Super Micro Computer

Spec stock of the day $TSSI - the census is they could steal $SMCI market share while they struggle to fix the internals of their company, it's a small cap company current with a 250M market cap, in 2023 97% came from DELL data centers, could they expand... Perhaps

$SMCI has disclosed it can’t file its Q1 2025 10-Q or 2024 10-K on time without unreasonable effort or expense, due to ongoing issues around internal controls and the need for a new audit firm. After concerns raised by its former auditor, a Special Committee review was launched and is nearly complete. Further delays stem from hiring a successor audit firm, finalizing internal control assessments, and completing necessary audits and reviews. The company will file these reports once its 2024 10-K is finalized.

Supermicro Q1 FY2025 Preliminary Financial Update & Special Committee Report $SMCI
$SMCI (+1.21%)

Preliminary Financial Highlights:

• Net Sales: Expected between $5.9B and $6.0B, below prior guidance of $6.0B to $7.0B

• GAAP & Non-GAAP Gross Margin: Approximately 13.3%

• GAAP Diluted EPS: Projected at $0.68 to $0.70, up from prior guidance of $0.60 to $0.77

• Non-GAAP Diluted EPS: Expected at $0.75 to $0.76, compared to previous guidance of $0.67 to $0.83

• Adjustments: Non-GAAP figures include stock-based compensation adjustments of $50M, net of related tax effects of $17M

• Cash & Debt: Total cash of ~$2.1B and total debt of ~$2.3B, with $0.6B in bank debt and $1.7B in convertible notes

Q2 FY2025 Guidance:

• Net Sales: Anticipated between $5.5B and $6.1B

• GAAP EPS: Forecasted at $0.48 to $0.58

• Non-GAAP EPS: Estimated at $0.56 to $0.65, assuming a tax rate of ~15% and diluted share count of 648M

Special Committee Investigation Update:

• Outcome: No evidence of fraud or misconduct by management or the Board

• Recommendations: Series of remedial actions to enhance internal governance and oversight

• Report: Full findings expected within a week

Form 10-K & Nasdaq Compliance:

• Filing Delay: Form 10-K for FY2024 remains pending; initial deadline was August 29, 2024

• Nasdaq Plan: Company received non-compliance notice; has until mid-November to file or submit a compliance plan, potentially extending to February 2025

Traders' Takeaway:

• Although Q1 net sales fell short of earlier guidance, EPS exceeded initial projections, showing profitability management.

• The Special Committee’s report clears management, adding credibility amid governance enhancements.

• Q2 guidance reflects stability, but Supermicro’s compliance delay with Nasdaq remains a watch point for potential listing risk.