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Monolithic Power (MPWR) Q3 Earnings Beat, Top Line Falls Y/Y
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Monolithic Power Systems, Inc. (MPWR - Free Report) 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 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.
Model N Inc , sporting a Zacks Rank #1 (Strong Buy) at present, delivered an earnings surprise of 21.26%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 45.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
Arista Networks, Inc. (ANET - Free Report) , presently carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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Monolithic Power (MPWR) Q3 Earnings Beat, Top Line Falls Y/Y
Monolithic Power Systems, Inc. (MPWR - Free Report) 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.
Model N Inc , sporting a Zacks Rank #1 (Strong Buy) at present, delivered an earnings surprise of 21.26%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 45.83%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
Arista Networks, Inc. (ANET - Free Report) , presently carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and is well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.