Monolithic Power Systems Q1 2025 Earnings Report

Monolithic Power Systems EPS Results

• Actual EPS: $4.04
• Consensus EPS: $4.00
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $2.81

Monolithic Power Systems Revenue Results

• Actual Revenue: $637.55 million
• Expected Revenue: $633.43 million
• Beat/Miss: Beat by +$4.13 million
• YoY Revenue Growth: +39.20%

Monolithic Power Systems Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 5:00PM ET

Monolithic Power Systems (NASDAQ:MPWR) engages in the design, development, marketing, and sale of semiconductor-based power electronics solutions for the storage and computing, automotive, enterprise data, consumer, communications, and industrial markets. The company provides direct current (DC) to DC integrated circuits (ICs) that are used to convert and control voltages of various electronic systems, such as cloud-based CPU servers, server artificial intelligence applications, storage applications, commercial notebooks, digital cockpit, power sources, home appliances, 4G and 5G infrastructure, and satellite communications applications. It offers lighting control ICs for backlighting that are used in systems, which provide the light source for LCD panels in computers and notebooks, monitors, car navigation systems, and televisions, as well as for general illumination products. The company sells its products through third-party distributors, value-added resellers, directly to original equipment manufacturers, original design manufacturers, electronic manufacturing service providers, and other end customers. It serves China, Taiwan, South Korea, Europe, Japan, Southeast Asia, the United States, and internationally. Monolithic Power Systems, Inc. was incorporated in 1997 and is headquartered in Kirkland, Washington.

Monolithic Power Systems Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Everyone to the MPS first quarter twenty twenty five earnings webinar. My name is Genevieve Cunningham and I will be the moderator for this webinar. Joining me today are Michael Singh, CEO and Founder of MPS Bernie Blegen, EVP and CFO and Tony Balo, 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.

[Operator]

Before we begin, I would 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 uncertainty. 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 Q1 twenty twenty five earnings release and in our SEC filings, including our Form 10 ks, 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'd like to turn the call over to Bernie Blegen.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Thanks, Jen. Good afternoon, and welcome to our Q1 twenty twenty five earnings call. In Q1, MPS achieved record quarterly revenue of $637,600,000 slightly higher than the fourth quarter of twenty twenty four and thirty nine point two percent higher than Q1 twenty twenty four. This performance reflected the ongoing strength of our diversified market strategy, consistent execution, continued innovation and strong customer focus. Let me call out a few highlights from the first quarter.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

At our March twenty Investor Day, we showcased MPS innovation across a range of areas, including new opportunities in robotics, automotive, data center, building automation, medical and audio. In Q1, Storage and Computing segment revenue increased 38% quarter over quarter on strong demand for both memory and notebook solutions. We continue to win designs across all major enterprise data customers with revenue ramps expected in the second half of this year. Finally, Q1 twenty twenty five automotive revenue increased 13% from Q4 twenty twenty four, the third consecutive quarter of sequential double digit growth. MPS continues to focus on innovation, solving our customers' most challenging problems and maintaining the highest level of quality.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

We continue to invest in new technology, expand into new markets and to diversify our end market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply stability and swiftly adapt to market changes as they occur. Our proven long term growth strategy remains intact as we continue our transformation from being a chip only semiconductor supplier to a full service silicon based solutions provider. I will now open the webinar up for questions.

[Operator]

Thank you, Bernie. Analysts, I would now like to begin our Q and A session. Our first question is from Tore Svanberg of Stifel. Tore, your line is now open.

[Tore Svanberg, Managing Director at Stifel Financial]

Yes. Thank you, Jen, and congratulations on a strong quarter, especially during this environment and especially the cash flows. First question is on enterprise data. So it did come in line with expectations, but you talked about some second half design wins ramping. Should should we infer by that that this is sort of the low point for enterprise data this year?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. At this time, we feel, of course, you know, when they're close to a second half of a year, so we feel a lot better. Okay. And the overall numbers, and that can can be better and all in the but at this time, we're not forecasting, okay, me and how good is good. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And so have a more a lot more confidence, okay, than at the beginning of the year.

[Tore Svanberg, Managing Director at Stifel Financial]

Great. Think yeah. Go ahead, Bernie.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

I think it's important to say that we're we're engaged with many different programs, either that we have the design wins or the qualification. So it's very broad based. But as Michael says, while our visibility is improving, clearly, the improvement is second half weighted.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yep. That that's that's that's a good comment. And there's a we do win many design have a many design wins, and customers design it in, and we're just waiting for the ramp.

[Tore Svanberg, Managing Director at Stifel Financial]

Great. Can I ask a follow-up?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. Go ahead.

[Tore Svanberg, Managing Director at Stifel Financial]

Yeah. So as my follow-up, Michael, I know over the last decade or so, you know, you've been working really hard to diversify globally, whether it's R and D centers, manufacturing partners and so on and so forth. I was hoping you could talk a little bit about those efforts, you know, especially given the current tariff environment. And, you know, how how are those efforts really impacting, you know, your position, right now?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. That's a that's a good, good question, Suma gave me. 10 started ten years ago, we start to emphasize, okay. You have a local manufacturing for local customers. And and The US was out of China.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

So, okay, started particularly started the last couple of years. And, okay, I mean, and right after pandemics, okay, I mean, the the volumes and we almost doubled more than doubled volumes and that we need to expand the the fab capacities and the serendipities, and that we all expanded in the outside of China. So okay. And at that time, the inside of China was full. And so now they give us a very good good positions, okay, for outside of China, for supplying The US side, and as well as the inside China.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

So that came in a in a so it's now is aware in a in a much better positions now.

[Tore Svanberg, Managing Director at Stifel Financial]

Great. Thank you for that. Congrats again.

[Tony Balow, Vice President of Finance at Monolithic Power Systems]

Sorry. The only thing I'd add right from addition to the supply chain, right, the diversification approach has really been on the front end as well around r and d. So as we've been looking both the design and the supply, that's really been a hallmark of the strategy over the long haul here.

[Operator]

Our

[Operator]

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

[Quinn Bolton, Senior Analyst at Needham & Company]

Thank you. And I'll offer my congratulations as well on the strong results and outlook. I guess, Bernie, Michael, maybe a follow-up on Tore's question just on enterprise data. I think you came into the year thinking enterprise data could be anywhere from flat plus or minus 20%. Sounds like you feel a little better about the business now.

[Quinn Bolton, Senior Analyst at Needham & Company]

Wondering, if you might be able to sort of tighten up that range on enterprise data. And then specifically, one of your large customers, sounds like there may have been a platform change, and I think some investors are concerned that that platform change on their next generation GPU could have an impact on your share. I wonder if you, might be able to address just your thoughts about how you're positioned in share as you come into the second half of the year.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

We were told by many customers, we offer a breadth of a product that meets our customer needs. Okay. We don't comment on a specific customers. Okay. And we don't come and, also, the matter of fact is that we don't know, and, okay, which our customers, like, projects are gonna ramp.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. All the changing as you said. Okay. And changing the schedules. And, okay, we these out of our concern, and we don't know it.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And as their their decision, but we we have enough product. We can meet the demand. And we're winning we feel better is because our customers recently qualified many of our our our product from the IC levels or to module levels. They they passed and, like, many rigorous testings, and that came in a and they feel good about it, and that came in now. We see some so we feel good about it.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

I don't know if we have a have a we expected to have a rent. So at this times, we not gonna forecast that was a half a year. So, like, in the past that we said or the last year, we said that this year could be a flattish in our numbers. We can let's see. It's an okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Let us deliver numbers. Hopefully, it's better than than we expected.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Yeah. And I I think that Michael is right that we have increased visibility because the design win and the qualification process is you know, down the road another month. But still as far as when the actual product ramps occur is outside of our control. So while I think that we feel more confident overall, the timing as far as the plus minus against the range, let's leave it wide open for right now.

[Quinn Bolton, Senior Analyst at Needham & Company]

Got it. And then maybe a follow-up question just Bernie on the second quarter guidance. Looks like gross margin ticks down by about 20 basis points at the midpoint. Wondered if you could just sort of address that. Is that just sort of mix shift within the product groups?

[Quinn Bolton, Senior Analyst at Needham & Company]

Are you starting to see either tariff costs and or pricing pressure? What accounts for the slight drop in gross margin in the second quarter?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Sure. There's not a specific event that we're pointing to. We're just saying that there's a mix of different things that may or may not be under us inside of our control. And so we're just being basically 20 basis points more conservative.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. Overall, all the new product we released whether have a higher higher margins. Okay. And the the higher volumes, the the more the margins is lowered. Okay?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And but we're not gonna intend to operate in a bit of a much below our corporate average. That's our goal. Yeah. We stay within the range. Yeah.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

We stay with our model. Yeah. Perfect. Thank you.

[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. Congrats on the results and guide. Thanks for the ask the question. In the first quarter, you had a very wide and divergent performance by segment to get you still to upside overall. Just wondering if there's any large segment moves in your second quarter guide, any kind of big divergent moves that you'd like to highlight?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

No. Actually, the range of variance for all of the groups is, you know, plusminus five percentage points. So, actually, we're seeing very narrow change sequentially. And, it's worth commenting there that, you know, I believe that if we were heavily influenced by pull ins, for example, that we might have seen a more dramatic fall off in a particular market segment. But when we when we look against particularly year over year, our strength is fairly broad based with enterprise data, as we've talked about, still looking for the ramp in the second half of the year.

[Ross Seymore, Managing Director at Deutsche Bank]

Got it. And I guess that leads to my second question, which was going to be something you kind of just touched on, which is the tariff side of things. I know you talked earlier about diversifying your manufacturing, and Tony mentioned about diversifying the R and D side of things. But as far as the pull ins, push outs, any sort of different behavior from your customers, I've been surprised how little of that has been admitted to or has actually occurred by some of the other analog companies. And so I just wondered what you guys are saying.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

If it happens, there's some pushing and pull pull out and that came in pulling a pull out and a push out. And those are small numbers, small enough, but it is that we we don't clearly understand it. Okay? And the overall numbers, very consistent as a as you see it. Well, Bernie mentioned that the q ones and that came the the the computing the computing segments and have grow the revenue growth and that came in that.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And so as a that's also as expected as a from last the previous quarters. And that came in the we have a lot of design win in those areas, and we are turning to and turning to our revenues.

[Tony Balow, Vice President of Finance at Monolithic Power Systems]

And, Rasa, like, that area, for sure. Right? There's a lot of other, you know, business factors beyond, you know, just tariff potential tariff related pull ins because there's AIPC, there's the end of Win 10 support, there's gaming. There's a lot of things that are driving the good business there as well.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. The key is the diversifications. And the best thing is that I can I can look at the numbers, and, okay, I don't I can't have any target number that I wanna analyze? Okay. Everything looks very smooth.

[Ross Seymore, Managing Director at Deutsche Bank]

Got it. Well, let's hope it stays that way. Thanks, guys.

[Operator]

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

[Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.]

Thanks, Jin, and congrats, guys, on the solid quarter. I guess my first question, if I could, really on data center or or server power, rack power to be specific. You talked about your 400 volt rack power solution at analyst day. I think you highlighted, like, 600 kilowatts within a couple years. I mean, we're seeing more in the press about even megawatt racks within the next, you know, handful of years.

[Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.]

So, you know, I was just curious if you could elaborate on the expected market opportunity or TAM there and and sort of when rack power sales are expected to become material for for NPS?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. Our customer asked us to pull in, I think, I believe with this month, we start if it's not this month, next month, so we deliver samples. I think it's this month. So okay. We deliver modules each module levels are, like, a 20 kilowatt levels.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And and for each modules, you add it together as somewhere as about six to 600,000 kilowatt to a million watt powers. And so we do have a product for that. Okay? And, well, we do have a initial developments, and now we have samples. Okay?

[Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.]

But, Michael, not to press you on it too hard, but would we see revenues, like material revenues this year, or is this more of a, you know, sample year, qualification year, and it's more of a 2026 revenue driver?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

I I believe it's a 2026. Okay. And and if you we we will we expected to have a higher good revenue come from the the type of modules. And so the same time, we prepare our our our production ramps. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Production qualifications. And, like, there's a lot of work in the in the second half of the years. But we fully expected it, and we anticipated that part of a growth.

[Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.]

Thanks for for all that, Michael. And then my second question is really on auto. You know, to me, you you I think you have several, like, material content drivers, you know, ramping this year. You know, you look at 48 volt transition beginning, 800 volt battery transition. You know, you've talked about power isolation modules.

[Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.]

I know you you talked about that at at Analyst Day also. I guess I'm curious, kind of a similar question in terms of, like, you know, how much do you expect BMS to contribute to to that segment, you know, to auto segment revenues this year? You know? And and I guess I'm curious if there are any regions favored within that.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. Of course, China's model changes much faster than than any other regions. But we do see in The US and The U Europe, even Korea's, and, okay, we're changing it. And changing not only from a 40 from a 400 volts to 800 volts and also from a 12 volts to 48 volts. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And those segments, in that case, started very these are still early at the very early stage. And we do ship those product now, okay, to to those segments. And I believe all the early changes, okay, we are all in it in in every model. Yeah. And I

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

and I think in automotive in particular here, because we've heard some concerns about unit volumes from North American and Chinese EVs in particular. But when we look at our second half, a lot of the momentum will be design wins that we secured in previous years that are coming to market, particularly in North America and in Europe. So we have a really, it's a a content driven second half story for automotive.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. Well, what you mentioned about 800 volts, okay, 48 volts, and those are probably we'll see a lot more in the 2026 and the '20 seventh.

[Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.]

Great. Thank thanks, you guys.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

K.

[Operator]

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

[Joe Quatrochi, Director & Equity Research Analyst at Wells Fargo]

Yes. Thanks for taking the questions. I wanted to follow-up on your comments on the storage and computing segment. Can appreciate you guys are seeing some design wins ramp. I guess as we look forward here, just given like the abnormal seasonality strength that you saw in 1Q, how do we think about that business kind of throughout the rest of this year?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

I are you talking about seasonality? I say we got I don't know. Now nowadays, okay, I'm being this a public NPS of being a public company of twenty one

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

years.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. And in recent years, I don't I don't know what the seasonality is. And but we we talk about the design wins in the in the memory side. Okay? In the memory part of the power management.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And we're talking about for the last year or two or so. So, like, even I think at one time, I even I even said it. Okay. When it will ramp up that this year, so okay. I mean but we don't know.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

So okay. These are kind of things that press plus and minus quarters. Okay. I mean, and the way you get it close to us and, okay, you get a you get orders and now you and by the end of the quarter, they don't push up and now here's the numbers. Okay?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And we're not very good at forecasting our numbers, but we're good at it. We're pretty good at delivering the numbers.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

But but I

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

think a really important point here as well is that that how broad based this is. So we're looking at DDR five, SSD, even HDD on the memory side. And then as Tony pointed out previously that within the notebook that there are a variety of factors that are that are driving that end market as well. So

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

CPU side. In the notebook side. The CPU side, desktops, and notebook side. And that came in and when Bernie mentioned all these segments, okay, these are pretty evenly growth. And, okay, maybe memory side and, okay, the DDR five is a little bit more than that more than the other ones.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay? And but they're pretty much, okay, consist okay. And evenly growth in the all all the all each segments.

[Tony Balow, Vice President of Finance at Monolithic Power Systems]

Yeah. And Joe, just relative to what Bertie said before going into q two, you know, everything's plus or minus a couple of points kind of thing. So you would infer from that that segment would not see a sharp fall off necessarily in Q2. Yep.

[Joe Quatrochi, Director & Equity Research Analyst at Wells Fargo]

Yep. No. That's helpful. I appreciate it. Maybe as a

[Joe Quatrochi, Director & Equity Research Analyst at Wells Fargo]

quick

[Joe Quatrochi, Director & Equity Research Analyst at Wells Fargo]

follow-up, looking at the enterprise data side, maybe on the non AI you know, segment of that that market, how are you thinking about traditional server CPU demand this year?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

They're doing good. And as you you probably know, listen, okay, all these are a lot of servers had a refresher. Okay. I mean, adapting whatever the intels are latest models and that and we we expected that, like as we said it, beginning over the last year, the year or year year before, we will increase our market shares. And that's now so okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

We're pretty much okay. And as we see as we said it in years ago.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Yeah.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Last year. Okay. I think just to stay on that point for a little bit longer is that, again, much like the other areas of our business, we're seeing consistent steady growth. It's not like a spike or a hockey stick. We will gain shares in the next years,

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

things that we even gain higher percentage in a in a server market.

[Joe Quatrochi, Director & Equity Research Analyst at Wells Fargo]

Perfect. Thank you.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. Our

[Operator]

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

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

Hey, guys. Thanks for taking my question, and congrats on the, solid first half performance. On the topic of of China, can you give us a sense of how big your business now is in China relative to, you know, local indigenous consumption? And, you know, given your China for China manufacturing supply chain, you know, how has that, and how will that position you versus, you know, larger your your larger US competitor?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

If you know our stories and okay. This is a okay. Lot of design and a lot of design activities and, like, a lot of manufacturing is happening in China Ten, Fifteen Years ago. And started 02/2016, we diversified not only from The U before it was The US and The China. And start of 02/1617, we established placing in in Europe, multiple places since then.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And and as I mentioned, the the before we constant mostly our manufacturing partners that's in China after the pandemic, so we migrated a lot by serendipity, I said earlier. And as a result, there was the the the capacity within China. So we announced it. And so I don't know how we gauge with our competitors. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

If there's any concentration, like, concentrated in The US for productions or concentrated in China, so, okay, in the current environment, neither of a good. You need a really balanced. And in China, your manufacturing particularly manufacturing for China. So, like, in The US, it's outside outside China and the same as in Europe.

[Tore Svanberg, Managing Director at Stifel Financial]

K. As my follow-up, I want

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

to ask about capacity and customer order lead times. It appears as though you have almost a half a year's worth of inventory on on your balance sheet, and you probably have infinite manufacturing availability, at least in the intermediate term.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

No. Quite infinite. Quite a yeah. So we have a lot. Yeah.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. Go ahead. Sorry. Okay.

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

Okay. So so my question is, do have you seen any sort of uptick in customer order lead times? And related, has that improved your visibility or your backlog or any of those forward looking metrics?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

So as as far as the inventory, let's take that on first off, is that we're we're a little bit we our our model is to hold about a hundred and eighty to two hundred days on our books, and we're well below that level right now. When we look at inventory in the channel, we also see that that is very lean against what we typically experience or what our model is. As far as the lead times, they're actually holding pretty well as far as what we're seeing in the supply chain. And as I've commented in prior comments that in certain of our end markets, they do demand short lead times, and so we have to build ahead of their demand. I think though, right now, we have a lot of flexibility.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

We're very well positioned regardless which way the market goes.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. If you know our what we try to when we targeted a hundred eighty days to two hundred days, okay, for many, many years. Okay? And for because of for the new all the new product ramp. Okay?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And in q one, I don't know if you remember as in like, I said, okay, in the inventory levels, very low, both from our both from a disti levels and as well as within NPS. Okay. We end at the very low levels. Okay. I even I may even said it.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. Was unhealthy levels. Okay. Too low. And, overall, our strategy is we always hold more inventory than in Disney, and we have a better manage it manage my time.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Thank you.

[Operator]

Our next question is from Joshua Buchalter of Cowen. Joshua, your line is now open.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Wanted to follow-up on Joe's question from

[Tony Balow, Vice President of Finance at Monolithic Power Systems]

Joshua there?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Oh, can't hear. Oh, it cannot I cannot hear you. Uh-oh. Now it's better now.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Yeah. I can hear you now.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Nope. Now it's cutting out.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Oh, now. Last try.

[Tony Balow, Vice President of Finance at Monolithic Power Systems]

Good? There you go. We can hear you.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Okay. I'm sorry about that, guys. My first time on Zoom. I wanted to follow-up on Joe's question from earlier on storage and compute. I I totally appreciate the share gains, that you mentioned, but the the, you know, 38% sequential growth in in what's usually a subseasonal quarter for for PCs is is certainly eye popping.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Are there any more metrics you can give us as to maybe content or or share shifts that are going on and and, you know, to give us comfort that there's not inventory build happening here? Thank you.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Well, in the in the past, we have a few eye popping numbers. Right? Okay. So we didn't we don't we didn't surprise it. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

I mean, as we said, and then, like, I mean, it's a it's a pretty evenly grow growth in the in the segment, particularly little bit more than the DDR fives as we said a few quarters ago. Bernie, you want

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

to Yeah. Josh, you might recall from my comments from year end when we were looking at the Q1 outlook. And I said that there was an atypical seasonal uplift anticipated storage and compute. And against our internal expectations, we came in within low single digit performance to the upside. So while it may be counter to whatever seasonality we've experienced in the past, everything rolled out pretty much as anticipated.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. We we have a okay.

[Tony Balow, Vice President of Finance at Monolithic Power Systems]

Go ahead. Well, as I said, the only just and Josh, just remember that storage compute, you heard Michael say it before, it's growth from both the memory side as well as the notebook side. So it's not all notebook driven that might, you know, apply to your seasonality question.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

I'm a desktop. Okay. And here is we have always in particularly in the last couple years. And the markets are very dynamic. Okay?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And you see one segment is popping up. The other one segment is not so much. And and in the last couple of years, you see more. This quarter's, okay, is storage in the compute. Last quarter, I don't know.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Was auto last couple of quarter auto model. Right. Before whether it was the Enterprise. The enterprise. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And, you know, we keep it like running like a circle. Okay.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Thank you for the color. And then I I wanted to follow-up on enterprise data also. You mentioned the increased confidence versus three months ago. Is is that coming from, you know, your your biggest customer in that segment, or is that more confidence in some of the the newer platform wins that you expected to ramp in the second half? And and and within that, like, are lead times still measured in in in weeks?

[Joshua Buchalter, Director - Equity Research at TD Cowen]

And and, like, when would you expect to, I guess, have more visibility onto the the share in the in enterprise data?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Do do it implies and, like, we circle back. No. So, like, we feel, as a as a time as a closer to the second half, it's okay. We feel better. So okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

As as always, and we have a more more clear visibility. Okay. Bernie, okay.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Yeah. That's exactly right. We we've talked about this in the past. It's not just the main customer, but some of our other customers are operating with shorter lead times. And as a result, we feel very good about the design wins, qualifications.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

And as I mentioned earlier, it's really the timing of when they expect to ramp. But even within that, you know, we're you know, increasingly more confident.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Oh, yeah. You're talking about large customers, small customers. Okay. When we're looking at all these, they all can be very big. They can all be big.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

They all can be big. Yeah.

[Joshua Buchalter, Director - Equity Research at TD Cowen]

Congratulations on the results and apologize for my technical difficulties again.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

No. Okay. Thanks, Josh. Okay.

[Operator]

Our next question is from William Stein of Truist. William, your line is now open.

[William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities]

Great. Thanks for taking my questions, guys. Two topics. I I wanted to hit on tariffs, and then I wanted to hit on some growth opportunities. On the tariff side, I you know, people have asked a bunch of different questions, but I wonder if you'd help us understand if there are any direct as in unit costs and unit pricing impact that's influencing your q two guidance.

[William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities]

And is there any indirect or unit demand impact influencing your q two guidance?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

No no to both questions. Yeah.

[William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities]

And then, you know, at the analyst day, you showed some pretty unique products for a semiconductor company. These sort of finished full full up

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah.

[William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities]

Products. I'll as I recall, there was a sonogram. I think you threatened to list that in Amazon, if I if I recall. But, also, you know, building automation, you had audio amplifiers. I I can't imagine that these are contributing meaningfully to revenue, but I wonder what your customer either, you know, established customer or emerging customer reaction was to this.

[William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities]

Did you see any anything worth noting that that could drive future demand that we'd wanna think about?

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

All I'll try to do is Bernie said earlier is in a way we wanna have a silicon based solution company. I want to monetize our know how. And for examples, and, okay, I mean, building automations, that box, we did it. And, okay, and you you add a lot of chicken shit stuff as they in the box. So we sell a lot of a sub 50¢ of all the products.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. We add it together, and then we we put some software as all most of our products is programmables and okay. And now we're making MCUs and, okay, we'll put it all together. It can be a very good viable solution sell for lot higher dollars. And same as ultrasound areas, and and Aviso, to me, is a very interesting.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

So, okay, we can leverage our know how sell instead of sell dollar, 2 dollar parts. Now you start to sell in some, okay, thousands 10 thousands of dollar stuff. And our customers and sometimes and they are relate to our customers. Okay. Our customers, okay, they buy we we're talking to a different level of people.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

We're not talking to engineer anymore. So, okay, we want to have a cooperating with a large companies. And, okay, we have those solutions, and you can sell you can buy the entire solution. You can have your as like a black white box. You label it.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And or or another way is you buy all the modules and rather than a chip. It just take much of an effort from their hand. And we do things because we do silicon. We do silicons, and then we know them. We can know the module levels, and then we stretch it out a little bit with adding more softwares.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Okay. We it's it's the entire Bloom systems. And depending on the level our our customers' interest, and, like, we can engage one with them in a chip levels, in a module levels, on a system levels. And we just want to provide more. And it's that's our know how.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

We leverage our know how, leverage on a silicon. And I contacted several very, very large companies. They are the leader in the area. There's much, much well welcomes in that game in to these kind of solutions. They want to work with us, and they want to work with us.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And this is at the very beginning. That's kind of things that we're transforming a company to from a silicon only to a solution company. These are the ones in the are things that we we that's how we from a silicon to module, we grow out of the silicon company. Then the form of modules, not getting we probably stay in the module level. We are never going to sell blinds in the shades of blinds and the air conditioning.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

It's not gonna we are not these are still in the module levels.

[William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities]

Great. Thank you.

[Operator]

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

[Chris Caso, Managing Director at Wolfe Research LLC]

Yes. Thank you. First question is with regard to, you know, the the the power for for some of the custom AI, projects, this year. Could you detail, you know, how significant that is, for the enterprise data segment this year? And, you know, maybe some, idea of of what the content is on that as compared to, you know, the largest customer in that segment.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

So when I look at the opportunities, particularly with AI, the products are only getting higher power and they're getting smaller footprints. And it's that area of innovation where we can help lead our customers to their end solutions in a way that our our customer our competitors aren't. So, you know, right now, the market has been dominated with really one main customer. And now as we see the second half of the year in particular, there's gonna be a number of new market entrants. And they're all with the same formula that

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

a big and small. Yeah. And the small is looks like gonna be a big. So okay. And the dollar content is a it's in half years or years.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

I'm okay. A few hundred million dollars. Okay. I mean, it's 506 hundred million dollars. It's these are it's not unthinkable for for half years.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah.

[Chris Caso, Managing Director at Wolfe Research LLC]

Got it. As a follow-up question, maybe I'll I'll dig into, some of what you talked about on the confidence on on the enterprise data as you go through the year. And I I guess maybe a a little more detail of the why you feel a little more comfortable now, as compared to to to where you were at the beginning of the year. Is it just simply a matter of of qualifications where you're not qualified on platforms that you may not have been qualified on at the beginning of the year? Is it, you know, more confidence with regard to market share on those?

[Chris Caso, Managing Director at Wolfe Research LLC]

You know, just just a little bit of of what what is driving the confidence for the year as compared to where it was ninety days ago.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

The year is a is a half year there. Okay. And then now is a half year, almost half year later, and, you'll feel the bad or feel good and okay. It's all gonna happen as as a way of getting closer. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And so we see the result and okay. As as we expected it. Okay.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Yeah. And say say that we've got we've got more positive data points to that we can look at, but still how that converts in the year, you know, that that's why I mentioned earlier that we're operating within a range of outcomes.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. And just always one thing we're good at in a look in the past, we're pretty good at it to to as we said.

[Chris Caso, Managing Director at Wolfe Research LLC]

Yeah. Got it. Thank you.

[Operator]

Our next question is from Jack Eagan of Charter. Jack, your line is now open.

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

Great. Thanks so much for taking the questions. So I was hoping you could talk a bit about the margin outlook for some of the new accelerator ramps in the second half and into 2026 and 2027. Is there really like a structural difference in the margin profile for those products going into custom ASICs and TPUs versus GPUs, whether better or for worse? I mean, just any similarities or differences as to how that kind of long term trajectory plays out would be helpful.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

I wouldn't say that there's a structural change. Now you have individual opportunities that could be plus or minus. Yeah. So this market there but there isn't a fundamental change in our margin model because of it.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. NPS operator, we want to operate it well within our module. Our model, we're at the low end, and we are very much aware of that. And and we want to do is we're not going to a higher volumes, low low margin business. Doesn't matter what area.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

And all these new products I said earlier, we release. So, okay, we all have a higher margins. And we we want to stay on the best performance. We're not competing on the price.

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

Okay, got it. Thanks. That's helpful. And then I guess for my follow-up, as it kind of relates to just the broader analog cycle across end markets. If you kind of strip out monolithics, new design wins that are ramping and share gains, are you seeing any signals that end demand broadly in maybe some of the more downtrodden markets is starting to increase?

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

I mean, I'm not sure if you can really separate those factors out. But if you're looking at markets like automotive and industrial, is there anything that gives you confidence that maybe those markets are actually turning around?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

I think for MPS, it's impossible to strip out the revenue ramps from new products. I know that we've had a competitor or two that have announced that they've seen a bottoming out or potential improvement. Again, our story has to do with the new product revenue ramps. And in particular, we've talked a lot about the second half as far as enterprise data, but I don't want to ignore all of the other opportunities in all of our other end markets. So we feel very well positioned regardless of the macro for both the second half of this year as well as the momentum we're carrying into 2026.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yeah. For if you know the history, for twenty one years as a public company, we only have a one year, two thousand ten. We the year we didn't grow, we missed $3,000,000. Every year, we grow.

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

Right. Okay. That's super helpful. Thanks so much.

[Tore Svanberg, Managing Director at Stifel Financial]

Okay.

[Operator]

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

[Analyst]

Hi, Michael and Bernie. Thanks for taking my question. So I'd like to dive deeper on the gross margin side. So it seems that legacy wafer pricing is trending down and also you're talking about new ramps in enterprise data and auto. So is there room for gross margin expansion going forward in the second half?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Of course, there there's room for, gross margin expansion.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

For second half, no. Second half. Yeah. We're not gonna increase the price to our customer. Okay.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

For for next years, that's very possible. Yeah. Yeah.

[Analyst]

Okay. Right. And I'll also like to tap into on on the communications end market. So I believe that segment is also benefiting from the AI infrastructure build outs. I believe on the optical module side.

[Analyst]

Could you provide more color on those applications? And also, when can we expect can we expect sort of, like, a similar ramp to the these enterprise data, the second half uptick for this year?

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Sure. It was interesting because the way we look at our communications market is we have, obviously, the network telecom exposure. We have, you know, the router wireless modems. And more recently, we have optical fiber optics. And I would say that when I look at the last two quarters and the outlook for q two, it's been very balanced.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

It hasn't been, you know, weighted by any any one component. And that that's what we're seeing. We already talked about that as far as storage and computing and in automotive in particular.

[Analyst]

Okay. Thank you.

[Michael Hsing, Founder, Chairman, President & CEO at Monolithic Power Systems]

Yep. Alright.

[Operator]

This concludes our q and a session. I'd now like to turn the webinar back over to Bernie.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

So I'd like to thank you all for joining us on this conference call. I look forward to talking to you again during the second quarter twenty twenty five conference call, which will likely be held in early August. So thank you. Have a nice day. Alright.

[Bernie Blegen, Executive VP & CFO at Monolithic Power Systems]

Okay.

Participants

Executives

• Bernie Blegen, Executive VP & CFO
• Michael Hsing, Founder, Chairman, President & CEO
• Tony Balow, Vice President of Finance

Analysts

• Tore Svanberg, Managing Director at Stifel Financial
• Quinn Bolton, Senior Analyst at Needham & Company
• Ross Seymore, Managing Director at Deutsche Bank
• Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.
• Joe Quatrochi, Director & Equity Research Analyst at Wells Fargo
• Gary Mobley, Managing Director & Senior Equity Analyst at Loop Capital
• Joshua Buchalter, Director - Equity Research at TD Cowen
• William Stein, Managing Director/Senior Research Analyst - Technology at Truist Securities
• Chris Caso, Managing Director at Wolfe Research LLC
• Jack Egan, Equity Research Analyst at Charter Equity Research, Inc.
• Analyst