Power management chips maker Monolithic Power Systems (NASDAQ:MPWR) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 39.2% year on year to $637.6 million. The company expects next quarter’s revenue to be around $650 million, close to analysts’ estimates. Its non-GAAP profit of $4.04 per share was 0.8% above analysts’ consensus estimates.
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Monolithic Power Systems (MPWR) Q1 CY2025 Highlights:
- Revenue: $637.6 million vs analyst estimates of $633.3 million (39.2% year-on-year growth, 0.7% beat)
- Adjusted EPS: $4.04 vs analyst estimates of $4.00 (0.8% beat)
- Adjusted EBITDA: $233 million vs analyst estimates of $229.7 million (36.5% margin, 1.4% beat)
- Revenue Guidance for Q2 CY2025 is $650 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 26.5%, up from 20.9% in the same quarter last year
- Free Cash Flow Margin: 30.1%, down from 50.7% in the same quarter last year
- Inventory Days Outstanding: 146, up from 138 in the previous quarter
- Market Capitalization: $35.16 billion
StockStory’s Take
Monolithic Power Systems delivered revenue above Wall Street’s expectations for Q1, with management highlighting the impact of broad-based demand across storage, computing, and automotive segments. CEO Michael Hsing attributed the quarter’s results to strong design win momentum, especially in enterprise data and automotive, and emphasized the company’s ongoing transformation from a chip supplier to a full-service silicon solutions provider. CFO Bernie Blegen also noted the positive contribution of new product ramps and an improved operating margin compared to last year.
Looking ahead, management pointed to continued investment in technology and supply chain diversification as key drivers for the rest of the year. Michael Hsing described growing confidence in the second half due to a backlog of design wins, particularly in enterprise data and automotive, but acknowledged some uncertainty in the timing and magnitude of customer ramps. The company expects revenue for the next quarter to remain steady, with margins influenced by product mix and ongoing supply chain adjustments.
Key Insights from Management’s Remarks
Management emphasized that the company’s diversified strategy and design wins were central to Q1’s performance and set the stage for future growth across several end markets.
- Enterprise Data Momentum: Management cited broad-based design wins and ramping qualifications with major customers, positioning the company for increased enterprise data revenue later this year. Michael Hsing stated that while visibility is improving, the major ramps are expected in the second half.
- Automotive Content Expansion: The automotive business posted its third consecutive quarter of double-digit sequential growth. Management credited this to increased content per vehicle, particularly from new power management modules supporting next-generation vehicle platforms in North America and Europe.
- Storage & Computing Upswing: Segment revenue increased sharply due to both memory and notebook demand. Management said growth was balanced across memory types (like DDR5) and end-user devices, and that results were driven by design wins rather than inventory build-up.
- Supply Chain Diversification: The company’s multi-year effort to localize manufacturing and R&D across regions has improved resilience to tariffs and geopolitical risks. Hsing explained that post-pandemic capacity expansions outside China now support both China and global customers.
- Transformation to Solutions Provider: Management reiterated its strategy of evolving from a chip-only supplier to a provider of complete silicon-based solutions, including system-level modules for building automation and medical devices. Early customer engagement on these new products was described as encouraging for long-term growth.
Drivers of Future Performance
Management expects steady performance in the upcoming quarter, with future growth dependent on new product qualifications, customer ramps, and continued diversification across end markets.
- Design Win Ramps: Many recent design wins in enterprise data and automotive are expected to translate into higher revenue later in the year, though the precise timing of customer adoption remains uncertain.
- Product Mix and Margins: Future margins will be affected by the mix of new versus mature products. Management aims to maintain margins within historical ranges, despite pressure from high-volume, lower-margin products.
- Supply Chain and Tariffs: Ongoing efforts to diversify manufacturing and R&D are intended to reduce exposure to tariffs and supply interruptions, but shifts in global trade policy or customer behavior could still introduce risks.
Top Analyst Questions
- Tore Svanberg (Stifel): Asked if the current quarter marks a low point for enterprise data and how supply chain diversification is impacting competitiveness; management indicated improved confidence and highlighted the benefits of local manufacturing outside China.
- Quinn Bolton (Needham): Sought details on the narrowing of enterprise data outlook and the impact of a customer’s platform change; management maintained a wide forecast range but expressed confidence due to recent product qualifications.
- Ross Seymore (Deutsche Bank): Questioned potential segment volatility and customer order behavior related to tariffs; management reported consistent demand and minimal pull-in/push-out effects.
- Rick Schafer (Oppenheimer): Inquired about timing for significant rack power solution revenue and automotive content drivers; management expects material rack power revenue in 2026 and noted automotive growth is content-driven across multiple regions.
- William Stein (Truist): Asked about direct tariff impacts and the long-term shift to full-system solutions; management said tariffs are not directly affecting unit costs and described positive customer response to new system-level products.
Catalysts in Upcoming Quarters
In the next few quarters, the StockStory team will be watching (1) how quickly enterprise data and automotive design wins convert into meaningful revenue, (2) the pace of new product ramps in storage and computing without inventory build-up, and (3) progress in supply chain localization amid shifting trade policies. The company’s ability to launch and scale its system-level solutions will also be a critical indicator of its transformation strategy.
Monolithic Power Systems currently trades at a forward P/E ratio of 41.4×. In the wake of earnings, is it a buy or sell? The answer lies in our free research report.
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