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    MPWR
    Earnings call· Dec 2024(Q4 FY24)

    MONOLITHIC POWER SYSTEMS INC MPWR

    Feb 6, 2025 Source

    Executive summary

    Monolithic Power Systems Q4 FY24 — Record Revenue and Dividend Increase

    Monolithic Power Systems delivered record Q4 FY24 revenue and achieved its 13th consecutive year of growth, driven by a diversified market strategy and continuous innovation. The company announced a significant dividend increase and a new share repurchase program, underscoring its commitment to shareholder returns. While the first half of 2025 is anticipated to be slower, particularly in enterprise data, MPS is positioning for future growth through new product ramps and continued investment in silicon-based solutions.

    Highlights

    5

    • Full year revenue reached $2.2 billion, marking a 21% increase from 2023.

    • Record quarterly revenue of $621.7 million in Q4 2024, up 37% year-over-year.

    • Quarterly dividend increased by 25% to $1.56 per share.

    • New $500 million 3-year share repurchase program authorized by the Board of Directors.

    • Returned 86% of free cash flow to shareholders over the past three years.

    Concerns

    3

    • Enterprise data segment expected to be down in Q1 2025 and flattish for the full year.

    • Overall first half of 2025 anticipated to be slower.

    • Volatility and short lead times in the AI business make precise revenue timing difficult.

    Guidance & targets

    5
    CategoryTargetConfidence
    Silicon carbide inverter revenue ramp
    Expected to ramp
    medium materiality
    Medium
    Silicon carbide-based applications introduction
    Expected to be introduced
    medium materiality
    Medium
    New high-accuracy 24-bit converters ramp
    Expected to ramp
    medium materiality
    Medium
    Enterprise data segment revenue
    Flattish year, possibly slightly up
    high materiality
    Medium
    Overall revenue pattern
    Slower start in the first half, broadening customer base in second half
    high materiality
    Medium

    Operational metrics

    7
    Revenue growth
    21%YoY
    FY24

    Full year revenue of $2.2 billion, up 21% from 2023.

    Revenue growth
    37%YoY
    Q4 FY24

    Record quarterly revenue of $621.7 million, 37% higher than Q4 2023.

    Dividend per share
    $1.56up 25%
    Q1 FY25

    Quarterly dividend will increase 25% to $1.56 per share.

    Share repurchase authorization
    $500Mnew authorization
    3-year program

    Board of Directors authorized a new $500 million 3-year share repurchase program.

    Share repurchase authorization
    $640Mcompleted
    Q4 FY24

    Completed share repurchases under a 2023 $640 million authorization during Q4 2024.

    Microcontroller projects
    12-13
    ongoing

    Can come up 12, 13 microcontrol projects is ongoing. Some of the stuff is shipping.

    Greater than 10% customers
    3
    FY24

    For the 3 quarters, Q1, Q3 in our 10-Q, we said that we had 2 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.

    Industry KPIs

    13
    MetricValueDetails
    Lead timesshort
    Backlog order book—
    Book to bill ratio—
    Ai data center revenue—
    Services installed base—
    Fab capacity utilization—
    Bookings net order intake—
    Wfe industry spend outlook—
    Design wins socket pipeline—
    Inventory channel inventorylow
    Node platform ramp schedule—
    Wafer shipments foundry ASP—
    End market segment revenue mix—

    Product announcements

    5
    ProductTypeDetails
    Silicon carbide inverterlaunch
    Automotive audio productslaunch
    Battery management solution for enterprise notebookslaunch
    Mini phase power stage for enterprise notebookslaunch
    New high-accuracy 24-bit convertersroadmap

    Deals & partnerships

    1
    AxignAcquisition of DSP technology

    Acquisition of DSP technology from Axign in 2024, which is now utilized in MPS's automotive audio products.

    Risks & headwinds

    3
    Enterprise Data Volatility and Timing UncertaintyQ1 2025, FY25

    Enterprise data segment expected to be down in Q1 2025 and flattish for FY25. Growth weighted to H2 2025.

    Mitigation: Focus on quality and supply availability; diversification even within a single segment; preparing supply chain and testing facilities for future ramps.

    Customer Launch Delays2023, H1 2024

    Automotive product launches were delayed in 2023 and H1 2024, impacting revenue ramps despite design wins.

    Mitigation: Focus on long-term product design wins and revenue conversion, rather than short-term timing.

    Difficulty in Predicting Hyperscaler RampsH2 2025

    The exact timing of hyperscaler product ramps is very difficult to call, leading to uncertainty in revenue recognition.

    Mitigation: Getting supply chain ready and quality testing facilities prepared to receive and convert these revenues.

    What to watch in Q1 FY25

    5

    Enterprise Data segment performance

    H2 FY25
    CurrentExpected to be down in Q1 FY25, flattish for FY25
    TargetImprovement in H2 FY25 as hyperscalers launch new products

    Why it matters

    This segment represents a multi-billion dollar opportunity, and its ramp will significantly impact overall company growth.

    We believe that we will be off to a slower start in the first half of the year. But as the year develops, the customer base is expected to broaden as hyperscalers launch their new products.

    Q&A highlights

    6

    Could you provide color on how various segments are expected to perform in Q1 2025, distinguishing between soft and healthy markets?

    Automotive, Communications, Memory, and Notebooks are expected to show strength, with Communications bouncing back. Industrial Consumer will contribute later in 2025, while Enterprise Data is projected to be down in Q1.

    “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.”

    asked by Tore Svanberg · answered by Bernie Blegen

    2 min read6 chapters

    Detailed Narrative

    01

    Q4 FY24 Performance and Full-Year Growth

    Monolithic Power Systems reported record quarterly revenue of $621.7 million in Q4 2024, representing a 37% increase year-over-year. This strong performance contributed to the company's 13th consecutive year of growth, with full-year 2024 revenue reaching $2.2 billion, up 21% from 2023. Management attributed this success to a diversified market strategy, consistent execution, continued innovation, and a strong customer focus.

    02

    Strategic Product Introductions and Ramps

    MPS is expanding its product portfolio with several key introductions. A silicon carbide inverter for high-powered clean energy applications was launched, with revenue expected to ramp in late 2025, alongside other silicon carbide-based applications planned for 2025 and 2026. The company is also developing new high-accuracy 24-bit converters, anticipated to ramp in the second half⚖️ of 2025, and has introduced battery management solutions and a mini phase power stage for enterprise notebooks.

    03

    Commitment to Shareholder Returns

    The company demonstrated a strong commitment to shareholder returns by increasing its quarterly dividend by 25% to $1.56 per share. Additionally, MPS completed a $640 million share repurchase authorization in Q4 2024 and subsequently authorized a new $500 million 3-year share repurchase program. Over the three years ending December 2024, MPS has returned 86% of its free cash flow to shareholders through buybacks and dividends.

    04

    Enterprise Data Segment Outlook and Volatility

    The enterprise data segment is projected to be down in Q1 2025 and is expected to be flattish for the full calendar year 2025. Growth in this segment is anticipated to be weighted towards the second half⚖️, driven by hyperscalers launching new products and existing customers ramping new offerings. Management highlighted the inherent volatility and short lead times in the AI business, making precise quarterly revenue predictions challenging.

    05

    Growth Drivers in Automotive and Communications

    Automotive is expected to continue its growth trajectory, building on two consecutive quarters of growth, primarily from EVs in China. This will be supplemented in the second half of 2025 by new ADAS solutions from a European OEM and additional content opportunities with a North American EV company. The communications segment, particularly optical, is also showing strong momentum from new product launches in Q3 2024, with customer diversification expected throughout 2025.

    06

    Evolution to Silicon-Based Solutions

    MPS is actively transforming from a chip-only semiconductor supplier to a full-service silicon-based solutions provider. This strategy involves integrating microcontrollers into various solutions, including power, lighting, audio, and AI, rather than offering them as standalone standard products. This approach supports the company's diversified growth strategy and aims to capture future opportunities across various market segments.

    AI-generated summary of the company’s earnings call. Not investment advice.