Q3 2025 Monolithic Power Systems Inc Earnings Call Q&A

October 30, 2025

Speaker #1: It's good for for the industry .

Speaker #3: Earlier today , along with our earnings announcement , NPS released a written commentary on the results of our operations . Both documents can be found on our website .

Speaker #2: Yeah I could see enterprise data growing . You know , in the range of 30 to 40% in 2026 . For us . Much of that though would be back in the second half of the year .

Speaker #3: Before we begin , I would like to remind everyone that in the course of today's presentation , we may make forward looking statements and projections within the meaning of the private Securities Litigation Reform Act of 1995 that involve risks and uncertainties .

Speaker #2: So while we've seen a number of new players that have been layered in , I think the material ramps are more weighted to the second half of the 26th .

Speaker #3: The risks , uncertainties and other factors that could cause actual results to differ from these forward looking statements are identified in the Safe Harbor statements contained in the Q3 2025 earnings release .

Speaker #2: That's very helpful . If I could follow on to that . You know , since since you provided a little bit of color on that Bernie , when you look at that 30 to 40% growth is is that , you know , because I know that , you know , some of the the vertical power designs , for example , you have more content .

Speaker #3: Our Q3 2025 Earnings commentary and in our SEC filings , including our form 10-K , which can be found on our website . Our steaks are made as of today , and we assume no obligation to update this information .

Speaker #3: Now , I would like to turn the call over to Bernie Blegen .

Speaker #4: Thanks , Arthur . Good afternoon and welcome to our Q3 2025 earnings call . In Q3 , NPS achieved record quarterly revenue of $737.2 million , 10.9% higher than the second quarter of 2025 and 18.9% higher than Q3 of 2024 .

Speaker #2: What , what what's the driver of that ? Is it fairly broad based ? Is it is it skewed towards , you know , some of the basic solutions , you know , more towards vertical power , whatever kind of color you can give behind that 30 to 40% expectation .

Speaker #3: And .

Speaker #1: CEO , I don't know how to make a 3,040% cost . Okay . I don't know . Okay . And the opportunities there okay .

Speaker #4: The performance reflected the ongoing strength of our diversified market strategy . Consistent execution continued innovation and relentless customer focus . Let me call out a few highlights from the third quarter .

Speaker #1: If we didn't deliver a 30 or 40% , the stocks are still from the from a $900 to $400 . Okay . That what kind of fuck up is that ?

Speaker #1: Okay . And and so I don't want to make them very . Just waiting for the numbers . Let the numbers show .

Speaker #4: A diversified market strategy drove year over year revenue growth in all of our end markets . We continued to expand our automotive customer base with another major tier one supplier adopting NPS for its next generation Adas solution .

Speaker #2: Fair enough . Thank you .

Speaker #4: Our next question is from Kelsey Chia of Citi Research . Kelsey , your line is now open .

Speaker #4: Additionally , we saw our first design for a full BMS solution on a robotics platform , which further supports our transformation from being a chip only semiconductor supplier to a full service silicon based solutions provider .

Speaker #6: Hi . Hi , Michael . I'm Bernie . Thanks for taking my question . So my question is on the competitive landscape . And I was hoping if you could share more , especially with regards to material side of things like gallium nitride , silicon carbide , I think your biggest enterprise customer has been signing a lot of partnerships with all these semiconductor companies , just wondering , MPs positioning in those and if if you actually see those materials as being important in the next generation of the power modules and chips .

Speaker #4: Overall , we continue to demonstrate our ability to grow and swiftly adapt to all aspects of all aspects of our business , to the fluid , geopolitical and macroeconomic environment .

Speaker #4: Our proven long term growth strategy remains intact as NPS focuses on innovation and solving our customers most challenging problems . We continue to invest in new technology , expand in new markets , and to diversify both our end market applications and global supply chain .

Speaker #4: This will allow us to capture future growth opportunities , maintain supply chain stability , and quickly adapt to market changes as they occur .

Speaker #1: very early stage where , where evaluating it and also don't forget about silicon silicon power mOSFET okay . Have the evolved we engaged a lot of new new new development and a lot of the data showed it can be very cost effective .

Speaker #4: I will now open the webinar up for questions .

Speaker #3: Thank you Bernie . And 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 Raise Hand button .

Speaker #1: And also can compete with the silicon carbide .

Speaker #3: Our first question is from Josh Buchalter of Cohen . Josh , your line is now open .

Speaker #6: Got it . Thank you . And .

Speaker #5: Hey guys . Thank you for taking my question . And congrats on another beat and raise . I guess to start , maybe adding up about a percent .

Speaker #1: A very new that's a very , very recent development .

Speaker #6: Yeah okay . Got it . And I would just like to have a sense of how do you guys feel today versus a quarter ago especially .

Speaker #5: Can you give us the puts and takes of which end markets you expect to grow more or less , and you know , of note , I think earlier you mentioned enterprise data was expected to be flat to down 20% .

Speaker #6: You guys have come a long way since the start of the year when you're dealing with all these market share changes , visibility on the ASIC customers and things like that .

Speaker #5: Any updates to the guidance for that segment in particular ? Thank you .

Speaker #4: Sure . Josh . When you look at Q3 , I think that we saw a little bit better than anticipated performance in both our enterprise data and industrial markets .

Speaker #6: And given the slew of announcements from from all these big mega partnerships , how do you see that relative to your opportunities and also , you know , given the maturity of the supply chain , I believe like things are probably , you know , the supply chain partners are getting to a good cadence .

Speaker #4: We had pretty much every other group was , as we anticipated . Looking ahead , and I know that you're interested in enterprise data .

Speaker #6: So how do you guys feel with regards to those recent announcements relative to your to your opportunity set . ?

Speaker #4: We've seen layering of additional customers . Again , this layering effect Q4 and is providing good momentum as we look ahead into the early part of next year .

Speaker #1: I don't measure quarter by quarter's . I'm measured by multiple years . So so I can tell you that .

Speaker #2: Okay . I guess the simplest way is we're very broadly indexed across not just the the merchant vendors or the large Asics , but medium and small time opportunities and all of these need to find their way into the marketplace .

Speaker #2: Well , I should add all these in a script readout . Bernie mentioned that a list of market segment and . They start growing and we look back in the last few quarters , all these growths are coming from a greenfield product that that will release the two , two , three years ago .

Speaker #2: And it's right now we're still very , very early in the process . So as Michael said , it's very hard to sort out in any particular time period .

Speaker #2: But I think that we're as well indexed amongst all the opportunities as anybody in this market .

Speaker #2: And now we see the city result . And so in a near future , in the next few quarters and we will see these were continue to to enhance our , our revenues .

Speaker #6: Okay . Thank you .

Speaker #4: For last question is from Jack Egan of Charter Equity Research . Jack , your line is now open .

Speaker #7: Great . Thank you for taking the questions . I have one on enterprise data . And then one on modules . More broadly .

Speaker #7: So so the shift to modules and vertical power delivery with the custom ASIC ramp should be a pretty big tailwind for MPs and kind of wondering about what the main drivers have been , at least so far for those customers that are switching from lateral to modules or vertical power .

Speaker #5: Thank you for the color there . Maybe a follow up on that Michael . You know , you've been pretty clear like philosophically you have some reservations and even frustrations with the AI market because of the concentration and visibility , given all the massive announcements over the last quarter , even in that space , maybe you could spend a couple minutes talking to us about , you know , just big picture philosophically , how you're approaching these huge forecasts .

Speaker #7: So I'm not really sure if you have this level of granularity , but . Among the major benefits like higher power density , higher efficiency , smaller footprint on the top side of the board , etc.

Speaker #5: And I'm sure competitive sockets with with massive scale , you know , how do you guys figure out which opportunities to go after and service and your thoughts on the market just given ?

Speaker #7: is there any one characteristic that's kind of being cited by your customers as the main reason that they are moving to those modules or vertical power delivery ?

Speaker #5: You know , I think you've had frustrations about it distracting from your diversified growth . Thank you both .

Speaker #1: Well , we don't see a from from a chip to module . Whoever stays the module stays the module . Start with the module .

Speaker #2: Yeah . As you said . Yeah . It is a it is a kind of a distraction . Okay . But business is business .

Speaker #1: Whoever stays the chip , stay with the chip . Okay . And so if the NPS provides the both okay and both chip solutions and and module solutions and at this time okay .

Speaker #2: The good money the good money okay . We don't want to take a bad money . Okay . And but overall , the bottom line is NPS want to demonstrate in the , in any segment of the market , we are the best we have possessed the best technology .

Speaker #1: And so I don't know if it answers that question for you okay .

Speaker #2: And best customers . Customer service and we're solving problems . We demonstrated that we can have a qualities and achievements and okay , all these all these categories , we we are the best company in in terms of which segment , which side of AI company .

Speaker #7: Got it okay . And then just kind of on the modules more broadly I think I believe if I understood it correctly last quarter , you mentioned that modules outside enterprise data could be like 10 to 15% of your total revenues .

Speaker #7: And so I was curious how much of your revenue base or I guess , addressable market outside enterprise data would be , you know , eligible for switching to modules ?

Speaker #2: We don't really care . We engage with a large companies and a and a small companies and we want to demonstrate that this is the best , best technology when the revenue comes , it comes and given times .

Speaker #7: I mean , even if you're looking several years into the future , how high could that mix of modules outside enterprise data go ?

Speaker #1: Well , that's that's a good question . So okay . And we we want to we we built those modules in a game very similar to enterprise modules okay .

Speaker #2: And okay , so we we said it given the given time , every all the true color will show .

Speaker #1: And in a . Okay . In a in a . Since 2017 and industrial markets are adopting a adoption kind of slow and actually faster than telecoms .

Speaker #5: Thank you Michael .

Speaker #3: Our next question is from Ross Seymour of Deutsche Bank . Ross , your line is now open .

Speaker #6: Hi , guys . Can you hear me .

Speaker #4: Just fine , Ross .

Speaker #6: Perfect. Thank you. I guess for my first question, on the automotive side of things, you talked about getting an incremental design win in the ADAS side of things.

Speaker #1: Okay . And these are two market segments that we we focus on . And then to our surprise , that auto industry is also also want to use it .

Speaker #6: There's a lot of choppiness in that end market across different geos and at different points in time . Cyclically , geopolitically , all those sorts of things .

Speaker #1: And because this easy to implement and so the other one is semi equipment and that's a large segment . So we didn't realize that okay I mean now we see all these revenues are happening in their .

Speaker #6: But from a secular growth perspective , can you just talk about Adas as a percentage of your revenues now versus user interface or USB and those sorts of things , and how Adas penetrating more of that market changes , the growth rate , the content diversity of it just kind of want to capture that Adas theme and what it really means to you .

Speaker #1: So I think that in the next couple of years we'll be grow faster than than a 3 or 4 years ago . And so we're picking up a business .

Speaker #4: Sure . Why don't I take a start at this ? So I think that we the history of establishing a strong presence in various markets with differentiated technology , you might recall going back a ways , it was USB ports for automotive , and now it's Adas .

Speaker #1: The rate of increase is , is , is picking up .

Speaker #7: Got it . Thanks , Michael . That's helpful .

Speaker #1: Good , good .

Speaker #4: This concludes our Q&A session. I would now like to turn the webinar back over to Bernie.

Speaker #4: And what this does is it has a cascading effect where we're able to get adoptions in the design wins and we call out when these begin to ramp and that's actually been more important to us than the necessarily the what the car is for .

Speaker #2: I'd like to thank you for all joining us for this conference call . I look forward to talking to you again during our fourth quarter 2025 conference call , which will likely be held in early February .

Speaker #4: End market . And in this one in particular , we have started with a lot of Adas opportunities , particularly in the EVs , because they're faster to come to market .

Speaker #4: But what that's given us , the opportunity has been , is to showcase all of our other technologies . And now we're starting to see those ramp , whether it's in body electronics or different applications , what we're more excited about is , as we look ahead and the transformation of the end market for automotive as it moves into 48 volt and zonal electronics .

Speaker #2: Yeah , we don't know . We don't know the breakdown . Okay . To answer your question exactly . Okay . I mean , maybe Bernie has some some ideas .

Speaker #2: Okay . I think it's less than half and I think it's well , less than half .

Speaker #4: Okay . It's considerably less than half .

Speaker #2: Yeah yeah yeah okay . And I'm just looking at the number of cars and also the , our , our revenues . And I cannot be more than half .

Speaker #2: But in Adas side more and more cars and including a concussion engine cars are adopting Adas . We will see a significant growth in in the next few years .

Speaker #2: That's where we we anticipated okay .

Speaker #6: This is my follow up . Pivoting to another thing you talked about in your press release . Of moving from a supplier , more of a solution provider .

Speaker #6: How do you think about the gross margin implications of that over time , you get a few points higher than you are now .

Speaker #6: A couple of years ago , we've talked about what does it take to get you back to kind of the upper 50s from the mid 50s ish , where you are today .

Speaker #6: Does that system approach help , or is that actually a headwind in the gross margin as you go forward ? As much as it might even be operating margin accretive ?

Speaker #2: I , I don't think so . I don't think that there would be a headwind . And I came in a lot of a large system that we're building .

Speaker #2: And , okay , we're kind of learning how to do it . And and it's created a lot of issues . Okay . And once the volume goes up and so we are learning , okay .

Speaker #2: And I think it's a thing . Okay . And . Since last year I mean in it will improve quite a bit . We we actually making our own test equipment as a , as a , as a lot of people know about it .

Speaker #2: Okay . We , we eat our own dog food and and creating the all fully automated test systems , those type of products never existed before .

Speaker #2: And ultimately will improve the yield . They improve the margins .

Speaker #6: Thank you .

Speaker #3: Our next question is from Torchy Wells Fargo . Joe line is now open .

Speaker #7: Yeah , thanks for taking question . Just ask with . There's a consumer in the fourth quarter and enterprise data . You guys were thinking that would be up somewhere like high single digits sequentially in the December quarter .

Speaker #7: Is that still the case ?

Speaker #4: So .

Speaker #8: So .

Speaker #2: Okay to to anticipating market . That's a very difficult call . And as betting on which stocks okay with it's difficult okay . And but we have our way of operating our business .

Speaker #2: We do the best . We do the best develop technology engage our customers closely and probably the same way you how you pick stocks okay .

Speaker #2: And so you get customers closely . What happens happens in a you can't predict what the what what the market is . And we don't do that actually .

Speaker #4: If I could just add to that , that since we last talked the second half . Nothing fundamentally changed in our positioning .

Speaker #7: Okay . Thanks . Thanks for that . That's helpful . Maybe just also following up like , you know , I think in the you had a comment on the first design win for full DMs solution for robotics platform .

Speaker #7: Can you talk about what drove that and how you think about the revenue opportunity ramping there and more wins in the future ?

Speaker #8: Yeah, we probably get too excited.

Speaker #2: To talk about those . I mean , in the the fact that we got excited is because we see robotics as happening . I in .

Speaker #2: the kind of . Predicted that that the BMS is going to happen . Okay . And we got in and we designed it and it's our customers engage with us okay .

Speaker #2: It's ground up systems that we developed and we see more and more these type of system will will happen . So this kind of system will be become a reality .

Speaker #2: So that's the reason we put out there okay .

Speaker #4: Yeah . And I'll just add on very specifically on that one . Clearly we called it out because of the fact it was the first opportunity .

Speaker #5: That we had .

Speaker #4: The design win on in terms of revenue , really 2026 . It's not necessarily .

Speaker #9: A model . I think starts . We might have Google . That's how it's .

Speaker #2: At a point is a we .

Speaker #9: Do a stuff .

Speaker #2: Actually and the C4 actuators and and a BMS charging wireless charging and these are back a few years ago . We don't know the robotics world will up .

Speaker #2: Okay . I'm talking about robotics since 2017 or 18 . And but the AI assist robot are more and more leaves that will really start taking off .

Speaker #2: And so that's kind of a project that we think is , oh , we pick winners . Okay . And we would like to see it .

Speaker #2: And that's why we are excited to to talk about this .

Speaker #7: Thank you .

Speaker #3: Our next question is from Quinn Bolton of Needham . Quinn . Your line is now open .

Speaker #10: Thank you . Congratulations , Michael . And Tony . I guess I wanted to start with a big picture question . Just , you know , looking through this earnings season , Intel's talked about , you know , sort of shortages of of server CPUs .

Speaker #10: We've seen hyperscalers significantly increasing CapEx . Nvidia talked about half $1 trillion of demand in 25 , 26 . I guess my question is about a year ago , I think you guys were seeing very , very short lead times in that business .

Speaker #10: And dealing with some level of pricing pressure . I'm wondering , as you look into the second half and more importantly , into next year , have you started to see any change in customer lead times ?

Speaker #10: Are they giving you better forecasts across the enterprise data segment , and is the pricing on voltage regulators and vertical power ? Has that changed at all over the last , you know , quarter or so ?

Speaker #4: Quinn , thanks for the question . Let me start that . This remains a very dynamic market . We're responding to a variety of requests when it comes to the orders and the expectations from our customers .

Speaker #4: So in some ways , we're getting improved predictability because we're adding we're layering . As I said , more customers into the mix .

Speaker #4: But as far as the market itself , and particularly with all the blockbuster announcements that have been coming out recently , you can see how quickly things are changing and you know what our position is , is that we can't control our customers necessarily , but we can position the companies be as responsive as we can .

Speaker #10: And is is this sort of dynamic market ? I mean , if folks are scrambling sort of to get capacity , has that had any lifting effect on pricing ?

Speaker #10: And then I'll ask my second question .

Speaker #8: Yeah . Well , the the .

Speaker #2: Any market segment started to form the in a ramp rapidly at the , at the beginning , always cause these imbalance supply in imbalance .

Speaker #2: Okay, I mean, so in the AI side, clearly like that, okay? I mean, once it goes on and if things will smooth out.

Speaker #4: Yeah . And then being specific to your question , I don't think we've seen any recent or sustainable trends in pricing one way or the other .

Speaker #10: Okay . Perfect . And then the second question for you , Bernie , gross margins have been sort of on a , you know , sort of ticking down over the last year or two .

Speaker #10: Can you give us any sense , you know , do you think they sort of stay in this mid 55 , 55.5% range ?

Speaker #10: Is there some point next year that you start to see gross margins starting to move higher , either driven by mix or new products or , you know , should we be thinking about margins being fairly flat over the next year or two ?

Speaker #4: Sure . As I've commented on prior calls , we've seen about 3 or 4 quarters in a row where I'd say that we have seen a strong uptick in demand and that continued even today .

Speaker #4: What makes this cycle different than ones that we've experienced in the past is that the orders are more short term nature . We're not seeing large build up in backlog in future quarters .

Speaker #4: And so without that visibility , it limits our capacity to be able to manage the mix of business that we want to be able to have .

Speaker #4: Those margins . So for the seeable future , until the demand .

Speaker #9: Profile changes of .

Speaker #4: The the build up backlog , I believe that we're going to be in sort of this steady range , plus or -30 basis points in the mid .

Speaker #9: 50 plus .

Speaker #2: With a .

Speaker #9: Lot . And .

Speaker #2: Some customers and to move its very stable margins in with the transition to . The . And the .

Speaker #9: Not quite .

Speaker #2: Margin profiles and but the the will improve and we stick with that .

Speaker #9: The . range thank you .

Speaker #3: Our next question is from Tori Swanberg . Tory . Your line is now open .

Speaker #11: Yeah . Thank you Michael Bernie Tony . On another record quarter . By the way some of that dog food you're referring to must be pretty pretty proprietary stuff .

Speaker #11: But my first question is on the enterprise data segment . So that's about $800 million business right now . And my understanding is , you know , you're on a journey here , right ?

Speaker #11: And you still selling dominant obviously moving into modules , subsystems of systems . So I'm not looking for numbers per se , but could you sort of let let us work that in 800 million .

Speaker #11: Where can we eventually go here with obviously more and more subsystem type solutions for enterprise data ?

Speaker #2: If I understand your your question correctly . Okay . I can answer that way . And we're anticipating building millions of millions of multiple millions of units per month type of shipment .

Speaker #2: And all of these all the integrate highly integrated modules never existed before . So how do we how do we test this thing ?

Speaker #2: How do we achieve that in a single low single-digit PM value? Okay, that is.

Speaker #9: A .

Speaker #2: Where .

Speaker #9: We never . Contact the issue .

Speaker #2: So we started using our own robotic systems to to make that happen . So now we achieved a very high 100% automated including including reliability .

Speaker #2: . And that's . how that's our .

Speaker #9: Future .

Speaker #2: And the goal is building multiple million .

Speaker #9: Units . But . That . The .

Speaker #11: Helpful . Thank you Michael . Did you also have a response to my question on the enterprise data . Again , you know , where are we in this journey to bring more system level solutions ?

Speaker #11: Start talking about , you know , and support .

Speaker #2: So I think it's a . hospitals that are less than a less than a third . Okay . And less than a third of our revenue .

Speaker #2: And .

Speaker #9: Growth last . And . And .

Michael Hsing: It's a sole welcome for that type of a product. That's my view at this time, sorry.

Operator: Welcome, everyone, to the MPS Q3 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of MPS; Bernie Blegen, EVP and CFO; and Tony Ballow, Vice President of Finance. Earlier today, along with our earnings announcement, MPS released a written commentary on the results of our operations. Both documents can be found on our website. Before we begin, I'd like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties.

Arthur Lee: Welcome, everyone, to the MPS Q3 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of MPS; Bernie Blegen, EVP and CFO; and Tony Ballow, Vice President of Finance. Earlier today, along with our earnings announcement, MPS released a written commentary on the results of our operations. Both documents can be found on our website. Before we begin, I'd like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risk and uncertainties.

Bernie Blegen: Rick, I think part of your question was also on the 800-volt high voltage DC for data center as well, right?

[Analyst]: Yes.

Bernie Blegen: I think on that one, we've been pretty careful about trying to go size the opportunity because, one, it's very far out. Two, we don't know how it'll ramp in the market. I think what we have said is, since we don't play in that part of the market today, the business we get is sort of all accretive to our overall SAM going forward. I think we want to be careful about sizing the market yet, given how far out it is and not knowing how it'll layer into the data centers going forward.

Operator: The risk, uncertainties, and other factors that could cause actual results to differ from these forward-looking statements are identified in the Safe Harbor Statements contained in the Q3 2025 earnings release, our Q3 2025 earnings commentary, and in our SEC filings, including our Form 10-K, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I'd like to turn the call over to Bernie Blegen.

The risk, uncertainties, and other factors that could cause actual results to differ from these forward-looking statements are identified in the Safe Harbor Statements contained in the Q3 2025 earnings release, our Q3 2025 earnings commentary, and in our SEC filings, including our Form 10-K, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I'd like to turn the call over to Bernie Blegen.

[Analyst]: I appreciate that. Thanks, you guys.

Operator: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.

Bernie Blegen: Hey, guys. Let me extend my congratulations on the continued strong growth and continued execution. I appreciate the fact that you still only have about three to four months of visibility, given the capacity that you can support and the quick turns business you can support. Can you confirm whether bookings continue to improve sequentially, and what are the seasonal considerations as we look out into the first quarter?

Bernie Blegen: Thanks, Arthur. Good afternoon, and welcome to our Q3 2025 earnings call. In Q3, MPS achieved record quarterly revenue of $737.2 million, 10.9% higher than the second quarter of 2025 and 18.9% higher than Q3 of 2024. This performance reflected the ongoing strength of our diversified market strategy, consistent execution, continued innovation, and relentless customer focus. Let me call out a few highlights from the third quarter. Our diversified market strategy drove year-over-year revenue growth in all of our end markets. We continued to expand our automotive customer base with another major Tier 1 supplier adopting MPS for its next-generation ADAS solution. Additionally, we secured our first design win for a full BMS solution on a robotics platform, which further supports our transformation from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider.

Michael Hsing: It's very difficult for us to predict that. What's the booking? Where are the bookings? We build our inventories. We try to build and look at the inventory now. We try to build up so we are below our models. Whatever comes, we anticipate it in that we can swiftly adapt.

Bernie Blegen: Yeah. Just to add to that is that we really don't have a lot of visibility into the first half of next year. We can definitely point to the normal drivers as far as both enterprise data and automotive are very well positioned for new revenue ramps. Getting both the timing as well as getting that to balance out, we don't have a strong view on Q1 yet. Okay. Appreciate that. If I'm not mistaken, your distribution inventory as of mid-year was at the low end of your five to eight-week target range, and it decreased in the June quarter. What was the trend sequentially for the September quarter, and when might you take that distribution inventory back up to maybe the mid to upper part of that normal range?

Bernie Blegen: Overall, we continue to demonstrate our ability to grow and swiftly adapt all aspects of our business to the fluid geopolitical and macroeconomic environment. Our proven long-term growth strategy remains intact as MPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar up for questions.

Overall, we continue to demonstrate our ability to grow and swiftly adapt all aspects of our business to the fluid geopolitical and macroeconomic environment. Our proven long-term growth strategy remains intact as MPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar up for questions.

[Analyst]: Currently, the Q3 channel inventory was unchanged in terms of days from where it was in the prior quarter. We take from that that we're satisfying real demand at this point, which again is a reflection of the quick turns business that we're working with.

Bernie Blegen: Thank you.

Operator: Thank you, Bernie. Panelists, 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 participant's icon on the menu bar and then click the raise hand button. Our first question is from Josh Buchalter of Cowen. Josh, your line is now open.

Arthur Lee: Thank you, Bernie. Panelists, 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 participant's icon on the menu bar and then click the raise hand button. Our first question is from Josh Buchalter of Cowen. Josh, your line is now open.

Operator: Our next question is from Chris Caso of Loop Capital. Chris, your line is now open.

[Analyst 1]: Yes. Thank you. Good evening. The first question is on enterprise data. What are sort of the puts and takes as you look into next year? This year there was some changes in market share in that, which affected that business. I guess I'm going to assume that things are cleaner as you go from this year into next year. I mean, one, do you expect to grow that business as you go into next year?

Joshua Buchalter: Hey, guys. Thank you for taking my question and congrats on another beaten raise. I guess to start, you know, maybe you guiding up about 1%, can you give us the puts and takes of which end markets you expect to grow more or less? And, you know, of note, I think earlier you mentioned enterprise data was expected to be flat to down 20%. Any updates to the guidance for that segment in particular? Thank you.

Michael Hsing: It’s cleaner. You see that this year is a, next year is a, this year is an, okay. We are doing pretty good this year. I mean, as I said earlier, the module business is growing. All these, this area, Monolithic Power Systems technology shines. The power, the higher power, the better it is, because we provide the highest power density product that fits this market perfectly. In the next couple of years, you will see it. Monolithic Power Systems is a major player in this market segment. Also, the market's big. We don't want to play, so we don't want to be a Monolithic Power Systems only. You want to have multiple competitors. It's good for the industry.

Bernie Blegen: Sure, Josh. When you look at Q3, I think that we saw a little bit better than anticipated performance in both our enterprise data and industrial markets. We had pretty much every other group was as we anticipated. Looking ahead, and I know that you're interested in enterprise data, we're seeing a layering of additional customers that began in this layering effect in Q4 and is providing this good momentum as we look ahead into the early part of next year.

Michael Hsing: Well, I should add, all these in the script read-out, Bernie mentioned a list of market segments, and they started growing. We look back in the last few quarters, all these growths that come from a greenfield product that were released two, three years ago. Now we see the result. So in the near future, in the next few quarters, we will see these will continue to enhance our revenues.

Bernie Blegen: Yeah, I could see enterprise data growing, you know, in the range of 30% to 40% in 2026 for us. Much of that, though, would be back in the second half of the year. While we've seen a number of new players that have been layered in, I think the material ramps are more weighted to the second half of 2026.

[Analyst 1]: That's very helpful. If I could follow on to that, since you provided a little bit of color on that, Bernie, when you look at that 30 to 40% growth, is that because I know that some of the vertical power designs, for example, you have more content. What's the driver of that? Is it fairly broad-based? Is it skewed towards some of the ASIC solutions, more towards vertical power? Whatever kind of color you can give behind that 30 to 40% expectation.

Joshua Buchalter: Thank you for the color there. Maybe a follow-up on that, Michael. You know, I think you've been pretty clear. Like, philosophically, you have some reservations and even frustrations with the AI market because of the concentration and visibility. You know, given all the massive announcements over the last quarter, even, or in that space, maybe you could spend a couple of minutes talking to us about, you know, just big picture philosophically, how you're approaching these huge forecasts and, I'm sure, competitive sockets with massive scale. You know, how do you guys figure out which opportunities to go after and service? And your thoughts on the market, just given, you know, I think you've had frustrations about it, distracting from your diversified growth? Thank you both.

Michael Hsing: As a CEO, I don't know how to make a 30, 40% cost. I don't know. The opportunity is there. If we didn't deliver a 30, 40%, the stocks are sealed from the $900 to $400. What kind of fuck-up is that? I don't want to make them very hard, just waiting for the numbers. Let the numbers show it.

Michael Hsing: Yeah, as you said, yeah, it is a kind of a distraction, okay? But business is a business. The good money is the good money, okay? We don't want to take a bad money, okay? But overall, the bottom line is MPS want to demonstrate in any segment of a market, we are the best. We have possessed the best technology and the best customer service. And we're solving problems. We demonstrated that we can have qualities and shipments, and, okay, all these categories, we are the best company. And in terms of which AI company, we don't really care. We engage with the large companies and the small companies. And we want to demonstrate that this is the best technology. When the revenue comes, it comes. And given times, and, okay, as we said it, given time, all the true color will show.

[Analyst 1]: Fair enough. Thank you.

Operator: Our next question is from Kelsey Chia of Citi Research. Kelsey, your line is now open.

[Analyst 2]: Hi, Michael. I'm Bernie. Thanks for taking my question. My question is on the competitive landscape. I was hoping if you could share more, especially with regards to the material side of things that Gale and I tried, silicon carbide. I think your biggest enterprise data customer has been signing a lot of partnerships with all these semiconductor companies. I was just wondering Monolithic Power Systems' positioning in those, and if you actually see those materials as being important in the next generation of the power modules and chips.

Michael Hsing: We do our own silicon carbide, and we're building the modules. We are using it again, but that's a very, very early stage where we're evaluating it. Also, don't forget about silicon. Silicon power MOSFET has evolved. We engaged a lot of new development, and a lot of the data showed it can be very cost-effective and also can compete with the silicon carbide.

Joshua Buchalter: Thank you, Michael.

Operator: Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open.

Arthur Lee: Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open.

Ross Seymore: Hi, guys. Can you hear me?

Bernie Blegen: Just fine, Ross.

Ross Seymore: Perfect. Thank you. I guess for my first question, the automotive side of things, you talked about getting an incremental design win in the ADAS side of things. There's a lot of choppiness in that end market across different OEMs and at different points in time, cyclically, geopolitically, all those sorts of things. But from a secular growth perspective, can you just talk about ADAS as a percentage of your revenues now versus user interface or USB and those sorts of things, and how ADAS penetrating more of that market changes the growth rate, the content, the diversity of it? Just kind of want to capture that ADAS theme and what it really means to you.

[Analyst 2]: Got it. Thank you.

Michael Hsing: That's a very, very recent development.

[Analyst 2]: Yeah. Okay. Got it. I would just like to have a sense of how do you guys feel today versus a quarter ago, especially you guys have come a long way, you know, since the start of the year when you're dealing with all these market share changes, visibility on the ASIC customers and things like that. Given the slew of announcements from all these big mega partnerships, how do you see that relative to your opportunities? Also, you know, given the maturity of the supply chain, I believe things are probably, you know, the supply chain partners are getting to a good cadence. How do you guys feel with regards to those recent announcements relative to your opportunity set?

Bernie Blegen: Sure. Why don't I take a start at this? So I think that we demonstrated a history of establishing a strong presence in various markets with differentiated technology. You might recall going back a ways; it was USB ports for automotive. And now it's ADAS. And what this does is it has a cascading effect where we're able to get adoptions and the design wins, and we call out when these begin to ramp. And that's actually been more important to us than necessarily what the SAR is for a particular end market. And in this one in particular, we have started with a lot of ADAS opportunities, particularly in the EVs, because they're faster to come to market.

Michael Hsing: I don't measure quarter by quarters. I measure by multiple years.

[Analyst 2]: Mm-hmm.

Michael Hsing: I can't tell you that.

Bernie Blegen: But what that's given us the opportunity has been to showcase all of our other technologies, and now we're starting to see those ramp, whether it's in body electronics or different applications. What we're more excited about is as we look ahead and the transformation of the end market for automotive as it moves into 48-volt and the zonal electronics.

But what that's given us the opportunity has been to showcase all of our other technologies, and now we're starting to see those ramp, whether it's in body electronics or different applications. What we're more excited about is as we look ahead and the transformation of the end market for automotive as it moves into 48-volt and the zonal electronics.

[Analyst 2]: Okay.

Bernie Blegen: I guess the simplest way is we're very broadly indexed across not just the merchant vendors or large ASICs, but medium and small-time opportunities. All of these need to find their way into the marketplace. Right now, we're still very, very early in the process. As Michael said, it's very hard to sort out in any particular time period. I think that we're as well indexed amongst all the opportunities as anybody in this market.

Michael Hsing: Yeah, we don't know the breakdown, okay, to answer your question exactly. Okay, I mean, maybe Bernie has some ideas, okay, but I think it's less than half. I think it's well less than half, okay?

[Analyst 2]: Okay, thank you.

Operator: Our last question is from Jack Egan of Charter Equity Research. Jack, your line is now open.

Ross Seymore: It's consistently less than half.

Bernie Blegen: Great. Thank you for taking the questions. I had one on enterprise data and then one on modules more broadly. The shift to modules and vertical power delivery with the custom ASIC ramp should be a pretty big tailwind for Monolithic Power Systems. I'm kind of wondering about what the main drivers have been, at least so far, for those customers that are switching from lateral to modules or vertical power. I'm not really sure if you have this level of granularity, but among the major benefits like higher power density, higher efficiency, smaller footprint on the top side of the board, etc., is there any one characteristic that's being cited by your customers as the main reason that they are moving to those modules or vertical power delivery?

Michael Hsing: Yeah, yeah, yeah, okay. I'm just looking at the number of cars and also our revenues, and that cannot be more than half, okay, MPS. But in the ADAS side, more and more cars, including combustion engine cars, they're adopting ADAS. We will see a significant growth in the next few years. That's where we anticipate it, okay?

Ross Seymore: Great. Thanks for that color. I guess as my follow-up, pivoting to another thing you talked about in your press release of moving from a silicon or chip-based supplier to more of a solution provider, how do you think about the gross margin implications of that over time? You know, you guys were a few points higher than you are now a couple of years ago. We've talked about what does it take to get you back to kind of the upper 50s from the mid-50s-ish where you are today. Does that system approach help, or is that actually a headwind in the gross margin as you go forward, as much as it might even be operating margin accretive?

Michael Hsing: From a chip to module, whoever stays, the module stays, the module starts with the module. Whoever stays, the chip stays with the chip. MPS provides both, both chip solutions and module solutions at this time. I don't know if it answered that question for you.

Michael Hsing: I don't think so. I don't think that there will be a headwind, okay? I mean, a lot of large systems that we're building, okay, we're kind of learning how to do it. And it creates a lot of issues, okay? And once the volume goes up, and so we're learning it, okay? And I think it's a thing to get a lot better, okay? And since last year, I guess, okay? I mean, and it will improve quite a bit. We actually are making our own test equipment, as a lot of people know about it, okay? We eat our own dog food. And creating all fully automated test systems. Those types of products never existed before. And I think it ultimately will improve the yield and improve the gross margins.

Bernie Blegen: Got it. Okay. Just kind of on the modules more broadly, I believe if I understood it correctly, the last quarter you mentioned that modules outside enterprise data could be like 10% to 15% of your total revenues. I was curious, how much of your revenue base or, I guess, addressable market outside enterprise data would be eligible for switching to modules? I mean, even if you're looking several years into the future, how high could that mix of modules outside enterprise data go?

Michael Hsing: That's a good question. We want to, we build those modules, very similar to enterprise modules. Since 2017, industrial markets adoption is kind of slow, actually faster than telecoms. These are two market segments that we focus on. To our surprise, the auto industries also want to use it because it's easy to implement. The other one is semiconductor equipment. That's a large segment, and we didn't realize that. Now we see all these revenues are happening there. I think that in the next couple of years, we'll be growing faster than three or four years ago. We're picking up business, the rate of increase is picking up.

Ross Seymore: Thank you.

Operator: Our next question is from Joe Quatrochi of Wells Fargo. Joe, your line is now open.

Arthur Lee: Our next question is from Joe Quatrochi of Wells Fargo. Joe, your line is now open.

Joe Quatrochi: Yeah, thanks for taking the question. Maybe first, I just wanted to ask, you know, with Blegen, within the Q4 guidance, is there any help you can kind of provide in just thinking about the end markets? I think there's some seasonality to maybe like a consumer in the fourth quarter. And then I think enterprise data, you guys were previously thinking that would be up somewhere like high single digits sequentially in the December quarter. Is that still the case?

Michael Hsing: So, okay, anticipating a market, that's a very difficult call. As you guys are betting on which stocks, okay, it's difficult, okay? But we have our way of operating our business. We do the best. We do the best, develop a technology, engage our customers closely. Probably the same way that you pick how you pick stocks, okay? So you engage customers closely. Whatever happens, happens. You can't predict what the market is. We don't do that, actually.

Bernie Blegen: Got it. Thanks much. That's helpful.

Michael Hsing: Good. Good.

Operator: This concludes our Q&A session. I would now like to turn the webinar back over to Bernie.

Bernie Blegen: I'd like to thank you for all joining us for this conference call. I look forward to talking to you again during our fourth quarter 2025 conference call, which will likely be held in early February. Thank you and have a nice day.

Bernie Blegen: If I could just add to that, that since we last talked about the second half of this year, nothing fundamentally changed in our positioning.

Ross Seymore: Okay. Thanks for that. That's helpful. Maybe just also following up, like, you know, I think in the press release or prepared remarks, you had a comment around the first design win for a full BMS solution for robotics platform. Can you talk about what drove that and how you think about the revenue opportunity ramping there and more wins in the future?

Joe Quatrochi: Okay. Thanks for that. That's helpful. Maybe just also following up, like, you know, I think in the press release or prepared remarks, you had a comment around the first design win for a full BMS solution for robotics platform. Can you talk about what drove that and how you think about the revenue opportunity ramping there and more wins in the future?

Michael Hsing: Yeah, we probably get too excited to talk about those, okay? I mean, and the fact is that we got excited is because we see robotics happening, okay? They kind of, we kind of predicted that that's the BMS is going to happen, okay? And we got in, and we designed it in, okay? And it's our customers engage with us, okay? There's a ground-up system that we developed. And we see more and more these types of systems will happen. So these kinds of systems will become a reality. So that's the reason we put out there, okay?

Ross Seymore: Yeah, and I'll just add on very specifically on that one. Clearly, we called it out because of the fact it was the first opportunity that we had the design win on. In terms of a revenue ramp, that's really starting in 2026. And it's not in and of itself necessarily a needle mover on the model. But I do think it sort of starts the wave of these full solution design wins that we might have going forward.

Bernie Blegen: Yeah, and I'll just add on very specifically on that one. Clearly, we called it out because of the fact it was the first opportunity that we had the design win on. In terms of a revenue ramp, that's really starting in 2026. And it's not in and of itself necessarily a needle mover on the model. But I do think it sort of starts the wave of these full solution design wins that we might have going forward.

Michael Hsing: Yeah, that's kind of the same kind of way in making a point that is, okay, we do start to do robotics stuff for the actuators and the IC4 actuators and the BMS charging, wireless charging. These are back a few years ago. We didn't even know that the robotics were taking off, okay? I've been talking about robotics since 2017 or 2018. But the AI assist robot are more and more beliefs, okay, that we're really starting taking off. So that's kind of a project that we think of that, oh, we picked the winners, okay? And we're glad to see it, and, okay, that's why we're probably too excited to talk about this.

Ross Seymore: Thank you.

Joe Quatrochi: Thank you.

Operator: Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.

Arthur Lee: Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.

Ross Seymore: Thank you. Congratulations, Michael Hsing and Tony Ballow. I guess I wanted to start with a big picture question, just, you know, looking through this earnings season. Intel's talked about, you know, sort of shortages of server CPUs. We've seen hyperscalers significantly increasing CapEx. NVIDIA talked about $0.5 trillion of demand in 2025-2026. I guess my question is, about a year ago, I think you guys were seeing very, very short lead times in that business and dealing with some level of pricing pressure. I'm wondering, as you're looking at the second half and more importantly into next year, have you started to see any change in customer lead times? Are they giving you better forecasts across the enterprise data segment? And is the pricing on voltage regulators and vertical power, has that changed at all over the last, you know, quarter or so?

Quinn Bolton: Thank you. Congratulations, Michael Hsing and Tony Ballow. I guess I wanted to start with a big picture question, just, you know, looking through this earnings season. Intel's talked about, you know, sort of shortages of server CPUs. We've seen hyperscalers significantly increasing CapEx. NVIDIA talked about $0.5 trillion of demand in 2025-2026. I guess my question is, about a year ago, I think you guys were seeing very, very short lead times in that business and dealing with some level of pricing pressure. I'm wondering, as you're looking at the second half and more importantly into next year, have you started to see any change in customer lead times? Are they giving you better forecasts across the enterprise data segment? And is the pricing on voltage regulators and vertical power, has that changed at all over the last, you know, quarter or so?

Bernie Blegen: Quinn, thanks for the question. Let me start that this remains a very dynamic market. We're responding to a variety of requests when it comes to the orders and the expectations from our customers. So in some ways, we're getting improved predictability because we're adding, we're layering, as I said, more customers into the mix. But as far as the market itself, and particularly with all the blockbuster announcements that have been coming out recently, you can see how quickly things are changing. And, you know, what our position is, is that we can't control our customers necessarily, but we can position the companies to be as responsive as we can.

Ross Seymore: Is this sort of dynamic market? I mean, if folks are scrambling sort of to get capacity, has that had any lifting effect on pricing? And then I'll ask my second question.

Quinn Bolton: Is this sort of dynamic market? I mean, if folks are scrambling sort of to get capacity, has that had any lifting effect on pricing? And then I'll ask my second question.

Michael Hsing: Well, any market segment started from the ramp rapidly at the beginning. Always caused these imbalanced, okay, supply imbalance, okay? I mean, so in the AI side, clearly it's like that, okay? I mean, once it goes off, okay, things will smooth out.

Bernie Blegen: Yeah. And then being specific to your question, I don't think we've seen any recent or sustainable trends in pricing one way or the other.

Ross Seymore: Okay. Perfect. And then second question for you, Bernie: gross margins have been sort of on a, you know, sort of ticking down over the last year or two. Can you give us any sense, you know, do you think they sort of stay in this mid-55% to 55.5% range? Is there some point next year that you start to see gross margins starting to move higher, either driven by mix or new products, or, you know, should we be thinking about margins being fairly flat over the next year or two?

Quinn Bolton: Okay. Perfect. And then second question for you, Bernie: gross margins have been sort of on a, you know, sort of ticking down over the last year or two. Can you give us any sense, you know, do you think they sort of stay in this mid-55% to 55.5% range? Is there some point next year that you start to see gross margins starting to move higher, either driven by mix or new products, or, you know, should we be thinking about margins being fairly flat over the next year or two?

Bernie Blegen: Sure. As I've commented on prior calls, we've seen about three or four quarters in a row where I'd say that we have seen a strong uptick in demand, and that continues even today. What makes this cycle different than ones that we've experienced in the past is that the orders are more short-term in nature. We're not seeing a large buildup and backlog in future quarters. And so without that visibility, it limits our capacity to be able to manage the mix of business that we want to be able to have expansion and gross margins. So for the foreseeable future, until the demand profile changes to elongate the buildup of backlog, I believe that we're going to be in sort of this steady range, ±20, 30 basis points in the mid-55.

Ross Seymore: Got it. Thanks for that.

Quinn Bolton: Got it. Thanks for that.

Michael Hsing: Yeah, we have a lot of products, okay? A few thousand products, okay? And 40 to 50,000 customers. The more, and it's very stable margins, okay? I mean, with the transitions to more solution-provided companies, okay, as I said earlier, and all these, and it has to be automated, and then, okay, and as time goes on, okay, and the margin will improve, but not quickly. That mass is very big. So, okay, we know it's operated on the low end of our margin profiles. Okay, I mean, but the longer term will improve, and we stick with a gross margin range.

Ross Seymore: Got it. Thank you.

Quinn Bolton: Got it. Thank you.

Operator: Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.

Arthur Lee: Our next question is from Tore Svanberg of Stifel. Tore, your line is now open.

Tore Svanberg: Yes, thank you. Michael Hsing, Tony Ballow, congrats on another record quarter. By the way, some of that dog food you're referring to must be pretty proprietary stuff. But my first question is on the enterprise data segment. So that's about an $800 million business right now. And my understanding is, you know, you're on a journey here, right? And you're still selling predominantly chips. You are obviously moving into module subsystems, eventually systems. So I'm not looking for any numbers per se, but could you sort of let us know where we are in that journey? I mean, building an $800 million business with chips, and, you know, where could we eventually go here with obviously more and more subsystem type solutions for enterprise data?

Michael Hsing: If I understand your question correctly, I can answer that way, and we're anticipating building millions of multiple millions of units per month type of shipment. All of these, all these highly integrated modules never existed before. So how do we test this thing? How do we achieve a single low single digit PPM failures? That is when we never encountered that kind of issues before. So we started using our own robotic systems to make that happen. So now, we achieve very high volumes, 100% automated, including reliability test. And that's our futures. The goal is building multiple million units a month for that. 10 million a month for that. That's the near-term goal.

Tore Svanberg: Yeah, that's very helpful. Thank you for that, Michael. And did you also have a response to my question on the enterprise data? Again, you know, where are we in this journey towards delivering more system-level solutions, especially with our talking about, you know, rack-level power and so on and so forth?

Michael Hsing: This is at the very beginning. Maybe I think it's modular power sells less than 1/3, okay? Less than 1/3 of our revenue. It grew in the last few years. We expected it to grow, some got delayed. Now it's started happening. In the next few years, it could be much more.

Tore Svanberg: Great. Thank you for that, Michael.

Ross Seymore: Maybe just to add on to the back of that, Tore, I think as you start talking about some of these solutions for 800-volt, as you discussed, those are like 27, 28 revenue ramps. So I think it supports what Michael was saying that we're still at the front end of this opportunity in the data center for us.

Tore Svanberg: Great. Thank you.

Michael Hsing: I think in the investor investment communities, if you have an 800-volt technology, data center transformer is like a flip switch. The lights turn on, turn on. It's not like that. Okay, the lights turn on. It takes a couple of years, okay? More than a couple of years to see the revenues. Okay? These take three, four years.

Tore Svanberg: Great perspective. Thank you again.

Operator: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.

Arthur Lee: Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.

Rick Schafer: Oh, thanks. And all that, Mike, congratulations, you guys. Just maybe if I could start with an auto question, you know, kind of a follow-up, but I know we talked about BMS robotics, but I know BMS becomes a bigger contributor for your auto segment next year. And you mentioned a couple of things, Michael, in an earlier question, but I'm just curious if you could give some guardrails or provide some guardrails about potential content trends for MPS, you know, as you start ramping some of those BMS opportunities. I mean, again, not asking for dollar content per car, but, you know, does it double or triple, you know, those kinds of numbers? Like what does it do to your potential content per vehicle moving into that BMS space in a more meaningful way?

<unk> M. P S third quarter 2025 earnings webinar.

Third quarter 2025 earnings webinar.

My name is Arthur Lee and I'll be the moderator for this webinar join.

As Arthur Lee and I'll be the moderator for this webinar.

Joining me today are Michael Hsing, CEO and founder of M. P. S. Bernie Blegen, EVP, and CFO and Tony Ballew, Vice President of Finance earlier.

Rick Schafer: As part of your answer, I'm curious, you know, where some of the lowest hanging fruit is for you guys? I mean, is it 48 volt? Is it power isolation? You know, that kind of thing. Thanks.

As part of your answer, I'm curious, you know, where some of the lowest hanging fruit is for you guys? I mean, is it 48 volt? Is it power isolation? You know, that kind of thing. Thanks.

Earlier today, along with our earnings announcement N. P. S released our written commentary on our results of operations. Both documents can be found on our website.

Earlier today, along four earnings announcement N. P. S released our written commentary on the results of operations. Both documents can be found on our website.

Michael Hsing: It's actually all of them. BMS revenues for autos and for EVs, and it's a bit far away, okay? But our customer, it's a very concentrated market. There are a few players, well, it's not a few car makers, and gradually all of them, they want a BMS. So our customers are glad to see MPS is in this to develop that series of that type of a product too. In terms of other low-hanging fruits, we see 48-volt as a trend. We developed those products back a few years ago, like five, six years ago. We provide all these integrated solutions rather than these discrete ones, and the size can be six, seven times smaller. The other one is the 800-volt for EV.

Before we begin I would like.

Before we begin.

To remind everyone that in a course of today's presentation. We may make forward looking statements and projections within the meaning of the private Securities Litigation Reform Act of 1995 that involve risk and uncertainties.

The risks uncertainties and other factors that could cause actual results to differ from these forward looking statements are identified in the safe Harbor statements contained in the Q3 2025 earnings release over Q3, 'twenty twenty-five earnings commentary and in our SEC filings, including our Form 10-K, which can be found on our website.

Q3, 'twenty twenty-five earnings commentary and in our SEC filings, including our Form 10-K, which can be found on our website.

Our statements are made as of today and we assume no obligation to update this information.

Now I would like to turn the call over to Bernie Blegen.

Thanks Arthur.

Good afternoon, and welcome to our Q3 2025 earnings call.

In Q3 M. P. S achieved record quarterly revenue of 737 $2 million.

Q3 M. P S G record quarterly revenue.

$737 $2 million.

$10, 9% higher than the second quarter of 2025, and 18, 9% higher than Q3 of 2024.

$10, 9% higher than the second quarter of 2025, and $18, 9% higher than Q3 of 2024.

This performance reflected the ongoing strength of our diversified market strategy.

This performance reflected the ongoing strength of our diversified market strategy consistent execution continued innovation and relentless customer focus.

<unk> execution continued innovation and relentless customer focus.

Michael Hsing: And then now, and okay, all goes up. And from 400 volts to 800 volts, okay? And in the China market, a lot of cars already have 800 volts, okay? So our silicon carbide solutions, okay, and not for traction inverters and for control systems, these products will be shined. And so that's I pulled out my hair at this moment.

And then now, and okay, all goes up. And from 400 volts to 800 volts, okay? And in the China market, a lot of cars already have 800 volts, okay? So our silicon carbide solutions, okay, and not for traction inverters and for control systems, these products will be shined. And so that's I pulled out my hair at this moment.

Let me call out a few highlights from the third quarter.

Me call out a few highlights from the third quarter.

Our diversified market strategy drove year over year revenue growth in all of our end markets.

We continue to expand our automotive customer base with another major tier one supplier adopting M. P. S sports next generation eight hour solution.

Additionally, we secured our first design win for a full BMS solution on a robotics platform, which further supports our transformation from being a chip only semiconductor supplier to a full service silicon based solutions provider.

Additionally, we secured our first design win for a full BMS solution on a robotics platform.

Which further supports our transformation from being a chip only semiconductor supplier to a full service silicon based solutions provider.

Ross Seymore: And Rick, maybe just to shape you a little bit on timing there to make sure. I think what we said is the layering of opportunities in auto really sort of out of the end of this year and the next year starts with design wins that we have, bringing new content to market per vehicle. You start to see zonal designs hit market next year, then ramping through into 2027. And then the BMS and traction inverter solutions are really kind of more like 2027 and beyond, just to make sure you understand sort of how those revenue opportunities are layering in.

Bernie Blegen: And Rick, maybe just to shape you a little bit on timing there to make sure. I think what we said is the layering of opportunities in auto really sort of out of the end of this year and the next year starts with design wins that we have, bringing new content to market per vehicle. You start to see zonal designs hit market next year, then ramping through into 2027. And then the BMS and traction inverter solutions are really kind of more like 2027 and beyond, just to make sure you understand sort of how those revenue opportunities are layering in.

Overall, we continued to demonstrate our ability to grow and swiftly adapt to all aspects of all aspects of our business to the fluid geopolitical and macro economic environment.

Our proven long term growth strategy remains intact as M. P. S focuses on innovation and solving our customers' most challenging problems.

Rick Schafer: Good. Thanks, Tony, for that color and thanks, Michael. If I could ask for my follow-up, just it's on HVDC, and I appreciate the timing commentary you provided a second ago, Tony, but I'm also curious. I mean, I'm just trying to figure out the right way to think about that emerging market. I mean, can you give a sense of how HVDC compares to sort of how you've described, you know, at your Analyst Day earlier this year, maybe how you described the 48-volt accelerator power opportunities? Or in any terms you want, just to try to give a sense of what that market represents to you guys or what you think it could.

We continue to invest in new technology.

We continue to invest in new technology expand into new markets and to diversify both our end market applications and global supply chain.

Expand into new markets and diversify both our end market applications and global supply chain.

This will allow us to capture future growth opportunities maintain supply chain stability and quickly adapt to market changes as they occur.

I will now open the webinar up for questions.

I will now open the women are up for questions.

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 onto participants icon on the menu bar and then click through resend button.

As a reminder, if you would like to ask a question. Please click onto participants icon on the menu bar and then click to resend button.

Michael Hsing: I think it's the 48 volts system is clear. Okay, there's a reason why the 48 volts, okay, is going back to those telecom times. Telecom systems, okay, means 48 volts, ±48 volts, okay? ±45 volts. First, it started within the server side. Okay, we talked about it for years, this thing. It has to be the solutions because once your current goes up, everybody remembers the car using the six volts batteries. Okay, then it became 12. Okay, it's ultimately, okay, moving up to 48 volts. I mean, these are all for control systems, 48 volts. The data center is already happening 48 volts. I see that's why I predict all the building systems, all the building automations are going to be on 48 volts. The building will be a DC power solutions.

Our first question is from Joshua Buchalter of Cowen.

Josh Your line is now open.

Hey, guys. Thank you for taking my question.

On another beat and raise.

On another beat and raise I guess to start maybe you're guiding up about 1% can you give us the puts and takes of which end markets do you expect to grow more or less.

I guess to start maybe you're guiding up about 1% can you give us the puts and takes of which end markets do you expect to grow more or less.

Of note.

Earlier, you mentioned, an enterprise data was expected to be flat to down 20% any updates to the guidance for that segment in particular, thank you.

Sure Josh.

When you look at Q3.

I think that Oh, we saw a little bit better than anticipated performance in both our.

Enterprise data.

Enterprise's data.

And industrial markets.

We had a.

We had pretty.

Pretty much every other group was as we anticipated.

Looking ahead, and I know that you're interested in the enterprise data.

Looking ahead, and I know that you're interested in enterprise data.

We're seeing a layering of additional <unk>.

Layering of additional <unk>.

Customers began is layering effect in Q4 and is providing us good momentum as we look ahead into the early part of next year.

Customers began this layering effect in Q4 and is providing us good momentum as we look ahead into the early part of next year.

Michael Hsing: The opportunity is great. As we put out, engage our customers with building automation systems, and we prove the point. Actually, it's so welcome for that type of a product. So that's my view at this time.

The opportunity is great. As we put out, engage our customers with building automation systems, and we prove the point. Actually, it's so welcome for that type of a product. So that's my view at this time.

Well.

I should add all of these.

In the us.

In the script the readout.

The readout.

Tony mentioned.

Tony mentioned, the lift out of a market segment.

Just out of our market segment.

I'm sorry.

They have started growing.

To a growing and.

And.

We look back in the last few quarters.

All of these growths are coming from a greenfield products.

Ross Seymore: Rick, I think part of your question was also on the 800-volt high-voltage DC for data center as well, right?

All of these <unk> come from a greenfield products.

Bernie Blegen: Rick, I think part of your question was also on the 800-volt high-voltage DC for data center as well, right?

<unk> released a two to three years ago and now we see the see the result.

<unk> released the two to three years ago, and then now we see the Cedar result.

Rick Schafer: Yes.

Ross Seymore: I think on that one, we've been pretty careful about trying to go size the opportunity because, one, it's very far out. Two, we don't know how it will ramp in the market. I think what we have said is since we don't play in that part of the market today, the business we get is sort of all accretive to our overall SAM going forward. But I think we want to be careful about sizing the market yet, given how far out it is and not knowing how it will layer into the data centers going forward.

Bernie Blegen: I think on that one, we've been pretty careful about trying to go size the opportunity because, one, it's very far out. Two, we don't know how it will ramp in the market. I think what we have said is since we don't play in that part of the market today, the business we get is sort of all accretive to our overall SAM going forward. But I think we want to be careful about sizing the market yet, given how far out it is and not knowing how it will layer into the data centers going forward.

And.

So.

<unk>.

Yeah futures in the next few quarters.

We'll see.

Let's see.

<unk> continued to enhance all of our revenues.

These will continue to enhance all of our revenues.

Thank you for the color there maybe a follow up on that Michael I think you've been pretty clear like just philosophically you have some reservations and frustration with the AI market because of that concentration and visibility.

Rick Schafer: I appreciate that. Thanks, you guys.

Operator: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.

Arthur Lee: Our next question is from Gary Mobley of Loop Capital. Gary, your line is now open.

Given all the massive announcements over the last quarter, even or in that space, maybe you could spend a couple minutes talking to us about just big picture philosophically, how you're approaching these huge forecast and I'm sure competitive sockets with massive scale.

Given all of the massive announcements over the last quarter, even or in that space, maybe you could spend a couple of minutes talking to us about.

Gary Mobley: Hey, guys. Let me extend my congratulations on the continued strong growth and continued execution. I appreciate the fact that you still only have about three to four months of visibility given the capacity that you can support and the quick turns business you can support. But can you confirm whether bookings continue to improve sequentially and what are the seasonal considerations as we look out into Q1?

Picture philosophically, how you're approaching the huge forecast and I'm sure competitive sockets with with massive scale.

How do you guys figure out which opportunities to go after in service and your thoughts on the market. Just given you I think you had presentations about it distracting from your diversified growth. Thank you both.

Do you guys figure out which opportunities to go after in service and your thoughts on the market. Just given you I think you've had frustrations about it distracting from your diversified growth. Thank you both.

Yeah.

Yes, yes.

Yes, yes. It is a it is a.

Yes. It is.

Kind of a distraction so lucky but business is the business good money good money, but we don't want to take a bad okay and.

Kind of a distraction so lucky but business is the business. Good money. Good money, Okay. We don't want to take a bad okay and.

Michael Hsing: It's very difficult for us to predict what's the booking, where the bookings are. We build our inventories. We try to build. Okay, look at the inventory now. We try to build up as a way below our models. Whatever comes, we anticipate it. We can swiftly adapt.

But overall the bottom line.

MTS, while the demonstrated.

Any second one of our market.

Any segment of our market.

We are the best we have that possess the best technology and best customers customer service.

We are the best we have that possess the best technology and the best customer customer service.

Uh huh.

We solving problems, we demonstrated that we can have a qualities and the shipment of the syndicate audience all being the category. We are the best company.

We.

Are we solving problems, we demonstrated that we can have our quantities in the ship months. Okay. All the insider, albeit category we are the best company.

Ross Seymore: Yeah, just to add to that is that we really don't have a lot of visibility into the first half of next year. We can definitely point to the normal drivers as far as both enterprise data and automotive are very well positioned for new revenue ramps. But getting both the timing as well as getting that to balance out, we don't have a strong view on Q1 yet.

Bernie Blegen: Yeah, just to add to that is that we really don't have a lot of visibility into the first half of next year. We can definitely point to the normal drivers as far as both enterprise data and automotive are very well positioned for new revenue ramps. But getting both the timing as well as getting that to balance out, we don't have a strong view on Q1 yet.

And.

In terms of which segment, which saw AI company.

In terms of which segment, which saw an AI company.

<unk>.

We don't really care, we engaged with a large companies and small.

We don't really care, we engage with large companies.

Small companies and.

More companies and.

We wanted to demonstrate a visit.

We wanted to demonstrate a visit that.

Best technology, when the revenue comes with a comps and.

Best Technology, one revenue comps comps and.

Tore Svanberg: Okay, appreciate that. And if I'm not mistaken, your distribution inventory as of mid-year was at the low end of your five- to eight-week target range, and it decreased in the June quarter. What was the trend sequentially for the September quarter? And when might you take that distribution inventory back up to maybe the mid- to upper part of that normal range?

Gary Mobley: Okay, appreciate that. And if I'm not mistaken, your distribution inventory as of mid-year was at the low end of your five- to eight-week target range, and it decreased in the June quarter. What was the trend sequentially for the September quarter? And when might you take that distribution inventory back up to maybe the mid- to upper part of that normal range?

Given times.

Given times okay.

Although we we said it Kevin given time every all the true color will show up.

Although we we said it gambling given part every all the true color will short.

Thank you Michael.

Our next question is from Ross Seymore with Deutsche Bank.

Our next question is from Ross Seymore of Deutsche Bank.

Your line is now open.

Ross Your line is now open.

Hi, guys can you hear me.

Just fine Ross.

Great. Thank you I guess for my first question the automotive side of things you've talked about getting an incremental design win at linear Adas side of things. There's a lot of choppiness in that end market across different geos and at different points in time cyclically geopolitically, all those sorts of things, but from a secular growth perspective can you just talk about <unk> as a percentage of your revenues now.

Great. Thank you I guess for my first question the automotive side of things you talked about getting an incremental design win and then the Adas side of things. There's a lot of choppiness in that end market across different geos and at different points in time cyclically geopolitically, all those sorts of things, but from a secular growth perspective can you just talk about Adas as a percentage of your revenues now.

Ross Seymore: Yeah, currently, the Q3 channel inventory was unchanged in terms of days from where it was in the prior quarter. So we take from that that we're satisfying real demand at this point, which again is a reflection of the quick turns business that we're working with.

Bernie Blegen: Yeah, currently, the Q3 channel inventory was unchanged in terms of days from where it was in the prior quarter. So we take from that that we're satisfying real demand at this point, which again is a reflection of the quick turns business that we're working with.

Versus user interface or USB, and those sorts of things and how adas penetrating more of that market changes the growth rate the content. The diversity of it just kind of want to capture that Adas theme and what it really means to you.

Tore Svanberg: Thank you.

Gary Mobley: Thank you.

Operator: Our next question is from Chris Caso of Wolfe Research. Chris, your line is now open.

Arthur Lee: Our next question is from Chris Caso of Wolfe Research. Chris, your line is now open.

Tore Svanberg: Yes, thank you. Good evening. The first question is on enterprise data and what are sort of the puts and takes as you look into next year? And of course, this year, there was some changes in market share in that, which affected that business. But I guess I'm going to assume that things are cleaner as you go from this year into next year. And I mean, one, do you expect to grow that business as you go into next year?

Chris Caso: Yes, thank you. Good evening. The first question is on enterprise data and what are sort of the puts and takes as you look into next year? And of course, this year, there was some changes in market share in that, which affected that business. But I guess I'm going to assume that things are cleaner as you go from this year into next year. And I mean, one, do you expect to grow that business as you go into next year?

Sure why don't I take a start with this.

Sure why don't I take a startup this.

So I.

I think that.

We've demonstrated a history.

Establishing a strong presence.

In various markets with differentiated technology.

You might recall going back a ways.

USB ports for automotive.

And now it's eight off and what this does is it has a cascading effect, where we're able to get adoptions in the design wins.

And now it's a dos and what this does is it has a cascading effect where.

We're able to get adoptions in the design wins and we call out when these begin to ramp.

Michael Hsing: Well, it's cleaner. You see that this year is the next year's, this year's. Okay, we're doing pretty good this year. And see, as I said earlier, the module business is growing. And so all this area, MPS technology shines. And the higher power, the better it is. And because we provide the highest density, power density products, that fits this market perfectly. And in the next couple of years, you will see it. MPS is a major player in this market segment. And also the market's big. It's not okay. We don't want to play, so we don't want to be an MPS only. Okay, you want to have multiple competitors. It's good for the industry.

And we call out when they begin to ramp.

And that's actually been more important to us.

Then the necessarily the.

What the Saar is for particular end market.

And in this one in particular.

And in this one in particular, we have started with a lot of eight das opportunities, particularly in the evs, because they're faster to come to market, but what that has given us the opportunity has been to showcase all of our other technologies and now we're starting to see those ramp whether it's Bob.

We have started with a lot of asos opportunities, particularly in the evs, because they're faster to come to market, but what that has given us the opportunity has been to showcase all of our other technologies and now we're starting to see those ramp whether its in body electronics where different applications.

The electronics were different applications.

We're more excited about.

What we're more excited about.

As we look ahead and the transformation of the.

And market for automotive as it moves into 48 volt and the zonal electronics.

Yes.

Yeah no we.

Yes.

Don't know the breakdown to answer your question exactly.

We don't know the breakdown okay too.

Question, exactly and look I mean.

But when you have some idea some that came out I think it's less than half.

But when you have some ideas that came out I think it's less than half.

Uh huh.

And.

I think it's well less than half its concerns and a half.

I think it's well less than half and half.

Ross Seymore: Yeah, I could see enterprise data growing in the range of 30% to 40% in 2026 for us. Much of that, though, would be back in the second half of the year. So while we've seen a number of new players that have been layered in, I think the material ramps are more weighted to the second half of 2026.

Bernie Blegen: Yeah, I could see enterprise data growing in the range of 30% to 40% in 2026 for us. Much of that, though, would be back in the second half of the year. So while we've seen a number of new players that have been layered in, I think the material ramps are more weighted to the second half of 2026.

Yeah, Yeah, yeah, Okay, and I'm just looking at the number of of cost and also the our our revenues and I cannot be more than half so look I missed.

Yeah, Yeah, yeah, Okay, and I'm just looking at the number of of cost and also the our our revenues and I cannot be more than half.

Yes.

But.

In the Adas side more in the mall.

In the Adas side more and more.

Cos.

Including our combustion.

Engine costs adopting aid us we will see a significant growth in the.

Engine cost adopting us we will see a significant growth in the <unk>.

Tore Svanberg: That's very helpful. If I could follow on to that, you know, since you provided a little bit of color on that, Bernie, when you look at that 30% to 40% growth, is that, you know, because I know that, you know, some of the vertical power designs, for example, you have more content. What's the driver of that? Is it fairly broad-based? Is it skewed towards, you know, some of the ASIC solutions, you know, more towards vertical power? Whatever kind of color you can give behind that 30% to 40% expectation.

Chris Caso: That's very helpful. If I could follow on to that, you know, since you provided a little bit of color on that, Bernie, when you look at that 30% to 40% growth, is that, you know, because I know that, you know, some of the vertical power designs, for example, you have more content. What's the driver of that? Is it fairly broad-based? Is it skewed towards, you know, some of the ASIC solutions, you know, more towards vertical power? Whatever kind of color you can give behind that 30% to 40% expectation.

And the next few years, that's the way we anticipated okay.

The next few years, that's the way we anticipated okay.

Great. Thanks for that color I guess as my follow up pivoting to another thing you talked about in your press release of moving from a silicon chip based supplier to more of a solutions provider.

Great. Thanks for that color I guess as my follow up pivoting to another thing you talked about in your press release of moving from a silicon or a chip based supplier to more of a solution provider.

How do you think about the gross margin implications of that over time. You know you guys were a few points higher than you are now a couple of years ago, We've talked about what does it take to get you back to kind of the upper fifty's from the mid fifties ish, where you are today does that system approach help or is that actually a headwind in the gross margin as you go forward.

How do you think about the gross margin implications of that over time, you guys were a few points higher than you are now a couple of years ago, We've talked about what does it take to get you back into kind of the.

The upper Fifty's from the mid fifties. This where you are today does that system approach help or is that actually a headwind in the gross margin as you go forward as much as it might even be operating margin accretive.

Michael Hsing: As a CEO, I don't know how to make a 30% to 40% cost. I don't know. The opportunity is there. Okay, if we didn't deliver a 30% to 40%, the stocks are still from $900 to 400. Okay, what kind of fuck-up is that? Okay. So I don't want to make them very hard. Just waiting for the numbers. Let the numbers show.

As much as it might even be operating margin accretive.

I I don't think so I don't think that there would be a headwind and academy and a lot of our large system our buildings and okay. We're kind of learning how to do it.

I I don't think so I don't think that there won't be a headwind and academy and a lot of our large system our buildings and okay. We're kind of learning how to do it and.

And.

A lot of issues.

A critical.

Issues Okay.

And once the volume goes up and so we're linear okay.

Once the volume goes up and so we're linear okay.

I think as the things that gets a lot better okay.

I think the things to get them a lot better okay and.

Safety.

Susan.

Tore Svanberg: Fair enough. Thank you.

Chris Caso: Fair enough. Thank you.

So you said last year I guess, okay I mean.

Say for last year I guess, okay.

Operator: Our next question is from Kelsey Chia of Citi. Kelsey, your line is now open.

Arthur Lee: Our next question is from Kelsey Chia of Citi. Kelsey, your line is now open.

And we're in a public cloud a bit away.

And we're in total are quite a bit away.

Actually making our own tested equivalent.

<unk> actually making our own tests at equivalent.

Kelsey Chia: Hi, hi, Michael. I'm Bernie. Thanks for taking my question. So my question is on the competitive landscape. And I was hoping if you could share more, especially with regards to the material side of things, GaN, silicon carbide. I think your biggest enterprise data customer has been signing a lot of partnerships with all these semiconductor companies. And I was just wondering MPS positioning in those and if you actually see those materials as being important in the next generation of the power modules and chips.

As a.

A lot of people know about it okay.

Wait.

We eat our own dog food and.

And.

Creating a fully automated.

Creating all fully automated.

Test systems, those type of products will never existed before.

Test systems those type of products will never existed before and I think ultimately will improve the yield and the April the gross margins.

And I think ultimately will improve the yield and the April the gross margins.

Thank you.

Our next question is from Joe Torchy, a wells Fargo.

Our next question is from Duke Tortuous of Wells Fargo.

Michael Hsing: We do our own silicon carbide. We're building modules. Also, we are seeing we are using again, okay? But that's a very, very early stage. We're evaluating it. Also, don't forget about silicon. silicon power MOSFETs have evolved. We engaged a lot of new developments. A lot of the data showed it can be very cost-effective and also can compete with the silicon carbide.

Joe Your line is now open.

Yeah. Thanks for taking the questions maybe first I just wanted to ask.

Yeah. Thanks for taking the question maybe first I just wanted to ask.

Within the <unk> guide is there any help you can kind of provide and just thinking about the end markets I think there's some seasonality to it maybe like in consumer in the fourth quarter and I think interface that you guys were previously thinking that it would be up somewhere like high single digits sequentially in the December quarter is that still the case.

Within the <unk> guide.

Is there any help you can kind of provide and just thinking about the end markets I think theres. Some seasonality so maybe like in consumer in the fourth quarter and that interface that you guys were previously thinking that would be up somewhere like high single digits sequentially in the December quarter is that still the case.

Uh huh.

Okay.

Uh huh.

Anticipating a market.

Anticipating the market.

That's a very difficult comp.

That's a very difficult court.

And.

Uh huh.

Are you guys embedding auto which stops okay.

Kelsey Chia: Got it. Thank you.

Michael Hsing: That's a very new, that's a very, very recent development.

It's difficult to look at it.

It's difficult to look at.

And.

Uh huh.

But.

Sure.

Kelsey Chia: Yeah. Okay, got it. I would just like to have a sense of how do you guys feel today versus a quarter ago, especially you guys have come a long way since the start of the year when you're dealing with all these market share changes, visibility on the ASIC customers, and things like that. Given the slew of announcements from all these big mega partnerships, how do you see that relative to your opportunities? Also, given the maturity of the supply chain, I believe things are probably, you know, the supply chain partners are getting to a good cadence. So how do you guys feel with regards to those recent announcements relative to your opportunity set?

We have our.

We have our way.

Way of operating our business, we do the best we do their best develop a technology engage our customers close late.

And Oh, probably the same way that youll pick a how you pick our stocks is okay and.

And Oh.

Probably the same way that youll pick a how you pick our stocks with okay and.

So you engage customers closely whatever happens happens and.

You can't predict what the what.

You can't predict what the what the market is and we don't do that actually.

What the market is.

We don't do that actually.

And if I could just add to that that debt.

And if I could just add to that that Oh.

Since we last talked about the second half of this year nothing fundamentally changed in our positioning.

Since we last talked about the second half of this year nothing has fundamentally changed in our in our positioning.

Okay. Thanks, Thanks for that that's helpful.

Okay. Thanks.

Thanks for that that's helpful.

Maybe just also following up.

Michael Hsing: I don't measure quarter by quarters. I measure by multiple years. So I can't tell you that.

I think in the press release your prepared remarks, you had a comment around the first design win for a full dms solution for robotics platform can you talk about what drove that and how you think about the revenue opportunity ramping there and more wins in the future.

Ross Seymore: Yeah, I guess the simplest way is we're very broadly indexed across not just the merchant vendors or large ASICs, but medium and small-time opportunities. All of these need to find their way into the marketplace. Right now, we're still very, very early in the process. As Michael said, it's very hard to sort out in any particular time period. I think that we're as well indexed amongst all the opportunities as anybody in this market.

Bernie Blegen: Yeah, I guess the simplest way is we're very broadly indexed across not just the merchant vendors or large ASICs, but medium and small-time opportunities. All of these need to find their way into the marketplace. Right now, we're still very, very early in the process. As Michael said, it's very hard to sort out in any particular time period. I think that we're as well indexed amongst all the opportunities as anybody in this market.

Well I hope so.

Well I'll start.

We've probably got too excited to talk about those.

And.

Hum.

So the fact that we got excited is because we see robotics happening okay.

The fact that we got excited is because we see robotics are happening.

They kind of.

Kind of.

We kind of predicted that that's that BMS is going to happen in a.

We kind of predicted that BMS is going to happen in a.

We got in <unk>.

We designed lettings and.

We designed <unk> and <unk>.

Kelsey Chia: Okay. Thank you.

It's our customers engage with US okay. There's a ground up systems that we developed.

Our customers engage with us okay, Theres a ground up systems that we developed.

Operator: Our last question is from Jack Egan of Charter Equity Research. Jack, your line is now open.

Arthur Lee: Our last question is from Jack Egan of Charter Equity Research. Jack, your line is now open.

And we see more and more these type of a system what will happened.

And we see more and more these type of a system or what happened.

Jack Egan: Great. Thank you for taking the questions. I had one on enterprise data and then one on modules more broadly. So the shift to modules and vertical power delivery with the custom ASIC ramp should be a pretty big tailwind for MPS. And I'm kind of wondering about what the main drivers have been, at least so far for those customers that are switching from lateral to modules of vertical power. So I'm not really sure if you have this level of granularity, but among the major benefits like higher power density, higher efficiency, smaller footprint on the top side of the board, etc., is there any one characteristic that's kind of being cited by your customers as the main reason that they are moving to those modules or vertical power delivery?

So.

These kind of.

The system will be.

Become a reality so that's the reason we put out there and look at.

Become a reality so that's the reason we put out there for them okay.

Yeah, and I'll just add on very specifically on that one clearly we called it out because of the fact it was the first opportunity that we have the design went on in terms of a revenue ramp that's really starting in 2026 and its not in and of itself necessarily a needle move around the model.

But I do think it sort of starts to wave of these full solution design wins that you might have going forward.

But I do think it starts to waive all of these full solution design wins that you might have going forward.

Yeah, that's come out.

Well.

The same store at the same time, the wing and making it a point.

The same from the same time the way you were making a point.

Okay.

We do start to do robotics and stuff.

Michael Hsing: Well, we don't see from a chip to module. Whoever stays with the module stays with the module. Start with the module. Whoever stays with the chip, stays with the chip. Okay. And so MPS provides both, okay, both chip solutions and module solutions at this time. Okay. And so I don't know if it answers that question for you.

Sure.

Operators.

I see four actuators and.

The IC for actuators and.

And our BMS charging wireless charging.

And our BMS charging wireless charging and.

These are back a few few years ago, we didn't even sell notes in October.

These are back a few few years ago, we didn't even sell notes in November.

Robotics, Whoa whoa, taking off okay, I've been talking about robotics is things that are 2017 or 18 and.

<unk> robotics.

Well, taking off okay, I've been talking about robotics is seeing strong 2017 or 18.

Uh huh.

But AI assist robot.

But.

Assist robot.

A more and more per leaves, okay, I won't really start taking off and.

A more and more per leaves okay.

Jack Egan: Got it. Okay. And then just kind of on the modules more broadly, I think, I believe if I understood it correctly, the last quarter you mentioned that modules outside enterprise data could be like 10% to 15% of your total revenues. And so I was curious how much of your revenue base, or I guess addressable market outside enterprise data would be eligible for switching to modules. I mean, even if you're looking several years into the future, how high could that mix of modules outside enterprise data go?

Really started taking off.

So that's kind of our projects.

So that's kind of our projects that we think is oh, we pick the windows, Okay, and we're glad to see us and that's why we probably too excited too to talk about this.

Oh, we pick the windows, Okay, and we're glad to see it and again, that's why we'd probably too excited too to talk about this.

Thank you.

Our next question is from Quinn Bolton of Needham.

Our next question is from Quinn Bolton Needham Quinn.

Your line is now open.

Yeah.

Graduations, Michael Bernie and Tony.

Graduations, Michael Bernie and Tony I, just wanted to start with a big picture question just.

I just wanted to start with a big picture question just.

Michael Hsing: That's a good question. So, okay, and we built those modules very similar to enterprise modules, okay, since 2017. Industrial market adapting kind of slows, and actually faster than telecoms. These are two market segments that we focus on. Then, to our surprise, the auto industry also wants to use it because it's easy to implement. So the other one is semi-equipment. That's a large segment. We didn't realize that. Okay. Now we see all these revenues are happening there. So, I think in the next couple of years, we'll be growing faster than three or four years ago. So we're picking up a business. The rate of increase is picking up.

Looking through this earnings season.

Intel's talked about you know sort of shortages of of server Cpus, we've seen hyperscale or significantly increasing capex and video talks about half a trillion dollars of demand in 'twenty five 'twenty six I guess my question is about a year ago. I think you guys were seeing very very short lead.

Intel has talked about you know sort of shortages of of server Cpus, we've seen hyperscale or significantly increasing capex and video talks about half a trillion dollars of demand in 'twenty five 'twenty six I guess my question is about a year ago. I think you guys were seeing very very short lead time.

<unk> in that business.

And that business and dealing with some level of pricing pressure I'm wondering as you look into second half and more importantly into next year have you started to see any change in customer lead times or are they giving you better forecast across the enterprise data segment and is the pricing on.

And dealing with some level of pricing pressure I'm wondering if you're looking at the second half and more importantly into next year have you started to see any change in customer lead times are they giving you better forecasts across the enterprise data segment and is the pricing on.

Voltage regulators and vertical power.

Has that changed at all over the last.

A quarter or so.

Glen Thanks for the question let.

Brian Thanks for the question.

Let me start that this remains a very dynamic market.

We're responding to.

We are.

Responding to a variety of requests.

Variety of requests.

When it comes to the orders and the expectations from our customers.

So in some ways.

We're getting improved predictability because we're adding.

We're layering as I said more customers into the mix.

We are layering as I said more customers into the mix.

Jack Egan: Got it. Thanks, Michael. That's helpful.

Michael Hsing: Good. Good.

But as far as the market itself and particularly with all the blockbuster announcements that have been coming out recently you can see how quickly things are changing and what our position is that we.

But as far as the market itself and particularly with all the blockbuster announcements that have been coming out recently.

Operator: This concludes our Q&A session. I would now like to turn the webinar back over to Bernie.

Arthur Lee: This concludes our Q&A session. I would now like to turn the webinar back over to Bernie.

You can see how quickly things are changing and.

Ross Seymore: I'd like to thank you for all joining us for this conference call. I look forward to talking to you again during our Q4 2025 conference call, which will likely be held in early February. Thank you and have a nice day.

Bernie Blegen: I'd like to thank you for all joining us for this conference call. I look forward to talking to you again during our Q4 2025 conference call, which will likely be held in early February. Thank you and have a nice day.

But our position is that.

We can't control our customers necessarily but we can position the company to be as responsive as we can.

Is this sort of dynamic market I mean, you folks are scrambling sort of to get capacity has that had any lifting effect on pricing and then I'll ask my second question.

Is this sort of dynamic market I mean, you folks are scrambling to get capacity has that had any lifting effect on pricing and then I'll ask my second question.

Yes.

Got it.

Any market segment started the fund.

I have a ramp rapidly at the at the beginning always caused these imbalances okay supply.

I have a ramp rapidly at the at the beginning always causes these imbalance K supply.

In balance okay.

So.

So in the AI side, it clearly is it like that.

In the AI side are clearly like that okay, and then once it goes awesome, okay things that will smooth it out.

Once it goes awesome, okay things that will smooth out.

And then it being specific to your question I don't think we've seen any.

And then it being specific to your question I don't think we've seen any recent.

Recent or sustainable trends in pricing, one way or the other.

Okay.

Perfect and then second question for you Bernie gross margins have been sort of on a.

Perfect and then second question for you Bernie gross margins have been sort of on a sort of kicking down over the last year or two.

Sort of ticking down over the last year or two.

Can you give us any sense do.

Can you give us any sense.

Do you think they sort of stay in this mid 50 555, 5% range.

Is there some point next year that you start to see gross margin starting to move.

Move higher either driven by mix or new products or.

Should we be thinking about margins being fairly flat over the next year or two.

Sure as I've commented on prior calls.

We've seen about three or four quarters in a row.

We're I would say that we have seen a strong uptick in demand and that continued.

We are I would say that we have seen that.

The uptick in demand and that continues.

Even today.

What makes this cycle different than ones that are.

What makes this cycle different than ones that are that we've experienced in the past is that the orders are more short term in nature, we're not seeing.

That we've experienced in the past is that the orders are more short term in nature, we're not seen.

Large buildup in backlog in future quarters, and so without that visibility it limits our capacity to be able to manage the mix of business that.

A large buildup in backlog in future quarters, and so without that visibility it limits our capacity to be able to manage the mix of business that we.

We want to be able to have <unk>.

We want to be able to have expansion in gross margin so for the foreseeable future.

Expansion in gross margin so for the foreseeable future until the demand profile changes to elongate.

Until the demand profile changes to elongate.

The buildup of backlog.

I believe that where.

I believe that.

We're gonna be in sort of the steady range, plus or minus 2030 basis points.

Gonna be in sort of a steady range plus or minus 2030 basis points.

In the mid 55.

Got it.

Uh huh.

We have a lot of products okay.

Okay and.

Okay.

A fifth.

For the 50000 customers.

50000 customers.

And two more and it's very stable margins.

And so more and it's very stable margins.

And.

With the transitions to more solution provided companies and again as I said earlier.

With the transition to a more solution provided companies and again as I said earlier.

And all of these to them it has to be automated and then okay and.

And all of these and there has to be automated and then okay and.

As time goes.

Awesome.

Margin Whoa, whoa improved and but not quickly.

Margin, Whoa, whoa improved and but not quickly and.

And.

Mass and mass is a very big.

A mask a mask the very big.

And so.

So nothing.

None is operated on a low a low end of our.

We're known as operated on a low a low end of our hour.

Our margin profiles and that came in.

Our margin profiles, so that came in.

But the long the longer term.

The long the longer term.

Well, you can pool and we.

Well you can pool and.

We stick with.

With a gross margin range.

Got it thank you.

Our next question is from tourists whimper of Stifel. Your.

Our next question is from tourists whimper of Stifel.

Your line is now open yes, thank you Michael Bernie Tony Congrats on another record quarter.

By the way some of the dog food, you're referring to must be pretty pretty proprietary stuff, but.

By the way some of that dog food, you're referring to must be pretty pretty proprietary stuff.

My first question is on the enterprise data segment.

So thats about an $800 million business right now.

And my understanding is you know.

And my understanding is you are on a journey here right and you're still selling predominately chips. You are obviously moving into modules subsystems. Eventually systems. So I'm not looking for any numbers per se, but can you just sort of let us know where we are in that journey I mean building an $800 odd business wood chips.

We're on a journey here right and you're still selling predominately chips you are obviously moving into modules subsystems. Eventually systems. So I'm not looking for any numbers per se, but can you just sort of let us know where we are in that journey I mean building an $800 odd business wood chips in.

Where can we eventually go here with obviously more and more subsystem type solutions for enterprise data.

Where could we eventually go here with obviously more and more subsystem type solutions for enterprise data.

If I understood your question correctly okay.

A cancer.

I can't answer.

Always.

Not always.

We're anticipating beauty meetings of our meetings.

We're anticipating booty meetings of our meetings.

Multiple millions of units.

Months type of shipment.

And.

All of these all of these are integrate highly integrated modules never existed before so how do we how do we test this thing how we achieve that.

All of these.

Integrate highly integrated modules never existed before.

So how do we how do we test this thing how long are achieved.

In the single low single digit ppm failure so okay.

And that single low single digit ppm failure, so lucky that is.

That is.

When wait we never encountered the dotcom issues before and okay, and so we start using our own robotic systems to make that happens. So now as we look at we achieved with a very high volumes of 100% automated including <unk>.

When we never encountered the dotcom issues before and okay, and so we start using our own robotic systems.

To make that happen. So now as we look at we achieved with a very high volumes of 100% automated including including.

Uh huh.

Reliability test.

Test.

And that's all that's our features and the goal is building multiple milling unit some months for that.

Take the $10 million a months before that.

Take care.

10 million of months before that.

That's the near term.

Hum.

Our gold.

Gold.

Yes, that's very helpful. Thank you for that Michael and did you also have a response to my question on the enterprise data.

Again.

Again, where are we in this journey towards delivering more system level solutions, especially with talking about rack level power and so on and so forth.

Or are we in this journey towards delivering more system level solutions, especially we are talking about rack level power and so on and so forth.

This is at the very beginning maybe.

I think it's.

<unk>.

Module power Skus.

Module power Skus in less than a wave of less than a third okay and.

Less than a wave of less than a third okay and less in the third.

Less than a third of.

Our revenues and grow in the last half years and.

The way, we expected it to grow as some.

Okay.

We expect it to grow some.

Delayed and.

Late and.

And then I'll start to happening and in our next.

And then I'll start to happening and in our next next years could be a much more.

Next years could be a much more.

Great. Thank you for that.

Maybe just to add on to the back of that story I think as we start talking about some of these solutions 800 volt as we discussed those are like 27 28 revenue ramp. So I think it supports what Michael was saying that we're still at the front end of this opportunity in the data center for us.

Maybe just to add on to the back of that story I think as we start talking about some of these solutions 800 volt as we discussed those are like 27 28 revenue lands. So I think it supports what Michael was saying that we're still at the front end of this opportunity in the data center for us.

Great. Thank you I think Athena Investor investment community, if you will.

Thank you I think Athena investor investment in communities.

If you are 800 volts of technologies in the.

800 volt technologies.

Sandler transformer is like us flip a switch the lifetime months 10 months, it's not like that okay. So I'd like to turn it on it takes a couple of years, okay more than couple of years to make our to see the revenues. Okay. These are take us three or four years.

Sandler transformer is like us flip a switch the lifetime months 10 months, it's not like that okay. So I'd like to turn it on it takes a couple of years.

More than a couple of years to make our to see the revenues okay.

A three or four years.

Great perspective, thank you again.

Our next question is from Rick Schafer of Oppenheimer. Rick Your line is now open.

Thanks, and I'll add my congratulations you guys.

Just maybe if I could start with an auto question kind of a follow up but I know, we talked about BMS robotics.

Just maybe if I could start with an auto question kind of a follow up but I know, we talked about BMS robotics, but I don't BMS becomes a bigger contributor for your auto segment next year.

BMS becomes a bigger contributor for your auto segment next year.

You mentioned a couple of things Mike Hope off an earlier question, but I'm just curious if you could give some guide rails would provide some guide rails about potential content trends for MTS as you start ramping some of those BMS opportunities would be.

You mentioned a couple of things my hope up an earlier question, but I'm just curious if you could give some guide rails and provide some guide rails about potential content trends for MTS as you start ramping some of those BMS opportunities.

Not asking for dollar content per car, but it does it does it double or triple those kinds of numbers like what does it do to your potential content per vehicle moving into that Dms space in a more meaningful way and as part of your answer I'm curious.

Again, not asking for dollar content per car, but.

Does it does it double or triple those kinds of numbers like what does it do to your potential content per vehicle moving into that Dms space in a more meaningful way.

Part of your answer I'm curious.

We're still gonna look where the some of the lowest hanging fruit is for you guys. I mean is it 48 volt power isolation that kind of thing.

Where some of the some of the lowest hanging fruit is for you guys. I mean is it 48 volt power isolation that kind of thing. Thanks.

Yes.

It's actually all of them Tanaka BNS revenues for auto and therefore <unk>.

It's actually all of them.

BNS revenues for auto and therefore <unk>.

It's a bit in the far away again.

But.

Our customer it's a very this is a very.

Our customer it's a very.

As a very.

<unk>.

Concentrated in a market is a few players.

In a few.

A few.

While it's not a few car carmakers and that gradually all of them. So they have what they want at BMS and.

While it's not a few car carmakers and that gradually all of them. So they have what they want at BMS.

Sure.

So our customers are glad though to see NPS.

Hum.

In English.

To develop a series of up that type of a product tubes.

Develop a series of up that type of a product two's.

And in terms of other low hanging food and okay, we see a 40 ables.

And in terms of other low hanging food and okay. We see a 40 ables as.

Uh huh.

As a as a trained and we develop all of those are those products back in a few years ago or five.

As a trained and we develop all of those are those products back in a few years ago.

Five six years ago.

And we provide all of these are integrated solution rather than it is a discrete one thing okay.

We provide all of these are integrated solution rather than either the screen once in okay.

The size can be.

Six seven times smaller.

And.

And the other one is our aim.

And the other one is.

800 volts for eat and analysis, all goes up and from a 400 volt to 800 holes okay.

800 volts for eat and analysis, all goes up and from a 400 volt to 800 rolls Okay.

And.

Uh huh.

In the China market is a lot of cars already.

In the China market is a lot of cars already have a 800 volts. Okay. So our silicon carbide solutions, Okay man not for for traction Inverters and therefore control systems. These are dated product will be shocked.

800 volts, okay. So our silicon carbide solutions came in.

For for traction Inverters, and therefore control systems.

This product will be shocked.

And so that's.

I pulled out my hair.

I pulled off Mark Harris.

At this moment.

And Rick maybe just to shape, a little bit on timing there to make sure I think what we said is the layering of opportunities in auto.

And then Rick maybe just to shape a little bit on timing there to make sure I think what we said is the layering of opportunities in auto really sort of the end of this year and next year starts with design wins that we have bringing new content to market per vehicle.

Sort of the end of this year and next year starts with design wins that we have bringing new content to market per vehicle.

You start to see zonal designs hip market next year, then ramping through into 'twenty seven.

Start to see <unk>.

Designs that market next year, then ramping through into 'twenty, seven and then the BMS and traction inverter solutions are really kind of more like 2007 and beyond just to make sure you understand sort of how those revenue opportunities are Larry again.

The BMS and traction in Burger solutions are really kind of more like 2007 and beyond just to make sure you understand sort of how those revenue opportunities are Larry again.

Thanks, Tony correct color on thanks, Michael and then if I could ask my follow up just in time each BDC.

Thanks, Toni so like the color and thanks, Michael and then if I could ask my follow up just to touch on each BDC.

I appreciate the timing commentary you provided a second ago, Tony but I'm also curious I mean, I'm just trying to figure out the right way to think about that emerging market.

Appreciate the timing commentary you provided a second ago, Tony but I'm also curious I mean, I'm just trying to figure out the right way to think about that emerging market I mean.

Can you give a sense of how <unk> compares to sort of how you described it.

Can you give a sense of how <unk> compares to sort of how you described at your at your Analyst day earlier. This year, maybe how you described the 48 volt accelerator our opportunity.

Your analyst day earlier this year, maybe how you described the 48 volt accelerator our opportunity.

Or any terms you bond just to try to give a sense of what that market represents for you guys or what you think it could.

I think it's a 48 volt system is a clear and there's a reason why the 48 volt. Okay is it goes back to our telephone time soon okay.

I think it's a 48 volt system is a clear and there's a reason why the 48 volt as a going back to those telephone time soon okay.

Technical systems.

And technical assistance.

48, volt, plus minus 40 holes Lucky and.

48 volt, plus minus 40 holes.

And.

Hmm.

Plus or minus 45% and.

Perhaps the minus 45% and.

First this started with a with.

First this started with the with.

And in the silver side, Okay, we'll talk about our four years. This thing so I'm, okay and.

It has to be the solutions.

It has to be the solutions because the Wednesday, you've got currently goes up everybody remembers is a car using a 60 volt batteries <unk> Paul doesn't okay.

Because of the Wednesday.

It goes up everybody remembers is a car using a 60 volt batteries like identity can Paul Okay.

Ultimate Okay, moving up to 48 volt I mean these are all full control systems 40 year lows.

Okay.

Okay, moving up to 48 volt I mean these are all for control systems for the year.

And.

So data center is already happening.

<unk> I see.

40 volts.

That's why I predict all the beauty.

That's why I predict all the beauty or the beauty automation all going to be on <unk>.

The beauty automation, all going to be on <unk> and.

And the building will be a DC power solutions.

And.

But the opportunity is great.

So the opportunity is great.

And as.

And the other.

We pulled out of all the engage our customers.

We pulled out of all the engage our customers where the building automation systems and we've pulled a point actually is a sole welcome for that type of a product.

Building automation systems, and we proved the point that actually is a sole welcome for that type of a product and.

Uh huh.

So that's.

That's my view.

Okay.

At this time.

And Rick I think part of your question was also on the 800 volt high voltage DC for for data center as well right yes.

And Rick I think part of your question was also on the 800 volt high voltage DC for for data center as well right, Yes, and I think on that one we've been pretty careful about trying to size of opportunities because one its very far out to we don't know how it will ramp in the market I think what we have said is since we don't play in that part of it.

Think on that one we've been pretty careful about trying to size of opportunity because one its very far out to we don't know how it will ramp in the market I think what we have said this since we don't play in that part of the market today, the business to get a sort of all accretive to our overall Sam going forward, but I think we wanted to be careful about sizing the market yet.

The market today, the business to get a sort of all accretive to our overall Sam going forward, but I think we wanted to be careful about sizing the market yet given how far out it is and not knowing how to layer into the data centers going forward.

Given how far out it is and not knowing how to layer into the data centers going forward.

I appreciate it thank you guys.

Our next question is from Gary Mobley of loop capital Gary Your line is now open.

Our next question is from Gary Mobley of loop capital.

Gary Your line is now open.

Hey, guys. Let me extend my congratulations on the continued strong growth in between execution.

I appreciate the fact that you still only have about three to four months of visibility.

Given the capacity that you can support in the quick turns business you can support but can you confirm whether bookings continued to improve sequentially in.

Given the capacity that you could support and.

Quick turns business you can support but can you confirm whether bookings continued to improve sequentially.

What are the seasonal considerations as we look out into the first quarter.

It's really difficult.

Okay great.

Difficult for us to.

So for us to predict okay, what's the what's the booking what's the what were the bookings that okay. We build our inventory. So we tried to build in okay. I looked at the inventory now.

<unk> predictor that okay, what's the what's the booking what's the what were the bookings that okay. We build our inventory. So we try to build an okay I looked at the inventory now.

And we tried to build up as that fades away at below our.

And then we try to build up as that fades away it's below our.

Models.

Our models.

Uh huh.

Whatever comes that we anticipated came in we can swiftly.

Whatever comes and we anticipated it came in we can swiftly.

Two to adopt.

Okay.

Yeah, just to add to that is that.

Yeah, just to add to that is that we.

We really don't have a lot of visibility into the first half of next year.

We can definitely point to a normal drivers as far as both the enterprise data and automotive are very well positioned for new revenue ramps.

But getting both the timing as well as getting that to balance out we don't have a strong view on Q1 yet.

But getting both the timing as well as giving that to balance out we don't have a strong view on Q1 yet.

I appreciate that.

And if I'm not mistaken your distribution inventory is at mid year was at the low end of your five date, we target range and the decreased in the June quarter, what was the trend sequentially for the September quarter, and when might you take that distribution inventory.

And if I'm not mistaken your distribution inventory is at mid year was at the low end of your five date, we target range and a decreased in the June quarter, what was the trend sequentially for the September quarter, and when might you take that distribution inventory.

<unk> back up to maybe the mid to upper part of that normal range.

Back up to maybe the mid to upper part of that normal range.

Yes, Kurt currently Q3 channel inventory was unchanged in terms of days from where it was in the prior quarter.

Yes, Kurt currently Q3 channel inventory was unchanged in terms of days.

Whereas in the prior quarter.

So we take from that that we're satisfying real demand at this point.

Which again is a reflection of the quick turns business.

Which again is a reflection of the quick turns business that way.

We're working with.

Thank you.

Our next question is from Chris Caso.

Search Chris Your line is now open.

Search.

Your line is now open.

Yes. Thank you good evening.

First question is on enterprise data.

What is sort of the puts and takes as you look into next year and of course this year there was a.

And what are sort of the puts and takes as you look into next year and of course this year there was a.

Some changes in market share in that which which which affected that business but.

I guess I'm going to assume that things are cleaner.

I guess I'm going to assume that things are cleaner as you go from this year into next year and I mean, one.

As you go from this year into next year and I mean, one.

Do you expect to grow that business as you go into next year.

Cleaner.

Cleaner instead of this.

This year the next year this year so okay.

We're doing pretty good this year, so I'm, okay Ram.

We are doing pretty good this year, so I'm okay.

And.

Yeah.

C. We.

See we and.

In the.

And as I said earlier the module business are growing so lucky.

Said earlier the module business are growing some that came in.

So all of these are this area.

NPS technology shines.

And the power the higher powered the better it is.

And because we provide the highest density.

Power density products.

Power density products that.

Fitch this market perfectly.

Fixed this market perfectly.

And.

In the next couple of years.

You will see at MTS.

This is a major players and.

This is a major players.

Hum.

H, a inkjet market assignment and also the market a bit.

Eight eight English market segment, and also the market a bit.

It's not we don't want to place it with pulse ox via MTS all of it. Okay, you want to have a multiple competitors.

It's not okay, we don't want to place a weight pulse ox via MTS alternates in okay, you want to have a multiple competitors.

Competitors, it's good for us.

For the industry.

Yes, I can see enterprise data.

Yeah, I could see enterprise data.

Growing.

In the range of 30% to 40% in 2026 for us much.

Much of that though would be back in the second half of the year. So while we've seen a number of new players that have been layered in.

The material ramps are more weighted to the second half of the 26.

That's very helpful. If I could follow on to that.

Since since you provide a little bit of color on that Bernie.

When you look at that 30% to 40% growth.

Is is that.

Because I know that some of the the vertical power designs. For example, you have more content.

What what what's the driver of that is it fairly broad based is it is it skewed towards you know.

What what what's the driver of that is it fairly broad based is it is it skewed towards.

Some of the basic solutions more towards vertical power whatever kind of color you can give behind that 30% 40% expectation.

Some of the basic solutions more towards vertical power whatever kind of color you can give behind that 30% to 40% expectation.

Hi.

I don't know how to make our sodium 40% cost.

Okay.

And.

Yes.

Attunity is a they're okay. If we didn't deliver 30, 40% of the stocks I see from them from a $900 to $400. Okay, what kind of buffer is that okay.

Attunity is a they're okay. If we didn't deliver 30, 40% of the stocks that theater from them from a $900 to $400. Okay. Now what kind of buffer is that okay and.

So.

So I don't want to make them very fast.

Just waiting for the Memphis lesser member shop.

Fair enough. Thank you.

Our next question is from Kelsey <unk> of Citi Research Kelsey Your line is now open.

Hi, Hi, Michael and Bernie Thanks for taking my question. So my question is on the kind of pattern.

Hi, Hi, Michael and Bernie Thanks for taking my question. So my question is on the competitive landscape and Alice.

Packages landscape and how this whole thing.

If you could share more especially if they forgot to material side of things like gallium nitride Silicon carbide I think.

If you could share more especially if they forgot to mccarroll side of things that gallium nitride silicon carbide I think.

Yeah, our biggest enterprises that customer has been spending a lot of partnerships with all these semiconductor companies and I was just wondering NPS positioning and dose.

Yeah.

First enterprises that customer has been spending a lot of partnerships. If all these semiconductor companies and I was just wondering MTS positioning and dose.

If you ask D C Dallas materials as being important and the next generation F D power like health and kits.

If you actually see Dallas materials as being important and the next generation F D power like health and kits.

We do our own silicon carbide.

And we're building our modules and.

And.

We're building our modules and.

Also we are seeing.

We are using a game that came in.

We are using a game.

But that's a very very early stage of where we're at.

But that's a very very early stage of where we're evaluating it.

Valerie it isn't it.

And also don't forget about silicon Silicon power MOSFET is okay.

And also don't forget about silica.

Silicon power MOSFET is okay.

Vault that okay, we engaged a lot of unused used development.

And.

And <unk>.

Lot of its data.

All of this data showed.

<unk> it.

It can be very cost effective and also can compete with our silicon carbide.

It can be very cost effective and also can compete with the silicon carbide.

Got it thank you.

It's a very new that's a very very recent development.

Yeah, Okay got it.

And I would just like to have a sense of how do you guys feel today versus a quarter ago I'm, especially you guys have come a long way since the start of the year when youre dealing with all of these market share changes sensibility on D assay customers and things like that and given the slew of announcements around.

I'd just like to have a sense of how do you guys feel today versus a quarter ago I'm, especially you guys have come a long way since the start of the year when youre dealing with all of these market share changes.

Buddy on D ASIC customers and things like that and given the slew of announcements around from all of these big Mac. Our partnerships, how do you see that relative to other Kennedys and also given the maturity of the supply chain I believe like things are probably.

From all of these.

Our partnerships, how do you see that relative to the opportunities and also given the maturity of the supply chain I believe like things are probably the supply chain partners are getting type of cadence. So how do you guys feel I think got to Dulles recent announcements.

The supply chain partners are getting the cadence.

So how do you guys feel I think got to Dulles recent announcements relative to our opportunity set.

Well I can tell you our toy or.

Opportunities Sac.

I don't measure it quarter by quarters.

I don't measure it quarter by quarter.

A major by multiple years.

<unk>.

So I can tell you that.

Yeah.

Okay.

Yeah, I guess the simplest ways, we're very broadly indexed across not just the merchant vendors or large essex, but our medium and small time opportunities and all of these need to find their way into the marketplace and it's right now we're still very very early.

Yeah, I guess the simplest ways, we're very broadly indexed across not just the merchant vendors or large ethics that our medium and small time opportunities and all of these need to find their way into the marketplace and it's right now we're still very very early in the process. So.

In the process. So as Michael said, it's very hard to sort out in any particular time period.

As Michael said, it's very hard to sort out in any particular time period.

But I think that we're well indexed amongst all the opportunities as anybody in this market.

Okay. Thank you.

Yeah.

Our last question is from Jack Ethan of Charter equity Research. Your line is now open.

Our last question is from Jack you can charter equity research. Your line is now open.

Great. Thank you for taking my questions I had one on enterprise data and then one on module with more broadly.

Great. Thank you for taking the questions I had one on enterprise data and then one on module with more broadly.

The shift to module than vertical power delivery with the custom ASIC ramp should be a pretty big tailwind per Mcf and I'm kind of wondering about what the main drivers have been at least so far for those customers that are switching from lateral to module the vertical power. So I'm not really sure. If you have the global granularity.

The shift to model them vertical power delivery with the custom ASIC ramp should be a pretty big tailwind per Mcf and I'm kind of wondering about what the main drivers have been at least so far for those customers that are switching from lateral to model the vertical power. So I'm not really sure. If you have the global granularity.

But among the major benefits like higher power density higher efficiency smaller footprint on the top side of board et cetera is there any one characteristic that's kind of being cited by your customers as the main reason that they are moving to those modules or vertical power delivery.

Well, we don't see.

Our pharma pharma chip to module.

Our pharma.

From a chip to a module.

However stays as a module stays as a module start with a module whoever stayed the chip stay with a chip okay and so.

However stays as a module state of the module start with a module whoever stayed the chip stay with a chip okay and so.

So the.

The NPS it provides us a bulk okay.

Both chip solutions, and and module solutions and.

At this time, okay and.

So I don't know if you answer that question for you.

Yeah.

Got it okay.

Then just kind of on the module more broadly I think what I bill.

And then just kind of on the modules more broadly I think.

Believe if I understood. It correctly last quarter, you mentioned that modules outside enterprise data it could be like 10% to 15% of your total revenues and so I was curious how much of your revenue base. So I guess the addressable market outside of enterprise data would be eligible for switching to modules I mean, even if youre working set.

If I understood. It correctly last quarter, you mentioned that modules outside enterprise data it could be like 10% to 15% of your total revenues and so I was curious how much of your revenue base. So I guess the addressable market outside of enterprise data would be eligible for switching to modules I mean, even if youre working several.

All years into the future.

How high could that mix of modules outside of enterprise data go.

But that's that's a good question so okay.

But that's just that's a good question so okay.

We want to we've built those the module market.

Very similar to retail price modules, okay and.

Very similar to enterprise modules, Okay and.

Okay.

Hum.

And.

Hum.

Since 2017 and.

Industrial markets adopting adoption is kind of slow and actually faster than the telephone syndicate and.

Mark is adopting adoption is kind of slow and actually faster than the telephone syndicate and.

These are two macro market segment the way we focus on it and then the two hour surprised a decade. Although industries also I also want to use it and because us easy to implement and.

These are two macro market segment the way we focus on it and then the two hour surprised a decade. Although industries also I also want to use it and because this easy to implement and.

So.

They don't want the semi equipment.

And.

That's our largest segment some of them we didn't realize that okay and then.

That's the largest segment we didn't realize that.

Now we see all of the of the revenues are happening you there.

So I think in the <unk>.

So I think in the next couple of years will be growing faster than <unk>.

Next couple of years will be growing faster than <unk>.

Then the us three or four years ago and.

Then us three or four years ago and.

So we're picking up a business.

The rate of increase.

Is it picking up.

Got it thanks, Michael that's helpful.

Good good.

Uh huh.

This concludes our Q&A session I would now.

Like to turn the weapon back over to Bernie.

Like to turn the weapon Patrick over to Bernie.

I'd like to thank you for all joining us in this conference call.

Look forward to talking to you again during our fourth quarter 2025 conference call, which will likely be held in early February. Thank you and have a nice day.

Q3 2025 Monolithic Power Systems Inc Earnings Call Q&A

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