Supermicro Announces Second Quarter Fiscal Year 2024 Financial Results

SAN JOSE, Calif. -- January 29, 2024 (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.

Investor Relations Contact
Nicole Noutsios
email: ir@supermicro.com

 

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.