Confidential
© 2016 Supermicro
First Quarter Fiscal 2017
Earnings Conference
Presentation
October 27, 2016
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Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements may relate, among other things, to our expected
financial and operating results, our ability to build and grow Supermicro, the benefit of our products
and our ability to achieve our goals, plans and objectives.
Such forward-looking statements do not constitute guarantees of future performance and are subject
to a variety of risks and uncertainties that could cause our actual results to differ materially from those
anticipated. These include, but are not limited to: our dependence on continued growth in the markets
for X86 based servers, blade servers and embedded applications, increased competition, difficulties
of predicting timing of new product introductions, customer acceptance of new products, poor product
sales, difficulties in establishing and maintaining successful relationships with our distributors and
vendors, shortages or price fluctuations in our supply chain, our ability to protect our intellectual
property rights, our ability to control the rate of expansion domestically and internationally, difficulty
managing rapid growth and general political, economic and market conditions and events.
For a further list and description of risks and uncertainties, see the reports filed by Supermicro with
the Securities and Exchange Commission. Supermicro disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. Supplemental information, condensed balance sheets and statements of operations follow.
All monetary amounts are stated in U.S. dollars.
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Non-GAAP Financial Measures
Non-GAAP gross margin in this presentation excludes stock-based compensation expense. Non-
GAAP net income and net income per share in this presentation exclude stock-based compensation
expense and the related tax effect of the applicable items. Management presents non-GAAP financial
measures because it considers them to be important supplemental measures of performance.
Management uses the non-GAAP financial measures for planning purposes, including analysis of the
Company's performance against prior periods, the preparation of operating budgets and to determine
appropriate levels of operating and capital investments.
Management also believes that the non-GAAP financial measures provide additional insight for
analysts and investors in evaluating the Company's financial and operating performance. However,
these non-GAAP financial measures have limitations as an analytical tool, and are not intended to be
an alternative to financial measures prepared in accordance with GAAP.
Pursuant to the requirements of SEC Regulation G, detailed reconciliations between the Company's
GAAP and non-GAAP financial results is provided at the end of the press release that was issued
announcing the Company’s operating and financial results for the quarter ended September 30, 2016.
In addition, a reconciliation from GAAP to non-GAAP results is contained in the financial summary
attached to today’s presentation and is available in the Investor Relations section of our website at
www.supermicro.com in the Events and Presentations section. Investors are advised to carefully
review and consider this information as well as the GAAP financial results that are disclosed in the
Company's SEC filings.
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Q1 FY2017 Non-GAAP Financial Highlights
(in millions, except per share data)
Direct business was 50.0% of total revenues
System business was 67.6% of total revenues
Change
Q1'17 YoY Sequential
Revenue $529.0 1.8% 0.9%
Profit after Tax $16.7 1.1% 60.9%
EPS $0.32 0.0% 60.0%
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Revenue Trend
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
$520
$639
$533 $524 $529
$'s millions
Supermicro Revenue Trend
Y/Y 17.2% 27.0% 13.1% -8.6% 1.8%
Seq. -9.4% 23.0% -16.6% -1.6% 0.9%
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Revenue Analysis
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
$163 $185 $160 $181 $171
$356
$454
$372 $343 $357
$'s millions
Supermicro Subsystems/System Revenue
Subsystems Systems
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Q1 FY2017 Major Markets
Datacenter/Cloud
12.8% of Total Revenue
-47.2% YoY
Storage
23.5% of Total Revenue
10.4% YoY Growth
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Q1 FY2017 Revenue by Geography
Other – 4.4%
United States
55.9%
Europe
21.5%
Asia
18.2%
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IoT/Embedded
10.7% of Total Revenue
12.9% YoY Growth
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The Ultra 1U and 2U Broadwell Product Lines
24 DIMM, 160W Xeon CPU, Flexible I/O, NVMe support
3 to 10% Less power consumption than competition
The Twin Architecture: TwinPro, FatTwin and BigTwin
Most optimized for Hyper-converged and HPC Applications
Best performance/watt and price/performance ratio
SuperBlade, MicroBlade and MicroCloud
Densest computing nodes, 0.05U/0.1U/0.2U per node
95% less cable, easy maintenance, and cost effectiveness
GPU and Xeon Phi/KNL Product lines
KNL optimized platforms with 100G OPA connectivity
170 TFlops with 8x Pascal GPUs in 4U
Lowest latency of data access and transfer
90 Bay/60 Bay, JBOD, Storage Server & 2U All-Flash Storage Array
24 DIMM DP redundant node and 200W+ CPU support
Up to 48 hot-swap dual-port NVMe/SAS3 in 2U
Big Data and Software Defined Storage Solutions
Embedded /IoT Product lines
Integrated compute, storage, and networking
Optimized for Small Business, Education, Hybrid IT, Edge
Computing Application
Rack Scale Design (SRSD) and Management Software
World’s Best Server/Storage Product Lines
NEW!
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NEW!
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Non-GAAP Gross Margins
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
13.9%
16.7%
14.9% 14.1%
15.2%
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Non-GAAP Operating Margins
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17
4.9%
8.3%
5.3%
3.1%
4.7%
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Summary P&L non-GAAP
(in millions, except per share data)
Change
Q1'17 YoY Sequential Q1'16 Q4'16
Operating Expense $55.7 $8.6 -$2.2 $47.1 $57.9
Operating Expense Ratio 10.5% 1.5% -0.5% 9.0% 11.0%
Operating Income $24.7 -$0.6 $8.5 $25.3 $16.2
Net Income $16.7 $0.2 $6.3 $16.5 $10.4
EPS $0.32 $0.00 $0.12 $0.32 $0.20
Diluted Common Share Count 52.2 52.0 53.0
Effective Quarterly Tax Rate 31.7% 34.2% 34.4%
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Q1 FY2017 YTD Summary Statement of Cash Flows
($’s millions)
3 Months Ended 3 Months Ended
30-Sep-16 30-Sep-15
Net Income $13.5 $13.7
Depreciation and amortization $3.8 $2.8
Stock-based comp expense $4.5 $3.9
Other reserves $3.2 -$2.5
Net change in AR, Inventory, AP -$50.9 -$11.8
Other prepaids and liabilities $14.9 $14.4
Cash flow from operations -$11.0 $20.3
Capital expenditures -$11.6 -$7.7
Free cash flow -$22.7 $12.6
Net cash - investing activities $0.1 $0.0
Net cash - financing activities -$12.0 $2.6
Effect of exchange rate fluctuation
on cash and cash equivalents $0.3 $0.2
Net change in cash -$34.3 $15.5
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Q1 FY2017 Summary of Balance Sheet Metrics
($’s millions)
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Q1'17 Q4'16 Change
Cash Equivalents & Investments $149.4 $183.7 $(34.3)
Accounts Receivable $328.3 $288.9 $39.3
Inventory $500.0 $449.0 $51.0
Accounts Payable $287.6 $249.2 $38.4
DSO 54 50 4
DIO 97 94 3
DPO 55 53 2
Cash Cycle Days 96 91 5
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Supplemental Financials
First Quarter Fiscal 2017
Ended September 30, 2016
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Non-GAAP Financial Summary
(in millions, except per share data)
Q1'17 Q4'16 Q1'16
Net Sales $529.0 $524.3 $519.6
Non-GAAP Gross Margin* 15.2% 14.1% 13.9%
Non-GAAP Operating Expenses* $55.7 $57.9 $47.1
Non-GAAP Operating Income* $24.7 $16.2 $25.3
Non-GAAP Net Income* $16.7 $10.4 $16.5
Non-GAAP Net Income per share* $0.32 $0.20 $0.32
Fully diluted shares for calculation* 52.2 53.0 52.0
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
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Prior Period Net Income Comparisons
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q1'17 Q4'16 Q1'16
Net Income (GAAP) $13.5 $7.0 $13.7
Stock-based Compensation Expense (tax affected)* $3.2 $3.4 $2.8
Net Income (Non-GAAP)* $16.7 $10.4 $16.5
Diluted Net Income per common share (GAAP) $0.26 $0.13 $0.27
Stock-based Compensation Expense (tax affected)* $0.06 $0.07 $0.05
Diluted Net Income per share (Non-GAAP)* $0.32 $0.20 $0.32
Shares used in diluted EPS calculation (Non-GAAP) * 52.2 53.0 52.0
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Quarterly Net Income (Loss)
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q1'17 Q4'16 Q3'16 Q2'16 Q1'16
Net income (GAAP) $13.5 $7.0 $16.7 $34.7 $13.7
Adjustments:
Stock-based compensation expense $4.5 $4.4 $3.9 $4.0 $3.9
Income tax effects of adjustments $(1.3) $(1.0) $(1.6) $(0.7) $(1.1)
Net income (Non-GAAP)* $16.7 $10.4 $19.0 $38.0 $16.5
Diluted Net Income per share (GAAP) $0.26 $0.13 $0.32 $0.67 $0.27
Adjustments: $0.06 $0.07 $0.04 $0.06 $0.05
Diluted Net Income per share (Non-GAAP)* $0.32 $0.20 $0.36 $0.73 $0.32
Diluted shares used in GAAP per share
calculation 51.1 52.3 52.2 51.5 51.4
Diluted shares used in Non-GAAP per share
calculation* 52.2 53.0 53.1 52.1 52.0