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SiTime Corp (SITM) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges and ...

GuruFocus Research
·4-min read

  • Q1 Revenue: $33 million

  • Non-GAAP Gross Margin: 57.9%

  • Q1 Non-GAAP Operating Loss: $8.3 million

  • Q1 Non-GAAP Net Loss: $1.9 million or $0.08 per share

  • Q2 Revenue Outlook: $40 million to $42 million

  • Q2 Non-GAAP Earnings Per Share Outlook: $0.01 to $0.05 per share

  • Cash and Equivalents: $517 million

Release Date: May 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • SiTime Corp (NASDAQ:SITM) reported Q1 results at the high end of their outlook with a revenue of $33 million and non-GAAP gross margins of 57.9%.

  • The company is seeing a positive trend with a decrease in customer inventories leading to increased order activity, supporting sequential growth projections for Q2, Q3, and Q4 of 2024.

  • SiTime Corp (NASDAQ:SITM) is experiencing growth across all end markets, with each expected to grow over the previous year, demonstrating the strength and diversity of their market presence.

  • The company has introduced 17 new oscillators and clocks targeting the comms enterprise data center (CED) market, enhancing their product portfolio and market reach.

  • SiTime Corp (NASDAQ:SITM) is strategically positioned to benefit from the upcoming mainstream adoption of 800G optical modules and the development of 1.2-terabit and 1.6-terabit module designs.

Negative Points

  • Q1 revenue of $33 million represents a 22% decrease from Q4 2023, attributed to typical seasonality.

  • Non-GAAP gross margins slightly decreased by 40 basis points sequentially due to the impact of lower volumes.

  • The automotive market is showing signs of pricing pressure, which could affect profitability despite new designs and increased market share.

  • While the integration of new clock products is progressing, meaningful revenue generation from these products is expected to take time.

  • The company faces challenges in the telecom sector with a slowdown in 5G infrastructure deployment, although there is potential growth with 5G-advanced equipment in 2025.

Q & A Highlights

Q: Can you discuss where the growth is coming from within your three product segments? A: (Rajesh Vashist, CEO) Growth is expected across all segments, with notable performance in communications enterprise data center (CED), automotive, and industrial sectors. The consumer segment will also see growth, albeit at a slower rate.

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Q: Are customers still digesting their inventories, or is that process nearly complete? A: (Elizabeth Howe, CFO) Most customers have made significant progress in reducing inventory levels, with expectations that this process will be largely complete by the end of the current quarter, returning to normal buying patterns.

Q: As customers complete inventory corrections by the end of Q2, do you expect a return to consumption levels? A: (Elizabeth Howe, CFO) The company sees a return to more normalized patterns and is optimistic about bookings reflecting this trend. Seasonal strength in the second half of the year is also anticipated.

Q: How will the consumer mix influence growth as you aim for 30% year-over-year growth? A: (Rajesh Vashist, CEO) The focus will be less on consumer markets and more on CED, industrial, and automotive markets, which are expected to drive significant growth due to new product introductions targeted at these higher-margin areas.

Q: Can you provide insights into the long-term growth rate projection of 30%? A: (Rajesh Vashist, CEO) The company maintains its projection of 25-30% growth for the current year, potentially leaning towards the higher end, with a clear view of achieving 30% growth in 2025.

Q: What are the expectations for the Aura business and the integration of 40 new clock products by year-end? A: (Rajesh Vashist, CEO) The integration is progressing well, with significant traction expected in the CED market. Initial revenue from these products may be modest but will demonstrate the strategic importance of offering integrated clock and oscillator solutions.

Q: How do you see gross margins evolving into 2025, especially with the recovery in the consumer business? A: (Elizabeth Howe, CFO) Gross margins are expected to improve in the second half of the year compared to the first half, driven by better product mix and manufacturing absorption, despite potential headwinds from the consumer segment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.