EPS of $0.55 increased by 62.2% from previous year
Gross margin of 11.2%
Net income of 297.24M
""Our robust growth is driven by our technology and product leadership in the AI infrastructure market, especially with Generative AI training and inferencing."" - Charles Liang
Super Micro Computer Inc (SMCI) Q4 2024 Financial Results Analysis
Executive Summary
In Q4 2024, Super Micro Computer Inc achieved a significant revenue milestone of $5.31 billion, reflecting an impressive 143% year-over-year growth driven by a robust demand for AI infrastructure solutions. This quarter also marks the company's continued leadership in the direct liquid cooling (DLC) technology segment, underscoring its strategic positioning in the growing AI market. Despite challenges including component shortages that delayed $800 million in shipments, management forecasts strong revenue growth for fiscal year 2025, projecting total revenue between $26 billion to $30 billion. The company also anticipates an easing of short-term margin pressures, primarily related to upfront costs associated with ramping production of DLC systems, which are expected to generate higher margins as production stabilizes.
Key Performance Indicators
Revenue
5.35B
QoQ: 39.08% | YoY:145.08%
Gross Profit
546.03M
11.23% margin
QoQ: -8.59% | YoY:46.90%
Operating Income
288.49M
QoQ: -23.74% | YoY:27.22%
Net Income
297.24M
QoQ: -26.14% | YoY:53.56%
EPS
0.60
QoQ: -15.49% | YoY:62.16%
Revenue Trend
Margin Analysis
Key Insights
**Q4 Revenue**: $5.31 billion, up 143% YoY, 38% QoQ.
**Gross Profit**: $546 million, gross margin at 11.3%, a decrease from 15.6% in Q3, due to product mix and initial costs of new DLC technologies.
**Operating Income**: $288 million; operating margin fell to 7.1% from 11.3% QoQ.
**Net Income**: $297 million, net margin of 5.55%.
**EPS**: Non-GAAP EPS of $6.25, below expectations of $7.62 - $8.42.
Financial Highlights
- Q4 Revenue: $5.31 billion, up 143% YoY, 38% QoQ.
- Gross Profit: $546 million, gross margin at 11.3%, a decrease from 15.6% in Q3, due to product mix and initial costs of new DLC technologies.
- Operating Income: $288 million; operating margin fell to 7.1% from 11.3% QoQ.
- Net Income: $297 million, net margin of 5.55%.
- EPS: Non-GAAP EPS of $6.25, below expectations of $7.62 - $8.42.
- Cash Flow: Operating cash flow used was $635 million, with a free cash flow of negative $662 million due to inventory builds anticipated for future growth.
- Current Ratio: 3.77, indicating strong liquidity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
5.35B
145.08%
39.08%
Gross Profit
546.03M
46.90%
-8.59%
Operating Income
288.49M
27.22%
-23.74%
Net Income
297.24M
53.56%
-26.14%
EPS
0.60
62.16%
-15.49%
Key Financial Ratios
currentRatio
3.77
grossProfitMargin
10.2%
operatingProfitMargin
5.39%
netProfitMargin
5.55%
returnOnAssets
2.99%
returnOnEquity
5.43%
debtEquityRatio
0.4
operatingCashFlowPerShare
$-1.08
freeCashFlowPerShare
$-0.9
priceToBookRatio
8.72
priceEarningsRatio
40.1
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Revenue Growth: "We achieved $14.94 billion in revenue for fiscal 2024, representing a 110% growth rate."
- DLC Shortages Impact: "Some key new components shortage delayed about $800 million of revenue shipments to July."
- Future Forecast: "We are targeting $6 billion to $7 billion in revenue for Q1 fiscal 2025."
- Innovation and Expansion: "Our new Malaysia facility will enhance our production capabilities and reduce operational costs."
- Stock Split Announcement: "We are targeting a 10-for-1 forward stock split to make ownership more accessible."
"Our robust growth is driven by our technology and product leadership in the AI infrastructure market, especially with Generative AI training and inferencing."
â Charles Liang
"We could ship more if not for DLC liquid cooling component shortage."
â Charles Liang
Forward Guidance
Management has provided optimistic guidance for fiscal Q1 2025, estimating revenues between $6 billion to $7 billion, capitalizing on robust demand for next-gen AI infrastructure and the successful rollout of new DLC solutions. Furthermore, management expects gross margins to improve in the latter half of fiscal 2025 as manufacturing efficiency increases and component shortages are alleviated. Key growth targets indicate a potential for substantial financial performance improvement as Super Micro continues to leverage its technological advancements and market expansion strategies.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SMCI Focus
11.23%
5.39%
5.43%
40.10%
QBTS
67.70%
-5.69%
65.40%
-2.18%
RGTI
31.90%
-5.10%
-11.50%
-2.75%
CRCT
42.00%
7.14%
2.11%
31.71%
QUBT
-62.20%
-105.58%
-11.30%
-2.13%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Super Micro Computer Inc is positioned for continued growth amid robust demand for AI and technological infrastructures. The company's commitment to innovation, particularly through its DLC products and anticipated Datacenter Building Block Solutions, suggests a strong competitive advantage going forward. While management's forecasts indicate potential revenue between $26 billion and $30 billion for fiscal year 2025, investors should remain cautious about short-term profitability as the company navigates component shortages and ongoing investments in operational scale. The long-term outlook remains strong, hinging on successful execution of production and sales strategies, alongside maintaining operational efficiencies.
Key Investment Factors
Growth Potential
Super Micro Computer Inc is poised for significant growth, primarily fueled by strong demand for AI infrastructure and its innovative DLC solutions, which are expected to capture a larger share of the market as data centers transition from air-cooled to liquid-cooled systems.
Profitability Risk
Short-term challenges, including supply chain disruptions affecting component availability, rising operational costs, and competitive pressures from larger firms in the AI and data center sectors may impact profitability and revenue forecasts in the interim.
Financial Position
Currently, SMCI has healthy liquidity ratios (current ratio of 3.77) but faces high debt levels with total debt amounting to $2.2 billion, leading to a net cash position of negative $504 million, which necessitates careful monitoring of cash flow management.
SWOT Analysis
Strengths
Leadership in AI infrastructure market.
Strong revenue growth of 143% YoY for Q4 2024.
Innovative DLC technology offering, positioning for future tech advancements.
Weaknesses
Recent declines in gross margin due to product mix and operational costs.
High debt levels and negative free cash flow may pressure liquidity.
Opportunities
Growing demand for efficient AI solutions and datacenter configurations.
Expansion into emerging markets and further production capacity enhancements.
Threats
Supply chain vulnerabilities and dependency on specific technology components.
Intense competition from larger technology firms in the AI and datacenter markets.