🖥️ Super Micro Computer (SMCI) Q1 FY2026 Earnings — Core Brief Edition
Headline: AI server ramp drives record orders but near-term gross margin compression; Q2 sales guided to $10–$11B and full-year raised to ≥$36B as DCPS “AI factory” strategy scales.
📊 Key Metrics
- Net revenue: $5.0B (-15% YoY, -13% QoQ; below prior $6–$7B guide).
- Non-GAAP gross margin: 9.5%.
- Non-GAAP operating margin: 5.4%.
- GAAP EPS: $0.26; Non-GAAP EPS: $0.35.
- GPU platforms: >75% of Q1 revenue.
- Channel mix: Enterprise $1.5B (31%; -51% YoY, -25% QoQ); OEM & Large DC $3.4B (68%; +25% YoY, -6% QoQ); 5G/IoT 1%.
- Geography: US 37%, Asia 46%, Europe 14%, RoW 3% (YoY: US -57%, Asia +143%, Europe +11%).
- Orders: Record new orders > $13B (largest deal in company history called out).
🚀 Segment & Strategy Highlights
- AI systems (NVIDIA-based and AMD lines) continue to lead shipments; customers upgrading into next-gen racks delayed some Q1 shipments into Q2.
- DCPS (data center building blocks / “AI factory”): first systems shipping; management targets >20% margin profile for this portfolio over time; positioned to reduce customer time-to-online and TCO.
- Capacity & footprint: ~6,000 racks/month global capacity (incl. liquid-cooling), 52MW power in place; Malaysia, Taiwan, EU, Middle East expansions to support CSPs, sovereign and enterprise demand.
🧠 Product, Tech, AI
- Shipping broad AI portfolio for LLM inference/training and HPC; next waves (e.g., upcoming NVIDIA/AMD platforms) in preparation.
- Increasing engineering/services support on mega-clusters to de-risk customer ramps.
⚠️ Credit & Risk (Ops)
- Working capital elevated for the ramp: Inventory $5.7B (from $4.7B), CCC 123 days (vs. 96), DSO 43, DPO 26.
- AR facility: $1.8B non-recourse program to bolster liquidity.
- Management notes quarter-to-quarter logistics/supply/customer-readiness can shift shipment timing.
💰 Balance Sheet & Capital
- Cash: $4.2B; Debt: $4.8B → Net debt $575M (vs. net cash prior quarter).
- Operating cash flow: - $918M; FCF: - $950M (inventory build ahead of Q2).
- Q1 capex: $32M.
🔭 Guidance / Outlook (explicit)
- Q2 FY26: Net sales $10–$11B; GAAP EPS $0.37–$0.45; Non-GAAP EPS $0.46–$0.54; gross margin -300 bps QoQ (ramp/expedite/engineering costs); capex $60–$80M.
- FY26: Net sales ≥$36B (raised from ≥$30B). Management expects margin improvement beyond Q2 as mega-cluster costs normalize, scale benefits kick in, and DCPS mix grows.
✅ Bottom Line
SMCI is leaning into the AI upcycle with mega-scale deployments and record order intake. Near-term GM is pressured by ramp costs and mix, but management’s path to higher-margin DCPS and broader global capacity underpins the raised FY revenue outlook and a push toward improved profitability as 2026 progresses.
SMCI 1Q26
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