View all news

Supermicro Announces Third Quarter Fiscal Year 2022 Financial Results

05/03/2022

Super Micro Computer, Inc. (Nasdaq: SMCI), a global leader in high-performance, high-efficiency server and storage technology and green computing, today announced financial results for its third quarter of fiscal year 2022 ended March 31, 2022.

Third Quarter Fiscal Year 2022 Highlights

  • Net sales of $1.36 billion versus $1.17 billion in the second quarter of fiscal year 2022 and $896 million in the same quarter of last year.
  • Gross margin of 15.5% versus 14.0% in the second quarter of fiscal year 2022 and 13.7% in the same quarter of last year.
  • Net income of $77 million versus $42 million in the second quarter of fiscal year 2022 and $18 million in the same quarter of last year.
  • Diluted net income per common share of $1.43 versus $0.78 in the second quarter of fiscal year 2022 and $0.35 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $1.55 versus $0.88 in the second quarter of fiscal year 2022 and $0.50 in the same quarter of last year.
  • Cash flow used in operations for the third quarter of fiscal year 2022 of $228 million and capital expenditures of $11 million.

Non-GAAP gross margin for the third quarter of fiscal year 2022 was 15.6%, which adds back stock-based compensation expenses of $0.5 million. Non-GAAP diluted net income per common share for the third quarter of fiscal year 2022 was $1.55, which adds back stock-based compensation expenses of $7.7 million, litigation expenses of $2.2 million, and $2.0 million of litigation settlement costs net of the related tax effects.

As of March 31, 2022, total cash and cash equivalents was $247 million and total bank debt was $547 million.

“This is Supermicro’s fourth consecutive quarter of revenues exceeding a billion dollars and with a trailing four quarter revenue run rate of $4.6 billion, it gives me strong confidence that we are well ahead of our long-term targets,” said Charles Liang, Chairman and CEO. “Our robust growth and EPS progress demonstrates the efficiency of our global operational leverage and our customers recognizing the value of our rack-scale Total IT Solutions in key market segments across AI, enterprise, cloud, edge/telco and others. Along with our product optimization, time to market advantage, and green computing cost-savings presented by our Total IT Solutions, our growth momentum should continue to fuel our emergence as the leading company in the industry in the coming quarters and years ahead.”

Business Outlook and Management Commentary

For the fourth quarter of fiscal year 2022 ending June 30, 2022, the Company expects net sales of $1.4 billion to $1.48 billion, GAAP net income per diluted share of $1.45 to $1.64 and non-GAAP net income per diluted share of $1.51 to $1.69. 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 54.3 million shares for GAAP and fully diluted share count of 55.7 million shares for non-GAAP. The outlook for Q4 of fiscal year 2022 GAAP net income per diluted share includes approximately $8.0 million in expected stock-based compensation expense and $1.0 million in other expenses that are excluded from non-GAAP net income per diluted share.

For fiscal year 2022 ending June 30, 2022, the Company raises its previous guidance of net sales from $4.2 billion to $4.6 billion to a new range of $4.96 billion to $5.04 billion, and raises its GAAP net income per diluted share of at least $2.77 to a new range of $4.16 to $4.35 and non-GAAP net income per diluted share of at least $3.20 to a new range of $4.53 to $4.71. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 16.5% and 18.7%, respectively, and a fully diluted share count of 53.6 million shares for GAAP and fully diluted share count of 55.1 million shares for non-GAAP. The outlook for fiscal year 2022 GAAP net income per diluted share includes approximately $39.0 million in expected stock-based compensation expense and other expenses 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 third quarter of fiscal year 2022.

Those wishing to access the live webcast may use the following link: https://events.q4inc.com/attendee/634441043

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 fourth quarter of fiscal year 2022 and full fiscal year 2022 guidance, the Company's long-term growth targets, the ability to accelerate sales growth to achieve the revenue target much sooner, the ability to maintain growth momentum, the ability to fuel our emergence as the leading company in the industry, and the ability to execute on the Company's strategy during the global COVID-19 pandemic. 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, 2021.

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 expenses, litigation settlement costs and other expenses, and excludes a credit from an executive SEC settlement, which are all adjusted for the related tax effects of the applicable items. 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.

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

 

 

 

 

March 31,

 

June 30,

 

 

2022

 

2021

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

247,424

$

232,266

Accounts receivable, net of allowances

 

679,785

 

463,834

Inventories

 

1,588,542

 

1,040,964

Prepaid expenses and other current assets

 

162,964

 

130,195

Total current assets

 

2,678,715

 

1,867,259

Investment in equity investee

 

4,778

 

4,578

Property, plant and equipment, net

 

282,319

 

274,713

Deferred income taxes, net

 

66,518

 

63,288

Other assets

 

38,847

 

32,126

Total assets

$

3,071,177

$

2,241,964

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

Current liabilities:

 

 

Accounts payable

$

779,561

$

612,336

Accrued liabilities

 

181,448

 

178,850

Income taxes payable

 

17,413

 

12,741

Short-term debt

 

403,045

 

63,490

Deferred revenue

 

114,688

 

101,479

Total current liabilities

 

1,496,155

 

968,896

Deferred revenue, non-current

 

115,063

 

100,838

Long-term debt, net of debt issuance costs

 

144,423

 

34,700

Other long-term liabilities

 

41,617

 

41,132

Total liabilities

 

1,797,258

 

1,145,566

Stockholders’ equity:

 

 

Common stock and additional paid-in capital

 

471,088

 

438,012

Accumulated other comprehensive income

 

554

 

453

Retained earnings

 

802,101

 

657,760

Total Super Micro Computer, Inc. stockholders’ equity

 

1,273,743

 

1,096,225

Noncontrolling interest

 

176

 

173

Total stockholders’ equity

 

1,273,919

 

1,096,398

Total liabilities and stockholders’ equity

$

3,071,177

$

2,241,964

 

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share amounts)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

 

 

2022

 

2021

 

2022

 

2021

Net sales

$

1,355,490

 

$

895,881

 

$

3,560,639

 

$

2,488,437

 

Cost of sales

 

1,144,715

 

 

772,864

 

 

3,047,982

 

 

2,099,410

 

Gross profit

 

210,775

 

 

123,017

 

 

512,657

 

 

389,027

 

Operating expenses:

 

 

 

 

Research and development

 

70,869

 

 

57,912

 

 

201,483

 

 

165,439

 

Sales and marketing

 

22,356

 

 

21,826

 

 

65,940

 

 

62,858

 

General and administrative

 

27,773

 

 

26,224

 

 

75,280

 

 

75,864

 

Total operating expenses

 

120,998

 

 

105,962

 

 

342,703

 

 

304,161

 

Income from operations

 

89,777

 

 

17,055

 

 

169,954

 

 

84,866

 

Other expense, net

 

4,663

 

 

2,017

 

 

4,106

 

 

(1,363

)

Interest expense

 

(1,531

)

 

(607

)

 

(3,485

)

 

(1,850

)

Income before income tax provision

 

92,909

 

 

18,465

 

 

170,575

 

 

81,653

 

Income tax provision

 

(16,192

)

 

227

 

 

(27,116

)

 

(8,541

)

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

 

255

 

 

(264

)

 

882

 

 

(409

)

Net income

$

76,972

 

$

18,428

 

$

144,341

 

$

72,703

 

Net income per common share:

 

 

 

 

Basic

$

1.49

 

$

0.36

 

$

2.82

 

$

1.41

 

Diluted

$

1.43

 

$

0.35

 

$

2.70

 

$

1.35

 

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

 

 

 

 

Basic

 

51,708

 

 

50,553

 

 

51,269

 

 

51,465

 

Diluted

 

53,786

 

 

53,218

 

 

53,401

 

 

53,747

 

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

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

 

 

2022

 

2021

 

2022

 

2021

Cost of sales

$

460

$

402

$

1,378

$

1,312

Research and development

 

4,141

 

 

3,328

 

 

12,124

 

 

10,369

 

Sales and marketing

 

504

 

 

503

 

 

1,517

 

 

1,517

 

General and administrative

 

2,636

 

 

3,261

 

 

8,913

 

 

7,919

 

Stock-based compensation expense

$

7,741

 

$

7,494

 

$

23,932

 

$

21,117

 

 

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

(unaudited)

 

 

 

 

 

Nine Months Ended
March 31,

 

 

2022

 

2021

Net cash (used in) provided by operating activities

$

(415,658

)

$

59,392

 

Net cash used in investing activities

 

(35,257

)

 

(44,627

)

Net cash provided by (used in) financing activities

 

466,365

 

 

(48,445

)

Effect of exchange rate fluctuations on cash

 

(304

)

 

362

 

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

 

15,146

 

 

(33,318

)

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

 

233,449

 

 

212,390

 

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

$

248,595

 

$

179,072

 

 

SUPER MICRO COMPUTER, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(in thousands except per share amounts)

(unaudited)

 

 

 

 

 

 

 

Three Months Ended
March 31,

 

Nine Months Ended
March 31,

 

 

2022

 

2021

 

2022

 

2021

GAAP GROSS PROFIT

$

210,775

 

$

123,017

 

$

512,657

 

$

389,027

 

Stock-based compensation

 

460

 

 

402

 

 

1,378

 

 

1,312

 

Other expenses

 

 

 

 

 

295

 

 

20

 

NON-GAAP GROSS PROFIT

$

211,235

 

$

123,419

 

$

514,330

 

$

390,359

 

 

 

 

 

 

GAAP GROSS MARGIN

 

15.5

%

 

13.7

%

 

14.4

%

 

15.6

%

Stock-based compensation expenses

 

0.1

%

 

0.1

%

 

0.1

%

 

0.1

%

Other expenses

 

%

 

%

 

0.0

%

 

0.0

%

NON-GAAP GROSS MARGIN

 

15.6

%

 

13.8

%

 

14.5

%

 

15.7

%

 

 

 

 

 

GAAP OPERATING EXPENSE

$

120,998

 

$

105,962

 

$

342,703

 

$

304,161

 

Stock-based compensation

 

(7,281

)

 

(7,092

)

 

(22,554

)

 

(19,805

)

Executive SEC settlement

 

 

 

 

 

 

 

2,122

 

Litigation settlement costs

 

(2,000

)

 

 

 

(2,000

)

 

 

Special performance bonuses

 

 

 

(2,508

)

 

(158

)

 

(5,129

)

Other expenses

 

 

 

 

 

 

 

(221

)

Litigation expenses

 

(2,210

)

 

(1,239

)

 

(4,133

)

 

(1,239

)

NON-GAAP OPERATING EXPENSE

$

109,507

 

$

95,123

 

$

313,858

 

$

279,889

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$

89,777

 

$

17,055

 

$

169,954

 

$

84,866

 

Stock-based compensation

 

7,741

 

 

7,494

 

 

23,932

 

 

21,117

 

Executive SEC settlement

 

 

 

 

 

 

 

(2,122

)

Litigation settlement costs

 

2,000

 

 

 

 

2,000

 

 

 

Special performance bonuses

 

 

 

2,508

 

 

453

 

 

5,129

 

Other expenses

 

 

 

 

 

 

 

241

 

Litigation expenses

 

2,210

 

 

1,239

 

 

4,133

 

 

1,239

 

NON-GAAP INCOME FROM OPERATIONS

$

101,728

 

$

28,296

 

$

200,472

 

$

110,470

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

6.6

%

 

1.9

%

 

4.8

%

 

3.4

%

Stock-based compensation

 

0.6

%

 

0.9

%

 

0.7

%

 

0.8

%

Executive SEC settlement

 

%

 

%

 

%

 

(0.1

)%

Litigation settlement costs

 

0.1

%

 

%

 

0.1

%

 

%

Special performance bonuses

 

%

 

0.3

%

 

0.0

%

 

0.2

%

Other expenses

 

%

 

%

 

%

 

0.0

%

Litigation expenses

 

0.2

%

 

0.1

%

 

0.1

%

 

0.1

%

NON-GAAP OPERATING MARGIN

 

7.5

%

 

3.2

%

 

5.7

%

 

4.4

%

 

 

 

 

 

 

 

 

 

 

GAAP TAX EXPENSE

$

16,192

 

 

(227

)

 

27,116

 

$

8,541

 

Adjustments to tax provision

 

3,415

 

 

2,473

 

 

9,584

 

 

5,633

 

NON-GAAP TAX EXPENSE

$

19,607

 

$

2,246

 

$

36,700

 

$

14,174

 

 

 

 

 

 

GAAP NET INCOME

$

76,972

 

$

18,428

 

$

144,341

 

$

72,703

 

Stock-based compensation

 

7,741

 

 

7,494

 

 

23,932

 

 

21,117

 

Executive SEC settlement

 

 

 

 

 

 

 

(2,122

)

Special performance bonuses

 

 

 

2,508

 

 

453

 

 

5,129

 

Litigation settlement costs

 

2,000

 

 

 

 

2,000

 

 

 

Other expenses

 

 

 

 

 

 

 

241

 

Litigation expenses

 

2,210

 

 

1,239

 

 

4,133

 

 

1,239

 

Adjustments to tax provision

 

(3,415

)

 

(2,473

)

 

(9,584

)

 

(5,633

)

NON-GAAP NET INCOME

$

85,508

 

$

27,196

 

$

165,275

 

$

92,674

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$

1.49

 

$

0.36

 

$

2.82

 

$

1.41

 

Impact of Non-GAAP adjustments

 

0.16

 

 

0.18

 

 

0.40

 

 

0.39

 

NON-GAAP NET INCOME PER COMMON SHARE – BASIC

$

1.65

 

$

0.54

 

$

3.22

 

$

1.80

 

 

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$

1.43

 

$

0.35

 

$

2.70

 

$

1.35

 

Impact of Non-GAAP adjustments

 

0.12

 

 

0.15

 

 

0.31

 

 

0.33

 

NON-GAAP NET INCOME PER COMMON SHARE – DILUTED

$

1.55

 

$

0.50

 

$

3.01

 

$

1.68

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

BASIC – GAAP

 

51,708

 

 

50,553

 

 

51,269

 

 

51,465

 

BASIC - NON-GAAP

 

51,708

 

 

50,553

 

 

51,269

 

 

51,465

 

 

 

 

 

 

DILUTED – GAAP

 

53,786

 

 

53,218

 

 

53,401

 

 

53,747

 

DILUTED - NON-GAAP

 

55,194

 

 

54,525

 

 

54,831

 

 

55,185

 

 

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

Source: Super Micro Computer, Inc.

Multimedia Files:

View all news