Supermicro Announces First Quarter Fiscal Year 2023 Financial Results

SAN JOSE, Calif. -- November 1, 2022 (BUSINESS WIRE) -- Supermicro (Nasdaq: SMCI), a Total IT Solution Provider for Cloud, AI/ML, Storage, and 5G/Edge, today announced financial results for its first quarter of fiscal year 2023 ended September 30, 2022.

First Quarter Fiscal Year 2023 Highlights

  • Net sales of $1.85 billion versus $1.64 billion in the fourth quarter of fiscal year 2022 and $1.03 billion in the same quarter of last year.
  • Gross margin of 18.8% versus 17.6% in the fourth quarter of fiscal year 2022 and 13.4% in the same quarter of last year.
  • Net income of $184 million versus $141 million in the fourth quarter of fiscal year 2022 and $25 million in the same quarter of last year.
  • Diluted net income per common share of $3.35 versus $2.60 in the fourth quarter of fiscal year 2022 and $0.48 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $3.42 versus $2.62 in the fourth quarter of fiscal year 2022 and $0.58 in the same quarter of last year.
  • Cash flow provided by operations for the first quarter of fiscal year 2023 of $314 million and capital expenditures of $11 million.

Non-GAAP gross margin for the first quarter of fiscal year 2023 was 18.8%. Non-GAAP diluted net income per common share for the first quarter of fiscal year 2023 was $3.42, which adds back stock-based compensation expenses of $7.8 million, net of the related tax effects.

As of September 30, 2022, total cash and cash equivalents was $238 million and total bank debt was $250 million. “In Q1 fiscal 2023, our revenue reached a record $1.85 billion dollars, which makes it our 7th consecutive quarter of accelerating YoY growth,” said Charles Liang, Chairman and CEO, Supermicro. “The 79% YoY quarterly growth is about ten times faster than the current industry average. It proves that our Green Computing and Total IT Solutions continue to gain customers’ acceptance and trust. We recognize the opportunities being driven by more demanding compute, storage, telco and AI workloads. Our new generation of products based on optimized system building blocks is the foundation behind our strong, continued growth going forward.”

Business Outlook and Management Commentary

For the second quarter of fiscal year 2023 ending December 31, 2022, the Company expects net sales of $1.7 billion to $1.8 billion, GAAP net income per diluted share of $2.54 to $2.81 and non-GAAP net income per diluted share of $2.64 to $2.90. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 17.4% and 19.4%, respectively, and a fully diluted share count of 55.7 million shares for GAAP and fully diluted share count of 57.0 million shares for non-GAAP. The outlook for Q2 of fiscal year 2023 GAAP net income per diluted share includes approximately $11.8 million in expected stock-based compensation expense.

For fiscal year 2023 ending June 30, 2023, the Company raises its guidance for net sales from a range of $6.2 billion to $7.0 billion to $6.5 billion to $7.5 billion, GAAP net income per diluted share from at least $7.27 to a range of $8.50 to $11.00, and non-GAAP net income per diluted share from at least $7.50 to a range of $9.00 to $11.30. The Company’s projections for annual GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 19.2% and 19.8%, respectively, and a fully diluted share count of 57.0 million shares for GAAP and fully diluted share count of 58.4 million shares for non-GAAP. The outlook for fiscal year 2023 GAAP net income per diluted share includes approximately $32.7 million in expected stock-based compensation and other expenses, net of related tax effects that are excluded from non-GAAP net income per diluted share.

Conference Call and Webcast Information

Supermicro will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its first quarter of fiscal year 2023. Those wishing to access the live webcast may use the following link: https://events.q4inc.com/attendee/707364803

The conference call can be accessed by registering online at: https://conferencingportals.com/event/fIceWmPv

After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes for entry. Registration is open during the live call, but to ensure connectivity for the full call, it is recommended that participants register a day in advance and dial-in for the call at least 10 minutes before the start of the call.

A replay of the webcast will be available shortly after the call on the Company’s investor relations website (https://ir.supermicro.com) 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 second quarter of fiscal year 2023 and full year fiscal 2023 guidance, Green Computing and Total IT Solutions gaining customers’ acceptance and trust, the drivers for the Company’s opportunities, and the ability of the Company’s new generation of products to be the foundations to growth going forward. 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) the global COVID-19 pandemic continues to present significant uncertainties for all parts of our business including our supply chain, our production operations and customer demand, (ii) our quarterly operating results may fluctuate, which could cause rapid declines in our stock price, (iii) 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, (iv) if we fail to meet publicly announced financial guidance or other expectations about our business, our stock could decline in value, (v) 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 (vi) 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, 2022, 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 and other expenses. Non-GAAP diluted net income per common share discussed in this press release adds back stock-based compensation expenses, special performance bonuses, litigation and controls remediation expense and other expenses, 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 gross margin to non-GAAP gross margin and from 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)

 

September 30,

 

June 30,

 

2022

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$     238,268

 

$     267,397

Accounts receivable, net of allowance for credit losses

       736,312

 

       834,513

Inventories

    1,736,055

 

    1,545,606

Prepaid expenses and other current assets

       169,245

 

       158,799

Total current assets

    2,879,880

 

    2,806,315

Investment in equity investee

           4,352

 

           5,329

Property, plant and equipment, net

       290,752

 

       285,972

Deferred income taxes, net

         89,155

 

         69,929

Other assets

         37,144

 

         37,532

Total assets

$  3,301,283

 

$  3,205,077

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$     785,025

 

$     655,403

Accrued liabilities

       213,521

 

       212,419

Income taxes payable

         68,411 

 

         41,743

Short-term debt

       101,173

 

       449,146

Deferred revenue

       185,225

 

       111,313 

Total current liabilities

    1,353,355

 

    1,470,024

Deferred revenue, non-current

       134,625

 

       122,548

Long-term debt

       148,551

 

       147,618

Other long-term liabilities

         39,549

 

         39,140

Total liabilities

    1,676,080

 

    1,779,330

Stockholders’ equity:

 

 

 

Common stock and additional paid-in capital

       497,183

 

       481,741

Accumulated other comprehensive income

              514

 

              911 

Retained earnings

    1,127,339

 

       942,923

Total Super Micro Computer, Inc. stockholders’ equity

    1,625,036

 

    1,425,575

Noncontrolling interest

              167

 

              172

Total stockholders’ equity

    1,625,203

 

    1,425,747

Total liabilities and stockholders’ equity

$  3,301,283

 

$  3,205,077

 

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share amounts)

 (unaudited)

 

Three Months Ended
September 30,

 

2022

 

2021

Net sales

$  1,852,130

 

$  1,032,730

Cost of sales

    1,504,595

 

       894,591

Gross profit

       347,535

 

       138,139

Operating expenses:

 

 

 

Research and development

         74,243

 

         65,143

Sales and marketing

         29,363

 

         21,624

General and administrative

         23,806

 

         22,244

Total operating expenses

       127,412

 

       109,011 

Income from operations

       220,123

 

         29,128

Other income, net

           8,054

 

                50

Interest expense

          (3,938)

 

             (804)

Income before income tax provision

       224,239

 

         28,374

Income tax (provision)

        (38,934)

 

          (3,325)

Share of (loss) income from equity investee, net of taxes

             (889)

 

              388

Net income

$     184,416

 

$       25,437

Net income per common share:

 

 

 

Basic

$           3.51

 

$           0.50

Diluted

$           3.35

 

$           0.48

Weighted-average shares used in calculation of net income per common share:

 

 

 

Basic

         52,598

 

         50,796

Diluted

         55,017

 

         52,916

 

 

 

 

 

Stock-based compensation is included in the following cost and expense categories by period (in thousands):

 

Three Months Ended
September 30,

 

2022

 

2021

Cost of sales

$            884

 

$            447

Research and development

           6,118 

 

           3,880

Sales and marketing

              809

 

              517

General and administrative

           3,203

 

           2,171

Stock-based compensation expense

$       11,014 

 

$         7,015

 

 

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

 (unaudited)

 

Three Months Ended
September 30,

 

2022

 

2021

Net cash provided by (used in) operating activities

$     313,587

 

$    (134,571)

Net cash (used in) investing activities

        (10,746)

 

        (11,902)

Net cash (used in) provided by financing activities

      (331,183)

 

       184,262

Effect of exchange rate fluctuations on cash

          (1,472)

 

               (11)

Net (decrease) increase  in cash, cash equivalents and restricted cash

        (29,813)

 

         37,778

Cash, cash equivalents and restricted cash at the beginning of the period

       268,559

 

       233,449

Cash, cash equivalents and restricted cash at the end of the period

$     238,746

 

$     271,227

 

SUPER MICRO COMPUTER, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands except per share amounts)

 (unaudited)

 

Three Months Ended

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

GAAP GROSS PROFIT

$        347,535    

 

$        287,344    

 

$        138,139    

Stock-based compensation

                 884    

 

                 498    

 

                 447    

Other expenses

                   —    

 

                   —    

 

                 295    

NON-GAAP GROSS PROFIT

$        348,419    

 

$        287,842    

 

$        138,881    

 

 

 

 

 

 

GAAP GROSS MARGIN

18.8 %

 

17.6 %

 

13.4 %

Stock-based compensation

0.0 %

 

0.0 %

 

0.0 %

Other expenses

— %

 

— %

 

0.0%.

NON-GAAP GROSS MARGIN

18.8 %

 

17.6 %

 

13.4 %

 

 

 

 

 

 

GAAP OPERATING EXPENSE

$        127,412    

 

$        122,131    

 

$        109,011    

Stock-based compensation

           (10,130)  

 

             (8,386)  

 

             (6,568)  

Special performance bonuses

                   —    

 

                   —    

 

                (158)  

Litigation and controls remediation expenses

                   —    

 

               (234)  

 

            (1,326)  

NON-GAAP OPERATING EXPENSE

$        117,282    

 

$        113,511    

 

$        100,959    

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$        220,123    

 

$        165,213    

 

$          29,128    

Stock-based compensation

            11,014    

 

              8,884    

 

              7,015    

Special performance bonuses

                   —    

 

                   —    

 

                 453    

Litigation and controls remediation expenses

                   —    

 

                 234    

 

              1,326    

NON-GAAP INCOME FROM OPERATIONS

$        231,137    

 

$        174,331    

 

$          37,922    

 

 

 

 

 

 

GAAP OPERATING MARGIN

11.9  %

 

10.1 %

 

2.8 %

Stock-based compensation

0.6 %

 

0.6 %

 

0.7 %

Special performance bonuses

— %

 

— %

 

0.1 %

Litigation and controls remediation expenses

— %

 

0.0 %

 

0.1 %

NON-GAAP OPERATING MARGIN

12.5 %

 

10.7 %

 

3.7 %

 

 

 

 

 

 

GAAP TAX EXPENSE

$          38,934    

 

$          25,760    

 

$            3,325    

Adjustments to tax provision

              3,230    

 

              4,137    

 

              2,830    

NON-GAAP TAX EXPENSE

$          42,164    

 

$          29,897    

 

$            6,155    

 

 

 

 

 

 

GAAP NET INCOME

$        184,416    

 

$        140,822    

 

$          25,437    

Stock-based compensation

            11,014    

 

              8,884    

 

              7,015    

Special performance bonuses

                   —    

 

                   —    

 

                 453    

Litigation and controls remediation expenses

                   —    

 

                 234    

 

              1,326    

Adjustments to tax provision

             (3,230)  

 

             (4,137)  

 

             (2,830)  

NON-GAAP NET INCOME

$        192,200    

 

$        145,803    

 

$          31,401    

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$              3.51    

 

$              2.70    

 

$              0.50    

Impact of Non-GAAP adjustments

                0.14    

 

                0.10    

 

                0.12    

NON-GAAP NET INCOME PER COMMON SHARE – BASIC

$              3.65    

 

$              2.80    

 

$              0.62    

 

 

 

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$              3.35    

 

$              2.60    

 

$              0.48    

Impact of Non-GAAP adjustments

                0.07    

 

                0.02    

 

                0.10    

NON-GAAP NET INCOME PER COMMON SHARE – DILUTED

$              3.42    

 

$              2.62    

 

$              0.58    

 

 

 

 

 

 

WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

BASIC – GAAP

            52,598    

 

            52,111    

 

            50,796    

BASIC – NON-GAAP

            52,598    

 

            52,111    

 

            50,796    

 

 

 

 

 

 

DILUTED – GAAP

            55,017    

 

            54,260    

 

            52,916    

DILUTED – NON-GAAP

            56,271    

 

            55,611    

 

            54,363