01—Abstract
Summary
Summary of the 10-Q filed November 7, 2025. Cited figures are marked; the original filing is the authoritative source.
Super Micro Computer, Inc. reported net sales of $5.02 billiona for the three months ended September 30, 2025, down from $5.94 billion a year earlier, and net income of $168.3 million compared with $424.3 million.
Diluted EPS was $0.26b versus $0.67. The filing attributes the decline mainly to the timing of several substantial customer orders received only in late September, which could not be shipped in the quarter, along with product mix changes and modestly lower average selling prices as the company priced competitively. Gross margin fell to 9.3% from 13.1%, and operating expenses rose 7.0% to $285.1 million.
Cash flow was weak in the quarter. Net cash used in operating activities was $917.5 millionc, driven by a $1.09 billion increase in inventories, which reached $5.73 billion. Cash and cash equivalents declined to $4.20 billion from $5.17 billion at June 30, 2025.
Convertible notes carried at about $4.65 billiond, and total lines of credit and term loans were $125.8 million. The company stated its cash and borrowing capacity should be sufficient for the next 12 months, and it has $11.6 billion of non-cancelable purchase commitments. The filing states that disclosure controls were not effective as of September 30, 2025.
Four material weaknesses in internal control over financial reporting, first identified in the fiscal 2024 Form 10-K, remain unremediated, though management reports significant remediation progress. Litigation includes securities class actions, derivative suits, a Canadian class action, and DOJ and SEC subpoenas, for which the company cannot estimate a loss.
02—Key points
Key Highlights
- Net sales were $5,017.8 million, down $919.5 million or 15.5% from $5,937.3 million, mainly due to late-September orders that could not ship within the quarter.
- Gross margin fell to 9.3% from 13.1%, reflecting competitive pricing, product and customer mix changes, and higher manufacturing-related expenses.
- Net income was $168.3 million versus $424.3 million; diluted EPS was $0.26 versus $0.67.
- Net cash used in operating activities was $917.5 million, driven by a $1,087.0 million increase in inventories, which rose to $5,730.0 million.
- Cash and cash equivalents decreased to $4,196.9 million from $5,169.9 million at June 30, 2025.
- Management concluded disclosure controls were not effective; four material weaknesses in internal control over financial reporting remain unremediated.
- The company entered a Receivables Purchase Agreement on July 16, 2025 with a $1,790.0 million uncommitted facility, though no receivables had been sold as of September 30, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Super Micro Computer kept $0.03.
- Revenue$5.02B100.0%
- Cost of revenue−$4.55B90.7%
- Gross profit$467.4M9.3%
- Operating costs−$285.1M5.7%
- Operating income$182.3M3.6%
- Interest, other & tax−$14.0M0.3%
- Net income$168.3M3.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed November 7, 2025Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $5.02B$5.94B | −15.5% |
| Cost of Revenue | $4.55B$5.16B | −11.8% |
| Gross Profit | $467.37M$775.58M | −39.7% |
| R&D Expenses | $173.31M$132.24M | +31.1% |
| Operating Expenses | $285.12M$266.38M | +7.0% |
| Operating Income | $182.26M$509.20M | −64.2% |
| Net Income | $168.28M$424.33M | −60.3% |
| EPS (Basic) | $0.28$0.72 | −61.1% |
| EPS (Diluted) | $0.26$0.67 | −61.2% |
| Shares Outstanding (Basic) | 595.62M589.56M | +1.0% |
| Shares Outstanding (Diluted) | 663.24M639.15M | +3.8% |
05—Questions
Frequently Asked Questions
Why did net sales decline year over year?
The filing attributes the $919.5 million, or 15.5%, decrease primarily to the timing of several substantial customer orders received only in late September 2025, which prevented related GPU, SuperRack, and other products from shipping in the quarter. Lower average selling prices from competitive pricing and a shift in product mix also contributed. U.S. net sales fell $2,406.8 million, or 56.7%, while Asia net sales rose $1,363.7 million, or 142.9%.
What drove the drop in gross margin?
Gross margin decreased to 9.3% from 13.1%, which the company attributed to its strategy of competitive pricing to gain market share, changes in product and customer mix, and higher manufacturing-related expenses. Tariff expenses increased $42.1 million, and inventory write-down adjustments rose $27.4 million.
How is the company funding its working capital needs?
Operating cash flow was negative $917.5 million, mainly due to inventory growth and a $321.2 million increase in accounts receivable. Cash fell to $4.20 billion. The company reported $125.8 million of outstanding lines of credit and term loans and $4,649.9 million of carrying value on convertible notes, and it stated that its cash, borrowing capacity, and internally generated cash flows should be sufficient for the next 12 months.
What are the main risks flagged in the filing?
The filing reports that disclosure controls were not effective due to material weaknesses in IT general controls, segregation of duties, data completeness and accuracy, and related-party transaction identification. It also discloses securities and derivative class actions, a Canadian class action, and DOJ and SEC subpoenas related to an August 2024 short seller report. The company says it cannot estimate possible losses from these matters.
06—Continue