01—Abstract
Summary
Summary of the 10-K filed August 28, 2025. Cited figures are marked; the original filing is the authoritative source.
Super Micro Computer, Inc. (Nasdaq: SMCI) reported net sales of $21.97 billiona for fiscal year 2025 (ended June 30, 2025), up from $14.99 billion in fiscal 2024, driven by demand for GPU servers, HPC and rack-scale solutions from large enterprise and data center customers.
Gross margin declined to 11.1% from 13.8%, citing competitive pricing to gain market share and changes in product and customer mix. Net income was $1,048.9 millionb, down from $1,152.7 million, and diluted EPS was $1.68 versus $1.92 a year earlier. The filing discloses material weaknesses: management concluded that internal control over financial reporting and disclosure controls were not effective as of June 30, 2025, and BDO USA, P.C. issued an adverse opinion on internal control.
The company was previously delinquent in its SEC reporting after EY resigned in October 2024, and it describes ongoing securities class actions, derivative litigation, and DOJ and SEC subpoenas tied to a August 2024 short seller report. Related-party dealings with Ablecom and Compuware, both affiliated with the CEO's family, represented 3.3% of cost of sales in fiscal 2025. Balance sheet and financing changed significantly: cash and cash equivalents rose to $5.17 billionc from $1.67 billion, and convertible notes of $4.65 billion were carried at year-end, following the issuance of $700.0 million 2028 Convertible Notes and $2.3 billion 2030 Convertible Notes.
The company also repurchased 4,891,171 shares for about $200.0 milliond in June 2025. Operating cash flow was $1.66 billion, compared with negative $2.49 billion in fiscal 2024.
02—Key points
Key Highlights
- Net sales rose to $21.97 billion in fiscal 2025 from $14.99 billion, with server and storage systems reaching $21.31 billion, driven by GPU and rack-scale demand.
- Gross margin fell to 11.1% from 13.8%, and net income declined to $1.05 billion from $1.15 billion.
- Management and the auditor both concluded internal control over financial reporting was not effective as of June 30, 2025, citing four unremediated material weaknesses.
- Cash and cash equivalents increased to $5.17 billion, while convertible notes totaled $4.65 billion on the balance sheet at June 30, 2025.
- Customer concentration rose: four customers each accounted for 10% or more of net sales in fiscal 2025, and two suppliers represented 64.4% and 5.1% of total purchases.
- Securities class actions, derivative suits, and DOJ and SEC subpoenas remain pending, with the company unable to estimate possible losses.
- Operating cash flow was $1.66 billion in fiscal 2025 versus negative $2.49 billion in fiscal 2024, mainly from higher customer collections and lower inventory purchases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, Super Micro Computer kept $0.05.
- Revenue$21.97B100.0%
- Cost of revenue−$19.54B88.9%
- Gross profit$2.43B11.1%
- Operating costs−$1.18B5.4%
- Operating income$1.25B5.7%
- Interest, other & tax−$204.1M0.9%
- Net income$1.05B4.8%
Where FY2025 revenue went
$21.97B- Cost of revenue: $19.54B, 89% of revenue
- Net income: $1.05B, 4.8% of revenue
- R&D: $636.5M, 2.9% of revenue
- Other operating costs: $540.4M, 2.5% of revenue
- Interest, other & tax: $204.1M, 0.9% of revenue
Kept 4.8% as net incomeNet income $1.05B · 4.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed August 28, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $21.97B$14.99B | +46.6% |
| Cost of Revenue | $19.54B$12.93B | +51.2% |
| Gross Profit | $2.43B$2.06B | +17.9% |
| R&D Expenses | $636.55M$463.55M | +37.3% |
| Operating Expenses | $1.18B$850.64M | +38.4% |
| Operating Income | $1.25B$1.21B | +3.5% |
| Net Income | $1.05B$1.15B | −9.0% |
| EPS (Basic) | $1.77$2.07 | −14.5% |
| EPS (Diluted) | $1.68$1.92 | −12.5% |
| Shares Outstanding (Basic) | 593.66M555.88M | +6.8% |
| Shares Outstanding (Diluted) | 628.40M602.15M | +4.4% |
05—Questions
Frequently Asked Questions
Why did gross margin decline in fiscal 2025?
Management attributed the decline from 13.8% to 11.1% primarily to a strategy of offering competitive pricing to gain market share, a change in product and customer mix, and higher manufacturing-related expenses. Cost of sales also included a $149.6 million increase in inventory write-down adjustments and an $86.5 million increase in tariff expense.
What are the material weaknesses disclosed in this 10-K?
The company identified four unremediated material weaknesses: information technology general controls for certain financial reporting systems, segregation of duties conflicts, controls over the completeness and accuracy of information produced, and control procedures for timely recording and disclosure, including identification of new related party transactions. Management has begun remediation but says the weaknesses cannot be considered remediated until controls operate effectively for a sufficient period.
How significant is the company's convertible debt and how was it used?
Total indebtedness was approximately $4.8 billion as of June 30, 2025, including $1.7 billion of 2029 Convertible Notes, $700.0 million of 2028 Convertible Notes, and $2.3 billion of 2030 Convertible Notes. The 2030 notes proceeds funded about $182.2 million of capped call transactions and a $200.0 million share repurchase, and the company states it expects existing resources to cover operations and debt obligations for the next 12 months.
How concentrated is the company's customer base?
Four customers each accounted for 10% or more of net sales in fiscal 2025, with Customer A at 20.9%, and one customer accounted for 10% or more in fiscal 2024. The filing notes that a significant reduction in sales to these key customers could substantially reduce revenue.
What related-party relationships could affect the company?
The company relies on Ablecom and Compuware, which are related parties controlled significantly by the family of CEO Charles Liang and related individuals. Purchases from these entities represented 3.3% of cost of sales in fiscal 2025, and the company holds non-cancelable purchase orders of $30.6 million with Ablecom and $118.3 million with Compuware as of June 30, 2025.
06—Continue