Sign in

Super Micro Computer, Inc. (SMCI) Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25 revenue was $4.60B, down 19% q/q and up 19% y/y, as customers delayed platform decisions during the Hopper-to-Blackwell transition; non-GAAP EPS was $0.31, with gross margin compressing to 9.7% from 11.9% due to inventory reserves and ramp costs .
  • Against S&P Global consensus, revenue missed ($4.60B vs $4.73B*) while EPS beat ($0.31 vs $0.30*); EBITDA came in below consensus as margins tightened on legacy inventory clearance and expedite costs . Values retrieved from S&P Global.
  • Management lowered FY25 revenue guidance to $21.8–$22.6B (from $23.5–$25.0B), and set Q4 guidance for net sales at $5.6–$6.4B, non-GAAP EPS $0.40–$0.50, and ~10% gross margin, citing tariff prudence and technology transition .
  • Near-term catalysts: resolution of platform decisions and Blackwell ramp into June/September, launch of DCBBS and DLC-2, and improved cash flow enabling faster growth; risks include tariff effects, margin pressure during transition, and GPU allocation constraints .

What Went Well and What Went Wrong

What Went Well

  • First-to-market delivery on next-gen AI infrastructure: volume shipments of air-cooled 10U and liquid-cooled 4U NVIDIA B200 HGX systems and GB200 NVL72 racks; broadened AI portfolio with AMD MI-325X solutions . “We achieved volume shipment of air-cooled 10U and liquid-cooled 4U NVIDIA B200 HGX systems… as well as GB200 NVL72 racks” .
  • Strong enterprise adoption and diversified mix: enterprise/channel revenue rose to $1.9B (42% of Q3 revenue) and Asia region grew 77% y/y, reflecting broader demand beyond large data centers .
  • Cash generation and balance sheet: CFO reported $627M operating cash flow and $594M free cash flow, moving to a $44M net cash position; inventory built to support Q4 shipments .

What Went Wrong

  • Margin compression and inventory reserves: non-GAAP GM fell 220 bps q/q to 9.7% on reserves for older-generation products and expedite costs; non-GAAP operating margin dropped to 5% .
  • Revenue shortfall vs initial Q3 guidance: Q3 net sales updated mid-quarter to $4.5–$4.6B from prior $5.0–$6.0B as platform decisions slipped, driving a miss on top line .
  • FY25 guidance cut and tariff caution: FY25 revenue lowered to $21.8–$22.6B (from $23.5–$25.0B) and Q4 GM guided to ~10% amid macro and tariff uncertainty; management refrained from reinstating FY26 targets .

Financial Results

MetricQ3 2024Q2 2025Q3 2025Q3 2025 Consensus
Revenue ($USD Billions)$3.85 $5.68 $4.60 $4.73*
GAAP Diluted EPS ($)$0.66 $0.51 $0.17 $0.30*
Non-GAAP Diluted EPS ($)$0.66 $0.59 $0.31 $0.30*
GAAP Gross Margin (%)15.5% 11.8% 9.6% —
Non-GAAP Gross Margin (%)15.6% 11.9% 9.7% —
Non-GAAP Operating Margin (%)—7.9% 5.0% —
Adjusted EBITDA ($USD Millions)$454.7 $478.9 $258.2 $384.7*
Adjusted EBITDA % of Net Sales (%)11.8% 8.4% 5.6% —
  • Results vs estimates: Revenue miss; EPS beat; EBITDA miss. Drivers: delayed platform decisions, inventory reserve for older products, expedite costs, and tariff prudence . Values retrieved from S&P Global.

Segment/Vertical and Mix

MetricQ2 2025Q3 2025
Enterprise/Channel Revenue ($B)—; 25% of revenue $1.9; 42%
OEM Appliance & Large Data Center ($B)—; 75% of revenue $2.6; 57%
Emerging 5G/Telco/Edge/IoT ($M)—$48; 1%
Server & Storage Systems (% of revenue)—97%
Subsystems & Accessories (% of revenue)—3%

KPIs

KPIQ3 2025
AI GPU platforms (% of revenue)>70%
Top two customers concentration22% and 14% of revenue
Geographic mixUS 60% (+3% y/y, -28% q/q); Asia 30% (+77% y/y, +76% q/q); Europe 6% (-3% y/y, -69% q/q); RoW 4% (+83% y/y, +45% q/q)
Ending inventory ($B)$3.9
Cash from operations ($M)$627
CapEx ($M)$33
Net cash position ($M)$44
Cash & equivalents ($B)$2.54
Total bank + convertible debt ($B)$2.49
Cash conversion cycle (days)124; DIO 81; DSO 56; DPO 13

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY2025$23.5–$25.0 $21.8–$22.6 Lowered
Net Sales ($B)Q3 2025$5.0–$6.0 $4.5–$4.6 Lowered (prelim update)
Net Sales ($B)Q4 2025—$5.6–$6.4 Introduced
GAAP Diluted EPS ($)Q4 2025—$0.30–$0.40 Introduced
Non-GAAP Diluted EPS ($)Q4 2025—$0.40–$0.50 Introduced
Gross Margin (%)Q4 2025—~10% Introduced
GAAP Operating Expenses ($M)Q4 2025—~$319 incl. $74 SBC Introduced
OI&E, net ($M)Q4 2025—~$(16) Introduced
GAAP / Non-GAAP Tax Rate (%)Q4 202510.7 / 12.7 (for Q3 guide) 14.9 / 16.5 Raised
Fully Diluted Shares (M)Q4 2025—628 (GAAP), 642 (Non-GAAP) Introduced
CapEx ($M)Q4 2025—$45–$55 Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 and Q2)Current Period (Q3)Trend
AI platform transition (Hopper → Blackwell)Ramp beginning; customers waiting on new chips; Blackwell shipments to start; FY26 $40B aspiration tied to Blackwell/DLC Delayed platform decisions moved revenue to Q4+; Blackwell ramp now starting; expectation for stronger June/Sept Improving (ramp beginning)
DLC-2 and DCBBS (Data Center Building Block Solutions)DCBBS pitched as end-to-end solution with up to 40% lower TCO; DLC majority market share; expanding US/EU/Asia capacity DLC-2 announced with power/water savings up to 40% and ~50 dB noise; DCBBS launch imminent Strengthening
Tariffs/macroCaution but target margins intact; FY26 guide framed with macro caveats Tariff prudence cited for ~10% GM guide; conservative margin stance Headwind persists
GPU allocationsNVL72 readiness contingent on NVIDIA supply; allocation constraints but improving vs Hopper Some allocation constraints remain, slightly better than Hopper Gradual improvement
Mix shift (Enterprise vs CSP)CSP-driven; liquid-cooled clusters growing; enterprise efforts building Enterprise/channel share rose to 42%, CSP concentration at 22%/14% Diversifying
Regional expansionMalaysia campus coming online; Europe/Taiwan scaling; US capacity ~1,500 DLC racks/month Malaysia shipments begin; expanding US domestic manufacturing and Midwest facility Scaling capacity
Regulatory/legal & governance10-K delay impact; special committee progress; BDO appointed; filings targeted by Feb 25 All outstanding statements filed; Nasdaq compliance; additions of CAO, GC, independent director Normalizing
R&D/OpExIncreased to support next-gen platforms; margins guided conservatively GAAP OpEx down 3% q/q; non-GAAP down 5% q/q; continued investment Efficient spend amid ramp

Management Commentary

  • “Our fiscal Q3 net revenue totaled $4.6 billion… decline primarily due to customer waiting and evaluating AI platforms between the current Hopper and the upcoming Blackwell GPUs, leading to a delayed commitment” .
  • “With the upcoming DLC-2 technology, Supermicro will… save power and water up to 40% and reduce data center noise level down to about 50 dB” .
  • “We achieved volume shipment of… NVIDIA B200 HGX systems… and GB200 NVL72 racks… started to offer AMD MI-325X solutions” .
  • “Q3 non-GAAP gross margin was 9.7%… down 220 bps q/q… due to higher inventory reserves for older generation products, lower volume and accelerated costs to enable time-to-market for new products” .
  • “Cash flow generated from operations for Q3 was $627 million… CapEx was $33 million… net cash position of $44 million” .

Q&A Highlights

  • Macroeconomic/tariff prudence drove conservative margin outlook; gross margin headwinds tied to Hopper-to-Blackwell changeover and tariff uncertainty .
  • Sequential growth cadence: management expects a strong June quarter and potentially stronger September, aiming to “repeat Hopper history” as Blackwell ramps .
  • Inventory reserves impact: ~220 bps reduction to Q3 margins; management hopes ~100 bps in June, near-zero by September as transition completes .
  • NVL72 and liquid-cooled demand: strong interest in GB200 NVL72 and B200 liquid-cooled systems; some customers’ liquid-cooled data centers are “a little bit late,” delaying deployments .
  • Capacity and manufacturing: 5,000 racks/month capacity in the US (up to 2,000 NVL72 racks); Malaysia to be fully enabled by year-end; continued domestic expansion .

Estimates Context

MetricQ3 2025 ConsensusQ3 2025 Actual
Revenue ($USD Billions)$4.73*$4.60
Primary EPS (Non-GAAP) ($)$0.30*$0.31
EBITDA ($USD Millions)$384.7*$258.2
  • Result vs consensus: Revenue miss; EPS beat; EBITDA miss (margin compression). Near-term estimate risk: potential upward revision to Q4 revenue as delayed commitments land, but margins likely remain conservative (~10% GM) due to tariff prudence and transition costs . Values retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter’s narrative is a technology-transition pause: customers deferred Hopper in favor of Blackwell, compressing margins and shifting revenue; look for conversion in June/September as platform decisions finalize .
  • Guidance reset de-risks FY25 but underscores cautious near-term gross margins (~10%): monitor tariff developments and inventory reserve normalization for margin inflection .
  • Enterprise mix is rising and Asia demand is accelerating, reducing reliance on a few CSPs; CSP customer concentration still meaningful (22% and 14%) and should be watched for lumpiness .
  • DCBBS and DLC-2 are strategic differentiators with quantifiable TCO savings; their broader adoption could support pricing power and services attachment over time .
  • Liquidity and FCF improved materially; convert issuance and net cash position provide working capital flexibility to fund ramp and global capacity scaling (Malaysia/US) .
  • Trading setup: near-term prints could benefit from Blackwell ramp execution and confidence on Q4 revenue range, but margin conservatism and tariff uncertainty may cap multiple until evidence of GM recovery emerges .
  • Medium-term thesis: first-to-market AI infrastructure, leadership in liquid cooling and end-to-end data center solutions (DCBBS) position SMCI to gain share through the Blackwell cycle; watch for evidence of sustained margin improvement and GPU allocation stability .

Values retrieved from S&P Global.

Best AI for Equity Research

Performance on expert-authored financial analysis tasks

Fintool-v490%
Claude Sonnet 4.555.3%
o348.3%
GPT 546.9%
Grok 440.3%
Qwen 3 Max32.7%