Monolithic Power Systems Inc (MPWR) Q4 2024 Earnings Call Highlights: Record Revenue and ...

GuruFocus.com
07 Feb
  • Full Year Revenue: $2.2 billion, up 21% from 2023.
  • Q4 2024 Revenue: $621.7 million, 37% higher than Q4 2023.
  • Quarterly Dividend: Increased by 25% to $1.56 per share.
  • Share Repurchase Program: Completed under a $640 million authorization; new $500 million three-year program authorized.
  • Free Cash Flow Return: 86% returned to shareholders through share repurchases and dividends over the past three years.
  • Warning! GuruFocus has detected 3 Warning Sign with MPWR.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Monolithic Power Systems Inc (NASDAQ:MPWR) achieved its 13th consecutive year of growth, with full-year revenue reaching $2.2 billion, a 21% increase from 2023.
  • The company reported record quarterly revenue of $621.7 million for Q4 2024, marking a 37% increase compared to Q4 2023.
  • Monolithic Power Systems Inc (NASDAQ:MPWR) introduced innovative products such as the silicon carbide inverter for high-powered clean energy applications and a family of automotive audio products utilizing DSP technology.
  • The company announced a 25% increase in its quarterly dividend to $1.56 per share and completed share repurchases under a $640 million authorization.
  • Monolithic Power Systems Inc (NASDAQ:MPWR) continues to focus on innovation and diversification, investing in new technology and expanding into new markets to capture future growth opportunities.

Negative Points

  • The enterprise data segment is expected to have a flattish year, with growth weighted towards the second half of 2025.
  • There is uncertainty regarding the timing of product ramps, particularly in the automotive and communications sectors, which could affect revenue projections.
  • The company faces challenges in predicting the exact timing and magnitude of revenue from hyperscale projects due to customer launch delays.
  • Monolithic Power Systems Inc (NASDAQ:MPWR) has limited visibility into the separation of CPU and GPU market dynamics, making it difficult to offer precise commentary on enterprise data components.
  • The company acknowledges the volatility in the AI side of enterprise data, which could impact revenue patterns throughout 2025.

Q & A Highlights

Q: Could you talk about the dynamics in the March quarter, especially by segment? A: Bernie Blegen, CFO: For Q1, automotive and communications are expected to drive growth. Memory demand is strong, and notebooks are seeing an uplift. Industrial consumer products will contribute later in 2025, while enterprise data will be down.

Q: How should we think about the enterprise data business throughout 2025? A: Michael Hsing, CEO: The enterprise data segment is a multibillion-dollar opportunity. We expect a slower start in the first half of the year, with growth picking up as hyperscalers launch new products. Overall, it could be a flattish year, but we are prepared for growth.

Q: Can you update us on the number of accelerated projects expected to ramp this year and into 2026? A: Tony Balow, EVP and CFO: We are engaged with all hyperscalers, but the exact timing of ramps is difficult to predict. We have multiple projects in the pipeline, and we expect scaling in the second half of the year.

Q: What is your potential content per vehicle in the automotive sector with the shift to 48-volt systems? A: Michael Hsing, CEO: We have products ready for 48-volt systems, which are becoming more prevalent in the automotive sector. This shift allows us to capture significant market share as these vehicles ramp up.

Q: Can you provide insights into the enterprise data market share dynamics, especially in the server CPU side? A: Bernie Blegen, CFO: The lines between CPU and GPU are blurring, making it hard to offer specific commentary. We have significant shares in the server market, and as it ramps up, our revenue will follow.

Q: Were there any customers contributing more than 10% of revenue in fiscal year '24? A: Bernie Blegen, CFO: Yes, we had two direct distributor customers and one indirect customer exceeding 10% of revenue throughout the year.

Q: How do you see revenue diversification outside of traditional power management markets? A: Michael Hsing, CEO: We are exploring opportunities in data converters, silicon carbide, DSP audio, and battery management systems. These represent billion-dollar opportunities, but we are not providing specific timelines.

Q: What is the expected revenue pattern through 2025, considering enterprise data might be more second-half weighted? A: Bernie Blegen, CFO: We anticipate a flattish year with a back-half weighting due to design wins and expected ramps. However, the exact quarterly distribution is uncertain.

Q: How do you view the competitive environment in hyperscale programs and ASIC engagements? A: Bernie Blegen, CFO: Our innovation and time to market give us a first-mover advantage. We focus on providing high-quality products, but customer decisions are beyond our control.

Q: What is driving notebook strength in the first quarter? A: Bernie Blegen, CFO: Recent design wins in notebooks are tied to new AI product demand, contributing to an atypical ramp in Q1.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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