MPWR - Earnings call transcript Q3 2018 | Monolithic Power Systems, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Monolithic Power Systems Incorporated's Third Quarter 2018 Earnings Conference Call. At this time all lines are on a listen-only mode. Later we will conduct a question-and-answer session and instructions will be provided at that time. And as a reminder, this conference is being recorded. I'd now like to turn the conference over to Bernie Blegen, Vice President and Chief Financial Officer. ahead. go Please

Theodore Bernie Blegen

differ for MPS management's SG&A factors August Safe accessible today. are March XXXX, identified projections afternoon Monolithic on published differ obligation Good results results of other income, to in third call. statements to the in the conference for net and basis. and statements have which We'll SEC. and our GAAP should earnings income also as QX would and both Thank other refer the A I'd is could XXXX, the and in could income, filings and well of financial Systems' on to Form and XXXX current These in through our conference Harbor financial no which XXXX today's earlier and forward-looking available conference X, the make to GAAP provided and Power we operating XXXX, tables course that release www.monolithicpower.com. superior margin, of website GAAP Risks, not one refer will and live expectations. earnings our we measures measures expense, and SEC gross non-GAAP prepared involve cause call. quarter the Internet included financial measures website, our risk X, for the to release expense, outlines webcast to remind SEC the with performance in earnings call, non-GAAP on uncertainty cause you. QX the on assumes filed earnings the call as release our to accordance and reconciliation I over between information that will accordance table reconciling welcome with that are that in replay is filed In not year, today. substitute today's on Safe R&D on the Harbor the operating along GAAP. earnings views releases, website. posted and Please in included be Form today's that like XX-K actual be with the release, statement you on non-GAAP materially the from a to as being update earnings contained are a QX to to contained in with or with and filed both a are considered prepared financial uncertainties, measures which our filed QX interest discussing be XX-Q investors XXXX the

grew million sequentially, everyone margin MPS, the gross Let margin for has quarterly basis matched me gross of another six XXXX quarter's our quarterly quarters. revenue performance. $XXX.X consecutive last expanded MPS' representing for Likewise revenue either prior start by non-GAAP fifth telling XXth the high established QX the our watermark or that in points quarter record XX non-GAAP

up the our expected, QX XX%; each up XX% and reflecting segments. $XXX million computing in revenue automotive and milestone, up reached revenue we targeted of year-over-year; strength As industrial XX%. for storage, market

During in some businesses, the the MPS high China region. in experience softness consumer-related did especially unexpected quarter, Greater volume

remain high see our and for still for these optimistic consumer high-end products in demand prospects we products. However,

low in segment. share market gained also We end communications

growing high margin higher We on will businesses focus these stay opportunistic in and products. volume

$XX.X XX.X% ago In broad or to based $XX.X market. with computing quarter XX% QX our revenue of high-end million MPS' XXXX revenue notebooks, and all million, storage revenue year-over-year. storage compared market with XX% above Looking well rates year increasing applications, our Computing cloud at revenue and of when storage computing the at the XXXX. average. third in quarter market represented Growth was in the increased and compared market, by end

XX.X% or Third market represented quarter the to total in This sources, quarter XXXX security. third million, versus year. increased and sales the XX% XX% quarter from increased $X.X our power applications of industrial meters for revenue of and primarily of $XX.X due prior XXXX third million revenue

revenue XX.X% infotainment, of penetrating the years Automotive was battery management. this automotive as the MPS' grew offer over safety for products million QX $XX.X number period body MPS' market. to products. of XXXX. increased Automotive control, of with In connectivity of revenue XXXX a applications QX and million, same or $X.X are billion we total the new stages of revenue of ahead, XX% XX% sales at lighting, opportunity plan and we application ADAS quarter in a for Third XXXX compared TAM largest of infotainment, and is result in $X early

of $X.X Third from quarter same period decreased increased or million, combination quarter XXXX. legacy share accounted XX% over the $X.X markets communications million, initial Revenue the network. markets $XX.X products XG revenue ramping gains consumer the of in represents in our for of in XX.X% XX% with or revenue QX and This our the prior revenue total the million, $XX.X of of compared for XX.X% XXXX. Consumer year. from third million,

in geopolitical the than second changes, quarter consumer XXXX. than not of did lose we XX revenue higher trade of a XX markets projects and quarter or gross margin XXXX was and the of XX.X%, these basis market points points likely high GAAP to basis policy loss volume the share. continued is While third higher reflection gain of

$XX.X operating the of GAAP in the $XX.X compared quarter quarter $XX.X and XXXX to third second in reported was XXXX. income million Our of reported million million

third higher XXXX, basis was basis non-GAAP than the and third points XX the of quarter higher XX.X%, quarter XXXX. second gross than of the XX For XXXX quarter margin points of

the was quarter income reported XXXX. million the prior $XX.X $XX.X $XX.X million in in compared quarter third to of reported million and operating non-GAAP Our

operating our expenses. Let's review

in third operating expenses and with in second GAAP of compared Our XXXX. quarter third $XX.X million $XX.X were of quarter million XXXX the in quarter $XX.X the million

$XXX,XXX non-GAAP million, Switching fully with diluted of and quarter was quarter million XXXX. XXXX $X.XX $XX.X XXXX. in end and both of net a from of share recorded difference compared expenses in Total and quarter second non-GAAP the basis, and expense $X.XX and third an QX non-GAAP GAAP $X.XX were share bottom quarter for million sold $XX.X of in of the second XXXX a the of the the in million, third in operating $XX.X share in income quarter third up third quarter compared was XXXX GAAP at expense or operating between third per loss were a and $XXX,XXX was share XXXX QX in million diluted per stock of $XX.X cost of expenses discussed income and unfunded the quarter XXXX shares Our a operating million $X.XX per QX expense per with share compared fully up in quarter or diluted reported $XX.X of $XX.X per XXXX deferred compensation for compensation quarter the million, million. compared including with compensation quarter XXXX The net litigation Fully third XXXX. QX plan. or income expenses XXXX. third XXXX XXXX. goods $XX.X set stock of quarters non-GAAP to we per the charged line, were from with expenses quarter $X.XX the are in here $XXX,XXX On $XX.X second share second of the $X.XX from GAAP outstanding the $XXX,XXX to the

balance $XXX.X investments at of million the compared Cash, Now let's the end of third and the end million to at sheet. XXXX the second of at cash $XXX.X quarter the were look quarter equivalents of XXXX.

XXXX with quarter, flow about QX generated operating cash compared $XX.X million of operating For $XX.X million. cash MPS flow of the

third of the quarter Third $XX.X million quarter XXXX of million, totaled quarter spending Accounts $XX.X second or XXXX compared sales of or of quarter and at receivable reported the at or of days the outstanding $XX.X the capital third the end million, reported XX XXXX in $X.X days XX ended XX days million. with XXXX.

of our XXX new are of the $XXX.X XXXX particularly product the of range of the in end up inventory XXX end the decreased days at the quarter from and the new the third Days automotive requirements at changing end our the million, in reflecting QX XXXX. were at to computing of inventories days from second inventory quarter XXXX. customer internal second of of at million end of introductions. quarter $XXX.X of XXXX and Days Our the

our fourth quarter the XXXX. for now outlook of Turning to

revenue We in $XXX of QX the range to are forecasting million $XXX million.

range foreign shares. conclusion, expected from gains fully according range plans stock goods XX.X sold; We XX.X% would to grew to market be in up $XX.X million range stock-based million total to XX.X%; This margin or to SG&A while of also non-GAAP gross communications as will estimate R&D diluted shares for range in in to phone million margin to products diversification XX.X in of our questions. including the geographical million expenses; GAAP environment. to open be $XXX,XXX in of compensation and in $X and uncertainty to we and amongst to now XX.X%; be million the greenfield cost I expenses litigation exchange SG&A expected, million; range following, approximately the gross and of expect both of million. segments geopolitical the products in excludes to In execute in is before expenses of $XX.X million markets. high-value charged income share the $XX.X GAAP other non-GAAP that $XX.X million and in continued the $X.X million, between $XX.X $XX.X R&D We XX.X% lines and gaining the consumer losses; the to compensation to and of expense

Operator

you. Thank

question Cowen. with first comes Ramsay from Our Matt

Your line is open. now

Matthew D. Ramsay

environment. of that across there. new often against you're number risks into high Thank about you The a could investors and your a versus guys, over the then for a a concerns lot of I gains juxtapose talk lot your at you. an just Michael, have opportunities we've expectation congratulations growth lot associated there's strong growth about are market and XX% content with to the Good results a just on getting of understand out next have Maybe couple afternoon, the of question uncertainty embedded is, for long-term level macro share with businesses. the of that set and gains. company share that company a that that the that years trying for of a forecasts of progressing most weaker folks we're how know and been there

Michael R. Hsing

okay. right, All

position of a and is well we segment. are plan, our to little we and the Those relatively to industrial segments market expect we those years is as what what grow next condition have know, in to the segments market the very should according MPS, set. immune only And a guys. in As such very not data small the share, we're in you have we a position macro heard greenfield we auto, market answer from particularly centers as you percentage and market be side. to as And it all few

Theodore Bernie Blegen

I there our we aggressive we new comments, in that, reflected to we're add that we is to think market our be said continuing one-point design prepared to has fact lose as in that wins. in while to securing that business, didn't far as make very a most share, consumer continue been downturn that's as gains. And

Matthew D. Ramsay

is are what talk what into many a and the programmable with with, share? And as amount mean a that programmable and follow might that about commentary today, winning see percentage I've and maybe into market trend forward guess, Michael, might bit as Thank bring of decent That shipping I solutions my high products portfolio. I you guess second, level, going of winning you now you. for helpful. time aspect designs how a you're nature in the of then and designs of could the that a your really, digging at No. spent of with you really little sort programmability up, team

Michael R. Hsing

right. All

our five to or Okay. the and of single-digit of percentage in years will a At expect quadruple most this in still point, probably And we XXX% next and the years. of our probably, products couple total likely revenues programmable. be four

Matthew D. Ramsay

back Cheers. No, Got helpful I'll really My congratulations done. and it. well queue, if mind. jump into that's and you don't

Michael R. Hsing

you. Thank

Operator

Thank you.

with Schafer Our question Rick Oppenheimer. comes from next

Your line open. is now

Rick Schafer

guys I'll add quarter. my Thanks. a congratulations nice Yeah. on

plus XX% in maybe auto quarter. industrial, and the So up obviously each

business sort Mostly within growth kind been a two, and know Maybe of, having really what visibility and the it's looks .tracking see to of million north see solid years lighting think us think timeline of then about to see I what margin year. walk ramp, BMS ADAS motor start there. I I'm I impact ramp. we for as like. is curious that what margin noticeable could $XX starting lot could and a next and this talk there you I leg guess wins three when through of to we auto to control a auto a, would that impact? there Michael looks business? you the of something now infotainment, start you're

Michael R. Hsing

we infotainment. business, start we the talk I those Bernie dive for as segments of – through in as still have controls Even the went models and the periphery said in about we scratch just in just starting all in We of body And as in and moving pieces these deep just next and and we're (XX:XX) surface. including as any designing the infotainment, to years, car. the auto couple also that. such headlights the kind and the lighting, auto Even earlier, a products

have want have and we quality don't see reputation do out out, three our have it we people proven in to I we all choose our and product is we to In and we We and ADAS, and those have pick enough just are electronic name control design. activities these out a product and is product be to years supply. and which

margin so higher. now even And same will the the or as stay be

Rick Schafer

of full do in I to it. talked switching the those start more revenues Got maybe see I like first customers talked start customer I kind a And or what been revenues about to with or established at some curious, guess what there. would customers could gears has it's also need of you've I care is And hundreds smaller guys. I feedback targeting, be that larger Thanks. a from something lot you've hit I people before you forward? so I far. revenues I do sort any e-commerce of that with your customers? material XXXX. of of Maybe know about call, XXXX? think know e-commerce. feedback through pull we believe customers I'm adding about getting in I'm see guess go know mean they Could to we e-commerce

Michael R. Hsing

year. Very just the possible, to a those they – XX,XXX supply, XX,XXX particularly so us those have are a if now. with we smaller and They the prove starting buy in for ones are – a those years units – be quality in stay ones customers we will are industrial customers to shops. those and And if

segments is, in So in start and and website terms and so a do the e-commerce – it not of feedback early – next digital far marketing how do still our we year. how year more their we have particularly still do to lot it's we to market this do and

will some significant You see changes.

every In disk well, feedback, terms of we far the download said a we current and a in they more few most so a I customers months – and, can't them hundred they're and want hand floppy almost products kind them recent type of They this very of it than them, wanted gain these see them one every of have we few, of one happy. a to they more and say product. of

Rick Schafer

larger from seen response the have some guys? HPA you any of And competitive

Michael R. Hsing

very similar the see as address and players in thing that a any other do. we they we don't segment and (XX:XX) do think I we the market

Rick Schafer

Okay, thanks Michael. lot, a Thanks.

Operator

you. Thank

Quinn Our comes from Needham. next Bolton question with

now open. is line Your

Quinn Bolton

whether sound of like into just those to you Hi, steady of gotten I the on guess is us investor starting with whether China the plan just guys. of rates of and which quarter of order in decline Thanks. in any in still they summer, I hear Congratulations execution. again few Bernie, the address, quarters of they the XXXX, to very that rates kind quarter the you to or Can couple wanted of backlog region. are in sense of product Michael, declining order late then biggest I started the where give fourth a one fears backlog sort maybe think downward sort on nearly last you'd a and follow-ups? trend of sort are maybe XXX% the looking terms address stabilized

Theodore Bernie Blegen

Sure.

in into we are the that end see pattern. other a as from that are or you think a branches in particularly referenced downturn to result see if any changes I our market that, QX did in that if demand, numbers out so markets that, comments and consumer see that that the monitoring sort again ordering of we of can and there Greater we for China the

more but returned to backlog we're referenced quarter. been with experiencing in going quarters You what again what far last we've accelerated seen a our previously a more has quarter, into pattern return is our normalized this also to not three fact is of level experience as been as in the where time this we've at that quarter sort and backlog for we've the in normalized really the that

areas certainly have thing are the that we for we continue have the demonstrated respond again to So long to better most have those ordering that the the the it's market. is think we something very targeted industrial, is are gains and significantly we're computing on, that I developments, to they the and us encouraging there than that visibility different But that just focused remain automotive, ability monitor seeing to and and as solid that that storage that. where

Quinn Bolton

uptick do you you the then maybe Whitley months? maybe be second Lake Lake of Cascade the Whitley look their Cascade address, XXXX, platform of with know, know and position your the content. could Lake And XX over Lake I launching just half in big about end server platform, Great. for and the Pearly terms or of the Cooper feel XXXX. next was end you as (XX:XX) or of Intel you then a Michael, How new and Cooper year, we XXXX by into will

Michael R. Hsing

think, most we last the have that to as release anything the the we we world think activity faster. couple think different, expect grow expected the I again, we I in revenue in expected I – that all the of product grow all I through and even we Then all next in XXXX, and same this it don't designing that of way XXXX. new – and just quarters

Quinn Bolton

a management – of XXXX steady over sort timeframe? So ramp server power a in XXXX that steady to

Michael R. Hsing

the of similar before. And a rate way others Yes. in

Quinn Bolton

Got it.

you. Okay. Thank

Theodore Bernie Blegen

Quinn?

Quinn Bolton

go Oh, ahead, Bernie.

Theodore Bernie Blegen

is that something or were obviously, I product to We to negative couple referring been what issues. need the referencing growth you their Intel to. Michael No. it going to schedule of to don't a adapt see was say to. that's that release And a different around impediment has that is as an we adjusting

Michael R. Hsing

couple of... about less care I

Quinn Bolton

Yes.

Michael R. Hsing

...plus/minus, a couple of quarters.

Quinn Bolton

Yes.

Michael R. Hsing

that's And traditional we cover the these them. servers, AR from servers, new growth direction of only type controls our and all of out new of of we not and but systems cover the all

Quinn Bolton

Thank you. Great.

Operator

you. Thank

Our next Seymore question comes with Ross from Bank. Deutsche

Your line is now open.

Ross C. Seymore

guys. Hi on Congrats environment. tough in guide this the resultant

inventory here. Just the wanted you into Well, normal. to ago that the and in coverage channel has backlog said that that returned backlog a dovetail asked question the to bit get side into was the Bernie

to Over correct the been have Have me course elevated of the stand this but I'm if you backlog? And guys shipping where does channel wrong, been you controlling it? inventory year, today?

Theodore Bernie Blegen

Sure.

to reference So, and far inventory, decline related the of of a commitments both that QX, that talking were actually that here had terms as for commitments QX in upwards how four six look quarters days in channel made to to and are of as ahead that lot we in in we sales you're QX and we finished months we'd is ago. QX the as between of a terms have both

the gets of drawn from a the against deliver of the uncertainty little is bit in when but the market, channel that to amount with is continuing are we so, And changed. that that timing

is it's in how down bit. whether And continue go a looking, to again that I went or don't I little have they'll a know, up we we something And to monitor. a bit don't have QX forecast so, But for little up QX.

Ross C. Seymore

whole further into that's like falls, number do fear guys mitigate the similarly years, then next to of a backlog year? step down. you look half a but from the of how first I plus say companies have the secular the for I normal, of trend is great that, the something people as is, guess next yourself that know you guys risk a we market the over have goes course XXX% coverage what and as to step

Michael R. Hsing

Ross. Yeah, okay. questions inventories The (XX:XX) now,

a changes and We new and auto, we industrials telecom. how of in pattern growth lot segments market inventories have the it the do in

business of although to inventory volume We all ramp. centers networks, also within And small cover need really high so those revenue go Now not we as or businesses the ramping is – the in regarding start and as half out we're inventory. the they'll about XG data worried computings. traditional the these a can to years, and well the the the cloud and lot

Theodore Bernie Blegen

that just or as the impacted more within price quarter, be geopolitical first said, achieve to the the then we on believe markets you to we tariffs So at of correct areas occur sensitivities by look trade in targeted the that our we're goals. result the less as they service policies. affected, have might and of half even course able that And prepared Michael XXXX are to ability demonstrated to we as the that basically that to are and as revenue the able QX be a

Michael R. Hsing

Yes, I we and say now, a inventory newcomer. we'll favorite the MPS, have a of product okay, we the our high condition again – company and the we are will high build will regardless in we're ship to my reputation, ship that like is inventory,

well as We one a few have a days million much as never that glitch reliability delivery. few of more of record problems, lot a a inventory. than that Any hit market being a cap of continuation of have a bigger We caused problem. kind dollars

Ross C. Seymore

as as a XXXX, last late grew back question, still last XXXX my blip in there XX%, I kind XXXX guys as a of you whole. was above XX% guess barely MPS, I cycle think year-over-year the you look the analog to early and for way Okay. market and

and was puts through as If like see what years it looking versus the today of positioning of you just takes it? some back three the and you MPS you walk can just contrast compare ago,

Theodore Bernie Blegen

Sure.

we and that half really obviously we've that with swing. in are started I think the in XXXX that to now beginning of the had of all full second releases new ramp product

we're much have to portfolio able manage. that different We a

which of lot back that I we products that think that, both from the and try I of hate so, diversification and terms Having we're being think short-term rather in I second flexibility what much that allows geographies, draw industry today. us and that the a people awful visibility would half And said don't how up and pretty semiconductor at observing long XXXX. of markets XXXX, have ended an to a regard, as or current parallel last. didn't have issue to an to between environment this specific and enough confidence might the

Ross C. Seymore

Great. Congrats, guys. Thank you.

Theodore Bernie Blegen

Thank you.

Michael R. Hsing

Thank you.

Operator

Thank you.

Our next with question comes Stein from William SunTrust.

open. line is Your now

William Stein

Great. to end trends. Thanks sure demand for taking sort my the question. narrative I the and understand make I just want of markets around

been good quarter have you So right results consumer be perhaps up have the is a that that lot was to is came me you you and and customers understand than you it there in would something better you to this took comms, you the I make Thank off attributable end in that upside or in upside what of to if that something But deliver as upside want surprised great. backed Helping I consumer extra to that fine, drive the would to this would allow as of that you. the market do? about meaningful that usually that was or to end comms' understand came market that that difference work posted sort more also to market. the in light sure tariffs. end think orders have made drove

Theodore Bernie Blegen

Thanks, of Will. observations. couple There's a

this increase course time, from as we correct the fairly to we was opportunistically able the just as it not performed far QX, then legacy or gateway it And lower this and impacted. at lead to on referring taken Interestingly broad-based sequentially ability a in number in of were business. relatively consumer This really were than consumer QX tends value And far historically, a historically look have experience, well. we areas in the with is as And was comms short different to as pretty we high actually markets, markets. to our business If even end a that within margin. of you be because pivot. lot to consumer that's and lower quarter quarter, router we play traditional

to quarter. to in So it in of effort was a be able that the opportunities bring order on opportunity and quote that we have not lot to within an accept

lining But I of as So business a actually We most good is have opportunity. up in upside been have might very look initial ahead, started see we comms XG that things to can I the encouraging shape sales encouraging the one I on for thing see think think we the is slight that some very side. surprise QX. most that that the is

Michael R. Hsing

last we The or comm few business as in quarters, the flat down. are slightly

ramp. And so we portion significant to those have and of product market years network a shares. designing And But ago. see in some XG there's refresh, okay, of start and we're we we're getting it, the back a couple

William Stein

other that people understand up consensus the well optimistic that XXXX investors endorse think for XX% Would you up, a you still one XX%. or I've is and XX% about perhaps of we long-term When if growth risks? and think too give year geopolitical at follow what's would you for the something ask Monolithic, don't about that's can. is given A heard is number next answers growth I

Michael R. Hsing

the we clearly that will – is beat industrial I your whatever think next okay. forecast for growth, year

We XX will or higher. beat points it by

Theodore Bernie Blegen

again the amount remains visibility have when of at areas support consistency design And can targeted that the is particularly far we in these of have we be that ordering as that that, execution. look XX%, our as cycles consistent that for of patterns. things we to our very longer with confidence next and and longer I that known Again, want solid. think in the year we one

the to that, successful. feel to half on first play year, we clear immune we the the macro early visibility that's have out don't not going be to have shots of we're the the said certainly confident stages the having on goal Now and in that reasonably We of how in year.

William Stein

Okay. Thanks.

Operator

you. Thank

Our next Svanberg with Tore from Stifel. question comes

is line now open. Your

Tore Egil Svanberg

Yes. the on few A record questions here. congratulations operating margin. Thank you and

chain supply some to operations you turmoil, certainly, about of all, there, thinking this know at have some mean, really But I know macro days, first So, your changes all? right? to is just point? it's any that the given in the all at strategy early I political your China at China any changes in I and operations of

Michael R. Hsing

When a the our we from really diversify China. years up, region And all to the is and of have development and these and we have presence. on see in focus two started R&D, one terms resources ago on issues regions. jobs that's area started okay, these But of – down, other different geopolitical the out of we controls, want in in is and if lot we other we and diversified, mostly political our on that region diversify the – we

Tore Egil Svanberg

Okay. Very good.

Theodore Bernie Blegen

go Tore ahead. And, –

Tore Egil Svanberg

go no, the Finish answer, No, yeah. ahead.

Theodore Bernie Blegen

going extent sell as as was to similar that We different exactly again, I to steps Yeah, the longer on say chain would have, supply we And into now, the right well. Michael's profile have and in adapt for the customers chain next issues or process. right. what far the probably we our that in end we term markets that visibility diversify the control don't supply just as the we

Tore Egil Svanberg

a That's question on XG. very And fair.

the or power there. in contribution are market So of on based types you're some these QSMod power or that starting data like revenue Intelli-phase center management see that's different Is to products? just

Michael R. Hsing

And hub you of computing And high-powered said the of And products Intelli-phase. segment. in that those what product in based on other types XG. network it segment is different it's a a well, as

Tore Egil Svanberg

half. this deliveries may were times, are so far Michael, your as Okay. assume focused still already since think in stable. are first lead you They the your I are good. They're as answered you stable now? times obviously sure but the on stable making question, there, very Very I And lead have

Michael R. Hsing

times on, Bernie stable. The okay. very Yes. can lead are add

Theodore Bernie Blegen

whether all change had test. very in lead no phases going times in wafer Everything We've the packaging Yeah. of production, is it's consistently.

Tore Egil Svanberg

Okay. good. Very

Just one any your the this last where sort but management, based flow just I use? you quarter. that is, in put to free almost $XX cash about know cash question, generated million approach to free of capital kind stock thought mean, to on I of how flow price

Michael R. Hsing

acquire. company technology the Well, either or to we're going increase for looking dividend some to

revenue for company increase. going not So, another I'm to buy

Tore Egil Svanberg

good. the results again all Congratulations you. on quarter. this record Sounds Thank

Theodore Bernie Blegen

Thank you.

Operator

Thank you.

with comes Vecchi question from Blair. next Our William Alessandra

line now open. is Your

Alessandra Vecchi

quarter. guys, Hi on great a congratulations

Theodore Bernie Blegen

Alex. Thanks,

Alessandra Vecchi

quantify the XX% it the Just on could traditional is the only think that? weakness of if and it go you've I here XX% or trying as little high have guys about risk to seeing consumer traditional, well think to you you where it's seems short to or of it's in most XX% is sort consumer XX% a of consider Just the historically term. we whole one that should it's the parts the more go said at and of there, is in only traditional be value given of gaming in revenue in the side Are from that bucket, that's consumer I in and XX% been weak bit weakness bucket, your the of gaming. that bucket seeing

Michael R. Hsing

see will, we devices we you see the variety what if And my and than a I – the times volume favorite still got Yeah, we gaming, and really I hate about a to of talking of one the and that say very IoT – last too market or topic other XXX% is in demand that then said similar. high wasn't our for in about to okay. kind support. the it's bit couple customer gadgets and not we the it the of happy, okay. in time my see of – talked and so we softness of And our designing, see okay. when we're our in not But there be customer heard connected here is these we that see that made with ones, And money gaming, volumes we high lot is other

Alessandra Vecchi

that of in we shifted? the and then optical traditionally save the terms and if strongest QX, to and just any to still us give of the weakest. And don't segment has you computing maybe as similarly on But on industrial guys or the sort from think you different segment the directional direction granularity what's QX, of Okay. the about had segments. how strongest Should storage then or

Theodore Bernie Blegen

look term. clearly and been and years what storage, drivers. full the seeing you we've about at now I think weren't the in we for secular in discussing several expansion again, those the now come This that results is we're Yeah, saw automotive, if results, all onetime computing industrial,

rates. with in how anything do. something that's far being see don't the then to I manage adept indicate so the growth that as able would And as at that margin we outlook the And of those a diminution consumer, we're

going So I think source that very total, far confident markets in not to as feel we but individual the as look at the QX, that growth. we as just in also we're number

Alessandra Vecchi

very Understand. helpful. That's

Okay.

me. for I think it that's

Theodore Bernie Blegen

Alex. Thanks,

Michael R. Hsing

Thank you.

Operator

Thank you.

comes next James. with from Our Caso Chris Raymond question

Your line open. now is

Chris Caso

Yes, you. thank

talk prevent through channel levels. the year regard been inventory. both that customers Just inventory those your to steps inventories? of your in confidence with speak guys I first And inventory discourage some to and the have visibility distribution OEM levels? you customers, question level from know about to to actions and try excess visibility Could what taking of and you is building Can you to to the

Michael R. Hsing

good are guys, And think question. favorite to convince normal. okay, pretty you Inventories, us my I tried for now all increase. Yeah, it's we I you of to

Theodore Bernie Blegen

while is inventory channels, creating I'd quarters certain as an we backlog certain demand to experienced in a a in far the a to is a of the opposed three real that, is for seen as quarter. of road. problem higher as moderation And sure satisfying normal because refer earlier then uncertainty, in that reflected make And we're than historic this is levels and down ordering we at response really of changed that to points that, the level again, we've us had and there over prior the in pattern just want

channel sell to at did thorough of as the expect we as in and we QX. that, it we the account all for a guidance what of taken And well got be having into the QX Now, in through QX total. very that assessment as said with our end gave

we feeling managing we're getting that it So feedback right and accordingly. we're were timely now,

Chris Caso

you're and probably on seasonal what what on regard any now? that consider with consideration of And work QX QX? on to great. But right patterns should And visibility we you normal Could there following know you talk seeing right, you're in aspects I guess from that. I about doing All of into based that. take right to now be lot just that there's not lot a are a

Theodore Bernie Blegen

one We guidance only provide Yeah. ahead. quarter

with any to opportunities between And looked was a QX at so, comment. had if in last QX because which we've exception year I that step down But don't an with from the to you X% want to unusual particularly storage overreach compute greenfield introduced, traditionally traditionally were and X%. of of that set the had of circumstances we

Chris Caso

Got it.

Okay. Thank you.

Operator

And follow Quinn you. do we Bolton have Thank Needham. up from with

Your line open. now is

Quinn Bolton

Hey. in into Chris' ask you as specifically, wanted you it answering your Bernie, kind of just look distribution channels. but I question, to addressed I guess

think their there's for a reduce the in environments, year-end. calendar tendency into I to inventories uncertain especially distributors

helpful? quarter? keep days inventory could the to guidance And account said supply so quarter do them you any them hand, channel. would forecast, their of inventory Or be at days you a of sort in the expecting Are chain in look reduce when provide on you fourth expect the guess took your I fourth disti sort you you into to of you constant us

Theodore Bernie Blegen

the to less sort But far the revenue denominator as Yeah, dollar as QX. the in is that formula QX quarterly of of value reduce inventory channel in QX. than the the tries works

will than at we're arithmetic exercise at expectation days the anything really above QX level be my a rather or may be below dollars maybe concerned in that that So, little and even that's a the about. is or the QX and

Quinn Bolton

Okay. Thank you.

Theodore Bernie Blegen

you. Thank

Operator

questions I'd back conference no Bernie show remarks. I over Blegen you. closing turn queue like further for to so to in the Thank

Theodore Bernie Blegen

again thank have in and fourth you. all I you a our Thank for conference call, to look I'd forward this quarter to in you to which like likely will conference us for day. joining Thank call. you And talking February. be nice

Operator

does your gentlemen, you conclude participation. very and Ladies much Thank conference. today's you. that Thank for

all day. may Have a disconnect. You wonderful

Monolithic Power Systems (MPWR) 25 Oct 182018 Q3 Earnings call transcript