Core Viewpoint - The article discusses the investment thesis for Monolithic Power Systems (NASDAQ: MPWR), highlighting its valuation multiples being near historically low levels and expressing strong conviction in the company's potential for growth [1]. Company Overview - Monolithic Power Systems is positioned in the semiconductor sector, which is characterized by high barriers to entry and oligopolistic market structures [1]. - The analyst has a beneficial long position in MPWR shares, indicating confidence in the company's future performance [1]. Investment Strategy - The investment approach emphasizes growth at a reasonable price, focusing on mid- to long-term investment horizons [1]. - The analyst expresses a preference for investing in larger companies, as smaller firms often carry underestimated risks [1]. Analyst Background - The analyst has a background in mechanical engineering and has transitioned from the oil and gas sector to focus on technology investments, particularly in semiconductors, robotics, and energy [1]. - The analyst holds a CFA Level II certification and is licensed by the Brazilian Securities Commission as both a portfolio manager and investment consultant [1].

Core Insights - Khaveen Investments is a global investment advisory firm focused on serving high-net-worth individuals, corporations, associations, and institutions [1] - The firm offers a wide range of services including market and security research, business valuation, and wealth management [1] - The flagship Macroquantamental Hedge Fund maintains a diversified portfolio across various asset classes, geographies, sectors, and industries [1] - The investment approach integrates top-down and bottom-up analysis, utilizing global macro, fundamental, and quantitative strategies [1] - Core expertise lies in disruptive technologies such as Artificial Intelligence, Cloud Computing, 5G, Autonomous and Electric Vehicles, FinTech, Augmented and Virtual Reality, and the Internet of Things (IoT) [1]

Core Viewpoint - Monolithic Power Systems (MPWR) has demonstrated resilience in a challenging technology sector, achieving a total return of approximately +8% in 2025, contrasting with the Technology Select Sector SPDR Fund's return of -8% [2][4]. Financial Performance - The company reported a 39% increase in total revenues, reaching nearly $638 million, surpassing analyst expectations by about 1% [4]. - Adjusted earnings per share (EPS) rose by almost 44% to $4.04, also exceeding forecasts by approximately 1% [4]. - For Q2, the company provided revenue guidance indicating a growth of 28% at the midpoint, which is nearly 3% above expectations [4]. Market Dynamics - Monolithic's stock experienced a 9% increase following its February earnings release and nearly 6% after the May 1 earnings report, although it still trades about 34% below its 52-week high [3]. - The company is facing challenges due to a decline in revenue from its Enterprise Data segment, which dropped 11% year-over-year and 31% from Q4 2024, largely attributed to its relationship with NVIDIA [5][6]. Diversification Strategy - Monolithic's revenue is diversified, with the Enterprise Data segment accounting for only 33% of total revenue, while other segments grew by over 40% year-over-year [6]. - The company continues to secure design wins in the Enterprise Data market and anticipates revenue recovery in the latter half of the year [6]. Supply Chain and Tariff Management - The company expects no significant impact from tariffs, as approximately 37% of its revenue is derived from China, supported by a "China for China" supply chain strategy [7]. Analyst Outlook - Analysts project a 12-month price target for Monolithic at $779.83, indicating a potential upside of 22.10% from the current price of $638.67 [9]. - Despite mixed updates from Wall Street regarding price targets, the average indicates a solid upside potential of 14% [8][9]. Long-Term Investment Perspective - The semiconductor industry is characterized by cyclicality, making future stock performance uncertain; however, Monolithic's long-term investment case remains strong due to the increasing demand for advanced chips [10][11].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-51026 Monolithic Power Systems, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or or ...

Core Insights - Monolithic Power Systems, Inc. (MPWR) reported strong first-quarter 2025 results, with adjusted earnings and revenues exceeding the Zacks Consensus Estimate [1] Financial Performance - Net income on a GAAP basis was $133.8 million or $2.79 per share, up from $92.5 million or $1.89 per share year-over-year, driven by top-line growth [3] - Non-GAAP net income increased to $193.8 million or $4.04 per share from $137.5 million or $2.81 per share in the prior-year quarter, surpassing the Zacks Consensus Estimate by 4 cents [3] - Revenues reached $637.6 million, a 39.2% increase from $457.9 million in the year-ago quarter, beating the Zacks Consensus Estimate of $635 million [4] Revenue Breakdown by End Markets - Storage and Computing revenues were $188.5 million, up 77.7% year-over-year, driven by strong demand for memory and notebook solutions, exceeding the Zacks Consensus Estimate of $177.57 million [5] - Automotive revenues contributed $144.9 million, compared to $87.1 million in the year-ago quarter, though it missed the Zacks Consensus Estimate of $148.34 million [6] - Industrial revenues increased to $42.6 million from $30.2 million year-over-year, slightly beating the Zacks Consensus Estimate of $42.16 million [6] - Communications end market revenues were $71.7 million, up from $46.7 million year-over-year, but fell short of the Zacks Consensus Estimate of $73.27 million [7] - Consumer end market revenues improved to $56.9 million from $38.1 million year-over-year, missing the Zacks Consensus Estimate of $58.92 million due to lower gaming revenues [7] Operational Metrics - Non-GAAP gross margin remained stable at 55.7%, while non-GAAP operating expenses rose to $133.5 million from $103.4 million in the prior-year period [8] - Non-GAAP operating income increased to $221.5 million from $151.6 million year-over-year [8] Cash Flow and Liquidity - Operating cash flow for the quarter was $256.4 million, compared to $248 million in the prior-year quarter [10] - As of March 31, 2025, cash and cash equivalents totaled $637.4 million, with $105.8 million in other long-term liabilities [10] Future Outlook - For Q2 2025, the company estimates revenues between $640 million and $660 million, with non-GAAP gross margin expected to be between 55.2% and 55.8% [11] - GAAP gross margin is anticipated to be in the range of 54.9% to 55.5%, with GAAP operating expenses projected between $189.0 million and $195.0 million [11]

Core Insights - Monolithic Power (MPWR) reported revenue of $637.55 million for Q1 2025, marking a year-over-year increase of 39.2% and exceeding the Zacks Consensus Estimate of $635.14 million by 0.38% [1] - The company achieved an EPS of $4.04, up from $2.81 a year ago, surpassing the consensus EPS estimate of $4.00 by 1.00% [1] Revenue by End Market - Storage and Computing: Revenue of $188.51 million, exceeding the average estimate of $177.56 million by analysts, with a year-over-year increase of 77.6% [4] - Communications: Revenue of $71.67 million, slightly below the average estimate of $73.28 million, reflecting a year-over-year increase of 53.7% [4] - Automotive: Revenue of $144.90 million, below the estimated $148.34 million, showing a year-over-year increase of 66.4% [4] - Enterprise Data: Revenue of $132.92 million, slightly above the average estimate of $131.33 million, but a year-over-year decrease of 11.2% [4] - Industrial: Revenue of $42.60 million, slightly above the estimated $42.17 million, with a year-over-year increase of 40.9% [4] - Consumer: Revenue of $56.95 million, below the average estimate of $58.93 million, reflecting a year-over-year increase of 49.6% [4] Stock Performance - Monolithic's shares have returned +0.4% over the past month, outperforming the Zacks S&P 500 composite, which declined by -0.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - Monolithic Power (MPWR) reported quarterly earnings of $4.04 per share, exceeding the Zacks Consensus Estimate of $4 per share, and up from $2.81 per share a year ago, representing an earnings surprise of 1% [1] - The company posted revenues of $637.55 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.38%, and compared to year-ago revenues of $457.89 million [2] - Over the last four quarters, Monolithic has consistently surpassed consensus EPS and revenue estimates [2] Group 2: Stock Performance and Outlook - Monolithic shares have increased by approximately 0.2% since the beginning of the year, while the S&P 500 has declined by 5.3% [3] - The future performance of the stock will depend on management's commentary during the earnings call and the company's earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $4.04 on revenues of $636.85 million, and for the current fiscal year, it is $16.97 on revenues of $2.64 billion [7] Group 3: Industry Context - The Semiconductor - Analog and Mixed industry, to which Monolithic belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Financial Data and Key Metrics Changes - In Q1 2025, Monolithic Power Systems (MPS) achieved record quarterly revenue of $637.6 million, which is slightly higher than Q4 2024 and 39.2% higher than Q1 2024 [3][4] - The company continues to focus on innovation and maintaining high-quality standards, which contributed to this revenue growth [4] Business Line Data and Key Metrics Changes - The Storage and Computing segment revenue increased by 38% quarter over quarter due to strong demand for memory and notebook solutions [4] - Automotive revenue increased by 13% from Q4 2024, marking the third consecutive quarter of sequential double-digit growth [4] Market Data and Key Metrics Changes - MPS is experiencing strong demand across various markets, including robotics, automotive, data centers, building automation, medical, and audio [4] - The company is diversifying its end market applications and global supply chain to capture future growth opportunities [5] Company Strategy and Development Direction - MPS is transitioning from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider [5] - The company is investing in new technology and expanding into new markets to maintain supply stability and adapt to market changes [5] Management's Comments on Operating Environment and Future Outlook - Management expressed increased confidence in the enterprise data segment, anticipating design wins to ramp in the second half of the year [20][24] - The company is not forecasting specific numbers for the second half but is optimistic about overall performance due to improved visibility and design wins [20][24] Other Important Information - MPS is focusing on diversifying its manufacturing and R&D efforts globally to mitigate risks associated with tariffs and supply chain disruptions [13][17] - The company is preparing for significant growth in the automotive segment, particularly with the transition to 48-volt and 800-volt systems [42][45] Q&A Session Summary Question: Is the enterprise data segment at a low point for the year? - Management indicated that they feel more confident as they approach the second half of the year, with expectations for improvement [7][10] Question: How are global diversification efforts impacting the company? - Management highlighted that local manufacturing for local customers has been emphasized, particularly outside of China, which has improved their position [13][14] Question: Can you provide guidance on enterprise data performance? - Management stated that while they feel better about the business, they are not tightening the range of expectations yet [20][24] Question: What accounts for the slight drop in gross margin in Q2 guidance? - Management noted that the drop is due to a mix of factors and is being conservative in their outlook [25][26] Question: How significant is the market opportunity for rack power solutions? - Management expects material revenues from rack power solutions to begin in 2026, with initial developments underway [40][41] Question: What is the outlook for the automotive segment? - Management indicated that the automotive segment is expected to see significant contributions from design wins secured in previous years, particularly in North America and Europe [45][46] Question: How is the company positioned in the AI infrastructure market? - Management noted that they are well-positioned to support AI projects, with significant dollar content expected in the coming years [111][112] Question: Is there room for gross margin expansion in the second half? - Management confirmed that there is potential for gross margin expansion, but they will not increase prices for customers in the near term [130][131]

Financial Data and Key Metrics Changes - In Q1 2025, Monolithic Power Systems (MPS) achieved record quarterly revenue of $637.6 million, which is slightly higher than Q4 2024 and 39.2% higher than Q1 2024 [4][5] - The company reported strong cash flows and a diversified market strategy contributing to its performance [8] Business Line Data and Key Metrics Changes - The Storage and Computing segment revenue increased by 38% quarter over quarter due to strong demand for memory and notebook solutions [5] - Automotive revenue increased by 13% from Q4 2024, marking the third consecutive quarter of sequential double-digit growth [5] Market Data and Key Metrics Changes - MPS continues to focus on innovation and expanding into new markets, which is expected to capture future growth opportunities [6] - The company is diversifying its end market applications and global supply chain to maintain supply stability and adapt to market changes [6] Company Strategy and Development Direction - MPS is transforming from a chip-only semiconductor supplier to a full-service silicon-based solutions provider [6] - The company is investing in new technology and expanding into new markets, including robotics, automotive, data centers, building automation, medical, and audio [5] Management's Comments on Operating Environment and Future Outlook - Management expressed increased confidence in enterprise data business for the second half of the year, with expectations for design wins to ramp up [20][25] - The company is not forecasting specific numbers for the second half but is optimistic about overall performance [24][25] Other Important Information - MPS is maintaining a conservative approach to gross margin guidance, anticipating a slight decrease in Q2 due to a mix of factors [27][28] - The company is focused on maintaining its margin model and not competing on price [120] Q&A Session Summary Question: Insights on enterprise data and design wins - Management indicated that while enterprise data came in line with expectations, they expect improvements in the second half due to design wins [20][21] Question: Impact of tariffs on guidance - Management confirmed that there are no direct or indirect impacts from tariffs influencing Q2 guidance [95] Question: Growth opportunities in new products - Management highlighted the potential for significant revenue from new products, particularly in building automation and ultrasound areas [97][100] Question: Margin outlook for new products - Management stated that there is no structural change in margin profiles due to new product ramps, maintaining focus on higher-margin products [119][120] Question: Demand signals in downtrodden markets - Management noted that it is difficult to separate new product revenue ramps from overall market demand but expressed confidence in the second half of the year [122][123]

Revenue Performance - Q1 2025 revenue reached $637.6 million, up 2.6% quarter-over-quarter and 39.2% year-over-year[11] - Automotive revenue increased 12.9% from Q4 2024 to $144.9 million, representing 22.7% of total revenue, and up 66.4% year-over-year[14] - Storage and Computing revenue was $188.5 million, up 38.1% quarter-over-quarter and 77.7% year-over-year, accounting for 29.6% of total revenue[12] - The company forecasts Q2 2025 revenue between $640 million and $660 million, with a GAAP gross margin of 54.9% to 55.5%[28] Income and Profitability - GAAP net income for Q1 2025 was $133.8 million, a significant decrease of 90.8% from Q4 2024, while non-GAAP net income was $193.8 million, down 2.3% from the previous quarter[22] - Net income for Q1 2025 was $133.791 million, up from $92.541 million in Q1 2024, representing a 44.5% increase[33] - Non-GAAP net income for Q1 2025 was $193.813 million, compared to $137.492 million in Q1 2024, reflecting a 40.9% growth[33] - Gross profit for Q1 2025 reached $353.230 million, with a gross margin of 55.4%, slightly up from 55.1% in Q1 2024[35] - Non-GAAP gross profit for Q1 2025 was $355.060 million, maintaining a non-GAAP gross margin of 55.7%[35] - The company reported a total operating income of $168.759 million for Q1 2025, up from $95.487 million in Q1 2024[38] - Non-GAAP operating income for Q1 2025 was $221.534 million, compared to $151.613 million in Q1 2024, marking a 46.1% increase[38] Expenses and Cash Flow - Total operating expenses for Q1 2025 were $184.471 million, an increase from $156.954 million in Q1 2024[36] - Non-GAAP operating expenses for Q1 2025 were $133.526 million, compared to $103.426 million in Q1 2024, indicating a 29.1% rise[36] - Total stock-based compensation and related expenses for Q1 2025 were $53.8 million, down from $56.3 million in Q4 2024[21] - Operating cash flow for Q1 2025 was $256.4 million, an increase from $167.7 million in Q4 2024[24] Margins and Projections - The gross margin for Q1 2025 was 55.4% under GAAP and 55.7% under non-GAAP, with the latter down 0.1 percentage points from Q4 2024[19] - Projected gross margin for Q2 2025 is expected to be between 54.9% and 55.5%[43] - Non-GAAP operating expenses for Q2 2025 are projected to range from $132.600 million to $136.600 million[45] Strategic Initiatives - The company continues to invest in new technology and expand into new markets to capture future growth opportunities[9] - Days of sales outstanding increased to 31 days in Q1 2025, up from 25 days in Q4 2024[25]