SiTime Corporation (SITM) Earnings

Management highlights

### Overall Financial Performance - Q2 26 delivered exceptional results: gross margin of 67.1% (up 8.9 percentage points YoY), operating margin of 34% (up from 10% YoY), and non-GAAP net income of $65.7 million ($2.34 per diluted share, up 400% YoY) - All business units and regions grew more than 50% YoY, with several growing over 100% YoY; book-to-bill, average order size, and average selling prices (ASPs) all increased on a higher-value product mix - Channel inventory remains at tight target levels, reflecting strong end-product pull-through; customer orders are now placed 12-18 months in advance, improving 2027 visibility - Average design-in value and sales funnel size grew significantly, signaling strong future demand ### End Market Growth Drivers - CED remains the core growth engine, with 9 consecutive quarters of triple-digit growth; key growth drivers include: 1) expanding bandwidth for 800G and 1.6T optical modules, where SiTime holds significant market share in a combined 2027 SAM of $450 million; 2) growing synchronization adoption by hyperscalers across data center compute and networking nodes, adding hundreds of dollars of SiTime content per rack; 3) expanding AI data center spending beyond traditional hyperscalers to new OEMs and ODMs - AI expansion beyond data centers creates new opportunities in automotive, humanoid robots, drones, and personal AI devices; for autonomous vehicles, precision timing delivers up to 10x better positional accuracy in a $400 million SAM - In aerospace and defense, Assured PNT (Position, Navigation, and Timing) is a $400 million market opportunity that provides backup timing when GPS is disrupted by jamming or spoofing, creating large retrofit demand as global defense spending increases - In MIC, emerging growth comes from personal AI devices, smart glasses, wearables, and health devices; the MIC sales funnel now exceeds $1.2 billion with strong 2027 visibility ### TPD Acquisition - Closed the acquisition of Renesas' timing business (TPD) on July 1, 2026, well ahead of the original year-end target - TPD is a 20-year established clocking franchise with proven product families (FemtoClock, VersaClock) and over $100 million in annual buffer product revenue; it serves 10,000 customers with 70% gross margins, 70% of its revenue comes from CED - Initial guidance projected $300 million in TPD revenue in the 12 months post-close, but management now expects it to grow at a faster rate than originally forecast - The acquisition accelerates SiTime's path to $1 billion in total annual revenue and expands its addressable market ### Long-Term Innovation Strategy - SiTime is shifting timing solutions from discrete components to integrated solutions via chiplets, advanced substrates, and modules to enable higher system performance and compute density - This integration will expand SiTime's CED SAM by $2.5 billion by 2030, creating new high-value opportunities as AI expands to edge and personal devices - SiTime is the creator of the precision timing category, holds industry leadership, and has the balance sheet to invest through market cycles

Guidance

- For Q3 26, combined total company revenue is expected to be between $285 million and $295 million. SiTime core revenue (excluding TPD) is expected to be $200 million to $210 million, representing ~30% sequential growth at the midpoint, while acquired TPD is expected to contribute ~$85 million in revenue - Combined gross margin for Q3 is expected to be approximately 68% (plus or minus 1 percentage point), driven by manufacturing operating leverage, favorable product mix from core CED and the acquired TPD business that offsets higher consumer mix headwinds in the second half - Q3 operating expenses are expected to be between $80 million and $85 million, as the company continues to invest in growth initiatives and TPD integration - Q3 non-GAAP EPS is expected to be between $3.50 and $3.65 per share - Core SiTime CED is expected to deliver triple-digit year-over-year growth in Q3 26; Automotive, Industrial and Aerospace Defense is expected to maintain its recent strong year-over-year growth rate; Consumer segment year-over-year growth is expected to accelerate significantly in Q3, driven by product proliferation from a large existing consumer customer - Management expects 2027 to be another year of significant growth, with no signs of slowdown in demand; the company's long-term multiyear average growth rate is ~30% or slightly higher, with acceleration from AI-driven demand - Gross margins are expected to remain above 65% and in the 67-68% range over the coming quarters

Segment performance

For Q2 26, total company revenue was $157 million, up 127% year-over-year (YoY) and 39% sequentially. 1. Communications, Enterprise and Data Center (CED): Revenue of $101 million, which is 64.3% of total Q2 revenue, up 181% YoY and 34% sequentially. Growth was driven by expanding demand for precision timing across AI infrastructure including optical modules, switches, and accelerators. 2. Automotive, Industrial and Aerospace Defense: Revenue of $24.8 million, which is 15.8% of total Q2 revenue, up 51% YoY and 18% sequentially. Growth came from continued adoption of precision timing across automotive automation, industrial automation, and defense applications. 3. Mobile, IoT and Consumer (MIC): Revenue of $31.4 million, which is 20% of total Q2 revenue, up 85% YoY and 89% sequentially. Strong sequential growth was driven by a large consumer customer that delivered $22.8 million in revenue for the quarter. The newly acquired Timing Products Division (TPD) from Renesas is expected to contribute ~$85 million in Q3 26, with ~70-75% of its revenue allocated to CED and the remaining 25-30% allocated to Automotive, Industrial and Aerospace Defense.

Risks & headwinds

- Carve-out and integration of the large TPD business is inherently complex; the company relies on a transition services agreement (TSA) with Renesas for manufacturing and test operations over the next several quarters, with ongoing supply chain constraints that need to be resolved to unlock full TPD growth - Forward-looking statements are inherently uncertain, and actual results may differ materially due to unforeseen risks and market changes; the company does not commit to updating forward-looking statements after the call - Demand growth, particularly for AI-related end markets, could change faster than current visibility suggests, impacting planned revenue and margin performance

Analyst Q&A

• Q: When SiTime announced the TPD acquisition earlier this year, management projected a $300 million annual revenue run rate 12 months post-close. With TPD expected to deliver $85 million in Q3 alone, what has changed to make the acquisition more attractive than originally expected? /

  A: During initial due diligence, management had more modest growth expectations for TPD, but the business has delivered consistently strong performance throughout 2026, particularly in its large CED segment (75% of TPD revenue). Management confirmed the business is on track to exceed the original $300 million annual target, but noted it is still early in integration and will provide more detailed outlooks as the team gains deeper familiarity with the business.

• Q: Management mentioned shifting from discrete timing components to integrated chiplet and module solutions. When should we expect material revenue contribution from these new higher ASP products? /

  A: The shift to integrated timing is driven by the industry need for higher performance, lower latency, and precise timing without signal degradation across high-performance systems. While ASPs are expected to rise, the bigger driver is increased density of timing components across systems. SiTime is pioneering this new product category, which is expected to add $2.5 billion in new addressable revenue by 2030.

• Q: Will TPD be reported as a separate segment going forward, and how is its revenue split across existing segments? /

  A: TPD has no consumer business, so its revenue will be split ~75% to CED and ~25% to Automotive, Industrial and Aerospace Defense. TPD will be integrated into SiTime's existing three segment reporting structure rather than being tracked as a standalone segment moving forward.

• Q: What is the outlook for the Bosch partnership agreement that expires next March, and does the TPD acquisition change any terms? /

  A: TPD's business is primarily traditional quartz clocks, which do not rely on MEMS resonators produced under the Bosch agreement, so the acquisition has no impact on the partnership. Bosch is a close partner, and management expects the renewal to be completed smoothly with no issues in the near term.

• Q: What is driving the higher deployment density of timing components in AI data centers, and how does this impact SiTime's revenue? /

  A: Higher timing density is driven by the need for synchronization across large GPU clusters, as well as across all subsystems within a data center rack including switches, accelerator cards, and processing units. Higher density increases the number of SiTime components used per system, and also enables higher ASP products (such as super TCXOs) that deliver the higher precision required for modern synchronization, both of which contribute to revenue growth.