Supermicro Announces Second Quarter Fiscal Year 2022 Financial Results

Rhea-AI Summary

Super Micro Computer announced its Q2 fiscal 2022 results, reporting net sales of $1.17 billion, a 41% increase year-over-year. Net income reached $42 million, up from $28 million in Q2 FY2021, translating to a diluted EPS of $0.78. Despite a decrease in gross margin to 14.0% from 16.4% last year, the company remains optimistic, projecting Q3 sales between $1.1 billion and $1.2 billion and maintaining its FY2022 guidance of $4.2 billion to $4.6 billion in sales.

Positive

• Net sales increased by 41% year-over-year to $1.17 billion.
• Net income rose to $42 million from $28 million in the same quarter last year.
• Diluted EPS improved to $0.78 compared to $0.52 in Q2 FY2021.
• Company continues to gain market share in key sectors such as AI and cloud.
• Maintains FY2022 revenue guidance of $4.2 billion to $4.6 billion.

Negative

• Gross margin decreased to 14.0% from 16.4% in Q2 FY2021.

SAN JOSE, Calif.--(BUSINESS WIRE)-- 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 second quarter of fiscal year 2022 ended December 31, 2021.

Second Quarter Fiscal Year 2022 Highlights

• Net sales of $1.17 billion versus $1.03 billion in the first quarter of fiscal year 2022 and $830 million in the same quarter of last year.

• Gross margin of 14.0% versus 13.4% in the first quarter of fiscal year 2022 and 16.4% in the same quarter of last year.

• Net income of $42 million versus $25 million in the first quarter of fiscal year 2022 and $28 million in the same quarter of last year.

• Diluted net income per common share of $0.78 versus $0.48 in the first quarter of fiscal year 2022 and $0.52 in the same quarter of last year.

• Non-GAAP diluted net income per common share of $0.88 versus $0.58 in the first quarter of fiscal year 2022 and $0.63 in the same quarter of last year.

• Cash flow used in operations for the second quarter of fiscal year 2022 of $53 million and capital expenditures of $12 million.

Non-GAAP gross margin for the second quarter of fiscal year 2022 was 14.0%, which adds back stock-based compensation expenses of $0.5 million. Non-GAAP diluted net income per common share for the second quarter of fiscal year 2022 was $0.88, which adds back stock-based compensation expenses of $9.2 million and controls remediation and litigation expenses of $0.6 million, net of the related tax effects.

As of December 31, 2021, total cash and cash equivalents was $247 million and total bank debt was $316 million.

“We are pleased to announce that our fiscal Q2 quarterly revenue grew 41% year over year, exceeding $1 billion for the third consecutive quarter, as Supermicro continues its transformation from a server hardware company into a higher value Total IT Solutions company,” said Charles Liang, Chairman and CEO. “Our Q2 performance significantly outperformed the industry growth rate again and was driven by strong design win momentum and record high shipments to our key global customers in the large enterprise, cloud, AI, and 5G/Telco markets. We continue to gain more top leading technology partners and global large enterprise accounts while growing market share and are accelerating our plan to achieve $10 billion in annual revenue much sooner.”

Business Outlook and Management Commentary

For the third quarter of fiscal year 2022 ending March 31, 2022, the Company expects net sales of $1.1 billion to $1.2 billion, GAAP net income per diluted share of $0.58 to $0.81 and non-GAAP net income per diluted share of $0.70 to $0.90. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 15% and 16.5%, respectively, and a fully diluted share count of 54.5 million shares for GAAP and fully diluted share count of 56.0 million shares for non-GAAP. The outlook for Q3 of fiscal year 2022 GAAP net income per diluted share includes approximately $8.5 million in expected stock-based compensation expense and $1.7 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 maintains its previous guidance of net sales of $4.2 billion to $4.6 billion, GAAP net income per diluted share of at least $2.77 and non-GAAP net income per diluted share of at least $3.20. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 15% and 17%, respectively, and a fully diluted share count of 54.1 million shares for GAAP and fully diluted share count of 55.6 million shares for non-GAAP. The outlook for fiscal year 2022 GAAP net income per diluted share includes approximately $37 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. PST today to discuss the results for its second quarter of fiscal year 2022.

Those wishing to access the live webcast may use the following link: https://event.on24.com/wcc/r/3574289/D238497E507F483833A2377F81B76B13

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 third 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 transform to a Total IT Solutions company and gain market share, 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, controls remediation and litigation expenses and other non-recurring 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)
	December 31,			June 30,
	2021			2021
ASSETS
Current assets:
Cash and cash equivalents	$	247,407		$	232,266
Accounts receivable, net of allowances		497,431			463,834
Inventories		1,393,672			1,040,964
Prepaid expenses and other current assets		154,778			130,195
Total current assets		2,293,288			1,867,259
Investment in equity investee		4,459			4,578
Property, plant and equipment, net		280,282			274,713
Deferred income taxes, net		61,837			63,288
Other assets		36,736			32,126
Total assets	$	2,676,602		$	2,241,964
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	695,180		$	612,336
Accrued liabilities		171,010			178,850
Income taxes payable		14,464			12,741
Short-term debt		176,904			63,490
Deferred revenue		142,021			101,479
Total current liabilities		1,199,579			968,896
Deferred revenue, non-current		110,531			100,838
Long-term debt, net of debt issuance costs		139,032			34,700
Other long-term liabilities		40,615			41,132
Total liabilities		1,489,757			1,145,566
Stockholders’ equity:
Common stock and additional paid-in capital		460,990			438,012
Accumulated other comprehensive income		549			453
Retained earnings		725,129			657,760
Total Super Micro Computer, Inc. stockholders’ equity		1,186,668			1,096,225
Noncontrolling interest		177			173
Total stockholders’ equity		1,186,845			1,096,398
Total liabilities and stockholders’ equity	$	2,676,602		$	2,241,964

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,
	2021				2020				2021				2020
Net sales	$	1,172,419			$	830,306			$	2,205,149			$	1,592,556
Cost of sales		1,008,676				694,211				1,903,267				1,326,546
Gross profit		163,743				136,095				301,882				266,010
Operating expenses:
Research and development		65,471				52,729				130,614				107,527
Sales and marketing		21,960				20,740				43,584				41,032
General and administrative		25,263				25,261				47,507				49,640
Total operating expenses		112,694				98,730				221,705				198,199
Income from operations		51,049				37,365				80,177				67,811
Other expense, net		(607	)			(2,539	)			(557	)			(3,380	)
Interest expense		(1,150	)			(569	)			(1,954	)			(1,243	)
Income before income tax provision		49,292				34,257				77,666				63,188
Income tax provision		(7,599	)			(5,108	)			(10,924	)			(8,768	)
Share of income (loss) from equity investee, net of taxes		239				(1,475	)			627				(145	)
Net income	$	41,932			$	27,674			$	67,369			$	54,275
Net income per common share:
Basic	$	0.82			$	0.54			$	1.32			$	1.05
Diluted	$	0.78			$	0.52			$	1.27			$	1.00
Weighted-average shares used in calculation of net income per common share:
Basic		51,314				51,499				51,055				51,914
Diluted		53,511				53,584				53,213				54,005

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,
	2021			2020			2021			2020
Cost of sales	$	471		$	407		$	918		$	910
Research and development		4,103			3,339			7,983			7,041
Sales and marketing		496			497			1,013			1,014
General and administrative		4,106			2,210			6,277			4,658
Stock-based compensation expense	$	9,176		$	6,453		$	16,191		$	13,623

SUPER MICRO COMPUTER, INC.
SELECTED CASH FLOW INFORMATION
(in thousands)
(unaudited)
	Six Months Ended December 31,
	2021				2020
Net cash provided by (used in) operating activities	$	(187,722	)		$	183,802
Net cash used in investing activities		(24,306	)			(25,551	)
Net cash provided by (used in) financing activities		227,173				(53,697	)
Effect of exchange rate fluctuations on cash		(9	)			540
Net increase in cash, cash equivalents and restricted cash		15,136				105,094
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	$	248,585			$	317,484

SUPER MICRO COMPUTER, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands except per share amounts)
(unaudited)
	Three Months Ended December 31,								Six Months Ended December 31,
	2021				2020				2021				2020
GAAP GROSS PROFIT	$	163,743			$	136,095				301,882			$	266,010
Stock-based compensation		471				407				918				910
Other expenses		—				—				295				20
NON-GAAP GROSS PROFIT	$	164,214			$	136,502			$	303,095			$	266,940
GAAP GROSS MARGIN		14.0	%			16.4	%			13.7	%			16.7	%
Stock-based compensation expenses		—	%			—	%			—	%			0.1	%
Other expenses		—	%			—	%			—	%			—	%
NON-GAAP GROSS MARGIN		14.0	%			16.4	%			13.7	%			16.8	%
GAAP OPERATING EXPENSE	$	112,694			$	98,730			$	221,705			$	198,199
Stock-based compensation		(8,705	)			(6,046	)			(15,273	)			(12,713	)
Executive SEC settlement		—				—				—				2,122
Special performance bonuses		—				(2,531	)			(158	)			(2,621	)
Other expenses		—				—				—				(221	)
Controls remediation and litigation expenses		(597	)			—				(1,923	)			—
NON-GAAP OPERATING EXPENSE	$	103,392			$	90,153			$	204,351			$	184,766
GAAP INCOME FROM OPERATIONS	$	51,049			$	37,365			$	80,177			$	67,811
Stock-based compensation		9,176				6,453				16,191				13,623
Executive SEC settlement		—				—				—				(2,122	)
Special performance bonuses		—				2,531				453				2,621
Other expenses		—				—				—				241
Controls remediation and litigation expenses		597				—				1,923				—
NON-GAAP INCOME FROM OPERATIONS	$	60,822			$	46,349			$	98,744			$	82,174
GAAP TAX EXPENSE	$	7,599				5,108				10,924			$	8,768
Adjustments to tax provision		3,339				1,977				6,169				3,160
NON-GAAP TAX EXPENSE	$	10,938			$	7,085			$	17,093			$	11,928
GAAP NET INCOME	$	41,932			$	27,674			$	67,369			$	54,275
Stock-based compensation		9,176				6,453				16,191				13,623
Executive SEC settlement		—				—				—				(2,122	)
Special performance bonuses		—				2,531				453				2,621
Other expenses		—				—				—				241
Controls remediation and litigation expenses		597				—				1,923				—
Adjustments to tax provision		(3,339	)			(1,977	)			(6,169	)			(3,160	)
NON-GAAP NET INCOME	$	48,366			$	34,681			$	79,767			$	65,478
GAAP NET INCOME PER COMMON SHARE – BASIC	$	0.82				0.54			$	1.32			$	1.05
Impact of Non-GAAP adjustments		0.12				0.13				0.24				0.21
NON-GAAP NET INCOME PER COMMON SHARE – BASIC	$	0.94			$	0.67			$	1.56			$	1.26
GAAP NET INCOME PER COMMON SHARE – DILUTED	$	0.78				0.52				1.27				1.00
Impact of Non-GAAP adjustments		0.10				0.11				0.19				0.18
NON-GAAP NET INCOME PER COMMON SHARE – DILUTED	$	0.88			$	0.63			$	1.46			$	1.18
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE
BASIC – GAAP		51,314				51,499				51,055				51,914
BASIC - NON-GAAP		51,314				51,499				51,055				51,914
DILUTED – GAAP		53,511				53,584				53,213				54,005
DILUTED - NON-GAAP		54,947				55,133				54,655				55,508

 

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Investor Relations Contact

Nicole Noutsios

email: ir@supermicro.com

Source: Super Micro Computer, Inc.

FAQ

What were Super Micro Computer's Q2 FY2022 net sales?

Super Micro Computer reported net sales of $1.17 billion for Q2 FY2022.

How did Super Micro's net income change in Q2 FY2022?

Net income for Q2 FY2022 was $42 million, an increase from $28 million in Q2 FY2021.

What is the earnings per share (EPS) for Super Micro in Q2 FY2022?

The diluted EPS for Super Micro in Q2 FY2022 was $0.78, up from $0.52 in the same quarter last year.

What are the revenue projections for Super Micro in Q3 FY2022?

Super Micro expects Q3 FY2022 net sales between $1.1 billion and $1.2 billion.

What is Super Micro's revenue guidance for the fiscal year 2022?

Super Micro maintains its revenue guidance for fiscal year 2022 at $4.2 billion to $4.6 billion.