Computer manufacturer Super Micro encountering issues
Super Micro Computer Inc. Reports Q4 2025 Results and Outlook for FY 2026
In a recent financial report, Super Micro Computer Inc. has shared its Q4 2025 results and outlook for FY 2026. The tech company has faced challenges in various areas, including revenues, margins, and earnings.
Revenue Woes
The company has missed analyst estimates for revenues for four consecutive quarters. For Q4 2025, Super Micro reported revenues of $5.76 billion, a 25% year-over-year increase and a 26% sequential growth in Server and Storage Systems. However, this figure fell short of analysts' expectations.
Margins Under Pressure
Gross margins declined 70 basis points year-on-year and 10 basis points sequentially to 9.6%. This decline is attributed to various factors, including trump tariffs, price concessions to new customers, increased costs due to NVIDIA's architecture switch to Blackwell chips, and intensified competition. These tariffs significantly compressed the company's earnings margin.
Earnings Miss
Earnings per share (EPS) of $0.41 missed analyst estimates by $0.03, partly due to tariffs. Analysts' expectations for EPS have decreased by 24% over the past three months and 44% over the past six months.
Future Outlook
Despite the challenges, Super Micro Computer is looking ahead. The company expects first-quarter sales of $6 billion to $7 billion for FY 2026. They also anticipate more than $33 billion in sales for the entire fiscal year.
Product Launches and Solutions
The company started volume shipments of its Nvidia Blackwell Ultra Systems in September and is introducing the micro center building block solution to offer complete solutions, including software and service solutions, to customers.
Margin Concerns
However, the company has not provided a gross margin outlook for FY 2026. The gross margins for the full year were 11.1%, a decrease from 13.8% in the previous year, partly due to trump tariffs and inventory management challenges. The company is offering competitive pricing to gain market share, which is contributing to margin erosion.
Financial Indicators
Free cash flow generation is not showing an appreciable even growth pattern. EBITDA has been revised down for the next two years, indicating a one-year delay in the earnings ramp-up.
Analysts' Take
Despite the challenges, some analysts remain optimistic. My Buy rating is based on the earnings prospect for FY 2027, providing a 21% upside using the company's median EV/EBITDA multiple and 49% using the higher peer group multiple. The Aerospace Forum has developed a stock screener to determine multi-year price targets.
Missed Guidance
The company missed its revenue guidance by $156.4 million, as revenue recognition from a major customer was delayed due to changes in requirements and production ramp-up was slowed by capital constraints.
In conclusion, Super Micro Computer Inc. has faced some financial challenges in the past quarters, but the company is looking to the future with new product launches and solutions. Investors will be watching closely to see how the company navigates the ongoing trump tariffs and competitive landscape.
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