TechDogs-"Supermicro Announces Second Quarter Fiscal Year 2023 Financial Results"

IT Infrastructure

Supermicro Announces Second Quarter Fiscal Year 2023 Financial Results

By

undefined
Overall Rating

SAN JOSE, Calif.--(BUSINESS WIRE)--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

First published on Wed, Feb 1, 2023

Enjoyed what you've read so far? Great news - there's more to explore!

Stay up to date with the latest news, a vast collection of tech articles including introductory guides, product reviews, trends and more, thought-provoking interviews, hottest AI blogs and entertaining tech memes.

Plus, get access to branded insights such as informative white papers, intriguing case studies, in-depth reports, enlightening videos and exciting events and webinars from industry-leading global brands.

Dive into TechDogs' treasure trove today and Know Your World of technology!

Disclaimer - Reference to any specific product, software or entity does not constitute an endorsement or recommendation by TechDogs nor should any data or content published be relied upon. The views expressed by TechDogs’ members and guests are their own and their appearance on our site does not imply an endorsement of them or any entity they represent. Views and opinions expressed by TechDogs’ Authors are those of the Authors and do not necessarily reflect the view of TechDogs or any of its officials. All information / content found on TechDogs’ site may not necessarily be reviewed by individuals with the expertise to validate its completeness, accuracy and reliability.

Tags:

Supermicro IT Solution AI/ML 5G/Edge IT Infrastructure Green Computing

Join The Discussion

- Promoted By TechDogs -

The Brivo Partner Program
  • Dark
  • Light