MPS(MPWR) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2022, Monolithic Power Systems (MPS) achieved record revenue of $1.79 billion, growing 48.5% from the prior year despite industry-wide supply chain constraints [8] - Q4 2022 revenue was$ 460 million, down 7.1% from Q3 2022 but up 36.7% from Q4 2021 [26] - Q4 2022 non-GAAP net income was $154 million or$ 3.17 per fully diluted share, compared to $3.53 per share in Q3 2022 and$ 2.12 per share in Q4 2021 [22] - Q4 2022 GAAP gross margin was 58.2%, down 50 basis points from Q3 2022 but up 60 basis points from Q4 2021 [27] Business Line Data and Key Metrics Changes - Enterprise Data revenue grew 116.1% year-over-year to $251.4 million, primarily due to higher sales of power management solutions for cloud-based applications [14] - Storage and Computing revenue increased 76.8% to$ 452.6 million, driven by strong sales growth for storage applications and enterprise notebooks [15] - Automotive revenue rose 46.8% to $300 million, reflecting increased sales for automated driver assistance systems [24] - Industrial revenue grew 18.6% to$ 218.2 million, while Consumer revenue increased 13.2% to $319.5 million [16] Market Data and Key Metrics Changes - In Q4 2022, Automotive revenue grew 72.8%, Enterprise Data revenue increased 69.0%, and Storage and Computing revenue grew 55.0% year-over-year [18] - Consumer revenue decreased by 20.1% in Q4 2022 compared to the previous year [18] Company Strategy and Development Direction - MPS is diversifying its global footprint by expanding R&D centers and supply chain partnerships outside of China to better align with customer demand [12] - The company introduced a new product line of isolated power modules for applications exceeding 1 kilowatt, with initial revenue expected in 2024 [9] - MPS aims to leverage its advanced technologies and product quality to maintain a competitive edge in the market [8] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding near-term business conditions due to elevated inventory levels but noted the ability to adapt to market changes [17] - For Q1 2023, MPS forecasts revenue in the range of$ 440 million to $460 million, with GAAP gross margin expected between 57.4% and 58.0% [35] Other Important Information - MPS announced a 33% increase in its quarterly dividend to$ 1 per share [38] - The company is focusing on business development and investing in infrastructure to support long-term growth [38] Q&A Session Summary Question: Outlook for computing storage business - Management noted that while there is weakness in notebooks, memory sales remain strong, and they expect notebooks to improve in early 2023, leading to a flat outlook for the first half of the year [42][44] Question: Update on power isolation module business - MPS is venturing into wide bandgap materials and expects to see results in the second half of the year [51] Question: Impact of sourcing outside China - Management clarified that MPS has significant manufacturing capacity outside of China and has not seen any revenue impact from customers wanting to source products outside of China [66] Question: Consumer business strategy - Management indicated that they are prepared to be more aggressive in the consumer market as opportunities arise, despite it being a smaller segment of revenue [68][70] Question: Inventory levels and revenue growth contributors - Management confirmed that channel inventories have stabilized and that revenue growth is driven by a mix of ASP increases and unit growth [79][81] Question: Concerns about 2022 growth sustainability - Management emphasized that their products are unique and programmable, which helps maintain market share despite potential headwinds [97] Question: Update on data converter business - Management acknowledged the high barriers to entry in the data converter market but expressed optimism about their competitive positioning [132]