Technology
Computer Hardware
$21.34B
5K
Super Micro Computer, Inc., together with its subsidiaries, develops and manufactures high performance server and storage solutions based on modular and open architecture in the United States, Europe, Asia, and internationally. Its solutions range from complete server, storage systems, modular blade servers, blades, workstations, full racks, networking devices, server sub-systems, server management software, and security software. The company provides application-optimized server solutions, rackmount and blade servers, storage, and subsystems and accessories; and server software management solutions, such as Server Management Suite, including Supermicro Server Manager, Supermicro Power Management software, Supermicro Update Manager, SuperCloud Composer, and SuperDoctor 5. In addition, it offers server subsystems and accessories comprising server boards, chassis, power supplies, and other accessories. Further, the company provides server and storage system integration, configuration, and software upgrade and update services; and technical documentation services, as well as identifies service requirements, creates and executes project plans, and conducts verification testing and technical documentation, and training services. Additionally, it offers help desk and on-site product support services for its server and storage systems; and customer support services, including ongoing maintenance and technical support for its products. The company provides its products to enterprise data centers, cloud computing, artificial intelligence, and 5G and edge computing markets. It sells its products through direct and indirect sales force, distributors, value-added resellers, system integrators, and original equipment manufacturers. The company was incorporated in 1993 and is headquartered in San Jose, California.
Key insights and themes extracted from this filing
Net sales increased by 46.6% to $21,972.0 million in fiscal year 2025 from $14,989.2 million in fiscal year 2024. This significant growth was primarily fueled by strong demand for GPU servers, HPC, and rack-scale solutions from large enterprise and data center customers across the United States, Asia, and Europe.
Gross margin decreased to 11.1% in fiscal year 2025 from 13.8% in fiscal year 2024, a 2.7 percentage point decline. This contraction was attributed to a strategic competitive pricing approach to gain market share, changes in product/customer mix, and increased manufacturing expenses, including a $149.6 million increase in inventory write-down adjustments.
Net income decreased by 9.0% to $1,048.9 million in fiscal year 2025 from $1,152.7 million in fiscal year 2024. This was primarily due to the decrease in gross profit and a 38.4% increase in operating expenses, partially offset by the significant increase in net sales.
The company delivered a comprehensive portfolio of AI-focused solutions compatible with NVIDIA's Hopper and Blackwell platforms, and launched Data Center Building Block Solutions (DCBBS) for liquid-cooled AI factories. This includes DLC-2, which can reduce electricity costs by up to 40% and total cost of ownership (TCO) by up to 20%.
Super Micro added a new manufacturing facility in Malaysia during fiscal year 2025 as part of efforts to expand capacities and serve customers more efficiently. This strategic expansion is intended to reduce overall manufacturing costs and enhance global logistics operations.
New product introductions in FY2025 include systems supporting Intel Xeon 6900/6 and AMD EPYC 9005/MI350/355, expanded edge and IoT portfolios, and AI-optimized storage solutions. These initiatives aim to capitalize on significant opportunities in AI, cloud computing, and 5G/edge computing markets.
Management identified material weaknesses in internal control over financial reporting as of June 30, 2025, and is implementing actions such as hiring qualified accounting personnel, reassessing procedures, and redesigning ERP system security. These efforts are critical to address prior SEC reporting delinquencies and ensure accurate financial reporting.
The CEO's compensation for fiscal year 2025 was primarily performance-based, with all five revenue goals (up to $21.0 billion) and four out of five stock price goals (up to $90.0 per share) under the 2023 CEO Performance Award having been achieved. This structure incentivizes leadership to drive specific financial and market objectives.
Total operating expenses rose by 38.4% to $1,176.9 million in fiscal year 2025, driven by higher headcount, salaries, stock-based compensation, and a $74.0 million increase in professional and service fees. The latter was primarily due to the Special Committee investigation and efforts to enhance external reporting and compliance activities.
As of June 30, 2025, the company reported unremediated material weaknesses in internal control over financial reporting, including issues with IT general controls, segregation of duties, and completeness/accuracy of information. This could adversely affect the ability to report financial condition timely and accurately, and potentially lead to further regulatory scrutiny.
New U.S. export control regulations, particularly in January 2025, impose worldwide authorization requirements and limits on advanced computing products (e.g., GPUs) to certain consignees and countries, including China and the Middle East. These restrictions could disadvantage the company relative to competitors and impede its ability to meet customer demand.
Four customers accounted for 10% or more of net sales in fiscal year 2025, and two suppliers accounted for 64.4% and 5.1% of total purchases. This high concentration exposes the company to substantial risks if key customers reduce orders or if supplier relationships are disrupted, potentially harming revenue and operations.
The company experienced increased net sales from server and storage systems, particularly GPU servers, HPC, and rack-scale solutions, indicating market share gains in these high-growth areas. This success is attributed to their ability to tailor products to the unique needs of these sectors and rapid time-to-market.
Super Micro emphasizes its 'Building Block Solutions®' architecture and in-house design competencies, enabling rapid introduction of new products with the latest technologies. This allows them to offer a broad selection of application-optimized solutions, providing a competitive edge against larger and smaller vendors.
The market is highly competitive, with large x86-based server vendors and ODMs increasingly offering branded products at low costs. This intense competition, along with a strategic competitive pricing approach, contributed to a 2.7 percentage point decline in gross margin in FY2025.
Cost of sales increased by $6,614.3 million (51.2%) in fiscal year 2025, primarily due to higher costs of components and materials for GPU servers, HPC, and rack-scale solutions. This was exacerbated by a $149.6 million increase in inventory write-down adjustments and higher tariff expenses.
Net cash provided by operating activities significantly improved to $1,659.5 million in fiscal year 2025, a substantial increase from $(2,486.0) million used in fiscal year 2024. This was driven by increased cash collection from customers and reduced inventory purchases, indicating better working capital management.
The company expanded its worldwide manufacturing capacity with a new facility in Malaysia during fiscal year 2025. This expansion aims to serve customers more efficiently and reduce overall manufacturing costs, leveraging its global operating structure to optimize operations.
Research and development expenses increased by 37.3% to $636.6 million in fiscal year 2025, reflecting significant investment in employee-related costs and product development. This is to remain at the forefront of innovation in next-generation products and technologies, particularly for AI and HPC.
The introduction of DLC-2, a next-generation Direct Liquid Cooling solution, is engineered to reduce electricity costs by up to 40% and total cost of ownership (TCO) by up to 20%. This highlights the company's leadership in green IT innovation and advanced thermal management solutions.
The company's 'Server Building Block Solutions®' architecture and close collaboration with leading vendors like NVIDIA, Intel, and AMD enable rapid development and introduction of new products. This strategy allows them to quickly incorporate the latest technologies and offer a broad portfolio.
In fiscal year 2025, Super Micro issued $700.0 million in 2028 Convertible Notes and $2.3 billion in 2030 Convertible Notes through private placements. This indicates a strategy of leveraging debt to finance ongoing business growth and strategic investments, contributing to a total consolidated indebtedness of $4.8 billion.
The company repurchased 4,891,171 shares of common stock for approximately $200.0 million in June 2025, concurrent with the 2030 Convertible Notes offering. This action, though not part of a publicly announced plan, suggests management's confidence in the company's valuation and future cash flow generation.
Purchases of property, plant, and equipment were $127.2 million in fiscal year 2025, and the company anticipates $180.0 million to $200.0 million in capital expenditures for fiscal year 2026. These investments are primarily for global manufacturing capabilities, new IT investments, and facility upgrades to support future growth.
Super Micro positions itself as a 'first to market innovator in high-performance, high-efficiency server, storage, networking, and management total solutions' through its 'We Keep IT Green' initiative. Its DLC-2 liquid cooling technology is designed to reduce electricity costs by up to 40% and TCO by up to 20%, directly contributing to environmental impact reduction.
The Board oversees human capital management and has added three new independent directors in fiscal year 2025, increasing board diversity. An ESG oversight committee with direct reporting lines to the board has been implemented, indicating a structured approach to governance.
The company is committed to providing a safe workplace, adhering to international standards for product safety and security, and global standards for fair and ethical treatment of workers, including preventing excessive working hours and prohibiting child labor. This reflects a focus on social responsibility across its operations.
The company faces risks from escalating trade restrictions, particularly U.S. export controls on advanced computing products (GPUs, AI) to China and the Middle East, which were further expanded in January 2025. These regulations create competitive disadvantages and limit the ability to sell products to full customer demand in certain countries.
Macroeconomic factors such as inflation, increased interest rates, and global economic downturns have impacted customer demand, leading to potential delays or reductions in spending. Inflationary pressures also increase operating costs, including labor and logistics, affecting profitability and financial results.
The growing use of AI has substantially increased demand for the company's products, with expectations for this trend to continue. However, the global AI market is subject to significant risks including evolving regulatory constraints, industry standards, and ethical considerations, which could materially and adversely impact business operations.