Earnings call transcript Q2 2023

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Genevieve Cunningham

Welcome, everyone, to the MPS Second Quarter 2023 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 webinar, 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. in factors in cause contained on the QX are release our other differ results in through February and including accessible May earnings identified filings, X, our are safe and filed XX, uncertainties, XXXX, that XX-K Form actual could to the our and Risks, Form SEC XX-Q filed on our website. harbor which statements XXXX, to obligation the provided update call. MPS assumes no on information today's

measures other GAAP. margin, which financial a accordance furnished accordance financial gross between available measures of before SEC operating non-GAAP the discussing income, reconciliation measures be in prepared be QX income, our and and both Tables website. income prepared release, is with we taxes, our non-GAAP in operating outline XXXX to financial on basis. will to not should with GAAP considered income, net the performance in earnings We are and are not have or financial income measures a GAAP expense, as the for a GAAP These on earnings that superior to non-GAAP currently and included substitute

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

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

Bernie Blegen

Thanks, Gen.

while sales and XXXX. lower communications million, consumer QX the industrial, lower, than with XXXX $XXX.X MPS quarter of improved enterprise second X.X% data computing, X.X% than the Compared reported quarter storage and sequentially. and of second revenue XXXX, were lower and first quarter of

higher increased Storage of notebook by sales. reflected XXXX quarter improvement $XXX.X revenue second sequential first quarter XXXX. our to the from of revenue primarily and revenue market. commercial X.X% computing The now Turning million

quarter revenue of XX.X% and quarter of year-over-year. second and compared in represented XXXX. XXXX revenue, with was storage computing computing up quarter Second Storage the XXXX second XX.X% revenue X.X% MPS'

Second the products $XX.X XXXX, million increased meter quarter from sales of of power XXXX for and X.X% of industrial quarter increased first source industrial revenue reflecting applications.

down represented total industrial Second XXXX. in compared quarter was second of revenue, second quarter the with revenue year-over-year. of XXXX XX.X% XX.X% Industrial quarter our XX.X% XXXX revenue

of The revenue quarter quarterly reflected from higher revenue consumer X.X% TV the device quarter first million of $XX.X sales. increased sequential Second gaming, and mobile XXXX. improvement

Consumer Second quarter XX.X% of year-over-year. XXXX revenue, second quarter XXXX. XX.X% with revenue quarter second MPS' revenue consumer XX.X% in down was compared the XXXX represented of

to quarter revenue second data XXXX, primarily enterprise CPU XXXX due of our softer new generation applications, demand increased AI of market, $XX.X initial In applications. the for million from of offset shipments first quarter X.X% which

XXXX was year-over-year. quarter enterprise data represented second second Enterprise XX.X% XXXX quarter revenue, the data of of XX.X% XXXX. compared down with Second MPS' in XX.X% revenue revenue quarter

of decreased million of automotive $XXX.X first the quarter revenue quarter Second XXXX. from X.X%

XXXX XX.X% quarter revenue, was in second revenue up XX.X% MPS' automotive XXXX. Second the quarter XXXX year-over-year. compared quarter revenue of Automotive second of represented XX.X% with

first primarily communications revenue of infrastructure sales. reflecting million of down lower quarter quarter the XXXX from XX.X% Second XXXX, was $XX.X

represented XX.X% sales our in XXXX quarter XX.X% compared Second revenue, of of with quarter Communications down second XX.X% second was communications total revenue XXXX. year-over-year. XXXX quarter the

oscillate. like In calls, customer case. I'd turned business. earning we some the our This general be have patterns previous about to make our ordering to noted out could comments has

requests. (ph) beyond getting XXXX more made visibility some see orders QX to delayed amended has This short-term lack continue forecasting of or We by [pull-in] difficult.

and particularly base services. We fundamentals by years, the X unchanged. business expanded delivering and few solidified we've market share accounts. revenue quality Tier tremendously, our amongst have our our In remain gains However, believe last customer products

for win pipeline, us positions have future which well we Additionally, growth. design strong a

few our highlights. recent of here a Here highlights a few are -- are

customers in a have designated X preferred with supplier We markets. multiple and Tier been telecom automotive

power centers carbide conversion. silicon and sampling green data for We energy have solutions started

continuing We for power are also EV applications. management development

customer We solutions our to applications base and platforms. next-generation for continuing developing broaden AI for are

in wins and as XXXX automotive, be to design solutions and look XXXX. new ahead we have will battery revenue USB-PD consumer management We major for drivers applications. industrial These and

Moving gross basis margin. than XX.X%, basis a XXXX GAAP of on first XXX to of comments gross now was quarter XXXX. and few the than the lower margin XXX lower points quarter points second

the XX.X%, compared in income Our attributed basis and reported Non-GAAP the is GAAP largely quarter-over-quarter variances quarter reported margin operating XXXX for down gross in quarter XXXX. decrease margin higher million, the The gross the in unfavorable million direct of first of expenses. was quarter $XXX.X to to non-GAAP GAAP XXXX. $XXX.X from was margin second first points both gross of and XXX

million Our $XXX.X of $XXX.X reported was quarter in million, QX XXXX. income XXXX the first non-GAAP to compared operating

Let's operating expenses. review our

Our compared operating $XXX.X million expenses of in GAAP first the second were quarter with quarter $XXX.X the in million of XXXX. XXXX,

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

expense, For of charged $XX.X cost million recorded first the compared quarter goods to approximately XXXX, the in of of second sold, XXXX. million was million, quarter with total including stock compensation $XX.X $X.X

bottom to Switching the line.

XXXX. share million compared $X.XX quarter per income $X.XX Second with was fully first quarter or share, per the net $XXX.X in XXXX of million GAAP or diluted $XX.X

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

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

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

end XXXX. reported the of Accounts ended $XXX.X outstanding, XX XXXX of the days quarter quarter the XX representing of at sales two of receivable which million, at than days second the first was lower days

of Our second XXX the XXXX of than the were end of of days of internal second Comparing at you inventory of current following first from the end the inventories projected of days of the of $XXX.X at at lower three decreased the first down XXXX the million, with quarter Days million the the revenue, at the of of XXXX. XXXX quarter first of $XXX.X inventory XXX the end at XXX days to days the of at were the days end can inventory quarter end end XXXX. second levels quarter's see quarter XXXX. quarter the of quarter of from

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

to expenses the or between million this expenses exchange $XXX million; QX of range the GAAP range XX.X million; We litigation million stock gross estimate non-GAAP $XXX.X to XX.X%; million, other to million are range million to sold; be of stock-based gross in excludes forecasting foreign to the goods $XX.X before of shares expense; $XX.X in to cost shares. million but XX.X% margin non-GAAP GAAP interest margin fully and of range compensation range in $XXX of revenue of gains charged in million and including compensation includes million, range in to $X.X range losses; $X.X would in $XX.X to diluted operating of the approximately million total expense XX.X% operating expense, the XX.X%; income that the XX.X $XXX.X of $X.X million the $XX.X million in

our the to for now continue execute In long-term questions. webinar strategy. conclusion, I open will we

Genevieve Cunningham

you, begin would session. Thank Q&A I our now Bernie. Analyst, like to

button. please As the and like click ask reminder, the on question, then to the would a bar Participants Hand Raise you if a click icon on menu

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

Ross Seymore

question. Thanks ask for letting a me

first, Bernie things you staying preamble? wonder is you competitive same? color. gave business et a give you ask geographic more to in when about orders things just a detail little us there bit your general improving, remaining if differences? the Are condition update than wanted Any Just cetera, had of volatile, more And on I your original kind changes little intensity, pricing, color, any like what could

Bernie Blegen

be I'd to help with Sure, that. glad out

been we prior oscillate. that each your the acknowledging that would supply coming we ordering there'd around your part what that's as backlog demand of draining they're period level align to an customer that quarters ordering is -- off guessing started try a that of afterwards, watching believe customers by that think created normal where that conversation imbalance when that extra are And demand. you're consistent a you I the patterns three sort of the in pretty you're of of last end So,

days as So, had XX level result have have during would the ordering not we of a that out pattern. of same the normal visibility XXX more to that, past we

we as predictability. same that, so, have a don't of level of And the result

marketplace. it's as competitors always And, On after normal the much norm remains today, that conditions and been like we've possible. as a the price very ourselves transitory in business trying we competitive consistent, whether that have is this period are question, your thing go downs to half that are is second incremental one whether the during under obviously, it's of or

Michael Hsing

both Let to the other see improvement slight the similar. consumer a -- business do and me pretty do U.S. ones, see it's stay add, from same. improvement (ph) much first we and in We [side] -- And too. quarters, and Asia essentially, from side,

Ross Seymore

as you, sense. guess that. had Great. end not just general to markets, follow-up, relatively guys in volatile for my Thanks a you Bernie, I have but specific

has your interested side, one between the the side, and most Any still which albeit in I about guide business data between third a of little And is smaller So, of bit been the last the in most quarter weaker? sort color color you AI second your markets? a quarter, of part your talked any for are the segment. the end sort for CPU think enterprise relatively people various

Michael Hsing

answered to data, are already delayed. questions like we and powers, the still -- ones -- we cannot all enough these now. are the And We it's there. data all -- centers, other products the enterprise part with of ship don't CPU you your relate Yes, your other like, see -- AI, --

Bernie Blegen

specific half, in bit we Yeah. second And into came at QX. to lower than add, unit been two thing and to other which And MPS, automotive we're and is expected. observing little lower, would but to two the product launches market, a comment customers, necessarily have at this and to have for be delayed that broader a appear general QX ramp we in the of our volumes least at had not the one as look been

Ross Seymore

guys. Thanks,

Genevieve Cunningham

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

Quinn Bolton

the There's well wanted I Hey, that maybe market as bringing been recent potentially as Vicor. as in the Bernie. chatter large customers your of side the on one ask a Michael GPU Renesas and source to just second of business. in

next with generation about maybe that And customer? the about the I've you Thanks. a share Just related wondering forward then, if that any how you as with feeling got X-nanometer impact have thoughts that position a you question, multi-sourcing you are at might customer And processor follow-up. looking look your customer? of into

Michael Hsing

Okay.

so I I think, engaged position. design, far, we new generations. develop the and we're in for next can't lead -- for the other a second the generations product the And -- in future deeply are

so, any And that, can't other speculate things, than we okay?

Bernie Blegen

they scenarios is it'd in be position found it's a everybody's equal innovation, most best representative this and competitive, a that. an for want customer's in not source. to us think a that But take they I particular and leadership partner single through interest

And that into we'd be competition the redesigns that always yes, so, allow would there anticipated market.

Michael Hsing

a as require emphasize that very also, And, I we near There's and diversified performance solution, understand now we MPS large we the MPS market. supply best -- no MPS growth. is at solution everything. the And provide the best time, a need, future. -- a if This solutions. is other same is to the the Either means for can customers believe there's our an had always

Quinn Bolton

fourth -- beyond Street the the out at I'm sort out historically. you'd visibility the wondering seasonal and investors you think December and Bernie, ramp in which think pretty I And approximately whether Or flat, just pattern a to seasonal sort an be is the you see quarter in quarter, choppy decline industry the the mentioned it the that GPU going looks business perhaps to fourth Thank would an mentioned like looks dynamics. for can MPS just a some is you fourth in seasonal shifts the best guess it above you. Michael. just of above XXX to of has you, the comment December timing point quarter? think modeled you quarter I right you, XX quarter given Thank think I do for given of is automotive? to days to this look

Bernie Blegen

Yeah.

in I And between uplift the points. anticipated that normal notebook the And MPS be Christmas, that's percentage think seasonality can seasonal I from to of been normal percentage X expected seeing between we're QX, decline for not factor would points come which and automotive. a down. to somewhere that's sales point increase that had precedes X sequential a so during the

comfortable a more be would down seasonal I with So, in QX.

Michael Hsing

-- Well, the try and mentioned couple we're now. seasonality, last And much year seasonality to of see -- you what we -- out it's talking figure we QX, a well, year, all before about the very years, and customers a least clearly is have seasonality demand a those last And at shortages, -- as is the that. is strong now I less.

call a okay? this anymore. you -- a years, it year, I seasonality and mean, I in XX%. year-over-year, as couple have is so, like, a like, so the And less. much can't like we really And -- experienced, not And it much, clearly over last

very in Bernie clear. seasonality, we're as it's So, But a not just lowered. I usually as said, said,

Quinn Bolton

Michael. Thank you, Understood. Bernie. you, Thank

Genevieve Cunningham

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

Rick Schafer

I Yeah, couple if guys, a questions Thanks. had could. just I

is kind green first more your does us you product a about could now? of And auto kind bit Like, timing, you maybe The remarks. second. of an win give update I'm there. out, how first then shake know like, timing, be all and then module And color is Or customers I many it kind little going revenue for of don't kind bit prepared evaluating center there? if data expectation I what on a isolation if Talk I of one little to are of could ramp to is a mean, in and design asking. guess, the the power auto -- the more mentioned if how revisit you stuff? a I could,

Michael Hsing

due Yeah, delay announce, that and a and delay but technical issues. (ph) to was [we little a it the to we bit, reintroduce resampling saw] will

silicon it. mostly, these as we -- that and earlier, in we'll speaking are product sample. mentioned right data it's carbides so, have resampled And now, automotive also the centers. as And same we And to start and

Rick Schafer

have think power XX% And nothing Okay. I or year. that's then, guys you so management almost Thanks, are Michael. $X to track And modules on is basically years think a up be just And ago. of I this second question business that couple now. of billion from

are me, are -- think, favored, mix sense in percent big I'm Thanks. has, a of core you average, into by Michael, Xx sure any this lighter envision how move to if believe, particular of modules? sort this becoming I initially, So, business business trying markets at do as a better I of margins, to be going I and it's multiplier. just that I'm Bernie, a there the least forward? end correct going the And think get ASP

Michael Hsing

Yes.

of not business, the and buy all of plug-in-play product. -- -- price in all the or lot a believe And, the I and be an they is we're to industrial want I to way of mentioned. involved in all component. can of -- telecom, And want a things on, our a is solution to and even not But People auto that's sensitive, where as less a of up design and a site, want can them Okay. ramping that's well lot give customers products future. equipment. volume the they're a that power most to go. technically when go And these be as like, and lot management, with and on ICs, initially, have -- semi -- consumer-related industrials, -- solutions doesn't module that's these

so, at is beginning. still this And very the

in and all next product customer out, the coming these see years. growth and few we all similar new have we'll have the base, rate We

Rick Schafer

Got Thanks, Michael. it.

Genevieve Cunningham

next line of from Jeremy, Kwan Jeremy open. now Stifel. question is Our is your

Jeremy Kwan

I we meaningfully your sort customers bounce Yes, you. in your in Tore. expected, are picking of is this these sense quarter. on of comms of guess maybe of before down expectations? business. last expect as one It for where And Jeremy you kind now? along what business Thank telling on you to levels early the at the year? guess first question of things guys we're their next what's half probably and I ones terms up out second a the are Should this call was to maybe

Michael Hsing

at other Yeah, XGs new participate And see, didn't business, as to and we all XGs. you infrastructure us.

really you up orders. know last in give hasn't for And we're in that products customers just designed quickly XG to ramped so, But yet. us our -- few were years, waiting our

far, so clear. And it's not

Okay.

question? Next

Genevieve Cunningham

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

William Stein

Hey. There for we go. questions. taking Thanks my

nearly we last us had you When growth First, inventory. revenue to channel your I'm hoping talk year. you XX% at can look P&L, about

I there's measurement there among still strong be investors think in there's any inventory be that? hear update sense We'd pretty through. of any worked love that or to some of have might channel you -- a to lot a the

Bernie Blegen

Sure.

what is a So, decrease sort meaningful as QX channel both in in that And the that as phenomena of dollars we've and between far when inventories we end they days. of observed has uncertainty terms the in pullback there seen when of time to a because places with demand order delay a customer end customer and been an do been. what has want was

But next that point a can in channel I very -- we to believe two to that end bring clear. a of continue position quarters. our markets now right inventories we're to where to over So, the couple normalize was

William Stein

like. So, not yet, is what so normalized -- it sounds

there's the So, that September some will I fair? that for lower Is expectation sell-through. be assume sell-in in guidance, than

Bernie Blegen

is XX just the the receiving, that going harder a also visibility and that's also net that or predictability orders Yeah. not the to past sell-through strength comments demand new but we're -- about of back out Again, to predict. days, the the the little XXX

William Stein

you. Thank Great.

Genevieve Cunningham

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

Matt Ramsay

me guys okay? Michael, Thank you much. Bernie, can very hear you

Michael Hsing

Yes.

Matt Ramsay

Awesome.

you and as we've you my the like some competitive rebuild over just than strategically your to question, feel a and how of those So, that you see the to back it consumer to been try had I'd Michael, if certain I've reemphasize business and of conversations environment, percentage I first company and it's to time in guess comments to get wanting for a Thank of sort push to of you. I now. of about revenue any sort about the revisit environment conversations order strategically some -- parts segment. had about company demand consumer supply, the level higher guess and

Michael Hsing

Yeah.

good So, a that's question.

some beginning. And, is the now So, value as this our down even at see see as now. mean, dramatically, and we went inventory but I said, the improvement, reflect values -- supply, inventory it will cost we our Bernie

technology our is And We revenues in don't so, all in a And segments very and couple they other size. -- capacities. share that because high have the of buy in we past, killers. is named fight. the And a and don't a it's all game. we or It's strengths. and We we have in in don't consumer -- we MPS price on gross a the mind, a simple segments. years, that, And the margins neglected provide better, because enough enough much segment, much last smaller the consumer

difficult the it's so, same we that IPOed. since games that to to not played And back go

Matt Ramsay

Michael. Thanks,

with segment because the focus on follow-up think that's and the on to I that's your come customer where two market question, some there, well AI of softness I And from. here, business there's think dynamics right, my I as documented. really going questions strength percentage lead CPU investor my of just enterprise a large in the the wanted data

uptick on I all quickly So, think, would any question long is of guys, really how demand? be what the in And support would of an of inventory space? a visibility? to is, customers is respond question have built guess timing ramps what And you the to in times so, I books the and the visibility segment? have to And into potential reacceleration you that the Thanks. do lead that that how

Michael Hsing

well is documented. probably okay, is visibility Our

can that AIs, see] will -- listening of a MPS quarters but about you you talk to to technical issues. the see And And in these all major [probably I few you you're will (ph) If potential. next MPS.

far so the is MPS far better than our competitor. is the that solutions think I

-- all months our not And even generation So, next we a -- XX processor, is working the -- in we're even a we're critical, strong working to even year higher. ago. And a and next the also, for ago, the challenging. generation, relationship for out. is on power of so the AI now, space heat reason, you And for and, technical more the the had radiate

pioneer so, the with the only And all solution factors. is these all And the other it. to form into had form the solution provide way we integrated vertical in and we And a fit to go. solutions,

Bernie Blegen

the if see of course quarters, we're think also multiple that it's over And the I I we're opportunities applications the launch could MPS. just going to And next initially customer breadth customer add engaged with. with that, to new the of four

that So, but yes, powerful with have expect one position a initial we quickly. we customer, very out branch very to

Michael Hsing

It multiple was customers.

Bernie Blegen

Multiple customers.

Matt Ramsay

Thank you, guys. Really appreciate it.

Genevieve Cunningham

next is Hans Our now from Rosenblatt. your Mosesmann Hans, open. line is question of

from open. Our question is next is Stifel. Kwan line your Jeremy of Jeremy, now

Jeremy Kwan

a follow-up you to wanted about ask I Hi. me capacity. allowing Yes. for here. I Thank guess,

You guys guys and whether down some may of competitive if you're for give you CapEx curve applications about also, on capacity or a was it very I these you really number environment have in that thinking that a you. advantage in ahead always you're not up wondering this and long-term And, this how Thank of through targeting? quarter? been cycles. and have

Michael Hsing

Yeah.

achieved earlier, China. XX%. than And it of of customers more stated have we can we of out As now more our capability of than China. kind our of out many We XX% requested move

questions? so, more want does don't is, the And and inventories, we we capacities, have Problem your to our overall it. that we from -- have And answer sell inventory. more now

Bernie Blegen

far pay terms on the the think very I in customers you as customer at as service to And year we're when we the that geographically, becomes both our both are dividends from front-end a turns now. expanding years how diversifying that around really predictable, two capacity capacity making, and will it think when today, environment back-end satisfaction. more investments look good it's and I of and this And Yeah. positioned and

Genevieve Cunningham

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

Chris Caso

Good evening. Thank Yes. you.

order I really forward, ask regard revenue few First business some in given question what visibility. been Is forward. requirement hasn't mean the visibility to turns the as is quarters? next changes several that's of does something And that quarters, we with over going past there And regarding going because end out for changing the look the any for that markets? at

Bernie Blegen

Sure.

think in as In I at Michael in to to QX XXXX improvement we just from far in responded would saw preceding bookings, nicely hand the that that XXXX, pretty years. to this that our or past, net in the next pick as up have quarter. QX not two end XX%, either historically XX% the of recent quarter's some more enjoyed of revenue degree but we the it's we to still our

only you're percent of that a to for turns quarter. so, And order numbers accomplish a to of in business relying fraction -- on particular order the in

at the steady seeing that yet where still not have we we're predictability. but level we're improvement, So,

Chris Caso

you. it. Got Thank

over your about As supply, to from I remains? think for advantage long a the that has How question is as partners think out competitive you easier landscape as that the do What to well means as a source Historically, pricing? you follow-up, from term that different I understand outside you Do a procure China. just you that of competitive some diversify going Monolithic try think been a your I bit foundry to for see and getting wafers of know you different supply forward? the on both there. your Power. I places had advantage access ability bringing competitor do follow-up supply

Michael Hsing

Well, -- back normal, than go a lower or you're mentioning course, should these is pricing, say, pre-pandemic. I to much costs of to of -- material as all

of will in a in of look, long-term want in spin out it bit but which little and request. to for of expand mostly, the expand next capacities, years' we so, we're we mention a few -- term, a terms we didn't invest, over course, and our -- And that's should couple now follow the And the next to we should from of one want plan, so because growth. down quarters, other is long the our we I we just course. still earlier, And customers' continue -- slow our China,

Chris Caso

you. Thank

Genevieve Cunningham

If Hand questions, any there button. please click follow-up the Raise are

I no would to As to Bernie. questions, there back are further over like the turn webinar

Bernie Blegen

forward our be again, like for Gen. during day. Thanks for talking third us to a look webinar, joining which have you to at all quarter likely you, of Thank webinar, again end nice I'd and the and you this will to thank October.

Monolithic Power Systems (MPWR) 31 Jul 232023 Q2 Earnings call transcript