SITM Q2 2025: 58% Revenue Surge, CED Data Center Guidance Up
- Strong Revenue Growth: The company delivered 58% year-over-year revenue growth in Q2 2025, driven by robust expansion in its communications enterprise data center (CED) segment—a key market for AI data centers.
- Improved Profitability: Q2 results showed a non-GAAP gross margin of 58.2% with continued margin expansion expected from higher mix of high ASP, new products.
- Product and Market Diversification: SiTime’s unique full system approach (integrating oscillators, clocks, and software) is fueling design wins across high-growth sectors, supporting opportunities in AI, industrial, automotive, and defense markets.
- Consumer Business Volatility: Management acknowledged that the mobile IoT consumer business can be very volatile—and Q&A comments noted that sequential results were flat, raising concerns about consistent performance in this segment.
- Softness in Automotive Revenues: Despite growth in design wins, management noted some softness in the automotive segment, where significant revenue might not materialize until later years, potentially delaying expected gains.
- Reliance on Future Design Wins: The company’s increased focus on higher-value system solutions, particularly in data centers and automotive, depends on future high-content design wins. However, some of these wins may take years to translate into high-volume shipments, increasing execution risk.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue ($USD Millions) | Q3 2025 | no prior guidance | $77 million to $79 million | no prior guidance |
Gross Margins (%) | Q3 2025 | no prior guidance | 58% to 59% | no prior guidance |
Operating Expenses ($USD Millions) | Q3 2025 | no prior guidance | $34 million to $34.5 million | no prior guidance |
Interest Income ($USD Millions) | Q3 2025 | no prior guidance | $7.5 million to $8 million | no prior guidance |
Diluted Share Count (Shares) | Q3 2025 | no prior guidance | Approximately 26.8 million shares | no prior guidance |
Non-GAAP EPS ($USD) | Q3 2025 | no prior guidance | $0.67 to $0.75 per share | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Consistent CED Segment Growth | In Q3–Q4 2024 and Q1 2025 calls, the CED segment was repeatedly highlighted as a major driver with strong YOY growth (e.g., 156%–233% increases, representing a significant portion of revenue) | In Q2 2025, the CED segment remains the strongest growth area with data center and AI‐driven sales showing continued robust performance (e.g., 137% YOY growth, 52% of revenue) | Consistent robust growth with an increasing emphasis on AI/data center drivers, reinforcing its role as a key revenue pillar |
Evolving Margin and Profitability Management | Earlier calls (Q3 and Q4 2024, Q1 2025) noted margin pressures from new lower‐margin product introductions balanced by cost improvements and operating leverage, with targets around 60% gross margin | Q2 2025 shows further margin improvement with rising non‐GAAP EPS and operating income, driven by favorable product mix and successful yield improvements | A clear evolution from margin pressure to improving margins as product portfolio shifts and cost reductions take effect |
Dependence on Future Design Wins and Pipeline Execution | Q1 2025 emphasized a strong design win funnel and long rollout cycles, while Q3 2024 detailed the two-year cycle for clock market design wins | Q2 2025 reiterates reliance on design wins and pipeline execution to drive future growth, especially in strategic segments, though specifics are less highlighted | Continued reliance on securing design wins remains critical, with pipeline execution consistently identified as key for near-term and long-term growth |
Broad End‑Market Diversification Across Automotive, Industrial, and Consumer Segments | Discussions in Q3, Q4 2024 and Q1 2025 detailed diversified revenue contributions across automotive, industrial/defense, and Mobile IoT/consumer segments (with each segment representing 23%–35% of total sales) | Q2 2025 continues to highlight diversified revenue bases with growth in automotive/industrial/defense (11% YOY) and consumer/Mobile IoT (23% YOY) segments, underscoring widespread market opportunities | Consistent message of diversification across segments, offering revenue resilience and balanced growth despite cyclical variations in individual markets |
Clocking Product Portfolio Development Versus Slow Revenue Penetration | Prior calls (Q3 2024, Q4 2024, Q1 2025) emphasized the launch of new clocking families (Cascade, Chorus, Symphonic) from the Aura acquisition with a noted lag in revenue penetration due to long design cycles (typically 2 years) | Q2 2025 underscores continued product development with innovative clocking solutions (Elite family, Cascade enhancements) while reiterating that revenue penetration remains gradual due to inherent design-in cycles | Consistent optimism about an expanding product portfolio, tempered by cautious expectations on revenue ramp-up due to long customer design cycles |
Automotive Segment Dynamics (Opportunities versus Softness) | Q3 2024 and Q1 2025 discussed solid opportunities via design wins in ADAS and autonomous technologies with some acknowledgment of lighter growth in automotive relative to other segments; Q4 2024 focused on opportunities driven by innovation in China | Q2 2025 reflects both opportunity (e.g., autonomous operations, robotaxis) and acknowledged short-term softness, maintaining focus on long-term automotive growth | Long-term potential remains strong despite short-term cyclicality, with consistent recognition of the segment’s dual nature—robust future opportunities alongside near-term softness |
Consumer Business Volatility in Mobile IoT | Q1 2025 pointed out cyclical volatility and unique product challenges with its major customer in the Mobile/IoT space; Q3 and Q4 2024 provided revenue figures without emphasizing volatility | Q2 2025 explicitly addresses the volatility in consumer/mobile products, noting that guidance is provided only with sufficient visibility, given inherent cyclical fluctuations | An increased focus on the unpredictable nature of consumer/mobile business, leading to more cautious guidance compared to earlier periods |
Emergence of New Products and Segments (Aura Semiconductor, 5G, Fixed Wireless) | Previous calls in Q3 2024, Q4 2024, and Q1 2025 highlighted the integration of Aura Semiconductor products and the introduction of new clock generators for 5G and fixed wireless; these were seen as revenue growth drivers | Q2 2025 continues to promote new products (e.g., Elite family, Symphonic clock generator) and reinforces expansion into segments such as 5G, fixed wireless, and enterprise markets | Persistent innovation with emerging product lines remains a major catalyst for future growth, showing steady progression in product diversification and market expansion |
High CapEx Exposure and Investment Risks | Earlier discussions in Q1 2025 and Q3 2024 mentioned elevated CapEx for capacity expansion and strategic investments, but with controlled spending and an emphasis on ROI | Q2 2025 notes a planned decrease in CapEx levels and a focus on strategic, measured investments to support innovation while maintaining financial discipline | A continued emphasis on balancing growth investments with operational efficiency, with a transition toward lower CapEx exposure and controlled risk |
Uncertainty in Major Customer Contributions | Q1 2025 and Q4 2024 expressed uncertainties, citing cyclical factors, tariff impacts, and delayed product news from major customers; Q3 2024 provided sales percentage figures without much discussion on uncertainty | Q2 2025 highlights uncertainty in consumer contributions due to inherent volatility in mobile products, reinforcing cautious guidance for future periods | Persistent uncertainty regarding major customer outcomes, particularly in volatile segments, remains a cautionary factor in overall performance forecasting |
Declining Emphasis on Hyperscaler Engagement | In Q3 2024, there was an explicit note that the company had made fewer inroads with hyperscalers and was instead focusing on CPU/GPU-driven opportunities | Q2 2025 does not mention hyperscalers, indicating that the earlier declining emphasis persists and the focus has shifted away from hyperscaler engagement | The shift away from hyperscaler targeting is sustained, with earlier commentary in Q3 2024 reflecting a strategic de-emphasis that appears to continue into the current period |
-
CED Growth
Q: What drives stronger CED guidance?
A: Management highlighted robust design wins and a deepening order pipeline in data center networking—lifting guidance to over 40% growth—as a sign of accelerating CED momentum. -
Segment Guidance
Q: How will segments grow this quarter?
A: Leadership expects significant growth in CED led by AI data centers, with all segments showing healthy double-digit increases, underpinning overall revenue strength. -
CED vs. Consumer
Q: Which segment outpaces others sequentially?
A: While consumer demand is seasonally expected to pick up later, CED remains the core growth driver with persistently strong performance, setting the pace for the overall quarterly outcomes. -
New Product Mix
Q: How are new products affecting margins?
A: The shift to higher-ASP, system-level new products—like the Elite and Cascade families—is enhancing gross margins and is expected to accelerate further, reflecting favorable mix shifts. -
Hyperscaler Opportunity
Q: Is there room in hyperscaler ASIC platforms?
A: Yes, management noted that while penetration varies, opportunities remain in hyperscaler environments, with strategic benefits from targeting merchant silicon platforms alongside traditional GPU setups. -
Mobile Guidance Policy
Q: Any special treatment for mobile in guidance?
A: They maintain a strict policy of including only confirmed mobile shipments in guidance, ensuring visibility and avoiding volatility in this unpredictable segment. -
Mobile IoT Performance
Q: Why was mobile IoT flat sequentially?
A: Despite a relatively muted sequential performance, management emphasized that mobile IoT is inherently cyclical, with anticipated stronger second-half demand underpinning longer‐term growth. -
Data Center Content
Q: What boosts higher dollar clock content?
A: By bundling oscillators and clocks as integrated system solutions, the company secures enhanced dollar content in data center designs, delivering more value than discrete components could individually. -
Symphonic ASP Impact
Q: Does Symphonic raise mobile product ASPs?
A: The integrated design of Symphonic, combining clock and oscillator functions, commands a premium pricing strategy that creates higher average selling prices in targeted mobile IoT categories. -
System Solutions
Q: Are there extra timing roles in data centers?
A: Management sees increasing complexity in data center architectures, which calls for comprehensive, system-level timing solutions beyond simple chip sales, reinforcing long-term innovation. -
5G Design Wins
Q: How are 5G wins affecting communications?
A: Though still early, design wins in 5G and related applications are gaining traction, suggesting that future communications revenue will benefit from these evolving deployments.
Research analysts covering SITIME.