Q1 2022 Monolithic Power Systems Inc Earnings Call
My name is Genevieve Cunningham and I will be the moderator for this webinar joint.
Joining me today are Michael Hsing, CEO , and founder of MTS, and Bernie Blegen, VP and CFO .
And of course, if today's conference call, we will make forward looking statements and projections that involve risk and uncertainty, which could cause results to differ materially from management's current views and expectations.
Please refer to the Safe Harbor statement contained in the earnings release published today.
Risks uncertainties and other factors that could cause actual results to differ are identified in the safe Harbor statements contained in the Q1 earnings release and in our SEC filings, including our Form 10-K filed on February 26.
2022 which is accessible through our website.
<unk> assumes no obligation to update the information provided on today's call.
We will be discussing gross margin operating expense R&D and SG&A expense operating income other income income before income taxes net income and earnings on both a GAAP and a non-GAAP basis. These.
These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP.
The table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our Q1 2022 earnings release, which we have furnished to the SCE and is currently available on our website.
I'd also like to remind you that today's conference call is being webcast live over the Internet and will be available for replay on our website for one year along with the earnings release filed with the SEC earlier today.
Now I'd like to turn the call over to Bernie.
Thanks, Joe.
Thank you.
First quarter revenue.
Seven seven.
So that $1 billion 48, 4% higher than the first quarter of 2021.
The year over year revenue increase represented strength overall market and more importantly broad.
Broad based market share gains, resulting from customer acceptance of our new product introductions.
Before looking at our revenue by market.
A word called your attention a change in our reporting.
In order to provide increased visibility on base.
Cloud computing revenue.
Reported or computer and storage and server products.
The table has been included in this world of Marshall and the Companys quarterly revenue on this basis in 2017.
The first one items as cold storage and computing.
I'm really referring to tool storage.
Computing.
The second was around this whole enterprise games gestures revenue.
Datacenter and cloud computing.
In our storage and computing markets.
First quarter 2022.
90, $646 million increased to $6 million or 23, 9%.
For the fourth quarter of 2021 Duisburg.
Due primarily to higher storage and commercial notebook sales confusing.
Storage and computing revenues represented 26% of MTS first quarter 2022 revenue compared with 26.
In the first quarter of 2021.
Okay.
Enterprise data market for us.
First quarter 2022 revenue of $42 $5 million increased five 1% in the fourth quarter of 'twenty. One due primarily to continued strength in data center workstations continued sales.
Private data revenue represented 3% of Mps's first quarter 2022 revenue compared with six 4% in the first quarter 2021.
First quarter of 2022, and communications revenues of $55 $6 million rose $97 million or 21, 1% for the fourth quarter of 2021.
The quarter over quarter increase primarily reflects the higher revenue related to <unk> build outs and satellite communications.
Communications revenue represented 14, 7% of Mps's first quarter 2022 revenue compared with 14, 2% in the first quarter of 2021.
First quarter 2022 revenue from consumer market of $81 million increased $13 6 million or 26% from the fourth quarter of 2021.
Question on quarterly improvement.
The sequential revenue increase reflected the broad based increase particularly related to our Iot business.
Consumer revenue represented 22% of our Q1 revenue compared with a 26, 1% of contribution in the first quarter of 2021.
First quarter 2022, automotive revenue was $54 $5 million decreased three 2% from the fourth quarter of 2021.
Automotive revenue represented 14, 4% of MTS first quarter 2022 revenue compared with 17, 6% in the previous year.
In our industrial market revenue of $48 $5 million was essentially flat with revenue recorded in the fourth quarter of 2021.
Industrial revenue represented 8% of our first quarter revenue compared with 15, 6% in the prior year.
Moving now to a few comments on gross margin.
GAAP gross margin was 57, 9% 30 basis points higher than the fourth quarter, 2021, and 250 basis points higher in the first quarter 2020 one.
Our GAAP operating income was $96 $1 million compared with $78.
$6 million reported in the fourth quarter of 2012.
For the first quarter of 2022.
non-GAAP gross margin was 58, 3%.
40 basis points better than the fourth quarter, 2021, and 250 basis points better than the first quarter of 2021.
Our non-GAAP operating income was $133 $6 million compared to $112 $1 million.
Reported in the fourth quarter of 2000.
Sure.
On both a GAAP and a non-GAAP basis.
Sequential quarterly gross margin improvement.
Was primarily due to better product yet is higher bell as revenue from higher value new product introductions are ramping.
Let's review our operating expenses.
Our GAAP operating expenses were $122 7 million in the first quarter of 2022, compared with $115 3 million for the fourth quarter of 2021.
Our non-GAAP first quarter 2022, operating expenses were $86 $6 million up from $83 $1 million reported in the fourth quarter of 2021.
The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense amortization of purchased intangibles and income or loss.
The deferred compensation plan.
For the first quarter of 2022 stock compensation expense, including approximately $1 million charged to cost of goods sold was $39 $8 million compared with $1 $2 million recorded in the fourth quarter of 2020.
Switching to the bottom line.
First quarter 2022 of GAAP net income of $79 $6 million or $1.65 per fully diluted share.
Compared with $72 $7 million or $1 57 per share in the fourth quarter of 2021.
First quarter 2022 non-GAAP net income of RMB 16, three.
$8 million or $2.45 per fully diluted share compared with $182 $1 million or $2 12 per fully diluted share in the fourth quarter of 2021.
Although the weighted shares outstanding at the end of Q1 2020 to $48 2 million.
Now turning to the balance sheet cash cash equivalents and investments were $775 $9 million at the end of the first quarter of 2022 compared to 720 $75 million at the end of the fourth quarter of <unk>.
For the quarter.
NTIC generated operating cash flow of about $107 4 million compared with operating cash flow of $28 $2 million for the fourth quarter of 2021.
First quarter 2022 capital spending sort of explosive for us.
Yes.
Accounts receivable ended the first quarter of 2020 to $128 2 million days sales outstanding up one day from 48 days at the end of the fourth quarter.
Our internal inventories at the end of the first quarter of 2022 were 311.
<unk>.
Upfront a $259 $4 million at the end of the fourth quarter of 2021.
Days of inventory increased to 178 days at the end of Q1 2022, compared with 166 days at the end of the fourth quarter of 2021.
Historically, you've calculated as days inventory on hand, as a function of our current quarter revenue.
Believe comparing current inventory levels with the following quarters projected revenue provides better economics.
On this basis again as you can see the inventory increased to 159 days at the end of first quarter of 2022 up from 149 days at the end of the fourth quarter of 2021.
I would now like to turn to our outlook for the second quarter of 2022.
We are forecasting Q2 revenue to the range of $440 million to $440 million.
We also expect the following GAAP gross margin in the range of.
$8 four.
Perfect.
non-GAAP gross margin range of $58 759, 8%.
GAAP, R&D and SG&A expenses between $132 million to $47 million and $136 7 million.
non-GAAP R&D and SG&A expenses to be in the major $90 million to 92 million.
This estimate excludes stock compensation and litigation expenses.
So stock based compensation expense of $44 $2 million to $46 $2 million, including approximately $5 million that would be charged to cost of goods sold.
In addition expenses ranging between $2 $8 million to $70 million.
Interest and other and governance expected to range from one point to $81 7 million before foreign exchange gains and losses.
Fully diluted shares to be in the range of 47 eight is for 48 8 million shares.
In conclusion, we.
We'll continue to execute on our long term plan for sustainable growth.
Now from the Webinar asked the question.
Thank you Bernie.
I would now like to begin our Q&A session. As a reminder, if you would like to ask a question. Please click on the participants icon on the menu bar and then click the <unk> button.
Our first question is from Ross Seymore of Deutsche Bank Ross. Your line is now open.
Okay.
Okay.
Yeah.
Yeah.
Okay.
Yeah.
China for us is not there, perhaps because of the month.
Our next question is from Alex Vecchi of William Blair. Alex Your line is now open.
Hey, everyone. Congratulations on a great quarter in a tough environment.
And maybe you can address a little bit the the supply constrained through some of the China Covid impact. It seems like you guys came out from that completely unscathed.
Be interested in some of the dynamics cause somebody to do that.
Well.
Alex.
We claim this kind of aware.
Sorry, My last year not from this year last year many years ago.
And as you remember.
In 2017.
60.
We said that we're going to have multiple greenfield products Whoa Whoa whoa.
And.
And exactly with only the ultimate plus or minus a euro zone and.
So we play modern.
Every aspect including logistics.
And.
Assembly house and our internal testing.
And.
This is not a <unk>.
One year.
We obtained a long time ago.
And.
Now some of that gain when the revenues ramp.
Brent.
It's a.
A little better than we.
We anticipated.
And so that's why you see the results.
And if I can add to that we've also built inventories so that the 178 days at the lower end of our goal of being between 180 <unk> and.
200 days, which provides us a good insurance policy and.
We look ahead to achieving our.
Numbers in the second half of the year, even the end of a second half of 2019.
Our business model is great, but we.
We built.
According to our plan and we know the business that will come out at the time I remember our inventories over 200 days.
And.
Part of it inventories that have been made up.
Our customers a few long haul.
No more reliable NPS.
As a major player.
Okay. That's really helpful. Thank you.
And then maybe one for you Bernie just on gross margin.
Margins have been very strong as it really relates to product mix.
Just on that front, how much more runway do you think you have on the gross margin front from the uplift on sort of your new products going forward.
Sure as you've seen.
In the results that we had for Q1, along with our guidance for Q2, which positions best around 59% gross margin.
I think we've done a fair job of.
Adjusting for the incorrect word but.
Acknowledging.
The uplift in the water space as a result of our product mix.
So again I'll give the same answer I gave last time that we believe that we've created a new floor.
Margins, which we can expand 10 to 20 basis points sequentially, but again, if opportunistically, we see a.
That said July August we would take it up another.
We will be happy to take that.
Wanted to emphasize that.
Well most of our peer companies that benefited us in terms of revenue growth and margin expansion from price increases.
<unk> has been driven primarily by the change in revenue mix, which is phase III is.
Higher value products and it was only in February .
This year, we gave a broad based increase.
Pricing.
Adapt is still far below.
The market has seen.
Yes.
Hum.
Hasan.
The cost to 12 hour.
Our our customers.
And.
Okay.
Margin expansion for our case, we said earlier setting a 2017 or 18, we don't have a heavy.
<unk>.
About 2019, as the market slowed down a little bit and we've built up a lot.
Some amortization.
Yes.
In our production in the pipeline so our margin slide.
Slightly lower but not much.
And now and what you see.
Margin continued to.
Two to grow.
Okay.
That's helpful with that ill go back into queue.
Okay.
Our next question is from Matt Ramsay of Cowen Matt. Your line is now open.
Thank you very much good afternoon, everybody hi can.
Can you guys hear me all right.
Yes.
Alright.
Michael I guess for either one of you guys. It was interesting that you're breaking out sort of that that the <unk>.
Data center piece from the PC and storage.
Business and I guess I wonder a couple of things about that.
May be you guys are trying to signal by breaking those out separately in particular.
The new enterprise data segment.
I don't know, 160% year over year, but that's really before.
The two primary server processor vendors launch with.
With new sockets. This year, so Michael could you maybe talk a little bit about.
The reason for breaking that out and.
The relative growth rates you guys expect to have these two new segments as we go forward.
If you combine them.
Combined the altogether.
We're going to ask.
In the past we answer those questions anyway.
And but we when we reported that one loan.
And so we're just more open more.
More clear.
Published shop with you guys.
Hum.
I will ask.
Less meaningful.
Medium for questions <unk>.
Sure any other reasons okay.
He did a good job of saying that.
Clearly at an inflection point for us an inflection year.
Which will gain momentum as we see.
Intel or AMD or <unk>.
For product releases coming up here so.
In addition to.
The expanding footprint, we have both 48 volt and artificial intelligence.
We believe that this will be one of our areas of sustainable growth for certainly the next three to five years exactly as Michael said, we believe that providing better transparency.
It is definitely there.
Information for our investors.
No. Thanks. Thank you both for that that's helpful.
I guess, if you look at the second quarter.
Guidance that you provided $430 million at the midpoint was quite a bit above.
Where consensus was and certainly where my model was.
Bernie if you might take a second to walk us through.
By segment, how you're thinking about the growth being concentrated in that would be really helpful. Thanks guys.
Yeah I think.
On a dollar and percentage basis, but we're going to see it.
Accelerating ramp.
Enterprise, particularly during the second half of the year.
I think we're going to see continued growth.
Storage and computing, albeit probably not at the same rate as part of the reason for that is that storage tends to be a precursor and used in our experiments to a data center ramp.
I think in each of the two prior quarters Steve.
A good strong ramp in storage and now we're expecting two to three quarters.
Data center.
In rest of the business communications as we said.
<unk> broadened into not only five G.
But also into satellite communications and that's going to continue to be a driver for foreseeable future in the other areas of the consumer.
It's coming along we emphasize the internet of things.
Actually the growth is broad based.
Alright, thanks, very much guys.
Okay.
Yeah.
Our next question is from Quinn Bolton of Needham Cohen. Your line is now open.
So let me offer my congratulations as well I wanted to come back to Alex's question about China, Obviously, you source most of your assembly and.
Wafer capacity in China, and I, just given the zero Covid policy in China, and some of the resulting in Lockdowns are you rethinking the need to diversify outside of China, either on the Assembly and test Assembly and wafer foundry side, and then I guess a related question I think most of you.
Final test takes place in chain do you have any contingency plans in place in case Chengdu is put under lockdown due to covet.
Yeah, we started.
A couple of years ago, when we really started doing so and.
As you know that China has been.
And the manufacturing in Asia.
The center of the World and we can Steve.
Leaving too much on it okay.
If they have a series of problems.
Everybody was worried about it you've got a bigger things.
Sure.
Yes, Doug.
Yes.
We really started getting established.
In a different.
Different political environment.
Has it been Chengdu Michael.
Do you have test capacity outside of Chengdu Chengdu goes under Lockdown.
Yes.
We're starting to have.
About a couple of years ago, but.
Maybe it's a little more than.
A little more than 12 months ago. The study yes.
Yes.
Testing capacity in Chengdu with concentrated on some of our higher value products, including automotive.
And now as Michael just said is now we just started the transition look internationally third parties. So.
We actually have ability and contingency planning going on outside of Chengdu only yes, we have.
Other than visa.
Hi.
<unk> high reliability product okay.
We tested our sides.
And.
Other than that we do.
Pretty high volumes.
Okay.
It's a.
In the <unk>.
Facility.
When I talk about the.
I just mentioned, Nevada is the outside China.
Got it Okay and then my follow up question is around the internal inventory level that you guys have done an absolutely fantastic job of increasing that in a very tight supply environment. I guess my question is as you're approaching now the low end of your target range of 180 to 200 days.
Can you tell us what's going on with lead times I would think is internal inventories get up to your target level that may give you the.
The ability to start to reduce lead times substantially gain even more market share, but wondering if you could.
Give us a sense of what's going on with lead times given that the increase in internal inventory levels. Thank you.
Our economy as a minimum.
This quarter the same as the last quarters.
Even <unk> bookings even.
I don't see any anything the rate of our bookings does not reduce.
And I'm going to use.
You took my answer on both fronts.
Lead times have remained very consistent with the last three quarters.
Again, what youre seeing as far as the buildup of inventories it has been a very conscious and deliberate decision.
To build the inventories in advance of particularly on the enterprise side to meet the demand we expect the second half of the year.
And then.
I think that we've.
We've done a good job of positioning ourselves.
Under.
What has now become uncertain environment.
Thank you.
Our next question is from William Stein of Truest. William Your line is now open great.
Great. Thanks, so much for taking my question and congrats on the very strong result, especially the outlook.
We understand though that.
While while we see a great number overall in particular for the guidance.
There is always moving parts.
When we look at it on a more detailed level and I wonder if.
You are seeing either perhaps showing to customers focusing on getting balanced.
Cats or full sets or however, you want to call it or if youre seeing anything related to Ukraine or the lockdowns in China, whether any of these factors.
Is influencing either the order rates or the backlog for example, if none of these things were happening the outlook would have been even stronger any any qualification that you can provide us would be helpful.
Yes.
Yeah.
I'll now open.
And the NPS.
Joining fees and we.
We are not a dominant.
Application.
Yes.
Application supplier welcome summing it up okay.
So whatever we shifted our view.
Small.
Part of it.
Part of the solutions.
And so we don't know if thats helpful.
Actually not all of them all of them. That's the beauty of it we don't know were aware of these costs.
And.
So.
So whether the Huawei effect on us okay.
We're very very much diversified we actually saw mills.
Okay.
Okay.
You bet.
Okay.
So.
Sure.
You too.
Answer your question if I could.
All of these things, yes, we do know what are the product of.
The product if it goes to cost.
These were.
We're pretty much notes I'm, okay with our product.
And enough, okay and other than that.
Okay. Thank you again here that im sorry.
Sorry.
Just reinforcing the answer from before.
There is no significant PPI, whether it's in the.
Bookings or any other area of our business, we're seeing the changed over the past few quarters.
That's helpful. Thank you.
You've talked about various levels of.
Revenue that you could achieve at full utilization in other words the capacity that you're building for I know that started a couple of years ago, well I'm sure it's ongoing really.
But the capacity.
And the upside that we've seen over the last few quarters of course those were not.
Playing very quickly they were planned a long time ago can you remind us or maybe update us on the medium to long term capacity planning thats in place today, what what levels of total capacity when we can expect over the next few quarters. Thank you.
A quick question I think we answered a question last quarter, we said that women are planned or billings all of the revenue.
And in the next couple of years.
So thats, what we do.
We continue to invest.
Yes, and I think.
Just to sort of lends some credibility to that if you recall about a year ago.
Yes.
We offered.
Q2.
In 2022, and we would be.
2 billion dollar run rate.
And with the guide that we need.
<unk> you.
Spectation.
I think thats.
Lateral so that backs up.
Amount of visibility in our supply chain.
So right now the goal is.
Michael said $4 billion.
Yes, the demand is there this year.
We'll do it yep yep.
What we'll do to bidding as we said.
We use a couple of years ago.
And.
We continue to.
See the demand.
<unk>.
And we.
We continue to see demand and we see that the amendment would be there.
Not a one.
A short term thing.
Okay.
Is that not happen that year, so that will happen.
Guys, Congrats again and thanks for taking my questions.
Yeah.
Our next question is from Rick Schafer of Oppenheimer. Your line is now open.
Thanks.
All the congratulations another stellar quarter from your guidance and outlook.
If I could my first question I'm, just kind of following up on the on the <unk>.
Server breakout and obviously, a big ramp ahead for Qs Mod and cloud this year.
I was curious kind of below that line a little bit if theres any update you could give us on your 48 coal.
Expectations this year or next and within that I'm curious.
Just sort of assume 48 volt virtually all AI accelerators for the next.
Couple of years, but I am curious when do you see 48 volt sort of move into other areas like CPU or some broader markets like auto or industrial I'm curious if you've looked at.
Sort of what that 48 volt, Sam looks like for NPS, because it seems like a like an awful big opportunity.
Yeah.
<unk> okay.
<unk> and the rig is actually starting up in automotive.
And.
And also the server and the a.
Okay.
He's our Cpus and.
<unk>.
Alright.
What are you able to put our current investments.
That's a different things, but at the same same same same technologies and also we see these.
Hello common areas for the year.
Yes, it's all standards and.
So.
<unk> <unk>.
With a fully evolved.
We hope so generic.
Sure.
There's a lot of area, we can grow.
Yes.
Thanks.
48 volt.
Not only are we seeing the ramp.
Adoption more broadly.
That competitively.
I would offer that.
We're very well positioned.
With some of the new technologies that we've rolled out.
And expect to roll out during the course of the next 18 months.
So I think here again, we have time for a product with leases pretty well the inflection of this market opportunity.
Yes.
And I think at.
You're talking about.
Our product a module.
It's Randy.
When combined.
We're providing whatever.
We are having a chip level our module.
I am a solution level.
Thanks.
And then maybe as my follow up just on <unk> I haven't asked.
<unk> in a while but I.
I mean, you guys are in.
Asia.
Big three tier one Oems and I just was curious if you could give us an update on your expectations. I know you flagged <unk> here from <unk> results. So I'm curious what your expectations are for this year.
If there is any update you could give us on.
Yeah, how content compares with what Youre seeing in server data center.
And sort of how that how that ramp looks.
And maybe if you could talk about that.
How are you.
Quantify that opportunity in macro base station.
Thanks, Chris.
And.
The.
G.
Relatively new.
Market segment for us.
So it's not like we can draw from our prior experience and calibrated up or down.
Sort of lagging a little hand to mouth on what.
Demand looks like and how fast per ship.
So we don't have a real good predictive model.
We've talked to you about it.
In the past.
Got.
Again, we believe.
On a broad base.
As you referred to the top three.
A number.
Partners.
Related to <unk> infrastructure, we're providing content.
And while it's easy to.
Look at the base station.
<unk>.
Calculating outlets.
Sam is available to us.
I think that.
We're also in fiber optic in the data center support for <unk>.
Well again.
The transceiver and the base station.
And again I think as Nick pointed out a lot of the initial technology that we're putting in.
Turning to the lower end and not necessarily specialized adaptive too.
<unk> specifically, so we don't have the same level of visibility on how it's being deployed.
We've used this strategy and tactics for the data center, we come in with lower dollar value content building relationships and then we're able to go to higher value.
Context, let me let me let me.
Let me say that.
We do have a custom designs for each.
And we have got plenty.
And somewhat thoughtful optics to August single channel all the way through customers.
And we do have a custom design.
Based on.
Our stand.
Our modules.
<unk>.
These are the products.
It's not really a low end.
But.
These are products that can be used for.
As a telecom with a bias of building blocks that would fly.
Hi, Paul.
Our solutions for each.
Although these blocks are each over the counter.
And.
We do see a lot of activity now and the.
Revenues.
Is it ramping up.
Got it congrats thanks guys.
Our next question is from Chris Caso of Raymond James Chris. Your line is now open.
Yes, Thank you and good evening.
Just a question about.
The profile of revenue growth as we go through the year and thus far.
Over the past several quarters your revenue growth has been pretty broadly based growth in most segments. I know, we've been speaking about and we've been anticipating for a while the server ramp as we get to the end of the year, but.
As we look through revenue in the next kind of 234 quarters do you expect that revenue growth to continue to be broadly based what do you think theres going to be concentrated in any particular segments.
Well.
Our strategy is.
Great.
Many send them to us or we can whenever we're also a growth.
And.
And.
I think that's the strengths.
Okay.
Diversifications.
Ed.
And the next few quarters, we see the demand as you move forward.
Two of <unk>.
23 of 24.
These are pretty much similar we don't see that much of a difference and.
One thing we see is a K a.
Uh huh.
Our customers demand more.
More.
Hi.
Product, which means they can easily adopt and.
Ease of use and.
And the much higher efficiency products and energy.
Efficiency product.
And.
And.
So these are much better floor.
US instead of.
Our customers do a lot of development work, we do with all the development work for our wood.
We developed a solution.
Sure.
Our customers so that means a higher all of them.
Our economy.
<unk>.
<unk>.
So that's.
That's really we see the only the only only tiny difference.
Got it thank you.
My follow up question is about the.
The impact of some of the China, Lockdowns and not from your production side, but rather from your customer side and what we heard from some others or at least one other.
Is that part of the challenges in China right now.
Customers, having facilities that are closed or that freight forward or is this simply unwilling to accept product because although some of the logistics challenges that are going on right now is that something youre facing as well.
And is there any impact on your revenue right now, which might mean some of those issues get get solved.
Some of that.
Goes into the second half of the year.
Absolutely it hit Us and don't get me wrong, even though we've got that.
Even though we've grown this much if we were not that problems Monaco with ship a whole lot more.
But we just have a we anticipated is a little better.
So we can still roll.
In our.
All of our models.
How much of a profit model.
And.
<unk>.
For the fourth.
Yes.
Okay.
<unk>.
On the other hand.
Other than our logistics.
Production limitations.
Limitations, our customers to have a mix too and I clearly see the auto business.
Sure.
We have.
Less problem of a shipping product.
Dan.
Yes other suppliers.
No.
You can speculate is that okay, because because.
Ltd.
Hum.
They are buying back.
Yes, they are purchasing.
Sure.
Our product.
For.
Because they can see other costs.
And I think that we continue to be very resilient under a number of environmental circumstances, but that is the planning that.
We've set in motion.
Years ago, and some of it is our first fiber long list and some of it is a gap that we can be in the moment. So again.
We did.
Knowledge impact.
Customer supply chain effectiveness.
But.
I wouldn't say that.
Announced O&M and we're continuing to monitor it.
Great. Thank you very much.
Our next question is from Torrey Swanberg of Stifel. Nicholas Sorry. Your line is now open.
Thank you.
<unk> from another record quarter.
Stunning.
The first question is on long term growth.
You grew more than 40% last year and it looks like you're on track to growing another 40% this year at least.
Michael in the past you've said.
There is no reason why you can't accelerate growth, even though you have the higher higher revenues.
With that one.
That's good.
So I'm just trying to understand what you think about long term growth at this point is probably the right number.
I know you probably want to commit to a number but anything you can add on that that would be great.
Yeah Okay.
He said is okay.
Adam.
About a few minutes ago, I said that our customers need and demand to more higher value products and.
Solution kind of a related product does not.
Hey, Walter.
Lola that engineering effort to NPS and <unk>.
I see that opportunity is.
If the opportunities are for.
Accelerated growth because.
Think about it if the landscape so we don't make any.
And.
And.
But just on the testing and final are controlled.
The control.
And.
Apply to anything else.
Right.
Apply to models of fire codes apply to any other.
The solution is all related to power all relate to what we know.
So from now on you will see NPS.
<unk> provides a parking place solution for all kind of robotics.
Industrial automation <unk>, and therefore building control center.
Those type of a product.
And.
Which has a lot higher asps.
We buy those components are which specifies both those components and we incorporated to our solutions.
Sure.
The unit.
Price will be much higher.
And.
All right now.
So.
How fast we can put all these solutions together and attending to a meaningful revenue.
And.
I can't predict.
And then you have got quite a lot of advantages to <unk>.
Now the same times mps's the semiconductor.
Chip business keeps growing.
No.
I don't see.
In the near term.
In the next year or so.
I don't see any slowdown.
And.
It's actually accelerating.
And so.
So to the other.
Our model does that.
At the very infancy.
And.
If you recall three or four or five years from now I think of the way will be a real solution company.
The semiconductor.
It is only a part of it.
In the total comp.
So I.
I want to grow mall similar to Alpha I assume more than $10 billion of companies gave me in 2015 buildings at a property and then there's no reason why why now.
That's great perspective, thank you for that Michael as my follow up.
I wasn't aware you had a lot of traction in the satcom market.
I was just hoping you could add a little bit more color there what types of applications.
Some of the strengths of the company has to be in that market.
And are you continuing to introduce new products because that to me. It's obviously very high margin business right, but it's also very difficult market to two questions.
Yes.
Our committed satellite communications.
Not only in a healthy lifestyle.
Last issue, there's a huge amount.
And.
There's a new standard and we began.
There's a lot of new activities in their phase out and.
We designed it into a.
A few years ago.
Mostly it is a power modules and.
Also we have related to these in the fellow eye itself.
These are control the solar panels.
Also.
All of us.
I think the quality units.
So.
And look while you just.
Okay.
<unk>.
These are pharma in China too.
Power following updated cannot throw out there.
Our total receivers.
And.
And also all the way down to the.
User.
Okay.
And the we all benefited from that.
Excellent very good congratulations again.
Thanks.
Our next question is from Ross Seymore of Deutsche Bank Ross. Your line is now open.
Hey can you guys hear me this time, Yeah Ross you are there.
I've been here the whole time.
I'm glad that we got it to work. So I guess the first question is a longer term one and then I'll follow up with the shorter term one Michael you talked many times on tonight's call about moving up the value chain, adding more value customers wanted to use monolithic for more and more than in the past that's going from kind of the second or third tier folks in various market.
It's up to the first tier so really what I wanted to get at are you seeing evidence of moving up to higher and higher value customers and does the fact that you didn't raise prices as much as your peers and that you had availability is that giving you longer term design wins higher value design wins anything you could do to quantify.
That dynamic.
I don't know how to quantify that.
Because we don't we.
We don't.
Well.
We then have a real winner.
The increase.
All of those are.
Hum.
First tiers the value the strategic customers because of that.
These prices.
Our negotiated away before that and we have the auditor.
And so.
So.
We always said that what we do what we said when we do.
Okay.
We have had the honest.
And I think that's also part of the NPS It Randy.
And.
And.
So.
That benefits from a more long term.
And.
For other high high value customers high value products.
It's a sporadic.
This is the very very beginning.
A lot of customers don't even know you offered.
But you also.
The anti solutions.
And.
So even though they don't even know that okay. NPS is just starting.
How does that.
Actually relates to a few years ago, we said that we're gonna be e-commerce okay.
Thomas parking program.
Program a malls all these <unk> and these are all with it.
And so.
So.
Yeah.
We do.
So not only in Poland.
Large customers and understand where the satellite company.
Companies that we have are they walk NCS that do a lot more.
<unk>.
Even that even.
Given the data science.
<unk> and <unk>.
A demand all of these are we provide the entire unit.
And.
And they don't have to get back.
So that's actually across the board.
We have just to name a few.
Thanks.
You see a small <unk>.
Got it.
Great. Thanks for all that color Michael.
For my follow up a nearer term question.
Bernie this could either be both revenues and or the gross margin and your answer on this and it's really about the mix you talked about the gross margin rising because of mix and new products being the driver of that so if I look at the industrial and automotive businesses. The last couple of quarters, the great year over year, but they've been flat to a little bit down sequentially for the last six.
Or so is there anything going on in that business is it just lumpiness is it waiting for to some design wins.
And on the mix side of that equation for gross margin I think most people believe those could be some of the more accretive areas. So how how is the mix such a positive for your gross margin. If the two areas that are supposed to be the highest margins are actually slightly underperforming the others.
Alright.
Okay. Thanks for your question just for questions Yeah, Yeah. That's.
That's a.
References as Michael said earlier is the power of our model of diversification.
Mark.
If you go back to the performance revenue.
Performance demonstrated industrial and automotive last year.
They were.
Neither our growth drivers.
And in current year.
Collected with the <unk>.
Help us to end markets really came down to it.
It being the timing of shipments.
So we believe that as far as the design wins that are coming in.
We don't believe that we over shipped.
To the extent that.
That's because it causes a problem.
Orders on the book remained incredibly positive.
So again, it's just it's more of a difference quarter over quarter.
Anything fundamentally different about the market.
And.
Sure.
<unk> also used there was a question of why are the margins both up.
The two segments.
Okay.
The year to year over year with growth Okay.
Look at that.
From a Q3 last year to announce that we have both segments our growth as a contributor.
Of all the modules.
Okay.
<unk> and <unk>.
Consumers.
Uh huh.
We phased out that market.
On the last years.
Maybe it's a year.
Beginning of last year.
When.
When the weather.
When our capacity is just the issues that I've asked to you. Its also we always base already.
Lower margin.
Another part of it.
But the overall.
Greenfield products might be driving that.
Yeah, and just to add to Michael's point as far as the phasing out of lower margin business.
We're trying to rationalize our wafer starts to capture the largest opportunity and as a result of the.
The lower margin business.
It used to have in our portfolio.
We haven't emphasized adding a production planning which is not there.
As a component of our business, but it has been historically.
Thank you.
Our next question is from Hans <unk> from Rosenblatt.
Your line is now open.
Hey, thanks.
Thanks for fitting me in and congratulations like everybody else's Vinci.
Hey, I have two questions.
Michael if we were to split 48 volts.
As an opportunity so I'm thinking it's hitting 48 volts to the rack in the data center and within the rack getting that 48 volt to the board.
And every board has has to deal with the accelerators and power issues. There. So there's three touch points. If that's the way to look at it what is the opportunity for each and where would you be seeing the first incremental business now for 48 volt for MTS.
I think it's.
The solution you're right. Okay, and then now the question is.
Thus depending on applications.
48 boss and.
Does it bounce with all those soft off a viable concept I believe hospital.
One <unk>.
Yes.
The last part we don't do that.
Our customers like it.
And.
There's a few providers.
For the solution is not com.
And.
So we play in the market.
Stop at 448 <unk> in the two five.
Okay.
Thus the market with place became Gander and.
It's the ultimate yield on materials, everybody else that he can't John Beach.
And.
Hum.
Our competitiveness for Biosimilar solutions.
Hum.
So thats not.
Not a ton of them. We know this is the application.
Which one.
We don't know.
Which went away.
Hard to tell all of these are high current product and you probably know more than items both.
Both of those 600 watts.
1000 watt and even some was a couple of other wall.
You'll see a diesel or NPS.
Now.
Diesel is at the higher one as you go into Orange smaller and.
So.
In the coming years.
Those accelerated cost populates demand.
But the other standards and.
That's why you see it ease up 48 volts of incumbents as well.
And.
And.
Then that you have a new solution that we provide.
Okay and the increased.
Close to it.
Oh.
Close to 1%.
Okay.
Okay.
Okay efficiency.
To sum up.
Yeah.
Thanks that was very helpful. Michael This is Mike my follow ons.
And this.
What is the view of the PC market for MTS, I think Intel mentioned at <unk>.
Low end of the PC market is weak, but the other parts okay.
Whats your view really have participation.
Yeah, we.
Obviously, okay.
We do well and that we do.
Tcs is a PC the commercial Pcs that even though the.
In our business.
On mobile we see it.
And but.
For us is a very opportunistic because we have a product developed our survey.
And without much of a engineering efforts, we can spin off with a few other products if you will.
Products.
For commercial PC.
And.
Commercial loans and.
On the other hand, we do battery management, we do we do.
Actually panel.
Panel politics.
And we're pretty much where can offer.
Notable other than our memories.
And then in the Cpus and.
So thats.
It is very opportunistic and we.
Currently we see the demand.
<unk> strong.
Yes.
The micro data.
Uh huh.
We have a very good footprint in the commercial side and because we have so many different kinds of offerings and what we're seeing is being able to sell additional content into the same platforms.
Yes.
Okay. Thank you very much.
Is there any follow up questions. Please click the raise hand button.
As there are no further questions I would now like to turn the webinar back over to Brendan Brennan.
Thanks Jen.
I'd like to thank you all for joining us for the Q1 2022 earnings Webinar I look forward to talking to you again during our second quarter conference call, which will likely be in July .
And have a nice day.
Yeah.
Yeah.
And today, it's almost that.
Yeah.
<unk>.
At this time.
Yeah.