Super Micro Computer(US:SMCI)2025-11-07 21:29Financial Performance - Net sales for the three months ended September 30, 2025, were $5,017.8 million, a decrease of 15.5% compared to $5,937.3 million in the same period of 2024[177][194] - Gross profit for the three months ended September 30, 2025, was $467.4 million, resulting in a gross margin of 9.3%, down from 13.1% in the prior year[177][179] - Net income decreased to $168.3 million for the three months ended September 30, 2025, compared to $424.3 million in the same period of 2024[172][179] - Total net sales decreased by $919.5 million or 15.5% year-over-year, primarily due to the timing of substantial customer orders and delays in data center readiness[195] - Net sales in the United States fell by $2,406.8 million or 56.7%, while sales in Asia increased by $1,363.7 million or 142.9%[196] - Gross profit declined by $308.2 million or 39.7%, resulting in a gross margin of 9.3%, down from 13.1%[198] Operating Expenses - Operating expenses increased by 7.0% to $285.1 million for the three months ended September 30, 2025, primarily due to higher headcount and increased compensation costs[177][179] - Operating expenses rose by $18.7 million or 7.0%, with a notable decrease in sales and marketing expenses by $21.0 million or 30.5%[201] Research and Development - Research and development expenses rose to $173.3 million for the three months ended September 30, 2025, compared to $132.2 million in 2024[192] - Research and development expenses increased by $41.1 million or 31.1%, mainly due to a rise in employee-related costs[201] - The company closely monitors product introduction cycles of industry leaders to inform its research and development investments[174] Cash Flow and Capital Expenditures - Cash and cash equivalents decreased from $5.2 billion to $4.2 billion as of September 30, 2025, indicating a need for working capital[213] - Net cash used in operating activities for the three months ended September 30, 2025, was $(917.5) million, a decrease of $1,326.4 million compared to $408.9 million in 2024[217] - Net cash used in investing activities was $(32.3) million, a decrease of $12.0 million from $(44.3) million in the same period last year, primarily due to reduced purchases of property, plant, and equipment[219] - Net cash used in financing activities was $(18.7) million, a decrease of $68.6 million compared to net cash provided of $49.9 million in 2024, mainly due to lower net proceeds from lines of credit and term loans[220] - The company anticipates capital expenditures for the remainder of fiscal year 2026 to be between $200.0 million and $220.0 million, focusing on global manufacturing capabilities and new product tooling[223] Debt and Obligations - As of September 30, 2025, the company has a current obligation of $100.6 million and a long-term obligation of $25.2 million related to long-term debt, along with a convertible debt obligation of $4,725.0 million[225] - The company has current obligations related to non-cancelable purchase commitments totaling $11.6 billion[225] - Interest rates for term loans and revolving lines of credit ranged from 1.3% to 5.8% as of September 30, 2025, with an outstanding principal indebtedness of $125.8 million[230] Market and Economic Factors - Macroeconomic factors such as inflation and supply chain constraints have impacted the company's operations and financial results[176] - The company aims to enhance product capabilities and expand service offerings to meet the growing demand in the AI and data center markets[175] - The company plans to strengthen its network of sales partners and distribution channels to expand market share[173] - The company will continue to evaluate new business opportunities and markets, which may necessitate additional facilities and capital expenditures[223] Other Financial Metrics - Other income, net increased by $44.0 million or 611.1%, primarily due to higher interest income and favorable foreign exchange rate fluctuations[206] - The income tax provision decreased by $34.5 million or 46.2%, reflecting a decline in worldwide income before tax[210] - The decrease in cash flows from operating activities was attributed to a decrease in net income and an increase in inventory purchases, partially offset by higher stock-based compensation[218] - The company has limited exposure to foreign exchange rate fluctuations as most sales and purchases are in U.S. dollars, with minimal historical impact from currency re-measurement[231] - The company has been profitable every year since its inception in 1993[172]