SiTime Corporation

Good afternoon and welcome to SciTime's first quarter 2022 financial results conference call. At this time, all participants are in 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 touchtone phone. As a reminder, this conference call is being recorded today, Wednesday, May 4, 2022. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Good afternoon, and welcome to SciTime's first quarter 2022 financial results conference call. On today's call from SciTime are Rajesh Vishis, 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 position, strategy and plans, future operations, the timing market, and other areas of discussion. It's not possible for the company's management to predict all risks, nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied. Neither the company nor any person assumes responsibility for the accuracy and completeness of the forward-looking statements. The company undertakes no obligation to publicly update forward-looking statements for any reason 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 the business, we refer you to the risks and factors described in the 10-K filed on February 25, 2022, as well as the company's subsequent filings with the SEC. Also during this call, we refer to certain non-GAAP financial measures, which are considered to be important measures of the company performance. These non-GAAP financial measures are provided in addition to and not as a substitute for nor superior to measures of financial performance prepared in accordance with U.S. GAAP. The only difference between GAAP and non-GAAP results is stock-based compensation expense and related payroll taxes. Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial results. With that, I'd now like to turn the call over to Rajesh. Please go ahead.

Good afternoon, and thank you for joining on today's call. Before I talk about CITAN's performance, I'd like to make a few comments about the war in Ukraine and the impact on CITAN. We've had an office in Lviv, Ukraine, for more than 15 years, and it's an important location for us. Despite the war, I wanted to report that our entire Ukrainian team has remained productive with high morale. I admire the courage and dedication and the single-minded focus that they put into their work without being asked to do so. For our part, we're providing and will continue to provide maximum logistical, financial, emotional support to our Ukrainian employees and their families. This is behavior that is central to the culture and integrity of the company. And as the employees tell me, it's one of the key reasons worldwide that employees join SciTime and stay on at SciTime. Turning to our results, we had a great first quarter. SciTime's business is exceptionally strong, underpinned by micro trends such as connectivity, cloudification, ADAS, and AI, which I believe will continue to drive worldwide growth across industries for multiple decades to come. SciTime with its singular focus on precision timing, a category we pioneered and we're leading, is a wonderful place to capitalize on it. In precision timing, we, of course, service customers with significantly improved products from CyTime that customers are unable to get from traditional suppliers. Additionally, however, with the launch of products like EliteX, we are creating new categories of precision timing. And in these categories, we are creating new markets and new demand for our products. This is being recognized by customers leading to a significant increase in our opportunity funnel, as well as driving our average prices higher in 2022 across our major product lines. The more we look, the more business we find. An example is in the automotive segment, which is one of our fastest growing markets and where we continue to build a $100 million business over the coming years. We're well on our way with automotive revenues expected to double this year over 2021. The same dynamics that work in data center and enterprise. We continue to see strong growth here. And again, revenues this year are expected to double over 2021. As cloud services providers expand and add new advanced features, precision timing again becomes critical for increasing bandwidth and lowering latencies. The same demand for precision timing is giving us strength in aerospace and defense. With some of the unique products that we are creating, we expect to see here, too, a $100 million business in the coming years. In summer 2019, we introduced our Endura line of products for this market, creating specialized products that are specifically oriented towards mission-critical electronic equipment in aerospace, defense, and satellite communications. These devices must reliably operate in the harshest of environments, and compared to quartz-based alternatives, SideTimes Endura Solutions provides up to 50 times better performance in such environments, making it a preferred choice for these applications. In 2020, the second half, we introduced our first clocking product family, the Cascade product line. I'm especially pleased that in the past few quarters, we've seen a huge upsurge in customer activity based on the performance and delivery of the Cascade product line. With the result that customer traction that would normally take 24 months has been compressed to a few quarters. As a metric, we have over 100 customers today in our Cascade product line and anticipate reaching 200 customers by the end of the year, doubling in effect. With 10x higher reliability and resilience, our clocking chips are being used across more than 20 applications that include switches, radios, satellite communications, video, power grid, and we are getting new opportunities weekly. You can tell that we are excited about our clocking business, not only because of its strength, but also because we have several new clocking products under development that we will be introducing over the coming quarters, forming a very strong business for years to come. As I mentioned in the past, Sidetime is a product innovation company, and we are meaningfully increasing our investment into new product development because this is a golden chance for us to seize the high ground in precision timing. We expect to introduce a total of six new products this year and more next year. With these new products, we believe, we expect that a served available market, SAM as it's known, will grow from a billion in 2021 to 4 billion per year in 2024 out of a 10 billion per year total available market. Recently, we introduced one of these new products, our EliteX SuperTCXO that I mentioned earlier. We believe that this platform is a true grain changer for edge networks as it delivers tremendous value, two times better stability, 30 times better reliability, 2x smaller, 4x lower power. You can see that there are applications that need these features, such as edge data centers, 5G, front hall, connected cars, industrial IoT, to name a few. As with all of Sysam's CCXO devices, Our Elitex product is fully programmable to within a very wide range of parameters, and this unique capability allows one product to address countless applications, which you can understand would be very important in a supply-challenged environment as well, at the same time while giving the customer exactly the product they want. A consistent outperformance and increased growth expectations for 2022 are indisputable evidence that side-times growth trajectory is accelerated. This is being driven by a powerful combination of secular trends in rapidly growing end markets, our expanding high-value product offerings and roadmap, and our aggressive customer acquisition strategy. We look forward to extending the success for years to come, and I will now turn this over to Art Shadwick.