SiTime Q2 Earnings Beat Estimates, Revenues Increase Y/Y

SITM’s CED Growth Accelerates

CED revenues increased 34% sequentially. The segment accounted for 64.3% of revenues, supported by demand across optical modules, switches, accelerators and other AI infrastructure systems. 

Management expects rapid growth to continue as customers transition toward 1.6-terabit optical modules. SiTime expects revenues tied to 1.6T applications to double in 2027, while 800-gigabit demand also grows significantly. Greater synchronization requirements are adding several hundred dollars of timing content per data center rack.

SiTime Broadens Growth Across Markets

Automotive, industrial and aerospace and defense revenues increased 51% year over year and 18% sequentially to $24.8 million. Precision timing adoption continued across autonomous vehicles, industrial automation and defense applications, including position, navigation and timing systems that can operate when GPS is disrupted.

Mobile, Internet of Things and consumer revenues jumped 85% year over year and 89% sequentially to $31.4 million. SiTime’s largest customer contributed $22.8 million. Management also highlighted emerging opportunities in smart glasses, wearables, health devices and other personal AI products.

SITM Margins Expand on Product Mix

Non-GAAP gross margin expanded 890 basis points (bps) year over year and 260 bps sequentially to 67.1%. The annual improvement reflected a stronger product mix and better manufacturing absorption, while the sequential gain primarily came from improved factory utilization.

Non-GAAP operating expenses totaled $52.1 million, comprising $25.6 million in research and development costs and $26.5 million in selling, general and administrative expenses. 

Non-GAAP operating income reached $53.5 million, lifting operating margin to 34% from 10.3% reported in the year-ago quarter.

SITM’s Strong Balance Sheet & Cash Flow Supports Expansion

SiTime ended the second quarter of 2026 with $1.92 billion in cash, cash equivalents and short-term investments. The balance included proceeds from $1.35 billion of zero-coupon convertible senior notes due 2031, which helped fund the cash portion of the Renesas timing business acquisition completed July 1.

Cash flow from operating activities more than doubled year over year to $40 million from $15.3 million. Capital expenditures were $12.9 million, resulting in free cash flow of $27.1 million.

SITM Integrates the Renesas Timing Business

The acquired Timing Products Division from Renesas adds more than 550 clocking products and serves about 10,000 customers. Roughly 70% of its revenues come from communications, enterprise and data center markets, while the remainder is tied to automotive, aerospace and industrial applications.

SITM management expects the division to contribute approximately $85 million in third-quarter revenues. The company is prioritizing customer continuity, supply expansion and migration onto SiTime's operating platform while relying on Renesas for manufacturing, testing and supply-chain support during the transition period.

SiTime Outlook Signals Another Growth Step

For the third quarter of 2026, SiTime expects combined revenues of $285-$295 million. Excluding the acquired business, core SiTime revenues are projected at $200-$210 million, representing roughly 30% sequential growth at the midpoint, with CED again expected to deliver triple-digit year-over-year growth.

Non-GAAP gross margin is forecast at approximately 68%, plus or minus one percentage point. Operating expenses are expected between $80 million and $85 million, while non-GAAP earnings are projected at $3.50-$3.65 per share.

Zacks Rank & Stocks to Consider

SiTime currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Onto Innovation ONTO, Inuvo INUV and Kimball Electronics KE. Each of the three stocks sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Onto Innovation, Inuvo and Kimball Electronics are set to report their quarterly results on Aug. 6, 11 and 12, respectively. Year to date, shares of Kimball Electronics and Inuvo have dropped 3.7% and 56%, respectively, while Onto Innovation have jumped 74.8%.

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