Written by Akash Sriram and Stephen Nellis
(Reuters) – Artificial intelligence server maker Super Microcomputer on Tuesday reported lower-than-expected third-quarter sales, due to shortages of some key components and lower profitability of a new product line of servers. A question rang out.
Supermicro shares have more than tripled since the beginning of the year, but were down 14% in after-bell trading.
The San Jose, Calif.-based company, which builds powerful AI servers with chips from Nvidia, Advanced Micro Devices and others, expects fourth-quarter sales to beat expectations as steady demand is expected. ing.
But analysts said on the earnings call that spending to support the transition to a new generation of Nvidia chips that require liquid cooling and whether new servers coming to market later this year will command a high enough price point. We posed questions to company executives regarding this matter. This is to boost Super Micro's profit margin.
The AI server maker was added to the S&P 500 index last month.
Super Micro is using its server liquid cooling technology to gain market share in a highly competitive industry.
CEO Charles Liang told analysts that the company paid a premium to secure supply to quickly build out water-cooled servers in the coming quarters, but end customers are seeing “a lot more water-cooled servers compared to older air-cooled servers.” He said he would pay “a very minimal premium.” server.
Inventories at the end of the March quarter were $4.12 billion, up from $1.45 billion for the fiscal year ended June 30, 2023.
Chief Financial Officer David Weigand said, “Cash flow will suffer, but we need that inventory to ship in the fourth quarter, so it's not a problem.''
Some analysts have said the company's quarterly estimates suggest margins will be below that range, but Supermicro is forecast to be in the 14% to 17% gross margin range over the long term. He added that the company aims to remain in the
The company's fourth-quarter revenue is expected to be between $5.1 billion and $5.5 billion, compared to analysts' average estimate of $4.89 billion, according to LSEG data.
“We could have delivered more products if we were not limited by the shortage of some key components,” Liang said.
The company raised its annual sales forecast to a range of $14.7 billion to $15.1 billion, from the previous estimate of $14.3 billion to $14.7 billion.
Supermicro reported adjusted earnings of $6.65 per share in the first quarter, compared to analysts' expectations of $5.78 per share.
Revenue for the quarter ended March 31 was $3.85 billion, compared to expectations of $3.95 billion, according to LSEG data.
Gross profit margin for the three-month period was 15.5%, down from 17.6% in the same period last year and in line with analyst expectations.
(Reporting by Akash Sriram in Bengaluru and Stephen Nellis in San Francisco; Editing by Tasim Zahid and Jamie Freed)
