Super Micro's earnings report brings more good news, and the stock is climbing

By Britney Nguyen

The company impressed Wall Street several weeks ago by teasing an improved profitability trajectory. Super Micro's latest forecast exceeds expectations as well.

Super Micro's stock was climbing in after-hours trading on Tuesday.

Super Micro has been working its way back into Wall Street's good graces, and its latest earnings report furthered the cause.

Since Super Micro (SMCI) preannounced aspects of its quarterly results a few weeks ago, arguably the most anticipated aspect of the company's report on Tuesday was its outlook. And on that, the company exceeded expectations, projecting fiscal first-quarter revenue between $14.5 billion and $15.5 billion.

That was ahead of the FactSet consensus for $11.8 billion at the midpoint. The outlook for adjusted earnings of between $1.01 and $1.10 also beat expectations, which had been for 72 cents.

Furthermore, Super Micro reported an adjusted gross margin of 17.6% for the June quarter, which was above even the updated guidance range it gave last month for between 15% and 17%. That was well ahead of the company's original outlook of 8.2% to 8.4%.

The company attributed the increase to a better mix of customers and products, and said that the figure includes adjustments for $9 million in stock-based-compensation expense.

Super Micro's stock gained 7.6% in after-hours trading on Tuesday.

For the June quarter, Super Micro reported revenue of $11.1 billion, which came in below the $11.6 billion analysts tracked by FactSet had been expecting. The company's adjusted earnings of $1.70 per share topped estimates for 92 cents, however.

The company offered preliminary guidance in July that had called for revenue to come in at the lower end of its previous outlook of between $11 billion and $12.5 billion in the fiscal fourth quarter.

Super Micro CEO Charles Liang said in a statement that the company's strategy on artificial-intelligence and IT solutions "continues to deliver strong results." He added that the company "added several hundred enterprise and other customers in the past year."

In July, Super Micro had said new orders reached more than $60 billion in the June quarter, helping to bring its backlog to record levels at the end of its fiscal year.

"As demand accelerates, we are improving profitability through a richer enterprise customer mix and broader adoption of our optimized Data Center Building Block Solutions (DCBBS) architecture," Liang said in the company's earnings release.

-Britney Nguyen

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08-11-26 2016ET