Super Micro Computer, Inc. (SMCI) Q2 2025 Earnings Summary

Executive Summary

SMCI reported preliminary Q2 FY2025 revenue of $5.6–$5.7B, up 54% YoY, with non-GAAP gross margin ~11.9% and non-GAAP EPS $0.58–$0.60; AI-related platforms contributed over 70% of revenue .
The company cut FY2025 revenue guidance to $23.5–$25.0B from $26–$30B and guided Q3 FY2025 revenue to $5.0–$6.0B with GAAP EPS $0.36–$0.53 and non-GAAP EPS $0.46–$0.62; management also reiterated a $40B FY2026 revenue target .
Management cited margin pressure from product/customer mix and expedited costs and noted NVIDIA allocation and the transition to Blackwell as gating factors; SMCI began shipping Blackwell B200 HGX systems (air- and liquid-cooled) and emphasized direct-liquid cooling (DLC) leadership with expected >30% adoption of new data centers over the next 12 months .
Compliance overhang eased: SMCI filed its FY2024 10-K and Q1/Q2 FY2025 10-Qs on Feb 25, regaining Nasdaq compliance with no restatements; however, the company disclosed late-2024 subpoenas from DOJ/SEC related to short-seller allegations and ongoing litigation .

What Went Well and What Went Wrong

What Went Well

Strong revenue growth and resilient AI demand: Q2 revenue $5.6–$5.7B (+54% YoY); non-GAAP EPS $0.58–$0.60 (+5% YoY). “Our preliminary fiscal Q2 net revenue is projected to range between $5.6 billion and $5.7 billion” .
Blackwell ramp and DLC leadership: “We have begun volume shipping of both air-cooled 10U and liquid-cooled 4U, NVIDIA B200-HGX system.” Management expects >30% of new data centers to adopt DLC in the next 12 months .
Strategic manufacturing and solutions: Expanded rack-scale DLC capacity (targeting 1,500 DLC GPU racks/month in the U.S.), end-to-end Data Center Building Block Solutions and on-site deployment/services as differentiators .

What Went Wrong

Guidance cut: FY2025 revenue lowered to $23.5–$25.0B (from $26–$30B) due to delays in new technology cycles and customer/product mix, with management citing Blackwell timing and a 10-K distraction .
Margin compression: Non-GAAP gross margin fell to ~11.9% from 13.3% in Q1; operating margin ~7.9% vs 9.9% in Q1, driven by mix and higher expedite/R&D costs .
Working capital/cash usage: Cash used in operations ~$240M in Q2 (vs +$409M in Q1), with CFO detailing inventory reductions, payables/payments and receivables trends .

Financial Results

Metric	Q4 FY2024	Q1 FY2025	Q2 FY2025
Revenue ($USD Billions)	$5.31	$5.9–$6.0	$5.6–$5.7
GAAP Diluted EPS ($)	$5.51 (pre-split)	$0.68–$0.70	$0.50–$0.52
Non-GAAP Diluted EPS ($)	$6.25 (pre-split)	$0.75–$0.76	$0.58–$0.60
Non-GAAP Gross Margin (%)	11.3%	13.3%	~11.9%
Non-GAAP Operating Margin (%)	7.1%	9.9%	~7.9%
AI-related Platforms (% of Revenue)	>70%	>70%	>70%

Non-GAAP adjustments: Q2 gross margin excludes ~$6.7M SBC; Q2 non-GAAP EPS excludes ~$63.0M SBC, net of ~$19.1M tax .

Q2 actuals vs prior company guidance (from Q1 call):

Metric	Company Guidance for Q2 (given on Q1 call)	Q2 Preliminary Actuals	Result
Revenue ($USD Billions)	$5.5–$6.1	$5.6–$5.7	In-line
GAAP EPS ($)	$0.48–$0.58	$0.50–$0.52	In-line
Non-GAAP EPS ($)	$0.56–$0.65	$0.58–$0.60	In-line

KPIs (balance sheet/working capital):

KPI	Q1 FY2025	Q2 FY2025
Cash and Equivalents ($B)	~$2.1	~$1.4 (Dec 31)
Total Debt ($B)	~$2.3 (Bank $0.6, Conv $1.7)	~$1.9 (Bank ~$0.2, Conv ~$1.7)
Inventory ($B)	~$5.0	~$3.66
Cash from Operations ($B)	~$0.409	(~$0.240) used
CapEx ($M)	$45–$55 guided; actual ~$? (not disclosed)	$28
Cash Conversion Cycle (days)	97	104
Days Inventory (days)	85	78
DSO (days)	41	47
DPO (days)	29	21
Diluted Shares (MM, GAAP)	~639	~636

Segment mix (latest detailed disclosure – FY2024 Q4):

Segment	Q4 FY2024 Revenue ($B)	% of Q4 Revenue
OEM Appliance & Large Data Center	$3.41	64%
Enterprise Channel	$1.83	34%
Emerging 5G/Telco/Edge/IoT	$0.075	2%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY2025	$26–$30B	$23.5–$25B	Lowered
Revenue ($USD Billions)	Q3 FY2025	—	$5.0–$6.0B	New Q3 guide
GAAP EPS ($)	Q3 FY2025	—	$0.36–$0.53	New Q3 guide
Non-GAAP EPS ($)	Q3 FY2025	—	$0.46–$0.62	New Q3 guide
Gross Margin (%)	Q3 FY2025	—	~12% (GAAP & non-GAAP)	New Q3 guide
Operating Expenses ($)	Q3 FY2025	—	+$17M seq (GAAP & non-GAAP)	New Q3 guide
Other Income & Expense ($)	Q3 FY2025	—	Net expense ~$12M	New Q3 guide
Tax Rate (%)	Q3 FY2025	—	GAAP ~10.7%; non-GAAP ~12.7%	New Q3 guide
Diluted Shares (MM)	Q3 FY2025	—	GAAP ~642; non-GAAP ~653	New Q3 guide

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 FY2024)	Previous Mentions (Q1 FY2025)	Current Period (Q2 FY2025)	Trend
AI/Blackwell ramp	Cautious on GB200 timing; real volume likely March quarter; FY2025 $26–$30B initial guide	Customers waiting for new chips; strong DLC momentum; Q2 guide down 100bps GM	Shipping B200 HGX air/liquid; GB200 NVL72 “ready” pending NVIDIA allocation; Q3 guide issued; FY2025 cut, FY2026 $40B target	Increasing clarity; supply gating
DLC adoption & leadership	>1,000 DLC racks shipped in Jun/Jul; targeting 25–30% of new DCs	DLC share rising; end-to-end management (SCC); 1,500 racks/month capacity	Expect >30% of new DCs adopt DLC; continued leadership; “disrupted leader” position	Strengthening
Margins & mix	Non-GAAP GM 11.3% (down); hyperscale mix and expedite costs weighed	Non-GAAP GM 13.3%; guide down for Q2 on mix	Non-GAAP GM ~11.9%; op margin ~7.9%; mix & R&D/expedite costs; Q3 GM ~12%	Volatile, expected to normalize
Supply chain & allocation	Component shortages pushed ~$800M revenue to Jul	Inventory high; working capital improved; awaiting new chips	NVIDIA allocation is gating factor for NVL72 volume; backlog follows chip cycles	Bottleneck persists
Regulatory/legal	—	Special committee found no evidence of fraud; auditor replacement in process	DOJ/SEC subpoenas; litigation; filings current and Nasdaq compliance regained (2/25)	Overhang reduced; inquiries ongoing
Regional strategy	—	Building Asia/Europe capabilities; Malaysia ramp	Expanding Asia/Europe; sovereign AI interest rising	Broadening footprint

Management Commentary

“We have begun volume shipping of both air-cooled 10U and liquid-cooled 4U, NVIDIA B200-HGX system.” (Charles Liang, CEO) .
“We expect more than 30% of new data centers worldwide to adopt liquid cooling infrastructure within the next 12 months.” .
“We anticipate this technology transition sets a strong foundation for us now, resulting in FY25 revenue in the range of $23.5 billion to $25 billion, paving the way for $40 billion revenue in FY26.” .
“Backlog tends to follow the chip cycle… with expectation of new chips coming out, you’ll see growing backlog industry-wide.” (CFO) .
“GB NVL72… we have a solution fully ready… we are waiting for more allocation… to ship in a much higher volume.” (CEO) .

Q&A Highlights

FY2026 $40B target: Management views 65% YoY growth as conservative, citing product pipeline, customer engagements, and underutilized capacity in US/Taiwan/Malaysia .
Margins through Blackwell cycle: Early-cycle products support better margins; DLC and operating leverage expected to help; target GM 14–17% longer-term .
Guidance downgrade drivers: Delay in new technology availability was “the biggest factor”; 10-K delay a distraction; mix also affected margins .
NVIDIA allocation: NVL72 ready; volume shipments hinge on allocation; demand exceeds current allocations .
Capital & liquidity: New $700M 2.25% converts (and amended 2029 notes); balance sheet unlevered; leveraging inventory/AR and bank facilities to fund growth .

Estimates Context

Wall Street consensus from S&P Global was unavailable at the time of writing due to API limitations; as a proxy, Q2 results came in within the company’s prior Q2 guidance ranges for revenue and EPS .
Street models should adjust to: FY2025 revenue range cut to $23.5–$25.0B; Q3 FY2025 revenue $5.0–$6.0B, GM ~12%, GAAP EPS $0.36–$0.53, non-GAAP EPS $0.46–$0.62 .

Key Takeaways for Investors

The quarter was operationally solid within guidance, but the FY2025 guidance cut is the key negative surprise; expect analysts to recalibrate revenue and margin assumptions accordingly .
Near-term revenue cadence is gated by NVIDIA allocation and the Blackwell transition; watch updates on NVL72 and B200 supply and sovereign AI wins for upside .
DLC and end-to-end data center solutions are strategic moats, with >30% of new DCs expected to adopt DLC; this supports margin recovery and differentiation into FY2026 .
Margin volatility persists on customer/product mix and expedite/R&D costs; management targets operating margin strength and longer-term GM normalization toward 14–17% .
Liquidity actions (new converts, amended notes) and regained filing compliance (no restatements) reduce capital markets and governance overhangs; monitor DOJ/SEC inquiries and litigation for residual risk .
KPIs show improved inventory turns and disciplined working capital, but Q2 saw cash used in operations; stability should improve with supply normalization and allocations .
Medium-term thesis: If Blackwell ramps and DLC adoption trends hold, SMCI’s $40B FY2026 ambition becomes more credible; execution on manufacturing scale (US/Asia/Europe) and turnkey DC solutions is central to realizing this trajectory .