SITM - Earnings call transcript Q4 2020

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Operator

Good afternoon, and welcome to SiTime’s Fourth Quarter 2020 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Wednesday, February 3, 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 the SiTime’s fourth quarter and full year 2020 financial results conference call.

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

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

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

Rajesh Vashist

Leanne. we you to record you, all all This those and Thank The end execute driven our SiTime call. to was broad-based revenue, of increase $XX.X provided quarter another which in XX. the growth XXXX guidance, last afternoon and an on thank three revenue sequentially which in November above us markets. million our joining continues of was year-over-year QX Good today’s well. updated represents XX% across with of by XX%

driven revenue XXXX total discuss increasing completed milestone. our call. the XXXX, X outlook year value over will XX% fourth full Art We the the we and XXXX also execution. financials consistent and in For billion by another by shipped quarter grew cumulatively. units In first later our quarter surpassed XXXX,

difficult enterprise products and performance where communications infrastructure our to is the continue We market, critical timing on and solve focus timing problems.

XX optical one servers, routers. modules, applications Head, switches have Remote ORAN, We Radio designs variety such and a as new and of

from data rapid to and Our instrumental higher these increase center, move superior the More to designs. modules winning XXXG deliver specifically, bandwidth resilience optical XXXG. in to ability environmental reliability was driving in is

market, vendors and growth we’re similar many chip SiTXXXX XXXX with set our a seeing design the wins that standards bodies We’ve on seeing the recently product. modules. are the next-generation we In working XXX-gig trend. are also Here, of engaged announced optical with – automotive

kinds in up XX devices. by of and electric with components in to need a of our vehicle. see about electric need electronic even for assistance growth rapid driver in timing an vehicles, all safety estimate These we all automobiles the With a more electrical XXXX systems systems, car ICs

comes from resilience market like with in don’t would and stability, you to generally, share growth I guidance, Our we some delivering specific and size, better success provide reliability end even a sold XXXX. though this numbers by for The XXXX and by from in that revenue – forecast continue we our time. to will revenue declined but automotive number grow of orders SiTime’s increased XX%, XX% it in small

CPU, variety win value EV management. LiDAR and in designs cameras, XXXX systems, a Our Ethernet, in funnel mirrors, of driven battery by ADAS, design active infotainment smart increased suspension,

So automotive a designs have eight of you can these that that years. see life five to

growth provide the over years. so And further coming they’ll

opportunities we are ways the call we release the product rapid towards One us trying address come strategy. to that that of a is what

when So our is a in us programmable derivatives, architecture, strategy, product few XX to strategy customize automation investment market systems address to and in timing which this solve opportunities up product. knowledge features, derivatives enables architecture from also bring been problems. supply XX difficult has it we like constrained the deliver is and the quickly to product can them at specific one With allows with to us past continued months. platform This

use is which also released IoT such adding SiTXXXX low as stability top for internet a key to by by customer commodity consumer our devices, case, and an times up algorithms connected part TCXO, products, typically devices, ideal such the is smart streaming strategy. a connectivity. get improved XX newly particular of is of than typical kind to power pricing by optimizing and address audio/video, able we higher devices this a And Our this value, and example. This wireless need. the the In that also over other meters we’re device

with release win we of recently notable when strategy rapid example is ADT. a announced our Another

spectrum deployed or old free XG is as operators it out. such XG XG by technologies widely sunsetting As up can as turns

performance and we’re than XG solution of which able applications existing a but conversion XX systems in use division better upgrade. stringent, expensive conversion, that to optimize XG such requirements a times to However, home their existing stable technology that existing enable without needed need our solutions. were as the solution resulting security security delivers rapidly enable an these meet will to the of platform, panels that performance successful that CellBounce, timing the Super-TCXO is truck ADT XG very rolls. this elite a CellBounce’s To requirements SiTime home

On we’ve to people. fire secure disrupted the these across as supply a dynamics able few be for wanted number incremental to strategic for on – make chain. this, customers. opportunities market industry. capacity. the our mind periods semiconductor impacted I supply recently and of today, continues for multi-source the to quartz wins SiTime, tightness the chain broader supplier business industry serve a of a in state opportunities This continued that’s by manufacturing of and has comments and especially created of SiTime, top since industry a market a fabulous have This supply chain responsiveness, of at lot in to The to and a most quartz dynamics chain our advantage during existing because new the of been supply Further

seen in with work they recent in we’ve times customers that to continue to months, increase closely we need. While lead products the deliver time

add suppliers solutions SiTime’s that suppliers in in to a opportunities available to TAM. semiconductor net the a timing the as also industry the or Our is total market growth general MEMS fact view were the

more SiTime’s uniquely are timing to remain leadership In quartz. the more silicon connectivity disrupt additional conclusion, complete our in ability to solution extend solutions. as relevant, becomes timing, as the solutions to I is basically non-semiconductor as continue industry we semiconductor and our positioned and critical TAM we continue before market itself, replacing said and that offer to more we function bringing So faster Timing to timing are a with important is ubiquitous. more increasingly

systems customers results world’s and our allows fourth discuss that, outlook timing and quarter over call and in-house to solve the our XXXX. products in Art? more three first for Our Art tough and problems. oscillators, us With uniquely of our the resonators detail better now the to product to design for knowledge I’ll having quarter turn provide categories the clocks

Art Chadwick

Rajesh Thanks, good afternoon Great. and everyone.

to and today’s quarter related payroll press detailed to stock-based our results compensation I’ll well exclude on a reconciliation During XXXX. for you for and us a discuss some release results results, I’ll for of fourth of expense. the tax and focus non-GAAP GAAP first financial as guidance GAAP XXXX description non-GAAP today, as financial which discussion refer results provide review my my quarter

begin with gross continued quarter growth, sequentially $XX.X quarter fourth $XXX.X was for for expansion mid record revenue and quarter margin up same quarter year. the XX% guidance. the exceeded quarter year strong had So some We XX% a markets. color was over net XX% the on to quarter fronts. income. Revenue record provide results and year-over-year. To end non-GAAP that full on revenue million, up the million up last Revenue was and guidance multiple mid actual increased We

I market by in sales report Our past. group, as the have

mobile seasonally strong primarily The into and and many $XX.X sequentially were wearable XX% total year. XX% phones, consumer, devices Sales quarter first products. of which is consumer IoT up segment in Sales largest this sales. full mobile into over our consists this This up sales customer. year was million including for XX% Sales customers, year-over-year. were segment last and up were of or the same XX% the across

XX% industrial, X% products the sales. quarter XX% broad-based million the automotive or for year. same year-over-year. were sequentially and is automotive, of up Sales Sales sales, into medical, which year and includes of sales up up were aerospace, and aerospace, The XX% military second full $X.X over industrial last

XX% the with communications R&D sales, sales end over $X.X quarter We including $XX.X sales ago. the year. the quarter for margins year-over-year. the to the of The were up third sequentially of XX.X%, sales year gross infrastructure, over than $X.X million during up margin Non-GAAP This and which SG&A. in growing a that continued of exceeded sales. just Non-GAAP quarter quarter and gross or had enterprise, customer networking. were XX% fastest last more $X.X had million, XG, points million year expenses sequentially up total were XX% X XX% data in X% same same and where expansion total is Sales XXX this up full of wireless customer up was up comprised XX% million sequentially and consists were for operating segment XXX% and basis points center quarter. the of the one We and

the million price, and million to $X.X from with revenue compensation receivables $XX.X up stock were Stock-based the at $X.X million in in million of Our revenue end volume quarter, million higher million bonus expense this generated gross per non-GAAP high related were stock assets, million like million and a of per in XXXX. due purchase from in $XX.X in and cash the the debt. balance Inventory or days. the generated share due and was an to to $X.X from share first XX down the I’d us quarter, DSOs grants QX, $X.XX some Trade provide $X.X shipments with guidance third new the from million taxes plan. were stock the coupled expanding performance to compared employee higher margins cash which of of gave of ending QX. quarter. consumed no quarter. for up equipment million now our net the $XX.X payroll third income We $X.XX third $X.X and record bank $XX.X in of or growth strong quarter $X.X million $XX.X operations due to

shares. year be effect to new to dilutive from share same expected between in an shares. add are from additional are the the due quarter is RSU This be to basic but midpoint from than We new XX.X higher seasonality, of RSUs quarter and to count over normal employee more million expenses which million. will stock up the taking XX% This last margins shares same expected million at $XX is year. Stock-based QX million. gross approximately increase points the in QX The of QX approximately and XX% it be $XX Operating approximately share down be the $X last increase expense would will will $XX approximately represents employee due an between be X expect growth count million and year. XX%, sales Non-GAAP payroll approximately QX QX beginning X.X to over revenue XX.X taxes. primarily hires The price. grants total compensation be to the diluted due million, million will and

first be share. EPS given, the based $X.XX we $X.XX between So non-GAAP per guidance expect quarter just and will on

full giving would like a I not financial are comments we guidance. offer the So year. to few year about

are that trends segments. continue significant our performance the all, high of solutions XXXX First in for growth the should revenue drive need to each driving in major timing of market

as pronounced our means first will year, not likely which We’re past in expecting a as strong of very usual the half be seasonality years.

margins off. In initiatives to continue pay our should expand addition, gross to

full XXX at the to increase XXX We by year. expect points least year prior the over basis to gross for margins

increase but less workforce to our top growth expanding growth OpEx rate operating are investment We order expansion. keep as to in technology, products and our in we’ll we rate margin drive our increasing new line than

So well, in perform summary, to while working we have that an continues from workforce home. exceptional

portfolio to expand that differentiated growing large markets. Our continues product and products address with

We a I’d balance to sheet looking for great tier strong have we’re like with Tier XXXX. Q&A. enviable forward X that, to the an a the turn call to back operator customers, of And and

Operator

Svanberg Instructions] first with Thank Our Tore you. Stifel. comes [Operator question from

You with question. may your proceed

Tore Svanberg

congratulations and results. you on the strong Thank very

will new ramping talked talk question Rajesh, you a enterprise. first is designs. timing bit when start there the those The could about little you production? about XX into Is way on any communications and and

Rajesh Vashist

Yes. Tore, thank you.

right overnight not these them slow we past discussed calls, them in play pure as some just are all the now. a And computing, them have of on are of satellites, up not ramping are networking ramp. It’s It’s of XG, some area. they’re an some ramp. in We are

And ramp takes it that XX spread out months up. the like It’s not so to typically these such over ramp communications is time. for as

ramping So XXXX into through say that I XXXX. they’re would

Tore Svanberg

modules And renting market’s meaningfully those that the and little that start you talked to optical would you of work bit wins going Understood. half a be Would start on based rapping? being expect opportunity design quite XXX-gig of an about our year. this to sort second that in

Rajesh Vashist

out. work of doing the are need we’re with these next I There’s of ironed flux. standard They’re middle think work. – lot in is forecast details a still future they’re of still that Probably some bodies, in because my year still to that be

rollouts. from say more, So we year maybe but the about now, should some a slightly of see now I to would start year around a from

Tore Svanberg

Great.

a year? your all pretty days inventory you us one your Just how I walk are but Art. – have Art, low, days, your for last inventory increase now through XX the question Could capacity bit, at you to expect levels. companies think low throughout little

Art Chadwick

Sure.

I somewhat as commentary mentioned the up, inventory, quarter, down two sales my though those related. Our went even of during in course, actually went are

course up the of We inventory will build to back start during XXXX.

QX So expect in and you should it beyond. to increase

hopefully we’re this certainly We on ahead strong are we of both have demand pretty the wafers, do CMOS this year. the half ordering to in so our entire and wafers, that MEMS supply that satisfy adequate seeing first for and

Tore Svanberg

good. again. Sounds Congratulations

Art Chadwick

Thanks.

Operator

you. Thank

from Quinn Company. with comes & Bolton question next Our Needham

You may with your proceed question.

Unidentified Analyst

congratulations Hi for Quinn. guys. This nice on is Michelle on the Thanks taking the question and results.

the drove guidance, one you So there the weeks what within earnings would quarter my revision to just terms provided December your what changed the And through of September just guidance few your color the for first you be on in can fourth us on the any positive upside quarter helpful? call? after walk

Art Chadwick

November Q, upside the until to in talking or November early later from guidance now? you we Are later from when gave November

Unidentified Analyst

exactly. Yes,

helpful. be time would the periods guess, both but I Just overall,

Art Chadwick

Sure.

going we for QX. minute I’m that saw QX in walk to So a the it’s same because to trend actually us back

guidance, Going QX we’ve revenue provided growth to from sequential pretty QX, into substantial had we QX. going

guidance. QX. felt we number that. Order course largest QX So up end QX. rate we’d extremely the that strong. than Kind in into margin. and had at about of ended the bookings number. extraordinarily by far We we of rate same large was we We ever a increased of been into raised of had that our August We And QX going our through because strong that. going by good scenario has record beating Order guidance gave just the the

the that end quarter. and we beat the time we we so by did guidance raise November modestly the of And finished at

to order attributed And for overall again, our rates been So strength us. I have in strong market. extraordinarily basically

Unidentified Analyst

for opportunities issues the Great. wondering there’s if quartz helpful. view chain my in they taken diversity away that more within Thank That’s trying kind diversify have for leading place of with the you. just from and change that to Is customers guys supply chain? based-off industry? you of your And any these industry. Just assess customers their follow-up the to year supply how quartz last

Rajesh Vashist

Yes.

that short-term of for quartz course not analog what the was a pronounced. in we know to was specific it know we of a did one the which That quartz. coming consumers of earlier, from of of that five about of a event, not, but it many So the very did example, constriction example, was products had supply the very been very component But were – they was talked getting kind for was event quartz, they products may but led a vendors have from factory. that they different

them. diversification a really So like what looked to was coming all

So bit some for call wake-up a industry. in I the of think people it was a

there longer-term to continue was short-term for was there a impact impact. is so then think, awhile. And And the impact and I going a long-term

industry we that to top weren’t I of where or situation any you that, in And storm. cautious course, in there double never made there very, a a system. have little indicated, none clean bookings of And through that in general booking Art of And tightness But If been general, overlay perfect very on has semiconductor think none a little very were know. pretty really going quarter sure you then assiduous good a on. a But a we’ve booking we have in satisfied QX. our that already it’s it very making we’re sure overall. had the making bit as were in bit a we you

make I’d tough timing The we problems. is – – solve also do point other I’ll are thing that we

a not commodity are We supplier.

do we charge premium. a So

in or in those So chain supply of whether our quality. as value performance products in it’s recognize who product, the use such our or

move adopt the tend once they they so not solution. to away SiTime And

Unidentified Analyst

Yes.

results. again, again, Thanks quarter helpful. congrats on the really and guys That’s next once Okay.

Art Chadwick

Michelle. you, Thank

Operator

you. Thank

Suji Our Capital. next comes Desilva ROTH with from question

your proceed question. with You may

Suji Desilva

My strong to Art. Hi, there. Rajesh. all congrats Hi, XXXX the

Following times already, to on aggressively? going customers last check talk lead the to question and – able them you this the about and you’re if wafers ordering Can missed ordering keep up about by been visibility. the I you’ve whether under

Rajesh Vashist

Yes.

for it thing our transparency at and lot is have one good sort played needs. we of ways, we wisely the chain done our a supply while ordering think of giving very I been both into we’ve have company

the little whether think also our we’ve don’t in they I MEMS those there’s that think a good a lead or of gone products or times because popular. going distributors one have have also up walking lot But sure backend. of a a TSMC. that way come dealing tell biggest of other very a customers our capacity is any and of I wafers our we fact the gone that, on nanometers, make job which TSMC that that wafers, up from our that lead done from is TSMC, indeed we’re XXX away one bit fact and the We’ve tightness, it’s is that at because times there very are

have so even went XXXX continuing And we into and through a this perhaps recognized and beyond maybe year trend that that. as XXXX

have do we customers within lead a good well requirements are and So managing times, we but they longer quoted job that. of

Suji Desilva

the already, segment first that to about Okay. is. you by I what then And some just you about working guidance? the this appreciate quarter outlook. whole talked you the is challenges Can the around through get industry color same Art talk

Art Chadwick

mobile for consumer QX from but space. QX all to IoT say QX, in and that the my not guidance is will I’m precisely I to So, what decrease refine the going is

And past growth seasonality to it’s normal our expecting We’re we’ve less going is just IoT And QX. mobile comms seasonality. kind and in of that years. and even consumer in seen and from industrial enterprise than decrease segment in the QX

Suji Desilva

you quick think for perhaps the… Last Okay. What question Rajesh.

Art Chadwick

one was just that. thing to add going I to

or mentioned customer, my largest QX. I internal about on drops of our as in Based about sales XX% of was our discussion plus total my XX% probably QX forecast sales that current Sorry, in to in minus.

those see So can from on to kind of QX numbers. QX decreasing what’s you based

Suji Desilva

to versus there. last Rajesh. for Do very helping you What are you come that question as the helpful, competition market starts the winning it’s design? are And Art. online? then quick think that impressive that’s you’re In No, win factors optical,

Rajesh Vashist

Yes. size it’s the temperature. I specifically, bandwidth, it’s very with mean, it’s a bandwidth and but

So I and also fact very important in that think very, stability it. factors have And jitter are performance we the to with those go like pieces there.

last that us. I well. the think relatively done very around product timeframe year, – I’m And QX – and think because continues has wins I It with was for happy those with well the it’s do gratified win very it. design we’re introduced very to recently

Suji Desilva

Great. Thanks.

Art Chadwick

Great. Thanks Suji.

Operator

Alex you. next Our Instructions] William with from comes [Operator Thank Blair. question Vecchi

You your may with question. proceed

Unidentified Analyst

Alex. Hey, great on quarter. this the Congrats is on Jake for

talked ordering and wafers some other you So add-on materials. about lot a

any gross the Just have on the margin and kind both of curious longer-term? of in if supply you the near the on view impact trajectory constraints

Rajesh Vashist

Well, be we future. think there in may

But of it’s we that But a cost the year is shortages no a possible We careful have – that think – It’s it. our increasing because is on in pretty margin supply chain. not not our happen, decrease haven’t or based quarter in of from I because is not may this gross our based yet. or one because territory seen it’s new here margin anything on either or of most evidence shortage. we’re are prices increase of think margins two costs I gross that gross quarter we in future increasing just but

wonderful of the time, all golden for that automotive, the are computing semiconductors is secular renaissance the the general. this all I that. wonderful think think sort I this healthcare, people a desperately period is shortage semiconductors forget of in XG, for a all because the And ADAS, needed

raising as have unlike on But not So heard now, are we prices. our we anecdotally, some eye have that we people any of supply chain.

Art Chadwick

Yes.

Jake, So add to also. I’ll that

margins gross expect percentage we higher XXXX not a is reduced continue gross new the higher larger sales, Just have and this have at becomes that from generally point. coming is our to gross make coming which in expansion pricing wafer The that increases margin. of from it expansion margin margin products, had we as to ASPs, that clear, and gross that

direct. take sales more We’re starting to

our that get as sales are distributors, overall expand our number that list that margins. we’ve we overhead, will initiatives XX that we on got have improves of expanded a initiatives. leverage a of on gross working the and go gross bypasses up we’ve margins, margins great our to gross and other Internally, continue manufacturing expect got that So we

Unidentified Analyst

Thanks the That for again, the sounds color. on quarter. Congrats great. great

Art Chadwick

Thanks, Jake.

Operator

I’m questions any time. now any further remarks. like I turn Chadwick, call would for to showing at not And this to back the further over you. Thank Art

Art Chadwick

Well, for Great. the there want will this questions, joining afternoon. everybody a are to if further no thank today. conclude Have I us we you. call great afternoon. Thank

Rajesh Vashist

guys. you, Thank

Operator

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

now may disconnect. You

SiTime (SITM) 4 Feb 212020 Q4 Earnings call transcript