Monolithic Power Systems Announces Results for the Third Quarter Ended September 30, 2024

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Insights

Monolithic Power Systems delivered an impressive Q3 2024 with significant growth metrics. Revenue increased 30.6% year-over-year to $620.1 million, while non-GAAP net income surged 32.3% to $198.8 million. The Enterprise Data segment showed remarkable growth, more than doubling to $184.5 million from $98.9 million last year.

The company maintained healthy margins with a 55.8% non-GAAP gross margin. Forward guidance suggests continued momentum, projecting Q4 revenue between $600-620 million. The transition from chip supplier to solutions provider is yielding results, with DC to DC products now representing over 99% of revenue.

Key positives include strong operating cash flow, diversified revenue streams across multiple sectors and sustained profitability. However, investors should note increased operating expenses and slight margin compression compared to 2023.

The semiconductor power management sector is experiencing robust demand, particularly in enterprise data and automotive applications. MPS's strategic positioning in these high-growth segments is evident in their results, with Enterprise Data showing a remarkable 86.4% YoY growth.

The shift in product mix toward DC to DC solutions ($616.1 million vs $447.4 million YoY) indicates successful market adaptation and higher-value offerings. While consumer and industrial segments show some softness, the company's diversification across six major markets provides stability. The 12.5% projected tax rate for 2024 suggests efficient tax management and potential for sustained profitability.

10/30/2024 - 04:01 PM

KIRKLAND, Wash., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (“MPS”) (Nasdaq: MPWR), a fabless global company that provides high-performance, semiconductor-based power electronics solutions, today announced financial results for the quarter ended September 30, 2024.

The financial results for the quarter ended September 30, 2024 were as follows:

Revenue was $620.1 million for the quarter ended September 30, 2024, a 22.2% increase from $507.4 million for the quarter ended June 30, 2024 and a 30.6% increase from $474.9 million for the quarter ended September 30, 2023.
GAAP gross margin was 55.4% for the quarter ended September 30, 2024, compared with 55.5% for the quarter ended September 30, 2023.
Non-GAAP gross margin (1) was 55.8% for the quarter ended September 30, 2024, excluding the impact of $1.7 million for stock-based compensation and related expenses, $0.5 million for deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with 55.7% for the quarter ended September 30, 2023, excluding the impact of $1.0 million for stock-based compensation expense and $0.1 million for deferred compensation plan income.
GAAP operating expenses were $179.4 million for the quarter ended September 30, 2024, compared with $128.0 million for the quarter ended September 30, 2023.
Non-GAAP operating expenses (1) were $125.2 million for the quarter ended September 30, 2024, excluding $50.7 million for stock-based compensation and related expenses and $3.5 million for deferred compensation plan expense, compared with $96.6 million for the quarter ended September 30, 2023, excluding $32.6 million for stock-based compensation expense and $1.3 million for deferred compensation plan income.
GAAP operating income was $164.0 million for the quarter ended September 30, 2024, compared with $135.6 million for the quarter ended September 30, 2023.
Non-GAAP operating income (1) was $220.8 million for the quarter ended September 30, 2024, excluding $52.4 million for stock-based compensation and related expenses, $4.0 million for deferred compensation plan expense and $0.3 million for amortization of acquisition-related intangible assets, compared with $167.8 million for the quarter ended September 30, 2023, excluding $33.6 million for stock-based compensation expense and $1.4 million for deferred compensation plan income.
GAAP other income, net was $10.3 million for the quarter ended September 30, 2024, compared with $2.3 million for the quarter ended September 30, 2023.
Non-GAAP other income, net (1) was $6.4 million for the quarter ended September 30, 2024, excluding $3.9 million for deferred compensation plan income, compared with $3.9 million for the quarter ended September 30, 2023, excluding $1.6 million for deferred compensation plan expense.
GAAP income before income taxes was $174.3 million for the quarter ended September 30, 2024, compared with $137.9 million for the quarter ended September 30, 2023.
Non-GAAP income before income taxes (1) was $227.2 million for the quarter ended September 30, 2024, excluding $52.4 million for stock-based compensation and related expenses, $0.3 million for amortization of acquisition-related intangible assets and $0.1 million for net deferred compensation plan expense, compared with $171.7 million for the quarter ended September 30, 2023, excluding $33.6 million for stock-based compensation expense and $0.3 million for net deferred compensation plan expense.
GAAP net income was $144.4 million and $2.95 per diluted share for the quarter ended September 30, 2024. Comparatively, GAAP net income was $121.2 million and $2.48 per diluted share for the quarter ended September 30, 2023.
Non-GAAP net income (1) was $198.8 million and $4.06 per diluted share for the quarter ended September 30, 2024, excluding $52.4 million for stock-based compensation and related expenses, $0.3 million for amortization of acquisition-related intangible assets, $0.1 million for net deferred compensation plan expense and $1.5 million for related tax effects, compared with $150.3 million and $3.08 per diluted share for the quarter ended September 30, 2023, excluding $33.6 million for stock-based compensation expense, $0.3 million for net deferred compensation plan expense and $4.8 million for related tax effects.

The financial results for the nine months ended September 30, 2024 were as follows:

Revenue was $1,585.4 million for the nine months ended September 30, 2024, a 16.0% increase from $1,367.1 million for the nine months ended September 30, 2023.
GAAP gross margin was 55.3% for the nine months ended September 30, 2024, compared with 56.3% for the nine months ended September 30, 2023.
Non-GAAP gross margin (1) was 55.7% for the nine months ended September 30, 2024, excluding the impact of $5.2 million for stock-based compensation and related expenses, $1.1 million for deferred compensation plan expense and $0.9 million for amortization of acquisition-related intangible assets, compared with 56.6% for the nine months ended September 30, 2023, excluding the impact of $3.3 million for stock-based compensation expense and $0.4 million for deferred compensation plan expense.
GAAP operating expenses were $500.4 million for the nine months ended September 30, 2024, compared with $397.8 million for the nine months ended September 30, 2023.
Non-GAAP operating expenses (1) were $340.3 million for the nine months ended September 30, 2024, excluding $151.7 million for stock-based compensation and related expenses, $8.4 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets, compared with $288.7 million for the nine months ended September 30, 2023, excluding $105.3 million for stock-based compensation expense, $3.8 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
GAAP operating income was $376.1 million for the nine months ended September 30, 2024, compared with $372.2 million for the nine months ended September 30, 2023.
Non-GAAP operating income (1) was $543.4 million for the nine months ended September 30, 2024, excluding $156.9 million for stock-based compensation and related expenses, $9.5 million for deferred compensation plan expense and $1.0 million for amortization of acquisition-related intangible assets, compared with $485.0 million for the nine months ended September 30, 2023, excluding $108.6 million for stock-based compensation expense, $4.2 million for deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
GAAP other income, net was $27.3 million for the nine months ended September 30, 2024, compared with $14.1 million for the nine months ended September 30, 2023.
Non-GAAP other income, net (1) was $18.2 million for the nine months ended September 30, 2024, excluding $9.2 million for deferred compensation plan income, compared with $10.7 million for the nine months ended September 30, 2023, excluding $3.4 million for deferred compensation plan income.
GAAP income before income taxes was $403.4 million for the nine months ended September 30, 2024, compared with $386.3 million for the nine months ended September 30, 2023.
Non-GAAP income before income taxes (1) was $561.5 million for the nine months ended September 30, 2024, excluding $156.9 million for stock-based compensation and related expenses, $1.0 million for amortization of acquisition-related intangible assets and $0.3 million for net deferred compensation plan expense, compared with $495.8 million for the nine months ended September 30, 2023, excluding $108.6 million for stock-based compensation expense, $0.8 million for net deferred compensation plan expense and $0.1 million for amortization of acquisition-related intangible assets.
GAAP net income was $337.3 million and $6.89 per diluted share for the nine months ended September 30, 2024. Comparatively, GAAP net income was $330.5 million and $6.78 per diluted share for the nine months ended September 30, 2023.
Non-GAAP net income (1) was $491.4 million and $10.04 per diluted share for the nine months ended September 30, 2024, excluding $156.9 million for stock-based compensation and related expenses, $1.0 million for amortization of acquisition-related intangible assets, $0.3 million for net deferred compensation plan expense and $4.1 million for related tax effects, compared with $433.8 million and $8.90 per diluted share for the nine months ended September 30, 2023, excluding $108.6 million for stock-based compensation expense, $0.8 million for net deferred compensation plan expense, $0.1 million for amortization of acquisition-related intangible assets and $6.1 million for related tax effects.

The following is a summary of revenue by end market (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
End Market	2024		2023		2024		2023
Enterprise Data	$	184,459	$	98,938	$	521,397	$	194,083
Storage and Computing		143,993		129,462		365,069		373,827
Automotive		111,344		95,171		285,629		304,907
Communications		71,884		46,786		162,095		163,985
Consumer		64,401		62,369		144,704		190,919
Industrial		44,038		42,141		106,541		139,339
Total	$	620,119	$	474,867	$	1,585,435	$	1,367,060

In the second quarter of 2024, the Company reorganized its product family and the amounts for the first quarter of 2024 have been restated to conform with the updates. No other prior-period amounts have been restated due to immateriality.

The following is a summary of revenue by product family (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Product Family	2024		2023		2024		2023
Direct Current (“DC”) to DC	$	616,105	$	447,394	$	1,563,472	$	1,290,750
Lighting Control		4,014		27,473		21,963		76,310
Total	$	620,119	$	474,867	$	1,585,435	$	1,367,060

“Our results continue to demonstrate the success of our proven, long-term growth strategy and our transformation from being only a chip supplier to a full solutions provider,” said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS’s financial targets for the fourth quarter ending December 31, 2024:

Revenue in the range of $600.0 million to $620.0 million.
GAAP gross margin between 55.2% and 55.8%. Non-GAAP gross margin (1) between 55.5% and 56.1%, which excludes the impact from stock-based compensation and related expenses as well as the impact from amortization of acquisition-related intangible assets.
GAAP operating expenses between $170.7 million and $174.7 million. Non-GAAP operating expenses (1) between $122.0 million and $124.0 million, which excludes estimated stock-based compensation and related expenses in the range of $48.7 million to $50.7 million.
Total stock-based compensation and related expenses of $50.3 million to $52.3 million including approximately $1.6 million that would be charged to cost of goods sold.
Interest and other income in the range of $6.2 million to $6.6 million before foreign exchange gains or losses.
Non-GAAP tax rate of 12.5% for 2024.
Fully diluted shares outstanding between 48.8 million and 49.2 million.

(1) Non-GAAP net income, non-GAAP net income per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before income taxes differ from net income, net income per share, gross margin, operating expenses, other income, net, operating income and income before income taxes determined in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Non-GAAP net income and non-GAAP net income per share exclude the effect of stock-based compensation and related expenses, which include stock-based compensation expense and employer payroll taxes in relation to the stock-based compensation, net deferred compensation plan expense, amortization of acquisition-related intangible assets and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense (income). Non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan income (expense). Non-GAAP operating income excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and deferred compensation plan expense (income). Non-GAAP other income, net excludes the effect of deferred compensation plan expense (income). Non-GAAP income before income taxes excludes the effect of stock-based compensation and related expenses, amortization of acquisition-related intangible assets and net deferred compensation plan expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation and related expenses, and amortization of acquisition-related intangible assets. Projected non-GAAP operating expenses exclude the effect of stock-based compensation and related expenses. 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 schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of MPS’s core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS. See the GAAP to non-GAAP reconciliations in the tables set forth below.

Earnings Commentary
Earnings commentary on the results of operations for the quarter ended September 30, 2024 is available under the Investor Relations page on the MPS website.

Earnings Webinar
MPS plans to host a question-and-answer conference call covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, October 30, 2024. The live event will be held via a Zoom webcast, which can be accessed at: https://mpsic.zoom.us/j/99356457350. The Zoom webcast can also be accessed live over the phone by dialing (669) 444-9171; the webcast ID is 99356457350. A replay of the event will be archived and available for replay for one year under the Investor Relations page on the MPS website.

Safe Harbor Statement
This press release contains, and statements that will be made during the accompanying webinar will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including under the “Business Outlook” section and the quote from our CEO herein, including, among other things, (i) projected revenue, GAAP and non-GAAP gross margin, GAAP and non-GAAP operating expenses, stock-based compensation and related expenses, amortization of acquisition-related intangible assets, other income before foreign exchange gains or losses, and fully diluted shares outstanding, (ii) our outlook for the fourth quarter of fiscal year 2024 and the near-term, medium-term and long-term prospects of MPS, including our ability to adapt to changing market conditions, performance against our business plan, our ability to grow despite the softening in our business, our industry and the global economic environment, revenue growth in certain of our market segments, potential new business segments, our continued investment in research and development (“R&D”), expected revenue growth, customers’ acceptance of our new product offerings, the prospects of our new product development, our expectations regarding market and industry segment trends and prospects, and our projected expansion of capacity and the impact it may have on our business, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements regarding the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, continued uncertainties in the global economy, including due to the Russia-Ukraine and Middle East conflicts, inflation, consumer sentiment and other factors; adverse events arising from orders or regulations of governmental entities, including such orders or regulations that impact our customers or suppliers, and adoption of new or amended accounting standards; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, and tax laws or the interpretation of same, including in foreign countries where MPS has offices or operations; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; acceptance of, or demand for, our products, in particular the new products launched recently, being different than expected; our ability to increase market share in our targeted markets; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of any continuing impact from the Russia-Ukraine and Middle East conflicts); our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to attract new customers and retain existing customers; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; our ability to expand manufacturing capacity to support future growth; adverse changes in production and testing efficiency of our products; any political, cultural, military, regulatory, economic, foreign exchange and operational changes in China, where a significant portion of our manufacturing capacity comes from; any market disruptions or interruptions in our schedule of new product development releases; our ability to manage our inventory levels; adequate supply of our products from our third-party manufacturing partners; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; the ongoing consolidation of companies in the semiconductor industry; competition generally and the increasingly competitive nature of our industry; our ability to realize the anticipated benefits of companies and products that MPS acquires, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the risks, uncertainties and costs of litigation in which MPS is involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on our financial performance if its tax and litigation provisions are inadequate; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of epidemics and pandemics on the global economy and on our business; the risks associated with the financial market, economy and geopolitical uncertainties, including the collapse of certain banks in the U.S. and elsewhere and the Russia-Ukraine and Middle East conflicts; our ability to adequately remediate our material weakness; and other important risk factors identified under the caption “Risk Factors” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on February 29, 2024. MPS assumes no obligation to update the information in this press release or in the accompanying webinar.

About Monolithic Power Systems
Monolithic Power Systems, Inc. (“MPS”) is a fabless global company that provides high-performance, semiconductor-based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life. Founded in 1997 by our CEO Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging. These combined advantages enable MPS to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

Contact:
Bernie Blegen
Executive Vice President and Chief Financial Officer
Monolithic Power Systems, Inc.
408-826-0777
MPSInvestor.Relations@monolithicpower.com

Monolithic Power Systems, Inc. Condensed Consolidated Balance Sheets (Unaudited, in thousands, except par value)

	September 30,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	700,347		$	527,843
Short-term investments		762,003			580,633
Accounts receivable, net		164,704			179,858
Inventories		424,942			383,702
Other current assets		108,454			147,463
Total current assets		2,160,450			1,819,499
Property and equipment, net		436,265			368,952
Acquisition-related intangible assets, net		10,225			-
Goodwill		26,080			6,571
Deferred tax assets, net		30,697			28,054
Other long-term assets		191,023			211,277
Total assets	$	2,854,740		$	2,434,353

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	115,865		$	62,958
Accrued compensation and related benefits		81,292			56,286
Other accrued liabilities		139,431			115,791
Total current liabilities		336,588			235,035
Income tax liabilities		64,656			60,724
Other long-term liabilities		101,806			88,655
Total liabilities		503,050			384,414
Commitments and contingencies
Stockholders’ equity:
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 48,779 and 48,028, respectively		1,274,127			1,129,937
Retained earnings		1,098,759			947,064
Accumulated other comprehensive loss		(21,196	)		(27,062	)
Total stockholders’ equity		2,351,690			2,049,939
Total liabilities and stockholders’ equity	$	2,854,740		$	2,434,353

Monolithic Power Systems, Inc. Condensed Consolidated Statements of Operations (Unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	620,119	$	474,867	$	1,585,435	$	1,367,060
Cost of revenue		276,676		211,326		708,973		597,064
Gross profit		343,443		263,541		876,462		769,996
Operating expenses:
Research and development		85,051		64,787		238,986		192,184
Selling, general and administrative		94,364		63,188		261,425		205,645
Total operating expenses		179,415		127,975		500,411		397,829
Operating income		164,028		135,566		376,051		372,167
Other income, net		10,278		2,289		27,330		14,129
Income before income taxes		174,306		137,855		403,381		386,296
Income tax expense		29,876		16,692		66,044		55,827
Net income	$	144,430	$	121,163	$	337,337	$	330,469

Net income per share:
Basic	$	2.96	$	2.54	$	6.93	$	6.96
Diluted	$	2.95	$	2.48	$	6.89	$	6.78
Weighted-average shares outstanding:
Basic		48,757		47,780		48,692		47,501
Diluted		48,964		48,792		48,945		48,734

SUPPLEMENTAL FINANCIAL INFORMATION STOCK-BASED COMPENSATION EXPENSE (Unaudited, in thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cost of revenue	$	1,576	$	1,020	$	4,585	$	3,317
Research and development		11,331		8,480		33,460		26,407
Selling, general and administrative		38,491		24,103		111,585		78,880
Total stock-based compensation expense	$	51,398	$	33,603	$	149,630	$	108,604

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME (Unaudited, in thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2024		2023			2024			2023
Net income	$	144,430	$	121,163		$	337,337		$	330,469

Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation and related expenses*		52,416		33,603			156,889			108,604
Amortization of acquisition-related intangible assets		320		33			983			99
Deferred compensation plan expense, net		141		256			294			767
Tax effect		1,479		(4,777	)		(4,149	)		(6,144	)
Non-GAAP net income	$	198,786	$	150,278		$	491,354		$	433,795

Non-GAAP net income per share:
Basic	$	4.08	$	3.15		$	10.09		$	9.13
Diluted	$	4.06	$	3.08		$	10.04		$	8.90

Shares used in the calculation of non-GAAP net income per share:
Basic		48,757		47,780			48,692			47,501
Diluted		48,964		48,792			48,945			48,734