MONOLITHIC POWER SYSTEMS Q2 FY25 earnings call MPWR

Monolithic Power Systems achieved record quarterly revenue of $664.6 million in Q2 FY25, representing a 4.2% sequential increase from Q1 FY25 and a 31.0% year-over-year increase from Q2 FY24. This strong performance was attributed to the company's diversified market strategy, consistent execution, and continued innovation, with broad-based revenue growth observed across all end markets.

The company commenced initial shipments of power solutions for new ASIC-based AI products, engaging with multiple large and emerging customers. Management reiterated confidence in achieving the previously stated $4 billion Serviceable Addressable Market (SAM) for enterprise data. For Q3 FY25, the enterprise data segment is projected to grow between 20% and 30% sequentially, with Q4 also expected to show sequential growth, highlighting the dynamic nature of this fast-moving market.

The automotive segment is a significant growth driver, with full-year FY25 growth anticipated to be between 40% and 50%. This growth is primarily fueled by new content ramps with Western OEMs, particularly picking up towards the end of Q3 and into Q4. Long-term opportunities in automotive include 48-volt systems and zonal architectures, which are expected to be key growth areas beyond the current year.

Despite two strong preceding quarters, management expressed caution regarding the storage and compute segment. This caution stems from the atypical seasonality experienced, with significant build-ups in Q1 and Q2, and the historical boom-and-bust cycles characteristic of these end markets. However, Q2 results for this segment surpassed expectations, indicating underlying strength.

MPS maintains capacity to support $4 billion in annual revenue, with a strategic goal to have 50% of this capacity located outside of China by year-end to ensure supply chain stability and flexibility. The company noted its inventory levels are low, and channel inventories across major geographies are lean, suggesting that current demand is real and being met efficiently through continuous qualification of new supply.

MPS is actively transforming from a chip-only supplier to a full-service silicon-based solutions provider. The module business, which offers integrated solutions for customers seeking to avoid detailed design work, is growing significantly and is expected to contribute 10% to 15% of total revenues next year (excluding enterprise data power modules). The eMotion business, after slower growth in previous years, is now seeing renewed momentum driven by AI-driven robotics, with expectations for much faster growth in the coming years.