Monolithic Power Announces Mixed Results for Q3 and Nine-Month Financials

Net revenue for Monolithic Power's third quarter was $56.5 million, a 3.6% decrease from $58.6 million in the second quarter of 2012 and a 6.7% increase from $53.0 million in the third quarter of 2011. Gross margin was 53.1% compared with 53.2% in the second quarter of 2012 and 52.5% in the third quarter of 2011. GAAP operating expenses were $23.7 million, including $23.9 million for research and development (R&D) and selling, general and administrative (SG&A) expenses, which include $4.1 million for stock-based compensation, and ($0.2) million for litigation benefit. Comparatively, for the three months ended September 30, 2011, GAAP operating expenses were $22.8 million, including $22.1 million for research and development and selling, general and administrative expenses, which included $3.3 million for stock-based compensation and $0.7 million for litigation expenses.

Non-GAAP(1) operating expenses were $19.6 million, excluding $4.1 million for stock-based compensation, compared with $19.5 million, excluding $3.3 million for stock-based compensation, for the quarter ended September 30, 2011. GAAP net income was $5.9 million and GAAP earnings per share were $0.16 per diluted share. Comparatively, GAAP net income was $5.5 million and GAAP earnings per share were $0.16 per diluted share for the quarter ended September 30, 2011. Non-GAAP(1) net income was $9.9 million and non-GAAP earnings per share were $0.27 per diluted share, excluding stock-based compensation and related tax effects, compared to non-GAAP net income of $7.8 million and non-GAAP earnings per share of $0.23 per diluted share, excluding stock-based compensation and related tax effects, for the quarter ended September 30, 2011.

Results for the nine months ended September 30, 2012

Net revenue was $165.6 million compared with $149.1 million for the nine months ended September 30, 2011, an increase of 11.1%. Gross margin was 52.9% compared with 51.4% for the nine months ended September 30, 2011. GAAP operating expenses were $71.3 million, including $71.6 million for research and development and selling, general and administrative expenses, which include $11.0 million for stock-based compensation, and ($0.3) million for litigation benefit. Comparatively, GAAP operating expenses were $65.7 million, including $63.2 million for research and development and selling, general and administrative expenses, which included $9.8 million for stock-based compensation and $2.5 million for litigation expenses for the nine months ended September 30, 2011. Non-GAAP(1) operating expenses were $60.3 million, excluding $11.0 million for stock-based compensation, compared with $55.9 million, excluding $9.8 million for stock-based compensation for the nine months ended September 30, 2011. GAAP net income was $15.5 million, with GAAP earnings per share of $0.43 per diluted share, compared with GAAP net income was $10.8 million and GAAP earnings per share of $0.31 per diluted share for the nine months ended September 30, 2011. Non-GAAP(1) net income was $26.1 million, with non-GAAP earnings per share of $0.73 per diluted share, excluding stock-based compensation and related tax effects, compared to non-GAAP net income of $19.7 million, with non-GAAP earnings per share of $0.56 per diluted share, excluding stock-based compensation and related tax effects, for the nine months ended September 30, 2011.

"MPS has delivered 11% growth year to date, well above the market. The current slowdown in our revenue growth is transitory," said Michael Hsing, CEO and founder of MPS. "With the breadth of our newly released products and our strong pipeline, MPS expects to accelerate its growth in 2013."

Business Outlook: Financial targets for the fourth quarter ending December 31, 2012

Revenue in the range of $46.0 million to $50.0 million with gross margin between 52.5% and 53.5%. GAAP research and development and selling, general and administrative expenses between $23.5 million and $25.5 million. Non-GAAP(1) research and development and selling, general and administrative expenses between $19.5 million and $21.0 million. This excludes an estimate of stock-based compensation expense in the range of $4.0 million to $4.5 million. The company expects to record a $2.5 million legal judgment as a benefit to fourth quarter litigation expense.