Supermicro announces second quarter fiscal year 2023 financial results
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.
