Monolithic Power Systems, Inc. (MPWR) Q4 2025 Earnings Call Transcript
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Overview
The earnings call reveals strong financial performance with significant growth in multiple segments, especially driven by AI and data center demand. The company is expanding capacity and investing in new technologies, indicating a robust future outlook. Although management avoided some specifics, the overall sentiment from analysts was positive, with confidence in the company's strategies and market position. Growth in the optical transceiver and automotive segments further supports a positive outlook, while the company's strategic initiatives and capacity expansions are expected to drive continued growth.
Key Financial Performance
Full Year Revenue (2025) $2.8 billion, up 26.4% from 2024. This growth was attributed to consistent execution, continued innovation, and customer focus.
Q4 2025 Revenue $751.2 million, 1.9% above Q3 2025 and 20.8% higher than Q4 2024. This reflects consistent execution, innovation, and customer focus.
Non-Enterprise Data End Markets Growth Over 40% year-over-year, showcasing the strength of MPS' diversified business model.
Quarterly Dividend Increased 28% to $2 per share. This is part of MPS' strategy to return value to stockholders.
Free Cash Flow Returned to Stockholders (3 years ending December 2025) Over 72% through share repurchases and dividends, reflecting MPS' commitment to returning value to stockholders.
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Operating Highlights
Record module revenue: Positioned for a further shift to solutions by sampling 800 volt power solution for data center.
Automotive solutions: Launched solutions for 48 volt and zonal architectures, including the first fully integrated 48 volt e-fuse and a kilowatt level zonal controller.
Non-Enterprise Data end markets: Grew by over 40% year-over-year, showcasing the strength of a diversified business model.
Customer base expansion: Expanded customer base in data center for power solutions across AI, server, memory, optical modules, and switch applications.
Revenue growth: Achieved 14th consecutive year of growth with full year revenue of $2.8 billion, up 26.4% from 2024. Record quarterly revenue of $751.2 million in Q4 2025, 20.8% higher than Q4 2024.
Supply chain capacity: Secured more than $4 billion of geographically balanced capacity and added additional supply chain partners to support future growth.
Dividend increase: Quarterly dividend increased by 28% to $2 per share.
Long-term growth strategy: Focus on innovation, solving customer challenges, investing in new technology, expanding into new markets, and diversifying end market applications and global supply chain.
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Risk or Challenges
Leadership Transition: The retirement of Bernie Blegen, the long-serving CFO, and the transition to Rob Dean as interim CFO could pose risks related to continuity and strategic execution during the leadership change.
Supply Chain Stability: While the company has expanded its supply chain partners and achieved geographically balanced capacity, any disruptions or inability to maintain this stability could impact future growth and operations.
Market Adaptability: The company's focus on diversifying end markets and adapting to market changes is critical, but failure to effectively execute this strategy could hinder growth and competitiveness.
Innovation and Technology Investment: Continued investment in new technology and innovation is essential for maintaining competitive advantage. However, any delays or inefficiencies in these investments could impact the company's ability to meet customer needs and capture growth opportunities.
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Guidance & Outlook
Future growth in automotive solutions: MPS launched solutions for 48 volt and zonal architectures, including the first fully integrated 48 volt e-fuse and a kilowatt level zonal controller, which are expected to support growth in 2026 and beyond.
Data center power solutions expansion: MPS expanded its customer base in data center power solutions across AI, server, memory, optical modules, and switch applications, focusing on leading-edge current density, power efficiency, and packaging.
Supply chain and capacity expansion: MPS secured more than $4 billion of geographically balanced capacity and continues to add supply chain partners to support future growth.
Dividend increase: MPS announced a 28% increase in its quarterly dividend to $2 per share, reflecting confidence in future cash flow and financial stability.
Long-term growth strategy: MPS plans to continue investing in new technology, expanding into new markets, and diversifying end market applications and global supply chain to capture future growth opportunities and adapt to market changes.
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Shareholder Return Plan
Quarterly Dividend Increase: The quarterly dividend will increase by 28% to $2 per share.
Historical Dividend and Shareholder Return: For the 3 years ending with December 2025, MPS has returned over 72% of free cash flow to stockholders through share repurchases and dividends.
Shareholder Return via Share Repurchases: MPS has returned over 72% of free cash flow to stockholders through share repurchases and dividends over the past 3 years.
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Key Q&A
Q:What are the trends observed in the March quarter across different market segments?
A:The company observed strong ordering trends in Q4 '25, with a book-to-bill ratio well above 1 and backlog extending into Q2 and Q3 of '26. Strength was particularly noted in enterprise data, communications, and automotive segments, which are expected to continue into Q1 and the rest of the year.
Q:What is the outlook for Enterprise Data in 2026?
A:The company has increased its growth floor estimate for Enterprise Data to 50% for 2025, with confidence driven by strong ordering patterns and design wins across multiple large customers. Management believes growth could exceed 50% due to strong demand and capacity to meet customer needs.
Q:How is the company performing in traditional server CPU demand and its relation to AI and GPUs?
A:The lines between AI, GPUs, and CPUs are becoming blurred as they use similar power supplies. The company is trending well in both categories but did not provide absolute figures.
Q:What is the company's view on memory prices and demand in the PC market?
A:The company does not have constraints on capacity and is participating selectively in emerging parts of the PC business. However, it is too early to predict how the PC market will trend this year.
Q:How has visibility in Enterprise Data changed compared to a year ago?
A:Visibility has improved due to longer ordering patterns as customers are concerned about capacity constraints. This change has increased management's confidence in the outlook for Enterprise Data.
Q:What is the growth outlook for non-Enterprise Data verticals in 2026?
A:Management did not commit to a 40% growth for 2026 but expects growth in non-Enterprise Data verticals, emphasizing that the company is still a small player in the overall market.
Q:Is the company gaining market share in the AI power segment for 2026?
A:Management avoided direct comparisons with competitors but expressed confidence in their product portfolio and broad customer engagement.
Q:What is the company's approach to 800-volt solutions for data centers?
A:The company is developing silicon carbide and GaN-based solutions for 800-volt racks. While these solutions are not expected to generate revenue this year or next, the company has started sampling them.
Q:What are the expectations for the optical transceiver business in 2026?
A:The optical transceiver business has grown significantly and is expected to continue growing, driven by the ramp of 1.6 terabit modules and data center demand.
Q:What are the drivers of growth in the automotive segment for 2026?
A:Growth is expected to be driven by the adoption of new technologies like Zonal and 48-volt systems, as well as ADAS. However, macro uncertainties like tariffs and EV subsidies could impact the market.
Q:What drove the company's outperformance in 2025?
A:The company grew 26% in 2025 despite a 2% decline in Enterprise Data revenue. This was attributed to strong execution and adaptability across all end markets.
Q:How has the outlook for 2026 changed in terms of revenue distribution across the year?
A:The first half of 2026 is more secure due to strong bookings and order backlog, but the second half remains uncertain.
Q:What is the company's position in SSD power for data centers?
A:The company is seeing growth in SSD power driven by enterprise demand and is participating in DDR5 memory modules, which are ramping up.
Q:What are the company's plans for capacity expansion?
A:The company is rapidly expanding capacity across silicon, silicon carbide, GaN, and module components to meet growing demand.
Q:Is the company gaining market share in Enterprise Data?
A:Management did not provide specific market share figures but emphasized strong engagement with top customers and participation in mid and small markets.
Q:What are the gross margin drivers and trends?
A:Gross margins are at the low end of the 55%-60% range. Management expects incremental improvements as backlog visibility improves.
Q:What is the status of the packaging innovation to double current density in modules?
A:The company has started sampling products with the new packaging innovation and expects to begin shipping this quarter or next.
Q:What is the impact of moving from a silicon supplier to a system provider on OpEx?
A:The transition is not expected to compress operating margins as the company has maintained R&D efficiency while developing new skill sets.
Q:What are the expectations for vertical power adoption in data centers in 2026?
A:Vertical power is expected to drive revenue in 2026 as it is the most energy-efficient solution for high-voltage, high-current applications.
Q:How does the shift to co-packaged optics impact the optical module business?
A:The shift to co-packaged optics is expected to increase revenue opportunities due to higher current density and integration, although it is a long-term trend.
Q:Review of Unclear Management Responses
A:Management avoided providing specific figures or clear answers on several topics, including absolute growth figures for traditional server CPU demand, the impact of memory prices on the PC market, and market share gains in Enterprise Data and AI power segments. Additionally, they did not quantify the impact of co-packaged optics on revenue or provide detailed gross margin drivers for specific end markets.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Blegen EVP
CFO Corporate
CFO finance
CFO lot
CFO partner
CFO remark
CFO round
Corporate Vice
Form Forms
Forms website
Founder MPS
MPS Blegen
MPS CFO
MPS commentary
MPS controllership
MPS finance
MPS investor
MPS name
MPS prospect
MPS tradition
MPS transition
MPS year
Today announcement
Welcome MPS
afternoon Today
analyst trust
announcement MPS
announcement year
business cycle
circumstance MPS
confidence responsibility
confidence role
continuity role
controllership CFO
culture employee
tradition MPS
MPWR Transcript
Monolithic Power Systems, Inc. (MPWR) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call reveals strong financial performance with significant growth in multiple segments, especially driven by AI and data center demand. The company is expanding capacity and investing in new technologies, indicating a robust future outlook. Although management avoided some specifics, the overall sentiment from analysts was positive, with confidence in the company's strategies and market position. Growth in the optical transceiver and automotive segments further supports a positive outlook, while the company's strategic initiatives and capacity expansions are expected to drive continued growth.
Monolithic Power Systems, Inc. (MPWR) Q3 2025 Earnings Call Transcript
Positive10-30
The earnings call reflects a positive sentiment, with record revenue growth and strategic transformation into a solutions provider. The Q&A section highlights strong market trends, especially in automotive and enterprise data segments, with optimistic future growth prospects. Although some management responses were vague, the overall outlook remains positive, particularly with the record revenue and strategic initiatives. The market is likely to react positively, considering the focus on innovation and growth opportunities.
Monolithic Power Systems, Inc. (MPWR) Q2 2025 Earnings Call Transcript
Positive7-31
The earnings call highlighted strong financial performance with record revenue and a diversified market strategy. Product development, particularly in AI and automotive, and a focus on enterprise data growth, were emphasized. Despite some caution in storage and compute, the overall outlook remains optimistic with robust guidance and diversified growth potential. The Q&A session reinforced this positive sentiment, with management addressing macroeconomic uncertainties and emphasizing strong demand across markets. The lack of detailed guidance on some aspects slightly tempers enthusiasm, but the overall sentiment is positive.
Monolithic Power Systems, Inc. (MPWR) Q1 2025 Earnings Call Transcript
Positive5-1
The earnings call summary shows strong financial performance with a 39.2% YoY revenue increase and a positive outlook on automotive and communications sectors. The Q&A section highlights management's confidence in market opportunities and supply chain stability, despite some uncertainty in enterprise data. The share repurchase program and dividend increase bolster shareholder returns, while the company's transformation strategy and product diversification support future growth. Although there are risks, the overall sentiment leans positive, likely resulting in a 2% to 8% stock price increase over the next two weeks.
MPWR Report
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