Super Micro Computer Inc. (NASDAQ:SMCI) gave investors conflicting figures in its Q4 preliminary update on July 21.
Fiscal Q4 revenue is expected near the bottom of its $11 billion to $12.5 billion guidance, below the $11.67 billion analyst consensus, yet shares jumped 17.5% after hours
Our take is that the market was not celebrating sales; rather, it was repricing how much profit Supermicro might extract from them. The Margin Surprise Changes the Quarter Supermicro now expects both GAAP and non-GAAP gross margins of 15% to 17%, almost twice its previous 8.2% to 8.4% forecast. At $11 billion of revenue, the new range implies roughly $1.65 billion to $1.87 billion of gross profit, compared with $902 million to $924 million under the old forecast.
Even the low end of the new range exceeds the high end of the old one by about $726 million. The reversal follows gross margins of only 6.3% in fiscal Q2 and 9.9% in Q3. Management attributed it to favorable customer and product mix.