SAN JOSE, Calif., Jan. 27 — Super Micro Computer, Inc. (NASDAQ: SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, has announced second quarter fiscal 2017 financial results for the quarter ended December 31, 2016.

Fiscal 2nd Quarter Highlights

• Quarterly net sales of $652.0 million, up 23.3% from the first quarter of fiscal year 2017 and up 2.0% from the same quarter of last year.
• GAAP net income of $22.0 million, up 62.5% from the first quarter of fiscal year 2017 and down 36.6% from the same quarter of last year.
• GAAP gross margin was 14.3%, down from 15.1% in the first quarter of fiscal year 2017 and down from 16.6% in the same quarter of last year.
• Server solutions accounted for 68.1% of net sales compared with 67.6% in the first quarter of fiscal year 2017 and 71.0% in the same quarter of last year.

Net sales for the second quarter ended December 31, 2016 totaled $652.0 million, up 23.3% from $529.0 million in the first quarter of fiscal year 2017. No customer accounted for more than 10% of net sales during the quarter ended December 31, 2016.

GAAP net income for the second quarter of fiscal year 2017 was $22.0 million or $0.43 per diluted share, a decrease of 36.6% from net income of $34.7 million, or $0.67 per diluted share in the same period a year ago. Included in net income for the quarter is $4.7 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the second quarter was $25.0 million, or $0.48 per diluted share, compared to non-GAAP net income of $38.0 million, or $0.73 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income increased from the first quarter of fiscal year 2017 by $8.4 million or $0.16 per diluted share.

GAAP gross margin for the second quarter of fiscal year 2017 was 14.3% compared to 16.6% in the same period a year ago. Non-GAAP gross margin for the second quarter was 14.4% compared to 16.7% in the same period a year ago. GAAP gross margin for the first quarter of fiscal year 2017 was 15.1% and Non-GAAP gross margin for the first quarter of fiscal year 2017 was 15.2%.

The GAAP income tax provision for the second quarter of fiscal year 2017 was $9.3 million or 29.7% of income before tax provision compared to $14.1 million or 28.8% in the same period a year ago and $6.4 million or 32.0% in the first quarter of fiscal year 2017. The effective tax rate for the second quarter of fiscal year 2017 was lower than the first quarter primarily due to an increase in the domestic production activities deduction and U.S. federal research and development (“R&D”) tax credits.

The Company’s cash and cash equivalents and short and long term investments at December 31, 2016 were $131.5 million compared to $183.7 million at June 30, 2016. Free cash flow for the six months ended December 31, 2016 was $(72.2) million, primarily due to an increase in the Company’s cash used in operating activities and used in the development and construction of improvements on the Company’s properties.

Business Outlook & Management Commentary

The Company expects net sales of $570 million to $630 million for the third quarter of fiscal year 2017 ending March 31, 2017. The Company expects non-GAAP earnings per diluted share of approximately $0.34 to $0.42 for the third quarter.

“We are pleased to report record second quarter revenues of $652.0 million that exceeded our guidance and outpaced a strong compare with last year. Contributing to this strong growth was our Twin family product line including our FatTwin, Storage, HPC, MicroBlade, and strong growth from enterprise cloud and Asia Pacific, particularly China. Component shortages and pricing, product and geographic mix adversely impacted gross margins while improved leverage allowed us to deliver stronger operating margins from last quarter,” said Charles Liang, Chairman and Chief Executive Officer. “We expect to continue the growth of last quarter and be reflected in the year-over-year revenue growth in the March quarter based on an increasing number of sizable customer engagements demanding the performance and advantages of our leading product lines. In addition, we are well positioned to benefit from technology transitions in 2017 and have upgraded our product lines to optimize these new technologies.”

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.

About Super Micro Computer, Inc.

Supermicro, a global leader in high-performance, high-efficiency server technology and innovation is a premier 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.

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Source: Supermicro