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Monolithic Power Systems

MPWR · Nasdaq

Operating income rose 84.4% on 47.6% more revenue

Operating expenses fell to 24.2% of revenue from 30.3%, lifting the operating margin to 31.0%, above any full year since FY2018.

Q2 FY2026, the quarter to Jun 30, 2026 · 10-Q filed Aug 5, 2026

Q2 FY2026 · revenue
$980.6M+47.6% on the year
Operating margin
31.0%
Net income
$257.3M
Free cash flow, quarter
$145.5M
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Key insights · Q2 FY2026
  1. 01

    Operating income rose 84.4% on 47.6% more revenue

    Operating expenses fell to 24.2% of revenue from 30.3%, lifting the operating margin to 31.0%, above any full year since FY2018.

    Why it matters

    Revenue rose 47.6% to $980.6M from $664.6M, while total operating expenses rose 17.8% to $237.2M. Research and development grew 23.2% and selling, general and administrative 12.9%, so their shares of revenue fell 2.4 and 3.7 points, to 12.1% each. Operating income rose 84.4% to $303.9M from $164.8M.1

    Almost all of the gain came below gross profit. The operating margin widened 6.2 points: operating expenses fell 6.1 points as a share of revenue, and the gross margin added 0.1 point, at 55.2% against 55.1%. The filing credits a mix of higher-priced power solutions for part of the revenue rise, but cost of revenue grew 47.2%, in step with sales.1

    The step is recent. The quarterly operating margin was 24.8% in Q2 FY2025, 26.5% in Q3 and 26.6% in Q4, then 30.0% in Q1 FY2026 and 31.0% now. The highest full-year margin in the FY2018 to FY2025 history was 29.4%, in FY2022, and FY2025 closed at 26.1%.1

    Within selling, general and administrative, the filing cites higher cash compensation and legal expenses, partly offset by lower stock-based compensation. Part of the operating-cost restraint is therefore a lighter equity-award charge rather than a smaller organisation.1

    AnalysisAnalysis: the same mechanism runs in both directions. Engineering and selling costs follow headcount and projects, not units, so a margin built on fast revenue growth can narrow quickly if demand pauses.

  2. 02

    Profit nearly doubled while free cash flow fell

    Net income rose 90.6% to $257.3M, but free cash flow fell to $145.5M from $189.5M as working capital and equipment absorbed cash.

    Why it matters

    Operating cash flow was $227.9M, 88.6% of net income, against $237.6M a year earlier, when it was larger than that quarter's net income of $135.0M. Free cash flow was 14.8% of revenue, against 28.5% a year earlier.1

    Capital spending rose to $82.4M from $48.1M, or 8.4% of revenue against 7.2%, and took 36.2% of operating cash flow against 20.3% a year earlier. This one quarter's capital spending equals 47.9% of all of FY2025's $172.0M.1

    For the half year the filing ties lower operating cash flow to "an overall increase in working capital needs" and higher investing outflows partly to larger purchases of property and equipment. It also records refundable deposits under a long-term wafer supply agreement and a long-term assembly service agreement.1

    Net income grew faster than operating income, 90.6% against 84.4%, partly because the effective tax rate fell to 20.0% from 23.7%. The filing attributes the lower rate to higher non-deductible stock-based compensation in 2025 than in 2026.1

    AnalysisAnalysis: the pattern fits a company building inventory and capacity ahead of orders. It stays benign only if receivables are collected on normal terms and the added stock ships in the following quarters rather than accumulating.

  3. 03

    Distributors now carry 88% of sales

    Sales through distribution rose to 88% from 83%, and the largest distributor took 28% of revenue against 25%, so end demand is seen mostly through intermediaries.

    Why it matters

    The filing says 88% of total sales were made through distribution arrangements, against 83% a year earlier. Distributor A accounted for 28% of revenue, up from 25%, and Distributor B for 15%, down from 17%. Sales to direct customers in Asia were 94% of revenue, against 93%.1

    The filing says distributors may terminate their agreements with advance notice, and that it would expect only a short-term disruption because it could engage alternative channels within a relatively short period. Certain distributors have limited stock rotation rights, for which the company keeps a reserve.1

    AnalysisAnalysis: the regional shares describe where chips are shipped and invoiced, not where the end products are sold. A channel that carries more of the flow also sees more of the inventory signal, so a pause in end demand could show up first as slower distributor orders.

Sources

  1. 1.Monolithic Power Systems 10-Q for the period to 2026-06-30 (the filing), Aug 5, 2026, read Nov 2, 2026

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Business performance

Growth, profit and margin

Revenue went from $165.0M in FY2009 to $2.8B in FY2025, the operating margin from 11.8% to 26.1%, over 16 years.

  • Revenue$2.8B
  • Operating income$728.6M
  • Operating margin26.1%
Period
Q2 FY2026
Revenue
$980.6M
Operating income
$303.9M
Operating margin
31.0%
Net income
$257.3M
Free cash flow
$145.5M
Business performance

Does the profit turn into cash?

Q2 FY2026: free cash flow of $145.5M against net income of $257.3M in the quarter.

  • Operating cash flow$838.2M
  • Capital expenditure$172.0M
  • Free cash flow$666.2M
  • Net income$621.5M

Capital expenditure is drawn below the axis as cash out. Cash conversion is operating cash flow over net income, shown in the tooltip for years with a profit.

Financial data and sources

How the revenue mix has shifted

Each breakdown the filing reports, as shares of revenue, for every period it restates.

Geographic markets

REVENUE RECOGNITION - Schedule of Revenue by Geographic Region (Details). The filing restates this breakdown for 1 period.

Click a member to isolate it across the years shown.

The figures

Margins, cash and growth for the period, each with what it was computed from.

Gross margin
55.2%
Source10-Q, Derived from Gross profit and Revenue in the 10-Q filed 2026-08-05
Operating margin
31.0%
Source10-Q, Derived from Operating income and Revenue in the 10-Q filed 2026-08-05
Net margin
26.2%
Source10-Q, Derived from Net income and Revenue in the 10-Q filed 2026-08-05
Free cash flow, quarter
$145.5M
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-05
Free cash flow margin, quarter
14.8%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-05
Cash conversion, quarter
0.89x
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-05
Capital spending, quarter
8.4%
Source10-Q, Derived from the prior period in the history in the 10-Q filed 2026-08-05
Revenue growth
+47.6%
From the record's own history, against the prior year.

Where revenue comes from

Every breakdown the filing reports for the period, with each item's share.

Geographic markets

Southeast Asia$49.0M5.0%
Europe$34.8M3.6%
Other$120.0K0.0%

These items do not sum to total revenue; the filing states them beside it. Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-08-05

What it costs

The cost lines beneath operating income, each as a share of revenue, then the operating result.

Costs are reported by function: what it cost to make what was sold, then the expenses of selling, developing and administering.

Cost lineQ2 FY2026Of revenueSource
Cost of revenue$439.6M44.8%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-08-05
Operating income$303.9M31.0%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-08-05

Operating figures the company states

From the text of the filing rather than its statements, each with the sentence that states it.

Distributor B share of revenue
15.0%
As of Jun 30, 2026
View source
Distributor B 15 % 17 % 15 % 18 %
Largest distributor (Distributor A) share of revenue
28.0%
As of Jun 30, 2026
View source
Distributor A 28 % 25 % 27 % 25 %
Revenue from direct customers in Asia
94.0%
As of Jun 30, 2026
View source
Our revenue from sales to direct customers in Asia was 94% and 93% of our total revenue for the three months ended June 30, 2026 and 2025, respectively.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, 10-Q filed Aug 5, 2026
Sales made through distribution arrangements
88.0%
As of Jun 30, 2026
View source
For each of the three and six months ended June 30, 2026, 88 % of the Company's total sales were made through distribution arrangements.

The statements, as filed

The income statement, cash flow statement and balance sheet in the company's own order and words. Every line links to the filing.

Income statement15 lines, as presented in the 10-Q
LineQ2 FY2026A year earlierChangeOf revenueSource
Income Statement
Revenue$980.6M$664.6M+48%100%Source10-Q, us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax, as reported in the 10-Q filed 2026-08-05
Cost of revenue$439.6M$298.6M+47%44.8%Source10-Q, us-gaap:CostOfRevenue, as reported in the 10-Q filed 2026-08-05
Gross profit$541.1M$366.0M+48%55.2%Source10-Q, us-gaap:GrossProfit, as reported in the 10-Q filed 2026-08-05
Operating expenses:
Research and development$118.6M$96.3M+23%12.1%Source10-Q, us-gaap:ResearchAndDevelopmentExpenseExcludingAcquiredInProcessCost, as reported in the 10-Q filed 2026-08-05
Selling, general and administrative$118.6M$105.0M+13%12.1%Source10-Q, us-gaap:SellingGeneralAndAdministrativeExpense, as reported in the 10-Q filed 2026-08-05
Total operating expenses$237.2M$201.3M+18%24.2%Source10-Q, us-gaap:OperatingExpenses, as reported in the 10-Q filed 2026-08-05
Operating income$303.9M$164.8M+84%31.0%Source10-Q, us-gaap:OperatingIncomeLoss, as reported in the 10-Q filed 2026-08-05
Other income, net$17.8M$12.2M+46%1.8%Source10-Q, us-gaap:NonoperatingIncomeExpense, as reported in the 10-Q filed 2026-08-05
Income before income taxes$321.7M$177.0M+82%32.8%Source10-Q, us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest, as reported in the 10-Q filed 2026-08-05
Income tax expense$64.4M$42.0M+53%6.6%Source10-Q, us-gaap:IncomeTaxExpenseBenefit, as reported in the 10-Q filed 2026-08-05
Net income$257.3M$135.0M+91%26.2%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-08-05
Net income per share:
Basic (in dollars per share)$5$3+86%0.0%Source10-Q, us-gaap:EarningsPerShareBasic, as reported in the 10-Q filed 2026-08-05
Diluted (in dollars per share)$5$3+86%0.0%Source10-Q, us-gaap:EarningsPerShareDiluted, as reported in the 10-Q filed 2026-08-05
Weighted-average shares outstanding:
Basic (in shares)49,138,00047,887,000+2.6%Source10-Q, us-gaap:WeightedAverageNumberOfSharesOutstandingBasic, as reported in the 10-Q filed 2026-08-05
Diluted (in shares)49,260,00048,019,000+2.6%Source10-Q, us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding, as reported in the 10-Q filed 2026-08-05
Cash flow statement7 lines, as presented in the 10-Q

Year to date, as a quarterly filing reports it.

LineQ2 FY2026A year earlierChangeSource
Cash flows from operating activities:
Net income$257.3M$135.0M+91%Source10-Q, us-gaap:NetIncomeLoss, as reported in the 10-Q filed 2026-08-05
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of discount on available-for-sale securities (shown as a deduction)($484.0K)$2.1M-77%Source10-Q, us-gaap:AccretionAmortizationOfDiscountsAndPremiumsInvestments, as reported in the 10-Q filed 2026-08-05
Statement of Cash Flows
Cash, cash equivalents and restricted cash, end of period$1.01B$787.5M+28%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-05
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents$1.01B$787.4M+28%Source10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-08-05
Restricted cash included in other long-term assets$216.0K$142.0K+52%Source10-Q, us-gaap:RestrictedCashAndCashEquivalentsNoncurrent, as reported in the 10-Q filed 2026-08-05
Total cash, cash equivalents, and restricted cash$1.01B$787.5M+28%Source10-Q, us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents, as reported in the 10-Q filed 2026-08-05
Non-cash investing and financing activities:
Liability accrued for dividends and dividend equivalents$100.3M$77.2M+30%Source10-Q, mpwr:LiabilityAccruedForDividendsAndDividendEquivalents, as reported in the 10-Q filed 2026-08-05
Balance sheet25 lines, as presented in the 10-Q
LineQ2 FY2026A year earlierChangeSource
Current assets:
Cash and cash equivalents$1.01B$787.4M+28%Source10-Q, us-gaap:CashAndCashEquivalentsAtCarryingValue, as reported in the 10-Q filed 2026-08-05
Short-term investments$408.2MSource10-Q, us-gaap:ShortTermInvestments, as reported in the 10-Q filed 2026-08-05
Accounts receivable, net$343.6MSource10-Q, us-gaap:AccountsReceivableNetCurrent, as reported in the 10-Q filed 2026-08-05
Inventories$675.8MSource10-Q, us-gaap:InventoryNet, as reported in the 10-Q filed 2026-08-05
Other current assets$44.2MSource10-Q, us-gaap:OtherAssetsCurrent, as reported in the 10-Q filed 2026-08-05
Total current assets$2.48BSource10-Q, us-gaap:AssetsCurrent, as reported in the 10-Q filed 2026-08-05
Assets
Property and equipment, net$774.5MSource10-Q, us-gaap:PropertyPlantAndEquipmentNet, as reported in the 10-Q filed 2026-08-05
Acquisition-related intangible assets, net$8.2MSource10-Q, us-gaap:IntangibleAssetsNetExcludingGoodwill, as reported in the 10-Q filed 2026-08-05
Goodwill$25.9MSource10-Q, us-gaap:Goodwill, as reported in the 10-Q filed 2026-08-05
Deferred tax assets, net$1.18BSource10-Q, us-gaap:DeferredIncomeTaxAssetsNet, as reported in the 10-Q filed 2026-08-05
Other long-term assets$217.3MSource10-Q, us-gaap:OtherAssetsNoncurrent, as reported in the 10-Q filed 2026-08-05
Total assets$4.69BSource10-Q, us-gaap:Assets, as reported in the 10-Q filed 2026-08-05
Current liabilities:
Accounts payable$182.2MSource10-Q, us-gaap:AccountsPayableCurrent, as reported in the 10-Q filed 2026-08-05
Accrued compensation and related benefits$93.6MSource10-Q, us-gaap:EmployeeRelatedLiabilitiesCurrent, as reported in the 10-Q filed 2026-08-05
Other accrued liabilities$222.1MSource10-Q, us-gaap:AccruedLiabilitiesCurrent, as reported in the 10-Q filed 2026-08-05
Total current liabilities$497.9MSource10-Q, us-gaap:LiabilitiesCurrent, as reported in the 10-Q filed 2026-08-05
Liabilities and stockholders’ equity
Income tax liabilities$75.0MSource10-Q, us-gaap:AccruedIncomeTaxesNoncurrent, as reported in the 10-Q filed 2026-08-05
Deferred tax liabilities$90.3MSource10-Q, us-gaap:DeferredIncomeTaxLiabilitiesNet, as reported in the 10-Q filed 2026-08-05
Other long-term liabilities$127.5MSource10-Q, us-gaap:OtherLiabilitiesNoncurrent, as reported in the 10-Q filed 2026-08-05
Total liabilities$790.8MSource10-Q, us-gaap:Liabilities, as reported in the 10-Q filed 2026-08-05
Stockholders’ equity:
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 49,142 and 48,709, respectively$1.03BSource10-Q, us-gaap:CommonStocksIncludingAdditionalPaidInCapital, as reported in the 10-Q filed 2026-08-05
Retained earnings$2.86BSource10-Q, us-gaap:RetainedEarningsAccumulatedDeficit, as reported in the 10-Q filed 2026-08-05
Accumulated other comprehensive income (loss)$509.0KSource10-Q, us-gaap:AccumulatedOtherComprehensiveIncomeLossNetOfTax, as reported in the 10-Q filed 2026-08-05
Total stockholders’ equity$3.90B$3.21B+21%Source10-Q, us-gaap:StockholdersEquity, as reported in the 10-Q filed 2026-08-05
Liabilities and stockholders’ equity
Total liabilities and stockholders’ equity$4.69BSource10-Q, us-gaap:LiabilitiesAndStockholdersEquity, as reported in the 10-Q filed 2026-08-05

About this data

Source
Monolithic Power Systems 10-Q, accession 0001628280-26-053275, filed Aug 5, 2026, read on Nov 2, 2026.
History
From the SEC's XBRL company facts, the value from the latest filing that stated each period.
Reading
Paragraphs marked Analysis are CXProWealth's reading; everything else is the filing's own numbers and words, or a cited source.
Version
methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-02
Edge and risks

What holds Monolithic Power Systems's model up, and what could bend it

Competitive edge

  • Fabless model keeps gross margin steady as scale grows

    Revenue rose from $582.4M in FY2018 to $2.79B in FY2025 while the gross margin stayed between 55.2% and 58.4%, with production bought from partners.

    The detail

    The filing describes a "fabless global company" that works with third parties to manufacture, assemble and test its chips, which it says limits capital expenditures and fixed costs. Gross margin was 55.4% in FY2018 on revenue of $582.4M and 55.2% in FY2025 on revenue of $2.79B. Capital spending was 6.2% of revenue in FY2025.1

    AnalysisAnalysis: when most of a chip's cost is a purchase that scales with volume, the gross margin depends on design and mix rather than on filling a factory, which is why it has moved in a narrow band through both fast and flat years.

  • Power solutions put more content on each board

    The filing credits part of the 47.6% revenue rise to power solutions, which carry higher selling prices than discrete chips.

    The detail

    The filing names three core strengths: system-level knowledge, semiconductor design expertise, and proprietary technologies in semiconductor processes, system integration and packaging. It says a higher mix of power solutions, which "generally carry higher average selling prices than discrete ICs," contributed to revenue growth. Gross profit rose 47.8% to $541.1M, slightly faster than revenue.1

    AnalysisAnalysis: an integrated solution takes on more of the customer's design work, so a customer that changes supplier has more to redesign. That deepens each design win, though the filing does not quantify switching costs.

  • Growth has been paid for from operating cash

    Free cash flow was positive in every year from FY2018 to FY2025, rising to $666.2M in FY2025 from $118.9M in FY2018.

    The detail

    In FY2025 operating cash flow was $838.2M and capital spending $172.0M, 20.5% of operating cash flow, leaving free cash flow of $666.2M on revenue of $2.79B. In FY2018 free cash flow was $118.9M on revenue of $582.4M.1

    AnalysisAnalysis: this quarter tests that record, with capital spending taking 36.2% of operating cash flow. The filing states that its cash, short-term investments and cash from operations will cover its liquidity needs for the coming year.

What to watch

  • Growth rests on AI servers, and orders can be cancelled

    The filing ties the revenue rise primarily to enterprise data and communications, while customers can cancel or reschedule orders without significant penalty.

    The detail

    The filing attributes the increase "primarily" to demand in enterprise data and communications, naming power management for AI and server applications and power for optical modules and switches. It says the company is "subject to industry downturns" and that cancellable orders make orders, revenue and expenses difficult to forecast.1

    History shows how leverage reverses. In FY2023 revenue was nearly flat at $1.82B against $1.79B in FY2022, yet operating income fell to $481.7M from $526.8M and the operating margin to 26.5% from 29.4%.1

    AnalysisAnalysis: with operating expenses at 24.2% of revenue and still rising in dollars, a pause in data-center build-outs would reach revenue faster than it reaches the cost lines.

  • Growth needs manufacturing capacity MPS does not own

    The filing lists securing manufacturing capacity among the conditions for growth, and capital spending rose to 8.4% of revenue from 7.2%.

    The detail

    The company relies on third parties to manufacture, assemble and test its chips. The 2026 executive performance awards can be earned partly by securing manufacturing capacity that supports a specified level of annual revenue, and the filing records refundable deposits under long-term wafer supply and assembly agreements.1

    AnalysisAnalysis: paying deposits and buying equipment to lock in partner capacity moves the model a step away from pure fabless economics. Capital spending of $82.4M this quarter, against $48.1M a year earlier, is the visible cost of that commitment.

  • Trade rules bear on a business shipping 94% to Asia

    Sales to direct customers in Asia were 94% of revenue, and the filing says tariffs and export controls can be enacted quickly and unexpectedly.

    The detail

    The filing names tariffs, export controls, retaliatory measures and changes in laws or economic policies in China or the U.S. It says none has had a material impact on revenue and operations through the filing date, and that its supply chain is structured to minimise the impact of tariffs, while warning that it may not succeed in mitigating future measures.1

    AnalysisAnalysis: because the shares reflect ship-to locations of distributors and resellers, a rule that changes how chips cross borders in Asia would affect how products reach buyers even when the end products are sold elsewhere.

Sources

  1. 1.Monolithic Power Systems 10-Q for the period to 2026-06-30 (the filing), Aug 5, 2026, read Nov 2, 2026
Go deeper

Monolithic Power Systems, further in

Member research, then your own questions on ChatGPT.

What could change the outlook

What Monolithic Power Systems's numbers depend on from here, read from the filing: the conditions behind this period's margins and growth, and where a change would show first.

  • What a 31.0% operating margin depends on

    Which lines decide whether this quarter's margin is a new level or a peak, and what the company's own history says about how fast operating leverage can run in reverse.

  • Inventory build or channel fill: reading the cash gap

    How to tell whether the cash absorbed by working capital and new equipment is capacity for confirmed demand, and which disclosures would show the difference first.

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Questions to start with
  • How quickly could Monolithic Power's operating margin narrow if AI server orders were rescheduled, given that most of its costs follow headcount?
  • Why did Monolithic Power's free cash flow fall this quarter while its net income nearly doubled?
  • What does a rising share of sales through Monolithic Power's largest distributor mean for its view of end demand?

Business Lens describes Monolithic Power Systems from its own filings with the SEC. It is not a view on its shares, a target, or advice to buy, sell or hold anything; figures are as filed and may be restated by the company later. The filing, the dates and the version are under the financial data above.