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Supermicro Announces Fourth Quarter and Full Year Fiscal Year 2023 Financial Results

Super Micro Computer, Inc. (Nasdaq: SMCI), a Total IT Solution Provider for Cloud, AI/ML, Storage, and 5G/Edge, today announced fourth quarter and full-year financial results for fiscal year 2023 ended June 30, 2023.

Fourth Quarter of Fiscal Year 2023 Highlights

  • Net sales of $2.18 billion versus $1.28 billion in the third quarter of fiscal year 2023 and $1.64 billion in the same quarter of last year.
  • Gross margin of 17.0% versus 17.6% in the third quarter of fiscal year 2023 and 17.6% in the same quarter of last year.
  • Net income of $194 million versus $86 million in the third quarter of fiscal year 2023 and $141 million in the same quarter of last year.
  • Diluted net income per common share of $3.43 versus $1.53 in the third quarter of fiscal year 2023 and $2.60 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $3.51 versus $1.63 in the third quarter of fiscal year 2023 and $2.62 in the same quarter of last year.
  • Cash flow used in operations for the fourth quarter of fiscal year 2023 of $9 million and capital expenditures of $8 million.

Non-GAAP gross margin for the fourth quarter of fiscal year 2023 was 17.1%, which adds back stock-based compensation expense of $1 million. Non-GAAP diluted net income per common share for the fourth quarter of fiscal year 2023 was $3.51, with adjustments for stock-based compensation expenses of $13 million, net of the related tax effects of $5 million.

As of June 30, 2023, total cash and cash equivalents was $440 million and bank debt was $290 million.

“Supermicro’s record revenue and 37% year-over-year growth for fiscal year 2023 validates our global leadership position in AI accelerated compute platforms,” said Charles Liang, President and CEO of Supermicro. “We continue to see unprecedented demand for AI and other advanced applications requiring optimized rack-scale solutions. We are in a great position to continue our growth momentum given our record new design wins, customers, and backlog for our best-in-class rack-scale Total AI & IT Solutions.”

Fiscal Year 2023 Summary

Net sales for the fiscal year ended June 30, 2023, were $7.12 billion versus $5.20 billion for the fiscal year ended June 30, 2022. Net income for fiscal year 2023 was $640 million, or $11.43 per diluted share, versus $285 million, or $5.32 per diluted share, for fiscal year 2022. Non-GAAP net income for fiscal year 2023 was $673 million, or $11.81 per diluted share, versus $311 million, or $5.65 per diluted share, for fiscal year 2022. Non-GAAP net income for fiscal year 2023 adds back stock-based compensation expense of $54 million and litigation recovery of $4 million, net of the related tax effects of $17 million.

Business Outlook and Management Commentary

For the first quarter of fiscal year 2024 ending September 30, 2023, the Company expects net sales of $1.90 billion to $2.20 billion, GAAP net income per diluted share of $2.02 to $2.80 and non-GAAP net income per diluted share of $2.75 to $3.50. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 14.7% and 15.4%, respectively, and a fully diluted share count of 56 million shares for GAAP and fully diluted share count of 57 million shares for non-GAAP. The outlook for Q1 of fiscal year 2024 GAAP net income per diluted share includes approximately $44 million in expected stock-based compensation expense and other expenses, net of related tax effects of $9 million, which are excluded from non-GAAP net income per diluted share.

For fiscal year 2024 ending June 30, 2024, the Company expects net sales of $9.5 billion to $10.5 billion.

Conference Call and Webcast Information

Supermicro will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its fourth quarter and full-year fiscal 2023 financial results. Those wishing to access the live webcast may use the following link:

https://events.q4inc.com/attendee/910502687

The conference call can be accessed by registering online at:

https://conferencingportals.com/event/AcFjVwZF

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 first quarter of fiscal year 2024 and full year fiscal 2024 guidance; demand for AI and other advanced applications; and the Company's position to continue 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, 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, litigation settlement costs, special performance bonuses 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 transforming into 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)

 

 

June 30,

 

June 30,

 

2023

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

440,459

 

$

267,397

Accounts receivable, net of allowance for credit losses

 

1,148,259

 

 

834,513

Inventories

 

1,445,564

 

 

1,545,606

Prepaid expenses and other current assets

 

145,144

 

 

158,799

Total current assets

 

3,179,426

 

 

2,806,315

Property, plant and equipment, net

 

290,240

 

 

285,972

Deferred income taxes, net

 

162,654

 

 

69,929

Other assets

 

42,409

 

 

42,861

Total assets

$

3,674,729

 

$

3,205,077

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

776,831

 

$

655,403

Accrued liabilities

 

163,865

 

 

212,419

Income taxes payable

 

129,166

 

 

41,743

Short-term debt

 

170,123

 

 

449,146

Deferred revenue

 

134,667

 

 

111,313

Total current liabilities

 

1,374,652

 

 

1,470,024

Deferred revenue, non-current

 

169,781

 

 

122,548

Long-term debt

 

120,179

 

 

147,618

Other long-term liabilities

 

37,947

 

 

39,140

Total liabilities

 

1,702,559

 

 

1,779,330

Stockholders’ equity:

 

 

 

Common stock and additional paid in capital

 

538,352

 

 

481,741

Accumulated other comprehensive income

 

639

 

 

911

Retained earnings

 

1,433,014

 

 

942,923

Total Super Micro Computer, Inc. stockholders’ equity

 

1,972,005

 

 

1,425,575

Noncontrolling interest

 

165

 

 

172

Total stockholders’ equity

 

1,972,170

 

 

1,425,747

Total liabilities and stockholders’ equity

$

3,674,729

 

$

3,205,077

 

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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net sales

$

2,184,861

 

 

$

1,635,460

 

 

$

7,123,482

 

 

$

5,196,099

 

Cost of sales

 

1,813,165

 

 

 

1,348,116

 

 

 

5,840,470

 

 

 

4,396,098

 

Gross profit

 

371,696

 

 

 

287,344

 

 

 

1,283,012

 

 

 

800,001

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

84,802

 

 

 

70,790

 

 

 

307,260

 

 

 

272,273

 

Sales and marketing

 

31,905

 

 

 

24,186

 

 

 

115,025

 

 

 

90,126

 

General and administrative

 

28,234

 

 

 

27,155

 

 

 

99,585

 

 

 

102,435

 

Total operating expenses

 

144,941

 

 

 

122,131

 

 

 

521,870

 

 

 

464,834

 

Income from operations

 

226,755

 

 

 

165,213

 

 

 

761,142

 

 

 

335,167

 

Other income, net

 

2,005

 

 

 

3,973

 

 

 

3,646

 

 

 

8,079

 

Interest expense

 

(3,509

)

 

 

(2,928

)

 

 

(10,491

)

 

 

(6,413

)

Income before income tax

 

225,251

 

 

 

166,258

 

 

 

754,297

 

 

 

336,833

 

Income tax provision

 

(31,302

)

 

 

(25,760

)

 

 

(110,666

)

 

 

(52,876

)

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

 

(380

)

 

 

324

 

 

 

(3,633

)

 

 

1,206

 

Net income

$

193,569

 

 

$

140,822

 

 

$

639,998

 

 

$

285,163

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

3.67

 

 

$

2.70

 

 

$

12.09

 

 

$

5.54

 

Diluted

$

3.43

 

 

$

2.60

 

 

$

11.43

 

 

$

5.32

 

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

 

 

 

 

 

 

 

Basic

 

52,679

 

 

 

52,111

 

 

 

52,925

 

 

 

51,478

 

Diluted

 

56,505

 

 

 

54,260

 

 

 

55,970

 

 

 

53,615

 

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,

 

2023

 

2022

 

2023

 

2022

Cost of sales

$

989

 

$

498

 

$

4,574

 

$

1,876

Research and development

 

7,187

 

 

4,447

 

 

30,736

 

 

16,571

Sales and marketing

 

1,128

 

 

541

 

 

4,599

 

 

2,058

General and administrative

 

3,482

 

 

3,398

 

 

14,524

 

 

12,311

Stock-based compensation expense

$

12,786

 

$

8,884

 

$

54,433

 

$

32,816

 

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

(unaudited)

 

Years Ended June 30,

 

 

2023

 

 

 

2022

 

Net cash provided by (used in) operating activities

$

663,580

 

 

$

(440,801

)

Net cash used in investing activities

 

(39,486

)

 

 

(46,282

)

Net cash (used in) provided by financing activities

 

(448,293

)

 

 

522,871

 

Effect of exchange rate fluctuations on cash

 

(3,400

)

 

 

(678

)

Net increase in cash, cash equivalents and restricted cash

 

172,401

 

 

 

35,110

 

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

 

268,559

 

 

 

233,449

 

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

$

440,960

 

 

$

268,559

 

 

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,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

GAAP GROSS PROFIT

$

371,696

 

 

$

287,344

 

 

$

1,283,012

 

 

$

800,001

 

Stock-based compensation

 

989

 

 

 

498

 

 

 

4,574

 

 

 

1,876

 

Other expenses

 

 

 

 

 

 

 

 

 

 

295

 

NON-GAAP GROSS PROFIT

$

372,685

 

 

$

287,842

 

 

$

1,287,586

 

 

$

802,172

 

 

 

 

 

 

 

 

 

GAAP GROSS MARGIN

 

17.0

%

 

 

17.6

%

 

 

18.0

%

 

 

15.4

%

Stock-based compensation

 

0.1

%

 

 

0.0

%

 

 

0.1

%

 

 

0.0

%

Other expenses

 

%

 

 

%

 

 

%

 

 

0.0

%

NON-GAAP GROSS MARGIN

 

17.1

%

 

 

17.6

%

 

 

18.1

%

 

 

15.4

%

 

 

 

 

 

 

 

 

GAAP OPERATING EXPENSES

$

144,941

 

 

$

122,131

 

 

$

521,870

 

 

$

464,834

 

Stock-based compensation

 

(11,797

)

 

 

(8,386

)

 

 

(49,859

)

 

 

(30,940

)

Litigation settlement costs

 

 

 

 

 

 

 

 

 

 

(2,000

)

Special performance bonuses

 

 

 

 

 

 

 

 

 

 

(158

)

Litigation (expense) recovery

 

 

 

 

(234

)

 

 

3,770

 

 

 

(4,367

)

NON-GAAP OPERATING EXPENSES

$

133,144

 

 

$

113,511

 

 

$

475,781

 

 

$

427,369

 

 

 

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$

226,755

 

 

$

165,213

 

 

$

761,142

 

 

$

335,167

 

Stock-based compensation

 

12,786

 

 

 

8,884

 

 

 

54,433

 

 

 

32,816

 

Litigation settlement costs

 

 

 

 

 

 

 

 

 

 

2,000

 

Special performance bonuses

 

 

 

 

 

 

 

 

 

 

453

 

Litigation expense (recovery)

 

 

 

 

234

 

 

 

(3,770

)

 

 

4,367

 

NON-GAAP INCOME FROM OPERATIONS

$

239,541

 

 

$

174,331

 

 

$

811,805

 

 

$

374,803

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

10.4

%

 

 

10.1

%

 

 

10.7

%

 

 

6.5

%

Stock-based compensation

 

0.6

%

 

 

0.6

%

 

 

0.8

%

 

 

0.6

%

Litigation settlement costs

 

%

 

 

%

 

 

%

 

 

0.0

%

Special performance bonuses

 

%

 

 

%

 

 

%

 

 

0.0

%

Litigation expense (recovery)

 

%

 

 

0.0

%

 

 

(0.1

)%

 

 

0.1

%

NON-GAAP OPERATING MARGIN

 

11.0

%

 

 

10.7

%

 

 

11.4

%

 

 

7.2

%

 

 

 

 

 

 

 

 

GAAP TAX EXPENSE

$

31,302

 

 

$

25,760

 

 

$

110,666

 

 

$

52,876

 

Adjustments to tax provision

 

5,304

 

 

 

4,137

 

 

 

17,267

 

 

 

13,721

 

NON-GAAP TAX EXPENSE

$

36,606

 

 

$

29,897

 

 

$

127,933

 

 

$

66,597

 

 

 

 

 

 

 

 

 

GAAP NET INCOME

$

193,569

 

 

$

140,822

 

 

$

639,998

 

 

$

285,163

 

Stock-based compensation

 

12,786

 

 

 

8,884

 

 

 

54,433

 

 

 

32,816

 

Litigation settlement costs

 

 

 

 

 

 

 

 

 

 

2,000

 

Special performance bonuses

 

 

 

 

 

 

 

 

 

 

453

 

Litigation expense (recovery)

 

 

 

 

234

 

 

 

(3,770

)

 

 

4,367

 

Adjustments to tax provision

 

(5,304

)

 

 

(4,137

)

 

 

(17,267

)

 

 

(13,721

)

NON-GAAP NET INCOME

$

201,051

 

 

$

145,803

 

 

$

673,394

 

 

$

311,078

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$

3.67

 

 

$

2.70

 

 

$

12.09

 

 

$

5.54

 

Impact of NON-GAAP adjustments

 

0.15

 

 

 

0.10

 

 

 

0.63

 

 

 

0.50

 

NON-GAAP NET INCOME PER COMMON SHARE – BASIC

$

3.82

 

 

$

2.80

 

 

$

12.72

 

 

$

6.04

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$

3.43

 

 

$

2.60

 

 

$

11.43

 

 

$

5.32

 

Impact of NON-GAAP adjustments

 

0.08

 

 

 

0.02

 

 

 

0.38

 

 

 

0.33

 

NON-GAAP NET INCOME PER COMMON SHARE – DILUTED

$

3.51

 

 

$

2.62

 

 

$

11.81

 

 

$

5.65

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC – GAAP

 

52,679

 

 

 

52,111

 

 

 

52,925

 

 

 

51,478

 

BASIC – NON-GAAP

 

52,679

 

 

 

52,111

 

 

 

52,925

 

 

 

51,478

 

 

 

 

 

 

 

 

 

DILUTED – GAAP

 

56,505

 

 

 

54,260

 

 

 

55,970

 

 

 

53,615

 

DILUTED – NON-GAAP

 

57,222

 

 

 

55,611

 

 

 

57,027

 

 

 

55,025

 

 

Non-GAAP diluted net income per common share for the third quarter of fiscal year 2023 was $1.63, with adjustments for stock-based compensation expenses of $14 million and $2 million litigation expense recovery, net of the related tax effects of $4 million.

 

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