Supermicro published preliminary quarterly results Tuesday, but the report may have raised more questions than it answered.
Super Micro Computer (SMCI -21.48%) stock is getting crushed again in Wednesday’s trading following the company’s preliminary earnings release. The server specialist’s share price was down 22.8% as of 2 p.m. ET and had been down as much as 27.1% earlier in the session.
After the market closed Tuesday, Supermicro published unaudited preliminary results for its fiscal 2025 first quarter, which ended Sept. 30. The tech specialist also provided an update on an internal review that’s underway following the recent resignation of Ernst & Young (EY) as its financial auditor.
Supermicro’s preliminary results raise questions
For the fiscal first quarter, Supermicro now expects to report sales of between $6 billion and $7 billion. It had previously been guiding for a range of $7 billion to $8 billion. That’s a substantial downward revision, and it may look even more worrying to investors due to concerns about the company’s accounting practices.
On the other hand, management expects to post a non-GAAP (adjusted) gross margin of 13.3% — better than was broadly expected. Meanwhile, management expects adjusted earnings for the quarter to be between $0.75 per share and $0.76 per share — fairly close to the center of its guidance for adjusted earnings between $0.67 per share and $0.83 per share. But the gross margin forecast and preliminary earnings range were relatively small bright spots in an otherwise concerning update for investors.
With its preliminary Q1 release, Supermicro also said that it couldn’t give a specific timeline for when its delayed fiscal 2024 10-K filing would be filed with the Securities and Exchange Commission (SEC). That could make it harder for investors to trust the company, and it could pose other issues for the stock.
What comes next for Super Micro Computer stock?
For its fiscal second quarter, Supermicro is guiding for sales of between $5.5 billion and $6.1 billion. At the midpoint, that would suggest a significant sequential quarterly decline compared to projected sales for fiscal Q1. Adjusted earnings per share are projected to be between $0.56 and $0.65.
With no clear indication of when the company’s 10-K report for its last fiscal year will be filed with the SEC, Supermicro is at risk of being delisted from the Nasdaq Stock Exchange. If that happened, the stock could still continue to trade through over-the-counter (OTC) markets. However, its share price and trading liquidity could plummet.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
