Monolithic Power Systems Q2 2025 Earnings Report

Monolithic Power Systems EPS Results

• Actual EPS: $4.21
• Consensus EPS: $4.12
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: $3.17

Monolithic Power Systems Revenue Results

• Actual Revenue: $664.57 million
• Expected Revenue: $648.74 million
• Beat/Miss: Beat by +$15.84 million
• YoY Revenue Growth: +31.00%

Monolithic Power Systems Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 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 Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: In Q2, MPS achieved record quarterly revenue of $664.6 M, up 4.2% sequentially and 31% year-over-year.
• Positive Sentiment: MPS guided for ~8% sequential growth in Q3 (midpoint), including 20-30% sequential growth in enterprise data and a seasonal consumer uplift, and expects Q4 revenue to also grow sequentially.
• Positive Sentiment: Initial shipments of power solutions for ASIC-based AI products are underway, with multiple design wins and the $4 B enterprise data SAM target still on track.
• Positive Sentiment: MPS is transforming from a chip-only supplier into a silicon-based solutions provider, with power modules projected to represent 10-15% of revenue next year.
• Positive Sentiment: The automotive segment is expected to grow 40-50% in 2025, with new platform ramps in Q3/Q4 and long-term opportunities in 48 V and zonal architectures.

Presentation

[Operator]

Welcome, everyone, to the MPS second quarter twenty twenty five earnings webinar. My name is Arthur Lee, and I will be the moderator for this webinar. Joining me today are Michael Singh, CEO and founder of MPS Bernie Blaken, EVP and CFO and Tony Ballo, 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 risks and uncertainties. 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 Q2 twenty twenty five earnings release, our Q2 twenty twenty five earnings commentary 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 would like to turn the call over to Grinny Blagan.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Thanks, Arthur. Good afternoon, and welcome to our q two twenty twenty five earnings call. In q two, MPS achieved record quarterly revenue of $664,600,000 4.2% higher than the 2025 and 31% higher than Q2 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 second quarter.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

We continue to see diversified revenue growth across all of our markets. To We began initial shipments of our power solutions to support our customers' new ASIC based AI products. Storage and compute revenue grew sequentially off a strong Q1 as we continue to see see demand for both memory and notebook power solutions. MPS continues to focus on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify our end market application and global supply chain.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

This will allow us to capture future growth opportunities, maintain supply chain 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. As a reminder, if you would like to ask a question, please click on the participants icon in the menu bar and then click the raise hand button. Our first question is from Tore Svanberg of Stifel. Tore, your line is now open.

[Tore Svanberg, Managing Director & Senior Analyst at Stifel Financial]

Yes. Thank you, and congratulations on another record quarter. Michael O'Bernie, I was hoping you could, talk a little bit more about the September, what the setup is there. You're guiding for 8% sequential growth at the midpoint. I was just hoping you could give us, some some puts and takes of the six end markets, in in the September.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Sure. Happy to, Tore. So, when we look at q we've got enterprise data growing between 2030% sequentially. We also see a seasonal uplift in consumer. And then with the exception of storage and compute, all of our other lines of business are up, high single digits.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

In storage and compute, we just have a little bit of caution, primarily because you're coming off of two very strong orders in q one and q two.

[Tore Svanberg, Managing Director & Senior Analyst at Stifel Financial]

That's great color. And just as my follow-up, you mentioned the AI ASIC programs now starting to ramp. I was hoping you could add a little bit more color there. Are we talking about you know, multiple customers? Are are these primarily vertical power architectures?

[Tore Svanberg, Managing Director & Senior Analyst at Stifel Financial]

And and I guess a really important question is, you know, back at the Analyst Day, you gave us that $4,000,000,000 SAM, for your, enterprise data market, and there's a lot that's happened since then. So I was just wondering if, if that number is, starting to move, quite a bit upward.

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

Yeah. You're right. Since the analyst day, the things are changing fast. And everything is good. And after a couple of years of these enterprise data segments.

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

And clearly, you establish a you you establish a winner or losers. Okay. And the NPS is appear to be a winners. We have we we do engage multiple customers. If it's not all large customers or large customers or potential customers, and, like, I mean, we have a lot of design wins and design activities.

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

And while there are threatens ramping up in the near terms. And, all also a lot of small emerging players. And, we see the peripheral of not only the in the data centers, but all kind of applications. And that's what we are very excited in the in the long terms. The short term ones, and I said in near terms, it doesn't mean to not get next six months, the next twelve months.

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

Okay. I keep saying, okay, our forecast revenues and, okay, is always a plus minus six to twelve months. So you said earlier is a $4,000,000,000. Okay. That's what we said.

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

That's what we see it, and, we're gonna get there.

[Tore Svanberg, Managing Director & Senior Analyst at Stifel Financial]

Great. Thank you, congrats again.

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

K. 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 LLC]

Yes, thanks. Good evening. I guess the first question is with regard to enterprise data. Previously, you had provided some guidance on that to be flat plus or minus 20%. You've talked about guidance for the September.

[Chris Caso, Managing Director at Wolfe Research LLC]

Any more visibility with regard to the full year guidance for that? Any more narrowing of that range and whatever kind of color you can provide on your expectations there?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Sure, Chris. The market, as Michael just said, remains dynamic. We have fairly short lead times. So even for q four, we don't believe we have our arms around all the business that's likely to to occur. So that that's just the the nature of the dynamic of this fast moving market.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

So, at q two, we identified, the range is being flat to down potentially 20%. And while we're not guiding on Q4, in addition to the growing q three sequentially by 20% to 30%, I can say that, q four, will be up sequentially.

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

Well, whatever we said in the beginning of the year, we're pretty we feel comfortable.

[Chris Caso, Managing Director at Wolfe Research LLC]

Got it. Okay. That's that's helpful. You know, just in general, and you know, you've obviously listened to the calls from some of your peers that there's some degree of macro uncertainty out there. Some of the customers some of your competitors rather have expressed some caution and some concern about some pull ins in certain areas.

[Chris Caso, Managing Director at Wolfe Research LLC]

I wonder if you could comment on that with respect to your business. And in general, as compared to ninety days ago, is there anything that's changed in your view of the overall markets or your expectations with respect to the year?

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

Well, I gave you a arrogant answer. Sorry. I don't listen to any other calls. Tell me that. Maybe I know from you.

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

Okay. And, we focus ourselves as as always. Market condition is a market conditions. Okay? We've provides the components to the multiple segments.

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

That's that's where we focus on it. And we focus on the internal internal executions and executions with our customers demanding in the futures. And that's what we always do. And whatever happens, happens. And as long as we're much better than everybody else.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

If I could add to that, the in q two, we used the phrase that we were cautiously optimistic about the outlook for the balance of the year. And I think that still describes, how we feel from the standpoint that we have seen a broad based strong continued strong demand profile in all of our end markets. However, the ordering pattern, because there is a little bit different risk pattern to remain with short lead times. So as a result, we're not necessarily building backlog that we have visibility out beyond two quarters. So that's about a little bit different from most recoveries that we've experienced.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

But again, I want to stress that we feel, very good about our our overall positioning for the remainder of the year.

[Chris Caso, Managing Director at Wolfe Research LLC]

Yeah. Helpful. Thank you.

[Operator]

Our next question is from Quinn Bolton of Needham.

[Quinn Bolton, MD - Equity Research at Needham & Company]

Congratulations on another good quarter, Michael, Bernie and Tony. I guess, Michael or Bernie, just wanted to ask as you start to shift into some of these ASIC platforms. Can you give us a sense? Are the ASIC platforms do they tend to be sourced, by multiple PMIC suppliers, or do you tend to see sole, you know, sole source sockets, you know, for a given generation of an ASIC, and then the ASIC vendor may, you know, source the first generation with yourself and, say, a second generation with a competitor? That's a question I've gotten a fair amount.

[Quinn Bolton, MD - Equity Research at Needham & Company]

And so just wondering if you could give us some sense on whether those ASIC programs tend to be single sourced or multiple sourced.

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

Yeah. We we see a variety of MS SQL sourced, and, more double sourced, multiple sourced, high cost source, a low cost source, all sorts. And and we do we deliver what our customer we develop a system vertical powers in our game and which is more module like solutions and even chip side. Okay. And do whatever our customers demand.

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

Okay. Maybe I can say that, okay, too vague. Okay, man. I disappointed that you didn't ask any any more specific technical questions.

[Quinn Bolton, MD - Equity Research at Needham & Company]

I, I'll I'll save those for for analyst day or maybe the callbacks.

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

Okay.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Quinn, let let me add real real quickly there is that each of the end customer, has their own reasons for, how they're they're selecting, their supply suppliers. Some of them, it's supply chain resilience. Others want innovation. Again, like every opportunity we have, we provide strong customer focus and consistent execution.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

So that that's what makes us feel that we're very well positioned across all of these opportunities.

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

Yeah. What I tell you is that what I tell you them, high cost and low cost, multiple cuts, one one source, two sauce, multiple sauce. They all all choose, but nothing but the choose.

[Quinn Bolton, MD - Equity Research at Needham & Company]

Okay.

[Quinn Bolton, MD - Equity Research at Needham & Company]

Got it. And then the second question, I'll I'll move to the automotive end market. Kind of wondering if you guys could give us your outlook for the second half of the year. What are the biggest drivers of growth? I think you have a couple of platforms with Western OEMs set to ramp where you have some pretty good content.

[Quinn Bolton, MD - Equity Research at Needham & Company]

Wondering to the extent that those ramp, does does that drive growth half over half in the automotive business, or are you looking for sort of more of a a flattish half over half in that segment, in in the second half?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

So automotive, and we've been very consistent on how we've described, the the rollout for calendar twenty five that we enjoyed a nice step up sequentially from q four to q one. We anticipated that that would be flattening a little bit in the middle part of the year and then picking up end of the q three, q four as these new content opportunities come online. So while there is some back and forth on the SAAR and units, and in particular, with individual companies, we're less affected by that than the timing of these new content ramps.

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

And Quinn, I think just one thing to add on that. Right? I know we're hyper focused just on the year, but I think if we step back and look longer term into 2026, the opportunities around 48 volt, some of the zonal architectures, I think they continue to be opportunity for us going forward. This will be a growth area for us over the long term.

[Quinn Bolton, MD - Equity Research at Needham & Company]

Thank you.

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

Okay. There's too many things. I can't remember. Okay.

[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 quarter and guide. Just want to dive first into the enterprise data side. You mentioned in your preamble or the press release that both the AI side and the server side were strong. Can you talk a little bit about any differences between those two growth rates, composition, kind of the breakdown of ED between those in in both February and March?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Again, I know something that we've talked about as it relates to enterprise data is that the lines between traditional CPU and AI are getting a little blurry. So it's very hard to, make clear statements of relative growth or importance. Having said that, I think that the overall profile, both for the near term or midterm and the long term, remains very positive.

[Ross Seymore, Managing Director at Deutsche Bank]

Great. And I guess as my follow-up, there's been a decent number of concerns about pull ins and tariff related activity. Obviously, you haven't mentioned anything on that. But outside of the enterprise data segment, when we think about the cyclical recovery that's happening, are you seeing any evidence of of that kind of tariff influenced behavior? And or, do you think this the cycle itself is really what's driving demand?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

We we believe this cycle is driving demand. We really don't have enough information to support, you know, change in our customers ordering pattern that that would be related to tariffs.

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

We don't wanna pretend to know that.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah.

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

Yeah. These are our our control. Okay. I mean, whatever happens, happens.

[Ross Seymore, Managing Director at Deutsche Bank]

Perfect. Thank you, guys.

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

Oh, by the way, our inventory is a low loss.

[Ross Seymore, Managing Director at Deutsche Bank]

I didn't wanna go there, but, it was nice to see.

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

I volunteered. I volunteered.

[Ross Seymore, Managing Director at Deutsche Bank]

Thank you.

[Operator]

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

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

Thanks, guys, and congrats on another nice quarter. You guys make it look easy. I I I wanted to ask a a quick follow-up on on the 4,000,000,000 enterprise data, Sam number. I was curious if that considers the eventual, conversion of server CPU to 48 volt? Does that factor that in, or is that incremental to that number?

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

And second part of that question, I'm curious, how much does HVDC, increase that that SAM or that TAM? And when do you expect, you know, direct current rack power to to start, you know, really taking off? I think you started sampling last quarter, if I'm correct.

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

Yes. Okay. That was a these are the 800 volt systems and, 400 volt systems. And, yes, we'll start to sampling. These are not in the factors.

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

And the post what you mentioned, the 48 volts 48 volt servers and also the 40 able systems and the 800 volt system where this far in the future so maybe far in the future is maybe a couple years a year, eighteen to twenty four months kind of things, maybe even longer. So okay. We don't wanna call the market. Okay. We are the only solution providers.

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

And these one, we believe ultimately all data center will convert into this type of a 48 volt and a and a 800 volt systems. And that's what we're targeting, but that's what we emerge and focus our our our development. Okay. Normally, in the last couple years, we said many years ago, so, like, even 02/2016, we foresee 48 volts. That would be the solution.

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

And now we've we became one of the key supplier in the in the in the last couple years. Okay. Three years ago, we start to working working on the the 800 volts systems. And also, not not not only that, also the BMS, the Berry Management Systems. And these are absolutely fit for that type of applications.

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

And not only for vehicles, energy storage, and the data centers, it's all about the energy, utilizations.

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

Hey, Rick. The only thing I'd add, know you asked a very specific enterprise data question, but remember, we kind of think about the overall data center opportunity. And, you know, whether that's optical module growth, whether that's going to be memory, all those things I think play in as opportunities for us. So I'm just trying to get us to step back a bit from what we're focusing on the enterprise data segment.

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

No. I I appreciate that, Tony. And and that actually leads me to my second question, which is, I know it's not your your largest segment, but communication seems to be firing on all cylinders. I mean, satellite, Wi Fi, five g, and transceiver power that you just mentioned. I didn't know if you guys can elaborate at all or talk at all about order to order trends or velocities there, outlook for that segment, like, just basically any color you'd be able to share there.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Sure. So if you if you look at, about a year ago, we saw a large step up, from q two twenty four to '23. And, a lot of that was in the core networking telecom business. And that sort of plateau that element has plateaued. But at the same time, we saw growth in the optical modules within the data center that's been growing very nicely.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

So right now, I think that we're positioned very well, but I don't necessarily have a strong signal of additional investment in in the network, category.

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

Okay. Thanks, guys.

[Operator]

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

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

Hey, guys. Thank you for taking my question and congrats on the record results as well. My chalky, but I'm also going to ask about enterprise data. As we get into the back half of this year, any metrics or guidelines you can give us on how much this new AI ASIC is contributing to the back half of the year, how it compares to, you know, your lead GPU customer? I mean, is this opportunity comparable in size to to what you, you know, you've been able to generate on the the the GPU side? Thank you.

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

Well, all these questions are being asked being being similar questions that we all answered. Okay. We're looking in the futures, even near term future looking good. And and but that that's that's only about, what, 25% of NPS business? And the bigger revenue growth is the rest of our company.

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

And, I I hope we should have more more question on the on the rest of our business.

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

Alright. I will take the subtle hints there and ask about autos.

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

Auto auto is a auto and enterprise data add together maybe only 40%. How about something else? Okay.

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

Alright. I mean, so I'll put the storage and compute then. Yeah. We can take this anywhere. I'll start

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

with the No. I'm just joking. Ask for whatever you wanna ask.

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

Well, let's stick with storage and compute then. I mean, you mentioned some caution there into the back half of the year. Is that sort of an inventory dynamic? And and you had gained a bunch of share, I believe, on DDR five to start the year. Is there still more room to run with from that on the sharing content side on the DDR side within, storage and compute? Thank you.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah. Josh, that's an excellent question because, we had a very significant step up, in our position competitively as well as, from revenue, in both storage and notebook. So, again, the the the the reason that I use the term, cautious is because, both end markets tend to be a different demand profile from, like, automotive, for example. And what I mean by that is, historically, notebooks have always been, like, consumer and been expansion in q three. We had such a atypical seasonality with a buildup in, q one and q two that it just pays to be a little bit cautious there.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Likewise, on memory, I have nothing to indicate that there there's a slowdown or a change of the market positioning. But, again, it's just that, in in the in the past, they've had historic boom and bust cycles. So that that's the only reason that I'm offering. Now having said that, we were pleasantly surprised in q two that the the results for that particular group came in better than expected.

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

Yeah. You know, auto, we grow significantly this year. Right?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah. Our our full year results are gonna be well above, what we've been doing Twenty percent? Yeah. We're probably in or for the full year, we'll be between 40 to 50% growth for the year.

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

Yeah. And

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

That's the reason Bernie asked you if they're okay if you're more cautious. Okay? Not gonna be a 100% next quarters. Okay? That's that's what we mean.

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

So relatively what cautious means. Okay? Cautious is not expected another, okay, or percent or higher. Yeah.

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

I got it. Thanks, guys. Next quarter's questions on TVs.

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

Okay. Alright. Thank you.

[Operator]

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

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

Hey, guys. Thanks for taking my question. Bernie, I appreciate the fact that you don't have a lot of visibility out into the fourth quarter, but I wanna ask about the seasonality of the fourth quarter. Typically, q four might be down, what, mid single digit percent sequentially. How do you see it shaping up this year?

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

I don't have a seasonality anymore.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah.

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

I've got plenty of videos. Okay.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

I I think Michael said it all there. You know, again, if you look at that historic trend, and I don't know the last time we actually fulfilled, being down, it it's in a fairly narrow range. So I I think, you know, flattish is probably the the easiest way to describe the outlook.

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

Helpful. Alright. So it sounds like you've got plenty of capacity, plenty of inventory. Can you remind us what sort of annual revenue you could support with your internal and external capacity? And can you confirm, you know, whether or not the book to bill ratio is in fact, you know, trending above parity?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah. So two separate questions, but I'll try to address pretty quickly.

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

I say I I I answered the first the second part. Our inventory is low.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah. Our current capacity, and we've talked about this in the past, is to be able to support $4,000,000,000 of revenue with diversification of 50% of that outside of China. So what we're trying to do is be able to support all of our customers' requirements in in whatever supply chain profile they're looking for. When you look at the book to bill ratio, and I commented on this earlier, that we're having sort of an atypical ordering pattern when you consider that we we do believe we're, in the middle of a cyclical recovery that's very broad based.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

And what I mean by that is the ordering patterns are, much more short term. We're not building a book to bill ratios of like 1.4, 1.5, where we'd have backlog continuing out into q one and q two of next year. It's really a more near term focus. So with those short lead times, that that's the only reason I have a little bit of, you know, concern about q four. And I don't want to, you know, send a negative signal.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

It's just that that that's the nature of the demand profile.

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

That's it. I wanna don't wanna send a negative sing single either for the, lower inventories. And, like, we don't we are expanding our supply chains.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah.

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

And, we can meet it in q four in our customer demand.

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

And and for for next years, we start to okay. Well, even now, it's in okay. We continuously qualify the new the newer supply and, whatever it takes to meet the customer demand. That's what we always do.

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

The only thing I'd add, I I don't know if it was part of your question, was in addition to the overall capacity, the geographical, balance of it. And what we've said is we would, by the end of the year, have half of that capacity outside of China, half of it inside. And to Michael's point, we just want to be able to believe we can meet customer demand no matter how they want to route their product.

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

Thank you, guys.

[Operator]

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

[Kelsey Chia, Equity Research Analyst at Citigroup]

Hi, Michael and Bernie. Congrats on those strong results. So I have a question on customer concentration. So it's great to hear that you guys are shipping to the ASIC platforms. So does it mean that, you know, NPS sort of back to the historical kind of diversified growth where there's no one customer that's more than 5% of your sales by the end of the year?

[Kelsey Chia, Equity Research Analyst at Citigroup]

Or is the ASIC ramp sort of lumpy as well that can sort of tilt that kind of customer concentration?

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah. I I think that when we had the high customer concentration, particularly in enterprise data, that was an aberration from what our normal model of being, you know, broadly diversified in terms of customers and markets and geography. So I think now that the portfolio of market entrants is starting to build up and we're gonna have exposure to all of those opportunities, you'll see us go back to a more normal profile of customers not, you know, contributing more than mid mid high single digits.

[Kelsey Chia, Equity Research Analyst at Citigroup]

Okay. Got it. My second question is on the the growth rate. So it seems that, you know, the analog industry has sort of been going through a downturn in the last two years. And, you know, potentially for 2026, we could see pretty strong growth due to the cyclical recovery.

[Kelsey Chia, Equity Research Analyst at Citigroup]

And you guys have a 10 to 15% outperformance target versus peers, so that would imply sort of, like, a close to a 20% growth rate perhaps for next year. Is that a right assumption? And if you can provide some color as to which end markets would be driving majority of that growth based on the content or design wins.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Sure. I I I think that, your rule of thumb as far as our traditional outperformance and also, what the broader market looks like, for, '26 are both accurate. So I think within, you know, plus minus a couple percentage points, I I I can support that those numbers. Again, as far as the particular end market drivers for next year, it it's we we believe it's gonna be broad based. Although with all of the enterprise data opportunities ramping next year, that will probably be a key contributor.

[Kelsey Chia, Equity Research Analyst at Citigroup]

Thank you. Thank you very much.

[Operator]

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

[William Stein, MD & Senior Analyst at Truist Securities]

Great. Thanks for taking my question. First, I wanted to clarify about the short lead times and ordering patterns. Is it fair to say that the only thing that's really gonna cause that to stabilize and lengthen is your extending the lead times that you quote to customers, which, likewise, is sort of difficult as long as revenue is, you know, fairly meaningfully below your capacity level. Is that is that a fair way to think about it?

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

Yeah. I don't know. It's a it's a correct categorization is meaningfully below our capacities. And, okay, I don't know if that's an accurate statement or not. But it's so overall, it's a fast changing market, and, customers are updating their models. Okay. We have just keep it up. That's yeah.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

Yeah. I I think we're being responsive to real demand. One thing we haven't touched on is that our channel inventories in each of the geos, major geos for us, are down in the quarter. So they're they're also very lean. So right now, we believe we're meeting real customer demand.

[William Stein, MD & Senior Analyst at Truist Securities]

Got it. That's great. Oh, by the way, Michael, what I meant was comparing the revenue guidance revenue results and guidance relative to a 4,000,000,000 level of capacity. There's a gap there. Right? So that that's all I meant.

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

Yeah.

[William Stein, MD & Senior Analyst at Truist Securities]

Yeah. Wasn't a criticism firm. It was

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

Oh, yeah. Yeah. Four four billings and okay. And it's not only for yeah. I mean, it's for enterprise.

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

Okay. These are these are web building capacity towards to it. It's it's that's the process.

[William Stein, MD & Senior Analyst at Truist Securities]

K. What?

[William Stein, MD & Senior Analyst at Truist Securities]

Got it. And the other thing I wanted to ask about was to comment on the product development and revenue trajectory in three areas that you've you've highlighted in the past as sort of unique growth opportunities. One is modules. The other is converters, d day and a to d converters. I think you hired a team a couple years ago.

[William Stein, MD & Senior Analyst at Truist Securities]

We haven't heard that much about it. And the other is emotion, which I know is ramped, but I I wonder how meaningful that's become relative to your overall

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

Thank you very much. Thank you very much. Okay. First thing, the ecommerce is a kind of flop. Right?

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

Okay. What's in the way that I I answer your question. That that part of your question is a few, few quarters ago, so okay. But the the good news is the module business is really growing other than in the enterprise, data and, industrials and that came in, industrial sites, even consumers sites in that game. And we offer those solutions that that our customer doesn't want to get into the detailed design, and we provide a solution for them.

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

And these are revenues that next year is about 10 to 15% of our total revenues. And, okay, other than the enterprise enterprise data power modules. And these are actually this is a very much related to when we provide a system solutions. And, so we're transforming a company, so as Bernie said earlier, be a system providers, a solution providers, and, that's what our customer wants. If they want a chip also, we provide chips.

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

And and the same time, it's a helper NPS revenue growth. We're not depending on only selling chips. A few years ago, I'm talking about I'm a pilot of selling chips only. Okay. And we we that's where our revenue grows. Okay. And the the other things that

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

you're talking about Data converter.

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

The well, data converter. The the the data converter is kinda slow moving. So okay. And we we are releasing a standard product for that. Okay.

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

And or only some billion dollar, $2,000,000,000 revenues, I maybe contributes very little. So, like, it may and that doesn't, will not move the needles. But but as a product and the in the products categories, that provides a total solution. That's a part of the pictures. That really benefits the top line growth on the on the on the in the in terms of solutions, emotions.

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

And, finally, we get a needle moving. And and that's been for for a while. We get so over about a 100 some million dollars, okay, in in the in the past few years. Okay. And they are not too bad.

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

Okay. It's a slower than the NPS total growth. Okay. But now it's robotics. And we see it AI driven robotics will be okay.

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

We see a lot of opportunities, okay, and a lot of potential to grow in in the next couple years. And, we provide, we provide the total, AI power, and we, well, not only AI power, we provide the all the actuators actuator solutions and motion controls and as well as as a as a a battery, as a BMS solutions. Okay? These all combine all altogether. The the motion will grow in a lot, a lot faster than than in a past few years.

[William Stein, MD & Senior Analyst at Truist Securities]

Thank you.

[Bernie Blegen, EVP & CFO at Monolithic Power Systems]

If there are any follow-up questions, please raise your hand. There are no further questions. I'd like to, just say a few closing comments. I'd like to thank you for all joining us this conference call. I look forward to talking to again during the third quarter twenty twenty five conference call, which will likely be held in late October. Thank you. Have a nice day.

Participants

Executives

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

Analysts

• Tore Svanberg, Managing Director & Senior Analyst at Stifel Financial
• Chris Caso, Managing Director at Wolfe Research LLC
• Quinn Bolton, MD - Equity Research at Needham & Company
• Ross Seymore, Managing Director at Deutsche Bank
• Rick Schafer, Managing Director - Semiconductor Equity Research at Oppenheimer & Co. Inc.
• Joshua Buchalter, Director - Equity Research at TD Cowen
• Gary Mobley, MD & Senior Equity Analyst at Loop Capital
• Kelsey Chia, Equity Research Analyst at Citigroup
• William Stein, MD & Senior Analyst at Truist Securities