SITM - Earnings call transcript Q2 2021

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Operator

Good afternoon, and welcome to SiTime’s Second Quarter 2021 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. If anyone needs assistance at any time during the conference call, please press the start followed by the 0 on your touchtone phone.

As a reminder, this conference call is being recorded today, Wednesday, August 4, 2021. to Group call Investor like Sievers to now Shelton of Relations. would turn over the Leanne I Leanne, please go ahead.

Leanne Sievers

Good afternoon, Results Financial Quarter Second and welcome Conference to Call. SiTime’s XXXX

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

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

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

Rajesh Vashist

Good had afternoon, joining Thank you, today’s quarter. We on Leanne. and exceptional truly for thank you a call.

conversion our the a acceleration with by existing Our and reflect that in year we a would have silicon to say shifted Increasingly, designs. high timing MEMS growth new clear SiTime’s a results solution has evidence leap in and I fundamental revenue. our into forward trajectory, gear

to more growth model in Over more in adoption with now the has technologies The the bring year understand strategy. view value these accelerated combined SiTime’s and back products, products. quarter flexibility, proposition our this more unique customers has focus even and clear new of the We our to and as of than the in need of this our of rapid quarter. timing XX% to precision double from who first of continue than now more programmability X year last quarters, past quarter sector, than increased clearly. that adoption year-over-year validation of fourth The this market XX% quality on fabless this a their our rate

cameras, new need for solutions or driving, ADAS, units There radar, supporting an customer electric increased and have design-ins connectivity. because have of LiDAR, off. is These and surged. vehicles, segment, For example, those control in the timing domain automated elements EVs high-performance like automotive taken

fact, and $XXX increased represent We has devices years. to dramatically number more to the over now a grow. than of million today business few XX vehicle could in at continues a SiTime In next the believe devices timing that automotive

seeing enterprise, which a to business years trends and also few also the because cloudification. become in adoption has similar datacenter potential of We’re next in million the $XXX

such As be segments. designed features latency. being in acceleration SiTXXXX driving where providers rate performance because cloud optical at and XXXG aerospace timing, of in features, sequentially quantify a critical adopted XX% and datacenters expand electronics, families performance. very services design size Increasing new To need the further more requires for servers and as Elite for in lower the our communications of and the bandwidth is business, Emerald new latency XXXG, doubled SiTime’s such and in. precision markets The industrial enterprise as where family our time automotive, wins becomes synchronization by in to add increased also have continue enduring is and timing, particularly modules its and brisk increasing lowering

allows next taken pricing pace this pricing us XX As benefits expect those to products. allows increase which ways. fact pricing stated unique chain at with our in and are secured to that SiTime’s delivers care the long-term qualify it manufacturing. them as to note and multiple QX, a are to see their we quartz by limited supply on here I’m pleased months. to single demand, in a by XX the over supported We’ve programmable our I we customers suppliers. semiconductor architecture securing configure timing We that is advantage They we customer Last our customers on taking work. focus our to an QX. precision like which steps needs, not the continue quarter, and just to which for rapid appreciate mentioned further in is CapEx-heavy change trend agreements also earlier, some well generally have to quickly respond I SiTime’s supply Customers part approach "products how strategy in expertise. can of timing that are systems that their reevaluate

close the available total with fabs of to wafer partners market. has in us to growth They our rewarded continue SiTime been capacity to or strategy demand. a capacity view with and already have as TAM help partnership Our XXXX. find addition more opportunity and and as meet assembly test growth test to our where our our doubled and our for customer expanded the we capacity partnership ‘XX We’ve secured houses, and demand our also meet needed to

a we uniquely the the last I where opportunity said, semiconductors, excels. age I in golden in As particular, precision high-growth in timing believe SiTime and market of multiyear are

summary, scaling of This few programmable need sustainable We of is acceleration forward have demonstrated leading SiTime’s seeing high-performance our timing to across in our years. XXX we’re for shift the business. In to on this applications execute solutions the ability a business. past

I’m in potential, and full turn outlook We’re to living for on quarter more I’ll of the our provide the to Art over second XXXX. now very to that. about up third detail the excited quarter way results to call our and discuss

Art Chadwick

to financial as Great. of the to and provide quarter. non-GAAP a GAAP Thanks, guidance description good detailed afternoon, reconciliation my third I’ll results Rajesh. on press results. for quarter everyone. discussion non-GAAP focus And results a for Today, as our well you refer GAAP and release second of results discuss today’s some XXXX I’ll financial

and mobile sequentially, which year-over-year. and growth. Sales down the $X.X sales. products, $XX.X into of but $XX.X last XG, over sales. had revenue which into all sequentially strong up year. and and metrics. $XX.X of into up up Revenue significant million Sales year-over-year. Communications medical, or XX% and broad-based XXX% up same was including the X% industrial, up sales, segment, up XX% on First XX% and automotive, our million We of sequentially gross sales XX% XXX% sequentially QX million, XX% million growth, were into This our was was XX% all, aerospace infrastructure quarter for exceptional includes of industrial, a networking, wireless net and consists Enterprise year-over-year. phones, expansion into strong mobile and margin datacenter segment, This IoT consumer up wearable of Sales or sales, which sales were were XXX% consumer military aerospace, and very quarter of or income was XX% quarter and devices our consists automotive segment, year-over-year

was accounted same sales pattern from sales the which This year. last for a saw largest was as we percentage XX% QX, of of Our this quarter. customer down

points before, mentioned to continue a QX of quarter. they Non-GAAP factors. and have X number The off. margins gross had and this pay within more margins, sequential be XX gross I’ve expand attributed of last significant margins more we XX.X%, As over to to up step initiatives points year. a increase than the up than in We gross can primary were X company increase function sequentially

than sales industrial and accounted Sales percentage comms markets product First, in of larger enterprise was favorable. for into QX. mix and a auto and

prices. QX per Second, higher the operating more compares million has with comprised built in $XX.X XX% Trade million million, last was with sales taxes expense raise XX% allowed revenue were days, DSOs as Inventory from This in of of overall expenses current to revenue. of and Non-GAAP $XX flat Non-GAAP million $X.X million days And payroll million, share. of sales quarter. to essentially the SG&A. overhead. or inventory just up pricing $X.X to $X.X related robust selectively $XX.X on QX. of net $X.X receivables we quarter was $X.X XX higher lastly, support $XX.X leverage us provides QX. and million were environment were from R&D or our million, down in with million income compensation manufacturing XX some Stock-based EPS $X.XX last

the trends cash timing provide $X.X need I’ll by bank in kicked the as in the for million to to higher to capital into I’d equipment. no some $X.X quarter solutions. cash During generated positive quarter of quartz quarter, continue transition million start from the and we performance in million high now from like operations gear XXXX. market $XXX third saying with flow and has silicon drive for guidance We new debt. invested the ended

significant year a sales increase We in will growth and this which of half in second are seeing beyond. drive the demand, further

visibility orders ever into is next which Additionally, us best year, well customers we giving have are placing the had.

to QX increase and sequential which will $XX the between XX% million, in midpoint. million at sales is expect about growth $XX We

our in for expect approximately of sales the to sales increase largest We quarter. customer total QX XX% to to

be third expenses due are continued would effect share invest expansion XX% expenses primarily continue non-GAAP that to will quarter margin to to count this between non-GAAP million. in workforce environment. approximately shares, we gross of expand XX.X in pricing increase non-GAAP as expect XX% approximately employee QX XX%. robust basic product $X.XX per shares. taking margins and new our expected will on about Based and million share. count be the in will expected expect QX million X Operating QX to approximately will development. XX.X case increase add $XX current gross RSUs million diluted $X.XX just operating We be between and EPS to additional share approximately The total The dilutive given, the guidance we shares. sequentially

We guidance QX, in will which are drive QX, not giving XX% we XX% to least full rate. that detailed comfortable are we than saying the or be expect year growth for at QX higher revenue will revenue but higher for

with continue of the we develop company line principles. basic ESG ESG, On our to topic culture in

call, valued makes creativity, mentioned I seen, workforce and believe diverse and last employees our valuing diversity work heard, to A environment employees we better promote problem-solving by decision-making. As all of stronger. We an supports ensure the inclusive our and contributions respected. us on feel

to impact the operations of We a important our sustainable ensure products future. also believe environmental and it’s minimize to

We sustainability and and and consumption developing our continue of to by emissions reduce water. carbon enhance energy policies our implementing to practices

truly in So summary, a are year. great we having

willing see are Our and customers pay proposition to it. value for our

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

call We very I’d have X expand, turn that have of operator an to strong enviable back balance the And list Q&A. we like with for the continues to a to sheet. customers Tier and that,

Operator

[Operator question your Quinn Bolton with will come Company. first Instructions] And Needham & from

Quinn Bolton

to great of there implement Congratulations sort selective Hopefully, pricing like you hear It price margin. recently can start only increases. with your I me. you’ve strategy. really the to particularly and gross results begun sounds on wanted your stronger

And a are can what with in you respect inning I guess price analogy, so And how continue? to to that increases? baseball long use

Rajesh Vashist

Yes.

I kind think middle of we’re in the it. of

few in of we last following well are reached early the innings, pricing -- We we haven’t didn’t come price We past part. but the way. think to the quite

and want to of As on you we single-sourced. with judicious in we it. XX% how of we our are count or our XX% both have are the business, with very, increase before, we that very mentioned our therefore, of price and it, the frequency price depending amplitude And increases, in the respect customers,

have see not may of who the customers many don’t may have any have seen it. example, price for we, So customers We some small increases. who

chain it from especially may view the a bigger it are as looking at of ones of well. supply if they Some see point

of the of we’re So in sort middle it.

off this this I shape year. of the think think good end exiting in I towards will be taper it year, we’ll and

Art Chadwick

Quinn, These to that. and of quarter are margins stepped in my that. time. expand cases and gross ago, And raised our for I because pricing. the pricing we continue a over QX I’ll we’re add In to that in in out are QX. that prices a guide just some environment And robust in It in primarily of right going guidance, there, did is very the middle they’re reason is to that

because that. So margin we will of see continued in and QX QX gross expansion

Quinn Bolton

that as my I beginning not is mentioned has question, you locked you to only outlook ‘XX, for back step color. your years to Thank were XXXX, also my you for guess XXXX. capacity that believe I wanted And guess but the have up improved Great. X then in ago. follow if to I second relative Rajesh, dramatically XXXX I of to additional

I would give sequential us you’ve do encompass kind plays that sense to be out? you so and demand, play any in much you ‘XX what guess to that ‘XX increase extent like about supply, see support upside, think that able you XXXX seen how might you when talked acceleration the if and can you out And another in locking of of

Rajesh Vashist

Right.

backend, locked test talking make assembly side. on not and on us, So also very sure we’re which that’s side, all, capacity first is the on I about the of important for in want the to that wafer here

side, does. wafer the just On see else we continue tightness everybody to like

to with of TSMC, way node TSMC. the long generally We world. are even have in we relationships thinking continued helpful our Bosch wafer strategy as as the This a very if fab quarter. tight a both at I very want have partnership But sole have But XXX jump not is sure nanometers. one a about That’s sort will. see make sea I of to as the we a with an because been a a very, everybody partners leave year’s pull-in with maybe SiTime growth, growth pursue beginning, at because you speaking, well is I that this I worth said change. of average see is, I of

year, growth And a are but this our continue greater, after for always course it be so we rate away of if could that at been that’s XX%. even we stated XX% XX%, And from the coming goal. not walking XX%,

Operator

come from Your Desilva with will Capital. next ROTH question Suji

Suji Desilva

Congratulations on the progress.

given it, you mean, in to and comms drove sustainable? XQ. mean, industrial growth kind the of of have a I growth quarter? mean, that simplifying -- what what auto, if in kind that without So just sequentially that growth I of Or of not, of sequentially I allowed kind growth in kind -- to that happen upside talked about I kind is guys strong growth

Rajesh Vashist

Right.

different timing of precision high. high-end the aerospace, is that high the growing is that listen is let’s thing well. about but what that for we a networking, that markets that very we in similar high-end other them, X to, are timing, in of it’s fact, talk in communications, which military, cars, because very, sort to, the is high-end world is of as what things both growth key, So the industrial, purvey that world world And it, is and need driving

So that’s taking up. us

be could is device density is which car ECU, that in or per could timing, means each goes or product, a which it be for is a per second ORAN, device, density The ASP going the end significantly And military could up a be going the the units. radio precision it up well, up. finally, the the of of as functionality product, those timing a density

beyond sort that’s So up that. the of move the secular

Now of the semiconductors is final markets. I an reasons been And inside acceleration accelerated we sort top one that, the in there believe and in have the end is of because on particularly shortage that our in timing. cherry is

have not most And performance, they that brought technical of stay. the service, them customers come, for sooner. for to once They stay noticed the tend capabilities we they has of that that stay So they stay us product. come the us did the for to to

So of a on been the has that it’s adoption just rate a end going products. back at customer on a discovery faster faster of

Suji Desilva

Okay, in a deeper there, no, a if that’s larger understand just XQ helpful to might your try understanding, the the dig color, on to certainly, than just outlook And XQ top Rajesh. then could in XQ. of I and general appreciate have customer stronger I and consumer little XQ,

are Is enough to running consumer growing the So back overall up -- Or that? consumer XQ other year? typical against be the having is customers something that half with with this the segments profile? allow the to the expectation

Art Chadwick

customers. other the It’s

Operator

Alessandra Your William next from Vecchi with will question Blair. come

Alessandra Vecchi

echo really an quarter. else’s I on everyone congratulations epic

a understanding what the up, and Was of year, supply expand recognition last that caused or and Just to the really point? this to on the Suji’s inflection sort what’s fully do of me understand little if the over quarters quarter. you really But sort in timing happen well. the device it of of and couple the event as growth quartz the also customers strong question, high-performance flicked you rate of dynamics bit think the watershed the last the help density quarter for caused need per going switch just and could the trials for tribulations over chain this sort

Rajesh Vashist

automotive, those in precision kinds strong could strong ADAS, growth. imagined ago, streak just not we the the have mean very year that would EVs, example. growth markets, of A timing, I have adoption, I to for in given at I numbers connectivity, Yes. would not -- of customer all. strong growth, say end customer

shortage these of time, of products, qualified fact has which factor of market tightness and one come they different and one the the big tide qualified growth delivering it, us, got has the the brought the in we on on our customer that But the fact reliability they us. stay potentially quality, the that So they hundreds are part once they part programmable, this them us. customers to numbers get and supply is to out to end with focus

discovery this think the of discovery we shortages to which we So away by in continue That’s acceleration it think customer a don’t is us, mutual or them by flash goes to when is growth. is SiTime the of pan of we that going and a an stay. suppliers, adoption evaporate. This call a that a year why

Alessandra Vecchi

was of That terms the a like-for-like price higher is some how makes and margin lot mix incredibly helpful And on is the how And the intuitive much from gross of then of products? it price raise, sense. chain raise? the updraft shift the that in of much front, value of a similarly and

Art Chadwick

Yes.

I understand sure So question. the quite Alex, not I’m

Alessandra Vecchi

said was because I margin of guess, of the absolute question I or the price much is sort improvement the on think change gross part you of the had But general how like-for-like sort a the shift you my just well versus and that raised of you X guess been an due the Elite pricing products I had Endura mix platforms? ago of platform raises to legacy on towards basis, as quarter product. some undervaluing on the

Art Chadwick

Yes.

different it way. a try I’ll to So answer in

and was X weight. of one And margins to on played substantially QX. think reasons. one kind was from leverage each pricing, gross manufacturing primary I those overhead. equal our And QX our was One of So gave mix, I increased

this of From and guiding is margin. added points other pricing I that I’m of all to quarter couple added those of again, due couple So QX, that pricing. QX of of points up to means a up, guide each and think of margin a points

Alessandra Vecchi

clarification. for you Thank sense. makes That that

Operator

And question John come with Credit your Pitzer Suisse. next will from

John Pitzer

correctly? margins I again in that an question first you Quinn’s QX. also is up sequentially be QX. guided I in hear Did sequentially My know expect just to thought to a up I that heard revenue gross clarification. you I answer

Art Chadwick

higher revenue I would I comfortable are to be away did will QX what from we we guidance. So again, saying revenue be than detailed that at QX. in expect giving in that least QX XX% shy say

be was is going XX% our that guided of a revenue very specifically than because it’s couple the and gross questions margins, That then of So more gross not between answer and broad-based for customer, ago. I QX up, just XX%. And on margins that. largest it’s would

it, without on expansion will there margin think I additional today. I be quantifying I think number QX, from but some to want gross QX don’t a that to put that

John Pitzer

then intensive. on in. you’ve the comments to comments think the I -- a And Thank customers, done being curious kind understand guys capital come takes you, But strong pricing respond That’s to Art. I’m help helpful, me once I’m come long businesses stay. Can it inevitably we just capacity quartz to prepared quartz explaining trying job you. about Rajesh quartz to back bring this good more about still importantly, I’m to in why demand your of with to should you’re capacity? how you they And your going fully the up by how speed guess, building capacity? as And environment

Rajesh Vashist

Right.

not That’s a I’m an a months quartz between this, a to X build say factory. XX to one. going X it’s in I’m and months expert to to So venture so factory,

happens, don’t is a SiTime’s circuit. In the other spot in quartz I words, MEMS And spot sweet quartz the of analog of is sweet starts because then around second just the words, around highest it’s it stability, performance in phase temperature oscillator. capacity, the around that around Whether noise, plus when around plain sold. resonator. to oscillators. jitter, and stability, that an in stability. performance -- that a ceramic problem see quartz even packaged company In The the is highest environmental other grows

And performance business, if we match strong up, not products. are. their circuits them not and build doesn’t we they quartz come with to particularly, think their it, even were their to are do that is they combine where analog So native when even this they

where And coming to looking not to are us can’t the they us unable they a products. these come support fact they to just and design So where for because just that go do customers new it but find where ASE And are We a to our wins, given, supply done, It’s There’s then it’s for generally can with increases to products. We win, not that they chain. ship to And quartz are care also is get We to we tend customers shine, it’s it them in not go take ship, have particular. can Bosch. significant can products from configurations, SiTime products they not in duress, the need frequency, quartz end and because after, no of different can million can’t again in flexible we use the some it’s but their a in but customers we capacity, one to design increase. XXX TSMC. the done. and go it’s with unlike which performance, we units we the where once configuration capacity increase fixed a them. typically easy, fixed tend fixed which is case say many let’s flexibility month, part,

John Pitzer

leads design my cycles. markets partly last play relatively with there’s me Rajesh, it, answered with already a you lot but long design end of question, you curious, cycles. also into a I’m that short to lot relatively there’s But and maybe

long just of So that the design-in much a you seeing I’m coming, you end just pick up of programmability better auto allowing for at markets perhaps like and you curious, are is designs sort to industrial? your offering were faster sockets rate even demand or in thought

Rajesh Vashist

tend making high-volume that sprinkling top person share, control, fact, added the the views car not cycles, example. And who that domain we they the the don’t building Even electric rigidity that. In of on around so the as there’s somebody is legacy where we for the all that’s where though X-year a their system, very degree with places, truck Yes, radar, the than cars people coming. the qual and auto, the see trucks, I the above. ECUs, a necessarily in added the have thinking. LiDAR, shining, is ADAS, electric in the necessarily who of same cameras, they electric are are not different those niceness people that dealing don’t we have have the of guess fact a are pickup to in pickup new have the But

our have chips We ways use. new of in

to have us for design-ins. coming all We people

say We have X, networking, lifecycles, be future. on based long people And that’s that continue the to And why typical the X-year so coming legacy we for bullish design-ins. that’s is to of that us time lower I end end so in speak, timing, this now, typical for not to precision high wonderful right is timing long about of the the in the a in why why timing, it’s to especially it. end, be, part telecommunications,

Operator

[Operator next Stifel. with Instructions] Tore Svanberg question come from Your will

Tore Svanberg

is us markets breakdown? your past each maybe of terms in guidance, just here the you’ve question, everyone This I my can end a Jeremy you calling to else’s me and expectations the And know I done Tory. in for add fantastic on for let the give that a these? quarter. congratulations of guess growth of first in terms

Art Chadwick

substantially. sequentially in of QX for the be the our not guidance we’re to QX. Yes. revenue up specific were our midpoint markets. expecting grow from QX. XX% in of all It’s We that going it’s At to major guidance, to Obviously,

QX a and we is markets. to But of QX it’s great better. obviously, going across So be had our even all major

Tore Svanberg

end whether chain this is chain, whether in which your it’s it’s in bottleneck what’s guess that robust growth. it’s it’s -- gating that point? I the factor now like are your right And there supply in your one seeing, great Whether at you -- and already things supply of seeing such see? but any customer terms in -- of you’re growth markets, the Great. you’re like critical there terms Are strong, in

Rajesh Vashist

world otherwise. I point, this are. Yes. where At factors only for world shape we We see feel good pretty events in COVID as events, gating

Tore Svanberg

new can terms resonator your Got you guess designs us anything if precision line. And I give going on are expectations? quick there? in Maybe it. update How maybe revenue just a of

Rajesh Vashist

Yes. lines. the Frankly, growth oscillator hard right business in been we haven’t been and now. clocking busy pushing that the the product We’ve very with

in lower the dollars, imagine, So $XX, as several It resonator up $X.XX, products can even $XX. all line significantly ASP. not you $X, exceed go can to is that generally other whereas does product

sense for the gross So it on margin makes revenue ASP, dollars. us focus higher in to higher

this focusing so growth just but because dollar that units we’re not revenue. falling units, level requires And of dollar close end also on a focus very for

Operator

speakers, time. questions further at me, showing Excuse no this I’m

continue. may You

Rajesh Vashist

All Have want great right. you. for everybody the us on case, In that to joining today. Thank thank call afternoon. we a

Art Chadwick

you. Thank

Operator

concludes This you for conference participating. Thank call. today’s

You may now disconnect.

SiTime (SITM) 8 Aug 212021 Q2 Earnings call transcript