10-QPeriod: Q3 FY2017

MONOLITHIC POWER SYSTEMS INC Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 6, 2017For Securities:MPWR

Summary

Monolithic Power Systems, Inc. (MPWR) reported strong financial results for the nine months ended September 30, 2017, with revenue increasing by 19.8% year-over-year to $341.5 million, driven by broad-based growth across most end markets, particularly Consumer and Computing & Storage. Net income saw a substantial increase of 46.9% to $53.1 million. The company demonstrated improved operational efficiency, with gross margin expanding to 54.8% and operating expenses as a percentage of revenue decreasing. Liquidity remains strong, with over $299 million in cash, cash equivalents, and short-term investments, supporting continued investment in R&D and a consistent dividend payout. Looking ahead, MPWR is focused on introducing new products and entering new market segments to sustain its growth trajectory. While the semiconductor industry can be cyclical, the company's targeted market areas and strong financial position provide a solid foundation. Investors should monitor the company's ability to manage its expanding operations, potential litigation, and ongoing efforts to diversify its customer base and geographic reach.

Financial Highlights

47 data points
Beta

Revenue

$128.94M

55.0% Gross Margin

Net Income

$23.64M

18.3% Net Margin

EPS (Diluted)

$0.54

Total Assets

$605.01M

Cash & Equivalents

$104.54M

Free Cash Flow

$29.10M

Financial Statements
Beta
Revenue$128.94M
Cost of Revenue$58.08M
Gross Profit$70.86M
SG&A Expenses$25.25M
Operating Expenses$47.02M
Operating Income$23.83M
Net Income$23.64M
EPS (Basic)$0.57
EPS (Diluted)$0.54
Shares Outstanding (Basic)41.46M
Shares Outstanding (Diluted)43.49M

Key Highlights

  • 1Revenue increased by 19.8% year-over-year to $341.5 million for the nine months ended September 30, 2017.
  • 2Net income rose significantly by 46.9% to $53.1 million for the same period.
  • 3Gross margin improved to 54.8% from 54.2% in the prior year's comparable period.
  • 4Operating expenses as a percentage of revenue decreased from 41.2% to 39.5% for the nine months ended September 30, 2017.
  • 5The company maintained a strong liquidity position with $299.6 million in cash, cash equivalents, and short-term investments as of September 30, 2017.
  • 6Dividends paid to stockholders and dividend equivalents totaled $25.3 million for the nine months ended September 30, 2017.
  • 7The company's revenue is increasingly diversified across end markets, with Consumer and Computing & Storage showing strong growth.

Frequently Asked Questions

Monolithic Power Systems, Inc. designs, develops, and markets high-performance power solutions. Their core strengths lie in deep system-level and applications knowledge, strong analog design expertise, and innovative proprietary process technology, enabling them to deliver integrated, energy-efficient, and cost-effective solutions for various markets including industrial, telecommunications, cloud computing, automotive, and consumer applications.

For the nine months ended September 30, 2017, MPWR reported a revenue increase of 19.8% to $341.5 million and a net income increase of 46.9% to $53.1 million compared to the same period in 2016. Gross margin improved to 54.8%, and operating expenses as a percentage of revenue decreased.

As of September 30, 2017, Monolithic Power Systems had strong liquidity with $299.6 million in cash, cash equivalents, and short-term investments. The company believes this, along with cash generated from operations, is sufficient to meet its liquidity requirements for the next 12 months.

Yes, the company derives a significant portion of its revenue from a limited number of customers, with Distributor A accounting for 17% of revenue in the nine months ended September 30, 2017. The filing also notes that revenue is heavily concentrated in Asia (89% for the nine months ended September 30, 2017), which exposes the company to various geographic and political risks.