SITM - Earnings call transcript Q1 2020

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Operator

Good afternoon and welcome to SiTime’s First Quarter 2020 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, May 6, 2020. I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.

Leanne Sievers

Good afternoon and welcome to SiTime’s first quarter 2020 financial results conference call.

SiTime Chief Vashist, Financial from and Executive call Chadwick, Art Officer. the are Chief Rajesh Officer On

all Before company’s risks we of discussion. can company and It company’s not person begin, management financial undertakes as assumes timing that statements during to date publicly to obligation the to market, changes these the as expectations. the I responsibility expected the predict forward-looking or company’s position, of would after materially light In or like materially update the forward-looking may the course to regarding no reason nor assess factors of future may actual this forward-looking contained assumptions, of for other company guidance applied. areas statements statements discussed company to strategy of any any results to actual extent the of statements. these those The not this and results and well call, operations, or results, the impact the during completeness differ outlook the other forward-looking any the for those uncertainties future any all to call may factors plans, anticipated of actual on this nor adversely to call from and and may combination events business possible in forward-looking the the statement. company Neither from occur, and results is conform make of including which for impact or point the cause factor out the COVID-XX, its risks, accuracy in differ the

to release provided in on we we non-GAAP factors which risks our and of addition X, business, the measure consider substitute SEC are XXXX. in we prepared this please the U.S. as performance. financial non-GAAP The be XX-K filed GAAP superior detailed associated our March information the stock-based refer financial press on or These GAAP I like For reconciliation But to expense. would today which company filing detailed measures ahead. to measures, to certain with the financial we refer non-GAAP between to risk go between Also an measures more only the with during call, our for will and to accordance to and financial Rajesh. described difference with important you to performance a not results. issued compensation GAAP. turn call over non-GAAP refer a Please results for of is now in

Rajesh Vashist

and Leanne. you, the of especially both of us IoT while time become that consumer and seasonality EPS everyone markets, you a for unprecedented delivered we afternoon has achieving world. guidance. solid revenue and joining thank quarter, results million expected Thank our Good were our for on with in original Recapping call, Revenue the first reflected an today’s growth $XX.X above year-over-year mobile, XX%. of what

But is can groups. to focused we’ve as of our home with functional also pandemic, and been high doing in safety actions, at on worldwide. and COVID-XX transitioned SiTime all our the from how imagine, you employees our Turning working successfully morale to the well-being productivity have

activity. strong, America, in in design China interaction good with especially be continues customer and win Our to North

product their a our challenging customers Our we maintaining our to value it problems. success of strength and ability SiTime to team, in for is this multi-source our supply, a our to finally, environment they shipments. effective testament continue the products. effectively testament to the strategy And timing to On operate new and has virtual in timely choose is as markets proven bring

delays. no with Our suppliers operating major are

during can you However, imagine, situation, can uncertain as these change that times.

SiTime’s environment. has the strengths, is benefited customers and and products, been consumer XX across market auto, and IoT, our One have timing defense segments, aero into XXX this and diversity industrial, of our markets. which us products mobile, communications-enterprise, applications challenging of designed in

to that we becoming are I excellent working customers reaching products many we continues approach design and result note during are home, in customers. over Additionally, in happy we serve a ranging complex that our from timing SiTime in are am better meetings webinars expertise. in which technical problems This making Even to have our XX,XXX design to trusted with progress to wins. chosen from to we their adviser customers while timing one-on-one ways, technical them to industry-leading able help our electronics. solve

we Tier of X value vibration. one because to because were examples, that was both data computing, customer cases, XX% system increasing high-performance In customer displace SiTime the SiTime performance. able a the additional As resilient complete SiTime we and center integrated clock of device Tier competitors smaller selected was of most to tree, the at X another these At entrenched provide. equipment,

industry through analog a and mixed-signal the to integration. in in expertise position we On leadership technology and front, unique timing establish continue the MEMS, a system-level

our our Over years, shipped developed which up to have are in of I we resonator are now third-generation two MEMS the MEMS use XX past Today, currently am generations oscillators. stability, in that to pleased and resonators have have Xx ready. reveal better that

by have improvements power XXx to these that of a the on, as in simultaneously we continue XX are dramatic a other am design and are units, We designed size noise, and worldwide. products radio such in the most enhancements so and up to products. the Elite now history sampled radios particularly that that Tier of including timing reducing for Currently, X resilience, significant design resonators family XX delivers improvements. wins dramatic of every get and with we our RRU, These growth unique design provider our class applications, enterprise, building Emerald value. these different advantages have we XX wins of our we’re XG are prominent environmental I breadth of of better and generation Combined of oscillators higher preferred XG, to business. XG we strong new on remote use produce. the area up with Xx. with of delivering In and performance and build of communications improvements, test resonators the one phase excited supplier into our have At areas wins

the financial summary, first edge $X pleased you, and to and and we disrupt in applications, deliver In Art. to years. demand to the predictable business high-value revenue. on We multiple $XX quarter in environment cash timing consumer MEMS designed million area fast a growth challenging we innovate focus in In customers this that position which We call with and outlook with is in allows market continue our IoT continues established would for for area our solutions. the also to at progress to into a pace discuss billion to computing grow the with I design future in our the We segment, market and over in products there to second With the positioned as mobile in and I and product results high like mobile our over Though uncertainty, be us Art engaged a especially XG to growth. growth silicon that, have customers focus positioned and remain timing. at for continued believe navigate leadership worldwide. our turn we am believe are XXXX an successive new for Over SiTime our are win activity this is quarter. to with leading well I well customer applications all, closely

Art Chadwick

afternoon good Great. Thanks, everyone. and Rajesh

be to pleased very financial conference holding public are We a call results our as company. second

you today’s QX results a discuss provide XXXX financial description will non-GAAP During refer detailed release guidance for quarter. I results. well my I’ll financial and my of on review non-GAAP focus results our the will press to GAAP GAAP second reconciliation as of for today, a and as discussion results to

quarter our excellent First business, it guidance as above same XX% down of all, three $XX.X quarter. our a XX% the end for up was quarter in reflecting To million, did market, color some grouping Revenue review range expected our market major on QX seasonality for but was us. the revenue I was quarter. This the year over I by sequentially, ago. last was will provide an

consists of of phones, devices $XX.X in QX consumer IoT of wearable QX, or and seasonality products. in first reflecting and First which typical sales, were down mobile quarter of primarily markets XX% these sales $XX.X or from the mobile, is sales million into Sales XX% for the consumer, million in year.

broad-based purchase QX to full and up from $X.X is margins sales, was higher and million. of in revolving on million $XX.X into expenses. $XX.X Sales end sales to million We auto related related beginning million, the other debt $X non-GAAP to We results. the between exceeded in payroll of were million XX of XX% regards enterprise, was which from million XX% QX $X.X drew of some chain credit consists aerospace, where during $XX are Out from which to pandemic. were down excluded $X.X interest Inventory loss these hires. expense sales, new Non-GAAP at and being against current that QX. a QX to and military QX. $X.X unusual costs global non-GAAP compensation aerospace as for up with caution, Net or of from a center down days. million, on company the which Sales the $XX applications, times. customer in sales were Next and customer XX% almost and one evenly sales wireless gross paid or were $XX.X liquidity and abundance disruptions expenses for a $XX.X protect sales. was increased or per were DSOs line were at million $X.X we to data million from applications communications taxes, we only million sales. networking. assets loss QX at grants. $X.XX resulting in operations Non-GAAP XX% sales split $X receivable built in $X.X of automotive, generated cash, XX.X%. or XX% to XG, XX% of operating million XX%, quarter is of $XX.X in infrastructure, the $X.X SG&A inventory FICA This up taxes, and year RSU non-GAAP million. The million in our we from QX, public This Stock-based from of or select the And in sales, goes and of also an operating of COVID-XX quarter a million than QX from potential of third increased given of and industrial taxes million including in was end supply R&D due generated QX million, which $X.X share. $X.X QX. had ensure of and industrial, In of cash contraction, were used of Accounts and the million net million, expense our drew or

this level some is Our upward then economy accordingly. intention to its pay clear debt our the of maintain debt trend until is down on and approximate an of

and revenue. the will cash sales to in crisis, impact the COVID-XX As we of now some quarter would current a $XX.X QX to to have unfortunately, quarter equivalents. Prior result, with in But be QX. I second economic would up expected the million for we ended contraction guidance QX like on XXXX. the some from provide have

million, the at last $XX.X our be being our global contraction, markets be this growth provide between higher to I that’s others XX% believe that and like X% further the million on color down story. however, year. a And are would between and point revenue well, think We but like of than markets. which quarter shows $XX.X in sequentially will second of same XX% strength quarter now midpoint, we would, $XX.X clearly our holding during midpoint various would to of out million. sales Some up with to some that I are impacted. the

driven and We data especially strength are by product server networking. enterprise, ramps demand and wireless, seeing communications increased new XG in and in center, from

but a Broad-based number to will the we positive. auto markets industrial aerospace XX% to moving sales markets, sequentially. parts, are we increase sequentially. We appears expect holding all generally to expect they of up increase these have and In into be sales well, X% and industrial,

many auto portion X% of this Although bring increase the a driving sales. we’re and markets, spend be stores value consumer It’s IoT And quickly Overall, sales. story comms unique are and exactly XX% are are on somewhat segment to relaxed how since it increased since most sales and it’s also programs is new into to similar people for how is this same a and market and the we not enterprise. significant retail so shelter-in-place smaller The surprising and industrial, markets we aerospace, are impact where restrictions automotive quickly of believe increasing sheltered quarter will dependent which as home know type business, our our sequentially, growth difficult are closed. to seeing affected aerospace market, how our is with mobile, at again. market will consumers

outlook as forecasts customers. for based recent booked from segment orders as Needless well by to change could QX as this say, directly on our progresses. quarter our customers Our is those forecasts received the already

revenue. segment be However, we we between relatively XX% our are be expected this to an based points, down believe the our and lower with by on mobile, somewhere overall likely expect margins be will XX% QX, current product improved will consumer offset data though into and sequentially. mix, sales flat and IoT Gross

closely. are managing expenses operating We

managing We have expenses. and discretionary aggressively temporarily are slowed hiring

operating quarter, income so $XXX,XXX, Stock-based expense the will due taxes million flat between million expense over compensation an approximately are will QX QX share nominal. Second increase debt million, shares. $XX quarter $X.X be to first $XX.X the count million. non-GAAP will be be with and higher will level. XX.X be expected approximately be QX somewhere and expenses relatively interest approximately to

a For non-GAAP any expect share. of event Based the are this $X.XX modest more bit be a in will of $X.XX balance supply we QX on disruptions. build planning guidance, per loss sheet, a between chain in in buffer inventory order the and EPS to we increase

I make a comments. but few guidance Now full for year, not the plan on will we providing do

We expect year for revenue variety the higher in revenue the to meaningfully than first reasons. a half second the of be half in of

up few months. economy the First, back rebound and over hope we believe will the the as next opens world

margin and However, SiTime, by specific due we improve in Furthermore, half as expect ship Sales fueled overall margins over we consumer mobile, Gross to and markets. margins we programs improve points the more that business. and will seasonality half. in products more X points should newer, the be half to as to gross our back strong of growth new IoT of a the our business higher-growth in X in specific design expect increases. wins second first also bounce higher-margin targeted from to second in revenue

future. are unusual these in SiTime positioned times, is we So but growth believe the well for strong

a with enviable X address these strengths Tier growing exceptional operator large these markets, the We stronger for We manage us have strong emerge Q&A. firmly than I’d products workforce, sheet. balance like to differentiated that will back to allow believe an of turn truly and and the to ever. an list that, customers and And through unusual times call

Operator

comes Caso James. Instructions] [Operator Chris question Your first Raymond with from

Chris Caso

your doing guess the sales afternoon. to put you’re I consumer regarding is that of amount end what seeing did anything half that Thank about is Good Yes. second market guess reduction about you the visibility you. which talk of the regard the go the I talk could the half and you perspective you plays in segment. extent that improving of and reflecting the question into that how first with kind as IoT, customer. in again, you by perhaps of customer the have second in If perhaps that in there? to – is inventory, some

Rajesh Vashist

right for a as mobile, the does going of the QX that. couple One do is Well, are, slightly a show it IoT business QX, fact, for expect, and to to reasons. because Chris, all, first Yes. Art time is extent, consumer, that indicated, in that we of lesser always up

prominent that this would continue you are second and doorbells – in to the of expect, and as of pretty all the and significant space the cameras remote products wearables design all that. in The consumer hearables, such that we get that is wins

think that growing nicely. So we of our very is solid and quite pipeline design wins

have our our customers cautious wearable customers it the some in in of As just far this, space, times. some of these being the who ones some –- of it the are as space, what in some is we from low relatively are hear traction by us frankly, push-outs seeing smaller and on of

are newer to come have that of out. waiting bigger Some guys products the

I lower in combination So coming to allows we think are the QX, this in pretty it’s say – QX. is that us but confident about growth what of sort QX, in that

Chris Caso

Thank it. you. Got

follow-up, seen, the how I you’re perhaps that. I be against a would And secondly, you We’ve and seeing supply space, ask for orders some potential to lot the disruptions. supply supply for manufacturing. any the in to watching I’m wanted that we’ve you cases, might of As a tend what about obviously reacting. back-end customers be then have firstly, guys protect sure heard particularly yourselves? to disruptions, in customers guess, seen forward potential pull in disruptions some

If to your can to doing as visibility you extent customers monitor can may give you the what any which and that. be

Rajesh Vashist

Right.

there suppliers, One behavior seen and with is have really third So what competitors. one throw we questions. are we our will our on in three the what as I seen one customers in have

on may technology done point opened have supplier, first for is is there up bit it a scary. crystal sort QX, has Carsem, know, technology. primary regards not in foremost, deemed pretty overnight of some in semiconductor essential So side many quite is suppliers, as was semiconductor and places, note particularly did not competitors crystal that, rocky and us business, deemed that in about business behavior which and is course, well since. you business. an was of was we shutdown The you will the – little of the Malaysia, was But a And where a that – to late

for in as deemed essential. were they example, not So Malaysia,

able with behavior an be added a They’re Other have ship. continuing supply to while side ASE solid, seen our the end no – itself shut issues no has we’ve and early pretty operate to that, way. than in mostly then is so TSMC UTAC, continues as plants of very their contact the supply So suppliers, way. finally, of change, to other our QX, been Bosch because importance just on. MEMS seen chain chain. part in normal kind with continued the us and hiccup, supplier at They on quickly whatsoever. the the of have has a continued and is by in in April be which them. to solid no And given down Carsem fab of SiTime That And very, a issues all. two constant resolved

about done – very abundance are products. so out have with feel pulling to customers, that this is in concerns from confident amount To impact. caution, On supply any significant of to We’ve that. explained with some appears an And I and we So have seen they in, they extent trying to other have reached many of from different do big but chain our our we customers. a how product. that know that them the not about timing our did can pull of we’ve them of that them had to

them a shown are fact of the too MEMS, do buildup company, fabless of many that our good we our our of pull-ins. opportunity think CMOS, sort have to buildup buildup inventory, them that’s given of We and I good, not

in done most suffering will between I working. our TCXOs world example, fact, chain in us they as So for see India significant shortages think factories or of shutdowns Europe the the of are go all, where customers the parts that some are because all other places SiTime market. of think who one of have like producers not the actually OCXOs well is in We and has we factories timing strengths some and, of and high-end or larger difference the of the of supply into and, for

Chris Caso

Thank you.

Rajesh Vashist

Yes.

Operator

Blayne is with question next your from Barclays. And Curtis

Blayne Curtis

my Thanks for questions. Hey, guys. taking

Rajesh Vashist

how Hey are you.

Blayne Curtis

get like, the are you products, segments will whether of curious look significant the And that, just guess any as ramping you versus products. wins, on have segment industrial, based well, auto am what second if for it’s of products you have as or half, upon delayed Art I just this but you months in of when I you those three Rajesh, new based ago can part comm I’m – address, the end the just would and the environment kind in Kind said guess, somewhat track? curious you at a whether Thanks. ramp. terms those still curious of said those And I if segments. of

Rajesh Vashist

condition. is or edge fronthaul deployed. think two one either These are or there if we continue customers. little backhaul microwave, smaller at or have generally, small all you’re pulled of RRUs looking just these back they or computing track. There – customers bit these to on of because Generally, all still be a market are of But or cell, are that the

deployed and In of fact, if guys you the might they of with big what sense doing. be that even we others greater some think like are a see urgency Verizon

in the The area a other center, just Chinese area with we consumption, area, the this And are manufacturer China, that the compete this processors in for in the China we out of has thing see been in we not coming happening high-end with but see United example. also is processing, processors area Chinese of data for for us, we of resurgence States, for would sorry. high-end data center China of big in where a China, that’s particularly which huge, traction, see seeing products

instruments products of have these I Emerald our more applications. but test into one. And being of breadth, our and expected happy we example, I to as that. And pretty And XX Very remarks, are and Elite strength radios are XX higher not pointed would as in out – put So traction. for are course, to ASPs. really different our see never this radios, less, see see that in my we and we happy not out was have I market, prepared happy the with

we gross go that in So why connect forward margins year. can we the in that’s to increase as

Operator

Your with is next Tore Svanberg from question Stifel.

Tore Svanberg

you. Thank Yes.

to year as that be about have should versus well? ratio. So guidance. know full XXXX sort the historical, XX, if way second giving you Is half we of XX, you’re thinking you not I half But tend first look this at

Art Chadwick

stronger hard on look for Again clearly, XXXX I But Tore, put want don’t and is the we’re guidance not is how some is look growth giving of XXXX that’s year. than the feel we this – back have also. Yes. back our And just going that this half drivers substantially significant the first because that, to drive pretty increases years, in pretty lot it the at will hard to revenue half. Art. year fiscal numbers We confident a if in you half.

I on to again, So But we’re pretty it. want point. a about this put bullish number don’t QX and at QX

Tore Svanberg

we environment. good. with haircutting over levels they’re And high here peers, performed the given Very last of bit kind backlog your bookings But the quarter when few of kind listen cap entering of also weeks? to of your and larger how your and they’re June of sort backlog a those How pretty some did quite orders.

Art Chadwick

Yes.

say get percentage contraction, global too customers about kind want on happened. of specific to I booked. we would Again, the don’t what that orders, expected I of not has Given our is will some to this. off but hold But

are We are we we either in or where were booked more than into QX QX QX. today going

those observations. concur I So would with

Tore Svanberg

Thank much. very That’s very helpful. you

Rajesh Vashist

better the We that better, don’t it, we we think these it I or for significant particularly we out – are that just earlier tree, at pull-ins. think shake And just And about did light and of pull-ins. us. how question orders looked in much placing people much are of comment it’s are working think that and

Tore Svanberg

Thank good. you. Very

Rajesh Vashist

Tore. Thanks, Right.

Operator

question Bolton Your with is Needham. next Quinn from

Quinn Bolton

comments, from the call just of margin. the back Art, direct during ramp prepared better of some better points to I in the X that the is gross because the you X but the second versus wanted dropped still to taking margins the think to I apologize up of of some said just got I absorption, business products? new drivers half half mix, sort first same and and come

Art Chadwick

Yes.

listed you That’s quite just exactly think correct. well, Quinn. it I

products about, ASPs margins. higher talked and gross higher always our we’ve As newer have

our percentage blended sales, that helps becomes that As margins. a larger of

Higher our As direct, out higher all absorption, overhead sales, manufacturing And the that the very I happening we that cuts leads margins, so helps to the is revenue be of higher take that the margins. those half of confident so year. sales more in distributor to leads that back should above particular that, feel for true.

up could higher. high guided range things it our we X we but the end even at consumer, of help strong If Obviously, percentage So either have may that case, be a if work X the good favor, very or little improvement. a points. in to a that top gross mobile, temper very, those IoT, margin But scenarios. bit line, of obviously the in little news are

Quinn Bolton

But with of bigger design to Elite significant on heads has Elite sure win to ramp second some those? Great. And still or you applications some you make I a XG like the just the are radio and and design track in And data that that on just follow-up and Emerald, remote center servers. in have those sounds Emerald, there it want of like the half. push-out wins largely been the no then Rajesh, delay on or think mentioned

Rajesh Vashist

right. That’s

In fact, be them. seeing some of acceleration as I little said, we in a even bit of might an

happy with the We’re very success that. of

that derivatives have that Elite added we they of And continue months then X, spec a they that, of this it. TCXO significant on VCXO have it. we and to derivatives level like – now. to remarkably or It relatively impact products, instrumental that yet X, MIL X, derivatives in the and X are multiple or We just right produce Elite getting of and these has Elite they push have like automotive product are doing grown strategy. platform a differential revenue, have have been certainly, last to cost spec very derivative the features – in And lower or to because taking these X a very, is the or are us – strategy Emerald either

Quinn Bolton

if question give or me, And probably that the hit bucket, automotive, much it of aero? the is I and wondering or automotive could us specifically automotive. much I outbreak. wondering of the is industrial, or how you was harder that sense with today the the just for think COVID would of – bucket how then business Great. some MIL some in industrial of are last automotive segments aerospace more But is consumer

Rajesh Vashist

– industrial, probably said, the defense is Automotive doing one course, is profitable. is well aerospace of very big, automotive, We the the think probably And very of Quinn, largest. as smallest. but I’ve always is us. And growing, business slowly for not very is

So and many that’s have satellites wins in on. because good well volume, a performance we and combination of many, do design ASP multiple so very we

very own. are automotive long that the in I wins seeing – bring considered take And automotive, we getting in we’re not the in we where large. in the of the cameras, And directionally of again, working SiTime. are those, are area that run, serializer, radar, SiTime of So directionally But its of SerDes value. exceptional to deserializers are LiDAR. It’s in we business continues UWB. design These the the – areas up. we for of These design for It’s XXXX, think holding areas being ones are are with the in it’s It’s area in for or the up. these and cars. the

of business of for All these great SiTime. are examples

Quinn Bolton

Thank you. Great.

Rajesh Vashist

Quinn. Thanks

Operator

Mr. Chadwick this the there to are turn And call I’ll back at no this time. time. at further over questions

Art Chadwick

by conference in say. today. operator. day. spending the and Have a We forward good to Well, healthy. call great look concludes the having results everybody of to what you we another we Great. everybody hopefully for thank that had quarter, end hope call everybody. Thank a to safe and want time Thanks, our And QX. with listening to We is

Rajesh Vashist

Bye-bye.

Operator

call. concludes this Thank gentlemen, for today’s and you Ladies participating. conference

disconnect. You may now

SiTime (SITM) 7 May 202020 Q1 Earnings call transcript