01—Abstract
Summary
Summary of the 10-K filed August 28, 2023. Cited figures are marked; the original filing is the authoritative source.
Super Micro Computer, Inc. (Nasdaq: SMCI) reported fiscal 2023 (year ended June 30, 2023) results with net sales of $7.12 billiona, up 37.1% from $5.20 billion in fiscal 2022, and net income of $640.0 million, compared with $285.2 million a year earlier.
Gross margin rose to 18.0% from 15.4%, and income from operations reached $761.1 millionb versus $335.2 million. Growth was driven by server and storage systems, whose sales rose 47.2% to $6.57 billion and now make up 92.2% of net sales, while subsystems and accessories fell 24.4% to $553.7 million. Net sales to customers in the United States grew 59.3% to $4.83 billion, while Asia declined 7.8% to $1.05 billion.
Cash and cash equivalents ended the year at $440.5 millionc, up from $267.4 million, after operating cash flow of $663.6 million. Financing activities used $448.3 million, including net debt repayments and $150.0 million of stock repurchases. Total debt was $290.3 million at June 30, 2023, down from $596.8 million.
The company repurchased 1,553,350 shares during the year and had $50.0 milliond remaining under its repurchase program. Management expects fiscal 2024 capital expenditures of $105.0 million to $115.0 million, including $75.0 million for a Malaysia land and manufacturing initiative. The filing also highlights ongoing risks: concentrated supplier purchases (two suppliers accounted for 30.7% and 13.5% of purchases in fiscal 2023), related-party dealings with Ablecom and Compuware (6.6% of cost of sales), and the CEO's 2021 performance award, for which four of five revenue milestones have been achieved and the final $8.0 billion goal remains.
The company paused sales to Russia, Belarus and restricted areas of Ukraine. Deloitte & Touche LLP's audit opinion was unqualified, and Ernst & Young was engaged as auditor for fiscal 2024.
02—Key points
Key Highlights
- Net sales rose 37.1% to $7.12 billion in fiscal 2023, led by server and storage systems, which grew 47.2% to $6.57 billion and represented 92.2% of net sales.
- Net income increased to $640.0 million from $285.2 million, and diluted EPS was $11.43 versus $5.32 in fiscal 2022.
- Gross margin improved to 18.0% from 15.4%, and operating expenses rose 12.3% to $521.9 million.
- Operating cash flow was $663.6 million versus negative $440.8 million in fiscal 2022, and cash ended the year at $440.5 million.
- Total debt fell to $290.3 million from $596.8 million, and the company repurchased $150.0 million of common stock during the year.
- Two suppliers accounted for 30.7% and 13.5% of total purchases, and related parties Ablecom and Compuware represented 6.6% of cost of sales.
- Fiscal 2024 capital expenditures are expected at $105.0 million to $115.0 million, including $75.0 million for the Malaysia manufacturing initiative.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Super Micro Computer kept $0.09.
- Revenue$7.12B100.0%
- Cost of revenue−$5.84B82.0%
- Gross profit$1.28B18.0%
- Operating costs−$521.9M7.3%
- Operating income$761.1M10.7%
- Interest, other & tax−$121.1M1.7%
- Net income$640.0M9.0%
Where FY2023 revenue went
$7.12B- Cost of revenue: $5.84B, 82% of revenue
- Net income: $640.0M, 9.0% of revenue
- R&D: $307.3M, 4.3% of revenue
- Other operating costs: $214.6M, 3.0% of revenue
- Interest, other & tax: $121.1M, 1.7% of revenue
Kept 9.0% as net incomeNet income $640.0M · 9.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed August 28, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $7.12B$5.20B | +37.1% |
| Cost of Revenue | $5.84B$4.40B | +32.9% |
| Gross Profit | $1.28B$800.00M | +60.4% |
| R&D Expenses | $307.26M$272.27M | +12.8% |
| Operating Expenses | $521.87M$464.83M | +12.3% |
| Operating Income | $761.14M$335.17M | +127.1% |
| Interest Expense | $10.49M$6.41M | +63.6% |
| Net Income | $640.00M$285.16M | +124.4% |
| EPS (Basic) | $1.21$0.55 | +120.0% |
| EPS (Diluted) | $1.14$0.53 | +115.1% |
| Shares Outstanding (Basic) | 529.25M514.78M | +2.8% |
| Shares Outstanding (Diluted) | 559.70M536.15M | +4.4% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue for fiscal 2023?
The filing attributes the increase mainly to server and storage systems sales, particularly to large enterprise and datacenter customers, for GPU, high performance computing and rack-scale solutions. Those systems rose 47.2% to $6.57 billion, while subsystems and accessories declined 24.4%, as the company emphasized selling full systems and servers.
How did the company's liquidity and debt position change?
Cash and cash equivalents rose to $440.5 million from $267.4 million. Operating cash flow was $663.6 million, and the company repaid net borrowings of $813.2 million, bringing total debt to $290.3 million from $596.8 million. Management believes current cash and borrowing capacity will cover operations and debt service for the next 12 months.
What concentration and related-party risks does the filing disclose?
Two suppliers accounted for 13.5% and 30.7% of total purchases in fiscal 2023. Purchases from related parties Ablecom and Compuware represented 6.6% of cost of sales. Charles Liang, the CEO and Chairman, is related to the Ablecom and Compuware leadership, and the company acknowledges it may be disadvantaged in negotiations with these entities.
What is the status of the CEO's 2021 performance award?
The 2021 CEO Performance Award covers up to 1,000,000 options at a $45.00 exercise price across five tranches. All five stock price goals have been achieved, four of five revenue goals are achieved, and the $6.8 billion revenue milestone is expected to be certified after the 10-K filing. The final $8.0 billion revenue goal has not been achieved, and vesting of the fourth tranche was pending certification.
What did the auditor conclude and what changed in the auditor relationship?
Deloitte & Touche LLP issued an unqualified opinion on the consolidated financial statements and on internal control over financial reporting as of June 30, 2023. Deloitte was dismissed effective upon completion of the fiscal 2023 audit, and Ernst & Young LLP was engaged as the independent registered public accounting firm for fiscal 2024.
06—Continue