Earnings call transcript Q4 2022

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Genevieve Cunningham

Welcome, everyone, to the MPS Fourth Quarter 2022 Earnings Webinar. My name is Genevieve Cunningham, and I will be the moderator for this webinar.

Joining me today are Michael Hsing, 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.

Please refer to the Safe Harbor statement contained in the earnings release published today. and factors in cause contained can the QX earnings other differ results in be and XX-K XXXX identified latest website. are Safe release found uncertainties on that filings actual could to the and our Risks, XX-Q our that in Harbor statements

the obligation today’s provided call. MPS assumes information no to update on

GAAP income will and on income, other operating be SG&A and expense, earnings basis. discussing We non-GAAP and income a gross taxes before R&D both income margin, a operating expense, net income,

measures non-GAAP with to in These for as prepared GAAP prepared and are GAAP. superior financial not a in should measures or considered performance with accordance of financial not be accordance substitute

in outlines the is year reconciliation between full that we to XXXX non-GAAP earnings table release, GAAP on filed available the and QX is SEC our with the which and measures A website. included our have currently financial financial measures

you webcast for Internet conference the like today’s call with to also earnings on release our being replay will remind and year, website earlier for filed is along I’d today. SEC one the with that be over the live available

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

Bernie Blegen

Gen. Thanks,

quality X prior industry-wide recognize $X.XX performance full achieved This the MPS from excellent customers advanced execution against record support. and year. consistent product supply customer having represented despite the Tier revenue MPS growing and For is chain more XXXX, capacity XX.X% This of year, billion, constraints. strategies technologies, our for

controller, isolator power introduced a integrated kilowatt for power X new Here devices. applications with few are product line XXXX. a modules of isolated from a highlights We fully and exceeding

this is for ramp integrated highly revenue solution XXXX. and targeted for initial reliable Our

traction centers, chargers, critical management for power inverters, turbines, storage power, and applications are wind applications. for EVs, data modules industrial power battery blocks EV other building solar These plug-in

and the commercially products designed we critical are standard XXXX, set were available and high products advanced made converter precision in for to have XXXX. revenue an data system-level medical initial MPS’ applications during applications. for ramp first expect these to industrial industry Our

of We MPS continue a of centers, to position resource believe diversify chain supply our With China expansion we and in demand distribution to outside match support with geographic global partnerships in presence, global better is our our to strong our customers our R&D the our customers’ profile. footprint facilities worldwide.

our improvement. XX.X%, to Storage Consumer compared XXX.X%, and by XXXX full XXXX. revenue Data XX.X%, year XX.X%, up year Industrial Turning demonstrating revenue up full XX.X% up Communication revenue revenue with revenue revenue and broad-based up revenue up market XXXX up revenue Computing Automotive Enterprise was segment XX.X%,

XXXX year GPU million. prior revenue to total is revenue million $XXX.X higher XXXX. compared due cloud-based server Data for in Data MPS’ increase represented Enterprise of applications. CPU XX.X% the and grew solutions of revenue Full power XXXX, Enterprise with over year This our $XXX.X X.X% sales management in primarily to XXX.X%

compared Storage and for Storage MPS’ primarily to prior enterprise year XX.X% represented and $XXX.X revenue over notebooks. million. applications growth revenue sales storage XXXX, revenue increase in for Computing XXXX total XX.X% with from the strong grew resulted and of million in XX.X% This Computing $XXX.X XXXX.

XX.X% revenue Communications $XXX.X with infrastructure communications XXXX in revenue represented grew XX.X% revenue and our XG improvement million. compared $XX.X million both sales satellite This XXXX. to for products applications. higher Communications of of reflected XX.X%

compared XXXX supporting the systems, increased XXXX. integrated sales full applications XX.X% of automated grew assistance driver represented year revenue XXXX. digital in This Automotive our Automotive XX.X% MPS’ in highly revenue year-over-year primarily revenue XX.X% million of and connectivity. cockpit gain with $XXX.X million to $XX.X represented

year-over-year XXXX. sales automation. smart compared XXXX revenue primarily full XX.X% represented $XX.X XX.X% meters with year in for Industrial revenue $XXX.X increase million industrial million and MPS’ XX.X% higher grew to year-over-year revenue in XXXX. This Industrial in of reflected applications XX.X% $XX.X XXXX revenue increased primarily appliances in year XX.X% grew revenue full reflected This and MPS’ smart compared increase in XXXX. XX.X% represented Consumer product $XXX.X of TVs. Consumer million revenue for with to home sales XXXX. million

Let’s conditions. talk the about general business

QX were oscillate might in near-term order business more with customers highlighted becoming During future. our conditions and earnings that concerned we the XXXX call, patterns near

As a that we to likely and higher the change would in to target catch inventory our result levels this patterns, possibly up be of in ordering XXX days our of indicated near-term. XXX

ordering customers quarter, as patterns slowed. stabilized the requested outs push During

still is below this are historic orders customers’ trending positive, norms. While

levels. QX our above is inventory In XXXX target our

we result, conditions. a remain near-term business As cautious about

past. believe we done also to adapt during swiftly changes can so MPS have the market as We changes macroeconomic in successfully similar

X.X% with fourth revenue Switching quarter down MPS generated up quarter but a XX.X% QX. from in quarter of comparable XXXX. million, of revenue XXXX, $XXX.X had from of to record the third the

by comparison revenue industrial increased revenue segment, grew for grew basis XX.X%, XX.X%. revenue Enterprise automotive and XXXX and computing quarter revenue grew year-over-year a revenue consumer Communications On market Storage XX.X%. fourth grew XX.X%. XX.X%. revenue decreased Data XX.X%, while

XX points quarter XXXX points basis third basis XX Fourth quarter than XXXX. margin quarter down XX.X%, the higher gross from with GAAP XXXX fourth of was

but Our XXXX. income million third below quarter the was to million fourth third Fourth non-GAAP margin gross basis XXXX of and basis the in XX.X%, than reported XXXX quarter higher of million the reported the XX compared quarter XXXX. of was GAAP $XX.X of operating in XX points $XXX.X quarter $XXX.X fourth points XXXX, quarter

largely favoring due The mix in input costs. sales was product margin products shift greenfield to efficiencies, gross high-value in a expansion than quarter more which year-over-year higher offset and fourth non-GAAP operational

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

Let’s review our operating expenses.

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

we from expenses $XX.X in $XX.X in from XXXX of were million, down the fourth and Our XXXX spent fourth third the non-GAAP of million the the reported quarter million quarter operating $XX.X XXXX. quarter up

a a $XXX,XXX IP in of million XXXX The and GAAP credit XXXX credit litigation and XXXX settlement compared quarter legal XXXX. both with quarter was litigation in in refund fourth non-GAAP a million a $X.X QX balance retainer. On reflected basis, QX expense a and fourth $X.X

from The and expense income non-GAAP quarters primarily the or stock deferred GAAP operating and compensation plan. differences expenses an loss discussed compensation between unfunded are for here

Fourth quarter-over-quarter was of quarter cost sold $XX.X million $X.X recorded $XX.X third planned with change quarter The in million XXXX vesting XXXX. including compensation in stock the million compared a charged to expense, expense assumptions. the of stock in change goods compensation reflected

per of quarter per quarter the or Switching with to per XXXX net of in share Fourth third quarter the million XXXX share compared share and fully line. XXXX. the bottom was income $XXX.X $X.XX $X.XX fourth GAAP $X.XX diluted in

with share in was XXXX, QX $X.XX per million. $X.XX the were or income XXXX. fourth net million share quarter per the shares of per of XXXX of third non-GAAP XXXX diluted QX $XXX.X outstanding compared end in and at Fully XX.X the fully share diluted $X.XX quarter

Now balance the look let’s sheet. at

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

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

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

at of were at inventories million, quarter to $XXX.X from fourth Our end XXX the the end the the inventory the rose you at Calculated internal third of on third webinar end the video, the as XXXX days from can see $XXX.X with end up XXXX. of quarter basis the days past a of and quarter practice, XXX XXXX consistent XXXX. of of days million on of QX the at our of

inventory We calculated economic of believe quarter’s a a as current current better hand provides on days comparing levels revenue. of with function revenue the we’ve Historically, inventory match. following quarter

can the XXXX. you at days XXX of of again, end quarter see the third of XXXX days end basis, XXX to the this at days of the quarter increased inventory fourth of from On

our now I like to outlook. XXXX would to turn QX

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

gross in to the the of margin We XX.X%. of following: GAAP XX.X%. Non-GAAP to expect also XX.X% range gross margin in range the XX.X%

would approximately that of expense million, compensation to stock-based cost million goods Total sold. million including of $XX.X $XX.X charged be $X.X

and expenses R&D expense R&D $XX.X million expense, to million. $XX.X million estimate $XXX.X SG&A million. compensation be expense. but $XXX.X expenses SG&A and Non-GAAP and between This range stock of including excludes GAAP the litigation to litigation includes in

QX XXXX outlook, will the with litigation Beginning forecast longer separately expenses. MPS no

$X.X is from million million before in the to $X.X charitable losses gains to contributions. foreign exchange and or income Interest expected be range

XX.X to will diluted in be tax The tax XX.X%. million as unchanged tax not to shares. been non-GAAP remains be for Fully have rate range from QX rate the in of The shares XXXX any material changes XXXX there regulations. XX.X non-GAAP

per of March XX% share as pleased dividend XXXX. I’m in share our a record quarterly $X from Finally, per $X.XX stockholders for increase to announce of to a XX,

In long-term about advantage believe conclusion, business while environment and development investing to can and near-term the we remain business focus infrastructure growth. conditions, take in to cautious swiftly of to adapt on changes market MPS current necessary we support

questions. the open now I’ll webinar up for

Genevieve Cunningham

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

Quinn Bolton

fourth at storage quarter. outlook wanted stronger I Congratulations results business Bernie least and nice to on I strong environment. the start guys. this expected much computing in guess the I the Hey, than the and in Michael, was

You when rest market correction. the quarter-on-quarter clearly experiencing inventory is revenue grew and [ph] PC softness the of

How guess, you. can And over up. the that of follow us business of you next outlook? sort do couple give your got quarters? trending So Thank then a I’ve see I you

Bernie Blegen

Sure.

also here there’s notebooks And memory word weakness probably far we’ve that improve very notebooks the of unit think as memory part been recently in be declines of in strong [ph] press us offset will gains to to continued sales. memory. Interestingly, addition, notebooks. a for ahead in the early some started decline about see And a see as those as I a XXXX. actually And we market. beginning here, lot decline in offsetting to in we look around in

of the category to looking be So at we’re the flattish. basically this first least year at for half

Quinn Bolton

Okay.

Michael Hsing

be The very one still remain to the see a portions high strong near very in then component And we AI futures. growth. the

Bernie Blegen

GPUs the should Absolutely. half of of In traction so be for artificial first with intelligence data the XXXX. in that really good the our drivers growth and enterprise really we’ve one got

Quinn Bolton

data the down quarter. fourth It enterprise question, by. next specifically first my it the see was be GPUs, strong to results slightly half going right? you or But just the in sounds sounds ramp that like was like driven is That in

Michael Hsing

that’s Yes, related intelligence. to artificial

Bernie Blegen

Yes. look initial there’s to platform as data, CPUs at launches for take still and enterprise Rapids both the for the we’re softness Genoa When Sapphire in the we waiting off.

Quinn Bolton

[ph] the the Do to a of than half half on you CPU the expect second in second that more take year? in

Bernie Blegen

Yes.

Quinn Bolton

Perfect. Thank you.

Genevieve Cunningham

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

Tore Svanberg

And Yes. or ramp congratulations technology Is BCD newer silicon Michael, little into this are just record you. Thank expect XXXX. curious, based company’s still you the like on more technologists? carbide was about year. isolation lot you to could GaN module anything now talked talk a the getting business, power hoping some bit venture I to on another about they starting that? a or whole or I’m because potentially you haven’t in into

Michael Hsing

production the that in, have first and yet. devices and the And but wind years, any of going all Yes, data talk and related see is My higher develop we solar the the some is now in onboard bandgap your materials, chargers, investigating the those these past, it to okay, we also in the have somewhere programs in about since and ready, we chargers a result to years. modules, – turbines. the solar are do we samples program so middle a that the second powers about not wide prediction or have isolated the when inverters And to half okay? pressuring make And I inverters, are in questions we think centers to of and XXXX. do

materials these modules. by have these isolated And bandgap again, of of ease making in one and is all use applications. the using simple BCD a and driven component basic using MPS devices our high very power is combine all very a those type togethers of well and All modules [indiscernible] and as using, for we the power own our process applications, which power as very

in in of higher EVs we products that years. growth these couple the Some next already expected in things And currently. the production

Tore Svanberg

but could just That’s follow-up, on footprint an very capacity my you update perspective, from And helpful. manufacturing about give diversification. the as both importantly us a more

an of about, you. talked regions but update You – sorts new all so yes, Thank also that? looking from perspective manufacturing perhaps to with partner at geographical both partners, a some geographic then capacity,

Michael Hsing

currently, manufacturing – or fully it. side, see else a by separated. R&D customer demand every to next close for the to that want to And and did from in be the case company for to you countries. we other always we local year by everybody for to site. the by years, can regions. from the we political wherever for in successfully all other the the the really We the capacities isolated we customers, of tensions just MPS Yes. as – in fulfill ones because tensions see And between in next we – know geopolitical they want one And will is we year or end manufacture and want as new end of demand and these And past, – the have ones [indiscernible] rent thing in our

Tore Svanberg

much, so you Thank again. congrats and Great.

Michael Hsing

Tore. Thanks,

Genevieve Cunningham

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

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

MattRamsay

very okay? you you Can hear afternoon, Good Thank guys. much. me,

Michael Hsing

Yes.

MattRamsay

– sources working sort Hey, term, to ask quickly we’ve move plans. some footprint that with wanted of in acute revenue other long Bernie. operations you pieces China. outside to the of TAM prepared But about your of been the product term you guys sort guess, And the really in of heard, mean, use reports Hey, China addressed you there’s those some Michael. want that and in that for I very mix The long I manufacturing at are question your the one – outside more I and to how script I really, maybe company. more, of very you’ve align guess, clear customers to been

guess, already to China product sourcing about. quickly you global source support some at many impacted more your probably than China those I to? Are outside of Or And and seeing able you you’ll behaviors maybe know outside that want of strange revenues of reports customers you talking from your those I’m that Thanks. any you’re move have of all? are customers? to

Michael Hsing

– that’s for Yes, But lot are of in misconception a misconception. it’s MPS a we it’s true. that is China. That’s manufacturers

manufacturer of, do capacities we – of countries a have So, outside COVID do – okay, the least do it and least prior half is in at we we at most we request or the futures. outside of to to zero past And impact in the question, the outside China. whoever answer manufacture in in whether China your of for the and – customers

MattRamsay

you Thank really clear. for All Michael. right. That’s that,

– I Just but a segment, to wanted the strategic lot. the question get which bit least is a most we about talk also business, little a volatile. consumer maybe kind of the important the

the Michael consumer to If prioritize it you philosophy XX% as quarter. And recover. is you understand might general keep business everything that guess to and to in fourth you I down of segment market bit else? a China Thank look you. serve and that is little have wanting will want the continue a rebounds? that at the if what Are excited and some the around I’m that when Or to revenue guys I where, in those markets guess numbers of came you potentially

Michael Hsing

because again I and bigger again, consumer you’ll as – consumer a past, a last Yes, within price when react segment. six and I in change in for we you consumer that opportunity. lot downturns you’ll to opportunity. the We react opportunity past, didn’t how lot a And the do. aggressive because the that growth. react in in what see the mean, will year you see number like a issues. constrain and to that’s would capacity capacity market just And know, you we in have a more say the the pick these would do you fast months, the the segment issues of be up it to the And And the of

Bernie Blegen

model keep the has in mind, do the diversity markets, we the customers, Matt And resilience that the the end business our of with serve. to of geographies

remains quarter continue invest XX% around in it. strategy dropped consumer, to of it of has part will important So and to very well, the that a

MattRamsay

Thank it. Appreciate you very guys. much,

Genevieve Cunningham

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

Michael Hsing

Hello?

Genevieve Cunningham

of is Gary, line Fargo. from Mobley Wells question Gary open. your is Our now next

Gary Mobley

for I related Hey, Michael. to an Hey, here. uninformed [Indiscernible] I that a covering your taking question I of for time first distribution. apologize ask however, XX% sales, you that, my the And days, And sales guys, in the But go advance XXX question thanks as inventory through Bernie. if analyst. that’s inventory. internal for believe, roughly your

and revenue? terms distribution give did it it in can you maybe inventory increase So if view and of favor us so, a what to did extent

Bernie Blegen

This call the Gary, us. party. opening to up, is Gary’s welcome with first

Michael Hsing

inventory the to welcome question. And

Bernie Blegen

this finished Inventory thought we question. question. I

Michael Hsing

For Gary’s, okay.

Bernie Blegen

Okay. Gary, it’s okay.

the look I’m to So QX, sorry, they basically from QX when at I or inventories from QX, to channel QX stabilized.

see that increase There’s in we quarter. inventory lead it about or and talk wafer six well. the So significant the time down starts we on about a out our terms we a when when see of balance can either when in didn’t sheet, sheet. slow from Likewise days on dollars balance you month address as I’ll

as we’re terms in the channel sell-through we year. QX, inventory very likewise, on balance our And head it the the in well to then So dollars of in see half remains to should looking stabilizing both second as the sheet normalize in of channel, good. as now

Gary Mobley

step I into… I apologize if

Michael Hsing

build XXXX. in side this – it. was we not and to XXX not XXX this opportunity. customers goes days the these It’s the I is the to is high it that days same And because over we start in and And see we will demand mean, again. fair cautiously because as inventory reduce done like now say then plus pushing this XXXX, it’s highs deliberate did out is And because on all and go inventory the

Gary Mobley

contributors and for Thank year, fiscal revenue how fiscal I that maybe for quite ask And the growth you was I is for wanted year about out commendable. the can for between that. that you it. see the quarter, well? you increases to hoping and deconstruct increases XXXX unit XX.X% as to ASP Got playing

Michael Hsing

with very everything this ponies, it’s are segment. a And don’t little like pony activities is more to we consumer one – It’s in growth to the diverse – two and we not because trick from aggressive a And in is same the trick a – not XXXX not different either. XXXX.

So I product. we have mean a multiple

a different We product have X,XXX products. like X,XXX,

customers, is the large way that’s – customers, full And of customer we a last industry. pass. thousands different to do XX few in same years. with a have let’s than our in And biggest say, X% continue We as we’re less still the

Bernie Blegen

Clearly, impact as the ahead, look higher it. business at ASPs technologies can and a in look of as value you go you driver XXXX along higher selling see with also we and that

other companies use ASPs to many while we is and only opportunity February representative increase of an imbalance single-digit in customers, prices So of raise as one the their had all to this gains. price back supply-demand and volume higher

Gary Mobley

guys. Thank Helpful. you,

Genevieve Cunningham

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

Ross Seymore

guys, Hi me? hear can you

Michael Hsing

Yes. Its fine.

Ross Seymore

also call the I one for the welcome inventory to thank to question… so want asking first, and Gary him Well, much the being Perfect.

Michael Hsing

remember. still You

Ross Seymore

would. you knew I

So was, about just question, stabilization one normal. the bit but they’re orders, your I first had still question below a one near-term little follow-up. said The talked you in on

that? on color any So

Storage sounded first bit. follow-on then and flat the Enterprise quarter, folding Data would be And would another and up you a said be Computing like near-term is it

down So get kind that? what’s you quarter first aggregate in to the overall, going an to first that’s question. flat you’re If sequentially of

Bernie Blegen

we’ve and plus to is to have is will you left may down down QX, about consistent down. strong. AI which is very in on side, be guided industrial And GPU, Enterprise automotive likely then at impression obviously, I And to X%, look come even we incorrect trends. improve. because continues with the And seasonal sort – the when momentum of Data it’s though an with likely the go So

Ross Seymore

the In you market, the said? stabilization color geographically order by end stuff

Michael Hsing

Yes.

We’re seeing activity. better

activity and what repeated was that lot I customers think but near-term ordering right a you that normalized necessarily can consumer, now, hasn’t as better I point it a cover. we it QX we’re to can lot seeing have both that areas you focused And commented being and a in very point call China into gotten more observable. translated here,

Ross Seymore

That’s really I Got about And Xx the And Thanks did you question XXXX, is have a growth investors my kind for XX% you guys up delta as it. analog that. lot of guys that longer-term round is from guess than done. get follow-up, about what category. XX% impressive numbers. I the SIA faster a defined historically in

that And because and just some product rectify. just had people are competition issues are some concerned competitors that some of they’ll soon that’s other because of insufficient that you can’t, fungibility supply or guys assume and people your growing

about and so the those going this headwinds could of turning And are all concerned full dynamics to having into this But year? year. kind for I you’re at you tailwinds headwinds turn overinflated guide know year. two into not XXXX those

Michael Hsing

not Okay, customer okay? those tell tell those – customers,

Ross Seymore

Investors.

Michael Hsing

gave Our the product. more investors, those our pay, the customer and a customers more stocks. configure buy hey, choose to don’t to me a pay lot is single And pretty our our programmable, in products. do And much products we versatile our can it and Everything products. source me-too lot

course, we’ll of okay, a advantage of shortage. take And in it,

our and software customers based. in can software technical will a and I And mean mean, headwinds, believe know, And I Our market lot I we for product stickier. and a gain people they those lot continue as don’t them is strengths okay. side to multiple share mean are you and okay, of the way, our use that, announced in use to more the

that’s like mean numbers number hearing our that. have fair, but We I to past a our show delivered

Ross Seymore

guys. Thanks,

Genevieve Cunningham

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

Rick Schafer

mean, say, all Thanks sure kind if there. sort me module, you’ll XX% congratulations, my could module question, can to Bernie, more strategy. it of of sort a module, of contribution so you and year And long-term? revenues. right doubles But first my markets, contributor. If specific ask it of to this if sort of I’ll a I’m your on I everything base maybe question you it’s the or what’s add direction a that just that’s overall correct broad them is I do your module to guys. weighted already. in mean, Michael, want bigger the couple or I end implications of toward eventually, as margin becomes comment curious I on I’m move mean,

again, think the a multiplier. this I Xx you please ASP me. said correct in type past But

Bernie Blegen

will answer. currently So X% you strategic are Modules of I’ll this Michael you and about our give give the numbers business. correction

Michael Hsing

Yes, and it has doubled.

Bernie Blegen

Yes.

Michael Hsing

double a Three two year-over-year two year, years In the or years? last for the years.

Bernie Blegen

Yes, three.

Michael Hsing

years. Three

Bernie Blegen

Yes.

Michael Hsing

Yes.

And in And so want business lot that of significant has it’s a that’s and MPS I see. move companies I a bad mean mean know yes, all to I going mean to module to now. are power all eventually, type modules, that’s modules module what okay I word but power I it, into in place I a connotation, the of new is a margins with, and power know a XX% don’t not old those different. your power what’s modules right it and like is again, modules. again, this business gross grandpa’s, And use and in very

above average. is core margin Our

that’s that of But higher. MPS like to users, how but will okay, much going we’re with was and we use much, – see they to how in – product simple or well over that, to end want how plus headaches stuff, need deep its the very to part as kind to up solutions very of they or don’t it sell have hardware to to service use does a the to provide. And solutions and customers, without They be and all power the the that. don’t of design knowledge supply, I I – $XXX need some we think And you leader should have know a be MPS design how like MPS a power a what supply, okay. a

Bernie Blegen

I particularly the And day, a seeing, to think the able if as to saved resource customers lowest back do in provider… as the in would that design biggest are value like do our cost to to three or design the are years earlier go not that back market total far there had areas that is And I want And than to for as far they time analog from with how what question, last demand I’d of single making cost. Rick’s our be as ingredient say decision win as other meet to power well, much better consider ownership. other any having customers’ to those we’re are a drivers

Michael Hsing

to you based build on if of examples power okay, power modules, equipment, modules. can the And $XX. equipment well give kind equipment you test and as semi buy Yes, MPS and all test selling over those own they we our well

And so very very segments than thought compact equipment a these And that and semi current market. perfect the that’s market much, on ASP in for much high are that.

Rick Schafer

leads the isolation silicon carbide And we year? – it have it any material my Thanks expect from XXXX? guys Okay. carbide update, for the you that color. I this the to just you’ll should actually does specific like you are color just looking Or – to module. it certainly next silicon year. with question. and that we all Do kind appreciate at contribution But sounds be discussed of sampling we this power

addition different to we’ve your modules that numbers, mean, And content Michael, vehicle? the heard does I do et per for inverter, traction of is but What silicon carbide cetera? potential what

Michael Hsing

inverters will it’s we see carbide, using maybe next trashing it okay, this not Our and silicon even year if year. and

expect are design Our our silicon proves in market carbide reliable up own our devices, okay, our the we And that And first. – we picked the but we we products that’s questions, that’s segment okay, just own, answer now. of there’s don’t building in we yes, stream, number your approved that, revenue this year, large so step. first – okay, and want develop some our okay. technologies no To the and and

Rick Schafer

Thanks, Michael. Thanks, Bernie.

Genevieve Cunningham

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

William Stein

for question. Thanks Great. taking my

module to this time. question Someone the beat me

different is known quarters? being the another expect what I but think for not come ago, you’re also you so in that bit far little traction ASP and is big growth and you converter this talked to a hired a work in you focus that which really I’ll area, know the So in quarters a past. something opportunity I to Can few about you a for, Monolithic. converters in direction about coming in team the your talk

Michael Hsing

ago, received use the are a Yes. days our and use couple our for ask We we of saw versions. and – can machines we imaging to customers, prior an questions, okay, the I our image X-ray glad their than from better much customers, and

sample in biotech is revenues is when year and are so our they And years. the product and this the other designed – small a next we probably in will companies see we revenue –

– have high This the is have will line better. is take that data lot we get technologies, lot And and a converted. performance of broaden very bottom the our the comparable barriers. and these a we And and the products ramping are if slow portfolios as These efforts of a not and high investment. very we design expand teams know-how is we product to it’s

we coming so teams. And more will of good far, – general you a up product quarters. now couple have see the up And sizable pretty built in next

William Stein

Michael, Thank one Maybe I that. you, other, can. if appreciate

Something there? lot is e-commerce we update how haven’t the and heard traction effort. about your whole lately, a progressing on speak company that’s the Any

Michael Hsing

actually, E-commerce. MPS I I’ll fast And take my expectation to we better too it’s think want I now here and that I mean, as be. Well, not said as maybe launched I it’s back. high is

launched maybe or lot not I lot. a MPS e-commerce. that helped not last ago, modules I And as a after – lot yes, we ramp-up. a mean – support. – after but think but XX there’s okay, true, our or in module XX And technical XX year, from resistance. expect of it’s it’s we remote months I more, of It’s

technical online. years. their they’re a our years, behaviors, want side, module search customers our design in lot. helped And schedule do issues. logging their again, do to years website. past now when we the the most think next the MPS especially to can years okay, and millenniums And Google about last all they can XX solve meeting a power take XX are a the fundamental do supply like we their like it from ago, will the than And – solve That rather five design you’re the a part And XX, ramp-up time, and engineer overall, I purchasing change okay? product is how think And help and next you the as even But things talking the and design XX I in to from product. now for the you how the of XX

okay, And and buy so from play plugging easy Internet. use use for products for the the are easy that, can these to designed and

William Stein

thank Okay, you.

Genevieve Cunningham

is question your Chris, of open. is Chris Suisse. Credit now from line next Our Caso

Chris Caso

The helped Yes, – And cycle, view where for has orders the go With incentive place that times Good through that. perhaps lead times product they – the your about and product obviously some shortages. down the as has shortages? question of worry interested a taken alleviate they so, that now right thank of lead afternoon, the to don’t for up bring need. now, some you. things the your in and it’s of everyone. is inventory degree about customers if didn’t What to we away one of we are on

Michael Hsing

than slowly they’re I’d down coming you agree six that down. combined lead long were as They And up as been weeks as more months. coming times much XX think. or have

if a they or have say could So I is in I And have attributed next decision. times that changed their lead their ordering really customers the inventory our that or behavior. to don’t which Obviously, uncertain the can’t fact know. adequate driver about with they’re in the change months, be six that

Chris Caso

Got it.

Okay.

mentioned consumer year. a business in Michael, more As you the through go earlier to little as a follow-up, some aggressive remarks, you plans be on

the see your model of comments? diversity is year, of on you other if could wondering So just Is expand slow. a market business is this that the business that where opportunistic something in something that some function just those you

go color on you you more that, business find give if please. us some elsewhere, could So can

Michael Hsing

these how we other can price right made are a five cycles to let in industrial it’s and in last they’re – to comment. have cycles product kind the not is is other or longer opportunities. as in computing relative clearly, years as it, have ago, are and say and more ago, And XX% the design our you the the know we again, will not is right we much consumer couple the all segment do of revenues automotive other not fast years okay? segments, down the how and design you and okay? and and obviously, we price we high we that. have as good many the the think of to these – MPS cloud and right structures as have And one very than our of – Remember, support And – from opportunity and on we And all quickly. we in the it’s It years. and product consumer. slowing opportunistic, move needle fast product, contrary cycles and And I revenues do

Chris Caso

of with does macro opportunities a we’ve just to that you follow segments elsewhere from come If of business some have back develop the of got product imply that the that that I higher sort better some improves could and cycles other growth when such some more back away driven of that, and on elsewhere, recently. maybe margin

Michael Hsing

No, it’s not.

a consumer we And because is on okay? didn’t side. sacrifice strategies. couple – always diversity years, consumers constraints, grow capacity Okay, our last And the of is of we

Chris Caso

Got it. Thank you.

Michael Hsing

Thanks, Chris.

Genevieve Cunningham

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

Tore Svanberg

wanted I data to Yes, come business. to thank just back you. the converter

you’re and of the difficult it’s to gorillas market. into XXX-pound getting this obviously think historically, been here into So very I crack kitchen

allow talked there else in entry. that, being And higher but successful to about that other anything model product your barriers I get the to the this business is high about will MPS precision, be market? You than

Michael Hsing

we model. it’s don’t think is I the – know business what

of few All And think large, XXX size a I are time. gorilla, market these the this know competitors. is okay. – you I pounds it’s these, said takes

from okay, but couple have come – it’s product the hope, do a going are And fast. had to and And just our it good the customers. and a We we well to different they the what an while. presents opportunities – around last take And take we years. highs of we it’s suppliers eye have and on especially little run know

Tore Svanberg

could capacity working That’s give on line just the the $X fair. update $X the us time billion an that you’re on? you for billion And and lastly,

Michael Hsing

Yes.

do fill said getting it. getting on we’re game. the we orders, consumer all these the and in And intact of things the these one we our difference still do – and We already. these gaming expansion, in cycles last suppliers two years, capacity the – in – that’s a fill – this and next for in this from obligations couple downturns. but okay? have – And several years to see And gaming the these we’re I up aggressive just so mentioned and is of kind repeatedly And the be As the we’ll And cycle, facts. have capacities. the next of our still and done past. reason And we I business, with work don’t

with We’re really may but slow we not – okay? I we have down little, our mean, obligations fabs, so a

Tore Svanberg

Great. again. Thank you,

Genevieve Cunningham

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

Quinn Bolton

a Great. me gross letting wanted I up. a sort take follow Thanks Bernie, ask of on thoughts quick for margin. or your just to quick ask

You looks mid-point. guided probably the the through points that to Street XX XX% basis consensus to XXX It at year. like than higher was the

flattish you half margins is the look and ability segment the keep to as this the XX% of So into the level XXXX. margins in bottom higher through opportunistic Or to sort the consumer of is likely second you at be this in in think year? trend push XXXX, do March can

Bernie Blegen

two when XX being the at as we least, trending And and the what’s mix Yes, not manufacturing rate at look right, additional down the that at points. sales of you flattish basis next while at we as deflation And really it I’d look we’ve the last you’re from look desirable. at not down probably for we’re at been And two significant quarters have is It’s the lower years. the XXXX. remainder the margin capacity, as because over taken revenue. a it’s

Quinn Bolton

you. Thank Understood.

Genevieve Cunningham

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

Ross Seymore

into margin you a side on trend do But for grew OpEx. the well. And the we up in expense know on OpEx good follow-up year regular guys on quick the this a you what doing the did? OpEx side, revenues throughout maybe this you’re litigation OpEx, which of the year year? putting rate did about on half that. time just as thank job think side just the my Okay, How last I

Bernie Blegen

capabilities expenses. to that amount Michael Having as expressed think our a our revenue want to show R&D have between and conditions. be operating managers for opportunities that some would invest in that, is in investment far is, we as what as financial market these continuing up there said as of very the we we good diversifying through and outlook uncertainty I real growing fair though, is supply here chain additional go

than won’t more that I operating expenses So much grow would of XX%, expect XX% in revenue the that year. growth current it’s likely

Michael Hsing

the in companies past, and two $X point years, the we billion now one all in that, said Having they whatever… reached past okay,

Bernie Blegen

X.X.

Michael Hsing

lot our a time I hire it’s breathing that room, Yes, last the mean, much. hasn’t and company. grown really more people X.X, couple okay. okay, have the and years, of infrastructure up now difficult to In we to this build a is

Ross Seymore

direction and Great. I memory/storage weak But those question follow-up, thought it the the to those very on in of time. the just aggregate asked, the quarter the computing was questions that some then. storage think or go opposite was markets you better for And one guess and and across I two quite notebook kind said the beginning I the board to for of quick the than a revisit first strength. weaker, been wanted close was know in was you first I have

in I’m guys that fourth any it’s in Is the on a because such stability you So and the first. attribute still the a in that it the the X disconnect but quarter surprised you’re share? What little Is general? the Obviously, strength to taking end getting at to? Just color Tier you the market would it content? more are orders, penetration?

Michael Hsing

we shares. believe I gained some think I

Bernie Blegen

Absolutely.

Michael Hsing

shares. some We Yes. market gained

Ross Seymore

you. Thank Great.

Michael Hsing

in summer we’re Yes, bit market. end on little low a aggressive

Bernie Blegen

Yes.

Ross Seymore

Thank you.

Genevieve Cunningham

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

Bernie Blegen

for for quarter call, here for conference Thank the which be first us talking will update, April. very be late again joining this much the and in we’ll you Great. and likely

you So thank much. very

Monolithic Power Systems (MPWR) 8 Feb 232022 Q4 Earnings call transcript