Super Micro Computer Inc. (NASDAQ:SMCI)

Current Income Tax Expense

The current income tax expense exhibited significant fluctuations over the analyzed period. Starting at $31,756 thousand in June 2019, it decreased substantially to $16,694 thousand in June 2020 and further declined to $15,326 thousand in June 2021. However, there was a marked increase beginning in June 2022, with the expense rising sharply to $59,533 thousand, followed by a dramatic surge to $203,376 thousand in June 2023, and continuing upward to $231,793 thousand in June 2024. This upward trend from 2022 onward indicates a substantial growth in current tax liabilities.

Deferred Income Tax Expense

Deferred income tax expenses presented negative values throughout the reviewed years, indicating deferred income tax benefits rather than expenses. The magnitude of these negative amounts declined from -$16,872 thousand in June 2019 to -$13,772 thousand in June 2020 and further decreased to -$8,390 thousand in June 2021. From June 2022 onward, there was a reversal in the trend, with the negative deferred tax amounts increasing dramatically in absolute terms, reaching -$9,710 thousand in 2023 and peaking at -$168,499 thousand in June 2024. This suggests large deferred tax asset realizations or adjustments impacting the tax expense during these years.

Income Tax Provision

The total income tax provision demonstrated variability corresponding to the combined effects of current and deferred tax figures. It started at $14,884 thousand in June 2019 and dropped sharply to $2,922 thousand in June 2020. Subsequently, the provision increased modestly to $6,936 thousand in June 2021, before rising substantially to $52,876 thousand in June 2022. A notable peak occurred in June 2023, with the provision reaching $110,666 thousand, followed by a decrease to $63,294 thousand in June 2024. These fluctuations reflect the combined influence of increasing current tax expenses and the changes in deferred tax benefits.

Overall Insights

The data indicates that the company's current income tax expenses have escalated significantly in recent years, especially post-2021. Despite this, the deferred income tax accounts have contributed considerable benefits, notably in the latest period ending June 2024, which offsets part of the current tax burden. The interplay of these factors has led to a generally increasing income tax provision, with a pronounced peak in June 2023. The sharp changes in deferred tax figures may signal adjustments related to timing differences, tax planning strategies, or changes in tax regulations impacting the company's reported tax obligations.

The financial data over the six-year period demonstrates notable fluctuations and trends in various tax-related components and their impact on the effective tax rate.

Statutory tax rate

The statutory tax rate remained stable at 21% throughout all reported years, providing a consistent benchmark for evaluating other tax metrics.

State income tax, net of federal tax benefit

This metric shows variability, with no reported value in 2020. It started modestly at 0.5% in 2019, then fluctuated slightly to 0.3% in 2021, rising to 1.1% in 2023 before a slight decrease to 1% in 2024. This indicates some volatility in state tax impacts net of federal benefits.

Foreign rate differential

Foreign rate differential exhibited variation starting positively at 1.1% in 2019, missing data for 2020, then turning negative in 2021 (-0.5%) and 2022 (-0.3%), followed by a modest recovery to positive 0.8% in 2023 and 0.2% in 2024. This pattern suggests fluctuating foreign tax rate impacts over the years.

Research and development tax credit

There is a clear trend toward a reduction in the R&D tax credit’s positive impact on the tax rate, beginning with a significant negative contribution (-9.5%) in 2019, reaching an even larger impact of -13.1% in 2020, and then gradually lessening to -6% by 2024. This decline indicates a diminishing benefit from R&D tax credits over time.

Uncertain tax positions, net of (settlement) with Tax Authorities

This line item has fluctuated from a positive 4.1% in 2019, then negative at -2.3% in 2020, back to positive in subsequent years but with lower magnitudes, ending at 1.1% in 2024, signifying uncertain tax positions had a variable but generally lower impact in later years.

Foreign derived intangible/Subpart F income inclusion

Consistently negative, this metric fluctuated mildly but remained within a range of about -1.4% to -3.8%, with no strong directional trend over the period, but indicating a persistent reduction effect on the tax rate.

Stock-based compensation

This factor showed increasing negative impact over time, starting from a slight positive contribution of 2.1% in 2019 but turning negative from 2020 onward, with a significant increase in its negative effect reaching -11.8% in 2024. This suggests stock-based compensation increasingly reduced taxable income or provided tax benefits in recent years.

Non deductible penalty on SEC matter

Recorded only in 2020 with a 4.4% positive impact, this unique event contributed to an increased effective tax rate for that year but was not observed in other periods.

Provision to return true-up

This contribution remained consistently negative at minor levels, within a narrow range around -0.1% to -1.9%, showing minor ongoing adjustments with limited impact on the overall tax rate.

Officer Comp IRC section 162(m) limitation

This item appears only from 2022 onward with a small but increasing positive impact on the tax rate, moving from 0.4% in 2022 to 1.8% in 2024, indicating rising limitations related to officer compensation deductions.

Other, net

The ‘Other, net’ category remained relatively stable and low, ranging from 0.1% to 1.2% across the years, indicating minor residual adjustments to the tax rate.

Effective tax rate

The effective tax rate exhibits significant volatility. Its lowest point occurred in 2020 at 3.4%, with a gradual increase peaking at 15.7% in 2022, followed by a slight decrease to 14.7% in 2023 and a notable decline to 5.2% in 2024. These fluctuations appear to correspond with changes in R&D tax credit benefits, stock-based compensation effects, and certain one-time items such as the non-deductible SEC penalty.

In summary, the data reflects stable statutory tax rates contrasted with varying effective tax rates influenced heavily by fluctuations in research and development tax credits, stock-based compensation deductions, and one-time tax settlements. The increasing negative impact of stock-based compensation and the decreasing benefit from R&D tax credits have been significant drivers of changes in the effective tax rate. Other factors, including uncertain tax positions and officer compensation limitations, played lesser but noticeable roles over the years.

Capitalized Research and Development Costs

There is a marked upward trend from 2020 onwards, rising substantially from 7,509 thousand US$ in 2020 to 240,489 thousand US$ in 2024. The amounts remained relatively stable between 2021 and 2022 before showing sharp increases thereafter, indicating intensified investment in development activities over recent years.

Research and Development Credits

These credits exhibit a steady growth over the analyzed period, increasing from 20,858 thousand US$ in 2019 to 56,707 thousand US$ in 2024. The sustained increase suggests improving returns or incentives related to research and development expenditures.

Deferred Revenue

Deferred revenue initially showed minor fluctuations, decreasing slightly in 2021 before increasing sharply from 24,370 thousand US$ in 2022 to 35,815 thousand US$ in 2024. This upward movement from 2022 indicates a growth in advance payments or unearned income.

Convertible Notes

Convertible notes appear only in 2024 with a value of 31,819 thousand US$, indicating a recent financing initiative involving convertible debt instruments.

Inventory Valuation

Inventory valuations increased steadily across the period, with a significant rise from 16,792 thousand US$ in 2022 to 33,255 thousand US$ in 2024. This consistent growth may reflect expansion in stock or higher input costs.

Stock-based Compensation

Reported stock-based compensation decreased from 6,080 thousand US$ in 2019 to a low point around 3,762 thousand US$ in 2022, followed by a sharp increase to 16,389 thousand US$ in 2024. The abrupt increase in 2024 suggests possible changes in equity compensation strategies or one-time grants.

Lease Obligations

Lease obligations showed variability, rising from 2,861 thousand US$ in 2021 to 7,274 thousand US$ in 2024 after a dip in 2023. These fluctuations may be linked to leasing arrangements or adherence to new accounting standards.

Warranty Accrual

Warranty accruals have gradually risen from 1,948 thousand US$ in 2019 to 3,737 thousand US$ in 2024, indicating a growing liability related to product guarantees.

Accrued Vacation and Bonus

Accrued vacation and bonus liabilities increased notably from 2,681 thousand US$ in 2019, peaking at 6,052 thousand US$ in 2022, before sharply decreasing to 3,668 thousand US$ in 2024. This pattern suggests variability in accrued compensation obligations, possibly impacted by staffing or policy changes.

Bad Debt and Other Reserves

These reserves fluctuated over time, peaking at 1,917 thousand US$ in 2020 before declining and then rising again to 2,597 thousand US$ in 2024. The pattern reflects adjustments in expected credit losses or other reserves.

Marketing Fund Accrual

The marketing fund accrual shows consistent growth from 554 thousand US$ in 2019 to 2,102 thousand US$ in 2024, suggesting increased allocation for marketing-related liabilities or expenses.

Prepaid and Accrued Expenses

Data for prepaid and accrued expenses is incomplete, with figures available only between 2020 and 2022. Within that period, values fluctuate without a clear trend, indicating possible timing differences in expense recognition.

Other

Other liabilities or assets increased modestly from 3,276 thousand US$ in 2019 to 5,978 thousand US$ in 2023 before declining to 4,910 thousand US$ in 2024. This moderate variability may represent miscellaneous balances.

Gross Deferred Income Tax Assets

These assets experienced significant growth, growing from 67,499 thousand US$ in 2019 to 438,762 thousand US$ in 2024. The sharp acceleration beginning in 2022 signals increasing deferred tax benefits, possibly from timing differences or tax loss carryforwards.

Valuation Allowance

Valuation allowances increased in magnitude (more negative) from -20,967 thousand US$ in 2019 to -59,841 thousand US$ in 2024, indicating growing reservations against deferred tax assets, reflecting caution regarding realizability.

Deferred Tax Assets (Net)

Net deferred tax assets increased significantly from 46,532 thousand US$ in 2019 to 378,921 thousand US$ in 2024, largely driven by gross deferred income tax assets exceeding valuation allowances to a greater extent over time.

Right of Use Asset

The right-of-use asset values are negative throughout the periods where data exists, ranging from -3,612 thousand US$ in 2020 to -7,005 thousand US$ in 2024, reflecting lease accounting liabilities under IFRS 16 or ASC 842.

Depreciation and Amortization

Depreciation and amortization expenses have remained relatively stable with minor fluctuations, ranging between -4,137 thousand US$ and -6,744 thousand US$, indicating consistent asset base and amortization policies.

Deferred Tax Liabilities

Deferred tax liabilities have generally increased in absolute terms, moving from -5,406 thousand US$ in 2019 to -13,749 thousand US$ in 2024, suggesting growing taxable temporary differences.

Deferred Income Tax Assets (Liabilities), Net

This net position has grown sharply over the period, especially from 2022 onwards, rising from 41,126 thousand US$ in 2019 to 365,172 thousand US$ in 2024, consistent with the significant rise in deferred tax assets relative to liabilities.

Deferred Income Tax Assets

The deferred income tax assets have shown a consistent upward trend over the analyzed periods, indicating an increasing recognition of tax benefits by the company.

From June 30, 2019, to June 30, 2020, there was a notable increase of approximately 33.5%, rising from $41,126 thousand to $54,898 thousand.

The growth continued, albeit at a slower rate, reaching $63,288 thousand in June 2021 and $69,929 thousand in June 2022, reflecting moderate incremental increases in this asset category.

Significant acceleration occurred between June 2022 and June 2023, during which the deferred tax assets more than doubled, increasing by approximately 132.6% to $162,654 thousand.

The upward trajectory persisted strongly into the latest period ending June 30, 2024, with the value more than doubling again to $365,172 thousand, representing substantial growth in this asset.

Overall, the data reveals a marked expansion in deferred income tax assets over the six-year span, which may be indicative of increased tax loss carryforwards, temporary differences, or other tax-related accounting considerations that the company expects to realize in the future.

The financial data reveals a consistent upward trend across all key metrics over the analyzed periods from June 30, 2019, to June 30, 2024. Both reported and adjusted total assets have shown substantial growth year over year. Reported total assets increased from approximately $1.68 billion in 2019 to nearly $9.83 billion in 2024, while adjusted total assets rose from about $1.64 billion to $9.46 billion during the same timeframe. This reflects a significant expansion in the company's asset base, indicating potential scaling or acquisition activities.

Total stockholders’ equity, both reported and adjusted, also exhibited strong growth. Reported equity grew from roughly $941 million in 2019 to over $5.41 billion in 2024, and adjusted equity increased from approximately $900 million to $5.05 billion. This trend suggests a considerable strengthening of the company's financial position and retained earnings, which may be attributable to profitable operations and possibly equity financing.

Net income demonstrated a robust upward trajectory as well. Reported net income increased from about $72 million in 2019 to over $1.15 billion in 2024. Similarly, adjusted net income rose from approximately $55 million to nearly $984 million. The difference between reported and adjusted net income indicates adjustments that likely pertain to tax-related or non-recurring items, with the adjusted figures somewhat lower but following the same overall growth pattern.

Across the data, the ratio of adjusted values to reported values remains relatively consistent, with adjustments reducing the figures modestly but not altering the overall trends. This consistency indicates that the adjustments for deferred income taxes and other items have not significantly distorted the underlying financial growth trends.

In summary, the data reflects a company experiencing substantial asset growth, strengthened equity, and increased profitability over the five-year period, supported by stable adjustments related to tax accounting, thus portraying a strong and improving financial position.

The financial data reveals several notable trends in profitability, asset efficiency, and leverage over the six-year period.

Net Profit Margin

The reported net profit margin exhibited a general upward trend from 2.05% in mid-2019 to a peak of 8.98% in mid-2023, before declining slightly to 7.69% by mid-2024. The adjusted net profit margin followed a similar pattern, increasing from 1.57% to 7.68% over the same period, then falling to 6.57%. This indicates an overall improvement in profitability, with some minor recent contraction.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios declined from 2019 through 2021, reaching lows around 1.59-1.63, before recovering in 2022 and 2023. Reported turnover rose to 1.94 in 2023, and adjusted turnover to 2.03, indicating improved efficiency in asset utilization. However, by 2024 both metrics decreased again to approximately 1.53-1.58, suggesting a reduction in asset turnover efficiency.

Financial Leverage

Financial leverage ratios increased steadily from 1.79-1.82 in 2019 to peaks around 2.25-2.31 in 2022, reflecting greater use of debt or other liabilities to finance assets. Subsequently, leverage declined in 2023 and 2024 to levels near 1.81-1.87, indicating a reduction in relative financial risk or deleveraging.

Return on Equity (ROE)

Reported ROE rose substantially from 7.64% in 2019 to a high of 32.45% in 2023, followed by a decline to 21.28% in 2024. Adjusted ROE showed a similar acceleration from 6.12% to 30.25% and then dipped to 19.48%. The pronounced increase up to 2023 suggests strong profitability gains and efficient capital use, while the recent decrease may indicate easing performance or asset base changes.

Return on Assets (ROA)

Reported ROA improved markedly from 4.27% in 2019 to 17.42% in 2023, then decreased to 11.73% in 2024. Adjusted ROA mirrored this trend, moving from 3.35% to 15.58% before dropping to 10.4%. This improvement indicates enhanced operational efficiency and profitability, with a later partial pullback.

Overall, the company demonstrated significant improvement in profitability and returns between 2019 and 2023, supported by higher leverage and fluctuating asset turnover. The decline in these metrics in 2024 suggests emerging challenges or shifts in operational or financial strategy that may warrant further investigation. The adjustments typically reduce margins and returns slightly compared to reported values, indicating the impact of tax-related adjustments on financial performance metrics.

The data reveals a consistent upward trajectory in both reported and adjusted net incomes from June 2019 through June 2024. Reported net income increased from $71.9 million to $1.15 billion, reflecting substantial growth, particularly notable from 2021 onward. Adjusted net income followed a similar pattern, rising from $55 million to $984 million, indicating that adjustments for deferred income taxes still demonstrate significant underlying profit improvements over the period.

Examining profitability, the reported net profit margin shows a steady increase from 2.05% in 2019 to a peak of 8.98% in 2023 before slightly declining to 7.69% in 2024. The adjusted net profit margin mirrors this trend, increasing from 1.57% to 7.68% in 2023 with a subsequent decline to 6.57% in the following year. This suggests that while profit margins expanded markedly during the five-year span, there is a hint of margin compression or normalization in the most recent year.

Income Growth

The data demonstrates strong income growth. The most pronounced increases occur between 2021 and 2023, where reported net income nearly sextuples, and adjusted net income approximately quintuples, indicating improved operational performance or extraordinary factors contributing to higher income during these years.

Profit Margin Trends

Profit margins consistently improved over the five years, which implies increasing operational efficiency or better pricing power. The margins suggest that the company managed to convert a larger portion of revenue into net profit through this period, with the highest efficiency observed around 2023.

Recent Year Adjustments

Both reported and adjusted margins experienced a slight decrease from 2023 to 2024, which could indicate emerging challenges such as increased costs, market competition, or changes in tax or accounting treatments affecting net profitability.

Adjusted vs. Reported Figures

Adjusted net income and adjusted net profit margin are consistently lower than their reported counterparts, indicating that deferred income tax adjustments have a non-trivial impact. Nevertheless, the parallel trends in both metrics imply that underlying business performance is robust.

In summary, the data reflects strong income growth and improving profitability over an extended period, with a recent plateau or slight decline in margins that warrants monitoring. The adjustments related to deferred taxes affect absolute profitability levels but do not alter the overall positive trend observed in the company’s financial performance.

The analysis of the annual financial data reveals distinct trends in both asset values and turnover ratios over the six-year period.

Total Assets

The reported total assets demonstrate a steady upward trend from 1,682,594 thousand US dollars in mid-2019 to 3,674,729 thousand US dollars in mid-2023, representing significant growth. There is a marked increase in the reported total assets in the final year, soaring to 9,826,092 thousand US dollars in mid-2024, indicating a substantial asset accumulation or acquisition activity.

The adjusted total assets follow a very similar pattern, starting at 1,641,468 thousand US dollars in mid-2019 and rising consistently to 3,512,075 thousand US dollars by mid-2023. Like the reported figures, the adjusted assets experience a sharp increase in the last year, reaching 9,460,920 thousand US dollars in mid-2024. The slight differences between reported and adjusted values suggest minor adjustments for deferred income tax impacts or similar factors, but overall trends remain consistent.

Total Asset Turnover Ratios

Both reported and adjusted total asset turnover ratios start relatively high, with reported turnover at 2.08 and adjusted at 2.13 in mid-2019, implying efficient asset utilization to generate revenue. There is a noticeable decline in both ratios over the subsequent years, reaching their lowest points around mid-2021 and mid-2022 (around 1.59-1.66).

From mid-2022 to mid-2023, turnover ratios improve, reaching 1.94 reported and 2.03 adjusted, indicating a more effective use of assets in that period. However, in mid-2024, both ratios decline again to 1.53 (reported) and 1.58 (adjusted). This decline, despite the significant asset growth, may suggest challenges in revenue generation relative to the size of the asset base or a lag in asset productivity following the rapid asset expansion.

Overall Interpretation

The data indicates robust asset growth over the years, with a particularly pronounced increase in the final recorded year. Meanwhile, asset turnover ratios suggest fluctuations in asset efficiency, with a general decline from earlier years, partial recovery, and then another decrease. The recent large asset increase is not matched by a proportional increase in asset turnover, highlighting potential operational scaling dynamics or integration challenges impacting revenue efficiency.

The data reveals a consistent upward trend in both total assets and stockholders' equity over the observed periods from June 30, 2019 to June 30, 2024, with notable acceleration in the most recent year.

Total Assets

Reported total assets increased steadily from 1,682,594 thousand US dollars in 2019 to 3,674,729 thousand US dollars in 2023, followed by a substantial surge to 9,826,092 thousand US dollars in 2024. The adjusted total assets follow a similar trajectory, rising from 1,641,468 thousand US dollars in 2019 to 3,512,075 thousand US dollars in 2023, then sharply increasing to 9,460,920 thousand US dollars in 2024.

Stockholders’ Equity

Reported stockholders’ equity has demonstrated continuous growth, moving from 941,015 thousand US dollars in 2019 to 1,972,005 thousand US dollars in 2023, with a marked increase to 5,417,206 thousand US dollars in 2024. The adjusted stockholders’ equity shows a similar positive trend, growing from 899,889 thousand US dollars in 2019 to 1,809,351 thousand US dollars in 2023, followed by a significant jump to 5,052,034 thousand US dollars in 2024.

Financial Leverage

Both reported and adjusted financial leverage ratios indicate variations over the period. Reported financial leverage increased from 1.79 in 2019 to a peak of 2.25 in 2022, then declined to 1.86 in 2023 and further to 1.81 in 2024. The adjusted financial leverage follows a comparable pattern, rising from 1.82 in 2019 to 2.31 in 2022, then falling to 1.94 in 2023 and 1.87 in 2024. This suggests that the company leveraged more in the earlier years, peaking in 2022, before reducing leverage in the last two years.

Overall, the financial data reflect strong asset growth and equity strengthening, particularly in the latest year, accompanied by a trend of decreasing financial leverage after reaching a peak in 2022. This indicates a potential strategic shift towards a more conservative capital structure and increased equity base.

Net Income Trends

The reported net income shows a consistent upward trajectory from 71,918 thousand USD in mid-2019 to 1,152,666 thousand USD by mid-2024. A particularly notable increase occurred between 2021 and 2022, where net income more than doubled from 111,865 thousand USD to 285,163 thousand USD, followed by significant growth continuing through 2024.

Adjusted net income mirrors the reported figures with a similar upward pattern, rising from 55,046 thousand USD in 2019 to 984,167 thousand USD in 2024. Adjusted net income values are generally lower than reported net income but maintain consistent proportional increases year over year, indicating adjustments largely moderate the reported earnings but preserve the overall growth trend.

Stockholders’ Equity Trends

Reported total stockholders’ equity of the company increased steadily across the periods, starting at 941,015 thousand USD in mid-2019 and reaching a substantial 5,417,206 thousand USD in mid-2024. This represents a strong growth in equity base, with the most pronounced increase appearing between 2023 and 2024.

Adjusted total stockholders’ equity follows a similar growth pattern but remains slightly lower than the reported figures. From 899,889 thousand USD in 2019, it increases progressively to 5,052,034 thousand USD by 2024, reflecting consistent equity expansion even after adjustments.

Return on Equity (ROE) Analysis

The reported ROE exhibits an increasing trend from 7.64% in 2019 to a peak of 32.45% in 2023, which subsequently declines to 21.28% in 2024. This pattern suggests improving profitability in relation to equity until 2023, followed by a reduction in efficiency or profitability relative to equity in the most recent year.

Adjusted ROE aligns closely with the reported ROE figures, rising from 6.12% in 2019 to a high of 30.25% in 2023, then decreasing to 19.48% in 2024. The adjustment narrows ROE slightly compared to reported values but reflects consistent trends in performance relative to equity.

Overall Observations

The data reveals strong financial growth over the six-year period with significant increases in net income and stockholders’ equity, demonstrating substantial capital appreciation. While profitability as measured by ROE improved markedly until 2023, there is evidence of a downturn in efficiency or profitability relative to equity in the latest year examined.

Adjustments for deferred or annual income tax reduce net income and equity figures somewhat but do not materially alter the overall positive financial trajectory. This consistency between reported and adjusted metrics supports the robustness of the observed growth and profitability trends.

The data demonstrates a clear upward trajectory in both reported and adjusted net income over the six-year period. Reported net income increased from approximately $71.9 million in 2019 to over $1.15 billion in 2024, reflecting a more than sixteen-fold growth. Adjusted net income followed a similar pattern, rising from about $55.0 million to nearly $984.2 million during the same time frame. The increase in reported income is consistently higher than the adjusted figures, indicating that the adjustments, primarily related to deferred and annual income tax considerations, have a moderating effect but do not substantially alter the overall profitability trend.

Total assets have also grown significantly throughout the period. Reported total assets rose from $1.68 billion in 2019 to approximately $9.83 billion in 2024, whereas adjusted total assets increased from $1.64 billion to about $9.46 billion. The adjustments here result in slightly lower asset figures compared to reported values, but the overall pattern of strong asset growth is consistent. This substantial increase in assets indicates considerable expansion or investment activity by the company, particularly notable in the last year analyzed.

Return on assets (ROA), both reported and adjusted, exhibits a progressive improvement from 2019 through 2023, followed by a noticeable decrease in 2024. Reported ROA increased from 4.27% in 2019 to a peak of 17.42% in 2023 before declining to 11.73% in 2024. Adjusted ROA showed a similar pattern, rising from 3.35% in 2019 to 15.58% in 2023, then falling to 10.40% in 2024. This trend suggests improved efficiency in asset utilization and earnings generation over the years, with the dip in 2024 potentially attributable to the disproportionately larger asset base relative to net income growth during that period.

Overall, the financial data reveals a period of sustained growth in profitability and asset base, with adjustments for tax effects slightly tempering reported figures but largely preserving the trend. The improvement in ROA until 2023 reflects enhanced operational performance, while the downturn in 2024 may warrant further investigation into the causes, such as changes in underlying business conditions or investment strategies.