Monolithic Power Systems (MPWR -1.79%), which provides semiconductor-based power electronics solutions, on Wednesday released its earnings report for the quarter ending March 31, 2024, outperforming analysts' estimates on both earnings per share (EPS) and revenue. The company reported a non-GAAP EPS of $2.81, surpassing the forecasted $2.66. Additionally, revenue reached $458 million, exceeding expectations of $448 million. While showing a robust performance, MPS saw a compression in gross margin.
| Metric | Q1 2024 Actual | Q1 2024 Estimates | Q1 2023 Actual | Change (YOY) |
|---|---|---|---|---|
| Revenue | $457.9 million | $447.7 million | $451.1 million | 1.5% |
| EPS (non-GAAP) | $2.81 | $2.66 | $3.00 | (6.3%) |
| GAAP gross margin | 55.1% | N/A | 57.4% | (2.3pp) |
| Non-GAAP gross margin | 55.7% | N/A | 57.7% | (2pp) |
| GAAP operating expenses | $157 million | N/A | $134.5 million | 16.7% |
| Non-GAAP operating expenses | $103.4 million | N/A | $96 million | 7.7% |
GAAP = unadjusted. Non-GAAP = adjusted. pp = percentage points.
An overview of Monolithic Power Systems
MPS specializes in creating high-performance power solutions for various industrial sectors, including computing, automotive, and consumer electronics. With a focus on energy-efficient power modules and integrated circuits, MPS has positioned itself as a crucial supplier.
The recent focus on expanding its product line and entering new markets has been central to its business strategy. Innovation remains a key pillar, allowing MPS to stay ahead in the competitive semiconductor field and continually meet the evolving needs of its customers.
Quarter highlights
MPS reported a noticeable year-over-year decrease in GAAP and non-GAAP gross margins, signaling cost pressures that could impact future profitability. The company saw strong revenue growth in enterprise data.
| End Market | Q1 2024 (Revenue, in thousands) | Q1 2023 (Revenue, in thousands) |
|---|---|---|
|
Enterprise data |
$149,727 | $47,163 |
| Storage and computing | $106,121 | $119,822 |
| Automotive | $87,092 | $105,342 |
| Communications | $46,645 | $67,906 |
| Consumer | $38,074 | $63,363 |
| Industrial | $30,226 | $47,469 |
| Total | $457,885 | $451,065 |
Data source: Company.
Management's forward-looking statements painted an optimistic picture, projecting a revenue range of $480 million to $500 million for the current quarter. That would compare to $441.1 million for the quarter ended June 30, 2023; 11% growth at the midpoint of the estimate. The forecast suggests confidence in strategy and market positioning.
In the current quarter, management is targeting:
- GAAP gross margin between 55.1% and 55.7%
- Non-GAAP gross margin between 55.4% and 56.0%
- GAAP operating expenses between $147.9 million and $151.9 million
- Non-GAAP operating expenses between $106.1 million and $108.1 million
Looking ahead
While the earnings beat and positive projections stand out, investors should keep an eye on the compression in gross margins and the implications of rising operating expenses. In its strategic outlook, MPS hints at market expansions and innovations that could potentially counterbalance current cost pressures.
