01—Abstract
Summary
Summary of the 10-Q filed February 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Super Micro Computer, Inc. reported a sharply higher top line for the quarter ended December 31, 2025, with net sales of $12.68 billiona versus $5.68 billion a year earlier, driven mainly by fulfillment of orders for customers' datacenter deployments, including a large design win from one customer.
Gross profit was $798.6 millionb, but gross margin fell to 6.3% from 11.8%, which management attributes to competitive pricing to gain market share, a change in product and customer mix, higher production and expedite costs, tariff expenses, and inventory write-downs. Net income was $400.6 million, compared with $320.6 million a year earlier, and diluted EPS was $0.60 versus $0.51. Balance sheet and cash flow shifted materially over the six months.
Accounts receivable rose to $11.00 billion and inventories to $10.60 billionc from June 30, 2025, while accounts payable rose to $13.75 billion. Net cash used in operating activities was $941.4 million for the six months, compared with $169.1 million provided a year earlier. Cash and cash equivalents declined to $4.09 billion from $5.17 billion.
The company entered a $2.0 billiond JPMorgan revolving credit facility on December 29, 2025, with no borrowings outstanding at quarter end, and disclosed subsequent January 2026 CTBC credit agreements totaling $1.8 billion in lender commitments. The filing states that disclosure controls and procedures were not effective as of December 31, 2025, due to material weaknesses in internal control over financial reporting that remain unremediated, including IT general controls, segregation of duties, and related party transaction identification. Several securities class action and derivative lawsuits are pending, and the company is responding to an SEC Enforcement subpoena; the company states it cannot estimate possible losses at this stage.
02—Key points
Key Highlights
- Net sales of $12.68 billion in the three months ended December 31, 2025, up from $5.68 billion, with AI GPU related product billings of $7.40 billion, up 169.7% year over year.
- Gross margin fell to 6.3% from 11.8%, reflecting competitive pricing, product and customer mix changes, tariff expense of $142.0 million (up from $5.2 million), and inventory write-downs.
- Net income of $400.6 million for the quarter, versus $320.6 million a year earlier; diluted EPS of $0.60 versus $0.51.
- Operating cash flow was negative $941.4 million for the six months, versus positive $169.1 million a year earlier, as accounts receivable rose to $11.00 billion and inventories to $10.60 billion.
- Cash and cash equivalents decreased to $4.09 billion from $5.17 billion at June 30, 2025; the company holds $2.0 billion JPMorgan revolving credit facility with no borrowings outstanding.
- Management concluded disclosure controls were not effective at December 31, 2025, citing material weaknesses in internal control over financial reporting that remain unremediated.
- Customer A represented 62.6% of net sales in the quarter, and 71.6% of accounts receivable at quarter end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Super Micro Computer kept $0.03.
- Revenue$12.68B100.0%
- Cost of revenue−$11.88B93.7%
- Gross profit$798.6M6.3%
- Operating costs−$324.3M2.6%
- Operating income$474.3M3.7%
- Interest, other & tax−$73.7M0.6%
- Net income$400.6M3.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed February 6, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $12.68B$5.68B | +123.4% |
| Cost of Revenue | $11.88B$5.01B | +137.3% |
| Gross Profit | $798.57M$670.02M | +19.2% |
| R&D Expenses | $180.76M$158.23M | +14.2% |
| Operating Expenses | $324.27M$301.40M | +7.6% |
| Operating Income | $474.30M$368.62M | +28.7% |
| Net Income | $400.56M$320.60M | +24.9% |
| EPS (Basic) | $0.67$0.54 | +24.1% |
| EPS (Diluted) | $0.60$0.51 | +17.6% |
| Shares Outstanding (Basic) | 598.00M592.51M | +0.9% |
| Shares Outstanding (Diluted) | 693.99M636.05M | +9.1% |
05—Questions
Frequently Asked Questions
Why did net sales more than double in the quarter?
The filing attributes the increase primarily to fulfillment and shipment of orders supporting customers' datacenter deployments, including a large design win from one customer, some of which had been delayed from the prior quarter due to customer configuration upgrades and data center readiness matters. Billings for AI GPU related products rose $7,398.2 million, or 169.7%, year over year.
Why did gross margin decline so significantly?
The company cites its strategy to offer competitive pricing to gain market share, a change in product and customer mix, higher production and expedite costs as it began shipping new AI GPU platforms at scale, higher tariff expenses, and increased inventory write-down adjustments, partly offset by a decrease in vendor rebates that increased cost of sales by $197.4 million.
Why is operating cash flow negative despite higher net income?
For the six months ended December 31, 2025, the filing attributes the decrease to an increase in inventory purchases, accounts receivable from customers, and other operational spending. Accounts receivable changes used $8.79 billion and inventory changes used $6.09 billion, while accounts payable provided $12.47 billion.
What are the main legal and control risks disclosed?
Several putative securities class actions and derivative lawsuits are pending, along with an SEC Enforcement subpoena received November 19, 2024. The company says these matters are too preliminary to estimate a loss. The filing also reports unremediated material weaknesses in internal control over financial reporting, which led management to conclude disclosure controls were not effective.
How is the company's liquidity position after the new credit facilities?
The company had $4.09 billion in cash and cash equivalents at December 31, 2025, and total lines of credit and term loans of $223.2 million. The $2.0 billion JPMorgan revolving facility had no borrowings outstanding at quarter end. Management believes current cash, borrowing capacity, and internally generated cash flows will be sufficient for the next 12 months.
06—Continue