Super Micro Computer Inc. Q1 FY'25 Business Update

Super Micro Computer Inc. (NASDAQ:SMCI) reported strong financial results in its Q1 FY'25 Business Update Call on October 30, 2024. The company announced a significant year-over-year revenue increase driven by robust demand for AI solutions. Preliminary net revenue is estimated between $5.9 billion to $6 billion, a 181% increase from the previous year. Non-GAAP earnings per share are projected at $0.75 to $0.76, reflecting a 122% rise. The company is also expanding its manufacturing capabilities and anticipates continued growth in its direct liquid cooling technology. For Q2 FY'25, Super Micro expects net sales to range from $5.5 billion to $6.1 billion, with GAAP diluted earnings per share projected between $0.48 and $0.58.

Key Takeaways

• Preliminary Q1 net revenue is estimated to be between $5.9 billion and $6 billion, marking a 181% year-over-year increase.
• Non-GAAP earnings per share for Q1 are projected to be $0.75 to $0.76, up 122% from the previous year.
• Super Micro is expanding manufacturing with a new campus in Malaysia and increased capacity in Silicon Valley.
• The company launched new AI infrastructure products and expects substantial growth in direct liquid cooling technology.
• Q2 FY'25 net sales are expected to be between $5.5 billion and $6.1 billion, with GAAP diluted earnings per share projected at $0.48 to $0.58.
• The company has a closing cash position of $2.1 billion and a total debt of $2.3 billion, with a net cash position estimated at negative $0.2 billion.
• Revenue was at the lower end of guidance due to customer delays awaiting the new Blackwell chip.
• Significant investments in working capital indicate strong access to capital moving forward.

Company Outlook

• For Q2 FY'25, net sales are projected to be between $5.5 billion and $6.1 billion.
• Gross margin is expected to decline by 100 basis points due to customer and product mix.
• Q2 GAAP and non-GAAP net income per diluted share are projected at $0.48 to $0.58 and $0.56 to $0.65, respectively.

Bearish Highlights

• Anticipated decline in gross margin for Q2 due to changes in customer and product mix.
• Revenue was at the lower end of guidance primarily due to delays for the new Blackwell chip.

Bullish Highlights

• Exceeded cautious margin guidance for Q1 and maintains a conservative approach for Q2.
• Shipments of over 2,000 liquid cooling racks expected to continue growth in this area.
• Growing interest and remote proof of concept engagements for NVIDIA's upcoming Blackwell chips.

Misses

• Despite significant revenue increase, the company's revenue was at the lower end of provided guidance.

Q&A Highlights

• CEO Charles Liang confirmed growing customer interest in NVIDIA's Blackwell chips.
• CFO David Weigand emphasized strong bank relationships and credit agreement flexibility.

In conclusion, Super Micro experiences significant growth in AI and liquid cooling technology sectors. Facing challenges with customer delays and a slight anticipated decline in gross margins, the company strategically invests and strengthens relationships with partners like NVIDIA to ensure future growth. The management team remains optimistic about competitive positioning and operational efficiency as they expand global manufacturing and product offerings.

InvestingPro Insights

Super Micro's impressive financial results align with InvestingPro data showing a 109.77% revenue growth over the last twelve months, supporting the 181% year-over-year increase in preliminary Q1 revenue. Despite solid performance, SMCI's stock has been volatile, with a 16.24% decline over the past week and a 32.82% drop in the last month. The stock trades at a low P/E ratio of 9.93 relative to earnings growth and may attract investors due to its undervalued perception amidst strong revenue projections and an expanding AI infrastructure product line.

Full Transcript – Super Micro Computer Inc Q1 2025:

Operator: Thank you for standing by… (Followed by conference call transcript)

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