SMCI Update

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Super Micro Computer, Inc. (SMCI) has experienced significant developments recently, both positive and negative. Here is a summary of the key events and financial performance:

Recent Performance and Guidance

• Q4 2024 Performance: Supermicro reported record quarterly revenue of $5.31 billion, up 143% year-over-year. For the full fiscal year 2024, the company achieved $14.94 billion in revenue, a 110% year-over-year growth.

• Growth Drivers: The strong growth was driven by Supermicro's technology and product leadership in the AI infrastructure market, especially with Generative AI training and inferencing.

• Future Guidance: For Q1 fiscal 2025, Supermicro expects revenue between $6-7 billion. For the full fiscal year 2025, they introduced guidance of $26-30 billion in revenue.

• Margins and Production: The company expects gross and operating margins to gradually increase throughout fiscal 2025, benefiting from lower manufacturing costs and the ramp of their new Datacenter Building Block Solutions .

• Stock Split: Supermicro announced a 10-for-1 forward stock split to make its stock more accessible.

Recent News

• Stock Price Decline: Super Micro's stock price has plunged significantly in recent weeks, dropping around 44% this week alone.

• Auditor Resignation: The steep decline was triggered by the news that Super Micro's auditor, Ernst & Young (EY), had resigned as the company's public accounting firm. EY cited concerns about management's representations and said it could no longer rely on them, leading to its resignation.

• Governance Concerns: The auditor's resignation and the resulting stock price collapse have raised concerns about Super Micro's governance and accounting practices.

• Market Value Decline: There are also reports that Super Micro's addition to the S&P 500 index in March 2024 has been followed by a two-thirds decline in its market value.

Financial Metrics

• Revenue: Supermicro's revenue has shown significant growth over the years, with the latest annual revenue for the fiscal year ending June 30, 2024, being $14.94 billion.

• EPS: The company's EPS has also seen substantial growth, with a value of $2.17 for the fiscal year ending June 30, 2024, representing a growth of 79.73%.

• Forward P/E: The forward P/E ratio for the fiscal year ending June 30, 2024, is 24.3, indicating market expectations for future earnings growth.

Conclusion

Super Micro Computer, Inc. has demonstrated strong financial performance and growth, particularly in the AI infrastructure market. However, recent governance issues, including the resignation of its auditor, have led to a significant decline in its stock price and raised concerns about its accounting practices.