SiTime(US:SITM)2023-05-04 02:48Financial Data and Key Metrics Changes - Revenue in Q1 2023 was $38.3 million, down 37% sequentially, primarily due to lower sales to the historically largest customer and other customers working through excess inventory [33][44] - Non-GAAP net income was $2 million or $0.09 per share, with non-GAAP gross margins at 61.8%, slightly down from Q4 [4][35] - Inventory at the end of the quarter was $60 million, up from $57.7 million in the previous quarter, indicating strategic wafer purchases [36][38] Business Line Data and Key Metrics Changes - Sales into the Industrial, Automotive, and Aerospace segment were $18.7 million or 49% of sales, down from $20.3 million in Q4 [11] - Sales into the Comms and Enterprise segment were $10.9 million or 28% of sales, down from $15.8 million in Q4 [11] - Sales into the mobile, IoT, and consumer segment were $8.8 million or 23% of sales, down from $24.7 million in Q4 [34] Market Data and Key Metrics Changes - The company forecasts that 60% of expected 2024 revenue will come from production opportunities in aerospace defense, with significant design wins among top US defense contractors [2] - In automotive, 70% of expected 2024 revenue will come from early-stage production opportunities, particularly in ADAS [31] - The Chinese electric vehicle market has seen significant declines, impacting demand in the automotive segment [12][45] Company Strategy and Development Direction - The company aims to expand its serviceable addressable market (SAM) from $1 billion in 2020 to $2.5 billion by the end of 2023 [21] - The strategy focuses on bringing compelling products to market that solve tough problems, positioning the company as a trusted advisor [30] - The company continues to invest in process and product development, maintaining confidence in long-term growth despite current challenges [53] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment remains challenging, with demand softening in several markets, particularly data centers and automotive [51][45] - The company expects Q2 revenue to be lower than Q1, with guidance between $25 million and $28 million [39] - There is an expectation for a recovery in 2024 and 2025 based on SAM expansion, design wins, and increasing average selling prices [29][48] Other Important Information - The company has a strong cash position of $576 million, allowing for strategic inventory purchases [36][59] - 80% of Q1 2023 revenue was sole sourced, indicating strong customer reliance on the company's products [47] - The company anticipates that inventory levels will remain high into the second half of the year, impacting current revenue [38] Q&A Session Summary Question: What are the drivers behind the gross margin drop? - Management indicated that the drop in gross margin is primarily due to lower revenue and a change in product mix, with high-margin products declining in sales [7][85] Question: What is the expected consumption rate moving forward? - Management noted that it is difficult to quantify the exact consumption rate, but they believe there is about $30 million in excess inventory that will impact revenue [42][55] Question: How does the company view the long-term growth rate? - Management maintains that a long-term growth rate of 30% is reasonable, based on new product introductions and market expansion [92][93] Question: When can we expect sales from the largest customer to normalize? - Management expects sales to the largest customer to improve in Q2, with a more substantial recovery anticipated in Q3 and normalization by Q4 [98][110]