Some key elements:

  • Sales of $3.66 billion, compared with $2.12 billion in the previous quarter and $1.80 billion last year.
  • Gross margin of 15.4%, versus 16.7% in the first quarter and 18.7% last year.
  • Net earnings of $296 million, up from $157 million in the first quarter and $176 million last year.
  • Diluted earnings per share of $5.10, compared with $2.75 in the previous quarter and $3.14 last year.
  • Negative cash flow from operations of $595 million and capital expenditures of $15 million.

Management revised sales for 2024 upwards to a range of $14.3 to $14.7 billion, against analysts' initial forecast of around $11.5 billion, i.e. 26% above initial estimates. This would give YoY sales growth of 103%. For the third quarter, SMCI forecasts sales of between $3.7 and $4.1 billion.

These good results confirm our investment thesis on the stock, which entered MarketScreener Investor USA portfolio on February 17, 2023, with a latent performance of +426.13% before the opening on 01/30/2024.

However, gross margin has fallen compared with previous quarters and years. SMCI has used a significant amount of cash flow in its operations, showing that its business is still capital-intensive.

Supermicro continues to strengthen its market leadership with AI-optimized computing platforms and complete IT solutions. SMCI continues to win new partners and meet growing demand from existing customers. The company relies on innovation to gain market share. However, it is doubtful whether it will gain significant market share. This explosive growth and dazzling profitability is creating an air-raid for competitors who are already starting to step into the breach. This still nascent market is a mine of opportunities for the entire sector: Supermicro and its competitors alike.