulations on the continuous recovery here.

Speaker Change: We will pause for a moment, while we compile our Q&A roster.

Tore Egil Svanberg: So it sounds like pretty strong growth for Q2. Rajesh, I was hoping you could maybe talk a little bit about where that growth is coming from, especially, you know, within your three product segments. Yeah, so it's from all of them, Tore. That's the nice part about it.

Operator: Our first question comes from tore Svanberg with Stifel. Your line is open.

Tore Egil Svanberg: Yes, Thank you and congratulations on the continued recovery here.

Tore Egil Svanberg: So it sounds like pretty strong growth for Q2.

Tore Egil Svanberg: Roger I was hoping you could maybe talk a little bit about where that growth is coming from especially within your three product segments.

Rajesh Vashist: Clearly, CED is going to do very well. And so is automotive and industrial. But equally, consumer is going to grow, although not as much, it is going to continue to grow as well. So I think we're going to see growth in all three sectors. Very good.

Speaker Change: Yes so.

Tore Egil Svanberg: It's from all of them story, that's the nice part about it clearly.

Rajesh Vashist: Is going to do very well.

Rajesh Vashist: And so is automotive and industrial but equally consumer is going to grow although not as much. It is going to continue to grow as well so.

Rajesh Vashist: I think we're going to see growth in all three segments.

Beth Howe: And you mentioned that customers continue to make progress on reducing inventory levels. Is it safe to say that that process is almost complete? Or are you still seeing, you know, certain customers still digesting the inventory? Hey, Tori, this is Beth.

Tore: Very good and you mentioned that customers continue to make progress on reducing inventory levels is it safe to say that that process is almost complete or are you still seeing certain customers still still.

Beth Howe: Di digesting the inventories.

Tore Egil Svanberg: I think it's a great question. So, we have seen a lot of progress in the inventory digestion. And as we said last quarter, I think it'll be pretty much behind us by the end of this quarter. A lot of customers are back to normal buying patterns, and the remainder, I think will be pretty much behind us this quarter. Great, I'll go back in line.

Beth Howe: Hey, Tony This is Beth I think it's a great question. So we have seen a lot of progress in the inventory digestion and as we said last quarter I think it'll be pretty much behind us by the end of this quarter a lot of customers are back to normal buying patterns.

Tore Egil Svanberg: And the remainder I think will be pretty much behind us this quarter.

Speaker Change: Great I'll go back in queue. Thank you.

Speaker Change: One moment for our next question.

Operator: Thank you. One moment for our next. Our next question comes from Quinn Bolton with Needham & Company. Your line is... Hey, yeah, let me offer my congratulations on the strong outlook. I guess, Beth, to follow up on your last answer there, if you think most customers sort of through the inventory correction by the end of the second quarter here, do you think we're sort of getting back to consumption levels? Should we be thinking about the 40 to 42 level as getting close to consumption, or do you think the 40 to 42 is still well below consumption levels?

Tore Egil Svanberg: Our next question comes from Quinn Bolton with Needham <unk> Company. Your line is open.

Nathaniel Quinn Bolton: Hey, let me offer my congratulations on the strong outlook I guess to follow up on your last answer there. If you think most customers sort of through the inventory.

Nathaniel Quinn Bolton: Correction by the end of the second.

Nathaniel Quinn Bolton: Second quarter here.

Nathaniel Quinn Bolton: Do you think we're sort of getting back to consumption levels should we be thinking about the 40% to 42.

Nathaniel Quinn Bolton: <unk> is getting close to consumption or do you think the 40 to 42 is still well below consumption levels.

Nathaniel Quinn Bolton: And then a second question, just as you're looking to the second half of the year, in most years, SiTime sees pretty healthy seasonality in the business, second half over first half. Wondering if you anticipate sort of normal seasonal second half strength this year, especially as customers emerge from the inventory correction. Thank you. Thanks, Glenn.

Nathaniel Quinn Bolton: And then second question just as you look into the second half of the year in most years site time, she is pretty pretty healthy seasonality in the business second half over first half wondering if you.

Nathaniel Quinn Bolton: Envision sort of normal seasonal second half strength this year.

Nathaniel Quinn Bolton: Especially as customers emerge from the inventory correction. Thank you.

Beth Howe: So let me address those questions. As we think about our sell-through versus our sell-in, I think we're seeing a good return to more normalized patterns, if you will, and being able to see that in the bookings as well. And so, really excited about seeing that return.

Speaker Change: Thanks, Glenn So let me address those questions as we think about our sell through versus our sell in I think we're seeing a good return too.

Beth Howe: More normalized patterns, if you will and being able to see that in the bookings as well.

Operator: In terms of seasonality, I think we do expect a seasonally stronger second half than first half, though I think we've also seen some pickup here in Q2 that Q2 is probably a little bit stronger than we would have thought 90 days ago, but we do still expect the second half to be stronger than the first half. Perfect. Thank you. One moment for our next. Our next question comes from Suji DeSilva with Rolf MKM. Your line is open.

Beth Howe: So really excited about seeing that return in terms of seasonality I think we do expect seasonally stronger second half than first half no. I think we've also seen some some pickup here in Q2 that Q2 is probably a little bit stronger than we would've thought 90 days ago, but we do still expect second half to be stronger than first.

Operator: Half.

Suji DeSilva: Perfect. Thank you.

Suji DeSilva: One moment for our next question.

Suji DeSilva: Our next question comes from <unk> Silva with Ralph your.

Suji DeSilva: Your line is open.

Suji DeSilva: Hi Rajesh, hi Beth, congrats on the recovery here. A longer term question perhaps to start, as you grow back to kind of 30% year over year and into over the next several quarters, do you think this time that the consumer mix will still kind of be the larger element as you grow and it was 50%, 60% before, I'm assuming it's not going to go that high, but or will it be more of a blended mix as you kind of grow into a larger revenue this time around with all the design?

Suji DeSilva: Hi, Richard Hi, Beth Congrats on the recovery here.

Suji DeSilva: A longer term question, perhaps start as you grow.

Suji DeSilva: Factors kind of 30% year over year in it too.

Suji DeSilva: The next several quarters do you think this time that the consumer mix will still kind of be the larger element as you grow and it was 50%, 60% before I'm, assuming you're talking about that high but or will it be more of a blended mix as you kind of grow into a larger revenue. This time around with all the design win pipeline yet.

Suji DeSilva: Yeah, thanks Suji. We've always maintained that the new products that we have launched over the last three years, plus the Quora acquisition, most of them go into the communications enterprise and data center, or CED, markets. So we expect to see continued strong growth in that market. We see that market, and our revenue for us getting to be $100 million in the coming years. We also expect continued growth in the automotive sector, which we also think will get to a very high number in the coming years.

Speaker Change: Yes, Thanks <unk>.

Suji DeSilva: We've always maintained that as the new products that we have.

Suji DeSilva: Launched over the last.

Suji DeSilva: Three years, plus the core acquisition most of them go into the communications Enterprise and data center markets. So we expect to see continued strong growth in that market, we see that market that revenue for us getting to be a $100 million in the coming years.

Suji DeSilva: <unk>.

Suji DeSilva: We also expect continued growth in automotive, which we also think we'll get to a very high number in coming years.

Suji DeSilva: While consumer and industrial will continue to grow while consumer will grow.

Suji DeSilva: Most of the products that we launched in the last two years, 80% of those products were intended for industrial automotive.

Rajesh Vashist: So while consumer and industrial continue to grow, while consumer will grow, most of the products that we launched in the last two years, 80% of those products were intended for industrial, automotive, and the CED markets. So it's reasonable to assume that our mix is going to grow as designed, significantly into the higher gross margin, higher ASP, much stickier products in the CED industrial and to some extent in the automotive. Very helpful, Rajesh.

Rajesh Vashist: And the CBD markets. So it's reasonable to assume that our mix is going to grow as designed.

Rajesh Vashist: Significantly into the higher gross margin higher ASP.

Rajesh Vashist: Stickier products and the CBD industrial and to some extent in the automotive market.

Rajesh Vashist: Very helpful. And then on the data Center success, you are having do you have a sense of what percent of that is coming from AI infrastructure Buildout, which.

Rajesh Vashist: The Hyperscale is we're focusing on right now do you have a sense of how levered you are to that.

Rajesh Vashist: In fact, I would pretty much say some of the bulk of it, given the optical modules, given the NIC card business, given the active cabling and optical cables, I think all of those are going in there; there are switches in there, the top-of-the-rack switches in there. So I think most of it that's coming is from there worldwide, but I deliberately put in the telecom piece just to say that I know telecom is a little bit out of fashion these days, but the next generation of 5G equipment is happening, and SiTime has secured significant design wins, and whenever that comes back, let's say in the middle of next year, we are going to participate in that too. Noted. Thanks.

Rajesh Vashist: What's pretty high.

Rajesh Vashist: It's in fact, I would pretty much say some of the bulk of it given the optical.

Rajesh Vashist: The optical modules.

Rajesh Vashist: Given the Nic card business given the.

Rajesh Vashist: The active cabling and optical cables I think all of those are going in there their switches in their the top of rack switches in there. So I think most of it that's coming is from their worldwide.

Rajesh Vashist: But I deliberately put in the telecom piece just to say that I know telecom is a little bit of a fashion. These days, but the next generation of <unk> equipment is happening and <unk> has secured significant design wins and whenever that comes back let's say in the middle of next year.

Rajesh Vashist: We are going to participate in that too.

Speaker Change: Okay noted.

Operator: One moment for our next question. Our next question comes from Chris Caso with Wolf Research Alliance. Yes, thank you.

Speaker Change: One moment for our next question.

Operator: Our next question comes from Chris Caso with Wolfe Research Your line is open.

Christopher Caso: Just a question about long-term growth. I think you reiterated that at kind of 30%. Can you speak about that in the context of, you know, this year, next year? Are those kind of reasonable assumptions from these levels now that the inventory burn is pretty well done? you know, driving expectations of 30% growth from these levels going forward. Yeah, I mean, even as early as our last earnings call in February, I was indicating between 25% and 30% growth for this year. And I continue to see that. I might even argue a little bit towards the higher end of that.

Christopher Caso: Yes. Thank you just a question about the long term growth rate projection.

Christopher Caso: You reiterated that at kind of 30%.

Christopher Caso: Can you speak about that in the context of this year next year.

Christopher Caso: Are those kind of reasonable assumptions from from these levels now that the inventory burn is pretty well done that we could start looking at.

Christopher Caso: Driving expectations of 30% growth from from these levels going forward.

Christopher Caso: Yes, I mean, even as early as last last earnings call in February I was indicating between 25% and 30% growth for this year.

Christopher Caso: Continue to see that I might even argue a little bit towards the higher end.

Christopher Caso: Of that.

Christopher Caso: But it is early days for this year, we're still in the first week of May, but I continue to see significant potential for some time in Q3 Q4, but very clearly in next year 2025.

Rajesh Vashist: But it is early days for this year. We're still in the first week of May, but I continue to see significant potential for SiTime in Q3, Q4. But very clearly, for next year, 2025, I certainly see 30% in line of sight. Thank you.

Rajesh Vashist: Certainly see 30% in line of sight.

Rajesh Vashist: As a follow-up, you mentioned in your remarks some pricing pressure on the automotive side. I wonder if you could expand on those remarks, you know, where you're seeing that pressure, and how you're dealing with it. And, you know, I guess, since you constrain those remarks to the auto segment, does that suggest that pricing in other segments is stable? Yeah, the pricing for SiTime between this past quarter and this quarter is going to continue to be the same.

Speaker Change: Thank you.

Speaker Change: As a follow up you mentioned in your remarks.

Rajesh Vashist: Some pricing pressure on the automotive side wondering if you could expand on those remarks.

Rajesh Vashist: Where are you seeing that pressure, how youre dealing with it and I guess since you constrain those remarks of the auto segment does that suggest that pricing and other segments as stable.

Rajesh Vashist: Yes, the pricing for some time between this past quarter and this quarter is going to continue to be the same.

Rajesh Vashist: In general, our price is driven, and our corporate ASP is driven more by, than by individual places where we might be under pressure, which will happen, which does happen in pretty much every segment, just to be clear. But it's just in the aggregate, I see it more in the automotive segment, simply because I think there is some pressure on EV pricing, and some of it is rolling down to us. But this is, you know, at the margins. I was just sharing those thoughts in the spirit of great transparency, just to say that it's not like we're completely impervious to macro events. But we do have ameliorating parts to it, which is that our mix is changing.

Rajesh Vashist: In general our prices driven or our corporate ESP is driven more by mix than by individual places, where we might be under pressure, which will happen, which does happened in pretty much every segment just to be clear, but it's just in the aggregate I see it more in automotive simply.

Rajesh Vashist: Because.

Rajesh Vashist: Think there is some pressure on EV pricing and some of it is rolling down to us but this is at the margins I was just sharing those thoughts in the spirit of great transparency.

Rajesh Vashist: To say that it's not like we're completely impervious to macro events, but we do have ameliorated.

Rajesh Vashist: <unk> parts to it which is that our mix is changing and so we're getting to.

Operator: And so we're getting to work around the pricing that we are getting through. In the coming years in the automotive industry, I want to put in a plug for the new product portfolio that we are attempting to build in that market. I think that's going to be significantly differentiated to deliver reliability and performance for the automotive market, the likes of which they have never seen. And I think we're already doing that in CED. I think we're going to repeat that in cars, but that's going to take a couple years. Thank you.

Operator: To work around the pricing that we're getting through it.

Operator: Coming years in automotive I want to put in a plug for the new product portfolio that we are attempting to build in that market I think thats going to be significantly differentiated to deliver reliability and performance for the automotive market the likes of which they have never seen and I think we're all.

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

Speaker Change: Got it.

Speaker Change: Thank you.

Operator: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. One moment for our next question. Our next question comes from Tom O'Malley with Barclays. Your line is open. Hi guys, this is Will Levy on behalf of Tom O'Malley.

Speaker Change: Again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.

William Levy: One moment for our next question.

Operator: Yeah.

William Levy: Our next question comes from Tom O'malley with Barclays. Your line is open.

Operator: Hi, guys. This is will levy on for Tom O'malley.

Tom O'malley: Just a quick question on gross margins on this trajectory into 25. Consumer Businesses is recovering in office. March Lowe, How do you see margins trending for the rest of 24? Unknown Attendee, Christopher Caso, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth Howe, as other segments grow. Sure, I'll take that one.

William Levy: A quick question on gross margins in this trajectory into 225.

Speaker Change: If the consumer business is recovering and an awesome March lows, how do you see margins trending for the rest of 'twenty four.

Speaker Change: Especially with the mix.

Speaker Change: Other segments grow as well.

Beth Howe: So if we think about gross margins, as I said, in Q2, we expect them to be kind of roughly similar to Q1. And in the back half, I would expect that they would see some improvement off those levels. Thanks. Should we assume, like, maybe... Unknown Attendee, Christopher Caso, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth, 59ers, a little granular there

Speaker Change: Sure I will.

Speaker Change: Take that one so as we think about gross margins as I said in Q2, we expect them to be kind of roughly similar to Q1 and then the back half I would expect that they would see some improvement off those levels.

Speaker Change: Should we assume like Navy's fifth.

Beth Howe: 50 bps increase in September December maybe exiting the year close to.

Speaker Change: 59 ish.

Speaker Change: It's a little granular there.

Beth Howe: No, I appreciate it. May I give you some insights on how to think about gross margins? So I think gross margin will trend up as we go into the second half versus the first half. There's a number of things that go into gross margin, and then we'll have to see how that evolves. So clearly, our product mix is a big driver of gross margins. And then we also look at the, as we grow revenue, then we would expect some better manufacturing absorption, which should be a benefit as well. We'll have to see how costs play out as we go through the year. So those are kind of the puts and takes that I'd be thinking about as I thought about the second half. Thank you so much.

Beth Howe: Yes.

Speaker Change: Appreciate maybe I'll give you some insights on how to think about gross margin. So I think they will trend up as we go into second half versus first half. There's a number of things that go into gross margin and then we'll have to see that how that evolves. So clearly our product mix is a big driver of gross margin and then we also look at.

Beth Howe: The as we grow the revenue then we would expect some better manufacturing absorption that should be.

Beth Howe: And if it is well we'll have to see how cost play as we go through the year. So those are kind of the puts and takes that I'd be thinking about as I thought about second half.

Speaker Change: Awesome. Thank you so much.

Operator: One moment for our next question, a follow-up question from Tore Svanberg, with Stiefel, your line is open. Yes, thank you. Rajesh, I had a question about the Aura business, the clocks. You talked about 40 new products. Relief at the end of the year. I know you talked about not only Sam Expansion here but also strategically how important it is to, you know, sell clocks in addition to your oscillator devices.

Speaker Change: One moment for our next question.

Operator: Our next question is a follow up question from tore Svanberg with Stifel. Your line is open.

Operator: Yes. Thank you Rakesh I had a question on the or a business all of the clocks you talked about 40 new products.

Operator: Relief at the end of the year.

Tore Egil Svanberg: I know you had talked about not just the the Sam expansion here, but also strategically how important it is to sell.

Tore Egil Svanberg: Sell clocks in.

Tore Egil Svanberg: In addition to your oscillated devices so.

Operator: So could you just elaborate a little bit on that, and as you launch those 40 new products, you know, how is the sampling going to be as far as garnering more content? Because I do assume the clocks probably pull in more oscillators. That's right.

Tore Egil Svanberg: Could you just elaborate a little bit on that.

Operator: Launched those 40 new products.

Tore Egil Svanberg: How how is how is the sampling going to be as far as garnering more content because I do assume the clocks, probably pull more oscillators chooses I'm not mistaken.

Tore Egil Svanberg: So there are many strategic elements to that. The first and foremost is that SiTime's focus is, right now, on the CED market with the clock and oscillators being sold as a bundle because we believe that that is where the biggest precision timing needs are and where we can help our customers, particularly in AI right now, and even in telecom. We can help our customers a lot. Think of it this way; our customers today have to go to semiconductor companies such as Skyworks, Renesas, and Microchip, to name a few, to get the clocking portion.

Operator: That's right. So there are many strategic elements to that.

Tore Egil Svanberg: First and foremost is that.

Tore Egil Svanberg: The site time focus is right now on the CBD market with the clock.

Tore Egil Svanberg: Oscillators being sold as a bundle because we believe that that is where the biggest precision timing needs are and where we can help our customers, particularly the AI right now we can help our cost and even in telecom, we can help our customers a lot think of it this way our customers today.

Tore Egil Svanberg: To go to semiconductor companies, such as Sky works Renaissance and Microchip two.

Tore Egil Svanberg: To name a few to get the clocking portion then they have to go to the crystal companies to get the oscillator and then the burden falls on them to make the matching of these two under very tough conditions of performance an environment to make that work Cyton makes it super easy for them with these new 40 <unk>.

Tore Egil Svanberg: Then they have to go to the crystal companies to get the oscillator, and then the burden falls on them to make the matching of these two under very tough conditions of performance and environment to make that work.

Rajesh Vashist: SiTime makes it super easy for them with these new 4D products and the current ones that we've already launched, to integrate and make it work as a subsystem. We're getting significant traction on that, and my comments on getting traction on that with our customers in the data center market, as well as in the NIC card business, are very much focused on that. I think we're going to start, we're not focused on the consumer space as much, we're focused mostly on the CED space, that is where the high margins are, and the clocking business also does have high margins, although not as high ASPs. ASPs are typically in the $5 to $10 range, oscillators can go as high as $30, but the gross margins are higher, close to 65 to 70%. Very good. Last question, then I'll go away.

Tore Egil Svanberg: Products and the current ones that we've already launched that.

Rajesh Vashist: We can put that integrated and make it work as a sub system and we are getting significant traction on that in my comments on getting traction on that with our customers in the in the.

Rajesh Vashist: In the in the data center market as well as in the Nic card business are very much focused on that so I think we're going to start we're not focused on the consumer space as much we're focused mostly on the <unk> space.

Rajesh Vashist: That is where the high margins are and the clocking business also does have high margins, although not as high Asps asps.

Rajesh Vashist: Asps are typically in the five to $10 range.

Rajesh Vashist: <unk> can go as high as $30.

Speaker Change: But the gross.

Rajesh Vashist: A higher close to 65% to 70%.

Rajesh Vashist: So you talked about obviously data center strength now, and it sounds like telecom will be more important next year. But what about enterprise networking? Are you starting to see that market waking up as well? Yeah, we are. Although I have to say, I'd put it at the bottom a little bit.

Speaker Change: Very good last question then I'll go away.

Speaker Change: So you talked about obviously data center strength now and it sounds like telecom more next year, but what about enterprise networking are you starting to see that market.

Rajesh Vashist: King.

Rajesh Vashist: As well.

Rajesh Vashist: Yes, we are although I have to say I would put at the bottom a little bit I think some of our customers. There are are figuring out.

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

Rajesh Vashist: Where to play a little bit more.

Rajesh Vashist: But right now I think the beauty of site time is that with.

Rajesh Vashist: With so many horses in the race in any different application or market weakened.

Rajesh Vashist: We can ride some that are really trending forward just like we are right now in data center and telecom as you point out for the future. So I think we're in pretty good shape. We also have storage business, which is doing okay, and so I think that.

Rajesh Vashist: We also have a storage business, which is doing okay. And so I think that's the best part about SiTime that I like, in that we are a highly diversified but, at the same time, high growth business. And that's what makes us unique among most other companies. Very good. Thank you again.

Rajesh Vashist: That's the best part about <unk> that I like in which.

Rajesh Vashist: We are a highly diversified but at the same time high growth.

Rajesh Vashist: Business and that's what makes us unique among most other companies.

Rajesh Vashist: Very good thank you again.

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

Speaker Change: And im not showing any further questions at this time I'd like to turn the call back over to management for any actually we just have one other question pop up one moment.

Nathaniel Quinn Bolton: Our next question is a follow-up from Quinn Bolton with Needham. Your line is open. Two quick follow-ups for me. One, the Aura semiconductor products you just mentioned, 40 clocks by the end of the year. I know these things sometimes take time to go out, get design wins, and ramp to production. So wondering if you could just kind of give us your latest thoughts. When do you think you'll start to see revenue from the Aura transaction, obviously excluding the Cascade product that used Aura originally? Thanks. Yeah, so you're right, Quinn, it does take a little bit of a long time, particularly the clocking portion.

Operator: Our next question is a follow up from Quinn Bolton with Needham Your line is open.

Nathaniel Quinn Bolton: Two quick follow ups from me one.

Nathaniel Quinn Bolton: Semiconductor products.

Nathaniel Quinn Bolton: You just mentioned 40 cost by the end of the year I know these things sometimes take time to go out get design wins to ramp to production. So I was wondering if you could just kind of give us your latest thoughts when do you think youll start to see revenue from the ore.

Speaker Change: Transaction, obviously, excluding the cascade product that used to or.

Speaker Change: Originally thanks.

Rajesh Vashist: Another reason is that it's in the CED area, but we are being a little bit more opportunistic. There are some products in the portfolio that are more PIN-compatible with existing products, mostly in the buffer area. And SiTime is picking up traction because the unique thing about SiTime is that, unlike other clocking companies whose this clocking business is a 1%, 2% business for them, this is everything to do with SiTime, right? That's 100% SiTime business.

Nathaniel Quinn Bolton: Yes, so youre right. It does take a little bit long time, particularly one is the clocking portion in other is that it's in the CBD area, but we are being a little bit more opportunistic there are some products in the portfolio that are more pin compatible.

Rajesh Vashist: Able with existing products, mostly in the buffer area and <unk> is picking up traction because the unique thing about <unk> is that unlike other clocking companies who is this this flocking business is a 1% 2% business for them. This has everything to do with <unk> right, that's 100% <unk>.

Rajesh Vashist: So that level of focus, concentration, customer care, and customer focus gets us a lot of traction, even when we have called them Me Too products, such as the buffers. And even in that, we are starting to get some traction. Possibly by late this year or early next year, we should be making small, you know, single digit millions from that kind of business. But I think it's just an indicator of what focus can bring to a market. And, and, and so yeah. Yeah, I hope that helps. No, that's perfect.

Rajesh Vashist: So that level of focus concentration customer care customer focus.

Rajesh Vashist: Gets us a lot of traction even when we have Paul them meet two products such as the buffers and even in that we are starting to get some traction possibly by late this year early next year, we should be getting small single digit millions from that kind of business.

Rajesh Vashist: But I think it's just an indicator of what focus can bring to our market and.

Rajesh Vashist: <unk>.

Rajesh Vashist: And so yes, yes.

Rajesh Vashist: Hope that helps.

Nathaniel Quinn Bolton: The other question for you, Beth, just thinking about the gross margin ramp into the second half. Obviously, consumer is, I think, the lower margin segment. Just wondering, you know, as you think about the second half, do you expect normal seasonality in the consumer segment in September? So maybe a little bit of a mixed headwind in September?

Rajesh Vashist: No.

Rajesh Vashist: That's perfect.

Rajesh Vashist: For you Beth just thinking about the gross margin ramp.

Nathaniel Quinn Bolton: Through the second half obviously consumer I think is the lower margin segment just wondering.

Nathaniel Quinn Bolton: About the second half do you expect normal seasonality in the <unk>.

Nathaniel Quinn Bolton: Consumer segment in September so maybe a little bit of a mix headwind in September or do you think the.

Beth Howe: Or do you think the CED and industrial auto markets, off perhaps a depressed pace, can continue to grow faster than consumers straight through year end? Thank you. Hey, Quinn, sure.

Nathaniel Quinn Bolton: <unk> in industrial auto markets off perhaps a depressed base can can continue to grow faster than consumer straight through year end. Thank you.

Beth Howe: So, as I look at the different markets, I think you summarized the different puts and takes. We do expect that you'll see Q3 seasonally stronger in consumer, which is a bit of a headwind, though consumer, sorry, the Commercial and Enterprise Data Center is growing very fast. So, I do think overall the net-net will be that gross margins should improve a little bit as we go into the second half versus the first half. And so, I think we would expect to see an upward trend, but to your point, some of the Enterprise Data Center strength will be mitigated with the consumer. But overall, increasing gross margins in the second half. Great, thank you. And I'm not showing any further questions at this time. I'd like to turn the call back over to management for any closing.

Beth Howe: Hey, Quinn sure so as I look at the different markets I think you summarized the different puts and takes do you expect that youll see Q3 seasonally stronger in consumer which is a bit of a headwind, though consumer sorry, the commercial and enterprise data center is growing very fast so I do think overall.

Beth Howe: The net net will be that gross margins should improve a little bit as we go into second half.

Beth Howe: Versus first half and so I think we would expect to see an upward trend, but to your point some of the enterprise data center strength will be mitigated with with consumer but overall increase in gross margins in second half.

Speaker Change: Great. Thank you.

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

Rajesh Vashist: No, thank you all for joining us. We are very happy to be at this point in SiTime's life in the second quarter, where we can look at growth all through the rest of the year, and we're delighted by how we're doing. Thank you all for joining us. Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have, Tore Svanberg, Suji DeSilva, Mark Edelstone, Arthur Chadwick, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth Howe, Elizabeth Howe, SiTime Tore Svanberg, Suji DeSilva, Mark Edelstone, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth Howe, Elizabeth Howe, SiTime ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Tore Svanberg, Suji DeSilva, Mark Edelstone, Arthur Chadwick, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth Howe, Elizabeth Howe, SiTime, ? ? ? ? ? ? ? ? Good day and thank you for standing by.

Speaker Change: No. Thank you all for joining us.

Speaker Change: We're very happy to be at this point in.

Rajesh Vashist: <unk> life in the second quarter, where we can look at growth all through the rest of the year and we're delighted by how we're doing thank you all for joining us.

Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Rajesh Vashist: [music].

Rajesh Vashist: Okay.

Rajesh Vashist: [music].

Rajesh Vashist: Okay.

Rajesh Vashist: Hum.

Rajesh Vashist: Okay.

Rajesh Vashist: [music].

Rajesh Vashist: No.

Rajesh Vashist: Yes.

Rajesh Vashist: [music].

Rajesh Vashist: Okay.

Rajesh Vashist: Yes.

Rajesh Vashist: Okay.

Rajesh Vashist: [music].

Rajesh Vashist: Welcome to CyTime's first quarter earnings call-in webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your

Rajesh Vashist: Come to the <unk> first quarter earnings call.

Rajesh Vashist: Earnings call and webcast at this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session need to press star one on your telephone you will then hear an automated message advising your hain. This race to withdraw your question. Please press star one again. Please be advised today's conference is being recorded I would now like to turn the conference over to your speaker today Brett.

Operator: You will then hear an automated message advising your hand. To withdraw your question, please press star 1. Please be advised, today's conference is being held. I would like to hand the conference over to your speaker today, Brett Perry with Shelton Group Investor Relations. Brett, please go ahead.

Brett Perry: With Shelton Group Investor Relations Brett. Please go ahead.

Brett Perry: Thank you, Kevin. Good afternoon, and welcome to SiTime's first quarter 2024 Financial Results Conference call. Joining us on today's call from SiTime are Rajesh Vashist, Chief Executive Officer, and Beth Howe, Chief Financial Officer. Before we begin, I'd like to point out that during the course of this call, the company may make forward-looking statements regarding expected future results, including financial positions, strategy, and plan, future operations, the timing market, and other areas of discussion.

Brett Perry: Thank you, Kevin and good afternoon, and welcome to <unk> first quarter 2024 financial results conference call joining us on today's call from <unk>.

Brett Perry: Chief Executive Officer, and Beth Howe, Chief Financial Officer, before we begin I'd 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.

Brett Perry: It's 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 results to differ materially from those contained in any forward-looking statement. 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 forward-looking statements. The company undertakes no obligation.

Brett Perry: <unk> operations, the timing market and other areas of discussion, it's 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 results to differ materially from those contained in any forward looking statements.

Brett Perry: 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 forward looking statements. The company undertakes no obligation.

Brett Perry: To publicly update forward looking statements for any reason after the date of this call to conform statements to actual results or to changes in the company's expectations for more detailed information on risks associated with the business. We refer you to the risk factors described in the 10-K filed on February 26, 2020, or as well as the company subsequent.

Brett Perry: Filings with the SEC.

Brett Perry: During the call we refer to certain non-GAAP measures, which are considered to be an important measure of company performance. These non-GAAP financial measures.

Brett Perry: In addition to and not as a substitute for nor superior to measures of financial performance prepared in accordance with U S. GAAP to GAAP to non-GAAP reconciliation includes stock based compensation as well as acquisitions acquisition related items related to amortization of intangible assets, one time acquisition related charges.

Brett Perry: The Gap to Non-Gap Reconciliation includes stock-based compensation, as well as acquisition-related items related to amortization of intangible assets, one-time acquisition-related charges, and expenses or income related to changes in the estimated fair value measurement of acquisition consideration, payable, and sales-based earn-out liability. Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial measures. With that, it's now my pleasure to turn the call over to SiTime CEO Rajesh. Please go ahead. Thank you, Brett. Good afternoon, all.

Rajesh Vashist: <unk> expenses or income related to changes in the estimated fair value measurement of acquisition consideration payable in sales based earn out liabilities.

Rajesh Vashist: Please refer to the Companys press release issued today for a detailed reconciliation between GAAP and non-GAAP financial results with that it's now my pleasure to turn the call over to <unk> CEO. Please go ahead.

Rajesh Vashist: I'd like to welcome new as well as existing investors to our Q1 2024 earnings call. For those of you that are not as familiar with SiTime, we are the leader in a dynamic new semiconductor category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning. SiTime's precision timing solutions serve the needs of AI, data center, automated driving, IoT, and 5G.

Rajesh Vashist: We are in the early days of transforming the $10 billion timing mark. On our Q1 results, those were at the high end of our outlook. Revenue for the quarter was $33 million, and non-GAAP gross margins were 57.9%.

Speaker Change: Thank you Brett.

Speaker Change: Good afternoon, all I would like to welcome new as well as existing investors to our Q1 2024 earnings call.

Rajesh Vashist: Those of you that are not as familiar with Si time, we are the leader in the dynamic new semiconductor category.

Rajesh Vashist: <unk> timing.

Rajesh Vashist: And electronics timing is ubiquitous and ensures reliable functioning site.

Rajesh Vashist: <unk> precision timing solutions serve the needs of AI data center automated driving Iot and <unk>.

Rajesh Vashist: We're in the early days of transforming the $10 billion timing market.

Rajesh Vashist: On our Q1 results those were at the high end of our outlook revenue for the quarter was 33 million and non-GAAP gross margins were 57, 9%.

Rajesh Vashist: In the past few months, we have continued to see a downward trend in customer inventories as expected.

Rajesh Vashist: Which has resulted in a pickup in order activity.

Rajesh Vashist: In our last earnings call.

Rajesh Vashist: <unk> forecast sequential growth throughout this year in Q2, Q3, and Q4 2024 trending back to a target growth rate.

Rajesh Vashist: Now, we reiterate that growth.

Rajesh Vashist: Okay.

Rajesh Vashist: We continue to see positive evidence of this one off item strength comes from the diversity of end markets customers geographies and products.

Rajesh Vashist: This trend shows in 2024, where every end market is expected to grow over the previous year.

Rajesh Vashist: We will shortly provide more color on three noteworthy markets the columns enterprise data center, or CEB and automotive and industrial.

Rajesh Vashist: Yes.

Rajesh Vashist: We've always stated that one of the best use cases of precision timing is in the <unk> market because of its high growth high Asps and high gross margins with enduring revenue.

Rajesh Vashist: At CD customers worldwide, we see diverse applications using our broad product line, which I'm going to talk about now.

Rajesh Vashist: In North America customers are developing enterprise AI systems, and all aspects of data center network infrastructure such as switches.

Rajesh Vashist: Art mix optical modules and active electrical and optical cables.

Rajesh Vashist: We are providing key OEMs and CSPs, or cloud service providers, with complete timing solutions, both clocks and oscillators, for many different use cases. Our products uniquely reliably deliver high performance in the presence of common system stressors, such as high and rapidly changing temperatures, vibration, and other kinds of system noise. As our data center customers push harder to increase their performance, they're looking to precision timing. SiTime is working closely with these customers to deliver optimized timing solutions, and we expect this trend to grow over time. In Taiwan and China, we're engaged with many of the key ODMs and OEMs that develop optical modules and servers for CSPs and OEMs around the world.

Rajesh Vashist: We are providing key Oems and csp's or cloud service providers with complete timing solutions, both clocks and oscillators for many different use cases.

Rajesh Vashist: Products uniquely to reliably deliver high performance in the presence of common systems stressors, such as high and rapidly changing temperatures vibration and other kinds of system noise.

Rajesh Vashist: As our data center customers push harder to increase their performance, they're looking to precision timing.

Rajesh Vashist: <unk> is working closely with these customers to deliver optimized timing solutions and we expect this trend to grow overtime.

Rajesh Vashist: In Taiwan and China.

Rajesh Vashist: We are engaged with many of the key Oems and Oems that develop optical modules and servers for Csp's and Oems around the world.

Rajesh Vashist: We are in a good position to benefit as 800 key optical modules displays 400 G and become mainstream in the next two years.

Rajesh Vashist: We're also beginning beginning to win the next generation of one point.

Rajesh Vashist: One two terabyte and one six terabyte module designs that will ramp into production in the next year.

Rajesh Vashist: In Europe, our focus in the CBD market is on telecom applications, while <unk> infrastructure deployment has slowed in the past.

Rajesh Vashist: We are engaged with key Oems that would provide <unk> advanced equipment, such as remote radio units distributed units and centralized units.

Rajesh Vashist: We also believe that our newest oscillators, such as the epic <unk> elite RF and elite ex Super <unk> delivered exceptional performance.

Rajesh Vashist: In these applications.

Rajesh Vashist: Our continued success in our core CBD market, especially hardening as it validates the strategy that we presented at our IPO.

Rajesh Vashist: The recent introduction of a chorus clock generator for AI data centers adds to the products that we acquired from aura.

Rajesh Vashist: All of which are complementary to our oscillate a portfolio.

Rajesh Vashist: The integration of all of our products is progressing well and by the end of 'twenty 'twenty four we will have added 40, new clocks.

Rajesh Vashist: Further expanding our portfolio in this market.

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

Rajesh Vashist: With all this we believe we are in great position in the columns enterprise data center market.

Rajesh Vashist: Another market, where we expect to see growth in 2024 is automotive.

Rajesh Vashist: While this current uncertainty in the growth of Evs, a presence in a variety of automotive applications, particularly in Adas electronics should help us to grow in 2024.

Rajesh Vashist: In time, our focus will be on developing new products that dramatically improve the performance and reliability of automotive electronics in this market. We are beginning to see some pricing pressure, but expect to offset this with new designs ramping into production in 2024 as well as <unk>.

Rajesh Vashist: <unk> market share.

Rajesh Vashist: And the industrial markets seismic sensors.

Rajesh Vashist: <unk> exploration of oil gas and minerals.

Rajesh Vashist: <unk> gas detection sensors for environmental safety as well as efficient farming equipment, which uses GSS electronics with centimeter level positioning.

Rajesh Vashist: Sure.

Rajesh Vashist: Our products deliver an order of magnitude better performance in these harsh environments.

Rajesh Vashist: In these applications, where they operate and we expect they will do naturally well.

Speaker Change: To summarize.

Rajesh Vashist: We believe that <unk> strategy is paying off.

Beth Howe: We will leverage our strength in end market diversity in product breadth as we return to a target growth rate.

Rajesh Vashist: I'll now turn the call over to Beth to discuss our financial results in more detail.

Beth Howe: Today I'll discuss our first quarter results and then provide our outlook for the second quarter of fiscal 2024. Q1 revenue was $33 million, compared with $42.4 million in Q4, down 22%, as expected, in line with typical seasonality. Drilling into revenue by market, sales into the communications enterprise and data center market were $9.9 million, or 30% of sales. Sales into the mobile, IoT, and consumer market were $10.3 million, or 31% of sales, with sales to our largest customer totaling $6.3 million, or 19% of sales.

Beth Howe: Thanks, Jess and good afternoon, everyone today I'll discuss our first quarter results and then provide our outlook for the second quarter of fiscal 2024.

Beth Howe: And sales into the automotive, industrial, and aerospace market were $12.9 million, or 39% of sales. Non-GAAP gross margins were 57.9%, down 40 basis points sequentially. The impact of lower volumes was partially offset by favorable mix and cost. Total non-GAAP operating expenses for the quarter were $27.4 million, with R&D expense of $16.4 million and SG&A expense of $11 million. Total operating expenses were up sequentially as expected due to the first quarter, the full integration of the Aura transaction, as well as seasonally higher FICA. We continue to be disciplined in the management of expenses while investing in our portfolio. The Q1 non-GAAP operating loss was $8.3 million.

Beth Howe: Q1 revenue was $33 million compared with $42 4 million in Q4 down 22% as expected in line with typical seasonality.

Beth Howe: Drilling into revenue by market sales into the communications enterprise and data center market were $9 9 million or 30% of sales.

Beth Howe: Sales into the mobile Iot and consumer market were $10 3 million or 31% of sales with sales to our largest customer totaling $6 3 million or 19% of sales.

Beth Howe: And sales into the automotive industrial and aerospace market were $12 9 million or 39% of sales.

Beth Howe: non-GAAP gross margins were 57, 9% down 40 basis points sequentially the impact of lower volumes was partially offset by favorable mix and cost.

Beth Howe: Total non-GAAP operating expenses for the quarter were $27 4 million with R&D expense at $16 4 million and SG&A expense of $11 million.

Beth Howe: Operating expenses were up sequentially as expected due to first quarter. The full integration of the aura transaction as well as seasonally higher FICA taxes, we continue to be disciplined in the management of expenses, while investing in our portfolio.

Beth Howe: The Q1, non-GAAP operating loss was $8 3 million.

Beth Howe: Interest and other income was $6 3 million and the Q1 non-GAAP net loss was $1 9 million or <unk> <unk> per share.

Beth Howe: Turning to the balance sheet accounts receivable were $16 8 million with DSO of 46 days, which is flat sequentially.

Beth Howe: Inventory at the end of the quarter was $74 $4 million as we continue to make strategic wafer purchases.

Beth Howe: During the quarter, we generated $1 7 million in cash from operations invested $3 million in capital purchases and ended the quarter with $517 million in cash cash equivalents and short term investments.

Speaker Change: Let me now review our outlook for Q2.

Beth Howe: As we noted last quarter, we are well positioned for long term growth and expect to grow sequentially as well as year over year for the remainder of 2024.

Beth Howe: We are taking a prudent approach to managing our cost structure as we absorbed the acquisition and prioritize investments to drive long term growth.

Beth Howe: With that in mind, we are providing the following outlook for the second quarter. We expect revenue of $40 to $42 million, an increase of 21 to 27% sequentially, and gross margins to be roughly flat compared with Q1. Operating expenses of $27.5 to $28 million and interest income of at least $5 million.

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

Beth Howe: We expect revenue of $40 million to $42 million, an increase of 21% to 27% sequentially grew.

Beth Howe: Gross margins to be roughly flat compared with Q1.

Beth Howe: Operating expenses of 27 $5 million to $28 million.

Beth Howe: And interest income of at least $5 million.

Beth Howe: As a result, we expect non-GAAP earnings per share to be in the range of 1 to 5 cents per share. In closing, we are executing on our strategy. We have a unique technology that addresses large and growing markets, and our design wins reinforce the strength of our value proposition with customers. All in all, we are excited about our market position and believe our growth story is firmly intact. With that, I'd like to hand the call back to the operator for questions and answers.

Beth Howe: As a result, we expect non-GAAP earnings per share to be in the range of one to five cents per share.

Beth Howe: In closing we are executing on our strategy.

Beth Howe: We have a unique technology that addresses large and growing markets and our design wins reinforced the strength of our value proposition with customers.

Beth Howe: All in all we are excited about our market position and believe our growth story is firmly intact.

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

Beth Howe: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star one on your telephone. If your question has been answered and you wish to remove yourself from the queue, please press star 119.

Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered and wish him with yourself from the queue. Please press star one again.

Speaker Change: We will pause for a moment, while we compile the Q&A roster.

Operator: Our first question comes from tore Svanberg with Stifel. Your line is open.

Tore Egil Svanberg: Yes, thank you and congratulations on the continuous recovery here.

Tore Egil Svanberg: So it sounds like pretty strong growth for Q2.

Tore Egil Svanberg: Jason I was hoping you could maybe talk a little bit about where that growth is coming from especially within your three product segments.

Speaker Change: Yes so.

Tore Egil Svanberg: It's from all of them story, that's the nice part about it.

Rajesh Vashist: Clearly CBD.

Rajesh Vashist: Going to do very well.

Rajesh Vashist: Hum.

Rajesh Vashist: And so is automotive and industrial but equally consumer is going to grow although not as much. It is going to continue to grow as well so.

Rajesh Vashist: We're going to see growth in all three segments.

Tori: Very good and you mentioned that customers continue to make progress on reducing inventory levels is it safe to say that that process is almost complete or are you still seeing certain customers still still.

Beth Howe: Di di digesting the inventories.

Beth Howe: I think it's a great question. So, we have seen a lot of progress in the inventory digestion. And as we said last quarter, I think it'll be pretty much behind us by the end of this quarter. A lot of customers are back to normal buying patterns, and the remainder, I think will be pretty much behind us this quarter. Great, I'll go back in line.

Speaker Change: Great I'll go back in queue. Thank you.

Speaker Change: One moment for our next question.

Operator: Thank you. One moment for our next. Our next question comes from Quinn Bolton with Needham & Company. Your line is, Hey, yeah, let me offer my congratulations on the strong outlook. I guess, Beth, to follow up on your last answer there, if you think most customers sort of through the inventory correction by the end of the second quarter here, do you think we're sort of getting back to consumption levels? Should we be thinking about the 40 to 42 level as getting close to consumption, or do you think the 40 to 42 is still well below consumption levels?

Beth Howe: Our next question comes from Quinn Bolton with Needham <unk> Company. Your line is open.

Nathaniel Quinn Bolton: Hey, let me offer my congratulations on the strong outlook.

Nathaniel Quinn Bolton: I guess first to follow up on your last answer there. If you think most customers sort of through the inventory.

Nathaniel Quinn Bolton: Correction by the end of the second quarter here.

Nathaniel Quinn Bolton: Do you think we're sort of getting back to consumption levels should we be thinking about the $40 to 42.

Nathaniel Quinn Bolton: Level is getting close to consumption or do you think the $40 to 42 is still well below consumption levels.

Nathaniel Quinn Bolton: And then second question just as you look into the second half of the year in most years <unk> pretty pretty healthy seasonality in the business second half over first half wondering if you.

Nathaniel Quinn Bolton: Envision sort of normal seasonal second half strength this year.

Nathaniel Quinn Bolton: Especially as customers emerge from the inventory correction. Thank you.

Speaker Change: Thanks, Glenn So let me address those questions as we think about our sell through versus our sell in I think we're seeing good return too.

Beth Howe: More normalized patterns, if you will and being able to see that in the bookings as well.

Beth Howe: In terms of seasonality, I think we do expect a seasonally stronger second half than first half. Though I think we've also seen some pickup here in Q2 that Q2 is probably a little bit stronger than we would have thought 90 days ago, but we do still expect the second half to be stronger than the first half. Perfect. Thank you. One moment for our next question. Our next question comes from Suji DeSilva with Rolf MKM. Your line is open. Hi Rajesh, hi Beth, congrats on the recovery here.

Speaker Change: So really excited about seeing that return in terms of seasonality I think we do expect seasonally stronger second half than first half no. I think we've also seen some pick up here in Q2.

Suji DeSilva: Q2 is probably a little bit stronger than we would've thought 90 days ago, but we do still expect second half to be stronger than first half.

Suji DeSilva: Perfect. Thank you.

Suji DeSilva: One moment for our next question.

Suji DeSilva: A longer-term question perhaps to start, as you grow back to kind of 30% year over year and into the next several quarters, do you think this time that the consumer mix will still kind of be the larger element as you grow, and it was 50%, 60% before? I'm assuming it's not going to go that high, but or will it be more of a blended mix as you kind of grow into a larger revenue this time around with all the design Yeah, thanks Suji.

Suji DeSilva: Our next question comes from Suzhou Silver with Ralph.

Speaker Change: Line is open hi.

Suji DeSilva: Hi, Josh Hi, Beth congrats on the recovery here.

Suji DeSilva: Longer term question, perhaps start as you grow.

Suji DeSilva: Back to kind of 30% year over year to over the next several quarters do you think this time that the consumer mix will still kind of be the larger element as you grow and it was 50%, 60% before I'm, assuming you're talking about that high but or will it be more of a blended mix as you kind of grow into a larger revenue. This time around with all the design win pipeline yet.

Suji DeSilva: We've always maintained that the new products that we have launched over the last three years, plus the Quora acquisition, most of them go into the communications enterprise and data center, or CED, markets. So we expect to see continued strong growth in that market. We see that market, that revenue for us getting to be $100 million in the coming years. We also expect continued growth in the automotive industry, which we also think will get to a very high number in the coming years.

Suji DeSilva: Yes, Thanks <unk>.

Suji DeSilva: <unk> always maintained that as the new products that we have.

Suji DeSilva: Launched over the last.

Suji DeSilva: <unk>.

Suji DeSilva: We also expect continued growth in automotive, which we also think we'll get to a very high number in coming years.

Suji DeSilva: So while consumer and industrial will continue to grow while consumer will grow.

Suji DeSilva: So while consumer and industrial continue to grow, while consumer will grow, most of the products that we launched in the last, [inaudible] significantly into higher gross margin, higher ASP, much stickier products in the CED industrial and to some extent in the automotive. Very helpful, Rajesh.

Suji DeSilva: Most of the products that we launched in the last two years, 80% of those products were intended for industrial automotive.

Rajesh Vashist: And the CBD markets. So it's reasonable to assume that our mix is going to grow as designed.

Suji DeSilva: Significantly into the higher gross margin higher ASP.

Suji DeSilva: Much stickier products and the CBD industrial and to some extent in the automotive market.

Rajesh Vashist: And then on the data center success you're having, do you have a sense of what percent of that is coming from the AI infrastructure build out, which the hyperscales are focusing on right now? Do you have a sense of how leveraged you are to that? It's pretty high. In fact, I would pretty much say some of the bulk of it, given the optical modules, given the NIC card business, given the active cabling and optical cables, I think all of those are going in there. There are switches in there,

Rajesh Vashist: Very helpful and then.

Rajesh Vashist: On the data center success, you are having do you have a sense of what percent of that is coming from AI infrastructure Buildout, which.

Rajesh Vashist: The Hyperscale is we're focusing on right now do you have a sense of how levered you are to that.

Rajesh Vashist: What's pretty high.

Rajesh Vashist: It's in fact, I would pretty much say some of the bulk of it given the optical.

Rajesh Vashist: The optical modules.

Rajesh Vashist: Given the Nic card business given the.

Rajesh Vashist: There are top-of-the-rack switches in them, so I think most of it that's coming is from there worldwide. But I deliberately put in the telecom piece just to say that I know telecom is a little bit out of fashion these days, but the next generation of 5G equipment is happening, and SiTime has secured significant design wins. And whenever that comes back, let's say in the middle of next year, we are going to participate in that too. Noted. Thanks.

Rajesh Vashist: But I deliberately put in the telecom piece just to say that I know telecom is a little bit other fashion. These days, but the next generation of <unk> equipment is happening and <unk> has secured significant design wins and whenever that comes back let's say in the middle of next year.

Rajesh Vashist: We are going to participate in that too.

Speaker Change: Okay noted.

Operator: One moment for our next question. Our next question comes from Chris Caso with Wolf Research Alliance. Yes, thank you.

Speaker Change: One moment for our next question.

Operator: Our next question comes from Chris Caso with Wolfe Research Your line is open.

Christopher Caso: Just a question about long-term growth. I think you reiterated that at kind of 30%. Can you speak about that in the context of, you know, this year, next year? Are those kind of reasonable assumptions from these levels now that the inventory burn is pretty well done? you know, driving expectations of 30% growth from these levels going forward. Yeah, I mean, even as early as our last earnings call in February, I was indicating between 25 and 30% growth for this year. And I continue to see that. I might even argue a little bit towards the higher end of that.

Christopher Caso: Yes. Thank you just a question about the long term growth rate.

Christopher Caso: <unk>.

Christopher Caso: I think you reiterated that at kind of 30%.

Christopher Caso: Can you speak about that in the context of this year next year.

Christopher Caso: Are those kind of reasonable assumptions from from these levels now that the inventory burn is pretty well done that we could start looking at <unk>.

Christopher Caso: Driving expectations of 30% growth from from these levels going forward.

Christopher Caso: Yes, I mean, even as early as last last earnings call in February I was indicating between 25% and 30% growth for this year.

Christopher Caso: And I continue to see that I might even argue a little bit towards the higher end of that.

Rajesh Vashist: But it is early days for this year. We're still in the first week of May. But I continue to see significant potential for SiTime in Q3, Q4. But very clearly, for next year, 2025, I certainly see 30% in line of sight. Thank you. As a follow-up, you mentioned in your remarks some pricing pressure on the automotive side. I wonder if you could expand on those remarks, you know, where you're seeing that pressure, and how you're dealing with it.

Christopher Caso: But it is early days for this year, we're still in the first week of May, but I continue to see significant potential for some time in Q3 Q4, but very clearly in next year 2025.

Speaker Change: Certainly you see 30% in line of sight.

Speaker Change: Thank you.

Speaker Change: As a follow up you mentioned in your remarks.

Speaker Change: Some pricing pressure on the automotive side wondering if you could expand on those remarks.

Rajesh Vashist: <unk>.

Rajesh Vashist: And, you know, I guess, since you constrain those remarks to the auto segment, does that suggest that pricing in other segments is stable? Yeah, the pricing for SiTime between this past quarter and this quarter is going to continue to be the same. In general, our price is driven, and our corporate ASP is driven more by individual places where we might be under pressure, which will happen, which does happen in pretty much every segment, just to be clear.

Speaker Change: Where are you seeing that pressure, how youre dealing with it.

Speaker Change: And I guess since you.

Rajesh Vashist: Constrain those remarks of the auto segment does that suggest that pricing in other segments as stable.

Rajesh Vashist: Yes, the pricing for some time between this past quarter and this quarter is going to continue to be the same.

Rajesh Vashist: But it's just in the aggregate; I see it more in the automotive sector, simply because I think there is some pressure on EV pricing, and some of it is rolling down to us. But this is, you know, at the margins. I was just sharing those thoughts in the spirit of great transparency, just to say that it's not like we're completely impervious to macro events. But we do have ameliorating parts to it, which is that our mix is changing.

Rajesh Vashist: I think there is some pressure on EV pricing and some of it is rolling down to us, but this is you know.

Rajesh Vashist: At the margins I was just sharing those thoughts in the spirit of great transparency just to say that it's not like we're completely impervious to macro events, but we do have ameliorated.

Rajesh Vashist: <unk>, which is that our mix is changing and so we're getting to.

Rajesh Vashist: To work around.

Rajesh Vashist: The pricing that we're getting through.

Rajesh Vashist: And so we're getting to work around the pricing that we are getting through. In the coming years in the automotive industry, I want to put in a plug for the new product portfolio that we are attempting to build in that market. I think that's going to be significantly differentiated to deliver reliability and performance for the automotive market, the likes of which they have never seen. And I think we're already doing that in CED. I think we're going to repeat that in cars, but that's going to take a couple years. Right. Thank you.

Rajesh Vashist: Coming years in automotive I want to put in a plug for the new product portfolio that we are attempting to build in that market I think thats going to be significantly differentiated to deliver reliability and performance for the automotive market the likes of which they have never seen and I think we are already.

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

Speaker Change: Got it.

Speaker Change: Thank you.

Speaker Change: Again, ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.

William Levy: One moment for our next question.

Operator: Yeah.

William Levy: Our next question comes from Tom O'malley with Barclays. Your line is open.

Tom O'malley: Just a quick question on gross margins on this trajectory into 2025. March Lowe, How do you see margins trending for the rest of 24? Unknown Attendee, Christopher Caso, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth Howe, as other segments grow.

William Levy: Hi, guys. This is <unk> on for Tom O'malley.

William Levy: Quick question on gross margins in this trajectory into 225.

William Levy: If the consumer business is recovering and off of March lows, how do you see margins trending for the rest of 'twenty four.

William Levy: Especially with the mix.

Tom O'malley: Other segments grow as well.

Beth Howe: Sure, I'll take that one. So if we think about gross margins, as I said, in Q2, we expect them to be kind of roughly similar to Q1. And in the back half, I would expect that they would see some improvement off those levels. Thanks. Should we assume, like, maybe...?, https://www.youtube.com Unknown Attendee, Christopher Caso, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Beth Howe, a little granular there.

Tom O'malley: Sure.

Speaker Change: I'll take that one so as we think about gross margins as I said in Q2, we expect them to be kind of roughly similar to Q1 and then the back half I would expect that they would see some improvement off those levels.

Speaker Change: Thanks, Julien assume like maybe 50 bps increase in September December maybe exiting the year close to 50.

Beth Howe: <unk> 59 ish.

Beth Howe: A little granular there.

Beth Howe: No, I appreciate it. May I give you some insights on how to think about gross margins? So I think gross margin will trend up as we go into the second half versus the first half. There's a number of things that go into gross margin, and then we'll have to see how that evolves. So clearly, our product mix is a big driver of gross margins. And then we also look at, as we grow revenue, then we would expect some better manufacturing absorption. That should be a benefit as well.

Beth Howe: Yes.

Speaker Change: I appreciate maybe I'll give you some insights on how to think about gross margin. So I think they will trend up as we go into second half versus first half. There's a number of things that go into gross margin and then we will have to see how that evolves. So clearly our product mix is a big driver of gross margin and then we also look.

Beth Howe: We'll have to see how costs play out as we go through the year. So those are kind of the puts and takes that I'd be thinking about as I thought about the second half. Thank you so much.

Beth Howe: The as we grow the revenue then we would expect some better manufacturing absorption that should be.

Beth Howe: If it is well we'll have to see how cost play as we go through the year. So those are kind of the puts and takes that I'd be thinking about as I thought about second half.

Speaker Change: Awesome. Thank you so much.

Operator: One moment for our next question. Our next question is a follow-up question from Tore Svanberg on Stiefel. Your line is open. Yes, thank you.

Speaker Change: One moment for our next question.

Operator: Our next question is a follow up question from tore Svanberg with Stifel. Your line is open.

Tore Egil Svanberg: Rajesh, I had a question about the Aura business, the clocks. You talked about 40 new products being released at the end of the year. I know you talked about not only Sam Expansion here but also strategically how important it is to, you know, sell clocks in addition to your oscillator devices. So could you just elaborate a little bit on that? And then, as you launch those 40 new products, you know, how is the sampling going to be as far as garnering more content? Because I do assume the clocks probably pull in more oscillators. That's right.

Tore Egil Svanberg: Yes. Thank you Rakesh I had a question on the or a business all of the clocks you talked about 40, new products being released at the end of the year.

Tore Egil Svanberg: I know you had talked about not just the Sam expansion here, but also strategically how important it is to.

Tore Egil Svanberg: Sell clocks.

Tore Egil Svanberg: In addition to your oscillated devices so.

Tore Egil Svanberg: Could you just elaborate a little bit on that.

Tore Egil Svanberg: Launched those 40 new products.

Tore Egil Svanberg: How how is how is the sampling going to be as far as garnering more content because I do assume the clocks, probably pull more oscillators too if I'm not mistaken.

Rajesh Vashist: So there are many strategic elements to that. The first and foremost is that SiTime's focus is right now on the CED market, with the clock and oscillators being sold as a bundle, because we believe that that is where the biggest precision timing needs are and where we can help our customers, particularly in AI right now, and even in telecom. We can help our customers a lot. Think of it this way; our customers today have to go to semiconductor companies such as Skyworks, Renesas, and Microchip, to name a few, to get the clocking portion.

Rajesh Vashist: That's right. So there are many strategic elements to that.

Rajesh Vashist: First and foremost is that.

Rajesh Vashist: The <unk> focus is right now on the CBD market with the clock.

Rajesh Vashist: Oscillators being sold as a bundle because we believe that that is where the biggest precision timing needs are and where we can help our customers, particularly the AI right now we can help our cost and even in telecom, we can help our customers a lot think of it this way our customers today.

Rajesh Vashist: Have to go to semiconductor companies, such as Sky works Renaissance and Microchip two.

Rajesh Vashist: To name a few to get the clocking portion then they have to go to the crystal companies to get the oscillator and then the burden falls on them to make the matching of these two under very tough conditions of performance an environment to make that work site that makes it super easy for them with these new 40 <unk>.

Rajesh Vashist: Then they have to go to the crystal companies to get the oscillator, and then the burden falls on them to make the matching of these two under very tough conditions of performance and environment to make that work.

Rajesh Vashist: SiTime makes it super easy for them with these new 4D products and the current ones that we've already launched, to put that integrated and make it work as a subsystem, and we're getting significant traction on that. My comments on getting traction on that with our customers in the data center market, as well as in the NIC card business, are very much focused on that. So I think we're going to start, we're not focused on the consumer space as much, we're focused mostly on the CED space, that is where the high margins are, and the clocking business also does have high margins, although not as high ASPs. ASPs are typically in the $5 to $10 range, oscillators can go as high as $30, but the gross margins are higher, close to 65 to 70%.

Rajesh Vashist: Products and the current ones that we've already launched that.

Rajesh Vashist: That is where the high margins are and the clocking business also does have high margins, although not as high Asps asps.

Rajesh Vashist: Asps are typically in the five to $10 range.

Rajesh Vashist: <unk> can go as high as $30.

Rajesh Vashist: But the gross margins are higher close to 65% to 70%.

Rajesh Vashist: Very good. Last question, then I'll go away. So you talked about obviously data center strength now, and it sounds like telecom will be more important next year. But what about enterprise networking?

Speaker Change: Very good last question then I'll go away.

Speaker Change: So you talked about obviously data center strength now and it sounds like telecom more next year, but what about enterprise networking are you starting to see that market waking up.

Speaker Change: As well.

Rajesh Vashist: Are you starting to see that the market is waking up as well? Yeah, we are. Although I have to say, I'd put it on the lower end a little bit.

Speaker Change: Yes, we are although I have to say I would put at the bottom a little bit I think some of our customers. There are are figuring out.

Rajesh Vashist: Where to play a little bit more.

Rajesh Vashist: But right now I think the beauty of sites is that.

Rajesh Vashist: With so many horses in the race in any different application or market weakened.

Rajesh Vashist: We also have a storage business, which is doing okay. And so I think that's the best part about SiTime that I like, in that we are a highly diversified but, at the same time, high growth business, and that's what makes us unique among most other companies. Very good. Thank you again.

Rajesh Vashist: That's the best part about <unk> that I like in which.

Rajesh Vashist: We are a highly diversified but at the same time high growth business.

Rajesh Vashist: Business and that's what makes us unique among most other companies.

Rajesh Vashist: Very good thank you again.

Operator: And I'm not showing any further questions at this time. I'd like to turn the call back over to management for any. Actually, we just have one other question pop up. Our next question is a follow-up from Quinn Bolton with Needham. Your line is open.

Speaker Change: And im not showing any further questions at this time I'd like to turn the call back over to management for any actually we just have one other question pop up one moment.

Operator: Our next question is a follow up from Quinn Bolton with Needham Your line is open.

Nathaniel Quinn Bolton: Two quick follow-ups for me. One, the Aura semiconductor products you just mentioned, 40 clocks by the end of the year. I know these things sometimes take time to go out, get design wins, and ramp to production, so I was wondering if you could just kind of give us your latest thoughts. When do you think you'll start to see revenue from the Aura transaction, obviously excluding the Cascade product that used Aura originally? Thanks. Yeah, so you're right, Quinn, it does take a little bit of a long time, particularly the clocking portion.

Nathaniel Quinn Bolton: Two quick follow ups from me one.

Nathaniel Quinn Bolton: Or of semiconductor products.

Nathaniel Quinn Bolton: Transaction, obviously, excluding the cascade product that used to or.

Nathaniel Quinn Bolton: Originally thanks.

Rajesh Vashist: Another is that it's in the CED area, but we are being a little bit more opportunistic. There are some products in the portfolio that are more pin-compatible with existing products, mostly in the buffer area.

Nathaniel Quinn Bolton: Yes, so youre right when it does take a little bit long time, particularly one is the clocking portion and other is that it's in the CBD area, but we are being a little bit more opportunistic there are some products in the portfolio that are <unk>.

Rajesh Vashist: <unk> pin compatible with existing products, mostly in the buffer area.

Rajesh Vashist: And SiTime is picking up traction because the unique thing about SiTime is that unlike other clocking companies, whose this clocking business is a 1%, 2% business for them, this is everything to do with SiTime, right? That's 100% SiTime business. So that level of focus, concentration, customer care, customer focus gets us a lot of traction, even when we have what we call Me Too products, such as the buffers.

Rajesh Vashist: And <unk> is picking up traction because the unique thing about <unk> is that unlike other clocking companies who is this this locking business is a 1% 2% business for them. This has everything to do with <unk> right, that's 100% <unk> business, so that level of focus concentration customer care.

Rajesh Vashist: Customer focus.

Rajesh Vashist: And even in that, we are starting to get some traction; possibly by late this year or early next year, we should be getting small, you know, single-digit millions from that kind of business. But I think it's just an indicator of what focus can bring to a market. And, and, and so yeah. Yeah, hope that helps. No, that's perfect.

Rajesh Vashist: But I think it's just an indicator of what focus can bring to our market and.

Rajesh Vashist: <unk>.

Rajesh Vashist: And so yes, yes.

Rajesh Vashist: Hope that helps.

Beth Howe: The other question for you, Beth, is just thinking about the gross margin ramp into the second half. Obviously, consumer, I think, is the lower margin segment. Just wondering, as you think about the second half, do you expect normal seasonality in the consumer segment in September, so maybe a little bit of a mixed headwind in September? Or do you think the CED and industrial auto markets, off perhaps a depressed pace, can continue to grow faster than consumer straight through year-end? Thank you. Hey Quinn, sure.

Rajesh Vashist: No.

Speaker Change: That's perfect.

Rajesh Vashist: For you Beth just thinking about the gross margin ramp in.

Beth Howe: Through the second half obviously consumer I think is the lower margin segment just wondering.

Quinn: About the second half do you expect normal seasonality in the <unk>.

Beth Howe: Consumer segment in September so maybe a little bit of a mix headwind in September or do you think the.

Beth Howe: <unk> in industrial auto markets off perhaps a depressed base can can continue to grow faster than consumer straight through year end. Thank you.

Beth Howe: The net net will be that gross margins should improve a little bit as we go into second half.

Speaker Change: Great. Thank you.

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

Operator: Great, thank you. And I'm not asking any further questions at this time. I'd like to turn the call back over to management for any closed questions. Thank you all for joining us. We're very happy to be at this point in SiTime's life in the second quarter, where we can look at growth all through the rest of the year, and we're delighted by how we're doing. Thank you all for joining us. Ladies and gentlemen, let's conclude today's presentation. You may now disconnect and have

Speaker Change: No. Thank you all for joining us.

Beth Howe: We're very happy to be at this point in.

Operator: <unk> life in the second quarter, where we can look at growth all through the rest of the year and we're delighted by how we're doing thank you all for joining us.

Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Q1 2024 SiTime Corp Earnings Call

Request a DemoDemo

SITM

SiTime

Earnings