SiTime Corporation

Good day, and thank you for standing by. Welcome to the SIDETIMES Second Quarter 2024 Earnings Conference Call. At this time, all participants are in 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 will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Leanne Sievers with Shelton Group Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to CITOM's second quarter 2024 financial results conference call. Joining us on today's call from CITOM are Rajesh Vashish, 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 your 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 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'll refer you to the risk factors described in the 10-K filed on February 26, 2024, as well as the company's subsequent filings with the SEC. During the call, we'll refer to certain non-GAAP financial 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 or superior to measures of financial performance prepared in accordance with U.S. GAAP. This gap 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 expense 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 Sitem's CEO. Rajesh, please go ahead.

Thank you, Leanne. Good afternoon. I'd like to welcome new as well as existing investors to Sitem's Q2 2024 earnings call. For those of you that are not as familiar with Sitem, we are the leader in a dynamic new semiconductor category called precision timing. In electronics, timing is ubiquitous and ensures reliable functioning. Sitem's precision timing solutions serve the needs of AI, data center, automated driving, IoT, and 5G. We're in the early days of transforming the $10 billion timing market. Q2 results exceeded the high end of our outlook. Revenue for the quarter was $43.9 million, which was well above our guidance of $40 to $42 million. Operating profit and EPS were both higher than expected. Each of our reported end markets grew in Q2 at double digit rates, both sequentially and year over year. The drag of excess inventory over the last few quarters has passed, and we see that inventory is now at normal levels. Bookings for the second half of 2024 are strong, and we expect both Q3 and Q4 to grow sequentially as forecasted. From a geographic perspective, our 2024 revenue in every major region is expected to be strong. Revenue from each of Greater China, North America, and Europe is expected to grow by double-digit percentages. What makes SciTime unique, apart from our technology, is the diversity that we have built in applications, customers, and products. The growth across all of these occurs at different times as we have previously forecasted. For example, while all our end markets are expected to grow throughout the year, the CED or Communications Enterprise Data Center market will grow at the fastest rate, more than 50%. This is also a market segment with high ASPs or prices, margins, and significant architectural differentiation. Five years ago, SciTime laid out a CED strategy of investing significantly in R&D and customers, and we will continue to do so in the future. We're confident of reaching a $100 million mark in this CED market as previously forecasted. Within CED, we've made progress in our AI business over several quarters, and I will spend time today to provide greater color on this. We have design wins with the precision timing products in all key applications of the AI ecosystem, including GPU and CPU boards, interconnect switches, optical modules, NIC cards, accelerator cards, active cables, and switches. To provide a sense of scale in 2024, we will ship 70 unique part numbers across 14 product families to 30 customers. 30 different customers who are all developing AI hardware. To provide greater specificity, we are focused on the revenue and growth from NIC or network interface cards, interconnected switches, and top-of-the-rack switches, where we deliver higher performance, smaller size, and higher reliability. The precision timing content in each of these systems can range from $8 to $25 and includes our highest-end products, such as Super TCXOs, OCXOs, as well as the network synchronizer clocks from our recent acquisition of the Aura products. SciTime is the preferred supplier in these applications because of our capability to customize our devices to the application requirement and deliver performance benefits. Also, as the only company to focus solely on precision timing, we offer the broadest portfolio of oscillators, clocks, and synchronization software, simplifying the customer's design and purchase decisions. Cloud service providers have been in a race to invest, and we expect that trend to continue at a level that helps fuel Sitem's growth. In fact, we now see a greater trend towards improving system bandwidth and utilization, which will require high performance and therefore more complex systems. precision timing from Cyton. Obviously, this bodes well for us as we have all the key technologies to service this trend. For example, as optical module and active cable bandwidth increases from 800 gigabits per second to 1.6 terabits all the way to 3.2 terabits in the next few years, we expect a corresponding increase in several performance areas of timing such as frequency, jitter, phase noise, stability, and environmental resilience. We're confident that SciTime has the products today and in our product roadmap to meet these needs. In data centers, we also see an increasing need for synchronization, of which we also offer a complete solution. To summarize, we believe that SciTime's strategy of increasing diversity across applications, customers, and products is paying off. By focusing on high value applications, we're accelerating our customer acquisition. Our expanding portfolio is delivering superior benefits in new applications that need precision timing. And as the only semiconductor company that's uniquely focused on timing, we're well positioned to continue our success. I'll now turn the call over to Beth to discuss the financial results in more detail.