SAN JOSE, Calif., April 28, 2017 — Super Micro Computer, Inc. (NASDAQ:SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, today announced third quarter fiscal 2017 financial results for the quarter ended March 31, 2017.
Fiscal 3rd Quarter Highlights
- Quarterly net sales of $631.1 million, down 3.2% from the second quarter of fiscal year 2017 and up 18.5% from the same quarter of last year.
- GAAP net income of $16.7 million, down 24.2% from the second quarter of fiscal year 2017 and equal to the same quarter of last year.
- GAAP gross margin was 14.0%, down from 14.3% in the second quarter of fiscal year 2017 and down from 14.9% in the same quarter of last year.
- Server solutions accounted for 70.0% of net sales compared with 68.1% in the second quarter of fiscal year 2017 and 69.9% in the same quarter of last year.
Net sales for the third quarter ended March 31, 2017 totaled $631.1 million, down 3.2% from $652.0 million in the second quarter of fiscal year 2017. No customer accounted for more than 10% of net sales during the quarter ended March 31, 2017.
GAAP net income for the third quarter of fiscal year 2017 and for the same period a year ago were both $16.7 million or $0.32 per diluted share. Included in net income for the quarter is $4.8 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the third quarter was $20.3 million, or $0.38 per diluted share, compared to non-GAAP net income of $19.0 million, or $0.36 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income decreased from the second quarter of fiscal year 2017 by $4.7 million or $(0.1) per diluted share.
GAAP gross margin for the third quarter of fiscal year 2017 was 14.0% compared to 14.9% in the same period a year ago. Non-GAAP gross margin for the third quarter was 14.0% compared to 14.9% in the same period a year ago. GAAP gross margin for the second quarter of fiscal year 2017 was 14.3% and Non-GAAP gross margin for the second quarter of fiscal year 2017 was 14.4%.
The GAAP income tax provision for the third quarter of fiscal year 2017 was $5.1 million or 23.6% of income before tax provision compared to $7.4 million or 30.7% in the same period a year ago and $9.3 million or 29.7% in the second quarter of fiscal year 2017. The effective tax rate for the third quarter of fiscal year 2017 was lower primarily due to a tax benefit resulting from the completion of an income tax audit in a foreign jurisdiction.
The Company’s cash and cash equivalents and short and long term investments at March 31, 2017 were $110.5 million compared to $183.7 million at June 30, 2016. Free cash flow for the nine months ended March 31, 2017 was $(113.5) million, primarily due to an increase in the Company’s cash used in operating activities.
Business Outlook & Management Commentary
The Company expects net sales of $655 million to $715 million for the fourth quarter of fiscal year 2017 ending June 30, 2017. The Company expects non-GAAP earnings per diluted share of approximately $0.40 to $0.50 for the fourth quarter.
“We are pleased to report third quarter revenues that exceeded our guidance in a quarter complicated by shortages in memory and SSD. Our resurgent revenue growth and market share gains are a result of our strategy of developing vertical markets that expand our TAMs. Storage, IOT, Accelerated Computing, Enterprise and Asia contributed to the 18.5% growth from last year,” said Charles Liang, Chairman and Chief Executive Officer. “Supermicro’s preparation for the upcoming new Xeon processor launches has never been stronger and our traction with new customer engagement for seeding and early deployment has been outstanding. We expect to lead the industry with the most innovative platform architectures, the broadest product array and total solutions during the upcoming technology transitions.”
It is currently expected that the outlook will not be updated until the Company’s next quarterly earnings announcement, notwithstanding subsequent developments. However, the Company may update the outlook or any portion thereof at any time. Such updates will take place only by way of a news release or other broadly disseminated disclosure available to all interested parties in accordance with Regulation FD.
Use of Non-GAAP Financial Measures
Non-GAAP gross margin discussed in this press release excludes stock-based compensation expense. Non-GAAP net income and net income per share discussed in this press release exclude stock-based compensation expense and the related tax effect 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. Pursuant to the requirements of SEC Regulation G, detailed reconciliations between the Company’s GAAP and non-GAAP financial results is provided at the end of this press release. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company’s SEC filings.
About Super Micro Computer, Inc.
Supermicro is a provider of end-to-end green computing solutions for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro’s advanced Server Building Block Solutions offer a vast array of components for building energy-efficient, application-optimized, computing solutions. Architecture innovations include Twin, TwinPro, FatTwin, Ultra Series, MicroCloud, MicroBlade, SuperBlade, Simply Double, Double-sided Storage, Battery Backup Power (BBP) modules and WIO/UIO. Products include servers, blades, GPU systems, workstations, motherboards, chassis, power supplies, storage, networking, server management software and SuperRack cabinets/accessories delivering unrivaled performance and value.
Source: Supermicro