Q2 2024 SiTime Corp Earnings Call

August 7, 2024

Good day, and thank you for standing by. Welcome to the SiTime Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Unknown Attendee: 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

Unknown Attendee: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.

Unknown Attendee: Please be advised that today's conference is being recorded.

Unknown Attendee: Unknown Attendee, Christopher Caso, Nathaniel Bolton, Brett Perry, Rajesh Vashist, Nathaniel To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Leanne Sievers with Shelton Group Investor Relations. Please go ahead. Thank you.

Operator: We advise that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Leanne Sievers, with Shelton Group Investor Relations. Please go ahead.

Leanne Siebers: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Leanne Siebers with Shelton Group Investor Relations. Please go ahead.

Leanne Sievers: I would now like to hand the conference over to your first speaker today, Leanne Sievers. With Shelton Group Investor Relations.

Unknown Attendee: Please go ahead. Thank you.

Leanne Sievers: Thank you. Good afternoon, and welcome to SiTime's second 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 its expected future results, including financial position, strategy, and plans, future operations, the timing market, and other areas of discussion.

Leanne Sievers: Good afternoon, and welcome to SiTime's second quarter 2024 financial result conference call. Joining us on today's call from SiTime, 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 your expected future results, including financial position, strategy and plans, and future 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.

Thank you. Good afternoon and welcome to SiTime's second 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.

Leanne Sievers: 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. 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.

Leanne Siebers: Before we begin, I'd like to point out that during the course of this call, the company may make forward-looking statements regarding your expected future results, including financial position, strategy and plans, future operations, the timing market, and other areas of discussion.

Speaker Change: 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.

Leanne Sievers: 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 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.

Leanne Siebers: 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.

Leanne Sievers: Neither the company nor any person assumes responsibility for the accuracy and completeness of forward-looking statements. The company undertakes no obligation 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.

Leanne Siebers: Neither the company nor any person assumes responsibility for the accuracy and completeness of forward-looking statements. The company undertakes no obligation 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.

Leanne Sievers: For more detailed information on risks associated with the business, we'll refer you to the risk factors described in the 10-K filed on February 26, 2024, as well as the company's subsequent filing with the SEC. During the call, we'll refer to certain non-GAAP financial 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 or superior to, measures of financial performance prepared in accordance with U.S. Gap. This 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 expense or income related to changes in the estimated fair value measurement of acquisition consideration, payable, and sales-based earn-up liabilities.

Leanne Siebers: 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.

Leanne Sievers: During the call, we'll refer to certain non-GAAP financial 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, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. This 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 expense 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 results. With that, it's now my pleasure to turn the call over to SiTime's CEO, Rajesh. Please go ahead.

Leanne Sievers: During the call, we'll refer to certain non-GAAP financial 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 or superior to, measures of financial performance prepared in accordance with U.S. GAAP. This 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 expense or income related to changes in the estimated fair value measurement of acquisition consideration payable and sales-based burnout liability. 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 SiTime CEO Rajesh Chandy. Rajesh, please go ahead.

Leanne Siebers: During the call, we'll refer to certain non-GAAP financial 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 or superior to, measures of financial performance prepared in accordance with U.S. GAAP.

Speaker Change: This 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,

Speaker Change: and expense or income related to changes in the estimated fair value measurement of acquisition consideration payable and sales-based earn out liabilities.

Leanne Sievers: Please refer to the company's press release issued today for a detailed reconciliation between Gap and non-GAAP financial results.

Speaker Change: 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 SiTime's CEO . Rajesh, please go ahead.

Leanne Sievers: With that, it's now my pleasure to turn the call over to Sytimes to EO.

Rajesh Vashist: Reject, please go ahead. Thank you, Leanne. Good afternoon.

Rajesh Vashist: Good afternoon. I'd like to welcome new as well as existing investors to SiTime's Q2 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 functionality.

Rajesh Vashist: I'd like to welcome you, as well as existing investors, to Sytimes Q2 2024 earnings call. For those of you that are not as familiar with Sytimes, we are the leader in a dynamic new semiconductor category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning.

Rajesh Vashist: Thank you, Leanne.

Rajesh Vashist: Good afternoon. I'd like to welcome new as well as existing investors to SiTime's Q2 2024 earnings call.

Rajesh Vashist: 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.

Rajesh Vashist: Sytimes precision timing solution serve the needs of AI, data center, automated driving, IOT, and 5-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2-2 We're in the early days of transforming the $10 billion timing market. Q2 results exceeded the high end of our outlook. Revenue for the quarter was 43.9 million, which was well above our guidance of 40 to 42 million. Operating profit and EPS were both higher than expected. Each in Q2 at double-digit rates, both sequentially and year over year. The drag of excess inventory over the last few quarters has passed, and we see that inventory is now at normal levels. Bookings for the second half of 2024 are strong, and we expect both Q3 and Q4 to grow sequentially as forecasted.

Rajesh Vashist: SiTime's precision timing solutions serve the needs of AI, data center, automated driving, IoT, and 5G. We're in the early days of transforming the $10 billion timing market. Q2 results exceeded the high end of our outlook. Revenue for the quarter was $43.9 million, which was well above our guidance of $40 to $42 million.

Speaker Change: SiTime's precision timing solutions serve the needs of AI, data center, automated driving, IoT, and 5G.

Rajesh Vashist: We're in the early days of transforming the $10 billion timing market. Q2 results exceeded the high end of our outlook. Revenue for the quarter was $43.9 million, which was well above our guidance of $40 to $42 million. Operating profit and EPS were both higher than expected. Each of our reported end markets grew in Q2 at double digit rates both sequentially and year over year. The drag of excess inventory over the last few quarters has passed, and we see that inventory is now at a normal level.

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

Speaker Change: Q2 results exceeded the high end of our outlook. Revenue for the quarter was $43.9 million, which was well above our guidance of $40 to $42 million.

Rajesh Vashist: Operating profit and EPS were both higher than expected. Additionally, each of our reported end markets grew in Q2 at double-digit rates, both sequentially and year-over-year. Bookings for the second half of 2024 are strong, and we expect both Q3 and Q4 to grow sequentially as forecast. From a geographic perspective, our 2024 revenue in every major region is expected to be strong. Revenue from each of Greater China, North America, and Europe is expected to grow by double-digit percentages. What makes SiTime unique apart from our technology is the diversity that we have built in applications, customers, and products. The growth across all of these occurs at different times, as we have previously forecasted.

Speaker Change: Operating profit and EPS were both higher than expected.

Speaker Change: Each of our reported end markets grew in Q2 at double-digit rates both sequentially and year-over-year.

Speaker Change: The drag of excess inventory over the last few quarters has passed and we see that inventory is now at normal levels.

Rajesh Vashist: Bookings for the second half of 2024 are strong, and we expect both Q3 and Q4 to grow sequentially as forecast. From a geographic perspective, our 2024 revenue in every major region is expected to be strong. Revenue from each of Greater China, North America, and Europe is expected to grow by double-digit percentages. What makes SiTime unique apart from our technology is the diversity that we have built in applications, customers, and products. The growth across all of these occurs at different times, as we have previously forecasted.

Speaker Change: Bookings for the second half of 2024 are strong and we expect both Q3 and Q4 to grow sequentially as forecasted.

Rajesh Vashist: From a geographic perspective, our 2024 revenue in every major region is expected to be strong. Revenue from each of Greater China, North America and Europe is expected to grow by double-digit percentages.

Speaker Change: From a geographic perspective, our 2024 revenue in every major region is expected to be strong. Revenue from each of Greater China, North America, and Europe is expected to grow by double-digit percentages.

Rajesh Vashist: What makes SiTime unique apart from our technology is the diversity that we have built in applications, customers, and products. The growth across all of these occurs at different times as we have previously forecasted. For example, while all our end markets are expected to grow throughout the year, the CED or Communications Enterprise Data Center market will grow at the fastest rate, more than 50%. This is also a market segment with high ASPs or prices, margins, and significant architectural differentiation. Five years ago, SiTime laid out a CED strategy of investing significantly in our ND and customers, and we will continue to do so in the future.

Speaker Change: What makes SiTime unique apart from our technology is the diversity that we have built in applications, customers, and products.

Speaker Change: The growth across all of these occurs at different times as we have previously forecasted.

Rajesh Vashist: For example, while all our end markets are expected to grow throughout the year, the CED, or Communications Enterprise Data Center, market will grow at the fastest rate, more than 50%. This is also a market segment with high ASPs, or prices, margins, and significant architectural differentiation. Five years ago, SiTime laid out a CED strategy of investing significantly in R&D and customers, and we will continue to do so in the future. We're confident of reaching the $100 million mark in this CED market, as previously forecasted.

Rajesh Vashist: For example, while all our end markets are expected to grow throughout the year, the CED, or Communications Enterprise Data Center, market will grow at the fastest rate, more than 50%. This is also a market segment with high ASPs, or prices, margins, and significant architectural differentiation. Five years ago, SiTime laid out a CED strategy of investing significantly in R&D and customers, and we will continue to do so in the future. We're confident of reaching a $100 million mark in this CED market, as previously forecasted.

Speaker Change: For example, while all our end markets are expected to grow throughout the year, the CED, or Communications Enterprise Data Center market, will grow at the fastest rate, more than 50%.

Speaker Change: This is also a market segment with high ASPs, or prices, margins, and significant architectural differentiation.

Speaker Change: Five years ago, SiTime laid out a CED strategy of investing significantly in R&D and customers, and we will continue to do so in the future.

Rajesh Vashist: We are confident of reaching a $100 million mark in this CED market as previously forecasted.

Speaker Change: we are confident of reaching one hundred million dollarmark in this cd market as previously forecasted

Rajesh Vashist: Within CED, we have made progress in our AI business over several quarters, and I will spend time today to provide greater color on this. We have designed wins with the precision timing products in all key applications of the AI ecosystem, including GPU and CPU boards, interconnect switches, optical modules, NIC cards, NIC cards, accelerator cards, active cables, and switches. To provide a sense of scale in 2024, we will ship 70 unique part numbers across 14 product families to 30 customers, 30 different customers who are all developing AI hardware. To provide greater specificity, we are focused on the revenue and growth from NIC or network info interface cards, interconnected switches, and top of the rack switches, where we deliver higher performance, smaller size, and higher reliability.

Rajesh Vashist: Within CED, we've made progress in our AI business over several quarters, and I will spend time today to provide greater color on this. We have designed WINS with precision timing products in all key applications of the AI ecosystem, including GPU and CPU boards, interconnect switches, optical modules, NIC cards, accelerator cards, active cables, and switches. To provide a sense of scale, in 2024, we will ship 70 unique part numbers across 14 product families to 30 customers, 30 different customers who are all developing AI hardware.

Speaker Change: Within CED, we have made progress in our AI business over several quarters, and I will spend time today to provide greater color on this.

Speaker Change: We have designed WINS with precision-timing products in all key applications of the AI ecosystem, including GPU and CPU boards,

Speaker Change: interconnect switches,

Speaker Change: Optical Modules, NIC Cards, Accelerator Cards, Active Cables, and Switches.

Speaker Change: To provide a sense of scale, in 2024, we will ship 70 unique part numbers across 14 product families to 30 customers, 30 different customers who are all developing AI hardware.

Rajesh Vashist: To provide greater specificity, we are focused on revenue and growth from NICs or Network Interface cards, interconnected switches, and top-of-the-rack switches, where we deliver higher performance, smaller size, and higher reliability. The precision timing content in each of these systems can range from $8 to $25 and includes our highest-end products, such as SuperTCXOs, OCXOs, as well as the Network Synchronizer Clock, from a recent acquisition of the Aura product.

Speaker Change: To provide greater specificity, we are focused on the revenue and growth from NIC or network

Speaker Change: Interconnected switches and top-of-the-rack switches, where we deliver higher performance, smaller size, and higher reliability.

Rajesh Vashist: The precision timing content in each of these systems can range from $8 to $25, and includes our highest end products, such as SuperTCXOs, OCXOs, as well as the network synchronized clock. from our recent acquisition of the Aura products. SiTime is the preferred supplier in these applications because of our capability to customize our devices to the application requirement and deliver performance benefits. Also, as the only company to focus solely on precision timing, we offer the broadest portfolio of oscillators, clocks, and synchronization software, simplifying the customer's design and purchase decisions. Cloud service providers have been in a race to invest, and we expect that trend to continue at a level that helps fuel SiTime's growth.

Speaker Change: The precision timing content in each of these systems can range from $8 to $25 and includes our highest-end products, such as SuperTCXOs, OCXOs, as well as the network-synchronized clocks from our recent acquisition of the Aura products.

Rajesh Vashist: SiTime is the preferred supplier in these applications because of our capability to customize our devices to the application requirement and deliver performance benefits. Also, as the only company to focus solely on precision timing, we offer the broadest portfolio of oscillators, clocks, and synchronization software, simplifying the customer's design and purchase decision. Cloud service providers have been in a race to invest, and we expect that trend to continue at a level that helps fuel SiTime's growth.

Speaker Change: SiTime is the preferred supplier in these applications because of our capability to customize our devices to the application requirement and deliver performance benefits.

Speaker Change: Also, as the only company to focus solely on precision timing, we offer the broadest portfolio of oscillators, clocks, and synchronization software, simplifying the customer's design and purchase decisions.

Speaker Change: cloud service providers have been in a race to invest and we expect that trend to continue at a level that help that helps fuel sitetimes growth

Rajesh Vashist: In fact, we now see a greater trend towards improving system bandwidth and utilization, which will require high performance and therefore more complex precision timing from SiTime. Obviously, this bodes well for us as we have all the key technologies to service this trend. For example, as optical module and active cable bandwidth increases from 800 gigabits per second to 1.6 terabits all the way to 3.2 terabits in the next few years, we expect a corresponding increase in several performance areas of timing such as frequency, jitter, phase noise, stability, and environmental resilience. We are confident that SiTime has the products today and in a product roadmap to meet these needs.

Rajesh Vashist: In fact, we now see a greater trend towards improving system bandwidth and utilization, which will require high performance and, therefore, more complex precision timing from SiTime. Obviously, this bodes well for us, as we have all the key technologies to service this trend. For example, as optical module and active cable bandwidth increases from 800 gigabits per second to 1.6 terabits, all the way to 3.2 terabits in the next few years, we expect a corresponding increase in several performance areas of timing, such as frequency, jitter, phase noise, stability, and environmental resilience.

Rajesh Vashist: In fact, we now see a greater trend towards improving system bandwidth and utilization, which will require high performance and, therefore, more complex precision timing from SiTime. Obviously, this bodes well for us as we have all the key technologies to service this trend. For example, as optical module and active cable bandwidth increases from 800 gigabits per second to 1.6 terabits, all the way to 3.2 terabits in the next few years, we expect a corresponding increase in several performance areas of timing, such as frequency, jitter, phase noise, stability, and environmental resilience.

Speaker Change: in fact we now see a greater trend towards improving system bwthand utilization which will require high performance and therefore more complex

SiTime: Precision Timing from SCI-TIME.

Speaker Change: Obviously, this bodes well for us as we have all the key technologies to service this trend.

Speaker Change: For example, as optical module and active cable bandwidth increases from 800 gigabits per second to 1.6 terabits all the way to 3.2 terabits in the next few years,

Speaker Change: We expect a corresponding increase in several performance areas of timing, such as frequency, jitter, phase noise, stability, and environmental resilience.

Rajesh Vashist: We're confident that SiTime has the products today and on the product roadmap to meet these needs. In data centers, we also see an increasing need for synchronization, of which we also offer a complete. To summarize, we believe that SiTime's strategy of increasing diversity across applications, customers, and products is paying off. By focusing on high-value applications, we're accelerating our customer acquisition. Our expanding portfolio is delivering superior benefits in new applications that need precision timing. And, as the only semiconductor company that's uniquely focused on timing, we're well positioned to continue. I'll now turn the call over to Beth to discuss the financial results in more detail. Beth? Thanks.

Speaker Change: We are confident that SiTime has the products today and in a product roadmap to meet these needs.

Rajesh Vashist: In data centers, we also see an increasing need for synchronization, of which we also offer a complete solution.

Speaker Change: In data centers, we also see an increasing need for synchronization, of which we also offer a complete solution.

Rajesh Vashist: To summarize, we believe that SiTime's strategy of increasing diversity across applications, customers, and products is paying off. By focusing on high value applications, we're accelerating our customer acquisition. Our expanding portfolio is delivering superior benefits in new applications that need precision timing, and as the only semiconductor company that's uniquely focused on timing, we're well positioned to continue our success.

Speaker Change: To summarize, we believe that SiTime's strategy of increasing diversity across applications, customers and products is paying off. By focusing on high-value applications, we are accelerating our customer acquisition.

Speaker Change: Our expanding portfolio is delivering superior benefits in new applications that need precision timing. And as the only semiconductor company that's uniquely focused on timing, we're well positioned to continue our success.

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

Speaker Change: I'll now turn the call over to Beth.

Beth Howe: Beth?

Beth Howe: Thanks Rajesh, and good afternoon everyone. Today I'll discuss the details of our second quarter results and provide our outlook for the third quarter. I'll focus my discussion on non-GAAP financial results, which are reconciled to GAAP in our press release. In Q2, we delivered strong revenue and earnings growth that exceeded our outlook. Q2 revenue was $43.9 million, up 58% year-on-year and up 33% sequentially when growth in each of our end markets is taken into account. Sales into the communications enterprise and data center market were $15.2 million, up 208% year-on-year and 55% sequentially.

Beth Howe: Thanks, Rajesh, and good afternoon, everyone. Today, I'll discuss the details of our second quarter results and provide our outlook for the third quarter. I'll focus my discussion on non-GAAP financial results, which are reconciled to GAAP in our press release. In Q2, we delivered strong revenue and earnings growth that exceeded our outlook. Q2 revenue was $43.9 million, up 58% year-on-year and up 33% sequentially when growth in each of our end markets is taken into account. Sales into the communications enterprise and data center market were $15.2 million, up 208% year-on-year and 55% sequentially.

Beth Howe: Thanks, Regesh.

Beth Howe: Good afternoon, everyone. Today, I'll discuss the details of our second quarter results and provide our outlook for the third quarter. I'll focus my discussion on non-GAAP financial results, which are reconciled to GAAP in our press release. In Q2, we delivered strong revenue and earnings growth that exceeded our outlook. Q2 revenue was $43.9 million, up 58 percent year-on-year and up 33 percent sequentially, with growth in each of our end markets. Sales into the communications enterprise and data center market were $15.2 million, up 208 percent year-on-year and 55 percent sequentially. Sales into the automotive, industrial, and aerospace market were $14.8 million, increasing 20 percent year-on-year and 15 percent sequentially.

Beth Howe: to discuss the financial results in more detail. Beth? Thanks, Rajesh. And good afternoon, everyone. Today, I'll discuss the details of our second quarter results and provide our outlook for the third quarter. I'll focus my discussion on non-GAAP financial results, which are reconciled to GAAP in our press release.

Speaker Change: In Q2, we delivered strong revenue and earnings growth that exceeded our outlook.

Speaker Change: Q2 revenue was $43.9 million, up 58% year-on-year and up 33% sequentially when growth in each of our end markets.

Speaker Change: Sales into the communications, enterprise, and data center market were $15.2 million, up 208% year-on-year and 55% sequentially.

Beth Howe: Sales into the automotive, industrial, and aerospace market were $14.8 million, increasing 20% year-on-year and 15% sequentially. And sales into the mobile, IoT, and consumer market were $13.8 million, up 33% year-on-year and 34% sequentially, with sales to our largest customer totaling $7.9 million, or 18% of sales. Non-GAAP gross margins were 57.7%, down 20 basis points sequentially.

Speaker Change: Sales into the automotive, industrial, and aerospace market were $14.8 million, increasing 20% year-on-year and 15% sequentially.

Beth Howe: And sales into the mobile IoT and consumer market were $13.8 million, up 33 percent year-on-year and 34 percent sequentially, with sales to our largest customer totaling $7.9 million or 18 percent of sales.

Speaker Change: And sales into the mobile, IoT, and consumer market were $13.8 million, up 33% year-on-year and 34% sequentially, with sales to our largest customer totaling $7.9 million, or 18% of sales.

Beth Howe: Rose. Non-GAAP gross margins were 57.7%, down 20 basis points sequentially. The impact of improved manufacturing absorption with higher volumes was more than offset by the higher overhead and other manufacturing costs as we continue to support our growth plans. Total non-GAAP operating expenses for the quarter were $28.1 million, with R&D expense of $16.1 million and SG&A expense of $12 million. Total operating expenses were up $0.7 million sequentially due to higher commissions on increased revenue as well as strategic hiring. The Q2 non-GAAP operating loss was $2.8 million, a significant improvement versus the prior quarter operating loss of $8.3 million.

Speaker Change: Non-GAAP gross margins were 57.7% down 20 basis points sequentially.

Beth Howe: The impact of improved manufacturing absorption with higher volumes was more than offset by higher overhead and other manufacturing costs as we continue to support our growth plan. Total non-GAAP operating expenses for the quarter were $28.1 million, with R&D expense of $16.1 million and SG&A expense of $12 million. Total operating expenses were up $0.7 million sequentially due to higher commissions on increased revenue as well as strategic hiring. The Q2 non-GAAP operating loss was $2.8 million, a significant improvement versus the prior quarter operating loss of $8.3 million.

Beth Howe: The impact of improved manufacturing absorption with higher volumes was more than offset by higher overhead and other manufacturing costs as we continue to support our growth plan. Total non-GAAP operating expenses for the quarter were $28.1 million, with R&D expense of $16.1 million and SG&A expense of $12 million. Total operating expenses were up $0.7 million sequentially due to higher commissions on increased revenue as well as strategic hires. The Q2 non-GAAP operating loss was $2.8 million, a significant improvement versus the prior quarter operating loss of $8.3 million.

Speaker Change: the impact of improved manufact absorption with higher volumes was more than offset by the higher overhead and other manufacturing costs as we continue to support our growth plans

Speaker Change: Total non-GAAP operating expenses for the quarter were $28.1 million with R&D expense of $16.1 million and SG&A expense of $12 million.

Speaker Change: Total operating expenses were up $0.7 million sequentially due to higher commissions on increased revenue as well as strategic hiring.

Speaker Change: The Q2 non-GAAP operating loss was $2.8 million, a significant improvement versus the prior quarter operating loss of $8.3 million.

Beth Howe: Interest in other income was $5.6 million, and Q2 non-GAAP net income was $2.8 million, or $0.12 per share, compared with a $1.9 million loss last quarter. Turning to the balance sheet, accounts receivable was $21 million with DSOs of 43 days, down 3 days sequentially. Inventory at the end of the quarter was $70.8 million, down from $74.4 million last quarter. During the quarter, we consumed $0.2 million in cash from operations, invested $2.6 million in capital purchases, and paid $69 million to Aura as part of the transaction we announced last year. We ended the quarter with $453 million in cash equivalents and short-term investments.

Beth Howe: Interest and other income was $5.6 million, and Q2 non-GAAP net income was $2.8 million, or 12 cents per share, compared with a $1.9 million loss last quarter. Turning to the balance sheet, accounts receivable was $21 million with DSOs of 43 days, down three days sequentially. Inventory at the end of the quarter was $70.8 million, down from $74.4 million last quarter.

Speaker Change: Interest and other income was $5.6 million, and Q2 non-GAAP net income was $2.8 million, or $0.12 per share, compared with a $1.9 million loss last quarter.

Speaker Change: Turning to the balance sheet, accounts receivable was $21 million, with DSOs of 43 days down three days sequentially.

Speaker Change: inventory at the end of the quarter was seventy point eight million dollars down from seventy-four point four million dollars last quarter

Beth Howe: During the quarter, we consumed $0.2 million in cash from operations, invested $2.6 million in capital purchases, and paid $69 million to Aura as part of the transaction we announced last year. We ended the quarter with $453 million in cash, cash equivalents, and short-term investments. Let me now review our outlook for the September quarter. In Q3, we expect to continue to deliver strong revenue growth and return to operating profitability. We also expect increased costs in both cost of goods and operating expenses as a result of higher costs associated with ramping up our new product.

Speaker Change: During the quarter, we consumed $0.2 million in cash from operations, invested $2.6 million in capital purchases, and paid $69 million to ORA as part of the transaction we announced last year.

Speaker Change: We ended the quarter with $453 million in cash, cash equivalents, and short-term investments.

Beth Howe: Let me now review our outlook for the September quarter. In Q3, we expect to continue to deliver strong revenue growth and to return to operating profitability. We also expect increased costs in both costs of goods and operating expenses as a result of higher costs associated with ramping our new products. Specifically, we expect revenue to increase 25 to 27 percent sequentially to about $55 million at the midpoint. Gross margins to be stable to slightly improving, trending towards 58 percent. Operating expenses to be in the range of $30.5 to $31 million, an interest income of at least $5 million.

Beth Howe: Specifically, we expect revenue to increase 25 to 27% sequentially to about $55 million at the midpoint. Gross margins to be stable to slightly improving, trending toward 58%. Operating expenses to be in the range of $30.5 to $31 million, and interest income of at least $5 million. As a result, we expect non-GAAP EPS to be in the range of $0.23 to $0.27 per share.

Speaker Change: Let me now review our outlook for the September quarter.

Speaker Change: In Q3, we expect to continue to deliver strong revenue growth and to return to operating profitability. We also expect increased costs in both costs of goods and operating expenses as a result of higher costs associated with ramping our new products.

Beth Howe: Specifically, we expect revenue to increase 25% to 27% sequentially to about $55 million at the midpoint. Gross margins to be stable to slightly improving, trending towards 58%. Operating expenses to be in the range of $30.5 to $31 million, and interest income to be at least $5 million. As a result, we expect non-GAAP EPS to be in the range of $0.23 to $0.27 per share.

Speaker Change: Specifically, we expect revenue to increase 25-27% sequentially to about $55 million at the midpoint.

Speaker Change: Gross Margins to be Stable to Slightly Improving, Trending Toward 58%

Speaker Change: Operating expenses to be in the range of 30.5 to 31 million dollars and interest income of at least 5 million dollars.

Beth Howe: As a result, we expect non-GAAP EPS to be in the range of 23 to 27 cents per share.

Speaker Change: As a result, we expect non-GAAP EPS to be in the range of $0.23 to $0.27 per share.

Beth Howe: In closing, we are executing on our strategy. Our product portfolio continues to expand with differentiated products that address large and growing markets, and our customers are clearly recognizing our value proposition. All in all, we are excited about our market position and our growth prospects ahead.

Unknown Attendee: In closing, we are executing on our strategy. Our product portfolio continues to expand with differentiated products that address large and growing markets, and our customers are clearly recognizing our value proposition. All in all, we are excited about our market position and our growth prospects ahead. Operator? Thank you.

Speaker Change: In closing, we are executing on our strategy. Our product portfolio continues to expand with differentiated products that address large and growing markets, and our customers are clearly recognizing our value proposition.

Speaker Change: All in all, we are excited about our market position and our growth prospects ahead.

Unknown Attendee: With that, I'd like to hand the call back to the operator for questions and answers. Operators, thank you. At this time, we will conduct the question-and-answer session. As a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be in it. Now, to withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster.

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

Unknown Attendee: At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Tom O'Malley of Barclays. Your line is now open.

Operator: At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Tom O'Malley of Barclays. Your line is now open.

Speaker Change: Thank you. At this time we will conduct the question and answer session. As a reminder, to ask a question you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question please press star 1 1 again. Please stand by while we compile the Q&A roster.

Christopher Caso: Our first question comes from the line of Tom O'Malley of Barclays. Your line is now open.

Speaker Change: Our first question comes from the line of Tom O'Malley of Barclays. Your line is now open.

Christopher Caso: Hey guys, thanks for taking my question. I just wanted to talk about the recovery into the second half. So you talked on the last call about kind of expanding. The opportunities that you were kind of chasing as revenue re-accelerated. Could you just talk about what you're seeing off the bottom here? Is it really just a return to accelerated demand in some end markets now that the inventory correction is kind of behind you? Or are you kind of seeing that traction in the additional kind of opportunities that you're chasing?

Tom O'malley: Hey guys, thanks for taking my question. I just wanted to talk about the recovery into the second half. So, you talked on the last call about kind of expanding the opportunities that you were kind of chasing as revenue re-accelerated. Could you just talk about, you know, what you're seeing off the bottom here? Is it really just a return to accelerated demand in some end markets now that the inventory correction is kind of behind us?

Tom O'malley: Hey, guys, thanks for taking my question. I just wanted to talk about the recovery into the second half. So you talked on the last call about kind of expanding the opportunities that you were kind of chasing as revenue re-accelerated. Could you just talk about, you know, what you're seeing off the bottom here? Is it really just a return to accelerated demand in some end markets now that the inventory correction is kind of behind us?

Tom O'malley: Hey guys, thanks for taking my question.

Tom O'malley: I just wanted to talk about the recovery into the second half. So you talked on the last call about kind of expanding the opportunities that you were kind of chasing as revenue reaccelerated. Could you just talk about, you know, what you're seeing off the bottom here? Is it really just...

Speaker Change: a return to accelerate demand and some endmarts now that the inventory correction is kind of behind you

Tom O'malley: Or are you kind of seeing traction in the additional kind of opportunities that you're chasing? I guess that's part one. And then part two is, if you look at that guidance for the September quarter, you obviously kind of talked about CED being the growth engine for the remainder of the year. But could you just give us a little color on those end markets and what you would expect from each kind of trending into the September quarter?

Christopher Caso: I guess that's part one. And then part two is if you look at that guidance in the September quarter, you obviously kind of talked about CDVing, the growth engine for the remainder of the year. Can you just give us a little color on those end markets and what you would expect from each kind of trending into the September quarter?

Speaker Change: or you kind of seeing that traction in the additional kind of opportunities that you're asing part one and then part two is if you look at that guide in the september quarter you obviously kind of talked about tvbeing the growth engine for the mainderof viewic could you just give usa little color on those end market

Rajesh Vashist: Right. So, it's a bit of both, Tom, on the first question. In other words, inventories down, as we said, it would have been a couple of quarters ago, and that happened, and demand is up. But demand isn't up in a monolithic way. There are some places where demand is up a little bit less, and others where demand is up a lot. So, the demand is up a lot in the area specifically of AI, specifically in the optical markets, and the interconnects, and some of the NIC card business. In general, all AI is up, and we continue to see it grow.

Rajesh Vashist: Right. So, it's a bit of both, Tom, on the first question. In other words, inventories down, as we said, it would have been a couple of quarters ago, and that happened, and demand is up. But demand isn't up in a monolithic way. There are some places where demand is up a little bit less, and others where demand is up a lot. So, the demand is up a lot in the area specifically of AI, specifically in the optical markets and the interconnects and some of the NIC card business. In general, all AI is up, and we continue to see it grow.

Rajesh Vashist: Right. So it's a bit of both, Tom, on the first question. In other words, inventory is down. As we said, it would be a couple of quarters ago, and that happened, and demand is up. Now demand isn't up in a monolithic way. There are some places where demand is up a little bit. Less and others where demand is up a lot.

Speaker Change: and what you would expect from each kind of trending into the September quarter.

Speaker Change: right

Speaker Change: So, it's a bit of both, Tom, on the first question. In other words...

Speaker Change: Inventories down, as we said, it would be a couple of quarters ago and

Speaker Change: that happened

Speaker Change: and demand is up. Now demand isn't up in a monolithic way. There are some places where demand is up a little bit less and others where demand is up a lot. So the demand is up a lot is in the area specifically of AI.

Rajesh Vashist: So the demand is up a lot is in the area specifically of AI, specifically in the optical markets and the interconnects and some of the Nick card business in general. All AI is up and we continue to see it grow up. I know there's a lot of headlines around that, but we specifically believe that this growth continues over time. As we progress.

Speaker Change: specifically in the optical markets and the interconnects and some of the NIC card business.

Speaker Change: In general, all AI is up.

Rajesh Vashist: I know there's a lot of headlines around that, but we specifically believe that this growth will continue over time as we progress. Now, the nice part about SiTime, of course, is that everything else is also growing. Our automotive business, along with the mill, aerospace, industrial, all of that, that whole category is growing, as is our consumer, IoT, and mobile category. So all of them are growing, but some are growing faster than others, just as I said.

Speaker Change: and we continue to see it grow up. I know there's a lot of headlines around that, but we specifically believe that this growth continues over time as we progress. Now, the nice part about SiTime, of course, is that

Rajesh Vashist: Now, the nice part about site I'm, of course, is that everything else is also growing. Our automated motive business or are along with the mill aerospace industrial all of that whole category grows as does our consumer IoT and mobile category. So all of them are growing, but some are growing faster than others, just as I said. As far as what is exactly happening, we certainly see that the drive towards higher performance solutions in optical and active cables is very critical, very important, and we see a lot of active in that active behavior in that including interconnects and so on.

Speaker Change: Everything else is also growing. Our automotive business...

Speaker Change: are, along with the mill aerospace, industrial, all of that, that whole category grows, as does our consumer, IOT and mobile category. So all of them are growing, but some are growing faster than others, just as I said.

Rajesh Vashist: As far as what is exactly happening, we certainly see that the drive towards higher performance solutions in optical and active cables is very critical, very important. And we see a lot of activity in that active behavior in that, including interconnect, and so on. So, just the general part of data center is growing, and we anticipate that the whole category of communications, enterprise, and data center will continue to grow as communications start to catch up along with enterprise in the coming quarters. In other words, We also expect that to grow in the coming quarters as some of the newer products from SiTime get adopted in those markets.

Speaker Change: as far as what is exactly happening we certainly see that the drive towards

Speaker Change: higher performance solutions in optical.

Speaker Change: And active cables is very critical, very important, and we see a lot of active in that, active behavior in that, including interconnects.

Rajesh Vashist: So just the general part of data centers all growing, and we anticipate that that whole category of communications, enterprise, and data center continues to grow as communication starts to catch up along with enterprise in the coming quarters. In other words, we also expect that to grow in the coming quarters as there are some of the newer products from site and get adopted in those markets.

Speaker Change: and so on.

Speaker Change: Just the general part of data center is all growing. And we anticipate that that whole category of, of communications, enterprise and data center continues to grow as communications start to catch up along with enterprise in the coming quarters. In other words,

Speaker Change: We also expect that to grow in the coming quarters as some of the newer products from SiTime get adopted in those markets.

Beth Howe: Yes, so you're referencing the newer products, and I think in your prepared remarks, you talked about both the COGS and some of the stem being a little higher as it relates to those newer products. If you look at gross margin for the remainder of the year, you're kind of guiding to flattish into September quarter, kind of trending more towards 58.

Tom O'malley: Yes, you're referencing the newer products. And I think in your prepared remarks, you talked about both the COGS and some of the spending a little higher as it relates to those newer products. If you look at gross margin for the remainder of the year, you're kind of guiding to flattish into the September quarter, kind of trending more towards 58. How should we be thinking about gross margin long term? I'd assume that new product integration and launch kind of is a one to two quarter event, and then you start to see growth after that.

Tom O'malley: Yes, you're referencing the newer products. And I think in your prepared remarks, you talked about both the COGS and some of the spending a little higher as it relates to those newer products. If you look at gross margin for the remainder of the year, you're kind of guiding to flattish into the September quarter, kind of trending more towards 58. How should we be thinking about gross margin long term? I would assume that new product integration and launch kind of is a one to two quarter event, and then you start to see growth after that.

Speaker Change: Yes, so you're referencing the newer products and I think in your prepared remarks you talked about...

Speaker Change: both the COGS and some of the STEM being a little higher as it relates to those newer products.

Speaker Change: If you look at gross margin for the remainder of the year, you're kind of guiding to flattish into the September quarter, kind of trending more towards 58. How should we be thinking about the gross margin long, which I might assume that new product integration and launch kind of is a one to two quarter event, and then you start to see growth after that. But could you help kind of give the cadence? You've been helpful in the past, kind of getting back to that 60 mark. Are we still thinking about the same timeframe, kind of early next year or have the new products kind of change that out?

Beth Howe: How should we be thinking about the gross margin monitor not assume that new product integration and launch kind of is a one to two quarter event and then you start to see growth after that.

Tom O'malley: But could you help kind of give the cadence? You've been helpful in the past kind of getting back to that 60 mark. Are we still thinking about the same timeframe kind of early next year, or have the new products kind of changed that out?

Beth Howe: But could you help kind of give the cadence, even help in the past kind of getting back to that 60 mark? Are we still thinking about the same time frame, kind of early next year, or have the new product kind of changed that out.

Operator: 2024 earnings conference call. 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 will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.

Beth Howe: Sure, Tom, I'll take that one. Thanks for the question. So we still expect gross margins to be above 60% over the longer term. So there will be no change there. And as you would expect, we are seeing the benefit of the manufacturing absorption with the revenue growth. But as I said, over the next couple of quarters, we do expect that gross margins will be, while maybe improving a little bit, not growing at that faster clip as we support these growth plans and ramp these new products into mass production. So it'll take a couple of quarters.

Beth Howe: I'll take that one. Thanks for the question. So we still expect gross margins to be above 60% over the longer term. So no change there. And as you'd expect, we are seeing the benefit of the manufacturing absorption with the revenue growth. But, as I said, over the next couple of quarters, we do expect that the gross margins will be, you know, while maybe improving a little bit, not growing at that faster clip as we're supporting these growth plans and ramping these new products into mass production. So it'll take a couple of quarters. As you know, you know, yields improve.

Speaker Change: right

Speaker Change: Sure, Tom, I'll take that one. Thanks for the question. So we still expect gross margins to be above 60% over the longer term. So no change there. And as you'd expect, we are seeing the benefit of the manufacturing absorption with the revenue growth.

Operator: Please be advised that today's conference is being recorded.

Speaker Change: But as I said, over the next couple of quarters, we do expect that the gross margins will be, you know, while maybe improving a little bit, not growing at that faster clip as we're supporting these growth plans and ramping these new products into mass production. So it'll take a couple of quarters. As you know, you know, yields improve and as we go through that, we expect improvement over time, but it'll take a couple of quarters as we're ramping these different products.

Leanne Sievers: I would now like to hand the conference over to your first speaker today, Leanne Sievers. With Shelton Group Investor Relations. Please go ahead. Thank you.

Tom O'malley: As you know, yields improve. And as we go through that, we expect improvement over time. But it'll take a couple of quarters as we're ramping these different products. You may recall as well that, while previously, we might have launched one product or one platform in a given year, in the last couple of years, you know. We were able to invest and reinvest a lot of the profits in the last couple of years into R&D.

Rajesh Vashist: Good afternoon, and welcome to SiTime's second quarter, 2024 Financial Result Conference call. Joining us on today's call from SiTime, 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 your expected future results, including financial position, strategy and plans, future 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.

Beth Howe: And as we go through that, we expect improvement over time. But it'll take a couple of quarters as we're ramping these different products.

Beth Howe: You may recall as well that, while previously we might have launched one product or one platform in a given year. In the last couple of years, you know, we think about we were able to invest and reinvest a lot of the profits from the last couple of years into R&D. And those product platforms are now coming into mass production. And so we have several new products that are ramping here in the next couple of quarters. But over the long term, we do expect to still be able to get the margins back to about 60%.

Speaker Change: You may recall as well that while previously we might have launched one product or one platform in a given year, in the last couple of years, you know, think about we were able to invest and reinvest a lot of the profits from the last couple of years into R&D, and those product platforms are now coming into mass production. And so we have several new products that are ramping here in the next couple of quarters. But over the long term, we do expect to still be able to get the margins back above 60%. Thank you.

Tom O'malley: And those product platforms are now coming into mass production. And so we have several new products that are ramping up here in the next couple of quarters. But over the long term, we do expect to still be able to get the margins back above 60%.

Beth Howe: And then that's just circling back on the first question, just the trajectory of those businesses into the September quarter, any color on what generating the optic, the kind of growth amongst all of the different segments or any particular color there. So, as we look at, we expect all three segments to grow year on year. We would expect that the data center fueled by AI would be the fastest growing next quarter as it was this quarter.

Beth Howe: And then Beth, just circling back on the first question, just the trajectory of those businesses into the September quarter, any color on what's generating the uptick, the kind of growth amongst all of the different segments or any particular color? So, as we look at it, we expect all...

Speaker Change: And then Beth, just circling back on the first question, just the trajectory of those businesses into the September quarter, any color on what's generating the uptick, the kind of growth amongst all of the different segments or any particular color there?

Rajesh Vashist: 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 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.

Beth Howe: So, as we look ahead, we expect all three segments to grow year on year. We would expect that the data center fueled by AI would be the fastest growing next quarter as it was this quarter.

Beth Howe: So as we look ahead, we expect all three segments to grow year on year. We would expect that the data center fueled by AI would be the fastest growing next quarter as it was this quarter.

Speaker Change: so as we look at we expect all three segments to grow year on year we would expect that the data centerfuield by ai would would be the fastest growing next quarter as it was this quarter

Unknown Attendee: Thank you. Please stand by for your next question.

Unknown Attendee: Thank you. Please stand by for your next question. Our next question comes from the line of Chris Caso of Wolf Research. Your line is now open.

Operator: Thank you. Please stand by for your next question. Our next question comes from the line of Chris Caso of Wolf Research. Your line is now open.

Speaker Change: Thank you.

Rajesh Vashist: For more detailed information on risks associated with the business, we'll refer you to the risk factors described in the 10K filed on February 26, 2024, as well as the company's subsequent filing with the SEC. During the call, we'll refer to certain non-gap financial measures, which are considered to be an important measure of company performance. These non-gap financial measures are provided in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with U.S. Gap.

Speaker Change: Please stand by for your next question.

Suji DeSilva: Our next question comes from the line of Chris Kaso of Wolf Research. Your line is now open.

Speaker Change: Our next question comes from the line of Chris Caso of Wolf Research. Your line is now open.

Suji DeSilva: Yes, thank you. Good evening. I guess the first question would be, you know, a prior call you talked about 30% growth to the year potentially being on the table. You know, given the guidance for September, that certainly looks more achievable now.

Christopher Caso: Yes, thank you. Good evening.

Chris Caso: Yes, thank you. Good evening.

Rajesh Vashist: This 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 expense or income related to changes in the estimated fair value measurement of acquisition, consideration, payable, and sales-based earn-up liabilities.

Chris Caso: yes thank you good evening i guess the first question would be prior call you'd talked about

Chris Caso: Unknown Speaker 30% growth to the year potentially being on the table, you know, given the guidance for September , that certainly looks more achievable now. Could you give some kind of so, you know, with that.

Christopher Caso: I guess the first question would be, on the prior call, you talked about 30% growth for the year potentially being on the table, you know, given the guidance for September, that certainly looks more achievable now. Could you give some, so, with that, some comments on, you know, what you might expect in December, understanding that you probably don't want to provide guidance at this point. But, you know, any sort of color on that, is there any seasonality in play, or is there any lumpiness to, you know, perhaps some of these AI-driven drivers in the CED segment as you go into the December quarter?

Chris Caso: I guess the first question would be, you know, on the prior call, you talked about 30% growth for the year potentially being on the table, you know, given the guidance for September, that certainly looks more achievable now. Could you give some kind of, with that, some comments on, you know, what you might expect in December, understanding that you probably don't want to provide guidance at this point? But, you know, any sort of color on that? Is there any seasonality in play? Or is there any lumpiness in, you know, perhaps some of these AI-driven drivers in the CED segment as you go into the December quarter?

Rajesh Vashist: Could you give some, so, you know, with that, you know, some comments on, you know, what you might expect on December, understanding that you probably don't want to provide guidance at this point, but, you know, any sort of color on that? Is there any seasonality in play, or is there any lumpiness to, you know, perhaps some of these AI driven drivers in the CED segment as you go into the December quarter? Yeah, we are; we still believe in that 30%. So we do expect that growth for side time. The thing is that I don't see that there's a particular lumpiness to it other than side time's ability to deliver the product, which we think is solid.

Speaker Change: Some comments on what you might expect on December , understanding that you probably don't want to provide guidance at this point, but any sort of color on that? Is there any seasonality in play, or is there any lumpiness to perhaps some of these AI-driven drivers in the CED segment as you go into the December quarter?

Rajesh Vashist: Please refer to the company's press release issue today for a detailed reconciliation between Gap and non-gap financial results.

Rajesh Vashist: Yeah, we are, we still believe in that 30%. So we do expect that growth for SiTime. The thing is that I don't see that there's any particular lumpiness to it, other than SiTime's ability to deliver the product, which we think is solid. And so we don't expect any lumpiness per se in the December quarter or through the year. Because this is, there's just a big pent-up demand for these products, these end products in data centers.

Rajesh Vashist: Yeah, we are, we still believe in that 30%. So we do expect that growth for SiTime. The thing is that I don't see that there's any particular lumpiness to it other than SiTime's ability to deliver the product, which we think is solid. And so, we don't expect any lumpiness per se in the December quarter or through the year because this is because there's just a big pent-up demand for these products, these end products in data centers.

Rajesh Vashist: With that, it's now my pleasure to turn the call over to Sytimes to EO. Reject, please go ahead. Thank you, Leanne.

Rajesh Vashist: Good afternoon. I'd like to welcome you, as well as existing investors, to Sytimes Q22024 earnings call. For those of you that are not as familiar with Sytimes, we are the leader in a dynamic new semiconductor category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning. [inaudible] We're in the early days of transforming the $10 billion timing market. Q2 results exceeded the high end of our outlook. Revenue for the quarter was 43.9 million, which was well above our guidance of 40 to 42 million.

Rajesh Vashist: And so we don't expect any lumpiness per se in the December quarter or through the year, because this is, there's just a big pent-up demand for, for these products, these end products in data centers. And I see that whether they are US-based or with their China-based, as you know, many of the China-based people also deliver for the big data center companies. I think, I think we see a very solid performance in those markets.

Rajesh Vashist: And I see that whether they are US-based or whether they're China-based, as you know, many of the China-based people also deliver for the big data center companies. I think we see a very solid performance in those.

Rajesh Vashist: And I see that whether they are U.S.-based or whether they're China-based – as you know, many of the China-based people also deliver for the big data center companies. I think we see a very solid performance in those.

Christopher Caso: Got it, helpful, thank you. I guess, as a follow-on question, if perhaps you could provide some color on the impact of some of the new products on, you know, what's going on right now. And just, you know, using CED as an example, we obviously went through an inventory correction, and, you know, we're kind of getting back to, you know, run rates that were seen, you know, kind of late 21, 22, before some of the shortages emerged.

Chris Caso: Got it, helpful, thank you. I guess, as a follow-on question, if perhaps you could provide some color on the impact of some of the new products on, you know, what's going on right now. And just, you know, using CED as an example, we obviously went through an inventory correction, and, you know, we're kind of getting back to, you know, run rates that were seen, you know, kind of late 21, 22, before some of the shortages emerged.

Unknown Attendee: Thank you.

Rajesh Vashist: I guess there's a follow-on question. If perhaps you could provide some color on the impact of some of the new products on, you know, what's going on right now, and just, you know, using CD as an example, we obviously go through an inventory correction and, you know, we're kind of getting back to, you know, run rates that were, you know, seen, you know, kind of late 21, 22 before some of the shortages emerged. And, you know, I guess, as we compare now to then, you know, how much do some of these new products come into play in terms of driving the growth that was independent of, you know, some of the supply disruptions and inventory correction.

Speaker Change: I guess as a follow on question, if perhaps you could provide some color on the impact of some of the new products on whats going on right now and just using <unk> as an example, we obviously go through an inventory correction.

Rajesh Vashist: Operating profit and EPS were both higher than expected. Each in Q2 at double digit rates, both sequentially and year over year. The drag of excess inventory over the last few quarters has passed, and we see that inventory is now at normal levels. Bookings for the second half of 2024 are strong, and we expect both Q3 and Q4 to grow sequentially as forecasted. From a geographic perspective, our 2024 revenue in every major region is expected to be strong.

Speaker Change: We're kind of getting back to.

Speaker Change: Run rates that we're seeing.

Speaker Change: And of late 'twenty, one 'twenty two before some of the shortages emerged and.

Christopher Caso: And, you know, I guess, as we compare now to then, you know, how much do some of these new products come into play in terms of driving the growth that was, independent of, you know, some of the supply disruptions and inventory correction.

Chris Caso: And, you know, I guess, as we compare now to then, you know, how much do some of these new products come into play in terms of driving the growth that was, independent of, you know, some of the supply disruptions and inventory correction.

Speaker Change: I guess as we compare now to then.

Speaker Change: How much do some of these new products come into play in terms of driving the growth that was.

Speaker Change: Independent of some of the supply disruptions in the inventory correction.

Rajesh Vashist: Yeah, these, they're significant. In fact, there are very much; these new products are very much part of it. All across the board, whether it is the oscillators that are used in the optical products from customers, those did not exist in 21 in volume. And they exist now. So we're good with that. There are the higher end. And PCXOs, super PCXOs, OCXOs, and then not to mention our products from our acquisition. I think those are all coming together to not only get us numerous design wins, but also allow us, as I mentioned, you know, to 30 to 14 product families.

Rajesh Vashist: Yeah, these, they're significant. In fact, they are very much these new products are very much part of it. All across the board, whether it is the oscillators that are used in the optical products from customers, those did not exist in volume in 21, and they exist now. So we're good with that.

Rajesh Vashist: Yeah, these, they're significant. In fact, they are very much, these new products are very much part of it. All across the board, whether it is the oscillators that are used in the optical products from customers, those did not exist in volume in 21, and they exist now. So we're good with that.

Rajesh Vashist: Revenue from each of greater China, North America and Europe is expected to grow by double digit percentages. What makes SiTime unique apart from our technology is the diversity that we have built in applications, customers and products. The growth across all of these occurs at different times as we have previously forecasted. For example, while all our end markets are expected to grow throughout the year, the CED or communications enterprise data center market will grow at the fastest rate more than 50%.

Speaker Change: Yes. This <unk>.

Speaker Change: Significant in fact, they are very much these new products are very much part of it.

Speaker Change: All across the board whether it is the oscillators that are used in the optical products from customers. Those did not exist in 'twenty one in volume and they exist now so we're good with that there are at the higher end.

Chris Caso: There are the higher-end TCXOs, super TCXOs, OCXOs, and then not to mention our products from our Aura acquisition. I think those are all coming together to not only get us numerous design wins but also allow us, as I mentioned, to have 30 to 14 product families. So I think it's safe to say that at least half of these product families are new, maybe even more than half of these are new.

Christopher Caso: There are the higher-end TCXOs, SuperTCXOs, OCXOs, and then not to mention our products from our Aura acquisition. I think those are all coming together to not only get us numerous design wins, but also allow us, as I mentioned, to have 14 product families. So I think it's safe to say that at least half of these product families are new, maybe even more than half of these are new.

Speaker Change: <unk> or.

Speaker Change: <unk> and then not to mention.

Speaker Change: Our products from our <unk> acquisition.

Speaker Change: I think those are all coming together.

Rajesh Vashist: This is also a market segment with high ASPs or prices, margins and significant architectural differentiation. Five years ago, SiTime laid out a CED strategy of investing significantly in our ND and customers, and we will continue to do so in the future. We are confident of reaching a $100 million mark in this CED market as previously forecasted. Within CED, we have made progress in our AI business over several quarters, and I will spend time today to provide greater color on this.

Speaker Change: To not only get us numerous design wins, but also allow us as I mentioned.

Speaker Change: With 30.

Rajesh Vashist: So I think it's safe to say that at least half of these product families are new, maybe even more than half of these are new.

Speaker Change: To 14 product families. So.

Speaker Change: I think it's safe to say that at least half of these product families are new maybe even more than half of these are new.

Rajesh Vashist: And just what will follow if I could, you know, with those new products, understand what you're saying now that as you ramping new products, there's a learning curve, these yield and such, but structurally, as you ramp some of these new products with higher precision, should we expect that structurally, those are those represent higher margins than what you've seen in the past. Right, we said that I said that my prepared remarks as well that the CD business is important to us from a long time ago because we see higher ESPs, higher margins, greater stickiness, if you will, greater architectural differentiation, greater definition with customers of jointly of performance. As such, it makes for, and given the size of it, we have other higher ESPs.

Rajesh Vashist: And just one more follow-up question, if I could, you know, with those new products, understand what you're saying now that as you're ramping new products, there's a learning curve, there's yield and such, but structurally, as you ramp some of these new products with higher precision, should we expect that structurally, those represent higher margins than what you've seen in the past?

Rajesh Vashist: And just one more follow-up question, if I could, you know, with those new products. Understand what you're saying now that as you're ramping new products, there's a learning curve, these yields and such. But structurally, as you ramp some of these new products with higher precision, should we expect that structurally, those represent higher margins than what you've seen in the past?

Speaker Change: And just one more follow up if I, if I could with those new products understand what youre, saying now that as you're ramping new products, there's a learning curve these yield and such but structurally.

Speaker Change: As you ramp some of these new products with higher precision should we expect that structurally those are those represent higher margins than what you've seen in the past.

Rajesh Vashist: We have designed wins with the precision timing products in all key applications of the AI ecosystem, including GPU and CPU boards, interconnect switches, optical modules, NIC cards, NIC cards, accelerator cards, active cables and switches. To provide a sense of scale in 2024, we will ship 70 unique part numbers across 14 product families to 30 customers, 30 different customers who are all developing AI hardware. To provide greater specificity, we are focused on the revenue and growth from NIC or network info interface cards, interconnected switches and top of the rack switches, where we deliver higher performance, smaller size and higher reliability.

Chris Caso: Right, we said that, I said that in my prepared remarks as well, that the CD business is important to us from a long time ago because we see higher ASPs, higher margins, greater stickiness, if you will, greater architectural differentiation, and greater definition with customers of jointly of performance. As such, it makes for, and given the size of it, we have other higher ASPs, and for example, middle aerospace defense, but the size of that market isn't as big as this. So that is why we are putting the CD business front and center, as we did several years ago and will continue to do in the future.

Christopher Caso: Right, we said that, I said that in my prepared remarks as well, that the CD business is important to us from a long time ago because we see higher ASPs, higher margins, greater stickiness, if you will, greater architectural differentiation, and greater definition with customers of jointly of performance. As such, it makes for, and given the size of it, we have other higher ASPs, and, for example, mill aerospace defense, but the size of that market isn't as big as this is. So this is why we are putting the CD business front and center, as we did several years ago and will continue to do in the future.

Speaker Change: Right, we said that I said that in my prepared remarks, as well that the CV business is important to us from a long time ago, because we see higher asps and higher margins greater stickiness, if you will.

Speaker Change: Greater architectural differentiation greater definition with customers of joint jointly or performance as such it makes for and given the size of it we have other.

Rajesh Vashist: And for example, middle aerospace defense, but the size of that market isn't as big as this is. So this, that is why we are, we're putting the CD business front and center as we did several years ago, and we'll continue to do in the future. Got it. Understood.

Speaker Change: A higher Asps and for example, 1000 aerospace defense, but the size of that market isn't as big as this is so that is why we are putting the CEB business front and center.

Speaker Change: As we did several years ago, and we'll continue to do in the future.

Christopher Caso: Got it. Understandable. Thank you.

Chris Caso: Got it. Understandable. Thank you.

Unknown Attendee: Thank you. One moment for our next question.

Speaker Change: Got it understood. Thank you.

Rajesh Vashist: The precision timing content in each of these systems can range from $8 to $25, and includes our highest end products, such as SuperTCXOs, OCXOs, as well as the network synchronized clock, from our recent acquisition of the Aura products. SiTime is the preferred supplier in these applications because of our capability to customize our devices to the application requirement and deliver performance benefits. Also, as the only company to focus solely on precision timing, we offer the broadest portfolio of oscillators, clocks, and synchronization software, simplifying the customer's design and purchase decisions.

Unknown Attendee: One moment for our next question. Our next question comes from the line of Tore Svanberg of Seifel. Your line is now open.

Operator: One moment for our next question. Our next question comes from the line of Tore Svanberg from Seiffel. Your line is now open.

Speaker Change: One moment for our next question.

Tore Svanberg: Our next question comes from the line of Tori, Stanburg, a cycle. The line is now open.

Speaker Change: Our next question comes from the line of Torrey Svanberg of Stifel. Your line is now open.

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

Torrey Svanberg: Yes. Thank you.

Torrey Svanberg: And congratulations on the solid recovery here.

Tore Svanberg: Rajesh, I had a sort of clarifying question on the communications DC and enterprise business. I think you said you expected growth of 50% plus for the year. I mean, based on the current run rate, it's tracking significantly above that. So I mean, we talked about much more than 50%. Any color you can add?

Tore Svanberg: Rajesh, I had a sort of clarifying question on the communications DC and enterprise business. I think you said you expected growth of 50% plus for the year. I mean, based on the current run rate, it's tracking significantly above that. So, I mean, are we talking about much more than 50%? Any color you can add?

Rajesh Vashist: Rajesh, I had a sort of clarifying question on the communications DC and enterprise business. I think you said it; you expected the growth 50% plus for the year. I mean, based on the current run rate, it's tracking significantly above that. So, I mean, we talk about much more than 50% in any color. Yes, the story of your math is always right. It is significantly above 50%; might even be closer to 70% plus. Perfect.

Torrey Svanberg: <unk> sort of clarifying question on the communications do you see the enterprise business. I think you said you expected to grow 50% plus for the year.

Speaker Change: I mean based on the current run rate its tracking significantly above that so.

Speaker Change: Are we talking about much more than 50% any any color you can add there. Please.

Rajesh Vashist: Yes, Tori, your math is always right. It is significantly above 50%, and might even be closer to 70% plus.

Speaker Change: Yes, sorry, your math is always right.

Speaker Change: It is significantly above 50% might even be closer to 70% plus.

Rajesh Vashist: Cloud service providers have been in a race to invest and we expect that trend to continue at a level that helps fuel SiTime's growth. In fact, we now see a greater trend towards improving system bandwidth and utilization, which will require high performance and therefore more complex precision timing from SiTime. Obviously, this boards well for us as we have all the key technologies to service this trend. For example, as optical module and active cable bandwidth increases from 800 gigabits per second to 1.6 terabits all the way to 3.2 terabits in the next few years, we expect a corresponding increase in several performance areas of timing such as frequency, jitter, phase noise, stability, and environmental resilience. We are confident that SiTime has the products today and in a product roadmap to meet these needs. In data centers, we also see an increasing need for synchronization of which we also offer a complete solution.

Tore Svanberg: Perfect. Thank you.

Rajesh Vashist: Thank you.

Speaker Change: Perfect. Thank you and as my follow up.

Rajesh Vashist: And as I follow up, you talked about, you know, how diversified the AI business or the AI data for businesses. You mentioned the number of customers and so on and so forth, because you also talked a little bit about how, you know, how the designing process works here. You mentioned that you are preferred to acquire it in many platforms. I also believe you have some reference designs with the processor company, so help us just understand a little bit, you know, how the design and process works as you continue to grab this business. Yeah, so the designing process obviously can happen either with the semiconductor company, that's a supplier of GPU CPUs, or it can be directly with people who do accelerator cards, active cables and so on.

Speaker Change: Talked about how diversified the AI business.

Speaker Change: Our data center business as you mentioned the number of customers in total so forth, but can you also talk a little bit about how.

Tore Svanberg: And as a follow-up, you talked about, you know, how diversified the AI business or the AI data center business is, you mentioned the number of customers and so on and so forth. But can you also talk a little bit about how the design process works here? You mentioned that you are a preferred supplier on many platforms. I also believe you have some reference designs with the processor company. So help us just understand a little bit, you know, how the design process works as you continue to ramp this business up.

Speaker Change: The designing process works here.

Speaker Change: You mentioned that you are preferred supplier and menu platforms. I also believe you have some restaurants designs with the processor company. So help us just understand a little bit how the designing process works as you continue to ramp this business.

Rajesh Vashist: Yeah, so the design process obviously can happen either with the semiconductor company that's a supplier of GPUs, CPUs, or it can be directly with people who do accelerator cards, active cables, and so on. So it is with those people.

Rajesh Vashist: Yeah, so the design-in process obviously can happen either with the semiconductor company that's a supplier of GPUs, CPUs, or it can be directly with people who do accelerator cards, active cables, and so on. So it is with those people.

Speaker Change: Yes, so the design in process, obviously can happen either with the semiconductor company that is a supplier of Gpus Cpus or it can be directly with people to do accelerated cards active cables.

Rajesh Vashist: So it is with those people, but then it's a complex supply chain as you know. There are ODMs, you know, and then there are contract manufacturers, and then there are the consumers of the product itself, you know, whether they are that's an AWS or whether that's a Google.

Speaker Change: And so on so it is with those people, but then it's a complex supply chain as you know there are Oems.

Rajesh Vashist: But then it's a complex supply chain, as you know, there are ODMs, you know, and then there are contract manufacturers. And then there are the consumers of the product itself, you know, whether they are that's an AWS, or whether that's Google. So for SiTime, even though the design win occurs at one place, we have to support everybody along the way. And that's what makes it particularly complex, selling the value proposition of SiTime or articulating the value proposition of SiTime all through the supply chain.

Rajesh Vashist: But then it's a complex supply chain, as you know, there are ODMs, and then there are contract manufacturers, and then there are the consumers of the product itself, you know, whether they are AWS or Google. So for SiTime, even though the design-in occurs at one place, we have to support everybody along the way. And that's what makes it particularly complex, selling the value proposition of SiTime or articulating the value proposition of SiTime all the way through the supply chain.

Speaker Change: And then there are contract manufacturers.

Speaker Change: And then there are the consumers of the product itself, whether they are that's an AWS or whether that is a Google software side time, even though the design win occurs at one place we have to support everybody along the way and that's what makes it particularly complex.

Rajesh Vashist: So for site time, even though the design when occurs at one place, we have to support everybody along the way, and that's what makes it particularly complex: selling the value proposition of site time or articulating the value proposition of site time all through the supply chain. And it's gratifying to be able to see that that value proposition is understood and accepted for site time, and the value proposition, of course, is around performance, around environmental resilience, but it's also around supply chain.

Rajesh Vashist: To summarize, we believe that SiTime's strategy of increasing diversity across applications, customers and products is paying off. By focusing on high value applications, we're accelerating our customer acquisition. Our expanding portfolio is delivering superior benefits in new applications that need precision timing and as the only semiconductor company that's uniquely focused on timing, we're well positioned to continue our success.

Speaker Change: Selling the value proposition of Si time, articulating the value proposition of <unk> all through the supply chain.

Rajesh Vashist: And it's gratifying to be able to see that that value proposition is understood and accepted for SiTime. And the value proposition, of course, is around performance, around environmental resilience, but it's also around the supply chain. One of the things that we see quite clearly is that the large, quick ramp. As you have seen, some of the providers like AMD and Nvidia have mentioned that they have a particularly aggressive rate of new product introduction.

Rajesh Vashist: And it's gratifying to be able to see that that value proposition is understood and accepted for SiTime. And the value proposition, of course, is around performance, around environmental resilience, but it's also around supply chain. One of the things that we see quite clearly is that the quick ramp, as you have seen some of the providers like AMD and NVIDIA have mentioned that they have a particularly aggressive rate of new product introduction.

Speaker Change: And it's gratifying to be able to see that that value proposition is understood and accepted.

Speaker Change: For some time and the value proposition of course is around performance around environmental resilience, but it's also around supply chain one of the things that we see quite clearly is.

Beth Howe: I'll now turn the call over to Beth to discuss the financial results in more detail. Beth? Thanks, Regesh.

Rajesh Vashist: One of the things that we see quite clearly is that the large quick ramp, as you have seen some of the providers like AMD and Nvidia have mentioned, that they have a particularly aggressive rate of new product introduction. If site time is to be a major supplier in this, we have to match that. That means we have to accelerate even further our product development in these markets. And so that's exactly what we've decided to do, and that's exactly what we're doing.

Beth Howe: Good afternoon, everyone. Today, I'll discuss the details of our second quarter results and provide our outlook for the third quarter. I'll focus my discussion on non-GAAP financial results which are reconciled to GAAP in our press release. In Q2, we delivered strong revenue and earnings growth that exceeded our outlook. Q2 revenue was $43.9 million up 58 percent year-on-year and up 33 percent sequentially when growth in each of our end markets. Sales into the communications enterprise and data center market were $15.2 million, up 208 percent year-on-year and 55 percent sequentially.

Speaker Change: That they're not.

Speaker Change: Quick ramp as you have seen some of the providers like AMD and Nvidia has mentioned that they have a particularly aggressive.

Speaker Change: Our rate of new product introduction <unk> is to be.

Rajesh Vashist: If SiTime is to be a major supplier in this, we have to match that. That means we have to accelerate even further our product development in these markets. And so that's exactly what we have decided to do. And that's exactly what we're doing.

Speaker Change: Is to be a major supplier in this we have to match that that means we have to accelerate even further our product development in these markets and so that's exactly what we've decided to do and Thats exactly what were doing.

Rajesh Vashist: That's a great insight. Just one last one on Aura. So it sounds like Aura is already starting to, you know, contribute to your revenue and growth and so on and so forth. I was just wondering, does that change at all, the terms of payment? Unknown Attendee Acquisition, or should we still assume that the timing of the payment remains the same? Yeah, I think the timing of the payments remains the same. I think what the Aura products do, for example, the network synchronizer that I mentioned in my prepared remarks, that is a very complex product.

Unknown Attendee: That's great.

Unknown Attendee: And so just one last one on, or so it sounds like, or is already starting to, you know, contribute to your revenue growth and sort of so far.

Speaker Change: That's great and just one last one on <unk>. So it sounds like aura is already starting to.

Speaker Change: Contribute to your revenue growth and sort of so far I was just wondering it does not change at all sort of the payment terms for the acquisition or should we still assume.

Beth Howe: Sales into the automotive industrial and aerospace market were $14.8 million, increasing 20 percent year-on-year and 15 percent sequentially. And sales into the mobile IoT and consumer market were $13.8 million, up 33 percent year-on-year and 34 percent sequentially, with sales to our largest customer, totaling $7.9 million or 18 percent of sales. Rose. Non-Gap gross margins were 57.7% down 20 basis points sequentially. The impact of improved manufacturing absorption with higher volumes was more than offset by the higher overhead and other manufacturing costs as we continue to support our growth plans.

Rajesh Vashist: I was just wondering, does that change at all sort of the payment terms for the acquisition, or should we still assume that the timing of the payments are still there? Yeah, I think the timing of the payments remains the same.

Speaker Change: But the.

Speaker Change: The timing of the payments are still yes, I think the timing of the payments remains the same I think what the Ora products do for example, the network synchronize their that I mentioned in my prepared remarks that is a very complex product.

Beth Howe: I think what the Aura products do, for example, the network synchronizer that I mentioned in my prepare marks, that is a very complex product. And it has a long design when design and cycle, and it takes a while to ramp up. I mean, we're not in any volume with that of any particular note and will not be outside of the payment cycle. So, in other words, whatever we have indicated in the past for payouts to Aura based on revenue will probably likely be still the case.

Rajesh Vashist: And it has a long design life cycle, and it takes a while to ramp up. I mean, we're not in any volume with that of any particular note and will not be outside of the payment cycle. So in other words, whatever we have indicated in the past for payouts to Aura based on revenue will probably likely be.

Speaker Change: It has long design wins design in cycle.

Rajesh Vashist: And it has a long design life when designed in the cycle, and it takes a while to ramp up. I mean, we're not in any volume with that of any particular note and will not be outside of the payment cycle. So in other words, whatever we have indicated in the past for payouts to Aura based on revenue will probably likely be.

Speaker Change: And it takes a while to ramp up I mean, we're not in any volume with that of any particular note and will not be outside of the payment cycles. So in other words what's.

Speaker Change: We have indicated in the past for payouts to <unk> based on revenue will probably likely be still the case.

Beth Howe: Total non-Gap operating expenses for the quarter were $28.1 million, with R&D expense of $16.1 million and SG&A expense of $12 million. Total operating expenses were up $0.7 million sequentially due to higher commissions on increased revenue as well as strategic hiring. The Q2 non-Gap operating loss was $2.8 million, a significant improvement versus the prior quarter operating loss of $8.3 million. Interest in other income was $5.6 million and Q2 non-Gap net income was $2.8 million or $12 cents per share, compared with a $1.9 million loss last quarter.

Beth Howe: Thanks. And Tore just added that. Hey, Tore just added that. The $69 million I referenced. This quarter is overwhelmingly the next payments for the assets. As you may recall, we did the deal back in December. We said we would be acquiring the die over time in 24 and actually in 25 as well. So many of the deliverables for 24 occurred in Q2, hence the cash payment. We've got one more small one in Q3 beyond just the earn-out. So the vast majority of that was part of the transaction that was expected to occur in 24.

Beth Howe: And sorry to add to that. Hey, Tore, just to add to that, the $69 million I referenced this quarter is overwhelmingly the next payments for the assets. As you may recall, when we did the deal back in December, we said we would be acquiring the die over time in 2024 and actually in 2025 as well. So many of the deliverables for 2024 occurred in Q2, hence the cash payment. We've got one more small one in Q3 beyond just the earn-out. So the vast majority of that was part of the transaction that was expected to occur in 2024.

Beth Howe: And sorry to add to that. Hey, Tore, just to add to that, the $69 million I referenced this quarter is overwhelmingly the next payments for the assets. As you may recall, when we did the deal back in December, we said we would be acquiring the die over time in 2024 and actually in 2025 as well. So many of the deliverables for 2024 occurred in Q2, hence the cash payment. We've got one more small one in Q3 beyond just the earn out. So the vast majority of that was part of the transaction that was expected to occur in 24.

Speaker Change: Sorry to add to that just yet.

Speaker Change: Hey, Terry just to add to that the $69 million I referenced this quarter is overwhelmingly the next payments for the assets as you may recall when we did the deal back in December we said, we would be acquiring the die over time in 'twenty, four and actually in 'twenty five as well so many of the deliverables for 24 occur.

Speaker Change: In Q2, hence the cash payment we've got one more small one in Q3.

Speaker Change: Beyond just the earn out to the vast majority of that was part of the transaction.

Speaker Change: That was expected to occur in 'twenty, four and to just put in a plug for our acquisition.

Rajesh Vashist: And to just plug the Aura acquisition, all of it is integrated, all the products are coming over as we expected, and I really must commend the Aura team. I think they have shown exceptional professionalism and cooperation in transferring these products. And with the team integration, I think I honestly can't believe that it could have gone any better. And the performance of their products is equal to or better than we expected. All of this we understood when we did the acquisition, but now we see clear evidence that it was clearly the right thing to do with the right group of people.

Rajesh Vashist: And to just put in a plug for the Aura acquisition, all of it is integrated, all the products are coming over as we expected, and I really must commend the Aura team. I think they have shown exceptional professionalism and cooperation in transferring these products. And with the team integration, I think I honestly can't believe that it could have gone any better. And the performance of their products is equal to or better than we expected. All of this we understood when we did the acquisition, but now we see clear evidence that it was clearly the right thing to do with the right group of people.

Rajesh Vashist: And to just put in a plug for the Aura acquisition, all of it is integrated. All the products are coming over as we expected. And I really must commend the Aura team. I think they have shown exceptional professionalism and cooperation in transferring these products. And with the team integration, I think I honestly can't believe that it could have gone any better. And the performance of their products is equal to or better than we expected. All of this we understood when we did the acquisition, but now we see clear evidence that it was clearly the right thing to do with the right group of people.

Speaker Change: All of it is integrated all the products that are coming over as we expected and I really must commend the <unk> team.

Beth Howe: Turning to the balance sheet, accounts receivable was $21 million with DSOs of 43 days down 3 days sequentially. Inventory at the end of the quarter was $70.8 million down from $74.4 million last quarter. During the quarter, we consumed $0.2 million in cash from operations, invested $2.6 million in capital purchases and paid $69 million to Aura as part of the transaction we announced last year. We ended the quarter with $453 million in cash equivalents and short-term investments.

Speaker Change: I think they have shown exceptional professionalism and cooperation and transferring these products and with the team integration I think.

Speaker Change: I honestly can't believe that it could it could have gone any better and.

Speaker Change: And the performance of their products is equal to or better than we expected.

Speaker Change: All of this we understood when we did the acquisition, but now we see clear evidence that it was clearly the right thing to do with the right group of people.

Unknown Attendee: That's all great colors.

Tore Svanberg: That's all great colors. Thank you so much.

Unknown Attendee: Thank you so much.

Speaker Change: That's all great color. Thank you so much.

Unknown Attendee: As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. Our next question comes from the line of Suji DeSilva of Roth Capital. Your line is now open.

Unknown Attendee: As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. Our next question comes from the line of Suji DeSilva of Roth Capital. Your line is now open.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Suji DeSilva: Our next question comes from the line of Suji De Silva of Roth Capital. Your line is now open.

Speaker Change: Our next question comes from the line of <unk> de Silva of Roth Capital. Your line is now open.

Suji DeSilva: Hi Rajesh, hi Beth, congrats on the progress here. Just to follow up on Tore's last question somewhat, just to clarify, these Aura WINS that you have in CED, were those secured post-acquisition, or did those design WINS pre-acquisition? And I'm just trying to understand, you know, if pre-acquisition, have any WINS been secured post-acquisition, or is it the combined product that just any color would be secured?

Suji DeSilva: Hi Rajesh, hi Beth, congrats on the progress here. Just to follow up on Tore's last question somewhat, just to clarify, these Aura winds that you have in CED, were those secured post-acquisition, or did those design winds pre-acquisition? And I'm just trying to understand, you know, if pre-acquisition, have any winds been secured post-acquisition, or is it the combined product that just any color that would be secure?

Suji DeSilva: Hi Rajesh. Hi Beth. Congrats on the progress here.

Speaker Change: Josh Hi, Pat Congrats on the progress here just to follow up on towards last question somewhat.

Suji DeSilva: Just to follow up on Tori's last question, somewhat, just to clarify, these aura wins these have in CD. Are those secured post-acquisition, or were those designed when pre-acquisition? I'm just trying to understand if pre-acquisition of any wins have been secured post-acquisition, or is it the combined product that just any color they're available?

Rajesh Vashist: Yeah, I think those are definitely post-acquisition because the network synchronization product, for example, was an important one that came across. There are some buffers in there that were pretty important as well for different markets, not the data center market necessarily. So all of these have been very quick and very brief, but the revenue, of course, still takes a little bit of time.

Speaker Change: Just to clarify these <unk> are those were those secured post acquisition or were those did those design wins pre acquisition and I'm just I understand.

Speaker Change: If pre acquisition of any wins have been secured post acquisition or is it the combined product just any color there would be helpful.

Rajesh Vashist: Yeah, I think those are definitely post-acquisition because the network synchronization product, for example, was an important one that came across. There are some buffers in there that were pretty important as well into different markets, not the data center market necessarily. All of these have been very quick and very brief, but the revenue, of course, still takes a little bit of time, Suji. That's fair. I just wanted to clarify that part.

Speaker Change: Yes, I think those are definitely post acquisition because the network synchronization product. For example was an important one that came across there are some buffers in there that were pretty important as well.

Beth Howe: Operating expenses to be in the range of $30.5 to $31 million, an interest income of at least $5 million. As a result, we expect non-GAP EPS to be in the range of 23 to 27 cents per share. In closing, we are executing on our strategy. Our product portfolio continues to expand with differentiated products that address large and growing markets and our customers are clearly recognizing our value proposition. All in all, we are excited about our market position and our growth prospects ahead.

Speaker Change: Into different markets not the data center market necessarily.

Speaker Change: So all of these have been very quick and very brief.

Speaker Change: But the revenue of course still takes a little bit of time surgery.

Suji DeSilva: Now, that's fair. Just wanted to clarify that part. And then, more broadly, I mean, I think, you know, you're gaining traction here in the data center. I'm presuming reliability, you know, lifetime between failures, is probably the main thing attracting these data centers. So, you know, clarify if that's, you know, my assumption there is correct.

Suji DeSilva: Now, that's fair. I just wanted to clarify that part. And then more broadly, I mean, I think, you know, you're gaining traction here in the data center. I'm presuming reliability, you know, lifetime between failures, is probably the main thing attracting these data centers. So, you know, clarify if that's, you know, my assumption there is correct. And if so, do you have any metrics around, you know, how much less frequently you fail than, say, a quartz-based solution?

Speaker Change: Okay. That's fair just wanted to clarify that and then more broadly I mean, I think you're gaining traction here in the data center can you I'm presuming resolved reliability.

Rajesh Vashist: And then, more broadly, I mean, I think you're getting traction here in the data center. I'm presuming reliability, lifetime clean failures is probably the main thing attracting these data centers. Make clear five; that's my assumption; there's correctness. So do you have any metrics around how much less frequently you failed and say a court space solution? Yeah, we do. In general, we have a fit rate, which is about 100 that of courts in general, but in specific products, it may vary because, for example, OCXOs in the courts world have a particularly more a tough time in performance across change of environment.

Speaker Change: Time between failures is probably the main thing attracting these data centers.

Speaker Change: Clarify if that's my assumption there is correct and if so do you have any metrics around.

Operator: With that, I'd like to hand the call back to the operator for questions and answers. Operators, thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press star one one on your telephone and wait for your name to be in it. Now, to withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster.

Speaker Change: How much less frequently you failed in say a court space solutions.

Rajesh Vashist: Yeah, we do. In general, we have a fit rate that is about 100 times that of quartz in general, but in specific products, it may vary. Because, for example, OCXOs in the quartz world have a particularly tough time with performance across changes in environment. But to be very specific about your question, it's less the reliability, which always, of course, comes into play, as does the supply chain, but it more has to do with performance.

Rajesh Vashist: And if so, do you have any metrics around, you know, how much less frequently you fail than, say, a quartz space solution?

Speaker Change: Yes, we do in general we have a fit rate, which is about 100 that of courts in general but in specific products. It may vary.

Speaker Change: For example, <unk> in.

Speaker Change: In the courts world or have a particularly.

Speaker Change: No.

Speaker Change: More.

Speaker Change: A tough time in performance across <unk>.

Christopher Caso: Our first question comes from the line of Tom O'Malley of Barclays. Your line is now open. Hey guys, thanks for taking my question. I just wanted to talk about the recovery into the second half. So you talked on the last call about kind of expanding. The opportunities that you were kind of chasing as revenue re-accelerated. Could you just talk about what you're seeing off the bottom here? Is it really just a return to accelerated demand in some end markets now that the inventory correction is kind of behind you?

Speaker Change: <unk> of environment, but to be very specific about your question.

Rajesh Vashist: But to be very specific about your question, it's less the reliability, which always, of course, comes into play, as does the supply chain, but it more has to do with performance. At the end of the day, everybody's performance hungry. I threw out a certain number of performance areas: frequency, jitter, phase noise, stability, and, of course, environmental resilience, which doesn't sound like performance, but it is the environment. It's the cloud under which all these products must work. So you can always get a phase noise at a certain stability, but under a tough environmental condition of, say, temperature spiking or air flow that may degrade dramatically, unlike side times products.

Speaker Change: Less the reliability, which always of course comes into play as does the supply chain, but it more has to do with performance at the end of the day everybody's performance hungry.

Christopher Caso: Or are you kind of seeing that traction in the additional kind of opportunities that you're chasing? I guess that's part one. And then part two is if you look at that guidance in the September quarter, you obviously kind of talked about CDVing, the growth engine for the remainder of the year. Can you just give us a little color on those end market and what you would expect from each kind of trending into the September quarter?

Rajesh Vashist: At the end of the day, everybody's performance hungry. I threw out a certain number of performance areas, frequency, jitter, phase noise, stability, and, of course, environmental resilience, which doesn't sound like performance, but it is. It's the cloud under which all these products must work. So you can always get phase noise at a certain stability, but under a tough environmental condition of, say, temperature spiking or airflow, that may degrade dramatically, unlike SiTime's products.

Speaker Change: Throughout a certain number of.

Speaker Change: Our performance areas frequency jitter phase noise stability and of course, environmental resilience, which doesn't sound like performance, but it is the environment its the its.

Speaker Change: There is the cloud under which all of these products must work. So you can always get a phase noise at a certain stability, but under a tough environmental condition of say temperature spiking or airflow.

Speaker Change: That may degrade dramatically. Unlike site times products. So that's where we win that's where our customers have agreed that we are superior and some of them have decided to exclusively deal with Si time, and some of them have gone a step further and have decided to define products.

Suji DeSilva: So that's where we win. That's where our customers have agreed that we are superior, and some of them have decided to exclusively deal with SiTime, and some of them have gone a step further and have decided to define products with us for the coming generations. So that, of course, gives us a significant viewpoint on the customer, and it was always us. This is what we always wanted. This is what all semiconductor companies do. This is what typical SOC companies do, and that's all we're doing. We're connecting with our best customers and solving tough problems for them that, otherwise, they would not solve.

Rajesh Vashist: So that's where we win. That's where our customers have agreed that we are superior, and some of them have decided to exclusively deal with SiTime, and some of them have gone a step further and have decided to define products with us for the coming generations. So that, of course, gives us a significant viewpoint on the customer, and it was always us. This is what we always wanted. This is what all semiconductor companies do. This is what typical SOC companies do, and that's all we're doing. We're connecting with our best customers and solving tough problems for them that, otherwise, they would not solve.

Rajesh Vashist: So that's where we win. That's where our customers have agreed that we are superior. And some of them have decided to exclusively deal with side time. And some of them have gone a step further and have decided to define products with us for coming generations. So that, of course, gives us a significant viewpoint into the customer. And it was always us. This is what we always wanted. This is what all semiconductor companies do. This is what typical SOC companies do. And that's all we're doing. We're connecting with our best customers and solving tough problems for them, which otherwise they would not solve.

Christopher Caso: Right. So it's a bit of both Tom on the first question. In other words, inventory is down. As we said, it would be a couple of quarters ago and that happened and demand is up. Now demand isn't up in a monolithic way. There are some places where demand is up a little bit. Less and others where demand is up a lot. So the demand is up a lot is in the area specifically of AI, specifically in the optical markets and the interconnects and some of the Nick card business in general all AI is up and we continue to see it grow up.

Speaker Change: With us for coming generations.

Speaker Change: That of course gives us a significant viewpoint into the customer and it was always thus this is what we always wanted this is what all semiconductor companies do.

Speaker Change: This is what typical Soc companies do.

Speaker Change: And that's all we're doing we're connecting with our best customers and solving tough problems for them, which otherwise they would not solve.

Suji DeSilva: Okay, thanks for the insight, Rajesh. Yeah.

Rajesh Vashist: Okay, thanks for the insight, Rajesh. Yeah.

Unknown Attendee: Thanks for the insight, Rajesh.

Speaker Change: Okay. Thanks for the insight rejection.

Unknown Attendee: Yeah.

Unknown Attendee: One moment for our next question.

Operator: One moment for our next question. Our next question comes from the line of Quinn Bolton of Needham & Company. Your line is now open.

Unknown Attendee: One moment for our next question. Our next question comes from the line of Quinn Bolton of Needham & Company. Your line is now open.

Speaker Change: Yes.

Christopher Caso: I know there's a lot of headlines around that but we specifically believe that this growth continues over time. As we progress. Now, the nice part about site I'm, of course, is that everything else is also growing. Our automated motive business or are along with the mill aerospace industrial all of that that whole category grows as does our consumer IoT and mobile category. So all of them are growing, but some are growing faster than others just as I said.

Speaker Change: One moment for our next question.

Quinn Bolton: Our next question comes from the line of Quinn Bolton of Needham and Company. Your line is now open.

Speaker Change: Our next question comes from the line of Quinn Bolton of Needham <unk> Company. Your line is now open.

Quinn Bolton: Hi Rajesh, hi Beth, wanted to add my congratulations. Wanted to come back to gross margin, just try to get a better understanding of sort of the new product ramp issues. Are these new products; is it kind of new analog die, new MEMS die that you just have to come up the yield curve? Are there new package types? I'm sort of surprised given how much revenue is increasing quarter to quarter that you're not seeing a higher margin lift.

Quinn Bolton: Hi, Rajesh. Hi, Beth.

Quinn Bolton: I wanted to, at my congratulations, wanted to come back to the, to the gross margin, just try to get a better understanding of sort of the new product ramp issues. Are these new products? Is it kind of new analog dye, new MEMS dye that you just have to come up the yield curve or their new package types?

Quinn Bolton: Hi, Robert Hi, Beth wanted to add my congratulations I wanted to come back to the gross margin just trying to get a better understanding of sort of the new product ramp issues are these new products is it kind of new analog dye new Mems die that you just have to come up the yield curve or are there new package types.

Quinn Bolton: And I guess a sort of follow-up to that is, I just wanted to make sure you guys aren't seeing any changes in pricing at customers. There's no particular mix shift to say mobile IOT or any new product ramps from large consumer companies that may be skewing the mix here in the second half of the year.

Quinn Bolton: You know, sort of surprised given, you know, how much revenue is increasing quarter to quarter that you're not seeing a higher margin lift. And I guess a sort of follow-up to that is I just wanted to make sure you guys aren't seeing any changes in pricing at the customers.

Speaker Change: Sort of surprised given given how much revenue is increasing quarter to quarter that youre not seeing a higher margin lift and I guess sort of follow up to that is I. Just wanted to make sure you guys aren't seeing any changes in pricing.

Christopher Caso: As far as what is exactly happening, we certainly see that the drive towards higher performance solutions in optical and active cables is very critical, very important and we see a lot of active in that active behavior in that including interconnects and so on. So just the general part of data centers all growing and we anticipate that that whole category of of communications enterprise and data center continues to grow as communication start to catch up along with enterprise in the coming quarters.

Beth Howe: There's no particular mix shift to say mobile IoT or no new product ramps from large consumer companies that may be skewing the mix here in the second half of the year.

Speaker Change: At the customers. There is no particular mix shift to say mobile Iot or no new product ramps from large consumer companies that may be skewing the mix here in the second half of the year.

Beth Howe: Hey, Quinn, this is Beth. So as we look at it, you rattled off MEMS and CMOS packaging. It's really all of the above. As we think about these new products for multiple markets, Rajesh has talked a bit about the AI markets, and so we're clearly launching a lot of new products there. I expect over time we'll see those yields improve. We also look at, from time to time, the mix of equipment purchases, whether we purchase the equipment or whether the OSAT does.

Beth Howe: Hey, Quinn, this is Beth. So as we look at it, you rattled off MEMS CMOS packaging. It's really all of the above as we think about these new products into multiple markets. Rajesh has talked a bit about the AI markets. And so we're clearly launching a lot of new products there. I expect over time we'll see those yields improve. We also look at, from time to time, the mix of equipment purchases, whether we, you know, we purchase the equipment or whether the OSAT does, and that, again, you pay part either way. But, you know, looking at that as well as we think about the cost of bring up, we, you know, kind of every product we evaluate that mix of how much equipment we're investing versus the OSATs, and typically both invest there.

Beth Howe: Hey, Glenn this is Beth so as we look at it you rattled off Mems Cmos packaging, it's really all of the above as we think about these new products into multiple markets rejections talked a bit about the AI markets and so we're clearly launching a lot of new products. There I expect over time, we'll see those yields improve.

Christopher Caso: In other words, we also expect that to grow in the coming quarters as as there are some of the newer products from site and get adopted in those markets. Yes, so you're referencing the newer products and I think in your prepare remarks, you talked about both the cogs and some of the stem being a little higher as it relates to those newer products. If you look at gross margin for the remainder of the year, you're kind of guiding to flattish into September quarter, kind of trending more towards 58.

Beth Howe: Again, you pay for it either way, but looking at that as well, as we think about the cost of bringing in new products, every product we evaluate that mix of how much equipment we're investing versus the OSATs, and typically, we both invest there. But nothing unusual. It's just as we've got so many new products coming into mass production, that's really what's driving it.

Speaker Change: <unk>. We also look at from time to time, the mix of equipment purchases, whether we purchased the equipment or the OS that doesn't that you pay for it either way but.

Beth Howe: Youre looking at that as well as we think about the cost of bringing up kind of every product we evaluate that that mix of how much equipment, we are investing versus the <unk> and typically both invest there, but nothing unusual it's just as we've got so many new products coming into mass production.

Beth Howe: But nothing unusual. It's just as we've got so many new products coming into mass production; that's really what's driving it. So it sounds like there may be some, you know, given if you're purchasing some of that equipment, there may be a little bit higher fixed costs coming into the cost goods line that, as you grow from here, you'll get absorption on that, but it serves as a headwind in their term given the ramp of those new products. I think that's a fair assessment, and we look at that and evaluate the economics on a, you know, product-by-product basis where we think it makes more sense to make some investment or share the investment versus have it come through on a unit basis as the products are assembled by the OSATs.

Christopher Caso: How should we be thinking about the gross margin monitor not assume that new product integration and launch kind of is a one to two quarter event and then you start to see growth after that. But could you help kind of give the cadence even help in the past kind of getting back to that 60 mark? Are we still thinking about the same time frame kind of early next year or have the new product kind of change that out.

Speaker Change: That's really what's driving it.

Quinn Bolton: So it sounds like there may be some, you know, given if you're purchasing some of that equipment, there may be a little bit higher fixed costs coming into the cost of goods line that as you grow from here, you'll get absorption on that, but it serves as a headwind in their term, given the ramp of those new products.

Speaker Change: So it sounds like there may be some given if youre purchasing some of that equipment, there may be a little bit higher fixed costs coming into the.

Speaker Change: Cost of goods line that as you grow from here Youll get absorption on that but it serves as a headwind in the near term.

Speaker Change: Given the ramp of those new products.

Beth Howe: I think that's a fair assessment, and we look at that and evaluate the economics on a, you know, product by product basis where we think it makes more sense to make some investment or share the investment versus have it come through on a unit basis as the products are assembled by the OSOT.

Speaker Change: I think Thats, a fair assessment, and we look at that and evaluate the economics on a product by product basis, where you think it makes more sense to make some investment our share of the investment versus had it come through on a unit basis as the products are assembled by the asset.

Christopher Caso: I'll take that one. Thanks for the question. So we still expect gross margins to be above 60% over the longer term. So no change there. And as you'd expect, we are seeing the benefit of the manufacturing absorption with the revenue growth. But as I said, over the next couple of quarters, we do expect that the gross margins will be, you know, while maybe improving a little bit, not growing at that faster clip as we're supporting these growth plans and ramping these new products into mass production.

Quinn Bolton: Got it. Got it. And then a follow-up for Rajesh.

Quinn Bolton: Got it. Got it.

Unknown Attendee: Got it.

Rajesh Vashist: And then a follow-up for Jesse: you've talked for a couple quarters now about strength in the CED, and you gave us some color on content for application, but I guess I wanted to come back and see if you might be able to give us. I think it said, you know, dollar content; some of the CED applications could be eight to $25. Is that what you might get in the AI server? Is that what you would get in a switch? You've talked about optical modules. You've talked about AEC cables. I'm wondering, you know, could you give us a sense, is like an AEC cable or an optical module?

Speaker Change: Got it got it and then a follow up for Josh you've talked for a couple of quarters now.

Speaker Change: About the strength in the CBD and you gave us some color on content per application, but I guess I wanted to come back and see if you might be able to give us.

Speaker Change: You had said dollar content in some of these CD applications could be 8% to $25 is that what you might get in an AI servers that what you would get in a switch.

Christopher Caso: So it'll take a couple of quarters. As you know, you know, yields improve. And as we go through that, we expect improvement over time. But it'll take a couple of quarters as we're ramping these different products. You may recall as well that while previously we might have launched one product or one platform in a given year. In the last couple of years, you know, we think about we were able to invest and reinvest a lot of the profits from the last couple of years into R&D.

Rajesh Vashist: You've talked for a couple quarters now about strengthening the CED, and you gave us some color on content per application, but I guess I wanted to come back and see if you might be able to give us, I think you'd said, you know, dollar content in some of these CED applications could be $8 to $25. Is that what you might get in an AI server? Is that what you would get in a switch?

Quinn Bolton: And then a follow-up for Rajesh, you've talked for a couple quarters now about strengthening the CED, and you gave us some color on content per application, but I guess I wanted to come back and see if you might be able to give us, I think you'd said, you know, dollar content in some of these CED applications could be $8 to $25. Is that what you might get in an AI server? Is that what you would get in a switch?

Speaker Change: You've talked about optical module as you've talked about AUC cables I'm wondering could you give us a sense is like an AUC cable or optical module is that like a dollar to $5 of content for <unk>. So could you give us some sense of what you might get on a typical Nic card.

Rajesh Vashist: Is that like a dollar to $5 a content for a TCXO? Could you give us some sense what you might get on a typical NIC card because it's just trying to get a little bit more specificity on what the timing content is in some of these pretty high volume applications. Thanks.

Christopher Caso: And those product platforms are now coming into mass production. And so we have several new products that are ramping here in the next couple of quarters. But over the long term, we do expect to still be able to get the margins back about 60%. And then that's just circling back on the first question, just the trajectory of those businesses into the September quarter, any color on what generating the optic, the kind of growth amongst all of the different segments or any particular color there.

Speaker Change: Because it just trying to get a little bit more specificity on what the timing content is in some of these pretty high volume applications.

Rajesh Vashist: You've talked about optical modules. You've talked about AEC cables. I'm wondering, you know, could you give us a sense of what an AEC cable or an optical module is like $1 to $5 of content for a TCXO? Could you give us some sense of what you might get on a typical NIC card? Because it, you know, just trying to get a little bit more specificity on what the timing content is in some of these pretty high volume applications. Thanks.

Quinn Bolton: You've talked about optical modules, you've talked about AEC cables. I'm wondering, you know, could you give us a sense of, is an AEC cable or an optical module, is that like $1 to $5 of content for a TCXO? Could you give us some sense of what you might get on a typical NIC card? Because I'm just trying to get a little bit more specificity on what the timing content is in some of these pretty high-volume applications. Thanks.

Rajesh Vashist: Yeah. So typically, the optical products tend to be lower in pricing. So they're closer to that $1 pricing rather than the $5 price. But when we in an Ethernet switch, when we sell a clock, which is anywhere from $5 to $10, and OCXO, which is anywhere from $15 to $25, it kind of adds up pretty quickly. And then it depends upon the consumption amount of these of these. So, for example, some of the switches sell in tens of thousands, but we believe that the NIC cards, which may have a total content of $5 to $10, will probably increase at a faster rate in units over time.

Speaker Change: Yeah.

Speaker Change: So typically the optical products tend to be lower in pricing. So they are closer to that $1 pricing rather than the $5 price.

Rajesh Vashist: Yeah, typically the optical products tend to be lower in pricing, so they're closer to that $1 price rather than the $5 price. But when we, in an Ethernet switch, when we sell CLOCK, which is anywhere from $5 to $10, and OCXO, which is anywhere from $15 to $25, it kind of adds up pretty quickly. And then it depends upon the consumption amount of these.

Rajesh Vashist: Yeah, typically, the optical products tend to be lower in pricing. So they're closer to that $1 price rather than the $5 price. But when we, in an Ethernet switch, when we sell CLOCK, which is anywhere from $5 to $10, and OCXO, which is anywhere from $15 to $25, it kind of adds up pretty quickly. And then it depends upon the consumption amount of these.

Speaker Change: But when we in an Ethernet switch when we sell clock.

Christopher Caso: So as we look at, we expect all three segments to grow year on year. We would expect that the data center fueled by AI would be the fastest growing next quarter as it was this quarter. Thank you. Please stand by for your next question.

Speaker Change: Which is anywhere from five to $10 and <unk>, which is anywhere from 15 to $25. It kind of adds up pretty quickly and then it depends upon.

Rajesh Vashist: So, for example, some of the switches sell in tens of thousands, but we believe that the NIC cards, which may have a total content of $5 to $10, will probably increase at a faster rate in units over time. The GPU boards, of course, and the CPU boards, we do well at, you know, in the $10 plus dollar range, but then those are relatively limited in units. So, where we flourish is when you get the sweet spot of higher ASPs and higher volumes rather than lower volume and high numbers.

Speaker Change: The.

Speaker Change: Consumption amount of these of these.

Speaker Change: So for example, some of the switches cell cell and tens of thousands, but we believe that the Nic cards, which may have a total content of five to $10, we'll probably.

Rajesh Vashist: Our next question comes from the line of Chris Kaso of Wolf Research. Your line is now open. Yes, thank you, good evening. I guess the first question would be, you know, a prior call you talked about 30% growth to the year potentially being on the table, you know, given the guidance for September that certainly looks more achievable now. Could you give some, so, you know, with that, you know, some comments on, you know, what you might expect on December understanding that you probably don't want to provide guidance at this point, but, you know, any sort of color on that, is there any seasonality in play, or is there any lumpiness to, you know, perhaps some of these AI driven drivers in the CED segment as you go into the December quarter?

Speaker Change: Increased at a faster rate.

Speaker Change: In units overtime.

Rajesh Vashist: The GPU boards, of course, and the CPU boards, we do well at, you know, in the, you know, the $10 plus dollar range. But then those are relatively limited in units.

Speaker Change: The GPU boards of course, and the CPU boards, we do well at <unk>.

Speaker Change: In.

Speaker Change: The 10, plus dollar range, but then those are relatively limited.

Rajesh Vashist: So where we flourishes when you get the sweet spot of higher ASPs and higher volumes rather than the lower volume and high number. Either way, when we look at the breadth of our design wins, CPU boards, GPU boards, switches, Ethernet switches, NIC cards, accelerator cards, optical modules, CE cables, or active cables, I think it's astonishing that when AI sort of started to take up about a year ago, many of you asked us how we would perform in that. And if you recall, I said these early days, we're trying to see the market ourselves. And what I'm gratified to see is that exactly what we saw happening has happened, which is that Are customers, customers make huge, you know, hundreds of billions of dollars, tens of billions of dollars investment in their, in the data centers, but then they want to keep on extracting more bandwidth, more utilization, more uptime, more synchronization, and that's where timing comes in, and that's why I'm very confident that even when the overall market, you know, there's been a lot of talk about commitment to dollars and capex by these large companies, I'm very confident that SiTime will continue to grow even if it slackens off a bit, because this is a portion that will always get more money, and we will benefit from that.

Speaker Change: In units. So we're we flourish as when you get the sweet spot of higher Asps.

Speaker Change: And highest volumes rather than the lower volume and high number either way.

Speaker Change: Sure.

Speaker Change: When we look at.

Rajesh Vashist: Either way, when we look at the breadth of our design wins, CPU boards, GPU boards, switches, Ethernet switches, NIC cards, accelerator cards, optical modules, CE cables, or active cables, I think it's astonishing that when AI sort of started to take off about a year ago, many of you asked us how we would perform in that. And if you recall, I said, in these early days, we're trying to see the market ourselves And what I'm gratified to see is that exactly what we saw happening has happened, which is that they are our customers.

Speaker Change: The breadth of our design wins CPU boards, GPU boards switches Ethernet switches Nic cards accelerator cards optical module C CE cables.

Rajesh Vashist: Yeah, we are, we still believe in that 30%. So we do expect that growth for side time. The thing is that I don't see that there's a particular lumpiness to it other than side time's ability to deliver the product, which we think is solid. And so we don't expect any lumpiness per se in the December quarter or through the year, because this is, there's just a big pent up demand for, for these products, these end products in data centers.

Speaker Change: Our active cables I think it's astonishing that when AI sort of started to pick up about a year ago. Many of you ask us how we would perform in that and if you recall I said. These early days, we're trying to see the market ourselves.

Speaker Change: And what I'm gratified to see is that exactly what we saw happening has happened which is that.

Rajesh Vashist: Customers make huge, you know, hundreds of billions of dollars, tens of billions of dollars investment in their data centers. But then they want to keep on extracting more bandwidth, more utilization, more uptime, more synchronization. And that's where timing comes in. And that's why I'm very confident that even when the overall market, you know, there's been a lot of talk about commitment to dollars and CapEx by these large companies. I'm very confident that SiTime will continue to grow even if it slackens off a bit because this is a portion that will always get more money, and we will benefit from it.

Speaker Change: Our our customers customers make huge.

Rajesh Vashist: And I see that whether they are US-based or with their China-based, as you know, many of the China-based people also deliver for the big data center companies. I think, I think we see a very solid performance in those markets.

Speaker Change: Hundreds of billions of dollars tens of billions of dollars investment in there in the data centers, but then they wanted to keep on extracting more bandwidth more utilization more uptime more synchronization and Thats, where timing comes in and that's why I'm very confident that even when the.

Rajesh Vashist: But then they want to keep on extracting more bandwidth, more utilization, more uptime, and more synchronization. And that's where timing comes in. And that's why I'm very confident that even when the overall market, you know, there's been a lot of talk about commitment to dollars and CapEx by these large companies, I'm very confident that SiTime will continue to grow even if it slackens off a bit, because this is a portion that will always get more money and we will benefit from.

Beth Howe: Thank you. I guess there's a follow on question. If perhaps you could provide some color on the impact of some of the new products on, you know, what's going on right now, and just, you know, using CD as an example, we obviously go through an inventory correction and, you know, we're kind of getting back to, you know, run rates that were, you know, seen, you know, kind of late 21, 22 before some of the shortages emerged.

Speaker Change: Overall market Theres been a lot of talk about commitment to dollars in capex by these large companies I am very confident that site and we will continue to grow even if its slackens off a bit because this is a portion that will always get more money and we will benefit from that.

Unknown Attendee: Got it. Thank you, Rajesh.

Quinn Bolton: Got it. Thank you, Rajesh.

Speaker Change: Got it thank you Jeff.

Rajesh Vashist: Yeah. At this time, I'm showing no further questions.

Rajesh Vashist: At this time, I am showing no further questions. I would now like to turn it back to Rajesh Vashist, CEO, for closing remarks.

Speaker Change: Yep.

Operator: At this time, I am showing no further questions. I would now like to turn it back to Rajesh Vashist, CEO, for closing remarks.

Speaker Change: At this time I am showing no further questions I would now like to turn it back to you with Jess <unk> CEO for closing remarks.

Rajesh Vashist: I would now like to turn it back to Rajesh Vashist, CEO, for closing remarks. Well, thank you all very much for joining us. Very happy to see the upturn in site time, as we promised it would happen in the second half, and we'll continue throughout the year, and hopefully in the coming years. That's certainly our design. Look forward to meeting you guys on the road. Talk to you soon. Thank you very much.

Beth Howe: And, you know, I guess, as we compare now to then, you know, how much do some of these new products come into play in terms of driving the growth that was independent of, you know, some of the supply disruptions and inventory correction. Yeah, these, they're significant. In fact, there are very much, these new products are very much part of it. All across the board, whether it is the oscillators that are used in the optical products from customers, those did not exist in 21 in volume.

Rajesh Vashist: Well, thank you all very much for joining us. Very happy to see the upturn in SiTime, as we promised it would happen in the second half, and we'll continue throughout the year and, hopefully, in the coming years. That's certainly our intention. I look forward to meeting you guys on the road. Talk to you soon. Thank you very much.

Rajesh Vashist: Well, thank you all very much for joining us. Very happy to see the upturn in SiTime, as we promised it would happen in the second half. And we'll continue throughout the year and, hopefully, in the coming years. That's certainly our intention. Look forward to meeting you guys on the road. Talk to you soon. Thank you very much.

Jess: Well. Thank you all very much for joining us very happy to see.

Speaker Change: The upturn in <unk> as we promised it would happen in the second half and will continue.

Speaker Change: Throughout the year and hopefully in the coming years that certainly are.

Speaker Change: Our design and look forward to meeting you guys on the road talk to you soon thank you very much.

Unknown Attendee: Thank you for your participation in today's conference. This concludes the program. You may now disconnect.

Unknown Attendee: Thank you for your participation in today's conference.

Operator: Thank you for your participation in today's conference. This concludes the program.

Speaker Change: Thank you for your participation in today's conference. This concludes the program you may now disconnect.

Unknown Attendee: This concludes the program. You may now disconnect.

Beth Howe: And they exist now. So we're good with that. There are the higher end. And PCXOs, super PCXOs, OCXOs, and then not to mention our products from our, our acquisition. I think those are all coming together to not only get us numerous design wins, but also allow us, as I mentioned, you know, to 30 to 14 product families. So I think it's safe to say that at least half of these product families are new, maybe even more than half of these are new.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Beth Howe: And just what will follow if I could, you know, with those new products, understand what you're saying now that as you ramping new products, there's a learning curve, these yield and such, but structurally, as you ramp some of these new products with higher precision, should we expect that structurally, those are those represent higher margins than what you've seen in the past. Right, we said that I said that my prepared remarks as well that the CD business is important to us from a long time ago because we see higher ESPs higher margins, greater stickiness, if you will, greater architectural differentiation, greater definition with customers of joint jointly of performance as such, it makes for and given the size of it, we have other higher ESPs.

Beth Howe: And for example, middle aerospace defense, but the size of that market isn't as big as this is. So this, that is why we are, we're putting the CD business front and center as we did several years ago, and we'll continue to do in the future. Got it. Understood.

Operator: Thank you. One moment for our next question.

Tori Stanburg: Our next question comes from the line of Tori, Stanburg, a cycle. The line is now open. Yes, thank you, and congratulations on the solid recovery here. Rajesh, I had a sort of clarifying question on the communications DC and enterprise business. I think you said it, you expected the growth 50% plus for the year. I mean, based on the current run rate, it's tracking significantly above that. So, I mean, we talk about much more than 50% in any color. Yes, story of your math is always right. It is significantly above 50% might even be closer to 70% plus.

Rajesh Vashist: Perfect. Thank you. And as I follow up, you talked about, you know, how diversified the AI business or the AI data for businesses, you mentioned the number of customers and so on and so forth, because you also talked a little bit about how, you know, how the designing process works here, you mentioned that you are preferred to acquire it in many platforms. I also believe you have some reference designs with the processor company, so help us just understand a little bit, you know, how the design and process works as you continue to grab this business.

Rajesh Vashist: Yeah, so the designing process obviously can happen either with the semiconductor company, that's a supplier of GPU CPUs, or it can be directly with people who do accelerator cards, active cables and so on. So it is with those people, but then it's a complex supply chain as you know, there are ODMs, you know, and then there are contract manufacturers and then there are the consumers of the product itself, you know, whether they are that's an AWS or whether that's a Google.

Rajesh Vashist: So for site time, even though the design when occurs at one place, we have to support everybody along the way, and that's what makes it particularly complex, selling the value proposition of site time or articulating the value proposition of site time all through the supply chain. And it's gratifying to be able to see that that value proposition is understood and accepted for site time and the value proposition, of course, is around performance around environmental resilience, but it's also around supply chain.

Rajesh Vashist: One of the things that we see quite clearly is that the large quick ramp, as you have seen some of the providers like AMD and Nvidia have mentioned that they have a particularly aggressive rate of new product introduction, if site time is to be is to be a major supplier in this, we have to match that. That means we have to accelerate even further our product development in these markets.

Beth Howe: And so that's exactly what we've decided to do and that's exactly what we're doing. That's great. And so just one last one on or so it sounds like or is already starting to, you know, contribute to your revenue growth and sort of so far. I was just wondering, does that change at all sort of the payment terms for the acquisition or should we still assume that the timing of the payments are still there?

Beth Howe: Yeah, I think the timing of the payments remains the same. I think what the Aura products do, for example, the network synchronizer that I mentioned in my prepare marks, that is a very complex product. And it has a long design when design and cycle and it takes a while to ramp up. I mean, we're not in any volume with that of any particular note and will not be outside of the payment cycle.

Beth Howe: So in other words, whatever we have indicated in the past for payouts to Aura based on revenue will probably likely be still the case. Thanks. And Tore just added that. Hey, Tore just added that. The $69 million I referenced. This quarter is overwhelmingly the next payments for the assets. As you may recall, we did the deal back in December. We said we would be acquiring the die over time in 24 and actually in 25 as well.

Beth Howe: So many of the deliverables for 24 occurred in Q2, hence the cash payment. We've got one more small one in Q3 beyond just the earn out. So the vast majority of that was was part of the transaction that was expected to occur in 24. And to just put in a plug for the aura acquisition, all of it is integrated. All the products are coming over as we expected. And I really must commend the aura team.

Beth Howe: I think they have shown exceptional professionalism and cooperation in transferring these products. And with the team integration, I think I honestly can't believe that it could have gone any better. And the performance of their products is equal to or better than we expected.

Rajesh Vashist: All of this we understood when we did the acquisition, but now we see clear evidence that it was clearly the right thing to do with the right group of people. That's all great colors. Thank you so much.

Operator: As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced.

Suji De Silva: Our next question comes from the line of Suji De Silva of Roth Capital. Your line is now open. Hi Rajesh. Hi Beth.

Rajesh Vashist: Congrats on the progress here. Just to follow up on Tori's last question, somewhat, just to clarify, these aura wins these have in CD. Are those secured post acquisition or were those designed when pre-acquisition? I'm just trying to understand, if pre-acquisition of any wins have been secured post-acquisition, or is it the combined product that just any color they're available? Yeah, I think those are definitely post-acquisition because the network synchronization product, for example, was an important one that came across.

Rajesh Vashist: There are some buffers in there that were pretty important as well into different markets, not the data center market necessarily. All of these have been very quick and very brief, but the revenue, of course, still takes a little bit of time, Suji.

Suji De Silva: That's fair. I just wanted to clarify that part.

Rajesh Vashist: And then more broadly, I mean, I think you're getting traction here in the data center. I'm presuming reliability, lifetime clean failures is probably the main thing attracting these data centers. Make clear five, that's my assumption, there's correctness. So do you have any metrics around how much less frequently you failed and say a court space solution? Yeah, we do. In general, we have a fit rate, which is about 100 that of courts in general, but in specific products, it may vary because, for example, OCXOs in the courts world have a particularly more a tough time in performance across change of environment.

Rajesh Vashist: But to be very specific about your question, it's less the reliability, which always, of course, comes into play as does the supply chain, but it more has to do with performance. At the end of the day, everybody's performance hungry. I threw out a certain number of performance areas, frequency, jitter, phase noise, stability, and, of course, environmental resilience, which doesn't sound like performance, but it is the environment. It's the cloud under which all these products must work.

Rajesh Vashist: So you can always get a phase noise at a certain stability, but under a tough environmental condition of, say, temperature spiking or air flow that may degrade dramatically, unlike side times products. So that's where we win. That's where our customers have agreed that we are superior. And some of them have decided to exclusively deal with side time. And some of them have gone a step further and have decided to define products with us for coming generations.

Rajesh Vashist: So that, of course, gives us a significant viewpoint into the customer. And it was always us. This is what we always wanted. This is what all semiconductor companies do. This is what typical SOC companies do. And that's all we're doing. We're connecting with our best customers and solving tough problems for them, which otherwise they would not solve. Thanks for the insight, Rajesh. Yeah.

Operator: One moment for our next question.

Quinn Bolton: Our next question comes from the line of Quinn Bolton of Needham and Company. Your line is now open. Hi, Rajesh. Hi, Beth. I wanted to, at my congratulations, wanted to come back to the, to the gross margin, just try to get a better understanding of sort of the new product ramp issues. Are these new products? Is it kind of new analog dye, new MEMS dye that you just have to come up the yield curve or their new package types?

Quinn Bolton: You know, sort of surprised given given, you know, how much revenue is increasing quarter to quarter that you're not seeing a higher margin lift. And I guess a sort of follow-up to that is I just wanted to make sure you guys aren't seeing any changes in pricing at the customers. There's no particular mix shift to say mobile IoT or no new product ramps from large consumer companies that may be skewing the mix here in the second half of the year.

Quinn Bolton: Hey, Quinn, this is Beth. So as we look at it, you rattled off MEMS CMOS packaging. It's really all of the above as we think about these new products into multiple markets. Rajesh has talked a bit about the AI markets. And so we're clearly launching a lot of new products there. I expect over time we'll see those yields improve. We also look at from time to time the mix of equipment purchases, whether we, you know, we purchase the equipment or whether the OSAT does and that, again, you pay part either way, but, you know, looking at that as well as we think about the cost of bring up, we, you know, kind of every product we evaluate that mix of how much equipment we're investing versus the OSATs and typically both invest there.

Quinn Bolton: But nothing unusual. It's just as we've got so many new products coming into mass production, that's really what's driving it. So it sounds like there may be some, you know, given if you're purchasing some of that equipment, there may be a little bit higher fixed costs coming into the cost goods line that as you grow from here, you'll get absorption on that, but it serves as a headwind in their term given the ramp of those new products.

Quinn Bolton: I think that's a fair assessment and we look at that and evaluate the economics on a, you know, product-by-product basis where we think it makes more sense to make some investment or share the investment versus have it come through on a unit basis as the products are assembled by the OSATs. Got it.

Rajesh Vashist: And then a follow-up for Jesse, you've talked for a couple quarters now about strength in the CED and you gave us some color on content for application, but I guess I wanted to come back and see if you might be able to give us. I think it said, you know, dollar content, some of the CED applications could be eight to $25. Is that what you might get in the AI server? Is that what you would get in a switch?

Rajesh Vashist: You've talked about optical modules. You've talked about AEC cables. I'm wondering, you know, could you give us a sense, is like an AEC cable or an optical module? Is that like a dollar to $5 a content for a TCXO? Could you give us some sense what you might get on a typical NIC card because it's just trying to get a little bit more specificity on what the timing content is in some of these pretty high volume applications.

Rajesh Vashist: Thanks. Yeah. So typically the optical products tend to be lower in pricing. So they're closer to that $1 pricing rather than the $5 price. But when we in an Ethernet switch, when we sell a clock, which is anywhere from $5 to $10 and OCXO, which is anywhere from $15 to $25, it kind of adds up pretty quickly. And then it depends upon the consumption amount of these of these. So, for example, some of the switches sell in tens of thousands, but we believe that the NIC cards, which may have a total content of $5 to $10 will probably increase at a faster rate in units over time.

Rajesh Vashist: The GPU boards, of course, and the CPU boards, we do well at, you know, in the, you know, the $10 plus dollar range. But then those are relatively limited in units. So where we flourishes when you get the sweet spot of higher ASPs and higher volumes rather than the lower volume and high number. Either way, when we look at the breadth of our design wins, CPU boards, GPU boards, switches, Ethernet switches, NIC cards, accelerator cards, optical modules, CE cables, or active cables, I think it's astonishing that when AI sort of started take up about a year ago, many of you asked us how we would perform in that.

Rajesh Vashist: And if you recall, I said these early days, we're trying to see the market ourselves. And what I'm gratified to see is that exactly what we saw happening has happened, which is that Are customers, customers make huge, you know, hundreds of billions of dollars, tens of billions of dollars investment in their, in the data centers, but then they want to keep on extracting more bandwidth, more utilization, more uptime, more synchronization, and that's where timing comes in, and that's why I'm very confident that even when the overall market, you know, there's been a lot of talk about commitment to dollars and capex by these large companies, I'm very confident that SiTime will continue to grow even if it slackens off a bit, because this is a portion that will always get more money, and we will benefit from that. Got it. Thank you, Rajesh. Yeah. At this time, I'm showing no further question.

Rajesh Vashist: I would now like to turn it back to Rajesh Vashist, CEO for closing remarks.

Operator: Well, thank you all very much for joining us. Very happy to see the upturn in site time as we promised it would happen in the second half, and we'll continue throughout the year, and hopefully in the coming years. That's certainly our design. Look forward to meeting you guys on the road. Talk to you soon. Thank you very much. Thank you for your participation in today's conference.

Operator: This concludes the program. You may now disconnect.

Q2 2024 SiTime Corp Earnings Call

Request a DemoDemo

SITM

SiTime

Earnings