Supermicro Announces Fourth Quarter and Full Fiscal Year 2024 Financial Results

Rhea-AI Summary

Supermicro (NASDAQ: SMCI) reported strong financial results for Q4 and full fiscal year 2024. Q4 highlights include:

- Net sales of $5.31 billion, up from $3.85 billion in Q3 and $2.18 billion year-over-year
- Gross margin of 11.2%, down from 15.5% in Q3 and 17.0% year-over-year
- Net income of $353 million, down from $402 million in Q3 but up from $194 million year-over-year
- Diluted EPS of $5.51, down from $6.56 in Q3 but up from $3.43 year-over-year

For fiscal year 2024, net sales reached $14.94 billion, a 110% increase year-over-year. The company announced a 10-for-1 stock split effective October 1, 2024. Supermicro expects Q1 FY2025 net sales between $6.0-$7.0 billion and projects FY2025 net sales of $26.0-$30.0 billion.

Positive

• Record Q4 net sales of $5.31 billion, a 143% increase year-over-year
• Fiscal year 2024 net sales reached $14.94 billion, up 110% year-over-year
• Net income for fiscal year 2024 was $1.21 billion, nearly doubling from $640 million in FY2023
• Strong Q1 FY2025 guidance with projected net sales of $6.0-$7.0 billion
• Ambitious FY2025 outlook with expected net sales of $26.0-$30.0 billion

Negative

• Q4 gross margin decreased to 11.2% from 15.5% in Q3 and 17.0% year-over-year
• Q4 net income of $353 million decreased from $402 million in Q3
• Q4 diluted EPS of $5.51 decreased from $6.56 in Q3
• Cash flow used in operations for Q4 was $635 million

Insights

Financial Analyst

Supermicro's Q4 FY2024 results showcase impressive growth but with some concerning trends. Revenue surged to $5.31 billion, a 143% YoY increase, driven by strong AI infrastructure demand. However, gross margin declined to 11.2% from 17.0% YoY, indicating potential pricing pressures or higher costs.

The full-year performance is stellar, with revenue up 110% to $14.94 billion and non-GAAP EPS growing 87% to $22.09. The company's forward guidance of $26-$30 billion for FY2025 suggests continued strong growth expectations.

Investors should monitor the balance sheet closely, as cash flow from operations was negative $635 million this quarter and total debt stands at $2.17 billion. This could indicate working capital challenges as the company scales rapidly.

Tech Industry Expert

Supermicro's explosive growth underscores the booming AI infrastructure market. Their focus on rack-scale DLC liquid cooling and Datacenter Building Block Solutions positions them well in the high-performance computing space. The planned 10-for-1 stock split could improve liquidity and accessibility for retail investors.

However, the declining gross margins are a red flag. This could be due to increased competition, component shortages, or aggressive pricing to gain market share. The company's ability to maintain profitability while scaling will be crucial.

The expansion in Malaysia is a strategic move to diversify the supply chain and potentially reduce costs. This, coupled with Silicon Valley expansions, shows Supermicro's commitment to meeting the surging demand and improving operational efficiency.

Market Research Analyst

Supermicro's results reflect the broader AI infrastructure boom. The company's 110% YoY revenue growth outpaces the overall server market, indicating significant market share gains. Their focus on AI-optimized solutions is clearly paying off.

The forward guidance of $26-$30 billion for FY2025 implies continued strong growth of 74-101%. This bullish outlook suggests that Supermicro expects the AI infrastructure demand to remain robust, potentially for several years.

However, investors should be cautious about potential market saturation or a slowdown in AI investments. The declining gross margins and negative cash flow from operations could also indicate challenges in managing this rapid growth efficiently. Monitoring competitor actions and overall market demand will be important in the coming quarters.

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 fourth quarter and full-year financial results for fiscal year 2024 ended June 30, 2024.

Fourth Quarter of Fiscal Year 2024 Highlights

• Net sales of $5.31 billion versus $3.85 billion in the third quarter of fiscal year 2024 and $2.18 billion in the same quarter of last year.

• Gross margin of 11.2% versus 15.5% in the third quarter of fiscal year 2024 and 17.0% in the same quarter of last year.

• Net income of $353 million versus $402 million in the third quarter of fiscal year 2024 and $194 million in the same quarter of last year.

• Diluted net income per common share of $5.51 versus $6.56 in the third quarter of fiscal year 2024 and $3.43 in the same quarter of last year.

• Non-GAAP diluted net income per common share of $6.25 versus $6.65 in the third quarter of fiscal year 2024 and $3.51 in the same quarter of last year.

• Cash flow used in operations for the fourth quarter of fiscal year 2024 of $635 million and capital expenditures of $27 million.

• The Company’s Board of Directors has authorized a 10-for-1 forward split of its common stock and we expect trading to commence on a split-adjusted basis on October 1, 2024.

Non-GAAP gross margin for the fourth quarter of fiscal year 2024 was 11.3%, which adds back stock-based compensation expense of $3 million. Non-GAAP diluted net income per common share for the fourth quarter of fiscal year 2024 was $6.25, with adjustments for stock-based compensation expenses of $52 million, net of the related tax effects of $20 million.

As of June 30, 2024, total cash and cash equivalents was $1,670 million and total bank debt and convertible notes were $2,174 million.

“Supermicro continues to experience record demand of new AI infrastructures propelling fiscal 2024 revenue up 110% year over year to $14.9 billion and non-GAAP earnings per share up 87% to $22.09,” said Charles Liang, President and CEO of Supermicro, “We are well positioned to become the largest IT infrastructure company, driven by our technology leadership including rack-scale DLC liquid cooling and business values of our new Datacenter Building Block Solutions. The investments in Malaysia and Silicon Valley expansions will further strengthen our supply chain, security, and economies of scale necessary for the growing AI revolution.”

Fiscal Year 2024 Summary

Net sales for the fiscal year ended June 30, 2024, were $14.94 billion versus $7.12 billion for the fiscal year ended June 30, 2023. Net income for fiscal year 2024 was $1.21 billion, or $20.09 per diluted share, versus $640 million, or $11.43 per diluted share, for fiscal year 2023. Non-GAAP net income for fiscal year 2024 was $1.34 billion, or $22.09 per diluted share, versus $673 million, or $11.81 per diluted share, for fiscal year 2023. Non-GAAP net income for fiscal year 2024 adds back stock-based compensation expense of $135 million, net of the related tax effects of $93 million.

Business Outlook and Management Commentary

For the first quarter of fiscal year 2025 ending September 30, 2024, the Company expects net sales of $6.0 billion to $7.0 billion, GAAP net income per diluted share of $5.97 to $7.66 and non-GAAP net income per diluted share of $6.69 to $8.27. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 9.9% and 14.6%, respectively, and a fully diluted share count of 65 million shares for GAAP and fully diluted share count of 66 million shares for non-GAAP. The outlook for Q1 of fiscal year 2025 GAAP net income per diluted share includes approximately $48 million in expected stock-based compensation expense and other expenses, net of related tax effects of $35 million, which are excluded from non-GAAP net income per diluted share.

For fiscal year 2025 ending June 30, 2025, the Company expects net sales of $26.0 billion to $30.0 billion.

Conference Call and Webcast Information

Supermicro will present a live audio webcast of a conference call to review its fourth quarter of fiscal year 2024 on Tuesday, August 6, 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 first quarter of fiscal year 2025 and full year fiscal 2025 guidance, the ability to continue to see record demand for new AI infrastructure, the ability to become a dominant IT infrastructure Company, and the ability of investments in certain expansions to strengthen the supply chain, security, and economies of scale for growth. 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 expense 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 a Total IT Solutions Provider with server, AI, storage, IoT, switch systems, software, and support services. Supermicro's motherboard, power, and chassis design expertise further enable our development and production, enabling next generation innovation from cloud to edge for our global customers. Our products are designed and manufactured in-house (in the US, Taiwan, and the 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)
	June 30,			June 30,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,669,766		$	440,459
Accounts receivable, net of allowance for credit losses		2,668,415			1,148,259
Inventories		4,407,972			1,445,564
Prepaid expenses and other current assets		308,471			145,144
Total current assets		9,054,624			3,179,426
Property, plant and equipment, net		414,008			290,240
Deferred income taxes, net		359,656			162,654
Other assets		114,952			42,409
Total assets	$	9,943,240		$	3,674,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,545,050		$	776,831
Accrued liabilities		237,921			163,865
Income taxes payable		18,268			129,166
Lines of credit and current portion of term loans		402,346			170,123
Deferred revenue		200,360			134,667
Total current liabilities		2,403,945			1,374,652
Deferred revenue, non-current		226,493			169,781
Term loans		74,083			120,179
Convertible notes		1,697,716			—
Other long-term liabilities		71,343			37,947
Total liabilities		4,473,580			1,702,559
Stockholders’ equity:
Common stock and additional paid in capital		2,827,627			538,352
Accumulated other comprehensive income		706			639
Retained earnings		2,641,163			1,433,014
Total Super Micro Computer, Inc. stockholders’ equity		5,469,496			1,972,005
Noncontrolling interest		164			165
Total stockholders’ equity		5,469,660			1,972,170
Total liabilities and stockholders’ equity	$	9,943,240		$	3,674,729

SUPER MICRO COMPUTER, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
	Three Months Ended June 30,								Years Ended June 30,
		2024				2023				2024				2023
Net sales	$	5,308,192			$	2,184,861			$	14,942,854			$	7,123,482
Cost of sales		4,711,844				1,813,165				12,831,125				5,840,470
Gross profit		596,348				371,696				2,111,729				1,283,012
Operating expenses:
Research and development		126,849				84,802				462,926				307,260
Sales and marketing		55,740				31,905				189,515				115,025
General and administrative		70,355				28,234				193,596				99,585
Total operating expenses		252,944				144,941				846,037				521,870
Income from operations		343,404				226,755				1,265,692				761,142
Other income, net		13,955				2,005				22,717				3,646
Interest expense		(3,112	)			(3,509	)			(19,352	)			(10,491	)
Income before income tax provision		354,247				225,251				1,269,057				754,297
Income tax provision		(994	)			(31,302	)			(62,729	)			(110,666	)
Share of (loss) income from equity investee, net of taxes		(526	)			(380	)			1,821				(3,633	)
Net income(1)	$	352,727			$	193,569			$	1,208,149			$	639,998
Net income per common share:
Basic	$	6.01			$	3.67			$	21.73			$	12.09
Diluted	$	5.51			$	3.43			$	20.09			$	11.43
Weighted-average shares used in calculation of net income per common share:
Basic		58,688				52,679				55,588				52,925
Diluted		64,208				56,505				60,215				55,970
(1) Net income for diluted net income per share calculation includes the add-backs of convertible notes interest charge, net of tax of $1,095 and $0, for the three months ended June 30, 2024 and 2023, respectively. Net income for diluted net income per share calculation includes the add-backs of convertible notes interest charge, net of tax of $1,480 and $0, for the year ended June 30, 2024 and 2023, respectively.

SUPER MICRO COMPUTER, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited)
Stock-based compensation is included in the following cost and expense categories by period (in thousands):
	Three Months Ended June 30,						Years Ended June 30,
		2024			2023			2024			2023
Cost of sales	$	3,185		$	989		$	15,865		$	4,574
Research and development		28,890			7,187			114,895			30,736
Sales and marketing		6,197			1,128			21,195			4,599
General and administrative		33,380			3,482			76,244			14,524
Stock-based compensation expense	$	71,652		$	12,786		$	228,199		$	54,433

SUPER MICRO COMPUTER, INC. SELECTED CASH FLOW INFORMATION (in thousands) (unaudited)
	Years Ended June 30,
		2024				2023
Net cash (used in) provided by operating activities	$	(2,479,437	)		$	663,580
Net cash used in investing activities		(200,783	)			(39,486	)
Net cash provided by (used in) financing activities		3,911,724				(448,293	)
Effect of exchange rate fluctuations on cash		(2,191	)			(3,400	)
Net increase in cash, cash equivalents and restricted cash		1,229,313				172,401
Cash, cash equivalents and restricted cash at the beginning of the year		440,960				268,559
Cash, cash equivalents and restricted cash at the end of the year	$	1,670,273			$	440,960

SUPER MICRO COMPUTER, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited)
	Three Months Ended June 30,								Twelve Months Ended June 30,
		2024				2023				2024				2023
GAAP GROSS PROFIT	$	596,348			$	371,696			$	2,111,729			$	1,283,012
Stock-based compensation		3,185				989				15,865				4,574
NON-GAAP GROSS PROFIT	$	599,533			$	372,685			$	2,127,594			$	1,287,586
GAAP GROSS MARGIN		11.2	%			17.0	%			14.1	%			18.0	%
Stock-based compensation		0.1	%			0.1	%			0.1	%			0.1	%
NON-GAAP GROSS MARGIN		11.3	%			17.1	%			14.2	%			18.1	%
GAAP OPERATING EXPENSES	$	252,944			$	144,941			$	846,037			$	521,870
Stock-based compensation		(68,467	)			(11,797	)			(212,334	)			(49,859	)
Litigation expense recovery		—				—				—				3,770
NON-GAAP OPERATING EXPENSES	$	184,477			$	133,144			$	633,703			$	475,781
GAAP INCOME FROM OPERATIONS	$	343,404			$	226,755			$	1,265,692			$	761,142
Stock-based compensation		71,652				12,786				228,199				54,433
Litigation expense recovery		—				—				—				(3,770	)
NON-GAAP INCOME FROM OPERATIONS	$	415,056			$	239,541			$	1,493,891			$	811,805
GAAP OPERATING MARGIN		6.5	%			10.4	%			8.5	%			10.7	%
Stock-based compensation		1.3	%			0.6	%			1.5	%			0.8	%
Litigation expense recovery		—	%			—	%			—	%			(0.1	)%
NON-GAAP OPERATING MARGIN		7.8	%			11.0	%			10.0	%			11.4	%
GAAP TAX EXPENSE	$	994			$	31,302			$	62,729			$	110,666
Adjustments to tax provision		20,167				5,304				92,808				17,267
NON-GAAP TAX EXPENSE	$	21,161			$	36,606			$	155,537			$	127,933
GAAP NET INCOME	$	352,727			$	193,569			$	1,208,149			$	639,998
Stock-based compensation		71,652				12,786				228,199				54,433
Litigation expense recovery		—				—				—				(3,770	)
Adjustments to tax provision		(20,167	)			(5,304	)			(92,808	)			(17,267	)
NON-GAAP NET INCOME	$	404,212			$	201,051			$	1,343,540			$	673,394
GAAP NET INCOME - BASIC	$	352,727			$	193,569			$	1,208,149			$	639,998
Convertible notes interest charge, net of tax		1,095				—				1,480				—
GAAP NET INCOME - DILUTED	$	353,822			$	193,569			$	1,209,629			$	639,998
NON-GAAP NET INCOME - BASIC	$	404,212			$	201,051			$	1,343,540			$	673,394
Convertible notes interest charge, net of tax		1,095				—				1,480				—
NON-GAAP NET INCOME - DILUTED	$	405,307			$	201,051			$	1,345,020			$	673,394
GAAP NET INCOME PER COMMON SHARE – BASIC	$	6.01			$	3.67			$	21.73			$	12.09
Impact of NON-GAAP adjustments		0.88				0.15				2.44				0.63
NON-GAAP NET INCOME PER COMMON SHARE – BASIC	$	6.89			$	3.82			$	24.17			$	12.72
GAAP NET INCOME PER COMMON SHARE – DILUTED	$	5.51			$	3.43			$	20.09			$	11.43
Impact of Non-GAAP adjustments		0.74				0.08				2.00				0.38
NON-GAAP NET INCOME PER COMMON SHARE – DILUTED	$	6.25			$	3.51			$	22.09			$	11.81
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE
BASIC – GAAP		58,688				52,679				55,588				52,925
BASIC – NON-GAAP		58,688				52,679				55,588				52,925
DILUTED – GAAP		64,208				56,505				60,215				55,970
DILUTED – NON-GAAP		64,827				57,222				60,886				57,027
Non-GAAP diluted net income per common share for the third quarter of fiscal year 2024 was $6.65, with adjustments for stock-based compensation expenses of $9 million, net of the related tax effect of $47 million.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806847881/en/

Investor Relations Contact:

Nicole Noutsios

email: ir@supermicro.com

Source: Super Micro Computer, Inc.

FAQ

What were Supermicro's (SMCI) Q4 2024 financial results?

Supermicro reported Q4 2024 net sales of $5.31 billion, net income of $353 million, and diluted EPS of $5.51.

How did Supermicro's (SMCI) fiscal year 2024 performance compare to 2023?

Supermicro's fiscal year 2024 net sales were $14.94 billion, up 110% from $7.12 billion in 2023. Net income increased to $1.21 billion from $640 million in 2023.

What is Supermicro's (SMCI) financial outlook for Q1 and full fiscal year 2025?

Supermicro expects Q1 FY2025 net sales of $6.0-$7.0 billion and projects full fiscal year 2025 net sales of $26.0-$30.0 billion.

Is Supermicro (SMCI) planning a stock split in 2024?

Yes, Supermicro announced a 10-for-1 forward stock split, with trading on a split-adjusted basis expected to commence on October 1, 2024.