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:
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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;
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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;
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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;
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anticipated trends, challenges and growth in our business and the markets in which we operate, including pricing expectations;
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our expectations regarding our revenue, gross margin, and expenses;
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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;
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our dependence on our largest customer;
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our customer relationships and our ability to retain and expand our customer relationships and to achieve design wins;
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our expectations regarding the success, cost, and timing of the introduction of new products;
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the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets;
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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;
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our goal to become the leading precision timing solution provider for advanced and challenging applications;
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our positioning of being designed into current and future systems;
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our belief that our advanced packaging designs can enable the smallest footprints in the industry, as well as deliver superior reliability and performance;
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competition in our existing and future markets;
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our expectations regarding regulatory developments in
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our expectations regarding the performance of, and our relationships with, our third-party suppliers and manufacturers;
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our expectations regarding our and our customers' ability to respond successfully to technological or industry developments;
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our ability to attract and retain key personnel;
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our expectations regarding intellectual property and related litigation;
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the adequacy and availability of our leased facilities;
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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 -------------------------------------------------------------------------------- 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 inAsia , 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 theU.S. 18 -------------------------------------------------------------------------------- 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
We maintain an office in Lviv,Ukraine . In connection withRussia's invasion ofUkraine inFebruary 2022 , we have prioritized the safety and welfare of our employees and their families inUkraine . We have also worked with our employees worldwide to minimize any disruption to our operations and business as a result ofRussia's invasion ofUkraine . We no longer engage contractors inRussia .
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 endedSeptember 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 19 -------------------------------------------------------------------------------- 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 endedSeptember 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 endedSeptember 30, 2022 and 2021, respectively, and 19% and 23% of our revenue for the nine months endedSeptember 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 endedSeptember 30, 2022 and 2021, respectively, and 45% and 61% of our revenue for the nine months endedSeptember 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 endedSeptember 30, 2022 and 2021, respectively, and 72% and 63% of our revenue for the nine months endedSeptember 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 endedSeptember 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 endedSeptember 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
Gross margin was higher by 4% in the nine months ended
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 -------------------------------------------------------------------------------- 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 endedSeptember 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 endedSeptember 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 endedSeptember 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 endedSeptember 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 . 21 --------------------------------------------------------------------------------
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 endedSeptember 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 ofSeptember 30, 2022 andDecember 31, 2021 , we had cash and cash equivalents of$41.6 million and$559.5 million , respectively. As ofSeptember 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. InFebruary 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. InNovember 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. InMay 2022 , we entered into a Sales Agreement ("Sales Agreement") withStifel, 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 endedSeptember 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 -------------------------------------------------------------------------------- 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
Operating Activities In the nine months endedSeptember 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 endedSeptember 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 endedSeptember 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 , orSEC , 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 --------------------------------------------------------------------------------
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
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