Monolithic Power Systems Announces Results for the Second

Monolithic Power Systems Announces Results for the Second Quarter Ended June 30, 2017

Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Revenue	$	112,198		$	94,079		$	212,560		$	178,591
Cost of revenue		50,773			43,153			96,293			82,155
Gross profit		61,425			50,926			116,267			96,436
Operating expenses:
Research and development		20,292			17,876			39,186			35,197
Selling, general and administrative		25,873			21,531			47,965			39,299
Litigation expense (benefit)		290			(8	)		576			37
Total operating expenses		46,455			39,399			87,727			74,533
Income from operations		14,970			11,527			28,540			21,903
Interest and other income, net		1,237			597			2,618			1,140
Income before income taxes		16,207			12,124			31,158			23,043
Income tax provision		1,193			926			1,668			1,270
Net income	$	15,014		$	11,198		$	29,490		$	21,773

Net income per share:
Basic	$	0.36		$	0.28		$	0.72		$	0.54
Diluted	$	0.35		$	0.27		$	0.68		$	0.52
Weighted-average shares outstanding:
Basic		41,323			40,387			41,185			40,208
Diluted		43,397			41,716			43,332			41,681

Cash dividends declared per common share	$	0.20		$	0.20		$	0.40		$	0.40



SUPPLEMENTAL FINANCIAL INFORMATION
STOCK-BASED COMPENSATION EXPENSE
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Cost of revenue	$	452		$	380		$	810		$	814
Research and development		3,961			3,318			7,459			7,016
Selling, general and administrative		10,714			8,049			18,520			12,896
Total stock-based compensation expense	$	15,127		$	11,747		$	26,789		$	20,726



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,
		2017			2016			2017			2016
Net income	$	15,014		$	11,198		$	29,490		$	21,773
Net income as a percentage of revenue		13.4	%		11.9	%		13.9	%		12.2	%

Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation expense		15,127			11,747			26,789			20,726
Amortization of acquisition-related intangible assets		513			513			1,026			1,026
Deferred compensation plan expense (income)		70			(3	)		141			(147	)
Tax effect		(1,201	)		(903	)		(2,766	)		(2,079	)
Non-GAAP net income	$	29,523		$	22,552		$	54,680		$	41,299
Non-GAAP net income as a percentage of revenue		26.3	%		24.0	%		25.7	%		23.1	%

Non-GAAP net income per share:
Basic	$	0.71		$	0.56		$	1.33		$	1.03
Diluted	$	0.68		$	0.54		$	1.26		$	0.99

Shares used in the calculation of non-GAAP net income per share:
Basic		41,323			40,387			41,185			40,208
Diluted		43,397			41,716			43,332			41,681



RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Gross profit	$	61,425		$	50,926		$	116,267		$	96,436
Gross margin		54.7	%		54.1	%		54.7	%		54.0	%

Adjustments to reconcile gross profit to non-GAAP gross profit:
Stock-based compensation expense		452			380			810			814
Amortization of acquisition-related intangible assets		513			513			1,026			1,026
Non-GAAP gross profit	$	62,390		$	51,819		$	118,103		$	98,276
Non-GAAP gross margin		55.6	%		55.1	%		55.6	%		55.0	%



RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Total operating expenses	$	46,455		$	39,399		$	87,727		$	74,533

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:
Stock-based compensation expense		(14,675	)		(11,367	)		(25,979	)		(19,912	)
Deferred compensation plan expense		(603	)		(304	)		(1,407	)		(461	)
Non-GAAP operating expenses	$	31,177		$	27,728		$	60,341		$	54,160



RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Total operating income	$	14,970		$	11,527		$	28,540		$	21,903
Operating income as a percentage of revenue		13.3	%		12.3	%		13.4	%		12.3	%

Adjustments to reconcile total operating income to non-GAAP total operating income:
Stock-based compensation expense		15,127			11,747			26,789			20,726
Amortization of acquisition-related intangible assets		513			513			1,026			1,026
Deferred compensation plan expense		603			304			1,407			461
Non-GAAP operating income	$	31,213		$	24,091		$	57,762		$	44,116
Non-GAAP operating income as a percentage of revenue		27.8	%		25.6	%		27.2	%		24.7	%



RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET
(Unaudited, in thousands)
	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Total interest and other income, net	$	1,237		$	597		$	2,618		$	1,140

Adjustments to reconcile interest and other income to non-GAAP interest and other income:
Deferred compensation plan income		(533	)		(307	)		(1,266	)		(608	)
Non-GAAP interest and other income, net	$	704		$	290		$	1,352		$	532

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