Supermicro Announces Second Quarter Fiscal Year 2024 Financial Results

January 29, 2024

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.

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

Source: Super Micro Computer, Inc.