Monolithic Power Systems, Inc. (NASDAQ:MPWR) Q2 2020 Earnings Conference Call - Final Transcript

Jul 28, 2020 • 05:00 pm ET

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Monolithic Power Systems, Inc. (NASDAQ:MPWR) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Genevieve Cunningham

Welcome everyone to the MPS Second Quarter 2020 Earnings Webinar. Please note that this webinar is being recorded and will be archived for one year on our Investor Relations page at www.monolithicpower.com.

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; and Bernie Blegen, VP and CFO. During this webinar, we will discuss our Q2 2020 financial results and guidance for Q3 2020, followed by a Q&A session. Analysts you are currently muted. [Operator Instructions]

In the course of today's webinar, we will be making forward-looking statements and projections that involve risk and uncertainty which could cause results to differ materially from management's current views and expectations. Please refer to the Safe Harbor statement contained in the earnings release published today.

Risks, uncertainties and, other factors that could cause actual results to differ are identified in the Safe Harbor statements contained in the Q2 earnings release and in our SEC filings including our Form 10-K filed on February 28th, 2020 and our Form 10-Q filed on May 11th, 2020, which are accessible through our website www.monolithicpower.com. MPS assumes no obligation to update the information provided on today's call.

We will be discussing gross margin, operating expense, R&D, and SG&A expense, operating income, interest, and other income, net income, and earnings on both a GAAP and a non-GAAP basis. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our earnings release which we have filed with the SEC. I would refer investors to the Q2 2019, Q1 2020, and Q2 2020 releases, as well as to the reconciling tables that are posted on our website.

Now, I'd like to turn the call over to Bernie Blegen.

Executive
Bernie Blegen

Thanks Gen. MPS achieved record second quarter revenue of $186.2 million, 12.3% higher than the first quarter of 2020 and 23.3% higher than the comparable quarter in 2019. Second quarter revenue growth was broad-based except for automotive. Our strong year-over-year revenue growth for 2020, in spite of the COVID-19 pandemic, was a result of our diversified growth strategy and our technological innovation.

Maintaining this level of superior performance and realizing future growth opportunities requires us to step up investments in capacity, infrastructure, quality assurance, and headcount. We are also expanding our operating capabilities outside China. Turning now to our second quarter 2020 revenue by market. Second quarter computing and storage revenue of $64.1 million increased $12.1 million or 23.3% from the first quarter of 2020. Computing and storage revenue represented 34.4% of MPS' second quarter revenue.

The sequential revenue increase reflected strength in storage revenue along with increased notebook revenue. Second quarter server revenue maintained the elevated levels achieved in the first quarter of 2020 and server revenue was