Super Micro Computer, Inc.
Other securities:
SMCIP
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Item 1. Business
Our Company
We are a Silicon Valley-based provider of total information technology ("IT") solutions which address demanding workloads from the enterprise and cloud to the intelligent edge. We deliver rack-scale solutions optimized for various workloads, including artificial intelligence (“AI”) and high-performance computing (“HPC”), where acceleration is critical. Additionally, we offer an extensive portfolio of server and storage solutions for enterprise data centers, cloud service providers ("CSPs"), and edge computing applications, such as 5G Telco, Retail and embedded.
During fiscal year 2026, we advanced our transformation into a total data center infrastructure provider through our Data Center Building Block Solutions® (“DCBBS”), an integrated offering that delivers complete, modular AI infrastructure from validated components and sub-systems, ranging from individual graphics processing units (“GPUs”) and networking switches to complete racks, site infrastructure, management software, and professional services. This complements our Total IT Solutions, which encompass complete servers, storage systems, modular blade servers, workstations, full-rack scale solutions, networking devices, server sub-systems and server management. These turn-key solutions are designed, developed, validated and installed for leading AI data centers. Our Total IT Solutions are designed for optimal power and thermal management, including using Supermicro’s state-of-the-art liquid cooling technologies. We also provide global support and services to help our customers install, upgrade and maintain their computing infrastructure, including liquid-cooling operations. We offer our customers a high degree of flexibility and customization by providing a broad array of server models and configurations from which they can choose the best solutions to meet their computing needs. Our server and storage systems, sub-systems, and accessories are architecturally designed for high reliability, quality, configurability, and scalability.
SMCI | 2026 Form 10-K | 1
Our in-house design competencies, design control over many of the sub-systems required within our server and storage systems, and our Server Building Block Solutions® (an innovative, modular and open architecture) enable us to rapidly develop, build and test complete solutions, which include servers, storage, software, and networking components. As a result, when new technologies are brought to market, we are generally able to quickly assemble a broad portfolio of solutions by leveraging common building blocks across product lines. We work closely with the leading microprocessor, GPU, memory, disk/flash, and interconnect vendors and other hardware and software suppliers to coordinate our new products’ design with their product release schedules. This enhances our ability to rapidly introduce new products by incorporating the latest technology, improve quality and reduce costs. We seek to be the first to market with superior product designs, and we have the ability to offer a broad selection of products using those technologies to our customers.
During the fiscal year ended June 30, 2026, we continued to expand our worldwide capacity, including a significant expansion of our Silicon Valley operations, including the on-going construction of a new state-of-the-art business complex and additional property leases to support our DCBBS campus near our San Jose headquarters. We conduct our operations principally from our Silicon Valley headquarters, and facilities in Taiwan, Malaysia, and the Netherlands. Our sales and marketing activities operate through a combination of our direct sales force and indirect sales channel partners. We work with distributors, value-added resellers, system integrators, and original equipment manufacturers (“OEMs”) to market and sell our optimized solutions to their end customers in our indirect sales channels.
Strategy
Our objective is to be the world’s leading provider of Total AI/IT Solutions, through a richer enterprise customer mix and broader adoption of our optimized DCBBS architecture. Combined with continued investment in technology leadership, manufacturing scale, and global compliance, we are enabling customers to deploy AI infrastructure faster and more efficiently, offering a comprehensive portfolio of high-performance, application-optimized server, storage and networking solutions. Achieving this objective requires continuous development and innovation of our Total AI/IT Solutions portfolio with better price-performance and architectural advantages over both prior generations of our solutions and competitors’ offerings. Through our strategy, we seek to maintain or improve our relative competitive position in many product areas and pursue markets that provide us with additional long-term growth opportunities. Key elements of our strategy include executing upon the following:
Strong Internal Research and Development and Internal Manufacturing Capability
We are continually investing in our engineering organization. As of June 30, 2026, we had over 3,500 employees in our research and development organization. These resources, along with our understanding of complex computing and storage requirements, enable us to deliver product innovation featuring advanced functionality and capabilities required by our customers. Also, our worldwide manufacturing facilities enable us to reduce the time to delivery in every geography around the world. Our engineers work directly with our manufacturing personnel to plan together and identify and address any issues together.
Introducing Innovative Products Faster
We seek to sustain advantages in both time-to-market and breadth of products by incorporating the latest technological innovations, such as new processors (central processing units (“CPUs”), and GPUs), liquid cooling enhancements, advancements in memory and storage, and evolving input/output ("I/O") technologies. We seek these advantages by leveraging our in-house design capabilities and our Building Block Solutions® architecture. This allows us to offer customers a broad range of products tailored to their specific application requirements and to focus on delivering products with better time-to-market.
In particular, during the fiscal year ended June 30, 2026 (“fiscal year 2026”):
•We delivered a comprehensive portfolio of AI-focused solutions specifically designed to support the latest AI workloads, including products compatible with NVIDIA's Blackwell and Blackwell Ultra generation platforms, such as the NVIDIA GB300 NVL72, GB200 NVL72, and HGX B300 and B200 systems, in air-cooled and liquid-cooled configurations;
SMCI | 2026 Form 10-K | 2
•We continued to scale our DCBBS, which simplify the deployment of liquid-cooled AI factories by integrating all critical infrastructure components—servers, storage, networking, racks, liquid cooling infrastructure, power distribution, software, services, and support. In approximately one year, our DCBBS product lines grew to more than ten key subsystems, including coolant distribution units, liquid-to-air heat exchangers, chilled doors, power shelves, battery backup units, water towers, dry towers, high-speed switching, and data center management software;
•We continued to deploy our next-generation Direct Liquid Cooling solution, DLC-2, engineered to significantly reduce power and water consumption, noise, and spatial requirements in data centers. DLC-2 provides nearly full liquid-cooling heat capture coverage of up to 98% per server rack, can reduce data center power consumption by up to 40% compared to air-cooled installations, and can decrease total cost of ownership (“TCO”) by up to 20%;
•We announced support for, and expanded rack-scale manufacturing and liquid-cooling capacity for, the upcoming NVIDIA Vera Rubin platform, including the NVIDIA Vera Rubin NVL72 and NVIDIA HGX Rubin NVL8 systems, and introduced DCBBS Blueprints for these platforms designed to scale AI data centers from a 5 megawatt (“MW”) to a 1 gigawatt ("GW") power envelope;
•We introduced new products supporting Intel Xeon 6 and Intel Xeon 6+ processors, AMD EPYC processors, and AMD Instinct™ MI350 series GPUs (MI350X and MI355X), and expanded our portfolio with Arm®-based platforms and additional Open Compute Project (“OCP”) ORv3-compliant systems;
•We announced support for AMD’s next–generation Helios platform. Helios is a 72-GPU double-width rack-scale system powered by AMD Instinct MI455X GPUs, 6th Gen AMD EPYC™ CPUs, and AMD Pensando™ networking technologies all unified by the open AMD ROCm™ software stack;
•We expanded our product offerings to include systems that support Arm AGI CPUs with an air-cooled dual-socket 2U compute-optimized and 5U GPU-optimized rackmount server, as well as a liquid-cooled multi-node solution designed specifically for rack-scale agentic AI deployments;
•We expanded our edge and internet of things ("IoT") portfolio with a variety of new systems designed for low-power environments that require compact, efficient compute solutions; and
•We broadened our storage offerings with AI-optimized storage solutions built for large-scale AI training and inference workloads, including systems designed for context memory extension.
Capitalizing on New Applications and Technologies
In addition to meeting traditional needs for server and storage systems, we have devoted, and will continue to devote, substantial resources to developing systems that support emerging and growing applications including AI, cloud computing, 5G/edge computing, storage and others. We believe there are significant opportunities for us in each of these rapidly developing markets, driven by stringent design requirements for these applications that often require the use of the latest technologies, allowing us to leverage our capabilities in product innovation, superior time-to-market, and portfolio breadth.
Liquid Cooling
To reduce the high cost of operating and address constraints on power and cooling in data centers, IT managers increasingly turn to suppliers that offer high-performance, cost-effective, energy-efficient, and environmentally friendly products. Our resource saving architecture supports our leadership in green IT innovation. We offer product lines that are designed to share common computing resources, thereby saving both valuable space and power as compared to general-purpose rackmount servers. In addition, due to the advanced power requirements of these systems, we provide end-to-end liquid cooling solutions across our designs to optimize the elevated power and thermal management requirements. We believe our approach of leveraging an overall architecture that balances data center power requirements, cooling, shared resources and refresh cycles helps reduce environmental impact while providing TCO savings for our customers.
Liquid cooling necessitates the need for rack-scale integration of the power and cooling infrastructure. We design, build, test, validate, and deliver complete rack scale solutions for liquid-cooled direct-to-chip cold plate solutions for CPUs, GPUs, and memory. In addition, we manufacture the sophisticated management systems -- Cooling Distribution Units, Cooling Distribution Manifolds -- to regulate system temperatures for maximum performance. Our DLC-2 technology stack also includes rear door heat exchangers, liquid-to-air sidecars, and cooling towers, along with proprietary coolant fluids engineered for enhanced chemical and thermal stability. Liquid cooling can be easily included in rack-level integrations to further increase system efficiency, reduce instances of thermal throttling, and lower both the TCO and Total Cost to Environment of data center deployments.
SMCI | 2026 Form 10-K | 3
Driving Software and Services Sales to our Global Enterprise Customers
We work closely with customers by offering total data center life-cycle management software. This enables data center operators to closely monitor their entire IT infrastructure, identify potential issues, and address them before they lead to failures. By offering management software and worldwide onsite and remote services to our customers, we also drive additional revenue for our total IT solutions. These software products and services are required for large-scale deployments, help meet service level agreements and address uptime requirements. In addition to our internal software development efforts, we partner with external software vendors to meet customer requirements.
Leveraging Our Global Operating Structure
We are committed to expanding our worldwide manufacturing capacity and logistics operations across the United States, Taiwan, the Netherlands, and Malaysia. During fiscal year 2026, we significantly expanded our Silicon Valley operations including the on-going construction of a new state-of-the-art business complex and additional property leases to support our DCBBS campus near our San Jose headquarters. This strategic expansion allows us to serve our customers more efficiently, reduce time to delivery, mitigate the impact of tariffs and regional costs, and reduce overall manufacturing costs.
Products and Services
We offer a broad range of compute, storage and edge platforms that are application-optimized server solutions, rackmount and blade servers, storage, and subsystems and accessories. These products are designed to serve a variety of markets, such as enterprise data centers, cloud computing, AI and 5G/edge computing. We complement our accelerated compute platforms inclusive of server and storage system offerings with software management, global services and support, the revenue for which is included in our server and storage systems revenue.
Server and Storage Systems
We offer platforms in rackmount, blade, multi-node and embedded form factors, which support single, dual, and multiprocessor architectures. Our key product lines include:
•An extensive portfolio of liquid and air cooled AI Servers for Training and Inferencing with integrated GPUs or PCIe based architectures;
•SuperBlade®, MicroBlade®, FlexTwin™, GrandTwin®, and BigTwin® blade and multi-node system families that are designed for density, performance, and efficiency that share common computing resources, thereby saving space and power over standard rackmount servers and offering superior serviceability and manageability;
•SuperStorage systems that provide high-density storage while leveraging an efficient use of power to achieve performance-per-watt savings. Our storage systems are also designed for maximum performance for AI training and inference environments;
•Hyper, CloudDC, and WIO, an extensive rackmount system family that provides optimization for a broad range of workloads and environments that deliver entire clusters of racks, with both liquid-cooled and air-cooled options, per customer requirements;
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and related notes which appear elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report, particularly under the heading “Risk Factors.”
Overview
We are a global leader in Application-Optimized Total IT Solutions. Founded and operating in San Jose, California, we are committed to delivering first-to-market innovation for Enterprise, Cloud, AI, and 5G Telco/Edge IT Infrastructure. As a Total IT Solutions manufacturer, our offerings include server, artificial intelligence (“AI”) systems, storage, IoT devices, switches, software, and support services. Supermicro's expertise in motherboard, power, and chassis design drives our ability to develop and produce next-generation innovations, from cloud to edge, for our global customers. Our products are designed and manufactured in-house across facilities in the United States, Taiwan, and the Netherlands. Leveraging our global operations for scale and efficiency, we optimize solutions to improve TCO while reducing environmental impact through Green Computing initiatives. Our award-winning portfolio of Server Building Block Solutions empowers customers to tailor systems precisely to their exact workloads and applications. By selecting from a broad family of flexible and reusable building blocks, customers can configure a comprehensive range of form factors, processors, memory, GPUs, storage, networking, power, and cooling solutions, including air-conditioned, free air, and liquid cooling solutions.
We commenced operations in 1993 and have been profitable every year since inception. For fiscal years 2026, 2025, and 2024, our net income was $2,230.5 million, $1,048.9 million, and $1,152.7 million, respectively.
In order to increase our sales and profits, we believe that we must continue to develop flexible application optimized server and storage solutions while being among the first to market with new features and products. Our focus is on delivering Total IT Solutions that integrate, validate, and deliver server, storage, networking and software at the rack and cluster (multi-rack) level. Additionally, we will continue to expand our software offerings and enhance customer service and support, particularly as we increase our focus on large enterprise and data center customers. A key component of our strategy is our DCBBS, which significantly reduces data center build time and enables full integration of AI computing, server, storage, networking, rack, cabling, liquid cooling, end-to-end management software, onsite deployment services, and ongoing maintenance. To further expand our market share, we intend to strengthen our network of sales partners and distribution channels.
We measure our financial success based on various key indicators, including growth in net sales, gross profit, income from operations, and net income per common share. In addition to these financial metrics, a critical non-financial indicator of our success is our ability to rapidly introduce new products and deliver the latest application-optimized server and storage solutions. To support this, we work closely with the developers and manufacturers of key components, allowing us to integrate emerging technologies as they become available. Our ability to quickly bring new products to market, which we believe is enabled by our Building Block Solution architecture, has historically enabled us to capitalize on major technology transitions such as the launch of new GPUs, microprocessors and storage technologies. Accordingly, we closely monitor the product introduction cycles of industry leaders, including NVIDIA Corporation, Intel Corporation, Advanced Micro Devices, Inc., Broadcom Inc., Samsung Electronics Company Limited, Micron Technology, Inc. and others. This strategic focus directly informs our research and development investments, as we continue to allocate resources toward both our current initiatives and future product innovation.
AI and Data Centers
The growing use of AI, which requires enhanced data center capabilities, has substantially increased demand for our products. We expect this trend to continue, with further demand for data center expansion driven by the AI market. As a result, we will continue to enhance our product capabilities and expand our service offerings, including DCBBS to address the growing demand in the AI market and data center markets. We believe that our ability to tailor certain products to the unique needs of these sectors sets us apart from many competitors and positions us to capture an even greater market share going forward.
SMCI | 2026 Form 10-K | 40
Macroeconomic Factors
Macroeconomic factors, including inflation, interest rate changes, capital market volatility, global supply chain constraints, tariffs, and global economic and geopolitical developments, have had and may continue to have direct and indirect impacts on our business and results of operations, particularly demand for our products and net sales. While difficult to isolate and quantify, these macroeconomic factors have also impacted and may continue to impact our supply chain and manufacturing costs, employee wages, costs for capital equipment, the value of our investments, revenue and competitive position. During fiscal year 2026, the computer server industry experienced supply constraints for certain components, including memory and storage, as well as GPU and CPU availability, which affected the timing of certain of our product deliveries, as well as the pricing of these items. Further, while many of these macroeconomic factors could have a long-term impact, others may have a short-term impact which could lead to our financial results not being comparable on a period-to-period basis. Within our supply chain, we continuously manage product availability and costs with our vendors.
Financial Highlights
The following is a summary of our financial highlights for fiscal years 2026 and 2025 (in thousands, except per share amounts):
| Years Ended June 30, | |||||||||||||
| 2026 | 2025 | ||||||||||||
| Net sales | $ | 39,063,072 | $ | 21,972,042 | |||||||||
| Gross profit | $ | 4,227,251 | $ | 2,429,922 | |||||||||
| Total operating expenses | $ | 1,456,765 | $ | 1,176,928 | |||||||||
| Income from operations | $ | 2,770,486 | $ | 1,252,994 | |||||||||
Net income | $ | 2,230,453 | $ | 1,048,854 | |||||||||
| Net income per common share - diluted | $ | 3.26 | $ | 1.68 | |||||||||
•Net sales increased by 77.8% in fiscal year 2026, as compared to fiscal year 2025, primarily driven by fulfillment and shipment of orders to support our customers' data center deployment, including large design wins from a few customers. The strong year-on-year growth was driven by our product mix, customer diversification, growth in enterprise and channel revenues and an increase in our average selling prices.
•Gross margin decreased to 10.8% in fiscal year 2026, from 11.1% in fiscal year 2025, primarily due to our strategy to offer competitive pricing to gain market share, change in product and customer mix, and higher manufacturing related expenses.
•Operating expenses increased by 23.8% in fiscal year 2026, as compared to fiscal year 2025, primarily due to higher headcount and increases in salary and stock-based compensation.
•Net income increased to $2,230.5 million in fiscal year 2026, as compared to $1,048.9 million in fiscal year 2025, as the increase in net sales was greater than the increase in operating costs, and was also sufficient to offset the decline in gross margin percentage.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which are prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we regularly evaluate our accounting estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The actual impact on our financial performance could differ from these estimates under different assumptions or conditions.
An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our consolidated financial statements. Critical accounting estimates in the areas of revenue recognition, inventories, and income taxes, when applicable, have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting estimates.
SMCI | 2026 Form 10-K | 41
For further information on all of our significant accounting policies, see Note 1. “Organization and Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in this Annual Report.
Revenue Recognition
We generate revenues from the sale of server and storage systems, subsystems, accessories and services.
We apply judgment in determining the transaction price as we may be required to estimate variable consideration when determining the amount of revenue to recognize. We include estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are reassessed each reporting period and recorded as an adjustment to revenue, as applicable.
We allocate the transaction price for each customer contract to each performance obligation based on the relative Stand-alone Selling Price (“SSP”) for each performance obligation within each contract. We recognize the amount of transaction price allocated to each performance obligation within a customer contract as revenue at the time the related performance obligation is satisfied by transferring control of the promised good or service to a customer. Determining the relative SSP for contracts that contain multiple performance obligations requires significant judgment. We determine SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, we apply judgment to estimate the SSP. For all performance obligations, we are able to establish the SSP by maximizing the use of observable inputs. We typically establish an SSP range for our products and services, which is reassessed on a periodic basis or when facts and circumstances change. SSP for our products and services can evolve over time due to changes in our pricing practices, internally approved pricing guidelines with respect to geographies, customer type, internal costs, and gross margin objectives for the related performance obligations which can also be influenced by intense competition, changes in demand for our products and services, economic and other factors.
Revenue is recognized either over time or at a point in time, depending on when control of the underlying products or services are transferred to the customer, which may require judgment. Revenue is recognized at a point in time for products. Revenue is recognized over time for extended warranty, on-site services provided. Revenue related to system rack installation and integration services is recognized over time when services are performed and the customer receives and consumes the benefits.
Inventories
Inventories are stated at lower of cost, using weighted average cost method, or net realizable value. Net realizable value is the estimated selling price of our products in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventories consist of raw materials (principally electronic components), work in process (principally products being assembled), and finished goods (principally finished products and products ready for sale). We evaluate inventory on a quarterly basis for lower of cost or net realizable value and excess and obsolescence and, as necessary, write down the valuation of inventories.
We charge cost of sales for inventory provisions to write-down our inventory to the lower of cost or net realizable value or for obsolete or excess inventory, and for excess product purchase commitments. Most of our inventory provisions relate to excess quantities of products or components, based on our inventory levels and future product purchase commitments compared to assumptions about future demand and market conditions, which requires management judgment, that vary based on inventory aging. Situations that may result in excess or obsolete inventory or excess product purchase commitments include changes in business and economic conditions, changes in market conditions, sudden and significant decreases in demand for our products, including potential cancellation or deferral of customer purchase orders, inventory obsolescence because of changing technology and customer requirements, new product introductions resulting in less demand for existing products or inconsistent spikes in demand, failure to estimate customer demand properly, ordering in advance of historical lead-times, government regulations and the impact of changes in future demand, or increase in demand for competitive products, including competitive actions. Net realizable value is the estimated selling price of our products in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
SMCI | 2026 Form 10-K | 42
Our inventory and capacity purchase commitments are based on forecasts of future customer demand and consider our third-party manufacturers’ lead times and constraints. Our manufacturing lead times can be and have been long, and in some cases, extended beyond twelve months for some products. We may place non-cancellable inventory orders for certain product components in advance of our historical lead times, pay premiums and provide deposits to secure future supply and capacity. We also adjust to other market factors, such as product offerings and pricing actions by our competitors, new product transitions, and macroeconomic conditions - all of which may impact demand for our products.
Income Taxes
We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.
Our calculation of deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws. Our estimates of deferred tax assets and liabilities may change based, in part, on added certainty or finality to an anticipated outcome, changes in accounting standards or tax laws in the U.S. or foreign jurisdictions where we operate, or changes in other facts or circumstances. In addition, we recognize liabilities for potential U.S. and foreign income tax contingencies based on our estimate of whether, and the extent to which, additional taxes may be due. If we determine that payment of these amounts is unnecessary or if the recorded tax liability is less than our current assessment, we may be required to recognize an income tax benefit or additional income tax expense in our financial statements accordingly.
We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized based on all available evidence. To the extent realization of the deferred tax assets becomes more-likely-than-not, we would recognize such deferred tax assets as income tax benefits during the period.
We recognize the benefit from a tax position only if it is more-likely-than-not that the position would be sustained upon audit based solely on the technical merits of the tax position. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense.
Results of Operations
Components of Results of Operations
Net Sales
Net sales primarily consist of sales of our server and storage solutions, including systems and related services, subsystems, and accessories. The key factors that impact net sales of our server and storage systems are the number of servers and racks sold, as well as the average selling prices per server or rack. For subsystems and accessories, the main drivers of net sales are the number of units shipped and the average selling price per unit. The prices for our server and storage systems can vary widely depending on the configuration, including factors such as speed, functionality and performance of key components, including CPUs, GPUs, SSDs, cooling systems, and memory. Similarly, the prices for our subsystems and accessories fluctuate depending on the relative value of the specific item being purchased, such as power supplies, server boards, chassis or other accessories.
Cost of Sales, Gross Profit, and Gross Margin
Cost of sales primarily consists of the costs to manufacture our products, which includes: the costs of components and materials, contract manufacturing, shipping, personnel expenses (salaries, benefits, stock-based compensation and incentive bonuses), equipment and facility expenses, warranty costs, and inventory valuation adjustment write-downs.
SMCI | 2026 Form 10-K | 43
We use several suppliers and contract manufacturers to design and manufacture subsystems in accordance with our specifications, with most final assembly and testing performed at our manufacturing facilities in the region where our products are sold. We work with Ablecom, one of our key contract manufacturers and a related party, for our chassis and certain other components. We also outsource a significant part of the manufacturing of certain components, particularly power supplies, to Compuware, also a related party. We also collaborate on design and development activities with Ablecom and Compuware, where we substantially fund the design costs and retain the intellectual property rights. Our purchases of products from Ablecom and Compuware combined represented 2.1%, 3.3%, and 4.3% of cost of sales on our consolidated statements of operations for fiscal years 2026, 2025, and 2024, respectively. For further details on our dealings with related parties, see Note 11, “Related Party Transactions” in the notes to the consolidated financial statements in this Annual Report.
Research and Development
Research and development expenses consist of personnel expenses including salaries, benefits, stock-based compensation and incentive bonuses, and related expenses for our research and development personnel, as well as product development costs such as materials and supplies, consulting services, third-party testing services, and equipment and facility expenses related to our research and development activities.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel expenses including salaries, benefits, stock-based compensation, commissions and incentive bonuses, and related expenses for our sales and marketing personnel, cost for trade shows, sales representative fees, and marketing programs. From time to time, we receive marketing development funding from certain suppliers. Under these arrangements, we are reimbursed for certain marketing costs that we incur as part of the joint promotion of our products and those of our suppliers. These amounts offset a portion of the related expenses and have the effect of reducing our reported sales and marketing expenses.
General and Administrative
General and administrative expenses consist primarily of general corporate costs, including personnel expenses such as salaries, benefits, stock-based compensation and incentive bonuses, and related expenses for our general and administrative personnel, financial reporting, corporate governance and compliance, outside legal, audit, tax fees, insurance, and credit losses on accounts receivable.
Other Income (Expense), Net, Interest Income, and Interest Expense
Other income (expense), net, interest income, and interest expense consists primarily of interest earned on our investments and cash balances, interest incurred on our debt, and foreign exchange gains and losses.
Income Tax Provision
Our income tax provision is based on our taxable income generated in the jurisdictions in which we operate, which primarily include the United States, Taiwan, and the Netherlands. Our effective tax rate differs from the statutory rate primarily due to research and development tax credits, certain non-deductible expenses, tax benefits from foreign derived intangible income, and stock-based compensation. A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in Note 14, “Income Taxes” in the notes to the consolidated financial statements in this Annual Report.
SMCI | 2026 Form 10-K | 44
The following table presents certain items of our consolidated statements of operations for the years ended June 30, 2026, 2025, and 2024 (in millions):
| Years Ended June 30, | |||||||||||||||||
| 2026 | 2025 | 2024* | |||||||||||||||
| Net sales | $ | 39,063.1 | $ | 21,972.0 | $ | 14,989.2 | |||||||||||
| Cost of sales | 34,835.8 | 19,542.1 | 12,927.8 | ||||||||||||||
| Gross profit | 4,227.3 | 2,429.9 | 2,061.4 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 771.2 | 636.6 | 463.5 | ||||||||||||||
| Sales and marketing | 352.6 | 273.1 | 189.7 | ||||||||||||||
| General and administrative | 333.0 | 267.2 | 197.4 | ||||||||||||||
| Total operating expenses | 1,456.8 | 1,176.9 | 850.6 | ||||||||||||||
| Income from operations | 2,770.5 | 1,253.0 | 1,210.8 | ||||||||||||||
| Other income (expense), net | 26.5 | (41.3) | (6.3) | ||||||||||||||
| Interest income | 186.9 | 59.8 | 29.0 | ||||||||||||||
| Interest expense | (194.6) | (59.6) | (19.4) | ||||||||||||||
| Income before income tax provision | 2,789.3 | 1,211.9 | 1,214.1 | ||||||||||||||
| Income tax provision | (556.3) | (156.8) | (63.3) | ||||||||||||||
| Share of (loss) income from equity investees, net of taxes | (2.5) | (6.2) | 1.8 | ||||||||||||||
| Net income | $ | 2,230.5 | $ | 1,048.9 | $ | 1,152.7 | |||||||||||
*Totals may not sum due to rounding.
The following table presents certain items of our consolidated statements of operations expressed as a percentage of net sales for the years ended June 30, 2026, 2025, and 2024:
| Years Ended June 30, | |||||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
| Cost of sales | 89.2 | % | 88.9 | % | 86.2 | % | |||||||||||||
| Gross profit | 10.8 | % | 11.1 | % | 13.8 | % | |||||||||||||
| Operating expenses: | |||||||||||||||||||
| Research and development | 2.0 | % | 2.9 | % | 3.1 | % | |||||||||||||
| Sales and marketing | 0.9 | % | 1.2 | % | 1.3 | % | |||||||||||||
| General and administrative | 0.8 | % | 1.3 | % | 1.3 | % | |||||||||||||
| Total operating expenses | 3.7 | % | 5.4 | % | 5.7 | % | |||||||||||||
| Income from operations | 7.1 | % | 5.7 | % | 8.1 | % | |||||||||||||
| Other income (expense), net | 0.1 | % | (0.2) | % | (0.1) | % | |||||||||||||
| Interest income | 0.4 | % | 0.3 | % | 0.2 | % | |||||||||||||
| Interest expense | (0.5) | % | (0.3) | % | (0.1) | % | |||||||||||||
| Income before income tax provision | 7.1 | % | 5.5 | % | 8.1 | % | |||||||||||||
| Income tax provision | (1.4) | % | (0.7) | % | (0.4) | % | |||||||||||||
Share of (loss) income from equity investees, net of taxes* | — | % | — | % | — | % | |||||||||||||
| Net income | 5.7 | % | 4.8 | % | 7.7 | % | |||||||||||||
*Represents an amount less than 0.1%.
SMCI | 2026 Form 10-K | 45
Net Sales
The following table presents net sales for fiscal years 2026, 2025, and 2024 (dollars in millions):
| Years Ended June 30, | 2026 over 2025 Change | 2025 over 2024 Change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | $ | % | $ | % | |||||||||||||||||||||||||||||||||
| Net sales | $ | 39,063.1 | $ | 21,972.0 | $ | 14,989.2 | $ | 17,091.1 | 77.8 | % | $ | 6,982.8 | 46.6 | % | |||||||||||||||||||||||||
Fiscal Year 2026 Compared with Fiscal Year 2025
During fiscal year 2026, we continued to experience increased net sales from server rack and storage systems due to fulfillment and shipment of orders to support our customers' data centers deployment, including large design wins from a few customers. The $17,091.1 million or 77.8% year-over-year increase in net sales of server and storage systems was primarily due to strong demand and increased billing for Hyper Servers, GPU & Super Racks of $15,261.5 million or 83.4% compared to prior year, including liquid-cooled and air-cooled servers that are generally more complex and of higher value, primarily related to our GB200, and GB300 systems. Our services and software net sales increased from $330.5 million, in fiscal year 2025, to $538.3 million, in fiscal year 2026, and contributed to overall growth, although product revenue remained the primary driver.
Fiscal Year 2025 Compared with Fiscal Year 2024
During fiscal year 2025, we experienced increased net sales from server and storage systems, particularly from our large enterprise and data center customers. The $6,982.8 million or 46.6% year-over-year increase in net sales of server and storage systems was primarily due to the strong demand and increased billings for GPU & Super Racks of $5,804.0 million or 52% compared to prior year, including liquid-cooled and air-cooled servers which are generally more complex and of higher value, primarily related to our H200, H100, and B200 systems, resulting in an increase of average selling price of 34%. Our services and software net sales increased by $102.2 million year-over-year.
Cost of Sales, Gross Profit, and Gross Margin
Cost of sales and gross margin for fiscal years 2026, 2025, and 2024 were as follows (dollars in millions):
| Years Ended June 30, | 2026 over 2025 Change | 2025 over 2024 Change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | $ | % | $ | % | |||||||||||||||||||||||||||||||||
| Cost of sales | $ | 34,835.8 | $ | 19,542.1 | $ | 12,927.8 | $ | 15,293.7 | 78.3 | % | $ | 6,614.3 | 51.2 | % | |||||||||||||||||||||||||
| Percentage of total net sales | 89.2 | % | 88.9 | % | 86.2 | % | |||||||||||||||||||||||||||||||||
| Gross profit | $ | 4,227.3 | $ | 2,429.9 | $ | 2,061.4 | $ | 1,797.4 | 74.0 | % | $ | 368.5 | 17.9 | % | |||||||||||||||||||||||||
| Gross margin | 10.8 | % | 11.1 | % | 13.8 | % | (0.3) | % | (2.7) | % | |||||||||||||||||||||||||||||
Fiscal Year 2026 Compared with Fiscal Year 2025
The $15,293.7 million or 78.3% year-over-year increase in cost of sales was primarily driven by an increase of $14,699.8 million or 73.3% in certain products including GPU servers, HPC systems, and rack-scale solutions, consistent with the higher shipment volume during fiscal year 2026, as compared to fiscal year 2025. The remaining increases in cost of sales were driven by a $237.7 million or 228.3% increase in tariff expenses driven by new trade policies enacted during the year and a $312.9 million or 24.9% increase due to a decrease in vendor rebates, partially offset by a $43.8 million or 18.8% decrease in inventory write-down adjustments resulting from increased sales related to some of our aged inventory products during the year.
Gross margin decreased to 10.8% in the fiscal year 2026, from 11.1% in the fiscal year 2025, primarily due to our strategy to offer competitive pricing to gain market share, change in product and customer mix, and higher manufacturing related expenses.
SMCI | 2026 Form 10-K | 46
Fiscal Year 2025 Compared with Fiscal Year 2024
The $6,614.3 million or 51.2% year-over-year increase in cost of sales was primarily attributed to an increase of $6,353.2 million or 50.6% in costs of components, materials, and contract manufacturing expenses primarily due to increases in shipments of GPU servers, HPC, and rack-scale solutions which have higher costs and a $86.5 million or 493.6% increase in tariff expense related to new trade policies enacted during the year, a $149.6 million or 179.2% increase in inventory write-down adjustments from aged inventory, a $67.9 million or 28.6% increase in overhead costs which includes higher labor costs attributed to increase of operating activities, and a $43.6 million or 75.5% increase in freight charges.
The year-over-year decrease of 2.7% in gross margin percentage was primarily due to our strategy to offer competitive pricing to gain market share, increased competition and a change in product and customer mix.
Operating Expenses
Operating expenses for fiscal years 2026, 2025, and 2024 were as follows (dollars in millions):
| Years Ended June 30, | 2026 over 2025 Change | 2025 over 2024 Change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | $ | % | $ | % | |||||||||||||||||||||||||||||||||
| Research and development | $ | 771.2 | $ | 636.6 | $ | 463.5 | $ | 134.6 | 21.1 | % | $ | 173.1 | 37.3 | % | |||||||||||||||||||||||||
| Percentage of total net sales | 2.0 | % | 2.9 | % | 3.1 | % | |||||||||||||||||||||||||||||||||
| Sales and marketing | $ | 352.6 | $ | 273.1 | $ | 189.7 | $ | 79.5 | 29.1 | % | $ | 83.4 | 44.0 | % | |||||||||||||||||||||||||
| Percentage of total net sales | 0.9 | % | 1.2 | % | 1.3 | % | |||||||||||||||||||||||||||||||||
| General and administrative | $ | 333.0 | $ | 267.2 | $ | 197.4 | $ | 65.8 | 24.6 | % | $ | 69.8 | 35.4 | % | |||||||||||||||||||||||||
| Percentage of total net sales | 0.8 | % | 1.3 | % | 1.3 | % | |||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 1,456.8 | $ | 1,176.9 | $ | 850.6 | $ | 279.9 | 23.8 | % | $ | 326.3 | 38.4 | % | |||||||||||||||||||||||||
Fiscal Year 2026 Compared with Fiscal Year 2025
Research and development expenses. The $134.6 million or 21.1% year-over-year increase in research and development expenses was primarily driven by an increase in employee-related costs of $128.2 million or 22.8%, mainly comprised of a $74.5 million or 38.1% increase in stock-based compensation, and a $53.7 million or 14.6% increase in salaries and benefits as we expanded our workforce and invested in key talent to support our global growth across regions. These increases, along with other immaterial cost increases, were partially offset by a $6.1 million or 9.7% decrease in product development costs. We believe that research and development expenses will continue to increase as we continue to expand our workforce and invest in key talent to stay at the forefront of development of next generation products and technologies.
Sales and marketing expenses. The $79.5 million or 29.1% year-over-year increase in sales and marketing expenses was primarily driven by an increase in employee-related costs of $112.7 million or 54.1%, mainly comprised of a $105.5 million or 61.9% increase in salaries and benefits, and a $7.2 million or 19.0% increase in stock-based compensation, similar to our research and development expenses as we expanded our workforce and invested in key talent company-wide. These increases were partially offset by $29.8 million or 81.6% higher marketing development funds received from certain business partners related to co-marketing and advertising events to promote products, which reduced sales and marketing expense, and a $3.3 million or 4.1% decrease in standard marketing and advertising activities during fiscal 2026 as compared to fiscal 2025. Looking ahead, we expect sales and marketing expenses to continue to rise as we expand our workforce and invest in key talent.
SMCI | 2026 Form 10-K | 47
General and administrative expenses. The $65.8 million or 24.6% year-over-year increase in general and administrative expenses was primarily driven by an increase in legal and internal investigation-related expenses of $31.7 million or 98.4%, and an increase in employee-related costs of $14.5 million or 10.6%, mainly comprised of a $8.4 million or 10.4% increase in salaries and benefits, and a $6.1 million or 10.8% increase in stock-based compensation, due to stock awards granted related to hiring and retention of key talent. Additionally, there was a $13.4 million or 248.1% increase in excise and franchise tax expense directly related to the increase in sales compared to prior-year, which increased the related tax expense, a $6.4 million or 711.1% increase in financing charges primarily driven by a $5.7 million or 100.0% increase in factoring fees for the receivables sold under the Receivables Purchase Agreement, and an increase of a $7.1 million or 54.6% in indirect facilities costs such as rental costs, utility costs, and depreciation costs. These increases were partially offset by a $12.0 million or 48.8% reduction in audit and tax fees, which were driven by an absence of additional costs related to the delayed filing of our Annual Report on Form 10-K for fiscal year 2024. Looking ahead, we expect general and administrative expenses to continue rising as we invest in process improvements, expand our workforce, and attract key talent to support our strategic initiatives and operational growth.
Fiscal Year 2025 Compared with Fiscal Year 2024
Research and development expenses. The $173.1 million or 37.3% year-over-year increase in research and development expenses was primarily driven by a $153.2 million or 34.7% increase in employee-related costs, mainly comprised of a $81.0 million or 70.0% increase in stock-based compensation, and $60.2 million or 20.2% increase in salaries, as we expanded our workforce and invested in key talent. Additionally, there was a $28.3 million or 78.3% increase in product development costs to support the development of next-generation products and technologies. These increases along with other immaterial cost increases were partially offset by an $11.0 million or 50.9% increase in research and development fees received from certain suppliers and customers.
Sales and marketing expenses. The $83.4 million or 44.0% year-over-year increase in sales and marketing expenses was primarily driven by a $53.5 million or 30.9% increase in employee-related costs, mainly due to a $30.9 million or 23.0% increase in salaries and a $16.6 million or 78.3% increase in stock-based compensation, similarly to our research and development expenses as we expanded our workforce and invested in key talent company-wide. Additionally, there was a $50.0 million or 164.6% increase in advertising, travel, and other related expenses due to an increase in our marketing efforts to support the launch and promotion of new products. These increases, along with other immaterial cost increases, were partially offset by a $20.8 million or 132.6% increase in additional marketing development funds received from certain business partners.
General and administrative expenses. The $69.8 million or 35.4% year-over-year increase in general and administrative expenses was primarily driven by a $74.0 million or 241.0% increase in professional and service fees, reflecting higher costs for external accounting, audit, tax, legal, and advisory services, primarily driven by the Special Committee investigation and the delay in filing our Annual Report on Form 10-K for fiscal year 2024. These services were necessary to support enhancements in our external reporting processes and compliance activities during fiscal year ended 2025. Additionally, there was a $20.7 million or 37.5% increase in facilities costs such as rental costs, utility costs, and indirect depreciation costs, which are related to our efforts to expand our production capacity in order to support growing customer demands. These increases, along with other immaterial cost increases, were partially offset by a $22.8 million or 28.6% decrease in employee-related costs related to stock-based compensation.
SMCI | 2026 Form 10-K | 48
Other Income (Expense), Net, Interest Income, and Interest Expense
Other income (expense), net, interest income, and interest expense for fiscal years 2026, 2025, and 2024 were as follows (dollars in millions):
| Years Ended June 30, | 2026 over 2025 Change | 2025 over 2024 Change | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | $ | % | $ | % | |||||||||||||||||||||||||||||||||
| Other income (expense), net | $ | 26.5 | $ | (41.3) | $ | (6.3) | $ | 67.8 | (164.2) | % | $ | (35.0) | 555.6 | % | |||||||||||||||||||||||||
| Percentage of total net sales | 0.1 | % | (0.2) | % | |||||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-10-07 | Liang Charles indirect | President and CEO | Sell | -100,000 | $45.02 | -$4,502,000 |
| 2026-10-07 | Liu Liang Chiu-Chu Sara | Director | Sell | -100,000 | $45.02 | -$4,502,000 |
| 2026-09-04 | Liu Liang Chiu-Chu Sara | Director | Sell | -100,000 | $40.00 | -$4,000,000 |
| 2026-09-03 | Liu Liang Chiu-Chu Sara | Director | Sell | -100,000 ×2 | $37.19 | -$3,718,584 |
| 2026-09-04 | Liang Charles indirect | President and CEO | Sell | -100,000 | $40.00 | -$4,000,000 |
| 2026-09-03 | Liang Charles indirect | President and CEO | Sell | -100,000 ×2 | $37.19 | -$3,718,584 |
Source: SEC Form 4 filings.
Recent SEC filings
- 2026-10-20 8-K Earnings Release; Financial Statements and Exhibits
- 2026-10-15 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-10-08 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-08-31 10-K Annual Report
- 2026-08-11 8-K Earnings Release; Financial Statements and Exhibits
- 2026-08-05 8-K Other Events; Financial Statements and Exhibits
- 2026-07-21 8-K Earnings Release; Financial Statements and Exhibits
- 2026-06-15 8-K Material Agreement Entered; Material Modification to Rights; Bylaws/Articles Amended; Financial Statements and Exhibits
- 2026-06-12 8-K Material Agreement Entered; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-06-12 424B5 Prospectus Supplement
- 2026-06-12 424B5 Prospectus Supplement
- 2026-06-12 424B5 Prospectus Supplement
- 2026-06-09 8-K Other Events; Financial Statements and Exhibits
- 2026-06-09 S-3ASR S-3ASR
- 2026-06-08 S-8 Employee Benefit Plan Registration