Super Micro Computer Inc Earnings - Q3 2025 Analysis & Highlights
Byline: Super Micro Computer Inc's Q1 2026 earnings call highlighted strong demand for AI GPU platforms, particularly the NVIDIA Blackwell Ultra-based GB300 product line, which has over $13 billion in back orders. The company is focused on expanding its Data Center Building Block Solutions (DCBBS) to optimize data center performance and reduce power consumption. Despite a revenue shift from Q1 to Q2 due to configuration upgrades, the company raised its full-year revenue outlook to at least $36 billion. Gross margins are expected to be impacted in the short term due to investments in new customer support and the ramp-up of a mega-scale GB300 platform.
Key Financial Results
Q1 2026 revenue was $5 billion, down 15% year-over-year.
AI GPU platforms represented over 75% of Q1 revenues.
Non-GAAP gross margin was 9.5%.
Non-GAAP operating margin for Q1 was 5.4%.
GAAP diluted EPS was $0.26, and non-GAAP diluted EPS was $0.35.
Q1 closing inventory was $5.7 billion, up from $4.7 billion in Q4.
Business Segment Results
Enterprise channel revenues totaled $1.5 billion, representing 31% of revenues.
OEM appliance and large data center segment revenues were $3.4 billion, representing 68% of Q1 revenues.
The emerging 5G/Telco/Edge/IoT segment contributed the remaining 1% of Q1 revenues.
The US represented 37% of Q1 revenues, Asia 46%, Europe 14%, and the Rest of the World 3%.
Capital Allocation
CapEx for Q1 totaled $32 million.
Executed a $1.8 billion AR facility to strengthen working capital.
The cash position totaled $4.2 billion, while bank and convertible note debt was $4.8 billion, resulting in a net debt position of $575 million.
Industry Trends and Dynamics
Demand for advanced AI compute and infrastructure solutions is evolving rapidly.
Product life cycles are compressing from 18-24 months to as short as 12 months.
Edge AI solutions are gaining traction for real-time processing in various environments.
Competitive Landscape
Competition remains intense in capturing the AI infrastructure market share.
Supermicro is focused on scale, innovation, and differentiated DCBBS offerings to strengthen market leadership.
The company aims to become the leading data center infrastructure company.
Growth Opportunities and Strategies
Expanding the DCBBS portfolio to optimize data centers for customers.
Executing an aggressive global expansion with new production facilities in various locations.
Focusing on higher margin segments such as Data Center Building Block Solutions, emerging global CSPs, sovereign mega projects, enterprise data centers, IoT, and telco solutions and software service offerings.
Financial Guidance and Outlook
Expects to ship at least $10.5 billion in the December quarter.
Anticipates sequential growth through fiscal 2026, achieving at least $36 billion in revenue for the year.
For Q2 fiscal year 2026, expects net sales in the range of $10 billion to $11 billion, GAAP diluted net income per share of $0.37 to $0.45, and non-GAAP diluted net income per share of $0.46 to $0.54.
Gross margins are expected to be down 300 basis points relative to Q1 fiscal year 2026 levels.
GAAP operating expenses are expected to be around $326 million in Q2.
Capital expenditures for Q2 are expected to be in the range of $60 million to $80 million.
Additional Factors
A customer's custom rack platform upgrade and customer logistics factors delayed some shipments to Q2.
The Q1 cash conversion cycle was 123 days, compared to 96 days in Q4.
Days of inventory increased by 30 days to 105 days versus 75 days in the prior quarter.
