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DATE

Wednesday, May 6, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Rajesh Vashist
  • Chief Financial Officer — Beth Howe

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TAKEAWAYS

  • Revenue -- $113.6 million, increasing 88% year over year and remaining essentially flat sequentially from Q4, driven by demand in AI data center applications.
  • Gross Margin -- 64.5%, up 7.1 percentage points year over year due to a higher mix of CED sales and manufacturing cost improvements.
  • Operating Margin -- 28%, up 25 percentage points from 3% in the prior year quarter.
  • Earnings Per Share (EPS) -- $1.44, rising more than fivefold from $0.26 in the prior year quarter.
  • Segment Performance -- Communications, Enterprise, and Data Center (CED) revenue reached $75.7 million, up 158% year over year and 17% sequentially; Automotive, Industrial, and Aerospace Defense produced $21.2 million, up 51%; Mobile, IoT, and Consumer delivered $16.7 million, down 1% year over year.
  • CED Growth Drivers -- Increased deployment of inference infrastructure and networking bandwidth, with content per system in inference at 2x-4x training; hyped demand for timing in 1.6 terabit optical modules and co-packaged optics resulting in higher ASPs and margins.
  • Aerospace and Defense Funnel -- Lifetime revenue funnel of approximately $0.5 billion, with expectations to reach $100 million in revenue over the next few years.
  • Cash Flow and Liquidity -- Cash flow from operations over $31.2 million, more than doubling from prior year; cash and short-term investments at $789 million at quarter end.
  • Q2 2026 Outlook -- Revenue guidance of $140 million to $150 million, up more than 100% year over year, gross margin forecast at approximately 65% (plus or minus 1 point), operating expenses of $46 million to $47 million, and non-GAAP EPS range of $1.85 to $2.
  • Long-term Model Commentary -- Management stated, “Our long-term financial model was 25% to 30% of annual revenue growth, and we have significantly exceeded it,” with the expectation that 65% gross margin and 30% operating margin targets will be achieved in Q2 2026.
  • Renesas Acquisition Status -- “our announced Renesas acquisition remains on track,” with no unexpected cost structure surprises and positive customer feedback, but no Q2 impact assumed in current guidance.

SUMMARY

SiTime Corporation (SITM +2.10%) delivered accelerated top-line and margin expansion in the quarter, driven by amplified demand from AI infrastructure, inference workloads, and new product adoption in timing solutions. Management raised revenue growth expectations for the full year to at least 80%, citing a strengthened order book and growing customer visibility, with durable pipeline signals in CED and continued expansion in aerospace and defense. Confident operational execution allowed the company to invest in headcount, engineering, and automation while maintaining operating leverage and liquidity well above industry norms.

  • Vashist described a $4 billion TAM for precision timing in the $11 billion timing market, targeting high-growth areas such as AI, autonomy, and high-speed communications.
  • CED growth was attributed to not only higher unit sales, but also increased ASPs, as XPU-based inference systems require up to four times more timing components than AI training systems.
  • The introduction of the Elite 2 Super TCXO family targets $1.5 billion cumulative SAM over five years by offering up to 3x greater synchronization than prior-generation products.
  • SiTime’s supply chain, relying on Bosch for MEMS and TSMC for analog, was described as "very solid," with earlier investments in automation and AI improving productivity and supporting scale.
  • Management expects the consumer segment to become a larger revenue contributor in the second half, which may "modulate" gross margins somewhat, but overall gross margin is still anticipated "above that 60% level."
  • The mobile, IoT, and consumer business saw temporary softness attributed to normal shipment timing, with a “particularly strong” second half anticipated.
  • Vashist said, “expanding share within older customers because,” citing competitive displacement and increased penetration, especially in module products.
  • Positive initial feedback has come from both customers and employees regarding the integration of the Renesas timing acquisition, described as a complementary fit to SiTime’s product portfolio.

INDUSTRY GLOSSARY

  • CED: Communications, Enterprise, and Data Center — SiTime's primary segment serving AI, cloud infrastructure, and networking customers.
  • XPU: A collective term for processing units including CPUs, GPUs, TPUs, supporting AI and high-performance workloads.
  • TCXO: Temperature-Compensated Crystal Oscillator, a high-stability oscillator used for precise timing in electronics.
  • OSAT: Outsourced Semiconductor Assembly and Test — third-party providers responsible for packaging and testing semiconductor components.
  • FAE: Field Application Engineer — technical experts who support customer adoption of semiconductor products.
  • SAM: Serviceable Available Market — the portion of total market demand targeted by a specific company's products.
  • RAN: Radio Access Network — part of telecom infrastructure enabling wireless connectivity, often referenced in 5G contexts.
  • LEO: Low Earth Orbit — orbital region for satellites commonly used in communications, navigation, and aerospace markets.
  • SmartNIC: A network interface card with onboard processing, increasingly used in data center and AI networking stacks.
  • TSMC: Taiwan Semiconductor Manufacturing Company, a leading foundry used for semiconductor fabrication.
  • OSATs: Plural of OSAT — denotes multiple outsourced semiconductor assembly and test vendors utilized in SiTime's supply chain.

Full Conference Call Transcript

Rajesh Vashist, 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 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 refer you to the risk factors described in the company's annual report on Form 10-K for the year ended December 31, 2025, as well as the company's subsequent filings with the SEC, including the company's quarterly reports on Form 10-Q. During the call, management will refer to 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 GAAP to non-GAAP reconciliation includes stock-based compensation expense, amortization of acquired intangibles and acquisition-related expenses, which include transaction and certain other cash costs associated with business acquisition as well as changes in the estimated fair value of earn-out liabilities and accretion of acquisition consideration payable. Please refer to the company's press release issued earlier today for a detailed reconciliation between GAAP and non-GAAP financial results. Unless otherwise specifically noted, all comparisons made during this webcast are year-over-year comparisons with the corresponding year ago period. With that, it's now my pleasure to turn the call over to SiTime's CEO. Rajesh, please go ahead.

Rajesh Vashist: Thanks, Leanne. Good afternoon and thank you for joining us today. We had a very strong start to 2026 driven by AI infrastructure and the significantly increased demand for precision timing. In 2010, SiTime saw an opportunity in the highly fragmented commodity-oriented timing industry. We forecasted then that timing would grow rapidly and become even more critical. We approached the problem from a systems view and built differentiated platforms delivering high performance, resilience and reliability. In other words, we created the category of precision timing, which has become important in hundreds of applications. I'm deeply satisfied with how successful precision timing has become as seen by the scale of our growth and the speed at which we have achieved it.

Today, with precision timing, SiTime addresses a $4 billion TAM in the $11 billion timing total available market in the high-growth areas of physical and infrastructure AI, autonomy, mobility and high-speed communications. I believe that these achievements have established SiTime as a key player in semiconductors. As far as our financial model goes, we can say promises made, promises kept in all key financial metrics. Our long-term financial model was 25% to 30% of annual revenue growth, and we have significantly exceeded it. We also set targets of 65% gross margin and 30% operating margin, which we expect to achieve in second quarter Q2 2026.

I believe that these metrics are sustainable as they come from highly differentiated products that deliver high value and therefore, high ASPs and gross margins. Moving on to the numbers. We delivered $113.6 million in Q1 2026, up 88% year-over-year. Earnings per share increased fivefold from $0.26 to $1.44. Gross margin reached 64.5%, up 7.1%, and operating margin was 28%. Growth was strong across all the regions, ranging from 30% to 140%. It's no surprise that our CED business unit led growth in Q1 2026. CED grew 158% year-over-year, marking our eighth consecutive quarter of triple-digit percentage growth, and we see this high-growth trend continuing. Our book-to-bill is growing with pull-through from the channel keeping inventories at the desired target.

Here are some details. CED benefits from the deployment of inference infrastructure and increased networking bandwidth within the data center. On inference infrastructure built on newer XPUs, it needs 2 to 4x more timing content per system than in training infrastructure. GPU utilization in inference workloads is now 20% to 40% and is targeted to get to 50% to 60%. Here, time synchronization plays a critical role in achieving higher GPU utilization and SiTime benefits from its products being used in this application. This emphasis on synchronization is driving demand for high ASP and high-margin products.

Elite and Elite RF Super TCXOs are widely deployed in AI infrastructure, and we have recently exceeded and extended our leadership with the new Elite 2 Super TCXO family. This newer Elite 2 delivers up to 3x better synchronization performance compared to Elite, which was already significantly better than quartz oscillators. With increasing demand, this class of product addresses a $1.5 billion of cumulative SAM over the next 5 years. As hyperscalers increase networking bandwidth within the data center, we expect to see meaningful adoption of 1.6 terabit optical modules in 2026. Higher frequencies and the need for more resilient performance are driving demand of our advanced oscillators at a higher price than those used in 800G.

At the same time, we expect to see continued strong shipment of oscillators for 400G and 800G for at least the next 2 years. On CPO or co-packaged optics, in our discussion with customers, we see even greater strength, for example, in CPO switches, where timing content can be up to 3x higher. Finishing up on the telecom part of CED, we see increasing convergence between AI and advanced telecom infrastructures, especially in 5G RAN or radio access networks and demand from new applications such as FWA or fixed wireless access. AI-enabled telecom designs contain 3x higher timing content, primarily from high ASP oscillators and clocks.

Our aerospace and defense business is another good example of the need for precision timing. Our success in LEO or low earth orbit satellites enables global connectivity, navigation and broadband access. LEO satellites have up to $2,000 of STM content per satellite, and we expect 7,000 to 10,000 LEO satellite launches over the next 3 years. With up to 15,000 LEO satellites deployed over the next 10 years, we see a strong outlook on this business. Defense P&T, also known as positioning, navigation and timing systems, satellite communications, autonomous drones and smart munitions have already used SiTime products.

We expect to benefit from recent increases in government spending to replenish supply and increase output where many of these are in high volumes. Our aerospace defense funnel is about $0.5 billion in lifetime revenue and our funnel to revenue conversion in this business is twice that of other businesses. We are well on track to achieve $100 million in aerospace defense revenue over the next few years with an expanded road map and strong customer relationships. In mobile, IoT and consumer, revenue momentum continues as our largest consumer customer is expected to expand deployments across additional platforms.

At other consumer customers, AI categories such as smart glasses, personal productivity devices and hearables are driving demand for ultra small, low-power, high-accuracy timing. This is where Titan resonators are gaining strong traction with semiconductor partners and OEMs and the funnel has grown to $400 million since introduction. On a separate note, our announced Renesas acquisition remains on track, and we continue to be optimistic about this combination. As we experience rapid growth, we continue to invest in people, systems and technology that makes us more productive, delivering even more valuable products faster. We expect to continue to drive durable revenue and deepen customer relationships.

We're now entering SiTime's next phase of growth from a position of strength, and I'm confident in our trajectory and very excited about what lies ahead for SiTime. Beth? Thanks, Rajesh.

Beth Howe: Today, I'll walk through our first quarter 2026 results, and then I'll provide our outlook for the second quarter. As a reminder, my remarks focus on non-GAAP financial results, which are reconciled to GAAP in our press release. Our first quarter results underscore the scalability and discipline of our operating model. We delivered strong revenue growth, expanded gross margins and demonstrated meaningful operating leverage, growing revenue 88% and expanding operating margins by 25% versus the year ago quarter. These results build on leverage we have demonstrated over multiple quarters and Q1 reinforces the durability of our model as we scale. This performance was driven by strong execution in the quarter with revenue of $113.6 million, up 88% year-on-year.

Sequentially, revenue was essentially flat with Q4, significantly better than anticipated at the beginning of the quarter, primarily driven by stronger-than-expected demand in AI data center applications. Communications enterprise and data center revenue was $75.7 million or 66.6% of total revenue, growing 158% year-over-year and 17% sequentially. This growth reflects the breadth of demand across AI infrastructure, including optical modules, switches, SmartNICs and accelerator platforms. Automotive, industrial and aerospace defense revenue was $21.2 million or 18.7% of total revenue, up 51% year-on-year. Within this sector, aerospace and defense was the fastest-growing area with all 3 subsectors benefiting from the accelerating adoption of precision timing across autonomous systems, defense modernization and industrial automation.

Mobile, IoT and consumer revenue was $16.7 million or 14.7% of total revenue, down 1% year-over-year, with our largest consumer customer contributing $10.2 million for the quarter. First quarter gross margin was 64.5%, an increase of 7.1 percentage points year-over-year. The improvement was driven by 2 factors. Roughly half of the increase was driven by favorable product mix of higher-margin products, reflecting strong CED growth, which carries higher above-average gross margins, combined with a lower mix of consumer products. The other half was driven by product cost improvements and better manufacturing absorption on higher revenue. Operating expenses for the quarter were $41.5 million, consisting of $21.5 million of R&D and $20 million of SG&A.

This reflects intentional investments to support our growth, including higher headcount and variable compensation tied to revenue performance as well as continued investments in our long-term road map. Operating income for the quarter was $31.8 million, an increase of $29.8 million year-over-year. Operating margins expanded by 25 percentage points from 3% in Q1 2025 to 28% this quarter. We are investing with conviction in the business and are delivering clear operating leverage as we do so. Interest and other income was $7.1 million and non-GAAP net income was $38.1 million. Earnings per share increased more than fivefold to $1.44 per share compared to $0.26 per share a year ago. Let me now turn to the balance sheet.

Accounts receivables ended the quarter at $55 million and days sales outstanding were 44 days, up from 36 days in Q4 as revenue linearity normalized. Inventory increased to $91.1 million in Q1, up from $81.6 million in Q4, in line with revenue growth. During the quarter, cash flow from operations more than doubled to $31.2 million, up from $15 million a year ago. We ended Q1 with strong liquidity position of $789 million in cash and short-term investments. Now let me turn to our outlook. This outlook is for SiTime and does not assume any benefit from the acquisition of the Renesas timing business, which has not yet closed.

I'll start with a few comments on the full year and then move to the June quarter. For the full year, we are increasing our revenue growth expectations to at least 80%, well above our prior expectations and our long-term target growth rate of 25% to 30%. This step change in growth reflects both the depth of our order book and the confidence customers are singling in their own demand forecast, particularly in CED. That confidence is translating into improved visibility, reinforcing our expectation for sustained momentum throughout the year.

For the June quarter, we expect revenue to be in the range of $140 million to $150 million, up more than 100% year-on-year. gross margin to be approximately 65%, plus/minus 1 point given our expected product mix for Q2. Operating expenses expected to be in the range of $46 million to $47 million as we continue to invest in growth. We expect interest income of approximately $5 million and a share count of approximately $27.5 million shares. As a result, we expect Q2 non-GAAP EPS to be in the range of $1.85 to $2 per share. In closing, our first quarter results underscore the scalability and discipline of our operating model.

These results build on the leverage we have demonstrated over multiple quarters and reflect strong education execution across our end markets. As we look ahead, we are confident in our ability to scale efficiently, deliver sustained profitability and execute on the opportunities in front of us. With that, I'll hand it back to the operator to open the line for questions. Operator?

Operator: [Operator Instructions] Our first question comes from the line of Tim Arcuri from UBS.

Timothy Arcuri: Rajesh, can you just talk about -- I mean, it sounds like CEV is white hot in June and then the rest of the year as well. Can you talk about specifically what that's from? Is it all XPU related? Is it optical related? Maybe you could just kind of double-click on that for us.

Rajesh Vashist: Sure thing. Yes. So basically, it's two things that I said are leading it. One is the inference infrastructure, all the XPUs, the switches, the inference workloads, those are growing as well as our content is growing in units, but also the ASPs are growing. The second one is, of course, the networking bandwidth within the data center, in other words, optical modules and everything connectivity, including active cabling, especially with the growth of the 1.6 terabit optical modules, which is growing, as we said the last time at a higher rate than we had anticipated last year. So as you said, everything is doing really well.

But I must say that so is the rest of our business so that just to put in a plug for that, our other businesses are going very well as well.

Timothy Arcuri: And then, Beth, I just wanted to ask about gross margin into the back half of the year. I know your large customer will come back. That will probably pull margins down a little bit, but the CED mix is definitely much higher. So do you think -- I mean, maybe margins come down a little bit off of the June level, but can you give us some puts and takes to think about into the back half of the year off of the June margin level?

Beth Howe: Thanks, Tim. Great question. So as you noted, there are a couple of puts and takes in our gross margins. We certainly benefited in Q1 from kind of the double benefit of a stronger mix of CED, which has those higher gross margins and a lower mix of consumer. As we move through the year, we would expect consumer to be a larger portion of the mix in the back half, which might modulate gross margins a bit just based on mix. But overall, we still expect gross margins to be above that 60% level and kind of well into this range. But it may modulate a bit, but still very -- toward the higher end of our target range.

Operator: Our next question comes from the line of Tore Svanberg from Stifel.

Tore Svanberg: On the very strong results. I guess my first question is on the Q2 guidance. It looks like 28% sequential growth at the midpoint. Can you maybe talk a little bit about the 3 segments and how you expect them to perform in the June quarter?

Rajesh Vashist: Yes. Thanks, Tore. Basically, I think the growth that we have seen, the pattern of growth we saw in Q1 continues in Q2. I think that the CED business continues to grow at its fast pace. The military, aerospace, defense, industrial, automotive business continues at the speed with which it has been growing. It's not growing, of course, as high as the CD, but it grows strongly all through the year. And finally, our mobile and consumer business, is obviously going to be, as noted earlier, significantly stronger in the second half of the year, but it does grow over the Q1 sort of part of the business. Basically, SiTime is demonstrating its diversified nature of our business.

I also talked about telecom at that point of view, just to say that in the world of AI, we -- it's not just only about the data center, it's about different kinds of AI, including the AI in, for example, the fixed wireless or the RAN radio access network businesses.

Tore Svanberg: Very good. And as my follow-up, there's obviously a lot of focus on high precision timing for the right reasons. But I think perhaps what is overlooked sometimes is your business model and your supply chain. I remember back in the pandemic years, you gained a lot of share because you actually had capacity while your competitors didn't. And I know it's probably still a bit early, but it does feel like we're getting into sort of a similar environment again now with capacity being tight in a lot of different places. So I'm just wondering if your supply chain, the uniqueness of that supply chain is allowing you to gain even more share during the current up cycle.

Rajesh Vashist: Right. Yes. Our capacity in short is very solid. We feel very good about it. As you know, we have our MEMS chips, and we have which come from Bosch. And we have our analog chips, which are in the older geometries like 180 nanometers, 150, 130 nanometers, which comes mostly from TSMC. All of those are in good shape. I think we have some challenges from time to time in the back end, particularly with the OSATs because of the volume, as you noted, but there's nothing there that's beyond the usual execution issues that we can't solve. So we feel pretty good about it.

Back in 2025, early '25 and maybe even late '24, we made a number of changes around automation in the back end, around the use of AI in our test programs and characterization that have given us particular speed. And I'd like to note that, that has made us significantly more productive with less CapEx than would typically be needed. So not only are we a purveyor of products that help in the AI rollout, we are starting to significantly improve productivity by the use of AI in the back end, but in significantly other areas as well.

Operator: Our next question comes from the line of Quinn Bolton from Needham & Company.

Quinn Bolton: Congratulations on the really nice outlook. Richard, you touched on it in your script, I was hoping you might be able to expand on why the inferencing drives even greater demand for precision timing and the synchronization requirements. You mentioned, I think, if I heard you right, that the inferencing content could be 2 to 4x the training content. And so -- in the past, I think you've talked about on some of the training racks, you might have had high hundreds of dollars of content. Wondering if you might be able to give us what you think your content per rack might be for an inferencing rack. -- certainly it sounds like it could reach into the 1,000-plus range.

Rajesh Vashist: Yes. I mean, look, what we see is that there is a greater need for GPU utilization and lower latency and higher throughput. All of those are dependent upon just the bare performance, the clear performance requirements around stability, around jitter, around phase noise reduction -- and then as you noted, around synchronization. So we said basically that it's not that there's anything particularly critical about inference that's driving it. It always does. It's just that there's a lot more inference work happening and the workloads are expected to get up to significant utilizations of up to 50% to 60%, driving the use case for synchronization. This is a story we've talked about in other areas before.

It's just maybe that it didn't come through that this is something that we expect to keep on happening more and more. The other part is that we are adding products like Elite to Super TCXO that are higher priced, higher performance, higher throughput and better synchronization than our previous generations of products. So we are accelerating our performance as well as the need for more of these products in volume.

Quinn Bolton: And so it sounds like it's kind of both an ASP as well as the unit driver to deliver that better synchronization and higher GPU utilization.

Rajesh Vashist: That's right. And we expect to continue at significant levels.

Quinn Bolton: Perfect. And then just, I guess, quickly on the gross margin, Beth, the revenue step-up in Q2 certainly seems like you'd be getting some pretty good absorption of any fixed costs. And so is there any particular headwind to gross margin in the second quarter? It sounds like CED is going to lead growth, which I think would be a net positive for margins. So I just want to make sure, are there any sort of offsets? Does the consumer really start to pick up in June? Or anything else keep that margin from expanding further than the 50 basis points you guided to?

Beth Howe: Thanks for the question, Quinn. So as we look at it, we did have some benefits in Q1 that drove a little bit higher gross margin. And so sometimes you can't anticipate those. And as we think about Q2 and certainly the back half of the year, we do expect a more normalized mix of consumer, which does have lower gross margins. And so again, a little bit of some benefits in Q1, combined with the mix in Q2 is really what's driving it.

Operator: Our next question comes from the line of Chris Caso from Wolfe Research.

Christopher Caso: I guess the first question, Rajesh, is maybe what's changed here that's shifted things into higher gear. And I think what you said was the combination of units, content and pricing. And I think I'm sure you would have anticipated qualitatively what's been going on for some time, which one of those elements is what's kind of causing the inflection here? Or perhaps it's a combination of all 3? Interested in your view on that.

Rajesh Vashist: Yes. Chris, you're absolutely right. We have seen this coming, but seeing it coming and having it happen in the time frame with the speed and the volume that's been happening has been very gratifying to see. As you know, we have a variety of customers. We sell to GPUs, XPUs, TPUs and then we sell into the switches in the AI business and then finally, in the connectivity part of it with more than 15 to 20 module makers and others that are involved in this technology. So I think it's a very broad overview, and we just see a groundswell across the numbers, the units, the ASPs and more other customers coming into the fray.

We've always indicated that some of the customers are better penetrated than others. And I guess now we're starting to penetrate the ones that we hadn't done as good a job as previously. So it's really just all around, as you indicated, and it's just happening now.

Christopher Caso: Right. And I guess the last part of your answer kind of dovetails to my next question, which would be sort of a share of TAM. And maybe you could speak to the extent to which your penetration of some of those other customers has helped here? And is this something that you'd expect as you go through the year, sort of a step change in revenue at some point as you bring some other customers on? Is it more gradual than that? And how much has new customer penetration helped drive these numbers?

Rajesh Vashist: Yes. New customer penetration has certainly helped, but expanding share within older customers because we were never fully penetrated, and we're still not fully penetrated in all our customers, particularly in the AI space. So expanding where we were has been important, increases in ASP, increases in volumes. There is some benefit to -- particularly in the module business, where the volumes have soared recently, and we see that some of our competitors using older technologies have been unable to keep up with it. This is different from the '21, '22. It's more that SiTime continues now to be an established player of high-quality products.

And so we get to be one of the first go-to's as our customers find that they need more and more product. So I don't think that this is going to stop. I think that we see this continuing because of the SiTime focus in all this. Our oscillators are gaining traction at higher ASPs. Our clocks, even though we have a relatively smaller portfolio of around 50 clocks is finding greater traction. I think the focus of the company, we also, in recent months, have added more salespeople and business people. We have talked about that in the past before. So we are able to handle better our businesses.

In short, we're coming to a tipping point of this company where just the native SiTime business pre the acquisition is really showing its strength. And we wanted to indicate that we see that as a stand-alone business of the business we've been in for the last 6, 7 years since we went public as a very strong business, and we wanted to send that message out.

Operator: Our next question comes from the line of Gary Mobley from Loop Capital.

Gary Mobley: And let me also extend my congratulations on the solid results. I wanted to start out with a multipart question on the Renesas Clock business. I realize this is an asset carve-out for Renesas. And hence, when you announced the acquisition, you were uncertain about the expenses you would take on other than the 160 engineers. And so my question is, do you have a better handle on the OpEx that you're taking on from this asset purchase? And then I guess, unrelated to that, have you gotten any initial feedback from customers? And any idea of perhaps some additional sales synergies from this acquisition?

Beth Howe: Gary, maybe I'll start with that question in terms of the -- as we've gotten to know the acquisition a little bit and some of the cost structure. So we are still in our planning phase for integration, and that's moving on track. We do feel that we -- the modeling that we did in terms of the cost structure, it's kind of -- as we get to know it, it's panning out kind of roughly where we thought it would be. Again, I think that's going to be an evolving conversation between now and close and then once we close the deal. But no unexpected surprises in terms of the cost structure for this business.

I think we are going to make some more investments like we talked about. So investing in CapEx for new equipment, both to support the growth that we want to drive in that business as well as just to refresh and modernize. I think we really want to kind of the care and feeding of that business and make some investments there. And so that is our expectation. But that's in line with what we said in February. So all on track there. The customer feedback I've heard from our sales and others has been positive so far. But maybe, Rajesh, do you want to comment a little bit on customer feedback?

Rajesh Vashist: Yes. So first, before I do that, I'll just add that as you point out, we're getting about 150-odd people, mostly engineers in development centers. So I think there's a clear need to invest in some more engineering. There are some marketing people. There are some sales FAEs that I think we see a clear need to invest significantly more than has been in the past, which is natural because we're pretty much focused on this business. But obviously, those investments have been comprehended in the previous guidance, certainly when we announced the deal, and we feel pretty good about it. So no surprises there.

On the customer side, equally, we've had some customers conversations, which are, I would say, almost universally positive. People see SiTime as, again, the focus helps the fact that we have a significantly large portfolio of products in a space that customers of that timing business are not used to, which is the oscillator business. Recall that they are complementary. The oscillators from SiTime, which make up a bulk of our business versus the clocking business, which comes from the Renesas timing division. So I think customers universally see that as complementary business and no changes there.

The other thing I must add is that we see positive responses from the team that's coming across, which is also good to see because we do really value the team, and we want to -- and we see its value from past years that they've added in the business part of it. So all in all, going well, looking forward to closing this deal out.

Gary Mobley: I hate to be the one to nitpick after such a strong quarter and guide. But looking at your mobile IoT and consumer business and your largest customer, it looks like both were down slightly on a year-on-year basis. Is that a reflection of the market or anything purposeful perhaps against maybe some supply constraints? Any color there would be helpful.

Beth Howe: Gary, this is Beth. Sure. So if we look at our mobile consumer business, really, the customers in that sector continue to be very large, in some cases, hundreds of billions of dollars in revenue on their own. These are all very large customers. And so $1 million or $2 million here or there between quarters really isn't an indication of anything other than timing of shipments. Also recall that a year ago, our large consumer customer is when they launched the new modem. And so the timing a year ago also plays into that a little bit. But again, I think it's $1 million or so in a very -- kind of customers with very large revenue.

So I wouldn't read much into it.

Rajesh Vashist: And just to add a little bit more to that, we see no messages there. It's pretty typical for that kind of business to be slower in this part. and would be particularly strong in the second half. In general, we think that our businesses fire at different times, and that is the strength of the company, that diversity of the fact that they can be stronger in different quarters is actually part of what I think adds value to the SiTime business. We're very satisfied with it.

Operator: Our next question comes from the line of Jim Schneider from Goldman Sachs.

James Schneider: Rajesh, you mentioned a number of things driving the upside, whether that be increased traction to customers you didn't already have a strong relationship with before as well as 1.6T networking and just an increased intensity in content for inference. If you were sort of -- I know it may be hard to disaggregate those, but if you were to have to disaggregate them, which would you say of those factors is the strongest driver of the upside?

Rajesh Vashist: You rightly pointed out. I think it's very difficult to do that. I think in the CED business, the AI business, the AI part, recall that it's communications, enterprise and data center. The data center part, all of it is doing really, really well. It's really hard to pull them apart. But I also wanted to indicate that communications and hence, the conversation around the telecom piece is doing well. As I noted earlier, the mobile IoT and consumer is somewhat cyclical inside the year, and it will do well in the year, very well even in the year. It's just that it's a little bit slower in the first quarter as it normally is.

And then the military, aerospace, defense, automotive, industrial is the sort of the strong middle, which keeps everything going at a sort of a steady pace. So all of these businesses are doing very well according to the world outside, according to macro events or all of that. We see no issues around supply chain in particular. I know some people have said that in the past as a semiconductor company. So we want to be very clear about that. We see strength in our supply chain. And we don't see any fundamental issues or macro issues or external issues that can trip us up as of now.

James Schneider: That's helpful. And then maybe one for Beth. Clearly, you're going to be at model in Q2. Going forward from there, philosophically, how are you thinking about the OpEx trajectory for the business? Would you -- with the increased revenue and gross margins, maybe allow the model to sort of float higher with more earnings fall through? Or are there specific R&D projects you want to focus on that would kind of keep us at the sort of 30% op margin level?

Beth Howe: Thanks, Jim. As we look at our investments, we do want to invest for growth. And I think even as we were reaccelerating our op margins and building back to these levels, we were still investing. And as Rajesh was talking about, I think we see a lot of opportunities to address more salespeople and FAEs to go after more of these opportunities to continue to invest in engineering to be able to build more products faster. So we're going to continue to invest in the business. And in fact, if anything, maybe want to invest a little bit more.

If I think about over the last 2 years, 2.5 years, we've invested well under that kind of 50% of revenue growth mark. And so as we look forward, we definitely want to make sure that we are capturing the growth and investing appropriately to go drive that. I think discipline will remain our MO, but investing for growth is clearly the priority.

Rajesh Vashist: And at the rates of growth that we're talking about, we indicated around 80% or more. I mean, it kind of gets hard to spend some of the money even if you want to. And a bunch of it is going to be spent on hiring more engineers, more business people, more support people. But we are quite careful in how we do that, both in the speed at which we do it, but also in the quality and the dedication of finding the dedicated employees that we truly want to be leaders in the company.

Beth Howe: And maybe said another way, there's still operating leverage in the model, and we expect to continue to drive that operating leverage. And at the same time, we want to make sure we're investing so that we can drive those opportunities.

Operator: Our next question comes from the line of Suji Desilva from ROTH Capital.

Sujeeva De Silva: Congratulations on the progress. So I want to double-click on your strength in CD and optical modules. Maybe you can help us distinguish, Rajesh, which customers adopted earlier than others more aggressively? And in this particular instance of the 10, 12, 15, 20 rather, what was the reason some jumped in earlier? I'm just curious here.

Rajesh Vashist: Well, now when we go back earlier to this, we're talking 2 years ago earlier, it was clear to many of the people at the 800 level that they couldn't find enough product, a, to satisfy their demand. This is in the oscillators. And b, they couldn't find the quality, the reliability and the performance that was needed. While the performance was always about better phase noise and better -- I'm sorry, better jitter and better stability. It was also about finding the quality and the reliability of the product. So that happened with the higher volume guys coming out of Asia, as you know. But that trend has continued in the United States with the suppliers.

And I think it's kind of a worldwide trend for us as we get to 1.6, and we are one of the few people that has both the performance characteristics and the ability to ramp up quickly with high quality, high reliability to the upsides that are seen in the business.

Sujeeva De Silva: Okay. And then a quick follow-up on this. I think you might have started to answer this, but with the strength in the optical module, you could assume -- you can imagine this is a rising tide lifts all boats. But I'm wondering, is there also a situation where your precision products versus what's in the market are creating kind of have and have nots, particularly as you get to something like 1.6T where you become something people need to have to be competitive. I'd be curious if that's a factor here versus really just strength overall in demand.

Rajesh Vashist: Yes. I think there is strength overall in demand, Suji. And I certainly believe from a very bronchial point of view that SiTime enables a level of performance that is not possible, but I shouldn't overstate it either because there are credible suppliers even at the 1.6T level. I think it's just that combination of performance high reliability and resilience and the supply chain that in the end, people keep on coming back to. Now recall that SiTime's prices are higher because we sell at a premium for all those reasons. And so we are continuing to be always sharing our business with most other suppliers in quartz oscillators, in particular, in the optical module market.

But we are very comfortable with that because we know that when it comes to support for these customers, SiTime is very strongly positioned. So all in all, I think we're very happy with where we are.

Operator: Thank you. This concludes the question-and-answer session. I would now like to turn it back to Rajesh Vashist for closing remarks.

Rajesh Vashist: Well, thank you. I am, again, deeply satisfied with where we are. We got to where in our financial model, much quicker, stronger than we ever thought, but I'm very, very happy about that. I'm also very happy that our precision timing category, creating a category in semiconductors of products is really hard to do because there's so many good people that play in this business. But the SiTime has done that successfully since IPO, I think it's a great testament to all the hard work that our team puts in, and I'm deeply proud of where we are today because of the work they do.

So I'll leave you with that thought and basically say we're looking forward to our coming quarters, and we expect to talk to you all soon. Thank you so much.

Operator: Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Thank you.