Exhibit 99.1

 

 

PRESS RELEASE

For Immediate Release

 

 

 

Monolithic Power Systems Announces Results for the Third Quarter Ended September 30, 2018

 

KIRKLAND, WASHINGTON, October 25, 2018--Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading company in high performance analog solutions, today announced financial results for the quarter ended September 30, 2018.

 

The results for the quarter ended September 30, 2018 are as follows:

 

 

Revenue was $160.0 million for the quarter ended September 30, 2018, a 14.5% increase from $139.8 million for the quarter ended June 30, 2018 and a 24.1% increase from $128.9 million for the quarter ended September 30, 2017.

 

GAAP gross margin was 55.6% for the quarter ended September 30, 2018, compared with 55.0% for the quarter ended September 30, 2017.

 

Non-GAAP (1) gross margin was 56.1% for the quarter ended September 30, 2018, excluding the impact of $0.5 million for stock-based compensation expense and $0.2 million for the amortization of acquisition-related intangible assets, compared with 55.7% for the quarter ended September 30, 2017, excluding the impact of $0.5 million for stock-based compensation expense and $0.5 million for the amortization of acquisition-related intangible assets.

 

GAAP operating expenses were $55.5 million for the quarter ended September 30, 2018, compared with $47.0 million for the quarter ended September 30, 2017.

 

Non-GAAP (1) operating expenses were $40.5 million for the quarter ended September 30, 2018, excluding $14.4 million for stock-based compensation expense and $0.7 million for deferred compensation plan expense, compared with $32.9 million for the quarter ended September 30, 2017, excluding $13.5 million for stock-based compensation expense and $0.6 million for deferred compensation plan expense.

 

GAAP operating income was $33.5 million for the quarter ended September 30, 2018, compared with $23.8 million for the quarter ended September 30, 2017.

 

Non-GAAP (1) operating income was $49.2 million for the quarter ended September 30, 2018, excluding $14.8 million for stock-based compensation expense, $0.2 million for the amortization of acquisition-related intangible assets and $0.7 million for deferred compensation plan expense, compared with $38.9 million for the quarter ended September 30, 2017, excluding $14.0 million for stock-based compensation expense, $0.5 million for the amortization of acquisition-related intangible assets and $0.6 million for deferred compensation plan expense.

 

GAAP interest and other income, net was $2.7 million for the quarter ended September 30, 2018, compared with $1.3 million for the quarter ended September 30, 2017.

 

Non-GAAP (1) interest and other income, net was $2.0 million for the quarter ended September 30, 2018, excluding $0.7 million for deferred compensation plan income, compared with $0.6 million for the quarter ended September 30, 2017, excluding $0.6 million for deferred compensation plan income.

 

GAAP income before income taxes was $36.2 million for the quarter ended September 30, 2018, compared with $25.1 million for the quarter ended September 30, 2017.

 

Non-GAAP (1) income before income taxes was $51.2 million for the quarter ended September 30, 2018, excluding $14.8 million for stock-based compensation expense, $0.2 million for the amortization of acquisition-related intangible assets and $0.1 million for deferred compensation plan income, compared with $39.5 million for the quarter ended September 30, 2017, excluding $14.0 million for stock-based compensation expense, $0.5 million for the amortization of acquisition-related intangible assets, and $0.1 million for deferred compensation plan income.

 

GAAP net income was $31.6 million and GAAP earnings per share were $0.71 per diluted share for the quarter ended September 30, 2018. Comparatively, GAAP net income was $23.6 million and GAAP earnings per share were $0.54 per diluted share for the quarter ended September 30, 2017.

 

Non-GAAP (1) net income was $47.3 million and non-GAAP earnings per share were $1.06 per diluted share for the quarter ended September 30, 2018, 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 $36.6 million and non-GAAP earnings per share of $0.84 per diluted share for the quarter ended September 30, 2017, excluding stock-based compensation income, amortization of acquisition-related intangible assets, net deferred compensation plan income and related tax effects.

 

 

 

 

The results for the nine months ended September 30, 2018 are as follows:

 

 

Revenue was $428.9 million for the nine months ended September 30, 2018, a 25.6% increase from $341.5 million for the nine months ended September 30, 2017.

 

GAAP gross margin was 55.5% for the nine months ended September 30, 2018, compared with 54.8% for the nine months ended September 30, 2017.

 

Non-GAAP (1) gross margin was 56.0% for the nine months ended September 30, 2018, excluding the impact of $1.4 million for stock-based compensation expense and $0.6 million for the amortization of acquisition-related intangible assets, compared with 55.6% for the nine months ended September 30, 2017, excluding the impact of $1.3 million for stock-based compensation expense and $1.5 million for the amortization of acquisition-related intangible assets.

 

GAAP operating expenses were $157.7 million for the nine months ended September 30, 2018, compared with $134.8 million for the nine months ended September 30, 2017.

 

Non-GAAP (1) operating expenses were $112.4 million for the nine months ended September 30, 2018, excluding $44.4 million for stock-based compensation expense and $0.9 million for deferred compensation plan expense, compared with $93.3 million for the nine months ended September 30, 2017, excluding $39.5 million for stock-based compensation expense and $2.0 million for deferred compensation plan expense.

 

GAAP operating income was $80.4 million for the nine months ended September 30, 2018, compared with $52.4 million for the nine months ended September 30, 2017.

 

Non-GAAP (1) operating income was $127.7 million for the nine months ended September 30, 2018, excluding $45.8 million for stock-based compensation expense, $0.6 million for the amortization of acquisition-related intangible assets and $0.9 million for deferred compensation plan expense, compared with $96.7 million for the nine months ended September 30, 2017, excluding $40.8 million for stock-based compensation expense, $1.5 million for the amortization of acquisition-related intangible assets and $2.0 million for deferred compensation plan expense.

 

GAAP interest and other income, net was $5.4 million for the nine months ended September 30, 2018, compared with $3.9 million for the nine months ended September 30, 2017.

 

Non-GAAP (1) interest and other income, net was $4.4 million for the nine months ended September 30, 2018, excluding $0.9 million for deferred compensation plan income, compared with $2.0 million for the nine months ended September 30, 2017, excluding $1.9 million for deferred compensation plan income.

 

GAAP income before income taxes was $85.8 million for the nine months ended September 30, 2018, compared with $56.2 million for the nine months ended September 30, 2017.

 

Non-GAAP (1) income before income taxes was $132.2 million for the nine months ended September 30, 2018, excluding $45.8 million for stock-based compensation expense and $0.6 million for the amortization of acquisition-related intangible assets, compared with $98.6 million for the nine months ended September 30, 2017, excluding $40.8 million for stock-based compensation expense, $1.5 million for the amortization of acquisition-related intangible assets, and $0.1 million for deferred compensation plan expense.

 

GAAP net income was $77.6 million and GAAP earnings per share were $1.75 per diluted share for the nine months ended September 30, 2018. Comparatively, GAAP net income was $53.1 million and GAAP earnings per share were $1.22 per diluted share for the nine months ended September 30, 2017.

 

Non-GAAP (1) net income was $122.3 million and non-GAAP earnings per share were $2.75 per diluted share for the nine months ended September 30, 2018, 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 $91.2 million and non-GAAP earnings per share of $2.10 per diluted share for the nine months ended September 30, 2017, excluding stock-based compensation income, amortization of acquisition-related intangible assets, net deferred compensation plan expense and related tax effects.

 

 

 

 

The following is a summary of revenue by end market for the periods indicated (in thousands):

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 

End Market

 

2018

   

2017

   

2018

   

2017

 

Computing and storage

  $ 47,658     $ 29,020     $ 115,584     $ 74,103  

Automotive

    19,785       12,857       57,857       38,042  

Industrial

    24,869       16,348       61,544       46,736  

Communications

    19,158       15,372       50,442       47,748  

Consumer

    48,505       55,342       143,458       134,870  

Total

  $ 159,975     $ 128,939     $ 428,885     $ 341,499  

 

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

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 

Product Family

 

2018

   

2017

   

2018

   

2017

 

DC to DC

  $ 147,727     $ 119,089     $ 394,492     $ 312,700  

Lighting Control

    12,248       9,850       34,393       28,799  

Total

  $ 159,975     $ 128,939     $ 428,885     $ 341,499  

 

“As expected, we continued to execute according to our plan of diversification in both products and geographical markets. We grew in Greenfield segments, while gaining share in high value products in consumer and communications amongst the uncertainty in the market and geopolitical environment," said Michael Hsing, CEO and founder of MPS.

 

Business Outlook

 

The following are MPS’ financial targets for the fourth quarter ending December 31, 2018:

 

 

Revenue in the range of $151 million to $157 million.

 

 

GAAP gross margin between 55.2% and 56.2%. Non-GAAP (1) gross margin between 55.6% and 56.6%, which excludes an estimated impact of stock-based compensation expenses of 0.3% and amortization of acquisition-related intangible assets of 0.1%.

 

 

GAAP research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses between $50.6 million and $55.6 million. Non-GAAP (1) R&D and SG&A expenses between $37.6 million and $40.6 million, which excludes an estimate of stock-based compensation expenses in the range of $13 million to $15 million.

 

 

Total stock-based compensation expense of $13.5 million to $15.5 million.

  

 

Interest and other income, net, of $1 million to $1.2 million before foreign exchange gains or losses.

 

 

Fully diluted shares outstanding between 44.6 million and 45.6 million.

 

(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, non-GAAP interest and other income, net, non-GAAP operating income and non-GAAP income before taxes differ from net income, earnings per share, gross margin, R&D and SG&A expenses, operating expenses, interest and other income, net, operating income and income before taxes determined in accordance with Generally Accepted Accounting Principles in the United States (GAAP). Non-GAAP net income and non-GAAP earnings per share exclude the effect of stock-based compensation expense, amortization of acquisition-related intangible assets, deferred compensation plan income/expense and related tax effects. Non-GAAP gross margin excludes 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 and deferred compensation plan income/expense. Non-GAAP interest and other income, net excludes the effect of deferred compensation plan income/expense. Non-GAAP operating income excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets and deferred compensation plan income/expense. Non-GAAP income before taxes excludes the effect of stock-based compensation expense, amortization of acquisition-related intangible assets 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 financial results at 3:00 p.m. PT / 6:00 p.m. ET, October 25, 2018. 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 1784676. This press release and any other information related to the call will also be posted on the website.

 

Safe Harbor Statement

This press release contains, and statements that will be made during the accompanying teleconference will contain, forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including, among other things, (i) projected revenues, GAAP and non-GAAP gross margin, GAAP and non-GAAP R&D and SG&A expenses, stock-based compensation expenses, amortization of acquisition-related intangible assets, interest and other income, and diluted shares outstanding, (ii) our outlook for the long-term prospects of the company, including our performance against our business plan, revenue growth in certain of our market segments, our continued investment into R&D, expected revenue growth, customers' acceptance of our new product offerings, the prospects of our new product development, and our expectations regarding market and industry segment trends and prospects, (iii) our ability to penetrate new markets and expand our market share, (iv) the seasonality of our business, (v) our ability to reduce our expenses, (vi) the impact of the 2017 Tax Act on our tax rate and provision; and (vii) statements of the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv), (v), or (vi). These forward-looking statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve significant known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ include, but are not limited to, our ability to attract new customers and retain existing customers; acceptance of, or demand for, MPS' products, in particular the new products launched recently, being different than expected; our ability to efficiently and effectively develop new products and receive a return on our R&D expense investment; competition generally and the increasingly competitive nature of our industry; any market disruptions or interruptions in MPS' schedule of new product development releases; adverse changes in production and testing efficiency of our products; our ability to realize the anticipated benefits of companies and products that we acquire, and our ability to effectively and efficiently integrate these acquired companies and products into our operations; our ability to manage our inventory levels; adverse changes in laws and government regulations, including in foreign countries where MPS has offices or operations; adverse events arising from orders of governmental entities, including such orders that impact our customers, and adopting of new or amended accounting standards; the effects of tariffs or other trade restrictions between the United States and China; the effect of catastrophic events; adequate supply of our products from our third-party manufacturing partners; the risks, uncertainties and costs of litigation in which we are involved; the outcome of any upcoming trials, hearings, motions and appeals; the adverse impact on MPS' financial performance if its tax and litigation provisions are inadequate; adverse changes or developments in the semiconductor industry generally, which is cyclical in nature; difficulty in predicting or budgeting for future customer demand and channel inventories, expenses and financial contingencies; the ongoing consolidation of companies in the semiconductor industry; and other important risk factors identified in MPS' Securities and Exchange Commission (SEC) filings, including, but not limited to, our annual report on Form 10-K filed with the SEC on March 1, 2018 and our quarterly report on Form 10-Q filed with the SEC on August 2, 2018. The forward-looking statements in this press release and statements made during the accompanying teleconference represent MPS' projections and current expectations, as of the date hereof, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call.

 

About Monolithic Power Systems

Monolithic Power Systems, Inc. (MPS) provides small, highly energy efficient, easy-to-use power solutions for systems found in industrial applications, telecom infrastructures, cloud computing, automotive, and consumer applications. MPS' mission is to reduce total energy consumption in its customers' systems with green, practical, compact solutions. The company was founded by Michael Hsing in 1997 and is based in the United States. MPS can be contacted through its website at www.monolithicpower.com or its support offices around the world.

 

 

 

 

Monolithic Power Systems, MPS, and the MPS logo are registered trademarks of Monolithic Power Systems, Inc. in the U.S. and trademarked in certain other countries.

 

Contact:

Bernie Blegen

Chief Financial Officer

Monolithic Power Systems, Inc.

408-826-0777

investors@monolithicpower.com

 

 

 

 

Monolithic Power Systems, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except par value)

  

   

September 30,

   

December 31,

 
   

2018

   

2017

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 131,094     $ 82,759  

Short-term investments

    216,754       216,331  

Accounts receivable

    59,887       38,037  

Inventories

    136,790       99,281  

Other current assets

    12,876       12,762  

Total current assets

    557,401       449,170  

Property and equipment, net

    147,497       144,636  

Long-term investments

    5,257       5,256  

Goodwill

    6,571       6,571  

Acquisition-related intangible assets, net

    308       951  

Deferred tax assets, net

    12,852       15,917  

Other long-term assets

    33,271       30,068  

Total assets

  $ 763,157     $ 652,569  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 27,603     $ 22,813  

Accrued compensation and related benefits

    22,996       15,597  

Accrued liabilities

    34,908       27,507  

Total current liabilities

    85,507       65,917  

Income tax liabilities

    31,173       31,621  

Other long-term liabilities

    36,313       33,024  

Total liabilities

    152,993       130,562  

Commitments and contingencies

               

Stockholders' equity:

               

Common stock and additional paid-in capital, $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 42,408 and 41,614, respectively

    435,085       376,586  

Retained earnings

    180,819       143,608  

Accumulated other comprehensive income (loss)

    (5,740 )     1,813  

Total stockholders’ equity

    610,164       522,007  

Total liabilities and stockholders’ equity

  $ 763,157     $ 652,569  

 

 

 

 

Monolithic Power Systems, Inc.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except per share amounts) 

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Revenue

  $ 159,975     $ 128,939     $ 428,885     $ 341,499  

Cost of revenue

    70,957       58,083       190,810       154,377  

Gross profit

    89,018       70,856       238,075       187,122  

Operating expenses:

                               

Research and development

    25,630       21,442       70,720       60,629  

Selling, general and administrative

    29,552       25,255       85,431       73,219  

Litigation expense

    343       327       1,513       903  

Total operating expenses

    55,525       47,024       157,664       134,751  

Income from operations

    33,493       23,832       80,411       52,371  

Interest and other income, net

    2,714       1,255       5,387       3,873  

Income before income taxes

    36,207       25,087       85,798       56,244  

Income tax provision

    4,639       1,445       8,168       3,112  

Net income

  $ 31,568     $ 23,642     $ 77,630     $ 53,132  
                                 

Net income per share:

                               

Basic

  $ 0.75     $ 0.57     $ 1.84     $ 1.29  

Diluted

  $ 0.71     $ 0.54     $ 1.75     $ 1.22  

Weighted-average shares outstanding:

                               

Basic

    42,362       41,458       42,173       41,276  

Diluted

    44,669       43,486       44,450       43,384  
                                 

Cash dividends declared per common share

  $ 0.30     $ 0.20     $ 0.90     $ 0.60  

 

 

 

 

SUPPLEMENTAL FINANCIAL INFORMATION

STOCK-BASED COMPENSATION EXPENSE

(Unaudited, in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Cost of revenue

  $ 471     $ 453     $ 1,384     $ 1,264  

Research and development

    3,979       3,838       12,168       11,297  

Selling, general and administrative

    10,393       9,678       32,213       28,198  

Total stock-based compensation expense

  $ 14,843     $ 13,969     $ 45,765     $ 40,759  

 

 

 

 

RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME

(Unaudited, in thousands, except per share amounts)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Net income

  $ 31,568     $ 23,642     $ 77,630     $ 53,132  

Net income as a percentage of revenue

    19.7 %     18.3 %     18.1 %     15.6 %
                                 

Adjustments to reconcile net income to non-GAAP net income:

                               

Stock-based compensation expense

    14,843       13,969       45,765       40,759  

Amortization of acquisition-related intangible assets

    197       513       644       1,538  

Deferred compensation plan (income) expense

    (66 )     (50 )     (26 )     90  

Tax effect

    800       (1,519 )     (1,746 )     (4,285 )

Non-GAAP net income

  $ 47,342     $ 36,555     $ 122,267     $ 91,234  

Non-GAAP net income as a percentage of revenue

    29.6 %     28.4 %     28.5 %     26.7 %
                                 

Non-GAAP net income per share:

                               

Basic

  $ 1.12     $ 0.88     $ 2.90     $ 2.21  

Diluted

  $ 1.06     $ 0.84     $ 2.75     $ 2.10  
                                 

Shares used in the calculation of non-GAAP net income per share:

                               

Basic

    42,362       41,458       42,173       41,276  

Diluted

    44,669       43,486       44,450       43,384  

 

 

 

 

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

(Unaudited, in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Gross profit

  $ 89,018     $ 70,856     $ 238,075     $ 187,122  

Gross margin

    55.6 %     55.0 %     55.5 %     54.8 %
                                 

Adjustments to reconcile gross profit to non-GAAP gross profit:

                               

Stock-based compensation expense

    471       453       1,384       1,264  

Amortization of acquisition-related intangible assets

    197       513       644       1,538  

Non-GAAP gross profit

  $ 89,686     $ 71,822     $ 240,103     $ 189,924  

Non-GAAP gross margin

    56.1 %     55.7 %     56.0 %     55.6 %

 

RECONCILIATION OF OPERATING EXPENSES TO NON-GAAP OPERATING EXPENSES

(Unaudited, in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Total operating expenses

  $ 55,525     $ 47,024     $ 157,664     $ 134,751  
                                 

Adjustments to reconcile total operating expenses to non-GAAP total operating expenses:

                               

Stock-based compensation expense

    (14,372 )     (13,516 )     (44,381 )     (39,495 )

Deferred compensation plan expense

    (650 )     (585 )     (923 )     (1,992 )

Non-GAAP operating expenses

  $ 40,503     $ 32,923     $ 112,360     $ 93,264  

 

RECONCILIATION OF OPERATING INCOME TO NON-GAAP OPERATING INCOME

(Unaudited, in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Total operating income

  $ 33,493     $ 23,832     $ 80,411     $ 52,371  

Operating income as a percentage of revenue

    20.9 %     18.5 %     18.7 %     15.3 %
                                 

Adjustments to reconcile total operating income to non-GAAP total operating income:

                               

Stock-based compensation expense

    14,843       13,969       45,765       40,759  

Amortization of acquisition-related intangible assets

    197       513       644       1,538  

Deferred compensation plan expense

    650       585       923       1,992  

Non-GAAP operating income

  $ 49,183     $ 38,899     $ 127,743     $ 96,660  

Non-GAAP operating income as a percentage of revenue

    30.7 %     30.2 %     29.8 %     28.3 %

 

RECONCILIATION OF INTEREST AND OTHER INCOME, NET, TO NON-GAAP INTEREST AND OTHER INCOME, NET

(Unaudited, in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Total interest and other income, net

  $ 2,714     $ 1,255     $ 5,387     $ 3,873  
                                 

Adjustments to reconcile interest and other income to non-GAAP interest and other income:

                               

Deferred compensation plan income

    (716 )     (635 )     (949 )     (1,902 )

Non-GAAP interest and other income, net

  $ 1,998     $ 620     $ 4,438     $ 1,971  

 

RECONCILIATION OF INCOME BEFORE INCOME TAXES TO NON-GAAP INCOME BEFORE INCOME TAXES

(Unaudited, in thousands)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2018

   

2017

   

2018

   

2017

 

Total income before income taxes

  $ 36,207     $ 25,087     $ 85,798     $ 56,244  
                                 

Adjustments to reconcile income before income taxes to non-GAAP income before income taxes:

                               

Stock-based compensation expense

    14,843       13,969       45,765       40,759  

Amortization of acquisition-related intangible assets

    197       513       644       1,538  

Deferred compensation plan (income) expense

    (66 )     (50 )     (26 )     90  

Non-GAAP income before income taxes

  $ 51,181     $ 39,519     $ 132,181     $ 98,631  

 

 

 

 

2018 FOURTH QUARTER OUTLOOK

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

(Unaudited)

 

   

Three Months Ending

 
   

December 31, 2018

 
   

Low

   

High

 

Gross margin

    55.2 %     56.2 %

Adjustments to reconcile gross margin to non-GAAP gross margin:

               

Stock-based compensation expense

    0.3 %     0.3 %

Amortization of acquisition-related intangible assets

    0.1 %     0.1 %

Non-GAAP gross margin

    55.6 %     56.6 %

 

RECONCILIATION OF R&D AND SG&A EXPENSES TO NON-GAAP R&D AND SG&A EXPENSES

(Unaudited, in thousands)

 

   

Three Months Ending

 
   

December 31, 2018

 
   

Low

   

High

 

R&D and SG&A expense

  $ 50,600     $ 55,600  

Adjustments to reconcile R&D and SG&A expense to non-GAAP R&D and SG&A expense:

               

Stock-based compensation expense

    (13,000 )     (15,000 )

Non-GAAP R&D and SG&A expense

  $ 37,600     $ 40,600  

 

 

 

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