Monolithic Power Systems Sales Up 16% in Q3

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San Jose, Calif. -- Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading company in high performance power solutions, today announced financial results for the quarter ended September 30, 2015.

The results for the quarter ended September 30, 2015 are as follows:

• Net revenue was $91.2 million, a 12.0% increase from $81.4 million in the second quarter of 2015 and a 16.4% increase from $78.3 million in the third quarter of 2014.
• GAAP gross margin was 54.2%, compared with 54.2% in the third quarter of 2014.
• Non-GAAP gross margin(1) was 55.1%, which excluded the impact of $0.3 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets, compared with 54.9% in the third quarter of 2014, which excluded the impact of $0.2 million for stock-based compensation expense and $0.3 million for the amortization of acquisition-related intangible assets.
• GAAP operating expenses were $36.1 million, compared with $32.0 million for the quarter endedSeptember 30, 2014.
• Non-GAAP(1) operating expenses were $26.5 million, which excluded $10.1 million for stock-based compensation expense and $0.5 million for deferred compensation plan income, compared with $23.4 million, which excluded $8.6 million for stock-based compensation expense, $0.1 million for acquisition-related transaction costs and $0.1 million for deferred compensation plan income, for the quarter endedSeptember 30, 2014.
• GAAP operating income was $13.3 million, compared with $10.4 million for the quarter ended September 30, 2014.
• Non-GAAP(1) operating income was $23.8 million, which excluded $10.5 million for stock-based compensation expense, $0.5 million for the amortization of acquisition-related intangible assets, and $0.5 million for deferred compensation plan income, compared with $19.6 million, which excluded $8.9 millionfor stock-based compensation expense, $0.1 million for acquisition-related transaction costs, $0.3 millionfor the amortization of acquisition-related intangible assets and $0.1 million for deferred compensation plan income, for the quarter ended September 30, 2014.
• GAAP net income was $11.2 million and GAAP earnings per share were $0.28 per diluted share. Comparatively, GAAP net income was $11.2 million and GAAP earnings per share were $0.28 per diluted share for the quarter ended September 30, 2014.
• Non-GAAP(1) net income was $22.4 million and non-GAAP earnings per share were $0.55 per diluted share, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects, compared with non-GAAP net income of $18.3 million and non-GAAP earnings per share of $0.46 per diluted share, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related transaction costs, net deferred compensation plan income and related tax effects, for the quarter endedSeptember 30, 2014.

The results for the nine months ended September 30, 2015 are as follows:

• Net revenue was $246.1 million, a 19.0% increase from $206.8 million for the nine months endedSeptember 30, 2014.
• GAAP gross margin was 54.1%, compared with 54.0% for the nine months ended September 30, 2014.
• Non-GAAP gross margin(1) was 55.0%, which excluded the impact of $0.8 million for stock-based compensation expense and $1.2 million for the amortization of acquisition-related intangible assets, compared with 54.5% for the nine months ended September 30, 2014, which excluded the impact of $0.7 million for stock-based compensation expense and $0.3 million for the amortization of acquisition-related intangible assets.
• GAAP operating expenses were $104.0 million, compared with $85.5 million for the nine months endedSeptember 30, 2014.
• Non-GAAP(1) operating expenses were $76.1 million, which excluded $28.4 million for stock-based compensation expense and $0.5 million for deferred compensation plan income, compared with $60.8 million, which excluded $24.2 million for stock-based compensation expense, $0.6 million for acquisition-related transaction costs and $0.1 million for deferred compensation plan income, for the nine months ended September 30, 2014.
• GAAP operating income was $29.3 million, compared with $26.1 million for the nine months endedSeptember 30, 2014.
• Non-GAAP(1) operating income was $59.2 million, which excluded $29.2 million for stock-based compensation expense, $0.5 million for deferred compensation plan income, and $1.2 million for the amortization of acquisition-related intangible assets, compared with $51.8 million, which excluded $24.9 million for stock-based compensation expense, $0.6 million for acquisition-related transaction costs, $0.3 million for the amortization of acquisition-related intangible assets and $0.1 million for deferred compensation plan income, for the nine months ended September 30, 2014.
• GAAP net income was $25.1 million and GAAP earnings per share were $0.62 per diluted share. Comparatively, GAAP net income was $26.6 million and GAAP earnings per share were $0.67 per diluted share for the nine months ended September 30, 2014.
• Non-GAAP(1) net income was $56.1 million and non-GAAP earnings per share were $1.38 per diluted share, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, net deferred compensation plan expense and related tax effects, compared with non-GAAP net income of $48.6 million and non-GAAP earnings per share of $1.23 per diluted share, excluding stock-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related transaction costs, net deferred compensation plan income and related tax effects, for the nine months ended September 30, 2014.

The following is a summary of revenue by end market for the periods indicated, estimated based on MPS's assessment of available end market data (in millions):

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

"As expected, we outperformed the market," said Michael Hsing, CEO and founder of MPS.

Business Outlook

The following are MPS' financial targets for the fourth quarter ending December 31, 2015:

• Revenue in the range of $84 million to $88 million.
• GAAP gross margin between 53.9% and 54.9%. Non-GAAP(1) gross margin between 54.6% and 55.6%. This excludes an estimated impact of stock-based compensation expenses of 0.3% and amortization of acquisition-related intangible assets of 0.4%.
• GAAP R&D and SG&A expenses between $34.2 million and $36.2 million. Non-GAAP(1) R&D and SG&A expenses between $25.0 million and $26.0 million. This excludes an estimate of stock-based compensation expenses in the range of $9.2 million to $10.2 million.
• Total stock-based compensation expense of $9.5 million to $10.5 million.
• Litigation expenses of $200,000 to $400,000.
• Other income of $200,000 to $300,000 before foreign exchange gains or losses.
• Fully diluted shares outstanding between ­­­41.1 million and 41.5 million before shares buyback.

(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 and non-GAAP operating income differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses and operating income determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related transaction costs, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin exclude the effect of stock-based compensation expense and amortization of acquisition-related intangible assets. Non-GAAP operating expenses exclude the effect of stock-based compensation expense, acquisition-related transaction costs and deferred compensation plan income/expense.  Non-GAAP operating income excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related transaction costs and deferred compensation plan income/expense. Projected non-GAAP gross margin excludes the effect of stock-based compensation expense and amortization of acquisition-related intangible assets. 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' 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.

Conference Call
MPS plans to conduct an investor teleconference covering its quarter ended September 30, 2015 results at2:00 p.m. PT / 5:00 p.m. ET, October 26, 2015. To access the conference call and the following replay of the conference call, go to http://ir.monolithicpower.com and click on the webcast link. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. In addition to the webcast replay, which will be archived for all investors for one year on the MPS website, a phone replay will be available for seven days after the live call at (404) 537-3406, code number 54228717. This press release and any other information related to the call will also be posted on the website.

For the complete press release, click here.