Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2021

KIRKLAND, Wash., July 27, 2021 (GLOBE NEWSWIRE) -- Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a global company that provides high-performance, semiconductor-based power electronics solutions, today announced financial results for the quarter ended June 30, 2021.

●	Revenue was $293.3 million for the quarter ended June 30, 2021, a 15.3% increase from $254.5 million for the quarter ended March 31, 2021 and a 57.5% increase from $186.2 million for the quarter ended June 30, 2020.
●	GAAP gross margin was 56.0% for the quarter ended June 30, 2021, compared with 55.1% for the quarter ended June 30, 2020.
●	Non-GAAP (1) gross margin was 56.3% for the quarter ended June 30, 2021, excluding the impact of $0.9 million for stock-based compensation expense and $0.1 million for deferred compensation plan expense, compared with 55.7% for the quarter ended June 30, 2020, excluding the impact of $0.6 million for stock-based compensation expense and $0.5 million for deferred compensation plan expense.
●	GAAP operating expenses were $103.6 million for the quarter ended June 30, 2021, compared with $74.6 million for the quarter ended June 30, 2020.
●	Non-GAAP (1) operating expenses were $70.3 million for the quarter ended June 30, 2021, excluding $31.2 million for stock-based compensation expense and $2.0 million for deferred compensation plan expense, compared with $50.7 million for the quarter ended June 30, 2020, excluding $20.4 million for stock-based compensation expense and $3.6 million for deferred compensation plan expense.
●	GAAP operating income was $60.6 million for the quarter ended June 30, 2021, compared with $28.0 million for the quarter ended June 30, 2020.
●	Non-GAAP (1) operating income was $94.9 million for the quarter ended June 30, 2021, excluding $32.1 million for stock-based compensation expense and $2.2 million for deferred compensation plan expense, compared with $53.0 million for the quarter ended June 30, 2020, excluding $21.0 million for stock-based compensation expense and $4.0 million for deferred compensation plan expense.
●	GAAP other income, net, was $3.0 million for the quarter ended June 30, 2021, compared with $5.2 million for the quarter ended June 30, 2020.
●	Non-GAAP (1) other income, net, was $1.2 million for the quarter ended June 30, 2021, excluding $1.9 million for deferred compensation plan income, compared with $1.6 million for the quarter ended June 30, 2020, excluding $3.6 million for deferred compensation plan income.
●	GAAP income before income taxes was $63.7 million for the quarter ended June 30, 2021, compared with $33.2 million for the quarter ended June 30, 2020.
●	Non-GAAP (1) income before income taxes was $96.1 million for the quarter ended June 30, 2021, excluding $32.1 million for stock-based compensation expense and $0.3 million for deferred compensation plan expense, compared with $54.7 million for the quarter ended June 30, 2020, excluding $21.0 million for stock-based compensation expense, and $0.5 million for deferred compensation plan expense.
●	GAAP net income was $55.2 million and $1.16 per diluted share for the quarter ended June 30, 2021. Comparatively, GAAP net income was $30.2 million and $0.64 per diluted share for the quarter ended June 30, 2020.
●	Non-GAAP (1) net income was $86.5 million and $1.81 per diluted share for the quarter ended June 30, 2021, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $50.6 million and $1.08 per diluted share for the quarter ended June 30, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects.

The financial results for the six months ended June 30, 2021 are as follows:

●	Revenue was $547.8 million for the six months ended June 30, 2021, a 55.6% increase from $352.0 million for the six months ended June 30, 2020.
●	GAAP gross margin was 55.7% for the six months ended June 30, 2021, compared with 55.1% for the six months ended June 30, 2020.
●	Non-GAAP (1) gross margin was 56.1% for the six months ended June 30, 2021, excluding the impact of $1.7 million for stock-based compensation expense and $0.3 million for deferred compensation plan expense, compared with 55.6% for the six months ended June 30, 2020, excluding the impact of $1.2 million for stock-based compensation expense and $0.4 million for the deferred compensation plan expense.
●	GAAP operating expenses were $198.6 million for the six months ended June 30, 2021, compared with $135.1 million for the six months ended June 30, 2020.
●	Non-GAAP (1) operating expenses were $136.6 million for the six months ended June 30, 2021, excluding $59.0 million for stock-based compensation expense and $3.0 million for deferred compensation plan expense, compared with $96.7 million for the six months ended June 30, 2020, excluding $38.4 million for stock-based compensation expense.
●	GAAP operating income was $106.7 million for the six months ended June 30, 2021, compared with $58.9 million for the six months ended June 30, 2020.
●	Non-GAAP (1) operating income was $170.7 million for the six months ended June 30, 2021, excluding $60.7 million for stock-based compensation expense and $3.3 million for deferred compensation plan expense, compared with $98.9 million for the six months ended June 30, 2020, excluding $39.6 million for stock-based compensation expense and $0.4 million for deferred compensation plan expense.
●	GAAP other income, net, was $5.6 million for the six months ended June 30, 2021, compared with $3.5 million for the six months ended June 30, 2020.
●	Non-GAAP (1) other income, net was $2.6 million for the six months ended June 30, 2021, excluding $3.0 million for deferred compensation plan income, compared with $3.7 million for the six months ended June 30, 2020, excluding $0.2 million for deferred compensation plan expense.
●	GAAP income before income taxes was $112.3 million for the six months ended June 30, 2021, compared with $62.4 million for the six months ended June 30, 2020.
●	Non-GAAP (1) income before income taxes was $173.3 million for the six months ended June 30, 2021, excluding $60.7 million for stock-based compensation expense and $0.2 million for deferred compensation plan expense, compared with $102.6 million for the six months ended June 30, 2020, excluding $39.6 million for stock-based compensation expense, and $0.6 million for deferred compensation plan expense.
●	GAAP net income was $100.6 million and $2.11 per diluted share for the six months ended June 30, 2021. Comparatively, GAAP net income was $65.9 million and $1.41 per diluted share for the six months ended June 30, 2020.
●	Non-GAAP (1) net income was $155.9 million and $3.27 per diluted share for the six months ended June 30, 2021, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $94.9 million and $2.03 per diluted share for the six months ended June 30, 2020, excluding stock-based compensation expense, net deferred compensation plan expense and related tax effects.

The following is a summary of revenue by end market for the periods indicated (in thousands):

		Three Months Ended June 30,								Six Months Ended June 30,
End Market		2021				2020				2021				2020
Computing and storage		$	87,723			$	64,087			$	155,218			$	116,044
Automotive			48,699				17,779				93,566				41,091
Industrial			43,323				26,592				83,111				51,829
Communications			37,459				30,095				73,528				57,965
Consumer			76,113				47,656				142,349				85,058
Total		$	293,317			$	186,209			$	547,772			$	351,987

The following is a summary of revenue by product family for the periods indicated (in thousands):

		Three Months Ended June 30,								Six Months Ended June 30,
Product Family		2021				2020				2021				2020
DC to DC		$	278,808			$	176,113			$	520,237			$	332,988
Lighting Control			14,509				10,096				27,535				18,999
Total		$	293,317			$	186,209			$	547,772			$	351,987

“With our planned capacity expansion in place and as we release more parts into production, we are well positioned to accelerate our future revenue growth,” said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS’s financial targets for the third quarter ending September 30, 2021:

●	Revenue in the range of $309 million to $321 million.
●	Gross margin, on both a GAAP and non-GAAP (1) basis, is expected to include a one-time benefit from a $4 million litigation settlement. Including this one-time benefit, GAAP gross margin will be in the range of 57.3% to 57.9% and non-GAAP (1) gross margin will be in the range of 57.6% to 58.2%. Excluding this one-time item, non-GAAP (1) gross margin will be in the range of 56.3% to 56.9%.
●	GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $104.1 million and $108.1 million. Non-GAAP (1) R&D and SG&A expenses between $73.9 million and $75.9 million, which excludes estimated stock-based compensation expenses in the range of $30.2 million to $32.2 million.
●	Total stock-based compensation expense of $31.2 million to $33.2 million.
●	Litigation expenses ranging between $2.3 million and $2.7 million.
●	Interest income of $1.0 million to $1.4 million.
●	Fully diluted shares outstanding between 47.4 million and 48.4 million.

(1) Non-GAAP net income, non-GAAP earnings per share, non-GAAP gross margin, non-GAAP R&D and SG&A expenses, non-GAAP operating expenses, non-GAAP other income, net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, other income, net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles in the United States (GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP operating expenses exclude the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP other income, net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense and a one-time benefit from a litigation settlement. Projected non-GAAP R&D and SG&A expenses exclude the effect of stock-based compensation expense. These non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A schedule reconciling non-GAAP financial measures is included at the end of this press release. MPS utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS's core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financial measures used by MPS.  

Earnings Webinar
MPS plans to host a Zoom webinar covering its financial results at 2:00 p.m. PT / 5:00 p.m. ET, on July 27, 2021. You can access the webinar at: https://mpsic.zoom.us/j/93453171033. The webinar will be archived and available for replay for one year under the Investor Relations page on the MPS website.

Safe Harbor Statement
This press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, litigation expenses, interest income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers' acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, and (vi) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), or (v). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPS’s products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; our ability to increase market share in our targeted markets; our ability to meet customer demand for our products due to constraints on our third-party suppliers’ ability to manufacture sufficient quantities of our products or otherwise; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS’s schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to manage our inventory levels; our ability to effectively manage our growth and attract and retain qualified personnel; the effect of export controls, trade and economic sanctions regulations and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets, particularly in China; our ability to obtain governmental licenses and approvals for international trading activities or technology transfers, including export licenses; adverse changes in laws and government regulations such as tariffs on imports of foreign goods, export regulations and export classifications, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adoption of new or amended accounting standards; the effect of epidemics and pandemics, such as the COVID-19 outbreak first identified in December 2019, on the global economy and on our business; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPS’s financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature, and our ability to adjust our operations to address such changes or developments; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies (including as a result of the COVID-19 pandemic); our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPS’s Securities and Exchange Commission (SEC) filings, including, but not limited to, our Annual Report on Form 10-K filed with the SEC on March 1, 2021 and our quarterly report on Form 10-Q filed with the SEC on May 10, 2021. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS’s projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

About Monolithic Power Systems
Monolithic Power Systems, Inc. (MPS) is a global company that provides high-performance, semiconductor-based power electronics solutions. MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life. Founded in 1997 by Michael Hsing, MPS has three core strengths: deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary semiconductor process and system integration technologies. These combined advantages enable MPS to provide customers with reliable, compact and monolithic solutions that offer highly energy-efficient and cost-effective products, as well as providing a consistent return on investment to our stockholders. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

Contact:
Bernie Blegen
Chief Financial Officer
Monolithic Power Systems, Inc.
408-826-0777
investors@monolithicpower.com

Monolithic Power Systems, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value) 

		June 30,				December 31,
		2021				2020
ASSETS
Current assets:
Cash and cash equivalents		$	220,210			$	334,944
Short-term investments			450,078				260,169
Accounts receivable, net			77,553				66,843
Inventories			177,322				157,062
Other current assets			24,917				22,980
Total current assets			950,080				841,998
Property and equipment, net			332,093				281,528
Goodwill			6,571				6,571
Deferred tax assets, net			17,699				18,556
Other long-term assets			66,548				59,838
Total assets		$	1,372,991			$	1,208,491
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	58,882			$	38,169
Accrued compensation and related benefits			55,279				45,840
Other accrued liabilities			68,570				62,960
Total current liabilities			182,731				146,969
Income tax liabilities			38,498				37,062
Other long-term liabilities			64,407				57,873
Total liabilities			285,636				241,904
Commitments and contingencies
Stockholders’ equity:
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 45,917 and 45,267, respectively			733,672				657,701
Retained earnings			341,382				298,746
Accumulated other comprehensive income			12,301				10,140
Total stockholders’ equity			1,087,355				966,587
Total liabilities and stockholders’ equity		$	1,372,991			$	1,208,491

Monolithic Power Systems, Inc.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Revenue		$	293,317			$	186,209			$	547,772			$	351,987
Cost of revenue			129,102				83,616				242,498				157,947
Gross profit			164,215				102,593				305,274				194,040
Operating expenses:
Research and development			44,753				31,673				86,645				57,629
Selling, general and administrative			57,238				40,883				108,691				73,047
Litigation expense			1,596				2,082				3,224				4,423
Total operating expenses			103,587				74,638				198,560				135,099
Income from operations			60,628				27,955				106,714				58,941
Other income, net			3,031				5,200				5,618				3,486
Income before income taxes			63,659				33,155				112,332				62,427
Income tax expense (benefit)			8,490				2,988				11,750				(3,495	)
Net income		$	55,169			$	30,167			$	100,582			$	65,922
Net income per share:
Basic		$	1.20			$	0.67			$	2.20			$	1.48
Diluted		$	1.16			$	0.64			$	2.11			$	1.41
Weighted-average shares outstanding:
Basic			45,796				44,785				45,647				44,620
Diluted			47,754				46,831				47,732				46,750

SUPPLEMENTAL FINANCIAL INFORMATION 
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Cost of revenue		$	885			$	642			$	1,700			$	1,199
Research and development			6,752				4,962				12,918				9,332
Selling, general and administrative			24,489				15,440				46,092				29,075
Total stock-based compensation expense		$	32,126			$	21,044			$	60,710			$	39,606

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME
(Unaudited, in thousands, except per share amounts)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Net income		$	55,169			$	30,167			$	100,582			$	65,922
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation expense			32,126				21,044				60,710				39,606
Deferred compensation plan expense			290				460				233				554
Tax effect			(1,117	)			(1,111	)			(5,578	)			(11,189	)
Non-GAAP net income		$	86,468			$	50,560			$	155,947			$	94,893
Non-GAAP net income per share:
Basic		$	1.89			$	1.13			$	3.42			$	2.13
Diluted		$	1.81			$	1.08			$	3.27			$	2.03
Shares used in the calculation of non-GAAP net income per share:
Basic			45,796				44,785				45,647				44,620
Diluted			47,754				46,831				47,732				46,750

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Gross profit		$	164,215			$	102,593			$	305,274			$	194,040
Gross margin			56.0	%			55.1	%			55.7	%			55.1	%
Adjustments to reconcile gross profit to non-GAAP gross profit:
Stock-based compensation expense			885				642				1,700				1,199
Deferred compensation plan expense			130				460				291				406
Non-GAAP gross profit		$	165,230			$	103,695			$	307,265			$	195,645
Non-GAAP gross margin			56.3	%			55.7	%			56.1	%			55.6	%

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Total operating expenses		$	103,587			$	74,638			$	198,560			$	135,099
Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense			(31,241	)			(20,402	)			(59,010	)			(38,407	)
Deferred compensation plan income (expense)			(2,022	)			(3,572	)			(2,981	)			30
Non-GAAP operating expenses		$	70,324			$	50,664			$	136,569			$	96,722

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Total operating income		$	60,628			$	27,955			$	106,714			$	58,941
Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense			32,126				21,044				60,710				39,606
Deferred compensation plan expense			2,152				4,032				3,272				377
Non-GAAP operating income		$	94,906			$	53,031			$	170,696			$	98,924

RECONCILIATION OF OTHER INCOME, NET, TO NON-GAAP OTHER INCOME, NET
(Unaudited, in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Total other income, net		$	3,031			$	5,200			$	5,618			$	3,486
Adjustments to reconcile other income, net to non-GAAP other income, net:
Deferred compensation plan expense (income)			(1,862	)			(3,572	)			(3,039	)			177
Non-GAAP other income, net		$	1,169			$	1,628			$	2,579			$	3,663

RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES
(Unaudited, in thousands)

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Total income before income taxes		$	63,659			$	33,155			$	112,332			$	62,427
Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:
Stock-based compensation expense			32,126				21,044				60,710				39,606
Deferred compensation plan expense			290				460				233				554
Non-GAAP income before income taxes		$	96,075			$	54,659			$	173,275			$	102,587

2021 THIRD QUARTER OUTLOOK
RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited)

		Three Months Ending
		September 30, 2021
		Low				High
Gross margin			57.3	%			57.9	%
Adjustment to reconcile gross margin to non-GAAP gross margin:
Stock-based compensation expense			0.3	%			0.3	%
Non-GAAP gross margin			57.6	%			58.2	%
Additional adjustment:
One-time benefit from a litigation settlement			(1.3	)%			(1.3	)%
Non-GAAP gross margin			56.3	%			56.9	%

RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES
(Unaudited, in thousands)

		Three Months Ending
		September 30, 2021
		Low				High
R&D and SG&A expense		$	104,100			$	108,100
Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:
Stock-based compensation expense			(30,200	)			(32,200	)
Non-GAAP R&D and SG&A expense		$	73,900			$	75,900