Super Micro Computer Inc. (NASDAQ:SMCI)

Current Income Tax Expense

The current income tax expense demonstrates a marked upward trend over the examined periods. Starting at $16,694 thousand in June 2020, it experienced a slight decrease in June 2021 to $15,326 thousand. However, beginning June 2022, it surged substantially, reaching $59,533 thousand, then escalating sharply to $203,376 thousand in June 2023. This upward momentum continued through to June 2024 and June 2025, with values rising to $231,793 thousand and $371,489 thousand respectively, indicating an accelerating increase in current tax obligations over the recent years.

Deferred Income Tax Expense

The deferred income tax figures exhibit a consistently negative pattern throughout the period, suggesting a deferred tax benefit or reduction in tax expense. The magnitude of this negative amount declined from -$13,772 thousand in June 2020 to a smaller negative value of -$6,657 thousand by June 2022, implying a reduction in deferred tax liabilities or an increased recognition of deferred tax assets during this period. However, from June 2023 onward, the deferred tax expense reversed sharply, reflecting significantly larger negative values of -$92,710 thousand in June 2023, which further expanded to -$168,499 thousand and -$214,638 thousand in June 2024 and June 2025 respectively. This pronounced increase in the negative deferred tax balance corresponds with a substantial change in the deferred tax position, indicating more pronounced deferred tax benefits or credits affecting the overall tax provision.

Total Income Tax Provision

The total income tax provision, aggregating current and deferred components, reveals considerable volatility and significant growth during the latter years. Initially, the provision was relatively modest, at $2,922 thousand in June 2020, growing moderately to $6,936 thousand in June 2021. A large spike occurred in June 2022, with the provision escalating to $52,876 thousand, followed by a pronounced rise to $110,666 thousand in June 2023. In June 2024, the income tax provision dropped to $63,294 thousand, showing some correction or variability in tax charges. By June 2025, the provision climbed again markedly to $156,851 thousand. This pattern suggests that while the company experienced fluctuating income tax expenses influenced by both current and deferred taxes, the overall tax burden has intensified substantially in recent years.

The analysis of the annual financial data reveals several notable trends in the tax-related factors affecting the company over the fiscal years from June 30, 2020, through June 30, 2025.

Statutory Tax Rate

The statutory tax rate remained stable, consistently at 21% for all years analyzed, indicating no change in the fundamental corporate tax rate applied.

State Income Tax, Net of Federal Tax Benefit

This component showed a gradual increase from 0.3% in 2021 to 1.1% by 2023, followed by a slight stabilization around 1.0-1.1% in the later years, suggesting an increasing state tax impact diminishing somewhat thereafter.

Foreign Rate Differential

The foreign rate differential was negative in 2021 (-0.5%) and 2022 (-0.3%), indicating a lower foreign tax burden relative to domestic rates, then turned positive from 2023 onwards, reaching 0.8% in 2023 and settling near 0.2-0.5%, reflecting changes in foreign taxation or income mix.

Research and Development Tax Credit

The benefit from R&D tax credits diminished over time, starting at a significant -13.1% in 2020 and improving to less negative levels by 2022 (-3.9%), then fluctuating moderately around -3.3% to -6.0%, and finally improving to -3.8% in 2025. This suggests a reduction in reliance or availability of R&D credits over the period.

Uncertain Tax Positions, Net of Settlements

This factor transitioned from a negative impact of -2.3% in 2020 to a positive contribution peaking at 2.0% in 2021, then reduced to near neutral levels between 0.1% and 1.1% in subsequent years. The volatility indicates ongoing adjustments or resolutions of uncertain tax positions.

Foreign Derived Intangible/Subpart F Income Inclusion

The negative impact of this item decreased steadily from -3.8% in 2020 to -1.4% in 2022, then increased slightly in subsequent years to around -2.5% by 2025, suggesting fluctuations in foreign intangible income or related tax provisions.

Stock-based Compensation

This element was relatively stable around -2.8% to -3.4% in the early years, but experienced a marked increase to -11.8% in 2024, before rebounding to -4.5% in 2025. The spike in 2024 indicates a significant unusual impact of stock-based compensation on the tax rate during that year.

Non Deductible Penalty on SEC Matter

This item was present only in 2020 at 4.4%, with no subsequent entries, signaling a one-time penalty affecting that fiscal year.

Provision to Return True-up

Generally minor and slightly negative, ranging from -1.1% in 2020 to stabilizing near -0.1% from 2023 onwards, indicating modest adjustments to prior tax provisions.

Officer Compensation IRC Section 162(m) Limitation

First appearing in 2022 with 0.4%, this limitation showed incremental growth peaking at 1.8% in 2024 before falling back to 0.9% in 2025, reflecting increasing tax disallowances related to executive compensation during this interval.

Other, Net

This category remained relatively stable and minor, fluctuating narrowly between 0.1% and 1.2% throughout the years, suggesting consistent miscellaneous tax effects.

Effective Tax Rate

The effective tax rate exhibited notable variability, starting at a low 3.4% in 2020, increasing to 15.7% in 2022, and slightly decreasing to 14.7% in 2023. It then dipped to 5.2% in 2024 before rising again to 12.9% in 2025. These fluctuations indicate varying tax benefits and burdens year over year, likely influenced by the combined effects of the items noted above, including the significant stock-based compensation and changing foreign and state tax impacts.

In summary, the data suggests a stable statutory tax environment with significant variability in effective tax outcomes driven by fluctuating tax credits, uncertain tax positions, stock-based compensation impacts, and evolving foreign and state tax exposures. The one-time penalty in 2020 and the spike in stock-based compensation impact in 2024 are particularly noteworthy anomalies within the period.

Capitalized Research and Development Costs

There is a substantial increase in capitalized R&D costs over the periods, rising from $7.5 million in 2020 to $334.5 million in 2025, indicating an intensification of investments in research and development activities.

Research and Development Credits

R&D credits show a consistent upward trend from $24.3 million in 2020 to $76 million in 2025, reflecting growing recognition or utilization of tax credits related to R&D expenditures.

Deferred Revenue

Deferred revenue increases steadily from $20.4 million in 2020 to $64.1 million in 2025, suggesting expansion in advance payments for goods or services, possibly indicating stronger sales or contractual commitments.

Convertible Notes

Convertible notes appear for the first time in 2024 at $31.8 million and increase to $52.6 million in 2025, signaling the company's recent reliance on convertible debt instruments for financing.

Inventory Valuation

Inventory levels grow steadily, from $13.9 million in 2020 to $87.4 million in 2025, which may indicate increased production, stockpiling, or anticipated sales growth.

Stock-Based Compensation

Stock-based compensation remains relatively stable around $3.7 to $4.6 million from 2020 to 2023, then increases sharply to $16.4 million in 2024 and $32.3 million in 2025, suggesting intensified employee incentive programs or grants.

Lease Obligations

Lease obligations show volatility with a peak at $67.6 million in 2025, up from $3.6 million in 2020, indicating considerable new lease agreements or reclassifications under accounting standards such as IFRS 16 or ASC 842.

Warranty Accrual

Warranty accruals increase moderately from $2.1 million to $3.7 million between 2020 and 2024, slightly decreasing to $3.6 million in 2025, reflecting a consistent approach to product warranty liabilities.

Accrued Vacation and Bonus

This liability fluctuates with a rise from $3.3 million in 2020 to $6.7 million in 2025, peaking mid-period and dipping in 2024, likely reflecting changes in employee compensation arrangements.

Bad Debt and Other Reserves

Reserves show a declining trend from $1.9 million in 2020 to $0.9 million in 2023 before rising sharply to $4.8 million in 2025, which could indicate changing credit risk or collection issues.

Marketing Fund Accrual

The marketing fund accrual grows consistently, nearly eightfold from $0.5 million in 2020 to $4.4 million in 2025, likely signifying increased marketing activities or commitments.

Prepaid and Accrued Expenses

Prepaid and accrued expenses decline from $2.6 million in 2020 to $1.3 million in 2022 and are not reported thereafter, suggesting either a data omission or a change in accounting policy or expense categorization.

Other

Other expenses increase notably in 2025, reaching $24.6 million from approximately $3.7 million in 2020, indicating the emergence of new or reclassified expense components.

Gross Deferred Income Tax Assets

These assets show strong growth, rising from $87.8 million in 2020 to $758.6 million in 2025, highlighting increased temporary differences or carryforwards beneficial to future tax liabilities.

Valuation Allowance

The valuation allowance increases in magnitude negatively from -$24.9 million to -$78.9 million, representing a growing reserve against deferred tax assets, possibly due to uncertainty about their realizability.

Deferred Tax Assets

Net deferred tax assets rise substantially from $62.9 million in 2020 to $679.7 million in 2025, consistent with the increase in gross deferred tax assets mitigated by the valuation allowance.

Right of Use Asset

A significant negative balance exists throughout the periods, increasing in absolute terms from -$3.6 million to -$65.9 million, related to lease accounting and reflecting the growing lease liabilities noted earlier.

Depreciation and Amortization

Depreciation and amortization expenses fluctuate around -$4.1 to -$6.7 million without a clear long-term trend, suggesting stable asset base or consistent capital expenditure patterns.

Deferred Tax Liabilities

Deferred tax liabilities vary but increase markedly from -$8 million in 2020 to -$72.3 million in 2025, aligning with the growth in deferred revenue and other taxable temporary differences.

Deferred Income Tax Assets (Liabilities), Net

Net deferred income tax balances escalate significantly from $54.9 million to $607.4 million, confirming an overall favorable timing benefit impacting the company's tax position.

Deferred Income Tax Assets

The deferred income tax assets exhibit a consistent and substantial upward trend over the observed periods. Starting at $54,898 thousand as of June 30, 2020, this figure increased progressively each year, reaching $63,288 thousand in 2021 and $69,929 thousand in 2022. Thereafter, the asset value rose more sharply to $162,654 thousand by mid-2023. This upward momentum accelerated further, with the deferred income tax assets escalating to $365,172 thousand in mid-2024 and finally reaching $607,416 thousand as of June 30, 2025. This growth trend suggests an increasing recognition of deferred tax benefits, which may reflect changes in the company's taxable income, tax planning strategies, or timing differences between accounting income and taxable income. The consistent growth in these assets indicates an evolving and increasingly complex tax position over the years.

The analysis of the financial data reveals significant growth trends and some fluctuations in key financial metrics over the six-year period under review.

Total Assets

Reported total assets have shown a consistent upward trajectory, increasing from approximately $1.92 billion in mid-2020 to over $14 billion by mid-2025. Adjusted total assets follow a very similar pattern, with slightly lower figures, reflecting the impact of income tax adjustments but maintaining the same growth momentum. The growth accelerated notably after 2023, with total assets more than doubling from 2023 to 2025.

Stockholders' Equity

Reported stockholders’ equity also exhibited steady growth, rising from about $1.07 billion in 2020 to over $6.3 billion in 2025. Adjusted equity values are consistently lower than reported figures, indicating that tax adjustments reduce the equity base, but the overall upward trend remains clear. There is a marked acceleration in equity between 2023 and 2024, where the reported equity nearly triples, suggesting either significant retained earnings or capital infusion during this period.

Net Income

Reported net income shows substantial increases with some volatility. Starting at around $84 million in 2020, the net income increases gradually up to $285 million in 2022 and then surges dramatically to nearly $1.15 billion by 2024, followed by a slight decline in 2025 to approximately $1.05 billion. Adjusted net income, which accounts for tax effects, follows a similar pattern but remains consistently below reported figures. This pattern indicates significant income growth with fluctuations likely influenced by operational performance and tax impacts.

Summary of Trends and Insights

Overall, the data depict a period of robust growth in asset base, equity capital, and profitability. The increases are especially pronounced after 2022, with asset and equity expansions coinciding with the rise in net income. Adjustments for deferred income taxes lower the reported values systematically but do not alter the underlying growth patterns. The sharp increase in equity and assets between 2023 and 2024 suggests strategic financial activities such as investments, asset acquisitions, or capital injections. Net income trends indicate strong operational improvements, though the slight decline in 2025 signals a possible normalization or external factors impacting profitability.

The financial data demonstrates notable variations in profitability, efficiency, and leverage ratios over the six-year period.

Net Profit Margin

The reported net profit margin rose steadily from 2.52% in 2020 to a peak of 8.98% in 2023, followed by a decline to 4.77% in 2025. The adjusted net profit margin follows a similar trajectory, increasing from 2.11% to 7.68% by 2023, then decreasing to 3.8% in 2025. This pattern indicates improved profitability until 2023, with a subsequent reduction in net profitability in the final years.

Total Asset Turnover

Reported total asset turnover fluctuated, starting at 1.74 in 2020, dropping slightly and then increasing to a high of 1.94 in 2023, before decreasing again to 1.57 in 2025. Adjusted figures mirror this trend but consistently remain marginally higher than reported turnover, peaking at 2.03 in 2023. These changes suggest varying operational efficiency with improvements up to 2023, followed by declines.

Financial Leverage

Both reported and adjusted financial leverage increased from 2020 to 2022, rising from about 1.8 to above 2.2, then declined substantially in 2023 but increased again by 2025 to around 2.22 (reported) and 2.36 (adjusted). The variations imply changes in capital structure with shifting reliance on debt financing.

Return on Equity (ROE)

The reported ROE showed a strong upward trend from 7.91% in 2020 to a peak of 32.45% in 2023, then decreased significantly to 16.64% in 2025. Adjusted ROE exhibited a similar pattern, reaching a peak of 30.25% in 2023 before falling to 14.65%. This indicates a pronounced increase in equity returns until 2023 with a notable decline subsequently.

Return on Assets (ROA)

Reported ROA increased from 4.39% in 2020 to 17.42% in 2023 before falling to 7.48% in 2025. Adjusted ROA followed a comparable pattern but with slightly lower percentages, peaking at 15.58% in 2023 and declining to 6.22% by 2025. This indicates improving asset efficiency and profitability until 2023, followed by reduced asset returns in later years.

Overall, the data reveals a period of growth in profitability, efficiency, and returns through 2023, after which a reversal is evident with diminishing margins, turnover, leverage moderation, and lower returns on both equity and assets. Adjusted figures consistently show slightly more conservative profitability and efficiency metrics compared to reported data. The trends may reflect changes in market conditions, operational performance, or financial strategy impacting the company’s financial outcomes.

The analysis of the annual reported and deferred income tax adjusted financial data reveals notable trends in both net income and profit margins over the six-year period.

Reported Net Income and Adjusted Net Income

Both reported and adjusted net income exhibit an overall upward trajectory from June 2020 to June 2025, with some fluctuations. Reported net income increased from 84,308 thousand US dollars in 2020 to a peak of 1,152,666 thousand US dollars in 2024, followed by a decline to 1,048,854 thousand US dollars in 2025. Adjusted net income follows a similar pattern, rising from 70,536 thousand US dollars in 2020 to 984,167 thousand US dollars in 2024, then decreasing to 834,216 thousand US dollars in 2025. The adjustment for deferred taxes consistently results in lower net income figures compared to reported net income, indicating the impact of tax adjustments on the financial outcomes.

Reported Net Profit Margin and Adjusted Net Profit Margin

The reported net profit margin increased significantly from 2.52% in 2020 to 8.98% in 2023, before declining to 7.69% in 2024 and further to 4.77% in 2025. Similarly, the adjusted net profit margin rose from 2.11% in 2020 to 7.68% in 2023, with subsequent decreases to 6.57% in 2024 and 3.8% in 2025. The margins demonstrate a strong improvement through 2023, indicating enhanced profitability, but the decline post-2023 suggests emerging challenges or increased costs affecting profitability despite high net income levels.

General Observations

The gap between reported and adjusted figures suggests that deferred income tax adjustments materially affect reported earnings but the overall trends in profitability remain consistent between the two measures. The peak in profitability and net income occurs in the middle years, with a notable slowdown or reversion in the most recent years. This pattern may reflect a period of rapid growth or favorable conditions followed by market saturation, increased expenses, or other operational factors impacting the financial performance toward the end of the examined period.

The data reveals a consistent upward trend in both reported and adjusted total assets over the six-year period. Reported total assets increased significantly from approximately 1.92 billion US dollars in 2020 to over 14 billion US dollars in 2025. Adjusted total assets followed a similar trajectory, rising from roughly 1.86 billion US dollars to over 13.4 billion US dollars during the same timeframe. This indicates substantial growth in the asset base of the company.

In terms of asset turnover ratios, which measure the efficiency in using assets to generate sales, there is some variability across the years. The reported total asset turnover started at 1.74 in 2020, declined slightly to 1.59 in 2021, and then remained relatively stable before seeing an increase to 1.94 in 2023. However, this was followed by a decline in the subsequent years, ending at 1.57 in 2025. The adjusted total asset turnover ratio exhibits a similar pattern: beginning at 1.79 in 2020, dipping to 1.63 in 2021, peaking at 2.03 in 2023, and then decreasing to 1.64 by 2025.

Overall, the data suggests that while the company’s asset base has expanded considerably over the period, the efficiency in utilizing those assets to generate revenue has fluctuated, with a notable peak in 2023 followed by a decline. Despite the drop in turnover ratios in the last two years, the values remain close to or above the levels observed at the start of the period, which might indicate an ongoing strategy to balance growth and operational efficiency.

The financial data reveals significant changes in the company's asset base and equity position over the examined periods, reflecting dynamic financial management and growth.

Total Assets

Reported total assets increased consistently from approximately $1.92 billion in mid-2020 to about $14.02 billion by mid-2025. Adjusted total assets follow a similar upward trajectory, starting at around $1.86 billion and reaching approximately $13.41 billion by the end of the period. This marks a substantial growth, indicating an aggressive asset acquisition or expansion strategy.

Stockholders’ Equity

Reported stockholders’ equity grew steadily from roughly $1.07 billion in 2020 to $6.30 billion in 2025. The adjusted figures mirror this trend, rising from about $1.01 billion to $5.69 billion. The growth in equity suggests increased retained earnings or equity infusion, contributing to a strengthened capital base over time.

Financial Leverage

The reported financial leverage ratio exhibits a fluctuating pattern, starting at 1.8 in 2020, peaking at 2.25 in 2022, dropping to 1.81 in 2024, and then rising again to 2.22 in 2025. Adjusted leverage ratios present a similar trend but consistently slightly higher, ranging from 1.84 to 2.36 across the periods. This indicates varying reliance on debt financing relative to equity, with leverage peaking mid-term before moderating and increasing again, reflecting changing capital structure dynamics and potentially fluctuating borrowing or equity issuance.

Overall, the data demonstrates robust asset growth and strengthening equity, with financial leverage ratios indicating prudent yet flexible use of debt. The adjusted figures suggest that deferred income tax adjustments have a moderate impact on equity and leverage but do not alter the overall growth trends significantly.

The financial data exhibits a significant upward trend in both reported and adjusted net income from June 30, 2020, through June 30, 2025. Reported net income increased from $84.3 million to over $1 billion by 2024, before a slight decline to approximately $1.05 billion in 2025. Similarly, adjusted net income rose substantially from $70.5 million in 2020 to a peak of $984 million in 2024, followed by a decrease to about $834 million in 2025. This pattern suggests strong profitability growth over the years with a slight pullback in the most recent period.

The total stockholders’ equity for Super Micro Computer, Inc. also demonstrated a pronounced increase across the same timeframe. Reported equity grew from $1.07 billion in 2020 to a peak exceeding $5.4 billion by 2024, continuing to expand to $6.3 billion in 2025. The adjusted equity figures follow a similar trajectory, rising from about $1.01 billion to over $5 billion in 2024 and then further to approximately $5.7 billion in 2025. These increases indicate a strengthening capital base, enhancing the company's financial stability and capacity for growth.

Return on equity (ROE) presents more variability over the periods observed. The reported ROE rose from 7.91% in 2020 to a high of 32.45% in 2023, before declining to 21.28% in 2024 and further dropping to 16.64% in 2025. The adjusted ROE followed a comparable pattern, peaking at 30.25% in 2023 and decreasing to 19.48% and 14.65% over the subsequent two years. This trend suggests that although profitability relative to equity was strong in the middle years, it faced moderate declines in the latter years, potentially reflecting the impact of the significant equity base increase or changing profitability dynamics.

Overall, the company experienced robust growth in income and equity throughout the majority of the periods reported, with a notable peak in profitability metrics around 2023. The later decrease in both net income and ROE could indicate transitional factors influencing performance, such as reinvestment in capital, market conditions, or operational adjustments. The adjusted metrics closely track the reported figures, confirming the consistency of underlying financial performance after income tax adjustments.

Net Income

Demonstrated substantial growth from 2020 to 2024, followed by a slight decline in 2025.

Stockholders’ Equity

Exhibited continuous and significant growth across all periods, indicating an expanding capital base.

Return on Equity

Peaked mid-period with declines in the most recent years, reflecting changes in profitability relative to equity.

Adjusted vs. Reported Figures

Adjusted values align closely with reported data, confirming consistent trends after tax adjustments.

The financial data over the analyzed periods reveal several notable trends and fluctuations in key performance indicators.

Net Income

The reported net income shows a strong upward trajectory from June 2020 through June 2024, increasing from 84.3 million US dollars to over 1.15 billion US dollars, followed by a slight decline to approximately 1.05 billion US dollars in June 2025. The adjusted net income mirrors this pattern but remains consistently lower than the reported figures, indicating the impact of adjustments such as deferred taxes. The adjusted net income rises from 70.5 million US dollars in 2020 to 984.2 million US dollars in 2024, before declining to around 834.2 million US dollars in 2025.

Total Assets

Reported total assets exhibit a substantial increase throughout the period, starting at approximately 1.92 billion US dollars in 2020 and escalating sharply to 14.02 billion US dollars by 2025. Adjusted total assets follow a similar trajectory, albeit marginally lower than the reported values, indicating consistent adjustments that slightly reduce asset totals. This rapid asset growth, particularly between 2023 and 2025, suggests significant expansion or acquisitions during this timeframe.

Return on Assets (ROA)

A marked fluctuation is evident in both reported and adjusted ROA values. Reported ROA increases steadily from 4.39% in 2020 to a peak of 17.42% in 2023, before declining to 7.48% in 2025. The adjusted ROA follows a similar pattern but remains persistently below the reported ROA. This suggests that the adjustments, possibly related to income tax effects, reduce the perceived profitability relative to assets. Post-2023, the decline in ROA despite the increasing assets and net income indicates diminishing efficiency or profitability on the asset base.

In summary, the company has demonstrated robust growth in net income and asset base over the reported periods, with peak profitability observed around mid-2023. However, the subsequent decline in both adjusted and reported ROA highlights potential challenges in maintaining profitability relative to the growing asset base. The consistent gap between reported and adjusted figures underscores the significant impact of accounting adjustments on the financial presentation, emphasizing the importance of considering both perspectives for an accurate assessment of financial health and performance.