SiTime Corporation

Good day and thank you for standing by. Welcome to the SciTimes first quarter earnings call and webcast. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today, Brett Perry with Shelton Group Investor Relations. Brett, please go ahead.

Thank you, Kevin. Good afternoon and welcome to Sidetime's first quarter 2024 financial results conference call. Joining us on today's call from Sidetime are Rajesh Vichist, Chief Executive Officer, and Beth Howe, 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'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 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 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 risk factors described in the 10-K file on February 26, 2024. as well as the company's subsequent filings with the SEC. During the call, we refer to certain non-GAAP measures which are considered to be an important measure of 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 GAAP to non-GAAP reconciliation includes stock-based compensation as well as acquisition-related items related to amortization of intangible assets one-time acquisition-related charges, and expenses or income related to changes in the estimated fair value measurement of acquisition consideration, payable, and sales-based earn-out liabilities. Please refer to the company's press release issued today for a detailed reconciliation between GAAP and non-GAAP financial results. With that, it's now my pleasure to turn the call over to Sidetime's CEO. Rajesh, please go ahead.

Thank you, Brett. Good afternoon, all. I'd like to welcome new as well as existing investors to our Q1 2024 earnings call. For those of you that are not as familiar with SciTime, we are the leader in a dynamic new semiconductor category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning. SciTime's precision timing solutions serve the needs of AI, data center, automated driving, IoT, and 5G. We are in the early days of transforming the $10 billion timing market. On our Q1 results, those were at the high end of our outlook. Revenue for the quarter was 33 million, and non-GAAP gross margins were 57.9%. In the past few months, we've continued to see a downward trend in customer inventories, as expected, which has resulted in a pickup in order activity. In our last earnings call, Sitem forecast sequential growth throughout this year in Q2, Q3, and Q4 2024, trending back to a target growth rate. And now we reiterate that growth. We continue to see positive evidence of this. One of Sitem's strengths comes from the diversity of end markets, customers, geographies, and products. This trend shows in 2024 where every end market is expected to grow over the previous year. I will shortly provide more color on three noteworthy markets, the comms enterprise data center, or CED, and automotive and industrial. We've always stated that one of the best use cases of precision timing is in the CED market because of its high growth, high ASPs, and high gross margins with enduring revenue. At CED Customers Worldwide, we see diverse applications using a broad product line, which I'm going to talk about now. In North America, customers are developing enterprise AI systems and all aspects of data center network infrastructure, such as switches, smart NICs, optical modules, and active electrical and optical cables. We're providing key OEMs and CSPs or cloud service providers with complete timing solutions, both clocks and oscillators, for many different use cases. Our products uniquely, reliably deliver high performance in the presence of common system stressors, such as high and rapidly changing temperatures, vibration, and other kinds of system noise. As our data center customers push harder, to increase their performance. They're looking to precision timing. SciTime is working closely with these customers to deliver optimized timing solutions, and we expect this trend to grow over time. In Taiwan and China, we're engaged with many of the key ODMs and OEMs that develop optical modules and servers for CSPs and OEMs around the world. We're in a good position to benefit as 800G optical modules displace 400G and become mainstream in the next two years. We're also beginning to win the next generation of 1.2 terabit and 1.6 terabit module designs that will ramp into production in the next year. In Europe, our focus in the CED market is on telecom applications. While 5G infrastructure deployment has slowed in the past few years, we expect that the next generation of 5G advanced equipment, which includes features for high performance and efficiency and lower power, will start ramping in 2025. We are engaged with key OEMs that will provide 5G advanced equipment such as remote radio units, distributed units, and centralized units. We also believe that our newest oscillators such as the EPIC OCXO, Elite RF, and Elite X Super TCXOs deliver exceptional performance in these applications. Our continued success in our core CED market is especially heartening as it validates the strategy that we presented at our IPO. At that time, We said we would expand a serviceable market, or SAM, with breadth in a product portfolio, and we accomplished this. We introduced 17 compelling new oscillators and clocks for this market. The recent introduction of a chorus clock generator for AI data centers adds to the clock products that we acquired from Aura, all of which are complementary to our oscillator portfolio. The integration of Aura products is progressing well, and by the end of 2024, we will have added 40 new clocks, further expanding our portfolio in this market. As our most innovative customers seek out our most innovative solutions, our customer connections are strengthening and our business is growing. While it will take time to generate meaningful revenue from the clock products, we're happy with the progress to date as it validates our strategy of offering a full product portfolio with one-stop shop for the precision timing needs. With all this, we believe we're in great position in the comms enterprise data center market. Another market where we expect to see growth in 2024 is automotive. While there's current uncertainty in the growth of EVs, our presence in a variety of automotive applications, particularly in ADAS electronics, should help us to grow in 2024. Our products are used in sensing, communications, and computing in automotive electronics, and the growth of electronics in all cars, not just EVs, is a multi-year trend which bodes well for our future automotive revenue. Over time, our focus will be on developing new products that dramatically improve the performance and reliability of automotive electronics. In this market, We are beginning to see some pricing pressure, but expect to offset this with new designs ramping into production in 2024, as well as increasing market share. The industrial market is the most diverse amongst all markets with over 100 end applications that use our products. While industrial applications are typically lower volume than in consumer, these designs can last as long as 10 years. To give you a sense of the diversity of our business, here are some new use cases in the industrial markets. Seismic sensors for geo-exploration of oil, gas, and minerals, new gas detection sensors for environmental safety, as well as efficient farming equipment which uses GNSS electronics with centimeter level positioning. Our products deliver an order of magnitude better performance in these harsh environments in these applications where they operate, and we expect they'll do naturally well. To summarize, we believe that side-time strategy is paying off. We will leverage our strengths in end-market diversity and product breadth as we return to a target growth rate. I'll now turn the call over to Beth to discuss our financial results in more detail.