Earnings call transcript: Monolithic Power Q2 2025 reports revenue boost

Monolithic Power Systems Inc. (NASDAQ:MPWR), a $34.08 billion market cap semiconductor company with a "GREAT" financial health score according to InvestingPro, reported its Q2 2025 earnings, highlighting a record revenue of $664.6 million, surpassing forecasts. The earnings per share (EPS) came in at $4.21, exceeding the anticipated $4.11. Despite these strong results, the company’s stock saw a decline of 2.64% in regular trading hours, closing at $730.54, although it showed a slight uptick in aftermarket trading.

Key Takeaways

• Monolithic Power posted a 31% year-over-year revenue increase.
• EPS exceeded forecasts by 2.43%.
• The company is diversifying its supply chain, with 50% outside China by year-end.
• Automotive market expected to grow 40-50% annually.
• Stock price decreased by 2.64% post-earnings announcement.

Company Performance

Monolithic Power Systems demonstrated a robust performance in Q2 2025, with revenue increasing by 31% year-over-year and 4.2% from the previous quarter. The company attributed this growth to diversified revenue streams across all markets, positioning itself to support $4 billion in annual revenue. The enterprise data and automotive markets were significant contributors, with the latter anticipated to grow substantially throughout the year.

Financial Highlights

• Revenue: $664.6 million, up 31% YoY.
• Earnings per share: $4.21, beating the forecast of $4.11.
• Revenue growth of 4.2% from the previous quarter.

Earnings vs. Forecast

Monolithic Power’s EPS of $4.21 surpassed the forecasted $4.11, marking a 2.43% surprise. This performance indicates a strong quarter for the company, continuing a trend of exceeding market expectations.

Market Reaction

Despite the positive earnings report, Monolithic Power’s stock fell by 2.64% during regular trading hours. The stock closed at $730.54, down from its 52-week high of $959.64. According to InvestingPro’s Fair Value analysis, the stock appears fairly valued at current levels. The company maintains strong fundamentals with liquid assets exceeding short-term obligations and operates with moderate debt levels. However, it showed a modest recovery in aftermarket trading, with a 0.31% increase.

Outlook & Guidance

Looking ahead, Monolithic Power remains cautiously optimistic for the remainder of the year. The company expects broad-based demand across markets and anticipates 20% growth in 2026. The enterprise data market is projected to be a key growth driver, with Q3 guidance suggesting an 8% sequential growth at the midpoint. The company has maintained dividend payments for 12 consecutive years, with an impressive 24.8% dividend growth in the last twelve months.

Access the complete MPWR analysis, including detailed valuation models and growth projections, in the comprehensive Pro Research Report available exclusively on InvestingPro.

Executive Commentary

• "We are transforming from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider," said Bernie Blaken, CFO.
• "We believe ultimately all data centers will convert to 48-volt and 800-volt systems," stated Michael Singh, CEO.
• "Our current capacity is to support $4 billion of revenue with 50% diversification outside of China," added Bernie Blaken, CFO.

Risks and Challenges

• Supply chain stability remains a focus, with efforts to diversify outside China.
• Market dynamics with short lead times and dynamic ordering patterns.
• Potential macroeconomic pressures affecting global demand.

Q&A

During the earnings call, analysts inquired about the company’s AI ASIC platforms and opportunities in the automotive and enterprise data markets. Questions also revolved around supply chain strategies and inventory management, highlighting the importance of adaptability in current market conditions.

Full transcript - Monolithic Power Systems Inc (MPWR) Q2 2025:

Arthur Lee, Moderator, MPS: 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.

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 Blaken, EVP and CFO, MPS: 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.

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.

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.

Arthur Lee, Moderator, MPS: 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, Analyst, Stifel: 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 Blaken, EVP and CFO, MPS: 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.

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, Analyst, Stifel: 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?

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 Singh, CEO and Founder, MPS: 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.

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.

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.

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.

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

Tore Svanberg, Analyst, Stifel: Great. Thank you, congrats again.

Michael Singh, CEO and Founder, MPS: K. Thank you.

Arthur Lee, Moderator, MPS: Our next question is from Chris Caso of Wolfe Research. Chris, your line is now open.

Chris Caso, Analyst, Wolfe Research: 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.

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 Blaken, EVP and CFO, MPS: 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.

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 Singh, CEO and Founder, MPS: Well, whatever we said in the beginning of the year, we’re pretty we feel comfortable.

Chris Caso, Analyst, Wolfe Research: 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.

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 Singh, CEO and Founder, MPS: Well, I gave you a arrogant answer. Sorry. I don’t listen to any other calls. Tell me that. Maybe I know from you.

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

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.

If I could add to that, the

Bernie Blaken, EVP and CFO, MPS: 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.

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

Chris Caso, Analyst, Wolfe Research: Yeah. Helpful. Thank you.

Arthur Lee, Moderator, MPS: Our next question is from Quinn Bolton of Needham. Congratulations

Quinn Bolton, Analyst, Needham: 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.

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 Singh, CEO and Founder, MPS: 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.

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, Analyst, Needham: I, I’ll I’ll save those for for analyst day or maybe the callbacks.

Bernie Blaken, EVP and CFO, MPS: Okay. 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.

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

Michael Singh, CEO and Founder, MPS: 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. Okay.

Quinn Bolton, Analyst, Needham: 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.

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 Blaken, EVP and CFO, MPS: 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 Ballo, Vice President of Finance, MPS: 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, Analyst, Needham: Thank you.

Michael Singh, CEO and Founder, MPS: Okay. There’s too many things. I can’t remember. Okay.

Arthur Lee, Moderator, MPS: Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open.

Ross Seymore, Analyst, 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 Blaken, EVP and CFO, MPS: 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, Analyst, 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 Blaken, EVP and CFO, MPS: 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 Singh, CEO and Founder, MPS: We don’t wanna pretend to know that. Yeah. Yeah. These are our our control. Okay.

I mean, whatever happens, happens.

Ross Seymore, Analyst, Deutsche Bank: Perfect. Thank you, guys.

Michael Singh, CEO and Founder, MPS: Oh, by the way, our inventory is a low loss.

Ross Seymore, Analyst, Deutsche Bank: I didn’t wanna go there, but, it was nice to see.

Michael Singh, CEO and Founder, MPS: I volunteered. I volunteered.

Ross Seymore, Analyst, Deutsche Bank: Thank you.

Arthur Lee, Moderator, MPS: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.

Rick Schafer, Analyst, Oppenheimer: 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?

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 Singh, CEO and Founder, MPS: 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.

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.

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.

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.

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

Tony Ballo, Vice President of Finance, MPS: 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, Analyst, Oppenheimer: 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 Blaken, EVP and CFO, MPS: 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.

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.

Chris Caso, Analyst, Wolfe Research: Okay. Thanks, guys.

Arthur Lee, Moderator, MPS: Our next question is from Josh Buchalter of Cowen. Josh, your line is now open.

Josh Buchalter, Analyst, 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 Singh, CEO and Founder, MPS: 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.

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

Chris Caso, Analyst, Wolfe Research: Alright. I will take

Josh Buchalter, Analyst, Cowen: the subtle hints there and ask about autos.

Michael Singh, CEO and Founder, MPS: Auto auto is a auto and enterprise data add together maybe only 40%. How about something else? Okay.

Josh Buchalter, Analyst, Cowen: Alright. I mean, so I’ll put the storage and compute then. Yeah. We can take this anywhere. I’ll start

Michael Singh, CEO and Founder, MPS: with the No. I’m just joking. Ask for whatever you wanna ask.

Josh Buchalter, Analyst, 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 Blaken, EVP and CFO, MPS: 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.

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 Singh, CEO and Founder, MPS: Yeah. You know, auto, we grow significantly this year. Right?

Bernie Blaken, EVP and CFO, MPS: 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. Yeah.

And

Michael Singh, CEO and Founder, MPS: 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.

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

Josh Buchalter, Analyst, Cowen: I got it. Thanks, guys. Next quarter’s questions on TVs.

Michael Singh, CEO and Founder, MPS: Okay. Alright. Thank you.

Arthur Lee, Moderator, MPS: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.

Bernie Blaken, EVP and CFO, MPS0: 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 Singh, CEO and Founder, MPS: I don’t have a seasonality anymore. Yeah. I’ve got plenty of videos. Okay.

Bernie Blaken, EVP and CFO, MPS: 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.

Bernie Blaken, EVP and CFO, MPS0: 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 Blaken, EVP and CFO, MPS: Yeah. So two separate questions, but I’ll try to address pretty quickly.

Tony Ballo, Vice President of Finance, MPS: I say I I I

Michael Singh, CEO and Founder, MPS: answered the first the second part. Our inventory is

Bernie Blaken, EVP and CFO, MPS: low. 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.

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.

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

Michael Singh, CEO and Founder, MPS: 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. Yeah. And, we can meet it in q four in our customer demand.

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 Ballo, Vice President of Finance, MPS: 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.

Michael Singh, CEO and Founder, MPS: Thank you, guys.

Arthur Lee, Moderator, MPS: Our next question is from Kelsey Chia of Citi Research. Kelsey, your line is now open.

Bernie Blaken, EVP and CFO, MPS1: 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?

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

Bernie Blaken, EVP and CFO, MPS: 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.

Bernie Blaken, EVP and CFO, MPS1: 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.

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 Blaken, EVP and CFO, MPS: 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.

Bernie Blaken, EVP and CFO, MPS1: Thank you. Thank you very much.

Arthur Lee, Moderator, MPS: Our next question is from William Stein of Truist. William, your line is now open.

Bernie Blaken, EVP and CFO, MPS2: 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 Singh, CEO and Founder, MPS: 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 Blaken, EVP and CFO, MPS: 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.

Bernie Blaken, EVP and CFO, MPS2: 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

Chris Caso, Analyst, Wolfe Research: I meant.

Bernie Blaken, EVP and CFO, MPS: Yeah. Yeah.

Bernie Blaken, EVP and CFO, MPS2: Wasn’t a criticism firm. It was

Michael Singh, CEO and Founder, MPS: Oh, yeah. Yeah. Four four billings and okay. And it’s not only for yeah. I mean, it’s for enterprise.

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

Tony Ballo, Vice President of Finance, MPS: K. What?

Bernie Blaken, EVP and CFO, MPS2: 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.

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

Tony Ballo, Vice President of Finance, MPS: Thank you

Michael Singh, CEO and Founder, MPS: very much. Thank you very much. Okay. First thing, the ecommerce is a kind of flop. Right?

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.

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.

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 Blaken, EVP and CFO, MPS: you’re talking about Data converter.

Michael Singh, CEO and Founder, MPS: 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.

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.

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.

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.

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.

Bernie Blaken, EVP and CFO, MPS2: Thank you.

Bernie Blaken, EVP and CFO, MPS: 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.

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