The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the related notes that appear elsewhere in this document.



The information in this Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended ("Securities Act"), and Section 21E of the Securities Exchange Act of
1934, as amended ("Exchange Act"), which are subject to the "safe harbor"
created by those sections. These forward-looking statements reflect our
management's beliefs and views with respect to future events and are based on
estimates and assumptions as of the date of this report and are subject to risks
and uncertainties. We may, in some cases, use words such as "anticipate,"
"believe," "could," "continue," "estimate," "expect," "intend," "may,"
"objective," "plan," "potential," "predict," "project," "should," "will,"
"would," or the negative of those terms, and similar expressions that convey
uncertainty of future events or outcomes to identify these forward-looking
statements. Forward-looking statements in this report include, but are not
limited to, statements regarding:

our plans to focus on precision timing solutions that deliver benefits to customers in our end markets, and to aggressively expand our presence in these markets;

the impact of the COVID-19 pandemic on our business, employees, revenue and other operating results, liquidity, and cash flows, and its impact on the businesses of our suppliers and customers, and our anticipated responses thereto;


our expectations regarding our ability to address market and customer demands
and to timely develop new or enhanced precision timing solutions to meet those
demands;

anticipated trends, challenges and growth in our business and the markets in which we operate, including pricing expectations;

our expectations regarding our revenue, gross margin, and expenses;

our belief as to the sufficiency of our existing cash and cash equivalents to meet our cash needs for at least the next 12 months and our future capital requirements over the longer term, including the potential impact of the COVID-19 pandemic thereon;

our dependence on our largest customer;

our customer relationships and our ability to retain and expand our customer relationships and to achieve design wins;

our expectations regarding the success, cost, and timing of the introduction of new products;

the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets;


our plans to expand sales and marketing efforts through increased collaboration
with our distributors, and contracted sales representatives, and as well as our
plans to invest in digital customer experience and lead generation, branding,
and segment marketing to leverage our existing portfolio to grow revenues;

our goal to become the leading precision timing solution provider for advanced and challenging applications;

our positioning of being designed into current and future systems;

our belief that our advanced packaging designs can enable the smallest footprints in the industry, as well as deliver superior reliability and performance;

competition in our existing and future markets;

our expectations regarding regulatory developments in the United States and foreign countries;

our expectations regarding the performance of, and our relationships with, our third-party suppliers and manufacturers;

our expectations regarding our and our customers' ability to respond successfully to technological or industry developments;

our ability to attract and retain key personnel;

our expectations regarding intellectual property and related litigation;

the adequacy and availability of our leased facilities;

the accuracy of our estimates regarding capital requirements, expectations regarding renewal of loans, and needs for additional financing.

In addition, any statements contained herein that are statements regarding events or results that may occur in the future may be deemed to be forward-looking statements. Forward­looking statements are subject to a number of risks and uncertainties that could


                                       17
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cause actual results to differ materially from those expected or referenced in
these forward-looking statements. These risks and uncertainties include, but are
not limited to, those risks discussed in Part II, Item 1A Risk Factors of this
report. Moreover, we operate in a very competitive and rapidly changing
environment. New risks emerge from time to time. It is not possible for our
management to predict all risks, nor can we assess the impact of all factors on
our business or the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained in any
forward-looking statements we may make. Given these uncertainties, you should
not place undue reliance on these forward-looking statements. We qualify all of
the forward-looking statements in this report by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future
events. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee that the future
results, levels of activity, performance, or events and circumstances reflected
in the forward-looking statements will be achieved or occur. Moreover, neither
we nor any other person assumes responsibility for the accuracy and completeness
of the forward-looking statements. We undertake no obligation to update publicly
any forward looking statements for any reason after the date of this report to
conform these statements to actual results or to changes in our expectations,
except as required by law.

In addition, statements that "we believe" and similar statements reflect our
beliefs and opinions on the relevant subject. These statements are based upon
information available to us as of the date of this report, and while we believe
such information forms a reasonable basis for such statements, such information
may be limited or incomplete, and our statements should not be read to indicate
that we have conducted an exhaustive inquiry into, or review of, all potentially
available relevant information. These statements are inherently uncertain and
investors are cautioned not to unduly rely upon these statements.

Overview



SiTime is a leading provider of precision timing solutions to the electronics
industry. Our precision timing solutions are the heartbeat of our customers'
electronic systems, solve complex timing problems and enable industry-leading
electronics products. We provide precision timing solutions that are
differentiated by high performance and reliability, programmability, small size,
and low power consumption. Our products have been designed into over 250
applications across our target markets, including communications and enterprise,
automotive, industrial, aerospace, and mobile, IoT and consumer. Cumulatively,
we have sold to over 15,000 customers to date.


Today, electronic devices are rapidly proliferating, driven by new customer
experiences, data & health monitoring, and cloudification, which, in turn,
require faster bandwidth and response times (latency). For example, automobiles
today have more electronics and connectivity than five years ago. Similarly, 5G
is delivering up to 10x more bandwidth than 4G. Individuals and corporations are
adopting cloudification whole-heartedly, necessitating large investments in data
centers. The electronics in all of these applications require precision timing
solutions that deliver superior timing performance, even in the presence of
environmentally stressful conditions such as high vibration, shock, airflow, and
temperature extremes. We expect that the demand for precision timing solutions
will continue to increase in the future.

At the heart of SiTime's precision timing solutions are our MEMS,
analog/mixed-signal, and systems technologies. All of our oscillators and clocks
contain MEMS and analog die, packaged in plastic, ceramic, or chip-scale
packages. We develop all these technologies in-house, which enables us to
co-optimize designs and deliver high performance and low-power solutions with
reliability. We have a deep understanding of mechanical, electrical, and thermal
properties of materials, which is a key requirement for developing our
proprietary MEMS processes. To maximize first-silicon success, we have also
developed our own MEMS simulation tools. Our analog/mixed-signal die are
developed in industry-standard processes and deliver high levels of electrical
performance using programmable phase-locked loops, temperature sensors,
regulators, data converters, receivers, and drivers. We combine our MEMS and
analog die in packages and perform thermal/mechanical/electrical optimization,
temperature compensation, and test and trim automation to deliver superior
performance with high manufacturability. Our solutions have embedded
non-volatile memory that allow for programmability of our devices.

We commenced commercial shipments of our first oscillator products in 2006.
Substantially all of our revenue to date has been derived from sales of
oscillator systems across our target end markets. In addition to oscillator
systems, we intend to expand our products to include clock IC and timing sync
solutions in the future. We seek to aggressively expand our presence in our end
markets with these two product categories.

We sell our products primarily through distributors in Asia, who in turn sell to
our end customers. We also sell products directly to some of our end customers.
Based on sell-through information provided by our distributors, we believe the
majority of our end customers are headquartered in the U.S.

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We operate a fabless business model, allowing us to focus on the design, sales,
and marketing of our products, quickly scale production, and significantly
reduce our capital expenditures. We leverage our global network of distributors
to address the broad set of end markets we serve. For our largest accounts,
dedicated sales personnel work with the end customer to ensure that our
solutions fully address the end customer's timing needs. Our smaller customers
work directly with our distributors to select the optimum timing solution for
their needs.

There are a number of industry-wide supply constraints affecting the supply of
analog circuits manufactured by certain foundries, including Taiwan
Semiconductor Manufacturing Company, and affecting outsourced semiconductor
assembly and test providers. We believe that the effects of the industry-wide
supply constraints on other timing device suppliers contributed in part to our
revenue and gross margin growth in 2021 and the first half of 2022, however we
may not be able to sustain these revenue and gross margin increases. In
addition, macroeconomic events such as rising inflation, recession, equity
market volatility, growing geopolitical tensions, war, decreased spending,
supply chain disruptions, and the COVID-19 pandemic have harmed and may continue
to harm our business and results of operations. We believe that the
macroeconomic events in 2022 and the industry-wide supply constraints have led
to an inventory buildup at some of our customers and their contract
manufacturers, which has and may continue to adversely affect demand for our
products. The future effects of macroeconomic events on our business and results
of operations, including demand for our products, are uncertain and difficult to
predict. For additional discussion please see Part II, Item 1A Risk Factors of
this report, especially the risk factor titled "Global macroeconomic conditions
have harmed and may continue to harm our business" and "Our revenue and
operating results may fluctuate from period to period, which could cause our
stock price to fluctuate."

We have employees in Finland, France, Japan, Malaysia, the Netherlands, Taiwan, Ukraine and the U.S.



We maintain an office in Lviv, Ukraine. In connection with Russia's invasion of
Ukraine in February 2022, we have prioritized the safety and welfare of our
employees and their families in Ukraine. We have also worked with our employees
worldwide to minimize any disruption to our operations and business as a result
of Russia's invasion of Ukraine. We no longer engage contractors in Russia.

Impact of COVID-19 on our Business



The COVID-19 pandemic has continued to impact our workforce and the operations
of our customers and suppliers during 2022. In response to the ongoing COVID-19
pandemic and related government measures, we implemented safety measures to
protect our employees and contractors at our locations around the world.

As the COVID-19 pandemic continues, the timing and overall demand of our
products and availability of supply chain may negatively and materially impact
our business operations and financial results. To date, we have experienced
minimal impact from any supplier disruption resulting from the COVID-19
pandemic, however, due to the changing nature and continuing uncertainty around
the COVID-19 pandemic, our ability to predict the impact of the pandemic on our
business and financial results in future periods remains limited.

We continue to actively monitor the effects and potential impacts of the
COVID-19 pandemic on our business and may take further actions altering our
business operations that we determine are in the best interests of our
employees, customers, partners, suppliers, and stakeholders, or as required by
federal, state, or local authorities. It is not clear what the potential effects
any such alterations or modifications may have on our business, including the
effects on our customers, employees, operations, and prospects, or on our
financial results for 2022 and beyond.

Results of Operations

Revenue



We derive revenue primarily from sales of precision timing solutions to
distributors who in turn sell to our end customers. We also sell products
directly to some of our end customers. Our sales are made pursuant to standard
purchase orders which may be cancelled, reduced, or rescheduled, with little or
no notice. We recognize product revenue upon shipment when we satisfy our
performance obligations as evidenced by the transfer of control of our products
to customers. We measure revenue based on the amount of consideration we expect
to be entitled to in exchange for products.

                       Three Months Ended                                 

Nine Months Ended September


                          September 30,                 Change                        30,                       Change
                      2022            2021           $           %           2022             2021           $           %
                                                        (in thousands except percentage)
Revenue             $  73,095       $  63,029     $ 10,066         16 %   $  222,766       $  143,067     $ 79,699         56 %




Revenue increased by $10.1 million, or 16%, for the three months ended September
30, 2022 compared to the same period in the prior year. The increase was
primarily related to an increase in average selling prices ("ASPs") of our
products and a $2.7 million increase in revenue recorded from the waiver of
accrued customer rebate offset by a 20% decrease in volume of shipments year
over year. The

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ASP increase was related to change in mix of the products we shipped. The
decrease in sales volume was driven by lower demand for our products from new
and existing customers. We may not be able to sustain our revenue growth or ASP
increases in the future at this current rate as we could face lower demand due
to macroeconomic conditions and more pricing pressure in future periods.



Revenue increased by $79.7 million, or 56%, for the nine months ended September
30, 2022 compared to the same period in the prior year. The increase was
primarily related to 15% higher volume of shipments year over year, an increase
in ASPs of our products and $2.7 million recognized as revenue from the waiver
of accrued rebates from a customer. The increase in sales volume was driven by
higher demand for our products from new and existing customers, including new
design wins at new and existing customers. The ASP increase was related to
change in mix of the products we shipped and increase in selling prices for
certain products.

Sales attributable to our largest end customer accounted for 25% and 20% of our
revenue for the three months ended September 30, 2022 and 2021, respectively,
and 19% and 23% of our revenue for the nine months ended September 30, 2022 and
2021, respectively. Our end customers predominantly purchase our products from
distributors. Our top three distributors by revenue together accounted for
approximately 55% and 45% of our revenue for the three months ended September
30, 2022 and 2021, respectively, and 45% and 61% of our revenue for the nine
months ended September 30, 2022 and 2021, respectively. Revenue attributable to
our largest ten end customers accounted for 80% and 46% of our revenue for the
three months ended September 30, 2022 and 2021, respectively, and 72% and 63% of
our revenue for the nine months ended September 30, 2022 and 2021, respectively.

Cost of Revenue, Gross Profit, and Gross Margin



Cost of revenue consists of wafers acquired from third-party foundries,
assembly, packaging, and test cost of our products paid to third-party contract
manufacturers, and personnel and other costs associated with our manufacturing
operations. Cost of revenue also includes depreciation of production equipment,
inventory write-downs, amortization of internally developed software, shipping
and handling costs, and allocation of overhead and facility costs. We also
include credits for rebates received from foundries to cost of revenue.

                       Three Months Ended
                          September 30,                 Change           Nine Months Ended September 30,           Change
                      2022            2021           $          %           2022               2021             $           %
                            (in thousands except percentage)                        (in thousands except percentage)
Cost of Revenue     $  25,799       $  21,334     $ 4,465         21 %   $   77,563       $       55,727     $ 21,836         39 %
Gross Profit           47,296          41,695       5,601         13 %      145,203               87,340       57,863         66 %
Gross Margin               65 %            66 %                                  65 %                 61 %




Gross profit increased by $5.6 million in the three months ended September 30,
2022 compared to the same period in the prior year. Gross profit increased $5.0
million mainly from higher revenue from increase in ASPs of our product mix and
$2.7 million from the reversal of customer rebates. This increase was partially
offset by higher other manufacturing and overhead costs of $2.1 million.



Gross profit increased by $57.9 million in the nine months ended September 30,
2022 compared to the same period in the prior year. Gross profit increased $61.5
million mainly from higher sales volume and an increase in ASPs of our product
mix and $2.7 million from the reversal of customer rebates. This increase was
partially offset by higher other manufacturing and overhead costs of $6.3
million.


Gross margin was lower by 1% in the three months ended September 30, 2022 compared to the same period in the prior year. The gross margin decreased primarily from lower sales volume of 19% and higher manufacturing costs, partially offset by an increase in ASPs and reversal of customer rebates.

Gross margin was higher by 4% in the nine months ended September 30, 2022 compared to the same period in the prior year. The gross margin increased from higher sales volume of 15%, an increase in ASPs and reversal of customer rebates. Our other manufacturing costs remained flat as a percentage of revenue.

We continue to see increases in our manufacturing costs in the remainder of fiscal year 2022 due to an industry wide increase in costs.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of our operating expenses and consist of salaries, benefits, bonuses, stock-based compensation, and commissions. Our operating expenses also include consulting costs, allocated costs of facilities, information technology and depreciation.


                                       20
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                       Three Months Ended
                          September 30,                 Change            Nine Months Ended September 30,           Change
                      2022            2021           $           %           2022               2021             $           %
                            (in thousands except percentage)                         (in thousands except percentage)
Operating
Expenses:
Research and
development         $  23,878       $  13,005     $ 10,873         84 %   $   66,490       $       36,252     $ 30,238         83 %
Selling, general
and
administrative         19,886          14,616        5,270         36 %       56,839               38,425       18,414         48 %
Total operating
expenses            $  43,764       $  27,621     $ 16,143         58 %   $  123,329       $       74,677     $ 48,652         65 %




Research and Development

Our research and development efforts are focused on the design and development
of precision timing solutions. Our research and development expense consists
primarily of personnel costs, which include stock-based compensation,
pre-production engineering mask costs, software license and intellectual
property expenses, design tools and prototype-related expenses, facility costs,
supplies, professional and consulting fees, and allocated overhead costs, which
may be offset by non-recurring engineering contra-expenses recorded in certain
periods. There is no assurance that we will have non-recurring engineering
contra-expense from period to period. We expense research and development costs
as incurred. We believe that continued investment in our products and services
is important for our future growth and acquisition of new customers and, as a
result, we expect our research and development expenses to continue to increase
in absolute dollars. However, we expect our research and development expense to
fluctuate as a percentage of revenue from period to period depending on the
timing of these expenses.

Research and development expense increased by $10.9 million, or 84%, for the
three months ended September 30, 2022 compared to the same period in the prior
year, primarily due to higher personnel costs of $3.5 million due to increased
headcount, an increase in stock-based compensation expense of $4.7 million,
higher ongoing new product related expenses of $3.4 million, and an increase in
depreciation and amortization of lab equipment and licenses of $0.8 million,
offset by an increase in non-recurring engineering contra-expense recognized of
$2.0 million.

Research and development expense increased by $30.2 million, or 83%, for the
nine months ended September 30, 2022 compared to the same period in the prior
year, primarily due to higher ongoing new product related expenses of $13.2
million, higher personnel costs of $10.4 million due to increased headcount, an
increase in stock-based compensation expense of $9.6 million, and an increase in
depreciation and amortization of lab equipment and licenses of $1.7 million
offset by an increase in non-recurring engineering contra-expense recognized of
$5.2 million.

There is no guarantee we will enter into a non-recurring engineering arrangement
or recognize such contra-expense in any future period. Based on our current
contracts, we expect the non-recurring engineering contra-expense to decline in
future periods.

Sales, General and Administrative



Sales, general and administrative expense consists of personnel costs, including
stock-based compensation, professional and consulting fees, accounting and audit
fees, legal costs, field application engineering support, travel costs,
advertising expenses and allocated overhead costs. We expect sales, general and
administrative expense to continue to increase in absolute dollars as we
increase our personnel and grow our operations, although it may fluctuate as a
percentage of revenue from period to period depending on the timing of these
expenses.

Selling, general and administrative expense increased by $5.3 million, or 36%,
for the three months ended September 30, 2022 compared to the same period in the
prior year, primarily due to higher stock-based compensation expense of $3.7
million, higher consulting fees of $0.9 million, and higher advertising spend of
$0.5 million.

Selling, general and administrative expense increased by $18.4 million, or 48%
for the nine months ended September 30, 2022 compared to the same period in the
prior year, primarily due to higher stock-based compensation expense of $10.3
million, higher consulting fees of $4.3 million, higher personnel costs of $2.6
million related to increased headcount and commissions and higher advertising
spend of $1.0 million.

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Other Income (Expense), net

Other income (expense), net consists primarily of interest income on our cash balances and foreign exchange gains and losses.



                    Three Months Ended September 30,           Change           Nine Months Ended September 30,           Change
                      2022                 2021             $          %          2022                 2021             $          %
                               (in thousands except percentage)                            (in thousands except percentage)

Interest Income     $   2,492         $            -     $ 2,492        n/a     $   3,295         $            -     $ 3,295       n/a
Other expense            (238 )                 (110 )      (128 )      116 %        (264 )                 (178 )       (86 )      48 %
Total other
income (expense),
net                 $   2,254         $         (110 )   $ 2,364        n/a     $   3,031         $         (178 )   $ 3,209       n/a




Other income (expense), net increased by $2.4 million and $3.2 million for the
three and nine months ended September 30, 2022, respectively, compared to the
same period in the prior year, primarily related to higher interest income
earned on short term investments and net unrealized gain on foreign exchange
rates due to increased activities in our foreign subsidiaries and favorable
exchange rate fluctuations.

Income Tax Expense



Income tax expense consists primarily of state income taxes and income taxes in
certain foreign jurisdictions in which we conduct business. We have a full
valuation allowance for deferred tax assets as the realization of the full
amount of our deferred tax asset is uncertain, including NOL, carryforwards, and
tax credits related primarily to research and development. We expect to maintain
this full valuation allowance until realization of the deferred tax assets
becomes more likely than not.

                       Three Months Ended September 30,             Change         Nine Months Ended September 30,          Change
                         2022                    2021             $          %       2022                2021             $          %
                                  (in thousands except percentage)                           (in thousands except percentage)

Income tax expense   $          (3 )         $          (4 )   $     1     (25%)   $    (123 )       $         (67 )   $   (56 )    84%



Liquidity and Capital Resources



As of September 30, 2022 and December 31, 2021, we had cash and cash equivalents
of $41.6 million and $559.5 million, respectively. As of September 30, 2022 we
also held $522.2 million of short-term investments in held-to-maturity
securities which consisted of treasury bills. Our principal use of cash is to
fund our operations to support growth.

In February 2021, we completed a follow-on public offering, in which we issued
and sold 1,500,000 shares of our common stock, resulting in net proceeds to us
of $181.6 million after deducting underwriting discounts and commissions and
deferred offering costs.

In November 2021, we completed a follow-on public offering, in which we issued
and sold 1,300,000 shares of our common stock, resulting in net proceeds to us
of $279.0 million after deducting underwriting discounts and commissions and
deferred offering costs.

In May 2022, we entered into a Sales Agreement ("Sales Agreement") with Stifel,
Nicolaus & Company, Incorporated ("Stifel"), under which we may offer and sell
from time to time at our sole discretion, up to an aggregate of 800,000 shares
of our common stock, par value $0.0001 per share, through Stifel as our sales
agent. During the nine months ended September 30, 2022, we sold 125,334 shares
of our common stock under the Sales Agreement at a weighted average price of
$188.98 per share resulting in net proceeds to us of $23.0 million, after
deducting underwriting discounts and commissions and deferred offering costs.
The Company intends to use the net proceeds from the shares of common stock
offered and sold to primarily replenish funds expended to satisfy anticipated
tax withholding and remittance obligations related to the net settlement upon
vesting of restricted stock unit awards ("RSU") granted to employees under the
equity incentive plans.

Our purchase obligations primarily include design and simulation licenses. For
information about our contractual obligations refer to "Note 5 - Lease" and
"Note 9 - Commitments and Contingencies" of the Notes to Condensed Consolidated
Financial Statements.

We expect to continue our investing activities, primarily in the purchase of property and equipment and capitalized software, to support research and development, sales and marketing, product support, and administrative staff.



We believe that our existing cash and cash equivalents and our short-term
investments will be sufficient to meet our cash needs for at least the next 12
months. Over the longer term, our future capital requirements will depend on
many factors, including our growth rate, the timing and extent of our sales and
marketing and research and development expenditures, and the continuing market
acceptance of our solutions. In the event that we need to borrow funds or issue
additional equity, we cannot provide any assurance that


                                       22
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any such additional financing will be available on terms acceptable to us, if at
all. If we are unable to raise additional capital when we need it, it would harm
our business, results of operations and financial condition.


                                                             Nine Months Ended September 30,
                                                               2022                   2021
                                                                     (in thousands)
Net cash provided by operating activities                $          34,945       $        34,413
Net cash used in investing activities                             (547,910 )             (22,484 )
Net cash provided by (used in) financing activities                 (4,888 )             181,588

Net increase (decrease) in cash and cash equivalents $ (517,853 ) $ 193,517






Operating Activities

In the nine months ended September 30, 2022, net cash provided by operating
activities of $34.9 million was primarily due to a net profit of $24.8 million
and non-cash expenses of $48.1 million, partially offset by a net outflow in
operating assets and liabilities of $37.9 million. Non-cash expenses were mainly
related to depreciation and amortization, stock-based compensation expense and
non-cash interest. Net outflow in operating assets and liabilities increased
primarily due to an increase in inventories as we built our wafer inventory
levels, an increase in prepaid expenses and other assets due to timing of
payments, and lower accrued expenses primarily due to timing of accrued payroll
and related benefit payments, partially offset by higher accounts payable due to
timing of payments.

Investing Activities

Our investing activities consist primarily of purchase of short-term
investments, capital expenditures for property and equipment purchases. Our
short-term investments were primarily in treasury bills to earn interest. Our
capital expenditures for property and equipment have primarily been for general
business purposes, including machinery and equipment, leasehold improvements,
acquired software, internally developed software used in production and support
of our products, computer equipment used internally, and production masks to
manufacture our products.

In the nine months ended September 30, 2022, net cash used in investing
activities was $547.9 million. We paid $519.9 million to purchase short-term
investments in held-to-maturity securities. We paid $25.0 million largely to
purchase test and other manufacturing equipment to support the increase in
demand of our products and other property and equipment for general business
purposes. We paid $3.0 million to purchase intangible assets.

Financing Activities



Our financing activities have primarily consisted of proceeds from issuance of
shares and withholding of taxes on restricted stock units. During the nine
months ended September 30, 2022, we sold 125,334 shares of our common stock
under the Sales Agreement resulting in net proceeds to us of $22.6 million,
after deducting underwriting discounts and commissions of $0.5 million and
deferred offering costs of $0.6 million. The net proceeds from the Sales
Agreement were offset by tax withholdings paid on behalf of employees for net
share settlement of $27.9 million.

Off-Balance Sheet Arrangements



During the periods presented, we did not have any relationships with
unconsolidated entities or financial partnerships, such as entities often
referred to as structured finance or special purpose entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements
or other contractually narrow or limited purposes.

Critical Accounting Policies and Estimates



Our condensed consolidated financial statements have been prepared in accordance
with GAAP. The preparation of these financial statements and accompanying
disclosures requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities in the consolidated financial
statements and the accompanying notes. The Securities and Exchange Commission,
or SEC, has defined a company's critical accounting policies as policies that
are most important to the portrayal of a company's financial condition and
results of operations, and which require a company to make its most difficult
and subjective judgments, often as a result of the need to make estimates of
matters that are inherently uncertain. Based on this definition, we have
identified our most critical accounting policies and estimates to be as follows:
(1) revenue recognition; (2) inventory; (3) stock-based compensation; and (4)
accounting for income taxes. Although we believe that our estimates,
assumptions, and judgments are reasonable, they are based upon information not
presently available. Actual results may differ significantly from these
estimates if the assumptions, judgments, and conditions upon which they are
based turn out to be inaccurate. Management believes that there have been no
significant changes to the items that we disclosed as our critical accounting

                                       23
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policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022.

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