Welcome, everyone, to the NPS fourth quarter 2025 earnings webinar. My name is Arthur Lee, and I'll be the moderator for this webinar. Joining me today are Michael Singh, CEO and founder of NPS, Bernie Blagan, EVP and CFO, Rob Dean, corporate controller, and Tony Ballou, vice president of finance. Earlier today, along with our earnings announcement, NPS released a written commentary on the results of our operations. Both documents can be found on our website. Before we begin, I would like to remind everyone that in the course of today's presentation, we may make forward-looking statements and projections within the meaning of the Private Securities Litigation Reform Act of 1995 that involved risk and uncertainties. The risk, uncertainties, and other factors that could cause actual results to differ from these forward-looking statements are identified in the Safe Harbor Statements contained in Q4 2025 earnings release, our Q4 2025 earnings commentary, and in our SEC filings, including our Form 10K and Forms 10Q, which can be found on our website. Our statements are made as of today, and we assume no obligation to update this information. Now, I'd like to turn the call over

to Tony. Thanks, Arthur. Good afternoon and welcome to our Q4 2025 earnings call. Today, we made an announcement that after 15 years at MPS and 10 as a CFO, Bernie will be retiring. Before we begin our prepared remarks, I'd like to turn the webinar over to him for his thoughts on his time at MPS and the transition ahead. Bernie?

Thanks, Tony. As I was preparing for today, I realized that this is my 40th earnings call as MPS as CFO. That's a nice round number to finish up with. It's been my pleasure and honor to work closely with Michael for so long and to have been a part of MPS's leadership team. I want to thank our investors and analysts for the trust you placed in me. It is natural for all businesses to go through cycles. Your support has been consistent regardless of the circumstances and I have greatly appreciated it. As I look ahead, MPS's prospects remain bright. With our unique culture, our dedicated employees, and a fantastic portfolio of products, MPS is well positioned to sustain the broad-based growth you've come to expect from us during the last 10 years. I have a lot of confidence in the team. I am transitioning my responsibilities too, starting with Rob Dean, who will be our interim CFO. Well, many of you may not know Rob, we have been partners in this enterprise for the last nine years. And like my predecessor and for myself, Rob continues the MPS tradition of transitioning from MPS's controllership to CFO. This ensures a lot of continuity in the role. Likewise, I will remain with the company to support a successful transition. Rob, would you like to

say a few words? Yes. Thanks, Bernie. And I'm grateful to you and Michael for this opportunity to continue the tradition and to have been part of the NPS finance team while you have been CFO. I know I speak for the entire finance team, and I thank you, Bernie, for everything you've done over the last 15 years. He's not only helped guide the business to consistent growth and execution, but he's grown a great team around him. I've worked closely with Michael and the executive team for close to a decade. We've developed a strong relationship, which I expect to continue, as we grow the company and take on the opportunities ahead. I appreciate the confidence they have placed in me in this new role. I look forward to meeting all of you in the coming days and weeks. With that, I'll pass it over to Tony.

Thanks, Rob. I will now move to our prepared remarks before going to Q&A. In 2025, MPS posted its 14th consecutive year of growth with a full-year revenue of $2.8 billion of 26.4% from 2024. For Q4 2025, we had a record quarterly revenue of $751.2 million, 1.9% above Q3 2025, and 20.8% higher than the fourth quarter of 2024. This performance reflected our consistent execution, continued innovation, and our ultimate customer focus. Let me call out a few highlights from 2025. Our non-enterprise data and markets grew by over 40% year-over-year, showcasing the strength of our diversified business model. We achieved our milestone of securing more than $4 billion of geographically balanced capacity and continued to add additional supply chain partners to support future growth. We had record module revenue and positioned ourselves for a further shift to solutions by sampling our 800-volt power solution for data center. In automotive, we launched solutions for 48-volt and zonal architectures, including the first fully integrated 48-volt eFuse and a kilowatt-level zonal controller that will support growth in 2026 and beyond. We expanded our customer base and data center for power solutions across AI, server, memory, optical modules, and switch applications with leading-edge current density, power efficiency, and packaging. I am also pleased to announce that our quarterly dividend will increase 28% to $2 per share. For the three years ending with December 2025, MPS has returned over 72% of free cash flow to stockholders through share repurchases and dividends. Our proven long-term growth strategy remains intact as MPS focuses on innovation and solving our customers' most challenging problems. We continue to invest in new technology, expand into new markets, and to diversify both our end-market applications and global supply chain. This will allow us to capture future growth opportunities, maintain supply chain stability, and quickly adapt to market changes as they occur. I will now open the webinar for questions.

Thank you, Tony. 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 Chris Castle of Hoof Research. Chris, your line is now open.

Yes, thank you. And Bernie, I'm lucky to be the first to congratulate you on your retirement and wish you all the best. It's been a pleasure all these years.

Thank you very much, Chris.

um so uh for for my first question i i guess as we look into the march quarter uh could could you give some color on uh what you're seeing you know with with with respect to the different segments uh you know what what what what do you see within the the various uh market segments sure let me uh

start to color this by talking a little bit about Q4 25. We saw a good step up in the ordering patterns in the quarter. Our book to bill ratio was well in excess of one. And that's really reflected in our backlog, which is starting to extend out into Q2 and Q3 of 26. We also finished with fairly routine, rather, our channel inventory stayed at the low end of our range. So we feel that we're servicing real demand and that we're seeing a lot of strong ordering trend. So as we look at the fourth quarter, you can see that we saw some pretty good strength, particularly as it relates to enterprise data. and also to the communications. We expect that those trends along with automotive should continue to extend into Q1 and into the remainder of the year.

Thank you. As a follow-up, and you mentioned enterprise data, and obviously, you know, that's been a focus of attention, not just for you, but the whole market. You know, you had made some comments in enterprise data for 26 on the last earnings call. and you know if i just annualize the q4 numbers you pretty much get to where that that guidance was so you know what are your thoughts on that in the year and and perhaps is there a seasonal element to enterprise data as we go through the year sure i'll start off on this one um

as i said in q4 we saw some uh fairly uh pronounced changes in ordering patterns uh which has given us a fair amount more of confidence as far as what the outlook for enterprise data could be in 26. Now, I think for those that you've worked with me for the last 10 years, you know that I like to stay pretty conservatively profiled when I make an estimate. So I'd probably say that whereas last quarter I talked about a range of between 30 and 40 percent, maybe i can increase that to a floor of 50 growth for 2025. well 50 i thought we can do a lot more

than that conservatively well i see you know this uh this is what i see here so okay we won the many design wings and uh across the board not from one company one large company and we have multiple customers, they're all very big. They call it Magnet Fixing 7 or 8 or whatever. We want all the designs. We are proven we're one of the variable AI power supply. Also, I see the other end, we have all the capacities we can deliver this year to our customers' needs. And I don't see why not. It's not only 50%. We'll be a lot more than that.

Maybe just one last thing to add. Chris, you heard us talk about the drivers for growth, which was really around growing existing customers, adding new customers, seeing new platforms come to market, and then, of course, just server tailwinds. I think we always knew those were in place, and now we're just seeing some of the backlog to go along with it. But the only other thing I'd add, right, is we focus a lot on enterprise data, but I think we've seen strong data center demand, which is really also pulled through storage growth, optical modules, switches, and other areas we've talked about. So I think overall we've seen strong data center demand through the end of the year.

Got it. Thank you. All the best, Bernie.

Our next question is from Joe Quatorchi of Wells Fargo. Joe, your line is now open.

Yeah, thanks for taking the questions. and my congrats to Bernie as well. Thanks for all the help. Maybe just to follow up on that in the enterprise data and the increase in Outlook, how much of that is related to traditional server CPU demand that it seems like is accelerating as well?

Well, as I said, we have a lot of new design wins in the game, particularly last year and a half. And we see continuously changing, adapt our modules and even from us changing from a silicon to modules and we see the trend and with our power densities and again we were winning the market.

Yeah I think to go back to part of your question which had to do with the traditional maybe CPU data center. The lines between AI, GPUs, and CPU are getting pretty blurry because they're so integral to one another these days.

They're using the same kind of a power supply now.

Exactly. But I would say that we've been trending very well in both categories. So I can talk to a trend line, but I can't really give you an absolute figure.

Okay, that's helpful. And then as a follow-up, as I think about just kind of like storage and compute and maybe the exposure to like PCs, are you seeing anything related to just kind of, you know, memory prices increasing, you know, and just kind of maybe some pressure on some demand destruction around that part of the market? Oh, you're talking about PC. The PC

is a different animal than the data centers. Okay, man. New question he's asking about memory

the constraints there whether we're seeing that affect us oh memory constraints and okay as i

said earlier we don't have a constraints on our on the on the capacity side yeah and i think where

you're going joe as well as also is there any demand destruction in pcs i think as you looked at q4 to the q1 remember we're coming off a very strong first half of 2025 so we expected that to be down a bit as well as we are participating more selectively in the emerging parts of that business i don't think we know how it's going to play out through the rest of this year at this point so i don't think it's possible to say how that market might trend we hear a lot of the same but i think

it's too early for us to tell thank you oh the memory memory constraint on the pc on the wrist yes oh oh okay i don't know okay we don't know those market okay we don't know our what our customer do yeah we deliver what our our customers ask i care less yeah okay our next question is

from josh pacalter of cohen josh your line is now open hey guys thank you for taking my question

and definitely want to echo the congrats and best wishes to bernie after an incredible run and a long sometimes strange trip um very much appreciate the support over the year and congrats and best of luck to rob um maybe just to start you know the incremental confidence in enterprise data is great to see and it seems like you guys are suggesting visit you feel better about visibility there than you have in the past is that a fair read and and if so you know is part of this it's just the market is is maturing and scaling and and also just the capacity needs are so great i'm just hoping you can maybe speak to how visibility compared to maybe a year ago or something thank you

Yeah, I think in prior quarters, I've said that we've been experiencing a turnaround, much of which has been around the enterprise data or more broadly, AI markets, but that the anomaly had been that we'd been seeing very short lead times and that they were not putting a lot of backlog in our books. And I'd say that the fundamental change that also making us more confident right now is that we are seeing longer ordering patterns because some of our customers are concerned about capacity constraints, not necessarily with us, but just in general.

Okay, that's helpful, caller. Thank you, Bernie. And then the 40% non-enterprise data growth number for 2025 is obviously huge and above your historical algorithm of, I think it was 10 to 15% above the analog industry. Is that still the right way we should be thinking about, you know, the non-compute exposed verticals into 2026 as well? Thank you and congrats again.

I will try to manage your expectation. We're not going to say 26% will have a 40% growth, okay? And these growths, okay, we are still small players in the overall markets compared to all the market size, okay? And some growth in some years, okay, we see the opportunities that we can grow better than than the other years, okay, but the long-term trade or even short-term trade and even 26

will grow. Okay, thank you. Our next question is from Quinn Bolton of Needham. Quinn, your line

is now open. Hey, thanks for taking my question and Bernie, it's been a great run, a great decade, so thank you for all your help along the way. Welcome, Rob. I wanted to ask some of your competitors in the ai power space are talking about their businesses doubling in 2026 and i know your business and their businesses don't you know overlap 100 there's there's different you know compositions my question is do you guys think um that you're gaining share as you look into 2026 broadly in the ai power segment yeah i refuse to get into a pissing

contest and again and the whole who uh who wear less on the on the stage okay um we let the number speaks um speak self as always as our seaside pills are what 20 from 21 years history we never do that

okay i i do think that we clearly have great products broad engagement across the customers We have design wins in a broad swath. So how the market then plays out remains to be seen, I think. But I think we're very confident in our product portfolio and the engagements we have right now.

Got it. And then, Michael, some of the folks…

That's a much better small stock. That's much better.

Well, as you said, we'll see where the numbers shake out at the end of the year. Michael, I wanted to ask, too, you talked about sampling your 800-volt.

you probably see much early okay oh good

we'll we'll stay tuned i wanted to ask you about the 800 volt uh solutions for uh 800 volt racks some of the participants in the market are suggesting nvidia and others are looking for gan based solutions i think you guys are are offering a silicon carbide based solution and so just wondering if you could talk about what you're seeing in the market is there a preference for gan or silicon carbide do you think there'll be a mix of compound semiconductor solutions for that 800

volt to 12 or six volt stage in those 800 volt racks yeah yeah okay again okay and this is a not a good venue to talk about technical terms and okay actually i'm happy i'm happy to be a person really knows the semiconductor device and we are developed silicon carbide okay and 10 years ago I was wrong for about the gangs and okay but in the in the last few years we develop our own gang devices okay and 800 volts since Tony's mentioned about it and we're entering a pissing contest and okay that revenue is not for this year not for even for next year so okay maybe end of them next year um however we're the first company to sample it now that's a part

of a pissing contest okay and again uh we we've done a good job and shown ourselves to be very adapted changes to the market. So whether it turns out to be, you know, GAN or silicon carbide, that is what's demanded, I'm sure that we'll be well positioned to take advantage of it.

Got it. Thank you. Our next question is from Rick Schaefer of Oppenheimer. Rick,

your line is now open. Oh, thanks. And I'll just say, Bernie, it's been a genuine pleasure. you're you're going to be missed and Michael I just just want to confirm for everybody that

you're you're never retiring right well it happened to be today is my 86th earnings call I'm looking for double it okay well um be serious okay and uh um I enjoyed this uh NPS okay immensely. We actually created this platform. Everybody can maximize their capability. And the more interesting things to me is we company evolved and we found a semiconductor, we sell semiconductor power management. Now in the semiconductor, we're getting to MCU, we're getting to data converters, we get up to even high speed, okay? These are a few gigahertz of stuff. And you will see the revenue soon. And on the overall marketing segment address, we migrate from silicon to systems, to a module to systems. And you will see a lot more. I enjoy this process a lot and I'm a part of it and I have all the product lines.

Thanks, Michael. It's reassuring. Hey, I also just had a quick clarification and then I've got a couple of follow-ups. But the clarification, Michael, you said earlier that the CPU and GPU and server are using the same power supplies now. So does that mean that server CPU is already

migrating to 48 volt uh it stood they use a uh mostly okay if they they have some advanced okay and uh um high price server or um or special servers and okay a special need they used to use 12 volts and but uh um i'm aware of some models use a 48 volts um my guess is still small i'm i'm not very clear on that on that but there's this and the majority is still 12 volts and nowadays it's clear the modules is the way to go and they feel all want to improve efficiency

thanks for clearing that up um so so my first question really is on optical transceiver because that you know that's basically a brand new product line you know a little over a year old i believe and by by our count in our model it's it's close to roughly five percent of sales exiting last year i think now um which is a pretty remarkable ramp so i i guess i'm thinking you know we're asking what are your expectations for that business this year and and what does that imply for comms segment you know what are sort of the puts and takes within the comms segment

I can comment on this because we entered the module journey since 2016 or 2017, and these happen to be the highest power density product on the market. Then optical modules, they wanted that because they have limited rooms. In terms of a business, I don't know the details, and maybe bernie as a uh tony tony can answer it okay yeah i'll just follow up i think i think

rick we have obviously seen great growth in optical modules over the past year and a half i think the way we look at the market very typical for mps is sort of interconnect so it's not just optical modules but engagements for cpo active copper other things as well because the market will then figure out what interconnect technology is actually going to succeed over the long term we obviously don't guide by you know sub end market let alone sub end market but we would expect optical module to continue to grow as you start to see the 1.6 ramp as we go through and for communications it should be an area of growth for us in 26 both on optical modules and as switches because that's where our data center switches are as well thanks for that and then

if i could sneak in one on automotive i mean obviously great gear in 25 and i'm just curious what are the what you see is the top driver top drivers excuse me of a segment growth this year i know you highlighted 48 volt zonal um and i i didn't hear you say much about adas but i assume adas i don't know if you can update us on how big adas is within that segment now or um and if there's any way to quantify sort of a shift this year that you expect in um in potential content

per vehicle. Sure. I want to take a victory lap on 2025 where automotive grew 43% year over year. But that's only the beginning. That's exactly the point here is that what we saw in 2025 and is going to continue is that while ADOS certainly was a strong initial ramp, particularly in 23, 24, and 25, I think we saw a lot more diversification into other content opportunities on the automotive platform. And so as we look ahead here, keep in mind, we're not necessarily driven by the SAR of the business, but our growth is dependent upon how fast our customers implement these new technologies particularly as it relates to zonal and 48 volt or even ados or ados and the

majority cars on the market is a is a nowhere nowhere anything close to what what tesla does okay and uh that's the car i drive okay you you you have a full um um i don't drive anymore okay And I think a majority of people still drive, okay? And that adoption rate, okay, and large automotive company do things very slowly and much slower than a Tesla does, okay? And for futures, we are up to this point, and actually the next couple of years, I see our products provides the complete power supply chipsets, and also we have all these firmware, software. We're very much engaged with all the car makers. And I don't see why not. okay and uh um that business is going to continue to grow yeah you actually guys okay you know how many cars that shipped with the ados okay which levels and okay and uh you can count mps in it

and rick we're a little hesitant to probably call any numbers for the full year just because there is a lot of macro uncertainty still great design wins great engagement with tier ones and oems but whether it's tariffs whether it's the end of ev subsidies or whether you even talk about what the impact on the auto market is from the memory shortage i don't think we know so i think we're a little hesitant to actually put a growth rate on it for the year

appreciate it thanks guys our next question is from gary mobley of loop capital gary your line

is now open hey guys thanks for taking my question and uh bernie your retirement's well deserved and look forward to working with you rob i think everybody on the call would share the same sentiment that I have that you're definitely one of my favorite CFOs. And for my retirement gift to you, I wanted to throw you a big softball question, but I think it's an important topic. You know, looking back over the past decade, when you've been CFO, you've outperformed the overall analog chip market, the overall voltage regulator market consistently every year, seemingly for different reasons each year but you know thinking about the outperformance of the market in 2025 you know maybe if you can give us a sense of what drove that was that just share gains and volts regulator die or was it something more substantial like moving into data converters was it you know tied to the higher content associated with modules and related can Can you give us some KPIs as it relates to sort of your module mix right now? Anything you can help us get a better understanding of that consistent market share growth?

Sure, Gary. And thank you for the kind words. They're appreciated. When you look at the overall performance for the company in 2025, we had what had been our largest revenue and market in enterprise data had actually declined 2%. And yet overall, the company grew 26%. And strategically, you know, how we're differentiated from our competition is that we are represented with the best technology, the best services across all of the end markets that we service. And this is really just a reflection of, you know, our execution against that strategy over all of these years. It wasn't that, pardon my saying, we pulled the rabbit out of the hat. We actually are able to adapt very quickly to have changes in the market. So that's what this was really a reflection of in our performance of 2025.

Thanks. As my follow-up, I wanted to ask about maybe some nuances in your increased visibility and comments regarding that. If I talk to you guys three months ago, I think you were thinking maybe the 2026 year was going to be a little more second-half weighted. Just given the stronger bookings that you've seen, the stronger order backlog, as you sit here today, would you say the shape of the year is a little more linear, less dependent on the second half?

I'd say that the first half for enterprise data in particular, but for the company, is more secure. I think there's still a lot of variables that need to be shaped before we really understand what the second half trajectory is going to look like. But obviously, the initial signs that we saw from the ordering pattern in Q4 and continuing into this dune year have been exceptionally positive. So now we have more of the high-level issue of trying to figure out what's real demand and what may be some double ordering on the part of our customers as they try to secure capacity. As I said, that's a high-level issue, and we've shown that we can adapt to that as well as anybody by the performance we gave in late 2020 and early 2021. Thank you.

We work with customers very, especially all these large data center customers, very closely. and uh they they will give you a they they will uh give us a very good uh lead times and uh and uh forecast and uh so we have the capacities ready and okay and we just uh meet that demand thanks

mike our next question is from tory swamper of stifo tory your line is now open yes thank you

and congratulations bernie uh you're a you're a class act and i'm going to miss you tremendously um my first question uh michael i'm going to zoom in on uh in a market where there's perhaps less contests uh which is storage and especially ssd uh power it seems to be an area that could see quite a bit of upside and growth in data centers this year so i was hoping you could talk a little about the profile of that business i i mean i think historic historically it's been more tied to you know client and edge devices but um again what's the company's position uh ssd for data

center going into 2026. yeah these are the power management and then also the signal processes okay these are all in the consortium driven by uh jed act okay i mean uh maybe tony you're a lot more familiar than I do. And we are part of it. And DDR4, we don't have much business, okay, very little. And DDR4 is, okay, we're in DDR4, okay, we're on the dining tables, okay. Before, DDR4 wasn't, Okay, and so now that this business is ramping, and I mean, the memories, and I mean, they're all shifted to DDL5, and again, and we clearly see the volumes now, this last year and this year, and we're not stopping there. We're migrated down to where we expanded our product lines to the single site. And these are all in the memory modules.

And I think there was a portion of your question as well about the non-DDR5 part of that business, sort of SDD and HDD. And we have seen an uptick in that part of the business as well. And I think you're right, it's being pulled through much more by the enterprise and then consumer these days and that's why we generally talk about storage being data center driven um inside of the storage and

compute segment yeah that's what i was trying to get to and as my follow-up um michael congratulations on getting to four billion in capacity but it looks like you're going to need quite a bit more than that so uh perhaps you could uh give us a little bit sense of what you're doing on the capacity front uh especially the next few years because you're clearly going to need much

more than four billion uh yes we are we're very aware about that okay and uh as speaking of course and i and we're continuously expanding our capacity and uh you know what you know uh nps histories and okay the worst things are shutting customers down okay and uh fortunately we haven't that happened in the NPS, okay. And now it gets a little more complicated, okay. We established the last, from the beginning of the last year, we established our supply management chain. And this is not only for silicon and not for semiconductors including silicon carbides, and I mean, and I'm getting nitrides in the materials and we do all modules and all the module components. And so we established that the supply chain management. So I think it's a, and also quality, don't, don't, okay. It's not everybody can play that game. So every supplier can play the game. these are we go through heavy auditing and so their standards okay they meet our standard ultimately is a reflex into our margins and so the short answer is yes we're expanding very fast

great thank you congrats again Bernie thank you our next question is from Kelsey Chia

of city research kelsey your line is now open hi hi bernie congratulations on your retirement really appreciate the opportunity to work with you over the past year um so i think um sort of on my first question is regards to the updated guidance for enterprise data um is there any market share gains assumption there or is it just primarily primarily due to this industry growth And also, you know, NPS has demonstrated strong execution and historically gleaned share during periods of supply constraints. So is it fair to assume that NPS could navigate any potential supply constraints and to take share in this environment?

Sure. And I think that I'd be doing a disservice to this conversation if I tried to break it down into a formula that says, what share gains or what's new business and I'd rather sort of respond a little differently that this is a large market we talk about the large you know the top six seven customers and we're fully engaged with them in a strategic manner where we're developing not just the release of the next generation but the one beyond that but this also is an end market with a long tail. And we're participating in the mid-market and the small size as well. So we're still very, very early in how this market's going to roll out and what our positioning is going to be. And I think that we're as well positioned as anybody to take advantage of the market opportunity. But this is a long and very big story. Got it.

Yeah. Well, the companies, I'm thinking about beyond AI, beyond enterprise data centers. And you heard, I'm not retiring. I'm thinking 10, 15 years ahead.

That's great. Can continue the app performance. And MPS outlined a gross margin target of 55 to 60%. Could you provide an update with regards to which end markets are currently above or below that corporate average or outline some of the specific gross margin drivers?

Yeah, we're in the range, but on the low side, I noticed that.

Let me add a little bit of color there. So, Michael said this earlier, when we look at all of the opportunities, we keep in mind, you know, what is the corporate model for gross margin, which is between 55 and 60 percent. And I've been fairly consistent over the course of the last four to six quarters when we've been trending at between 55.5 and 55.8, which, as Michael said, is the low end of our model, that in order for us to show improvement, we really need to have a little longer time horizon as far as backlog to be able to manage it. So we are starting to see a backlog developing, which I don't want to make too much out of what one quarters of experience, but we should be able to resume at some time during the year the cadence that we've historically shown of incremental sequential improvements of maybe 10 to 20 basis points quarter of a quarter. Sounds good. Thank you. Thanks, Bernie.

Our next question is from Jack Egan of Chartered Research. Jack, your line is now open.

Jack Egan Great. Thanks for taking the question. I'll echo the congratulations for Bernie and Rob. I had a bit of a technical one. During last year's Investor Day, you mentioned a packaging innovation that would allow you to basically double the current density of your modules to about three amps per millimeter squared. I'm just curious, are there any updates on that? Is that still a work in progress or you know is there kind of a timeline for that milestone we start to

sampling those products and again we expect to have a shipping in uh this this quarter and next quarter this quarter yeah those are already implemented they're really already qualified and uh our customers uh we're sort of a qualification on it got it okay that's great to

here. And then kind of from a higher level then, you know, last quarter, you talked a bit about the gross margin implications of moving from a silicon supplier to a system provider over the long term. I was a bit curious about the impact on OPEX as well. I mean, is that going to require you to kind of bring on new teams with experience in systems? Or is there enough overlap between, you know, the chip design and system design processes that you can accomplish it organically, I guess there's any any details on you know the impact that R&D dollars or SG&A

leverage would be nice well we need to go first things okay first okay and we only gain not lose okay I never believes I get big dollars and I get investments and okay and the translates to the bigger game okay that's a Bullshit. And so look at NPS. We're creating a few thousand, four to 5,000 products. And I lost tracking. We addressed the multiple second world market. Why we can pull up all these one plus ones equals threes. And again, not just the two anymore. We can pull up all these products, put in the systems. and we can provide higher values to end users, which doesn't mean we're building a refrigerator, we're building TVs. We're building some things to alleviate our customers' design effort, manufacturing effort, and give us a high ASP. I said earlier that we're sick and tired of selling silicon, But why we can't just put all the silicon together and migrate to system levels, like modules, and like system, you will see more and more. So at least I can say the net margins, net profit had to increase. And there'll be a company that's going to be a lot more efficient.

I want to touch on something that this transformation has been occurring now for well over 10 years. If you think about, we were pretty much completely an analog design house 10, 12 years ago. And then we've been able to migrate where we added both digital engineers and software engineers, and now we've had to take on new responsibilities and new skill sets related to packaging, and as Michael said, and testing, and each time we've done this, we've maintained the same level of R&D efficiency, of getting the most out of the dollars spent, so just changing to develop, you know, new skill sets around the new opportunities we've identified does not necessarily mean that it's going to get more expansive or it's going to compress our operating

margins. I'll just have one last comment. Even we made the model during Investor Day, Jack, that was fully aware of this transition. And so we talked about growing OPEX slower than revenue, giving some leverage to the model. We knew this transition was happening when we put that guidance

out there yeah okay thank you all for all the color yeah our last question is from sebastian knowledge of william blair sebastian your line is now open yeah good good afternoon and thanks

for taking the questions i'll just echo the best wishes for you burn your retirement my first question is really on the shift to vertical power solutions in the data center as we move through 2026 what are your expectations for adoption of vertical power and has that changed at all from

your view in previous quarters vertical power oh that's a long that's a everybody's going to a vertical power so i guess okay i mean and uh oh those one don't and like they sooner later they

will this is just where the direction of the market uh it's the only energy efficient solution you can put in place if you're going to operate in the these high high voltage uh current current And so that's just a natural evolution of the marketplace.

Got it. So do you think that starts to drive revenue in 2026 then? Is that fair to say? Yeah, yeah, yeah. Oh, yeah. Great, great. That's helpful. And then maybe just as a follow-up on your optical module business, I think you talked about this a little bit in a previous question, but as we think about this shift to co-packaged optics that's getting a lot more attention these days, how does that potentially change your revenue opportunity in optics? Is it more revenue per port? Are the ASP significantly higher?

Any thoughts on that? Higher current, higher density is always good for us. And we're smarter in the increased power. And there's a lot more opportunity for us. And a higher level of integration. Yeah, high level integrations. And widen the competition gap. Yeah, I think

one thing i'd add there is again i think that's again for a long term i don't think that necessarily moves the needle on 26 just to be sure but it's certainly something we're engaged in over the

longer term okay got it makes sense thank you this concludes our q a session i would now like

to turn the webinar back over to tony i'd like to thank all of you for joining us today on this conference call our first quarter 2026 conference call will likely be held in late april thank you and have a great day.