Monolithic Power Systems (MPWR) Q1 2022 Earnings Call Transcript

Monolithic Power Systems (MPWR -4.64%)
Q1 2022 Earnings Call
May 02, 2022, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Genevieve Cunningham

Welcome, everyone, to the MPS first-quarter 2022 earnings webinar. Please note that this webinar is being recorded and will be archived for one year on our Investor Relations page at www.monolithicpower.com. My name is Genevieve Cunningham, and I will be the moderator for this webinar. Joining me today are Michael Hsing, CEO and founder of MPS; and Bernie Blegen, VP and CFO.

In the course of today's conference call, we will make forward-looking statements and projections that involve risks and uncertainty, which could cause results to differ materially from management's current views and expectations. Please refer to the Safe Harbor statement contained in the earnings release published today. Risks, uncertainties and other factors that could cause actual results to differ are identified in the Safe Harbor statements contained in the Q1 earnings release and in our SEC filings, including our Form 10-K filed on February 25, 2022, which is accessible through our website. MPS assumes no obligation to update the information provided on today's call.

We will be discussing gross margin, operating expense, R&D and SG&A expense, operating income, other income, income before income taxes, net income, and earnings on both a GAAP and a non-GAAP basis. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our Q1 2022 earnings release, which we have furnished to the SEC and is currently available on our website. I'd also like to remind you that today's conference call is being webcast live over the internet and will be available for replay on our website for one year, along with the earnings release filed with the SEC earlier today.

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

Bernie Blegen -- Vice President and Chief Financial Officer

Thanks, Gen. MPS posted record first-quarter revenue of $377.7 million, 48.4% higher than the first quarter of 2021. The year-over-year revenue increase represented strength in the overall market and, more importantly, broad-based market share gains resulting from customer acceptance of our new product introductions. Before looking at our revenue by market, I would like to call to your attention a change in our reporting.

In order to provide increased visibility on data center and cloud computing revenue, we broke reporting for computer and storage into two separate markets. A table has been included in this webinar showing the company's quarterly revenue on this basis since 2017. The first line item is called storage and computing, which primarily refers to total storage and cloud computing revenue. The second line item is called enterprise data, which captures revenue from data center and cloud computing.

In our storage and computing market, first-quarter 2022 revenue of $96.6 million increased $18.6 million or 23.9% from the fourth quarter of 2021 due primarily to higher storage and commercial notebook sales. Computing -- storage and computing revenue represented 25.6% of MPS' first quarter 2022 revenue, compared with 20.2% in the first quarter of 2021. In our enterprise data market, first-quarter 2022 revenue of $42.5 million increased 5% in the fourth quarter of 2021 due primarily to continuing strength in data center and workstation computing sales. Enterprise data revenue represented 11.3% of MPS' first-quarter 2022 revenue, compared with 6.4% in the first quarter of 2021.

First-quarter 2022 communications revenue of $55.6 million rose $9.7 million or 21.1% for the fourth quarter of 2021. The quarter-over-quarter increase primarily reflected higher revenue related to 5G build-outs and satellite communications. Communications revenue represented 14.7% of MPS' first-quarter 2020 revenue, compared with 14.2% in the first quarter of 2021. First-quarter 2022 revenue from consumer markets of $80.0 million increased $13.6 million or 20.6% from the fourth quarter of 2021.

This sequential quarterly improvement -- this sequential revenue increase reflected a broad-based increase, particularly related to our IoT business. Consumer revenue represented 21.2% of our Q1 revenue, compared with a 26% contribution in the first quarter of 2021. First-quarter 2022 automotive revenue of $54.5 million decreased 3.2% from the fourth quarter of 2021. Automotive represented 14.4% of MPS' first-quarter 2022 revenue, compared with 17.6% in the previous year.

In our industrial market, revenue of $48.5 million was essentially flat with revenue recorded in the fourth quarter of 2021. Industrial revenue represented 12.8% of our first-quarter revenue, compared with 15.6% in the prior year. Moving now to a few comments on gross margin. GAAP gross margin was 57.9%, 30 basis points higher than the fourth quarter of 2021 and 250 basis points higher than the first quarter of 2021.

Our GAAP operating income was $96.1 million, compared with $78.6 million reported in the fourth quarter of 2021. For the first quarter of 2022, non-GAAP gross margin was 58.3%, 40 basis points better in the fourth quarter of 2021 and 250 basis points better than the first quarter of 2021. Our non-GAAP operating income was $133.6 million, compared to $112.0 million reported in the fourth quarter of 2021. On both a GAAP and a non-GAAP basis, the sequential quarterly gross margin improvement was primarily due to a better product mix as higher -- as revenue from higher-value new product introductions are ramping.

Let's review our operating expenses. Our GAAP operating expenses were $122.7 million in the first quarter of 2022, compared with $115.3 million in the fourth quarter of 2021. Our non-GAAP first-quarter 2022 operating expenses were $86.6 million, up from $83.0 million reported in the fourth quarter of 2021. The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense, amortization of purchased intangibles, and income or loss on an unfunded deferred compensation plan.

For the first quarter of 2022, stock compensation expense, including approximately $1.3 million charged to cost of goods sold, was $39.8 million, compared with $31.2 million reported in the fourth quarter of 2021. Switching to the bottom line. First-quarter 2022 GAAP net income was $79.6 million or $1.65 per fully diluted share, compared with $72.7 million or $1.51 per share in the fourth quarter of 2021. First-quarter 2022 non-GAAP net income was $118.3 million or $2.45 per fully diluted share, compared with $102.1 million or $2.12 per fully diluted share in the fourth quarter of 2021.

Fully diluted shares outstanding at the end of Q1 2022 were $48.2 million. Now let's look at the balance sheet. Cash, cash equivalents and investments were $775.9 million at the end of the first quarter of 2022, compared to $727.5 million at the end of the fourth quarter of 2021. For the quarter, MPS generated operating cash flow of about $107.4 million, compared with operating cash flow of $28.2 million in the fourth quarter of 2021.

First-quarter 2022 capital spending totaled $26.5 million. Accounts receivable ended the first quarter of 2022 at $120.3 million or 29 days of sales outstanding, up 1 day from 28 days at the end of the fourth quarter of 2021. Our internal inventories at the end of the first quarter of 2022 were $311.0 million, up from the $259.4 million at the end of the fourth quarter of 2021. Days of inventory increased to 178 days at the end of Q1 2022 compared with 166 days at the end of the fourth quarter of 2021.

Historically, we've calculated days of inventory on hand as a function of the current quarter revenue. We believe comparing current inventory levels with the following quarter's projected revenue provides a better economic match. On this basis, again, as you can see, days of inventory increased to 159 days at the end of the first quarter of 2022, up from 149 days at the end of the fourth quarter of 2021. I would now like to turn to our outlook for the second quarter of 2022.

We are forecasting Q2 revenue in the range of $420 million to $440 million. We also expect the following: GAAP gross margin in the range of 58.4% to 59%, non-GAAP gross margin in the range of 58.7% to 59.3%, GAAP R&D and SG&A expenses between $132.7 million and $136.7 million, non-GAAP R&D and SG&A expenses to be in the range of $90.0 million to $92.0 million. This estimate excludes stock compensation and litigation expenses. Total stock-based compensation expense of $44.2 million to $46.2 million, including approximately $1.5 million, that would be charged to cost of goods sold.

Litigation expenses ranging between $2.3 million and $2.7 million. Interest and other income is expected to range from $1.3 million to $1.7 million before foreign exchange gains or losses. Fully diluted shares to be in the range of 47.8 million to 48.8 million shares. In conclusion, we will continue to execute on our long-term plan for sustainable growth.

I will now open the webinar up for questions. 

Genevieve Cunningham

Thank you, Bernie. Analysts, I would now like to begin our Q&A session. As a reminder, if you would like to ask a question, please click on the Participants icon on the menu bar and then click the Raise Hand button. Our first question is from Ross Seymore of Deutsche Bank.

Ross, your line is now open.

Bernie Blegen -- Vice President and Chief Financial Officer

Gen, if Ross is not there, perhaps we can move on.

Genevieve Cunningham

Our next question is from Alex Vecchi of William Blair. Alex, your line is now open.

Alex Vecchi -- William Blair -- Analyst

Hey, everyone. Congratulations on a great quarter in a tough environment. Maybe you can address a little bit the supply constraints and some of the China COVID impact. It seems like you guys came out from that completely unscathed.

I'd be interested in some of the dynamics that have allowed you to do that.

Michael Hsing -- Founder and Chief Executive Officer

Well, Alex, we planned this kind of ramp, not from last year -- not from this year or last year, many years ago. And as you remember, in 2018 and '17, even '16, that we said that we're going to wait on a lot greenfield products that will grow. And exactly, we don't know if we're going to get plus or minus a year or so. And so we planned a lot of every aspect, including logistics, and stack assembly house, and now our internal testing.

And this is not a one-year thing. We planned a long time. And now when the revenues ramped, it's a little better than we anticipated. And so that's where you see the result now.

Bernie Blegen -- Vice President and Chief Financial Officer

And if I could add to that, we've also built inventories so that in 178 days, just at the lower end of our goal of being between 180 and 200 days, which provides us a good insurance policy as we look ahead to achieving our numbers for the second half of the year.

Michael Hsing -- Founder and Chief Executive Officer

Yes, even the end of the second half of 2019, the business is not as great. But we built according to our plan, and we know the business will come. At that time, I remember, our inventory is over 200 days. And that part of it, inventories have made  our customers feel we're a lot more reliable and MPS as a major player.

Alex Vecchi -- William Blair -- Analyst

OK. That's really helpful. Thank you. And then maybe one for you, Bernie, just on gross margin.

Margins have been very strong as of late. You've alluded to product mix. Just on that front, how much more runway do you think you have on the gross margin front from the uplift on sort of your new products going forward?

Bernie Blegen -- Vice President and Chief Financial Officer

Sure. As you've seen both in the results that we had for Q1, along with our guidance for Q2, which positions us around 59% gross margin, I think we've done a fair job of -- digesting is the incorrect word -- but acknowledging the uplift in our margins as a result of our product mix. So again, I'll give the same answer I did last time, that we believe that we've created a new floor on gross margins, which we can expand 10 to 20 basis points sequentially. But again, if opportunistically we see a back set which allows us to take it up another, we will be happy to take that.

I want to emphasize that while most of our peer companies have benefited both in terms of revenue growth and margin expansion from price increases, ours has been driven primarily by the change in revenue mix, which is favoring these higher-value products. Ad it was only in February of this year that we did a broad-based increase of our prices, but that was still far below what the market has seen. 

Michael Hsing -- Founder and Chief Executive Officer

Just a pass on the cost to our customers. And as the margin expansion for our case, we said it earlier, OK, setting in the 2017 or '18, we don't have a headwind. And by 2019, the market slows down a little bit, and we build up a lot of -- some amortizations at -- in the production and the pipeline. So our margin went slightly lower, but it's not much lower.

And now -- and that you see is margin continued to grow.

Alex Vecchi -- William Blair -- Analyst

That's helpful. With that, I'll go back into queue.

Genevieve Cunningham

Our next question is from Matt Ramsay of Cowen. Matt, your line is now open.

Matt Ramsay -- Cowen and Company -- Analyst

Thank you very much. Good afternoon, everybody. Can you guys hear me all right?

Michael Hsing -- Founder and Chief Executive Officer

Yes.

Matt Ramsay -- Cowen and Company -- Analyst

Michael, I guess, for either one of you guys. It was interesting that you're breaking out sort of the data center piece from the PC and storage business. And I guess, I wonder a couple of things about that. Like what maybe you guys are trying to signal by breaking those out separately? In particular, the new enterprise data segment is up, I don't know, 160% year over year, but that's really before the two primary server processor vendors launched with new sockets this year.

So Michael, could you maybe talk a little bit about the reason for breaking that out and the relative growth rates you guys expect of these two new segments as we go forward? Thanks.

Michael Hsing -- Founder and Chief Executive Officer

Yes. If you combine all together, it's kind of -- we're going to answer -- in the past, we answered those actions anyway. But when we reported, it was on some numbers. And so which is more clear.

And we published that, you guys know it and the market have a less meaningful questions in '21. Any other reasons here?

Bernie Blegen -- Vice President and Chief Financial Officer

I think, Matt, you did a good job of saying that it was clearly an inflection point for us, inflection year, which will gain momentum as we see both Intel and AMD are positioned for product releases for the coming up year. So that in addition to the expanding footprint we have both 48-volt and artificial intelligence, we believe that this will be one of our areas for sustainable growth for certainly the next three to five years. And exactly as Michael said, we believe that providing better transparency is definitely a better information for our investors.

Matt Ramsay -- Cowen and Company -- Analyst

No, thanks to both for that. That's helpful. I guess if you look at the second quarter guidance that you provided, $430 million at the midpoint was quite a bit above where consensus was and certainly where my model was. Bernie, if you might take a second to walk us through by segment, how you're thinking about the growth being concentrated, that would be really helpful.

Thanks, guys.

Bernie Blegen -- Vice President and Chief Financial Officer

I think that on a dollar or percent basis, we're going to see an accelerating ramp in enterprise, particularly during the second half of the year. I think we're going to see continued growth in our storage and computing, albeit probably not at the same rate. Part of the reason for that is that storage tends to be a precursor, at least in our experience, to a data center ramp. So I think in each of the two prior quarters, we've seen a good strong ramp in storage and now we're expecting two to three quarters in the data center.

In the rest of the business, communications, as we said, we've broadened into not only 5G, but also into satellite communications. And that's going to continue to be a driver for the foreseeable future. In the other areas are mostly the consumer, that is coming along. We emphasized the Internet of Things, but we actually -- the growth there is broad based.

Matt Ramsay -- Cowen and Company -- Analyst

All right. Thanks very much, guys.

Bernie Blegen -- Vice President and Chief Financial Officer

Thank you.

Genevieve Cunningham

Our next question is from Quinn Bolton of Needham. Quinn, your line is now open.

Quinn Bolton -- Needham and Company -- Analyst

Hey, guys, let me offer my congratulations as well. I wanted to come back to Alex's question about China. Obviously, you source most of your assembly and wafer capacity in China. And just given that zero COVID policy in China and some of the resulting lockdowns, are you rethinking the need to diversify outside of China, either on the assembly and test or assembly and wafer foundry side? And then I guess a related question, I think most of your final test takes place in Chengdu.

Have you any contingency plans in place in case Chengdu is put under lockdown due to COVID?

Michael Hsing -- Founder and Chief Executive Officer

Yes. We started a couple of years ago. We already started doing so. And as you know that China and manufacturing in Asia is the center of the world.

And we can't think too much about it. It could mean, if they have a serious problem, I think that everybody will worry about it, given the bigger things. And yes -- the answer is yes, OK. We already started and again established in a different political environment in this area.

Quinn Bolton -- Needham and Company -- Analyst

And Chengdu, Michael, do you have test capacity outside of Chengdu if Chengdu goes under lockdown?

Michael Hsing -- Founder and Chief Executive Officer

Yes. As we're starting to about a couple of years ago, but maybe it's a little more than 12 months ago, we're started.

Bernie Blegen -- Vice President and Chief Financial Officer

With the testing capacity in Chengdu, we've concentrated that on some of our higher-value parts, including automotive. And now as Michael just said is now we've started transition where we can actually have third parties. So we actually have a built-in contingency plan.

Michael Hsing -- Founder and Chief Executive Officer

Yes. Outside Chengdu only, we have -- other than these higher reliability products we're testing in our site. And other than that, OK, we do pretty high volumes, if it's not half of it, OK. It's in a different facility.

What I talked about, I just mentioned about is the outside China.

Quinn Bolton -- Needham and Company -- Analyst

Got it, OK. And then my follow-up question is around the internal inventory level that you guys have done an absolutely fantastic job of increasing that in a very tight supply environment. I guess my question is as you're approaching now the low end of your target range of 180 to 200 days, can you tell us what's going on with lead times? I would think as internal inventories get up to your target level, that may give you the ability to start to reduce lead times to potentially gain even more market share. But wondering if you could give us a sense what's going on with lead times, given that increase in internal inventory levels.

Thank you.

Michael Hsing -- Founder and Chief Executive Officer

Our lead time in this quarter is the same as the last quarter. So probably even in our booking ,even -- I don't see anything. The rate of our booking is not reduced. And Bernie, anything to add?

Bernie Blegen -- Vice President and Chief Financial Officer

No, you took my answer on both fronts, that lead times have remained very consistent in each of the last three quarters. And again, what you're seeing as far as the build of inventories has been a very conscious and deliberate decision to build the inventories in advance, particularly on the enterprise side, to meet the demand we expect for the second half of the year. And then I think that we've done a good job of positioning ourselves under what has now become uncertain environment. 

Quinn Bolton -- Needham and Company -- Analyst

Thank you.

Genevieve Cunningham

Our next question is from William Stein of Truist. William, your line is now open.

William Stein -- Truist Securities -- Analyst

Great. Thanks so much for taking my question. Congrats on the very strong results, especially the outlook. We understand though that while we see a great number overall, in particular for the guidance, there's always moving parts when we look at it on a more detailed level.

And I wonder if you're seeing either perhaps owing to customers focusing on getting balanced kits or full sets or however you want to call it or if you're seeing anything related to Ukraine or the lockdowns in China, whether any of these factors is influencing either the order rates or the backlog. For example, if none of these things were happening, the outlook would have been even stronger. Any qualification you can provide us would be helpful.

Michael Hsing -- Founder and Chief Executive Officer

Yes. Well, MPS is selling Jelly Beans. And we are a dominant application supply. We're a consumer in that way.

I mean so whatever we ship, these are the small part of the solutions. And so we don't know, OK. Actually, that's our motto. That's the beauty of it.

We don't know where these costs end up. So whether the wall affected us, OK, and we're very, very much diversified. We actually don't know. So to answer your question, the only things we do know where the product goes to the data sets, the product that goes to a car.

These are -- we pretty much know where the product ends up, OK. And other than that, we don't. 

Bernie Blegen -- Vice President and Chief Financial Officer

Just reinforcing the answer from before, there is no significant KPI whether it's in the bookings or any other area of our business that we're seeing a change from the past few quarters.

William Stein -- Truist Securities -- Analyst

That's helpful. Thank you. Bernie, you've talked about various levels of revenue that you could achieve at full utilization. In other words, the capacity that you're building for.

I know this started a couple of years ago. Well, I'm sure it's ongoing really. But the capacity and the upside that we've seen over the last few quarters, of course, those were not planned very quickly. They were planned a long time ago.

Can you remind us or maybe update us on the medium to long-term capacity planning that's in place today? What levels of total capacity we can expect over the next few quarters? Thank you.

Michael Hsing -- Founder and Chief Executive Officer

Yes. That's a good question. I think we answered that question in last quarter. So OK, we said that we're going to play in the $4 billion of revenues in the next couple of years.

And so that's what we do, and we continue to invest.

Bernie Blegen -- Vice President and Chief Financial Officer

Yes. And I think just to sort of lend some credibility to that. You recall about a year ago that we offered by the end of Q2 in 2022 that we would be a $2 billion run rate. And with the guide that we have provided and the expectations ahead, I think that's a milestone that backs up the amount of visibility in our supply chain.

So right now, the goal, as Michael said, $4 billion.

Michael Hsing -- Founder and Chief Executive Officer

Yes. If the demand is there in this year, we will do it Yes. And what we'll do to bidding as we said in a couple of years ago. And we continue to see the demand, and we see the demand will be there.

So OK, this is not short term, OK, things OK. And if it does not happened that year, that will happen the year after.

William Stein -- Truist Securities -- Analyst

Guys, congrats again. Thanks for taking my questions.

Genevieve Cunningham

Our next question is from Rick Schafer of Oppenheimer. Rick, your line is now open.

Rick Schafer -- Oppenheimer and Company -- Analyst

Thanks. I'll echo all the congratulations, another stellar quarter from you guys and outlook. If I could, my first question, I'm just kind of following up on the server breakout and obviously a big ramp ahead for QSMod and cloud this year. I was curious kind of below that line a little bit, if there's any updates you could give us like your 48 volt expectations this year or next.

And within that, I'm curious, I'd sort of assume 48 volts virtually all AI accelerator for the next couple of years. But I'm curious when you see 48 volt sort of move into other areas like CPU or some broader markets like auto or industrial because I'm curious if you've looked at sort of what that 48 volt SAM looks like for MPS because it seems like an awful big opportunity.

Michael Hsing -- Founder and Chief Executive Officer

Yes. 48 volts is actually starting in automotive and also the server and AI, OK. These are CPUs. And for the 48 volts for the car, that's a different thing but the same technologies.

And also, we see these at telecom areas, 48 volts can be -- it's all standard. And so now the 4Gs and the compliance with the 48  volt, OK, we have the solution there. So there's a lot of areas we can grow.

Bernie Blegen -- Vice President and Chief Financial Officer

And I think that the 48 volts, not only are we seeing the ramp of its adoption more broadly, but competitively, I would offer that we're very well positioned with some of the new technologies that we've rolled out and expect to roll out during the course of the next 18 months. So I think here again, we've timed our product releases pretty well with the inflection of this market opportunity.

Michael Hsing -- Founder and Chief Executive Officer

Yes. And I think talking about our product, the module is ramping. We're providing whatever the customers need, whether on the chip level or module level or even at the solution level.

Rick Schafer -- Oppenheimer and Company -- Analyst

OK ,thanks. And then maybe as my follow-up, just on 5G. I haven't asked the 5G question in a while. But I mean you guys are engaged with the sort of the big 3 Tier 1 OEMs.

And I just was curious if you could give us an update on your expectations. I know you flagged 5G here from 1Q results. And so I'm curious what your expectations are for this year. And if there's any update you could give us on sort of how content compares with what you're seeing in server and data center and sort of how that ramp looks.

And maybe if you could talk about how you quantify that opportunity in macro base station. Thanks.

Bernie Blegen -- Vice President and Chief Financial Officer

The 5G is a relatively new market segment for us. So it's not like we can draw from our prior experience and calibrate it up or down. We're sort of living a little hand-to-mouth on what demand looks like and how fast we're shipping. So we don't have a real good predictive model.

What we talked to you about in the past has been that, again, we believe on a broad base, not only with as you referred to, the top 3, but with a number of partners related to 5G infrastructure. We're providing content. And while it's easy to look at the base station as a means of calculating out what the SAM is available to us, I think that we're also in fiber optics, in the data center support for 5G, as well as in the transceiver of the base station. And again, I think as we pointed out, a lot of the initial technology that we're putting in is tending to be lower end and not necessarily specialized with adapting to 5G specifically.

So we don't have the same level of visibility on how it's being deployed. And we've used this strategy in the past, I think, for data center. We come in with lower dollar value content, build the relationships and then we're able to go to higher-value content.

Michael Hsing -- Founder and Chief Executive Officer

Let me say that we say that we do have a custom design for each of the areas that Bernie said. And from fiberoptics to all the single chain, all the way to transmitters. And we do have a custom design and based on our standard product modules. And these are the products, it's not really at low end.

But these products can be used for any other telecom, which provides a building block, which provides power solutions for each of these blocks, for each of these categories. And we do see a lot of activity now and the revenues is a ramping now.

Rick Schafer -- Oppenheimer and Company -- Analyst

Got it. Congrats. Thanks, guys. 

Genevieve Cunningham

Our next question is from Chris Caso of Raymond James. Chris, your line is now open.

Chris Caso -- Raymond James -- Analyst

Yes, thank you and good evening. I guess a question about the profile of revenue growth as we go through the year. And thus far, over the past several quarters, your revenue growth has been pretty broadly based, seeing growth in most segments. I know we've been speaking about and we've been anticipating for a while, the server ramp as we get to the end of the year.

But as we look through revenue in the next kind of two, three, four quarters, do you expect that revenue growth to continue to be broadly based? Where do you think this is going to be concentrated in any particular segments?

Michael Hsing -- Founder and Chief Executive Officer

Well, the strategy is we fire as many cylinders we can, OK. Whatever grows, we grow, OK. And I think that's the strength of our diversification. And in the next few quarters, we see the demand even for 2023 and '24, and these are pretty much similar, OK.

We don't see that much of a difference. And one thing we see, our customers demand more high-value product, which means they can easily adopt and ease of use and a much higher efficiency product and an energy-converting efficiency product. And so these are much better for us. Instead of our customers doing a lot of development work, we do a lot of development work for our -- we develop a solution for our customers.

So that means a higher dollar content. And so that's really -- we see that as the only difference.

Chris Caso -- Raymond James -- Analyst

Got it, thank you. My follow-up question is about the impact of some of the China lockdowns and not from your production side, but rather from your customer side. And what we heard from some others or at least one other is that part of the challenges in China right now are customers having facilities that are closed or that freight forwarders is simply unwilling to accept product because of some of the logistics challenges that are going on right now. Is that something you're facing as well? And is there any impact on your revenue right now, which might mean some of those issues get solved, that some of that goes into the second half of the year?

Michael Hsing -- Founder and Chief Executive Officer

Absolutely, it affects us. And don't get me wrong, even though we've grown this much, if it were not for that problem, we'd ship a whole lot. But we just have -- we anticipated a little better. So we can still roll in on our models, OK.

It's not much about of our models. And for the quarter to quote, it is above our model, even a year, two years, OK. And on the other hand and other than our logistics and production limitations, our customers, they have a mix too. And clearly, you see the auto business.

I mean we have less problem of shipping product than other suppliers. So you can speculate, OK, because it limited our -- they are buying -- they are purchasing our product and for -- because they're missing other costs.

Bernie Blegen -- Vice President and Chief Financial Officer

And I think that we continue to be very resilient under a number of environmental circumstances. Part of that is the planning that we've set in motion three or four years ago. And some of it how our first buyer model is and some of it is how adaptive we could be in the moment. So again, we didn't acknowledge the impact our customer supply chain affecting us.

But I wouldn't say that that is a pronounced audit and we're continuing to monitor it.

Chris Caso -- Raymond James -- Analyst

Thanks very much.

Genevieve Cunningham

Our next question is from Tore Svanberg of Stifel Nicolas. Tore, your line is now open.

Tore Svanberg -- Stifel Financial Corp. -- Analyst

Yes, thank you. And congratulations on another record quarter, quite stunning. First question is on long-term growth. So you grew more than 40% last year.

Looks like you're on track to growing another 40% this year at least. Michael, in the past, you've said there's no reason why you can't accelerate growth even though you have higher revenues.

Michael Hsing -- Founder and Chief Executive Officer

You remembered that one. That's good.

Tore Svanberg -- Stifel Financial Corp. -- Analyst

So I'm just trying to understand what you think about long-term growth at this point. Is 40% the right number? I know you're probably not going to commit to a number. But yes, anything you can add on that would be great.

Michael Hsing -- Founder and Chief Executive Officer

Yes. As I've always said, about a few minutes ago, I said that, OK, our customers even remains at the more higher value products. It can be in a solution kind of related products. And now we launched it and loaned their engineering efforts to MPS, And I see that opportunity is -- the opportunities for accelerated growth because think about it.

At MPS, we don't make anything. We're just only testing their final control -- quality control. And that can apply to anything else. And that can apply to models, apply to tools, OK, apply to any other solutions.

But it's all related to power, all related to what we know. And so from now on, you will see at MPS, OK, we provide plug-and-play solution for all kinds of robotics, for industrial automation and for building controls and those type of a products and -- which has a lot higher ASPs. We buy those components or we specify those components, and we incorporate to our solutions. So the unit price will be much higher.

And now it's how fast we can put all these solutions together and turning into a meaningful revenue. And that I can predict. And then you have that product knowledge too. Now at the same time, MPS' semiconductor chip business keep growing.

So I don't see in the near term, in the next year or so, I don't see any slowdown. And it's actually accelerating. And so the model is at the very infancies. And if you go three or four, five years from now, I think we will be a real solution company and being a semiconductor operator is only a part of it in the total content.

So I want to grow more. I've seen more than $10 billion of companies, a $10 billion, $15 billion company, and there is no reason why not.

Tore Svanberg -- Stifel Financial Corp. -- Analyst

That's great perspective. Thank you for that, Michael. As my follow-up, I wasn't aware you had a lot of traction in the SATCOM market. I was just hoping you could add a little bit more color there.

What types of applications? What are some of the strengths the company has today in that market? And are you continuing to introduce new products? Because that's -- to me, that's obviously a very high-margin business, right, but it's also a very difficult market to crack into.

Michael Hsing -- Founder and Chief Executive Officer

Yes. It's our committed satellite communications and not only being the satellite itself, the grand station, there's a huge amount. And there's a new standard, and we gain -- there's a lot of new activities there. And we designed it a few years ago.

And mostly, it is a power module. And also, we have related to these -- in the satellite itself. And I mean these are controlled solar panels and also a lot of power box. And I think the value in this is so -- the value of this is everywhere, OK.

And these are from antenna to powering up the antenna to power the receivers and also all the way down to the user interface. And we all benefit from that.

Tore Svanberg -- Stifel Financial Corp. -- Analyst

Excellent, very good. Congratulations again.

Michael Hsing -- Founder and Chief Executive Officer

Thank you.

Bernie Blegen -- Vice President and Chief Financial Officer

Thanks.

Genevieve Cunningham

Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open.

Ross Seymore -- Deutsche Bank -- Analyst

Hi. Can you guys hear me this time?

Michael Hsing -- Founder and Chief Executive Officer

Yes. 

Bernie Blegen -- Vice President and Chief Financial Officer

Ross, you're there.

Ross Seymore -- Deutsche Bank -- Analyst

I've been here the whole time. I'm glad that we got it to work. So I guess the first question is a longer-term one, then I'll follow up with a shorter-term one. Michael, you talked many times on tonight's call about moving up the value chain, adding more value.

Customers want to use Monolithic for more and more. And in the past, that's going from kind of the second or third tier folks in various markets up to the first tier. So really, what I want to get at was, are you seeing evidence of moving up to higher and higher value customers? And does the fact that you didn't raise prices as much as your peers and that you had availability, is that giving you longer-term design wins, higher-value design wins? Anything you could do to quantify that dynamic.

Michael Hsing -- Founder and Chief Executive Officer

I don't know how to quantify that, OK, because we don't -- we didn't increase the price, OK, for those customers, those  first tier, the valued strategic customers because this prices are negotiated way before that. And we have to audit. And so we always said what we do. It's what we said when we do.

So we have to honor that. And I think that also is a part of an MPS branding. And so that benefits us for the long term. And for other high-value customers or high-value products, it's sporadic.

I mean this is at the very beginning. A lot of customers don't even know, oh, you offer this solutions. Are you going to offer the entire solutions? And so they don't even know that, OK. MPS is just starting to and that actually relates to a few years ago.

We said that we're going to do e-commerce, OK. We were going to do an e-commerce plug-and-play programmable platform, all these things. And these are all related. So we do solar only for large customers, and I said we're a satellite company.

We are an EV companies. We have a -- they want MPS do a lot more or even the data centers and the demand of all these -- we provide the entire unit. And they don't have the design. So that's actually across the board we have, just to name a few.

But revenue is still small. We're starting.

Ross Seymore -- Deutsche Bank -- Analyst

Great. Thanks for all that color, Michael. And for my follow-up, a nearer-term question. Bernie, this could either be both revenues and/or the gross margin and your answer on this, and it's really about the mix.

You've talked about the gross margin rising because of mix and new products being the driver of that. So if I look at the industrial and automotive businesses the last couple of quarters, they're great year-over-year, but they've been flat to a little bit down sequentially for the last six months or so. Is there anything going on in that business? Is it just lumpiness? Is it waiting for some design wins? And on the mix side of that equation for gross margin, I think most people believe those could be some of the more accretive areas. So how is the mix such a positive for your gross margin if the two areas that are supposed to be the highest margins are actually slightly underperforming the others?

Michael Hsing -- Founder and Chief Executive Officer

Makes sense. That's a simple question.

Bernie Blegen -- Vice President and Chief Financial Officer

Very good questions. Let me reference what Michael said earlier is the power of our model is the diversification of the end markets. And if you go back to the performance, the revenue performance that we demonstrated in industrial and automotive last year, they were leaders. They were our growth drivers.

In the current year and it reflected with the help of the two end markets, it really came down to it being the timing of shipments. So we believe that as far as the design wins that are coming in, we don't believe that we've over shipped them to the extent that that's going to cause us a problem. The orders on the book remained incredibly positive. So again, it's more a difference quarter-over-quarter as opposed to anything fundamentally different about the market.

Michael Hsing -- Founder and Chief Executive Officer

And also one of the questions is, why the margin goes up if these are two segments or silos, OK? I mean the year-to- year or year-over-year, we grow, OK. If you look at it from Q3 last year to now, we had both segments overall contribute to the bottom of margins -- OK, gross margins. And the other segment, OK, consumers, OK, I mean we phased out and that can mean a dismount from the last year. So OK, maybe the year -- beginning of the last year.

When the capacity gets the issues, as you know, we always face on these lower margin. That's another part of it. But the overall, the greenfield products are what's driving the margins.

Bernie Blegen -- Vice President and Chief Financial Officer

And just to add to Michael's point as far as phasing out lower margin business, we're trying to rationalize our wafer starts to capture the largest opportunity. And as a result, some of the lower margin business that we used to have in our portfolio, we haven't emphasized that in our production planning, which has not been there as a component of our business like it has been historically.

Rick Schafer -- Oppenheimer and Company -- Analyst

Thank you.

Genevieve Cunningham

Our next question is from Hans Mosesmann from Rosenblatt. Hans, your line is now open.

Hans Mosesmann -- Rosenblatt Securities -- Analyst

Thanks. Thanks for getting me in and congratulations, like everybody else has mentioned. Good stuff. I have 2 questions.

Michael, if we were to split 48 volts as an opportunity, so I'm thinking it getting 48 volts to the rack in your data center and within the rack, getting that 48 volts to the board and every board has to deal with the accelerators and there's power issues there. So there's three touch points. If that's the way to look at it, what is the opportunity for each? And where would you be seeing the first incremental business for 48 volts for MPS?

Michael Hsing -- Founder and Chief Executive Officer

I think it's the solution. Yes, you're right, OK. And then now the question is that does depend on applications. The 48 volts and the account for 4 volts, the account for 5 volts down to -- directly to 1.2 volts.

That's -- the last part, OK, we don't do that and our customers -- and there's a few providers for the solution is not comp. And so we plan the market. I mean it's down 12, 48 convert to 12 and convert 5 -- 4 or 5 volts, OK. That's the market we play.

It's open builder materials. Everybody else can jump into it. And we -- so our competitor provides similar solutions. And so that kind of -- we know this is an application but which one, we don't know.

Which one, it's hard to tell. All these are high current products and you probably know more than I do, OK, it goes to 600 watts to 1,000 watts and even some a couple of thousand watts. You see these are all MPS solutions. And that these are -- if the higher ones you go, the volume gets smaller.

And so in the coming years and those accelerate the costs that populates in the data centers, and that's where you see it. These are 48 volts and that convert to 12. And then you have new solutions that we provide so you can reach to 5 volts, OK, and an increase close to 1% of efficiency, which is a lot.

Hans Mosesmann -- Rosenblatt Securities -- Analyst

Thanks. That was very helpful, Michael. My follow-on just in this. What is the view of the PC market for MPS? I think Intel mentioned that the low end of the PC market is weak, but the other parts are OK.

What's your view to the degree that you have participation at least?

Michael Hsing -- Founder and Chief Executive Officer

Yes. We -- obviously, OK, we do well. OK, we do PCs, the commercial PCs, even the low end of business from the way we see it. But for us, it's very opportunistic because we have a product developed for server.

And without much of an engineering effort, we can spin off and do other product. We can do a product for commercial PC for commercial goals. And on the other end, we do battery management. We do actually panel power tools.

And  pretty much, we can offer the entire mobile solution, other than memory, other than the CPUs. And so that's -- it's very opportunistic. And currently, we see the demand is very strong.

Bernie Blegen -- Vice President and Chief Financial Officer

Yes. And just to add to that, what Michael just said, we have a very good footprint in the commercial side. And because we have so many different kinds of offerings, what we're seeing is being able to sell additional content into those same platforms.

Hans Mosesmann -- Rosenblatt Securities -- Analyst

OK. Thank you very much.

Genevieve Cunningham

If there are any follow-up questions, please click the Raise Hand button. As there are no further questions, I would now like to turn the webinar back over to Bernie.

Bernie Blegen -- Vice President and Chief Financial Officer

Great. Thanks, Gen. I'd like to thank you all for joining us for the Q1 2022 earnings webinar. I look forward to talking to you again during our second quarter conference call, which would likely be in July.

Thank you, and have a nice day.

Duration: 64 minutes

Call participants:

Genevieve Cunningham

Bernie Blegen -- Vice President and Chief Financial Officer

Alex Vecchi -- William Blair -- Analyst

Michael Hsing -- Founder and Chief Executive Officer

Matt Ramsay -- Cowen and Company -- Analyst

Quinn Bolton -- Needham and Company -- Analyst

William Stein -- Truist Securities -- Analyst

Rick Schafer -- Oppenheimer and Company -- Analyst

Chris Caso -- Raymond James -- Analyst

Tore Svanberg -- Stifel Financial Corp. -- Analyst

Ross Seymore -- Deutsche Bank -- Analyst

Hans Mosesmann -- Rosenblatt Securities -- Analyst

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