Our financial performance improved in the first quarter of 2024 with revenue up both sequentially and from the first quarter of 2023. Ordering patterns consistently trended upward through the quarter. Visibility into the second half of 2024, however, is limited and many customers remain cautious.

Despite this uncertainty around the second half of 2024, customer engagement across all our end markets remains very high and our design win pipeline continues to grow stronger. Additionally, we are continuing to expand our product portfolio and diversify our supply chain globally. We believe both actions position our company for further growth as the market improves.

“We saw consistent improvement through the first quarter, but we continue to be cautious about second half 2024 business conditions. Overall, our proven, long-term growth strategy remains intact, and we can swiftly adapt to market changes as they occur,” said Michael Hsing, CEO and founder of MPS.

Revenue

MPS reported first quarter revenue of $457.9 million, 0.9% higher than the fourth quarter of 2023 and 1.5% higher than the first quarter of 2023. Compared with the fourth quarter of 2023, sales in Enterprise Data and Communications improved sequentially.

In our Enterprise Data market, first quarter 2024 revenue of $149.7 million increased 16.2% from the fourth quarter of 2023 primarily from growth in sales supporting server solutions. First quarter 2024 Enterprise Data revenue was up 217.2% year over year. Enterprise Data revenue represented 32.7% of MPS's first quarter 2024 revenue compared with 10.5% in the first quarter of 2023.

First quarter 2024 Communications revenue of $46.7 million was up 14.0% percent from the fourth quarter of 2023 primarily reflecting higher network sales. First quarter 2024 Communications revenue was down 31.2% year over year. Communications sales represented 10.2% of our total first quarter 2024 revenue compared with 15.1% in the first quarter of 2023.

First quarter Automotive revenue of $87.1 million decreased 3.0% from the fourth quarter of 2023 primarily due to lower digital cockpit sales. First quarter 2024 Automotive revenue was down 17.3% year over year. Automotive revenue represented 19.0% of MPS’s first quarter 2024 revenue compared with 23.3% in the first quarter of 2023.

Storage and Computing revenue of $106.1 million decreased 9.5% from the fourth quarter of 2023. The sequential revenue reduction was primarily from lower sales of products for storage solutions. First quarter 2024 Storage and Computing revenue was down 11.4% year over year. Storage and Computing revenue represented 23.2% of MPS’s first quarter 2024 revenue compared with 26.6% in the first quarter of 2023.

First quarter 2024 Industrial revenue of $30.2 million decreased 9.4% from the fourth quarter of 2023 due to lower point of sale applications. First quarter 2024 Industrial revenue was down 36.4% year over year. Industrial revenue represented 6.6% of our total first quarter 2024 revenue compared with 10.5% in the first quarter of 2023.

First quarter Consumer revenue of $38.1 million decreased 13.0% from the fourth quarter of 2023 primarily from lower gaming revenue. First quarter 2024 Consumer revenue was down 39.9% year over year. Consumer revenue represented 8.3% of MPS’s first quarter 2024 revenue compared with 14.1% in the first quarter of 2023.

Gross Margin & Operating Income

GAAP gross margin was 55.1%, 20 basis points lower than the fourth quarter of 2023. The quarter-over-quarter decrease was attributed primarily to an unfavorable product mix. Our GAAP operating income was approximately $95.5 million compared to $109.6 million reported in the fourth quarter of 2023.

Non-GAAP gross margin for the first quarter of 2024 was 55.7%, flat to the fourth quarter of 2023. Our non-GAAP operating income was $151.6 million compared to $156.1 million reported in the fourth quarter of 2023.

Operating Expenses

Our GAAP operating expenses were $157.0 million in the first quarter of 2024 compared with $141.6 million in the fourth quarter of 2023.

Our Non-GAAP first quarter 2024 operating expenses were approximately $103.4 million, up from $96.7 million in the fourth quarter of 2023.

The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are primarily stock compensation and related expense and deferred compensation plan expense.

For the first quarter of 2024, total stock compensation and related expenses, including approximately $1.9 million charged to cost of goods sold, was $51.8 million compared with $41.1 million recorded in the fourth quarter of 2023.

The Bottom Line

First quarter 2024 GAAP net income was $92.5 million or $1.89 per fully diluted share, compared with $96.9 million or $1.98 per share in the fourth quarter of 2023.

First quarter 2024 non-GAAP net income was $137.5 million or $2.81 per fully diluted share, compared with $140.9 million or $2.88 cents per fully diluted share in the fourth quarter of 2023.

There were 48.9 million fully diluted shares outstanding at the end of the first quarter of 2024.

Balance Sheet and Cash Flow

Cash, cash equivalents and investments were $1.29 billion at the end of the first quarter of 2024 compared to $1.11 billion at the end of the fourth quarter of 2023. For the quarter, MPS generated operating cash flow of approximately $248.0 million compared with the fourth quarter of 2023 operating cash flow of $153.3 million.

Accounts receivable ended the first quarter of 2024 at $194.4 million, representing 39 days of sales outstanding, which was 3 days higher than the 36 days reported at the end of the fourth quarter of 2023.

Our internal inventories at the end of the first quarter of 2024 were $396.0 million, up from $383.7 million at the end of the fourth quarter of 2023. Days of inventory of 175 days at the end of the first quarter of 2024 were 3 days higher than at the end of the fourth quarter of 2023.

We have carefully managed our internal inventories throughout the year, balancing the uncertainty in the market with being prepared to capture market upturns when they occur. Comparing current inventory levels using next quarter’s projected revenue, days of inventory decreased to 165 days at the end of the first quarter from 170 days at the end of the fourth quarter of 2023.

Q2’24 Business Outlook