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MONOLITHIC POWER SYSTEMS INC (MPWR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was a record quarter: revenue $737.18M (+10.9% q/q, +18.9% y/y), non-GAAP EPS $4.73; GAAP EPS $3.71. Non-GAAP gross margin held at 55.5% and GAAP operating margin was 26.5% .
  • Results beat S&P Global consensus: revenue $737.18M vs. $722.14M*, and non-GAAP EPS $4.73 vs. $4.64*; both better than expected, driven by stronger Enterprise Data (AI power) and broad-based y/y growth across all end markets . Values retrieved from S&P Global.
  • Q4 2025 guidance is roughly in line with Street: revenue $730–$750M vs. $741.69M* consensus midpoint; gross margin guide steady at ~55% (GAAP 54.9–55.5%; non-GAAP 55.2–55.8%) . Values retrieved from S&P Global.
  • Key drivers: sequential strength in Enterprise Data (+33% q/q on AI applications), Consumer (+21% q/q), Industrial (+18% q/q); Storage & Computing declined 4.5% q/q on weaker notebooks; inventories well managed with days of inventory down to 139 (current-quarter basis) .

What Went Well and What Went Wrong

What Went Well

  • Enterprise Data accelerated on AI: $191.5M, +33% q/q and +3.8% y/y; management cited “layering of additional customers” and AI power solutions as the catalyst .
  • Broad-based y/y growth: all six end markets grew y/y; Automotive +36.1% y/y with an additional Tier 1 ADAS design win; first full BMS design win on a robotics platform underscores shift to solutions .
  • Strong cash generation and balance sheet: operating cash flow $239.3M; cash, cash equivalents and short-term investments $1,269.5M; DIO fell to 139 days (current-quarter basis) vs. 150 in Q2 .

What Went Wrong

  • Storage & Computing down sequentially (-4.5% q/q) driven by lower notebook power solutions despite strong y/y growth; mix tempered overall q/q momentum .
  • Gross margin expansion elusive near term; management reiterated margins likely remain mid-55% +/- 20–30 bps given short-dated orders and limited backlog visibility .
  • Visibility remains limited (3–4 months) with short lead times and constrained ability to steer mix; channel inventory lean but bookings predictability remains a watch item .

Financial Results

Headline P&L versus Prior Periods

MetricQ3 2024Q2 2025Q3 2025
Revenue ($M)$620.12 $664.57 $737.18
GAAP Diluted EPS ($)$2.95 $2.78 $3.71
Non-GAAP Diluted EPS ($)$4.06 $4.21 $4.73
GAAP Gross Margin (%)55.4% 55.1% 55.1%
Non-GAAP Gross Margin (%)55.8% 55.5% 55.5%
GAAP Operating Margin (%)26.5% 24.8% 26.5%
Non-GAAP Operating Margin (%)35.6% 34.8% 35.4%

Results vs. S&P Global Consensus (Q3 2025)

MetricQ3 2025 EstimateQ3 2025 ActualResult
Revenue ($M)$722.14*$737.18 Beat
Primary EPS (non-GAAP) ($)$4.64*$4.73 Beat
Values retrieved from S&P Global.

Segment Revenue Breakdown

End MarketQ3 2024 ($M)Q3 2025 ($M)YoY Change (%)
Enterprise Data$184.46 $191.48 3.8%
Storage & Computing$143.99 $186.57 29.6%
Automotive$111.34 $151.54 36.1%
Communications$71.88 $79.87 11.1%
Consumer$64.40 $72.40 12.4%
Industrial$44.04 $55.32 25.7%
Total$620.12 $737.18 18.9%

Selected KPIs and Balance Sheet

KPIQ3 2024Q2 2025Q3 2025
Cash, Cash Equivalents & ST Investments ($M)$1,462.4 $1,146.1 $1,269.5
Operating Cash Flow ($M)$231.7 $237.6 $239.3
Accounts Receivable ($M)$164.7 $194.8 $241.6
Days Sales Outstanding (days)24 27 30
Internal Inventories ($M)$424.9 $490.6 $505.7
Days of Inventory (current-quarter revenue)140 150 139
Days of Inventory (next-quarter revenue)139 135 139

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 2025n/a$730–$750 New
GAAP Gross Margin (%)Q4 2025n/a54.9–55.5 New
Non-GAAP Gross Margin (%)Q4 2025n/a55.2–55.8 New
GAAP OpEx ($M)Q4 2025n/a$206.8–$212.8 New
Non-GAAP OpEx ($M)Q4 2025n/a$145.5–$149.5 New
Stock-based Comp ($M)Q4 2025n/a$63.2–$65.2 (incl. ~$1.9M COGS) New
Other Income ($M)Q4 2025n/a$7.4–$7.8 (pre-FX) New
Non-GAAP Tax RateFY 2025n/a15% New
Diluted Shares (M)Q4 2025n/a48.5–48.9 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/Enterprise DataVisibility improving but short lead times; multiple ASIC/GPU programs; ramps 2H25; TAM expansion from 48V and future HVDC noted; rack-power sampling with material revenue from 2026 Enterprise Data +33% q/q on AI power; “layering” of customers; caution on long-term sizing; pricing stable; gross margin steady mid-55% given limited backlog Improving demand; still dynamic with short visibility
Margin outlookQ2: guide mid-55% GM; structural model intact; near-term 20 bps conservatism; no tariff-driven margin impact Expect mid-55% +/- 20–30 bps near term; mix management constrained without elongated backlog Stable
Supply chain/lead timesCapacity to support ~$4B revenue with ~50% ex-China by year-end; short lead times; channel inventory lean Short visibility (3–4 months); channel inventory unchanged q/q and lean; internal DIO down (current-quarter basis) Steady/lean
Auto (ADAS/48V/zonal)Content ramps in 2H25; 48V/800V and BMS trajectories into 2026–27 ADAS design win; auto +4.4% q/q, +36.1% y/y; zonal in 2026; BMS/traction inverter more 2027+ Positive, staged ramps
Modules/solutions shiftEmphasis on solutions; modules outside Enterprise Data seen as 10–15% of revs next year (Q2) First full BMS design win in robotics; management reiterates solutions-led strategy Building
Pricing/macro/tariffsNo direct pricing/tariff impact to guidance; diversified manufacturing and R&D footprint No sustained pricing trend change; macro dynamic but broadly indexed across customers Neutral

Management Commentary

  • “Our results demonstrate our continued success in transforming from a chip-only, semiconductor supplier to a full service, silicon-based solutions provider.” – CEO Michael Hsing .
  • “We’re seeing a layering of additional customers [in Enterprise Data]…providing momentum as we look ahead into the early part of next year.” – CFO Bernie Blegen .
  • On AI mix and focus: “Business is business…we engage with the large companies and the small companies…we want to demonstrate that this is the best technology.” – CEO Michael Hsing .
  • On gross margins: “For the foreseeable future…we’re going to be in…mid-55%” given limited backlog and short-dated orders – CFO Bernie Blegen .

Q&A Highlights

  • Enterprise Data: sequential outperformance driven by AI power demand; more customers being layered in; management avoided sizing far-out HVDC opportunity; pricing stable without sustained trend changes .
  • Margins: GM expected to remain mid-55% near term due to short visibility and limited ability to optimize mix; longer-term solution automation could help yields and margins .
  • Auto roadmap: ADAS content expanding; 48V and zonal architectures ramp starting 2026; BMS/traction inverter opportunities are more 2027+ .
  • Inventory/Channel health: channel inventory days unchanged q/q and lean; internal DIO improved on current-quarter basis; DSO rose to 30 days .
  • Timelines: Robotics BMS design win is strategic; revenue impact starts 2026; sets stage for broader solution wins .

Estimates Context

  • Q3 2025: Revenue $737.18M vs. S&P Global consensus $722.14M*; primary EPS $4.73 vs. $4.64* – both beats . Values retrieved from S&P Global.
  • Q4 2025: Company revenue guidance $730–$750M bracketed around S&P Global consensus $741.69M* (midpoint ~$740M), implying roughly in-line top-line outlook . Values retrieved from S&P Global.
MetricQ4 2025 Consensus*Company Guidance
Revenue ($M)$741.69*$730–$750

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based y/y growth with Enterprise Data AI power the key sequential driver; diversified end-market strength reduces reliance on any single program .
  • The quarter delivered clean beats on revenue and EPS vs. consensus; Q4 revenue guide is essentially in line, suggesting continuity rather than a re-acceleration into year-end . Values retrieved from S&P Global.
  • Margins remain resilient but capped near-term in the mid-55% GM range due to short-cycle ordering and limited backlog; watch for elongation of visibility as a pre-condition for GM expansion .
  • Auto content continues to build (ADAS now; 48V/zonal next year; BMS/traction inverter further out), creating a multi-year layering of growth vectors beyond AI data center .
  • Inventory discipline improved (current-quarter DIO down to 139 days) with lean channel inventories, supporting the quality of demand and limiting risk of near-term digestion .
  • Strategic pivot to solutions (modules, system-level) is gaining traction (e.g., robotics BMS), which can deepen moats and potentially support margins over time as automation scales .
  • Legal overhang: a patent infringement suit was filed by Reed Semiconductor (Oct 6); while no financial impact noted, it is a background risk to monitor .

Values retrieved from S&P Global where indicated by an asterisk (*).