SiTime Corporation

Good afternoon and welcome to SciTimes fourth quarter 2020 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 star key followed by the zero on your touchstone telephone. As a reminder, this conference call is being recorded today, Wednesday, February 3rd, 2021. I would now like to turn the call over to Leanne Seavers, of Shelton Group Investor Relations. Leigh Ann, please go ahead.

Good afternoon and welcome to Sidetime's fourth quarter and full year 2020 financial results conference call. On the call from Sidetime are Rajesh Vasheesh, Chief Executive Officer, and Art Chadwick, 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, the timing market, and other areas of discussion. It is not possible for the company's management to predict all risks, nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed during the call may not occur and actual results could differ materially and adversely from those anticipated or implied. Neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statement. The company undertakes no obligation to publicly update forward-looking statements for any reason after the date of this call to conform these statements to actual results or to changes in the company's expectations. For more detailed information on risks associated with our business, we refer you to the risk factors described in our 10-K filed on March 2, 2020, as well as the company's subsequent filings with the SEC. Also during this call, we will refer to certain non-GAAP financial measures, which we consider to be an important measure of company performance. These non-GAAP financial measures are provided in addition to and not as a substitute or superior to measures of financial performance prepared in accordance with U.S. GAAP. The only difference between GAAP and non-GAAP results is stock-based compensation expense. But please refer to the press release issued today for a detailed reconciliation between our GAAP and non-GAAP financial results. I'd now like to turn the call over to Rajesh. Please go ahead.

Thank you, Leanne. Good afternoon and thank you to all those joining us on today's call. Sitem continues to execute well. The last quarter Q4 2020 was another record with 40.3 million in revenue, which was above our updated guidance, which we provided on November 24th. This revenue represents an increase of 23% sequentially and 43% year over year driven by the broad-based growth across all three of our end markets. For the full year 2020, the total revenue grew by 38% over 2019, driven by increasing value and R consistent execution. In 2020, we also completed another milestone. We surpassed 2 billion units shift cumulatively. Art will discuss our fourth quarter financials and first quarter 2021 outlook later in the call. We continue to focus on the communications and enterprise infrastructure market where timing performance is critical and our products solve difficult timing problems. We have won 30 new designs in a variety of applications such as ORAN, remote radio heads, servers, optical modules, switches, and routers. Our ability to deliver superior environmental resilience and higher reliability was instrumental in winning these designs. More specifically, the rapid increase in bandwidth is driving data center optical modules to move from 100G to 400G. Here, we're seeing many design wins with a recently announced 9501, the SIP 9501 product. We're also engaged with standards bodies and chipset vendors that are working on the next generation of 800G optical modules. In the automotive market, we're seeing a similar growth trend. With the rapid growth of electrical vehicles, safety, and driver assistance systems, we see a need for even more electric components in automobiles with up to 3,000 ICs of all kinds in an electric vehicle. These electronic systems in a car all need, by our estimate, about 50 timing devices. Our growth and success comes from delivering better stability, resilience, and reliability in a small size. Even though we don't provide specific end market guidance generally, I would like to share some numbers with you for this time. The number of autos sold in 2020 declined by 34%, but our revenue, CITAM's revenue from automotive increased by 55%, and we forecast that it will continue to grow in 2021. Our design wind funnel value increased in 2020, driven by designs in a variety of cameras, smart mirrors, infotainment systems, Ethernet, ADAS, CPU, active suspension, LIDAR, and EV battery management. So you can see that these automotive designs have a life of five to eight years, and so they'll provide further growth over the coming years. One of the ways that we are trying to address the opportunities that come towards us is what we call a rapid product release strategy. So our systems knowledge with continued investment in automation and the architecture, which is a programmable product architecture, enables us to customize features, bring them to market quickly, and solve difficult timing problems. With this strategy, we can deliver up to 15 derivatives, 15 product derivatives from one platform product. This strategy also allows us to address specific opportunities when supply is constrained like it has been in the past few months. Our newly released TCXO, the SIT5008, is such an example. In this case, we improved stability by up to 10 times by optimizing our algorithms and address a particular customer need. This device is ideal for consumer and IoT devices such as internet-connected audio-video, over-the-top streaming devices, smart meters, and other devices that use low-power wireless connectivity. And typically, by adding this kind of value, we're also able to get a higher pricing than typical commodity products, which is also a key part of our strategy. Another example of a rapid release strategy is when we recently announced a notable win with ADT. As 5G is deployed widely, operators can free up spectrum by sunsetting old technology, such as 3G or 4G, as it turns out. However, there are existing applications such as home security systems that use the 3G technology and that need an upgrade. CellBounce, which is a division of ADT, needed a very stable signing solution that would enable the successful 3G to 4G conversion of existing home security panels without expensive truck rolls. To enable this conversion, CellBounce's performance requirements were stringent. but we were able to rapidly optimize our elite platform SuperTCXO to meet these requirements, resulting in a side-term solution that delivers 10 times better performance than the existing solutions. On the state of the semiconductor business today, I wanted to make a few comments on the industry dynamics and supply chain, since that's top of mind for a lot of people. The quartz industry has continued to be disrupted, most recently by a fire, as a supplier to the quartz industry. This impacted supply chain and manufacturing capacity. These market dynamics have created opportunities for SciTime because of our responsiveness, we've been able to secure incremental opportunities and wins across a number of new and existing customers. Further in this, our fabulous multi-source supply chain continues to serve as a strategic advantage for Sitem, especially during periods of tightness in the broader supply chain. While we have seen lead times increase in recent months, we continue to work closely with customers to deliver products in the time that they need. Our suppliers, who are also the suppliers to the semiconductor industry in general, view Sitem's MEMS timing solutions as a growth opportunity that is, in fact, a net add to their total available market, or the TAM. So basically, our silicon timing solutions are bringing additional TAM to the semiconductor industry as we are replacing a non-semiconductor solution, quartz. In conclusion, we continue to extend SciTAM's leadership in timing, and we remain uniquely positioned to continue to disrupt the market with our ability to offer complete timing solutions. Timing itself, as I've said before, is a critical function that is increasingly important as faster connectivity becomes more and more relevant, more and more ubiquitous. Our systems knowledge and having the three product categories in-house uniquely, oscillators, clocks, and resonators, allows us to better design products for our customers and solve the world's tough timing problems. With that, I'll now turn over the call to Art to discuss our fourth quarter results in more detail and provide our outlook for the first quarter of 2021.