SiTime’s Q2 2026 Earnings Call: Gross Margin, Consumer Growth, and TPD Integration Timelines Don’t Match

Date of Call: Aug 5, 2026

Financials Results

• Revenue: $157.4 million, up 127% year-over-year and 39% sequentially
• EPS: $2.34 per diluted share, up 400% year-over-year
• Gross Margin: 67.1%, up 8.9 percentage points year-over-year and 2.6 points sequentially
• Operating Margin: 34%, up from 10% a year ago and 28% sequentially

Guidance:

• Revenue for Q3 expected to be $285 to $295 million.
• SciTime revenue (excluding TPD) expected to be $200 to $210 million, up 30% sequentially at the midpoint.
• TPD revenue expected to be approximately $85 million.
• Combined gross margin expected to be approximately 68% plus or minus a point.
• Operating expenses expected to be $80 to $85 million.
• Non-GAAP EPS expected to be $3.50 to $3.65 per share.
• Q3 represents a step change in growth reflecting strong backlog and customer confidence.

Business Commentary:

Revenue Growth and Margin Expansion:

• SciTime reported revenue of $157.4 million for Q2 2026, up 127% year-over-year. Gross margins increased to 67.1%, up 8.9 percentage points from the previous year, and operating margin rose to 34% from 10% a year ago.
• The substantial revenue growth and margin expansion were driven by broad strength across all business units and regions, particularly in the Communications Enterprise and Data Center (CED) segment, which grew 181% year-over-year.

CED Segment Growth:

• The Communications Enterprise and Data Center (CED) segment achieved revenue of $101.2 million, representing an 181% year-over-year increase and a 34% sequential increase.
• Growth was fueled by expanding demand for precision timing in AI infrastructure, including optical modules, switches, and accelerators, as well as the adoption of higher-performance modules like 1.6T terabit optical modules.

Impact of TPD Acquisition:

• The acquired Timing Products Division (TPD) contributed approximately $85 million in revenue in Q3, with expectations of exceeding the initial $300 million annualized run rate target within 12 months post-close.
• The acquisition added depth to SciTime's portfolio, with TPD's strong performance in the CED segment (70% of its revenue) aligning with SciTime's growth drivers in data center and AI applications.

Mobile IoT and Consumer Growth:

• Mobile IoT and consumer revenue reached $31.4 million, up 85% year-over-year and 89% sequentially.
• Growth was driven by a significant rollout with a large consumer customer, expected to continue with new product introductions, and increasing demand for personal AI devices and wearables.

Future Growth and Integration:

• SciTime's outlook for Q3 includes revenue of $285 to $295 million, with expectations for continued strong growth in CED, automotive, and consumer segments.
• The integration of TPD is expected to enhance SciTime's offerings and customer reach, supported by a transformational acquisition that aligns with the company's strategy to lead in precision timing solutions.

Sentiment Analysis:

Overall Tone: Positive

• Rajesh Vichas stated, 'Today, I'm happy to introduce you to an expanded SciTime... The second quarter was truly exceptional.' Beth Howe added, 'Q2 reflects the continued strength of our core business and the scalability of our financial model. We delivered significant revenue growth, expanded gross margins, and increased operating profitability.'

Q&A:

• Question from Quinn Bolton (Needham and Company): Could you repeat the OPEX guidance for Q3 on a combined basis?
  Response: Operating expenses for the combined company are expected to be $80 to $85 million.

• Question from Quinn Bolton (Needham and Company): What has changed to make the TPD acquisition even stronger from a revenue contribution perspective?
  Response: Management was surprised by the strong performance of the TPD business, with its 75% CED revenue benefiting from the same drivers as SciTime's core business, leading to an outlook that exceeds the initial $300 million annualized run rate target.

• Question from Quinn Bolton (Needham and Company): How will TPD revenue be reported going forward, and how does the 25% non-CED revenue split?
  Response: The TPD business will be integrated into SciTime's existing segments, with roughly 75% in CED and 25% split between Auto/Aero/Industrial; it does not have a consumer business.

• Question from Tori Vanberg (Stiefel): How should we think about growth by segment in Q3?
  Response: Expect triple-digit growth in core SciTime CED, strong growth in Automotive/Aerospace/Industrial, and a significant acceleration in consumer growth in Q3, driven by a major design win.

• Question from Tori Vanberg (Stiefel): When should we start to see material revenue from more integrated chiplet/module solutions?
  Response: The transition to integrated timing solutions is expected to add significant revenue (billions by 2030), with ASPs potentially increasing and usage density rising, though specific timing was not provided.

• Question from Timothy R. Curry (UBS): How will the core SciTime business and TPD grow relative to each other in the next few quarters?
  Response: Core CED is expected to be the fastest growing, driven by AI and telecom; consumer growth will accelerate in H2 2026/2027; TPD growth depends on resolving supply chain constraints with Renesas over the coming quarters.

• Question from Timothy R. Curry (UBS): Does the TPD acquisition impact the Bosch agreement renewal?
  Response: No impact; the Bosch agreement is for typical clocks, not resonators/MEMS, and renewal is expected with no issues.

• Question from Nicholas Welschleman (Needham and Company): What is the growth trajectory for the core CED business over the next year?
  Response: Expect continued strong growth with no signs of slowdown, supported by AI, with 2027 also expected to be a year of significant growth.

• Question from Nicholas Welschleman (Needham and Company): What are the gross margin drivers heading into Q3 and beyond?
  Response: Gross margins are expected to remain above 65%, driven by manufacturing absorption and product mix benefits, offsetting headwinds from higher consumer mix.

• Question from Jim Snyder (Goldman Sachs): What is driving growth in the data center design win pipeline, and how much is market share gain versus TAM growth?
  Response: Growth is driven by market share gains in optical modules (especially 1.6T) and increased synchronization content per rack, plus expansion of the data center market beyond hyperscalers.

• Question from Jim Snyder (Goldman Sachs): How do you expect end markets to track in terms of growth for Q3?
  Response: Expect triple-digit growth in CED, similar year-over-year growth in Auto/Aero/Industrial, and accelerated growth in consumer, driven by a major design win rollout.

• Question from Suji De Silva (Firm not specified): When might combined company products appear in the roadmap?
  Response: Integration is expected to occur in the coming quarters, starting with unique products like integrated clocks with oscillators, and organizational collaboration will deepen over time.

• Question from Suji De Silva (Firm not specified): What is driving the need for higher density deployments?
  Response: Increased synchronization requirements across more GPUs, switches, and accelerators in data center racks, plus higher-ASP products like Super TCXOs, are driving density, ASP, and overall usage growth.

Contradiction Point 1

Gross Margin Trajectory

Expectations for gross margin progression conflict between quarters.

Quinn Bolton (Needham and Company) - Quinn Bolton (Needham and Company)

2026Q2: Gross margins are expected to remain strong (~67–68%)... Margins should stay above 65% in coming quarters. - Beth Howe(CFO)

Can you provide early thoughts on the growth trajectory for the core CED business next year and the key drivers of gross margin performance in Q2 and into Q3? - Tim Arcuri (UBS)

2026Q1: In the back half, consumer products will be a larger portion of the mix, which may moderate gross margins. However, gross margins are still expected to remain above 60% and at the higher end of the target range. - Beth Howe(CFO)

Contradiction Point 2

Consumer Segment Growth Expectations

The expected timing for a significant acceleration in the Consumer/IoT segment differs.

Tori Vanberg (Stiefel) - Tori Vanberg (Stiefel)

2026Q2: For the core SciTime business excluding TPD, Q3 growth expectations are: ... Consumer/IoT accelerating significantly in the second half, driven by a major design win... - Beth Howe(CFO)

What was the growth in each segment for Q3, including the core SciTime business and TPD? - Gary Mobley (Loop Capital)

2026Q1: The mobile/consumer business is typically slower in the first quarter and is expected to be stronger in the second half. - Rajesh Vashist(CEO)

Contradiction Point 3

Timing for Integration of TPD Business

Contradiction on the current state and timeline for integrating the TPD acquisition.

Timothy R. Curry (UBS) - Timothy R. Curry (UBS)

2026Q2: For TPD... growth potential is high but integration is early; supply chain constraints mean reliance on transition services with Renesas for several quarters... - Beth Howe(CFO)

How will the growth rates of core SciTime versus TPD compare in the next few quarters? - Tore Svanberg (Stifel)

2025Q4: The acquisition includes 100% of Renesas' Timing Products Division (TPD). The potential integration of SiTime's Titan resonators into Renesas' microcontrollers (MCUs) is a separate Memorandum of Understanding (MOU) being explored... - Rajesh Vashist(CEO)

Contradiction Point 4

Contribution and Timeline of the Titan Resonator Platform

Revenue contribution timeline for the resonator business appears to have advanced.

What are your thoughts on the company's recent performance? - Quinn Bolton (Needham and Company)

2026Q2: For TPD, the previous $300 million annualized run rate expectation is now looking conservative, as the business has shown continued strength with ~75% of its revenue coming from CED. - Beth Howe(CFO)

Could you provide the OPEX guidance for Q3, update on what has changed in the TPD acquisition to strengthen its revenue contribution over the last six months, and clarify how TPD revenue will be reported going forward—within existing segments or as a separate breakout? - Tore Svanberg (Stifel)

20251106-2025 Q3: The *Titan* resonator platform will not contribute meaningful revenue until late 2026 or 2027. - Rajesh Vashist(CEO)

Contradiction Point 5

Growth Outlook for Core Business and Consumer Segment

Accelerated growth forecast for Consumer/IoT conflicts with previous muted outlook.

Tori Vanberg (Stiefel) - Tori Vanberg (Stiefel)

2026Q2: For the core SciTime business excluding TPD, Q3 growth expectations are: ... Consumer/IoT accelerating significantly in the second half, driven by a major design win with a large consumer customer. - Beth Howe(CFO)

How should we think about Q3 growth by segment, including core SciTime and TPD, and when will material revenue from integrated solutions like chiplets and modules become evident? - Tore Svanberg (Stifel)

20251106-2025 Q3: SiTime is still a small player in the clock market. Significant oscillator revenue pull-in is likely in 1-1.5 years. - Rajesh Vashist(CEO)