Super Micro Computer — First Quarter Fiscal Year 2027 Earnings Summary

Financial Performance:

• Net sales reached $19.9 billion, a significant increase from $5.0 billion in Q1'26 and $11.1 billion in Q4'26.
• GAAP gross margin was 12.7%, compared to 9.3% in Q1'26 and 17.5% in Q4'26.
• Non-GAAP gross margin was 12.8%, an improvement from 9.5% in Q1'26.
• Net income was $1,594 million, up from $168 million in Q1'26 and $1,178 million in Q4'26.
• Diluted net income per common share was $1.75, compared to $0.26 in Q1'26 and $1.62 in Q4'26.
• Non-GAAP diluted net income per common share was $1.81, compared to $0.35 in Q1'26.
• Cash flow used in operating activities was $434 million.
• Capital expenditures and investments totaled $47 million.
• Total cash and cash equivalents were $6.9 billion as of September 30, 2026.
• Total bank debt and convertible notes were $8.6 billion as of September 30, 2026.
• Deferred revenue increased to $5.67 billion (current $4.33 billion + non-current $1.34 billion) from $2.61 billion (current $1.58 billion + non-current $1.03 billion) at June 30, 2026.
• Adjusted EBITDA was $2,227 million, or 11.2% of net sales, compared to $335 million (6.7% of net sales) in Q1'26.

Guidance and Future Outlook:

• Second quarter fiscal 2027 net sales are expected to range between $19.5 billion and $21.5 billion.
• Second quarter fiscal 2027 GAAP net income per diluted share is projected between $1.59 and $1.83.
• Second quarter fiscal 2027 non-GAAP net income per diluted share is projected between $1.66 and $1.90.
• Full-year fiscal 2027 net sales are expected to range between $72.0 billion and $82.0 billion.
• Projections assume a GAAP tax rate of approximately 21.2% and a non-GAAP tax rate of approximately 21.1%.
• Projections assume a fully diluted share count of 753 million for GAAP and 769 million for non-GAAP.
• Q2'27 GAAP net income per diluted share includes approximately $89 million in expected stock-based compensation expense.

Business Segments and Product Lines:

• The company is transforming into a Total AI and IT Datacenter Solution provider, with Data Center Building Block Solutions (DCBBS) driving value from gigawatt-scale datacenters to single-container PODs.
• Growth is supported by expanding software, proactive service, and networking solutions.
• Products are designed and manufactured in-house in the US, Taiwan, Malaysia, and the Netherlands.
• The portfolio includes server, AI, storage, IoT, switch systems, software, and support services.
• Building Block Solutions support comprehensive form factors, processors, memory, GPUs, storage, networking, power, and cooling solutions (air-conditioned, free air cooling, or liquid cooling).

Market and Competitive Landscape:

• The company targets larger customers and larger sales opportunities, which may lead to a more concentrated customer base.
• The company leverages global operations for scale and efficiency to optimize Total Cost of Ownership (TCO) and reduce environmental impact.

Risks and Challenges:

• Quarterly operating results may fluctuate.
• Targeting larger customers may increase cost of sales, lower margins, and make sales less predictable.
• Average sales prices for server solutions could decline if customers do not continue purchasing the latest generation products or additional components.
• Adverse economic conditions, including increased tariffs, could affect the business.
• Financial results presented are preliminary and may differ from final reported results.

Management Commentary and Tone:

• Charles Liang, Founder, President, and CEO, stated that the transformation into a Total AI and IT Datacenter Solution provider is accelerating.
• Management highlighted that DCBBS is enhancing profitability and long-term shareholder value.
• The company aims to make AI infrastructure faster to deploy, ensure superior up-time, and provide more cost-effective solutions through key enterprise partnerships and expanding global production capacity.

Other Key Points:

• The press release includes preliminary unaudited financial results based on information available as of the release date; final results may vary after audit committee review.
• The independent registered public accounting firm has not audited, reviewed, or performed procedures on the preliminary data.
• Stock-based compensation expense totaled $100.2 million for the quarter, with $8.1 million in cost of sales and $92.1 million in operating expenses.
• Preferred stock dividends declared and paid were $63.7 million.
• Series A Mandatory Convertible Preferred Stock accrued dividends were $25.2 million.
• Net cash used in financing activities was $135.3 million, driven by repayments of lines of credit and term loans.
• Accounts receivable increased significantly to $9.7 billion from $6.1 billion at the end of the previous quarter.
• Inventories increased to $15.1 billion from $12.9 billion at the end of the previous quarter.