Supermicro Announces Second Quarter Fiscal Year 2022 Financial Results

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

 

 

Contacts

Investor Relations Contact
Nicole Noutsios

email: [email protected]

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