01—Abstract
Summary
Summary of the 10-K filed March 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Monolithic Power Systems, Inc. (MPS) reported strong revenue growth in its 2018 fiscal year, with a 23.7% increase to $582.4 milliona.
This growth was primarily driven by significant gains in the Computing and Storage, Automotive, and Industrial end markets, which collectively saw revenue rise by 57.9%b, 48.6%, and 40.7% respectively. The Consumer segment experienced a slight decline, while the Communications segment saw modest growth. The company maintained healthy gross margins, increasing to 55.4% in 2018 from 54.8% in 2017, reflecting strong product differentiation and efficiency.
Research and development expenses increased year-over-year, as did selling, general, and administrative expenses, largely due to headcount growth and stock-based compensation. The company's financial position remains robust, with a substantial increase in cash and cash equivalents, indicating strong operational cash flow generation. MPS continues to invest in new product development and market expansion, positioning itself for sustained growth in the high-performance analog power solutions market.
02—Key points
Key Highlights
- Revenue increased by 23.7% to $582.4 million in 2018, driven by strong performance in Computing and Storage, Automotive, and Industrial sectors.
- Gross margin improved to 55.4% in 2018 from 54.8% in 2017, indicating effective cost management and product pricing power.
- Operating expenses increased due to investments in R&D and SG&A, reflecting headcount growth and stock-based compensation.
- Cash and cash equivalents significantly increased to $172.7 million as of December 31, 2018, from $82.8 million in the prior year.
- The company's product portfolio is diversified across key end markets, with Computing and Storage and Consumer being the largest segments.
- MPS maintains a fabless business model, focusing on design and development while outsourcing manufacturing.
- The company is committed to returning value to shareholders, as evidenced by its ongoing quarterly cash dividend program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Monolithic Power Systems kept $0.18.
- Revenue$582.4M100.0%
- Cost of revenue−$259.7M44.6%
- Gross profit$322.7M55.4%
- Operating costs−$209.2M35.9%
- Operating income$113.5M19.5%
- Interest, other & tax−$8.2M1.4%
- Net income$105.3M18.1%
Where FY2018 revenue went
$582.4M- Cost of revenue: $259.7M, 45% of revenue
- SG&A: $113.8M, 20% of revenue
- Net income: $105.3M, 18% of revenue
- Other operating costs: $95.4M, 16% of revenue
- Interest, other & tax: $8.2M, 1.4% of revenue
Kept 18% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed March 1, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $582.38M$470.93M | +23.7% |
| Cost of Revenue | $259.71M$212.65M | +22.1% |
| Gross Profit | $322.67M$258.28M | +24.9% |
| SG&A Expenses | $113.80M$97.26M | +17.0% |
| Operating Expenses | $209.18M$180.86M | +15.7% |
| Operating Income | $113.49M$77.42M | +46.6% |
| Net Income | $105.27M$65.20M | +61.4% |
| EPS (Basic) | $2.49$1.58 | +57.6% |
| EPS (Diluted) | $2.36$1.50 | +57.3% |
| Shares Outstanding (Basic) | 42.25M41.35M | +2.2% |
| Shares Outstanding (Diluted) | 44.60M43.58M | +2.3% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth for Monolithic Power Systems in 2018?
Revenue growth was primarily driven by increased sales in the Computing and Storage (+57.9%), Automotive (+48.6%), and Industrial (+40.7%) end markets. These increases were attributed to strong demand in specific applications like solid-state drives, cloud computing, high-performance notebooks, infotainment systems, safety and connectivity applications, and power sources, security, and meter products.
How did the company's gross margin perform in 2018?
Monolithic Power Systems saw an improvement in its gross margin, increasing to 55.4% in 2018 from 54.8% in 2017. This improvement was attributed to the sales of higher-margin products and lower manufacturing overhead costs as a percentage of revenue, partially offset by higher inventory write-downs.
What is the company's strategy for future growth?
MPS plans to achieve revenue growth by introducing new products within its existing product families and expanding into new product categories and families. Key to this strategy is leveraging its core strengths in analog design expertise and proprietary process technologies to offer highly integrated, energy-efficient, and cost-effective power solutions across its target end markets.
What is the company's financial position regarding liquidity?
The company's liquidity position strengthened significantly in 2018. Cash and cash equivalents increased to $172.7 million from $82.8 million in the prior year, and short-term investments stood at $204.6 million. This robust liquidity provides the company with financial flexibility for operations, investments, and shareholder returns.
06—Continue