Analysis SMCI
Supermicro's sales surged. Why did operating cash stay negative?
A largely preannounced sales jump came with new preliminary cash details. Our comparison traces the operating-balance drag, stronger profit and higher annual outlook.
Super Micro Computer's preliminary quarterly sales nearly quadrupled to $19.95 billion, but operating activities still used $434 million of cash. The outflow was smaller than last year's $918 million, despite the much larger sales ramp.
The first-quarter fiscal 2027 figures cover July through September 2026. They remain preliminary because the company's financial closing procedures are incomplete.
Research by Ticker Byline shows that all eight operating asset and liability adjustments together absorbed $2.18 billion. That more than offset $1.75 billion of net income and the noncash adjustments listed in the cash-flow statement.
Profit rose faster than operating cash
The supplier of servers and data-center systems reported preliminary operating profit of $2.06 billion, versus $182 million a year earlier. Consolidated net income reached $1.59 billion, versus $168 million.
The full cash bridge shows where profit and cash separate. Changes in receivables, inventories and prepaid or other assets reduced the reconciliation by a combined $6.39 billion. Liability adjustments offset much of that amount.
| Component | Amount |
|---|---|
| Net income plus listed noncash adjustments | +1.748 |
| Receivables, inventory and prepaid/other assets | −6.387 |
| Deferred revenue adjustment | +3.054 |
| Other operating liability adjustments | +1.151 |
| Operating cash flow | −0.434 |
Deferred revenue includes advance payments and invoices issued before products or services are provided. A rise in this liability can coincide with a receivable, so the $3.05 billion adjustment is not a measure of new customer cash receipts.
Compared with last year's quarter, the combined operating-balance drag worsened by $954 million. Net income plus noncash adjustments improved by $1.44 billion, leaving the operating outflow $484 million smaller.
The sales jump was largely flagged in October
On October 20, Supermicro had already estimated quarterly sales of $18.5 billion to $19.5 billion, above its original $14.5 billion to $15.5 billion forecast. November's preliminary result is another $446 million above that updated range.
Gross margin was 12.7%, above October's 12.0% to 12.5% estimate and last year's 9.3%, but below the June quarter's 17.5%.
The annual sales forecast increased to $72 billion to $82 billion from August's $65 billion to $72 billion. The next quarter's sales forecast is $19.5 billion to $21.5 billion.
Cash ended September at $6.90 billion, down from $7.52 billion in June. Bank borrowings and convertible notes totaled $8.65 billion. The Supermicro company profile follows those balances, preliminary earnings and the equity financing already completed in June.