Monolithic Power (MPWR) Q1 Earnings Beat on Higher Revenues

Monolithic Power Systems, Inc. MPWR reported healthy first-quarter 2024 results, with the bottom and the top lines beating the respective Zacks Consensus Estimate. Despite declining trends in several verticals, the Kirkland, WA-based company witnessed modest revenue growth year over year, backed by strong momentum in the Enterprise Data vertical.

Net Income

Net income, on a GAAP basis, was $92.5 million or $1.89 per share compared with $109.8 million or $2.26 per share in the year-ago quarter. Higher operating expenses primarily led to this downturn in the net income.

Non-GAAP net income declined to $137.5 million or $2.81 per share from $146 million or $3 per share in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate by 15 cents.

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise 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 $457.9 million, up from $451.1 million in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $448 million. Growth in Enterprise Data is mostly offset by weakness in the Consumer, Communications and Industrial vertical.

Storage and Computing revenues were $106.1 million, down 11.4% year over year. Lower sales of products for storage solutions affected net sales in this vertical. Revenues fell short of the Zacks Consensus Estimate of $109 million.

Net sales from Enterprise Data improved to $149.7 million from $47.2 million in the year-ago quarter, backed by growing sales of server solutions. Revenues surpassed the Zacks Consensus Estimate of $145 million.

In the first quarter, the Automotive segment contributed $87.1 million in revenues compared with $105.3 million in the year-ago quarter. Lower digital cockpit sales impacted revenues in this segment. The top line beat the Zacks Consensus Estimate of $83 million.

Industrial revenues stood at $30.2 million compared with $47.5 million in the year-ago quarter. Soft demand for point-of-sale applications impeded the segment’s revenues. The top line missed the Zacks Consensus Estimate of $30.95 million.

The Communications vertical registered $46.7 million in revenues compared with $67.9 million in the year-ago quarter. Revenues beat the Zacks Consensus Estimate of $39.88 million.

Net sales from the Consumer segment declined to $38.1 million from $63.4 million in the year-ago quarter. Lower gaming revenues impacted the top line. Net sales marginally missed the Zacks Consensus Estimate of $39.24 million.

By product family, revenues in DC-to-DC were $416 million, down from $425.2 million in the year-ago quarter. In the first quarter, Lighting Control revenues increased to $41.9 million from $25.9 million in the prior-year quarter.

Other Details

Non-GAAP gross margin was 55.7%, down from 57.7% reported in the year-ago quarter. Non-GAAP operating expenses came in at $103.4 million compared with $96 million reported in the prior-year period. Non-GAAP operating income was $151.6 million, down from $164.1 million in the year-earlier quarter.

Cash Flow & Liquidity

During the March quarter, the company generated an operating cash flow of $248 million. As of Mar 31, 2024, cash and cash equivalents totaled $488.3 million, with $86.9 million in other long-term liabilities.

Outlook

For the second quarter of 2024, the company estimates revenues within the range of $480-$500 million. Non-GAAP gross margin is expected between 55.4% and 56%. Non-GAAP operating expenses are projected between $106.1 million to $108.1 million. Total stock-based compensation expenses are expected in the range of $43.2 million to $45.2 million.

Zacks Rank & Stocks to Consider

MPWR currently carries a Zacks Rank #4 (Sell).

Here are some better-ranked stocks that investors may consider.

NVIDIA Corporation NVDA, currently sporting a Zacks Rank #1 (Strong Buy), delivered a trailing four-quarter average earnings surprise of 20.18%. In the last reported quarter, it delivered an earnings surprise of 13.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.

Arista Networks, Inc. ANET, sporting a Zacks Rank #1 at present, 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 a long-term earnings growth expectation of 17.5% and delivered an earnings surprise of 13.3%, on average, in the trailing four quarters.

It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.

Qualcomm Incorporated QCOM, carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 7.54%. In the last reported quarter, it delivered an earnings surprise of 6.09%.

Qualcomm Incorporated designs, manufactures and markets digital wireless telecom products and services based on the Code Division Multiple Access technology. The products include CDMA-based integrated circuits and system software for wireless voice and data communications, as well as global positioning system products.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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