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Super Micro Computer (SMCI), a retailer of high-performance servers and liquid-cooled AI racks, has chosen to release its latest quarterly earnings at a time when investors are forced to view every financial update from the company with great consideration. skepticism stemming not only from Hindenburg Research’s harsh report in August but also from a series of events that followed, including SMCI withholding its annual report, the DOJ’s launch of a preliminary investigation into the company’s alleged accounting malpractices, the exodus of its second auditor in about 18 months, and the imminent delisting of Nasdaq exchange.

Worse yet, Super Micro Computer failed to convince investors through the content of its initial earnings release and subsequent earnings report.

$SMCI | Super Micro Computer Q1’25 Preliminary Revenue Highlights:

🔹 Net Sales: $5.9 billion-$6.0 billion (Previously: $6.0 billion-$7.0 billion) 🔴
🔹 Non-GAAP EPS: $0.75 to $0.76 (Previously: $0.67 to $0.83) 😕
🔹 GAAP Gross Margin: ~13.3%

Q2’25 Guidance:
🔹 Net Sales: $5.5 billion to $6.1 billion (est. $6.79 billion) 🔴
🔹GAAP…

— Wall St Engine (@wallstengine) November 5, 2024

To wit, Super Micro Computer has now reported that it likely earned quarterly revenue of between $5.9 billion and $6 billion in fiscal Q1’25, as per initial tabulations. Additionally, GAAP gross margin for the quarter is likely to be calculated at 13.3 percent.

For fiscal Q2’25, Super Micro Computer estimates revenue between $5.5 billion and $6.1 billion vs. the consensus estimate is around $6.79 billion.

For those who may not be aware, Super Micro Computer’s struggles began in August when Hindenburg Research highlighted instances of alleged accounting fraud and corporate governance lapses in a detailed report. SMCI then delayed submission of its annual report for the fiscal year ending June 30, possibly in an effort to conduct an internal review.

On September 17, the Nasdaq exchange notified Super Micro Computer that it had 60 days (or until November 16) to file the required annual report or make a plan to return to compliance with Nasdaq regulations. Failure to do this may result in delisting.

Super Micro $SMCI just had this to say about Nasdaq compliance:

“The Company intends to take all necessary steps to achieve compliance with Nasdaq’s advanced listing requirements as soon as possible” pic.twitter.com/RrIRtwGQ8o

— Evan (@StockMKTNewz) November 5, 2024

Today, while asserting that it “intends to take all necessary steps to achieve compliance with Nasdaq’s continued listing requirements as soon as possible,” Super Micro Computer declined to provide a firm timeline for the release of its much-delayed annual report. expected to hit its shares.

Of course, SMCI has renegotiated the main loan agreement with Cathay Bank, under which the company will now submit its audited financial statements by December 31 compared to the previous agreement, which set October 28 as the deadline for submitting the financial statements. financial documents. This suggests that the company is likely to beat Nasdaq’s deadline set for November 16 to submit its annual report.

Meanwhile, the DOJ is also said to have launched an investigation into Super Micro Computer’s alleged accounting violations. As per a Hindenburg Research anecdote, SMCI engaged in filling distribution channels by pushing products to distributors based on artificially inflated demand estimates, making partial deliveries to meet certain sales targets and inflating the total number of deliveries in the process, rehiring top executives responsible for the “violations expansive accounting” that resulted in a $17.5 million settlement with the SEC, and paid nearly a billion dollars over the past three years to non-arm’s-length suppliers such as Ablecom and Compuware.

Super Micro Computer’s investor call didn’t go well and shares dropped significantly after a few hours

Company executives would not discuss EY’s resignation $SMCIauditor after questioning the integrity and ethical values ​​of the company,
Can’t say for sure when the audit will be submitted… pic.twitter.com/rGeAnz022x

— kristen shaughnessy (@kshaughnessy2) November 5, 2024

Upon their return, Super Micro Computer executives declined to discuss in today’s earnings report the circumstances that forced the company’s appointed auditor, Ernst & Young (EY), to submit his resignation.

When asked by an analyst when Blackwell earnings would start showing up on SMCI’s books, Super Micro Computer CEO Charles Liang noted that “we ask NVIDIA every day.”

He later confirmed:

Our capacity is ready, but there are not enough new chips.

At the time of writing, Super Micro Computer shares were down 16 percent in after-hours trading.