Monolithic Power Systems ((MPWR)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Monolithic Power Systems (MPS) showcased a strong revenue performance and successful market diversification, particularly in the automotive and enterprise data sectors. However, concerns were raised regarding engagement in the AI market, gross margin stability, and limited visibility into future demand, which could impact growth projections.
Record Quarterly Revenue
MPS achieved a record quarterly revenue of $737.2 million, marking a 10.9% increase from the second quarter of 2025 and an 18.9% rise compared to the third quarter of 2024. This significant growth underscores the company’s strong financial performance and strategic market positioning.
Diversified Market Strategy Success
The company’s diversified market strategy has led to year-over-year revenue growth across all end markets. Notably, there has been significant expansion in the automotive customer base, highlighted by a design win for a full Battery Management System (BMS) solution on a robotics platform.
Enterprise Data Growth Momentum
MPS reported improved performance in the enterprise data and industrial markets, with additional customers expected to contribute in the fourth quarter. This momentum is anticipated to carry into 2026, further strengthening the company’s market position.
Automotive Segment Expansion
The automotive segment is experiencing incremental design wins in Advanced Driver Assistance Systems (ADAS), showcasing MPS’s technology across both electric and combustion engine vehicles. This segment is expected to see significant growth in the coming years.
Challenges in AI Market Engagement
Despite potential opportunities, MPS expressed reservations about the AI market, citing concentration and visibility issues. The company views the AI market as a distraction, which could hinder its engagement and growth in this sector.
Gross Margin Stability Concerns
MPS’s gross margins have been declining over the past year or two, with expectations to remain in the mid-55% range. This is attributed to limited visibility into future demand, which poses challenges for margin expansion.
Uncertainty in Market Visibility
The company faces limited visibility into the first half of 2026, with no strong outlook for the first quarter due to a lack of backlog buildup. This uncertainty affects MPS’s ability to manage its business mix for margin expansion.
Forward-Looking Guidance
During the Q3 2025 earnings call, MPS provided guidance indicating a slight upward adjustment of about 1% for the fourth quarter, driven by robust performance in enterprise data and industrial markets. The company continues to focus on innovation and customer service, aiming to enhance its gross margins by transitioning from a chip-based supplier to a full-service solutions provider.
In summary, Monolithic Power Systems’ earnings call highlighted strong revenue growth and successful market diversification, particularly in the automotive and enterprise data sectors. However, challenges in the AI market, gross margin stability, and limited market visibility pose potential risks to future growth. The company’s forward-looking guidance reflects a cautious optimism, with a focus on innovation and strategic market positioning.