Monolithic Power Systems Q4 2024: Building Silicon-based Solutions
Main takes from Conference Calls and Earnings Report with my Personal Touch
Hello explorer, welcome back! 🧑🚀
Today, I’m continuing my earnings reviews with Monolithic Power Systems (MPS) after covering Cloudflare yesterday. Originally, I planned to dive into Amazon, but given the extensive coverage it already gets, I’ve decided to focus on this lesser-known gem instead.
If you’ve been following Expanse Stocks, you know I’ve been tracking MPS closely, with a Deep Dive published two months ago 👉 𓇲 MPS, where I highlighted the opportunity created by market fears over Nvidia canceling power module orders due to unproven power management issues.
Well, it turns out those fears were overblown. Looking at MPS's excellent earnings report released yesterday—and yesterday’s price reaction (+9%)—there’s little to worry about and plenty to like about this under-the-radar, well-diversified semiconductor business for the long haul.
Let’s break it down! 👇
Expanse Stocks x Finchat.io Partnership!
🎁 Get 20% off + 2 months free on any Finchat plan! →📎 Claim Discount
Not a member yet? Join Expanse Stocks for free to access Deep Dives, Monthly Specials, Hidden Gems, stock news, and more!
📰 What’s New?
Free Access to 📊 Quarterly Updated Portfolio Composition - by Industry and Geography, plus Valuation Metrics → 📎 Expanse Stocks: Behind-The-Scenes
📌 Free-to-Read Articles (📎 linked below)
🔎 Deep Dives Brief – ⛅ Cloudflare | 👷♂️ Parsons | 𓇲 MPS | 🥼 Medpace | 🔌 Arista Networks
💎 Hidden Gems – Latest: Third Edition (2 British small-cap treasures)
🤏 Monthly Picks +🎅 Christmas Special: Top 5 Picks for 2025
💸 General Investing - Latest: DCF & Reverse-Engineered DCF (GOOG, ASML examples) + Moaty Software Companies (6 Gems)
💬 Join my Chat! ( 📎 Learn more)
👀 Coming Next
📊 Understanding ROIC, ROIIC, & ROCE - Measuring Investment Efficiency
💎 Hidden Gems - Special Edition II (Paid Subscribers)
🔐 Paid Subscriber Exclusives
💎 Hidden Gems - Special Editions + exclusive sections from recent Hidden Gems articles
🎁 Bonus Picks - From 🎅 Christmas Special
📊 DCF & Reverse DCF Models – Download in 📎 Portfolio Section
➕ Unlock Premium Content – For just $0.39/day ($12/month) or $0.27/day ($100/year) with the annual plan!
📎 Full Portfolio Content - 🗓️ Biweekly Updates (Last Update: 28-Feb-2025)
🔎 Stock Picking Methodology – Learn my long-term strategy
💼 Full Portfolio Access – Holdings, Valuation metrics & Performance tracking
📈 Live Trade Updates – My latest trades & watchlist additions
📊 DCF & Reverse-Engineered DCF Models – Proprietary models & valuation guides
🎯 Swing Trading Strategy – My short-term trading approach
💬 Private Community Chat - 📎 Learn more
Q4 2024 Financial Results
Revenue Growth 🟢
Q4 Revenue: $621.7M, up 37% YoY, above expectations.
Full-Year Revenue: $2.2B (+21% YoY), the 13th consecutive year of growth
Profitability & Margins 🟢
Gross Margin: 56.3%, driven by higher-value product mix and operational efficiency.
Net Income: $167.2M for Q4, representing solid bottom-line growth.
Free Cash Flow: Returned 86% of its FCF to shareholders over the past 3 years.
Shareholder Returns 🙌
Dividend Increase: 25% increase to $1.56 per share.
New Share Buyback: Completed a $640M repurchase program and announced a new $500M authorization for the next 3 years.
📌 CFO Bernie Blegen on financial discipline:
"We remain committed to investing in long-term growth while ensuring shareholder-friendly capital allocation. Our financial model allows us to return significant value to investors without compromising innovation."
2025 Outlook
MPS expects a slower start in H1 2025, followed by a stronger ramp in automotive, communications, AI, SiC and enterprise data in H2. 👀
Automotive Growth & EV Expansion 🟢
Strong design wins in 48V and 800V systems, particularly for ADAS and power isolation solutions.
Silicon carbide (SiC) inverters expected to ramp in late 2025 for clean energy applications.
Note 👉 This represents another revenue stream opportunity with high margins to their well-diversified portfolio 👌
📌 CEO Michael Hsing on automotive adoption:
"Once these new EV platforms ramp, we expect to be a dominant player in 48-volt and power isolation solutions, setting us apart from competitors."
Enterprise Data & AI Growth
AI-related demand is expected to accelerate in H2 2025.
Power modules & AI accelerators will be key drivers in data centers and networking.
📌 Hsing on enterprise data:
"We are gaining significant market share in server power solutions. As the market ramps, so will MPS revenue."
Notebook, Communications & Optical Growth 🟢
Optical transceivers are seeing renewed demand, particularly in fiber optic data centers.
Communications segment showed strong rebound in Q4, with further expansion expected in 2025.
Battery management solutions for enterprise notebooks expected to drive further adoption.
📌 VP Tony Balow on communications:
"The biggest inflection point is fiber optics, and we expect this trend to accelerate in 2025."
"We are early in the ramp cycle for fiber optics, and we expect revenue from this segment to grow meaningfully over the next few quarters."
AI, Silicon Carbide & New Product Innovations
MPS continues expanding beyond traditional power management into data converters, DSP audio, battery management, and SiC solutions.
Silicon Carbide (SiC) Expansion
MPS introduced a next-gen silicon carbide inverter for high-powered clean energy and EV applications.
Initial SiC revenue ramp is expected in late 2025, with wider adoption in 2026.
📌 Hsing on SiC market opportunity:
"This is a multi-billion-dollar opportunity, and we are positioning ourselves to capture a significant share as the market evolves."
Battery Management & AI Power Modules
New battery management solutions for enterprise notebooks enable faster charging and longer battery life.
Expanded power module lineup for data centers and next-gen AI accelerators.
Diversification & R&D Investments
MPS is evolving beyond a chip supplier into a full silicon-based solutions provider.
The company is working on advanced DSP audio solutions, high-accuracy ADCs, and power isolation technologies.
📌 Hsing on long-term strategy:
"We’ve spent decades building a diversified portfolio. If one segment slows, another picks up. That’s the strength of our model."
Analyst Day Teaser
Investor Day (March 20, 2025): MPS will unveil next-gen product innovations, including AI-focused solutions.
📌 Hsing on future products:
"The most exciting product we haven’t announced yet. Join us on March 20, and you’ll see why."
Challenges & Risks
Enterprise Data Volatility
Near-term AI demand is uncertain, with some hyperscaler ramps delayed into late 2025 👀
Memory, networking, and optical markets are expected to see growth, but at different paces.
📌 Blegen on enterprise data outlook:
"We expect enterprise data to be flattish in 2025, but with stronger growth in the back half as new hyperscaler projects ramp."
Automotive Market Timing
EV platform adoption rates vary, impacting the timing of revenue realization.
While design wins are secured, the pace of adoption remains a variable.
📌 Hsing on EV uncertainty:
"We know 48V and 800V power solutions will take off. The only question is exactly when."
Macro & Supply Chain Risks
Global demand fluctuations and inventory digestion in certain segments could create near-term headwinds.
📌 Blegen on navigating market cycles:
"We’ve been through many cycles, and our ability to adapt to shifting demand patterns remains one of our biggest strengths."
🧠 Final Take
MPS wrapped up 2024 with record revenue, solid execution, and growing momentum in AI, automotive, silicon carbide, and enterprise data.
Near-term uncertainty around hyperscaler ramp delays in H1 2025 may arise doubts, but MPS’s diversification strategy, innovation pipeline, and high customer switching costs set it up for sustained growth.
With AI, EVs, and power-hungry data centers driving demand, MPS is positioned to capitalize on multiple billion-dollar opportunities in the coming years.
As CEO Michael Hsing put it:
"MPS is no longer just a power management company. We’re building complete silicon-based solutions that redefine what’s possible."
Ready to dive deeper? Here’s what I offer and how I can help you
Free Access to 📊 Quarterly Updated Portfolio Composition - by Industry and Geography, plus Valuation Metrics → 📎 Expanse Stocks: Behind-The-Scenes
➕ Unlock Premium Content – For just $0.39/day ($12/month) or $0.27/day ($100/year) with the annual plan!
📎 Full Portfolio Content - 🗓️ Biweekly Updates (Last Update: 28-Feb-2025)
🔎 Stock Picking Methodology – Learn my long-term strategy
💼 Full Portfolio Access – Holdings, Valuation metrics & Performance tracking
📈 Live Trade Updates – My latest trades & watchlist additions
📊 DCF & Reverse-Engineered DCF Models – Proprietary models & valuation guides
🎯 Swing Trading Strategy – My short-term trading approach
💬 Private Community Chat - 📎 Learn more
🔐 Full access to all my articles