MONOLITHIC POWER SYSTEMS INC

Previous wording

These forward-looking statements generally are identified by the words “would,” “could,” “may,” “should,” “predict,” “potential,” “targets,” “continue,” “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “will,” and similar expressions. All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, global economic uncertainties, including tariffs and retaliatory measures, and geopolitical tensions on the semiconductor industry and our business. These statements are not guarantees of future performance and are subject to significant risks and uncertainties. Actual events or results could differ materially and adversely from those expressed in any such forward-looking statements. Risks and uncertainties that could cause actual results to differ materially include those set forth throughout this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K including, in particular, in the sections entitled “Risk Factors.” Except as required by law, we disclaim any duty, and undertake no obligation, to update any forward-looking statements, whether as a result of new information relating to existing conditions, future events or otherwise or to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q and entail significant risks. Readers should carefully review future reports and documents that we file from time to time with the SEC, such as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

Current wording

These forward-looking statements generally are identified by the words “would,” “could,” “may,” “should,” “predict,” “potential,” “targets,” “continue,” “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “will,” and similar expressions. All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, global economic uncertainties, including tariffs, export controls and retaliatory measures, and geopolitical tensions on the semiconductor industry and our business. These statements are not guarantees of future performance and are subject to significant risks and uncertainties. Actual events or results could differ materially and adversely from those expressed in any such forward-looking statements. Risks and uncertainties that could cause actual results to differ materially include those set forth throughout this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K including, in particular, in the sections entitled “Risk Factors.” Except as required by law, we disclaim any duty, and undertake no obligation, to update any forward-looking statements, whether as a result of new information relating to existing conditions, future events or otherwise or to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q and entail significant risks. Readers should carefully review future reports and documents that we file from time to time with the SEC, such as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

Previous wording

We operate in the cyclical semiconductor industry. We are subject to industry downturns, but we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term. Historically, our revenue has generally been higher in the second half of the year than in the first half although various factors, such as market conditions and the timing of key product introductions, could impact this trend.

Current wording

We operate in the cyclical semiconductor industry. We are subject to industry downturns, but we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term.

Previous wording

We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. Our revenue from sales to customers in Asia was 93% of our total revenue for each of the three and six months ended June 30, 2025 and 2024.

Current wording

We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products. Our revenue from sales to customers in Asia was 91% and 94% of our total revenue for the three months ended September 30, 2025 and 2024, respectively, and 93% of our total revenue for each of the nine months ended September 30, 2025 and 2024.

Previous wording

In preparing our condensed consolidated financial statements in accordance with U.S. GAAP, we are required to make estimates, assumptions and judgments that affect the amounts reported in our financial statements and the accompanying disclosures. Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, global economic uncertainties, geopolitical tensions and global tariffs and retaliatory measures and announcements regarding same. Actual results could differ from these estimates and assumptions, and any such differences may be material to our condensed consolidated financial statements.

Current wording

In preparing our condensed consolidated financial statements in accordance with U.S. GAAP, we are required to make estimates, assumptions and judgments that affect the amounts reported in our financial statements and the accompanying disclosures. Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, global economic uncertainties, geopolitical tensions and global tariffs, export controls and retaliatory measures and announcements regarding same. Actual results could differ from these estimates and assumptions, and any such differences may be material to our condensed consolidated financial statements.

Previous wording

There have been no material changes during the three months ended June 30, 2025 to our critical accounting estimates from the information provided in the “Critical Accounting Estimates” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

There have been no material changes during the nine months ended September 30, 2025 to our critical accounting estimates from the information provided in the “Critical Accounting Estimates” section of Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

Revenue for the three months ended June 30, 2025 was $664.6 million, an increase of $157.2 million, or 31.0%, from $507.4 million for the three months ended June 30, 2024. The increase in revenue was primarily due to higher shipment volume.

Current wording

Revenue for the three months ended September 30, 2025 was $737.2 million, an increase of $117.1 million, or 18.9%, from $620.1 million for the three months ended September 30, 2024. The increase in revenue was primarily due to higher shipment volume.

Previous wording

For the three months ended June 30, 2025, revenue from the storage and computing market increased $80.4 million, or 69.9%, from the same period in 2024. This increase was primarily due to higher sales of power solutions for storage applications and notebooks. Revenue from the automotive market increased $57.9 million, or 66.4%, from the same period in 2024. This increase was broad-based and primarily due to higher sales of applications supporting advanced driver assistance systems, infotainment and motion control. Revenue from the enterprise data market decreased $43.2 million, or 23.1%, from the same period in 2024. This decrease was primarily due to lower sales of our power management solutions for artificial intelligence (“AI”) applications, partially offset by higher sales of our power management solutions for server applications. Revenue from the communications market increased $30.2 million, or 69.4%, from the same period in 2024. This increase was primarily driven by higher sales of power solutions for optical modules and routers. Revenue from the consumer market increased $17.4 million, or 41.3%, from the same period in 2024. This increase was primarily driven by higher sales of products for home appliances, gaming solutions and monitors, partially offset by lower sales of power management solutions for digital cameras. Revenue from the industrial market increased $14.4 million, or 44.7%, from the same period in 2024. This increase was primarily due to higher sales for power sources and instrumentation applications.

Current wording

For the three months ended September 30, 2025, revenue from the storage and computing market increased $42.6 million, or 29.6%, from the same period in 2024. This increase was primarily due to higher sales of power solutions for storage applications. Revenue from the enterprise data market increased $7.0 million, or 3.8%, from the same period in 2024. Revenue from the automotive market increased $40.2 million, or 36.1%, from the same period in 2024. This increase was primarily due to higher sales of applications supporting advanced driver assistance systems, infotainment, and motion control. Revenue from the communications market increased $8.0 million, or 11.1%, from the same period in 2024. Revenue from the consumer market increased $8.0 million, or 12.4%, from the same period in 2024. Revenue from the industrial market increased $11.3 million, or 25.6%, from the same period in 2024.

Previous wording

Revenue for the six months ended June 30, 2025 was $1,302.1 million, an increase of $336.8 million, or 34.9%, from $965.3 million for the six months ended June 30, 2024. The increase in revenue was primarily due to higher shipment volume.

Current wording

Revenue for the nine months ended September 30, 2025 was $2,039.3 million, an increase of $453.9 million, or 28.6%, from $1,585.4 million for the nine months ended September 30, 2024. The increase in revenue was primarily due to higher shipment volume.

Previous wording

For the six months ended June 30, 2025, revenue from the storage and computing market increased $162.8 million, or 73.6%, from the same period in 2024. This increase was primarily due to higher sales of power solutions for storage applications, notebooks and graphics cards. Revenue from the automotive market increased $115.8 million, or 66.4%, from the same period in 2024. This increase was broad-based and primarily due to higher sales of applications supporting advanced driver assistance systems, infotainment, and body electronics. Revenue from the enterprise data market decreased $60.1 million, or 17.8%, from the same period in 2024. This decrease was primarily due to lower sales of our power management solutions for AI applications, partially offset by higher sales of our power management solutions for server applications. Revenue from the communications market increased $55.2 million, or 61.2%, from the same period in 2024. This increase was primarily driven by higher sales of power solutions for optical modules and routers. Revenue from the consumer market increased $36.3 million, or 45.2%, from the same period in 2024. This increase was primarily driven by higher sales of products for home appliances and gaming solutions. Revenue from the industrial market increased $26.8 million, or 42.9%, from the same period in 2024. This increase was primarily due to higher sales for power sources, instrumentation and industrial meter applications.

Current wording

For the nine months ended September 30, 2025, revenue from the storage and computing market increased $205.3 million, or 56.2%, from the same period in 2024. This increase was primarily due to higher sales of power solutions for storage applications, notebooks and graphics cards. Revenue from the automotive market increased $155.9 million, or 54.6%, from the same period in 2024. This increase was primarily due to higher sales of applications supporting advanced driver assistance systems and infotainment. Revenue from the enterprise data market decreased $53.0 million, or 10.2%, from the same period in 2024. Revenue from the communications market increased $63.2 million, or 39.0%, from the same period in 2024. This increase was primarily driven by higher sales of power solutions for optical modules and routers. Revenue from the consumer market increased $44.3 million, or 30.6%, from the same period in 2024. This increase was primarily driven by higher sales of products for home appliances and gaming solutions. Revenue from the industrial market increased $38.1 million, or 35.7%, from the same period in 2024.

Previous wording

Cost of revenue was $298.6 million, or 44.9% of revenue, for the three months ended June 30, 2025, and $226.9 million, or 44.7% of revenue, for the three months ended June 30, 2024. The $71.7 million increase in cost of revenue was primarily driven by higher shipment volume.

Current wording

Cost of revenue was $330.9 million, or 44.9% of revenue, for the three months ended September 30, 2025, and $276.7 million, or 44.6% of revenue, for the three months ended September 30, 2024. The $54.3 million increase in cost of revenue was primarily driven by higher shipment volume.

Previous wording

Cost of revenue was $582.9 million, or 44.8% of revenue, for the six months ended June 30, 2025, and $432.3 million, or 44.8% of revenue, for the six months ended June 30, 2024. The $150.6 million increase in cost of revenue was primarily driven by higher shipment volume.

Current wording

Cost of revenue was $913.8 million, or 44.8% of revenue, for the nine months ended September 30, 2025, and $709.0 million, or 44.7% of revenue, for the nine months ended September 30, 2024. The $204.9 million increase in cost of revenue was primarily driven by higher shipment volume.

Previous wording

Gross margin was 55.1% for the three months ended June 30, 2025, compared with 55.3% for the three months ended June 30, 2024. The decrease in gross margin was mainly driven by product mix, partially offset by a decrease in inventory write-downs as a percentage of revenue.

Current wording

Gross margin was 55.2% for the nine months ended September 30, 2025, compared with 55.3% for the nine months ended September 30, 2024. The decrease in gross margin was mainly driven by product mix, partially offset by a decrease in inventory write-downs as a percentage of revenue.

Previous wording

R&D expenses were $188.5 million, or 14.5% of revenue, for the six months ended June 30, 2025, and $153.9 million, or 15.9% of revenue, for the six months ended June 30, 2024. The $34.6 million increase in R&D expenses was primarily due to $19.8 million increase in cash compensation expenses and benefits, $6.3 million increase in new product development expenses, $3.0 million increase in laboratory and other supplies, and $0.8 million increase in stock-based compensation and related expenses.

Current wording

R&D expenses were $98.2 million, or 13.3% of revenue, for the three months ended September 30, 2025, and $85.1 million, or 13.7% of revenue, for the three months ended September 30, 2024. The $13.1 million increase in R&D expenses was primarily due to an $8.9 million increase in cash compensation and benefits, a $1.2 million increase in stock-based compensation and related expenses, and a $1.1 million increase in laboratory and other supplies.

Previous wording

R&D expenses were $96.3 million, or 14.5% of revenue, for the three months ended June 30, 2025, and $77.9 million, or 15.3% of revenue, for the three months ended June 30, 2024. The $18.3 million increase in R&D expenses was primarily due to $9.4 million increase in cash compensation expenses and benefits, $2.1 million increase in new product development expenses, $1.9 million increase in expense related to changes in the fair value of deferred compensation plan liabilities, and $1.5 million increase in laboratory and other supplies.

Current wording

R&D expenses were $286.7 million, or 14.1% of revenue, for the nine months ended September 30, 2025, and $239.0 million, or 15.1% of revenue, for the nine months ended September 30, 2024. The $47.7 million increase in R&D expenses was primarily due to a $29.0 million increase in cash compensation and benefits, a $6.3 million increase in new product development expenses, and a $4.1 million increase in laboratory and other supplies.

Previous wording

SG&A expenses were $197.2 million, or 15.1% of revenue, for the six months ended June 30, 2025, and $167.1 million, or 17.3% of revenue, for the six months ended June 30, 2024. The $30.2 million increase in SG&A expenses was primarily driven by $16.8 million increase in cash compensation and benefits, and $8.7 million increase in stock-based compensation and related expenses.

Current wording

SG&A expenses were $112.9 million, or 15.3% of revenue, for the three months ended September 30, 2025, and $94.4 million, or 15.2% of revenue, for the three months ended September 30, 2024. The $18.5 million increase in SG&A expenses was primarily driven by an $8.3 million increase in cash compensation and benefits, and a $7.0 million increase in stock-based compensation and related expenses.

Previous wording

The income tax expense for the three months ended June 30, 2025 was $43.3 million, or 24.4% of pre-tax income. The income tax expense for the six months ended June 30, 2025 was $83.4 million, or 23.8% of pre-tax income. The effective tax rates were higher than the federal statutory rate of 21% primarily due to the U.S. impact of foreign earnings and non-deductible stock-based compensation. The higher effective tax rates relative to the federal statutory rate were partially offset by income generated by our subsidiaries in lower tax jurisdictions, foreign tax credits, and U.S. R&D credits.

Current wording

The income tax expense for the three months ended September 30, 2025 was $27.3 million, or 13.3% of pre-tax income. The income tax expense for the nine months ended September 30, 2025 was $110.7 million, or 19.9% of pre-tax income. The effective tax rates were lower than the federal statutory rate of 21% primarily due to the effect of U.S. federal tax law changes enacted during the quarter, income generated by our subsidiaries in lower tax jurisdictions, foreign tax credits, and U.S. R&D credits. The lower effective tax rates relative to the federal statutory rate were partially offset by the U.S. impact of foreign earnings and non-deductible stock-based compensation.

Previous wording

The income tax expense for the three months ended June 30, 2024 was $23.7 million, or 19.1% of pre-tax income. The income tax expense for the six months ended June 30, 2024 was $36.2 million, or 15.8% of pre-tax income. The effective tax rates were lower than the federal statutory rate of 21% primarily due to lower statutory tax rates at certain of our foreign subsidiaries, and excess tax benefits from stock-based compensation. The lower effective tax rates relative to the federal statutory rate were partially offset by the inclusion of the GILTI tax.

Current wording

The income tax expense for the three months ended September 30, 2024 was $29.9 million, or 17.1% of pre-tax income. The income tax expense for the nine months ended September 30, 2024 was $66.0 million, or 16.4% of pre-tax income. The effective tax rates were lower than the federal statutory rate of 21% primarily due to lower statutory tax rates at certain of our foreign subsidiaries, and excess tax benefits from stock-based compensation. The lower effective tax rates relative to the federal statutory rate were partially offset by the U.S. impact of foreign earnings.

Previous wording

In December 2023, the Bermuda CIT Act was enacted and signed into law. See Note 13 for further details.

Current wording

In December 2023, the Bermuda CIT Act was enacted and signed into law. See Note 13 to our unaudited condensed consolidated financial statements for further details.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $787.4 million and short-term investments of $358.7 million, compared with cash and cash equivalents of $691.8 million and short-term investments of $171.1 million as of December 31, 2024. As of June 30, 2025, $687.4 million of cash and cash equivalents and $181.4 million of short-term investments were held by our foreign subsidiaries. For the six months ended June 30, 2025, we repatriated $275 million of cash from certain of our foreign subsidiaries to the U.S. with minimal tax impact. We may repatriate additional cash from certain of our foreign subsidiaries in future periods to fund our expenditures. We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $1,081.3 million and short-term investments of $188.2 million, compared with cash and cash equivalents of $691.8 million and short-term investments of $171.1 million as of December 31, 2024. As of September 30, 2025, $871.0 million of cash and cash equivalents and $154.5 million of short-term investments were held by our foreign subsidiaries. For the nine months ended September 30, 2025, we repatriated $275 million of cash from certain of our foreign subsidiaries to the U.S. with minimal tax impact. We may repatriate additional cash from certain of our foreign subsidiaries in future periods. We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

Previous wording

For the six months ended June 30, 2025, the $105.0 million increase in net cash provided by operating activities compared to the same period in 2024 was primarily due to increased accounts receivable collections, partially offset by increased inventory purchases and changes in other working capital.

Current wording

For the nine months ended September 30, 2025, the $112.6 million increase in net cash provided by operating activities compared to the same period in 2024 was primarily due to increased accounts receivable collections, partially offset by increased inventory purchases.

Previous wording

For the six months ended June 30, 2025, the $11.7 million increase in net cash used in financing activities compared to the same period in 2024 was primarily due to an increase of $17.5 million in dividend and dividend equivalent payments, partially offset by a decrease in repurchases of common stock.

Current wording

For the nine months ended September 30, 2025, the $21.7 million increase in net cash used in financing activities compared to the same period in 2024 was primarily due to an increase of $31.2 million in dividend and dividend equivalent payments, partially offset by a decrease in repurchases of common stock.

Previous wording

Although consequences of economic uncertainties and macroeconomic conditions, including tariffs and retaliatory measures and announcements regarding same, and other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,146.1 million as of June 30, 2025, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.

Current wording

Although consequences of economic uncertainties and macroeconomic conditions, including tariffs and retaliatory measures and announcements regarding same, and other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,269.5 million as of September 30, 2025, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for at least the next 12 months.

Previous wording

As of June 30, 2025, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $60.0 million prepayment, were $449.0 million, of which $397.2 million was due within a year.

Current wording

As of September 30, 2025, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $60.0 million prepayment, were $499.3 million, of which $443.2 million was due within a year.

Previous wording

Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities. As of June 30, 2025, these obligations totaled $19.9 million, of which $4.0 million was short-term.

Current wording

Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities. As of September 30, 2025, these obligations totaled $18.9 million, of which $3.8 million was short-term.

Previous wording

In February 2025, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028. Shares are retired upon repurchase. We repurchased 3,900 shares of our common stock for an aggregate purchase price of $2.6 million during the three months ended June 30, 2025. No repurchases were made during the three months ended March 31, 2025. As of June 30, 2025, $497.4 million remained available for future repurchases under the program.

Current wording

In February 2025, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028. Shares are retired upon repurchase. We repurchased 6,000 shares of our common stock for an aggregate purchase price of $4.7 million during the nine months ended September 30, 2025. As of September 30, 2025, $495.3 million remained available for future repurchases under the program.

Previous wording

Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents. As of June 30, 2025, these obligations totaled $97.5 million.

Current wording

Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents. As of September 30, 2025, these obligations totaled $102.3 million.