Q1 2025 SiTime Corp Earnings Call

Operator: Good afternoon and welcome to SiTime's first quarter 2025 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session.

Good afternoon, and welcome to <unk> first quarter 2025 financial results Conference call.

At this time all participants are in a listen only mode.

Speaker Change: At the conclusion of todays conference call instructions will be given for the question answer session. As a reminder, this conference call is being recorded today may seven 2025, I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations Brett. Please go ahead.

Operator: As a reminder, this conference call is being recorded today, May 7, 2025.

Brett Perry: I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations.

Brett Perry: Brett, please go ahead. Thank you, Dede.

Brett Perry: Good afternoon and welcome to SiTime's first quarter 2025 financial results conference.

Speaker Change: Thank you T D.

Speaker Change: Afternoon, and welcome to <unk> first quarter 2025 financial results conference call joining us today from the call on the call.

Brett Perry: Joining us today on the call from SiTime are Rajesh Vashist, Chief Executive Officer, and Beth Howe, Chief Financial. Before we begin, I'd like to point out that during the course of this call, the company may make forward-looking statements regarding expected future results, including financial positions, strategy and 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 statement.

Speaker Change: From side time a rejection.

Beth Howe: Chief Executive Officer, and Beth Howe, Chief Financial Officer before we.

Beth Howe: Again, I'd like to point out that during the course of this call. The company May make forward looking statements regarding expected future results, including financial position strategy and plans future operations, the timing market and.

Beth Howe: And other areas of discussion.

Beth Howe: It's not possible for the company's management to predict all risks nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward looking statements.

Brett Perry: In light of these risks, uncertainties, and assumptions, the forward-looking events discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied. Neither the company nor any person assumes responsibility for the accuracy and completeness of forward-looking statements. The company undertakes no obligation 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: 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.

Beth Howe: Neither the company nor any person assumes responsibility for the accuracy and completeness of forward looking statements.

Beth Howe: 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 14 2025.

Brett Perry: 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 14, 2025, as well as the company's subsequent filings with the Securities and Exchange Also during the call, we'll refer to 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 nor superior to measures of financial performance prepared in accordance with U.S. GAAP. The gap to non-GAAP reconciliation includes stock-based compensation expense, amortization of acquired intangibles.

Beth Howe: The company's subsequent filings with the Securities and Exchange Commission.

Beth Howe: Also during the call, we'll refer to 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 nor superior to measures of financial performance prepared in accordance with U S. GAAP.

Beth Howe: A GAAP to non-GAAP reconciliation includes stock based compensation expense amortization of acquired intangibles.

Brett Perry: and others.

Beth Howe: And acquisition related expenses, which include transaction and certain other cash costs associated with business acquisition as well as changes in the estimated fair value of contingent consideration and earn out liabilities. Please refer to the company's press release issued.

Speaker Change: Earlier today for a detailed reconciliation between GAAP and non-GAAP financial results with that it's now my pleasure to turn the call over to <unk> CEO rejection. Please go ahead.

Rajesh Vashist: With that, it's now my pleasure to turn the call over to SiTime CEO, Rajesh, please go ahead. Thanks, Brett. Good afternoon. I'd like to welcome new as well as existing investors to SiTime's first quarter 2025 earnings call. SiTime is the leader in a dynamic new semiconductor category that we call precision timing. which is a heartbeat of modern electronics. Whether it is in AI data centers, networking infrastructure, automated vehicles, personal mobility, or IoT, SiTime's precision timing delivers better performance and reliability. Precision timing uses semiconductor technology to reimagine time and transform the $10 billion timing model. SiTime is uniquely focused on high-value timing markets and applications and serving them with highly differentiated products that deliver exceptional value.

Beth Howe: Thanks, Brett.

Beth Howe: Good afternoon.

Speaker Change: To welcome new as well as existing investors to <unk> first quarter 2025 earnings call.

Speaker Change: <unk> is the leader in a dynamic new semiconductor category that we call precision timing.

Speaker Change: Which is the heartbeat of <unk> electronics.

Speaker Change: It is an AI data centers networking infrastructure automated vehicles personal mobility our Iot.

Speaker Change: Site times precision timing delivers better performance and reliability.

Speaker Change: Precision timing uses semiconductor technology to re imagine time and transform the $10 billion timing market.

Speaker Change: Uh huh.

Speaker Change: <unk> is uniquely focused on high value timing markets and applications and serving them with highly differentiated products that deliver exceptional value with this strategy. We are building a strong business that is diverse across industries applications and geographies geographies.

Rajesh Vashist: With this strategy, we're building a strong business that is diverse across industries, applications, and geography. This has served us well, and even in this dynamic environment, it has enabled us to continue to grow rapidly. The numbers speak for themselves. Q1 2025 was a great quarter where we delivered financial results well above our target. Revenue was 83% higher than the year ago at $60.3 million. Gross margins were 57.4%, and EPS was $0.26 per share. This growth was driven by all of our segments. The Comms Enterprise Data Center, or CED, business tripled year over year. And both the mobile IoT consumer and the auto-industrial defense customer segments grew double-digit percent.

Speaker Change: This has served us well and even in this dynamic environment. It has enabled us to continue to grow rapidly.

Speaker Change: The numbers speak for themselves.

Speaker Change: Q1, 2025 was a great quarter, we delivered financial results well above our target.

Speaker Change: Revenue was 83% higher than a year ago.

Speaker Change: At $60 3 million gross margins were 57, 4% and EPS was <unk> 26 per share.

Speaker Change: This growth was driven by all of our segments.

Speaker Change: Comms and enterprise data center or C. E D business tripled year over year and bought the mobile Iot consumer and the auto industrial defense customer segments.

Speaker Change: Grew double digit percentages.

Rajesh Vashist: Revenue from our largest customer grew over 75%. We expect this strength to continue in Q2. Our CED business has shown significant sequential growth for four consecutive quarters now, driven by the strength of AI. Our OEM and cloud service provider customers continue to reaffirm their growth outlook, and we expect the data center business to continue to grow through 2025. We know that AI infrastructure needs higher network bandwidth to improve GPU utilization rates, which directly impacts the consumption of SiTime's precision timing product. There are two trends that confirm this infrastructure upgrade. First, optical module and switch bandwidth is doubling, and we're shipping in high volume in 800G today.

Speaker Change: Revenue from our largest customer grew over 75%.

Speaker Change: We expect this strength to continue in Q2.

Speaker Change: Okay.

Speaker Change: Our CEB business has shown significant sequential growth for four consecutive quarters now driven by the strength of AI.

Speaker Change: Our OEM and cloud service provider customers continue to reaffirm the growth outlook and we expect the data center business to continue to grow through 2025.

Speaker Change: We know that yeah infrastructure needs higher network bandwidth to improve GPU utilization rates, which directly impacts the consumption of site times precision timing products.

Speaker Change: There are two trends that confirm this infrastructure upgrade.

Speaker Change: <unk> optical module and switch bandwidth is doubling and we're shipping in high volume and 800 G. Today.

Rajesh Vashist: We're now seeing increased design activity for 1.6T modules, which we expect will become the mainstream in 26 and 27. SiTime has had success on 1.6T designs, and we have over 20 opportunities at customers worldwide. As a second trend, active electrical cables, or AEC, continue to replace passive cables within the data center rack with 2 to 4x higher bandwidth. In both these applications, SiTime continues to be a highly differentiated solution where we deliver significant value in performance and resilient supply. Additionally, we are also very excited about our clocking business, which is central to the strategy of solving customers needs across the timing subsystem.

Speaker Change: We're now seeing increased design activity for one six T modules, which we expect will become the mainstream and 26% and 27.

Speaker Change: <unk> has had success on 160 designs and we have over 20 opportunities at customers worldwide.

Speaker Change: As a second trend active electrical cables, our AUC continue to replace passive cables within the data center rack with two to Forex higher bandwidth.

Speaker Change: In both these application site them continues to be a highly differentiated solution, where we deliver significant value and performance and resilient supply.

Speaker Change: Additionally, we are also very excited about our clocking business, which is central to the strategy of solving customers' needs across the timing subsystem.

Rajesh Vashist: We continue to have a sustainable advantage because we uniquely have all the components required to make truly differentiated products. By integrating the oscillator with the clock and software, SiTime has created a new clock category that is a complete system solution, which delivers increased performance and simplified designs for our customers. This strategy has the potential to create the highest clocking revenue in the industry in the coming years across all the customer segments. SiTime has already launched three clocking products with higher ASPs and longer revenue streams, a trend that will continue for products in the future. Some examples are in CED, our Cascade family offers the benefit of more resilient performance and has been designed into diverse applications.

Speaker Change: We continue to have a sustainable advantage because we uniquely have all the components required to make truly differentiated products.

Speaker Change: By integrating the oscillator with the clock and software Sytem has created a new cloud category that is a complete system solution, which delivers increased performance and simplified designs for our customers.

Speaker Change: This strategy has the potential to create the highest blocking revenue in the industry in the coming years across all the customer segments.

Speaker Change: <unk> has already launched three clocking products with higher Asps.

Speaker Change: And longer revenue streams, a trend that will continue for products in the future.

Speaker Change: Some examples are in CD or Cascade family offers the benefit of more resilient performance and has been designed into diverse applications.

Rajesh Vashist: from switches and NIC cards, network interface cards, in data centers to 5G equipment, and fixed wireless access, or FWA. In automotive, our Corus family has over a dozen high-value designs in ADAS, or Automated Driving Applications, where it offers the benefit of integration and higher reliability. For the mobile IoT consumer market, we have recently introduced Symphonic, the industry's first integrated clock generator for 5G millimeter wave consumed products, as well as asset trackers and GNSS or GPS receivers. Symphonic customers get high performance with environmental resilience, small size, system power efficiency, and also find homes in industrial applications.

Speaker Change: Switches and then make cards network interface cards in data centers to fight equipment and fixed wireless access or <unk>.

Speaker Change: In automotive our chorus family has over a dozen high value designs in Adas, our automated driving applications, where it offers the benefit of integration and higher reliability.

Speaker Change: For the mobile Iot consumer market, we have recently introduced symphonic the industry's first integrated clock generator for <unk> millimeter wave <unk> products as well as asset trackers, and GNL says our GPS receivers.

Speaker Change: Symphonic customers get high performance with environmental resilient small size system power efficiency and also find homes and industrial applications.

Rajesh Vashist: In these dynamic times, our product differentiation is key to continued success.

Speaker Change: In these dynamic times, our product differentiation is key to continued success.

Rajesh Vashist: I'm confident in SiTime's ability to adapt to the rapid changes in the world today while continuing to grow revenue, profitability, and market share.

Speaker Change: Confident in <unk> ability to adapt to the rapid changes in the world today, while continuing to grow revenue profitability and market share.

Beth Howe: With that, I'll turn the call over to Beth, our CFO, to discuss financial results in more detail. Thanks, Rajesh. Good afternoon, everyone. Today, I'll discuss first quarter 2025 results, and then I'll provide our outlook for the second quarter of fiscal 2025. As a reminder, I'll focus my discussion on non-GAAP financial results, which are reconciled to GAAP in our press release. Our Q1 results highlight the momentum of our business. First quarter revenue increased 83% year-on-year to $60.3 million, driven by ongoing strength in our data center business, as well as growth in our mobile business. Sales to the communications, enterprise, and data center customer segment were $29.3 million, up 198% year-on-year.

Speaker Change: With that I'll turn the call over to Beth <unk>, our CFO to discuss financial results in more detail.

Speaker Change: Seth Thanks for Jess Good afternoon, everyone. Today I'll discuss first quarter 2025 results and then I'll provide our outlook for the second quarter of fiscal 2025, as a reminder, I'll focus my discussion on non-GAAP financial results, which are reconciled to GAAP in our press release.

Speaker Change: Our Q1 results highlight the momentum of our business first quarter revenue increased 83% year on year to $63 million driven by ongoing strength in our data center business as well as growth in our mobile business.

Speaker Change: Sales to the communications enterprise and data center customer segment were $29 $3 million up 198% year on year.

Beth Howe: Sales into the automotive, industrial, and defense customer segment were $14.1 million, up 10% year-on-year. and sales into the mobile, IoT, and consumer-customer segment were $16.9 million, up 64% year-on-year. with sales to our largest in-customer increasing 76% to $11.1 million. In terms of the mix of revenue, Communications Enterprise Data Center represented 49% of revenue, Automotive Industrial and Defense made up 23% of revenue, and the Mobile IoT Consumer represented 28% of total revenue. Gross margins for the quarter were 57.4%, with gross margin dollars increasing 81% year-on-year. Total non-GAAP operating expenses were $32.5 million, flat, sequentially, and in line with expectations.

Speaker Change: Sales into the automotive industrial and defense customer segment were $14 $1 million up 10% year on year.

Speaker Change: And sales into the mobile Iot and consumer customer segment, or $16 9 million up 64% year on year with.

Speaker Change: With sales to our largest end customer increasing 76% to $11 $1 million.

Speaker Change: In terms of the mix of revenue.

Speaker Change: Immunizations Enterprise data center represented 49% of revenue automotive.

Speaker Change: Industrial and defense made up 23% of revenue.

Speaker Change: And the mobile Iot consumer represented 28% of total revenue.

Speaker Change: Gross margins for the quarter were 57, 4% with gross margin dollars, increasing 81% year on year.

Speaker Change: Total non-GAAP operating expenses were $32 5 million flat sequentially and in line with expectations for the quarter R&D expense was $19 $3 million in SG&A expense was $13 $2 million.

Beth Howe: For the quarter, R&D expense was $19.3 million, and SG&A expense was $13.2 million. Q1 non-GAAP operating income was $2.1 million, an improvement of $10.3 million, or 16 percentage points versus the same quarter a year ago. Q1 non-GAAP net income was $6.3 million or $0.26 per share. Turning to the balance sheet, accounts receivable were $28.1 million, with DSO improving to 42 days versus 50 days in Q4. Inventory ended the quarter at $82.6 million compared with $76.7 million in Q4 as we ramp production for key new products and continue to maintain strong wafer balances for assurance of supply.

Speaker Change: Q1, non-GAAP operating income was $2 1 million, an improvement of $10 3 million or 16 percentage points versus the same quarter a year ago.

Speaker Change: Q1, non-GAAP net income was $6 $3 million or 26 cents per share.

Speaker Change: Turning to the balance sheet accounts receivable were $28 $1 million with DSO, improving to 42 days versus 50 days in Q4.

Speaker Change: Inventory ended the quarter at $82 $6 million compared with $76 $7 million in Q4, as we ramp production for key new products and continue to maintain strong wafer balances for assurance of supply.

Beth Howe: During the quarter, we generated $15 million in cash from operations, up $1.5 million sequentially, and up $13.3 million year over year. CAFX was $16.4 million in the quarter, driven largely by the purchases of production equipment, and we paid $5 million to ORG Semiconductor. Our balance sheet remained strong, and we ended the quarter with $398.9 million in cash and short-term investments and no debt.

Speaker Change: During the quarter, we generated $15 million in cash from operations up one.

Speaker Change: $5 million sequentially, and up $13 $3 million year over year.

Speaker Change: Capex was $16 $4 million in the quarter, driven largely by the purchases of production equipment, and we paid $5 million to or semiconductor.

Speaker Change: Our balance sheet remains strong and we ended the quarter with $398 $9 million in cash and short term investments and no debt.

Beth Howe: Now I'd like to provide our outlook for the June quarter. For Q2, we expect revenue growth of 45% to 50% year-on-year, which is $64.7 million at the midterm. Gross margins to be approximately flat compared with Q1. Operating expenses to be in the range of $33 to $33.5 million and interest income of approximately $3 to $3.4 million.

Speaker Change: Now I'd like to provide our outlook for the June quarter.

Speaker Change: For Q2, we expect revenue growth of 45% to 50% year on year, which is $64 $7 million at the midpoint.

Speaker Change: Gross margins to be approximately flat compared with Q1.

Speaker Change: Operating expenses to be in the range of 33 to $33 5 million and interest income of approximately three to $3 $4 million.

Beth Howe: As a result, we expect second quarter non-GAAP EPS to be in the range of $0.25 to $0.31 per share.

Speaker Change: As a result, we expect second quarter non-GAAP EPS to be in the range of 25% to 31 cents per share.

Operator: With that, I'll open it up for questions. Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: With that I'll open it up for questions.

Speaker Change: Thank you to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Operator: Please stand by while we compile the Q&A roster.

Speaker Change: Okay.

Quinn Bolton: And our first question comes from Quinn Bolton of Niederman Company. Your line is open. Hey guys, congratulations on the nice results and outlook. I guess, you know, first question, Rajesh, you mentioned a significant design win back in March at the Morgan Stanley Investor Conference with your largest customer. That customer is up, I think, 76% year-on-year. Can you give us a sense, do you expect that kind of growth to continue throughout the year? Just what should we be expecting as that customer launches, you know, phones with the internal modem? Where you have two timing sockets paired with that.

Speaker Change: And our first question comes from Quinn Bolton of Needham <unk> Company. Your line is open.

Quinn Bolton: Hey, guys. Congratulations on the nice results and outlook I guess for.

Quinn Bolton: First question <unk>, you mentioned the significant design win back in March at the Morgan Stanley Investor Conference with your largest customer that customer is up I think 76% year on year can you give us a sense do you expect that kind of growth to continue throughout the year, just what should we be expecting.

Quinn Bolton: Is that customer launches.

Quinn Bolton: Following with the internal modem.

Quinn Bolton: Where you have two timing sockets paired with that internal modem.

Rajesh Vashist: Yeah, I think we should expect to have continued growth. I don't know if it'll be in the same percentage. Clearly, there is strength. You mentioned those two design wins. I think those design wins are in good shape.

Quinn Bolton: Yes, I think we should expect to have continued growth I don't know if it'll be the same percentage.

Quinn Bolton: Clearly there is strength.

Quinn Bolton: We you mentioned those two design wins I think those design wins are in good shape, what we what remains to be seen however, as always is first of all as you know, it's a consumer product. So it typically cycles up and down a little bit more than others.

Rajesh Vashist: What remains to be seen, however, as always, is, first of all, as you know, it's a consumer product. So it typically cycles up and down a little bit more than others. The second is it's the first one of its kind in the phone paired to their own certain chips that they have. So I think we've got to see where that goes.

Quinn Bolton: The second is it's the first one of its kind.

Quinn Bolton: In the phone paired too.

Quinn Bolton: Their own certain chips that they have so I think we've got to see where that goes and finally, we do live in a very dynamic environment.

Rajesh Vashist: And finally, we do live in a very dynamic environment where we don't know what the impact of tariffs or not tariffs or lesser tariffs or more tariffs are going to have. So all that being said, we continue to expect growth. Yeah.

Quinn Bolton: Where you we don't know.

Quinn Bolton: What the impact of tariffs are not tariffs are lesser tariffs are more tariffs are going to have so all that being said, we continue to expect growth yes.

Beth Howe: And maybe a follow-up. For Beth, I think, you know, as revenue grows into the second half of the year, I think you were expecting margin expansion. Can you give us a sense, do you still expect margins to expand in the second half? And I guess as part of that, to extent your largest customer, which is in the consumer space, you know, continues to grow at a pretty healthy clip. Would that potentially represent some drag on margins that we should be thinking about?

Quinn Bolton: And maybe a follow up.

Quinn Bolton: For Beth Beth I think as revenue grows into the second half of the year I think you're expecting margin expansion can you give us a sense do you still expect margins to expand in the second half and I guess as part of that to the extent your largest customer which is in the consumer space continues.

Quinn Bolton: To grow at a pretty healthy clip would that potentially represent some drag on margins that we should be thinking about thank you.

Beth Howe: Thank Thanks for the question. So, as we look at our gross margins, you indicated the two factors. So, we do remain committed to the gross margin target for our core business of 60 percent that we've been working towards. As we've discussed, we're making improvements in our costs and yields for our new products as they ramp. In addition, as you mentioned, we do have this new consumer business, which does come at lower gross margins. And so, while it does contribute incremental revenue and gross profit dollars and also provide significant value to us over the long term, it does put some pressure on our gross margin rate.

Quinn Bolton: Thanks for the question so as I look at our gross margins you indicated the two factors. So we do remain committed to the gross margin target for our core business of 60% that we've been working towards as well.

Quinn Bolton: We've discussed we're making improvements in our cost in yields for our new products as they as they ramp. In addition, as you mentioned we.

Quinn Bolton: We do have this new consumer business, which does come at lower gross margins and so while it does contribute incremental revenue and gross profit dollars and also provides significant value to us over the long term. It does put some pressure on our gross margin rate.

Beth Howe: And so, overall, we're working to offset and mitigate that pressure to deliver the 60 percent by the end of the year. And that's what we're working towards. So 60% is still the target. That's still our target. Clearly, we're working on it. We've got a little more work to do now with the new product. Understood.

Quinn Bolton: So.

Quinn Bolton: <unk>.

Quinn Bolton: Working to offset and mitigate that pressure to deliver the 60% by the end of the year.

Quinn Bolton: That's what we're working towards.

Quinn Bolton: 60% is still the target.

Quinn Bolton: That's still our target clearly we are working on it we've got a little more work to do now with the new products.

Operator: Thank you very much. We'll get back in the queue. Thank you.

Quinn Bolton: Understood. Thank you very much I'll get back in queue.

Quinn Bolton: Thank you.

Tore Svanberg: Our next question comes from Tore Svanberg of Stiefel. Your line is open. Yes, thank you and congratulations on the strong results. So I know there's a lot of focus on your largest customer, but I mean, the data center segment continues to be very robust, Rajesh. So I was just hoping you could elaborate a little bit more on your growth profile there. You definitely talked about 800 gig upgrade cycle moving to 1.6. You talked about the AECs, but my understanding is that you participate in a lot of different parts. AI Data Center. So how should we think about the continuous momentum here throughout?

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

Speaker Change: Yes, Thank you and congratulations on the strong results.

Speaker Change: So I know, there's a lot of focus on your largest customer but.

Speaker Change: In the data center segment continues to be very robust right. Josh. So I was just hoping you could elaborate a little bit more on your growth profile. There you definitely talked about 800 gig upgrade cycle moving to 1.6, you talked about the AUC is but my understanding is that you participate in a lot of different parts of the AI data centers. So how.

Speaker Change: Do we think about the continued momentum here throughout the year.

Rajesh Vashist: Well, the continuous momentum is strong.

Speaker Change: Well the continuous momentum is strong.

Rajesh Vashist: So, you rightly point out that while I have given examples in the optical module and the connectivity, there are other opportunities and switches in server racks, in the GPU, the CPU, accelerator cards, and so on. And we are, in fact, in every one of those. We are also looking at new opportunities that are coming directly from GPUs that are being made by non-semiconductor companies. And we see that as a tremendous opportunity as well. So, we stand pretty strongly behind continued growth, frankly, for years to come in the overall AI data center market because we see no slowdown in it.

Speaker Change: So you rightly point out that while I have given examples in the optical module and the connectivity.

Speaker Change: There are other opportunities in switches in server racks in the GPU, the CPU accelerator cards and so on and we are in fact in every one of those.

Speaker Change: We are also.

Speaker Change: Looking at new opportunities that are coming directly from.

Speaker Change: <unk> that are being made by non semiconductor companies.

Speaker Change: And we see that as a tremendous opportunity as well so we stress stand pretty strongly behind.

Speaker Change: <unk> growth frankly for years to come.

Speaker Change: In the overall AI data center market.

Speaker Change: Because we see no slowdown in it.

Tore Svanberg: Very good.

Tore Svanberg: Thank you for that. And that's my follow up.

Speaker Change: Very good thank you for that and that's my follow up could you talk a little bit about which segments you expect to drive the sequential growth.

Rajesh Vashist: Could you talk a little bit about which segments you expect to drive the sequential growth into the June quarter? And have you seen any sort of pull in activity at all as as related to potential tariffs? Yeah, it's always hard to tell whether there is pull-in activity, but at this point, I would say it is minimal, if any. We haven't detected any pull-in activity. Our bookings natively just continue to be very strong, and customers are looking well beyond the 90-day tariff mark for Q3, Q4 and onwards, so our outlook continues very bright and very solid.

Speaker Change: For the June quarter, and have you seen any sort of pull in activity at all.

Speaker Change: As as it related to potential tariffs.

Speaker Change: Yeah, it's always hard to tell whether there is put the pull in activity, but at this point I would say it is minimal if any we haven't detected any pull in activity.

Speaker Change: Our bookings natively just continue to be very strong and customers are looking well beyond the 90 day tariff Mark for Q3, Q4 and onwards. So our outlook continues very bright and very solid.

Rajesh Vashist: The growth will, as we said, just like we look back on Q1 and see that the growth came from every one of those, every one of those, whether it's CED or data center, I'm sorry, or mobile IoT consumer or auto industrial defense, it will continue to come from all aspects. Might be a little bit lighter from the auto side, but I think it's quite a uniform growth. And the reason for that, as always, is because of our differentiated products. Our premium products, our products tend to be premium, and they get sold in our customers' premium products, which are generally less impacted by weaknesses of any kind in the market.

Speaker Change: The growth will as we said just like we look back on Q1 and see that.

Speaker Change: The growth came from every one of those.

Speaker Change: Every one of those where the CD or our data center I'm, sorry, our mobile Iot consumer our auto industrial defense.

Speaker Change: It will continue to come from all aspects might be a little bit lighter from the auto side.

Speaker Change: And but I think it's quite a uniform growth and the reason for that as always is because of our differentiated products.

Speaker Change: Our premium products, our products tend to be premium and that gets sold in a customer's premium products, which are generally less.

Speaker Change: Less impacted by.

Speaker Change: Weaknesses of any kind in the market. So that's why we think we're in a strong position.

Rajesh Vashist: So that's why we think we're in a strong.

Tore Svanberg: Great, congratulations again. Thank you.

Speaker Change: Great Congratulations again.

Speaker Change: Thank you.

Christopher Caso: And as a reminder, if you have a question, please press star 1 1 and our next question comes from Chris Caso of Wolf Research. Your line is open. Yes, thank you. Good afternoon. I guess the first question is your outlook for the full year, and you had talked about, I think, 25 to 30 percent growth for the year. You know, given the differing landscape, you know, both take into account, you know, perhaps some of the design wins you spoke about, but also some of the uncertainty in the market. Is that still a valid goal for the year, or is that too low of a goal, too high of a goal?

Speaker Change: Thank you and as a reminder, if you have a question. Please press star one one and our next question comes from Chris Caso of Wolfe Research. Your line is open.

Speaker Change: Okay.

Speaker Change: Thank you good afternoon, I guess the first question is.

Speaker Change: Our outlook for the full year and you had talked about I think 25% to 30% growth for the year.

Speaker Change: Given the differing landscape will take into account perhaps.

Speaker Change: Some of the new design wins, you spoke about but also some of the uncertainty in the market.

Speaker Change: Is that still a valid goal for the year.

Rajesh Vashist: And, you know, what do you expect to be the drivers for the year? Has that changed as compared to what you thought of course? Yeah, so we are, of course, monitoring like everybody else to the extent we can, the dynamic environment, and what we see going on in the world at large.

Speaker Change: Or is that too low of a goal to hire the goal and what do you expect it to be the drivers for the year, how does that changed as compared to what you thought a quarter ago.

Speaker Change: Yes so.

Speaker Change: We are of course monitoring like everybody else to the extent, we can the dynamic environment.

Speaker Change: And what we see going on in the world at large.

Rajesh Vashist: But having said that, we would still reaffirm our growth, our growth prospects at that number we talked about 25 to 30% for the base business and additional growth based on the new design win that we have had. We see, we again go back to the differentiation of our products and the breadth of our products. We go back to the fact that we are now in the system timing selling business with the clocking products, as I indicated in my prepared remarks. And finally, to the fact that our design when funnel continues very strongly, which matches the product funnel.

Speaker Change: But having said that we would still reaffirm our growth.

Speaker Change: Our growth prospects at that number we talked about 25% to 30%, but the base business and additional growth based on the new design win that we've had.

Speaker Change: We see we again go back to the differentiation of our products.

Speaker Change: And the breadth of our products. We go back to the fact that we are now in the system timing selling business with the clocking products as I indicated in my prepared remarks, and finally to the fact that.

Speaker Change: Our design win.

Speaker Change: Funnel continues very strongly.

Speaker Change: Which matches the product funnel as far as where they come from I'll reiterate the same thing I said earlier, which is it'll happen in all segments. It's highly likely that CBD led by data center will grow significantly strongly just as.

Rajesh Vashist: As far as where they come from, I'll reiterate the same thing I said earlier, which is it'll happen in all segments. It's highly likely that CED, led by data center, will grow. And of course, please stay active in the internet. Got it.

Speaker Change: It did the last quarter, but all the others will also join in.

Speaker Change: So it's all boats will be going up perhaps one or two higher than others.

Speaker Change: Okay.

Beth Howe: And then a question for Beth, and just to follow up with some of your comments on gross margins, you know, so what are the levers that you can pull to get to that 60% target at the end of the year while, you know, factoring in, you know, some of the lower margin revenue? Is that a function of, you know, cost, cost reduction on on some of the products, or is that a function of mix with regard to the rest? Sure, Chris. So as we look at it, it's a function of a couple of things. So one is that we are making progress in terms of the new product introductions and the ramp there, improving the cost of those new products and, you know, improving the yields as those ramp.

Speaker Change: Got it.

Quinn Bolton: And then a question for Beth and then just to follow up with some of your comments on gross margins.

Quinn Bolton: So so what are the levers that you can pull.

Quinn Bolton: To get to that 60% target at the end of the year, while factoring in some of the lower margin revenue is that a function of.

Quinn Bolton: Cost cost reduction on some of the products or is that a function of mix with regard to the rest of the business.

Speaker Change: Sure Chris So as we look at it it's a function of a couple of things. So one is that we are making progress in terms of the new product introductions and the ramp there improving the cost of those new products and improving the yields as those ramp and that's the work we've been doing <unk> been talking about.

Beth Howe: And that's the work we've been doing, we've been talking about. We also expect revenue growth as we go through the year. And so that, you know, expect to see some operating leverage or manufacturing, you know, kind of leverage as we have more revenue. And as I said earlier, you know, the new business does provide incremental gross profit dollars, but is a bit of a, you know, pressure on the rate. And so we'll be looking to take additional actions to improve the cost structure in order to overcome some of those headwinds.

Quinn Bolton: We also expect revenue growth as we go through the year and so that.

Quinn Bolton: Got to see some operating leverage or manufacturing kind of leverage as we have more revenue and as I said.

Quinn Bolton: In earlier.

Quinn Bolton: The new business does provide incremental gross profit dollars, but is a bit of a.

Quinn Bolton: Pressure on the rate and so we'll be looking to take additional actions to improve the cost structure in order to overcome some of those headwinds.

Rajesh Vashist: Got it. And, and, you know, if I could ask one more, Rajesh, with regard to the data center... You know, you mentioned a couple of different trends within that business. Perhaps you could separate out your content going forward and things like, you know, 1.6 terabyte modules, active cables, and that, you know, how does your content grow? As you know, some of these new technologies go in as compared to your penetration, just SiTime getting a bigger market share of Yeah, so I think the dollar content doesn't increase. Let's look at our ASP doesn't increase as, say, going from 800 to 1.6 in any significant way.

Quinn Bolton: Got it.

Quinn Bolton: And if I could ask one more.

Quinn Bolton: Or just with regard to the data center business.

Quinn Bolton: You mentioned, a couple of different trends within that business.

Quinn Bolton: Perhaps you could separate out your content going forward and things like.

Quinn Bolton: One six terabyte modules active cables and that.

Quinn Bolton: How does your content grow as some of these new technologies go in as compared to your penetration GSI time, getting a bigger market share of some of these markets.

Quinn Bolton: Yeah, So I think.

Quinn Bolton: The dollar content doesn't increase.

Quinn Bolton: Our our ESP doesn't increase as say going from 800 to one six in any significant way. So that's one that's not happening.

Rajesh Vashist: So that's one. That's not happening. Our dollar content remains steady in each of the design wins. The number of design wins increases for sure because the need for precision timing gets continued to be spread out more and more. As an example, it was only a year ago that we started to see our first AEC or active electrical cables being used. And some of the accelerator cards didn't use any of our precision products two years ago, and now some of them are using some of our most valuable, highly differentiated products. The third way is a greater penetration into customers, because while we have done a reasonably good job at penetrating some of our customers in the OEM semiconductor module space, there's still more penetration to be had there.

Quinn Bolton: Our dollar content remains steady in each of the design wins the number of design wins increases for sure because the need for precision timing gets continued to be spread out more and more as an example, it was only a year ago that we started to see our first.

Quinn Bolton: AUC are active electrical cable is being used.

Quinn Bolton: And some of the accelerated cards.

Quinn Bolton: Didn't use any of our precision products two years ago and now there are some of them are using some of our most.

Quinn Bolton: Valuable highly differentiated products.

Quinn Bolton: The third way is a greater penetration into customers because we.

Quinn Bolton: While we have done a reasonably good job at penetrating some of our customers and the OEM semiconductor module space. There is still more penetration to be had there. So the expand expand inside after landing strategy and then there is new customers, particularly as csp's that is still not.

Rajesh Vashist: So the expand inside after landing strategy. And then there are new customers, particularly as CSPs, that are still not directly meaningful customers of SiTime. So we really have a lot of levers to pull here. And there's also the change in architecture that happens in many cases. So one of them is, for example, going after a significantly denser architecture with significantly higher use case of SiTime's precision timing products per unit or increasing the density of usage. So all in all, we think that this is a big updraft for SiTime for some significant time to come.

Quinn Bolton: A meaningful customers of <unk>. So we really have a lot of levers to pull here.

Quinn Bolton: And there is also.

Quinn Bolton: The change in the architecture that happens in many cases one of them is for example, going after significantly denser architecture with significantly higher use case of <unk> precision timing products.

Quinn Bolton: Per unit are increasing the density of usage.

Quinn Bolton: So all in all we think that this is.

Quinn Bolton: A big updraft for some time for some significant time to come.

Rajesh Vashist: Got it.

Operator: Thank you. Yep. Thank you.

Quinn Bolton: Got it thank you.

Quinn Bolton: Yes.

Quinn Bolton: Thank you.

Suji DeSilva: Our next question comes from Suji DeSilva of Roth Capital. Your line is open. Hi, Rajesh. Hi, Beth. Congrats on the progress here.

Speaker Change: Our next question comes from Citi, Just Silva of Roth Capital. Your line is open.

Just Silva: Hi, Josh Hi, Beth.

Rajesh Vashist: Can you talk about the platforms you called out, naming them Rajesh, Cascade, Chorus, Symphonic, and just how you're trying to portray the product portfolio and roadmap here? I think it's the first time I've heard those called out together, sort of your platform. Right, right. Thank you for that. Our Cascade family of products is much more on the CED side. It's being used in communications, in enterprise, in data center. It's our most complex chip in the clocking business. It's probably our first chip that we did in clocking. There are versions of it that are integrated with oscillators.

Just Silva: Congrats on discussing the progress here can you talk about the platforms you've called out naming them.

Speaker Change: Cascade cores symphonic and just how you're trying to portray the the product portfolio and roadmap here I think it's first of all I've heard those called out together sort of Europe.

Just Silva: Platform right.

Speaker Change: Thank you for that our Cascade family of products.

Speaker Change: Much more on the on the CD side its end use being used in communications and enterprise and data center, it's our most complex chip.

Speaker Change: In the locking business, it's probably our first.

Speaker Change: Chip that we did in clocking.

Speaker Change: Their versions of it that are integrated with oscillators that versions of fares that are not integrated so theres a whole price performance level of it and it's in the higher end of the range.

Rajesh Vashist: There are versions of it that are not integrated. So there's a whole price performance level of it, and it's in the higher end of the range.

Rajesh Vashist: The second one is relatively new, coarse family of products, is for some reason, not what, for some reason, but for reason of integration and higher reliability, is more attuned for the automotive market and the self-driving market, primarily because of its significantly smaller size and significantly higher performance in terms of jitter and phase noise. And the final one is the latest one.

Speaker Change: The second one is relatively new chorus family of products.

Speaker Change: Is for some reason not worked for some reason, but for the reason of integration and higher reliability.

Speaker Change: Is more attuned for the automotive market and the self driving market.

Speaker Change: Primarily because of its significantly smaller size and significantly.

Speaker Change: Higher performance in terms of jitter and phase noise and the final one is the latest one I think we just got the press release out on that a day or two ago. The symphonic which is our site time generated all of these are sites and generated except cascade by the way, which is comes from the <unk> acquisition.

Rajesh Vashist: I think we just got the press release out on that a day or two ago, the Symphonic, which is a SiTime-generated – all of these are SiTime-generated, except Cascade, by the way, which comes from the Aura acquisition. But the Symphonic product is a multi-output clock generator, more for the 5G millimeter wave, which we think, other than consumer products, is also getting used significantly in industrial applications. And that's based on the phase noise, the resilience, the small size, the low power. So these are multi-year efforts at cracking the market.

Speaker Change: But the symphonic product is multi output clock generator.

Speaker Change: More for the <unk> millimeter wave, which we think other than consumer products is also getting used significantly in industrial applications and thats based on the phase noise. The resilience the small size and low power. So these are multi year efforts.

Rajesh Vashist: And the point that I wanted to make was that with the launch of Symphonic in particular, we have increased our target revenue that we expect to get over the coming years. You know, I've always said about $100 million in a few years from our clocking business, and I can say comfortably that we are highly likely to increase it significantly in the coming years because of the launch of some of these products. So very, very pleased with that and very pleased with the traction that we've been getting.

Speaker Change: At cracking the market and the point that I wanted to make was that.

Speaker Change: With the launch of symphonic in particular, we have increased our target revenue that we expect to get over the coming years.

Speaker Change: I've always said about $100 million in a few years from our trucking business and I can say comfortably that we are highly likely to increase it significantly in the coming years because of the launch of some of these products. So very very pleased with that.

Speaker Change: And very pleased with the traction that we've been getting.

Rajesh Vashist: Okay, and just to clarify the strong growth you're having in data center and optical, should I think of that as being majority cascade? Or is that the oscillator products and shifting to more all the oscillators? Yeah, all the oscillators, the EPIC product, the Elite RF, the Elite itself, the Elite TCXOs, the clocking products, even some of the buffers from Aura, which are relatively undifferentiated, but, you know, higher number in use case. I think we are, this is the CED business is the classic case we've always maintained is the one which is the highest growth, the greatest value proposition that SiTime can bring, the highest ASPs with the highest volumes that balance, and, of course, very sticky or very long-lived business.

Speaker Change: Okay, and just to clarify the strong growth you are having in.

Speaker Change: Data center and optical.

Speaker Change: Of that as being majority cascade or is that the oscillator products and shifting to more <unk>.

Speaker Change: Yes, all the oscillators, the epic product the elite RF.

Speaker Change: The elite itself daily TCE shows.

Speaker Change: The clogging products.

Speaker Change: Even some of the buffers from Ora, which are relatively undifferentiated, but but the.

Speaker Change: The higher number in use case.

Speaker Change: I think we are this is the the CEB business as the classic case, we've always maintained is the one which is the highest.

Speaker Change: Our growth.

Speaker Change: Great is the value proposition that <unk> can bring the highest asps with the highest volumes that balance.

Speaker Change: And of course, very sticky or very long lift business. So it's very much a business that we're very focused on.

Rajesh Vashist: So, it's very much a business that we are very focused on. very helpful Rajesh. Thanks.

Josh: Okay, great very helpful for Josh Thanks.

Speaker Change: Thank you.

Josh: Thank you.

Tore Svanberg: And we have a follow-up from Tore Svanberg of CIFL, your line is open. Yes, thank you. Yeah, Rajesh, I know you've got a lot of data center segment. I also know you have a lot of design wins in the telecom 5G communications market. Just wondering if that's starting to move or is that market still quite? Yeah, thank you for that question, Tore. Yes, it is starting to move. And it isn't particularly large right now, but we expect to keep on growing in that. There are some initiatives going on in fixed wireless. Overseas, there are others in the enterprise space that are looking quite good.

Josh: Okay.

Josh: And we have a follow up from tore Svanberg of Stifel. Your line is open.

Tore Svanberg: Yes. Thank you.

Speaker Change: I know you've got a lot of momentum in the data Center segment.

Tore Svanberg: Also I know you have a lot of design wins in the.

Tore Svanberg: Telecom <unk> communications market, just wondering if thats starting to move or is that market is still quite slow.

Tore Svanberg: Yes, it's thank you for that question Terry Yes, it is starting to move.

Tore Svanberg: And it isn't particularly large right now, but we expect to keep on growing and that there are some initiatives going on in fixed wireless.

Tore Svanberg: And overseas there are others in the enterprise space that are looking quite good. So we think we will acquire new new customers in this.

Rajesh Vashist: So, we think we'll acquire new customers in this. So, very enthused about it.

Tore Svanberg: So very very enthused about it and I briefly mentioned software and Si time has for the last year or so.

Rajesh Vashist: And I briefly mentioned software, and SiTime has, for the last year or so, been using the IEEE 1588 or synchronization software to add greater value to our customers. And that has allowed us to, frankly, to charge more for our oscillator and clocking products, because customers need that full solution of oscillator, clocks, and the synchronized software all together. It's another example of our system self. Very good.

Tore Svanberg: Using the <unk> <unk> hundred 88, our synchronization software to add greater value to our customers and that has allowed us.

Tore Svanberg: Two.

Tore Svanberg: Frankly to charge more for our.

Tore Svanberg: Our oscillator and clocking products because customers need that full solution of oscillator clocks and the synchronized software altogether. It's another example of our system sell.

Beth Howe: And as my last question, a question for Beth. Beth, the capex has been around 15, 16 million the last three quarters. I assume that's for, you know, maybe a combination of things. But could you give us any sense for, you know, how much longer it would be at this more elevated level?

Speaker Change: Very good and as my last question a question for Beth Beth the Capex has been around 50 to 60 million. The last three quarters I assume thats for maybe a combination of things but.

Speaker Change: Could you give us any sense for how much longer it would be at this more.

Speaker Change: Fitted level.

Beth Howe: Thanks, Tori. Yes, we've been investing to build capacity for some of these new products that we've been talking about, the ones we talked about today, for example. I would expect we've got a little more to go in terms of Q2 at these levels, and for the full year, probably roughly in line with the total for 2024. So I would expect the total CapEx for the year to be kind of mid to high 30s for the year. Perfect. Thank you.

Tore Svanberg: Thanks, Torry, yes, we've been investing.

Tore Svanberg: To build capacity for some of these new products that we've been talking about the ones. We talked about today for example.

Tore Svanberg: I would expect we've got a little more to go in terms of Q2 at these levels and for the full year probably.

Tore Svanberg: Roughly in line with the total for 2024, so I would expect the total capex for the year to be.

Tore Svanberg: Yes kind of.

Tore Svanberg: Mid to high <unk> for the year.

Tore Svanberg: Perfect. Thank you.

Operator: We have no further questions at this time.

Speaker Change: Thank you we have no further questions at this time I would like to turn it back to management for closing remarks.

Rajesh Vashist: I'd like to turn it back to management for closing remarks. Thank you, Didi. What I wanted to highlight here was that these are tough times, somewhat from macro conditions. There are uncertainties in the market. It's highly dynamic. The news continues to change and evolve. And at SiTime, we ask ourselves, what is our role in all this? And our role in all of this is to navigate this to the best of our ability. And where we can do a great job is focus and stick to the things that we can control. So what do we control?

Tore Svanberg: Thank you.

Sure.

Tore Svanberg: Sure.

Tore Svanberg: What I wanted to highlight here was that.

Tore Svanberg: These are tough times.

Tore Svanberg: What from macro conditions, there are uncertainties in the market. It is highly dynamic.

Tore Svanberg: <unk>.

Tore Svanberg: The news continues to change and evolve and at same time, we ask ourselves what is our role in all of this and our role in all of this is to navigate this.

Tore Svanberg: With to the best of our ability and where we can do a great job is focus and stick to the things that we can control. So what do we control we control the cadence and value of our parks, we're doing that with highly differentiated product we continue.

Rajesh Vashist: We control the cadence and value of our parts. We're doing that with highly differentiated product. We continue, we can control the acquisition of key customers and greater penetration. We continue to do that in many of our new customers. We have acquired new customers, new applications. we are obviously able to control our spending. And as you can see, our spending continues to be flattish as we go, and we control increasing our gross margins. So we're doing that as well. So in general, we are managing our own destiny with the cards that we've been dealt. And I think that I feel very confident that by sticking to all of these value will leverage all of this valuable levers, we can come out on the other end of it very, very strong.

Tore Svanberg: Can control the acquisition of key customers and greater penetration, we continue to do that in many of our new customers, we have acquired new customers new applications.

Tore Svanberg: We are obviously able to control our spending and as you can see our spending continues to be flattish as we go.

Tore Svanberg: And we control increasing our gross margins, so we're doing that as well so.

Speaker Change: In general we.

Speaker Change: Managing our own destiny with the cards and that we've been dealt and I think that I feel very confident that by sticking to all of these value will leverage all of this valuable levers we can come out on the other end of it very very strong and.

Operator: And thank you for your attention to this and listening into our quarterly results.

Speaker Change: Thank you for your pet.

Speaker Change: To this end listening into our quarterly results.

Operator: This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change: Okay.

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