Q3 2025 SiTime Corp Earnings Call

Speaker #2: Good afternoon and welcome to SITIME Corp . Third quarter 2020 Financial Results conference call . After the speakers presentation , there will be a question and answer session .

Speaker #2: To ask a question during the session , you will need to press star one one on your telephone . You will then hear an automated message advising your hand is raised .

Speaker #2: To withdraw your question , please press star one one again . As a reminder , this conference is being recorded today , November 5th , 2025 .

Speaker #2: I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations . Bret . Please go ahead .

Speaker #3: Thank you . Ari . Good afternoon and welcome to SITIME Corp Third Quarter 2020 Financial Results conference call . Joining us on today's call from SITIME Corp .

Speaker #3: Rajesh Vashist Chief Executive Officer and Beth Howell Chief Financial Officer before we begin , I'd like to point out that during the course of this call , the company may make forward looking statements regarding expected future results , including financial positions , strategy and plans , future operations .

Speaker #3: 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 factors or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements.

Speaker #3: 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.

Speaker #3: Neither the company nor any person assumes responsibility for the accuracy and completeness of the forward looking statements . The company undertakes no obligation to publicly update forward looking statements for any reason .

Speaker #3: After the date of today's conference call to confirm 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 14th , 2025 , as well as the company's subsequent filings with the Securities and Exchange Commission .

Speaker #3: During the call , management will 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 US GAAP .

Speaker #3: This GAAP to non-GAAP reconciliation includes stock based compensation expense , amortization of acquired intangibles , and acquisition related expenses , which include transaction and certain other costs , cash costs associated with business acquisition , as well as changes in the estimated fair value of contingent consideration and earn out liabilities .

Speaker #3: We refer you to the company's press release issued 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 SITIME Corp CEO Rajesh .

Speaker #3: Please go ahead .

Speaker #4: Thank you . Bret . Good afternoon everyone . It's a pleasure to connect with you all again . We value the trust of our long standing shareholders and extend a warm welcome to those joining this item .

Speaker #4: Journey . As I becomes more prevalent , it drives the need for better timing and synchronization , which in turn propels faster growth for precision timing .

Speaker #4: Our key applications are centered around AI , including networking and computing hardware in clusters Expus GPUs , CPUs , etc. . For inference , personal AI computers and AI based next generation communications equipment .

Speaker #4: Here , as well as in all our other end markets . Site and provides differentiation with resilient performance and reliability . Q2 Q3 2025 was a milestone quarter in systems history , with revenue of $83.6 million , up 45% year over year , an increase in gross margins to 58.8% and EPs more than doubling to $0.87 .

Speaker #4: Exceptionally strong bookings reinforce our outlook for continued growth momentum . Our growth is playing out geographically as well . In Q3 , we saw double digit percentage growth in every region .

Speaker #4: We continue with design win momentum across all our end customer segments , highlighting the broad demand for our products in Q3 . Demand from Sid communications , Enterprise and Data Center customers surged with Sigmund revenue up 115% year over year .

Speaker #4: This marks the sixth consecutive quarter of triple digit growth in Sid , and represents 51% of our revenue in Q3 . We expect the growth to continue at a fast pace , driven by three trends .

Speaker #4: First , we will generate more revenue with our oscillators and clock generators in existing design as their shipments increase . Examples include Elite and Elite RF oscillators , which enable better synchronization for low latency and higher GPU efficiency .

Speaker #4: Second , we continue to win new designs , which will generate new revenue for example , optical module bandwidth is doubling to the 1.6 Terabit level , and these new modules are beginning to ramp .

Speaker #4: Now , demand for the 1.6 Terabit modules has recently doubled , indicating a sharp transition to 1.6 Terabit technology in first half 2026 .

Speaker #4: Additionally , SITIME Corp oscillator ASPs in this application are higher because of the higher frequency and performance requirements . The third reason is that Sid orders are coming in with shorter lead times .

Speaker #4: With a supply chain preparedness and product architecture system has better availability and is doing a great job in fulfilling this demand . Our funnel is growing rapidly as well .

Speaker #4: Particularly in clocks where it has quadrupled to 300 million in the past year . All of these trends are giving us higher confidence for 2026 .

Speaker #4: Moving to aerospace defense . Precise timing is critical . For example , our Endura oscillators enable synchronized movement and robust communications with GPS becoming increasingly compromised .

Speaker #4: Localized timing with the highest performance oscillators provides essential hold over capability for continued operations in automotive . Our recently launched porous clock generator is ramping at top aides , car companies and is integrating into leading L4 and robotaxi designs .

Speaker #4: Our product roadmap features fail safe technology , which advances safety first , design with high stability , timing and predictable failover for L4 autonomy .

Speaker #4: And finally , in mobile IoT consumer , we expect strong growth from our symphonic Clock generator in mobile applications in the coming year .

Speaker #4: We're very excited to introduce the Titan platform, a breakthrough that marks our entry into the $4 billion standalone resonator market. Titan opens an incremental $400 million SAM, or serviceable available market, today, which we expect to grow to $1 billion by 2028.

Speaker #4: This platform is the result of more than two decades of innovation, hundreds of millions of dollars in investment, and six generations of MEMS technology.

Speaker #4: Over that time , we've improved resonator performance by 100 x , and we see another 10 to 20 times improvement within reach as we continue to innovate , Titan fundamentally transforms the resonator market .

Speaker #4: First , it eliminates the need for stand alone board level resonators , which is a persistent challenge for customers by enabling semiconductor level packaging and integration .

Speaker #4: Second , it creates long lived revenue streams for these semiconductor companies that integrate Titan and deliver more value to their customers . We believe Titan and our resonator roadmap puts Satan years ahead of the industry .

Speaker #4: Our leadership will enable a new class of electronics that are smaller , lower power and higher performance , setting the stage for the next wave of innovation across the business .

Speaker #4: Robust demand and a healthy funnel position . It positions us well for continued strong growth . We remain committed to further investing in R&D , deepening customer engagement and strengthening operating leverage .

Speaker #4: SITIME Corp is well positioned for enduring success . I look forward to the opportunities ahead and to sharing our continued progress . I'll now turn the call over to Beth to discuss our financial results in more detail .

Speaker #4: Beth .

Speaker #5: Thanks , Rajesh , and good afternoon , everyone . Today I'll walk through our third quarter fiscal 2020 results and then provide our outlook for the fourth quarter .

Speaker #5: As a reminder , I'll focus on non-GAAP financials , which are reconciled to GAAP in our press release . Q3 reflects the continued execution of our strategic priorities .

Speaker #5: Our performance demonstrates the strength of our diversified products and applications . The scalability of our operating model , and the growing demand for our differentiated solutions .

Speaker #5: In the third quarter , revenue increased 45% year on year to $83.6 million , driven by revenue in communications , enterprise Data Center , which grew 115% year over year to $42.1 million .

Speaker #5: Sales into the automotive , industrial and defense market totaled $20.2 million , up 14% year on year , and sales into the mobile , IoT and consumer market increased 4% year on year to $21.3 million , of which our large consumer and customer represented $15.3 million .

Speaker #5: In terms of the mix of revenue , the communication Enterprise Data Center market represented 51% of revenue , while the mobile IoT consumer market represented 25% of revenue .

Speaker #5: And the automotive Industrial Defense market represented 24% of revenue . Q3 non-GAAP gross margin was 58.8% , up 70 basis points year on year due to improving product mix and favorable product cost .

Speaker #5: Total non-GAAP operating expenses increased 14% year on year to $33.7 million for the quarter . R&D expense was $18.5 million and SG&A expense was $15.2 million .

Speaker #5: As we invested in both sales and marketing . We continue to be disciplined while investing for future growth . Q3 non-GAAP operating income was $15.4 million , an improvement of $11.4 million , or 12 percentage points , versus the same quarter a year ago .

Speaker #5: Q3 non-GAAP net income was $23.4 million , or 28% of revenue , and non-GAAP earnings per share more than doubled year over year to $0.87 .

Speaker #5: Turning to the balance sheet accounts receivable were $22.5 million , with DSO improving to 24 days versus 35 days in Q2 due to better revenue linearity .

Speaker #5: Inventory at the end of the quarter was $86.7 million , compared to $84.1 million in Q2 . As we continue to maintain strong inventory for assurance of supply during the quarter , cash from operations more than doubled sequentially to $31.4 million .

Speaker #5: As expected , capital expenditures stepped down in Q3 to $5.1 million . We ended the quarter with $810 million in cash and short term investments .

Speaker #5: Now , I'd like to provide our outlook for the December quarter for Q4 . We expect revenue of 100 to $103 million , gross margins of 60 to 60.5% , operating expenses of 35 to $36 million , interest income of 7 to $7.5 million , and diluted share count of approximately 27 million shares .

Speaker #5: As a result , we expect fourth quarter non-GAAP EPs to be in the range of $1.16 to $1.21 per share . In closing , our third quarter performance and outlook for Q4 reflect the strong top line momentum and the meaningful operating leverage in our model as we scale .

Speaker #5: We are executing on our strategy to lead in high growth , high value markets . Our diversified portfolio continues to gain traction across AI , automotive , industrial , defense and consumer sectors , reinforcing the strength of our Multi-market approach .

Speaker #5: Operational discipline remains a cornerstone , as evidenced by the expanding gross margins and significant increase in operating income with robust product pipeline and deepening customer engagement , we are well positioned to drive sustained growth , operating leverage and long term shareholder value .

Speaker #5: With that , I'll open it up for questions . Operator .

Speaker #2: Thank you . At this time , we will conduct a 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 announced .

Speaker #2: To withdraw your question , please press star one one again . Our first question comes from the line of Tori Svanberg of Stifel .

Speaker #2: Your line is now open .

Speaker #6: Yes . Thank you . Congrats on the record revenue and the very strong outlook . Could you give us a sense for what's driving the strength in Q4 ?

Speaker #6: I mean , I assume Sid is going to continue to be a strong growth driver , but yeah , on a relative basis , could you could you talk about the three segments into Q4 , please ?

Speaker #5: Sure . I'll , start there . Tori . So we do see kind of continuation of trends and sequential growth in each of our segments for for Q4 .

Speaker #5: No surprise , the AI and data center business continues to to lead the growth in terms of the strength of the markets . But we are continuing to see adoption of our new mobile symphonic product , as well as performance in aerospace and defense .

Speaker #5: As we look into Q4 .

Speaker #6: Very good . And that's my follow up . A question for you , Rajesh . So now that you've got , you know , clocks getting designed , when you got the the resonator product line , I'm just wondering how how that serves to pull in more oscillator opportunities for you as well .

Speaker #6: Because my understanding is , you know , sometimes you get , you know , drawn in with more components , especially as you get design wins for clocks and resonators .

Speaker #6: So any color you could add there , please .

Speaker #4: Yeah . Thanks for that . Tori , the clocks definitely do bring the oscillators or oscillators bring in more clocks . But in spite of the very , very robust funnel that we have in clocks , we're still a relatively small player in the clock cycle .

Speaker #4: So I think it'll probably be for it to be able to pull in our oscillators to significant levels . That's probably out for about a year , year and a half .

Speaker #4: At least as far as tighten the resonator pulling us in , I think that's definitely not going to have any meaningful revenue till late 26 or 27 .

Speaker #4: Even going out in the future . I think the main reason for talking about these is to indicate that SITIME Corp has really established its position as a broad based timing supplier , which makes us completely unique .

Speaker #4: There is nobody else that has oscillators as strongly as we do have . Clocks rising and resonators coming in for the future and bringing in a lot of strategic value to the customers .

Speaker #4: So we just wanted to expose that to investors , to get them to understand how far we have come in the last couple of years in building ourselves out .

Speaker #4: .

Speaker #6: That's great perspective . Congrats again .

Speaker #4: Thank you .

Speaker #2: Thank you . As a reminder to ask a question , you will need to press star one one on your telephone . Our next question comes from the line of Quinn Boulton of Needham and Company .

Speaker #2: Your line is now open .

Speaker #7: Hey , guys , congratulations on the results and outlook . I guess I just wanted to come back for just . I might have missed some of your initial comments on the Titan Resonator market , but obviously , I think historically , resonators have , you know , kind of sold at lower price points than , than clocks .

Speaker #7: And oscillators . And so I'm just wondering as that business ramps , I think you said late 26 into 2027 , can you give us a sense what's the margin profile of the Titan family ?

Speaker #7: And does that , you know , is that sort of aligned with your kind of roughly 60% gross margin that you guided to for the fourth quarter ?

Speaker #4: You're exactly right . Quinn . The ASPs are definitely lower . They're lower than oscillators . Typically , and they're lower than clocks typically .

Speaker #4: But as you say , it really shows up in volume because that $4 billion resonator market is a 40 , 40 billion unit market or more .

Speaker #4: So the ASPs are low . We're talking $0.20 or below . But the gross margins are definitely in the 60% regime . And in fact , probably higher .

Speaker #4: And and yeah , so the design wins are typically would be in tens of millions of units level design wins .

Speaker #7: Excellent . And then , you know , you've kind of filled out the the timing portfolio . And I realize , you know , you may have additional product lines .

Speaker #7: You can add to oscillators or clocks , but I guess I just wanted to to think about you guys raised roughly 400 million .

Speaker #7: You're sort of in the third quarter looking to M&A. Can you just give us any updated thoughts on, you know, M&A?

Speaker #7: I think there have been some assets that have been rumored for sale . You know , divisions of larger , you know , analog companies .

Speaker #7: Any thoughts on like atomic clocks . There's been some you know , acquisitions of atomic clock companies announced over the past couple of of months .

Speaker #7: And so just , just , any updated thoughts on what you might be thinking on , you know , further enhancing the product portfolio through M&A ?

Speaker #4: Yeah , we certainly are interested in M&A . And I think we're looking to get scale . Unfortunately , the atomic clock business , particularly the ones you may be referring to , are quite far out in revenue terms .

Speaker #4: So while very interesting technologically and certainly something which is a gleam in our eye , I think we would be looking more near-term for M&A that actually has some impact .

Speaker #7: Understood . Okay . Thank you Rajesh .

Speaker #8: Sure .

Speaker #2: Thank you . Our next question comes from the line of Tori Svanberg of Stifel . Your line is now open .

Speaker #6: Yeah .

Speaker #6: Thanks . Just just a few . Follow ups . First of all , Beth , the gross margin is pretty strong . 60 60.5 I assume that is , again , mixed driven .

Speaker #5: very attractive ASPs and margins for us . So as that business has become 50 , 51% of the mix , that is positive for us as well .

Speaker #5: And then we will , always continue to to work on our costs . But and that is also benefited by the scale . So I think if I look at it , product mix is definitely helping us as we mix to more and more CD and then the scale and cost components also play a role .

Speaker #6: Great . And then my last question is for back to you , Rajesh . Could you just give us an update on where you stand with your go to market strategy ?

Speaker #6: I think in the past you've , you know , put together some efforts to work a little bit closer with the hyperscalers , maybe even closer to some of the bigger chip players that sell to those hyperscalers .

Speaker #6: So any update there would be helpful . Thank you .

Speaker #4: Yeah , I think we're continuing to make significant progress , particularly in the semiconductor area . I think you we also see the entry of new people in the market who were not your typical players .

Speaker #4: I mean , notably , you know , Oracle and of course , OpenAI and so on . So I think we are looking at the whole ecosystem and as the timing company that is focused on high end timing , differentiated timing , those are clearly customers that we're looking at moving into and what we find ourselves is that we as there's more performance , less latency , smaller size , lower power , there's a greater need for site and products .

Speaker #4: And I think the 1.6 terabit per second is a great example of that . In the last couple of calls , when you've talked , we've seen that further out in time , but we've seen acceleration among many of these technologies .

Speaker #4: So , you know , it looks really good .

Speaker #6: Very good . Thank you again .

Speaker #2: Thank you . Our next question comes from the line of Chris Caso of Wolfe Research . Your line is now open .

Speaker #3: Yes . Thanks .

Speaker #6: Good evening .

Speaker #9: I guess the first question is , you know , with with regard to the customer base , you know , can you give us some sense right now of , you know , obviously AI data center is is what's driving a lot of this right now .

Speaker #9: You know , how much of that market are you able to address with the reach that you have now with the sales and the engineering and the customer relationships right now ?

Speaker #9: And what can you do to to expand that into the areas where you just don't have penetration right now as you know , a smaller player in what's a very big market ?

Speaker #8: Yeah , I think just to .

Speaker #4: Be very clear , Chris , we're in the early innings of all of this . If you look at the the ecosystem that we are selling to , we're selling to semiconductor companies .

Speaker #4: As noted , we're selling to the hyperscalers . We're selling to the OEMs that are working on it . We're selling to the Odms .

Speaker #4: We're selling to the module makers . We're selling to the active cable makers . So SITIME Corp has a almost an embarrassment of riches in we are building ourselves up and hence the comment on both making significant efforts in R&D as we see the need for greater and greater product needs that are one two years out , even .

Speaker #4: And then of course , into the channel , the channel strategy , not only directly addressing the OEMs , but also the hyperscalers .

Speaker #4: As we mentioned , and increasing significantly a geographic footprint , both in United States , in all geographies . Actually , in the United States , in Asia , and as well as in Europe .

Speaker #4: So I think it's a we're actually on a very fast growth curve in adding resources in R&D and development , as well as in marketing and sales to address all these markets .

Speaker #4: But it's early innings .

Speaker #9: Got it . Helpful for my follow up . Could you talk a bit about content ? And you know , you mentioned earlier in the call at 1.60 transition .

Speaker #9: What what does that transition do to to timing content to your content on the board . And what else should we be watching as as potential content drivers within that ?

Speaker #9: Segment .

Speaker #4: Yeah . So that's probably one of the easiest ones to talk about because it's one where we see higher volumes and we see the significant increase in in ASPs and average selling prices .

Speaker #4: So that's relatively an easy one . But it's also in the switches also in the accelerator cards , the , the connectivity cards , the .

Speaker #4: Whether they're PCIe or they use or any of the other technology , I think it really comes into full force . We also think that there is a future roadmap where timing the whole conversation around Chiplets is starting to get very interesting as we look forward out into the future .

Speaker #4: It's not happening now , but it's happening out in the future . I think that gets very interesting . Significantly increasing content as we go forward .

Speaker #9: Thank you .

Speaker #2: Thank you . As a reminder , if you would like to ask a question , please press star one one on your telephone .

Speaker #2: Our next question comes from the line of Quinn Boulton of Needham and Company . Your line is now open .

Speaker #7: Hi . Thanks for letting me ask a couple of follow ups . I guess the first one , the CD business up well over 100% with the fourth quarter guidance .

Speaker #7: I guess I was just wondering , can you talk anything about visibility , lead times and that business ? Are you starting to see any shortages of other components that could constrain that business ?

Speaker #7: Or maybe on the flip , if things are tight , do you think there may be any hoarding or inventory stocking starting to take place in the CD business ?

Speaker #7: And then I've got a quick follow up .

Speaker #4: Yeah , I mean , we're in our business . We certainly don't think there's hoarding in our business . We certainly don't think that there's any shortages in the sense that sci time , you know , back to my prepared comments .

Speaker #4: We have built up a robust chain value chain , a robust supply chain , and we were able to move because of our programmability and our focus on this market .

Speaker #4: So we were good in getting to that . We do hear rumors of some of the optical components that are in shortage , but I don't think that anybody is holding back because we see quite a significant increase in in volumes .

Speaker #4: But so far that's about it . We've also , of course , heard of substrate shortages , but I think that's sort of fairly common knowledge .

Speaker #4: Nothing , nothing . That's very particular to timing .

Speaker #7: Great . And then I guess , you know , kind of just wondering if you had any updated thoughts sort of on just what you would now , maybe call typical seasonal trends as we start thinking about modeling 2026 , you know , when you were less driven by CD and maybe a little bit more mobile , IoT focused , you saw pretty strong seasonality in the March quarter , wondering if you think that seasonal pattern starts to , you know , mitigate a little bit with with the business mixing to CD , or would you still think the March quarter , you know , is down ?

Speaker #7: You know , kind of ten , 15% , maybe more just due to seasonal factors , just any any sort of thoughts on what what seasonality may now be .

Speaker #7: .

Speaker #5: Joaquin , this is Beth . Maybe I'll start there . So as I think about seasonality , we do still see some seasonality in our business .

Speaker #5: So I still do expect that we'll see that pattern from Q4 to Q1. That being said, overall, our business is being driven by the strong demand we're seeing across our portfolio.

Speaker #5: You know , I think we've talked a lot about CD and AI and the ongoing demand there , as well as demand in in the other segments .

Speaker #5: So again , there will I would expect there's still kind seasonality as you were describing . But I also there's a number of things that are going on that can that can mitigate that .

Speaker #5: I think I'd also keep in mind , as we've talked about before , that in any given quarter , we service some very , very big customers .

Speaker #5: And and so you also can sometimes from time to time , see a little bit of shifting between quarters just depending on where that demand falls and when they make the orders .

Speaker #5: That is just there's nothing to be read into that other than just when the order is shipped . So hopefully that gives you some some insights about seasonality .

Speaker #5: But I do continue to expect that we'll see that that seasonal Q4 to Q1 that we've seen in the past .

Speaker #7: Perfect. Thank you, Beth.

Speaker #2: Thank you . This concludes our question and answer session . I would now like to turn it back to management for closing remarks .

Speaker #4: Well , thank you all very much . We are really , really pleased to be able to put out these stellar results . I think we see significant growth coming and we're very , very happy to to have you guys along for the ride .

Speaker #4: So thank you very much .