MPWR - Earnings call transcript Q3 2019 | Monolithic Power Systems, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Monolithic Power Systems Q3 2019 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]

to Executive conference Systems, Officer like speaker to Michael now Chief today, of would hand over the your Hsing. I Monolithic Power go please ahead. Sir,

Michael Hsing

Thank board customer support We publication. marketing last center overseas from that response board and In you. the We in the and for Good had facilities few China. third representing to our recent meeting have established to overwhelming here. our received appreciation for quarter Shanghai. messages newly a days, for Hello, everyone. to members held operations morning many support. management in showed support a deep express I’m MPS we and our trust your

this it is that to manipulative. is reaction publication and Our malicious

through the details. We not will go bore your to intelligence

will actions, against appropriate assure Lastly, our including activities MPS we I malicious any interest. reputation you actions, shareholders damaging and unlawful and legal take

Thank you again.

Now speak about with earnings. let to that Bernie I’ll

Bernie Blegen

which published today’s information website and at Systems could obligation and course quarter assumes Good of third on welcome X, that both that. uncertainties, SEC our harbor the and Please are contained March materially Form call. for to our identified safe on harbor provided involve safe which accessible conference the no in today’s to in including statements statements earnings XX-K of call. filed to XXXX, through results views MPS cause you uncertainties are conference XX-Q and the could and make risks differ that on and call, in we QX August to XXXX factors projections afternoon, QX update the release and Thank results forward-looking to will actual Power our X, In www.monolithicpower.com. Monolithic XXXX expectations. from management’s refer contained XXXX, filed the filings, Form in statements today. the differ Risks, release current cause other the

table and and income, considered non-GAAP measures with other substitute earnings and for, financial a and expense, the with accordance release, performance and on measures superior expense, posted reconciling on discussing are financial reconciliation refer income, GAAP SEC. will to, our measures GAAP website. in as SG&A be the of the both would These A measures the GAAP. operating interest income in earnings prepared we non-GAAP QX that is be between as gross releases basis. margin, I not outlines have in are QX to well XXXX the a as accordance operating should included with filed which not investors R&D QX that prepared We net financial our non-GAAP XXXX or XXXX, to and GAAP tables a financial

filed record is $XXX.X replay quarter revenue than quarter to with website with XXXX I’d also higher along and of higher comparable today’s webcast our SEC will the earlier live revenue earnings of third the be over and in the million, on today. quarter in MPS the XXXX. X.X% second than achieved XX.X% conference being Internet remind year, the available you that for one for release like call

of third servers Looking and important Computing of by of and increased revenue ramp. revenue quarter notebooks, at The third the revenue market, million XX.X% storage $XX.X using our storage server in in in represented this XX.X% Quantum quarter State XXXX design our reported XXXX. the revenue $XX.X our of early gains sales for QSMod, broad-based power applications, and market; MPS recent for second from quarterly and with sequential storage. was wins revenue Coupled stage management revenue. is MPS’ growth TPUs, AI computing high-end at or million Modulation, quarter

with the XX-volt product, the highest killer smallest offers and server supercomputing energy factor intelligence, solution a introduce power to like solution of applications. its efficiency class. This artificial would also form a one I next-generation levels of for of

Our share customers in market important this we we’ll segment. validated our have solutions believe win as

over of grew revenue autonomous Third smart million second driving. the automotive infotainment, quarter $XX.X ADAS XXXX, reflecting of of lighting, quarter and XX.X% product initial for sales

In contract Tier major large at were a supplier. automobile awarded a we addition, relatively X

relationship We third next begin revenue XXXX to two of XX.X% revenue years. revenue. expect generating Automobile from three MPS’ in this the is total to quarter

essentially market, boxes. revenue our revenue In projected quarter industrial quarter and for project revenue sources XXXX to industrial of decreased offset our due by which products meters. and can vary quarter based, revenue revenue. growth was third Third of increased of significantly second Much total power quarter. XXXX to reflected Industrial a legacy third Sequentially, XX.X% wearable quarter XX.X% the the of applications XXXX XXXX second in increase systems, of million XXXX our represented with markets second and increased consumer by set-top $XX.X $XX.X consumer from flat certain seasonal revenue. for of sales million security represented this of quarter of primarily is revenue XX.X% quarter be

quarter the revenue. MPS million Infrastructure, sequential XX.X% revenue communications Third down sales is wins XXXX. our quarter third sales decreased as legacy and sales, downturn design Communications in with total to move XG to second router of benefit of existing applications, represented wireless Despite the XXXX XXXX sequentially. well revenue, positioned revenue. we quarter $XX.X XX.X% for was from along of XG believe

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

year matching operating second was reported and quarter Our third $XX.X margin a from gross the basis XX $XX.X million XXXX, quarter of margin income lower in the for million in the of of third of XXXX. quarter the ago. but second to gross GAAP points for compared quarter XXXX Non-GAAP the than $XX.X second reported XXXX million XX.X%, reported was quarter

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

Let’s operating expenses. review our

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

up for were non-GAAP quarter are Our non-GAAP second stock we expenses operating the spent $XX.X plan. million, $XX.X GAAP and $XX.X the in the and between operating million third or the here expenses operating the quarter reported income loss of up compensation in XXXX and deferred discussed The XXXX. million unfunded third quarter from compensation XXXX expense of quarters from an on difference expenses

For quarter cost quarter in the third second compared compensation of charge goods reported $XX.X was to stock of million million XXXX, approximately including XXXX. the $XXX,XXX of total sold to $XX.X expense

the per XXXX $X.XX the per XXXX. quarter the quarter net bottom per second outstanding quarter in was share of diluted $XX.X or with third income million third of $XX.X per end or million share with the of $X.XX diluted income $XX.X XXXX was to in the share $X.XX compared non-GAAP XXXX, million fully or of net fully or or compared Switching line; fully XX.X $X.XX million per second or per QX $XX.X $XX.X was and share of in shares XXXX and QX million million. $XX.X $X.XX quarter share XXXX the at share quarter $X.XX diluted million GAAP third in

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

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

capital Third quarter XXXX totaled spending $X.X million.

days which of than quarter ended million, at XX at is representing and two XXXX. end $XX.X three at outstanding, XXXX days than Accounts sales days of lower third quarter receivable lower second the quarter the the XX reported the XX of third the days XXXX days of the

management’s end application-specific in third XX to third end to XXXX customer quarter days in of the internal of drop at and at the end our we than minimal the of growth inventories the Under in at the the inventory are the of from inventory rate XXX a carries market of XXXX. down million, both of of of risk. lower at end the carrying represent the given were million Days inventory, of to products higher or of Our The wafer accelerated decision of of of were quarter second XXXX. most $XXX.X dollars our quarter level quarter start the circumstances, not of and support are second terms revenue response XXXX days normal $XXX.X obsolescence slow that downturn. comfortable days,

would I outlook the quarter XXXX. for of fourth our turn to to like

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

Interest the million to that SG&A would between We Fully in also margin GAAP million. non-GAAP following: to in range the income range $XX.X GAAP million, XX.X goods XX.X% Litigation $X.X in sold; $XX.X approximately expected R&D million; cost be between to expense expenses million XX.X%; diluted to to expenses of expected $X.X and be $XXX,XXX margin $X.X of of million including million. expect XX.X% and million of to and total stock-based million. non-GAAP range charged shares. in to gross million $XXX,XXX to to $XX.X shares $XX.X be should million XX.X gross to R&D expense XX.X%; $XX.X from the the range range is of of the range compensation to SG&A $XX.X

and I lines will the we that themselves. conclusion, phone execute now continue to for In results the deliver open for speak Hello? questions.

Operator

we Are ready sir. for Yes, questions?

Bernie Blegen

Yes.

Operator

from comes Oppenheimer. of [Operator first Our you. Instructions] Schafer Rick Thank question

open. line Your is

Rick Schafer

particular year-over-year. Maybe could for you a industrial, high-margin my had new strength all a close about and on job sort all quarter? on quarter. by of but give auto, any you nice customers question or compute, up the little mean, if digits nicely, quarter tough relative XX%, congratulations anybody are is I any there color talk I you, guys, of in guess another double region XX% could you nice think, the really a and bit Hi, verticals I first or these setup, to strength customer kind any

Bernie Blegen

Sure.

that Let It me [indiscernible]. of sort stuck wasn’t off.

is quarter observing industrial. good if in that automotive, relative are that strength is a for help restate Rick’s will to think the I [indiscernible] we that computing there question, and

concentration any if customers the bit for color and the what of so there of or far as looking distribution if little are geographic a is And like. level XX% you’re as

yes, So it. I got

drove and if on mix I performance, So put you our finger so storage. computing first Rick, what can comment that on QX your right if of the

some for first done exhibited that and half storage, across in QX momentum XXXX. our it lines Computing and was the strong we drove what And individual nor all no us, there has over geographic. concentration in that weakness of saw in business, of

has been this there demand. the that nice because weak half see So was of to in just year, first

industrial, say In has an been should that demand of area affected been or maybe ahead benefiting by has ordering that today. I

that in any actions. anticipating China, further of some trading occurring And is

surveillance. pretty concentrated it and was have Europe well Automotive any we in beginning to a years I believe in that do this ordering of exactly levels be not at my in And quarter. XX% return some expecting while don’t China. fingertips, customers I of have we’ll and that far as model is new sources So Korea broad-based as as very power seeing sales as

Rick Schafer

to being follow-up Okay. difficult I second talked is question story. on XG. the And contributor bigger just the growth apologize know good. obviously, book order It’s Thanks. softer and you if about a it’s it my me. hear I MPS quarter, looks to recent but becoming the in My obviously

maybe on And there some and little what guys, provide color content of So on business? in what’s share maybe for dollar is if XG your assumptions you that reacceleration or competition you could about visibility your color a opportunity expectations. bit your

Just on XG, please. general some color

Michael Hsing

Okay. color XG? General on

Bernie Blegen

Yes.

Michael Hsing

Okay.

quarter as what initial And the – this telling customers ramp, very see ramp. I there’s okay, this current that. that XG, said, we our this they more us see On is is to that than

forecast they lumpy. pulling materials. somewhat our will is And will few it our customers, the follow that start – in So next quarters, is for they

quarters And that kind of not the kind of lumpy. our still this is the quarter to last that ramp few so looks very initial okay, the few – to is quarters, smooth, whether ramp, next from guess the

Rick Schafer

about Okay. for any sort station on opportunity, you content dollar base of when MPS? dollar a think XG Michael, comment opportunity

Michael Hsing

building base For to to we basic the block. capture we to and chain the station provide product basic We because ended the us, signal it very up. building where the just is central actually provide don’t stations, difficult From block. know

Rick Schafer

Understood. Thanks congrats and again. Okay.

Michael Hsing

Rick. Thanks

Operator

you. Thank

comes of SunTrust. William question from Our next Stein

line is open. Your

William Stein

Great.

it’s all having each I hearing trouble think other – we’re perhaps.

QX channel the is, that I’m where you QX? slowly. target and can earlier really expect the perhaps what speak go us I’ll it where level inventory comment year, in levels, you So, of inventory perhaps on in remind hoping it in was was level to what

Bernie Blegen

Sure.

March sales an certainly, the range had And The me being with, to in qualitative sales year, to. not sell January higher with beginning as We and disclosed even a fact the to has is But spread. talk open QX, at distributor finished range. through the So to with the opportunity we and of that manage lot in March look up at we end haven’t this have let of customers. did do the end we the that that an we more disproportional that above in quarter, to normal our we terms. of

So that’s why that was up.

terrific a In at QX, actually the And to in then and the saw days we but current end more channel upper distribution, in what the finished of in is sell-through. returned is normal lower had our the range. broad-based we our And quarter, range even QX. this at that normal – of as we’re And all end again, seen have we we geographies. actually

So, strong was make book. we it but a to on sell-through. that, But did not that, I probably inventories similar the that sustain I’d level comment as that’s care certainly that show on the the positive to

Michael Hsing

Yes.

remind everybody. me Let

that this early in buildup, XX% MPS at reacting in the that and commented I year, clear one think to outlook now criticism. last also, in was February up low inventory – XXXX. futures. to December regarding in it’s ended days earnings and was very low normal to February, more growth think the the of that for in And inventory, quarters inventory is the inventory. for growth we entire we early started over And don’t starts anticipated wafer see that the due uncertain in reduce call, our And I – our we we to the we

build again. We it to have up

Bernie Blegen

that’s the not And this on channel. our to is the referring books, inventory in

William Stein

can please. Great. If have I follow-up, one

think for else and recovery you be broader order typical you cycle, get year, coming to but all market think you the situation hinder XX year. we’re the guide something growth reflect in necessarily or think close you that interested have that the Or expecting think next not would Do post a do in expectation anything number? on year going for I’m up the I you next you we that through materially to your current trade I is an to so least very expectations in that year. per could it? the keep at below or of

Michael Hsing

this we to we remember, I year. And next this and quarter, we delivered quarter And Good forecast said question. on we don’t to throughout no, it very next want want last – forecast clear. Yes. the was that period the – think not year, don’t

segments, And expected. they XG the kind said, initial very growth, even greenfield start smooth. quarters did will not we products all that lumpy. of as we Now, say few it’s it’s start now It’s greenfield to not grow. is this for the just not we the in. very ramp, quarter, And our MPS, to XG the – market we – see And as good put next as with

similar in And and see industrial. so other see this segments to – do these very we in auto all we

so rate. And our year, – we growth next what’s can the forecast

industry I think the by than we’ll XX%. XX% better be to

William Stein

Thank environment. the this enough. and Good and very on tough you outlook in congratulations much good results

Michael Hsing

Thank you.

Operator

Thank you.

question of next of Our from comes Stifel. Tore line Svanberg

open. line Your is

Tore Svanberg

Yes.

flows. cash on record echo the the especially and Let me congratulations

and in first clarification just maybe So here. a question, to get

now, are your days at inventory right XXX. So

QX? QX year? they back is level go to – again back will So what the this of in sort up will of they go That probably saying were you you’re in that

Bernie Blegen

The growing XXX peer that trying with percentage and be. growth for a we’re XX markets. as products But coming to XXX is bit ahead at Michael’s the points market. is between and Yes. opportunities of little inventory be And that industry again, going new back to greenfield our this what to range new just a may balance norms higher point to manage from XX sheet. we’re than And in would that days result,

have demand we so we with we the experiences customers. what that so our initial do positive above is invest And

Tore Svanberg

why through. mean cash that started I quarter, obviously this right, that’s record Very great. good. And selling you flows That’s had inventory yes,

Second question is automotive. on

big $XXX about no that gain traction And it’s the So of year million one I with lot And to some think contract. there’s directly – mentioned starting secret even a OEMs. with business a now. you of you’re

include sort about $XXX direct to that correct? OEM relationships think So not as that any have, started you does you million, of other

Bernie Blegen

which I end were didn’t about. Sorry. apologize. I know talking you market

Tore Svanberg

Automotive. Automotive.

Bernie Blegen

Automotive?

Tore Svanberg

business $XXX now, million yes. Yes.

Bernie Blegen

Okay.

much question we to do then how exposure the is have the And OEMs. so

Tore Svanberg

No, to the of The Or establish already you deeper wondering with if is is no, OEMs. relationships new contributing that that’s business that million $XXX all the come? no. started sort to still rate. run some I’m question that’s on

Bernie Blegen

the because say And me let So back question hearing having we’re that. you. difficulty apologize about I

is the you’re saying – million our exposure how far So to that on as much OEMs that roughly of run the question, $XXX the is rate, what that’s as still and yes.

Tore Svanberg

mean fine, with trying of is I’m wins much that more that’s just your from how I bigger recent coming Yes, to understand business yes. OEMs.

Michael Hsing

yes. yes, Oh,

win and project three relatively automotive large relatively Okay. years. Recent X a two award, or next Tier is large supplier, a from project. will This the which be recent the a in it’s

so in X, And Tier very up six will X. of got will from nine Tier this in win type existing more lot the And ramp revenues months, far, next a all the some see project. large we’ve we as the to little we from

will pave to three years that to two So away. even three, the four next

Tore Svanberg

what I asking. exactly That’s was

question, a When with last I’ll more in ask production and you simple XX-volt? one Just question. be will

Michael Hsing

now. starting It’s

Tore Svanberg

Great. Thank you.

Operator

next The you Alessandra comes Blair. Vecchi William from Thank of question

Your open. line is

Alessandra Vecchi

on an everyone. Hi amazing also in environment. quarter this Congratulations

have of do puts steady additionally, sort how then growth? job as think potential similar of holding have outstanding margin next question the guys steady. we you done those margin XXXX? improvement about on year Where takes – we it. front, forward and Just job expenses of that do the similarly with an think OpEx gross or think your a done operating we you and on And of side, revenue holding the sort phenomenal about How sort managing future going guys balancing do

Michael Hsing

large see and want spend the I right? – stick we here, models, well. now, as as to I shareholders, slightly And above, think which that more year, we EPS our they want to wrestled is models, to this I which growth to our think stick our with I we’re but money

Bernie Blegen

– a Yes, Alex, it’s again, yes. It’s fair question.

our along to have We operating leverage I able are growth. model provide which investors we familiar believe be want to with revenue a with where

long-term conditions, long gross we current the invest while to that of we’ve in will for steady margin we market in continuing MPS investments to what the is consider However, certain what our tried term. done position hold strategic

Alessandra Vecchi

markets sort Okay. then guide? QX you strongest if color I on similarly, did it, the give weakest didn’t And end apologize or That’s hear very expect any helpful. within what to I of but be you

Bernie Blegen

traction. there’s at of with of look in of QX we QX, and a trends actually to that point look automotive. you QX, a some this When with is Michael’s and positive to lumpy I before, some with And end industrial had that the pull-ins. continuation we believe storage that just that had while business. do think has lot market there, also XG, the saw I of at it down that, computing said a And as echo still And we respect to is

Michael Hsing

lower. be similar So, like And will ones be other the a QX would very the normal, And level. slightly better. keep consumer, would

Alessandra Vecchi

Very me. from it That’s similar, very okay. helpful. That’s

Michael Hsing

you. Thank

Bernie Blegen

Thanks, Alex.

Operator

you. Thank

from Williams of Our Capital. next David Loop question comes

Your line is open.

David Williams

more Thank you impressive architecture, opportunity see you. already that was to maybe could that. and and And hoping that might there. happy maybe, the I little maybe, begun there let benefits what guide, what give be and for an traction to to me guys. you and be the XX-volt able you’ve your It’s on congratulations, see a echo information But quarter

Michael Hsing

GPU, a started converting ago there’s five the the ship, started started we we four, The volts we for see power we year some ago are products system, that the components. shipment to Okay. to trend. win. XX-volt XX the components we in that those we And and system, for – about – many And for years the XX-volt

David Williams

look is opportunity potential think What do could be a think year there? the you we that or do What you if two out? total revenue

Michael Hsing

one how size. We for and find the MPS okay, in volts, And – centers we big hundreds of the than see big, the some in we of. other still the as the million going centers, be. intelligence their They’re we’ve the very can out And adoption certainly can it – piece, volts. rate any advocating actually volts the revenue don’t what’s XX-volt think and it’s but market, IRR done XX servers the income have artificial us, And data like needle. have data majority efforts running and that’s to I to many move the don’t that of still will at market idea what’s dollars. XX Certainly, what’s XX

Bernie Blegen

can I add if David, one more comment.

XX-volt is e-commerce the it’s be will all nearly supercomputing the intelligence, think centers, I migrating that for direction to. or for or whether artificial that data

Michael Hsing

that us give we we market to those they XX-volts. sooner merge or what believe And or two segments, That’s three believe. years, later, will

David Williams

on what lastly obviously perspective, the center seeing maybe, macro? for just and issue. are there? Okay, your seeing me. just you comment the issues you maybe, maybe, Can from excellent. been inventory? just are Or you from And then data benefiting inventory wins drivers are now? But And It’s you company-specific versus an design the

Michael Hsing

we have We supply just at these market. in qualities including In Well, during past, you’re looking want new – have if products. the these all the mentioned shipping new products, have to for problem the risk products a inventory. the now, with to wins these on and to said don’t and issues. I’ve risk. again to taking or the any the we’re customers We you the build a new with product annual want take again, it the our are all – don’t And new XX-volt, us, any all interruption

we ship. So, we more have can material

we Now, stage. are the at

– of we a which have build to inventory. do have We more ship, lot to we and who put effort to

Bernie Blegen

about the also were new centers you data in penetration as was as markets? David, whether far talking that

David Williams

still was prior, up had had mopped some been within excess softness that I curious the data if just that caused inventories center Yes. there was if yet.

Bernie Blegen

center. data the Oh,

Okay.

Michael Hsing

Yes. get that. I didn’t

Bernie Blegen

well the we the characterize – is way interesting that that data individual customer, an individual both was – and experienced customers. And to growth, this one So, the terms overcapacity broad-based. what’s an of downturn was likewise, as in a of as very experience, center example I products our geography. that is think that also of QX that with as in was It result diversified just our

Michael Hsing

so it. Great. much. Thanks Appreciate

David Williams

Thank you.

Operator

question Quinn you. comes Needham Bolton Company. from The next of & Thank

Your is line open.

Quinn Bolton

guys. for of of in. about, But results. a to time go talked And the at a outlook, me start, down and haven’t quarter to squeezing had basis. a revenue you know midpoint decelerated they their Thanks had through pretty just Instruments’ a Hey, probably I wanted lot I Texas guide, on their that’s, being the December poor revenue XX%. think, row, where in eighth has I year-over-year

So, looks analog if a for XXXX. mid-single-digit might in I use a certainly as Texas Texas Instruments like Instruments looking proxy revenue the be market, to it decline

or you peers? start but some seeing I so again talk where that’s there. year, of And kind next for you XX% guess a let’s some question, are think with your give big versus us if you where you’re how you big, can of can growth you’re about, extent is And I consensus The comfortable comfortable; points, market differentiated the growth? analog you’re XX%, broader to analog know the Street down

Bernie Blegen

Sure. At had flash only TI. on we’ve reports this point, the to review the opportunity

like. found market in with immune QX, not they’re and and think that We So, versus the along decrease the I that not downturn of them is was their of how projected, – difference I significance QX both business. movements elements MPS driver. are affected a deficit understand business XXXX much by to at am we’re the But the they what certainly, between to market in other of the consensus, a from analog

new within yet. XX control, on that continue we said but market the found hasn’t the to at products. which XX that our we Michael we believe percentage are earlier equilibrium continue focus market on outperform as its this to this points, can call, still to introduce We And elements is the

Michael Hsing

no is They are so MPS There are big. because they markets. comparison and Yes. between TI, the

but We small. We a opportunities. lot are do very of we can’t have –

opportunities, we the market for comparison. And expanding we’re also And our but should enormous is XX% time, the growth macroeconomic these to we in at much less same that But segments. our the us and different no for so affected – be segment in start we shares conditions. – this building X% us, in – the so of by market – there’s

Quinn Bolton

Bernie Thanks, and Michael.

The activity June and I in some you sales, XX% the guys one that was that quarter, thought second customer that you was is, build think of I question ahead. over of had saw

You hit your for provide and were guidance able to QX.

some of into in sources and in sort mentioned You segment factored industrial in power the ahead ahead Have your surveillance that QX you guidance, build quarter activity here fourth additional equipment. meaning that XXX in build guidance? if you in to QX in in unexpected sort still XXX your did ahead segments see you’ve demand that’s that those strength and tempered build QX of in reflected some QX

Michael Hsing

we’re Yes. know, it QX. aiming Well QX. obviously, in for in for have to already that be We don’t but we

Bernie Blegen

he Yes, said it all.

Michael Hsing

Okay.

Quinn Bolton

Okay.

yes? So, the is answer

Michael Hsing

Oh, will miss yes, yes, quarter. quarter absolutely. Otherwise, we by

Quinn Bolton

Michael, lastly, And to then just to it. Got I back want come XX-volt.

You product, mentioned that you’ve year. been sampling I a think, about for

strength. GPU product? clarify, more saw third strength just of GPU areas, you to was that And in QX XX-volt you seen I your XX-volt strength existing the design the one in from have wanted where in Or think was was quarter, – I GPUs wins? that from

Michael Hsing

coming. the we do It’s growth No. revenue see yet, XX-volt healthy but traditional. is – not The is stream a It’s a more of moving GPU needle XX-volt. a

Quinn Bolton

Got you. it. Thank

Michael Hsing

Yes.

Operator

Thank you.

comes of question next Our Cowen. from Ramsay Matt

Your line is open.

Matt Ramsay

segments you morning Good continued over the there, guys. is has one team closely Maybe, has much. my very could Michael, the business. Microsoft grow been you the that you relationship relationship benefit the different give forward? as bit extent the color move how to as of might the to it you to with relationship of Thank nature – strategically little business that across can, you that watching MPS and of that a us could

Michael Hsing

customers. And that margin move mean, not down. our top-line a build gaming. very as growth our can this, it cyclical customers, the and said very I on for manage it. shareholders, very our statement we growth. growth, want predictable that’s my – regard, we with to which Yes. or But predictable doesn’t don’t all want revenue In and past, We – up for made it’s I And in not – don’t is Oh, as that favorite, to a smooth I’ve sure. model comment like the I we business,

every you get in two And they that extra years start so regard, then or lower. revenue, three have in quarters you gaming, to or that every year the next have in two and

is range. that couple giving that’s roughly favorite, So I in well, conference see growth love we all our clarified in as years, are grows And that over is that’s is gaming, and that we following And that still of us all call, difficulty. and grows, customers because listening. MPS business then we million models. your much, And And this value. But in the is for effect said shareholders, models. the still our $XXX not less. And in much also last money in we revenue accelerating – that

gaming. So, I love gaming. I love

Bernie Blegen

If can additional one comment. I add

not our While customers, thing our individual from and we’re is peers I we to very separates competition MPS responsive that customers’ one to believe do that talk requirements.

So, than often well, as the challenge, of bringing turn us a in order And and we’re to from if solution. the not, to is customers that differentiated. innovation, technology they have forward benefit an of they all a find level engineering result, our

Michael Hsing

best is the way, best we provide the provide our corporate said, we the By this us not customers BS, what service. we are support, telling

Matt Ramsay

sensitivity Got the it. to appreciate customer. No. I individual the

center spending reacceleration – from in anticipating been not spending question the server XG XX market some obviously to the it last cloud the been now And a market. follow-up months, in a the my challenges. but As data is general, side, in like there’s just on seems there’s over side, XX

to customer in some how the other some You the but that my little servers, Intel-based guys is of a content quarters. diversity understanding overall data that computing customer business certain have expecting could center into there’s talk base providers. about next base grow few and bit you’re you Maybe, with great

Bernie Blegen

Sure.

strength I MPS think of is the diversity.

that kinds solutions. different all suitable of are different have technologies We for

it’s of XG, hard we're also tend much as initial we applications, now, what we’re look advantage here right to to So, stage to and to come, terms very initial mentioned continue center very the growth. that model. it. take market again; some seeing, center of and intelligence. through it's very of model we e-commerce the positioned Michael generations those but think really of several also support positioned and is artificial the in like, opportunities well very growth data data earlier, of look going at we're while And for to is solid When And size

think is I different well anybody adaptive technology you developments developed we're I power take to when think advantage how look So customer solutions, at new as as evolving and market. an our positioned we've for of the that relationships of

Matt Ramsay

All you best. the very guys. much Thank

Michael Hsing

you. Thank

Operator

Thank you.

question comes Ross next Bank. Our Deutsche of line the Seymore from of

is line open. Your

Ross Seymore

guys. or Hi, for two. the question Thanks

little progress come see side then other that would are as that to processors you a And people of and down Monolithic? might management that you doing want how there. of better largely sorts how, evolution if the of for it occur, that or form on understand another? Is where First more versus kind the related? just playing you ASIC guys FPGA bit backfill? little trying side, FPGA processor XG you're any the power to a Are related? of one there benefit worried does are figure Is would bit impact out related? ASSP

Michael Hsing

all our power that's And making. value the on these We The above. blocks. blocks. are don't out is eyes to as are All to all goes. size figure need just to products the typically I a answer design customers the several but power vague, – be want our of reminder blocks product where fundamental everybody, try our we and products. They our power supply of with

to power. segment we same design need a And that systems. standard build to we've fiber their the the so don't the standard optical their to the when from the the And component to become to be data product, processing in design – – the company – line, all communication engineers within each they transmitters line, processing they

where actually product up. ended know don't our So we really

Bernie Blegen

parts think question to you have here, Ross. your I two

occur, we first that looking how very how The that. develop. have all and I that's initial sort to is take stages early think been far we get an we've ramp clear forward when foresee does as defensible going of is the aspects point, what that's and And think the to But to it's really XG I of hard we're to. as of XG, we're ramp advantage and in of Michael's that predictable or this long-term, to

Ross Seymore

I call congratulations Monolithic is about My wouldn't it. so at be well. one inventory, didn't earnings an Got as that if ask question on it next

Michael Hsing

call the Ross. in my after lost February focus I've

the view will still Okay, know that's a Actually, what because too little don't fair we question. we actually it high market a do. as

Ross Seymore

or up, you do down. I'm it utilization give a goes controlling going congratulate reconcile And you when much too go inventory do when dollars to Well, I up, of kind secondarily, if it is how comes how to day's utilization talk when to with to blow grief rising? comment? a you I – I and have lowering needing But back you not sunshine it about at that one, guys,

Bernie Blegen

Sure.

do seen down and of sheet, wafers months. and you think a starts. so six that at back well. February, them and started at as what we've inventory last if the we're the sell-through demand to you much over okay we about starts, And ratchet had the into an for our in time it than we the wafer a wafer time, period did now So are coming we [indiscernible]. lower manage it's good to there's Well, starts with balance historically those really extended [indiscernible] level same lot receiving of And levels yes,

well. So into started goods aligning that finished that come back to our means as

we're Difficulty] bit look for [Technical at we in level at little QX the and at raw the when about expect we of work that you So process, When on probably light look composition, the right materials, goods. we're a ramp finished

Operator

comes James. [Operator Instructions] Chris The the next Raymond question Caso of of line from

Your line open. is

Chris Caso

Operator, us Yes, management have we lost team. now? you hello. Can may guys hear the

Operator

shortly. in be precede. Speakers Please will today's resume I conference. stand delay believe. a you patience. Apologize. The hold. for slight you your There and conference Ladies may by. Thank may gentlemen, please

Unidentified Company Representative

online. back will Michael and Bernie

Operator

next from and go to question. Deutsche Bank. We'll Ross ahead go Seymore the

Your line is open.

Ross Seymore

can guys, Hi me? hear you

Bernie Blegen

Yes, fine, thank you.

yes. perfect, it's Now

Ross Seymore

Yes.

you I versus things, of you you all that. the probably raw The through Bernie, halfway walking continued were the through, and of and side though hear the were utilization versus you. So couldn't whip guess materials talking even inventory we

that it to start mean And I target to get days up, Does that was say. both? going you to sort didn't to? what punch-line inventory, expect of that think the of dollars range of you back inventory going any are

Bernie Blegen

XXX when inventory to anticipating is wafers dollars the days the expected while Again, to of range fact internally starts months to that XXX, in we between and ramp. closed revenues eight about six we our in of months advance are manage

So right in of now, put of support starting starts wafer to business we're for QX QX XXXX. and

we that. in where to a that of a then of of also normally regard, look dollar the our points you to points about days percentage percentage as at two QX obviously, on QX, lower revenues lower a is cyclicality expect up replenishment And sort so four basis. is will that the And see than because denominator, go

the to the So was will on terms my that And intended talk really dollars. I comment reflect given our seasonality. have of think impact then to in days

Ross Seymore

base relatively should Got at? I just it to it's is expense double something One, Or ones litigation nature? court in seems what we new is. something guided be that wanted like it. that usually Is quick due? Two Or it one-time looking of is to be coming a a understand. that the case is about

Bernie Blegen

Yes.

have... We

Michael Hsing

time. long a not Definitely

Bernie Blegen

next trial It's so. date in coming one-time we a worth have or case, the quarter here and a up

Ross Seymore

you? second when camera retrospective IT then quarter? is And that of will it in the an that is in you. to of to last first meant building customers so, Got then – inventory, one what do I on who benefit have do you believe wanted something that you ongoing or half did this – you quarter, that Or were you your security what And things. as the if quarter? was comment third that said But commented for know see to the I is year just side earlier. revenues quick whatever its a fourth the that be

Bernie Blegen

And the we're the to industrial that it of stream, rate we experiencing. normal it uncertainty again, significantly if run for just for speaks at sort I revenue reported this I think lines that higher all its look then us. is market trend Well, where than

I pull-ins there in could think impact some can the were so that on two. you and that market quarter how this performs and particular some or infer next segment And have

Michael Hsing

our from messages from end different and customers heard our We customers.

ramp, and and good is news And a of to the they large heard also in same because are starting so tariffs. pulling projects the time, at have the we few that new they're

And building so very Intel. blocks not again, and basic we're we're building

the servers we're them So they built. PCs cost help you see our of still many can can how a how building materials. build We of and or processor, entire building small many very

Ross Seymore

that's it. Got All guys, right, it me. from

Michael Hsing

Thank you.

Operator

Thank you.

from of comes James. Raymond Chris question Caso Our next

open. is line Your

Chris Caso

morning evening Yes, thank you. Good and guys. good you for

the going XX% you about that to was customer forward has with is as what XX% like third in that the that a into on color It plus look had you regard you And there? the give Could wasn't second in quarter. customer now question the customer sounds the revenue QX customer at quarter. normalized First level guidance? some

Bernie Blegen

Yes.

that number that's relationships transpired reported clearly our We'll are are product about XX-Q talk customer customers don't and particular have QX. we say can that this think that I and where very multiple broad-based time have beyond what ramps since a in they individual they the that of we occurring get the for here. same at

Michael Hsing

XX% consistent don't more customers. Yes. we than have And

all for And one a certain the and or we we quarter There's we their and past, long customers, We be it don't week it. use And don't remember very building different have they can simple number where swapped in things. can This of business. not. have time of customers. That's the tail we a our blocks don't whether due of a And But build okay? overall, certain customers. reported they have a it, period many it that. I to

Chris Caso

win of goal guess way if of gets rate for sort an somewhere And between to it, that. of and to business design year you $XX be incremental – as that's on about framework million run that to top XX% that Thank revenue. it's to your million to grows the the point generate the question into year? about Got if things sort can respect as your tell Perhaps that? What goal is of I I'm you you. at that visibility that that would level agree, growing next thinking drive $XX last the of of the to need market abstract XX% into it, you you above look look with I you me this next guess think it. you rate, industry, and what is and right

Michael Hsing

last have couple review and of for simple the we It's and And we term. last – group. product we to due tariffs, wide the also the product have we're we checking And immediate more quarters. in cannot see or is Yes. the in the And and there it's against these previous numbers, few line the projecting much group numbers, longer line in – have very the due or sales We because two line and some a so. next is what tariff, due the and process to we modeled next in product months a all That's geographic sales for year than sales business also more – those, nine more rougher swings the predict. we And years three predict. years. the gather cannot the sales government and to and policies

it more theory. than is the looking on And empirical sales next looking what expected. can at we we're do can numbers. sales is we behind year is And we all that. other – can hand, and this we These why bigger these that theory on now are for based much we're we numbers really real a sometimes that than say And can always One is numbers historical do that.

can But the in we than Even than different. more year, beginning of reality XX%. believe that. grow that, so to And very grow at a and January, the the is forecast lot we we more

much. that we So can we this on grow the based to our shareholders, that's historical say numbers,

Chris Caso

All right, thank you.

Michael Hsing

Okay. Thank you.

Operator

like to At over remarks. I'd Sir? Blegen back call the you. Thank any for this closing turn to time, Bernie

Bernie Blegen

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

Operator

conference Ladies and for call. this gentlemen, concludes Thank today's you participating.

now may disconnect. You

Monolithic Power Systems (MPWR) 23 Oct 192019 Q3 Earnings call transcript