SiTime (SITM Quick QuoteSITM - Free Report) reported third-quarter 2026 non-GAAP earnings of $4.01 per share, which surpassed the Zacks Consensus Estimate by 17.60%. The company reported earnings of 87 cents per share in the year-ago quarter.

Revenues jumped 257% year over year to $298.7 million and beat the consensus mark by 2.85%. Growth was driven by strong demand for AI infrastructure timing solutions and contributions from the acquired Renesas Timing Products Division (TPD). Core communications, enterprise and data center (CED) revenues climbed 202%.

SITM’s CED Growth Accelerates on AI Demand

Core CED revenues surged 202% year over year and increased 26% sequentially to $127.3 million. Growth reflected robust demand across optical modules, networking equipment, accelerator cards and other AI infrastructure applications.

SiTime highlighted growing opportunities as customers transition toward higher-bandwidth optical technologies. The company expects its timing content to increase by up to twofold in near-packaged optics and threefold in co-packaged optics. The shift toward 1.6-terabit optical modules also supports higher average selling prices and increased market share.

SiTime Sees Broad-Based Growth Across Markets

Automotive, industrial and aerospace and defense revenues increased 76% year over year and 43% sequentially to $35.5 million. Demand benefited from growing precision timing requirements in autonomous systems, radar, counter-drone technologies and industrial automation.

Mobile, Internet of Things and consumer revenues jumped 133% year over year and 58% sequentially to $49.5 million. SiTime's largest consumer customer contributed $42.7 million, supported by broader modem adoption across platforms. SiTime also highlighted emerging opportunities in AI smart glasses and pendants, with product ramps expected in 2027.

SITM Benefits From Renesas Timing Business

The acquired TPD business generated $86.3 million in revenues, representing 67% growth from the comparable year-ago period under Renesas. The acquisition, completed July 1, contributed to SiTime’s first full quarter of consolidated results.

TPD’s revenue mix is heavily concentrated in communications, enterprise and data centers, accounting for more than 80% of its business. SiTime noted early cross-selling opportunities across both customer bases. However, wafer supply constraints remain a challenge, with tighter conditions expected to persist into 2027 despite anticipated improvements early in the year.

SiTime’s Margins Expand on Favorable Product Mix

Non-GAAP gross margin expanded 1,190 basis points (bps) year over year and 360 bps sequentially to 70.7%. The improvement reflected greater contributions from higher-value products, the addition of TPD and better manufacturing absorption.

Non-GAAP operating expenses totaled $81.6 million, comprising $48.6 million in research and development costs and $33 million in selling, general and administrative expenses. Expenses increased $29.5 million sequentially as SiTime expanded engineering, product development and sales capabilities.

Non-GAAP operating income reached $129.5 million, with operating margin expanding to 43.4% from 18.5% in the year-ago quarter.

SITM's Cash Flow Reflects Working Capital Pressure

SiTime ended the third quarter with $324.3 million in cash, cash equivalents and short-term investments. Operating activities used $6.6 million in cash, reflecting working capital movements associated with the integration of TPD.

Days sales outstanding increased 10 days sequentially to 61 days, primarily due to the timing of TPD-related collections. Inventory rose to approximately $112 million to support fourth-quarter demand. Capital expenditures totaled $11.2 million.

SiTime expects working capital and cash flow to improve in the fourth quarter as collections normalize and integration progresses.

SiTime Projects Further Growth in Q4

For the fourth quarter of 2026, SiTime expects revenues between $331 million and $341 million, with both its core business and TPD projected to grow sequentially. Non-GAAP gross margin is expected to remain around 70%, plus or minus one percentage point.

Operating expenses are projected to remain roughly flat sequentially. SiTime anticipates interest income of $2-$2.5 million and non-GAAP earnings of approximately $4.76 per share at the revenue guidance midpoint.

SiTime’s design opportunity pipeline has quadrupled since 2025 to $10 billion, supported by expanding customer engagement and demand across AI infrastructure and industrial applications. The company’s semiconductor-related opportunity pipeline has grown eightfold to more than $4 billion, with most related revenues expected to begin ramping in 2028 and 2029.

SiTime also announced a three-for-one forward stock split. Shareholders of record on Dec. 3, 2026, will receive two additional shares for each share held, with split-adjusted trading expected to begin Dec. 7, 2026.

Zacks Rank & Stocks to Consider

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

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