sitm-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________________________________

FORM 10-Q

________________________________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39135

________________________________________________________

SiTime Corporation

(Exact name of registrant as specified in its charter)

________________________________________________________


Delaware			02-0713868
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
5451 Patrick Henry Drive Santa Clara, CA			95054
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (408) 328-4400

________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

SITM

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 1, 2023, the registrant had 22,456,407 shares of common stock, $0.0001 par value per share, outstanding.

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		Page
	Risk Factor Summary	1
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 6.	Exhibits	50
Signatures		51

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RISK FACTORS SUMMARY

Our business is subject to numerous risks, as more fully described in “Part II, Item 1A: Risk Factors” below. You should read these risks before you invest in our common stock. We may be unable, for many reasons, including those that are beyond our control, to implement or execute our business strategy. In particular, risks associated with our business include, among others:

•Global macroeconomic conditions have harmed and may continue to harm our business;

•We are subject to the cyclical nature of the semiconductor industry;

•We have historically depended on a limited number of customers for a significant portion of our revenue; if we are unable to expand or further diversify our customer base, our business, financial condition, and results of operations could suffer, and the loss of, or a significant reduction in orders from our customers, including a large customer or end customer, could significantly reduce our revenue and adversely impact our operating results;

•Because we do not typically have long-term purchase commitments with our customers, orders may be cancelled, reduced, or rescheduled with little or no notice, which in turn exposes us to inventory risk, and may cause our business and results of operations to suffer;

•Our revenue and operating results may fluctuate from period to period due to, among other factors, macroeconomic conditions, cyclical fluctuations in the semiconductor market, customer demand, product life cycles, fluctuations in inventories held by our distributors or end customers, the gain or loss of significant customers, the availability of capacity in our supply chain, research and development costs, the impact of the COVID-19 pandemic on our business as well as our suppliers and customers, and product warranty claims. This in turn could cause our stock price to decline;

•The third parties we rely upon for our raw materials, engineered materials, wafer fabrication and supply, assembly, packaging and testing may be unable to secure raw materials, reduce their resources available to us and our immediate suppliers, not meet satisfactory yields or quality, or increase pricing, which could harm our ability to ship our solutions to our customers on time and in the quantity required which could cause an unanticipated decline in our sales and loss of customers;

•A significant portion of our operations is located outside of the United States, which subjects us to additional risks, including increased complexity and costs of managing international operations and geopolitical instability;

•Our success and future revenue depend on our ability to achieve design wins and to convince our current and prospective customers to design our products into their product offerings, as well as our customers’ ability to develop products that achieve market acceptance;

•Our target customer and product markets may not grow or develop as we currently expect, and if we fail to penetrate new markets and scale successfully within those markets, our revenue and financial condition would be harmed;

•If we are not able to successfully introduce and ship in volume new products in a timely manner, our business and revenue will suffer;

•Pandemics, epidemics, or other outbreaks of disease have had and may in the future have an adverse impact upon our business, results of operations and financial condition, as well as the businesses of our suppliers and customers;

•Our gross margins may fluctuate due to a variety of factors, which could negatively impact our results of operations and our financial condition;

•Our revenue in recent periods may not be indicative of future performance and our revenue may fluctuate over time;

•Our customers require our products and our third-party contractors to undergo a lengthy and expensive qualification process, which does not assure product sales. If we are unsuccessful or delayed in qualifying any of our products with a customer, our business and operating results would suffer;

•We provide a lifetime warranty on our products and may be subject to warranty or product liability claims, which could harm our reputation, result in unexpected expenses, and cause us to lose market share;

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•Defects in our products could harm our relationships with our customers and damage our reputation;

•If we fail to compete effectively, we may lose or fail to gain market share, which could negatively impact our operating results and our business;

•We may make acquisitions in the future that could disrupt our business, cause dilution to our stockholders, reduce our financial resources, and harm our business;

•We may not be able to accurately predict our future capital needs, and we may not be able to obtain additional financing to fund our operations;

•We may seek, or be required to seek debt financing in the immediate or near term;

•If significant tariffs or other trade restrictions are placed on our products or third-party suppliers, our revenue and results of operations may be materially harmed;

•Failure to comply with the laws associated with our activities outside of the United States could subject us to penalties and other adverse consequences;

•We are subject to government regulation, including import, export and economic sanctions laws and regulations that may expose us to liability and increase our costs;

•New or future changes to U.S. and non-U.S. tax laws, or tax regulatory authorities disagreeing with our positions and conclusions regarding certain tax positions, could materially adversely affect us;

•Breaches or other disruptions of our security systems may damage our reputation and adversely affect our business;

•We may fail to adequately protect our intellectual property and have received, and may in the future receive, claims of intellectual property infringement, misappropriation, or other claims, which in turn could result in significant expense, result in the loss of significant rights, and harm our relationship with our end customers and distributors;

•We may be impacted by risks associated with MegaChips’ ownership of a significant portion of our stock, for instance as long as MegaChips holds a significant amount of our stock, our other shareholders’ ability to influence matters requiring stockholder approval will be limited, and there could be potential conflicts of interest between us and affiliates of MegaChips, which could impact our business and operating results;

•Substantial future sales of our common stock could cause the market price of our common stock to decline; and

•Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SiTime Corporation

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)


	As of
	September 30, 2023		December 31, 2022
Assets:
Current assets:
Cash and cash equivalents	$	16,711	$	34,603
Short-term investments in held-to-maturity securities	551,398		529,494
Accounts receivable, net	25,182		41,229
Inventories	64,539		57,650
Prepaid expenses and other current assets	9,071		6,091
Total current assets	666,901		669,067
Property and equipment, net	55,916		58,772
Intangible assets, net	5,665		5,205
Right-of-use assets, net	8,854		10,848
Other assets	10,351		6,724
Total assets	$	747,687	$	750,616
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	12,320	$	14,881
Accrued expenses and other current liabilities	18,960		18,913
Total current liabilities	31,280		33,794
Lease liabilities	6,065		8,149
Other non-current liabilities	—		193
Total liabilities	37,345		42,136
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $0.0001 par value - 200,000 shares authorized; 22,456 and 21,702 shares issued and outstanding at September 30, 2023 and December 31, 2022	2		2
Additional paid-in capital	778,742		716,343
Accumulated deficit	(68,402)		(7,865)
Total stockholders’ equity	710,342		708,480
Total liabilities and stockholders’ equity	$	747,687	$	750,616

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SiTime Corporation

Condensed Consolidated Statements Of Operations And Comprehensive Income (Loss)

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	35,520	$	73,095	$	101,590	$	222,766
Cost of revenue	15,603		25,799		43,195		77,563
Gross profit	19,917		47,296		58,395		145,203
Operating expenses:
Research and development	23,647		23,878		74,671		66,490
Selling, general and administrative	21,447		19,886		63,456		56,839
Total operating expenses	45,094		43,764		138,127		123,329
Income (loss) from operations	(25,177)		3,532		(79,732)		21,874
Interest income	7,333		2,492		19,629		3,295
Other expense, net	(232)		(238)		(292)		(264)
Income (loss) before income taxes	(18,076)		5,786		(60,395)		24,905
Income tax expense	(49)		(3)		(142)		(123)
Net income (loss)	$	(18,125)	$	5,783	$	(60,537)	$	24,782
Net income (loss) attributable to common stockholders and comprehensive income (loss)	$	(18,125)	$	5,783	$	(60,537)	$	24,782
Net income (loss) per share attributable to common stockholders, basic	$	(0.81)	$	0.27	$	(2.74)	$	1.17
Net income (loss) per share attributable to common stockholders, diluted	$	(0.81)	$	0.26	$	(2.74)	$	1.09
Weighted-average shares used to compute basic net income (loss) per share	22,326		21,353		22,065		21,143
Weighted-average shares used to compute diluted net income (loss) per share	22,326		22,614		22,065		22,688

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SiTime Corporation

Condensed Consolidated Statements Of Stockholders' Equity

(In thousands)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balances at June 30, 2023	22,210	$	2	$	758,542	$	(50,277)	$	708,267
Stock-based compensation expense	—	—		19,316		—		19,316
Net loss	—	—		—		(18,125)		(18,125)
Issuance of common stock in connection with At-The-Market offering net of underwriting discounts and commissions and other offering costs	100	—		12,535		—		12,535
Issuance of shares upon vesting of restricted stock units, net of tax withholdings	146	—		(11,651)		—		(11,651)
Balances at September 30, 2023	22,456	$	2	$	778,742	$	(68,402)	$	710,342

Balances at June 30, 2022	21,286	$	2	$	692,402	$	(12,120)	$	680,284
Stock-based compensation expense	—	—		16,400		—		16,400
Net income	—	—		—		5,783		5,783
Issuance of common stock in connection with At-The-Market offering net of underwriting discounts and commissions and other offering costs	25	—		2,919		—		2,919
Issuance of shares upon vesting of restricted stock units, net of tax withholdings	125	—		(10,944)		—		(10,944)
Balances at September 30, 2022	21,436	$	2	$	700,777	$	(6,337)	$	694,442

Balances at December 31, 2022	21,702	$	2	$	716,343	$	(7,865)	$	708,480
Stock-based compensation expense	—	—		59,493		—		59,493
Net loss	—	—		—		(60,537)		(60,537)
Issuance of common stock in connection with At-The-Market offering net of underwriting discounts and commissions and other offering costs	300	—		33,898		—		33,898
Issuance of shares upon vesting of restricted stock units, net of tax withholdings	454	—		(30,992)		—		(30,992)
Balances at September 30, 2023	22,456	$	2	$	778,742	$	(68,402)	$	710,342

Balances at December 31, 2021	20,825	$	2	$	663,614	$	(31,119)	$	632,497
Stock-based compensation expense	—	—		42,051		—		42,051
Net income	—	—		—		24,782		24,782
Issuance of common stock in connection with At-The-Market offering net of underwriting discounts and commissions and other offering costs	125	—		22,998		—		22,998
Issuance of shares upon vesting of restricted stock units, net of tax withholdings	486	—		(27,886)		—		(27,886)
Balances at September 30, 2022	21,436	$	2	$	700,777	$	(6,337)	$	694,442

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SiTime Corporation

Condensed Consolidated Statements Of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income (loss)	$	(60,537)	$	24,782
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization expense	11,736		8,497
Stock-based compensation expense	59,225		41,795
Unrealized interest on held to maturity securities	(19,181)		(2,241)
Changes in assets and liabilities:
Accounts receivable, net	16,047		(6,520)
Inventories	(6,889)		(21,755)
Prepaid expenses and other assets	(6,608)		(949)
Accounts payable	(2,850)		(2,729)
Accrued expenses and other liabilities	135		(5,935)
Net cash provided by (used in) operating activities	(8,922)		34,945
Cash flows from investing activities
Purchase of held to maturity securities	(925,089)		(519,937)
Proceeds from maturity of held to maturity securities	922,365		—
Purchase of property and equipment	(6,106)		(25,004)
Cash paid for intangibles	(3,046)		(2,969)
Net cash used in investing activities	(11,876)		(547,910)
Cash flows from financing activities
Tax withholding paid on behalf of employees for net share settlement	(30,992)		(27,886)
Proceeds from public offering	34,818		23,685
Payments for offering costs	(920)		(687)
Net cash provided by (used in) financing activities	2,906		(4,888)
Net decrease in cash and cash equivalents	(17,892)		(517,853)
Cash and cash equivalents
Beginning of period	34,603		559,461
End of period	$	16,711	$	41,608
Supplemental disclosure of cash flow information
Income taxes paid	159		40
Supplemental disclosure of noncash investing and financing activities
Unpaid property and equipment	1,641		1,830
Right-of-use assets acquired under operating leases	—		4,599

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SiTime Corporation

Notes To Unaudited Condensed Consolidated Financial Statements

Note 1. The Company and Basis of Presentation

SiTime Corporation (the “Company”) was incorporated in the State of Delaware in December 2003. The Company is a leading provider of precision timing solutions to the global electronics industry, providing the timing functionality that is needed for electronics to operate reliably and correctly. The Company's products have been designed to address a wide range of applications across a broad array of end markets. The Company operates a fabless business model and leverages its global network of distributors to address the broad set of end markets that it serves.

The accompanying interim condensed consolidated financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X, and should be read in conjunction with the Company's audited consolidated financial statements and related notes thereto filed with the U.S. Securities and Exchange Commission (SEC) on Form 10-K for the fiscal year ended December 31, 2022. The interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of management, of a normal, recurring nature necessary to provide a fair statement of results for the interim periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023, for any future year, or for any other future interim period.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Coronavirus Disease (“the COVID-19 pandemic”)

The COVID-19 pandemic continued to impact the Company's workforce and the operations of its customers and suppliers during 2022. In response to the COVID-19 pandemic and related government measures, the Company implemented safety measures to protect its employees and contractors at its locations around the world. The COVID-19 pandemic has not had a significant impact on the Company in 2023.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the Company’s audited consolidated financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2022. There have been no changes to these accounting policies through September 30, 2023.

Recent Accounting Pronouncements

There are currently no new accounting pronouncements with a future effective date that are considered material, or could be material, to us.

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Note 2. Net Income (Loss) Per Share

The following table summarizes the computation of basic and diluted net income (loss) per share attributable to common stockholders of the Company:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

	(in thousands, except per share data)
Net income (loss) attributable to common stockholders	$	(18,125)	$	5,783	$	(60,537)	$	24,782
Weighted-average shares outstanding
Weighted average shares used to compute basic net income (loss) per share	22,326		21,353		22,065		21,143
Dilutive effect of employee equity incentive plans	—		1,261		—		1,545
Weighted average shares used to compute diluted net income (loss) per share	22,326		22,614		22,065		22,688
Net income (loss) attributable to common stockholders per share, basic	$	(0.81)	$	0.27	$	(2.74)