Supermicro Reports Third Quarter 2016 Financial Results 

SAN JOSE, Calif., April 29 -- Super Micro Computer, Inc. (NASDAQ: SMCI), a global leader in high-performance, high-efficiency server, storage technology and green computing, has announced third quarter fiscal 2016 financial results for the quarter ended March 31, 2016. The final results are in line with the preliminary results announced by the Company on April 14, 2016.

Fiscal 3rd Quarter Highlights

• Quarterly net sales of $532.7 million, down 16.6% from the second quarter of fiscal year 2016 and up 13.1% from the same quarter of last year.
• GAAP net income of $16.7 million, down 52.0% from the second quarter of fiscal year 2016 and down 27.7% from the same quarter of last year.
• GAAP gross margin was 14.9%, down from 16.6% in the second quarter of fiscal year 2016 and down from 16.3% in the same quarter of last year.
• Server solutions accounted for 69.9% of net sales compared with 71.0% in the second quarter of fiscal year 2016 and 64.1% in the same quarter of last year.

Net sales for the third quarter ended March 31, 2016 totaled $532.7 million, down 16.6% from $639.0 million in the second quarter of fiscal year 2016. One customer accounted for 10.2% of net sales during the quarter ended March 31, 2016.

GAAP net income for the third quarter of fiscal year 2016 was $16.7 million or $0.32 per diluted share, a decrease of 27.7% from net income of $23.1 million, or $0.44 per diluted share in the same period a year ago. Included in net income for the quarter is $3.9 million of stock-based compensation expense (pre-tax). Excluding this item and the related tax effect, non-GAAP net income for the third quarter was $19.0 million, or $0.36 per diluted share, compared to non-GAAP net income of $24.9 million, or $0.47 per diluted share, in the same quarter of the prior year. On a sequential basis, non-GAAP net income decreased from the second quarter of fiscal year 2016 by $19.0 million or $0.37 per diluted share.

GAAP and Non-GAAP gross margin for the third quarter was 14.9% compared to 16.3% in the same period a year ago. GAAP gross margin for the second quarter of fiscal year 2016 was 16.6% and Non-GAAP gross margin for the second quarter of fiscal year 2016 was 16.7%.

The GAAP income tax provision was $7.4 million or 30.7% of income before tax provision compared to $8.1 million or 26.1% in the same period a year ago and $14.1 million or 28.8% in the second quarter of fiscal year 2016. The effective tax rates for the second quarter of fiscal year 2016 and third quarter of fiscal year 2015 were lower primarily due to the reinstatement of U.S. federal research and development tax credits.

The Company's cash and cash equivalents and short and long term investments at March 31, 2016 were $179.1 million compared to $98.1 million at June 30, 2015. Free cash flow for the nine months ended March 31, 2016 was $67.7 million, primarily due to an increase in the Company's cash provided by operating activities and partially offset by the cash used in the development and construction of improvements on the Company's properties.

Business Outlook & Management Commentary

The Company expects net sales of $580 million to $640 million for the fourth quarter of fiscal year 2016 ending June 30, 2016. The Company expects non-GAAP earnings per diluted share of approximately $0.46 to $0.58 for the fourth quarter.

“As previously disclosed, in the seasonally weaker third quarter, softer market demand caused our results to be below our guidance. However, we continued to grow at an industry leading pace by growing 13.1% over last year and the third quarter marks the 27 straight quarter of year-over-year growth. This quarter, growth was led by our two strongest segments, Datacenter and Cloud as well as Storage,” said Charles Liang, Chairman and Chief Executive Officer. “As we look to the quarter ahead, Supermicro will again be first to market with the broadest array of server solutions built on Broadwell which was recently launched. In addition, we will continue to offer the industry’s most innovative solutions for the software defined storage market, including all flash, NVMe, hybrid and converged solutions.”

It is currently expected that the outlook will not be updated until the Company’s next quarterly earnings announcement, notwithstanding subsequent developments. However, the Company may update the outlook or any portion thereof at any time. Such updates will take place only by way of a news release or other broadly disseminated disclosure available to all interested parties in accordance with Regulation FD.

About Super Micro Computer, Inc.

Supermicro, a global leader in high-performance, high-efficiency server technology and innovation is a premier provider of end-to-end green computing solutions for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro's advanced Server Building Block Solutions offer a vast array of components for building energy-efficient, application-optimized, computing solutions. Architecture innovations include Twin, TwinPro, FatTwin, Ultra Series, MicroCloud, MicroBlade, SuperBlade, Simply Double, Double-sided Storage, Battery Backup Power (BBP) modules and WIO/UIO. Products include servers, blades, GPU systems, workstations, motherboards, chassis, power supplies, storage, networking, server management software and SuperRack cabinets/accessories delivering unrivaled performance and value.

Source: Supermicro