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Power management chips maker Monolithic Power Systems (NASDAQ:MPWR) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 39.2% year on year to $637.6 million. Guidance for next quarter’s revenue was optimistic at $650 million at the midpoint, 2.3% above analysts’ estimates. Its non-GAAP profit of $4.04 per share was 0.9% above analysts’ consensus estimates.

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Monolithic Power Systems (MPWR) Q1 CY2025 Highlights:

• Revenue: $637.6 million vs analyst estimates of $633.3 million (39.2% year-on-year growth, 0.7% beat)

• Adjusted EPS: $4.04 vs analyst estimates of $4.00 (0.9% beat)

• Adjusted Operating Income: $221.5 million vs analyst estimates of $219.9 million (34.7% margin, 0.7% beat)

• Revenue Guidance for Q2 CY2025 is $650 million at the midpoint, above analyst estimates of $635.7 million

• Operating Margin: 26.5%, up from 20.9% in the same quarter last year

• Free Cash Flow Margin: 40.2%, down from 50.7% in the same quarter last year

• Market Capitalization: $28.39 billion

“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,” said Michael Hsing, CEO and founder of MPS.

Company Overview

Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ:MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Monolithic Power Systems’s sales grew at an incredible 29.6% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Monolithic Power Systems’s annualized revenue growth of 13.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.