Supermicro Announces Fourth Quarter and Full Year Fiscal Year 2022 Financial Results

Super Micro Computer, Inc. (Nasdaq: SMCI), a global leader in high-performance, high-efficiency server and storage technology and green computing, today announced fourth quarter and full-year financial results for fiscal year 2022 ended June 30, 2022.

Fourth Quarter of Fiscal Year 2022 Highlights

  • Net sales of $1.64 billion versus $1.36 billion in the third quarter of fiscal year 2022 and $1.07 billion in the same quarter of last year.
  • Gross margin of 17.6% versus 15.5% in the third quarter of fiscal year 2022 and 13.6% in the same quarter of last year.
  • Net income of $141 million versus $77 million in the third quarter of fiscal year 2022 and $39 million in the same quarter of last year.
  • Diluted net income per common share of $2.60 versus $1.43 in the third quarter of fiscal year 2022 and $0.74 in the same quarter of last year.
  • Non-GAAP diluted net income per common share of $2.62 versus $1.55 in the third quarter of fiscal year 2022 and $0.81 in the same quarter of last year.
  • Cash flow used in operations for the fourth quarter of fiscal year 2022 of $25 million and capital expenditures of $11 million.

Non-GAAP gross margin for the fourth quarter of fiscal year 2022 was 17.6%, which adds back stock-based compensation expense of $0.5 million. Non-GAAP diluted net income per common share for the fourth quarter of fiscal year 2022 was $2.62, which adds back stock-based compensation expense of $8.9 million and other expenses of $0.2 million, net of the related tax effects.

As of June 30, 2022, total cash and cash equivalents was $267.4 million and bank debt was $596.8 million.

“The Supermicro team has attained yet another milestone by achieving $5.2 billion in annual revenue,” said Charles Liang, Chairman and CEO. “The ramp up of recent design wins and top tier customers adopting our plug and play ("PNP") rack-scale solutions have given us momentum going into fiscal year 2023. We are well on our way to becoming the leading global supplier of rack-scale Total IT Solutions, powering the world’s digital transformation across diverse applications in key market segments including AI, enterprise, cloud, edge/telco and others.”

Fiscal Year 2022 Summary

Net sales for the fiscal year ended June 30, 2022, were $5.20 billion versus $3.56 billion for the fiscal year ended June 30, 2021. Net income for fiscal year 2022 was $285 million, or $5.32 per diluted share, versus $112 million, or $2.09 per diluted share, for fiscal year 2021. Non-GAAP net income for the fiscal year 2022 was $311 million, or $5.65 per diluted share, versus $136 million, or $2.48 per diluted share, for fiscal year 2021. Non-GAAP net income for the fiscal year 2022 adds back stock-based compensation expense of $32.8 million, litigation expenses of $4.4 million, $2.0 million of litigation settlement costs, and $0.5 million of special performance bonuses, net of the related tax effects.

Business Outlook and Management Commentary

For the first quarter of fiscal year 2023 ending September 30, 2022, the Company expects net sales of $1.52 billion to $1.62 billion, GAAP net income per diluted share of $2.01 to $2.27 and non-GAAP net income per diluted share of $2.07 to $2.32. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 19.4% and 20.3%, respectively, and a fully diluted share count of 54.8 million shares for GAAP and fully diluted share count of 56.2 million shares for non-GAAP. The outlook for Q1 of fiscal year 2023 GAAP net income per diluted share includes approximately $8.6 million in expected stock-based compensation expense and $0.5 million in 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 expects net sales of $6.2 billion to $7.0 billion, GAAP net income per diluted share of at least $7.27 and non-GAAP net income per diluted share of at least $7.50. The Company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 20.3% and 21.1%, respectively, and a fully diluted share count of 55.6 million shares for GAAP and fully diluted share count of 57.0 million shares for non-GAAP. The outlook for fiscal year 2023 GAAP net income per diluted share includes approximately $35.4 million in expected stock-based compensation expense 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. PDT today to discuss the results for its fourth quarter and full-year fiscal 2022 financial results. Those wishing to access the live webcast may use the following link: https://events.q4inc.com/attendee/361336377

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 first quarter of fiscal year 2023 and full fiscal year 2023 guidance, the Company's long-term growth targets, momentum going into fiscal year 2023, the ability to become the leading global supplier of rack-scale Total IT Solutions, 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 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, special performance bonuses, litigation and controls remediation expenses, litigation settlement costs and other 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)

 

 

June 30,

 

June 30,

 

2022

 

2021

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

267,397

 

$

232,266

Accounts receivable, net of allowances

 

834,513

 

 

463,834

Inventories

 

1,545,606

 

 

1,040,964

Prepaid expenses and other current assets

 

158,799

 

 

130,195

Total current assets

 

2,806,315

 

 

1,867,259

Investment in equity investee

 

5,329

 

 

4,578

Property, plant and equipment, net

 

285,972

 

 

274,713

Deferred income taxes, net

 

69,929

 

 

63,288

Other assets

 

37,532

 

 

32,126

Total assets

$

3,205,077

 

$

2,241,964

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

655,403

 

$

612,336

Accrued liabilities

 

212,419

 

 

178,850

Income taxes payable

 

41,743

 

 

12,741

Short-term debt

 

449,146

 

 

63,490

Deferred revenue

 

111,313

 

 

101,479

Total current liabilities

 

1,470,024

 

 

968,896

Deferred revenue, non-current

 

122,548

 

 

100,838

Long-term debt

 

147,618

 

 

34,700

Other long-term liabilities

 

39,140

 

 

41,132

Total liabilities

 

1,779,330

 

 

1,145,566

Stockholders’ equity:

 

 

 

Common stock and additional paid in capital

 

481,741

 

 

438,012

Accumulated other comprehensive income

 

911

 

 

453

Retained earnings

 

942,923

 

 

657,760

Total Super Micro Computer, Inc. stockholders’ equity

 

1,425,575

 

 

1,096,225

Noncontrolling interest

 

172

 

 

173

Total stockholders’ equity

 

1,425,747

 

 

1,096,398

Total liabilities and stockholders’ equity

$

3,205,077

 

$

2,241,964

SUPER MICRO COMPUTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended June 30,

 

Years Ended June 30,

 

2022

 

2021

 

2022

 

2021

Net sales

$

1,635,460

 

 

$

1,068,985

 

 

$

5,196,099

 

 

$

3,557,422

 

Cost of sales

 

1,348,116

 

 

 

923,474

 

 

 

4,396,098

 

 

 

3,022,884

 

Gross profit

 

287,344

 

 

 

145,511

 

 

 

800,001

 

 

 

534,538

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

70,790

 

 

 

58,930

 

 

 

272,273

 

 

 

224,369

 

Sales and marketing

 

24,186

 

 

 

22,825

 

 

 

90,126

 

 

 

85,683

 

General and administrative

 

27,155

 

 

 

24,675

 

 

 

102,435

 

 

 

100,539

 

Total operating expenses

 

122,131

 

 

 

106,430

 

 

 

464,834

 

 

 

410,591

 

Income from operations

 

165,213

 

 

 

39,081

 

 

 

335,167

 

 

 

123,947

 

Other income (expense), net

 

3,973

 

 

 

(1,471

)

 

 

8,079

 

 

 

(2,834

)

Interest expense

 

(2,928

)

 

 

(635

)

 

 

(6,413

)

 

 

(2,485

)

Income before income tax

 

166,258

 

 

 

36,975

 

 

 

336,833

 

 

 

118,628

 

Income tax (provision) benefit

 

(25,760

)

 

 

1,605

 

 

 

(52,876

)

 

 

(6,936

)

Share of income from equity investee, net of taxes

 

324

 

 

 

582

 

 

 

1,206

 

 

 

173

 

Net income

$

140,822

 

 

$

39,162

 

 

$

285,163

 

 

$

111,865

 

Net income per common share:

 

 

 

 

 

 

 

Basic

$

2.70

 

 

$

0.78

 

 

$

5.54

 

 

$

2.19

 

Diluted

$

2.60

 

 

$

0.74

 

 

$

5.32

 

 

$

2.09

 

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

 

 

 

 

 

 

 

Basic

 

52,111

 

 

 

50,230

 

 

 

51,478

 

 

 

51,157

 

Diluted

 

54,260

 

 

 

52,782

 

 

 

53,615

 

 

 

53,507

 

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,

 

2022

 

2021

 

2022

 

2021

Cost of sales

$

498

 

$

450

 

$

1,876

 

$

1,762

Research and development

 

4,447

 

 

3,661

 

 

16,571

 

 

14,030

Sales and marketing

 

541

 

 

505

 

 

2,058

 

 

2,022

General and administrative

 

3,398

 

 

2,816

 

 

12,311

 

 

10,735

Stock-based compensation expense

$

8,884

 

$

7,432

 

$

32,816

 

$

28,549

SUPER MICRO COMPUTER, INC.

SELECTED CASH FLOW INFORMATION

(in thousands)

(unaudited)

 

 

Years Ended June 30,

 

2022

 

2021

Net cash (used in) provided by operating activities

$

(440,801

)

 

$

122,955

 

Net cash used in investing activities

 

(46,282

)

 

 

(58,016

)

Net cash provided by (used in) financing activities

 

522,871

 

 

 

(44,440

)

Effect of exchange rate fluctuations on cash

 

(678

)

 

 

560

 

Net change in cash, cash equivalents and restricted cash

 

35,110

 

 

 

21,059

 

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

 

233,449

 

 

 

212,390

 

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

$

268,559

 

 

$

233,449

 

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,

 

2022

 

2021

 

2022

 

2021

GAAP GROSS PROFIT

$

287,344

 

 

$

145,511

 

 

$

800,001

 

 

$

534,538

 

Stock-based compensation

 

498

 

 

 

450

 

 

 

1,876

 

 

 

1,762

 

Other expenses

 

 

 

 

 

 

 

295

 

 

 

20

 

NON-GAAP GROSS PROFIT

$

287,842

 

 

$

145,961

 

 

$

802,172

 

 

$

536,320

 

 

 

 

 

 

 

 

 

GAAP GROSS MARGIN

 

17.6

%

 

 

13.6

%

 

 

15.4

%

 

 

15.0

%

Stock-based compensation

 

0.0

%

 

 

0.1

%

 

 

0.0

%

 

 

0.1

%

Other expenses

 

 

 

 

 

 

 

0.0

%

 

 

0.0

%

NON-GAAP GROSS MARGIN

 

17.6

%

 

 

13.7

%

 

 

15.4

%

 

 

15.1

%

 

 

 

 

 

 

 

 

GAAP OPERATING EXPENSES

$

122,131

 

 

$

106,430

 

 

$

464,834

 

 

$

410,591

 

Stock-based compensation

 

(8,386

)

 

 

(6,982

)

 

 

(30,940

)

 

 

(26,787

)

Executive SEC settlement

 

 

 

 

 

 

 

 

 

 

2,122

 

Litigation settlement costs

 

 

 

 

 

 

 

(2,000

)

 

 

 

Special performance bonuses

 

 

 

 

(672

)

 

 

(158

)

 

 

(5,801

)

Other expenses

 

 

 

 

 

 

 

 

 

 

(221

)

Litigation and controls remediation expense

 

(234

)

 

 

163

 

 

 

(4,367

)

 

 

(1,076

)

NON-GAAP OPERATING EXPENSES

$

113,511

 

 

$

98,939

 

 

$

427,369

 

 

$

378,828

 

 

 

 

 

 

 

 

 

GAAP INCOME FROM OPERATIONS

$

165,213

 

 

$

39,081

 

 

$

335,167

 

 

$

123,947

 

Stock-based compensation

 

8,884

 

 

 

7,432

 

 

 

32,816

 

 

 

28,549

 

Executive SEC settlement

 

 

 

 

 

 

 

 

 

 

(2,122

)

Litigation settlement costs

 

 

 

 

 

 

 

2,000

 

 

 

 

Special performance bonuses

 

 

 

 

672

 

 

 

453

 

 

 

5,801

 

Other expenses

 

 

 

 

 

 

 

 

 

 

241

 

Litigation and controls remediation expenses

 

234

 

 

 

(163

)

 

 

4,367

 

 

 

1,076

 

NON-GAAP INCOME FROM OPERATIONS

$

174,331

 

 

$

47,022

 

 

$

374,803

 

 

$

157,492

 

 

 

 

 

 

 

 

 

GAAP OPERATING MARGIN

 

10.1

%

 

 

3.7

%

 

 

6.5

%

 

 

3.5

%

Stock-based compensation

 

0.6

%

 

 

0.7

%

 

 

0.6

%

 

 

0.8

%

Executive SEC settlement

 

%

 

 

%

 

 

%

 

 

(0.1

)%

Litigation settlement costs

 

%

 

 

%

 

 

0.0

%

 

 

%

Special performance bonuses

 

%

 

 

0.0

%

 

 

0.0

%

 

 

0.2

%

Other expenses

 

%

 

 

%

 

 

%

 

 

0.0

%

Litigation and controls remediation expenses

 

0.0

%

 

 

0.0

%

 

 

0.1

%

 

 

0.0

%

NON-GAAP OPERATING MARGIN

 

10.7

%

 

 

4.4

%

 

 

7.2

%

 

 

4.4

%

 

 

 

 

 

 

 

 

GAAP TAX EXPENSE (BENEFIT)

$

25,760

 

 

$

(1,605

)

 

$

52,876

 

 

$

6,936

 

Adjustments to tax provision

 

4,137

 

 

 

3,373

 

 

 

13,721

 

 

 

9,006

 

NON-GAAP TAX EXPENSE

$

29,897

 

 

$

1,768

 

 

$

66,597

 

 

$

15,942

 

 

 

 

 

 

 

 

 

GAAP NET INCOME

$

140,822

 

 

$

39,162

 

 

$

285,163

 

 

$

111,865

 

Stock-based compensation

 

8,884

 

 

 

7,432

 

 

 

32,816

 

 

 

28,549

 

Executive SEC settlement

 

 

 

 

 

 

 

 

 

 

(2,122

)

Special performance bonuses

 

 

 

 

672

 

 

 

453

 

 

 

5,801

 

Litigation settlement costs

 

 

 

 

 

 

 

2,000

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

241

 

Litigation and controls remediation expenses

 

234

 

 

 

(163

)

 

 

4,367

 

 

 

1,076

 

Adjustments to tax provision

 

(4,137

)

 

 

(3,373

)

 

 

(13,721

)

 

 

(9,006

)

NON-GAAP NET INCOME

$

145,803

 

 

$

43,730

 

 

$

311,078

 

 

$

136,404

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – BASIC

$

2.70

 

 

$

0.78

 

 

$

5.54

 

 

$

2.19

 

Impact of NON-GAAP adjustments

 

0.10

 

 

 

0.09

 

 

 

0.50

 

 

 

0.48

 

NON-GAAP NET INCOME PER COMMON SHARE – BASIC

$

2.80

 

 

$

0.87

 

 

$

6.04

 

 

$

2.67

 

 

 

 

 

 

 

 

 

GAAP NET INCOME PER COMMON SHARE – DILUTED

$

2.60

 

 

$

0.74

 

 

$

5.32

 

 

$

2.09

 

Impact of NON-GAAP adjustments

 

0.02

 

 

 

0.07

 

 

 

0.33

 

 

 

0.39

 

NON-GAAP NET INCOME PER COMMON SHARE – DILUTED

$

2.62

 

 

$

0.81

 

 

$

5.65

 

 

$

2.48

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC – GAAP

 

52,111

 

 

 

50,230

 

 

 

51,478

 

 

 

51,157

 

BASIC – NON-GAAP

 

52,111

 

 

 

50,230

 

 

 

51,478

 

 

 

51,157

 

 

 

 

 

 

 

 

 

DILUTED – GAAP

 

54,260

 

 

 

52,782

 

 

 

53,615

 

 

 

53,507

 

DILUTED – NON-GAAP

 

55,611

 

 

 

54,082

 

 

 

55,025

 

 

 

54,910

 

 

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