Super Micro Computer, Inc.

Previous wording

We commenced operations in 1993 and have been profitable every year since inception. For the three months ended September 30, 2025 and 2024, our net income was $168.3 million and $424.3 million, respectively.

Current wording

We commenced operations in 1993 and have been profitable every year since inception. For the three months ended December 31, 2025 and 2024, our net income was $400.6 million and $320.6 million, respectively. For the six months ended December 31, 2025 and 2024, our net income was $568.8 million and $744.9 million, respectively.

Previous wording

In order to increase our sales and profits, we believe that we must continue to develop flexible application optimized server and storage solutions while being among the first to market with new features and products. Our focus is on delivering Total IT Solutions that integrate, validate, and deliver server, storage, networking and software at the rack and cluster (multi-rack) level. Additionally, we will continue to expand our software offerings and enhance customer service and support, particularly as we increase our focus on large enterprise and data center customers. A key component of our strategy is our DCBBS, which significantly reduces data center build time and enables full integration of AI computing, server, storage, networking, rack, cabling, liquid cooling, end-to-end management software, onsite deployment services, and ongoing maintenance. To further expand our market share, we also recognize the need to strengthen our network of sales partners and distribution channels.

Current wording

In order to increase our sales and profits, we believe that we must continue to develop flexible application optimized server and storage solutions while being among the first to market with new features and products. Our focus is on delivering Total IT Solutions that integrate, validate, and deliver server, storage, networking and software at the rack and cluster (multi-rack) level. Additionally, we will continue to expand our software offerings and enhance customer service and support, particularly as we increase our focus on large enterprise and data center customers. A key component of our strategy is our Data Center Building Block Solutions (“DCBBS”), which significantly reduces data center build time and enables full integration of AI computing, server, storage, networking, rack, cabling, liquid cooling, end-to-end management software, onsite deployment services, and ongoing maintenance. To further expand our market share, we also recognize the need to strengthen our network of sales partners and distribution channels.

Previous wording

•Gross margin decreased to 9.3% in the three months ended September 30, 2025 from 13.1% in the three months ended September 30, 2024, primarily due to our strategy to offer competitive pricing to gain market share, change in product and customer mix, and higher manufacturing related expenses.

Current wording

•Gross margin decreased to 6.3% in the three months ended December 31, 2025 from 11.8% in the three months ended December 31, 2024, primarily due to our strategy to offer competitive pricing to gain market share and a change in product and customer mix.

Previous wording

•Operating expenses increased by 7.0% in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to higher headcount and increases in salary and stock-based compensation.

Current wording

•Operating expenses increased by 7.6% in the three months ended December 31, 2025 as compared to the three months ended December 31, 2024, primarily due to higher headcount and increases in salary and stock-based compensation.

Previous wording

•Net income decreased to $168.3 million in the three months ended September 30, 2025 as compared to $424.3 million in the three months ended September 30, 2024, which was primarily due to decrease in gross profit and increase in operating and other expenses.

Current wording

•Net income increased to $400.6 million in the three months ended December 31, 2025 as compared to $320.6 million in the three months ended December 31, 2024, which was primarily due to a higher increase in net sales.

Previous wording

There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Current wording

There have been no material changes to our critical estimates as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Previous wording

We use several suppliers and contract manufacturers to design and manufacture subsystems in accordance with our specifications, with most final assembly and testing performed at our manufacturing facilities in the region where our products are sold. We work with Ablecom, one of our key contract manufacturers and a related party, for our chassis and certain other components. We also outsource a significant part of the manufacturing of certain components, particularly power supplies, to Compuware, also a related party. We also collaborate on design and development activities with Ablecom and Compuware, where we substantially fund the design costs and retain the intellectual property rights. Our purchases of products from Ablecom and Compuware combined represented 3.4% and 4.6% of cost of sales on our condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024, respectively. For further details on our dealings with related parties, see Note 10, “Related Party Transactions” in the notes to the condensed consolidated financial statements.

Current wording

We use several suppliers and contract manufacturers to design and manufacture subsystems in accordance with our specifications, with most final assembly and testing performed at our manufacturing facilities in the region where our products are sold. We work with Ablecom, one of our key contract manufacturers and a related party, for our chassis and certain other components. We also outsource a significant part of the manufacturing of certain components, particularly power supplies, to Compuware, also a related party. We also collaborate on design and development activities with Ablecom and Compuware, where we substantially fund the design costs and retain the intellectual property rights. Our purchases of products from Ablecom and Compuware combined represented 1.6% and 2.1% of cost of sales on our condensed consolidated statements of operations for the three and six months ended December 31, 2025, respectively, and 2.7% and 3.7% of cost of sales on our condensed consolidated statements of operations for the three and six months ended December 31, 2024, respectively. For further details on our dealings with related parties, see Note 10, “Related Party Transactions” in the notes to the condensed consolidated financial statements.

Previous wording

Other income, net and interest expense consists primarily of interest earned on our investments and cash balances, interest incurred on our debt, and foreign exchange gains and losses.

Current wording

Other income, net, interest income, and interest expense consists primarily of interest earned on our investments and cash balances, interest incurred on our debt, and foreign exchange gains and losses.

Previous wording

The following table presents certain items of our condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024 (in millions):

Current wording

The following table presents certain items of our condensed consolidated statements of operations for the three and six months ended December 31, 2025 and 2024 (in millions):

Previous wording

The following table presents certain items of our condensed consolidated statements of operations expressed as a percentage of net sales for the three months ended September 30, 2025 and 2024:

Current wording

The following table presents certain items of our condensed consolidated statements of operations expressed as a percentage of net sales for the three and six months ended December 31, 2025 and 2024:

Previous wording

The following table presents net sales for the three months ended September 30, 2025 and 2024 (dollars in millions):

Current wording

The following table presents net sales for the three and six months ended December 31, 2025 and 2024 (dollars in millions):

Previous wording

The$919.5 million or 15.5% decrease in net sales was primarily due to the timing of several substantial orders, which were only received in late September, such that the products covered by those orders could not be shipped during the quarter ended September 30, 2025. This was caused principally by customer configuration upgrades and delays in data center readiness. A decrease in our average selling price compared to the prior quarter ended September 30, 2024 also contributed modestly to the decline in net sales of server and storage systems, as we maintained our strategy of pricing our products competitively to retain and or gain market shares. This was most pronounced in declining billings for GPU & Super Racks of $527.8 million or 11.7% year over year, including liquid-cooled and air-cooled servers that are generally more complex and of higher average selling price. Additionally, sales across other product categories decreased by $349.9 million, or 28.5%, including Traditional Storage, SuperBlade, Ultra Server, and other product lines.

Current wording

The$7,004.5 million or 123.4% increase in net sales was primarily due to fulfillment and shipment of orders to support our customers' datacenters deployment, including a large design win from a customer, during the three months ended December 31, 2025, some of which were originally delayed due to customer configuration upgrades and data center readiness matters. An increase in our average selling price compared to the prior quarter ended December 31, 2024 also contributed modestly by product mix. This was most pronounced in increased billings for AI GPU related products of $7,398.2 million or 169.7% year over year, including liquid-cooled and air-cooled servers that are generally more complex and of higher average selling price. This was partially offset by decreased sales across other product categories by $475.9 million, or 42.5% as we continue to focus on gaining market share from our AI GPU platforms.

Previous wording

Cost of sales and gross margin for the three months ended September 30, 2025 and 2024 are as follows (dollars in millions):

Current wording

Cost of sales and gross margin for the three and six months ended December 31, 2025 and 2024 are as follows (dollars in millions):

Previous wording

The $611.3 million or 11.8% decrease in cost of sales was primarily driven by a net decrease of approximately $754.5 million or 14.1% in certain products including GPU servers, HPC, and rack-scale solutions, consistent with the lower shipment volume during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, resulting from the timing of several substantial orders that were received near the end of the quarter and therefore could not be fulfilled. This was caused principally by customer configuration upgrades and delays in data center readiness. This decrease was partially offset by a $91.3 million or 29.8% decrease in vendor rebates, a $42.1 million or 398.3% increase in tariff expenses driven by new trade policies, as well as a $27.4 million or 299.3% increase in inventory write-down adjustments from aged inventory.

Current wording

The $6,876.0 million or 137.3% increase in cost of sales was primarily driven by an increase of approximately $6,429.2 million or 119.2% in certain products including GPU servers, HPC systems, and rack-scale solutions, consistent with the higher shipment volume during the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. The remaining increases in cost of sales were driven by a $142.0 million or 2621.0% increase in tariff expenses driven by new trade policies, a $107.3 million or 419.8% increase in inventory write-down adjustments resulting from excess and obsolete inventory with either insufficient demand or reduced realizable value, and a $197.4 million or 47.5% increase due to a decrease in vendor rebates.

Previous wording

The 3.8% decrease in the gross margin percentage was due to a change in product and customer mix.

Current wording

The 5.5% decrease in the gross margin was due to a change in product and customer mix, higher production and expedite costs as we began to ship new AI GPU platforms on a large scale and the increases in tariff expense and inventory write-down adjustments described above.

Previous wording

Operating expenses for the three months ended September 30, 2025 and 2024 are as follows (dollars in millions):

Current wording

Operating expenses for the three and six months ended December 31, 2025 and 2024 are as follows (dollars in millions):

Previous wording

Sales and marketing expenses. The $21.0 million or 30.5% decrease in sales and marketing expenses was primarily driven by a $19.9 million, or 289.3%, decrease in advertising and promotion expenses due to a marketing reimbursement of $17.2 million, or 291.6%, received from certain business partners for reimbursed product release and promotion efforts, and a $8.9 million, or 34.7%, decrease in sales commission bonuses during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. These decreases along with other minor cost decreases were partially offset by an increase in employee-related costs, mainly due to a $4.5 million, or 21.7%, increase in salaries and a $3.3 million, or 43.0%, increase in stock-based compensation, similarly to our research and development expenses as we expanded our workforce and invested in key talent company-wide.

Current wording

Sales and marketing expenses. The $6.5 million or 8.2% decrease in sales and marketing expenses was primarily driven by a $11.6 million, or 240.8%, higher marketing development fund received from certain business partners related to co-marketing and advertising events to promote products, which reduced sales and marketing expense, and $13.1 million, or 48.6%, decrease in standard marketing and advertising activities during the three months ended December 31, 2025 as compared to the three months ended December 31, 2024. These decreases along with other minor cost decreases were partially offset by an increase in employee-related costs, mainly due to a $17.0 million, or 41.2%, increase in salaries and a $0.8 million, or 8.0%, increase in stock-based compensation, similar to our research and development expenses as we expanded our workforce and invested in key talent company-wide.

Previous wording

General and administrative expenses. The $1.4 million or 2.1% decrease in general and administrative expenses was primarily attributable to a $6.8 million or 63.3% reduction in audit and tax fees, driven by an absence of additional costs related to the delayed filing of our fiscal 2024 Form 10-K, and a $2.1 million or 68.8% reduction in excise tax expense driven by decrease in sales compared to prior-year quarter which reduced the related tax expense. These reductions were partially offset by a $2.1 million or 39.3% increase in consulting fees, driven by greater use of external consultants to support and enhance our financing activities and other initiatives. Additionally, there was a $3.6 million or 30.3% net increase in employee-related costs including salaries, bonus, and stock-based compensation as we expanded our workforce and invested in key talent, and a $1.9 million or 6.2% increase in facilities costs such as rental costs, utility costs, and indirect depreciation costs, which are related to our efforts to expand our production capacity in order to support growing customer demands.

Current wording

General and administrative expenses. The $5.4 million or 4.2% increase in general and administrative expenses was primarily attributable to a $7.1 million or 30.3% increase in indirect facilities costs such as rental costs, utility costs, and depreciation costs, a $4.3 million or 104.7% increase in excise and franchise tax expense directly related to the increase in sales compared to prior-year quarter which increased the related tax expense, a $2.9 million or 27.3% increase in consulting fees, driven by greater use of external consultants to support and enhance our financing activities and other initiatives. Additionally, there was a $1.9 million or 3.2% net increase in employee-related costs including salaries, bonus, and stock-based compensation as we expanded our workforce and invested in key talent. These increases were partially offset by a $6.6 million or 51.3% reduction in audit and tax fees, driven by an absence of additional costs related to the delayed filing of our fiscal 2024 Form 10-K, and a $5.3 million or 30.0% reduction in legal fees driven by the absence of litigation fees due to resolved matters.

Previous wording

Other income, net and interest expense for the three months ended September 30, 2025 and 2024 are as follows (dollars in millions):

Current wording

Other income, net, interest income, and interest expense for the three and six months ended December 31, 2025 and 2024 are as follows (dollars in millions):

Previous wording

The $44.0 million or 611.1% increase in other income, net was primarily driven by higher interest income and favorable foreign exchange rate fluctuations. This is mainly comprised of an increase of $43.3 million or 543.2% in interest income for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, reflecting increased cash deposits funded by the proceeds from our convertible notes issuance, a $6.5 million or 459.6% gain from mark-to-market adjustments on a marketable equity securities investment, and a $4.4 million or 1687.7% from foreign currency exchange rate fluctuations resulting from a stronger U.S. dollar in the first quarter of fiscal 2026. These gains were partially offset by a $12.0 million impairment loss related to our non-marketable investment during the first quarter of fiscal 2026.

Current wording

The $4.0 million or 95.2% decrease in other income, net was primarily driven by unfavorable foreign currency exchange rate fluctuations resulting from a weaker U.S. dollar during the three months ended December 31, 2025.

Previous wording

The $7.5 million or 43.1% increase in interest expense was primarily driven by a $21.9 million or 1187.3% increase in interest and amortization related to the amendment of the 2029 Convertible Notes and new issuance of the 2028 Convertible Notes and the 2030 Convertible Notes during the second half of fiscal 2025. This increase was partially offset by a $13.9 million or 94.1% decrease in interest expense associated with our Bank of America line of credit and term loans, which were fully repaid in November 2024.

Current wording

The $18.8 million or 289.2% increase in interest expense was primarily driven by a $22.7 million or 2012.3% increase in interest and amortization related to the amendment of the 2029 Convertible Notes and new issuance of the 2028 Convertible Notes and the 2030 Convertible Notes during the second half of fiscal 2025. This increase was partially offset by a $3.6 million or 70.6% decrease in interest expense associated with our Bank of America line of credit and term loans, which were fully repaid in November 2024.

Previous wording

Income tax provision decreased by $34.5 million or 46.2% primarily due to a decline in worldwide income before income tax provision that reduced tax expense by $58.4 million which was offset by a lower tax benefit from stock-based compensation of approximately $14.5 million, and the effects of other immaterial tax items of approximately $9.4 million. The income before income tax provision for the first quarter of fiscal 2026 was $208.6 million, which is a decrease of $290.5 million or 58.2%.

Current wording

Income tax provision increased by $7.6 million or 5.8% primarily due to a decline in worldwide income before income tax provision that reduced tax expense by $33.7 million which was offset by a lower tax benefit from stock-based compensation of approximately $23.7 million, an increase of state tax expense by $10.9 million, and the effects of other immaterial tax items of approximately $6.7 million. The income before income tax provision for the six months ended December 31, 2025 was $708.8 million, which is a decrease of $165.3 million or 18.9%.

Previous wording

We have financed our growth primarily with funds generated from operations, as well as utilizing borrowing facilities, selling our common stock, and issuing convertible notes. Recent drivers of liquidity changes included an increase in the need for working capital due to higher levels of inventory required to support future growing revenues, greater requests for longer payment terms from customers due to increasing system costs and to a lesser extent longer supply chain lead times on certain key components. Our cash and cash equivalents were $4.2 billion and $5.2 billion as of September 30, 2025 and June 30, 2025, respectively. Our cash and cash equivalents held in foreign locations was $974.2 million and $607.2 million as of September 30, 2025 and June 30, 2025, respectively.

Current wording

We have financed our growth primarily with funds generated from operations, as well as utilizing borrowing facilities, selling our common stock, and issuing convertible notes. Recent drivers of liquidity changes included an increase in the need for working capital due to higher levels of inventory required to support future growing revenues, greater requests for longer payment terms from customers due to increasing system costs and to a lesser extent longer supply chain lead times on certain key components. Our cash and cash equivalents were $4.1 billion and $5.2 billion as of December 31, 2025 and June 30, 2025, respectively. Our cash and cash equivalents held in foreign locations was $616.3 million and $607.2 million as of December 31, 2025 and June 30, 2025, respectively.

Previous wording

Net cash used in operating activities during the three months ended September 30, 2025 mostly consisted of $168.3 million net income adjusted for certain non-cash items, such as $89.1 million of share-based compensation expense, $12.3 million of depreciation and amortization expense, and changes in working capital. The decrease in cash flows from operating activities during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was due to a decrease in net income, and increase in an inventory purchases, partially offset by higher stock-based compensation, and other operational spending.

Current wording

Net cash used in operating activities during the six months ended December 31, 2025 mostly consisted of $568.8 million net income adjusted for certain non-cash items, such as $179.6 million of stock-based compensation expense, $25.4 million of depreciation and amortization expense, and changes in working capital. The decrease in cash flows from operating activities during the six months ended December 31, 2025 compared to the six months ended December 31, 2024 was due to an increase in inventory purchases, accounts receivables from customers, and other operational spending, partially offset by higher stock-based compensation and an increase in net income.

Previous wording

Net cash used in investing activities during the three months ended September 30, 2025 mostly consisted of $32.3 million of purchases of property, plant, and equipment as we continued to invest in real estate, servers, data centers, and network infrastructure. The decrease in cash used in investing activities during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, was due to decreases in purchases of property, plant, and equipment.

Current wording

Net cash used in investing activities during the six months ended December 31, 2025 mostly consisted of $53.5 million of purchases of property, plant, and equipment as we continued to invest in real estate, servers, data centers, and network infrastructure, as well as investments made in equity securities of $25.0 million. The increase in cash used in investing activities during the six months ended December 31, 2025 compared to the six months ended December 31, 2024, was mostly due to increases in purchases of property, plant, and equipment.

Previous wording

Net cash used in financing activities during the three months ended September 30, 2025 mostly consisted of payment for withholding taxes related to settlement of equity awards of $43.6 million, partially offset by net proceeds from lines of credit and term loans of $17.0 million. The increase in cash used by financing activities during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, was mostly due to decrease in net proceeds from lines of credits and term loans.

Current wording

Net cash provided by financing activities during the six months ended December 31, 2025 mostly consisted of net proceeds from lines of credit and term loans of $115.4 million, partially offset by payment for withholding taxes related to settlement of equity awards of $71.1 million. The increase in cash provided by financing activities during the six months ended December 31, 2025 compared to the six months ended December 31, 2024, was mostly due to an increase in net proceeds from lines of credits and term loans.

Previous wording

Refer to Note 7, “Lines of Credit and Term Loans”, in the notes to the condensed consolidated financial statements in this Quarterly Report for further information on our outstanding debt.

Current wording

Refer to Note 7, “Lines of Credit, Revolving Credit Facilities, and Term Loans”, in the notes to the condensed consolidated financial statements in this Quarterly Report for further information on our outstanding debt.

Previous wording

Our estimated future obligations as of September 30, 2025, include both current and long-term obligations. For our long-term debt, as noted in Note 7, “Lines of Credit and Term Loans” in the notes to the condensed consolidated financial statements, we have a current obligation of$100.6 million and a long-term obligation of $25.2 million. Additionally, as noted in Note 8, “Convertible Notes” in the notes to the condensed consolidated financial statements, we have a convertible debt obligation of$4,725.0 million. Under our operating leases as noted in Note 9, “Leases” in the notes to the condensed consolidated financial statements, we have a current obligation of $30.1 million and a long-term obligation of$359.8 million. As noted in Note 13, “Commitments and Contingencies” in the notes to the condensed consolidated financial statements, we have current obligations related to non-cancelable purchase commitments of $11.6 billion.

Current wording

Our estimated future obligations as of December 31, 2025, include both current and long-term obligations. For our long-term debt, as noted in Note 7, “Lines of Credit, Revolving Credit Facilities, and Term Loans” in the notes to the condensed consolidated financial statements, we have a current obligation of$201.8 million and a long-term obligation of$21.4 million. Additionally, as noted in Note 8, “Convertible Notes” in the notes to the condensed consolidated financial statements, we have a convertible debt obligation of$4,725.0 million. Under our operating leases as noted in Note 9, “Leases” in the notes to the condensed consolidated financial statements, we have a current obligation of$31.8 million and a long-term obligation of$354.1 million. As noted in Note 13, “Commitments and Contingencies” in the notes to the condensed consolidated financial statements, we have current obligations related to non-cancelable purchase commitments of$3.9 billion.