Monolithic Power (MPWR) Q3 Earnings Beat, Top Line Falls Y/Y
Monolithic Power Systems, Inc. MPWR reported relatively modest third-quarter 2023 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. However, the Kirkland, WA-based company witnessed a revenue contraction year over year, owing to a sales drop in various end markets. Despite solid design wins and an expanding customer base, fluctuating ordering patterns induced by near-term uncertainty impacted net sales during the quarter.
Net Income
Net income, on a GAAP basis, was $121.2 million or $2.48 per share compared with $124.3 million or $2.57 per share in the year-ago quarter. Top-line decline primarily led to this downturn in the net income.
Non-GAAP net income declined to $150.3 million or $3.08 per share from $170.7 million or $3.53 per share in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate by a penny.
Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise
Monolithic Power Systems, Inc. price-consensus-eps-surprise-chart | Monolithic Power Systems, Inc. Quote
Revenues
Monolithic Power generated revenues of $474.9 million, down from $495.4 million in the year-ago quarter. The top line marginally beat the Zacks Consensus Estimate of $474 million. Weakness in several business verticals, such as Industrial and Communications, reversed the positive trends in the Automotive, Storage and Computing segments.
Storage and Computing revenues rose to $129.5 million, up 14.7% year over year owing to higher sales of commercial notebooks. Revenues fell short of the Zacks Consensus Estimate of $137 million.
Net sales from Enterprise Data improved to $98.9 million from $75.3 million in the year-ago quarter. The rise in both GPU and CPU program sales boosted the top line. Revenues surpassed the Zacks Consensus Estimate of $69.3 million.
In the third quarter, the Automotive segment contributed $95.2 million in revenues compared with $87.1 million in the year-ago quarter. The top line fell short of the Zacks Consensus Estimate of $104.4 million.
Industrial revenues stood at $42.1 million compared with $58.7 million in the year-ago quarter. Weak demand for security and industrial meter applications impeded the segment revenues. The top line missed the Zacks Consensus Estimate of $49.2 million.
The Communications vertical registered $46.8 million in revenues compared with $72.3 million in the year-ago quarter. Lower infrastructure sales hindered the top line in this segment. Revenues marginally beat the Zacks Consensus Estimate of $46.5 million.
Net sales from the Consumer segment declined to $62.4 million from $89.2 million in the year-ago quarter. A decline in TV and home appliance sales affected the revenue in this vertical. Higher gaming and monitor sales partially reversed this trend. Net sales missed the Zacks Consensus Estimate of $67.7 million.
By product family, revenues in DC-to-DC were $447.4 million, down from $463 million in the year-ago quarter. In the third quarter, Lighting Control revenues decreased to $27.5 million from $32.4 million in the prior-year quarter.
Other Details
Non-GAAP gross margin was 55.7%, down from 59% reported in the year-ago quarter, owing to unfavorable product mix.
Non-GAAP operating expenses came in at $96.6 million compared with $98.4 million reported in the prior-year period. Non-GAAP operating income was $167.8 million, down from $193.7 million. The downside was induced by top-line decline year over year.
Cash Flow & Liquidity
During the September quarter, the company generated an operating cash flow of $175.9 million. As of Sep 30, 2023, cash and cash equivalents totaled $421.2 million, with $77.4 million in other long-term liabilities.
Outlook
For the fourth quarter of 2023, the company estimates revenues within the range of $442-$462 million. Non-GAAP gross margin is expected between 55.4% and 56%. Non-GAAP operating expenses are projected between $95.9 million to $97.9 million. Total stock-based compensation expenses are expected in the range of $32.2 million to $34.2 million. Management anticipates near-term uncertainty to persist in the upcoming quarters.
Zacks Rank & Stocks to Consider
MPWR currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks that investors may consider.
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