Super Micro Computer (SMCI.US) Q1 Revenue Surges Nearly Threefold Year-on-Year, Setting a Record; Operating Cash Flow Still Negative

According to Investing.com News, Super Micro Computer (SMCI.US) released its financial results for the first quarter of fiscal year 2027 on Tuesday. Driven by the demand for AI data center infrastructure, the company's quarterly revenue reached a record high, nearly tripling year-over-year, with net profit increasing more than eightfold. However, the company’s operating cash flow remained negative, and the gross margin declined significantly compared to the previous quarter.

The financial report shows that for the first fiscal quarter ending September 30, 2026, Super Micro Computer’s revenue reached $19.946 billion, an increase of approximately 298% compared to $5.018 billion in the same period last year, and an increase of about 80% compared with $11.1 billion in the previous quarter.

According to US GAAP, net profit for the first quarter was $1.594 billion, up approximately 847% from $168 million in the same period last year; diluted earnings per share were $1.75, compared to $0.26 in the same period a year ago.

On a non-GAAP basis, the company’s adjusted diluted earnings per share were $1.81, higher than $0.35 in the same period last year, representing a year-over-year increase of about 417%.

In terms of profitability, Super Micro Computer’s GAAP gross margin for the first quarter was 12.7%, higher than the 9.3% in the same period last year, but down 4.8 percentage points from 17.5% in the previous quarter. Non-GAAP gross margin was 12.8%, compared to 9.5% in the same period last year.

The company’s operating profit for the first quarter was $2.064 billion, a significant increase from $182 million in the same period last year. Adjusted EBITDA was $2.227 billion, compared to $335 million in the same period last year, with adjusted EBITDA margin rising from 6.7% to 11.2%.

AI Data Center Business Drives Record Revenue

Super Micro Computer's founder, president, and CEO Charles Liang stated that the company's ongoing transformation into a comprehensive provider of AI and IT data center solutions continues to accelerate, driving first-quarter revenue for fiscal 2027 to a record high of $19.9 billion.

Liang emphasized that the company’s modular data center solutions are creating greater value for customers, with applications ranging from gigawatt-scale large data centers to single-container scale deployments. At the same time, the company is continuously expanding its software, proactive services, and network solutions, which help improve profitability and create long-term shareholder value.

He also mentioned that by strengthening enterprise partnerships and expanding global production capacity, Super Micro Computer is committed to helping customers deploy AI infrastructure more quickly, enhance system operational stability, and reduce costs.

However, despite the substantial increase in quarterly revenue, the company's gross margin still saw a significant decline compared to the previous quarter. In its risk disclosure, Super Micro Computer noted that as it increasingly targets large customers and large-scale sales projects, customer concentration may rise, sales costs could increase, and profit margins may come under pressure.

Operating Cash Flow Remains Negative with Higher Accounts Receivable and Inventory

It is noteworthy that Super Micro Computer’s operating cash flow remained negative in the first fiscal quarter. The financial report shows a net cash outflow from operating activities of $434 million in the first quarter, though this is an improvement compared to a net outflow of $918 million in the same period last year, presenting a contrast to the markedly higher accounting profit.

According to the cash flow statement, accounts receivable increased by about $3.56 billion, and inventory rose by approximately $2.477 billion during the first quarter, putting pressure on operating cash flow. Meanwhile, deferred revenue increased by about $3.054 billion, partially offsetting the aforementioned impacts.

As of the end of September, the company’s accounts receivable reached $9.685 billion, higher than $6.125 billion at the end of June; inventory rose to $15.054 billion, up from $12.896 billion at the end of the previous quarter.

Capital expenditures and investments for the first quarter totaled around $47 million. As of the end of September, cash and cash equivalents amounted to approximately $6.9 billion, while bank debt and convertible notes totaled about $8.6 billion.

Q2 Revenue Expected to Reach Up to $21.5 Billion, Full-Year Guidance as High as $82 Billion

Looking ahead to the second quarter of fiscal 2027, Super Micro Computer expects revenue to range between $19.5 billion and $21.5 billion, with a midpoint of $20.5 billion, representing approximately 3% growth over the first fiscal quarter. The company forecasts GAAP diluted earnings per share for the second quarter to be between $1.59 and $1.83, and non-GAAP diluted EPS to be between $1.66 and $1.90.

For the entire fiscal year 2027, Super Micro Computer expects revenue to range from $72 billion to $82 billion, with a midpoint of $77 billion.

Overall, Super Micro Computer’s latest financial results indicate that demand for AI data center infrastructure is fueling rapid growth in the company’s revenue and profits. However, investors should remain attentive to key financial indicators such as sequentially lower quarterly gross margin, rising accounts receivable and inventory levels, and ongoing negative operating cash flow.