0000950170-23-017841.txt : 20230504 0000950170-23-017841.hdr.sgml : 20230504 20230504160703 ACCESSION NUMBER: 0000950170-23-017841 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 66 CONFORMED PERIOD OF REPORT: 20230331 FILED AS OF DATE: 20230504 DATE AS OF CHANGE: 20230504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SITIME Corp CENTRAL INDEX KEY: 0001451809 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 201199709 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-39135 FILM NUMBER: 23888667 BUSINESS ADDRESS: STREET 1: SITIME CORPORATION STREET 2: 5451 PATRICK HENRY DRIVE CITY: SANTA CLARA STATE: CA ZIP: 95054 BUSINESS PHONE: 408-328-4400 MAIL ADDRESS: STREET 1: SITIME CORPORATION STREET 2: 5451 PATRICK HENRY DRIVE CITY: SANTA CLARA STATE: CA ZIP: 95054 10-Q 1 sitm-20230331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2023

OR

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 ☒ No ☐

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 ☒ No ☐

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

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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. ☐

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

 

As of May 1, 2023, the registrant had 21,951,808 shares of common stock, $0.0001 par value per share, outstanding.

 

 


Table of Contents

 

 

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

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.

Controls and Procedures

22

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

23

Item 5

Other Information

45

Item 6.

Exhibits

46

Signatures

47

 

 

i


 

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, and 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;
The impact and uncertainty related to the ongoing COVID-19 pandemic could adversely impact 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;
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 not be able to accurately predict our future capital needs, and we may not be able to obtain additional financing to fund our operations;

 

1


 

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.

 

2


 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements.

SiTime Corporation

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

38,265

 

 

$

34,603

 

Short-term investments in held-to-maturity securities

 

 

537,818

 

 

 

529,494

 

Accounts receivable, net

 

 

21,464

 

 

 

41,229

 

Inventories

 

 

60,011

 

 

 

57,650

 

Prepaid expenses and other current assets

 

 

8,986

 

 

 

6,091

 

Total current assets

 

 

666,544

 

 

 

669,067

 

Property and equipment, net

 

 

57,487

 

 

 

58,772

 

Intangible assets, net

 

 

4,800

 

 

 

5,205

 

Right-of-use assets, net

 

 

10,227

 

 

 

10,848

 

Other assets

 

 

7,370

 

 

 

6,724

 

Total assets

 

$

746,428

 

 

$

750,616

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

8,186

 

 

$

14,881

 

Accrued expenses and other current liabilities

 

 

17,020

 

 

 

18,913

 

Total current liabilities

 

 

25,206

 

 

 

33,794

 

Lease liabilities

 

 

7,471

 

 

 

8,149

 

Other non-current liabilities

 

 

91

 

 

 

193

 

Total liabilities

 

 

32,768

 

 

 

42,136

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value - 200,000 shares authorized;
   
21,952 and 21,702 shares issued and outstanding at
   March 31, 2023 and December 31, 2022

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

738,013

 

 

 

716,343

 

Accumulated deficit

 

 

(24,355

)

 

 

(7,865

)

Total stockholders’ equity

 

 

713,660

 

 

 

708,480

 

Total liabilities and stockholders’ equity

 

$

746,428

 

 

$

750,616

 

 

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

 

 

 

3


 

SiTime Corporation

Condensed Consolidated Statements Of Operations And Comprehensive Income (Loss)

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Revenue

 

$

38,343

 

 

$

70,253

 

Cost of revenue

 

 

15,302

 

 

 

25,020

 

Gross profit

 

 

23,041

 

 

 

45,233

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

24,457

 

 

 

20,595

 

Selling, general and administrative

 

 

20,733

 

 

 

18,578

 

Total operating expenses

 

 

45,190

 

 

 

39,173

 

Income (loss) from operations

 

 

(22,149

)

 

 

6,060

 

Interest income

 

 

5,629

 

 

 

 

Other income, net

 

 

100

 

 

 

148

 

Income (loss) before income taxes

 

 

(16,420

)

 

 

6,208

 

Income tax expense

 

 

(70

)

 

 

(68

)

Net income (loss)

 

 

(16,490

)

 

$

6,140

 

Net income (loss) attributable to common stockholders and
   comprehensive income (loss)

 

$

(16,490

)

 

$

6,140

 

Net income (loss) per share attributable to common
   stockholders, basic

 

$

(0.76

)

 

$

0.29

 

Net income (loss) per share attributable to common
   stockholders, diluted

 

$

(0.76

)

 

$

0.27

 

Weighted-average shares used to compute basic
   net income (loss) per share

 

 

21,794

 

 

 

20,921

 

Weighted-average shares used to compute diluted
   net income (loss) per share

 

 

21,794

 

 

 

22,703

 

 

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

 

 

4


 

SiTime Corporation

Condensed Consolidated Statements Of Stockholders' Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2022

 

 

21,702

 

 

$

2

 

 

$

716,343

 

 

$

(7,865

)

 

$

708,480

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

19,136

 

 

 

 

 

 

19,136

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(16,490

)

 

 

(16,490

)

Issuance of common stock in connection with At-The-Market offering net of underwriting discounts and commissions and other offering costs

 

 

100

 

 

 

 

 

 

12,749

 

 

 

 

 

 

12,749

 

Issuance of shares upon vesting of restricted stock units, net of tax withholdings

 

 

150

 

 

 

 

 

 

(10,215

)

 

 

 

 

 

(10,215

)

Balances at March 31, 2023

 

 

21,952

 

 

$

2

 

 

$

738,013

 

 

$

(24,355

)

 

$

713,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2021

 

 

20,825

 

 

$

2

 

 

$

663,614

 

 

$

(31,119

)

 

$

632,497

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

15,237

 

 

 

 

 

 

15,237

 

Net income

 

 

 

 

 

 

 

 

 

 

 

6,140

 

 

 

6,140

 

Issuance of shares upon vesting of restricted stock units, net of tax withholdings

 

 

217

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at March 31, 2022

 

 

21,042

 

 

$

2

 

 

$

678,851

 

 

$

(24,979

)

 

$

653,874

 

 

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

 

 

5


 

SiTime Corporation

Condensed Consolidated Statements Of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

(16,490

)

 

$

6,140

 

Adjustments to reconcile net income (loss) to net cash provided by
   operating activities

 

 

 

 

 

 

Depreciation and amortization expense

 

 

3,824

 

 

 

2,544

 

Stock-based compensation expense

 

 

18,536

 

 

 

14,280

 

Unrealized interest on held to maturity securities

 

 

(4,235

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

19,765

 

 

 

7,725

 

Inventories

 

 

(2,361

)

 

 

(7,123

)

Prepaid expenses and other assets

 

 

(2,895

)

 

 

(330

)

Accounts payable

 

 

(6,430

)

 

 

(1,515

)

Accrued expenses and other liabilities

 

 

(2,212

)

 

 

(1,693

)

Net cash provided by operating activities

 

 

7,502

 

 

 

20,028

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of held to maturity securities

 

 

(379,543

)

 

 

 

Proceeds from maturity of held to maturity securities

 

 

375,454

 

 

 

 

Purchase of property and equipment

 

 

(2,094

)

 

 

(7,452

)

Cash paid for intangibles

 

 

(191

)

 

 

(583

)

Net cash used in investing activities

 

 

(6,374

)

 

 

(8,035

)

Cash flows from financing activities

 

 

 

 

 

 

Tax withholding paid on behalf of employees for net share settlement

 

 

(10,215

)

 

 

 

Proceeds from public offering

 

 

13,119

 

 

 

 

Payments for offering costs

 

 

(370

)

 

 

 

Net cash provided by financing activities

 

 

2,534

 

 

 

 

Net increase in cash and cash equivalents

 

 

3,662

 

 

 

11,993

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of period

 

 

34,603

 

 

 

559,461

 

End of period

 

$

38,265

 

 

$

571,454

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

Income taxes paid

 

 

104

 

 

 

14

 

Supplemental disclosure of noncash flow information

 

 

 

 

 

 

Unpaid property and equipment

 

 

486

 

 

 

2,356

 

Right-of-use assets acquired under operating leases

 

 

 

 

 

3,659

 

 

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

 

6


 

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.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments of a normal, recurring nature, which are necessary to state fairly the financial information included therein. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in SiTime Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.

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.



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 March 31, 2023.

Recent Accounting Pronouncements

There are no new accounting pronouncements that are pending to be adopted by the Company.

 

Note 2. Net Income (Loss) Per Share

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

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

 

 

(in thousands, except per share data)

 

Net income (loss) attributable to common stockholders

 

$

(16,490

)

 

$

6,140

 

Weighted-average shares outstanding

 

 

 

 

 

 

Weighted average shares used to compute basic net income (loss) per share

 

 

21,794

 

 

 

20,921

 

Dilutive effect of employee equity incentive plans

 

 

 

 

 

1,782

 

Weighted average shares used to compute diluted net income (loss) per share

 

 

21,794

 

 

 

22,703

 

Net income (loss) attributable to common stockholders per share, basic

 

$

(0.76

)

 

$

0.29

 

Net income (loss) attributable to common stockholders per share, diluted

 

$

(0.76

)

 

$

0.27

 

 

Potential dilutive securities include dilutive common shares from share-based awards attributable to the assumed exercise of restricted stock unit awards using the treasury stock method. Under the treasury stock method, potential common shares outstanding are not included in the computation of diluted net income per share if their effect is anti-dilutive.
 

Anti-dilutive potential shares from share-based awards are excluded from the calculation of diluted earnings per share if either their exercise price exceeded the average market price during the period, or the share-based awards were determined to be anti-dilutive

 

7


 

based on applying the treasury stock method. During the three months ended March 31, 2023 and 2022, the Company had 415,017 potential shares and 3,211 potential shares from share-based awards that are anti-dilutive, respectively.

Note 3. Fair Value Measurements

The carrying amounts of the Company’s financial instruments, which include cash equivalents, short-term investments and accounts receivable, accounts payable, accrued liabilities, and other current liabilities, approximate their fair values due to their short maturities.

Cash and cash equivalents

On March 31, 2023 and December 31, 2022, cash balances in bank checking and savings accounts of $38.0 million and $31.6 million, respectively, were valued using Level 1 of the fair value hierarchy. On March 31, 2023 and December 31, 2022, highly liquid money market funds of $0.3 million and $3.0 million, respectively, were valued using Level 1 of the fair value hierarchy, quoted prices in active markets for identical assets, and are included in cash equivalents.

Short-term investments in held-to-maturity securities

As of March 31, 2023 and December 31, 2022, the Company had entered into treasury bills with maturities of six months, which the Company intends to hold until maturity and has classified as held-to-maturity securities. The held-to-maturity securities are recorded at amortized cost totaling $533.0 million with gross accrued interest of $4.8 million and net carrying value of $537.8 million. As of December 31, 2022, the amortized cost of the held-to-maturity securities totaled $524.4 million with gross accrued interest of $5.1 million and net carrying value of $529.5 million. The carrying value of our investments is reviewed quarterly for changes in circumstances or the occurrence of events that suggests an investment may not be fully recoverable. These treasury bills were valued using Level 1 of the fair value hierarchy, quoted prices in active markets for identical assets, and are included in short-term investments.

Note 4. Balance Sheet Components

Accounts Receivable, net

Accounts receivable, net consisted of the following:

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

Accounts receivable, gross

 

$

21,514

 

 

$

41,279

 

Allowance for credit losses

 

 

(50

)

 

 

(50

)

Accounts receivable, net

 

$

21,464

 

 

$

41,229

 

 

Inventories

Inventories consisted of the following:

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

Raw materials

 

$

26,111

 

 

$

17,518

 

Work in progress

 

 

26,037

 

 

 

33,687

 

Finished goods

 

 

7,863

 

 

 

6,445

 

Total inventories

 

$

60,011

 

 

$

57,650

 

 

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

Prepaid expenses

 

$

3,225

 

 

$

3,118

 

Other current assets

 

 

5,761

 

 

 

2,973

 

Total prepaid expenses and other current assets

 

$

8,986

 

 

$

6,091

 

 

 

8


 

 

Property and Equipment, Net

Property and equipment, net consisted of the following:

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

Lab and manufacturing equipment

 

$

75,652

 

 

$

73,220

 

Computer equipment

 

 

3,238

 

 

 

3,170

 

Furniture and fixtures

 

 

563

 

 

 

509

 

Construction in progress

 

 

5,115

 

 

 

5,967

 

Leasehold improvements

 

 

7,365

 

 

 

7,129

 

 

 

91,933

 

 

 

89,995

 

Accumulated depreciation

 

 

(34,446

)

 

 

(31,223

)

Total property and equipment, net

 

$

57,487

 

 

$

58,772

 

 

Depreciation expense related to property and equipment was $3.2 million and $2.1 million for the three months ended March 31, 2023 and 2022, respectively.

Intangible Assets, Net

Intangible assets, net consisted of the following:

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

 

 

Gross Assets

 

 

Accumulated Amortization

 

 

Net Assets

 

 

Gross Assets

 

 

Accumulated Amortization

 

 

Net Assets

 

Internal use software

 

$

9,434

 

 

$

(8,933

)

 

$

501

 

 

$

9,434

 

 

$

(8,833

)

 

$

601

 

Purchased software

 

 

12,772

 

 

 

(8,473

)

 

 

4,299

 

 

 

12,583

 

 

 

(7,978

)

 

 

4,604

 

Intangible assets

 

$

22,206

 

 

$

(17,406

)

 

$

4,800

 

 

$

22,017

 

 

$

(16,811

)

 

$

5,205

 

 

Amortization expense for intangible assets was $0.6 million and $0.3 million for the three months ended March 31, 2023 and 2022, respectively.

The estimated aggregate future amortization expense for intangible assets subject to amortization as of March 31, 2023 is summarized as below:

 

 

 

(in thousands)

 

2023 (remainder)

 

$

1,803

 

2024

 

 

1,711

 

2025

 

 

708

 

2026

 

 

385

 

2027

 

 

193

 

 

 

$

4,800

 

 

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

Accrued payroll and related benefits

 

$

4,801

 

 

$

6,109

 

Revenue reserves

 

 

2,047

 

 

 

1,840

 

Deferred non-recurring engineering services

 

 

2,628

 

 

 

2,689

 

Short term lease liability

 

 

2,574

 

 

 

2,485

 

Other accrued expenses

 

 

4,970

 

 

 

5,790

 

Total accrued expenses and other current liabilities

 

$

17,020

 

 

$

18,913

 

 

 

9


 

 

The Company recorded reductions to research and development expenses related to non-recurring engineering service arrangements in the condensed consolidated statements of operations of $1.2 million and $2.0 million during the three months ended March 31, 2023 and 2022, respectively.

Note 5. Leases

The Company leases real estate property under operating leases. The Company leases office space in California, Michigan, Malaysia, Japan, Taiwan, the Netherlands, Finland, and Ukraine all under non-cancellable operating leases with various expiration dates through May 2029.

The remaining lease terms vary from a few months to 6 years. For certain of its leases the Company has options to extend the lease term for periods varying from one to five years. These renewal options are not considered in the remaining lease term unless it is reasonably certain that the Company will exercise such options. The Company also has variable lease payments that are primarily comprised of common area maintenance and utility charges.

The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheet as of March 31, 2023:

 

 

 

As of

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(in thousands)

 

Right-of-use assets

 

$

10,227

 

 

$

10,848

 

Lease liabilities included in accrued expenses and other current liabilities

 

 

2,574

 

 

 

2,485