Monolithic Power Systems Q3 2025 Earnings Results & Report

Monolithic Power Systems EPS Results

• Actual EPS: $4.73
• Consensus EPS: $4.62
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $4.06
• EPS Beat Rate: 6 of last 8 quarters

Monolithic Power Systems Revenue Results

• Actual Revenue: $737.18 million
• Expected Revenue: $720.66 million
• Beat/Miss: Beat by +$16.52 million
• YoY Revenue Growth: +18.90%

Monolithic Power Systems (NASDAQ:MPWR) (NASDAQ: MPWR) is a semiconductor company that designs, develops and markets high-performance power-management solutions. Its products help convert, regulate and control electrical power in electronic systems, with applications spanning computing and storage, automotive, industrial, communications infrastructure, consumer electronics and other markets.

The company’s product portfolio includes power-management integrated circuits, DC-to-DC converters, power modules, battery-charging and management solutions, LED drivers, motor drivers, voltage regulators and related analog and mixed-signal devices. These products are used by manufacturers to improve the efficiency, reliability and size of electronic equipment and systems.

Monolithic Power Systems was founded in 1997 by Michael Hsing, who serves as the company’s chief executive officer. The company is headquartered in Kirkland, Washington, and serves customers globally through operations and sales activities in North America, Asia, Europe and other international markets.

Monolithic Power Systems Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: MPS reported a record quarter with $737.2 million revenue (up 10.9% sequential, 18.9% YoY) and highlighted new wins including a major Tier‑1 ADAS design win and its first full BMS design win for a robotics platform, signaling progress toward becoming a solutions provider.
• Positive Sentiment: The enterprise data business is showing renewed momentum with layering of additional customers and management expects strong growth—management cited a potential 30–40% growth in 2026, with material ramps skewed to the second half of the year.
• Negative Sentiment: Gross margins are likely to remain around the mid‑55% range (±20–30 bps) for the foreseeable future due to short‑term order profiles and limited backlog visibility, with any margin improvement from the systems/solutions transition expected to be gradual.
• Neutral Sentiment: Company visibility remains short (~3–4 months) with channel inventory days unchanged and demand described as dynamic; management says they can quickly adapt but have limited near‑term clarity (especially for Q1 and early 2026).

Presentation

[Operator]

Welcome, everyone, to the MPS third quarter 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Hsing, CEO and Founder of MPS, Bernie Blegen, EVP and CFO, and Tony Balow, Vice President of Finance. Earlier today, along with our earnings announcement, MPS released a written commentary on the results of our operations. Both documents can be found on our website. Before we begin, I'd like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties.

[Operator]

The risks, uncertainties, and other factors that could cause actual results to differ from these forward-looking statements are identified in the Safe Harbor Statements contained in the Q3 2025 earnings release, our Q3 2025 earnings commentary, and in our SEC filings, including our Form 10-K, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I would like to turn the call over to Bernie Blegen.

[Bernie Blegen, EVP and CFO at MPS]

Thanks, Arthur. Good afternoon, and welcome to our Q3 2025 earnings call. In Q3, MPS achieved record quarterly revenue of $737.2 million, 10.9% higher than the second quarter of 2025 and 18.9% higher than Q3 of 2024. This performance reflected the ongoing strength of our diversified market strategy, consistent execution, continued innovation, and relentless customer focus. Let me call out a few highlights from the third quarter. Our diversified market strategy drove year-over-year revenue growth in all of our end markets. We continued to expand our automotive customer base with another major Tier 1 supplier adopting MPS for its next-generation ADAS solution. Additionally, we secured our first design win for a full battery management system solution on a robotics platform, which further supports our transformation from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider.

[Bernie Blegen, EVP and CFO at MPS]

Overall, we continue to demonstrate our ability to grow and swiftly adapt to all aspects of our business to the fluid geopolitical and macroeconomic environment. Our proven long-term growth strategy remains intact as MPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar up for questions.

[Operator]

Thank you, Bernie. Panelists, I would now like to begin our Q&A session. As a reminder, if you would like to ask a question, please click on the participant's icon on the menu bar and then click the raise hand button. Our first question is from Josh Buchalter of Cowen. Josh, your line is now open.

[Josh Buchalter, Director at Cowen]

Hey, guys. Thank you for taking my question and congrats on another beat and raise. I guess to start, maybe you guiding up about 1%. Can you give us the puts and takes of which end markets you expect to grow more or less? Of note, I think earlier you mentioned enterprise data was expected to be flat to down 20%. Any updates to the guidance for that segment in particular? Thank you.

[Bernie Blegen, EVP and CFO at MPS]

Sure, Josh. When you look at Q3, I think that we saw a little bit better than anticipated performance in both our enterprise data and industrial markets. Pretty much every other group was as we anticipated. Looking ahead, I know that you're interested in enterprise data. We're seeing a layering of additional customers that began in this layering effect in Q4 and is providing this good momentum as we look ahead into the early part of next year.

[Michael Hsing, CEO and Founder at MPS]

I should add all these. In a script readout, Bernie mentioned a list of market segments, and they started growing. We look back in the last few quarters, all these growths come from greenfield products that were released two, three years ago. Now we see the result. In the near future, in the next few quarters, we will see these will continue to enhance our revenues.

[Josh Buchalter, Director at Cowen]

Thank you for the color there. Maybe to follow up on that, Michael, I think you've been pretty clear. Philosophically, you have some reservations and even frustrations with the AI market because of the concentration and visibility. Given all the massive announcements over the last quarter, even in that space, maybe you could spend a couple of minutes talking to us about just big picture philosophically, how you're approaching these huge forecasts and I'm sure competitive sockets with massive scale. How do you guys figure out which opportunities to go after and service and your thoughts on the market, just given I think you've had frustrations about it, distracting from your diversified growth? Thank you both.

[Michael Hsing, CEO and Founder at MPS]

Yeah, as you said, it is a kind of a distraction, okay? Business is a business. The good money is a good money, okay? We don't want to take a bad money, okay? Overall, the bottom line is MPS wants to demonstrate in any segment of a market we are the best. We have possessed the best technology and the best customer service. We're solving problems. We demonstrated that we can have qualities and shipments. In all these categories, we are the best company. In terms of which AI company, we don't really care. We engage with the large companies and the small companies. We want to demonstrate that this is the best technology. When the revenue comes, it comes. Given times, as we said it, given time, all the true color will show.

[Josh Buchalter, Director at Cowen]

Thank you, Michael.

[Operator]

Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open.

[Ross Seymore, Managing Director at Deutsche Bank]

Hi, guys. Can you hear me?

[Bernie Blegen, EVP and CFO at MPS]

Just fine, Ross.

[Ross Seymore, Managing Director at Deutsche Bank]

Perfect. Thank you. I guess for my first question, the automotive side of things, you talked about getting an incremental design win on the ADAS side of things. There's a lot of choppiness in that end market across different GOs and at different points in time, cyclically, geopolitically, all those sorts of things. From a secular growth perspective, can you just talk about ADAS as a percentage of your revenues now versus user interface or USB and those sorts of things, and how ADAS penetrating more of that market changes the growth rate, the content, the diversity of it? I just kind of want to capture that ADAS theme and what it really means to you.

[Bernie Blegen, EVP and CFO at MPS]

Sure. I think that we've demonstrated a history of establishing a strong presence in various markets with differentiated technology. You might recall going back a ways, it was USB ports for automotive, and now it's ADAS. What this does is it has a cascading effect where we're able to get adoptions and the design wins. We call out when these begin to ramp, and that's actually been more important to us than necessarily what the SAR is for a particular end market. In this one in particular, we have started with a lot of ADAS opportunities, particularly in the EVs because they're faster to come to market. What that's given us the opportunity has been is to showcase all of our other technologies, and now we're starting to see those ramp, whether it's in body electronics or different applications.

[Bernie Blegen, EVP and CFO at MPS]

What we're more excited about is as we look ahead and the transformation of the end market for automotive as it moves into 48V and zonal electronics.

[Michael Hsing, CEO and Founder at MPS]

We don't know the breakdown to answer your question exactly. Maybe Bernie has some ideas. I think it's less than half. I think it's well less than half.

[Bernie Blegen, EVP and CFO at MPS]

It's considerably less than half.

[Michael Hsing, CEO and Founder at MPS]

Okay. I'm just looking at the number of cars and also our revenues. That cannot be more than half. In the ADAS side, more and more cars, including combustion engine cars, they're adopting ADAS. We will see a significant growth in the next few years. That's where we anticipate it.

[Ross Seymore, Managing Director at Deutsche Bank]

Great. Thanks for that, color. I guess as my follow-up, pivoting to another thing you talked about in your press release of moving from a silicon or chip-based supplier to more of a solution provider, how do you think about the gross margin implications of that over time? You guys were a few points higher than you are now a couple of years ago. We've talked about what does it take to get you back to kind of the upper 50% from the mid-50%-ish where you are today. Does that system approach help, or is that actually a headwind in the gross margin as you go forward, as much as it might even be operating margin accretive?

[Michael Hsing, CEO and Founder at MPS]

I don't think so. I don't think that there would be a headwind. A lot of large systems that we're building, we're kind of learning how to do it. It creates a lot of issues. Once the volume goes up, we're learning it. I think things get a lot better. Since last year, I guess, it will improve quite a bit. We're actually making our own test equipment, as a lot of people know about it. We eat our own dog food. Creating all fully automated test systems, those types of products never existed before. I think ultimately we'll improve the yield and improve the gross margins.

[Ross Seymore, Managing Director at Deutsche Bank]

Thank you.

[Operator]

Our next question is from Joe Quatrochi of Wells Fargo. Joe, your line is now open.

[Joe Quatrochi, Director at Wells Fargo]

Yeah, thanks for taking the questions. Maybe first, I just wanted to ask, you know, with bedded within the 4Q guide, is there any help you can kind of provide in just thinking about the end markets? I think there's some seasonality to maybe like a consumer in the fourth quarter. I think enterprise data, you guys were previously thinking that would be up somewhere like high single digits sequentially in the December quarter. Is that still the case?

[Michael Hsing, CEO and Founder at MPS]

Anticipating a market, that's a very difficult call. As you guys are betting on which stocks, it's difficult. We have our way of operating our business. We do the best, develop a technology, engage our customers closely. Probably the same way that you pick how you pick stocks, okay? You engage customers closely. Whatever happens, happens. You can't predict what the market is, and we don't do that, actually.

[Bernie Blegen, EVP and CFO at MPS]

Since we last talked about the second half of this year, nothing's fundamentally changed in our positioning.

[Joe Quatrochi, Director at Wells Fargo]

Okay. Thanks for that. That's helpful. Maybe just also following up, like, you know, I think in the press release or prepared remarks, you had a comment around the first design win for a full battery management system solution for robotics platform. Can you talk about what drove that and how you think about the revenue opportunity ramping there and more wins in the future?

[Michael Hsing, CEO and Founder at MPS]

Yeah. We probably get too excited to talk about those. The fact is that we got excited because we see robotics happening. We kind of predicted that that's the BMS going to happen. We got in and we designed it in. Our customers engage with us. There's a ground-up system that we developed, and we see more and more these type of a system will happen. These kind of systems will become a reality. That's the reason we put out there.

[Tony Balow, VP of Finance at MPS]

I'll just add on very specifically on that one. Clearly, we called it out because of the fact it was the first opportunity that we had the design win on. In terms of a revenue ramp, that's really starting in 2026. It's not in and of itself necessarily a needle mover on the model, but I do think it sort of starts the wave of these full solution design wins that we might have going forward.

[Michael Hsing, CEO and Founder at MPS]

Yeah. That's kind of the same kind of way in making a point that is, okay. We do start to do robotics stuff for the actuators and the IC for actuators and the BMS charging, wireless chargings. These are back a few years ago. We didn't even know that the robotics world was taking off. I've been talking about robotics since 2017 or 2018. The AI-assist robot are more and more beliefs, okay, that we're really starting taking off. That's kind of a project that we think is, oh, we picked the winners. We're glad to see it. That's why we're probably too excited to talk about this.

[Joe Quatrochi, Director at Wells Fargo]

Thank you.

[Operator]

Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.

[Quinn Bolton, Managing Director at Needham]

Thank you. Congratulations, Michael, Bernie, and Tony. I guess I wanted to start with a big picture question, just, you know, looking through this earnings season, Intel's talked about, you know, sort of shortages of server CPUs. We've seen hyperscalers significantly increasing CapEx. NVIDIA talked about $0.5 trillion of demand in 2025 and 2026. I guess my question is, about a year ago, I think you guys were seeing very, very short lead times in that business and dealing with some level of pricing pressure. I'm wondering, as you're looking at the second half and more importantly into next year, have you started to see any change in customer lead times? Are they giving you better forecasts across the enterprise data segment? Is the pricing on voltage regulators and vertical power, has that changed at all over the last quarter or so?

[Bernie Blegen, EVP and CFO at MPS]

Quinn, thanks for the question. Let me start that this remains a very dynamic market. We're responding to a variety of requests when it comes to the orders and the expectations from our customers. In some ways, we're getting improved predictability because we're adding, we're layering, as I said, more customers into the mix. As far as the market itself, particularly with all the blockbuster announcements that have been coming out recently, you can see how quickly things are changing. What our position is, is that we can't control our customers necessarily, but we can position the company to be as responsive as we can.

[Quinn Bolton, Managing Director at Needham]

Is this sort of dynamic market? I mean, if folks are scrambling to get capacity, has that had any lifting effect on pricing? I'll ask my second question.

[Michael Hsing, CEO and Founder at MPS]

Yeah. Any market segment started from the ramp rapidly at the beginnings always caused these imbalances, okay, supply imbalance. Okay. I mean, on the AI side, clearly it's like that. I mean, once it goes on, things will smooth out.

[Bernie Blegen, EVP and CFO at MPS]

Yeah. To be specific to your question, I don't think we've seen any recent or sustainable trends in pricing one way or the other.

[Quinn Bolton, Managing Director at Needham]

Okay. Perfect. Second question for you, Bernie, gross margins have been sort of ticking down over the last year or two. Can you give us any sense? Do you think they sort of stay in this mid-55%, 55.5% range? Is there some point next year that you start to see gross margins starting to move higher, either driven by mix or new products? Should we be thinking about margins being fairly flat over the next year or two?

[Bernie Blegen, EVP and CFO at MPS]

Sure. As I've commented on prior calls, we've seen about three or four quarters in a row where I'd say that we have seen a strong uptick in demand, and that continues even today. What makes this cycle different than ones that we've experienced in the past is that the orders are more short-term in nature. We're not seeing a large buildup and backlog in future quarters. Without that visibility, it limits our capacity to be able to manage the mix of business that we want to be able to have expansion in gross margins. For the foreseeable future, until the demand profile changes to elongate the buildup of backlog, I believe that we're going to be in sort of the steady range, ±20 basis points, 30 basis points in the mid-55%.

[Quinn Bolton, Managing Director at Needham]

Got it. Thanks for that.

[Michael Hsing, CEO and Founder at MPS]

We have a lot of products, a few thousand products, and a few, 40,000 customers-50,000 customers. To move, it's very stable margins. With the transitions to more solution-provided companies, as I said earlier, all these, it has to be automated. As time goes on, the margin will improve, but not quickly. That mass is very big. We know it is operated on the low end of our margin profiles. The longer term will improve, and we stick with a gross margin range.

[Quinn Bolton, Managing Director at Needham]

Got it. Thank you.

[Operator]

Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.

[Tore Svanberg, Managing Director and Senior Analyst at Stifel]

Yes. Thank you, Michael. Bernie, Tony, congrats on another record quarter. By the way, some of that dog food you're referring to must be pretty proprietary stuff. My first question is on the enterprise data segment. That's about an $800 million business right now. My understanding is you're on a journey here, right? You're still selling predominantly chips. You're obviously moving into module subsystems, eventually systems. I'm not looking for any numbers per se, but could you sort of let us know where we are in that journey? I mean, building an $800 million business with chips, and where could we eventually go here with obviously more and more subsystem type solutions for enterprise data?

[Michael Hsing, CEO and Founder at MPS]

If I understand your question correctly, I can answer that way. We're anticipating building multiple millions of units per month type of a shipment. All these highly integrated modules never existed before. How do we test this thing? How do we achieve a single low single digit PPM failures? That is, we never encountered that kind of issues before. We started using our own robotic systems to make that happen. Now we achieved very high volumes, 100% automated, including reliability test. That's our future, and the goal is building multiple million units a month for that. $10 million a month for that. That's the near-term goal.

[Tore Svanberg, Managing Director and Senior Analyst at Stifel]

Yeah, that's very helpful. Thank you for that, Michael. Did you also have a response to my question on the enterprise data? Where are we in this journey towards delivering more system-level solutions, especially with our talking about rack-level power and so on and so forth?

[Michael Hsing, CEO and Founder at MPS]

This is at the very beginning. Maybe I think it's module power skills, less than a third, okay, and less than a third of our revenues. It grew in the last half years. We expected it to grow, some got delayed. It now started happening. In the next years, could be much more.

[Tore Svanberg, Managing Director and Senior Analyst at Stifel]

Great. Thank you for that, Michael.

[Tony Balow, VP of Finance at MPS]

Maybe just to add on to the back of that, Tore, I think as you start talking about some of these solutions for 800V, as we discussed, those are like 2027, 2028 revenue ramps. I think it supports what Michael was saying, that we're still at the front end of this opportunity in the data center force.

[Tore Svanberg, Managing Director and Senior Analyst at Stifel]

Great. Thank you again.

[Michael Hsing, CEO and Founder at MPS]

I think in the investment communities, if you have an 800V technology, data center transformer is like a flip switch. The lights turn on, turn on. It's not like that. The light turned on, it takes a couple of years, more than a couple of years to see the revenues. These take three, four years.

[Tore Svanberg, Managing Director and Senior Analyst at Stifel]

Great perspective. Thank you again.

[Operator]

Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.

[Rick Schafer, Managing Director and Semiconductor Equity Analyst at Oppenheimer]

Oh, thanks. I'll add my congratulations, you guys. Maybe if I could start with an auto question, kind of a follow-up. I know we talked about BMS robotics, but I know BMS becomes a bigger contributor for your auto segment next year. You mentioned a couple of things, Michael, in an earlier question, but I'm just curious if you could give some guide rails or provide some guide rails about potential content trends for MPS as you start ramping some of those BMS opportunities. I mean, again, not asking for dollar content per car, but does it double or triple, those kinds of numbers? What does it do to your potential content per vehicle moving into that BMS space in a more meaningful way? As part of your answer, I'm curious where some of the lowest hanging fruit is for you guys. Is it 48V? Is it power isolation?

[Rick Schafer, Managing Director and Semiconductor Equity Analyst at Oppenheimer]

That kind of thing. Thanks.

[Michael Hsing, CEO and Founder at MPS]

It's actually all of them. BMS revenues for autos and for EVs. It's a bit far away. Our customer, it's a very concentrated market. There's a few players. Well, it's not a few carmakers, and gradually all of them, they want a BMS. Our customers are glad to see MPS is in this to develop that series of that type of a product tools. In terms of other low-hanging fruits, we see 48V as a trend. We developed those products back a few years ago, like five, six years ago. We provide all these integrated solutions rather than these discrete ones, and the size can be 6x-7x smaller. The other one is 800V for EV. Now all goes up, and from 400V to 800V. In the China market, a lot of cars already have 800V.

[Michael Hsing, CEO and Founder at MPS]

Our silicon carbide solutions, not for traction inverters and for control systems, these products will be shined. That's, I pulled off my hair at this moment.

[Tony Balow, VP of Finance at MPS]

Rick, maybe just to shape you a little bit on timing there to make sure. I think what we said is the layering of opportunities in auto really sort of out of the end of this year and the next year starts with design wins that we have, bringing new content to market per vehicle. You start to see zonal designs hit market next year, then ramping through into 2027. The battery management system and traction inverter solutions are really kind of more like 2027 and beyond, just to make sure you understand sort of how those revenue opportunities are layering in.

[Rick Schafer, Managing Director and Semiconductor Equity Analyst at Oppenheimer]

Good. Thanks, Tony, for that color. Thanks, Michael. If I could ask for my follow-up, it's on HVDC. I appreciate the timing commentary you provided a second ago, Tony, but I'm also curious. I'm just trying to figure out the right way to think about that emerging market. Can you give a sense of how HVDC compares to how you've described at your analyst day earlier this year, maybe how you describe the 48V accelerator power opportunity? Or in any terms you want, just to try to give a sense of what that market represents to you guys or what you think it could.

[Michael Hsing, CEO and Founder at MPS]

I think it's a 48V system. It's clear. There's a reason why it's 48V. It's going back to those telecom times. Telephone systems are 48V, ±48V, or ±45V. First, it started with the server side. We talk about four years, this thing. It has to be the solutions because once your current goes up, everybody remembers the car using a 6V battery, then it became 12V, and it's ultimately moving up to 48V. These are all for control systems, 48V. The data center is already happening, 48V. I see. That's why I predict all the building systems, all the building automations are going to be on 48V, and the building will be a DC power solutions. The opportunity is great. As we put out, engage our customers with building automation systems, and we prove the point, actually, it's so welcome for that type of a product.

[Michael Hsing, CEO and Founder at MPS]

That's my view at this time.

[Tony Balow, VP of Finance at MPS]

Rick, I think part of your question was also on the 800V high voltage DC for data center as well, right?

[Rick Schafer, Managing Director and Semiconductor Equity Analyst at Oppenheimer]

Yes.

[Tony Balow, VP of Finance at MPS]

I think on that one, we've been pretty careful about trying to go size the opportunity because, one, it's very far out. Two, we don't know how it will ramp into market. I think what we have said is since we don't play in that part of the market today, the business we get is sort of all accretive to our overall SAM going forward. I think we want to be careful about sizing the market yet, given how far out it is and not knowing how it will layer into the data centers going forward.

[Rick Schafer, Managing Director and Semiconductor Equity Analyst at Oppenheimer]

I appreciate that. Thanks, you guys.

[Operator]

Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.

[Gary Mobley, Managing Director and Senior Equity Analyst at Loop Capital]

Hey, guys. Let me extend my congratulations on the continued strong growth and continued execution. I appreciate the fact that you still only have about three to four months of visibility, given the capacity that you can support and the quick turns business you can support. Can you confirm whether bookings continue to improve sequentially, and what are the seasonal considerations as we look out into the first quarter?

[Michael Hsing, CEO and Founder at MPS]

It's very difficult for us to predict that, okay, what's the booking? Where's the bookings? We build our inventory. We try to build. Look at the inventory now. We try to build up as a case way below our models. Whatever comes, we anticipate it. We can swiftly adapt.

[Bernie Blegen, EVP and CFO at MPS]

Yeah, just to add to that, we really don't have a lot of visibility into the first half of next year. We can definitely point to the normal drivers as far as both enterprise data and automotive are very well positioned for new revenue ramps, but getting both the timing as well as getting that to balance out, we don't have a strong view on Q1 yet.

[Gary Mobley, Managing Director and Senior Equity Analyst at Loop Capital]

Okay. Appreciate that. If I'm not mistaken, your distribution inventory as of mid-year was at the low end of your five to eight-week target range, and it decreased in the June quarter. What was the trend sequentially for the September quarter? When might you take that distribution inventory back up to maybe the mid to upper part of that normal range?

[Bernie Blegen, EVP and CFO at MPS]

Yeah. Currently, the Q3 channel inventory was unchanged in terms of days from where it was in the prior quarter. We take from that that we're satisfying real demand at this point, which again is a reflection of the quick turns business that we're working with.

[Gary Mobley, Managing Director and Senior Equity Analyst at Loop Capital]

Thank you.

[Operator]

Our next question is from Chris Caso of Wolfe Research. Chris, your line is now open.

[Chris Caso, Managing Director at Wolfe Research]

Yes, thank you. Good evening. The first question is on enterprise data. What are sort of the puts and takes as you look into next year? This year there was some changes in market share in that, which affected that business. I guess I'm going to assume that things are cleaner as you go from this year into next year. I mean, one, do you expect to grow that business as you go into next year?

[Michael Hsing, CEO and Founder at MPS]

It’s cleaner. You see that this year is the next year’s. This year’s, okay. We are doing pretty good this year. As I said earlier, the module business is growing. All these, this area, MPS technology shines. The higher power, the better it is, because we provide the highest density power density products that fit this market perfectly. In the next couple of years, you will see it. MPS is a major player in this market segment. Also, the market is big. It’s not okay. We don’t want to play. We don’t want to be a MPS only. You want to have multiple competitors. It’s good for the industry.

[Bernie Blegen, EVP and CFO at MPS]

Yeah, I could see enterprise data growing in the range of 30%-40% in 2026 for us. Much of that, though, would be back in the second half of the year. While we've seen a number of new players that have been layered in, I think the material ramps are more weighted to the second half of 2026.

[Chris Caso, Managing Director at Wolfe Research]

That's very helpful. If I could follow on to that. Since you provided a little bit of color on that, Bernie. When you look at that 30%-40% growth, is that because I know that some of the vertical power designs, for example, you have more content. What's the driver of that? Is it fairly broad-based? Is it skewed towards some of the ASIC solutions, more towards vertical power? Whatever kind of color you can give behind that 30%-40% expectation.

[Michael Hsing, CEO and Founder at MPS]

As a CEO, I don't know how to make a 30%-40% cost. I don't know. The opportunity is there. If we didn't deliver a 30%-40%, the stocks I see from $900 to $400, what kind of fuck-up is that? I don't want to make them very hot, just waiting for the numbers. Let the numbers show it.

[Chris Caso, Managing Director at Wolfe Research]

Fair enough. Thank you.

[Operator]

Our next question is from Kelsey Chia of Citi Research. Kelsey, your line is now open.

[Kelsey Chia, Analyst at Citi Research]

Hi, Michael and Bernie. Thanks for taking my question. My question is on the competitive landscape. I was hoping you could share more, especially with regards to the material side of things, like gallium nitride and silicon carbide. I think your biggest enterprise data customer has been signing a lot of partnerships with all these semiconductor companies. I was just wondering about MPS' positioning in those, and if you actually see those materials as being important in the next generation of the power modules and chips.

[Michael Hsing, CEO and Founder at MPS]

We do our own silicon carbide. We're building modules. Also, we are seeing we are using again. That's a very, very early stage. We're evaluating it. Also, don't forget about silicon. Silicon power MOSFETs have evolved. We engaged a lot of new developments. A lot of the data showed it can be very cost-effective and also can compete with the silicon carbide.

[Kelsey Chia, Analyst at Citi Research]

Got it. Thank you.

[Michael Hsing, CEO and Founder at MPS]

That's a very, very recent development.

[Kelsey Chia, Analyst at Citi Research]

Yeah. Okay. Got it. I would just like to have a sense of how do you guys feel today versus a quarter ago? Especially you guys have come a long way since the start of the year when you're dealing with all these market share changes, visibility on the ASIC customers, and things like that. Given the slew of announcements from all these big mega partnerships, how do you see that relative to your opportunities? Also, given the maturity of the supply chain, I believe things are probably—the supply chain partners are getting to a good cadence. How do you guys feel with regards to those recent announcements relative to your opportunity set?

[Michael Hsing, CEO and Founder at MPS]

I don't measure quarter by quarters. I measure by multiple years. I can't tell you that.

[Bernie Blegen, EVP and CFO at MPS]

I guess the simplest way is we're very broadly indexed across not just the merchant vendors or large ASICs, but medium and small-time opportunities. All of these need to find their way into the marketplace. Right now, we're still very, very early in the process. As Michael said, it's very hard to sort out in any particular time period. I think that we're as well indexed amongst all the opportunities as anybody in this market.

[Kelsey Chia, Analyst at Citi Research]

Okay, thank you.

[Operator]

Our last question is from Jack Egan of Charter Equity Research. Jack, your line is now open.

[Jack Egan, Equity Research Analyst at Charter Equity Research]

Great. Thank you for taking the questions. I had one on enterprise data and then one on modules more broadly. The shift to modules and vertical power delivery with the custom ASIC ramp should be a pretty big tailwind for MPS. I'm kind of wondering about what the main drivers have been, at least so far, for those customers that are switching from lateral to modules or vertical power. I'm not really sure if you have this level of granularity, but among the major benefits, like higher power density, higher efficiency, smaller footprint on the top side of the board, etc., is there any one characteristic that's being cited by your customers as the main reason that they are moving to those modules or vertical power delivery?

[Michael Hsing, CEO and Founder at MPS]

From a chip to module, whoever stays with the module stays with the module. Start with the module. Whoever stays with the chip stays with the chip. MPS provides both, both chip solutions and module solutions at this time. I don't know if it answered that question for you.

[Jack Egan, Equity Research Analyst at Charter Equity Research]

Got it. Okay. Just kind of on the modules more broadly, I believe, if I understood it correctly, the last quarter you mentioned that modules outside enterprise data could be like 10%-15% of your total revenues. I was curious how much of your revenue base, or I guess addressable market outside enterprise data, would be eligible for switching to modules, even if you're looking several years into the future. How high could that mix of modules outside enterprise data go?

[Michael Hsing, CEO and Founder at MPS]

That's a good question. We build those modules, very similar to enterprise modules, in 2017. Industrial market adoption is kind of slow, actually faster than telecoms. These are two market segments that we focus on. To our surprise, the auto industries also want to use it because it's easy to implement. The other one is semi-equipment, and that's a large segment. We didn't realize that. Now we see all these revenues are happening there. I think in the next couple of years, we'll be growing faster than three or four years ago. We're picking up a business. The rate of increase is picking up.

[Jack Egan, Equity Research Analyst at Charter Equity Research]

Got it. Thanks, Michael. That's helpful.

[Michael Hsing, CEO and Founder at MPS]

Good. Good.

[Operator]

This concludes our Q&A session. I would now like to turn the webinar back over to Bernie.

[Bernie Blegen, EVP and CFO at MPS]

I'd like to thank you for all joining us for this conference call. I look forward to talking to you again during our fourth quarter 2025 conference call, which will likely be held in early February. Thank you and have a nice day.

Participants

Executives

• Michael Hsing, CEO and Founder

Analysts

• Quinn Bolton, Managing Director at Needham
• Josh Buchalter, Director at Cowen
• Jack Egan, Equity Research Analyst at Charter Equity Research
• Chris Caso, Managing Director at Wolfe Research
• Tore Svanberg, Managing Director and Senior Analyst at Stifel
• Bernie Blegen, EVP and CFO at MPS
• Gary Mobley, Managing Director and Senior Equity Analyst at Loop Capital
• Kelsey Chia, Analyst at Citi Research
• Tony Balow, VP of Finance at MPS
• Ross Seymore, Managing Director at Deutsche Bank
• Rick Schafer, Managing Director and Semiconductor Equity Analyst at Oppenheimer
• Joe Quatrochi, Director at Wells Fargo