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Monolithic Power (MPWR) Q1 Earnings & Revenues Top Estimates

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Monolithic Power Systems, Inc. (MPWR - Free Report) reported first-quarter 2021 non-GAAP earnings of $1.46 per share, which beat the Zacks Consensus Estimate by 9.77%. Notably, the bottom line improved 53.7% on a year-over-year basis.

Revenues of $254.5 million climbed 9.2% from the year-ago quarter’s figure and surpassed the Zacks Consensus Estimate by 5.09%. On a sequential basis, the top line surged 53.5%. The reported figure was also above the higher end of management’s guidance of $236-$248 million.

Strong demand across each of the end-markets, and a diversified multi-market strategy drove year-over-year growth. The company has been benefiting from robust adoption of new product introductions, which resulted in broad-based market share gains.

Management noted that new products introduced in the last three years contributed to 37% of first-quarter 2021 revenues. Momentum in new product adoption is paving the way for accelerated growth.

Quarter in Details

Revenues by Product Family

Revenues in the DC to DC segment (94.9% of total revenues) soared 53.9% year over year to $241.4 million. Moreover, Lighting Control (5.1% of total revenues) revenues improved 46.3% to $13 million.

Revenues by End Market

Computing & Storage (26% of total revenues) revenues increased 29.9% year over year to $67.5 million. The market’s robust performance was driven by broad-based sales strength, solid uptick in storage, and high-end notebooks on growing clout of cloud computing.

Consumer (26%) revenues rallied 77.1% from the year-ago quarter to $66.2 million, reflecting gains from increase in overall demand of wearables, gaming consoles, and home-focused IoT applications. Also, improvement of the company’s new mobile device charging IC aided performance.

Industrial (16%) revenues surged 57.7% to $39.8 million courtesy of broad-based gains across all the company’s major product groups. Strong performance of power devices remains a tailwind.

Automotive (18%) revenues were $44.9 million, up 92.5% from the prior-year figure. The company continued sales growth in infotainment, safety and connectivity application products. Further, momentum in new products introduced in 2021 aided results and is expected to boost performance in the quarters ahead.

Communications (14%) revenues advanced 29.4% to $36.1 million. The end-market gained from robust uptick in networking and wireless gateway home router sales.

Margins in Detail

Non-GAAP gross margin expanded 30 basis points (bps) from the year-ago quarter’s level to 55.8%. Management had predicted the figure between 55.4% and 56%.

Non-GAAP operating expenses amounted to $66.2 million during the reported quarter, up 43.8% year over year. As a percentage of revenues, the figure expanded 180 bps on a year-over-year basis to 27.3%.

Non-GAAP operating income climbed 65.1% year over year to $ 75.8 million. Non-GAAP operating margin (as a percentage of revenues) expanded 210 bps from the year-ago quarter’s level to 29.8%.

Balance Sheet & Cash Flow

As of Mar 31, 2021, cash, cash equivalents and short-term investments were $641.6 million, compared with $598 million reported as of Dec 31, 2020.

Monolithic Power generated operating cash flow of $77.1 million compared with $79.6 million in the prior quarter. Notably, capital spending totaled $19 million in the first quarter.

Encouraging Q2 Guidance

For second-quarter 2021, the company projects revenues between $274 million and $286 million. The Zacks Consensus Estimate for revenues is currently pegged at $251.07 million, which indicates growth of 34.8% from the year-ago reported figure.

Management anticipates non-GAAP gross margin between 55.5% and 56.1%.

Conclusion

We believe that Monolithic Power has significant prospects on account of increased demand for storage and computing, and data centers and cloud due to COVID-19-induced work-from-home trend.

Also, demand recovery across automotive end market is a tailwind.

Zacks Rank & Stocks to Consider

Currently, Monolithic Power carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector worth consideration are Agilent Technologies (A - Free Report) , Microchip (MCHP - Free Report) and NVIDIA (NVDA - Free Report) . All the stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microchip is scheduled to released quarterly results on May 6. Agilent scheduled to report quarterly results on May 25, while NVIDIA is slated to announce results on May 26.

Long-term earnings growth rate of Agilent, NVIDIA and Microchip is pegged at 9% and 15.05% 15.47%, respectively.

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