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MONOLITHIC POWER SYSTEMS INC (MPWR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record revenue of $621.7M (+0.2% q/q, +36.9% y/y) with non-GAAP EPS of $4.09 (roughly flat q/q) and stable gross margins; GAAP EPS spiked to $29.88 due to a one-time $1.3B tax benefit recognition .
  • End-market strength was led by Enterprise Data ($194.9M, +51% y/y) and Automotive ($128.3M, +43% y/y), while Storage & Computing and Communications also grew double-digits y/y; Consumer and Industrial improved y/y but declined sequentially .
  • Q1 2025 guidance: revenue $610–$630M; GAAP GM 55.1–55.7%; non-GAAP GM 55.4–56.0%; GAAP opex $180.2–$186.2M; non-GAAP opex $126.9–$130.9M; non-GAAP tax rate 15% for 2025; FD shares 47.8–48.2M .
  • Capital return is a notable catalyst: quarterly dividend raised 25% to $1.56/share and a new $500M buyback authorized through 2028, following completion of a prior $640M program in Q4 2024 .

What Went Well and What Went Wrong

What Went Well

  • Enterprise Data growth tied to AI/server power solutions; segment revenue up 51% y/y in Q4 and full-year Enterprise Data up 122% to $716.2M, reflecting strong product ramps and diversification across hyperscalers .
  • Automotive strength with broad-based momentum (ADAS, infotainment); Q4 revenue up 15% q/q and 43% y/y; management reiterated confidence in 48V platforms and multi-year adoption beyond EVs .
  • Shareholder returns: dividend increased to $1.56/share and new $500M buyback; prior $640M buyback fully executed in Q4; management highlighted returning 86% of FCF over three years via buybacks/dividends .

Management quotes:

  • “Our proven, long-term growth strategy remains intact as we continue our transformation from being a chip-only, semiconductor supplier to a full service, silicon-based solutions provider.” – CEO Michael Hsing .
  • “We remain cautiously optimistic, but our momentum is certainly in the right direction.” – CFO Bernie Blegen .

What Went Wrong

  • Sequential softness expected in Enterprise Data for Q1; management anticipates a flattish Enterprise Data year in 2025 weighted to the back half, citing customer ordering volatility and second sourcing dynamics .
  • Communications segment down 11% q/q in Q4 due to networking softness (partly offset by optical strength), illustrating lumpiness in newer product ramps .
  • Operating cash flow fell to $167.7M from $231.7M q/q, and cash/short-term investments declined to $862.9M due to share repurchases; inventories remain elevated in dollars albeit improving in days .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$454.0 $620.1 $621.7
GAAP Gross Margin %55.3% 55.4% 55.4%
Non-GAAP Gross Margin %55.7% 55.8% 55.8%
GAAP Operating Expenses ($M)$141.6 $179.4 $181.1
Non-GAAP Operating Expenses ($M)$96.7 $125.2 $126.1
GAAP Operating Income ($M)$109.6 $164.0 $163.3
Non-GAAP Operating Income ($M)$156.1 $220.8 $220.7
GAAP Diluted EPS ($)$1.98 $2.95 $29.88
Non-GAAP Diluted EPS ($)$2.88 $4.06 $4.09

Notes: GAAP EPS includes a $1.3B tax benefit recognition in Q4 2024 .

Q4 2024 Actual vs Consensus (S&P Global)RevenueEPS
Actual$621.7M $4.09 non-GAAP; $29.88 GAAP
ConsensusN/A (S&P Global data unavailable at time of query)N/A (S&P Global data unavailable at time of query)

End-Market Revenue Mix (Q4 YoY):

End Market ($USD Millions)Q4 2023Q4 2024
Enterprise Data$128.9 $194.9
Storage & Computing$117.3 $136.5
Automotive$89.8 $128.3
Communications$40.9 $63.8
Consumer$43.7 $57.3
Industrial$33.4 $40.8
Total$454.0 $621.7

Key KPIs and Balance Sheet Trends:

KPIQ4 2023Q3 2024Q4 2024
Cash + Short-Term Investments$1,108.5M $1,462.4M $862.9M
Operating Cash Flow$153.3M $231.7M $167.7M
Accounts Receivable$179.9M $164.7M $172.5M
DSO (Days)36 24 25
Internal Inventories$383.7M $424.9M $419.6M
Days of Inventory (current qtr rev)172 140 138
Days of Inventory (next qtr rev)170 140 138

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ1 2025N/A$610–$630M New
GAAP Gross MarginQ1 2025N/A55.1–55.7% New
Non-GAAP Gross MarginQ1 2025N/A55.4–56.0% New
GAAP Operating ExpensesQ1 2025N/A$180.2–$186.2M New
Non-GAAP Operating ExpensesQ1 2025N/A$126.9–$130.9M New
Interest & Other Income (pre-FX)Q1 2025N/A$5.8–$6.2M New
Total SBC (incl. $1.7M in COGS)Q1 2025N/A$55–$57M New
Non-GAAP Tax RateFY 2025N/A15% New
Fully Diluted SharesQ1 2025N/A47.8–48.2M New
Dividend per ShareQ1 2025$1.25 $1.56 Raised
Share Repurchase AuthorizationMulti-year$640M (completed in Q4’24) New $500M through Feb 4, 2028 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Enterprise Data (AI/server power)Slowing growth pace vs prior surge; second sourcing emerging; preparing for VR14 and vertical power; expected modest Q4 growth; lumpy ramps (Q2/Q3) Flattish for 2025, back-half weighted; Q1 down; broad hyperscaler engagements; focus on quality/supply Back-half weighted; diversification; cautious near term
AutomotiveNear-term fuzzy in Q2, long-term strong; power isolation to ramp; solution-based content growth Strong Q4; expected to drive Q1; 48V systems as key differentiator; Europe/North America content adds Accelerating multi-quarter ramps
Communications/OpticalIdentified as greenfield; wireless/5G investment (Q2) Optical leads; Q4 comms down q/q but expected rebound; drives Q1 uplift Sustained ramp with some volatility
Notebooks/AI PCDDR5/notebooks growth (Q2); memory improving (Q3) Q1 uplift tied to AI PCs/design wins Improving with AI PC cycle
Supply chain & inventoryChannel lean; internal inventory uncomfortably low (Q3) Q4 inventory days improved to 138; DSO 25 days Efficiency improving, managed prudently
New products & R&DSolutions/modules 20–25% of revenue excluding AI (Q2) SiC inverter (late 2025 ramp), DSP audio (Axign), battery management, 24-bit ADCs (H2’25) Broadened portfolio driving future ramps
Regulatory/legal (Huawei)No special license arrangements; limited exposure context (Q2) No new issues highlighted in Q4 callStable

Management Commentary

  • Strategy: “Our proven, long-term growth strategy remains intact… transformation from chip-only to full service, silicon-based solutions provider.” – CEO Michael Hsing .
  • Capital return: “Quarterly dividend will increase 25% to $1.56… new $500M 3-year share repurchase program.” – CFO Bernie Blegen .
  • Enterprise Data outlook: “Off to a slower start… customer base expected to broaden as hyperscalers launch new products… likely flattish year weighted to back half.” – CFO Bernie Blegen .
  • Competitive positioning: “We’re engaged across all the hyperscalers… timing of ramps difficult to call… focus on winning sockets.” – Management .
  • Automotive roadmap: “48-volt integrated solutions… sets MPS apart from competitors.” – CEO Michael Hsing .

Q&A Highlights

  • 2025 Enterprise Data: Management expects “flattish” full-year with back-half weighted ramps across hyperscalers and ASIC/tensor processors; Q1 down sequentially .
  • Automotive growth drivers: Broad-based content momentum beyond ADAS; 48V architecture and isolation content; multi-year adoption across regions .
  • Communications/optical: Optical is the largest driver; legacy networking softer; customer base to diversify through 2025 .
  • Notebooks/AI PC: Q1 uplift linked to AI PC demand and recent design wins; ramp timing atypical for seasonality .
  • Customer concentration: Two distributors and one indirect customer >10% for FY’24; specifics to be disclosed in filings .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 revenue and EPS were unavailable at time of query, so beats/misses versus Street cannot be determined from S&P data. Where comparisons to estimates are not shown, it is due to S&P Global data access limitations (Daily Request Limit exceeded).
  • Implication: In absence of consensus, focus on q/q and y/y trajectories and Q1 2025 guidance ranges for near-term modeling .

Key Takeaways for Investors

  • Q4 operationally solid: revenue $621.7M, non-GAAP EPS $4.09, gross margins steady; GAAP EPS inflated by a one-time $1.3B tax benefit—do not extrapolate into run-rate earnings .
  • Near-term setup: Q1 guide $610–$630M with Enterprise Data down sequentially; Automotive and Communications expected to drive growth—position for potential back-half ramp in AI/server programs .
  • Capital returns as catalysts: Dividend increased to $1.56/share and new $500M buyback through 2028 following $640M completed in Q4; supports shareholder yield and downside protection in volatile segments .
  • Segment momentum: Enterprise Data +51% y/y in Q4; Automotive +43% y/y; optical within Communications accelerating—watch optical module demand and hyperscaler platform launches for inflections .
  • Balance sheet disciplined: DSO improved to 25; inventory days to 138; operating cash flow healthy though down q/q due to repurchases—capacity to support ramps remains adequate .
  • Strategic trajectory: Expanding solutions portfolio (SiC inverter, DSP audio, battery management, ADC 24-bit) provides multi-year optionality beyond AI power; investor day March 20, 2025 is a milestone for product visibility .
  • Trading lens: Expect choppy near-term headlines on Enterprise Data but constructive medium-term narrative tied to diversified ramps, stable margins, and capital returns; monitor Q1 demand in notebooks/AI PCs and comms optical .