Supermicro Announces Second Quarter Fiscal Year 2023 Financial Results

SAN JOSE, Calif.--()--Supermicro (Nasdaq: SMCI), a Total IT Solution Provider for Cloud, AI/ML, Storage, and 5G/Edge, today announced financial results for its second quarter of fiscal year 2023 ended December 31, 2022.

Second Quarter Fiscal Year 2023 Highlights

  • Net sales of $1.80 billion versus $1.85 billion in the first quarter of fiscal year 2023 and $1.17 billion in the same quarter of last year.
  • Gross margin of 18.7% versus 18.8% in the first quarter of fiscal year 2023 and 14.0% in the same quarter of last year.
  • Net income of $176 million versus $184 million in the first quarter of fiscal year 2023 and $42 million in the same quarter of last year.
  • Diluted net income per common share of $3.14 versus $3.35 in the first quarter of fiscal year 2023 and $0.78 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $3.26 versus $3.42 in the first quarter of fiscal year 2023 and $0.88 in the same quarter of last year.
  • Cash flow provided by operations for the second quarter of fiscal year 2023 of $161 million and capital expenditures of $10 million.

Non-GAAP gross margin for the second quarter of fiscal year 2023 was 18.8% which adds back stock-based compensation expenses of $1 million. Non-GAAP diluted net income per common share for the second quarter of fiscal year 2023 was $3.26, with adjustments for stock-based compensation expenses of $17 million and $2 million litigation expense recovery, net of the related tax effects of $4 million.

As of December 31, 2022, total cash and cash equivalents was $305 million and total bank debt was $170 million.

“Our fiscal Q2 2023 saw another record quarter with revenue just over $1.8 billion, up 54% YoY, making it the eighth consecutive quarter of outstanding growth that effectively doubled our annual revenue,” said Charles Liang, Chairman and CEO, Supermicro. “We continue to lead the market with the best designs and best in class Total IT Solutions. In fact, the structural shifts in the end markets favor our solution strategy. I remain confident and excited for fiscal 2023 and beyond, as we are in the beginning of many new platform launches that should continue to support our share gain momentum in the long run.”

Business Outlook and Management Commentary

For the third quarter of fiscal year 2023 ending March 31, 2023, the Company expects net sales of $1.42 billion to $1.52 billion, GAAP net income per diluted share of $1.75 to $2.02 and non-GAAP net income per diluted share of $1.88 to $2.14. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 15.9% and 16.9%, respectively, and a fully diluted share count of 57 million shares for GAAP and fully diluted share count of 58 million shares for non-GAAP. The outlook for Q3 of fiscal year 2023 GAAP net income per diluted share includes approximately $9 million in expected stock-based compensation and other expenses, net of related tax effects that are excluded from non-GAAP net income per diluted share.

For fiscal year 2023 ending June 30, 2023, the Company maintains its guidance for net sales from a range of $6.5 billion to $7.5 billion, GAAP net income per diluted share from a range of $8.50 to $11.00, and non-GAAP net income per diluted share from a range of $9.00 to $11.30. The Company’s projections for annual GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 19.2% and 19.8%, respectively, and a fully diluted share count of 57 million shares for GAAP and fully diluted share count of 58 million shares for non-GAAP. The outlook for fiscal year 2023 GAAP net income per diluted share includes approximately $33 million in expected stock-based compensation and other expenses, net of related tax effects 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 2023.

Those wishing to access the live webcast may use the following link: https://events.q4inc.com/attendee/374434608

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 2023 and full year fiscal 2023 guidance, structural shifts in the end markets favoring our solution strategy, and new platform launches supporting our share gain momentum in the long run. 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 may continue to present significant uncertainties for 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, 2022, 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 and other 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 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,

 

2022

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

304,595

 

$

267,397

Accounts receivable, net of allowance for credit losses

 

768,167

 

 

 

834,513

 

Inventories

 

1,421,817

 

 

 

1,545,606

 

Prepaid expenses and other current assets

 

154,924

 

 

 

158,799

 

Total current assets

 

2,649,503

 

 

 

2,806,315

 

Investment in equity investee

 

3,197

 

 

 

5,329

 

Property, plant and equipment, net

 

289,255

 

 

 

285,972

 

Deferred income taxes, net

 

95,741

 

 

 

69,929

 

Other assets

 

37,246

 

 

 

37,532

 

Total assets

$

3,074,942

 

 

$

3,205,077

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

559,962

 

 

$

655,403

 

Accrued liabilities

 

169,866

 

 

 

212,419

 

Income taxes payable

 

38,713

 

 

 

41,743

 

Short-term debt

 

27,869

 

 

 

449,146

 

Deferred revenue

 

120,530

 

 

 

111,313

 

Total current liabilities

 

916,940

 

 

 

1,470,024

 

Deferred revenue, non-current

 

159,574

 

 

 

122,548

 

Long-term debt

 

142,273

 

 

 

147,618

 

Other long-term liabilities

 

37,313

 

 

 

39,140

 

Total liabilities

 

1,256,100

 

 

 

1,779,330

 

Stockholders’ equity:

 

 

 

Common stock and additional paid-in capital

 

514,559

 

 

 

481,741

 

Accumulated other comprehensive income

 

612

 

 

 

911

 

Retained earnings

 

1,303,506

 

 

 

942,923

 

Total Super Micro Computer, Inc. stockholders’ equity

 

1,818,677

 

 

 

1,425,575

 

Noncontrolling interest

 

165

 

 

 

172

 

Total stockholders’ equity

 

1,818,842

 

 

 

1,425,747

 

Total liabilities and stockholders’ equity

$

3,074,942

 

 

$

3,205,077

 

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,

 

2022

 

2021

 

2022

 

2021

Net sales

$

1,803,195

 

 

$

1,172,419

 

 

$

3,655,325

 

 

$

2,205,149

 

Cost of sales

 

1,465,773

 

 

 

1,008,676

 

 

 

2,970,368

 

 

 

1,903,267

 

Gross profit

 

337,422

 

 

 

163,743

 

 

 

684,957

 

 

 

301,882

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

70,700

 

 

 

65,471

 

 

 

144,943

 

 

 

130,614

 

Sales and marketing

 

28,445

 

 

 

21,960

 

 

 

57,808

 

 

 

43,584

 

General and administrative

 

23,095

 

 

 

25,263

 

 

 

46,901

 

 

 

47,507

 

Total operating expenses

 

122,240

 

 

 

112,694

 

 

 

249,652

 

 

 

221,705

 

Income from operations

 

215,182

 

 

 

51,049

 

 

 

435,305

 

 

 

80,177

 

Other (expense) income, net

 

(6,335

)

 

 

(607

)

 

 

1,719

 

 

 

(557

)

Interest expense

 

(1,756

)

 

 

(1,150

)

 

 

(5,694

)

 

 

(1,954

)

Income before income tax provision

 

207,091

 

 

 

49,292

 

 

 

431,330

 

 

 

77,666

 

Income tax (provision)

 

(29,573

)

 

 

(7,599

)

 

 

(68,507

)

 

 

(10,924

)

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

 

(1,351

)

 

 

239

 

 

 

(2,240

)

 

 

627

 

Net income

$

176,167

 

 

$

41,932

 

 

$

360,583

 

 

$

67,369

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

3.31

 

 

$

0.82

 

 

$

6.84

 

 

$

1.32

 

Diluted

$

3.14

 

 

$

0.78

 

 

$

6.51

 

 

$

1.27

 

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

 

 

 

 

 

 

 

Basic

 

53,160

 

 

 

51,314

 

 

 

52,726

 

 

 

51,055

 

Diluted

 

56,144

 

 

 

53,511

 

 

 

55,427

 

 

 

53,213

 

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,

 

2022

 

2021

 

2022

 

2021

Cost of sales

$

1,486

 

$

471

 

$

2,370

 

$

918

Research and development

 

9,334

 

 

 

4,103

 

 

 

15,452

 

 

 

7,983

 

Sales and marketing

 

1,448

 

 

 

496

 

 

 

2,257

 

 

 

1,013

 

General and administrative

 

4,713

 

 

 

4,106

 

 

 

7,916

 

 

 

6,277

 

Stock-based compensation expense

$

16,981

 

 

$

9,176

 

 

$

27,995

 

 

$

16,191

 

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

(unaudited)

 

 

Six Months Ended
December 31,

 

2022

 

2021

Net cash provided by (used in) operating activities

$

474,674

 

 

$

(187,722

)

Net cash (used in) investing activities

 

(20,631

)

 

 

(24,306

)

Net cash (used in) provided by financing activities

 

(415,821

)

 

 

227,173

 

Effect of exchange rate fluctuations on cash

 

(1,693

)

 

 

(9

)

Net increase in cash, cash equivalents and restricted cash

 

36,529

 

 

 

15,136

 

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

 

268,559

 

 

 

233,449

 

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

$

305,088

 

 

$

248,585

 

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,

 

2022

 

2021

 

2022

 

2021

GAAP GROSS PROFIT

$

337,422

 

 

$

163,743

 

 

$

684,957

 

 

$

301,882

 

Stock-based compensation

 

1,486

 

 

 

471

 

 

 

2,370

 

 

 

918

 

Other expenses

 

 

 

 

 

 

 

 

 

 

295

 

NON-GAAP GROSS PROFIT

$

338,908

 

 

$

164,214

 

 

$

687,327

 

 

$

303,095

 

 

 

 

 

 

 

 

 

GAAP GROSS MARGIN

 

18.7

%

 

 

14.0

%

 

 

18.7

%

 

 

13.7

%

Stock-based compensation

 

0.1

%

 

 

0.0

%

 

 

0.1

%

 

 

0.0

%

Other expenses

 

%

 

 

%

 

 

%

 

 

0.0

%

NON-GAAP GROSS MARGIN

 

18.8

%

 

 

14.0

%

 

 

18.8

%

 

 

13.7

%

 

 

 

 

 

 

 

 

GAAP OPERATING EXPENSE

$

122,240

 

 

$

112,694

 

 

$

249,652

 

 

$

221,705

 

Stock-based compensation

 

(15,495

)

 

 

(8,705

)

 

 

(25,625

)

 

 

(15,273

)

Special performance bonuses

 

 

 

 

 

 

 

 

 

 

(158

)

Litigation recovery (expense)

 

2,230

 

 

 

(597

)

 

 

2,230

 

 

 

(1,923

)

NON-GAAP OPERATING EXPENSE

$

108,975

 

 

$

103,392

 

 

$

226,257

 

 

$

204,351

 

 

 

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$

215,182

 

 

$

51,049

 

 

$

435,305

 

 

$

80,177

 

Stock-based compensation

 

16,981

 

 

 

9,176

 

 

 

27,995

 

 

 

16,191

 

Special performance bonuses

 

 

 

 

 

 

 

 

 

 

453

 

Litigation (recovery) expense

 

(2,230

)

 

 

597

 

 

 

(2,230

)

 

 

1,923

 

NON-GAAP INCOME FROM OPERATIONS

$

229,933

 

 

$

60,822

 

 

$

461,070

 

 

$

98,744

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

11.9

%

 

 

4.4

%

 

 

11.9

%

 

 

3.6

%

Stock-based compensation

 

1.0

%

 

 

0.8

%

 

 

0.8

%

 

 

0.7

%

Special performance bonuses

 

%

 

 

%

 

 

%

 

 

0.1

%

Litigation (recovery) expense

 

(0.1

)%

 

 

0.0

%

 

 

(0.1

)%

 

 

0.1

%

NON-GAAP OPERATING MARGIN

 

12.8

%

 

 

5.2

%

 

 

12.6

%

 

 

4.5

%

 

 

 

 

 

 

 

 

GAAP TAX EXPENSE

$

29,573

 

 

$

7,599

 

 

$

68,507

 

 

$

10,924

 

Adjustments to tax provision

 

4,300

 

 

 

3,339

 

 

 

7,530

 

 

 

6,169

 

NON-GAAP TAX EXPENSE

$

33,873

 

 

$

10,938

 

 

$

76,037

 

 

$

17,093

 

 

 

 

 

 

 

 

 

GAAP NET INCOME

$

176,167

 

 

$

41,932

 

 

$

360,583

 

 

$

67,369

 

Stock-based compensation

 

16,981

 

 

 

9,176

 

 

 

27,995

 

 

 

16,191

 

Special performance bonuses

 

 

 

 

 

 

 

 

 

 

453

 

Litigation (recovery) expense

 

(2,230

)

 

 

597

 

 

 

(2,230

)

 

 

1,923

 

Adjustments to tax provision

 

(4,300

)

 

 

(3,339

)

 

 

(7,530

)

 

 

(6,169

)

NON-GAAP NET INCOME

$

186,618

 

 

$

48,366

 

 

$

378,818

 

 

$

79,767

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$

3.31

 

 

$

0.82

 

 

$

6.84

 

 

$

1.32

 

Impact of Non-GAAP adjustments

 

0.20

 

 

 

0.12

 

 

 

0.34

 

 

 

0.24

 

NON-GAAP NET INCOME PER COMMON SHARE – BASIC

$

3.51

 

 

$

0.94

 

 

$

7.18

 

 

$

1.56

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$

3.14

 

 

$

0.78

 

 

$

6.51

 

 

$

1.27

 

Impact of Non-GAAP adjustments

 

0.12

 

 

 

0.10

 

 

 

0.18

 

 

 

0.19

 

NON-GAAP NET INCOME PER COMMON SHARE – DILUTED

$

3.26

 

 

$

0.88

 

 

$

6.69

 

 

$

1.46

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC – GAAP

 

53,160

 

 

 

51,314

 

 

 

52,726

 

 

 

51,055

 

BASIC – NON-GAAP

 

53,160

 

 

 

51,314

 

 

 

52,726

 

 

 

51,055

 

 

 

 

 

 

 

 

 

DILUTED – GAAP

 

56,144

 

 

 

53,511

 

 

 

55,427

 

 

 

53,213

 

DILUTED – NON-GAAP

 

57,318

 

 

 

54,947

 

 

 

56,641

 

 

 

54,655

 

Non-GAAP diluted net income per common share for the first quarter of fiscal year 2023 ended September 30, 2022 was $3.42, which adds back the impact of stock-based compensation expenses, net of the related tax effects of $0.07 per common share.

Contacts

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

Release Summary

Supermicro Announces Second Quarter Fiscal Year 2023 Financial Results

Contacts

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