Supermicro Announces Third Quarter Fiscal Year 2024 Financial Results

Rhea-AI Summary

Super Micro Computer, Inc. (Nasdaq: SMCI) reported strong financial results for the third quarter of fiscal year 2024, with net sales reaching $3.85 billion, gross margin at 15.5%, and net income of $402 million. The company also raised its revenue outlook for fiscal year 2024 to a range of $14.7 to $15.1 billion. Supermicro's President and CEO, Charles Liang, highlighted the record revenue and non-GAAP EPS growth, emphasizing market leadership in AI infrastructure and the expansion of new solutions.

Positive

• Record revenue of $3.85 billion for the third quarter of fiscal year 2024

• Non-GAAP diluted net income per common share of $6.65, up 308% year-over-year

• Strong demand for AI solutions driving market leadership in AI infrastructure

• Increased revenue outlook for fiscal year 2024 to $14.7 to $15.1 billion

Negative

• Expectations of negative tax rates for GAAP and non-GAAP net income per diluted share

• Projected stock-based compensation expenses impacting GAAP net income for the fourth quarter of fiscal year 2024

Insights

Financial Analyst

Sifting through Super Micro's Q3 fiscal 2024 financial results, several points leap out. The net sales increase to $3.85 billion represents a significant jump, not just sequentially from Q2, but year-over-year—tripling from the $1.28 billion mark. This signals robust demand, likely propelled by trends in AI, Cloud Storage and 5G/Edge technologies. Such a growth trajectory is typically reflective of a company seizing market opportunities effectively.

The net income figures tell a similar story of growth, with an increase to $402 million from $296 million in Q2 and from $86 million in the same quarter last year. When it comes to earnings per share (EPS), both GAAP and non-GAAP measures have increased significantly, which is a strong indicator of profitability on a per-share basis. However, the reported gross margin slight decline to 15.5% from 17.6% last year suggests there could be increasing costs or pricing pressures to consider.

Tech Industry Analyst

Supermicro's mention of their success in AI rack scale Plug and Play (PnP) solutions and Direct Liquid Cooling (DLC) designs indicates a competitive edge in high-growth tech areas. Direct Liquid Cooling in particular, is a cutting-edge technology that allows for more efficient cooling of computer systems, which is critical in high-performance computing used in AI. This ability to innovate at the product level can be a significant factor in their market share growth.

Furthermore, the optimistic revenue outlook for FY2024, with an increase from a range of $14.3 to $14.7 billion to $14.7 to $15.1 billion, suggests confidence in the company's strategic direction and product pipeline. For an investor, this forward guidance could be a signal of stability and the potential for continued growth.

Market Research Analyst

When compared to industry peers, Supermicro's projected year-over-year revenue and non-GAAP EPS growth of 200% and 308% respectively, stands out. It's important to note that while this performance is impressive, it is essential to monitor whether these growth rates are sustainable in the long term, especially given the rapid pace of change in the tech sector.

Regarding capital expenditures and operational cash flow, the outlay of $93 million combined with a reported operational cash outflow of $1,520 million might raise questions about liquidity and cash management strategies. Investors would benefit from understanding the nature of these investments and how they are expected to contribute to future revenue growth.

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 financial results for its third quarter of fiscal year 2024 ended March 31, 2024.

Third Quarter Fiscal Year 2024 Highlights

• Net sales of $3.85 billion versus $3.66 billion in the second quarter of fiscal year 2024 and $1.28 billion in the same quarter of last year.
• Gross margin of 15.5% versus 15.4% in the second quarter of fiscal year 2024 and 17.6% in the same quarter of last year.
• Net income of $402 million versus $296 million in the second quarter of fiscal year 2024 and $86 million in the same quarter of last year.
• Diluted net income per common share of $6.56 versus $5.10 in the second quarter of fiscal year 2024 and $1.53 in the same quarter of last year.
• Non-GAAP diluted net income per common share of $6.65 versus $5.59 in the second quarter of fiscal year 2024 and $1.63 in the same quarter of last year.
• Cash flow used in operations for the third quarter of fiscal year 2024 of $1,520 million and capital expenditures of $93 million.

Non-GAAP gross margin for the third quarter of fiscal year 2024 was 15.6% with adjustments for stock-based compensation expenses of $3 million. 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.

As of March 31, 2024, total cash and cash equivalents was $2,115 million and total bank debt and convertible notes were $1,863 million.

“We had yet another record quarter with fiscal Q3 revenue of $3.85 billion with non-GAAP EPS of $6.65 per share. This year-over-year revenue growth of 200% and year-over-year non-GAAP EPS growth of 308% was well above our industry peers,” said Charles Liang, President and CEO of Supermicro. “Strong demand for AI rack scale PnP solutions, along with our team’s ability to develop innovative DLC designs, enabled us to expand our market leadership in AI infrastructure. As new solutions ramp, including fully production ready DLC, we expect to continue gaining market share. As such, we are raising our fiscal year 2024 revenue outlook from $14.3 to $14.7 billion to a new range of $14.7 to $15.1 billion.”

Business Outlook and Management Commentary

For the fourth quarter of fiscal year 2024 ending June 30, 2024, the Company expects net sales of $5.1 billion to $5.5 billion, GAAP net income per diluted share of $7.20 to $8.05 and non-GAAP net income per diluted share of $7.62 to $8.42. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately -2.9% and 2.6%, respectively, and a fully diluted share count of 64.8 million shares for GAAP and fully diluted share count of 65.3 million shares for non-GAAP. The outlook for fourth quarter of fiscal year 2024 GAAP net income per diluted share includes approximately $30 million in expected stock-based compensation, net of related tax effects of $28 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 $14.3 billion to $14.7 billion to a range of $14.7 billion to $15.1 billion and establishing guidance for GAAP net income per diluted share of $21.61 to $22.46 and non-GAAP net income per diluted share of $23.29 to $24.09. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 3.6% and 9.2%, respectively, and a fully diluted share count of 61.2 million shares for GAAP and fully diluted share count of 61.8 million shares for non-GAAP. The outlook for fiscal year 2024 GAAP net income per diluted share includes approximately $116 million in expected stock-based compensation, net of related tax effects of $98 million that are excluded from non-GAAP net income per diluted share.

Conference Call and Webcast Information

Supermicro will present a live audio webcast of a conference call to review its third quarter of fiscal year 2024 on Tuesday, April 30, 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 fourth quarter of fiscal year 2024 and updated full year fiscal 2024 guidance, the ability of the team to develop innovative DLC designs, the ability to expand market leadership in AI infrastructure, the ability of new systems to ramp, and the 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 a Total IT Solutions manufacturer 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)
	March 31,			June 30,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	2,115,476		$	440,459
Accounts receivable, net of allowance for credit losses		1,650,153			1,148,259
Inventories		4,124,587			1,445,564
Prepaid expenses and other current assets		173,716			145,144
Total current assets		8,063,932			3,179,426
Property, plant and equipment, net		385,566			290,240
Deferred income taxes, net		330,248			162,654
Other assets		83,035			42,409
Total assets	$	8,862,781		$	3,674,729
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,092,445		$	776,831
Accrued liabilities		290,370			163,865
Income taxes payable		20,021			129,166
Short-term debt		81,566			170,123
Deferred revenue		233,293			134,667
Total current liabilities		1,717,695			1,374,652
Deferred revenue, non-current		203,198			169,781
Long-term debt		85,646			120,179
Convertible notes		1,696,255			—
Other long-term liabilities		65,831			37,947
Total liabilities		3,768,625			1,702,559
Stockholders’ equity:
Common stock and additional paid-in capital		2,805,008			538,352
Accumulated other comprehensive income		549			639
Retained earnings		2,288,436			1,433,014
Total Super Micro Computer, Inc. stockholders’ equity		5,093,993			1,972,005
Noncontrolling interest		163			165
Total stockholders’ equity		5,094,156			1,972,170
Total liabilities and stockholders’ equity	$	8,862,781		$	3,674,729

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,
	2024					2023			2024				2023
Net sales	$	3,850,066			$	1,283,296			$	9,634,662			$	4,938,621
Cost of sales		3,252,698				1,056,937				8,119,281				4,027,305
Gross profit		597,368				226,359				1,515,381				911,316
Operating expenses:
Research and development		116,226				77,515				336,077				222,458
Sales and marketing		49,691				25,312				133,775				83,120
General and administrative		53,137				24,450				123,241				71,351
Total operating expenses		219,054				127,277				593,093				376,929
Income from operations		378,314				99,082				922,288				534,387
Other income (expense), net		10,035				(78	)			8,762				1,641
Interest expense		(6,246	)			(1,288	)			(16,240	)			(6,982	)
Income before income tax provision		382,103				97,716				914,810				529,046
Income tax benefit (provision)		19,983				(10,857	)			(61,735	)			(79,364	)
Share of income (loss) from equity investee, net of taxes		373				(1,013	)			2,347				(3,253	)
Net income	$	402,459			$	85,846			$	855,422			$	446,429
Net income per common share:
Basic	$	7.13			$	1.61			$	15.68			$	8.42
Diluted	$	6.56			$	1.53			$	14.53			$	8.00
Weighted-average shares used in calculation of net income per common share:
Basic		56,478				53,280				54,562				53,011
Diluted		61,431				56,233				58,889				55,796

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,
	2024				2023				2024				2023
Cost of sales	$	3,221			$	1,215			$	12,680			$	3,585
Research and development		24,856				8,097				86,005				23,549
Sales and marketing		4,993				1,214				14,998				3,471
General and administrative		23,037				3,126				42,864				11,042
Stock-based compensation expense	$	56,107			$	13,652			$	156,547			$	41,647

SUPER MICRO COMPUTER, INC. SELECTED CASH FLOW INFORMATION (in thousands) (unaudited)
	Nine Months Ended March 31,
	2024				2023
Net cash (used in) provided by operating activities	$	(1,844,158	)		$	672,919
Net cash used in investing activities		(131,969	)			(28,618	)
Net cash provided by (used in) financing activities		3,652,783				(547,291	)
Effect of exchange rate fluctuations on cash		(1,634	)			(2,269	)
Net increase in cash, cash equivalents and restricted cash		1,675,022				94,741
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	$	2,115,982			$	363,300

SUPER MICRO COMPUTER, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited)
	Three Months Ended								Nine Months Ended
	March 31, 2024				March 31, 2023				March 31, 2024				March 31, 2023
GAAP GROSS PROFIT	$	597,368			$	226,359			$	1,515,381			$	911,316
Stock-based compensation		3,221				1,215				12,680				3,585
NON-GAAP GROSS PROFIT	$	600,589			$	227,574			$	1,528,061			$	914,901
GAAP GROSS MARGIN		15.5	%			17.6	%			15.7	%			18.5	%
Stock-based compensation		0.1	%			0.1	%			0.1	%			0.1	%
NON-GAAP GROSS MARGIN		15.6	%			17.7	%			15.8	%			18.6	%
GAAP OPERATING EXPENSE	$	219,054			$	127,277			$	593,093			$	376,929
Stock-based compensation		(52,886	)			(12,437	)			(143,867	)			(38,062	)
Litigation recovery		—				1,540				—				3,770
NON-GAAP OPERATING EXPENSE	$	166,168			$	116,380			$	449,226			$	342,637
GAAP INCOME FROM OPERATIONS	$	378,314			$	99,082			$	922,288			$	534,387
Stock-based compensation		56,107				13,652				156,547				41,647
Litigation recovery		—				(1,540	)			—				(3,770	)
NON-GAAP INCOME FROM OPERATIONS	$	434,421			$	111,194			$	1,078,835			$	572,264
GAAP OPERATING MARGIN		9.8	%			7.7	%			9.6	%			10.8	%
Stock-based compensation		1.5	%			1.1	%			1.6	%			0.8	%
Litigation recovery		—	%			(0.1	)%			—	%			(0.1	)%
NON-GAAP OPERATING MARGIN		11.3	%			8.7	%			11.2	%			11.5	%
GAAP TAX (BENEFIT) EXPENSE	$	(19,983	)		$	10,857			$	61,735			$	79,364
Adjustments to tax provision		47,023				4,433				72,641				11,963
NON-GAAP TAX EXPENSE	$	27,040			$	15,290			$	134,376			$	91,327
GAAP NET INCOME	$	402,459			$	85,846			$	855,422			$	446,429
Stock-based compensation		56,107				13,652				156,547				41,647
Litigation recovery		—				(1,540	)			—				(3,770	)
Adjustments to tax provision		(47,023	)			(4,433	)			(72,641	)			(11,963	)
NON-GAAP NET INCOME	$	411,543			$	93,525			$	939,328			$	472,343
GAAP NET INCOME - BASIC	$	402,459			$	85,846			$	855,422			$	446,429
Convertible notes interest charge, net of tax		385				—				385				—
GAAP NET INCOME - DILUTED	$	402,844			$	85,846			$	855,807			$	446,429
NON-GAAP NET INCOME - DILUTED	$	411,928			$	93,525			$	939,713			$	472,343
GAAP NET INCOME PER COMMON SHARE – BASIC	$	7.13			$	1.61			$	15.68			$	8.42
Impact of Non-GAAP adjustments		0.16				0.15				1.54				0.49
NON-GAAP NET INCOME PER COMMON SHARE – BASIC	$	7.29			$	1.76			$	17.22			$	8.91
GAAP NET INCOME PER COMMON SHARE – DILUTED	$	6.56			$	1.53			$	14.53			$	8.00
Impact of Non-GAAP adjustments		0.09				0.10				1.24				0.29
NON-GAAP NET INCOME PER COMMON SHARE – DILUTED	$	6.65			$	1.63			$	15.77			$	8.29
WEIGHTED-AVERAGE SHARES USED IN COMPUTING NET INCOME PER COMMON SHARE
BASIC – GAAP		56,478				53,280				54,562				53,011
BASIC – NON-GAAP		56,478				53,280				54,562				53,011
DILUTED – GAAP		61,431				56,233				58,889				55,796
DILUTED – NON-GAAP		61,953				57,315				59,578				56,966

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 $33 million, net of the related tax effects of $10 million.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240430682820/en/

Investor Relations Contact

Nicole Noutsios

email: ir@supermicro.com

Source: Super Micro Computer, Inc.

FAQ

What were Supermicro's net sales for the third quarter of fiscal year 2024?

Supermicro reported net sales of $3.85 billion for the third quarter of fiscal year 2024.

What is the non-GAAP diluted net income per common share for the third quarter of fiscal year 2024?

The non-GAAP diluted net income per common share for the third quarter of fiscal year 2024 was $6.65.

What is Supermicro's revised revenue outlook for fiscal year 2024?

Supermicro raised its revenue outlook for fiscal year 2024 to a range of $14.7 to $15.1 billion.

When is Supermicro's conference call to review its third quarter of fiscal year 2024?

Supermicro's conference call will be held on Tuesday, April 30, 2024, at 5:00 p.m. ET / 2:00 p.m. PT.

Where can I access the webcast of Supermicro's conference call?

The webcast will be available at https://ir.supermicro.com.