Q3'26 Earnings Commentary
Monolithic Power Systems Reports Third Quarter Results on October 29, 2026 Monolithic Power Systems, Inc. (“MPS”) reported its results after market close on October 29, 2026 and will host a question-and-answer webinar at 2:00 p.m. PT / 5:00 p.m. ET. The webinar can be accessed from the Investor Relations section of the MPS website atwww.monolithicpower.com. ──────────────────────────────────────────────────────────────────────────────
In Q3, MPS achieved another significant milestone exceeding $1 billion in quarterly revenue for the first time. Q3 revenue of $1.2 billion was 22.6% higher than the second quarter of 2026 and 63.1% higher than the third quarter of 2025.
• Our capacity surpassed $6 billion dollars in annual revenue support. We expect to have $8 billion of capacity in place by the second half of 2027 on our way to $10 billion in support of our rapidly expanding business.
• We saw strong demand across our existing customers which we expect to continue into 2027.
• In addition, using our in-house developed AI design tools we significantly expanded our customer base in traditional areas, as well as in new applications such as desktop AI designs.
• In Automotive, we received first orders for our 48V power solutions and expect design wins for 48V and Zonal architectures to be a driver of growth in 2027.
• We started ramping robotics solutions with sensor and motor control products across multiple geographies.
• We landed our first large data converter design win which we expect to ramp 2027.
• We continued to increase our SAM with the ramp of our high speed memory products.
• We continued to build out our high voltage portfolio and began sampling GAN based solutions for use in 800V data center architectures complementing our existing SiC based designs.
• MPS focuses on innovation and solving our customers’ most challenging problems.
• We consistently invest in new technologies that open new end markets and applications.
• We continue to transform from a chip-only semiconductor supplier to a full service solution provider.
• We continuously expand and diversify our global supply chain allowing us to capture future growth opportunities, maintain supply stability, and rapidly adapt to market changes as they occur. 3 “Overall, we see accelerated growth. Our diversified growth strategy is paying off,” said Michael Hsing, CEO and founder of MPS.
We had record revenue of $1,202 million in the third quarter, 22.6% higher than the second quarter of 2026 and 63.1% higher than revenue in the third quarter of 2025. Compared with the second quarter of 2026, sales improved sequentially across Communications, Enterprise Data, Industrial, Automotive and Consumer end markets.
In our Communications end market, third quarter revenue of $187.4 million was up 42.5% from the second quarter primarily as a result of higher sales of power solutions for optical modules and switches. Third quarter Communications revenue was up 134.7% year over year. Communications sales represented 15.6% of our total third quarter revenue compared with 13.4% in the second quarter of 2026.
Third quarter Enterprise Data revenue of $506.7 million increased 33.2% from the second quarter. The sequential increase was driven by higher sales of our power management solutions for AI and server applications. Third quarter Enterprise Data revenue was up 164.6% year over year. Enterprise Data revenue represented 42.1% of our total third quarter revenue compared with 38.8% in the second quarter of 2026.
Third quarter Industrial revenue of $71.4 million increased 30.2% from the second quarter primarily as a result of higher sales for power sources. Third quarter Industrial revenue was up 29.0% year over year. Industrial revenue represented 6.0% of our total third quarter revenue compared with 5.6% in the second quarter of 2026.
Third quarter Automotive revenue of $180.7 million increased 15.0% from the second quarter primarily from higher sales of ADAS power solutions. Third quarter Automotive revenue was up 19.2% year over year. Automotive revenue represented 15.0% of our third quarter revenue compared with 16.0% in the second quarter of 2026.
Third quarter Consumer revenue of $64.0 million increased 12.6% from the second quarter. Third quarter Consumer revenue was down 11.6% year over year. Consumer revenue represented 5.3% of our total third quarter revenue compared with 5.8% in the second quarter of 2026.
Third quarter Storage and Computing revenue of $192.2 million decreased 3.8% from the second quarter. Third quarter Storage and Computing revenue was up 3.0% year over year. Storage and Computing revenue represented 16.0% of MPS’s third quarter revenue compared with 20.4% in the second quarter of 2026.
GAAP gross margin was 55.4%, 0.2 percentage points higher than the second quarter of 2026. Our GAAP operating income was $357.7 million compared to $303.9 million reported in the second quarter of 2026. 4 Non-GAAP gross margin for the third quarter of 2026 was 55.7%, 0.1 percentage points higher than the second quarter of 2026. Our non-GAAP operating income was $464.5 million compared to $367.7 million reported in the second quarter of 2026.
GAAP operating expenses were $307.9 million in the third quarter of 2026 compared with $237.2 million in the second quarter of 2026. Non-GAAP operating expenses were $205.3 million, up from $177.6 million in the second quarter of 2026.
The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are primarily stock-based compensation and related expenses and deferred compensation plan income (expense).
Total stock-based compensation and related expenses, including approximately $3.7 million charged to cost of goods sold, was $106.3 million in the third quarter of 2026 compared with $53.5 million in the second quarter of 2026.
Third quarter 2026 GAAP net income was $271.1 million or $5.51 per fully diluted share, compared with $257.3 million or $5.22 per fully diluted share in the second quarter of 2026.
Third quarter 2026 non-GAAP net income was $402.7 million or $8.19 per fully diluted share, compared with $320.1 million or $6.50 per fully diluted share in the second quarter of 2026.
Third quarter 2026 non-GAAP tax rate of 15% was flat to the second quarter of 2026.
There were 49.2 million fully diluted shares outstanding at the end of the third quarter of 2026.
We repurchased $453.4 million of our stock in the third quarter, compared to $4.0 million in the second quarter of 2026.
Cash, cash equivalents and short-term investments were $1,091 million at the end of the third quarter of 2026 compared to $1,414 million at the end of the second quarter of 2026. For the third quarter of 2026, MPS generated operating cash flow of $289.9 million compared with second quarter of 2026 operating cash flow of $227.9 million.
Accounts receivable at the end of the third quarter of 2026 were $461.6 million, representing 35 days of sales outstanding, which was 3 days higher than the 32 days reported at the end of the second quarter of 2026.
Our internal inventories at the end of the third quarter of 2026 were $764.9 million, up from $675.8 million at the end of the second quarter of 2026. Days of inventory of 130 days at the end of the third quarter of 2026 was 10 days lower than at the end of the second quarter of 2026. 5 Comparing current inventory levels using next quarter’s projected revenue, days of inventory at the end of the third quarter of 117 days was 2 days higher than at the end of the second quarter of 2026.
Selected Balance Sheet and -Unaudited Inventory Data Q3'26 Q2'26 Q3'25 Cash, Cash Equivalents, and $ 1,091.2 M $ 1,413.8 M $ 1,269.5 M Short-Term Investments Operating Cash $ 289.9 M $ 227.9 M $ 239.3 M Flow Accounts $ 461.6 M $ 343.6 M $ 241.6 M Receivable Days of Sales 35 Days 32 Days 30 Days Outstanding Internal $ 764.9 M $ 675.8 M $ 505.7 M Inventories Days of Inventory (current quarter 130 Days 140 Days 139 Days revenue) Days of Inventory (next quarter 117 Days 115 Days 137 Days revenue)
• Non-GAAP gross margin in the range of 55.5% to 56.1%, which excludes the impact from stock-based compensation and related expenses as well as the impact from amortization of acquisition-related intangible assets.
• Total stock-based compensation and related expenses in the range of $121.0 million to $125.0 million including approximately $3.8 million that would be charged to cost of goods sold.
• Non-GAAP operating expenses in the range of $216.8 million to $220.8 million. This estimate excludes stock-based compensation and related expenses in the range of $117.2 million to $121.2 million.
• Interest and other income in the range from $7.8 million to $8.2 million before foreign exchange gains or losses.
Furthermore, in October 2026, our Board of Directors authorized an additional $500 million for stock repurchases, bringing our total current authorization to $1 billion after repurchases made during the third quarter of 2026. 6
This earnings commentary contains, and statements that will be made during the accompanying webinar will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, that should not be unduly relied upon, including under the “Q4 2026 Business Outlook” section herein, the quote from our Chief Executive Officer regarding our growth and success of our business strategy, our statements regarding our business focus, expected capacity growth and the timing thereof, expected strong demand across our existing customers into 2027, expected design wins as a driver of growth for our Automotive end market in 2027, increasing sales of robotic solutions across multiple geographies, increasing sales of large data converters in 2027, the continued increase in our SAM through increasing sales of our high speed memory products, the build out of our high voltage portfolio and GAN based solutions, investments in new technologies that open new end markets and applications, and the expansion and diversification of our supply chain to allow us to capture future growth opportunities, maintain supply stability and swiftly adapt to market changes as they occur, including, among other things, (i) projected revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, stock-based compensation and related expenses, amortization of acquisition- related intangible assets, other income before foreign exchange gains or losses, and fully diluted shares outstanding, (ii) our outlook for the fourth quarter of fiscal year 2026 and the near-term, medium-term and long-term prospects of MPS, including our ability to adapt to changing market conditions, performance against our business plan, our ability to grow despite the various challenges facing our business, our industry and the global economic environment, potential new business segments, our continued investment in research and development (“R&D”), expected revenue growth, customers’ acceptance of our new product offerings, the prospects of our new product development, our expectations regarding market and industry trends and prospects, and our goal to expand our capacity and the impact it may have on our business, (iii) our ability to penetrate new markets and expand our market share, (iv) our ability to reduce our expenses, and (vi) statements regarding the assumptions underlying or relating to any statement described above. These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this earnings commentary and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, continued uncertainties in the global economy, including due to current and potential global conflicts, global tariffs, export controls and retaliatory measures and announcements regarding same, inflation, consumer sentiment and other factors; adverse events arising from orders or regulations of governmental entities, including such orders or regulations that impact our 7 customers or suppliers, and adoption of new or amended accounting standards; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, and tax laws or the interpretation of same, including in foreign countries where MPS has offices or operations; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; acceptance of, or demand for, our products, in particular the new products launched recently, being different than expected; our ability to increase market share in our targeted markets; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of any impact from current and potential global conflicts); our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to attract new customers and retain existing customers; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; our ability to expand manufacturing capacity to support future growth; adverse changes in production and testing efficiency of our products; any political, cultural, military, regulatory, economic, foreign exchange and operational changes in China, where a significant portion of our manufacturing capacity comes from; any market disruptions or interruptions in our schedule of new product development releases; our ability to manage our inventory levels; adequate supply of our products from our third-party manufacturing partners; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; the ongoing consolidation of companies in the semiconductor industry; competition generally and the increasingly competitive nature of our industry; our ability to realize the anticipated benefits of companies and products that MPS acquires, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the risks, uncertainties and costs of litigation in which MPS is involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on our financial performance if its tax and litigation provisions are inadequate; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of epidemics and pandemics on the global economy and on our business; the risks associated with the financial market, economy, global tariffs, export controls and retaliatory measures and announcements regarding same, and geopolitical uncertainties, including current and potential global conflicts; the Company’s ability to timely and adequately remediate its material weakness; and other important risk factors identified under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on February 27, 2026. MPS assumes no obligation to update the information in this earnings commentary or in the accompanying webinar.
This earnings commentary contains references to certain non-GAAP financial measures. Non-GAAP net income, non-GAAP net income per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP other income, net, and non-GAAP income before income taxes differ from net income, net income per share, gross margin, operating expenses, operating income, other income, net, and income before income taxes determined in accordance with U.S. Generally Accepted Accounting Principles 8 (“GAAP”). Non-GAAP net income and non-GAAP net income per share exclude the effect of stock-based compensation and related expenses, which include stock- based compensation expense and employer payroll taxes in relation to the stock- based compensation, amortization of acquisition-related intangible assets, net deferred compensation plan expense, and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan income (expense). Non-GAAP operating income excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense. Non-GAAP other income, net excludes the effect of deferred compensation plan expense (income). Non-GAAP income before income taxes excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and net deferred compensation plan expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, and amortization of acquisition-related intangible assets. Projected non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses. 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. MPS utilizes both GAAP and non- GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non- GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of MPS’s core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS. See the GAAP to Non-GAAP reconciliations in the tables set forth below.
MPS is a fabless global company that provides high-performance, semiconductor- based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future. Founded in 1997 by our CEO Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging. These combined advantages enable MPS to deliver reliable, compact, and monolithic solutions that are highly energy- efficient, cost-effective, and environmentally responsible, while providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.
Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries. 9
ASSETS September 30, December 31, Current assets: 2026 2025 ────────────────────────────────────────────────────────────────────────────── Cash and cash $ 560,544 $ 1,099,302 equivalents Short-term 530,690 157,243 investments Accounts receivable, 461,633 255,626 net Inventories 764,879 564,649 Other current assets 54,024 106,982 Total current assets 2,371,770 2,183,802 Property and 821,573 627,689 equipment, net Acquisition-related intangible assets, 7,929 8,790 net Goodwill 25,944 25,944 Deferred tax assets, 1,183,003 1,182,883 net Other long-term 262,362 165,091 assets Total assets $ 4,672,581 $ 4,194,199 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 236,469 $ 138,272 Accrued compensation and related 136,528 85,963 benefits Other accrued 267,657 145,130 liabilities Total current 640,654 369,365 liabilities Income tax 75,022 75,022 liabilities Deferred tax 90,316 90,480 liabilities Other long-term 132,849 127,835 liabilities Total liabilities 938,841 662,702 Commitments and contingencies Stockholders’ equity: Common stock and additional paid-in capital: $0.001 par value; shares authorized: 690,429 936,998 150,000; shares issued and outstanding: 48,792 and 48,709, respectively Retained earnings 3,034,058 2,609,651 Accumulated other comprehensive income 9,253 -15,152 (loss) Total stockholders’ 3,733,740 3,531,497 equity Total liabilities and stockholders’ $ 4,672,581 $ 4,194,199 equity
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
Three Months Ending December 31, 2026 ────────────────────────────────────────────────────────────────────────────── Low High Operating expenses $ 334,000 $ 342,000 Adjustments to reconcile operating expenses to non-GAAP operating expenses: Stock-based compensation and other -117,200 -121,200 expenses Non-GAAP operating $ 216,800 $ 220,800 expenses
Full text with the tables
Exhibit 99.1
Monolithic Power Systems
Q3'26 Earnings Commentary
The highest quality power solutions for
Industrial Applications, Telecom Infrastructures,
Cloud Computing, Automotive, and Consumer Applications
1
Monolithic Power Systems Reports Third Quarter Results on October 29, 2026
Monolithic Power Systems, Inc. (“MPS”) reported its results after market
close on October 29, 2026 and will host a question-and-answer webinar at
2:00 p.m. PT / 5:00 p.m. ET. The webinar can be accessed from the Investor
Relations section of the MPS website atwww.monolithicpower.com.
──────────────────────────────────────────────────────────────────────────────
Q3 2026 Financial Summary -Unaudited
GAAP
Q3'… Q2'26 Q3'… QoQ YoY
Chan… Cha…
Rev… $ $ $ 22.6 % 63.1 %
($M) 1,2… 980.6 737…
Gro… 55.4 % 55.2 % 55.1 % 0.2 0.3
Mar… pts pts
Opex $ $ $ 29.8 % 45.9 %
($M) 307… 237.2 211…
Ope… 29.7 % 31.0 % 26.5 % (1.3) 3.2
Mar… pts pts
Net $ $ $
inc… 271… 257.3 179… 5.4 % 50.8 %
($M)
Dil… $ $ $ 5.6 % 47.3 %
EPS 5.51 5.22 3.74
Non…
Q3'… Q2'26 Q3'… QoQ YoY
Chan… Cha…
Rev… $ $ $ 22.6 % 63.1 %
($M) 1,2… 980.6 737…
Gro… 55.7 % 55.6 % 55.5 % 0.1 0.2
Mar… pts pts
Opex $ $ $ 15.6 % 38.4 %
($M) 205… 177.6 148…
Ope… 38.6 % 37.5 % 35.4 % 1.1 3.2
Mar… pts pts
Net $ $ $
inc… 402… 320.1 227… 25.8 % 77.3 %
($M)
Dil… $ $ $ 26.0 % 73.2 %
EPS 8.19 6.50 4.73
Tax 15.0 % 15.0 % 15.0 % Flat Flat
Rate
…
…
…
…
% %
R… C… of
R…
…
… Q… Q… Q… Q… YoY Q… Q…
…
… $ $ $ 3… % 1… % 42… % 38… %
… 5… 3… 1…
…
& 1… 1… 1… (… %) 3… % 16… 20…
…
… 1… 1… 7… 4… % 1… % 15… 13…
… 1… 1… 1… 1… % 1… % 15… 16…
… 7… 5… 5… 3… % 2… % 6.0 5.6
… 6… 5… 7… 1… % (… %) 5.3 5.8
… $ $ $ 2… % 6… % 100 % 100 %
1… 9… 7…
2
Ongoing Business Conditions
In Q3, MPS achieved another significant milestone exceeding $1 billion in
quarterly revenue for the first time. Q3 revenue of $1.2 billion was 22.6%
higher than the second quarter of 2026 and 63.1% higher than the third quarter
of 2025.
During the quarter:
• Our capacity surpassed $6 billion dollars in annual revenue support. We expect
to have $8 billion of capacity in place by the second half of 2027 on our way to
$10 billion in support of our rapidly expanding business.
In our enterprise data end market:
• We saw strong demand across our existing customers which we expect to continue
into 2027.
• In addition, using our in-house developed AI design tools we significantly
expanded our customer base in traditional areas, as well as in new applications
such as desktop AI designs.
In addition to our rapid Enterprise Data growth:
• In Automotive, we received first orders for our 48V power solutions and expect
design wins for 48V and Zonal architectures to be a driver of growth in 2027.
• We started ramping robotics solutions with sensor and motor control products
across multiple geographies.
• We landed our first large data converter design win which we expect to ramp
2027.
• We continued to increase our SAM with the ramp of our high speed memory
products.
• We continued to build out our high voltage portfolio and began sampling GAN
based solutions for use in 800V data center architectures complementing our
existing SiC based designs.
Our diversified market strategy remains unchanged:
• MPS focuses on innovation and solving our customers’ most challenging
problems.
• We consistently invest in new technologies that open new end markets and
applications.
• We continue to transform from a chip-only semiconductor supplier to a full
service solution provider.
• We continuously expand and diversify our global supply chain allowing us to
capture future growth opportunities, maintain supply stability, and rapidly
adapt to market changes as they occur.
3
“Overall, we see accelerated growth. Our diversified growth strategy is paying
off,” said Michael Hsing, CEO and founder of MPS.
Q3 2026 Revenue Results
We had record revenue of $1,202 million in the third quarter, 22.6% higher than
the second quarter of 2026 and 63.1% higher than revenue in the third quarter of
2025. Compared with the second quarter of 2026, sales improved sequentially
across Communications, Enterprise Data, Industrial, Automotive and Consumer end
markets.
In our Communications end market, third quarter revenue of $187.4 million was up
42.5% from the second quarter primarily as a result of higher sales of power
solutions for optical modules and switches. Third quarter Communications revenue
was up 134.7% year over year. Communications sales represented 15.6% of our
total third quarter revenue compared with 13.4% in the second quarter of 2026.
Third quarter Enterprise Data revenue of $506.7 million increased 33.2% from the
second quarter. The sequential increase was driven by higher sales of our power
management solutions for AI and server applications. Third quarter Enterprise
Data revenue was up 164.6% year over year. Enterprise Data revenue represented
42.1% of our total third quarter revenue compared with 38.8% in the second
quarter of 2026.
Third quarter Industrial revenue of $71.4 million increased 30.2% from the
second quarter primarily as a result of higher sales for power sources. Third
quarter Industrial revenue was up 29.0% year over year. Industrial revenue
represented 6.0% of our total third quarter revenue compared with 5.6% in the
second quarter of 2026.
Third quarter Automotive revenue of $180.7 million increased 15.0% from the
second quarter primarily from higher sales of ADAS power solutions. Third
quarter Automotive revenue was up 19.2% year over year. Automotive revenue
represented 15.0% of our third quarter revenue compared with 16.0% in the second
quarter of 2026.
Third quarter Consumer revenue of $64.0 million increased 12.6% from the second
quarter. Third quarter Consumer revenue was down 11.6% year over year. Consumer
revenue represented 5.3% of our total third quarter revenue compared with 5.8%
in the second quarter of 2026.
Third quarter Storage and Computing revenue of $192.2 million decreased 3.8%
from the second quarter. Third quarter Storage and Computing revenue was up 3.0%
year over year. Storage and Computing revenue represented 16.0% of MPS’s third
quarter revenue compared with 20.4% in the second quarter of 2026.
Q3 2026 Gross Margin & Operating Income
GAAP gross margin was 55.4%, 0.2 percentage points higher than the second
quarter of 2026. Our GAAP operating income was $357.7 million compared to $303.9
million reported in the second quarter of 2026.
4
Non-GAAP gross margin for the third quarter of 2026 was 55.7%, 0.1 percentage
points higher than the second quarter of 2026. Our non-GAAP operating income was
$464.5 million compared to $367.7 million reported in the second quarter of
2026.
Q3 2026 Operating Expenses
GAAP operating expenses were $307.9 million in the third quarter of 2026
compared with $237.2 million in the second quarter of 2026. Non-GAAP operating
expenses were $205.3 million, up from $177.6 million in the second quarter of
2026.
The differences between non-GAAP operating expenses and GAAP operating expenses
for the quarters discussed here are primarily stock-based compensation and
related expenses and deferred compensation plan income (expense).
Total stock-based compensation and related expenses, including approximately
$3.7 million charged to cost of goods sold, was $106.3 million in the third
quarter of 2026 compared with $53.5 million in the second quarter of 2026.
The Bottom Line
Third quarter 2026 GAAP net income was $271.1 million or $5.51 per fully diluted
share, compared with $257.3 million or $5.22 per fully diluted share in the
second quarter of 2026.
Third quarter 2026 non-GAAP net income was $402.7 million or $8.19 per fully
diluted share, compared with $320.1 million or $6.50 per fully diluted share in
the second quarter of 2026.
Third quarter 2026 non-GAAP tax rate of 15% was flat to the second quarter of
2026.
There were 49.2 million fully diluted shares outstanding at the end of the third
quarter of 2026.
We repurchased $453.4 million of our stock in the third quarter, compared to
$4.0 million in the second quarter of 2026.
Balance Sheet and Cash Flow
Cash, cash equivalents and short-term investments were $1,091 million at the end
of the third quarter of 2026 compared to $1,414 million at the end of the second
quarter of 2026. For the third quarter of 2026, MPS generated operating cash
flow of $289.9 million compared with second quarter of 2026 operating cash flow
of $227.9 million.
Accounts receivable at the end of the third quarter of 2026 were $461.6 million,
representing 35 days of sales outstanding, which was 3 days higher than the 32
days reported at the end of the second quarter of 2026.
Our internal inventories at the end of the third quarter of 2026 were $764.9
million, up from $675.8 million at the end of the second quarter of 2026. Days
of inventory of 130 days at the end of the third quarter of 2026 was 10 days
lower than at the end of the second quarter of 2026.
5
Comparing current inventory levels using next quarter’s projected revenue, days
of inventory at the end of the third quarter of 117 days was 2 days higher than
at the end of the second quarter of 2026.
Selected Balance
Sheet and -Unaudited
Inventory
Data
Q3'26 Q2'26 Q3'25
Cash, Cash
Equivalents, and $ 1,091.2 M $ 1,413.8 M $ 1,269.5 M
Short-Term
Investments
Operating Cash $ 289.9 M $ 227.9 M $ 239.3 M
Flow
Accounts $ 461.6 M $ 343.6 M $ 241.6 M
Receivable
Days of Sales 35 Days 32 Days 30 Days
Outstanding
Internal $ 764.9 M $ 675.8 M $ 505.7 M
Inventories
Days of Inventory
(current quarter 130 Days 140 Days 139 Days
revenue)
Days of Inventory
(next quarter 117 Days 115 Days 137 Days
revenue)
Q4 2026 Business Outlook
For the fourth quarter of 2026 ending December 31, we are forecasting:
• Revenue in the range of $1,315 million to $1,385 million.
• GAAP gross margin in the range of 55.2% to 55.8%.
• Non-GAAP gross margin in the range of 55.5% to 56.1%, which excludes the
impact from stock-based compensation and related expenses as well as the impact
from amortization of acquisition-related intangible assets.
• Total stock-based compensation and related expenses in the range of $121.0
million to $125.0 million including approximately $3.8 million that would be
charged to cost of goods sold.
• GAAP operating expenses between $334.0 million and $342.0 million.
• Non-GAAP operating expenses in the range of $216.8 million to $220.8 million.
This estimate excludes stock-based compensation and related expenses in the
range of $117.2 million to $121.2 million.
• Interest and other income in the range from $7.8 million to $8.2 million
before foreign exchange gains or losses.
• Non-GAAP tax rate of 15% for 2026.
• Fully diluted shares outstanding in the range of 48.9 to 49.3 million shares.
Furthermore, in October 2026, our Board of Directors authorized an additional
$500 million for stock repurchases, bringing our total current authorization to
$1 billion after repurchases made during the third quarter of 2026.
6
For further information, contact:
Tony Balow
Vice President, Chief Financial Officer
Monolithic Power Systems, Inc.
MPSInvestor.Relations@monolithicpower.com
Safe Harbor Statement
This earnings commentary contains, and statements that will be made during the
accompanying webinar will contain, forward-looking statements, as that term is
defined in the Private Securities Litigation Reform Act of 1995, that should not
be unduly relied upon, including under the “Q4 2026 Business Outlook” section
herein, the quote from our Chief Executive Officer regarding our growth and
success of our business strategy, our statements regarding our business focus,
expected capacity growth and the timing thereof, expected strong demand across
our existing customers into 2027, expected design wins as a driver of growth for
our Automotive end market in 2027, increasing sales of robotic solutions across
multiple geographies, increasing sales of large data converters in 2027, the
continued increase in our SAM through increasing sales of our high speed memory
products, the build out of our high voltage portfolio and GAN based solutions,
investments in new technologies that open new end markets and applications, and
the expansion and diversification of our supply chain to allow us to capture
future growth opportunities, maintain supply stability and swiftly adapt to
market changes as they occur, including, among other things, (i) projected
revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses,
stock-based compensation and related expenses, amortization of acquisition-
related intangible assets, other income before foreign exchange gains or losses,
and fully diluted shares outstanding, (ii) our outlook for the fourth quarter of
fiscal year 2026 and the near-term, medium-term and long-term prospects of MPS,
including our ability to adapt to changing market conditions, performance
against our business plan, our ability to grow despite the various challenges
facing our business, our industry and the global economic environment, potential
new business segments, our continued investment in research and development
(“R&D”), expected revenue growth, customers’ acceptance of our new product
offerings, the prospects of our new product development, our expectations
regarding market and industry trends and prospects, and our goal to expand our
capacity and the impact it may have on our business, (iii) our ability to
penetrate new markets and expand our market share, (iv) our ability to reduce
our expenses, and (vi) statements regarding the assumptions underlying or
relating to any statement described above. These forward-looking statements are
not historical facts or guarantees of future performance or events, are based on
current expectations, estimates, beliefs, assumptions, goals, and objectives,
and involve significant known and unknown risks, uncertainties and other factors
that may cause actual results to be materially different from the results
expressed by these statements. Readers of this earnings commentary and listeners
to the accompanying conference call are cautioned not to place undue reliance on
any forward-looking statements, which speak only as of the date hereof. Factors
that could cause actual results to differ include, but are not limited to,
continued uncertainties in the global economy, including due to current and
potential global conflicts, global tariffs, export controls and retaliatory
measures and announcements regarding same, inflation, consumer sentiment and
other factors; adverse events arising from orders or regulations of governmental
entities, including such orders or regulations that impact our
7
customers or suppliers, and adoption of new or amended accounting standards;
adverse changes in laws and government regulations such as tariffs on imports of
foreign goods, export regulations and export classifications, and tax laws or
the interpretation of same, including in foreign countries where MPS has offices
or operations; the effect of export controls, trade and economic sanctions
regulations and other regulatory or contractual limitations on our ability to
sell or develop our products in certain foreign markets, particularly in China;
our ability to obtain governmental licenses and approvals for international
trading activities or technology transfers, including export licenses;
acceptance of, or demand for, our products, in particular the new products
launched recently, being different than expected; our ability to increase market
share in our targeted markets; difficulty in predicting or budgeting for future
customer demand and channel inventories, expenses and financial contingencies
(including as a result of any impact from current and potential global
conflicts); our ability to efficiently and effectively develop new products and
receive a return on our R&D expense investment; our ability to attract new
customers and retain existing customers; our ability to meet customer demand for
our products due to constraints on our third-party suppliers’ ability to
manufacture sufficient quantities of our products or otherwise; our ability to
expand manufacturing capacity to support future growth; adverse changes in
production and testing efficiency of our products; any political, cultural,
military, regulatory, economic, foreign exchange and operational changes in
China, where a significant portion of our manufacturing capacity comes from; any
market disruptions or interruptions in our schedule of new product development
releases; our ability to manage our inventory levels; adequate supply of our
products from our third-party manufacturing partners; adverse changes or
developments in the semiconductor industry generally, which is cyclical in
nature, and our ability to adjust our operations to address such changes or
developments; the ongoing consolidation of companies in the semiconductor
industry; competition generally and the increasingly competitive nature of our
industry; our ability to realize the anticipated benefits of companies and
products that MPS acquires, and our ability to effectively and efficiently
integrate these acquired companies and products into our operations; the risks,
uncertainties and costs of litigation in which MPS is involved; the outcome of
any upcoming trials, hearings, motions and appeals; the adverse impact on our
financial performance if its tax and litigation provisions are inadequate; our
ability to effectively manage our growth and attract and retain qualified
personnel; the effect of epidemics and pandemics on the global economy and on
our business; the risks associated with the financial market, economy, global
tariffs, export controls and retaliatory measures and announcements regarding
same, and geopolitical uncertainties, including current and potential global
conflicts; the Company’s ability to timely and adequately remediate its material
weakness; and other important risk factors identified under the caption “Risk
Factors” and elsewhere in our Securities and Exchange Commission (“SEC”)
filings, including, but not limited to, our Annual Report on Form 10-K filed
with the SEC on February 27, 2026. MPS assumes no obligation to update the
information in this earnings commentary or in the accompanying webinar.
Non-GAAP Financial Measures
This earnings commentary contains references to certain non-GAAP financial
measures. Non-GAAP net income, non-GAAP net income per share, non-GAAP gross
margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP other
income, net, and non-GAAP income before income taxes differ from net income, net
income per share, gross margin, operating expenses, operating income, other
income, net, and income before income taxes determined in accordance with U.S.
Generally Accepted Accounting Principles
8
(“GAAP”). Non-GAAP net income and non-GAAP net income per share exclude the
effect of stock-based compensation and related expenses, which include stock-
based compensation expense and employer payroll taxes in relation to the stock-
based compensation, amortization of acquisition-related intangible assets, net
deferred compensation plan expense, and related tax effects. Non-GAAP gross
margin excludes the effect of stock-based compensation and related expenses,
amortization of acquisition-related intangible assets and deferred compensation
plan expense. Non-GAAP operating expenses exclude the effect of stock-based
compensation and related expenses, amortization of acquisition-related
intangible assets and deferred compensation plan income (expense). Non-GAAP
operating income excludes the effect of stock-based compensation and related
expenses, amortization of acquisition-related intangible assets and deferred
compensation plan expense. Non-GAAP other income, net excludes the effect of
deferred compensation plan expense (income). Non-GAAP income before income taxes
excludes the effect of stock-based compensation and related expenses,
amortization of acquisition-related intangible assets and net deferred
compensation plan expense. Projected non-GAAP gross margin excludes the effect
of stock-based compensation and related expenses, and amortization of
acquisition-related intangible assets. Projected non-GAAP operating expenses
exclude the effect of stock-based compensation and related expenses. 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. MPS utilizes both GAAP and non-
GAAP financial measures to assess what it believes to be its core operating
performance and to evaluate and manage its internal business and assist in
making financial operating decisions. MPS believes that the inclusion of non-
GAAP financial measures, together with GAAP measures, provides investors with an
alternative presentation useful to investors’ understanding of MPS’s core
operating results and trends. Additionally, MPS believes that the inclusion of
non-GAAP measures, together with GAAP measures, provides investors with an
additional dimension of comparability to similar companies. However, investors
should be aware that non-GAAP financial measures utilized by other companies are
not likely to be comparable in most cases to the non-GAAP financial measures
used by MPS. See the GAAP to Non-GAAP reconciliations in the tables set forth
below.
About
Monolithic Power Systems
MPS is a fabless global company that provides high-performance, semiconductor-
based power electronics solutions. MPS’s mission is to reduce energy and
material consumption to improve all aspects of quality of life and create a
sustainable future. Founded in 1997 by our CEO Michael Hsing, MPS has three core
strengths: deep system-level knowledge, strong semiconductor design expertise,
and innovative proprietary technologies in the areas of semiconductor processes,
system integration, and packaging. These combined advantages enable MPS to
deliver reliable, compact, and monolithic solutions that are highly energy-
efficient, cost-effective, and environmentally responsible, while providing a
consistent return on investment to our stockholders. MPS can be contacted
through its website at www.monolithicpower.com or its support offices around the
world.
Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of
Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other
countries.
9
Monolithic Power Systems, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value)
ASSETS September 30, December 31,
Current assets: 2026 2025
──────────────────────────────────────────────────────────────────────────────
Cash and cash $ 560,544 $ 1,099,302
equivalents
Short-term 530,690 157,243
investments
Accounts receivable, 461,633 255,626
net
Inventories 764,879 564,649
Other current assets 54,024 106,982
Total current assets 2,371,770 2,183,802
Property and 821,573 627,689
equipment, net
Acquisition-related
intangible assets, 7,929 8,790
net
Goodwill 25,944 25,944
Deferred tax assets, 1,183,003 1,182,883
net
Other long-term 262,362 165,091
assets
Total assets $ 4,672,581 $ 4,194,199
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 236,469 $ 138,272
Accrued compensation
and related 136,528 85,963
benefits
Other accrued 267,657 145,130
liabilities
Total current 640,654 369,365
liabilities
Income tax 75,022 75,022
liabilities
Deferred tax 90,316 90,480
liabilities
Other long-term 132,849 127,835
liabilities
Total liabilities 938,841 662,702
Commitments and
contingencies
Stockholders’ equity:
Common stock and
additional paid-in
capital:
$0.001 par value;
shares authorized: 690,429 936,998
150,000; shares
issued and
outstanding:
48,792 and 48,709,
respectively
Retained earnings 3,034,058 2,609,651
Accumulated other
comprehensive income 9,253 -15,152
(loss)
Total stockholders’ 3,733,740 3,531,497
equity
Total liabilities and
stockholders’ $ 4,672,581 $ 4,194,199
equity
10
Monolithic Power Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
Three Nine
Mont… Mont…
Ended Ended
Sept… Sept…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Rev… $ 1,20… $ 737… $ 2,98… $ 2,03…
Cost
of 536,… 330… 1,33… 913,…
rev…
Gro… 665,… 406… 1,65… 1,12…
pro…
Ope…
exp…
Res…
and 140,… 98,… 359,… 286,…
dev…
Sel…
gen… 167,… 112… 389,… 310,…
and
adm…
Tot…
ope… 307,… 211… 748,… 596,…
exp…
Ope… 357,… 195… 902,… 528,…
inc…
Oth…
inc… 8,936 10,… 32,8… 27,7…
net
Inc…
bef… 366,… 205… 935,… 556,…
inc…
tax…
Inc…
tax 95,5… 25,… 213,… 106,…
exp…
Net $ 271,… $ 179… $ 721,… $ 449,…
inc…
Net
inc…
per
sha…
Bas… $ 5.53 $ 3.75 $ 14.70 $ 9.40
Dil… $ 5.51 $ 3.74 $ 14.66 $ 9.37
Wei…
sha…
out…
Bas… 49,0… 47,… 49,… 47,8…
Dil… 49,1… 48,… 49,… 48,0…
11
RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)
Three Nine
Months Months
Ended Ended
Septem… Septemb…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Net $ 271,067 $ 179,766 $ 721,591 $ 449,827
income
Adjust…
to
reconc…
net
income
to
non-GA…
net
income:
Stock-…
compen…
and 106,288 60,875 208,375 174,966
related
expens…
Amorti…
of
acquis… 320 320 960 960
intang…
assets
Deferr…
compen…
plan 544 423 1,129 698
expens…
net
Tax 24,489 -14,270 42,043 -3,344
effect
Non-GA…
net $ 402,708 $ 227,114 $ 974,098 $ 623,107
income
Non-GA…
net
income
per
share:
Basic $ 8.21 $ 4.74 $ 19.84 $ 13.01
Diluted $ 8.19 $ 4.73 $ 19.79 $ 12.98
Shares
used in
the
calcul…
of
non-GA…
net
income
per
share:
Basic 49,052 47,898 49,097 47,879
Diluted 49,184 48,042 49,230 48,022
12
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
Th… Ni…
Mo… Mo…
En… En…
Se… Se…
2026 30, 20… 2026 30, 20…
──────────────────────────────────────────────────────────────────────────────
G… $ 66… $ 406… $ 1,… $ 1,1…
p…
G… 55.… 55… 55.… 55…
m…
A…
to
r…
g…
p…
to
n…
g…
p…
S…
c…
a… 3,… 1,9… 7,… 5,5…
r…
e…
A…
of
a… 287 287 861 861
i…
a…
D…
c… 261 500 1,… 942
p…
e…
N…
g… $ 66… $ 408… $ 1,… $ 1,1…
p…
N…
g… 55.… 55… 55.… 55…
m…
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
Three Nine
Months Months
Ended Ended
Septem… Septemb…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Total
operat… $ 307,852 $ 211,045 $ 748,941 $ 596,774
expens…
Adjust…
to
reconc…
total
operat…
expens…
to
non-GA…
total
operat…
expens…
Stock-…
compen…
and -102,5… -58,958 -201,224 -169,4…
related
expens…
Amorti…
of
acquis… -33 -33 -99 -99
intang…
assets
Deferr…
compen…
plan 72 -3,715 -6,386 -7,778
income
(expen…
Non-GA…
operat… $ 205,306 $ 148,339 $ 541,233 $ 419,469
expens…
13
RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
Three Nine
Months Months
Ended Ended
Septem… Septemb…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Total
operat… $ 357,687 $ 195,183 $ 902,733 $ 528,700
income
Adjust…
to
reconc…
total
operat…
income
to
non-GA…
total
operat…
income:
Stock-…
compen…
and 106,288 60,875 208,375 174,966
related
expens…
Amorti…
of
acquis… 320 320 960 960
intang…
assets
Deferr…
compen… 189 4,215 8,117 8,720
plan
expense
Non-GA…
operat… $ 464,484 $ 260,593 $ 1,120,1… $ 713,346
income
RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET
(Unaudited, in thousands)
Three Nine
Months Months
Ended Ended
September Septemb…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Total
other $ 8,936 $ 10,392 $ 32,801 $ 27,743
income,
net
Adjust…
to
reconc…
other
income,
net to
non-GA…
other
income,
net:
Deferr…
compen…
plan 355 -3,792 -6,988 -8,022
expense
(incom…
Non-GA…
other $ 9,291 $ 6,600 $ 25,813 $ 19,721
income,
net
RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE
INCOME TAXES
(Unaudited, in thousands)
Three Nine
Months Months
Ended Ended
Septem… Septemb…
2026 30, 2025 2026 30, 2025
──────────────────────────────────────────────────────────────────────────────
Total
income
before $ 366,623 $ 205,575 $ 935,534 $ 556,443
income
taxes
Adjust…
to
reconc…
income
before
income
taxes
to
non-GA…
income
before
income
taxes:
Stock-…
compen…
and 106,288 60,875 208,375 174,966
related
expens…
Amorti…
of
acquis… 320 320 960 960
intang…
assets
Deferr…
compen…
plan 544 423 1,129 698
expens…
net
Non-GA…
income
before $ 473,775 $ 267,193 $ 1,145,9… $ 733,067
income
taxes
14
2026 FOURTH QUARTER OUTLOOK
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited)
Three Months Ending
December 31, 2026
──────────────────────────────────────────────────────────────────────────────
Low High
Gross margin 55.2 % 55.8 %
Adjustment to reconcile
gross margin to
non-GAAP gross margin:
Stock-based compensation
and other 0.3 0.3
expenses
Non-GAAP gross margin 55.5 % 56.1 %
RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
Three Months Ending
December 31, 2026
──────────────────────────────────────────────────────────────────────────────
Low High
Operating expenses $ 334,000 $ 342,000
Adjustments to reconcile
operating
expenses to non-GAAP
operating expenses:
Stock-based compensation
and other -117,200 -121,200
expenses
Non-GAAP operating $ 216,800 $ 220,800
expenses
15