01—Abstract
Summary
Summary of the 10-Q filed August 5, 2026. Cited figures are marked; the original filing is the authoritative source.
Monolithic Power Systems, Inc. (MPWR) reported a strong financial performance for the second quarter and first half of fiscal year 2026, driven by significant growth in its Enterprise Data and Communications segments.
Revenue increased by approximately 47.6% year-over-year for the quarter and 37.1% for the first half, reaching $980.6 milliona and $1.78 billion, respectively. This robust top-line growth translated into substantial improvements in profitability, with net income rising significantly compared to the prior year. The company demonstrated impressive operational efficiency, maintaining stable gross margins around 55% despite increased revenues.
Operating expenses, while increasing in absolute terms due to investments in R&D and personnel, represented a lower percentage of revenue compared to the previous year, leading to a significant expansion in operating income margin. MPWR also continues to actively return capital to shareholders through dividends and a share repurchase program, underscoring its commitment to enhancing shareholder value. However, investors should note the ongoing material weakness in internal controls related to deferred income taxes, which the company is actively working to remediate.
02—Key points
Key Highlights
- Revenue surged by 47.6% year-over-year to $980.6 million for Q2 2026, driven by strong performance in Enterprise Data and Communications sectors.
- First half 2026 revenue grew 37.1% to $1.78 billion, reflecting sustained demand across key markets.
- Gross margin remained strong and stable, holding steady at approximately 55.2% for the quarter and 55.3% for the first half.
- Operating income saw substantial expansion, increasing to $303.9 million for the quarter and $545.0 million for the first half, indicating improved operational leverage.
- Net income more than doubled year-over-year for the quarter, reaching $257.3 million, and increased significantly for the first half to $450.5 million.
- The company returned capital to shareholders through $98.3 million in dividends declared for Q2 2026 and $4.0 million in share repurchases.
- Despite positive financial results, a material weakness in internal controls over financial reporting related to deferred income taxes remains, with remediation efforts ongoing.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Monolithic Power Systems kept $0.26.
- Revenue$980.6M100.0%
- Cost of revenue−$439.6M44.8%
- Gross profit$541.1M55.2%
- Operating costs−$237.2M24.2%
- Operating income$303.9M31.0%
- Interest, other & tax−$46.6M4.8%
- Net income$257.3M26.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed August 5, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $980.64M$664.57M | +47.6% |
| Cost of Revenue | $439.57M$298.56M | +47.2% |
| Gross Profit | $541.07M$366.02M | +47.8% |
| SG&A Expenses | $118.56M$104.99M | +12.9% |
| Operating Expenses | $237.18M$201.26M | +17.8% |
| Operating Income | $303.89M$164.76M | +84.4% |
| Net Income | $257.30M$135.01M | +90.6% |
| EPS (Basic) | $5.24$2.82 | +85.8% |
| EPS (Diluted) | $5.22$2.81 | +85.8% |
| Shares Outstanding (Basic) | 49.14M47.89M | +2.6% |
| Shares Outstanding (Diluted) | 49.26M48.02M | +2.6% |
05—Questions
Frequently Asked Questions
What are the primary drivers of the significant revenue growth in Q2 2026?
The primary drivers of the significant revenue growth in Q2 2026 were increased demand for products serving the Enterprise Data and Communications end markets. Specifically, higher sales of power management solutions for artificial intelligence (AI) and server applications significantly boosted the Enterprise Data segment, while increased sales of power solutions for optical modules and switches drove growth in the Communications segment. A favorable product mix, with a higher proportion of power solutions (which generally have higher average selling prices), also contributed to the revenue increase.
How has the company managed its operating expenses in relation to revenue growth?
Monolithic Power Systems has managed its operating expenses effectively. While Research and Development (R&D) and Selling, General, and Administrative (SG&A) expenses increased in absolute dollar amounts due to investments in new product development, personnel, and legal matters, they represented a smaller percentage of total revenue in Q2 2026 (24.2%) compared to Q2 2025 (30.3%). This improved operating leverage led to a significant expansion in operating income margin, from 24.8% in Q2 2025 to 31.0% in Q2 2026.
What is the status of the material weakness in internal controls, and what is the company's plan?
The company identified a material weakness in internal control over financial reporting related to the accounting for deferred income taxes, which was present as of December 31, 2025, and has not been remediated as of June 30, 2026. Management, under the oversight of the Audit Committee, is implementing measures to remediate this weakness. The company expects to remediate the material weakness by the end of fiscal year 2026 and is actively monitoring the effectiveness of its remediation plan. However, there is no assurance regarding the exact timing of completion.
How is the company returning capital to shareholders, and are there any changes to these programs?
Monolithic Power Systems continues to return capital to shareholders through its quarterly cash dividend program and a stock repurchase program. In Q2 2026, the company declared a dividend of $2.00 per share, totaling approximately $98.3 million. It also repurchased 3,000 shares for $4.0 million. Notably, in July 2026 (subsequent to the reporting period), the Board of Directors increased the authorized amount of the stock repurchase program by an additional $500.0 million, demonstrating continued commitment to returning value to shareholders.
06—Continue