What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-05-05 · 208 added, 412 removed, 536 unchanged (54% of the section changed)

3 unchanged sentences

(in thousands, except par value per share amounts)

March 31, June 30,

September 30, June 30,

Current assets:

Cash and cash equivalents $ 543,156 $ 440,459

Accounts receivable, net of allowance for credit losses of $ 168 and $ 1,753 at March 31, 2023 and June 30, 2022, respectively (including accounts receivable from related parties of $ 2,031 and $ 8,398 at March 31, 2023 and June 30, 2022, respectively)

Accounts receivable, net of allowance for credit losses of $ 79 and $ 82 at September 30, 2023 and June 30, 2023, respectively (including accounts receivable from related parties of $ 1,335 and $ 5,473 at September 30, 2023 and June 30, 2023, respectively)

845,729 1,148,259

Inventories 2,052,805 1,445,564

Prepaid expenses and other current assets (including receivables from related parties of $ 32,985 and $ 24,412 at March 31, 2023 and June 30, 2022, respectively)

Prepaid expenses and other current assets (including receivables from related parties of $ 24,905 and $ 27,732 at September 30, 2023 and June 30, 2023, respectively)

129,144 145,144

6 unchanged sentences

Current liabilities:

Accounts payable (including amounts due to related parties of $ 76,113 and $ 87,355 at March 31, 2023 and June 30, 2022, respectively)

Accounts payable (including amounts due to related parties of $ 92,115 and $ 89,134 at September 30, 2023 and June 30, 2023, respectively)

$ 1,084,058 $ 776,831

Accrued liabilities (including amounts due to related parties of $ 18,352 and $ 18,676 at March 31, 2023 and June 30, 2022, respectively)

Accrued liabilities (including amounts due to related parties of $ 16,504 and $ 14,017 at September 30, 2023 and June 30, 2023, respectively)

152,500 163,865

11 unchanged sentences

Authorized shares:

Outstanding shares:

52,484 and 52,311 at March 31, 2023 and June 30, 2022, respectively

Issued shares:

52,484 and 52,311 at March 31, 2023 and June 30, 2022, respectively

Issued and outstanding shares:

53,295 and 52,901 at September 30, 2023 and June 30, 2023, respectively

574,718 538,352

12 unchanged sentences

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

Net sales (including related party sales of $ 9,188 and $ 47,669 in the three months ended March 31, 2023 and 2022, respectively, and $ 54,316 and $ 120,206 in the nine months ended March 31, 2023 and 2022, respectively)

September 30,

Net sales (including related party sales of $ 17,396 and $ 25,055 in the three months ended September 30, 2023 and 2022, respectively)

$ 2,119,672 $ 1,852,130

Cost of sales (including related party purchases of $ 87,732 and $ 95,479 in the three months ended March 31, 2023 and 2022, respectively, and $ 283,010 and $ 279,893 in the nine months ended March 31, 2023 and 2022, respectively)

Cost of sales (including related party purchases of $ 113,107 and $ 96,536 in the three months ended September 30, 2023 and 2022, respectively)

1,765,981 1,504,595

6 unchanged sentences

Income from operations 172,510 220,123

Other (expense) income, net ( 78 ) 4,663 1,641 4,106

Other income, net

Interest expense ( 1,863 ) ( 3,938 )

1 unchanged sentence

Income tax provision ( 20,215 ) ( 38,934 )

Share of (loss) income from equity investee, net of taxes ( 1,013 ) 255 ( 3,253 ) 882

Share of loss from equity investee, net of taxes

( 50 ) ( 889 )

Net income $ 156,995 $ 184,416

11 unchanged sentences

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

Net income $ 156,995 $ 184,416

8 unchanged sentences

(in thousands, except share amounts)

Three Months Ended March 31, 2023 Common Stock and

Three Months Ended September 30, 2023 Common Stock and

Additional Paid-In

4 unchanged sentences

Shares Amount

Balance at December 31, 2022 53,400,301 $ 514,559 $ 612 $ 1,303,506 $ 165 $ 1,818,842

Balance at June 30, 2023 52,901,358 $ 538,352 $ 639 $ 1,433,014 $ 165 $ 1,972,170

Exercise of stock options, net of taxes 188,957 4,288 — — — 4,288

1 unchanged sentence

Shares withheld for the withholding tax on vesting of restricted stock units ( 92,973 ) ( 25,301 ) — — — ( 25,301 )

Share repurchases, retirement and related taxes

( 1,553,350 ) ( 489 ) — ( 149,907 ) — ( 150,396 )

Stock-based compensation — 57,379 — — — 57,379

1 unchanged sentence

Net income — — — 156,995 ( 4 ) 156,991

Balance at March 31, 2023 52,483,741 $ 528,279 $ 683 $ 1,239,445 $ 166 $ 1,768,573

Three Months Ended March 31, 2022 Common Stock and

Additional Paid-In

Capital Accumulated

Comprehensive Income Retained

Earnings Non-controlling Interest Total

Stockholders’

Shares Amount

Balance at December 31, 2021 51,508,616 $ 460,990 $ 549 $ 725,129 $ 177 $ 1,186,845

Exercise of stock options, net of taxes 251,598 4,363 — — — 4,363

Release of common stock shares upon vesting of restricted stock units 161,873 — — — — —

Shares withheld for the withholding tax on vesting of restricted stock units ( 51,914 ) ( 2,006 ) — — — ( 2,006 )

Stock-based compensation — 7,741 — — — 7,741

Other comprehensive income — — 5 — — 5

Net income (loss) — — — 76,972 ( 1 ) 76,971

Balance at March 31, 2022 51,870,173 $ 471,088 $ 554 $ 802,101 $ 176 $ 1,273,919

SMCI | Q3 2023 Form 10-Q | 4

Nine Months Ended March 31, 2023 Common Stock and

Balance at September 30, 2023 53,294,998 $ 574,718 $ 651 $ 1,590,009 $ 161 $ 2,165,539

Three Months Ended September 30, 2022

Common Stock and

Additional Paid-In

Capital Accumulated

Comprehensive Income (Loss) Retained

Comprehensive Income (Loss)

Earnings Non-controlling Interest Total

5 unchanged sentences

Shares withheld for the withholding tax on vesting of restricted stock units ( 58,303 ) ( 3,716 ) — — — ( 3,716 )

Share repurchases, retirement and related taxes

( 1,553,350 ) ( 489 ) — ( 149,907 ) — ( 150,396 )

Stock-based compensation — 11,014 — — — 11,014

Other comprehensive loss

— — ( 397 ) — — ( 397 )

Net income (loss) — — — 184,416 ( 5 ) 184,411

Balance at March 31, 2023 52,483,741 $ 528,279 $ 683 $ 1,239,445 $ 166 $ 1,768,573

Nine Months Ended March 31, 2022 Common Stock and

Additional Paid-In

Capital Accumulated

Comprehensive Income Retained

Earnings Non-controlling Interest Total

Stockholders’

Shares Amount

Balance at June 30, 2021 50,582,078 $ 438,012 $ 453 $ 657,760 $ 173 $ 1,096,398

Exercise of stock options, net of taxes 921,001 15,951 — — — 15,951

Release of common stock shares upon vesting of restricted stock units 535,469 — — — — —

Shares withheld for the withholding tax on vesting of restricted stock units ( 168,375 ) ( 6,807 ) — — — ( 6,807 )

Stock-based compensation — 23,932 — — — 23,932

Other comprehensive income — — 101 — — 101

Net income — — — 144,341 3 144,344

Balance at March 31, 2022 51,870,173 $ 471,088 $ 554 $ 802,101 $ 176 $ 1,273,919

Balance at September 30, 2022 52,851,469 $ 497,183 $ 514 $ 1,127,339 $ 167 $ 1,625,203

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Nine Months Ended

Three Months Ended

September 30,

OPERATING ACTIVITIES:

Net income $ 156,995 $ 184,416

Reconciliation of net income to net cash provided by (used in) operating activities:

Reconciliation of net income to net cash provided by operating activities:

Depreciation and amortization 9,155 8,547

Stock-based compensation expense 57,379 11,014

Recovery for credit losses ( 11 ) ( 815 )

Provision for excess and obsolete inventories 31,441 13,875

Share of loss (income) from equity investee 3,253 ( 882 )

Share of loss from equity investee

Foreign currency exchange gain

( 6,192 ) ( 9,203 )

Deferred income taxes, net ( 23,021 ) ( 19,226 )

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable, net (including changes in related party balances of $ 6,367 and $( 25,405 ) during the nine months ended March 31, 2023 and 2022, respectively)

Accounts receivable, net (including changes in related party balances of $ 4,138 and $( 1,851 ) during the three months ended September 30, 2023 and 2022, respectively)

302,501 95,088

Inventories ( 607,241 ) ( 190,449 )

Prepaid expenses and other assets (including changes in related party balances of $( 8,573 ) and $( 5,726 ) during the nine months ended March 31, 2023 and 2022, respectively)

Prepaid expenses and other assets (including changes in related party balances of $ 2,827 and $( 10,139 ) during the three months ended September 30, 2023 and 2022, respectively)

19,990 ( 11,991 )

Accounts payable (including changes in related party balances of $( 11,242 ) and $ 17,170 during the nine months ended March 31, 2023 and 2022, respectively)

Accounts payable (including changes in related party balances of $ 2,981 and $ 6,674 during the three months ended September 30, 2023 and 2022, respectively)

302,973 132,302

Income taxes payable 32,229 26,668

Accrued liabilities (including changes in related party balances of $ 2,487 and $ 9,585 during the three months ended September 30, 2023 and 2022, respectively)

Deferred revenue 36,055 85,989

Accrued liabilities (including changes in related party balances of $( 324 ) and $( 3,213 ) during the nine months ended March 31, 2023 and 2022, respectively)

Other long-term liabilities (including changes in related party balances of $( 80 ) and $( 105 ) during the three months ended September 30, 2023 and 2022, respectively)

( 46 ) ( 159 )

Other long-term liabilities (including changes in related party balances of $( 241 ) and $ 596 during the nine months ended March 31, 2023 and 2022, respectively)

Net cash provided by operating activities

270,465 313,587

Net cash provided by (used in) operating activities 672,919 ( 415,658 )

INVESTING ACTIVITIES:

Purchases of property, plant and equipment (including payments to related parties of $ 6,325 and $ 2,505 during the nine months ended March 31, 2023 and 2022, respectively)

Purchases of property, plant and equipment (including payments to related parties of $ 826 and $ 729 during the three months ended September 30, 2023 and 2022, respectively)

( 2,631 ) ( 10,746 )

Investment in a privately-held company — ( 1,100 )

Investment in marketable securities

Net cash used in investing activities

( 7,631 ) ( 10,746 )

FINANCING ACTIVITIES:

3 unchanged sentences

Payment of withholding tax on vesting of restricted stock units ( 25,301 ) ( 3,716 )

Stock repurchases ( 146,526 ) —

Other 10 ( 15 )

Net cash (used in) provided by financing activities ( 547,291 ) 466,365

Net cash used in financing activities

( 159,941 ) ( 331,183 )

Effect of exchange rate fluctuations on cash ( 203 ) ( 1,472 )

Net increase in cash, cash equivalents and restricted cash 94,741 15,146

Net increase (decrease) in cash, cash equivalents and restricted cash

102,690 ( 29,813 )

Cash, cash equivalents and restricted cash at the beginning of the period 440,960 268,559

1 unchanged sentence

Supplemental disclosure of cash flow information:

SMCI | Q3 2023 Form 10-Q | 6

Cash paid for interest $ 2,214 $ 4,076

Cash paid for taxes, net of refunds $ 8,999 $ 27,274

SMCI | Q1 2024 Form 10-Q | 5

Non-cash investing and financing activities:

Unpaid property, plant and equipment purchases (including due to related parties of $ 1,391 and $ 729 as of March 31, 2023 and 2022, respectively)

Unpaid property, plant and equipment purchases (including due to related parties of $ 3,672 and $ 3,782 as of September 30, 2023 and 2022, respectively)

$ 8,032 $ 6,599

Right of use ("ROU") assets obtained in exchange for operating lease commitments $ 9,177 $ 750

Unpaid stock repurchases $ 3,472 $ —

See accompanying notes to condensed consolidated financial statements.

11 unchanged sentences

The unaudited condensed consolidated financial statements included herein reflect all adjustments, including normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position, results of operations and cash flows for the periods presented.

The consolidated results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2023.

The consolidated results of operations for the three months ended September 30, 2023 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2024.

Certain prior year amounts within cash from operating activities in the condensed consolidated statements of cash flows have been reclassified to conform to current year presentation.

These changes in presentation do not affect previously reported results.

Concentration of Supplier Risk

1 unchanged sentence

Shortages could occur in these materials due to an interruption of supply or increased demand in the industry.

Two suppliers accounted for 16.9 % and 26.9 % of total purchases for the three months ended March 31, 2023, and the same two suppliers accounted for 13.0 % and 19.4 % of total purchases for the three months ended March 31, 2022.

Two suppliers accounted for 15.8 % and 23.6 % of total purchases for the nine months ended March 31, 2023, and the same two suppliers accounted for 18.0 % and 11.4 % of total purchases for the nine months ended March 31, 2022.

Purchases from Ablecom, and Compuware, related parties of the Company (see Part I, Item 1, Note 8, "Related Party Transactions") accounted for a combined 8.3 % and 8.2 % of total cost of sales for the three months ended March 31, 2023 and 2022, respectively, and a combined 7.0 % and 9.0 % of total cost of sales for the nine months ended March 31, 2023 and 2022, respectively.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash, investment in an auction rate security and accounts receivable.

One customer accounted for 10.7 % of the net sales for the three months ended March 31, 2023, and one customer accounted for 11.8 % of the net sales for the nine months ended March 31, 2023.

One customer accounted for 10.2 % of the net sales for the three months ended March 31, 2022 and no single customer accounted for 10% or more of the net sales for the nine months ended March 31, 2022.

One customer accounted for 21.0 % of the Company's accounts receivable, net as of March 31, 2023.

One customer accounted for 21.7 % of the Company's accounts receivable, net as of June 30, 2022.

Treasury Stock

The Company accounts for treasury stock under the cost method.

Upon the retirement of treasury shares, the Company deducts the par value of the retired treasury shares from common stock and allocates the excess of cost over par as a deduction to additional paid-in capital based on the pro-rata portion of additional paid-in-capital, and the remaining excess as a deduction to retained earnings.

Retired treasury shares revert to the status of authorized but unissued shares.

Two suppliers accounted for 55.1 % and 10.3 % of total purchases for the three months ended September 30, 2023, and the same two suppliers accounted for 25.7 % and 16.1 % of total purchases for the three months ended September 30, 2022.

The increase in concentration of total purchases to one of the Company's suppliers to 55.1 % of total purchases for the three months ended September 30, 2023 is as a result of the purchase of GPUs to build its solutions for the Company's customers.

Purchases from Ablecom, and Compuware, related parties of the Company (see Part I, Item 1, Note 8, "Related Party Transactions") accounted for a combined 6.4 % of total cost of sales for both the three months ended September 30, 2023 and 2022.

Concentration of Credit and Customer Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents, restricted cash and accounts receivable.

Three customers accounted for 15.7 %, 14.5 % and 10.3 % of accounts receivable, net as of September 30, 2023.

Two customers accounted for 22.9 % and 19.3 % of accounts receivable, net as of June 30, 2023.

These accounts receivable represent a concentration of credit risk to the Company.

One customer accounted for 25.0 % of the net sales for the three months ended September 30, 2023.

One customer accounted for 21.9 % of the net sales for the three months ended September 30, 2022.

SMCI | Q1 2024 Form 10-Q | 7

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting Pronouncements Recently Adopted

There were no new pronouncements recently adopted.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued authoritative guidance, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

The guidance also establishes (1) a general contract modification principle that entities can apply in other areas that may be affected by reference rate reform and (2) certain elective hedge accounting expedients.

The amendments in this update do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022 that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship.

The amendment was effective for all entities through December 31, 2022.

In January 2021, the FASB issued further guidance on this topic, which clarified the scope and application of the original guidance.

In December 2022, FASB issued an Accounting Standards Update (ASU) for the deferral of the sunset date of Topic 848 and amendments to the definition of secured overnight financing rate (“SOFR").

The ASU defers the sunset date of Topic 848 to December 31, 2024.

The Company has loans and lines of credit with various financial institutions.

Benchmark interest rates are used to calculate the interest on borrowings under the Chang Hwa Bank, CTBC, HSBC, ESUN and Mega Bank Credit Facilities.

LIBOR was used to calculate the interest on borrowings under the Company's 2018 Bank of America Credit Facility.

The 2018 Bank of America Credit Facility was amended on June 28, 2021 to provide for a new maturity date of June 28, 2026 and fallback terms related to LIBOR replacement mechanics.

On March 3, 2022, the 2018 Bank of America Credit Facility was amended to, among other items, increase the size of the facility from $ 200.0 million to $ 350.0 million and update provisions relating to payments and LIBOR replacement mechanics to SOFR.

As these amendments had other contemporaneous changes to the facility, including the amount of borrowings permitted under the facility and not just directly related to LIBOR replacement, optional expedients under this guidance cannot be elected.

The Company is currently evaluating the overall impact of the adoption of this guidance and does not expect it to have a material impact on its consolidated financial statements and disclosures.

Disaggregation of Revenue

The Company disaggregates revenue by type of product and by the geographical market in order to depict the nature, amount, and timing of revenue and cash flows.

The Company disaggregates revenue by type of product and by the geographical market.

Service revenues, which are less than 10%, are not a significant component of total revenue, and are aggregated within the respective categories.

1 unchanged sentence

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

Server and storage systems $ 1,966,608 $ 1,713,056

3 unchanged sentences

Subsystems and accessories are comprised of server boards, chassis and accessories.

SMCI | Q3 2023 Form 10-Q | 9

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

International net sales are based on the country and geographic region to which the products were shipped.

The following is a summary for the three and nine months ended March 31, 2023 and 2022, of net sales by geographic region (in thousands):

The following is a summary for the three months ended September 30, 2023 and 2022, of net sales by geographic region (in thousands):

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

United States $ 1,619,514 $ 1,295,504

12 unchanged sentences

Additionally, at times, deferred revenue may fluctuate due to the timing of advance consideration received from non-cancellable non-refundable contract liabilities relating to the sale of future products.

Revenue recognized during the three and nine months ended March 31, 2023, which was included in the deferred revenue balance as of June 30, 2022, of $ 233.8 million, was $ 25.2 million and $ 86.2 million, respectively.

Deferred revenue increased $ 76.1 million as of March 31, 2023 as compared to the fiscal year ended June 30, 2022 was mainly due to the deferral on invoiced amounts for service contracts during the period exceeding the recognized revenue from contracts entered into in prior periods.

This was accompanied by a $ 2.4 million increase in non-cancellable non-refundable advance consideration or cash consideration received from customers which preceded the Company's satisfaction of the associated performance obligations relating to product sales expected to be fulfilled in the next 12 months.

Revenue recognized during the three months ended September 30, 2023, which was included in the opening deferred revenue balance as of June 30, 2023, of $ 304.4 million, was $ 43.7 million.

SMCI | Q1 2024 Form 10-Q | 8

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred revenue increased $ 36.1 million as of September 30, 2023 as compared to the fiscal year ended June 30, 2023.

This increase was mainly due to a $ 21.1 million increase in non-cancellable non-refundable advance consideration or cash consideration received from customers which preceded the Company's satisfaction of the associated performance obligations relating to product sales expected to be fulfilled in the next 12 months.

Transaction Price Allocated to the Remaining Performance Obligations

2 unchanged sentences

These performance obligations generally consist of services, such as on-site services, including integration services and extended warranty services that are contracted for one year or less, and products for which control has not yet been transferred.

The value of the transaction price allocated to remaining performance obligations as of March 31, 2023 was $ 309.9 million .

The value of the transaction price allocated to remaining performance obligations as of September 30, 2023 was approximately $ 340.5 million .

The Company expects to recognize approximately 49 % of remaining performance obligations as revenue in the next 12 months, and the remainder thereafter.

SMCI | Q3 2023 Form 10-Q | 10

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Capitalized Contract Acquisition Costs and Fulfillment Cost

8 unchanged sentences

Such fulfillment costs are insignificant to the Company’s condensed consolidated financial statements.

SMCI | Q1 2024 Form 10-Q | 9

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net Income Per Common Share

The following table shows the computation of basic and diluted net income per common share for the three and nine months ended March 31, 2023 and 2022 (in thousands, except per share amounts):

The following table shows the computation of basic and diluted net income per common share for the three months ended September 30, 2023 and 2022 (in thousands, except per share amounts):

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

Net income $ 156,995 $ 184,416

4 unchanged sentences

Diluted net income per common share $ 2.75 $ 3.35

For the three and nine months ended March 31, 2023 and 2022, the Company had stock options, restricted stock units ("RSUs") and performance based restricted stock units ("PRSUs") outstanding that could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net income per share in the periods presented, as their effect would have been anti-dilutive.

The anti-dilutive common share equivalents resulting from outstanding equity awards were 187,358 and 452,611 for the three months ended March 31, 2023 and 2022, respectively, and 235,494 and 452,182 for the nine months ended March 31, 2023 and 2022, respectively.

SMCI | Q3 2023 Form 10-Q | 11

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the three months ended September 30, 2023 and 2022, the Company had stock options, restricted stock units ("RSUs") and performance based restricted stock units ("PRSUs") outstanding that could potentially dilute basic earnings per share in the future, but were excluded from the computation of diluted net income per share in the periods presented, as their effect would have been anti-dilutive.

The anti-dilutive common share equivalents resulting from outstanding equity awards were 337,730 and 307,395 for the three months ended September 30, 2023 and 2022, respectively.

Balance Sheet Components

The following tables provide details of the selected balance sheet items (in thousands):

March 31, 2023 June 30, 2022

Finished goods $ 1,075,482 $ 1,025,555

Work in process 159,994 209,576

Purchased parts and raw materials 304,943 310,475

Total inventories $ 1,540,419 $ 1,545,606

During the three and nine months ended March 31, 2023, the Company recorded a net provision for excess and obsolete inventory to cost of sales totaling $ 6.0 million and $ 31.4 million, respectively, and $ 10.2 million and $ 13.9 million, for the three and nine months ended March 31, 2022, respectively.

The Company classifies subsystems and accessories that may be sold separately or incorporated into systems as finished goods.

Prepaid Expenses and Other Current Assets:

March 31, 2023 June 30, 2022

Other receivables (1)

$ 110,712 $ 138,054

Prepaid expenses 8,724 5,632

Deferred service costs 6,476 5,562

Prepaid income tax 1,522 2,352

Restricted cash — 251

Other 12,466 6,948

Total prepaid expenses and other current assets $ 139,900 $ 158,799

(1) Other receivables are receivables from contract manufacturers based on certain buy-sell arrangements of $ 81.0 million and $ 98.9 million as of March 31, 2023 and June 30, 2022, respectively.

Cash, Cash Equivalents and Restricted Cash:

March 31, 2023 June 30, 2022

September 30, 2023 June 30, 2023

Cash and cash equivalents $ 543,156 $ 440,459

Restricted cash included in prepaid expenses and other current assets — 251

Restricted cash included in other assets 494 501

Total cash, cash equivalents and restricted cash $ 543,650 $ 440,960

September 30, 2023 June 30, 2023

Finished goods $ 1,364,995 $ 1,045,177

Work in process 333,689 71,874

Purchased parts and raw materials 354,121 328,513

Total inventories $ 2,052,805 $ 1,445,564

SMCI | Q1 2024 Form 10-Q | 10

2 unchanged sentences

Property, Plant, and Equipment:

March 31, 2023 June 30, 2022

September 30, 2023 June 30, 2023

Buildings $ 143,496 $ 143,496

8 unchanged sentences

Property, plant and equipment, net $ 291,669 $ 290,240

Other Assets:

March 31, 2023 June 30, 2022

Operating lease right-of-use asset $ 19,514 $ 23,679

Deferred service costs, non-current 9,315 6,316

Investment in equity investee 2,494 5,329

Prepaid expense, non-current 1,908 2,011

Deposits 1,729 1,069

Investment in auction rate security 1,590 1,590

Restricted cash, non-current 499 911

Other 1,784 1,956

Total other assets $ 38,833 $ 42,861

Accrued Liabilities:

March 31, 2023 June 30, 2022

September 30, 2023 June 30, 2023

Accrued payroll and related expenses $ 38,658 $ 53,439

1 unchanged sentence

Customer deposits 19,722 16,577

Accrued warranty costs 9,704 9,073

Accrued cooperative marketing expenses 10,764 9,744

Accrued warranty costs 9,107 9,079

Operating lease liability 8,473 7,292

Accrued professional fees 813 2,363

Accrued legal liabilities (Note 11) — 18,250

Other 41,222 41,737

Total accrued liabilities $ 152,500 $ 163,865

SMCI | Q3 2023 Form 10-Q | 13

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Performance Awards Liability

In March 2020, the Board of Directors (the “Board”) approved performance bonuses for the Chief Executive Officer, a senior executive and two members of the Board, which payments would be earned when specified market and performance conditions are achieved.

The Chief Executive Officer’s total cash bonus opportunity was $ 8.1 million, divided into two equal tranches.

Each tranche would be earned if the average closing price for the Company’s common stock reached specified targets.

The Board retained the flexibility to reduce the amount payable under the first tranche (but not the second tranche) based on performance goals.

Both price targets were reached during the fiscal year ended June 30, 2021, and the second tranche total of $ 4.0 million was paid in full.

As of June 30, 2021, the Company also expected it would likely pay the first tranche in full, and therefore recorded an expense of $ 3.6 million since March 2020 relating to the first tranche.

In September 2021, after the Company had closed its books for the year ended June 30, 2021, the Board decided to exercise its discretion to reduce the amount to be paid to the Chief Executive Officer for the first tranche to $ 2.0 million, which was paid in the quarter ended December 31, 2021.

As a result of the Board’s decision to reduce the amount to be paid under the first tranche, the Company adjusted the $ 3.6 million expense previously recorded for the first tranche to the new amount of $ 2.0 million, which resulted in the Company recognizing a $ 1.6 million benefit from this adjustment during the quarter ended September 30, 2021.

This performance award to the Chief Executive Officer was concluded in the year ended June 30, 2022.

As such, there is no further transaction thereafter.

There was no expense or benefit recognized during the three and nine months ended March 31, 2023.

The benefit recognized during the three and nine months ended March 31, 2022 was none and $ 1.6 million, respectively.

Other Long-term Liabilities:

March 31, 2023 June 30, 2022

Accrued unrecognized tax benefits including related interests and penalties, non-current $ 18,865 $ 18,866

Operating lease liability, non-current 12,668 16,661

Accrued warranty costs, non-current 5,268 3,064

Other 439 549

Total other long-term liabilities $ 37,240 $ 39,140

Product Warranties:

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

Balance, beginning of the period $ 14,859 $ 12,136

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s investment in an auction rate security is classified within Level 3 of the fair value hierarchy as the determination of its fair value was not based on observable inputs as of March 31, 2023 and June 30, 2022.

The Company is using the discounted cash flow method to estimate the fair value of the auction rate security at each period end and the following assumptions:

2 unchanged sentences

Financial Assets and Liabilities Measured on a Recurring Basis

The following table sets forth the Company’s financial instruments as of March 31, 2023 and June 30, 2022, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

The following table sets forth the Company’s financial instruments as of September 30, 2023 and June 30, 2023, which are measured at fair value on a recurring basis by level within the fair value hierarchy.

These are classified based on the lowest level of input that is significant to the fair value measurement (in thousands):

March 31, 2023 Level 1 Level 2 Level 3 Asset at

September 30, 2023 Level 1 Level 2 Level 3 Asset at

Money market funds (1)

1 unchanged sentence

Certificates of deposit (2)

— 126,951 — 126,951

Investment in marketable securities 3,866 — — 3,866

Auction rate security — — 1,843 1,843

6 unchanged sentences

Total assets measured at fair value $ 20,823 $ 462 $ 1,843 $ 23,128

(1) $ 20.5 million and $ 20.0 million in money market funds are included cash and cash equivalents and $ 0.1 million and $ 0.2 million in money market funds are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of March 31, 2023 and June 30, 2022, respectively.

(2) $ 0.2 million and $ 0.2 million in certificates of deposit are included in cash and cash equivalents, $ 0.1 million and $ 0.3 million in certificates of deposit are included in prepaid expenses and other assets, and $ 0.2 million and $ 0.3 million in certificates of deposit are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of March 31, 2023 and June 30, 2022, respectively.

(1) $ 20.9 million and $ 20.6 million in money market funds are included cash and cash equivalents and $ 0.2 million and $ 0.2 million in money market funds are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of September 30, 2023 and June 30, 2023, respectively.

(2) $ 126.7 million and $ 0.2 million in certificates of deposit are included in cash and cash equivalents, $ 0.1 million and $ 0.1 million in certificates of deposit are included in prepaid expenses and other assets, and $ 0.2 million and $ 0.2 million in certificates of deposit are included in restricted cash, non-current in other assets in the condensed consolidated balance sheets as of September 30, 2023 and June 30, 2023, respectively.

The carrying amounts reported in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, other assets, accounts payable and accrued liabilities approximate their fair values.

The investment in marketable securities is carried at fair value using values available on a public exchange and is based on a Level 1 input.

The investment is accounted for as an equity security, with unrealized gains and losses included in earnings.

Unrealized loss of $ 1.1 million has been recorded in Other income, net in the condensed consolidated statement of operations for the three months ended September 30, 2023.

On a quarterly basis, the Company also evaluates the current expected credit loss by co nsidering factors such as historical experience, market data, issuer-specific factors, and current economic conditions.

Based on this assessment during the three and nine months ended March 31, 2023, there were no indications that the Company’s investments had credit losses.

There was no movement in the balances of the Company's financial assets measured at fair value on a recurring basis, consisting of investment in an auction rate security, using significant unobservable inputs (Level 3) for the three and nine months ended March 31, 2023 and 2022.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three and nine months ended March 31, 2023 and 2022.

For the three months ended September 30, 2023, the credit losses related to the Company’s investments were not material.

SMCI | Q1 2024 Form 10-Q | 12

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a summary of the Company’s investment in an auction rate security as of March 31, 2023 and June 30, 2022 (in thousands):

There was immaterial movement in the balances of the Company's financial assets measured at fair value on a recurring basis, consisting of investment in an auction rate security, using significant unobservable inputs (Level 3) for the three months ended September 30, 2023 and 2022.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three months ended September 30, 2023 and 2022.

The following is a summary of the Company’s investment in an auction rate security as of September 30, 2023 and June 30, 2023 (in thousands):

Cost Basis Gross

1 unchanged sentence

Auction rate security $ 1,750 $ 287 $ ( 194 ) $ 1,843

No gain or loss was recognized in other comprehensive income for the auction rate security for the three and nine months ended March 31, 2023 and 2022.

No gain or loss was recognized in other comprehensive income for the auction rate security for the three months ended September 30, 2023 and 2022.

The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis.

As of March 31, 2023 and June 30, 2022, total debt of $ 187.2 million and $ 596.8 million, respectively, was reported at amortized cost.

As of September 30, 2023 and June 30, 2023, total debt of $ 146.2 million and $ 290.3 million, respectively, was reported at amortized cost.

This outstanding debt was classified as Level 2 as it was not actively traded.

1 unchanged sentence

Other Financial Assets - Investments into Non-Marketable Equity Securities

The Company's non-marketable equity securities are investments in privately held companies without readily determinable fair values in the amount of $ 1.2 million as of March 31, 2023 and June 30, 2022.

The Company's non-marketable equity securities are investments in privately held companies without readily determinable fair values in the amount of $ 0.1 million and $ 1.7 million as of September 30, 2023 and June 30, 2023, respectively.

The Company accounts for these investments at cost less impairment, if any, plus or minus changes from observable price changes in orderly transactions for the identical or similar investments by the same issuer.

During the three and nine months ended March 31, 2023 and 2022, the Company did not record any upward or downward adjustments to the carrying values of the non-marketable equity securities related to observable price changes.

The Company also did not record any impairment to the carrying values of the non-marketable equity securities during the three and nine months ended March 31, 2023 and 2022.

During the three months ended September 30, 2023, the Company performed a qualitative assessment and identified impairment indicators.

The Company recorded a $ 1.6 million impairment during the three months ended September 30, 2023 in Other income, net on the condensed consolidated statement of operations.

The Company did not have any impairment to the carrying values of the non-marketable equity securities during the three months ended September 30, 2022.

SMCI | Q1 2024 Form 10-Q | 13

2 unchanged sentences

Short-term and Long-term Debt

Short-term and long-term debt obligations as of March 31, 2023 and June 30, 2022 consisted of the following (in thousands):

March 31, June 30,

Short-term and long-term debt obligations as of September 30, 2023 and June 30, 2023 consisted of the following (in thousands):

September 30, June 30,

Line of credit:

4 unchanged sentences

HSBC Bank Credit Facility — —

2021 E.SUN Bank Credit Facility — 7,800

Mega Bank Credit Facility — —

2 unchanged sentences

Chang Hwa Bank Credit Facility due October 15, 2026 23,892 26,853

CTBC Bank term loan, due June 4, 2030 39,390 40,372

CTBC Term Loan Facility, due June 4, 2030

35,424 38,208

2021 CTBC Credit Lines, due August 15, 2026 4,183 4,721

10 unchanged sentences

Activities under Revolving Lines of Credit and Term Loans

Available borrowings and interest rates as of March 31, 2023 and June 30, 2022 consisted of the following (in thousands except for percentages):

March 31, 2023 June 30, 2022

Available borrowings and interest rates as of September 30, 2023 and June 30, 2023 consisted of the following (in thousands except for percentages):

September 30, 2023

June 30, 2023

Available borrowings Interest rate Available borrowings Interest rate

4 unchanged sentences

2022 CTBC Credit Lines

$ — — $ 105,000 3.33 %

2023 CTBC Credit Line

$ 105,000 3.33 %

Chang Hwa Bank Credit Facility $ 20,000 6.51 % $ 20,000 6.58 %

1 unchanged sentence

2022 E.SUN Bank Credit Facility $ 30,000 4.18 % $ 30,000 4.18 %

2022 E.SUN Bank Credit Facility $ 30,000 4.18 % $ — —

Mega Bank Credit Facility $ 20,000 2.55 % $ 20,000 2.55 %

1 unchanged sentence

Chang Hwa Bank Credit Facility due October 15, 2026 $ — 1.55 % $ — 1.55 %

CTBC Bank term loan, due June 4, 2030 $ — 1.20 % $ — 0.83 %

CTBC Term Loan Facility, due June 4, 2030

$ — 1.20 % $ — 1.20 %

2021 CTBC Credit Lines, due August 15, 2026 $ — 1.40 % $ — 1.40 %

2021 E.SUN Bank Credit Facility, due September 15, 2026

$ — 1.75 % $ 7,734 1.75 %

2022 ESUN Bank Credit Facility, due August 15, 2027 $ — 1.75 % $ — 1.75 %

4 unchanged sentences

Short-term and Long-term Debt” of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for a more complete description of the Company's credit facilities.

The Company entered into new agreements during the nine months ended March 31, 2023 with the following terms:

2022 E.SUN Bank Credit Facility

On August 9, 2022 (the “New E.SUN Bank Effective Date”), the Company through Super Micro Computer Inc., Taiwan, a Taiwan corporation and wholly-owned subsidiary of the Company (the “Taiwan Subsidiary”), entered into a new General Credit Agreement with E.SUN Bank, which replaced the 2021 E.SUN Bank Credit Facility (the “New E.SUN Bank Credit Facility”).

The New E.SUN Bank Credit Facility permits borrowings of up to (i) NTD 1.8 billion ($ 61.0 million U.S.

dollar equivalent) and (ii) US $ 30.0 million.

Other terms of the New E.SUN Bank Credit Facility are substantially identical to the prior E.SUN Bank Credit Facility.

Generally, interest for base rate loans made under the New E.SUN Bank Credit Facility are based upon an average interbank overnight call loan rate in the finance industry (such as TAIFX) plus a fixed margin and is subject to occasional adjustment.

The New E.SUN Bank Credit Facility has customary default provisions permitting E.SUN Bank to terminate or reduce the credit limit, shorten the credit period, or deem all liabilities due and payable, including in the event the Taiwan Subsidiary has an overdue liability at another financial organization.

The Company is not a guarantor of the New E.SUN Bank Credit Facility.

SMCI | Q3 2023 Form 10-Q | 18

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Terms for specific drawdown instruments issued under the New E.SUN Bank Credit Facility, such as credit amount, term of use, mode of drawdown, specific lending rate, and other relevant terms, are to be set forth in Notifications and Confirmation of Credit Conditions (a “Notification and Confirmation”) negotiated with E.SUN Bank.

Under a Notification and Confirmation entered into on the New E.SUN Bank Effective Date, the Taiwan Subsidiary and E.SUN Bank have agreed to both a Medium Term Credit Loan of NTD 680.0 million ($ 23.0 million U.S.

dollar equivalent) with a tenor of five years (the “Medium Term Loan”) and a drawdown of US $ 30.0 million under the New E.SUN Bank Credit Facility for an import loan with a tenor of 120 days (the “Import O/A Loan”).

With respect to the Medium Term Loan, the interest rate thereunder is based upon a floating annual rate plus a fixed margin, subject to adjustment under certain circumstances.

Interest payments are due on a monthly basis.

Principal is amortized evenly on a monthly basis, with principal payments subject to a one year grace period prior to the commencement of repayment.

The Medium Term Loan will be used by the Taiwan Subsidiary to support its manufacturing activities (such as purchase of materials and components) (“Use of Proceeds”).

Drawdowns may be in amounts of up to 80 % of permitted Use of Proceeds expenses.

The Taiwan Subsidiary is subject to various financial covenants in connection with the Medium Term Loan, including a current ratio, net debt to equity ratio, and interest coverage ratio.

The current Medium Term Loan and the prior medium term loan under the Prior E.SUN Bank Credit Facility shall not exceed in aggregate NTD 1.8 billion.

With respect to the Import O/A Loan, the period of use is between April 28, 2022 and April 28, 2023.

The interest rate thereunder is based on TAIFX3 plus a fixed margin, subject to negotiation on a monthly basis and adjustment under certain circumstances.

Interest payments are due on a monthly basis, and the principal is repayable on the due date.

Neither the Medium Term Loan nor Import O/A loan are secured.

As of March 31, 2023, the amount outstanding under the Medium Term Loan was denominated in NTD and remeasured into US dollars of $ 53.8 million.

The interest rate as of March 31, 2023 was 1.75 % per annum.

As of March 31, 2023 and June 30, 2022, the amounts outstanding under the Import O/A Loan were $ 0.0 million and $ 7.8 million, respectively.

The interest rate as of March 31, 2023 and June 30, 2022 was 4.18 % and 1.81 % per annum, respectively.

As of March 31, 2023, the amount available for future borrowing under the Import O/A Loan was $ 30.0 million.

2022 CTBC Credit Line

Pursuant to banking practices in Taiwan to confirm loan agreements annually, on October 3, 2022, the Company through the Taiwan Subsidiary entered into an Agreement for Individually Negotiated Terms and Conditions with CTBC Bank Co., Ltd.

(“CTBC Bank”) (such credit line, the “2022 CTBC Credit Line”) related to the prior 2021 CTBC credit lines (the “2021 CTBC Credit Lines”).

The terms of the 2022 CTBC Credit Line remain substantially similar to the 2021 CTBC Credit Line, except the 2022 CTBC Credit Line made certain minor amendments to the monthly interest payment date.

The total borrowing cap under the whole arrangement is $ 105.0 million and NTD 1,550.0 million ($ 55.4 million U.S.

dollar equivalent).

The Company, through the Taiwan Subsidiary, was party to that certain credit agreement, dated May 6, 2020, with CTBC Bank, which provided for a ten-year , non-revolving term loan facility (the “2020 CTBC Term Loan Facility”) to obtain up to NTD 1,200.0 million ($ 40.7 million U.S.

dollar equivalent).

As of March 31, 2023 and June 30, 2022, the amounts outstanding under the 2020 CTBC Term Loan Facility were $ 39.4 million and $ 40.4 million, respectively.

The interest rates for these loans were 1.20 % per annum as of March 31, 2023 and 0.83 % as of June 30, 2022.

The 2021 Credit Lines permitted borrowings, from time to time, pursuant to (i) a term loan facility of up to NTD 1,550.0 million ($ 55.4 million U.S.

dollar equivalent) including the previously-existing ten-year , non-revolving term loan facility of NTD 1,200.0 million ($ 42.9 million U.S.

dollar equivalent) and a new 75-month , non-revolving term loan facility of NTD 350.0 million ($ 12.5 million U.S.

dollar equivalent) to use to purchase machinery and equipment for the Company’s Bade Manufacturing Facility located in Taiwan (the “2021 CTBC Machine Loan”), and (ii) a line of credit facility of up to $ 105.0 million (the “2021 CTBC Credit Facility”).

As of March 31, 2023 and June 30, 2022, under the 2021 CTBC Machine Loan, the amounts outstanding were $ 5.2 million and $ 5.5 million, respectively.

The interest rates for these loans were 1.40 % per annum as of March 31, 2023 and 1.03 % as of June 30, 2022.

The 2021 CTBC Credit Facility term loan was repaid on October 26, 2021.

As of March 31, 2023 and June 30, 2022, the outstanding borrowings under the 2021 CTBC Credit Facility revolving line of credit were none and $ 84.8 million, respectively.

The interest rates for these loans was 3.33 % per annum as of March 31, 2023 and ranged from 1.80 % to 2.52 % as of June 30, 2022.

The Company entered into a new General Credit Agreement with CTBC Bank during the three months ended September 30, 2023 with the following terms:

2023 CTBC Bank Credit Lines

On September 28, 2023 (the “Effective Date”), the Company's Taiwan subsidiary entered into a new general agreement for omnibus credit lines with CTBC Bank, which replaces the prior CTBC credit lines in their entirety and permits for borrowings, from time to time, thereunder pursuant to various individual credit arrangements and includes the previously issued long and medium term loan facility of NTD 1,550.0 million entered in 2021 and 2020 (the “Long and Medium Loan Facility”), and each of (i) a short-term loan and guarantee line providing credit of up to NTD 1,250.0 million and NTD 100.0 million, respectively (the “NTD Short Term Loan/Guarantee Line”), (ii) a short-term loan providing a line of credit of up to $ 40.0 million (the “USD Short Term Loan Line”), and (iii) an export/import o/a loan line providing a line of credit of up to $ 105.0 million for exports and $ 50.0 million for imports (the “Export/Import Line,” and, together with the NTD Short Term Loan/Guarantee Line and the USD Short Term Loan Line, the “New CTBC Credit Lines”).

Aggregate borrowings under the New CTBC Credit Lines together is subject to a cap of $ 105.0 million.

SMCI | Q1 2024 Form 10-Q | 15

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 2023, the amount available for future borrowing under the 2022 CTBC Credit Line was $ 105 million.

As of March 31, 2023, the net book value of land and building located in Bade, Taiwan, collateralizing the 2022 CTBC Credit Line was $ 75.4 million.

The Company was in compliance with all financial covenants under 2022 CTBC Credit Line as of March 31, 2023.

HSBC Bank Credit Facility

On February 7, 2023, the Company through the Taiwan subsidiary, entered into a new facility letter (the “New Facility Letter”) with the Taiwan affiliate of HSBC Bank which expanded the prior $ 30 million facility letter entered into with HSBC Bank on January 7, 2022.

The New Facility Letter permits borrowings up to a combined aggregate limit of $ 50 million which may be comprised of borrowings under a New Taiwan Dollar revolving facility with a sub-limit of NTD 300 million (the “NTD Revolver”) and an export/seller facility with a sub-limit of $ 50 million (the “Export/Seller Facility”).

Interest under both the NTD Revolver and Export/Seller Facility is based on HSBC Bank’s base rate plus a fixed margin, subject to adjustment under certain circumstances.

Interest payments thereunder are due on a monthly basis, or such other interest period as agreed by HSBC Bank, and principal is repayable on the due date.

Amounts due under the New Facility Letter are currently not secured, but subject to HSBC Bank’s right of set-off and right to repayment on demand and call for cash cover.

As of March 31, 2023 and June 30, 2022, the outstanding borrowings under the HSBC Credit Facility were $ 0.0 million and $ 30.0 million, respectively.

The interest rates for these loans were 4.50 % per annum as of March 31, 2023 and ranged from 1.95 % to 2.20 % as of June 30, 2022.

Interest rates under each of the individual New CTBC Credit Lines are to be established according to individual credit arrangements, which interest rates shall be subject to adjustment depending on the satisfaction of certain conditions.

Each of the NTD Short Term Loan/Guarantee Line and USD Short Term Loan Line are secured by certain of the Company's Taiwan subsidiary’s assets, including certain property, land, and plant.

The tenor for each of the individual New CTBC Credit Lines is one year.

For the Long and Medium Loan Facility, the Taiwan subsidiary is subject to various financial covenants, including current ratio, debt service coverage ratio, and financial debt ratio requirements.

In the event the Taiwan subsidiary does not satisfy such financial covenants, CTBC Bank is permitted to, among other things, reduce the permitted total borrowings to a cap of $ 70.0 million from $ 105.0 million.

Additional covenants require, among other things, the Company to maintain ownership of all of the capital stock of its Taiwan subsidiary and prohibit secondary mortgages on certain assets securing various of the New CTBC Credit Lines.

The New CTBC Credit Lines have customary default provisions permitting CTBC Bank to suspend the extension of credit, reduce the credit line, shorten the credit extension term, or declare all principal and interest amounts immediately due and payable upon the occurrence of an event of default.

The Company's Taiwan subsidiary intends to use borrowings under the New CTBC Credit Lines in connection with financing of eligible accounts receivable and accounts payable (vendor invoices) and to finance additional improvements to the Company’s Bade Manufacturing Facility located in Taiwan.

Principal payments on short-term and long-term obligations are due as follows (in thousands):

4 unchanged sentences

The Company is in compliance with all the covenants for the outstanding debt.

SMCI | Q3 2023 Form 10-Q | 20

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company leases offices, warehouses and other premises, vehicles and certain equipment leased under non-cancelable operating leases.

Operating lease expense recognized and supplemental cash flow information related to operating leases for the three and nine months ended March 31, 2023 and 2022 were as follows (in thousands):

Operating lease expense recognized and supplemental cash flow information related to operating leases for the three months ended September 30, 2023 and 2022 were as follows (in thousands):

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

Operating lease expense (including expense for lease agreements with related parties of $ 139 and $ 422 for the three and nine months ended March 31, 2023, respectively, and $ 143 and $ 568 for the three and nine months ended March 31, 2022, respectively)

September 30,

Operating lease expense (including expense for lease agreements with related parties of $ 139 and $ 143 for the three months ended September 30, 2023 and 2022, respectively)

$ 2,184 $ 2,110

Cash payments for operating leases (including payments to related parties of $ 134 and $ 391 for the three and nine months ended March 31, 2023, respectively, and $ 141 and $ 631 for the three and nine months ended March 31, 2022, respectively)

Cash payments for operating leases (including payments to related parties of $ 128 and $ 130 for the three months ended September 30, 2023 and 2022, respectively)

$ 2,083 $ 2,038

New operating lease assets obtained in exchange for operating lease liabilities $ 9,177 $ 750

During the three and nine months ended March 31, 2023 and 2022, the Company's costs related to short-term lease arrangements for real estate and non-real estate assets were immaterial.

Non-lease variable payments expensed in the three and nine months ended March 31, 2023 were $ 0.5 million and $ 1.3 million, respectively.

Non-lease variable payments expensed in the three and nine months ended March 31, 2022 were $ 0.2 million and $ 0.7 million, respectively.

As of March 31, 2023, the weighted average remaining lease term for operating leases was 3.2 years and the weighted average discount rate was 3.0 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of March 31, 2023 were as follows (in thousands):

During the three months ended September 30, 2023 and 2022, the Company’s costs related to short-term lease arrangements for real estate and non-real estate assets were immaterial.

Non-lease variable payments expensed in the three months ended September 30, 2023 and 2022 were immaterial.

SMCI | Q1 2024 Form 10-Q | 16

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of September 30, 2023, the weighted average remaining lease term for operating leases was 3.5 years and the weighted average discount rate was 4.1 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of September 30, 2023 were as follows (in thousands):

Maturities of operating leases

4 unchanged sentences

Present value of operating lease liabilities $ 26,069

As of March 31, 2023, commitments under short-term lease arrangements, and operating and financing leases that have not yet commenced were immaterial.

The Company has entered into lease agreements with related parties.

See Part I, Item 1, Note 8, “Related Party Transactions,” for a further discussion.

SMCI | Q3 2023 Form 10-Q | 21

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Related Party Transactions

4 unchanged sentences

Ablecom’s Chief Executive Officer, Steve Liang, is the brother of Charles Liang, the Company’s President, Chief Executive Officer and Chairman of the Board.

Steve Liang and his family members owned approximately 28.8 % of Ablecom’s stock and Charles Liang and his spouse, Sara Liu, who is also an officer and director of the Company, collectively owned approximately 10.5 % of Ablecom’s capital stock as of March 31, 2023.

Steve Liang and his family members owned approximately 36.0 % of Ablecom’s stock and Charles Liang and his spouse, Sara Liu, who is also an officer and director of the Company, collectively owned approximately 10.5 % of Ablecom’s capital stock as of September 30, 2023.

Bill Liang, a brother of both Charles Liang and Steve Liang, is a member of the Board of Directors of Ablecom.

5 unchanged sentences

Under these agreements, the Company outsources to Ablecom a portion of its design activities and a significant part of its server chassis manufacturing as well as an immaterial portion of other components.

Ablecom manufactured approximately 96.3 % and 88.8 % of the chassis included in the products sold by the Company during the three months ended March 31, 2023 and 2022, respectively, and 93.0 % and 82.5 % of the chassis included in the products sold by the Company during the nine months ended March 31, 2023 and 2022, respectively.

Ablecom manufactured approximately 85.5 % and 88.4 % of the chassis included in the products sold by the Company during the three months ended September 30, 2023 and 2022, respectively.

With respect to design activities, Ablecom generally agrees to design certain agreed-upon products according to the Company’s specifications, and further agrees to build the tools needed to manufacture the products.

1 unchanged sentence

The Company retains full ownership of any intellectual property resulting from the design of these products and tooling.

SMCI | Q1 2024 Form 10-Q | 17

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

With respect to the manufacturing aspects of the relationship, Ablecom purchases most of materials needed to manufacture the chassis from third parties and the Company provides certain components used in the manufacturing process (such as power supplies) to Ablecom through consignment or sales transactions.

4 unchanged sentences

The Company’s exposure to financial loss as a result of its involvement with Ablecom is limited to potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company’s products such that the Company incurs a loss on the sale or cannot sell the products.

Outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on March 31, 2023 were $ 23.4 million and $ 23.6 million, respectively, and outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on June 30, 2022 were $ 39.5 million and $ 36.0 million, respectively, effectively representing the exposure to financial loss.

Outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on September 30, 2023 were $ 49.5 million and $ 27.7 million, respectively, and outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on June 30, 2023 were $ 37.4 million and $ 23.7 million, respectively, effectively representing the exposure to financial loss.

The Company does not directly or indirectly guarantee any obligations of Ablecom, or any losses that the equity holders of Ablecom may suffer.

Since Ablecom manufactures substantially all the chassis that the Company incorporates into its products, if Ablecom were to suddenly be unable to manufacture chassis for the Company, the Company’s business could suffer if the Company is unable to quickly qualify substitute suppliers who can supply high-quality chassis to the Company in volume and at acceptable prices.

SMCI | Q3 2023 Form 10-Q | 22

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Dealings with Compuware

13 unchanged sentences

In addition to the inventory purchases, the Company also incurs costs associated with design services, tooling assets, and miscellaneous costs.

SMCI | Q1 2024 Form 10-Q | 18

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s exposure to financial loss as a result of its involvement with Compuware is limited to potential losses on its purchase orders in the event of an unforeseen decline in the market price and/or demand of the Company’s products such that the Company incurs a loss on the sale or cannot sell the products.

Outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on March 31, 2023 were $ 154.3 million and $ 59.7 million, respectively, and outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on June 30, 2022 were $ 213.3 million and $ 44.3 million, respectively, effectively representing the exposure to financial loss.

Outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on September 30, 2023 were $ 138.2 million and $ 38.8 million, respectively, and outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on June 30, 2023 were $ 156.2 million and $ 46.8 million, respectively, effectively representing the exposure to financial loss.

The Company does not directly or indirectly guarantee any obligations of Compuware, or any losses that the equity holders of Compuware may suffer.

5 unchanged sentences

The Company recorded a deferred gain related to the contribution of certain technology rights.

As of March 31, 2023 and June 30, 2022, the Company had no unamortized deferred gain balance in accrued liabilities and none in other long-term liabilities in the Company’s condensed consolidated balance sheets.

SMCI | Q3 2023 Form 10-Q | 23

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

There was no balance in the deferred gain in the consolidated balance sheets as of September 30, 2023 and June 30, 2023.

The Company monitors the investment for events or circumstances indicative of potential impairment and makes appropriate reductions in carrying values if it determines that an impairment charge is required.

3 unchanged sentences

The Company has concluded that the Corporate Venture is in compliance with the new restrictions.

The Company does not believe that the equity investment carrying value is impacted as of March 31, 2023.

No impairment charge was recorded for the three and nine months ended March 31, 2023 or 2022.

The Company sold products worth $ 6.4 million and $ 43.7 million to the Corporate Venture during the three months ended March 31, 2023 and 2022, respectively, and sold products worth $ 23.6 million and $ 97.3 million to the Corporate Venture during the nine months ended March 31, 2023 and 2022, respectively.

The Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture as of March 31, 2023 and June 30, 2022 have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture.

The Company does not believe that the equity investment carrying value is impacted as of September 30, 2023.

No impairment charge was recorded for the three months ended September 30, 2023 or 2022.

The Company sold products worth $ 0.8 million and $ 11.3 million to the Corporate Venture during the three months ended September 30, 2023 and 2022, respectively.

The Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture as of September 30, 2023 and June 30, 2023 have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture.

To the extent that the elimination of intra-entity profits reduces the investment balance below zero, such amounts are recorded within accrued liabilities.

The Company had $ 1.9 million and $ 8.0 million due from the Corporate Venture in accounts receivable, net as of March 31, 2023 and June 30, 2022, respectively.

The Company had the following balances related to transactions with its related parties as of March 31, 2023 and June 30, 2022 (in thousands):

The Company had $ 0.2 million and $ 1.9 million due from the Corporate Venture in accounts receivable, net as of September 30, 2023 and June 30, 2023, respectively.

SMCI | Q1 2024 Form 10-Q | 19

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company had the following balances related to transactions with its related parties as of September 30, 2023 and June 30, 2023 (in thousands):

Ablecom Compuware Corporate Venture Total

March 31, 2023 June 30, 2022 March 31, 2023 June 30, 2022 March 31, 2023 June 30, 2022 March 31, 2023 June 30, 2022

September 30, 2023 June 30, 2023 September 30, 2023 June 30, 2023 September 30, 2023 June 30, 2023 September 30, 2023 June 30, 2023

Accounts receivable $ 4 $ 2 $ 1,092 $ 3,528 $ 239 $ 1,943 $ 1,335 $ 5,473

6 unchanged sentences

(2) Includes current portion of operating lease liabilities included in other current liabilities.

The Company's results from transactions with its related parties for each of the three months ended March 31, 2023 and 2022, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS (1)

Three months ended March 31, Three months ended March 31, Three months ended March 31, Three months ended March 31, Three months ended March 31,

2023 2022 2023 2022 2023 2022 2023 2022 2023 2022

Net sales $ 2 $ 2 $ 2,826 $ 3,928 $ 6,360 $ 43,739 $ — $ — $ 9,188 $ 47,669

Purchases - inventory $ 33,637 $ 49,472 $ 54,095 $ 43,989 $ — $ — $ — $ 2,018 $ 87,732 $ 95,479

Purchases - other miscellaneous items $ 2,329 $ 1,687 $ 541 $ 404 $ — $ — $ — $ — $ 2,870 $ 2,091

(1) MPS ceased to be a related party in the quarter ended September 30, 2022.

SMCI | Q3 2023 Form 10-Q | 24

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company's results from transactions with its related parties for each of the nine months ended March 31, 2023 and 2022, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS (1)

Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31,

The Company’s results from transactions with its related parties for each of the three months ended September 30, 2023 and 2022, are as follows (in thousands):

Ablecom Compuware Corporate Venture Total

Three months ended September 30,

2023 2022 2023 2022 2023 2022 2023 2022

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Purchases - other miscellaneous items $ 4,759 $ 4,763 $ 417 $ 258 $ — $ — $ 5,176 $ 5,021

(1) MPS ceased to be a related party in the quarter ended September 30, 2022.

The Company’s cash flow impact from transactions with its related parties for each of the nine months ended March 31, 2023 and 2022, are as follows (in thousands):

Ablecom Compuware Corporate Venture MPS (1)

Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31, Nine months ended March 31,

The Company’s cash flow impact from transactions with its related parties for each of the three months ended September 30, 2023 and 2022, are as follows (in thousands):

Ablecom Compuware Corporate Venture Total

Three months ended September 30,

2023 2022 2023 2022 2023 2022 2023 2022

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Unpaid property, plant and equipment $ 3,672 $ 3,782 $ — $ — $ — $ — $ 3,672 $ 3,782

(1) MPS ceased to be a related party in the quarter ended September 30, 2022.

Tripartite Agreement

On November 8, 2021, Super Micro Computer Inc., Taiwan (the “Subsidiary”), a Taiwan corporation and wholly-owned subsidiary of the Company, entered into a Tripartite Agreement (the “Agreement”) with Ablecom and Compuware related to a three-way purchase of land.

Ablecom has advised that its underlying agreements to acquire land from the third-party landowners in proximity to the Company’s campus in Bade, Taiwan have been terminated, and during the quarter ended December 31, 2022, the Agreement was terminated.

SMCI | Q1 2024 Form 10-Q | 20

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25 % at the end of one year and one sixteenth per quarter thereafter.

As of March 31, 2023, the Company had 2,438,619 authorized shares available for future issuance under the 2020 Plan.

As of September 30, 2023, the Company had 1,324,299 authorized shares available for future issuance under the 2020 Plan.

Common Stock Repurchase and Retirement

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The number of shares purchased and the timing of such purchases are based on working capital requirements, market and general business conditions, and other factors, including alternative investment opportunities.

During the nine months ended March 31, 2023, the Company repurchased and retired 1,553,350 shares of common stock for an aggregated $ 150.0 million.

As of March 31, 2023, $ 50.0 million was available for additional repurchases of common stock.

No shares were repurchased under the share repurchase program during the three months ended September 30, 2023.

As of September 30, 2023, $ 50.0 million was available for additional repurchases of common stock.

Determining Fair Value

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Risk-Free Interest Rate—The risk-free interest rate used in the Black-Scholes valuation method is based on the United States Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

The fair value of stock option grants for the three and nine months ended March 31, 2023 and 2022 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

The fair value of stock option grants for the three months ended September 30, 2023 and 2022 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

Risk-free interest rate 4.15 % - 4.32 %

2.81 % - 4.06 %

0.81 % - 1.65 %

Expected term 6.07 years 6.09 years 6.07 years 6.09 years

Expected term 3.00 years - 5.99 years

Dividend yield — % — %

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50.62 % - 51.30 %

49.69 % - 49.99 %

Weighted-average fair value $ 188.29 $ 28.67

The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three and nine months ended March 31, 2023 and 2022 (in thousands):

The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

March 31, Nine Months Ended

2023 2022 2023 2022

September 30,

Cost of sales $ 5,904 $ 884

5 unchanged sentences

Stock-based compensation expense, net $ 41,330 $ 9,675

As of March 31, 2023, $ 19.0 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.84 years and $ 82.5 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.70 years.

As of September 30, 2023, $ 65.4 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.65 years and $ 203.1 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.67 years.

Additionally, as described below, $ 0.5 million of unrecognized compensation cost related to the 2021 CEO Performance Stock Option is expected to be recognized over a period of 0.5 years.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The achievement status of the operational and stock price milestones as of March 31, 2023 was as follows:

The achievement status of the operational and stock price milestones as of September 30, 2023 was as follows:

Annualized Revenue Milestone (in billions) Achievement Status Stock Price Milestone Achievement Status

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$ 5.8 Achieved $ 75 Achieved (3)

$ 6.8 Probable $ 95 Not yet achieved (4)

$ 8.0 Probable $ 120 Not yet achieved

$ 6.8 Achieved $ 95 Achieved (4)

$ 8.0 Probable $ 120 Achieved (5)

(1) The vesting of the first tranche of 200,000 option shares under the 2021 CEO Performance Stock Option, representing one-fifth of such award, was certified by the Company ’ s Compensation Committee in August 2022.

1 unchanged sentence

(3) The vesting of the third tranche of 200,000 option shares under the 2021 CEO Performance Stock Option representing one-fifth of such award was certified by the Company ’ s Compensation Committee in January 2023.

(4) The $ 95 stock price milestone was achieved subsequent to March 31, 2023, and was certified by the Company’s Compensation Committee in April 2023.

(4) The vesting of the fourth tranche of 200,000 option shares under the 2021 CEO Performance Stock Option representing one-fifth of such award was certified by the Company ’ s Compensation Committee in September 2023.

(5) On June 19, 2023, the Compensation Committee certified achievement of the $ 120 stock price milestone based upon the 60 trading day average stock price from March 6, 2023 through May 30, 2023.

On the grant date, a Monte Carlo simulation was used to determine for each tranche (i) a fixed expense amount for such tranche and (ii) the future time when the market price milestone for such tranche was expected to be achieved, or its “expected market price milestone achievement time.” Separately, based on a subjective assessment of the Company’s future financial performance, each quarter, the Company will determine whether achievement is probable for each operational milestone that has not previously been achieved or deemed probable of achievement, and, if so, the future time when the Company expects to achieve that operational milestone, or its “expected operational milestone achievement time.” When the Company first determines that an operational milestone has become probable of being achieved, the Company will allocate the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting time.” The “expected vesting time” at any given time is the later of (i) the expected operational milestone achievement time (if the related operational milestone has not yet been achieved) and (ii) the expected market price milestone achievement time (if the related market price milestone has not yet been achieved).

1 unchanged sentence

Each quarter thereafter, the Company will recognize the prorated portion of the then-remaining expense for the tranche based on the number of quarters between such quarter and the then-applicable expected vesting time, except that upon vesting of a tranche, all remaining expenses for that tranche will be immediately recognized.

During the three and nine months ended March 31, 2023, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 0.5 million and $ 3.8 million, respectively.

During the three and nine months ended March 31, 2022, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 1.5 million and $ 5.3 million, respectively.

As of March 31, 2023 and June 30, 2022, the Company had $ 1.8 million and $ 5.6 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

The unrecognized compensation cost as of March 31, 2023 is expected to be recognized over a period of more than 1.25 years.

During the three months ended September 30, 2023 and 2022, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 0.2 million and $ 1.3 million, respectively.

As of September 30, 2023 and June 30, 2023, the Company had $ 0.5 million and $ 0.7 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

The unrecognized compensation cost as of September 30, 2023 is expected to be recognized over a period of 0.5 years.

SMCI | Q1 2024 Form 10-Q | 23

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes stock option activity during the nine months ended March 31, 2023 under all plans:

The following table summarizes stock option activity during the three months ended September 30, 2023 under all plans:

Outstanding Weighted

5 unchanged sentences

Forfeited/Cancelled ( 4,041 ) $ 50.83

Balance as of March 31, 2023 3,420,203 $ 36.87 6.32

Options vested and exercisable at March 31, 2023 2,136,763 $ 30.76 5.01

Balance as of September 30, 2023 3,356,147 $ 62.71 6.66

Options vested and exercisable at September 30, 2023 2,092,330 $ 34.42 5.47

RSU and PRSU Activity

The following table summarizes RSU and PRSU activity during the nine months ended March 31, 2023 under all plans:

The following table summarizes RSU and PRSU activity during the three months ended September 30, 2023 under all plans:

Time-Based RSUs

5 unchanged sentences

Forfeited ( 31,724 ) $ 91.38

Balance as of March 31, 2023 1,970,072 $ 47.25

Balance as of September 30, 2023 2,178,074 $ 104.49

SMCI | Q1 2024 Form 10-Q | 24

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded a provision for income taxes of $ 10.9 million and $ 79.4 million for the three and nine months ended March 31, 2023, respectively, and $ 16.2 million and $ 27.1 million for the three and nine months ended March 31, 2022, respectively.

The effective tax rate was 11.1 % and 15.0 % for the three and nine months ended March 31, 2023, respectively, and 17.4 % and 15.9 % for the three and nine months ended March 31, 2022, respectively.

The effective tax rate for the three months ended March 31, 2023 is lower than that for the three months ended March 31, 2022, primarily due to an increase in the tax deduction for stock compensation in the three months ended March 31, 2023.

The effective tax rate for the nine months ended March 31, 2023 is lower than that for the nine months ended March 31, 2022, primarily due to a significant increase in tax deductible stock compensation expense in the third quarter of fiscal year 2023.

The Company recorded a provision for income taxes of $ 20.2 million and $ 38.9 million for the three months ended September 30, 2023 and 2022, respectively.

The effective tax rate was 11.4 % and 17.4 % for the three months ended September 30, 2023 and 2022, respectively.

The effective tax rate for the three months ended September 30, 2023 is lower than that for the three months ended September 30, 2022, primarily due to an increase in the tax deduction for stock compensation in the three months ended September 30, 2023.

The Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development (“R&D”) expenses in the year incurred and instead requires taxpayers to capitalize R&D expenses, including software development cost, and subsequently amortize such expenses over five years for R&D activities conducted in the United States and over fifteen years for R&D activities conducted outside of the United States beginning in the Company's fiscal year 2023.

Although Congress has considered legislation that would defer, modify, and repeal the capitalization and amortization requirement, there is no assurance the provision will be deferred, repealed, or otherwise modified.

As of March 31, 2023, the Company had gross unrecognized tax benefits of $ 41.3 million, of which, $ 23.5 million if recognized, would affect the Company's effective tax rate.

During the nine months ended March 31, 2023, there was a $ 2.4 million increase in gross unrecognized tax benefits.

The Company's policy is to include interest and penalties related to unrecognized tax benefits within the provision for taxes on the condensed consolidated statements of operations.

As of March 31, 2023, the Company had accrued $ 3.4 million of interest and penalties relating to unrecognized tax benefits.

The Company believes that it has adequately provided reserves for all uncertain tax positions;

however, amounts that may be asserted by tax authorities could be greater or less than the Company's current position.

Accordingly, the Company's provision for federal, state, and foreign tax related matters to be recorded in the future may change as revised estimates are made or as the underlying matters are settled or otherwise resolved.

The federal statute of limitations remains open in general for tax years ended June 30, 2019 through 2022.

however, amounts asserted by tax authorities could be greater or less than the Company’s current position.

Accordingly, the Company’s provision on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or as the underlying matters are settled or otherwise resolved.

In general, the federal statute of limitations remains open for tax years ended June 30, 2020 through 2023.

Various states’ statutes of limitations remain open in general for tax years ended June 30, 2019 through 2023.

Certain statutes of limitations in major foreign jurisdictions remain open in general for the tax years ended June 30, 2017 through 2022.

Certain statutes of limitations in major foreign jurisdictions remain open for the tax years ended June 30, 2018 through 2023.

It is reasonably possible that the Company’s gross unrecognized tax benefits will decrease by approximately $ 3.2 million, in the next 12 months, due to the lapse of the statute of limitations.

These adjustments, if recognized, would positively impact the Company’s effective tax rate, and would be recognized as additional tax benefits.

SMCI | Q3 2023 Form 10-Q | 30

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Commitments and Contingencies

Litigation and Claims— On February 8, 2018, two putative class action complaints were filed against the Company, the Company's Chief Executive Officer, and the Company's former Chief Financial Officer in the U.S.

District Court for the Northern District of California (Hessefort v.

Super Micro Computer, Inc., et al., No.

18-cv-00838 and United Union of Roofers v.

Super Micro Computer, Inc., et al., No.

18-cv-00850).

The complaints contain similar allegations, claiming that the defendants violated Section 10(b) of the Securities Exchange Act due to alleged misrepresentations and/or omissions in public statements regarding recognition of revenue.

The court subsequently appointed New York Hotel Trades Council & Hotel Association of New York City, Inc.

Pension Fund as lead plaintiff.

The lead plaintiff then filed an amended complaint naming the Company's Senior Vice President of Investor Relations as an additional defendant.

On June 21, 2019, the lead plaintiff filed a further amended complaint naming the Company's former Senior Vice President of International Sales, Corporate Secretary, and Director as an additional defendant.

On July 26, 2019, the Company filed a motion to dismiss the complaint.

On March 23, 2020, the Court granted the Company’s motion to dismiss the complaint, with leave for lead plaintiff to file an amended complaint within 30 days.

On April 22, 2020, lead plaintiff filed a further amended complaint.

On June 5, 2020, the Company filed a motion to dismiss the further amended complaint, the hearing for which was calendared for September 23, 2020;

however, the Court held a conference on September 15 to discuss how the Court could efficiently address the recent SEC settlement agreement.

The parties stipulated to allow plaintiffs to further amend the complaint solely to add allegations relating to the SEC settlement.

On October 14, 2020, plaintiffs filed a Fourth Amended Complaint.

On October 28, 2020, defendants filed a supplemental motion to dismiss.

On March 29, 2021, the Court granted in part and denied in part defendants’ motions to dismiss.

Plaintiffs’ claims under Sections 10(b) and 20 of the Exchange Act were dismissed with prejudice as against the Company’s former head of Investor Relations, Perry Hayes.

Plaintiffs’ Section 10(b) claim, but not the Section 20 claim, was likewise dismissed as to Wally Liaw, a founder, former director, and former SVP of International Sales.

The Court denied the motions to dismiss the Section 10(b) and Section 20 claims against the Company, Charles Liang, and Howard Hideshima, the Company’s former CFO.

On March 11, 2022, the Company, together with the individual defendants, agreed in principle with plaintiff’s counsel to settle the action.

On April 8, 2022, the parties entered into a stipulation of settlement, pursuant to which and subject to Court approval, plaintiff will dismiss with prejudice and release on behalf of a class of shareholders all claims against defendants, including the Company, in exchange for payment of $ 18,250,000 , of which sum $ 2,000,000 will be funded by the Company.

On May 25, 2022, the Court vacated the hearing on preliminary approval of the proposed settlement scheduled for June 2, 2022, stating that the unopposed motion was suitable for disposition without oral argument.

All settlement funds have been transferred into an account controlled by the settlement’s escrow agent.

No settlement funds will be distributed until the Court grants final approval.

On November 8, 2022, the Court granted preliminary approval and calendared a hearing on March 2, 2023 for final approval, which the Court continued to May 4, 2023.

At the May 4, 2023 hearing, the Court indicated that it planned to grant final approval in a subsequent order, which will fully resolve the action.

Other legal proceedings and indemnifications

Legal proceedings and indemnifications

From time to time, the Company has been involved in various legal proceedings arising from the normal course of business activities.

The resolution of any such matters have not had a material impact on the Company’s consolidated financial condition, results of operations or liquidity as of March 31, 2023 and any prior periods.

The resolution of any such matters have not had a material impact on the Company’s consolidated financial condition, results of operations or liquidity as of September 30, 2023 and any prior periods.

The Company has entered into indemnification agreements with its current and former directors and executive officers.

3 unchanged sentences

Purchase Commitments — The Company has agreements to purchase inventory and non-inventory items primarily through the next 12 months.

As of March 31, 2023, these remaining noncancelable commitments were $ 932.8 million, including $ 83.3 million for related parties.

SMCI | Q3 2023 Form 10-Q | 31

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Lease Commitments - See Part I, Item 1, Note 7, "Leases," for a discussion of the Company's operating lease and financing lease commitments.

As of September 30, 2023, these remaining noncancelable commitments were $ 1.4 billion, including $ 66.4 million for related parties.

Segment Reporting

1 unchanged sentence

The Company’s chief operating decision maker is the Chief Executive Officer.

SMCI | Q1 2024 Form 10-Q | 25

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following is a summary of property, plant and equipment, net (in thousands):

March 31, June 30,

September 30, June 30,

Long-lived assets:

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements