Monolithic Power Systems, Inc. Price & Performance (MPWR)

And welcome our Q4 twenty twenty four earnings call. [indiscernible] [indiscernible] up 21% from 2023. For Q4 twenty twenty four, we had record quarterly revenue of $621,700,000 above Q3 twenty twenty four and thirty seven percent higher than the fourth quarter of twenty twenty three. This performance reflected the strength of our diversified market strategy consistent execution, continued innovation and strong customer focus. Let me call out a few highlights from 2024. We introduced a silicon carbide inverter for high powered clean energy applications. Initial revenue is expected to ramp In late twenty twenty five, Other silicon carbide based applications are expected to be introduced in multiple geographies We developed a family of high quality, cost effective automotive audio products utilizing DSP technology from our 2024 XSign acquisition powered by MPS Solutions. For enterprise notebooks, we launched a battery management solution and are sampling a new mini phased power stage. These products enable faster charge time and significantly improved notebook battery life. Building on our first analog to digital converter design win in 2024, we are developing new high accuracy 24 bit converters which are expected to ramp in the second half of twenty twenty five. MPS continues to focus on innovation, solving our customers' most challenging problems and maintaining the highest level of quality.

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 chain stability and swiftly adapt to market changes as they occur. Finally, I'm pleased to announce our quarterly dividend will increase 25% to $1.56 per share and during Q4 twenty twenty four, we completed share repurchases under a $20.23 $640,000,000 authorization. This week, our Board of Directors authorized a new $500,000,000 three year share repurchase program For the three years ending, December 2024 MPS has returned 86% of its free cash flow to shareholders whose share repurchases and dividends paid 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. Thank you, Bernie.

Analysts, I would now like to begin our Q and A session. As a reminder, and then click the raise hand button. Our first question is from Torese Thonberg of Stifel. Torese, your line is now open.

Yes. Thank you and congratulations on the solid results. Either Michael or Bernie, could you talk a little bit about the dynamics here in the March, especially by segment? Obviously, we know some end markets are still soft yet others are actually quite healthy. So any more color on how you see the various segments the March would be really helpful.

Sure. As far as our Q1 outlook, I think need to take the perspective that relative to the size of the market, we're a fairly small player. But we have a lot of greenfield design wins which have been previously delayed that are now starting to ramp as we enter 2025. So when we look at two of the areas that are going to drive most of the growth in the quarter, automotive is continuing to grow and communications where we launched some new products in Q3, are bouncing back from Q4 and will continue strong. Memory's demand profile is also very good. And notebooks look to be having a Q1 uplift. We don't know for sure, but we've had many design wins and believe that those are coming into the market. On industrial consumer, we have a lot of new product ramps but those are likely to start to contribute at the end of twenty twenty five. And on the enterprise data will be down.

Very good. And as my follow-up on enterprise data, how should we think about that business throughout calendar twenty five? Again, obviously a lot of different dynamics, different players, The growth trajectory for that business throughout calendar twenty five Any color you can share with us there?

Yes. We don't talk about it in the near terms in the Pacific customers as we always do. So again, we [indiscernible] is the weekend controls our customers are buying pattern, their allocations. And And this year's like but overall, this is a multi billion dollars market segment. We are getting ready for these next few years and the growth and it's clearly a multi billion dollar opportunities.

But for us, let's [indiscernible] we this year could be Even or maybe slightly up a This is our best guess. We don't know Yes, just to add a little bit of color to how we see the year rolling out, we believe that we will be off to a a slower start in the first half of the year. But as the year develops, the customer base is expected broaden as hyperscalers launch their new products. So we have multiple product ramps with both existing customers as well as with these new hyperscalers. So as Michael just said, we believe it's likely to be a flattish year but we believe that from a quality and supply availability perspective, we're in very good shape. Could be up too. So we don't know. Yes. Okay. Exactly. That's fair. Congrats again on the results. Thank you.

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

Thanks guys. I'll add my congratulations And if I could maybe tack on to the backup of Torrey's question.

I was wondering if you could update us maybe just to give us a sense of the number of accelerated projects that you expect to ramp this year and into 2026 Just to kind of get a sense, I heard you loud and clear, Michael, that this is a a billion dollar plus TAM. I'm just trying to get a sense of how many So multiple billing points.

Don't be shy about that. We're not shy on that. We don't want to lose that, okay? Eric, this is Tony. I'll jump in. I think I think what we want to say is we're engaged across all the hyperscalers But what you heard Michael say was that the exact timing of the ramp is very difficult for us to call So I don't think we want to put a specific number of customers that are exact ramp times out there, other than saying that we're engaged broadly across them as Bernie said, we believe that's going to scale through the second half.

I can give you examples And We foresee that these projects are ramping. In the 2022, 2023, You look at the automotive side, we said that we have a lot of design wins. And we said all these are going to ramp up or we have a lot of inventories. And 2023 is kind of flattish years. Our customer delayed their launch. So the '23 affected us. And but I keep saying we don't really care. And And as long as we have a product and designing, and designing their new product, especially to look and We're turning to a revenue plusminus twelve months, eighteen months.

And if I could just add to Michael's comments there. When you look at automotive, it was delayed not just in '23, but also in the first half of 'twenty four against what we had built inventory and against our expectations. But now as you can see, it's very solidly on track with two consecutive quarters of growth. And likewise, you could apply that same formula to what we're seeing in the communications with the release of the fiber optics in the data center. So we have the technology, but we're and ramps in the market, a lot of that's a little bit out of our control.

Well, you mean directly AI powers, okay, we have so many projects working with multiple hyperscale companies and so we cannot tell which one is well ramping first. Okay? I know what the magnitude of ramping. Just we are getting the supply chain ready get our quality testing facility ready to to to get these to receive these revenues. Okay. Turning to revenues [indiscernible] so the timing we care less. Thanks for all that color, Michael.

Funny you're talking about auto because that's my second question, if I could. The EV conversion to 48 volt power and to 800 volt batteries is sort of set to ramp this year, I believe, and I know you mentioned in the prepared remarks, Bernie, that you you're going to be shipping power isolation content second half. I think I heard you say And I believe EV is about three quarters of your auto business. So I just wondered if you could talk us through sort of what your potential content given all those changes, right, of all these additional drivers, what your content looks like last year or potential content per vehicle versus what it looks like in 2025 with all these new with all these new jump balls That's very good questions.

And we mentioned about 48 volt system many, many years ago. And particularly for auto, [indiscernible] And we have all these product ready We're designing those new vehicles. And these have a base on four labels, systems. We can capture a lot [indiscernible] [indiscernible] once their vehicles are ramping up, put on the market, And initially, we'll be another dominant player And I think that this is the rollout in automotive starts with EV, which is quicker to adapt new technologies onto their platform, but we expect it to continue for multiyear Yes. Again, NPS again, we provide a 48 volt integrated solutions. And, all all of these high power modules all based on the NPS silicon solutions. And and those were significantly changed All these are discrete way of doing accrued together, the 48 volts [indiscernible] So that definitely sets the NPS apart from from the rest of our competitive.

And Rick, beyond just pure 48 volt, remember what you saw beginning Q3 was designs outside of ADAS start to hit the market. We saw more broad based growth in the auto segment. And we'd expect that to continue as additional sockets come to market. So I think that's the other dynamic that's happening as well.

Great. Thanks, you guys. Our next question is from Ross Seymore of Deutsche Bank.

Ross, your line is now open.

Can you hear me now?

Yes. Hi, Ross. Perfect.

Hi there.

Want to revisit the enterprise data side of things and not to overplay that, but the market share gains and dynamics in the server CPU side of things has that changed at all? I think everybody knows what's going on with one key customer and the diversification market share shifts and those sorts of things. But you guys have other things that are happening as we speak as well. So I really wanted to focus on the dynamics outside of those, not just with the ASIC providers and other GPU providers, but also with the CPU market.

Ross, so let me say something else first. Our inventory Our inventory low and the channel inventory is low. We're going to ramping up.

Okay.

And the rest of us are okay.

I didn't know if I had a follow-up on that. It's a very good question. And let me just give you a little bit of what we're seeing. It's a fast changing landscape. And what I mean by that, it's difficult to offer commentary on enterprise [indiscernible] In these different components. The lines between CPU and GPU are becoming blurry. And in support of both lines of business, we have a lot of standard products. So while we've historically had better visibility in the separation and could track them a little more easily. It's hard for us to make more than just a generalized comment about what direction either market segment is going in. [indiscernible] we're getting significant shares about on the server side. And once you see the server markets start to ramping up, [indiscernible] Great. I guess as my non inventory follow-up, you guys well in that in the second half of the year. It's a little bit choppy still, but can you just give us an idea profile of that business? Much is kind of the old comps versus the new comps and give us a little bit more color on more color on what the growth driver is that gives you the confidence for the year?

And I assume it's on the optical side of things, but just a little more details on that would be helpful. We're all laughing, Sanjay.

And would you say the beginning of the question?

It was Kyle's, right, Ross? Yes. On the communication side, it's just you guys have been talking about that growing for many, many years and it finally did year, but I know there's some legacy pieces and some new pieces. So I just want to try to get some color on the difference between them.

Yes, Ross, I think you kind of hit it when you were asking the question, right? If you look at comps going forward, the area of strength that we've really been calling out is in optical. And we'd expect that to continue as part of the overall data center opportunity that you heard Michael talk about. So I think that's probably the biggest inflection point that you've seen over the past couple of quarters versus legacy business. Got it. Thank you.

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

Hey, guys. Let me extend my congratulations as well.

I wanted to start with a housekeeping question. Were there any greater than 10% customers in fiscal year twenty twenty four? And if you can't name customer, can you at least give us a sense of how big that customer was in the year?

Certainly for the March, Q3 in our October, we said that we had two direct customers, which are distributors that were greater than 10% and one indirect customer that was greater than 10% and that carries through for the full year as well.

Okay. But you can't give us a number that would publish in the 10 ks in terms of the percentage of revenue from that direct customer?

Not at this time.

Okay. I tried. All right. Wanted to ask about revenue diversification outside of your traditional power management market. And if I count correctly, there's maybe four shots on goal and you highlighted some of those in your press release and that would be data converters, silicon carbide, DSP audio and battery management systems. So my question is, how big in revenue terms can that be in the fiscal year twenty twenty six timeframe? Or said differently, how much of a growth catalyst can it be on top of what you're producing in traditional power management? [indiscernible] Traditional power management, they're talking about these are low voltage things if it's what you mean. Okay, the silicon carbide is of course to me, is also in the power management and but these are much higher powers and a very high power management in the And We don't want to put on the numbers. But these are, again, a billing a couple of billing dollar opportunity for all of them for [indiscernible] I don't want to put a timeline. On it.

Okay. [indiscernible] picked a couple for the script, but we only could put a few in for time. But I think our strategy continues to be plant a lot of seeds in a lot of different areas that can turn into revenue as the market decides what to prioritize. Well, that's a good point. And they are only yeah, [indiscernible] This time, you come over, you will see a lot of showcase on the MPS new technologies. And these all will contribute in the next few years of growth. Okay. And if you want to paint down what is the numbers, okay, I would say that, okay, we if you look at the past for NPS, what the model is, we will I don't see anything any reason we should change Okay? So faster or slower.

Thanks, guys. Our next question is from Quinn Bolton of Needham.

Quinn, your line is now open. Hey, guys. I'll offer my congratulations as well. I guess, Bernie, Michael, obviously, a very strong start to the year in the March.

Your comments about enterprise data, certainly sound like that business might be more second half weighted. And so I guess I'm just trying to think what sort of revenue pattern would you expect through 2025? Is the first half slower the second half materially stronger Do you think that you have some puts and takes? And so it's a kind of more linear ramp through the year? Just any sort of thoughts on the shape of revenue through '25 would be helpful.

Yeah. So the comment that we made as far as the outlook for the year really looks at the design wins we've secured and an expectation of what is going to be ramping Keep in mind though that particularly in the AI side, of enterprise data, that has tended to be very volatile and that we have relatively short lead times as far as when we get hard information or POs for actual delivery. So I think that within the context of what we believe is most likely to happen, We're very secure by saying flattish year that's weighted to the back half. But how that curve actually plays out over the quarters is to be determined.

Yes. Let me add on. Okay. Bernie said [indiscernible] if you will, and very is at the initial ramp. So you're only involved with we have a few customers Now, so, okay, we talked about it before. So we have a multiple [indiscernible] [indiscernible] [indiscernible] Well, Ken, I guess that was going to be my sort of second question just thinking about the enterprise data segment. Can you just give us a sense what you're seeing in terms of one, like for like pricing pressure and then two, I think some of the newer designs, really move away from a silicon only solution to much more of a module solution and I assume that those carry You're much higher dollar content for you. And so do you see as you mix the customer, you ramp some of the new hyperscaler designs, Do you think the blended ASP trends in that business even if you see some like for like pricing, could that go higher through the year as these new platforms ramp?

Well, NPS, let us stick with our our models in our margin model. And gross margin model. We We provide performance in If it doesn't fit the MPS business, model, we don't take those business.

And so far, we're the leading suppliers [indiscernible] as well as power modules. [indiscernible] so this is the reason we, in in a very short time, in the last twelve, twenty four months, we have engaged with all these hyperscales We have all these projects designed way, designing it. And And also we have a future products where many future products in the in the development. Got it. Thank you, Michael. [indiscernible] Our next question is from Chris Caso of Wolfe. Chris, your line is now open.

Yes, thanks. I guess just to start, I just want to make sure [indiscernible] understood correctly some of the comments. So when you look at the enterprise data flattish for the year weighted to the back half, and I'm assuming that's the entirety of the enterprise data segment not not just that associated with AI, And maybe you could talk about how you talked about some of the hyperscalers, some of the custom ramps happen in the second half of the year. Is that what's driving that strength in the back half of the year? What's kind of driving that that back half waiting?

Chris, that's an accurate observation. It's as we look at the ramps for both [indiscernible] and some of the tensor processor products that are expected to come out we've been prototyping those, but the revenue ramps are really weighted to the second half. And in addition, some of our existing customers in the AI business in particular have multiple new products that they're ramping and those will have different demand profiles as well. And then that's just within the enterprise data. I think another important ingredient is what we've referred to as the triple down effect as we see the other applications that are allied to enterprise data or AI specifically in memory, optical and networking all three of those are areas for growth as well during 2025.

Right.

And I guess as you look at the full year, obviously, from what you guys are seeing and the better than seasonal Q1, it's safe to say you're starting out a little better than some of the others in the space. What's your thought as as you go through the year? I mean, is there any lumpiness with regard to some of the opportunities that ramping early in the year that we should consider as we go through the year Or is excluding the Enterprise Data's business do you see revenue kind of on a a fairly stable upslope trajectory as you go through the year. [indiscernible] tell you some It's very difficult to Surota, you go by year by year, we don't go by year by year. It's okay. I mean, but all the way we have to report a year by year. And give you examples, our large customers start to push out some product pulling lot of other ones. So we can we we can't really tell. And other customers, other hyperscales start to ramp, okay, start, they telling us we're going to keep a ramp. Whether the ramp have an effective and move our revenue needles, in Q4 of this year or Q1 of next year, [indiscernible] [indiscernible] The only thing I'd add on Michael is and it just comes back to the focus on what you can control.

Right? And the organization looking at providing the best products with the best quality And that's what we can do right now. And as the market then plays through, that will turn into revenue. So I don't think we're trying to get into a quarter by quarter debate here, Chris. I think that's how we've more landed kind of in a first half dynamic at this point.

Thank you.

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

Yes. Thank you for taking my question. A couple of times you've talked about the hyperscale program sort of driving growth more so in the back half of the year. I guess if we compare these sockets to what you've already done in AI and the accelerator side, there's a lot of companies in the analog space that are saying that they have power engagements with ASIC vendors as well. Would you expect the majority of these merchant the ASIC programs to be dual sourced? And I know you're not going to necessarily quantify share, but I'd just be curious to hear how you're seeing the competitive environment in these sockets.

Sure. Let me take the first opportunity there. If you look at our most recent track record in the new and I'd say new relatively new AI business. The reason we were able to secure a lead position initially is because of our ability to innovate and our time to market. Along with our overall performance characteristics. So to the extent that that is valued, in these product launches, those are the qualities that give us an [indiscernible] we've said a couple of times on this call that when we look at our customers, we don't necessarily control what their decision process is or why. And so again, we lead with our strengths and believe that we're well positioned and then we'll see how the numbers turn out the end of the year here.

Yes, you mentioned the second half, you're paying that down as on the second half of the ramp. What we mean is in the very near futures. It could be Q1 of next year, could be Q3 of this year, [indiscernible] even overlapping [indiscernible] And lot of things as I said earlier, okay, and our large customers, some of the push out, other ones are pulling to the game. And [indiscernible] so we cannot tell.

I guess to put a punctuation statement, we remain cautious the op That's the professional way to say it.

We always get the more professional answers from Bernie. Okay, no, thank you.

Thank you both for the color there. As my follow-up, I guess, you're kind enough to give sort of a rough outlook for enterprise data growth for 2025 Any more clues you can give us on how you're expecting either at the company level 02/1935 growth to shake out and any sort of which segments you would expect to be the biggest contributors to growth?

Biggest ones we are thinking there's multiple of them.

Yes.

And whether multiple of them will rent in a different many different segments in [indiscernible] [indiscernible] But other ones are coming up. And we focus on the diversified growth that That is the key strategy. So we've been playing the same principles for last twenty five years.

And if this thing doesn't work, then other things will work. Okay, that's always [indiscernible] And as long as we bring up the best performance, highest performance in a market. We will if if this segment slows down for whatever the reasons, other segment will pick up Thank you both and congrats on the results.

Thank you.

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

Great. Thanks for taking my question.

Let me start with, what everyone's been asking about is enterprise data. I think you highlighted, Bernie, that it's going to be down sequentially Can can you give us a little help on the Monolithic? Because you know, down could be down, like, 3% or, like, 30% Maybe just dimensionalize it a little bit to give us some context, please.

Yes. I think that it'd be really hard again what Michael just said is that the strength of our model is the diversification And I would probably point to the outlook that we've given in total for Q1 as being a risk profile that we believe we can deliver comfortably against. Based on what we can see in our backlog and the continuing the ongoing ordering patterns. But again, trying to actually stratify with a level of precision on the end market this point might be difficult.

Yes, you may looking for precisions and the realities in the business we go for long terms. And we go for long term. It doesn't mean Yire Chen will have uplift uplift in our revenues. Okay.

Yeah. Clearly, my ability to model the near term is is problematic. A follow-up can. Maybe let me switch gears a little bit. Michael, I think in the past you talked about having some capability in microcontrollers. Historically, you know, I know that it's not like a focus, or it's not a meaningful part of your revenue as well as I understand.

Should we expect that to change? There's so many new products you talk about silicon carbide power and converters now and DSPs even should we expect microcontrollers or another any other digital sort of, logic technology to become a bigger part of your revenue over time?

Very good questions. And, we don't list out a microcontroller as a standalone standard product that we sell. As a matter of fact, we as a [indiscernible] we sell many microcontroller now, okay? And of As I recall, in my mind, can come up twelve, thirteen microcontrol projects is ongoing. Some of those stuff is shipping. But what we sell microcontroller is on the system level. [indiscernible] the last field conference, so this NPS is evolving to to a silicon based solution company. Microcontrollers plays a key role. [indiscernible] All these powers, all these other lighting, all these other audios and including power supply, including AI They all have a microcontrollers. [indiscernible] [indiscernible] the standard microcontroller part. And clearly also a lot of microcontroller integrated And that's the reason we don't list it apart. This is separate. Okay.

Our next question is from William Kirwan of Morningstar William, your line is now open.

Hey, everyone. Thanks for letting us get a question in here. A lot of good questions so far, so I'll try not maybe it sounds like at least in the March automotive communications seem to be driving some of the growth. So wondering if you could just give a broader view into the demand for those markets for 2025 and your opportunities for share gains in those two?

Sure. Well, it's good to hear you in the Q and A by the way. Most of the ones that we have are long design cycles. And automotive probably lends its to three years for an EV in advance of when it gets launched. Or as many as four to five years for a traditional internal combustion. Now having said that, the timing of those ramps, when we get the design win comes to market still remains a question mark. But with within the context of six to nine months we can be reasonably predictive. So in automotive, we see continuation of what's been driving our last two quarters of growth as far as EVs in China.

And those will be supplemented in the second half of the year more likely by a European OEM that is going to be bringing up a autonomous driving ADAS solution as well as additional content opportunities in North American EV company. And then when you look at the communications side, I think that is we're very early stages of being able to ramp the revenue opportunities, particularly in fiber optics. We started out with two primary customers but that we expect that customer base to diversify over the year.

As always the pattern. [indiscernible] That's excellent. And then maybe one just on some of the new products that were introduced at the start of the call. Really just which one of these may be excite you the most and what are the new markets that you might be able to enter with these that are, the most attractive, do you think, from a growth perspective? [indiscernible] The most exciting product, we haven't announced it yet. [indiscernible] [indiscernible] And these equal babies, okay? They all grow should be very same rate. Again, we picked four, but there's many more behind that. So it's hard to pick just one. Actually, we wanted to have a teaser to make sure we had the best turnout for the Investor Day. Okay. Excellent. We'll wait for more detail in March.

Thanks, guys.

All right.

Okay.

Our next question is from Hans Mosesman of Rosenblatt.

Thanks. Congrats, guys. I'll be quick.

What is the split for your enterprise data between AI and non AI, if that's possible? And I have a follow-up.

Yes, again, I think we already answered that question. So we really don't have a meaningful way to make that divide. And our customers are not [indiscernible] not appreciated where disclose those numbers. [indiscernible] our customers have made it very clear.

Is is non AI considered memory and optical? Historically, just out of curiosity?

These are in different market segments. Optical and communication, memories and storage.

Fine. Okay. At the risk of upsetting your customers if you answer what is the share between your historical AI customer for this year versus accelerator customers, what's the split? Is it ten ninety or fifty-fifty or And for this year, and at the end of the year, and we probably will have a more in the near term where we have a more clear picture, but then now we don't. Frankly, as Bernie said, we're not in a position to answer [indiscernible] and also by either by product share the same product and and also some of our customers doesn't want us to release these informations.

Okay. You very much.

Our last question is from Joe Kotroki from Wells Fargo. Joe, your line is now open.

Thanks for taking the questions. Just curious on the notebooks strength that you guys are talking about into the first quarter. Wondering this what's driving that? Is that strength from you're starting to see pull for AIPCs or is that channel refill? Just trying to understand some of those dynamics.

That's a great question. In fact, we believe that a lot of the design wins that we've had in notebooks more recently are tied into new AI product demand. But as I said, it's a little bit of an atypical ramp for Q1. So we really don't have a definitive answer on the the why behind it.

Got it. And then just trying to think about that the new project that are ramping in the second half for enterprise data, Any help that you can provide and just try to think about like the architectures of those solutions that you're shipping to your customers, are you still seeing those as being lateral power opportunities or are those starting to move to more vertical solutions?

Yes. I think you heard us talk a couple of times that we're not going to talk specific to any customer or their particular architectural solution. I think for us, what you see is again folks is providing a portfolio of products with the best quality, the best performance and then the customers can choose what works for them.

And going back to Michael's earlier comment as far as basically the value proposition of the principles we operate under, what we're most interested in doing and continuing to do is winning sockets.

Yeah. Our customers are particularly does not want us to reveal the lateral power or vertical power.

Got it. That's helpful. Thank you.

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

I'd like to thank you all for joining us for this conference call. As a quick reminder, we will be hosting our Investor Day on 03/20/2025. Michael and other MPS executives will showcase our vision for innovation and outline key elements of the company's long term gross The event will be held in our San Jose offices and will include live presentations, a Q and A session and demos of our latest solutions for a number of applications and a lot of a number of other markets. If you haven't done so already, please email your RSVP to mpsinvestor, one word, dot relations Monolithic dot com. You can also access a live stream of the event on our Investor Relations Web Separately, I look forward to talking to you again during our first quarter twenty twenty five conference call, which will likely be held in May.

Thank you, and have a nice day.