Supermicro Announces Second Quarter Fiscal Year 2024 Financial Results
Super Micro Computer, Inc. (SMCI) reported strong financial results for the second quarter of fiscal year 2024, with net sales of $3.66 billion, representing a 103% year-over-year growth. The company also raised its revenue outlook for fiscal year 2024 to $14.3 billion to $14.7 billion. However, the gross margin decreased to 15.4% compared to the previous quarter, and cash flow used in operations was $595 million. The company's total cash and cash equivalents were $726 million, while total bank debt was $376 million.
Positive
Record net sales of $3.66 billion for the second quarter of fiscal year 2024, representing a 103% year-over-year growth.
Raised revenue outlook for fiscal year 2024 to $14.3 billion to $14.7 billion.
Strong net income of $296 million, with diluted net income per common share of $5.10.
Total cash and cash equivalents of $726 million as of December 31, 2023.
Negative
Decrease in gross margin to 15.4% compared to the previous quarter.
Cash flow used in operations for the second quarter of fiscal year 2024 was $595 million.
The reported financial results by Super Micro Computer, Inc. reflect a significant year-over-year revenue growth, which is a strong indicator of the company's expanding market presence, particularly in the AI, Cloud, Storage and 5G/Edge sectors. The revenue increase from $1.80 billion to $3.66 billion suggests a robust demand for the company's products. However, the decline in gross margin from 18.7% to 15.4% could be a point of concern for investors, as it may indicate rising costs or pricing pressure. It is essential to assess whether this margin compression is a result of strategic investments that could yield long-term benefits or if it reflects challenges in cost management.
Furthermore, the substantial cash used in operations ($595 million) warrants a closer examination of the company's working capital management and operational efficiency. While the net income growth is indeed positive, it is important to contextualize the cash flow figures within the company's investment activities and overall financial health. The raised revenue outlook for fiscal year 2024 could signal management's confidence in sustained demand, but it also sets a high bar for performance expectations.
Supermicro's performance in the IT solutions market, with a focus on AI and cloud services, positions the company within a high-growth industry. The reported revenue growth rate of 103% year-over-year significantly outpaces average industry growth rates, indicating that Supermicro is capturing market share from competitors or expanding in underserved markets. The increased revenue outlook for fiscal year 2024 suggests that Supermicro anticipates continued strong demand for its optimized AI computer platforms and rack-scale Total IT Solutions.
However, the market will be looking closely at the company's ability to maintain or improve profit margins in the face of potential industry-wide challenges such as supply chain disruptions, component shortages, or shifts in customer spending due to macroeconomic factors. The company's forward-looking statements about expected net sales and earnings per share for the upcoming quarter will be scrutinized for sustainability in the face of such uncertainties.
The emphasis on AI, Cloud, Storage and 5G/Edge by Supermicro aligns with current technological trends and the increasing demand for high-performance computing solutions. Supermicro's record revenue results indicate that their product offerings are well-received in the market, which is an important consideration given the competitive nature of the tech industry. The company's strategic focus on optimized AI computer platforms and Total IT Solutions may be contributing to its strong performance.
However, investors should consider the implications of the company's operational cash flow usage and capital expenditures in relation to its innovation and growth strategies. The technology sector is capital-intensive and continuous investment is often necessary to maintain a competitive edge. It would be beneficial to analyze how these financial metrics compare with industry norms and the potential impact on the company's long-term technological leadership.
01/29/2024 - 04:05 PM
SAN JOSE, Calif. --(BUSINESS WIRE)--
Super Micro Computer, Inc. (Nasdaq: SMCI) , a Total IT Solution Provider for AI, Cloud, Storage and 5G/Edge, today announced financial results for its second quarter of fiscal year 2024 ended December 31, 2023.
Second Quarter Fiscal Year 2024 Highlights
Net sales of $3.66 billion versus $2.12 billion in the first quarter of fiscal year 2024 and $1.80 billion in the same quarter of last year.
Gross margin of 15.4% versus 16.7% in the first quarter of fiscal year 2024 and 18.7% in the same quarter of last year.
Net income of $296 million versus $157 million in the first quarter of fiscal year 2024 and $176 million in the same quarter of last year.
Diluted net income per common share of $5.10 versus $2.75 in the first quarter of fiscal year 2024 and $3.14 in the same quarter of last year.
Non-GAAP diluted net income per common share of $5.59 versus $3.43 in the first quarter of fiscal year 2024 and $3.26 in the same quarter of last year.
Cash flow used in operations for the second quarter of fiscal year 2024 of $595 million and capital expenditures of $15 million .
Non-GAAP gross margin for the second quarter of fiscal year 2024 was 15.5% which adds back stock-based compensation expenses of $4 million . Non-GAAP diluted net income per common share for the second quarter of fiscal year 2024 was $5.59 , with adjustments for stock-based compensation expenses of $43 million , net of the related tax effects of $10 million .
As of December 31, 2023, total cash and cash equivalents was $726 million and total bank debt was $376 million .
“We continued to demonstrate our market leadership in fiscal Q2 2024, reporting record revenue results of $3.66B , year-over-year growth of 103% ,” said Charles Liang, President and CEO of Supermicro. “While we continue to win new partners, our current end customers continue to demand more Supermicro’s optimized AI computer platforms and rack-scale Total IT Solutions. As our innovative solutions continue to gain market share, we are raising our fiscal year 2024 revenue outlook to $14.3 billion to $14.7 billion .”
Business Outlook and Management Commentary
For the third quarter of fiscal year 2024 ending March 31, 2024, the Company expects net sales of $3.7 billion to $4.1 billion , GAAP net income per diluted share of $4.79 to $5.64 and non-GAAP net income per diluted share of $5.20 to $6.01 . The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 13.8% and 15.8% , respectively, and a fully diluted share count of 60.1 million shares for GAAP and fully diluted share count of 61.0 million shares for non-GAAP. The outlook for third quarter of fiscal year 2024 GAAP net income per diluted share includes approximately $28 million in expected stock-based compensation, net of related tax effects of $14 million that are excluded from non-GAAP net income per diluted share.
For fiscal year 2024 ending June 30, 2024, the Company is raising its guidance for revenues from a range of $10 billion to $11 billion to a range of $14.3 billion to $14.7 billion .
Conference Call and Webcast Information
Supermicro will present a live audio webcast of a conference call to review its second quarter of fiscal year 2024 on Monday, January 29, 2024, at 5:00 p.m. ET / 2:00 p.m. PT.
The webcast will be available at https://ir.supermicro.com .
A replay of the webcast will be available shortly after the call at the same website and will remain accessible for one year.
Cautionary Statement Regarding Forward Looking Statements
Statements contained in this press release that are not historical fact may be forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward looking statements may relate to, among other things, the third quarter of fiscal year 2024 and updated full year fiscal 2024 guidance, the ability to continue to demonstrate market leadership, the ability to continue to win new partners, and our ability to continue to gain market share. Such forward looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from those anticipated, including: (i) our quarterly operating results may fluctuate, which could cause rapid declines in our stock price, (ii) as we increasingly target larger customers and larger sales opportunities, our customer base may become more concentrated, our cost of sales may increase, our margins may be lower and our sales may be less predictable, (iii) if we fail to meet publicly announced financial guidance or other expectations about our business, our stock could decline in value, (iv) the average sales prices for our server solutions could decline if customers do not continue to purchase our latest generation products or additional components, and (v) adverse economic conditions may harm our business. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward looking statements are contained in our filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in such filings, particularly in our Annual Report on Form 10-K for our fiscal year ended June 30, 2023, and Quarterly Reports on Form 10-Q filed thereafter.
Use of Non-GAAP Financial Measures
Non-GAAP gross margin discussed in this press release adds back stock-based compensation expenses. Non-GAAP diluted net income per common share discussed in this press release adds back stock-based compensation expenses and litigation recovery adjusted for the related tax effects. Management presents non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP financial measures for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance. However, these non-GAAP financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with GAAP. A reconciliation of GAAP gross margin to non-GAAP gross margin and from GAAP diluted net income per common share to non-GAAP diluted net income per common share is included in the tables below.
About Super Micro Computer, Inc.
Supermicro (NASDAQ: SMCI) is a global leader in Application-Optimized Total IT Solutions. Founded and operating in San Jose, California , Supermicro is committed to delivering first to market innovation for Enterprise, Cloud, AI and 5G Telco/Edge IT Infrastructure. We are transforming to being a Total IT Solutions provider with server, AI, storage, IoT and switch systems, software and services while continuing to deliver advanced high-volume motherboard, power and chassis products. The products are designed and manufactured in-house (in US, Taiwan and Netherlands ) leveraging global operations for scale and efficiency and optimized to improve TCO and reduce environmental impact (Green Computing). The award-winning portfolio of Server Building Block Solutions® allows customers to optimize for their exact workload and application by selecting from a broad family of systems built from our flexible and reusable building blocks that support a comprehensive set of form factors, processors, memory, GPUs, storage, networking, power and cooling solutions (air conditioned, free air cooling or liquid cooling).
Supermicro, Server Building Block Solutions, and We Keep IT Green are trademarks and/or registered trademarks of Super Micro Computer, Inc.
SUPER MICRO COMPUTER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31,
June 30,
2023
2023
ASSETS
Current assets:
Cash and cash equivalents
$
725,660
$
440,459
Accounts receivable, net of allowance for credit losses
1,502,971
1,148,259
Inventories
2,466,997
1,445,564
Prepaid expenses and other current assets
146,727
145,144
Total current assets
4,842,355
3,179,426
Property, plant and equipment, net
297,102
290,240
Deferred income taxes, net
218,274
162,654
Other assets
47,269
42,409
Total assets
$
5,405,000
$
3,674,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
1,261,533
$
776,831
Accrued liabilities
214,462
163,865
Income taxes payable
46,453
129,166
Short-term debt
276,307
170,123
Deferred revenue
193,334
134,667
Total current liabilities
1,992,089
1,374,652
Deferred revenue, non-current
190,342
169,781
Long-term debt
99,322
120,179
Other long-term liabilities
46,173
37,947
Total liabilities
2,327,926
1,702,559
Stockholders’ equity:
Common stock and additional paid-in capital
1,190,276
538,352
Accumulated other comprehensive income
657
639
Retained earnings
1,885,977
1,433,014
Total Super Micro Computer, Inc. stockholders’ equity
3,076,910
1,972,005
Noncontrolling interest
164
165
Total stockholders’ equity
3,077,074
1,972,170
Total liabilities and stockholders’ equity
$
5,405,000
$
3,674,729
SUPER MICRO COMPUTER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
December 31,
Six Months Ended
December 31,
2023
2022
2023
2022
Net sales
$
3,664,924
$
1,803,195
$
5,784,596
$
3,655,325
Cost of sales
3,100,602
1,465,773
4,866,583
2,970,368
Gross profit
564,322
337,422
918,013
684,957
Operating expenses:
Research and development
108,824
70,700
219,851
144,943
Sales and marketing
46,854
28,445
84,084
57,808
General and administrative
37,180
23,095
70,104
46,901
Total operating expenses
192,858
122,240
374,039
249,652
Income from operations
371,464
215,182
543,974
435,305
Other (expense) income, net
(7,886
)
(6,335
)
(1,273
)
1,719
Interest expense
(8,131
)
(1,756
)
(9,994
)
(5,694
)
Income before income tax provision
355,447
207,091
532,707
431,330
Income tax provision
(61,503
)
(29,573
)
(81,718
)
(68,507
)
Share of income (loss) from equity investee, net of taxes
2,024
(1,351
)
1,974
(2,240
)
Net income
$
295,968
$
176,167
$
452,963
$
360,583
Net income per common share:
Basic
$
5.47
$
3.31
$
8.45
$
6.84
Diluted
$
5.10
$
3.14
$
7.86
$
6.51
Weighted-average shares used in calculation of net income per common share:
Basic
54,135
53,160
53,614
52,726
Diluted
58,078
56,144
57,632
55,427
Stock-based compensation is included in the following cost and expense categories by period (in thousands):
Three Months Ended
December 31,
Six Months Ended
December 31,
2023
2022
2023
2022
Cost of sales
$
3,555
$
1,486
$
9,459
$
2,370
Research and development
25,439
9,334
61,149
15,452
Sales and marketing
4,340
1,448
10,005
2,257
General and administrative
9,727
4,713
19,827
7,916
Stock-based compensation expense
$
43,061
$
16,981
$
100,440
$
27,995
SUPER MICRO COMPUTER, INC.
SELECTED CASH FLOW INFORMATION
(in thousands)
(unaudited)
Six Months Ended
December 31,
2023
2022
Net cash (used in) provided by operating activities
$
(324,620
)
$
474,674
Net cash used in investing activities
(22,535
)
(20,631
)
Net cash provided by (used in) financing activities
632,194
(415,821
)
Effect of exchange rate fluctuations on cash
170
(1,693
)
Net increase in cash, cash equivalents and restricted cash
285,209
36,529
Cash, cash equivalents and restricted cash at the beginning of the period
440,960
268,559
Cash, cash equivalents and restricted cash at the end of the period
$
726,169
$
305,088
SUPER MICRO COMPUTER, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
Six Months Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP GROSS PROFIT
$
564,322
$
337,422
$
918,013
$
684,957
Stock-based compensation
3,555
1,486
9,459
2,370
NON-GAAP GROSS PROFIT
$
567,877
$
338,908
$
927,472
$
687,327
GAAP GROSS MARGIN
15.4
%
18.7
%
15.9
%
18.7
%
Stock-based compensation
0.1
%
0.1
%
0.1
%
0.1
%
NON-GAAP GROSS MARGIN
15.5
%
18.8
%
16.0
%
18.8
%
GAAP OPERATING EXPENSE
$
192,858
$
122,240
$
374,039
$
249,652
Stock-based compensation
(39,506
)
(15,495
)
(90,981
)
(25,625
)
Litigation recovery
—
2,230
—
2,230
NON-GAAP OPERATING EXPENSE
$
153,352
$
108,975
$
283,058
$
226,257
GAAP INCOME FROM OPERATIONS
$
371,464
$
215,182
$
543,974
$
435,305
Stock-based compensation
43,061
16,981
100,440
27,995
Litigation recovery
—
(2,230
)
—
(2,230
)
NON-GAAP INCOME FROM OPERATIONS
$
414,525
$
229,933
$
644,414
$
461,070
GAAP OPERATING MARGIN
10.1
%
11.9
%
9.4
%
11.9
%
Stock-based compensation
1.2
%
1.0
%
1.7
%
0.8
%
Litigation recovery
—
%
(0.1
)%
—
%
(0.1
)%
NON-GAAP OPERATING MARGIN
11.3
%
12.8
%
11.1
%
12.6
%
GAAP TAX EXPENSE
$
61,503
$
29,573
$
81,718
$
68,507
Adjustments to tax provision
9,569
4,300
25,618
7,530
NON-GAAP TAX EXPENSE
$
71,072
$
33,873
$
107,336
$
76,037
GAAP NET INCOME
$
295,968
$
176,167
$
452,963
$
360,583
Stock-based compensation
43,061
16,981
100,440
27,995
Litigation recovery
—
(2,230
)
—
(2,230
)
Adjustments to tax provision
(9,569
)
(4,300
)
(25,618
)
(7,530
)
NON-GAAP NET INCOME
$
329,460
$
186,618
$
527,785
$
378,818
GAAP NET INCOME PER COMMON SHARE – BASIC
$
5.47
$
3.31
$
8.45
$
6.84
Impact of Non-GAAP adjustments
0.62
0.20
1.39
0.34
NON-GAAP NET INCOME PER COMMON SHARE – BASIC
$
6.09
$
3.51
$
9.84
$
7.18
GAAP NET INCOME PER COMMON SHARE – DILUTED
$
5.10
$
3.14
$
7.86
$
6.51
Impact of Non-GAAP adjustments
0.49
0.12
1.18
0.18
NON-GAAP NET INCOME PER COMMON SHARE – DILUTED
$
5.59
$
3.26
$
9.04
$
6.69
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE
BASIC – GAAP
54,135
53,160
53,614
52,726
BASIC – NON-GAAP
54,135
53,160
53,614
52,726
DILUTED – GAAP
58,078
56,144
57,632
55,427
DILUTED – NON-GAAP
58,962
57,318
58,404
56,641
Non-GAAP diluted net income per common share for the first quarter of fiscal year 2024 was $3.43 , with adjustments for stock-based compensation expenses of $41 million , net of the related tax effects of $16 million .
View source version on businesswire.com: https://www.businesswire.com/news/home/20240129226943/en/
Investor Relations Contact
Nicole Noutsios
email: ir@supermicro.com
Source: Super Micro Computer, Inc.
What is the ticker symbol for Super Micro Computer, Inc.?
The ticker symbol for Super Micro Computer, Inc. is SMCI.
What were the net sales for the second quarter of fiscal year 2024?
The net sales for the second quarter of fiscal year 2024 were $3.66 billion.
What was the gross margin for the second quarter of fiscal year 2024?
The gross margin for the second quarter of fiscal year 2024 was 15.4%.
What is the company's revenue outlook for fiscal year 2024?
The company raised its revenue outlook for fiscal year 2024 to $14.3 billion to $14.7 billion.
What was the total cash and cash equivalents as of December 31, 2023?
The total cash and cash equivalents as of December 31, 2023, were $726 million.