SiTime (SITM) Q3 2026 Earnings Call Transcript

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DATE

Nov. 4, 2026

CALL PARTICIPANTS

• Investor Relations - Brett Perry
• Chief Executive Officer - Rajesh Vashist
• Chief Financial Officer - Elizabeth A. Howe

TAKEAWAYS

• Revenue -- $298.7 million, representing 257% year-over-year growth following the first full quarter of consolidated results with the Timing Product Division (TPD).
• Non-GAAP Gross Margin -- 70.7%, an increase of 11.9 percentage points year over year driven by favorable product mix and higher manufacturing absorption.
• Non-GAAP Operating Margin -- 43%, up from 18% in the prior year quarter, reflecting increased operating leverage.
• Non-GAAP EPS -- $4.01, representing a 360% increase from the prior year.
• Core SiTime Revenue -- $212.4 million, growing 154% year over year.
• TPD Segment Revenue -- $86.3 million, up 67% from the third quarter of 2025 when the business was part of Renesas.
• Communications, Enterprise, and Data Center Revenue -- $127.3 million, increasing 202% year over year and 26% sequentially from the second quarter of 2026.
• Mobile, IoT, and Consumer Revenue -- $49.5 million, up 133% year over year, driven by a large consumer customer contributing $42.7 million.
• Automotive, Industrial, and Aerospace/Defense Revenue -- $35.5 million, growing 76% year over year and 43% sequentially from the second quarter of 2026.
• Total Sales Funnel -- $10 billion, representing a fourfold increase since 2025.
• Semiconductor Funnel -- $4 billion, growing eightfold due to a dedicated global sales team engaging semiconductor companies years ahead of production.
• Segment-Specific Funnels -- $900 million in aerospace and defense, $1 billion in automotive, and $1.4 billion in industrial applications.
• Inventory -- $112 million at the end of the quarter, reflecting growth intended to support expected demand in the fourth quarter of 2026.
• Days Sales Outstanding -- 61 days, an increase of 10 days from the second quarter of 2026 due to the timing of TPD collections.
• Q4 Revenue Guidance -- $331 million to $341 million, with sequential growth expected in both core SiTime and TPD segments.
• Q4 Non-GAAP EPS Guidance -- $4.76 at the midpoint of the range based on a diluted share count of approximately 32.8 million shares.
• Cash and Short-term Investments -- $324 million, providing liquidity to continue investing in the product road map.
• Revenue Forecast Increase -- Twofold to fivefold at the company's largest account for 2027.
• Capital Expenditures -- $11.2 million for the third quarter.
• Other Income -- $800,000 in the third quarter, with interest income projected to rise to $2 million to $2.5 million in the fourth quarter.
• Non-GAAP Operating Expenses -- $81.6 million, consisting of $48.6 million in R&D and $33 million in SG&A.

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RISKS

• Vashist stated, "neither we nor PPD, had expected this huge surge in demand, and we are seeing significant growth," noting that wafer supply constraints are expected to persist through 2027.
• Vashist noted that in the short term, the company has "struggled more with the supply chain from the acquisition of TPD because we have had to rely on TSAs from Renesas."

SUMMARY

SiTime Corporation (NASDAQ:SITM) reported results for the first full quarter following the acquisition of the Timing Product Division (TPD), achieving an annualized revenue run rate exceeding $1 billion. Management stated that the integration has expanded the company's serviceable addressable market and structurally shifted the business model toward higher-margin products. The company reported significant growth in its total sales funnel and deep engagement with top-tier semiconductor firms to embed precision timing solutions into future AI and data center architectures.

• Management announced a 3-for-1 stock split of common stock, with shareholders of record on Dec. 3, 2026, receiving two additional shares for every share held.
• Vashist noted that new optical module generations are raising technical requirements, stating, "these generations overlap shipping at the same time and new module types create additional timing opportunities."
• The company expects to reach a new serviceable addressable market of $2.5 billion by 2030 through applications in chiplets, synchronization, and trusted time.
• Management reported that market share in 1.6-terabit optical modules is expected to grow compared to the 800G generation, which already saw a fourfold increase in market share.
• Vashist indicated that the semiconductor funnel of $4 billion is expected to begin materializing into revenue starting in 2028 and 2029.
• Howe reported that the gross margin improvement to 70.7% reflects the specific product mix being sold rather than price increases.

INDUSTRY GLOSSARY

• CED: Communications, Enterprise, and Data Center, a primary business segment for SiTime.
• TPD: Timing Product Division, the segment acquired from Renesas.
• XPO: Extra Dense Pluggable Optics, a module type that increases timing content in data centers.
• NPO: Near Package Optics, an architecture that drives up to twofold more oscillator content.
• CPO: Co-Packaged Optics, which can drive up to threefold more timing content using high-value clocks.
• SAM: Serviceable Addressable Market, the specific portion of the market a company can target.
• DSP: Digital Signal Processor, a specialized microprocessor used in optical modules.
• TCXO: Temperature Compensated Crystal Oscillator, a high-precision timing component.
• TSA: Transition Service Agreement, a contract used during acquisitions where the seller provides specific services to the buyer.

Full Conference Call Transcript

Operator: Good afternoon, and welcome to SiTime's Third Quarter 26 Financial Results Conference Call. At this time, all participants are in a listen only mode. At the conclusion of the conference call, instructions will be given for the question and answer session. To ask a question during the session, you will need to press 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 1-1 again. As a reminder, this conference call is being recorded today, November 4, 2026. I would now like to turn the call over to Brett Perry of Shelton Group Investor Relations. Brett, please go ahead.

Brett Perry: Thank you, Kelly, and good afternoon to those on the call. Welcome to SiTime's Third Quarter 26 Financial Results Conference Call. Joining us on today's call are SiTime's Chief Executive Officer, Rajesh Vashist, and chief financial officer, Beth Howe. Before we begin, I would like to remind everyone that during today's call, management will make forward looking statements regarding our business. Financial performance, market opportunities, growth strategy and future operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed today.

For a discussion of these risks and uncertainties, please refer to today's earnings press release and the company's filings with the SEC including our most recent Form 10-K and subsequent Form 10 Q filings. SiTime undertakes no obligation to update any forward looking statements except as required by law. During this call, we will also discuss certain non GAAP financial measures. These measures should be considered as a supplement to and not a substitute for measures of financial performance prepared in accordance with US GAAP. Reconciliations between GAAP and non GAAP financial measures included in today's earnings press release. Which is available on the Investor Relations section of SiTime's website www.cytimes.com.

Lastly, unless otherwise noted, all financial comparisons discussed on today's call are on a year over year basis. With that, it is now my pleasure to turn the call over to SiTime's CEO, Rajesh, please go ahead.

Rajesh Vashist: Thank you, Brett. Good afternoon, everyone. Thank you for joining us today. I am delighted to say that on July 1, we completed the acquisition of Renesas' timing product division or PPD. Q3 was a-- full first full quarter of consolidated results. I will break out PPD results today to give greater visibility into the performance of both businesses. SiTime had an outstanding third quarter. Combined revenue was $298.7 million up 257% year over year Gross margin was 70.7%. Up 11.9 percentage points and we expect it to remain in this range. Operating margin was 43% up 25 percentage points and EPS was $4.01 up 360%.

When we announced the acquisition, we said it would accelerate our path to $1 billion in annual revenue, and our Q3 results put us above that level on an annualized run rate basis. Our core SiTime business is strong. And continues to deliver remarkable growth. Q3 revenue was $212.4 million up 154% year over year. Our core CED business or communications enterprise and data center again, led our growth with revenues up 202% year over year. Our other deals also grew more than 75%. All grew at least 55 percent and 2 regions grew at triple digit rates. Demand is strong, Book to bill increased from Q2 Average order size grew. And total distributor inventory remained below our target.

Our visibility into 2027 and 2028 continues to improve with significant growth in backlog, average design in value, and the size of our funnel. Our total funnel now stands at $10 billion and has quadrupled since 2025. PPD also delivered exceptional growth exceeding expectations. Revenue was $86.3 million up 67% from Q3 25 when the business was part of Renesas. The integration has gone exceptionally well across the teams, customers, and road map. The TPD team is happy to be part of a company that shares their passion and focus on timing. We see positive responses and engagement and retention across TPD locations.

With the addition of TPD, we can provide more complete timing solutions, increasing our content in customer systems, and making SiTime a more strategic partner. At our largest account, our 2027 revenue forecast has increased by 2 to 5x. Moreover, our greater focus is already creating new opportunities and the pull through that we envision is happening in both directions. In C-- In CD, center architectures are creating new opportunities for SiTime. Tips is moving closer to compute, stitching together tens of thousands of GPUs, with the bandwidth and latency needed to operate as 1 system. For SiTime, this creates 2 growth vectors. More complex optical modules and optics coming directly into the compute fabric.

First, the new optical module generations are ramping rapidly. And each 1 raises the bar with higher frequencies, lower jitter, and greater resilience. All areas where SiTime excels. Importantly, these generations overlap shipping at the same time. And new module types create additional timing opportunities with XPO or extra dense pluggable optics adding clocks along oscillators doubling our content. Between data centers, coherent optics provides the bandwidth connect large AI workloads. These modules require extremely low trigger timing the gigahertz range, where our ASP can increase by up to 5 times. Second, when optics comes closer to the compute fabric, there is increasing bandwidth with lower power and latency.

NPO or near package optics drives up to 2x more oscillators content. And CPO or co packaged optics drives up to 3x more timing content with high value clocks. SiTime today has design wins with leading customers in XPO, Coherent Optics, NPO, and CPO. The trend is clear. More bandwidth requires more precision timing. In our other businesses, mobile IoT consumer grew 133%. Year-over-year, driven by our largest consumer customer expanding its modem product across more platforms. At the same time, AI is moving from the cloud into personal devices. That requires more sensing, connectivity, localization, and always on processing.

Together, these trends increase the need for precise low power timing, and we are seeing new designs in AI smart glasses and pendants that will ramp in 2027 using both Titan resonators and our oscillators. In our aerospace defense automotive, and industrial BU, our opportunities are expanding as systems become more autonomous connected, and mission critical. In aerospace and defense, our funnel is now $900 million, driven by radar, counter drone systems, and resilient alternatives to GPS. Automotive is $1 billion, with increasing timing content in zonal architectures and autonomous commercial vehicles. And finally, industrial has $1.4 billion led by physical AI applications such as robotics, and smart grid.

As these systems continue to become more intelligent and autonomous, real time decision making and synchronization become critical significantly increasing SiTime's timing content per system. A few quarters ago, we talked about the significant opportunities that come with deepening our relationships with leading semiconductor companies. We have now built a dedicated global sales team to engage customers when critical architecture and timing decisions are being made years ahead of production. This gives us early insight into future requirements and helps us develop differentiated solutions across AI training, inference, mobile, automotive, and other markets. As a consequence, our semiconductor funnel has grown 8x to more than $4 billion. Creating a substantial future revenue opportunity.

Our rapid organic growth and the TPD acquisition have structurally changed SiTime. Here are 3 changes that define the new SiTime. First, our financial model is stronger with higher gross margins. Sustainable operating margins of 40%+ and broad based growth business. Our seasonality is less pronounced as CED, becomes a larger portion of our overall business. Second, our relationships with customers are deeper, and more strategic. Importantly, this early engagement allows us to influence decisions around new concepts like chiplets, synchronization, and trusted time where better precision timing can improve performance and availability. We expect that these applications will create a new SAM of $2.5 billion by 2030.

And third, we now have the scale to innovate fas-- to innovate faster. With the industry's largest team, dedicated solely to timing, we can develop more products in parallel and extend the precision timing leadership. For all the progress we have made, we believe we are still in the early stages of what is possible. Our ambition remains clear, We want SiTime to be the trusted timing adviser to our customers. And the de facto choice precision timing in the world's most important electronic systems. I will now turn the call over to Beth, our CFO, to review the financial details. Beth?

Elizabeth A. Howe: Thanks, Rajesh. Today, I will walk through our third quarter 26 results and provide our outlook for the fourth quarter. As a reminder, my remarks focus on non GAAP financial results which are reconciled to GAAP in our press release. This quarter marks an inflection point in SiTime's evolution. As our business continues to scale, we now have a broader revenue base a richer mix of higher value products, and greater operating leverage. And the addition of TPD, we are further solidifying our leadership in precision timing. This progress is reflected in our third quarter revenue growth gross margin expansion and meaningful improvement in net income.

At the same time, we are continuing to invest in R&D and go to market to support the growth opportunities ahead. With that context, total revenue for the quarter was $298.7 million up 257% year over year and up 90% sequentially. The newly acquired TPD business delivered revenue of $86.3 million an increase of 67% compared with a year ago when the business was part of Renesas. Excluding TPD, revenue was $212.4 million up 154% year over year of which communications enterprise and data center delivered revenue of $127.3 million up 202% year over year and up 26% sequentially. Automotive, industrial, and aerospace defense generated revenue of $35.5 million up 76% year over year and up 43% sequentially.

Mobile IoT and consumer revenue $49.5 million up 133% year over year and up 58% sequentially, reflecting strong sequential growth in our large consumer customer that contributed $42.7 million in the quarter. Third quarter gross margin was 70.7% up 11.9 percentage points year over year and 3.6 percentage points sequentially. The primary driver was favorable product mix, with a greater contribution from higher value, higher margin products in our core SiTime portfolio as well as the addition of TPD. Importantly, this improvement reflects the products we are selling rather than price increases. Better manufacturing absorption from higher revenue also contributed. Operating expenses were $81.6 million, consisting of $48.6 million in R&D $33 million in SG&A.

Operating expenses increased $29.5 million sequentially in line with the outlook I provided in August. We continue to invest the engineering capacity, product development and go to market needed to support our growth while maintaining discipline on our overall cost structure. Operating income increased to $129.5 million or 43% of revenue compared with 34% of revenue in Q2 and 18% a year ago. Other income was $800 thousand. As a result, non GAAP net income increased over 5x to $130.3 million and non GAAP earnings per share were $4.01. These results reflect strong revenue growth favorable product mix and meaningful operating leverage, even as we continued to fund our product road map and invest for growth.

Turning to the balance sheet and cash flow. DSO was 61 days in Q3, up 10 days from Q2, primarily reflecting the timing of collections related to TPD, with those collections received in early Q4. Inventory increased to $112 million to support expected Q4 demand. Together, these working capital movements contributed to the $6.6 million use of operating cash in Q3. We expect working capital and cash flow to improve in Q4 as collection timing normalizes and integration progresses. Capital expenditures for the quarter were $11.2 million. We ended the quarter with $324 million in cash and short term investments, providing significant liquidity and flexibility to continue investing in the business.

Now looking ahead to Q4, the TPD integration is progressing extremely well and going forward we will provide our outlook and report our results on a combined basis. For Q4, we expect revenue of $331 million to $341 million with both the core SiTime and TPD growing sequentially from Q3 to Q4. We expect gross margin to remain around 70%, plus or minus 1 point, reflecting the expected mix of the business. Operating expenses are expected to remain roughly flat with Q3, We expect interest income of $2 million to $2.5 million and a diluted share count of approximately 32.8 million shares.

At the midpoint of the range, we would expect Q4 non GAAP EPS to be approximately $4.76 per share. And finally, today, we announced a 3-for-1 stock split of SiTime common stock to make our stock more accessible to a broader base of investors. The shareholders of record at the close of business on December 3, 2026, will receive 2 additional shares for every outstanding share held on the record date. And trading will begin on a split adjusted basis on Monday, December 7, 2026. With that, I will hand the call back to the operator to open the line for questions.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 1-1 on your phone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Please limit yourself to 1 question and 1 follow-up question for this session. You are welcome to reenter the queue if you have additional questions. Please stand by while we compile the Q&A roster. Our first question comes from the line of Tore Svanberg of Stifel. Your line is now open.

Tore Svanberg: Yes. Thank you, and congratulations on the very strong results. Rajesh, you gave us some great detail there on the exposure to AI data center within the various networks especially on optical. I am just curious from where you sit. You know, where do you expect the content to increase the most for your products, whether it is clocks or oscillators? I mean, sounds like there is a step function in NPO. But my understanding, there is a further step function then as we start to see CPO get deployed?

Rajesh Vashist: Yeah. I think it is-- I think to answer your question, Tore, it is across the oscillators as well as the clocks. So 1 of the easiest ways to say it is my example of the low jitter gigahertz product they typically are going to be at a higher price, maybe 3, maybe 4x. So a gigahertz oscillator may cost 6 to $8 whereas a megahertz oscillator might be around 1 to $2. So right there, there is a up level in pricing. The other thing that happens is that the. In NPO, for example, the number of DSPs are much greater. And wherever there are more DSPs, there are more oscillators.

And there certainly is more clock being used in the end fuse as well, whereas, you know, the electrical part of the switch is. The optics are closer. And we have some design wins around that as well. So overall, this is a question that is been asked a few times. About what is the impact when there is less copper whenever that happens and more optics. And we have always maintained that SiTime benefits to the upside and. In this trend. And so we are confirming that with some more details here.

Tore Svanberg: Very good. And as my follow-up, I am very intrigued with the work that you have been doing with semiconductor companies. And I think you mentioned the funnel growing 8x to about $4 billion. Could you maybe unpack a little bit how that works? I mean do you get paid by the centers of the companies for using your chips? Is this perhaps more of like a reference design? And, you know, when do we start to see that becoming or that $4 billion funnel materializing into more revenues. Thank you.

Rajesh Vashist: Yeah. So as I have mentioned before, I have talked in previous quarters and said that is 1 area where we wanted to invest more money. And the point that I was making was that we now have a fully funded team of several people that are calling on anywhere from the top 10 to top-20 semiconductor companies going even beyond that. So the answer is all of the above. To how do we make revenue. Of all, we make revenue directly with some of the customers. In some of these cases, directly twinned with the product and sold to the semiconductor company itself. And then they sell it.

The second part is in the reference design, of course, we get to play in that. And third, there is this co packaging piece going on, which is going on at a relatively little pace or low pace, which we expect to ramp up in 2028 and 2029 in particular. So given the time deadlines here, none of this or relatively smaller piece of this $4 billion funnel happens in 2027, Most of it starts to ramp in 2028 and 2029. And we just wanted to say, that there is another aspect, and that is when we engage with semiconductor companies, the conversation is extremely detailed and collaborative in changing architectures to recognize unique products from SiTime.

And this gets us embedded further, but it also makes us more consequential to our customers. So I think it is just an amazing win for us and I am really glad that we have the team up and running. Thank you for that, and congratulations again. Thank you.

Operator: 1 moment for our next question. Our next question comes from the line of Quinn Bolton of Needham and Company. Your line is now open.

Quinn Bolton: Hi, guys. Let me offer my congratulations on the strong outlook. I guess we just wanted to start the TPD business. I know that segment has been fairly wafer constrained. I am wondering if you could give us an update on how you see wafer availability for that business. Do you still expect constraints to last into perhaps as far as middle of next year? Or have you been successful with Renaissance in increasing wafer support for the TPD business?

Rajesh Vashist: Yeah. So I think in general, constraints will continue through the coming year through 2027. it is the severity of the constraints that we have been very concerned about in this handoff not wanting to constrain our customers, frankly, our customers, because Renesas continues to sell to them. And wanting to make sure that there are no severe consequences, line down and such. So with that, we have been quite successful both with our team as well as the support from Renesas.

But in general, as I said once before, we expect that we will get closer to the supply chain ourselves by Q1, and we start to resolve the more severe issues, exiting this quarter, and getting into Q1, Q2, I think we should be in significantly better shape. However, I have said that there are constraints in the supply chain particularly around the wafers because of the increased demand. Frankly, neither we nor PPD, had expected this huge surge in demand, and we are seeing significant growth. On to the good, but really something for us to manage, which I am pretty confident we will by early part of next year. 2027. Excellent.

Quinn Bolton: And then a follow-up maybe for Beth. Just wondering, it sounds like the book to bill continues to strengthen. Wondering if you could give us a sense how far out do you have visibility or backlog? And what are lead times doing on the products? Are they increasing? Are they stable? Just any of comments on lead times and visibility?

Elizabeth A. Howe: Yes. So we have exceptional visibility heading into 2020. I think we have got a strong design win funnel and we have got a strong backlog going into the year. So we feel very well positioned as we kind of finish up 2026 and going into 2027. Think about lead times. We are managing the lead times. As Rajesh was just talking about, in the supply constrained environment, it is something that the ops team works really hard with our suppliers on, in order to ensure that we can get products, and we are managing through it, I think, is the best way to frame it. Okay. Thank you. Thank you.

Operator: 1 moment for our next question. Our next question comes from the line of Suji Desilva of Roth Capital. Your line is now open.

Suji Desilva: Hi, Rajesh. Hi, Beth. Congratulations on the results here. I think I heard you say the Renaissance product business You gave a year over year number even though I know it is included for the first time this quarter. Did you say 67% year over year? And if you did, what end markets are the key drivers there, and how is that exposure different from SiTime core end market exposure? Understand the sustainability of Renesas is. Thanks, Suji.

Elizabeth A. Howe: So you are correct. The TPD business grew 67% year over year similar to the comparable to when they were part of Renaissance. The mix of that business is overwhelmingly, probably 80%-plus, in what we would call our CE&D business and 15% to 20% is in industrial and automotive. For them. So that is that is the kind of mix of the businesses. And like our business, over the last year plus, it has moved, a bit more. They previously were more like 75-25, so it is moved a bit more in toward CED, not unexpectedly given the growth in the market. Okay. that is helpful color there.

Suji Desilva: Then, I know when you guys did the acquisition, you talked about Renesas' customer base as being exciting part of the opportunity here. And cross sell synergies as they had established version 100 customers. Any near-term kind of early updates there, Rajesh, on how those discussions are going, how the cross sell opportunity looks to you? Is it gonna take time? Or is that moving along in at a nice pace?

Rajesh Vashist: Yeah. No. that is what I sort of hinted at in my prepared remarks, Suji, that the focus has created new opportunities, and the pull through or the drag along, if you will, is happening in both directions. I think, it is only been a quarter I think we have already seen the benefit of selling into the TPD customers that some of them, they were very strong at. And I think the reverse where we have taken them in with the clocking products into customers that we were stronger at I think, is already happening. I think clocking is clearly more architectural, more quote, unquote, strategic to customers. That probably helps us.

We always high time more but it is also true that we are able to take them significantly into some of the new architectures which will pay off in the future. So it is really working exactly the way I thought, including with the integration. Okay. Appreciate the color, Rajesh. Thanks. Thank you.

Operator: Next question comes from the line of Gary Mobley I am sorry. 1 second. Hey. Hi. Go ahead. Gary, your line is now open. Sorry. No worries.

Gary Mobley: Hi, Rajesh. Hi, Beth. Gary Mobley from Stonex. On behalf of Gary Mobley. Congrats on the quarter, guys, and thanks for taking my question. So just wanted to ask specifically about the design win pipeline. And we are starting to hear more customers shift towards precision timing and away from quartz. So I would love to get a sense at, A, how has your opportunity pipeline changed over you know, call it, the last 12 to 24 months? And b, how are you sort of handling that on the resource side both your own sales team and then also your distribution network? Love to get some color on that.

Rajesh Vashist: Yeah. So the with. As I said, we have seen quite a surge in demand, I mean, especially when you widen the aperture from 12 to 24 months. there is no doubt that the increase in demand has been amazing. We can now see not just in the 20-- right, sitting in 2026, not only do we see in 2027, but we can see in 2028. As well. And there are new architectures that I talked about, whether it is with semiconductor companies or hyperscalers, that we can see. That is also true, by the way, in the non CED business. I think we have opportunities in military, aerospace, defense, and industrial We talked about robotics.

We talked about the smart grid. I think as you know, in automotive, it is a little bit of a longer SiTime. We are starting to see some of those longer cycles play out now in our favor. So I think we have significant breadth coming in that. And so our funnel is larger Our number of salespeople and FAEs, it is significantly larger. So we probably have the largest Salesforce now calling on it worldwide. With special emphasis in China and in EMEA. So that is helping us.

Gary Mobley: As far as distribution goes, as every. As you know, we are fulfilling to distribution. We are a design win company. That chooses to basically sell through do not have a distribution business that is very large. that is selling into stocking, and then selling out of stocking programs. it is very much made for the customer, programmed to the customer, designed for the customer, thing. So our distributor inventory is at very healthy levels. And we are very happy with that. Got it. Thank you. And then just my follow-up. You know, I know you guys mentioned core CED grew over 200% year over year, which is, you know, great to see.

So, you know, just wanted to double click on that How is the mix shifted, call it, again, over the past you know, few years between CPUs, GPUs, custom XPUs. You know, you guys also mentioned optical modules. You know, just trying to get a better understanding of whether this is moved away from being GPU centric and become much more diversified. Thank you.

Rajesh Vashist: Yeah. I do not think we see a big change in that. We still see the connectivity part, the networking part as a very strong piece. Call it around 50% of our business is around modules, you know, AEC, connectivity. At the same time, on the rack side of the business, our business continues to grow with the switches, with the accelerator cards, with the level of inference where we get 2x to 3x more in the CPU and the servers, and continued strong business in the GPU. it is kind of like a 50-50 thing and both of both of those markets continue to grow solidly. Sounds great. Thanks again, guys, and congrats on the quarter. Thank you.

Operator: 1 moment for our next question. Our next question comes from the line of Suji Desilva of Rosenblatt Securities. Your line is now open.

Suji Desilva: Hi. Thank you for taking my question, and congrats on the great results. So you said on your 2027 revenue forecast that your largest customer accounts have increased 2 to 5x times. So what does that compare against, and how does that increase? Like, does that refer to PPD? Does it for SiTime? Or is it the combined portfolio? And can you give us a sense of the incremental dollars And how much of this is already backed by firm customer orders? Thank you.

Rajesh Vashist: Yeah. Thank you, Suji. Welcome to Sightime. Thank you. Basically, what we are seeing yeah. We. We are basically seeing a increase in design wins So most of that refers back to the design inside of the. Of the business. And what we wanted to do was give our investors a flavor of how strong our pipeline for design wins is, how strong our funnel is. And so all of that refers to that, and it is all over in all areas, really, across the business. And maybe Beth wanted to say. To add something to that.

Elizabeth A. Howe: Yeah. And in addition, it also points to the complementary nature of our TPD plus CyTime. As we talk about when we did the deal, the. There were a number of customers where they had a large installation and maybe were less of a customer for SiTime. And some of SiTime larger customers where TPD had less of a presence. And so of the things that we are we are talking about here is this combination of now having TPD and tine You are seeing that complementary nature in that increase in our forecast.

As we bring these 2 companies together and some of those customers where maybe SiTime had not had much of a presence previously, we now have a much larger presence. Got it.

Suji Desilva: And so as my follow-up, you know, I guess at OCP, we heard architects discussing a move from basically microsecond of synchronization error towards tens of nanoseconds. So in the design wins for 2027, where does that first translate into a SiTime socket? Is it on the mix side? Is it on a compute tray? Or is that still, like, on the switch And how much of that stuff is shipping in current design wins the next generation? Thank you.

Rajesh Vashist: Yeah. Very little of that will be shipping in the 20 sixth or even in the 20 seventh time frame schedule. I think that is all directional And I was at some part of it, and it is a very kind of a thoughtful conversation. On where the system is headed. But I think directionally, you are correct. When it gets to that level of precision, I think there is there is almost nobody else who can supply what we are talking about with the kinds of latencies that we are talking about. Clearly, optics greater move into optics is gonna drive more of that.

And I think there is some innovative architectures that are happening now but I would not expect much beyond mix and TCXOs from SiTime connecting. Right? So the NIC cards connect with the high precision TCXOs and there is just more use case of them on the accelerator parts. Okay. Thank you. Thank you.

Operator: 1 moment for our next question. Our next question comes from the line of Joe Moore of Morgan Stanley. Your line is now open. Nicole, if you are on the line, it is now open. I am not hearing a response at the moment. Can probably move on. Let's move on, and then we can come back to Nicole. Absolutely. 1 moment. Our next question comes from the line of Jim Schneider of Goldman Sachs. Your line is now open.

James Schneider: Good afternoon. Thanks for taking my question. I know you do not want to guide more than 1 quarter in advance, but I was wondering if you could help us understand at least the specific design win in the Smart segment of 1 of your larger customers. What sort of seasonality will that have, if any, heading into the March quarter? Or would we think that some of the model ramps that are happening at the beginning of the year would more than offset that typical seasonality? Just wanted to make sure we are level set on that.

Elizabeth A. Howe: Hey, James. This is Beth. Thanks for the question. So as we ramp that design win, I do think it will modulate the normal typical Q4 to Q1 seasonality a bit. for at least for this 2026 to 2027 year.

James Schneider: And then as we, I mean, I guess as we think about the CED business, over the course of 2027 and start to model that how would you, encourage us to think about the linearity of that of that revenue? Because I know there is many moving parts between your own business ramping with the design wins and also the Renesas business presumably a little bit less supply constrained? And maybe get us you can address anything about supply constraint end of it, that would be great. Thank you.

Elizabeth A. Howe: So as we think about seasonality in, I think given all of the dynamics of that market the way AI is evolving over the last you know, many quarters, I think it is it is hard to necessarily talk about seasonality per se. But you know, probably 2027 looks a bit like 2026. But I think it is it is really hard to predict the seasonality because it can come in the form of. With these big customers, a little bit of revenue shifting from 1 quarter to another depending on when exactly we ship. Can move kind of those the growth percentages there.

But, you know, 2027 probably looks comparable to 2026 from that perspective as we continue to see sequential growth in CED. So that is kind of as we see it today. Thank you.

Rajesh Vashist: And to add to that, in terms of tightness of supply, I think that in the short term, in Q3 and Q4, we have struggled more with the supply chain from the acquisition of TPD because we have had to rely on TSAs from Renesas. And so, as we have gotten closer to the business, trying to understand, the specific needs has taken a little bit of time. Given the supply chain that we have had to deal with. As to the old core business, if you will, of SiTime, the old business of SiTime, sure, we have some supply constraints, but nothing that we cannot manage.

In general, we think we will have managed all of this by the start of Q1 And certainly, the more stock parts of the shortages for the PPD business will probably be handled through this quarter we will be in positive space in Q1. Operator, is there a next question?

Operator: Yes. 1 moment, please. Our next question comes from the line of Chris Caso of Wolfe Research. Your line is now open.

Chris Caso: Question is about the diversification of the CED business. And I know that your share and your content are not equal across all the platforms, but I know you are making some efforts you know, in order to do so. Can you comment on that? And, you know, I mean, considering that you know, some of the custom XPU solutions we are expecting to probably grow faster than, some of the merchant solutions over the next year. You know, what does that mean for the CED business as you go into 2027?

Rajesh Vashist: Yeah. I think thanks, Chris. I think we expect that to have a pretty strong impact on growth. Because we are seeing multiple design wins in that space. So we expect that to do very well in CED in general. What we wanted to give was a sense in the. In. When we talked about the funnel was a sense of how big it is and how pervasive across all applications it is whether it is in the GPU, the CPU part, whether it is a mix and switches, but also in the connectivity pieces.

And the 2-- 1-plus-1-equals-3 part, but getting the oscillators and the clocking solutions together of old SiTime and TPD for the new SiTime, I think it makes our portfolio complete. And allows us to win designs against people who have been in the clocking business and give the significant conversation around architectures that we did not have. So it is really coming through for us the way we expected it to. Got it.

Chris Caso: As a-- Beth, I know you. You have spoken about the necessity now that you brought the TPD business on to kind of fill in some of the things that did not come along with TPD, such as sales. What should we expect for OpEx as we go through the next year as you make some of those hires and you know, integrate that TPD business and fill in some of those blanks.

Elizabeth A. Howe: Mhmm. You are absolutely right, Chris. When we acquired TPD, we primarily acquired engineers a few FAEs and a few folks in operations, and we are building out the infrastructure to support that business, whether it be finance, HR, legal, even building up a sales team as well to support that. So that. Growing that combined with supporting the own. The growth of our own business I would expect that we continue to see kind of sequential increases in OpEx from Q4 to Q1, Q1 to Q2. In general, that is what I do expect is those sequential increases.

Now from time to time, as we are seeing in Q3 to Q4, the timing of program expenses or some of these items can be a little uneven quarter to quarter. But overall, I would expect sequential growth as we go through 2027. Thank you. Thank you.

Operator: 1 moment for our next question. Our next question comes from the line of Joe Moore of Morgan Stanley. Your line is now open.

Joe Moore: Hi. We figured this out. it is Joe Moore from Morgan Stanley. Somehow I got registered under the wrong name. But thank you guys. Wonder if you could talk about the market share on 1.6-terabit. You have talked about being much higher market share than you were at 400 gigabit. You know, where are you now from a mix standpoint, 400, 800, 1.6? And you know, should we think about that as a growth driver for you as 1.6 becomes a bigger part of the mix?

Rajesh Vashist: Yeah, absolutely. We should, as it transitions from 800G to 1.6T. And beyond that for that matter to 3.2, We did not have a very large portion of our business in the 400G. So while we are shipping in the 400, and we expect that to ship for a couple more years, have a relatively small market share. In the 800G, it grew over 4x. And I would say that in the 1.6, it grows again. So there is a unit uplift. market share up, but there is also an ASP uplift going from 800G to 1.6-terabit. And we have indicated that as being a significant driver of growth in revenue because of performance and other attributes that we have.

Brett. Thank you very much. Thank you.

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

Rajesh Vashist: Yeah. Thank you for that. We really see ourselves as the company that after the acquisition has really transformed itself into this place where there is fundamental changes between our scale I think the scale of engineers, the scale of sales, the scale of the business itself, is very high, and it helps us to grow the financial transition over to high gross margin high net operating margin company, I think, is already happening. And then the closer move to customers across the market I think, has really changed SiTime. So I think our customers recognize it. Our partners recognize it.

And I think we wanted to make sure that our investors get to see that we see ourselves as having fundamentally transformed from this 1 billion tipping point revenue onwards to greater growth and greater impact in the market. With all that, we thank all our investors, and we invite them to join the ride for future and even better times. Thank you very much.

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

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