speaker
Genevieve
Moderator

Welcome, everyone, to the MPS First Quarter 2021 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, and I will be the moderator for this webinar. Joining me today are Michael Singh, CEO and founder of MPS, and Bernie Blagan, VP and CFO. Hello. In the course of today's conference call, we will be making forward-looking statements and projections that involve risk 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 statement contained in the Q1 earnings release. and in our SEC filings, including our Form 10-K filed on March 1st, 2021, which is accessible through our website. NPS 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, interest and other income, 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 earnings release, which we have filed with the SEC. I would refer investors to the Q1 2020, Q4 2020, and Q1 2021 earnings releases, as well as to the reconciling tables that are posted 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 would like to turn the call over to Bernie Blagan.

speaker
Bernie Blagan
VP and CFO

Senator Blagan. MPS posted record first quarter revenue of $254.5 million, 53.5% higher than the first quarter of 2020. 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. 37% of our first quarter 2021 revenue resulted from new products introduced in the last three years. New product acceptance on this scale has paved the way for accelerated growth. Looking at our revenue by market, first quarter 2021 revenue from consumer markets of $66.2 million increased $28.8 million, or 77.1% from the same period of 2020. The year-over-year revenue increase reflected a broad increase in overall demand along with the initial revenue ramp from our new mobile device charging IC. Consumer revenue represented 26.0% of our Q1 revenue compared with 22.6% contribution in the first quarter of 2020. First quarter 2021 automotive revenue of $44.9 million grew 92.5% over the same period of 2020. This growth primarily reflected continuing sales growth for infotainment safety and connectivity application products and first time revenue from products introduced in the 2021 model year. Automotive revenue represented 17.6% of MPS's first quarter 2021 revenue compared with 14.1% in the previous year. In our computing and storage market, first quarter 2021 revenue of $67.5 million increased $15.5 million, or 29.9% year over year, due primarily to higher notebook and storage sales. Computing and storage revenue represented 26.5% of MPS's first quarter 2021 revenue, compared with 31.3% in the first quarter of 2020. First quarter 2021 industrial revenue of $39.8 million increased 57.7% from the first quarter of 2020 and accounted for 15.6% of our total first quarter revenue. The revenue increase over the first quarter of 2020 primarily reflected broad-based gains in all of our major product groups. First quarter 2021 communications revenue, $36.1 million, rose $8.2 million, or 29.4% from the first quarter of 2020. The year-over-year increase primarily reflected higher networking and wireless gateway home router sales. Communication revenue represented 14.2% of MPS's first quarter 2021 revenue compared with 16.8% in the first quarter of 2020. Our sustainable above market growth is based on the following. One, we have and are continuously investing in expansion and diversification of our supply chain. Specifically, we executed ahead of market demand. Two, we accelerated the release of advanced products and solutions based on our leading edge technologies. Three, we've gained increased acceptance of our solutions with first tier customers globally. Four, we continue to diversify and support a wider number of end product applications. Moving now to a few comments on gross margin. GAAP gross margin was 55.4%, 10 basis points higher than the fourth quarter of 2020 and 20 basis points higher than the first quarter of 2020. Our GAAP operating income was $46.1 million, compared with $40.0 million reported in the fourth quarter of 2020. For the first quarter of 2021, non-GAAP gross margin was 55.8%, 10 basis points better than the fourth quarter of 2020, and 30 basis points better than the first quarter of 2021. Our non-GAAP operating income was $75.8 million compared to $66.3 million reported in the fourth quarter of 2020. Let's review our operating expenses. Our GAAP operating expenses were $95.0 million in the first quarter of 2021, compared with $88.9 million in the fourth quarter of 2020. Our non-GAAP first quarter 2021 operating expenses were $66.2 million up from the $63.6 million reported in the fourth quarter of 2020. The differences between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense and income or loss on an unfunded deferred compensation plan. For the first quarter of 2021, total stock compensation expense, including approximately $816,000 charged to cost of goods sold, was $28.6 million compared with $23.0 million recorded in the fourth quarter of 2020. Switching to the bottom line, first quarter 2021 GAAP net income was $45.4 million or 95 cents per fully diluted share compared with $42.9 million or 90 cents per share in the fourth quarter of 2020. First quarter 2021 non-GAAP net income was $69.5 million or $1.46 per fully diluted share compared with $62.5 million or $1.31 for fully diluted share in the fourth quarter of 2020. Fully diluted shares outstanding at the end of Q1 2021 were 47.7 million. Now let's look at the balance sheet. Cash equivalents and investments were $641.6 million at the end of the first quarter of 2021, compared to $598.0 million at the end of the fourth quarter of 2020. For the quarter, NPS generated operating cash flow of about $77.1 million, compared with operating cash flow $79.6 million in the fourth quarter of 2020. First quarter, 2021 capital spending totaled $19 million. Accounts receivable end of the first quarter of 2021 at $84.1 million, or 30 days of sales outstanding, up four days from 26 days at the end of the fourth quarter of 2020. Our internal inventories at the end of the first quarter of 2021 were $175 million, up from the $157.1 million at the end of the fourth quarter of 2020. Days of inventory increased to 141 days at the end of Q1 2021, compared with 137 days at the end of the fourth quarter of 2020. Historically, we've calculated days of inventory on hand as a function of the current quarter's revenue. We believe comparing current inventory levels with the following quarter's revenue provides a better economic match. On this basis, you can see Days of inventory increased slightly to 128 days at the end of the first quarter of 2021 from 126 days at the end of the fourth quarter of 2020. I would now like to turn to our outlook for the second quarter of 2021. We are forecasting Q2 revenue in the range of $274 to $286 million. We also expect the following. Gap. gross margin in the range of 55.1 to 55.7%. Non-GAAP gross margin in the range of 55.5 to 56.1%. GAAP R&D and SG&A expenses between $95.9 million and $99.9 million. Non-GAAP R&D and SG&A expenses to be in the range of $65.5 million to $67.5 million. This estimate excludes stock compensation and litigation expenses. Total stock-based compensation expense of $31.4 million to $33.4 million, including approximately $1 million that would be charged to cost of goods sold. Litigation expenses ranging between 2.3 and 2.7 million dollars. Interest and other income is expected to range from 1.3 to 1.7 million dollars before foreign exchange gains or losses. Fully diluted shares to be in the range of 47.3 to 48.3 million shares. In conclusion, we have paved the way to multi-billion dollar revenue. I will now open the webinar for questions.

speaker
Genevieve
Moderator

Thank you, Bernie. Analyst, I would now like to begin our Q&A session. As a reminder, if you would like to ask the question, please click on the Participants icon on the menu bar and then click the Raise Hand button. Our first question comes from Joshua Buchalter of Cohen. Joshua, your line is now open.

speaker
Joshua Buchalter
Analyst at Cohen

Hey guys, thanks for taking my question and congrats on another set of solid results. I was hoping you could elaborate on the inventory dynamics. You're one of the few companies that invested proactively ahead of the supply issues across the industry, but you're still not near your 180 to 200 day target. So just wondering how you're thinking about balancing rebuilding the channel versus taking business that some of your peers can't serve and also your share gains. Thank you.

speaker
Michael Singh
CEO and Founder of MPS

Well, As we continue to expand our capacities, as we said it earlier, as we said it in the last quarters, and I think we expected it with the current rate, the increase, the capacity will be end of the year or early next year. So we'll achieve that type of inventory. So if the demand is not continue to increase, this much.

speaker
Bernie Blagan
VP and CFO

And I think it's notable, Josh, that we did increase both in terms of dollars and days, the amount of inventory we had from Q4 to Q1, which runs counter to the capacity constraints that some peer companies are experiencing.

speaker
Joshua Buchalter
Analyst at Cohen

Got it. Thank you. That makes sense. And any more granularity you can provide in the guidance by end market for next quarter, any of the buckets moving materially more than the others? Thanks and congrats again.

speaker
Bernie Blagan
VP and CFO

Yeah, I would probably look to computing where there was a couple quarter gap in data center that data center should begin to take off again. I think automotive appears to be continuing to grow nicely, both in terms of year-over-year performance and sequentially. And also we're seeing that same continuation in consumer.

speaker
Genevieve
Moderator

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

speaker
Ross Seymour
Analyst at Deutsche Bank

Hi, guys. Thanks for letting me ask a question. I want to talk about the sustainability of demand. Recently in this earnings season, a lot of semi-stocks have sold off on really good numbers, and it clearly looks like the market is worried about double ordering, those sorts of peak cyclical activities. Can you talk a little bit about how your visibility has changed, if at all, over the last quarter from the demand side of the equation? And Any kind of general puts and takes about how you view the second half of the year? I know you're only guiding for 2Q, but any sort of company specifics or general trends that you'd like to highlight in the second half of the year would be helpful.

speaker
Michael Singh
CEO and Founder of MPS

Yes. Okay. And, of course, we're concerning double orders. Okay. And in the past, we said that we have a rigorous procedures to prevent that. Okay. And we partial, we practicing partial shipments in the last six quarters. And we make sure our customers have a very minimal, very minimal on-hand inventories. And the same times that we're not preventing their line downs, okay, their production line downs. So go back to your questions, what's the demands? We believe in a lot of our demands is sustainable. The reason we said that, Bernie said it earlier in a script, and that for us, these are greenfield market, greenfield product line. We start to grow, and that's why As Bernie said, 37% of our products, we grow all from new products that we released from the last three years. And there is no reason to believe next two years, next years, I'm not even talking about next six months. I'm talking about next couple years. These products will continue to grow. And the same times, and the product that we released in the last two years, that will continue to turn into revenues in 12 months later. So we believe our growth is sustainable.

speaker
Ross Seymour
Analyst at Deutsche Bank

Great. Thanks, Michael. I guess for my follow-up, a little more specific on one of your segments, the communications area has been very, very volatile. I know there's... bans on different customers that can ship at different points in times. But can you talk a little bit about what's driving the sequential growth that was up so much in the first quarter, admittedly off of a week or fourth quarter? And then as this year progresses, how do you see that market, specifically more of the 5G side of things rather than the networking and gateway sides?

speaker
Michael Singh
CEO and Founder of MPS

We see, as a matter of fact, we have a communication meetings with top tiers and non-Chinese 5G makers. That market segment is well picking up. They believe this year and the next year, they're on the delinquency too.

speaker
Bernie Blagan
VP and CFO

We believe we're very well positioned, just as Michael said there, because the reach of new customers that we're addressing with 5G solutions is very broad. So we think that as the market gains momentum, we're very well positioned to take full advantage of it.

speaker
Ross Seymour
Analyst at Deutsche Bank

Great. Thanks, guys, and congrats again.

speaker
Bernie Blagan
VP and CFO

Thank you. Thank you.

speaker
Genevieve
Moderator

Our next question comes from Tory Svanberg of Stifel. Tory, your line is now open.

speaker
Tory Svanberg
Analyst at Stifel

Yes, thank you. Michael and Bernie, congrats again on a very strong quarter. First question, I was hoping you could talk a little bit about your share gains, especially during times when capacity is really tight. So, you know, your solutions tend to be more integrated, especially versus discreet. And a lot of those discreets are in shortage. So, I'm just wondering if you are seeing an acceleration in your share gains during this very tight semiconductor environment.

speaker
Michael Singh
CEO and Founder of MPS

Well, it's a, if, if examples, and I can, I can give you a couple of examples, a couple of scenarios. And I can, if we're in a, it's a dual sources, okay. And our competitors are using our customers using two dual source or, or, or triple source. And ours tend to be a lot more fewer component than our competitor. And that is one interpretation why the demand is, and we're gaining so much demand. And another scenario is, for the futures. And we gained a lot of market shares because just recently, because for those new product, their new project, the shippings, they were putting a production for next six to 12 months. And we have a lot of design week lately.

speaker
Tory Svanberg
Analyst at Stifel

That's great. And as my follow-up, and you talked about the Contribution from the new products. I know you're not going to give us specific information on pricing, but is it fair to say that the ASPs now of those new products are considerably higher than perhaps the last year or two?

speaker
Michael Singh
CEO and Founder of MPS

Yeah, for the gross margins, we stay on, of course. And we're not looking for a price hike. And that probably is not sustainable. So I think we practice our models and going the same train as before.

speaker
Bernie Blagan
VP and CFO

Yeah, and just to add to that, uh, yes, certainly the new products that we're introducing and particularly those that are more heavily integrated, uh, uh, the mix of business does favor, uh, a higher ASP for those new products.

speaker
Tory Svanberg
Analyst at Stifel

Yeah, that's, that's, that's what I thought. Okay. Thank you. Congrats again. Thank you. Thank you.

speaker
Genevieve
Moderator

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

speaker
William Stein
Analyst at Truist

Great. Thanks for taking my questions. Um, Bernie, you, uh, I think it was you in the opening remarks, you said something about paved the way for accelerated growth. We all know monolithic system, you know, pretty amazing job with regard to growth relative to the industry, but should we interpret that as meaning perhaps we stay above 20% for a more protracted period of time?

speaker
Michael Singh
CEO and Founder of MPS

I think that's what we see announced. And, and what we see announced and that can be in the, in the, a year or two years ago. So, okay, we only grow like an 8%. Again, in the last year, 30-somethings, and this year so far, sort of we're in a very high percentage. And so we're looking at this kind of rate, it will continue.

speaker
Bernie Blagan
VP and CFO

Yeah, I think that's the message that we've tried to say in the formal comments and Michael added to that if you look at the reason for our growth, both last year and this year, it has much more to do with market share gains and new products and having developed our supply chain than it does necessarily rely upon just the broader market. And so certainly in 2019, we had high expectations and we were we're not immune to downturns in the market. But I think that if we have a more normalized demand that we can perpetuate this accelerated rate of revenue growth, perhaps in excess of the 20% mark.

speaker
William Stein
Analyst at Truist

And then along these lines, I think a couple of other questions might've even alluded to it with regard to higher ASP. I think of a big driver of that is your, transition to selling more of these modules and those types of more complex integrated solutions. Is that the case? And I'm hoping you might quantify that for us. I think in the past, you've talked about growth rates, at least offline of the module business. Maybe you can talk about whether this is reaching a size where it makes sense to disclose revenue from that piece.

speaker
Michael Singh
CEO and Founder of MPS

Yes, the module business is doing really well. In a modules slash e-commerce business, it's doing really well. And I think we're beginning to find a way how to grow that business. By no means this is a full-blown business yet. We haven't really break it out. But that business now, I see it in its much higher ASP. And that will start to grow like two years out. It will be a significant difference and a significant contribution to the revenue growth.

speaker
Bernie Blagan
VP and CFO

One other aspect to add, Will, is that if you look at certain of our end markets and I'll pick automotive as an example, much more of what they're demanding is not for a specific IC. They want to have a system solution. So if you look, for example, at autonomous driving or ADOS, there has to be built in fail safe redundancy You have to have system communications throughout, in the example I'm using here, that coordinate the cameras, the sensors, and the processor. And so you're creating entire chipsets for a dynamic solution. And just by the natural consequence of how you're designing those solutions, they have significantly higher ASPs.

speaker
Michael Singh
CEO and Founder of MPS

Yeah. and to elaborate on that, and that these are not restricted to only a semiconductor. That we designed, and we offer entire solutions, and we designed it. NPS don't produce anything, but NPS, okay, including semiconductor, we designed a semiconductor. The same time we design other components, And now, as Bernie said earlier, even in the automotive business, we're selling solutions. Rather than in the past, we're selling a single piece of silicon. And two or three years later, I don't know how you, how can you specify is an NPS a semiconductor company, but we're a solution providers. And we sell solutions much higher, higher, ASP.

speaker
William Stein
Analyst at Truist

That's great. Thanks, guys.

speaker
Genevieve
Moderator

Thank you. Our next question comes from David Williams of Loop Capital. David, your line is now open.

speaker
David Williams
Analyst at Loop Capital

Thank you, and congrats on the quarters. Thanks, David. I wanted to touch on the capacity expansion, and you had mentioned this earlier, but how is that progressing, and I guess is it moving at the same pace as you would have expected, just kind of given the some of the tightness that we're seeing within the industry? Is there, maybe is that moving at the pace you expected and maybe the pricing of that, anything surprising there?

speaker
Michael Singh
CEO and Founder of MPS

Yeah, capacity expansions that we mentioned about six quarters ago. So that gave me, and we steadily increased. In the last years, we did some extra works, okay, to increase the capacity, so that gave And from now on, probably pretty continuous as kind of a increase. Okay. And so Bernie, you can comment on that.

speaker
Bernie Blagan
VP and CFO

Okay. Yeah, I think that we've been clear that in 2020, we brought up the 12 inch fab and now we're continuing to qualify parts on that. In 2021, we're midstream and bringing up an eight inch capacity. We're continuing to qualify parts. One of the underreported stories here is that we have existing relationships with our fab partners that date back as long as 15 to 20 years. And they're excellent relationships. And we have been able to manage both in terms of when there's under capacity and over capacity, where we have very even-handed relationships. So even within our existing relationships, foundation or base that they've been encouraged and been very positive contributors to helping us add capacity as well. So I think the important point here, as we said in our earlier comments, is that continuous investment has always been a part of MPS. It's a differentiator and that we see it as being able to expand over the next several years in order to keep up with the increased demand that we're anticipating.

speaker
David Williams
Analyst at Loop Capital

Great. And then maybe just on the leverage, you think that's remaining in the model here. Obviously, there's quite a bit that's embedded, but how, when we're thinking about gross margin at the operating end and maybe even the operating margin, where do you think those could go to as you really start to hit on all cylinders and get the revenue acceleration that you've mentioned?

speaker
Michael Singh
CEO and Founder of MPS

Well, as a revenue acceleration, we need to continue to invest. And obviously, we can't grow out of thin air, certainly many times. And as long as the growth rate there, we see the growth rate in the next 12 years, in the next 12 months. And once we see that, we will invest.

speaker
David Williams
Analyst at Loop Capital

Thank you.

speaker
Genevieve
Moderator

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

speaker
Rick Schaefer
Analyst at Oppenheimer

Thanks. Hey guys, I'll add my congratulations as well. I had maybe a couple of questions by in-market. I guess the first one's automotive. I think you guys outgrew SAR by 35, 40% last year, you know, and, I know tight component supplies, you know, kind of curbed first quarter auto, you know, production didn't seem to hurt you guys too much. I know your auto business, I think, was up almost 100%. So I guess my question is, I mean, do you see that as an ongoing risk or something, you know, that could impact your auto growth? You know, I'm curious, you almost doubled it this past quarter. I mean, could it have been better if it weren't for components, you know, supply constraints out there, whether they're direct or indirect or, I guess any signs are things getting better yet in that auto food chain?

speaker
Michael Singh
CEO and Founder of MPS

Yeah, whether our growth is restricted by the shortage of a component from our customer size, we don't really know. On the other hand, with total market shares, addressable market, where MPS is so small, so teeny tiny, And so we will notice it. And all these greenfield product growths, and these are new demand. And right off the bat, and these product is just taking off.

speaker
Rick Schaefer
Analyst at Oppenheimer

Thanks. Oh, sorry, Bernie.

speaker
Bernie Blagan
VP and CFO

I'm sorry, just to add one more quick comment. We have seen nothing at this point, to indicate that there's necessarily been a slowdown in ordering an automotive. So, again, as Michael said, we can't make a guess as far as, you know, whether there is a limit on demand, but we see continued strong numbers in our backlog.

speaker
Rick Schaefer
Analyst at Oppenheimer

Great. Thanks. And maybe just a follow-up then on Hyperscale. I think you highlighted, Bernie, I think you mentioned Hyperscale's been kind of picking up or data center starting to show signs of life. So, You know, I'm curious, just with the launch of Ice Lake and things are, you know, we are picking that up here in that elsewhere as well, that hyperscale is getting better. You know, how do you see, I guess, QS mod data center? How do you see that ramping this year? I mean, is it relatively linear from here? Are we going to see a second half inflection of some kind? Does that kind of build some inertia? And I'm also curious, you know, I think last quarter you talked about 48-volt a little bit. I don't know, is it still much too small to kind of break out or talk about, or can you give a sense of what kind of contribution 48-volt QS mods is now? Thanks.

speaker
Bernie Blagan
VP and CFO

Sure. So let me start with the 48-volt question. You know, I believe that there is significant, growth opportunity for us in 48-volt. I think we're very well positioned as far as both GPUs and down the road in the eventual... AI. Yeah, AI applications. And there are even automotive applications that we're positioned in.

speaker
Michael Singh
CEO and Founder of MPS

These are... If it's not in the six months, probably nine months, the revenue will be significantly up. Yeah.

speaker
Bernie Blagan
VP and CFO

So then turning to your other point, the point of inflection for QSMOD, and remember, just for everybody else's benefit, that's our dynamic power management for the CPU processor, that really we see good growth in what we refer to as VR 13.5. But it's when it goes to 7 nanometer VR14, which is expected for next year, that that's where we might get much more of an uplift, market share gains.

speaker
Rick Schaefer
Analyst at Oppenheimer

Got it. Thank you, guys.

speaker
Genevieve
Moderator

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

speaker
Quinn Bolton
Analyst at Needham

Thanks all for my congratulations, Michael and Bernie. I guess my first question is, I think, you know, you've sort of said 2020 and 2021 would be investment years, which would somewhat constrain your operating margin here in the near term. It looks like your revenue is coming stronger than expected. And so even with that investment, your margins expanding. And if I'm doing my math right, it looks like margin will be over 31 percent in June. How should we think about your level of investment as revenue continues to come in better than expected? Will you continue to invest, or do you think you'll drive further operating leverage going forward?

speaker
Michael Singh
CEO and Founder of MPS

I think from now we see the growth opportunity is even higher than the three years ago. And so we will continue to invest as long as we see that, as long as we can keep up that kind of growth rate. And if not, we're definitely slowing down until we regroup. So far, we see too much opportunities.

speaker
Bernie Blagan
VP and CFO

There's no such thing.

speaker
Michael Singh
CEO and Founder of MPS

I guess that's a good problem. Yes.

speaker
Bernie Blagan
VP and CFO

Quinn, I do think that there are further opportunities for operating margin expansion, but I think that we've tried to be clear on this during the last 18 months that we see that there's more value to our shareholders in being able to accelerate the rate of revenue growth. And that's really where we've been putting most of our emphasis on.

speaker
Quinn Bolton
Analyst at Needham

Got it. And the second question is, I think you touched on some of this with your disclosure that new products were 37% of sales, but obviously is the investment community worries about how much double ordering may be going on given the overall industry tightness. I guess I'm wondering, do you guys have a figure you can give us for the percentage of your products that are either sole sourced and or new products? Because I think where, you know, the threat of double ordering may be would be on, you know, older products that are dual sourced. And so, I guess I'm trying to figure out, you know, what percent of your revenue today might be from older products that could have alternative sources?

speaker
Michael Singh
CEO and Founder of MPS

Yeah, let me put it that way, okay? We have 37% of our products, okay? We have 4,000, 5,000 products. Just think about it, okay? And these are 37% of our product. And in January, all these revenues – a portion of our revenue is still relatively small and still in the ramping stage. And those products, they are mostly single source. And as you said, these are legacy products. Once the production volume ramps somewhere into the stabilizer, and then they will have a second source. Of course, clearly we experienced some urgency for even double ordering. And as we said, we try to keep a very, very minimal. And just preventing them lying down at the same time and we prevent them to carry too much of inventory. I'll only fail if I answer your questions. Maybe Bernie can.

speaker
Quinn Bolton
Analyst at Needham

Yeah, no, that's helpful. I guess last quick one for you, Bernie. Do you expect to increase your absolute inventory dollars on hand in the June quarter?

speaker
Bernie Blagan
VP and CFO

Yeah, currently that's what we're modeling, yes. Now, again, Michael was careful to add that, you know, This is the supply chain we have pretty good visibility on. The demand, you know, we have to continually try to test and make sure we understand that. So on the supply chain, we are looking at continuing to increase the dollar value of inventory sequentially in quarters. And demand, we just have to continue to reassess. But as Michael also said, our time horizon has more to do on the demand front over the next 15 to 18 months, as opposed to anything that we're concerned about in the next quarter or two.

speaker
Quinn Bolton
Analyst at Needham

Got it. Thank you.

speaker
Genevieve
Moderator

Our next question is from Kevin Gerrigan of Rosenblatt. Kevin, your line is now open.

speaker
Kevin Gerrigan
Analyst at Rosenblatt

Hi, guys. Let me echo my congratulations on the quarter. Just a quick one for me. You alluded a little to it before, but I was just kind of wondering how your MPS Now service and e-commerce business did this quarter and how that compares to last quarter, which I believe also had some pretty strong growth. And I'm just kind of looking a little further out as things start to open back up. Do you think that business will take a pause?

speaker
Michael Singh
CEO and Founder of MPS

I don't think it's a business taking a pause. And we just started. That would be very upsetting if it's a business taking a pause. And if we're taking a pause, I mean, we probably, well, at this time, we're still learning. It may take a pause. And that's something we haven't really figured out. But so far in the last three, last four, four or five quarters. And the measurements that we put in place, they keep going up. And the orders and the interactings and the demand creation, the value for the index for demand creation, creations keep increasing. And I think they will turn into revenues, and they'll turn into much bigger revenues.

speaker
Bernie Blagan
VP and CFO

Kevin, if I could add to that a little bit, is the e-commerce and the MPS Now are just two legs or two aspects of the much larger story of how we transition from an IC company to a solutions provider. that also includes providing fully complete reference designs and a broad array of solutions in all of our different end markets. So this is really proving the longer term model. And while we are still learning and the numbers are still relatively small, we're in the early innings of this, everything's very encouraging that we're headed in the right direction and onto something that is very sustainable.

speaker
Kevin Gerrigan
Analyst at Rosenblatt

Got it. That's very helpful. Thanks, guys.

speaker
Bernie Blagan
VP and CFO

Thank you.

speaker
Genevieve
Moderator

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

speaker
Bernie Blagan
VP and CFO

Thanks, Jen. I'd like to thank you all for joining us for the Q1 2021 earnings webinar. I look forward to talking to you again during our second quarter conference call, which will likely be in July. Thank you. Have a nice day.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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