MPWR - Earnings call transcript Q4 2021 | Monolithic Power Systems, Inc.

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Genevieve Cunningham

Welcome, everyone, to the MPS Fourth Quarter 2021 Earnings Webinar. Please note that this webinar is being recorded and will be archived for one year on our Investor Relations page at www.monolithicpower.com. My name is Genevieve Cunningham, and I will be the moderator for this webinar.

Joining me today are Michael Hsing, as CEO and Founder of MPS; and Bernie Blegen, VP and CFO. In the course of today’s conference call, we will make forward-looking statements and projections that involve risk and uncertainty, which could cause results to differ materially from management’s current views and expectations. Safe contained the release the to today. published refer Harbor in statement earnings Please other website. could March X, statements are factors to and Form on in uncertainties Risks, that November including filings, and identified QX release through our the accessible Form our the filed SEC differ filed cause which in Safe XXXX, in XXXX, Harbor on both contained XX-K earnings our and X, are results actual XX-Q information the provided today’s assumes no update MPS to on obligation call.

We as before operating performance for of reconciliation financial a to internet measures expense, non-GAAP a will measures for one being with are conference on will today’s non-GAAP expense, you outlines in the R&D operating income, I’d and earlier discussing the table filed with QX earnings have prepared we to superior in over like gross SEC substitute along is website. and prepared not accordance available release, considered remind also replay which on These available be today. margin, year earnings that with net measures or webcast financial with live be earnings in on our to the year our call is for with the and the is other and income website and currently our and GAAP full release included filed SEC XXXX financial GAAP and basis. that the GAAP. SG&A income, income a accordance between income A both non-GAAP be taxes, should not financial measures GAAP

over call Now, I’d like to the to Bernie turn Blegen.

Bernie Blegen

our $X.X our quality milestone prior and billion being against by for the customer surpassed consistent and first year record MPS performance more superior recognized than the year. XXXX, In technologies, higher XX.X% companies excellent full $X execution by support. represented tiered revenue strategies billion, achieving This Jen. Thanks, revenue product

opportunities XX% product capacity ahead XXXX, expand to the of new market infrastructure high successfully on capabilities. grew to quality are in well see we our operational highly more and growth and $X share by invest continue and to ramp us, gains. achieve in beyond company MPS strategic revenue billion allowing we As – capacity track we XXXX, In

Here highlights, online new continued we in in XXXX. achieved the are qualify a XX X a inch XXXX. brought few we parts fab which Brought fab, to in and inch online

We motor USB products sophisticated We technology will continue fab drives, design smart invest MCU more to and capacity. power high cores delivery, requiring power and in as such solutions into and growing electrification. assembly processor power

of prototype first Our a digital performance high lab and applications converter product outstanding silicon medical evaluations. analog precision for achieved

market first customer end in from a industrial and of supporting of supporting product XG, released business and have sample large this in infrastructure sampling VRXX, believe DDR, representative more. revenue developing designs a PD, ramp BMS, includes new new is product previously We step applications We AI, USB will number XXXX. technology both ADAS, started The in Validation many QX XXXX. segment strong a applications. in

Fourth Switching $XXX.X had higher sales Industrial market to fourth XX.X% XXXX of record compared our quarter XXXX the and in XX.X% product revenue, TVs. by represented Computing X.X% applications. gain Automotive year applications highly storage revenue, of sales and XX.X% broad based in revenue market revenue communications reflected million automotive increase primarily XX.X% XX.X% $XXX.X XX.X% the million to compared quarter XXXX. margin improvement than XX.X% XX.X% year XXXX, was for represented computing assistance both million. automated of of the Full Industrial grew infrastructure revenue XX.X% segment, compared the revenue products This XX.X%, XXXX and our lines This XX.X% enterprise segment digital million was from increase up revenue and XX.X% just up prior enjoying $XX.X MPS’ wireless revenue in gateway in Consumer revenue systems revenue year revenue automotive XXXX. computing to revenue points $XX.X full riders million Turning how appliances $XXX.X higher year better notebooks, grew Communications third in year-over-year, demonstrating of $XXX.X XXXX $XX.X as and up smart XX.X% in of represented full in XXX our over of Same million, quarter – and compared storage communication This automotive integrated applications. computing grew to with revenue XXXX. year fourth up of XXXX represented $XXX.X strong revenue and higher MPS XXXX each year XX.X% XX.X% XXXX to XX.X% $XXX.X compared with our MPS’ XXXX. XXXX. to full computing and third and million basis than in sales quarter Automotive in and higher XXXX. was. with quarter revenue XX.X%, full $XXX.X million. revenue Communications represented and the with with Consumer consumer industrial broad of XXXX to grew than cloud XX.X% GAAP for XX.X%, By million to XX.X%, full growth. of revenue consumer MPS’ for $XX.X grew driver industrial based XX.X%. revenue revenue increased XXXX connectivity. revenue revenue, QX. supporting increased grew up X.X%. and with home storage product generated growth grew XX.X% XXXX. grew primarily double-digit with sales improvement reflecting cockpit, year-over-year revenue revenue year-over-year represented quarter grew XX.X% XXXX a million XXXX. resulted year revenue revenue MPS’ This grew for storage was than XX.X% XXXX, primary of comparable million and storage in XXXX. XX.X% revenue compared our gross

XXXX. operating the and sales achieved XXXX. of $XX.X income XX.X%, compared products higher XXXX of million large expansion more gains higher in to Fourth XXXX non-GAAP costs. price fourth margin offset quarter, gains, The the to mix, in basis due million which a fourth the operational year-over-year quarter quarter non-GAAP XXXX market management. in high sales gross the greenfield due was in efficiency quarter XXXX input third discipline quarter measure product availability was share than shift GAAP of than $XX.X product MPS quarter higher noteworthy to of XXX fourth was and value in XX largely million reported gross reported than basis points margin favoring and and $XX.X points Our third in

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

review operating Let’s expenses. our

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

the in was compared spent basis, quarter XXXX. fourth quarter XXXX, a non-GAAP the non-GAAP per a Our of expense credit XXXX from of and QX XXXX fourth both million third up $XX.X reported up operating $XX.X GAAP and expenses litigation of fourth $X.X expense quarter $XXX,XXX compensation quarter legal million million a reflected we the $XX.X are a with million than On The in balance from were The refund litigation quarters GAAP Fourth IP in QX fourth it $X.XX of loss $X.XX share, expenses $X.XX the QX $XXX.X XXXX. share in to line. an compared of per a $XX.X unfunded expense, compensation from at deferred fees. in XXXX GAAP XXXX operating of and $XX.X charged quarter plan. including shares and QX income fourth of goods and income diluted with $X.X anticipated of differences million million. and XXXX. in net retainer or settlement quarter and cost of XXXX quarter discussed XXXX quarter XXXX the in a of XXXX. an credit compared non-GAAP for balance expense $X.XX here lower expense the third between will fourth the or XXXX or XXXX stock income in quarter in XXXX. $X.XX share of stock the bottom the fully was million $XX.X of per expense to million XX the sold end Switching Fourth compared with share share non-GAAP – per $XX.X quarter in quarter diluted the fully $X.XX diluted XXXX was $XXX,XXX per outstanding was compensation and share net million third recorded with third per Fully quarter

at sheet. Now the let’s look balance

$XXX.X equivalence As third XX, million compared at cash, of XXXX of million XXXX. totaled $XXX.X to the the of investments quarter and end December cash

of or of the XXXX of quarter $XX.X a the outstanding XXXX reported fourth operating fourth sales of XX higher increase quarter of million totaled flow at QX third million outstanding quarter or For generated and million. reported accounts or of cash capital of about $XXX.X XXXX of the operating XX end spending the days flow million. the $XX.X with of XXXX Fourth quarter between fourth cash at million end days cash end million XXXX. quarter with in operating inventory in sales the drop receivable XX $XX.X Accounts of primarily $XX.X $XXX.X receivable. quarter compared days flow $XX.X MPS reflected The the compared and XXXX, of at the million

comparing XXXX. on provides of current and on function of days the of the of were internal the the at end Historically, XXXX XXXX revenue. of the XXXX. as from inventory up of can at the Our the days XXX end end increased third the basis, fourth video, I economic quarter’s XXXX. revenue hand from at can you XXX turn Calculated match. to of to QX outlook. with better the rose the see of current third at days XXX end of practice to On to quarter a a past calculated the with basis of fourth days of inventory see now levels days quarter days at this end XXX our We as from the inventory webinar the consistent end inventory our quarter of quarter of the again, XXXX like quarter third the following we days quarter believe QX at we’ve million XXXX of inventories would $XXX.X from of million the $XXX.X

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

million range to XX.X% range following. million the of the Total XX.X%. expense GAAP of the gross XX.X% Non-GAAP between including in income million to before expect R&D SG&A to million of million litigation also expenses. We sold. to to range to of $X.X range expenses in compensation the that stock and of approximately compensation excludes or $XXX.X losses. based to and $XX.X to margin XX.X%. would million shares be Fully gross expenses $X.X margin $XX.X of expected GAAP $X.X to $XX.X cost in in from charged Interest the exchange is expenses range Non-GAAP $XX.X be $X.X R&D million. and million diluted and Litigation million SG&A to XX.X million and to goods $X.X XX.X stock be million, in $XXX.X This estimate range gains million. the foreign of million. be shares.

increase which XX XXXX. strong In $X.XX Finally, to supported announce dividend stockholders and XX% I’m share fab high-value, due to XXXX share per $X.XX in as in revenue pleased greenfield-product, assembly for XX% conclusions, in increase MPS’ capacity, per to performance our March of record financial from was quarterly our largely a a ramp. of

market product is revenue $X beyond. billion, to company the expand capacity gains in and XXXX well Looking new XXXX strategic successfully beyond on to allowing ahead, in XXXX, achieve and track ramp share MPS

Genevieve Cunningham

like Thank Tore, I your line question Svanberg begin session. our to would Tore now you, is Stifel first of Instructions] now Q&A from Our Bernie. Nicolaus. [Operator Analysts, is open.

Tore Svanberg

the very on results. Thank Yes. congratulations very, And strong you.

actually high. there’s in to industry? this how very, and I’m going being this finding are people to very seeing capacity the build able the How you I’m to both of so able your much spite you inventory how you tight come the you that to differently. So were we’re this ask in ask inventory question again environment inventory, ask going carry Usually, time you, get

Michael Hsing

for inventory presents a These short-term. are opportunity a all And day, as things, know, enough fab, now are now we few years okay. ago. this These the planted just it we we two futures crystal have day in a qualifier And it. was and react, terms just don’t as ball and we just we and couldn’t react fast ahead we nothing short we – a plan catch the as can. Well, building you we cut business, one just and okay,

Bernie Blegen

next to to on that, And two I for we presents think that capacity quarters. have of in to shows the a hand that add sales inventory allow that us the lot

inventory, in the do lean. sure is we keeping what our of hold such – we’re the channel that inventory, touch the done inventory we’re made manage inventories still our investments in customers the we’re we’re abilities So what to we’ve best in are to keeping. to trying trying supply channel make conscious in that And chain. the with And is that

So they’re likewise lean.

Michael Hsing

to we what years we ways do – capacities do now do and few Yes. remember have and beyond we have million saw I it. and you okay, our going didn’t and and a years you scrambling for some is, joking to But And a I a add much course, to MPS we for wasn’t ago, get I as couple also That’s million business. or want to talk and this well the expect is ago a that. and plan few grow XX%. ahead okay of in about we dollars. creative

wasn’t so last or And six tricks then in a have we magic is, – it so. all months don’t like, the that’s and that

Bernie Blegen

And it’s revenue we note rate revenue as good the – is precedent. $X you crossed growth and historic threshold as have our noted, accelerated Michael from billion

Tore Svanberg

Yes. Well done.

you you’re actually also billion this of worth my capacity? little follow-up You’ve products in product on there bit question, X-inch, just As a now, more sales about qualifying the add ramping XX-inch. on on year? color $X talked Will be XX-inch could

Michael Hsing

Yes.

we know, we capital as fab. do don’t fabs, don’t these a And that again, you capacity all a a qualifier increase qualifying, of so lot We’re money. spendings have build cost MPS and but have

like, nowadays. questions, so – And your we to transitions do answer and

it X-inch much or as whether is can. all XX-inch We Okay. we as this capacity get

Bernie Blegen

that just that fab to brought was online we in that, And second XX-inch our XXXX. add

Michael Hsing

Yes.

Tore Svanberg

I’ll in you good. Very congrats back go and Right. line. Thank again.

Michael Hsing

you. Thank Okay.

Genevieve Cunningham

now line comes next is your from Our question of William William, Stein Truist. open.

William Stein

that taking this over accelerate about on of should even we modules past, trajectory the question. contributes that spoken any strategy your of you’ve might acquisitions comment and today growth business either to you. thing or that I’m Thank also business. odd the further for the outlook. executed module in were you future fulfill on the revenue how Thanks if And think in ask my for want Great. wondering results popping the about Congrats and tuck-in about area. that in percentage could time. contemplated to that what potential I

Michael Hsing

Yes.

of Okay. a a the XX% you question, the I’m glad business module for this it’s year. asked I think side

Bernie Blegen

digits. single mid actually It’s

Michael Hsing

Okay. Yes, yes.

can And more so as much quantify you a accurately.

others on now. what that’s the see is, couple XXX% about you accelerating every – questions All MPS know for future acquisitions other the know grow and to this the years the in growth for okay, technology second of Okay. detail. I enhance couple next I we the don’t numbers things, And technology or our companies. okay, last years in I years. years, word the those now using and your it tuck-in the Yes. using our of And the part

engaging a now. as handful far nothing like, it we’re we’re we materials are it lies. announce and with handful company, companies with so of six – engaged nothing than should – We more – We a and

William Stein

you. Thank

Genevieve Cunningham

William is of Our is now Alex line question from Alex, Blair. next your open. Vecchi

Alex Vecchi

my Thanks And the congratulations for question. on the results. I echo taking outstanding

expand regards alluded the to maybe in that of to right to you’ll the can in upwards current expansion billion more the how to two or three question capacity portfolio billion billion Tore’s I or capacity do quantify the can product year support on way revenues. the it? you’ve think from about with adding on, $X in to $X past, think or fact you much next $X the you be think Just

long-term the is the right to trajectory? think So of way sort that about

Michael Hsing

even revenues. more we selling the for that a correct. have semiconductors, That’s absolutely and modules solutions Yes. capacities But features, the for to even we’re have of and utilizes because yes, going which kind high-dollar fab And silicons less.

wafer have – will we we CIMIC even factors. be should – we – have shouldn’t So our so and capacity less

Alex Vecchi

segment Storage a you little It was maybe helpful. forward. for years? little with and in talked the the – notebooks. That’s going notebook that’s in I comments about the talk breakdown, you’ve terms the a seems is opportunity few and Compute enterprise one the what in Can like there what there’s or similarly think trepidation your investor on then where general, bit actually really the And quarter. areas, the strong segment – outlook very And the over is of about maybe next notebooks of SAM

Bernie Blegen

Sure.

important I part is large we’re units where think by consumer driven that the necessarily it’s two, share over market as experienced, the really been enterprise for retail has into selling that at very far three would that to we’ve qualify really we’ve the as years, that in capturing level, been a of not trends. $X,XXX. successful growth And particular above last

So that are being to notebooks. the as projected not downward prone they’re for unit numbers

Michael Hsing

Yes. the as And be known Overall, strategy to we that’s want We growth. balanced growth. want to a don’t notebook a MPS’ company. achieve diversify is

Bernie Blegen

And saw just to our XXXX. which business, server into expect cloud uptick we particularly continue point, QX, and Michael’s ramp we to pick up to strong a in in on very

Michael Hsing

the revenue single digit is Overall, now. very, is notebook very a –

Alex Vecchi

Okay. Thank back into queue. I’ll you. With that, hop

Genevieve Cunningham

next Our is Quinn of is Bolton open. your now Needham. line from Quinn, question

Quinn Bolton

guys. I well. for my gotten a Hey, you I long the haven’t offer congratulations question Michael, and time. surprised the yet, company I’m but followed Bernie as

margin gross If have my quarter. I may in ever up. margin biggest basis you beat points you think I is this put the beat guys by numbers got this gross XXX right,

that think was $X back onetime in that in number drove you the strength revenue to but a margin, million third Looking litigation a I clearly had quarter, gross the issue.

about So margins basis you’re the quarter. in the technically can up XX talk and guiding strength flat, effectively points them gross drove first you first what in

margin? continues. about strength you margin that gross just So it Can like looks talk

Bernie Blegen

comments, favorable now a we’re shift bit is the on margins a mix, operational product on new I where which We but benefiting to in reflect by indicated Sure. in also business, more efficiencies. little our that prepared tried greenfield the that higher right

As from far reflection that’s our also we indicated but as is XX-inch, silicon a standards. of percentage quality of earlier, the coming improved

So forward grow sequentially, eyes as of to have we’ve we’ve reflected I we sort to margin is our going which basis look new to an obviously, if on there another open keep a that step-up. again what that offered think although we’ll XX points sustainable the floor, XX opportunity

Michael Hsing

headwind years And in asked, there’s gross another any few there greenfield we A remember, is okay. no there side, a margins. product. talked actually, – about is If in headwind then you the ago, I

these the aim greenfield high the at and new was product high-end So answer products, products will all values.

gross the be so better. And margin should

So that price gross this increase cost time, the said, high to we as is even the didn’t our with shifted that customers customers. improvement. improvement. or passed also the of product, to passed margin gross the But We the to XX-inch and much. much And efficiency a Bernie internal majority our pretty not margin

Quinn Bolton

in Got new if your rate it. seen nice pretty follow-on, inventory for you internal products greenfield And as much that for of quarters internal say, business? you’ve increase comment, could versus, two the as you’re building levels. how now, just a a that run is Wondering inventory,

Michael Hsing

we side. consumer Clearly, a away shifted from

for allocated products we high-end lot segment. targeted that so a these And targeted of – MPS market

So for the we inventories segments. grow those

Bernie Blegen

rate. I we do that is add treating think a as run high-volume we’re some business, to and that there something have

have an where potential. cover make insurance has markets as upside positively the So perceived opportunities, greenfield that that we we the we’re have products, sure can the – policy new that they’re it’s to these and tightest new capacity. customers very new we probably area and But

have building levels. been by share market that’s support inventory to products as been of afforded that. the gains well as far as new the appropriate very as And acceptance customer well I inventory We think reflected

Quinn Bolton

Got it. you. Thank

Genevieve Cunningham

Deutsche question is Ross, line of next now Bank. Seymore open. Our your from is Ross

Ross Seymore

greater wanted was in This have share I different. to was follow-up year congrats. But your to half competition. there, of And and – guys Quinn’s past year you answer the so. second echo well, availability very than market always gained also you your the Bernie. past, on the had question I’ll significantly consistently this no

moving how gotten just the believe customer mentioned lead revenue out to to up So that sustainability relationship, enhanced Do what base. customer kind been into just sticky will wanted dynamic? growth relationships of first that’s availability you’ve from I figure the availability. going I’m the trying tier availability of wins or to client of that the because see because the you forward? the You of

Michael Hsing

question. a That’s very very, good

do that that you about a to a think XX% two how and released grow these these ramping it, And customers – first-tier close they’re okay, in products we okay, So customers. greenfield usually, $X carefully. are base, supply like Well, all over these new we products very billion okay? large

So MPS allocate source. have a everywhere. They capacities. shortage percentage. second large have a they we now have And always don’t

That’s MPS purpose So care product factors. can about everything factor. the factor programmable find less. customers contributes our do products And that before shifted find out, out now – more that one in to multiple our talk and is MPS. second And and are we single other they product they

so shortly, can And out source MPS replace we designed – our the – we adopt solutions. the and to and can we customers redesign

programmable, So is two are that. they problems the And realize and values. and they solve these points the more – enjoy their very MPS but and second they products point, especially sticky, our

I would very they’re so say And sticky.

Ross Seymore

of guess which analog of aspirations the I talk the your as that? going thought sort into follow-up about side is the And And question, opportunity a what I little which opportunity, things. just part you there, talked you’re of huge Can of another after? getting applications you some my is in unfolding you about converter a bit market greenfield Great. see

Michael Hsing

do have. which and and the silicon are purely a a we new we is Yes. these these – – are single We never side, have These internally we performance outstanding. just did developed. segments, the are And [indiscernible] in market

a market for that’s of We lot experience, us. have new segment a have they group of a and and people

will focus things. x-rays of like be and the imaging, those and medical ultrasounds and also communications the applications, type So

Bernie Blegen

of that margins. as have, characteristics And been there far exclusive carved companies not they that, result have gross that pretty technology, as add, the ones very high of lot a to of out just the have markets. a are command this And successful And with as this.

be new big very a but So market to advantage. a entrant, also a with competitive – we look

Michael Hsing

Yes.

it’s for yes, So it – a is MPS. milestone

company, As a so-called we’ll and see they what what can and next see and have analog And couple do. do for it we And years, can we do. achieved so high-performance we now, a the tried product of they mediocre result.

Ross Seymore

you. Thank

Genevieve Cunningham

Our Chris, open. line your next question now James. is from is Chris from Raymond Caso

Chris Caso

Yes, thank you.

bit question, a that first are a talk my on. QX the expect of these of I Can little $X that’s about And additions bringing capacity road you as additions At they at level? because and that up better brought that the we a seasonality. in For will obviously, the be your during year? results then through that Is what the fairly on the going capacity seasonal in, to year? to think revenue able the QX, in meet go And capacity step this presumably you’re customer normally suspect do some there Are year? billion happens, requirements fully than some we level, you when is talk to you point? evenly come about

Bernie Blegen

there. Chris, think credit questions to Hopefully, thread keep be I’ll able for I you going. three get the

QX, The observed modest issue with to do had we seasonality QX a first generally from speaking, dip. and to

company, our an our gating a products. function item the sort as with have we’ve alongside is development supply pointed always that’s of company of today how not fast built a availability. new balance, capacity opposed question, that we that Michael do is as because part can which to fact demand the for of And out grow. has And fact, to In as earlier an such imbalance, product your second seasonality in as and much unprecedented

have a one our always So been this in looking to we’re ahead of XXXX. out. we, that’s the we’ve been years is many to got and, that thing market and of decisions make And the really But done capacity think capacity fact, we’ve build in how able front intelligent reflection fact, needed. had upsurge participate at I accelerate out in that of when in has

of in discussions in feel XXXX, order to we’re we’re in doing So capacity and be we what in XXXX. secure very beyond. able capable And fact, XXXX for get to in

Michael Hsing

honestly, Well, trouble. another to gives we’ll your this answer us for questions, XX% if it in growth be year,

Okay.

Chris Caso

Okay.

trouble I think the that if welcome will were be case. that

Michael Hsing

Yes.

Chris Caso

more answer, about regard sales call, I’ll ask you enough price a made one as nice Bernie, to you were disciplined Bernie, is pricing. take you the comment which with management liberty to to and spoke that Mike I think which on to growth a in you’d Could to explain expect that to something to you pricing that’s whether how where been year-on-year the you what that’s rearview means and and termed it. increase? has mirror the continue extent contributor And

Bernie Blegen

I of having that a selective to an companies share. of we even increases prices as a within price we or of specific semiconductors that, that that made We of but to secure think along many being have on a customers. higher opportunities, means people them increase And the their a showed early year. QX market most And product to base availability with conscious decision recognized lot not – with broad a market a for able and our broadly, did not. to level affect opportunity this created analog implemented as we that as did

they we level look will price our to modest as be more at peer implemented. than a companies but so are broad-based more And but selective increases, implement of XXXX, have at going some now we

Michael Hsing

okay. growth at invest we steady we a Yes, it, when have it, the the but model, we in we state customers We our as a in our margin and segment. opportunities. And every modest have saying look gross for do keep future growth expansions future – for and

Chris Caso

helpful. Very Thank it. you. Got

Genevieve Cunningham

open. Rick, of your question is Schafer Oppenheimer. is next now from line Our Rick

Rick Schafer

opportunity guys another guys pretty a just in – mean for the Maybe look significant on could, if I I quarter, XG. as talked the have quarter. my Hi, past a next thanks and about congratulations on nice you quick MPS. XG question

you center potentially potential you to I content of of or think, data guys. said dollars cloud there, Michael, hundreds server I for sort think similar of

this any don’t on part could still So And I’m as this ramp journey QSMOD Or revenue be you that going load going year? to contribution of momentum start sort to second began point it know how I design the year? of if see the you sort inflect or are might during half ECUs when update to of sort of part your sort server. us more be curious, give of initial of if you since that that’s kind question, of of of is in

could you great. that any be would If give there, color

Michael Hsing

Yes.

we of give question your lot and very answer And see in a is mean to relate and the I technology-based XGs from So we size side high and XGs, like high ramping. power especially a QSMOD. the all I first rate to in products again, areas current of actually all similar up single of the the XG a don’t first, transmitters. the to And – product, part in all way – in

so still centers. so for I state. mean is the steady other And they’re like data question And QSMOD the

we – are occupy we of high be to almost to and that the a is total the not single-digit total a said the from nothing okay, is And year, single-digit. But the still than percentage of end a of of we the occupy We have XX we less if of market. say significance this the should don’t business. earlier that in a I XX% market,

a So of to lot we grow. room have still

Bernie Blegen

data the and a VRXX we’re center. in – that point very the cloud Michael, And in with the in good on the release of inflection

Rick Schafer

of that, it took, share And today, about get follow is about load you Yes. but think, Michael, or I sort to think XX%. of I four three years to point just which need

couple a in of could QSMOD that’s I years? sort are next for proxy the good So saying of think be you

Michael Hsing

Yes.

Yes. Okay.

So let’s grow accepted within days, was sort it’s three the more know was And VRXX.X I’ll didn’t start talking four – players, longer very so in think, shares long VRXXs, of I I early MPS actually next, pretty years. it why mentioned, I wondering the happening we we to could other ramp, I say that that, quickly. have the this now, about, take than and And right? or what good as okay? to and And sometimes okay? VRXXs, Bernie for as not but year, than

Bernie Blegen

delayed VRXX be again, Yes. it’s likely been QX. more has to

Michael Hsing

Yes, yes, yes.

Bernie Blegen

QX XX.X. observed are an in as right, of you But result uplift we’ve a

Michael Hsing

Yes, yes.

Okay.

Rick Schafer

and obviously, investing how need going curious mean, I cash cetera? if here you future looks obviously. business and could really if curious Thanks. R&D, run to asked a I’ve give good forward. probably. of done follow-up I job just you feed I’m Balance in a update on to great, Thanks. ask, the just been of And use just I could you’ve ask I to but an time. a us much in wanted Bernie sheet long et R&D, growth just was

Bernie Blegen

great amount Yes. also it story. receivables One at particular to order to question to available And a as we’re it’s a inventory, fund to lot certain but we liquidity. because look we’re growth, as expenses in sort of is cash an keep our levels particularly of and a have do And want expanding our And three even you fabs those demand we for relates all assembly, though infrastructure far next thing rate. about outsourced at we’ve a operating level The building as and capacity. testing. own of of of worldwide and our is talked accelerated that it our

our that. an we do own In you We purchased the then some our we the that of all few with And which, we’re companies you own buildings, additional and testing of can’t staff know, going of to outsource footprint quality requires requirements headcount. our fact, new house we’re one have growing investment. as the in, that of markets

balance to order So sheet prepared growth going accelerate same continue dividend in to announced in we’re the the while increasing time, our to the leverage by XX%. at as we we’re the help comments,

we mindful So to the some that shareholders. of return need back to we’re cash also

Michael Hsing

said Bernie we’re that accelerated not No, Well, absolutely No, accelerating. expense Yes. no. said growth.

clear. that make Let’s

– okay, and dividend our model, are an the and support And our – case not in we investors buyback. above from the okay? cash so our investors, growth have to we of And for for – overwhelming bit growth, pretty little MPS return expenses a growth

the buybacks thought let’s again a we okay. or issue are we because it now, okay, about delay to tax we okay, to okay, I get still related, this whether want don’t not feedback, know So they related divide.

cash consistently a by can – MPS is I our the a using not of to to want think revenue So are in is revenue we dividends, we side But acquire said other And past, company, the we for grow zone. is cheaper of in growth, increased models do the okay? this.

– the areas And products can sustainable and to product. couple fuel the lot growth a And – can variety a some based to different MPS can we those has acquire and garden And very we company unique we interested. we’re companies. of end a enhance and want of small of can sustainable. So that’s tuck-in those grow MPS product, technology, a really on

And so the earlier, I said now. were engaged with a few companies

Rick Schafer

for the guys. color all Thanks Congrats.

Genevieve Cunningham

Our now is next question your is from Matt Ramsay line of Cowen. Matt, open.

Matt Ramsay

I in you this per and engagements three EV if last, four bit lead some wonder is I drivetrains, terms market, very your in opportunities talk the timing talked opportunity customer, Michael, Thanks. in for, I’ve afternoon, about braking. MPS guess, I years. you how everyone. of regenerative car might market? But with for much. know, the some the about have of the or that, guys that more a three, don’t the been vehicle four months, little you in in wide in Good Thank of more might pipeline electric about you the revenue bit the number you a asking

Michael Hsing

we we area, almost are I market, in with We ADAS are the X.X ADAS that everybody. EV the think X.X. or engage in

I can’t you so And numbers. give

car, pure has this about electrical year. to $XX MPS $XXX somewhere we’re And date. to starting For shipping

not year, year. starting last this We’re actually starting

will over add with involve yet, drive release trend, regenerative we have another don’t a And those you but braking If we and revenue $X,XXX. a products. those do those

Matt Ramsay

ASP it. Got those products, – are Any thoughts on larger any timing?

Michael Hsing

them couple them much talking several there’s MPS couple released now, a many a we customers we to already. products can the And – is use key reference design. that – of want have are And are the or We offer total pretty of there’s than more already solutions. we

Matt Ramsay

it. Got

question, number capacity the one having topic. a of follow-up and CapEx about and is I’ve it’s ton the a been conversations adding fear at CapEx, Infineon in of from coming industry everyone that a new pretty couple Instruments is the a peak, You much quarters, is. fabs the adding in of up is a broad-based And different see industry of things online next ton adding Texas my investor – investing it As of that this right?

you’re guys in industry continue capacity it to as for a when capacity, been And process have it. the that you. wonder, online I just the the like have of so nature others maybe ton position And adding. to of you that you. could capacity, And a to Michael? on, with be the contrast bringing that’s type Thank going rest the unique sounds up you’re concerns of struggled do may some have you capacity catches for of any come online node the that the industry

Michael Hsing

question. good a That’s Yes.

there, a go how we’re build So MPS getting a usually, build anything. is We say, answer don’t fill should all long-term thing can wonder, I capacity okay, those we know And don’t in have have And a empty. up. It’s we fab We the okay, that. first fab we you we you anything. don’t are partnership. okay, but that fab, do technologies. we

And so I you okay, it, those want last – no to capacity, add guys shipment, okay? mean okay? and year, busy are are there like mean, the and this forget year or I fabs.

much, we costs We The a do these have give downturns. a engage build consignment don’t Remember, fab don’t them compare some on building building – we much And like minimum. fab. commitment, technology. do But And – – our we less. have and fab. some And we with so equipment, is some cost a not is implement in okay. but we the it’s

Okay.

Matt Ramsay

it. Thanks appreciate very much guys. I

Michael Hsing

Yes.

Okay.

Genevieve Cunningham

Svanberg line Our open. Tore, Tore now question is Stifel. from is next your of

Tore Svanberg

Yes. you. Thank

running – but fast. early four Just in quick two follow-ups. would you have so horses I have year, the know you really that it’s are

year, one think server, this year? this kind have If and which horses of auto do bit horse look the you but of will we lot yes, faster? there’s horses a we grow should a I that’s bet running about at just which know You talk of slowly. on

Michael Hsing

not company. think and – of at we’re – clearly, so And are this are, shifting we be consumers company. this remain least service noble couple those. in again automotive to cloud year, to of for similar. want a We well, and don’t last I the probably from – We from a shifted it’s – consumer our MPS And from is Definitely to quarters. our shifting computing and all server these year, side.

why okay, So we that’s see it.

Bernie Blegen

reflection that’s because think when that Yes. we’ve the accurate say say strong year, current surprised that by a more And of were horses, strength in I’d that I the Industrial. got you five we

and the next of communications – that’s still talked think not hoped And on it half about we fast as market, on I originally very coming this had second to earlier, may into for or the be as we in year. So while continue looks year. the expected, promising going as

broad-based So I growth. think really remains being the thesis

Michael Hsing

we a And the quickly, And we That’s not every – these but okay. let’s business. knows? can as we year, business in shift favor, in And by – shift down But all who quickly. maybe a we it. other segments currently, Yes. slow market year, end and it’s can say, half shift of consumer grow can Consumer

Tore Svanberg

high the there? track to your And good. crack your really that that end market it’s are to into of things data all us new data And at to track the converter We should segment way topic, for there? success Sounds be are very some difficult that success you really, into for going that will back we And coming market. of the for know you. What technology? the converter

Michael Hsing

So be showed it test wasn’t the on okay? product. of the good a – said – are want that don’t to And market I be case, yes, very we’re far predict Like very, far, to know said quickly, But existing the to very the a technology going data better is that’s – new but out high-end market it’s So can ramping center earlier I we I - and that. than we data product. okay. segment. the we Turn

Tore Svanberg

there, I Great. you even very the mean million be impressed. get Yes. if I’d $XXX could

Michael Hsing

yes. Oh,

I’m along learned [indiscernible] time. of matter of Yes, way, we okay. probably a And It’s the that. confident Okay.

Tore Svanberg

Okay. Thank you.

Michael Hsing

All right.

Okay.

Genevieve Cunningham

over As are no questions, I webinar the back like Bernie. further there Instructions] now [Operator to turn to would

Bernie Blegen

in hold I’d conference look and to again, quarter, first Well, our you again joining like talking this us to about once April. you all in call, thank likely we’ll forward which for to

So day. thanks nice and again, a have

Monolithic Power Systems (MPWR) 11 Feb 222021 Q4 Earnings call transcript