Supermicro Posts $19.9 Billion in Revenue as Operations Use Cash

Super Micro Computer (SMCI ) reported preliminary results for the first quarter of fiscal 2027 on November 3, 2026, with unaudited net sales of $19.9 billion for the period ended September 30, 2026, up from $11.1 billion in the preceding quarter and $5.0 billion a year earlier. Operations used $434 million in cash during the quarter despite the sharp increase in earnings.

The sales figure came in above the $18.5 billion to $19.5 billion estimate in Supermicro’s October 20, 2026 preliminary business update, which had replaced guidance of $14.5 billion to $15.5 billion. The earlier update attributed the increase primarily to demand for AI platforms.

Margins Improve From Last Year but Slip Sequentially

GAAP gross margin was 12.7%, up from 9.3% a year earlier but down from 17.5% in the fourth quarter of fiscal 2026. The result exceeded the 12.0% to 12.5% October estimate, which the company had linked primarily to customer and product mix.

Gross profit increased to $2.541 billion from $467.4 million a year earlier, while operating expenses rose to $476.6 million from $285.1 million. Operating income reached $2.064 billion, compared with $182.3 million.

Net income was $1.594 billion, against $1.178 billion in the prior quarter and $168 million a year earlier. Diluted earnings per share were $1.75, versus $1.62 and $0.26 in those respective periods.

The results remain preliminary and unaudited because Supermicro’s financial closing procedures are incomplete. The figures may change before its financial statements are prepared and filed.

Receivables and Inventory Absorb Cash

The operating cash outflow was smaller than the $917.5 million used in the year-earlier quarter, while capital expenditures and investments totaled $47 million. Nevertheless, the cash-flow details show the financial demands accompanying the sales expansion.

Accounts receivable used $3.560 billion of cash and inventories used $2.477 billion, while a $3.054 billion increase in deferred revenue partly offset those and other working-capital movements. On the balance sheet, receivables rose to $9.685 billion from $6.125 billion at June 30, 2026, and inventories increased to $15.054 billion from $12.896 billion. Those movements show how the larger business increased the cash committed to customer balances and stock.

Cash and cash equivalents totaled $6.9 billion at September 30, against $8.6 billion of total bank debt and convertible notes.

Second-Quarter and Full-Year Outlook

Supermicro expects net sales of $19.5 billion to $21.5 billion for the fiscal second quarter ending December 31, 2026, with GAAP diluted earnings per share of $1.59 to $1.83. The non-GAAP diluted EPS forecast, which excludes stock-based compensation and related tax effects, is $1.66 to $1.90. Net sales for the full fiscal year are forecast at $72.0 billion to $82.0 billion.

Founder, President and CEO Charles Liang called the quarterly revenue a record and described a “transformation into a Total AI and IT Datacenter Solution provider” that he said was accelerating. He connected Data Center Building Block Solutions, software, proactive service and networking with deployments ranging from gigawatt-scale data centers to single-container PODs, and identified enterprise partnerships and expanding global production capacity as parts of that strategy.

The quarter establishes both the higher earnings accompanying Supermicro’s AI-infrastructure expansion and the cash demands of scaling the business. A central question for subsequent results is whether collections and deferred-revenue growth can keep pace with the receivables and inventory required by that expansion, allowing more of the reported profit to become operating cash.