Welcome, everyone, to the MPS Q3 2024 Earnings Webinar. My name is Genevieve Cunningham, and I will be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of MPS, Bernie Blegen, EVP and CFO, and Tony Balow, Vice President of Finance. Earlier today, along with our earnings announcement, MPS released a written commentary on the results of our operations. Both of these documents can be found on our website. 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 risk and uncertainty. 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 earnings release 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. Thanks, Jen. Good afternoon, and welcome to our Q3 2024 earnings call. MPS achieved record quarterly revenue of $620.1 million, 22% higher than revenue in the Q2 of 2024 and 30% higher than revenue in the Q3 of 2023. Our performance during the quarter reflected the strength of our diversified market strategy, as we experienced improved ordering trends across most end markets and additionally benefited from additional revenue ramps associated with design wins secured in prior years. Let me call out a few highlights. Q3 2024 automotive revenue was up 28% sequentially, with improvements in infotainment, lighting, ADAS, and body controls. Communication revenue was up 65% from the prior quarter, reflecting new product ramps for Wi-Fi, optical, networking, and router solutions. Storage and compute revenue was up 25% sequentially on the strength of demand for DDR5 and SSD memory and notebooks. MPS continues to focus on innovation, solving our customers' most challenging problems and maintaining the highest level of quality. In addition, we continue to expand and diversify our global supply chain, which will allow us to capture future growth, maintain supply chain stability, and swiftly adapt to market changes as they occur. Our proven long-term growth strategy remains intact as we continue our transformation from being a chip-only semiconductor supplier to a full-service silicon-based solutions provider. I'll now open the webinar up for questions. Thank you, Bernie. Panelists, I would now like to begin our Q&A session. As a reminder, if you'd like to ask a question, please click on the participants icon on the menu bar and then click the raise hand button. Our first question is from Rick Schafer of Oppenheimer. Rick, your line is now open. Thanks, and congrats to you guys. I' ve got a two-part question, Jennifer. If I could. The first is on enterprise data. It looks like it was down about 15% sequentially. I don't know if you could give some color on that. You know, is that one-time in nature, or does that reflect a more sustained shift in that segment as we look into 2024 and then into 2025? And then my second part of my question, it looked like auto, you listed a few of them, Bernie. You know, automotive, industrial, comms, consumer, all look like they were up pretty materially sequentially. So, you know, is that, you know, how would you characterize those segments, which have sort of been lagging the last few quarters? You know, do you feel like those have made the turn? Sure, Rick. This is Bernie. Let me start with the enterprise data. Sequentially, we were down about 1.5% from Q2. And that, you know, a couple of things that we've talked about. One is that we don't control our customers' ordering patterns. So, as it relates to the current quarter, we did see a different ordering trend than we'd observed in each of the past six quarters. And then, as far as looking ahead, we've been very open about the fact that, as far as supply chain security for our customers, that that's going to require a second or third competitor to, you know, be introduced on the share. And so there's a lot of issues here that we've been talking about and that we're managing. But one very important point is that MPS's strength is in the diversity, and we don't try to call out a particular end market's results. We try to deliver the company in total. And that's sort of a short-term view, but Michael may have a couple of comments on the longer-term view. Probably everybody knows that if you look at the transcript from the last years, you know, we talk about the market is big, and the market is growing, or the AI requirements is growing, and so the customers initially will always take the best solutions to fulfill their needs and the best solutions and also the speed of the development service, as Bernie said earlier, and that's why we occupy a pretty large share. Okay, and last year, we said that, okay, this market is too big, and MPS will always have the best solutions in these applications, and we will talk, we also talk about, and the market is bigger, there will be a second, a third, and a fourth supplier to join this segment, and when will that happen, and we don't know. Okay. It happened in the last couple of quarters. Okay. Next year is what we see. Again, the market is growing very fast. We have other ones, like SoC side of the market segments, and it hasn't really ramped up yet or started ramping. The other ones, like other hyperscale companies, computing companies, and their own SoCs and their own TPUs, they call it the Tensor Processing Units. Those ones are still small. We're ramping in the next few quarters. Okay. As Bernie said, MPS in the past, we always emphasized diversity. We will not be known to be an AI power supply company. Okay. Then, Rick, I think you had a question as far as automotive and whether or not the step-up that we observed from Q2 to Q3 was more of a broader trend line or if it was a one-time event. This, we believe, is a step-up where a lot of design wins have been waiting in the pipeline for the right opportunity. So we do believe that specific to us, not a discussion about the broader market, but specific to us that a number of product ramps are expected to come into the stream in the next two or three quarters. Well, again, okay, as we said many years ago, there's a lot of new design wins. And when the ramp will take off, we don't know. We'll be plus minus a year or so. Do we care? We don't. Okay. And now all these greenfield products start to germinate. And that's what you see in the revenue today. Maybe one more comment just for Rick is that traditionally, you know, we'd been talking about strength in ADAS, but what you heard Bernie talk about was we saw that strength in automotive across kind of all the segments, including infotainment, body controls, really a sign of those sockets that we had won previously now start generating revenue. It was more broad-based within automotive than maybe we talked about previously. Thanks for all that color, you guys, and maybe right on that point on auto specifically, you know, I realize that this is a broad-based pickup, and it's basically design win-driven, as all things are with you guys, but I'm curious, specifically. NVIDIA, I believe, did really well the last year or two with DRIVE Orin, and I know you guys do power there, so I didn't know if you could talk specifically about China auto and what content trends look like for you guys there, and maybe give a sense of how big China auto is now as sort of a portion of your overall auto segment. Thanks a lot. China, again, EV business is booming. And now the taper off a little bit, and it looks like we're booming again. Okay. And we're going the right direction again. And there's a lot of requirements. And the infotainment and the new type of infotainment and also the ADAS, okay, it's widely adopted in China. And so that's what we see a bigger portion of it is ramping from China. And also we see it, and other than the ADAS, okay, we see a lot of other products and will grow from Germany and the U.S. Thank you, guys. Our next question is from Tore Svanberg of Stifel. Tore, your line is now open. Yes, thank you. And congratulations on the record revenue. I wanted to follow up on enterprise data. Obviously, you had two very strong quarters, H1 of the year. It took a breather this quarter. But how should we think about that business into the December quarter? And Michael, I know you talked about many new product ramps in 2025, but just sort of specifically for Q4, how should we expect that business to perform? As far as I know, Q4, we don't lose any shares. And probably going in, it was the same as forecast. Okay. We don't. Okay, we can't really tell. And this forecast was given to us a few quarters ago. And we just fulfilled that demand. So we'll have. That's what we built for me in the last couple of quarters. And as we look to the outlook and the guidance that we provided, really, enterprise data was somewhere in the plus low single digits. So again, our customers' ordering patterns are really what drives the performance there. No, that's very fair, and the one big surprise to me this quarter was communications. I t was your strongest growth segment this quarter. You highlighted Wi-Fi, optical networking. Could you maybe just give us a little bit more color on what's going on there? It does sound like you have some new segments there that you are penetrating, especially on the optical side. The opticals is a data converter, data communications within the data centers within your racks. And that's a portion of it. But that's not all of them. Other one is the new Wi-Fi format and start to ramping up. That's MPS have a lot of reference designs. And again, that's what we see is across a continent. All these projects turn into a revenue now. So I think the outlook for, again, MPS specifically remains very solid. Generally, after you have a big initial stocking in the quarter with a new revenue ramp, it tends to tail off for a quarter. But we see sustainable growth in communications through the H1 of 2025. Great. Thank you for the color. We'll be back in line. Our next question is from Joshua Buchalter of Cowen. Joshua, your line is now open. Hey, guys. Thank you for taking my question. I think in response to Rick's question, you mentioned two factors that sort of drove the flattening out of enterprise data center order patterns and second sourcing. C could you maybe rank order which one of those had the bigger impact near term? And in particular, as we think about your customers diversifying their suppliers, are you seeing this more on AI accelerator platforms that are already in the market, or is this tied to the newer platforms that are currently ramping? Thank you. So I think Michael offered that in Q4, we're not expecting Q3 and Q4 to see share position change. So that was really just trying to acknowledge that that is a function of being the market leader in AI. And then over time, as we see a layering of all these new AI opportunities, Michael referred to the TPUs, which will probably begin to ship late June. I don't know the TPU. What I remember is the TPU. Maybe it's Google's name, okay, a trademark name. Okay. To me, it's a Tensor Processor. Tensor Processor. That's what it means. And it's all really some of you refer to this as SoCs. And we have many design. We engage with many of our customers in many years ago. And those products, okay, is actually we see start to ramp in the last quarter. Okay. But thank you for the call there. And I realize you've got content in multiple different sockets on many of these accelerator cards. And so my question is going to try to oversimplify it. But how should we think about, as we think about some of these new AI accelerator platforms, your content opportunity maybe in relationship to power draw of the actual processors or any other helpful rules of thumb you can give us as we try to fine-tune our models into next year? Thank you. I said, if you believe like our—and if you believe as we believe, our products, our solution is the best and the most power efficient. The market is bigger. That portion of our revenue will grow. The rest of the stuff, I don't get. We don't care. Just let it happen. Let the numbers speak self. Thanks, guys. Our next question is from Chris Caso of Wolfe. Chris, your line is now open. Yes, thank you. Good evening. T he first question, as we look at your guidance for the December quarter, not a lot changing on a sequential basis. I think you mentioned that the enterprise data would be up low single digits sequentially in December. Anything else that you would call out as kind of growing or shrinking different from the average in December? And then following that, given that enterprise data has grown as a percentage of revenue, does that affect seasonality as you look into the March quarter? Is there anything we should be thinking about with respect to the different customer mix as we go into March? Sure. If you're looking at Q4 by end market, it's interesting. You have some seasonality, but currently, we don't believe that any of the end markets are going to change by more than plus or minus mid-single digits. So it's a very, very narrow range that we're talking about there. And when we look out into the momentum carried into 2025, obviously, we don't guide beyond Q4, but it has been seasonally down quarter for a lot of companies. But I don't have a view on what that's going to look like currently. Okay. Thank you. We don't really care. As long as we have a design, we design and we're in the project with our customers. And when those ramps start to happen, our customers, they don't have clear views. And let those products, okay, let it take its own course. Let the numbers speak self. Okay. As a follow-up, as you look into next year, the other part of your enterprise data business on traditional server, that's an area that you guys have been favorable on for a while, but you've been waiting for the market to improve. We heard some a little better news from at least one of the CPU vendors this week. Can you give some view of kind of the share content, what you're seeing in that part of the enterprise data business as you go into 2025? Yes. These are good questions. Yes, we do see it. And the volume started picking up. And as we said many years ago, and this version, Sapphire Rapids or something, and the VR14s, and we will pick up shares. And the 13.5, by serendipity of a shortage is okay. And we prove we're significant suppliers. And the 14s, and we will be a significant - well, one of the big suppliers in this Sapphire Rapids growth. Maybe just beyond just the enterprise data segment itself, as you see those ramp, right, they'll pull through other solutions like DDR5 memory and continue to be a tailwind in some of the other segments as well. Thank you. Our next question is from William Stein of Truist. William, your line is now open. Great. Thanks for taking my question. Michael, I know you often are involved in some interesting, sort of sometimes idiosyncratic growth drivers for the company. I know for some time you were famously tinkering in the automotive end market and sort of searching for more effective solutions than what was available in the market. And I understand your focus has been perhaps more in the home automation market more recently. And I wonder if you could talk to us about some things that might be on the come in the next couple of years from the company in that end market? Yes. Okay. As you know, as an MPS, I have a few thousands of products. We are in lighting. We are in a thermos tats, and we are in shades controls, and we are in all these fan models and security, the window actuators, and the window and door opening actuators, and we're also making MCU now, and those MCUs can be a brain of everything while we're just putting in one box, and we're putting in one box with the software, and we sell as a kit. Everything is including it. The key is the ease of use. I think this will change the market segment for building automations. That's helpful. Maybe as a follow-up, you mentioned your MCUs now. There's another category that you entered relatively recently. You're not really known for it as much, but data converters. I think you hired a team in that area, and you had some very good results for initial product, maybe in the medical end market. Can you talk about traction in that product category, please? We are growing in that segment. The revenue is still small. As you know, these design cycles are very long and also, the product life cycles, 10, 20 years, okay, they last forever, and those segments win some in some industrial side as well as the medical side, and we have more product rolling out as a matter of fact in the next couple of quarters, some family of a standard product. We will gain more market shares in this segment. Great. Thank you. Okay. Our next question is from Ross Seymour of Deutsche Bank. Ross, your line is now open. Hi, guys. Thanks for letting me ask a question. I want to go back to the non-enterprise data side. I think by my math, it was up about 35-36% sequentially. I know you guys have a ton of design wins, and you're kind of just waiting on firm to ramp. But the magnitude of that ramp, the diversity of it, and just the commentary that bookings are improving seems to be at odds with the very muted recovery that so many of the peers are seeing, so could you just explain, do you think cyclical conditions are getting better, or is this a very Monolithic Power-specific dynamic? Any sort of color on that? I think, Ross, we're experiencing a little bit of both. Thalita's. Is somebody? Hans, can you mute it? Yeah. Yeah. Okay. Can you mute it? Okay. So Ross, you're asking the difference between growth specific to us and what we're seeing in the market. And in the current quarter, or let me go back. The previous quarter, we actually saw improvements in our ordering patterns. But they're not a consistent trend. But what we saw in the current quarter was a lot of new revenue opportunities that we received from design wins secured in previous years that were coming to the market now, particularly in the communications, particularly in automotive. And then also, we saw an improvement in the overall profile of the memory market. Well, as a matter of fact, we see all across the board. Yeah. Other than AI, other than AI powers, and all across the board. And how are you, as my follow-up, whether it's in the AI side or otherwise, a lot of supply has been added to the market over the last couple of years to address shortages, etc. And so a fear people have is that pricing pressure is going to ensue, whether it's more competition in AI power that you mentioned earlier, or just a more aggregate holistic increase in pricing pressure. Are you guys seeing any evidence of that? Our competitors, also some of the Chinese suppliers, and they always want to lower the price and to get in the market, to get in the socket. Okay. That's not the game we played, and so a lot of our customers, they don't change those socket. They don't change our products can swap out quickly, and those kind of things. We also emphasize diversities, not in one segment, and a lot of shipments, a lot of volumes going to one particular applications. For example, like AI. We will provide values. Our value is the highest performance, and all the other products, okay, and let our customers choose. The history telling us, history showed. As long as we operate in the same principles, the revenue will keep growing and growing the same way. And we see in the next couple of years, especially next years, we see all these products will grow. And now, we just see the first sign of it. And all these design wins turn into revenue now. Thank you. Our next question is from Quinn Bolton of Needham. Quinn, your line is now open. Hey, guys. Thanks for taking my question. F irst to start off, I think it was for the first time ever in your June 10-Q, you guys disclosed a 10%+ customer. And I'm wondering, I know you haven't filed the 10-Q yet, but if that's going to be an ongoing disclosure, would you be able to provide us if you had any 10% customers in the June, sorry, September quarter? And if so, what% of revenue was that customer? So Quinn, what you're referencing is basically revenue exposure by direct customer and indirect. And when the customer hits a certain threshold, according to the SEC guidelines, we need to put a reference to that. But we're never putting a name out there. No. No. We do not. This time, we will still have one customer is bigger than 10%. As a bonus, you can check the numbers. Okay. Is that about right? So only two? Yeah. Two customers and above 10%. Okay, and we'll get the percentages in the queue. It's one or two. I think it's one or two. And maybe you check the. I believe it's the ones. Okay. Bernie can check. That one. No, it's only one. Two would be very big. I don't believe the numbers. We don't. Yeah. Okay. The second question is, I know you don't want to guide to 2025 yet. Hold on a second. Tony, could you check that? Could you check that? Is it one or two? So I think the second one is less than 4%. Yes. I'll check it. Give me 10 seconds, and I'll get back to you. So, okay. This had to be on our record, and then let's make it clear. Go ahead. Okay. Maybe while we're waiting for Tony, my second question was, I know you're not going to sort of give us specific guidance out to 2025, but the street is looking for continued pretty strong growth in the enterprise data segment. I know you've talked about lots of cross currents in terms of expecting some additional competition to enter that market, some pricing pressure at existing customers, but you also have the ASIC designs that start to ramp next year. The street's kind of looking for that business to hit almost $1.1 billion in revenue. And just wondering if is that, given your crystal ball, is that sort of a reasonable expectation? Do you think that we should be tempering expectations for that segment, given some of the cross currents you've mentioned, or do you want to just kind of keep it one quarter at a time? Yes. I can tell very confidently we will be okay. Let's say that. And when this market, when this AI markets turn into a regular server market, MPS will be a significant player in that. And now, this is not become a what do you call it? Reach to equilibrium. Not a run rate. This is still ramping up. And when this segment is ramping, when it starts ramping, it's kind of lumpy. You don't see this thing. Okay. You can't keep going forever like the first two since last year's and the first couple of this quarter's, first couple of quarters in this year. And so to answer your questions for next year's, clearly, we have a lot more customers, as I said earlier. We'll start to ramping those design will turn into those design will turn into revenues. Michael, just to circle back relative to DISTI, we'll call out two for direct, we'll call out one. Okay. That's a direct customer, not a DISTI? So we'll call out one direct. We'll call out multiple DISTIs as higher than 10%. One DISTI, we never combined them. Okay. Because all the reporting, that's in the reporting. All the design creation, all the exposures for the end customer is only one. The next one is, I believe, less than, definitely below 5%. Yeah. Got it. Thank you, Michael. Thank you, Bernie. Okay. Our next question is from Tore Svanberg of Stifel. Tore, your line is now open. Yes. Thank you. I had a similar question to Quinn, but thinking more about vertical power. So enterprise data this year, more than $700 million. I assume the contribution from vertical power is still quite low. And if that's the case, as the market does transition to vertical power, could we see this market base basically even accelerate over the next few years? Absolutely. Yeah. Not in the next few years. Next few quarters. Okay. Yes. In other words, we are playing the power module market segments since 2017. And all these technologies, all these manufacturing capabilities, and that will really benefit for these vertical powers. And as we speak, now we are shipping those products in good volumes. Sounds good. Thank you. Our next question is from Ross Seymour of Deutsche Bank. Ross, your line is now open. Hey, guys. Thanks for letting me get a little follow-up snuck in here. Inventory. I know, Michael, you and I have laughed about that many times since cycles have passed. That's my favorite question. There you go. In this instance, internal inventory came down by a lot, days-wise. What did external channel inventory do? How are you looking at that? Was some of that 35% sequential growth that I referred to in my initial question a little bit ago inventory fill, or has the channel stayed lean? No, the channel stayed lean. In fact, our total days went down in the quarter. We want to build up, and as always, we build the inventory, and it's not synced with the market demand. You see, our Ross, okay, you're the expert of MPS inventory. If you checked our inventory levels, it's the opposite of the market demand. Now the market demand for MPS is very high, so the inventory is low, and we don't think we're going to run into a shortage issue. But the inventory level is at the uncomfortable level. Gotcha. And just to clarify, Bernie, when you said total inventory actually went down, you mean just total channel inventory days fell? Total channel inventory. Yes. Channel inventory is also low. Got it. Okay. That's it. Thanks, guys. This now concludes our Q&A session. I would now like to turn the webinar back over to Bernie. Thank you. I'd like to thank you all for joining us for this conference call and look forward to talking to you again in our Q4 conference call, which is likely to be in early February. Thank you. Have a nice day.