SiTime(SITM) - 2025 Q2 - Quarterly Report

Risk Factor Summary This section provides a high-level overview of the principal risks facing the company, including macroeconomic conditions, industry cyclicality, customer dependence, and supply chain reliance Risk Factor Summary This section provides a high-level overview of the principal risks facing the company, including macroeconomic conditions, industry cyclicality, customer dependence, and supply chain reliance - Global macroeconomic conditions and the cyclical nature of the semiconductor industry are identified as significant risks that have harmed and may continue to harm the business[8] - The company has historically depended on a limited number of customers for a significant portion of its revenue, and the loss of a large customer could significantly reduce revenue[8] - Reliance on third parties for raw materials, wafer fabrication, assembly, packaging, and testing exposes the company to supply chain risks, including potential shortages, quality issues, and price increases[8] - A significant portion of operations is located outside the United States, subjecting the company to additional risks such as geopolitical instability and increased management complexity[8] PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2025, including balance sheets, statements of operations, stockholders' equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows a significant increase in total assets to $1.27 billion from $885.0 million at the end of 2024, driven by cash and short-term investments, while total liabilities slightly decreased Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Assets | | | | Cash and cash equivalents | $172,522 | $6,106 | | Short-term investments | $624,144 | $412,728 | | Total current assets | $918,901 | $544,060 | | Total Assets | $1,269,136 | $884,959 | | Total Liabilities | $168,455 | $185,240 | | Total Stockholders' Equity | $1,100,681 | $699,719 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three and six months ended June 30, 2025, the company reported significant year-over-year revenue growth, with Q2 revenue increasing to $69.5 million, and a narrowed net loss of $(20.2) million for the quarter Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $69,494 | $43,866 | $129,808 | $76,888 | | Gross Profit | $36,052 | $21,523 | $66,387 | $39,183 | | Loss from Operations | $(24,611) | $(32,320) | $(52,721) | $(67,358) | | Net Loss | $(20,179) | $(26,769) | $(44,056) | $(55,473) | | Net Loss Per Share, basic | $(0.84) | $(1.16) | $(1.85) | $(2.42) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity substantially increased during the first six months of 2025, rising from $699.7 million to $1.1 billion, primarily due to $387.3 million from a follow-on public offering and $29.7 million from an ATM offering, partially offset by a net loss - The company raised $387.3 million in net proceeds from a follow-on public offering of 2,012,500 shares in June 2025[17][52] - An additional $29.7 million in net proceeds was raised through an At-The-Market (ATM) offering of 150,000 shares during the second quarter of 2025[17][50] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, operating activities provided $30.4 million, investing activities used $247.4 million, and financing activities provided $383.4 million, resulting in a net increase in cash and cash equivalents of $166.4 million Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $30,376 | $1,548 | | Net cash provided by (used in) investing activities | $(247,364) | $78,412 | | Net cash provided by (used in) financing activities | $383,404 | $(72,791) | | Net increase in cash and cash equivalents | $166,416 | $7,169 | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed information supporting the financial statements, including the company's single operating segment, geographic revenue breakdown, equity incentive plans, and $30.2 million in future non-cancelable purchase commitments - The company operates in one reportable segment: the design, development, and sale of Precision Timing solutions[63] Revenue by Geographic Area (Six Months Ended June 30, in thousands) | Country | 2025 | 2024 | | :--- | :--- | :--- | | Hong Kong | $47,395 | $25,536 | | Taiwan | $33,255 | $21,611 | | United States | $8,951 | $7,623 | | Singapore | $7,075 | $6,468 | | Other | $33,132 | $15,650 | | Total | $129,808 | $76,888 | - As of June 30, 2025, the company had total future non-cancelable purchase commitments of $30.2 million[68] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial results, highlighting a 58% year-over-year revenue increase for Q2 2025, improved gross margin to 52%, increased operating expenses, and significantly strengthened liquidity from public offerings Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $69,494 | $43,866 | $25,628 | 58% | | Gross Profit | $36,052 | $21,523 | $14,529 | 68% | | Gross Margin | 52% | 49% | - | 2.8 p.p. | - The increase in revenue for Q2 and the first six months of 2025 was primarily due to an increase in sales volume and higher average selling prices from a change in product mix[89] - The company's largest end customer accounted for 17% of revenue in Q2 2025, while the top three distributors accounted for 66% of revenue[90] - Research and development expenses increased by 20% YoY in Q2 2025, driven by higher spending on new product development, increased stock-based compensation, and higher headcount[98][100] - The company's liquidity position was significantly enhanced by raising $387.3 million from a follow-on public offering and $29.7 million from an ATM offering during the first half of 2025[118][119] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are foreign currency risk, considered minimal due to U.S. dollar denominated revenues, and interest rate risk, due to substantial holdings of cash, cash equivalents, and short-term investments totaling $796.6 million - Foreign currency risk is not considered material because substantially all revenue is denominated in U.S. dollars[131] - The company is exposed to interest rate risk with $172.5 million in cash and cash equivalents and $624.1 million in short-term investments as of June 30, 2025; a hypothetical 10% change in interest rates would affect interest income by approximately $0.9 million for the six-month period[132][133] Controls and Procedures As of June 30, 2025, the CEO and CFO concluded that the disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[136] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[137] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings, and no liability for claims was deemed probable or reasonably estimable as of June 30, 2025 - The company did not have any amounts accrued for litigation and contingencies as of June 30, 2025, as no liability was determined to be both probable and reasonably estimable[66][139] Risk Factors This section details significant risks, including semiconductor industry cyclicality, heavy reliance on a few major customers and distributors (with Apple as the largest end customer), dependence on limited third-party suppliers (Bosch, TSMC), international trade policies, and geopolitical risks - The company is subject to the highly cyclical nature of the semiconductor industry, which can lead to significant fluctuations in product demand, inventory levels, and average selling prices[142] - The top three distributors accounted for 66% of revenue in Q2 2025, and the largest end customer, Apple Inc., accounted for 17% of revenue, highlighting significant customer concentration risk[143][144] - The company operates a fabless model, relying on third parties like Bosch for MEMS wafers and TSMC for analog circuits, which exposes it to supply chain disruptions, capacity constraints, and quality control issues[151][153][154] - A significant portion of operations are outside the U.S., including R&D in Ukraine and manufacturing suppliers in Asia, creating exposure to geopolitical risks, such as tensions between China and Taiwan[165][166] Other Information This section discloses that four executive officers adopted Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025, to facilitate planned sales of company stock - During the quarter ended June 30, 2025, four executive officers, including the Executive VPs of Engineering, Sales, Marketing, and Legal, adopted Rule 10b5-1 trading plans[274] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications required by the Sarbanes-Oxley Act - The exhibits filed with this report include key corporate governance documents and certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[276]