Q3 2024 Earnings Summary
- Strong growth in Enterprise Data segment due to vertical power products, with growth expected in the next few quarters. MPS is now shipping these products in good volumes.
- MPS is gaining significant share in new server platforms (Sapphire Rapids/VR14), becoming a significant supplier in this growth. This will pull through other solutions like DDR5 memory and contribute to future growth.
- Strong growth in Communications segment, driven by new Wi-Fi formats and optical networking. MPS's reference designs are turning into revenue, and they see sustainable growth through the first half of 2025.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
End Markets | Q3 2024 | Improved bookings trends carried into Q3 2024, with broad participation across end markets. Expected continued growth in Communications, Storage, and Computing, plus incremental improvements. | no current guidance | N/A |
Enterprise Data | Q3 2024 | Expected growth in Enterprise Data, though at a slower rate compared to previous quarters. Remains a significant focus area with ongoing opportunities yet to ramp up. | no current guidance | N/A |
End Markets | Q4 2024 | no prior guidance | No significant changes expected; all end markets anticipated to change by no more than ± mid-single digits. | no prior guidance |
Enterprise Data | Q4 2024 | no prior guidance | Expected to be up low single digits sequentially. | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Communications | Q3 2024 | Expected continued growth in Communications | 71.9 million | Met |
Storage and Computing | Q3 2024 | Expected continued growth in Storage and Computing | 144.0 million | Met |
Enterprise Data | Q3 2024 | Expected growth in Enterprise Data | 184.5 million | Missed |
Other Groups | Q3 2024 | Incremental improvements anticipated in other groups | Automotive = 111.3, Industrial = 44.0, Consumer = 64.4, Lighting = 4.0 | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Automotive Market | Uncertainty in Q2, cautious optimism in Q1, and near-term uncertainty but strong year-over-year gains in Q4. | Strong growth with broad-based strength (infotainment, lighting, ADAS, body controls) and ramping of prior design wins. | Shift from uncertainty to robust growth |
Enterprise Data & AI | Varied from slowing growth in Q2 to strong demand in Q1 and rapid expansion in Q4, with references to AI-driven opportunities. | Highlighted rapid expansion, but concerns over competition and minor sequential declines in some segments. | Consistent focus, sentiment oscillates between high growth and competition concerns |
Pricing Pressure & Competition | No explicit mentions in Q2; noted in Q1 (less susceptible due to differentiated technology) and Q4 (competition entering supply chain). | Ongoing challenges due to competition and some pricing pressure, but MPS emphasizes high-performance products. | Recurring but not uniformly discussed each quarter |
Home & Building Automation | No mention in Q2, Q1, or Q4. | Newly introduced as a high-potential segment, with MCUs and integrated kits for lighting, HVAC, and security systems. | New topic |
Modules & Solutions | Q2: Transformation from chip to solutions (20-25% of revenue). Q1: Modules >$100M revenue. Q4: Transition to modules in 48V systems. | Emphasis on full-service silicon solutions for higher margins and revenue. | Consistent strategy to drive margins and revenue |
Revenue Concentration Risk | No mention in Q2, Q1, or Q4. | One direct customer over 10% of revenue, with distributors also above 10%, but diversified end-customer exposure. | Newly highlighted |
Capacity Expansion | Discussed only in Q4 as building for $4B revenue capacity. No mentions in Q2 or Q1. | Not referenced in Q3. | No updates after Q4 mention |
Design Wins | Q2: Wins in automotive EV, data center, VR13.5/VR14. Q1: EVs in China, enterprise data, server share gains. Q4: ADAS, AI, CPU. | Major growth drivers in automotive, data center, and CPU servers, with ASIC ramps expected in coming quarters. | Consistent highlight as key future revenue contributors |
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Enterprise Data Outlook
Q: Why was Enterprise Data down, and what's the outlook?
A: Enterprise Data was down about 1.5% from Q2 due to different customer ordering patterns compared to the past six quarters. Looking ahead to Q4, MPS expects Enterprise Data to be up low single digits sequentially. They are not anticipating any share position changes and believe that the introduction of second or third competitors for supply chain security is a factor. New AI opportunities, including tensor processors, are expected to ramp in the next few quarters, contributing to growth. -
Non-Enterprise Data Growth
Q: Is the strong growth in non-Enterprise segments cyclical or company-specific?
A: It's a bit of both. MPS experienced improvements in ordering patterns and new revenue opportunities from prior design wins coming to market, particularly in Automotive and Communications. The momentum is seen across all segments except AI power, indicating both cyclical improvement and MPS-specific factors. -
Pricing Pressure and Competition
Q: Are you seeing pricing pressure due to increased competition?
A: Competitors, including some Chinese suppliers, are attempting to lower prices to enter the market. However, MPS doesn't compete on price; instead, it focuses on providing the highest performance solutions. Customers are unlikely to switch quickly, and MPS emphasizes diversity and value. -
Customer Concentration
Q: Do you have any 10% customers in the September quarter?
A: Yes, MPS had one direct customer accounting for over 10% of revenue in the quarter. They also acknowledged multiple distributors exceeding 10%, but only one end customer surpassed that threshold. -
Traditional Server Business Outlook
Q: What's your view on traditional server business into 2025?
A: Volumes in the traditional server market are starting to pick up. MPS expects to be a significant supplier in the Sapphire Rapids platform, specifically in VR14 solutions, contributing to growth in this segment. -
Vertical Power Transition
Q: Will the shift to vertical power accelerate market growth?
A: Absolutely. MPS has been involved in the power module market since 2017, and its technology and manufacturing capabilities position it well for the vertical power transition. They are already shipping products in good volumes, which is expected to accelerate growth over the next few quarters. -
2025 Enterprise Data Revenue Expectations
Q: Is $1.1 billion in Enterprise Data revenue in 2025 reasonable?
A: While not providing specific guidance, MPS is confident it will be a significant player when the AI market reaches equilibrium. With many customers and designs starting to ramp into revenues, they anticipate substantial growth. -
Communications Segment Performance
Q: What's driving growth in the Communications segment?
A: Growth is driven by optical networking and new Wi-Fi formats ramping up. MPS has numerous reference designs in these areas, and the outlook remains solid with sustainable growth expected through the first half of 2025. -
Automotive Segment Growth
Q: Have the Automotive and other lagging segments turned around?
A: Yes, the step-up from Q2 to Q3 in Automotive is believed to be sustainable. A number of design wins are now ramping up, and revenue is expected to grow over the next 2-3 quarters. Strength is seen across all segments, including infotainment and body controls. -
Home Automation Opportunities
Q: What are your growth drivers in home automation?
A: MPS offers products in lighting, thermostats, shade controls, fan motors, security systems, and window actuators. They are also developing MCUs that can serve as the brain for various devices, aiming to simplify building automation with all-in-one solutions.