What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-06 compared with 2024-02-02 · 339 added, 269 removed, 617 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands, except par value per share amounts)

December 31, June 30,

March 31, June 30,

Current assets:

Cash and cash equivalents $ 2,115,476 $ 440,459

Accounts receivable, net of allowance for credit losses of $ 77 and $ 82 at December 31, 2023 and June 30, 2023, respectively (including accounts receivable from related parties of $ 3,859 and $ 5,473 at December 31, 2023 and June 30, 2023, respectively)

Accounts receivable, net of allowance for credit losses of $ 75 and $ 82 at March 31, 2024 and June 30, 2023, respectively (including accounts receivable from related parties of $ 1,110 and $ 5,473 at March 31, 2024 and June 30, 2023, respectively)

1,650,153 1,148,259

Inventories 4,124,587 1,445,564

Prepaid expenses and other current assets (including receivables from related parties of $ 34,293 and $ 27,732 at December 31, 2023 and June 30, 2023, respectively)

Prepaid expenses and other current assets (including receivables from related parties of $ 30,249 and $ 27,732 at March 31, 2024 and June 30, 2023, respectively)

173,716 145,144

6 unchanged sentences

Current liabilities:

Accounts payable (including amounts due to related parties of $ 101,700 and $ 89,134 at December 31, 2023 and June 30, 2023, respectively)

Accounts payable (including amounts due to related parties of $ 102,582 and $ 89,134 at March 31, 2024 and June 30, 2023, respectively)

$ 1,092,445 $ 776,831

Accrued liabilities (including amounts due to related parties of $ 18,509 and $ 14,017 at December 31, 2023 and June 30, 2023, respectively)

Accrued liabilities (including amounts due to related parties of $ 18,798 and $ 14,017 at March 31, 2024 and June 30, 2023, respectively)

290,370 163,865

Income taxes payable 20,021 129,166

Short-term debt 276,307 170,123

Lines of credit and current portion of term loans

81,566 170,123

Deferred revenue 233,293 134,667

1 unchanged sentence

Deferred revenue, non-current 203,198 169,781

Long-term debt 99,322 120,179

85,646 120,179

Convertible notes

Other long-term liabilities 65,831 37,947

5 unchanged sentences

Issued and outstanding shares:

55,917 and 52,901 at December 31, 2023 and June 30, 2023, respectively

58,552 and 52,901 at March 31, 2024 and June 30, 2023, respectively

2,805,008 538,352

12 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

Net sales (including related party sales of $ 15,781 and $ 20,073 in the three months ended December 31, 2023 and 2022, respectively, and $ 33,177 and $ 45,126 in the six months ended December 31, 2023 and 2022, respectively)

Net sales (including related party sales of $ 25,804 and $ 9,188 in the three months ended March 31, 2024 and 2023, respectively, and $ 58,980 and $ 54,316 in the nine months ended March 31, 2024 and 2023, respectively)

$ 3,850,066 $ 1,283,296 $ 9,634,662 $ 4,938,621

Cost of sales (including related party purchases of $ 112,445 and $ 98,743 in the three months ended December 31, 2023 and 2022, respectively, and $ 225,552 and $ 195,279 in the six months ended December 31, 2023 and 2022, respectively)

Cost of sales (including related party purchases of $ 130,397 and $ 87,732 in the three months ended March 31, 2024 and 2023, respectively, and $ 355,948 and $ 283,010 in the nine months ended March 31, 2024 and 2023, respectively)

3,252,698 1,056,937 8,119,281 4,027,305

6 unchanged sentences

Income from operations 378,314 99,082 922,288 534,387

Other (expense) income, net

Other income (expense), net

10,035 ( 78 ) 8,762 1,641

1 unchanged sentence

Income before income tax provision 382,103 97,716 914,810 529,046

Income tax provision ( 61,503 ) ( 29,573 ) ( 81,718 ) ( 68,507 )

Income tax benefit (provision)

19,983 ( 10,857 ) ( 61,735 ) ( 79,364 )

Share of income (loss) from equity investee, net of taxes

13 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

Net income $ 402,459 $ 85,846 $ 855,422 $ 446,429

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) 6 98 18 ( 299 )

Total other comprehensive income (loss), net of tax 6 98 18 ( 299 )

Other comprehensive (loss) income, net of tax:

Foreign currency translation (loss) gain

( 108 ) 71 ( 90 ) ( 228 )

Total other comprehensive (loss) income, net of tax

( 108 ) 71 ( 90 ) ( 228 )

Total comprehensive income $ 402,351 $ 85,917 $ 855,332 $ 446,201

4 unchanged sentences

(in thousands, except share amounts)

Three Months Ended December 31, 2023 Common Stock and

Three Months Ended March 31, 2024 Common Stock and

Additional Paid-In

Capital Accumulated

Comprehensive Income Retained

Comprehensive Income (Loss)

Earnings Non-controlling Interest Total

1 unchanged sentence

Shares Amount

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

Exercise of stock options, net of taxes 152,452 5,287 — — — 5,287

Release of common stock shares upon vesting of restricted stock units 213,366 — — — — —

Balance at December 31, 2023 55,917,304 $ 1,190,276 $ 657 $ 1,885,977 $ 164 $ 3,077,074

Exercise of stock options 436,901 15,540 — — — 15,540

Release of common stock upon vesting of restricted stock units 291,428 — — — — —

Shares withheld for the withholding tax on vesting of restricted stock units ( 93,737 ) ( 78,391 ) — — — ( 78,391 )

1 unchanged sentence

2,000,000 1,731,186 — — — 1,731,186

Purchase of capped calls, net of tax

— ( 109,710 ) — — — ( 109,710 )

Stock-based compensation — 56,107 — — — 56,107

Other comprehensive income — — 6 — — 6

Net income — — — 295,968 3 295,971

Balance at December 31, 2023 55,917,304 $ 1,190,276 $ 657 $ 1,885,977 $ 164 $ 3,077,074

Three Months Ended December 31, 2022

Common Stock and

Other comprehensive loss

— — ( 108 ) — — ( 108 )

Net income (loss)

— — — 402,459 ( 1 ) 402,458

Balance at March 31, 2024 58,551,896 $ 2,805,008 $ 549 $ 2,288,436 $ 163 $ 5,094,156

Three Months Ended March 31, 2023 Common Stock and

Additional Paid-In

4 unchanged sentences

Shares Amount

Balance at September 30, 2022

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

Exercise of stock options

452,835 9,495 — — — 9,495

Exercise of stock options, net of taxes 347,666 7,183 — — — 7,183

Release of common stock shares upon vesting of restricted stock units 290,471 — — — — —

Release of common stock upon vesting of restricted stock units

275,890 — — — — —

Shares withheld for the withholding tax on vesting of restricted stock units ( 91,935 ) ( 8,938 ) — — — ( 8,938 )

Share repurchases, retirement and related taxes ( 1,553,350 ) ( 489 ) — ( 149,907 ) — ( 150,396 )

Stock-based compensation — 13,652 — — — 13,652

1 unchanged sentence

— — 71 — — 71

Net income (loss) — — — 176,167 ( 2 ) 176,165

Balance at December 31, 2022

53,400,301 $ 514,559 $ 612 $ 1,303,506 $ 165 $ 1,818,842

Net income — — — 85,846 1 85,847

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

SMCI | Q3 2024 Form 10-Q | 4

Six Months Ended December 31, 2023

Common Stock and

Nine Months Ended March 31, 2024 Common Stock and

Additional Paid-In

Capital Accumulated

Comprehensive Income Retained

Comprehensive Income (Loss)

Earnings Non-controlling Interest Total

3 unchanged sentences

52,901,358 $ 538,352 $ 639 $ 1,433,014 $ 165 $ 1,972,170

Exercise of stock options, net of taxes 341,409 9,574 — — — 9,574

Release of common stock shares upon vesting of restricted stock units 511,022 — — — — —

Exercise of stock options

778,310 25,114 — — — 25,114

Release of common stock upon vesting of restricted stock units

802,450 — — — — —

Shares withheld for the withholding tax on vesting of restricted stock units ( 245,327 ) ( 119,285 ) — — — ( 119,285 )

Issuance of common stock in a public offering, net of issuance costs

Issuances of common stock in public offerings, net of issuance costs 4,315,105 2,313,990 — — — 2,313,990

Purchase of capped calls, net of tax

— ( 109,710 ) — — — ( 109,710 )

Stock-based compensation — 156,547 — — — 156,547

Other comprehensive income — — 18 — — 18

Net income (loss)

Other comprehensive loss

— — ( 90 ) — — ( 90 )

Balance at December 31, 2023

Net income (loss)

— — — 855,422 ( 2 ) 855,420

Six Months Ended December 31, 2022

Common Stock and

Balance at March 31, 2024 58,551,896 $ 2,805,008 $ 549 $ 2,288,436 $ 163 $ 5,094,156

Nine Months Ended March 31, 2023 Common Stock and

Additional Paid-In

5 unchanged sentences

Balance at June 30, 2022 52,311,014 $ 481,741 $ 911 $ 942,923 $ 172 $ 1,425,747

Exercise of stock options, net of taxes 752,892 15,327 — — — 15,327

Release of common stock shares upon vesting of restricted stock units 484,003 — — — — —

Exercise of stock options

1,205,727 24,822 — — — 24,822

Release of common stock upon vesting of restricted stock units

759,893 — — — — —

Shares withheld for the withholding tax on vesting of restricted stock units ( 239,543 ) ( 19,442 ) — — — ( 19,442 )

Share repurchases, retirement and related taxes ( 1,553,350 ) ( 489 ) — ( 149,907 ) — ( 150,396 )

Stock-based compensation — 41,647 — — — 41,647

2 unchanged sentences

Net income (loss) — — — 446,429 ( 6 ) 446,423

Balance at December 31, 2022

53,400,301 $ 514,559 $ 612 $ 1,303,506 $ 165 $ 1,818,842

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

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

OPERATING ACTIVITIES:

5 unchanged sentences

( 2,347 ) 3,253

Foreign currency exchange loss (gain)

Unrealized foreign currency exchange gain

( 282 ) ( 2,497 )

2 unchanged sentences

Changes in operating assets and liabilities:

Accounts receivable, net (including changes in related party balances of $ 1,614 and $ 3,178 during the six months ended December 31, 2023 and 2022, respectively)

Accounts receivable, net (including changes in related party balances of $ 4,363 and $ 6,367 during the nine months ended March 31, 2024 and 2023, respectively)

( 507,870 ) 165,883

Inventories ( 2,679,023 ) 5,187

Prepaid expenses and other assets (including changes in related party balances of $( 6,561 ) and $( 22,925 ) during the six months ended December 31, 2023 and 2022, respectively)

Accounts payable (including changes in related party balances of $ 12,566 and $ 751 during the six months ended December 31, 2023 and 2022, respectively)

Prepaid expenses and other assets (including changes in related party balances of $( 2,517 ) and $( 8,573 ) during the nine months ended March 31, 2024 and 2023, respectively)

( 25,673 ) 15,088

Accounts payable (including changes in related party balances of $ 13,448 and $( 11,242 ) during the nine months ended March 31, 2024 and 2023, respectively)

309,613 ( 9,120 )

Income taxes payable ( 99,824 ) 50,855

Accrued liabilities (including changes in related party balances of $ 4,492 and $ 851 during the six months ended December 31, 2023 and 2022, respectively)

Accrued liabilities (including changes in related party balances of $ 4,781 and $( 324 ) during the nine months ended March 31, 2024 and 2023, respectively)

123,937 ( 62,639 )

Deferred revenue 132,043 76,062

Other long-term liabilities (including changes in related party balances of $( 152 ) and $( 168 ) during the six months ended December 31, 2023 and 2022, respectively)

Other long-term liabilities (including changes in related party balances of $( 178 ) and $( 241 ) during the nine months ended March 31, 2024 and 2023, respectively)

5,424 ( 3,883 )

Net cash (used in) provided by operating activities

1 unchanged sentence

INVESTING ACTIVITIES:

Purchases of property, plant and equipment (including payments to related parties of $ 4,528 and $ 4,514 during the six months ended December 31, 2023 and 2022, respectively)

Purchases of property, plant and equipment (including payments to related parties of $ 9,132 and $ 6,325 during the nine months ended March 31, 2024 and 2023, respectively)

( 110,296 ) ( 28,618 )

1 unchanged sentence

Net cash used in investing activities ( 131,969 ) ( 28,618 )

( 22,535 ) ( 20,631 )

FINANCING ACTIVITIES:

Proceeds from borrowings 857,683 144,037

Repayment of debt ( 776,987 ) ( 564,662 )

Proceeds from exercise of stock options, net of taxes 9,574 15,327

Proceeds from lines of credit and term loans

1,818,850 164,326

Repayment of lines of credit and term loans

( 1,939,590 ) ( 570,446 )

Proceeds from exercise of stock options

25,114 24,822

Payment of withholding tax on vesting of restricted stock units ( 119,285 ) ( 19,442 )

Issuance of common stock in a public offering, net of issuance costs

Stock repurchases — ( 146,526 )

Issuances of common stock in public offerings, net of issuance costs 2,313,990 —

Proceeds from issuance of 2029 convertible notes, net of issuance costs

Purchase of capped calls ( 142,140 ) —

Other 76 ( 25 )

6 unchanged sentences

Cash, cash equivalents and restricted cash at the end of the period $ 2,115,982 $ 363,300

SMCI | Q3 2024 Form 10-Q | 6

Supplemental disclosure of cash flow information:

1 unchanged sentence

Cash paid for taxes, net of refunds $ 300,596 $ 107,054

SMCI | Q2 2024 Form 10-Q | 6

Non-cash investing and financing activities:

Unpaid property, plant and equipment purchases (including due to related parties of $ 2,577 and $ 1,764 as of December 31, 2023 and 2022, respectively)

Unpaid property, plant and equipment purchases (including due to related parties of $ 1,492 and $ 1,391 as of March 31, 2024 and 2023, respectively)

$ 9,345 $ 2,885

Right of use ("ROU") assets obtained in exchange for operating lease commitments $ 24,140 $ 1,679

Unpaid stock repurchases $ — $ 3,472

Investment obtained in exchange for an asset

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 six months ended December 31, 2023 are not necessarily indicative of the results that may be expected for future quarters or for the fiscal year ending June 30, 2024.

The consolidated results of operations for the three and nine months ended March 31, 2024 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.

3 unchanged sentences

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

Two suppliers accounted for 68.1 % and 7.3 % of total purchases for the three months ended December 31, 2023, and the same two suppliers accounted for 17.6 % and 14.1 % of total purchases for the three months ended December 31, 2022.

Two suppliers accounted for 62.9 % and 8.6 % of total purchases for the six months ended December 31, 2023, and the same two suppliers accounted for 22.3 % and 15.3 % of total purchases for the six months ended December 31, 2022.

The increase in concentration of total purchases to one of the Company's suppliers to 68.1 % and 62.9 % of total purchases for the three and six months ended December 31, 2023, respectively, is as a result of the purchase of key components 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 3.6 % and 6.7 % of total cost of sales for the three months ended December 31, 2023 and 2022, respectively, and a combined 4.6 % and 6.6 % of total cost of sales for the six months ended December 31, 2023 and 2022, respectively.

Supplier A accounted for 69.8 % and supplier B accounted for 5.1 % of total purchases for the three months ended March 31, 2024, and supplier A accounted for 26.9 % and supplier B accounted for 16.9 % of total purchases for the three months ended March 31, 2023.

Supplier A accounted for 65.8 % and supplier B accounted for 7.1 % of total purchases for the nine months ended March 31, 2024, and supplier A accounted for 23.6 % and supplier B accounted for 15.8 % of total purchases for the nine months ended March 31, 2023.

The increase in the concentration of the Company's total purchases from supplier A for 69.8 % and 65.8 % of total purchases for the three and nine months ended March 31, 2024, respectively, is as a result of the purchase of key components 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 9, "Related Party Transactions") accounted for a combined 4.0 % and 8.3 % of total cost of sales for the three months ended March 31, 2024 and 2023, respectively, and a combined 4.4 % and 7.0 % of total cost of sales for the nine months ended March 31, 2024 and 2023, respectively.

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.

Four customers accounted for 26.7 %, 16.3 %, 13.0 % and 11.3 % of accounts receivable, net as of December 31, 2023.

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

Customer A accounted for 27.9 %, customer E accounted for 18.1 % and customer B accounted for 15.4 % of accounts receivable, net as of March 31, 2024.

Customer A accounted for 22.9 % and customer B accounted for 19.3 % of accounts receivable, net as of June 30, 2023.

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

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Two customers accounted for 25.5 % and 10.4 % of the net sales for the three months ended December 31, 2023 and o ne customer accounted for 25.3 % of the net sales for the six months ended December 31, 2023.

No single customer accounted for 10% or more of the net sales for the three months ended December 31, 2022 , and one customer accounted for 15.8 % of the net sales for the six months ended December 31, 2022 .

Customer A accounted for 21.2 % and customer B accounted for 16.8 % of the net sales for the three months ended March 31, 2024 and customer A accounted for 23.7 % of the net sales for the nine months ended March 31, 2024.

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

Accounting Pronouncements Not Yet Adopted

15 unchanged sentences

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

8 unchanged sentences

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 six months ended December 31, 2023 and 2022, of net sales by geographic region (in thousands):

The following is a summary for the three and nine months ended March 31, 2024 and 2023, of net sales by geographic region (in thousands):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

13 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 six months ended December 31, 2023, which was included in the opening deferred revenue balance as of June 30, 2023, of $ 304.4 million, was $ 31.5 million and $ 75.2 million, respectively.

Deferred revenue increased $ 79.2 million as of December 31, 2023 as compared to the fiscal year ended June 30, 2023.

This increase was mainly due to a $ 44.3 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 and nine months ended March 31, 2024, which was included in the opening deferred revenue balance as of June 30, 2023, of $ 304.4 million, was $ 28.9 million and $ 104.1 million, respectively.

Deferred revenue increased $ 132.0 million as of March 31, 2024 as compared to the fiscal year ended June 30, 2023.

This increase was mainly due to 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 $ 24.7 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 December 31, 2023 was approximately $ 383.6 million .

The value of the transaction price allocated to remaining performance obligations as of March 31, 2024 was approximately $ 436.5 million .

The Company expects to recognize approximately 53 % of remaining performance obligations as revenue in the next 12 months, and the remainder thereafter.

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Capitalized Contract Acquisition Costs and Fulfillment Cost

Contract acquisition costs are those incremental costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained.

Contract acquisition costs consist primarily of incentive bonuses paid to Company employees.

Contract acquisition costs are considered incremental and recoverable costs of obtaining and fulfilling a contract with a customer and are therefore capitalizable.

The Company applies the practical expedient to expense incentive bonus costs as incurred if the amortization period would be one year or less, generally upon delivery of the associated server and storage systems or components.

Where the amortization period of the contract cost would be more than a year, the Company applies judgment in the allocation of the incentive bonus cost asset between hardware and service performance obligations and expenses the cost allocated to the hardware performance obligations upon delivery of associated server and storage systems or components and amortizes the cost allocated to service performance obligations over the period the services are expected to be provided.

Contract acquisition costs allocated to service performance obligations that are subject to capitalization are insignificant to the Company’s condensed consolidated financial statements.

Contract fulfillment costs consist of costs paid in advance for outsourced services provided by third parties to the extent they are not in the scope of other guidance.

Fulfillment costs paid in advance for outsourced services provided by third parties are capitalized and amortized over the period the services are expected to be provided.

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

Net Income Per Common Share

The following table shows the computation of basic and diluted net income per common share for the three and six months ended December 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 and nine months ended March 31, 2024 and 2023 (in thousands, except per share amounts):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

Net income $ 295,968 $ 176,167 $ 452,963 $ 360,583

Weighted-average shares outstanding 54,135 53,160 53,614 52,726

Net income - basic $ 402,459 $ 85,846 $ 855,422 $ 446,429

Convertible notes interest charge, net of tax

Net income - diluted

$ 402,844 $ 85,846 $ 855,807 $ 446,429

Weighted-average shares outstanding - basic 56,478 53,280 54,562 53,011

Effect of dilutive convertible notes

Effect of dilutive securities 4,482 2,953 4,172 2,785

Weighted-average diluted shares 58,078 56,144 57,632 55,427

Basic net income per common share $ 5.47 $ 3.31 $ 8.45 $ 6.84

Diluted net income per common share $ 5.10 $ 3.14 $ 7.86 $ 6.51

For the three and six months ended December 31, 2023 and 2022, the Company had stock options and restricted stock units ("RSUs") 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 584,855 and 211,729 for the three months ended December 31, 2023 and 2022, respectively, and 461,292 and 259,562 for the six months ended December 31, 2023 and 2022, respectively.

Weighted-average shares outstanding - diluted 61,431 56,233 58,889 55,796

Net income per common share - basic $ 7.13 $ 1.61 $ 15.68 $ 8.42

Net income per common share - diluted $ 6.56 $ 1.53 $ 14.53 $ 8.00

For the three and nine months ended March 31, 2024 and 2023, the Company had stock options and restricted stock units ("RSUs") 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 8,804 and 187,358 for the three months ended March 31, 2024 and 2023, respectively, and 310,463 and 235,494 for the nine months ended March 31, 2024 and 2023, respectively.

Potentially dilutive common shares issuable upon conversion of our outstanding convertible notes are determined using the if-converted method.

SMCI | Q3 2024 Form 10-Q | 11

4 unchanged sentences

Cash, Cash Equivalents and Restricted Cash:

December 31, 2023 June 30, 2023

March 31, 2024 June 30, 2023

Cash and cash equivalents $ 2,115,476 $ 440,459

1 unchanged sentence

Total cash, cash equivalents and restricted cash $ 2,115,982 $ 440,960

December 31, 2023 June 30, 2023

March 31, 2024 June 30, 2023

Finished goods $ 2,984,698 $ 1,045,177

3 unchanged sentences

Property, Plant, and Equipment:

December 31, 2023 June 30, 2023

March 31, 2024 June 30, 2023

Land $ 149,394 $ 86,642

Buildings 163,510 143,496

Machinery and equipment 145,549 130,151

Land 90,754 86,642

Building and leasehold improvements 65,185 59,634

5 unchanged sentences

Property, plant and equipment, net $ 385,566 $ 290,240

SMCI | Q2 2024 Form 10-Q | 12

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accrued Liabilities:

December 31, 2023 June 30, 2023

Accrued payroll and related expenses $ 64,237 $ 53,439

March 31, 2024 June 30, 2023

Customer deposits $ 73,786 $ 16,577

Accrued payroll and related expenses 54,745 53,439

Contract manufacturers liabilities 27,496 23,634

2 unchanged sentences

Operating lease liability 8,154 7,292

Accrued professional fees 756 2,363

Other 102,625 44,100

Total accrued liabilities $ 290,370 $ 163,865

SMCI | Q3 2024 Form 10-Q | 12

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Product Warranties:

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

9 unchanged sentences

The Company classifies its financial instruments, except for its investment in an auction rate security, within Level 1 or Level 2 in the fair value hierarchy because the Company uses quoted prices in active markets or alternative pricing sources and models using market observable inputs to determine their fair value.

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 December 31, 2023 and June 30, 2023.

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:

1 unchanged sentence

The liquidity discount assumption is based on the management estimate of lack of marketability discount of similar securities and is determined based on the analysis of financial market trends over time, recent redemptions of securities and other market activities.

SMCI | Q2 2024 Form 10-Q | 13

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Assets and Liabilities Measured on a Recurring Basis

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

Financial Instruments Measured on a Recurring Basis

The following table sets forth the Company’s financial instruments as of March 31, 2024 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):

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

March 31, 2024 Level 1 Level 2 Level 3 Asset at

Money market funds (1)

2 unchanged sentences

Investment in marketable equity security 2,652 — — 2,652

4,176 — — 4,176

Auction rate security — — 1,843 1,843

6 unchanged sentences

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

(1) $ 0.1 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 December 31, 2023 and June 30, 2023, respectively.

(2) $ 0.2 million and $ 0.2 million in certificates of deposit are included in cash and cash equivalents, $ 0.1 million and $ 0.1 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 December 31, 2023 and June 30, 2023, respectively.

SMCI | Q3 2024 Form 10-Q | 13

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

1 unchanged sentence

The unrealized gains and losses of the investment is included in earnings.

The condensed consolidated statement of operations for the three and six months ended December 31, 2023, includes an unrealized gain of $ 0.3 million and a loss of $ 0.8 million, respectively, which have been recorded in Other income, net.

The condensed consolidated statement of operations for the three and nine months ended March 31, 2024, includes an unrealized loss of $ 1.5 million and $ 2.3 million, respectively, which have been recorded in Other income, net.

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.

For the three and six months ended December 31, 2023, the credit losses related to the Company’s investments were not material.

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 and six months ended December 31, 2023 and 2022.

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

SMCI | Q2 2024 Form 10-Q | 14

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

For the three and nine months ended March 31, 2024, the credit losses related to the Company’s investments were not material.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the three and nine months ended March 31, 2024 and 2023.

The following is a summary of the Company’s investment in an auction rate security as of March 31, 2024 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 six months ended December 31, 2023 and 2022.

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

As of December 31, 2023 and June 30, 2023, total debt of $ 375.6 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.

The amortized cost of the outstanding debt approximates the fair value.

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 $ 0.1 million and $ 1.7 million as of December 31, 2023 and June 30, 2023, respectively.

No gain or loss was recognized in other comprehensive income for the auction rate security for the three and nine months ended March 31, 2024 and 2023.

The Company measures the fair value of outstanding lines of credit and term loans for disclosure purposes on a recurring basis.

As of March 31, 2024 and June 30, 2023, total lines of credit and term loans of $ 167.2 million and $ 290.3 million, respectively, was reported at amortized cost.

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

The amortized cost of the outstanding lines of credit and term loans approximates the fair value.

Convertible notes

The estimated fair value of the Company's 0 % convertible senior notes due 2029 (the "Convertible Notes") was $ 1,911.6 million as of March 31, 2024.

The Company measures the fair value of its convertible notes for disclosure purposes on a recurring basis.

The estimated fair value of the Convertible Notes was determined through consideration of quoted market prices.

The fair value of the Convertible Notes are categorized in Level 2 of the fair value hierarchy.

Other Financial Assets - Investments in 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 $ 22.6 million and $ 1.7 million as of March 31, 2024 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 six months ended December 31, 2023, the Company performed a qualitative assessment and identified impairment indicators.

The Company recorded a $ 0.2 million and $ 1.8 million impairment during the three and six months ended December 31, 2023, respectively, 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 and six months ended December 31, 2022.

During the three and nine months ended March 31, 2024, the Company performed a qualitative assessment and identified impairment indicators.

The Company recorded a $ 0.0 million and $ 1.8 million impairment during the three and nine months ended March 31, 2024, respectively, 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 and nine months ended March 31, 2023.

SMCI | Q3 2024 Form 10-Q | 14

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Short-term and Long-term Debt

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

December 31, June 30,

Lines of Credit and Term Loans

Short-term and long-term loan obligations as of March 31, 2024 and June 30, 2023 consisted of the following (in thousands):

March 31, June 30,

Line of credit:

3 unchanged sentences

2024 CTBC Credit Lines

HSBC Bank Credit Facility 29,704 —

Chang Hwa Bank Credit Facility

2023 HSBC Bank Credit Lines

2022 E.SUN Bank Credit Facility

Mega Bank Credit Facility 7,186 —

9 unchanged sentences

Total term loans 126,815 158,719

Total debt 375,629 290,302

Short-term debt and current portion of long-term debt 276,307 170,123

Debt, non-current $ 99,322 $ 120,179

Total lines of credit and term loans

167,212 290,302

Lines of credit and current portion of term loans

81,566 170,123

Term loans, non-current

$ 85,646 $ 120,179

SMCI | Q3 2024 Form 10-Q | 15

2 unchanged sentences

Activities under Revolving Lines of Credit and Term Loans

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

December 31, 2023

June 30, 2023

Available borrowings and interest rates as of March 31, 2024 and June 30, 2023 consisted of the following (in thousands except for percentages):

March 31, 2024 June 30, 2023

Available borrowings Interest rate Available borrowings Interest rate

5 unchanged sentences

$ — — $ 105,000 3.33 %

2023 CTBC Credit Line

2024 CTBC Credit Lines

$ 160,006 1.94 % - 6.26 %

Chang Hwa Bank Credit Facility $ 20,000 6.30 % $ 20,000 6.58 %

HSBC Bank Credit Facility $ 20,296 1.90 % - 6.37 %

2023 HSBC Bank Credit Lines

$ 41,783 2.03 % - 6.37 %

$ 50,000 4.50 %

2022 E.SUN Bank Credit Facility $ 30,000 6.67 % $ 30,000 4.18 %

Mega Bank Credit Facility $ 12,814 1.90 % - 1.91 %

$ 20,000 2.55 %

Term loan facilities:

11 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 six months ended December 31, 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.

The Company entered into new agreements during the nine months ended March 31, 2024 with the following terms:

SMCI | Q3 2024 Form 10-Q | 16

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

2024 CTBC Bank Credit Lines

On February 16, 2024 (the “Effective Date”), the Company's Taiwan subsidiary entered into a new general agreement for omnibus credit lines with CTBC Bank.

This agreement (which changed arrangements which had been entered into with CTBC Bank in September 2023), increased the aggregate total borrowings under the various individual credit arrangements with CTBC Bank from $ 105.0 million to $ 185.0 million.

The credit arrangements under such general agreement now include the previous 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”), (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 (iv) an import o/a loan line of credit of up to $ 80.0 million available through August 31, 2024 (the “Incremental Import Line,” and, together with the NTD Short Term Loan/Guarantee Line, the USD Short Term Loan Line, and the Export/Import Line, the “Increased CTBC Credit Lines”).

Aggregate borrowings under all the Increased CTBC Credit Lines is subject to a cap of $ 185.0 million.

Interest rates under each of the individual Increased 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 continue to be secured by certain of the Company's Taiwan subsidiary’s assets, including certain property, land, and plant.

The tenor of the Incremental Import Line provides for availability until August 31, 2024 with a final drawdown date of October 30, 2024.

Such Incremental Import Line, which is reviewed quarterly for cancellation by the CTBC Bank, is also subject to an average usage requirement and fee for retaining the underutilized portion of such line.

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.

As of December 31, 2023, the outstanding borrowings under the 2023 CTBC Bank Credit Lines were $ 36.9 million.

The interest rate for these loans were 1.96 % - 6.52 % per annum as of December 31, 2023.

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

The Increased 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.

The Company's Taiwan subsidiary intends to use borrowings under the Increased CTBC Credit Lines in connection with financing of eligible accounts receivable and accounts payable (vendor invoices).

As of March 31, 2024, the outstanding borrowings under the 2024 CTBC Bank Credit Lines were $ 25.0 million.

The interest rate for these loans were 1.94 % - 6.26 % per annum as of March 31, 2024.

SMCI | Q3 2024 Form 10-Q | 17

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2023 HSBC Bank Credit Lines

5 unchanged sentences

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 coverage.

As of December 31, 2023, the outstanding borrowings under HSBC Bank Credit Lines were $ 29.7 million.

The interest rates for these loans were 1.90 % - 6.37 % per annum as of December 31, 2023.

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

As of March 31, 2024, the outstanding borrowings under HSBC Bank Credit Lines were $ 8.2 million.

The interest rates for these loans were 2.03 % - 6.37 % per annum as of March 31, 2024.

Principal payments on lines of credit and term loans are due as follows (in thousands):

Fiscal Year Principal Payments

1 unchanged sentence

2029 and thereafter 10,265

Total short-term and long-term debt $ 375,629

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

Total lines of credit and term loans

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

SMCI | Q3 2024 Form 10-Q | 18

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Convertible Notes

2029 Convertible Notes

In February 2024, the Company issued $ 1,725.0 million aggregate principal amount of Convertible Notes.

The Company received net proceeds from the offering of approximately $ 1,695.8 million.

The Company used approximately $ 142.1 million of the net proceeds to fund the cost of entering into the Capped Call Transactions described below.

The Convertible Notes will mature on March 1, 2029.

The Convertible Notes do not bear regular interest, and the principal amount of the Convertible Notes do not accrete.

The Convertible Notes are convertible into cash, shares of the Company’s common stock, or a combination of cash and shares of common stock, at the Company’s election, at an initial conversion rate of 0.7455 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of $ 1,341.38 per share of common stock.

The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the Convertible Notes (the "Indenture").

Special interest and additional interest will accrue on the Convertible Notes in the circumstances and at the rates described in the Indenture.

The debt issuance costs are amortized to interest expense.

The Convertible Notes do not contain financial maintenance covenants.

Holders may convert their Convertible Notes at their option only in the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2024, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of Company’s common stock on such trading day and the conversion rate on such trading day;

(3) upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the Indenture;

(4) if the Company calls such notes for redemption;

and (5) at any time from, and including, September 1, 2028 until the close of business on the second scheduled trading day immediately before the maturity date.

If the Company undergoes a fundamental change (as defined in the Indenture), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Convertible Notes, at a fundamental change repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid special interest and additional interest, if any, up to, but excluding, the fundamental change repurchase date.

In addition, following certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or during the relevant redemption period.

The Convertible Notes are redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after March 1, 2027 and on or before the 20 th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for a specified period of time.

The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid special and additional interest, if any, to, but excluding, the redemption date.

The Convertible Notes have customary provisions relating to the occurrence of “events of default” (as defined in the Indenture).

The occurrence of such events of default may result in the acceleration of all amounts due under the Convertible Notes.

The Convertible Notes were not eligible for conversion as of March 31, 2024.

No sinking fund is provided for the Convertible Notes.

SMCI | Q3 2024 Form 10-Q | 19

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Convertible Notes are general unsecured obligations of the Company and rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Convertible Notes;

equal in right of payment with all of the Company’s existing and future senior, unsecured indebtedness;

effectively subordinated to any of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness;

and structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity if any, of the Company’s current or future subsidiaries.

As of March 31, 2024, none of the conditions permitting the holders of the Convertible Notes to convert their notes early had been met.

Therefore, the Convertible Notes are classified as long-term.

The Company accounted for the issuance of the Convertible Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

The carrying value of the Convertible Notes, net of unamortized issuance costs of $ 28.7 million, was $ 1,696.3 million as of March 31, 2024.

Interest expense related to the amortization of debt issuance costs was $ 0.5 million for the quarter ended March 31, 2024.

The effective interest rate is 0.34 %.

In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated capped call transactions (collectively, the “Capped Call Transactions”) with certain financial institutions (the “Capped Call Counterparties”).

The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon conversion of the Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of the Convertible Notes, as the case may be, with such reduction and/or offset, in each case subject to a cap.

The Capped Call Transactions have an initial strike price of $ 1,341.38 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Convertible Notes.

The cap price of the Capped Call Transactions was initially $ 1,951.04 per share of common stock, representing a premium of approximately 100 % above the last reported sale price of $ 975.52 per share of common stock on February 22, 2024, and is subject to certain adjustments under the terms of the Capped Call Transactions.

For accounting purposes, each Capped Call Transaction is a separate transaction, and not part of the terms of the Convertible Notes.

As these transactions meet certain accounting criteria, the Capped Call Transactions of $ 142.1 million are recorded in stockholders’ equity and are not accounted for as derivatives.

The Capped Call Transactions will not be remeasured as long as they continue to meet the conditions for equity classification.

The Convertible Notes and the Capped Call Transactions will be integrated for tax purposes.

The accounting impact of this tax treatment results in the Capped Call Transactions being deductible with the cost of the Capped Call Transactions qualifying as original issue discount for tax purposes over the term of the Convertible Notes.

SMCI | Q3 2024 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 six months ended December 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 and nine months ended March 31, 2024 and 2023 were as follows (in thousands):

Three Months Ended

Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

Operating lease expense (including expense for lease agreements with related parties of $ 139 and $ 140 for the three months ended December 31, 2023 and 2022, respectively, and $ 277 and $ 284 for the six months ended December 31, 2023 and 2022, respectively)

Operating lease expense (including expense for lease agreements with related parties of $ 86 and $ 139 for the three months ended March 31, 2024 and 2023, respectively, and $ 363 and $ 422 for the nine months ended March 31, 2024 and 2023, respectively)

$ 2,538 $ 2,129 $ 7,076 $ 6,354

Cash payments for operating leases (including payments to related parties of $ 129 and $ 127 for the three months ended December 31, 2023 and 2022, respectively, and $ 257 and $ 257 for the six months ended December 31, 2023 and 2022, respectively)

Cash payments for operating leases (including payments to related parties of $ 75 and $ 134 for the three months ended March 31, 2024 and 2023, respectively, and $ 333 and $ 391 for the nine months ended March 31, 2024 and 2023, respectively)

$ 2,469 $ 2,146 $ 6,756 $ 6,209

New operating lease assets obtained in exchange for operating lease liabilities $ 22,301 $ 655 $ 24,140 $ 1,679

During the three and six months ended December 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 six months ended December 31, 2023 were $ 0.5 million and $ 0.9 million, respectively.

Non-lease variable payments expensed in the three and six months ended December 31, 2022 were $ 0.4 million and $ 0.9 million, respectively.

As of December 31, 2023, the weighted average remaining lease term for operating leases was 3.1 years and the weighted average discount rate was 4.2 %.

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

On January 31, 2024, the Company entered into a lease for approximately 260,000 square feet of space in San Jose, California for a term of 79 months.

The Company commenced lease payments and accepted the premises, which it is utilizing as warehouse space, in March 2024.

Aggregate payment under the lease is approximately $ 0.3 million per month, subject to an annual increase of 3 %.

On February 9, 2024, the Company consummated the purchase of certain real estate for $ 80.0 million in San Jose, California.

Such purchased real estate was previously under lease, leading to the de-recognition of the related ROU asset of $ 7.9 million and lease liability of $ 8.3 million.

During the three and nine months ended March 31, 2024 and 2023, 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, 2024 were $ 0.6 million and $ 1.6 million, respectively.

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

As of March 31, 2024, the weighted average remaining lease term for operating leases was 4.8 years and the weighted average discount rate was 5.0 %.

Maturities of operating lease liabilities under noncancelable operating lease arrangements as of March 31, 2024 were as follows (in thousands):

Maturities of operating leases

15 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 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 December 31, 2023.

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

6 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 87.2 % and 95.5 % of the chassis included in the products sold by the Company during the three months ended December 31, 2023 and 2022, respectively, and 86.3 % and 91.8 % of the chassis included in the products sold by the Company during the six months ended December 31, 2023 and 2022, respectively.

Ablecom manufactured approximately 95.2 % and 96.3 % of the chassis included in the products sold by the Company during the three months ended March 31, 2024 and 2023, respectively, and 92.7 % and 93.0 % of the chassis included in the products sold by the Company during the nine months ended March 31, 2024 and 2023, 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.

7 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 December 31, 2023 were $ 49.1 million and $ 37.5 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.

Outstanding cancellable and non-cancellable purchase orders from the Company to Ablecom on March 31, 2024 were $ 113.7 million and $ 48.4 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.

19 unchanged sentences

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 December 31, 2023 were $ 121.6 million and $ 49.9 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.

Outstanding cancellable and non-cancellable purchase orders from the Company to Compuware on March 31, 2024 were $ 147.7 million and $ 52.1 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.

4 unchanged sentences

As such, the Corporate Venture is also a related party.

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

There was no balance in the deferred gain in the consolidated balance sheets as of December 31, 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.

The carrying value of the equity investment in the corporate venture was $ 5.1 million and $ 2.0 million as of March 31, 2024 and June 30, 2023, respectively.

The Company does not believe that the equity investment carrying value is impaired as of March 31, 2024 and June 30, 2023.

No impairment charge was recorded for the three and nine months ended March 31, 2024 and 2023.

SMCI | Q3 2024 Form 10-Q | 23

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In June 2020, the third-party parent company that controls the Corporate Venture was placed on a U.S.

government export control list, along with several of such third-party parent’s related entities and a separate listing for one of its subsidiaries.

The Corporate Venture is not itself a restricted party.

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 December 31, 2023.

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

The Company sold products worth $ 11.4 million and $ 6.0 million to the Corporate Venture during the three months ended December 31, 2023 and 2022, respectively, and $ 12.2 million and $ 17.3 million to the Corporate Venture during the six months ended December 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 December 31, 2023 and June 30, 2023 have been eliminated and have reduced the carrying value of the Company’s investment in the Corporate Venture.

The Company sold products worth $ 4.3 million and $ 6.4 million to the Corporate Venture during the three months ended March 31, 2024 and 2023, respectively, and $ 16.5 million and $ 23.6 million to the Corporate Venture during the nine months ended March 31, 2024 and 2023, respectively.

The Company’s share of intra-entity profits on the products that remained unsold by the Corporate Venture as of March 31, 2024 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 $ 3.5 million and $ 1.9 million due from the Corporate Venture in accounts receivable, net as of December 31, 2023 and June 30, 2023, respectively.

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

The Company had $ 0.8 million and $ 1.9 million due from the Corporate Venture in accounts receivable, net as of March 31, 2024 and June 30, 2023, respectively.

The Company had the following balances related to transactions with its related parties as of March 31, 2024 and June 30, 2023 (in thousands):

Ablecom Compuware Corporate Venture Total

December 31, 2023 June 30, 2023 December 31, 2023 June 30, 2023 December 31, 2023 June 30, 2023 December 31, 2023 June 30, 2023

March 31, 2024 June 30, 2023 March 31, 2024 June 30, 2023 March 31, 2024 June 30, 2023 March 31, 2024 June 30, 2023

Accounts receivable $ 3 $ 2 $ 268 $ 3,528 $ 839 $ 1,943 $ 1,110 $ 5,473

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(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 December 31, 2023 and 2022, are as follows (in thousands):

The Company’s results from transactions with its related parties for each of the three months ended March 31, 2024 and 2023, are as follows (in thousands):

Ablecom Compuware Corporate Venture Total

Three months ended December 31, Three months ended December 31, Three months ended December 31, Three months ended December 31,

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

2024 2023 2024 2023 2024 2023 2024 2023

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

The Company’s results from transactions with its related parties for each of the nine months ended March 31, 2024 and 2023, are as follows (in thousands):

Ablecom Compuware Corporate Venture Total

Six months ended December 31, Six months ended December 31, Six months ended December 31, Six months ended December 31,

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

2024 2023 2024 2023 2024 2023 2024 2023

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Purchases - other miscellaneous items $ 12,616 $ 9,855 $ 1,092 $ 1,078 $ — $ — $ 13,708 $ 10,933

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

The Company’s cash flow impact from transactions with its related parties for each of the nine months ended March 31, 2024 and 2023, are as follows (in thousands):

Ablecom Compuware Corporate Venture Total

Six months ended December 31, Six months ended December 31, Six months ended December 31, Six months ended December 31,

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

2024 2023 2024 2023 2024 2023 2024 2023

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

As of December 31, 2023, the Company had 483,780 authorized shares available for future issuance under the 2020 Plan.

Offering of Common Stock

As of March 31, 2024, the Company had 1,668,086 authorized shares available for future issuance under the 2020 Plan.

Offerings of Common Stock

On December 5, 2023, the Company completed a public offering of 2,415,805 shares of the Company's common stock at $ 262.00 per share, with 2,315,105 shares sold by the Company and 100,700 shares sold by selling stockholders.

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The Company did not receive any proceeds from the sale of the shares of common stock by the selling stockholders.

On March 22, 2024, the Company completed a public offering of 2,000,000 shares of the Company's common stock at $ 875.00 per share.

The Company received net proceeds of $ 1,731.5 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

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.

No shares were repurchased under the share repurchase program during the three and six months ended December 31, 2023.

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

The share repurchase program was effective until January 31, 2024, at which time the remaining unutilized portion of such program expired.

SMCI | Q3 2024 Form 10-Q | 26

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

No shares were repurchased under the share repurchase program during the three and nine months ended March 31, 2024.

The share repurchase program was effective until January 31, 2024, at which time the remaining unutilized portion of such program expired.

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 six months ended December 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 and nine months ended March 31, 2024 and 2023 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

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2.81 % - 4.25 %

Expected term 5.99 years

Expected term 3.00 years - 5.99 years

6.07 years 3.00 years - 5.99 years

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50.62 % - 51.68 %

Weighted-average fair value of options

$ 290.08 $ 41.50 $ 205.79 $ 35.06

Weighted-average fair value $ 156.09 $ 36.37 $ 179.16 $ 34.60

The following table shows total stock-based compensation expense included in the condensed consolidated statements of operations for the three and six months ended December 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 and nine months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

December 31, Six Months Ended

March 31, Nine Months Ended

2024 2023 2024 2023

6 unchanged sentences

Stock-based compensation expense, net $ 9,084 $ 10,208 $ 83,906 $ 33,482

As of December 31, 2023, $ 73.5 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 3.26 years and $ 237.0 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.65 years.

As described below, there is no unrecognized compensation cost related to the 2021 CEO Performance Stock Option as of December 31, 2023.

Additionally, $ 27.4 million of unrecognized compensation cost related to the 2023 CEO Performance Stock Option is expected to be recognized over a period of 1.75 years.

SMCI | Q3 2024 Form 10-Q | 27

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 2024, $ 95.9 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 3.25 years and $ 309.0 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.72 years.

As described below, there is no unrecognized compensation cost related to the 2021 CEO Performance Stock Option as of March 31, 2024.

Additionally, $ 36.9 million of unrecognized compensation cost related to the 2023 CEO Performance Stock Option is expected to be recognized over a period of 2.5 years.

Stock Option Activity

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In March 2021, the Company’s Compensation Committee of the Board of Directors (the “Compensation Committee”) approved the grant of a stock option award for 1,000,000 shares of common stock to the Company’s CEO (the “2021 CEO Performance Stock Option”).

The 2021 CEO Performance Stock Option has five vesting tranches with a vesting schedule based entirely on the attainment of operational milestones (performance conditions) and market conditions, assuming (1) continued employment either as the CEO or in such capacity as agreed upon between the Company’s CEO and the Board and (2) service through each vesting date.

Each of the five vesting tranches of the 2021 CEO Performance Stock Option will vest upon certification by the Compensation Committee that both (i) the market price milestone for such tranche, which begins at $ 45.00 per share for the first tranche and increases up to $ 120.00 per share thereafter (based on a 60 trading day average stock price), has been achieved, and (ii) any one of five operational milestones focused on total revenue, as reported under U.S.

GAAP, have been achieved for the previous four consecutive fiscal quarters.

Upon vesting and exercise, including the payment of the exercise price of $ 45.00 per share, prior to March 2, 2024, the Company’s CEO must hold shares that he acquires until March 2, 2024, other than those shares sold pursuant to a cashless exercise where shares are simultaneously sold to pay for the exercise price and any required tax withholding.

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

As of March 31, 2024, the 2021 CEO Performance Stock Option had fully vested based upon achievement of operational and stock price milestones as follows:

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

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$ 6.8 Achieved $ 95 Achieved (4)

$ 8.0 Achieved (5)

$ 120 Achieved (6)

$ 8.0 Achieved $ 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.

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(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) Revenue reported for the four quarters ended December 31, 2023 was $ 9.3 billion.

Achievement of the $ 8.0 billion revenue goal has not yet been certified by the Company’s Compensation Committee.

(6) 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.

During the three and six months ended December 31, 2023, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 0.5 million and $ 0.7 million, respectively.

During the three and six months ended December 31, 2022, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 1.9 million and $ 3.2 million, respectively.

As of December 31, 2023 and June 30, 2023, the Company had $ 0.0 million and $ 0.7 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

(5) The vesting of the fifth 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 February 2024.

During the three and nine months ended March 31, 2024, the Company recognized compensation expense related to the 2021 CEO Performance Stock Option of $ 0.0 million and $ 0.7 million, respectively.

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.

As of March 31, 2024 and June 30, 2023, the Company had $ 0.0 million and $ 0.7 million, respectively, in unrecognized compensation cost related to the 2021 CEO Performance Stock Option.

SMCI | Q3 2024 Form 10-Q | 28

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Upon vesting and exercise, including the payment of the exercise price of $ 450.00 per share, prior to November 14, 2026, the Company’s CEO must hold shares that he acquires until November 14, 2026, other than those shares sold pursuant to a cashless exercise where shares are simultaneously sold to pay for the exercise price and any required tax withholding.

The achievement status of the operational and stock price milestones as of March 31, 2024 was as follows:

Annualized Revenue Milestone (in billions) (1)

Achievement Status Stock Price Milestone (1)

Achievement Status

$ 13.0 Probable $ 450 Achieved (2)

$ 15.0 Probable $ 600 Achieved (3)

$ 17.0 Probable $ 750 Achieved (4)

$ 19.0 Probable $ 900 Achieved (5)

$ 21.0 Not Probable $ 1,100 Not met

(1) Under the terms of the 2023 CEO Performance Stock Option, the annualized revenue milestones and stock price milestones set forth in the table above must be achieved by December 31, 2028 and March 31, 2029, respectively.

(2) On March 2, 2024, the Compensation Committee certified achievement of the $ 450 stock price milestone based upon the 60 trading day average stock price from November 29, 2023 through February 26, 2024.

(3) On April 1, 2024, the Compensation Committee certified achievement of the $ 600 stock price milestone based upon the 60 trading day average stock price from December 15, 2023 through March 13, 2024.

(4) On April 1, 2024, the Compensation Committee certified achievement of the $ 750 stock price milestone based upon the 60 trading day average stock price from January 4, 2024 through April 1, 2024.

(5) The 60 trading day average stock price from January 31, 2024 through April 25, 2024 was $ 903.10 .

Achievement of the $ 900 stock price milestone has not yet been certified by the Company’s Compensation Committee.

SMCI | Q3 2024 Form 10-Q | 29

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Annualized Revenue Milestone (in billions)

Achievement Status

Stock Price Milestone

Achievement Status

$ 13.0 Probable

$ 450 Not met

$ 15.0 Not Probable

$ 600 Not met

$ 17.0 Not Probable

$ 750 Not met

$ 19.0 Not Probable

$ 900 Not met

$ 21.0 Not Probable

$ 1,100 Not met

During the three and six months ended December 31, 2023, the Company recognized compensation expense related to the 2023 CEO Performance Stock Option of $ 2.5 million.

As of December 31, 2023 , the Company had $ 27.4 million in unrecognized compensation cost related to the 2023 CEO Performance Stock Option.

The unrecognized compensation cost as of December 31, 2023 is expected to be recognized over a period of 1.75 years.

On the respective grant dates of each of the 2021 CEO Performance Award and the 2023 CEO Performance Award, a Monte Carlo simulation was used to determine for each tranche of each award (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).

During the three and nine months ended March 31, 2024, the Company recognized compensation expense related to the 2023 CEO Performance Stock Option of $ 16.9 million and $ 19.4 million, respectively.

As of March 31, 2024, the Company had $ 36.9 million in unrecognized compensation cost related to the 2023 CEO Performance Stock Option.

The unrecognized compensation cost as of March 31, 2024 is expected to be recognized over a period of 2.5 years.

On the respective grant dates of each of the 2021 CEO Performance Award and the 2023 CEO Performance Award, a Monte Carlo simulation was used to determine for each tranche of each award (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, using a Monte Carlo simulation, 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).

The Company will immediately recognize a catch-up expense for all accumulated expenses from the respective grant date through the quarter in which the operational milestone was first deemed probable of being achieved.

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.

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

The following table summarizes stock option activity during the nine months ended March 31, 2024 under all plans:

Outstanding Weighted

5 unchanged sentences

Forfeited/Cancelled ( 10,874 ) $ 129.36

Balance as of December 31, 2023 3,798,239 $ 119.94 7.00

Options vested and exercisable at December 31, 2023 2,044,524 $ 36.57 5.36

SMCI | Q2 2024 Form 10-Q | 28

SUPER MICRO COMPUTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes RSU activity during the six months ended December 31, 2023 under all plans:

Balance as of March 31, 2024 3,466,354 $ 142.08 7.17

Options vested and exercisable at March 31, 2024 1,914,265 $ 40.26 5.67

The following table summarizes RSU activity during the nine months ended March 31, 2024 under all plans:

Time-Based RSUs

5 unchanged sentences

Forfeited ( 66,515 ) $ 137.91

Balance as of December 31, 2023 2,210,683 $ 128.75

Balance as of March 31, 2024 2,129,933 $ 162.57

SMCI | Q3 2024 Form 10-Q | 30

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded a provision for income taxes of $ 61.5 million and $ 81.7 million for the three and six months ended December 31, 2023, respectively, and $ 29.6 million and $ 68.5 million for the three and six months ended December 31, 2022, respectively.

The effective tax rate was 17.3 % and 15.3 % for the three and six months ended December 31, 2023, respectively, and 14.3 % and 15.9 % for the three and six months ended December 31, 2022, respectively.

The effective tax rate for the three months ended December 31, 2023 is higher than that for the three months ended December 31, 2022, primarily due to a 2 % increase caused by a reduction of foreign derived intangible income which is subject to lower income tax rate than a statutory tax rate of 21%.

In addition, there was a 1 % increase caused by more non tax deductible stock-based compensation for officers over one million dollars threshold.

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

The Company recorded a benefit for income taxes of $ 20.0 million for the three months and a provision of $ 61.7 million for the nine months ended March 31, 2024, respectively.

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.

The effective tax rate was ( 5.2 )% and 6.7 % for the three and nine months ended March 31, 2024, respectively, and 11.1 % and 15.0 % for the three and nine months ended March 31, 2023, respectively.

The effective tax rate for both the three and nine months ended March 31, 2024 is lower than that for the three and nine months ended March 31, 2023, primarily due to significant increase in the stock-based compensation tax deduction, and research and development tax credits.

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.

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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 December 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 March 31, 2024 and any prior periods.

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

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

As of December 31, 2023, these remaining noncancelable commitments were $ 1.9 billion, including $ 87.4 million for related parties.

As of March 31, 2024, these remaining noncancelable commitments were $ 2.9 billion, including $ 100.4 million for related parties.

SMCI | Q3 2024 Form 10-Q | 31

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

December 31, June 30,

March 31, June 30,

Long-lived assets:

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Subsequent Events

On January 26, 2024, the Company entered into an agreement to purchase real estate for an aggregate price of $ 80.0 million, subject to certain adjustments to be determined at closing.

The transaction is expected to close during the third quarter of fiscal 2024.

The Company plans to acquire this property using its own cash.

On January 31, 2024, the Company entered into a lease for approximately 260,000 square feet of space in San Jose, California for a term of 79 months.

The Company currently intends to use such premises for additional warehouse space.

The lease also provides that the Company is required to rent an additional approximate 198,000 square feet of space in the same building after such space becomes available for the remainder of the term stated above.

Aggregate payment under the lease for both the primary space and additional space is approximately $ 0.6 million per month, subject to annual increase.

On April 17, 2024, the Company’s Taiwan subsidiary renewed its credit agreement with Mega Bank, which increases the credit limit from $ 20 million to $ 50 million.

This new loan is interest bearing, unsecured and the Company is not serving as a guarantor.

On April 19, 2024, the Company’s Taiwan subsidiary entered into a credit agreement with E.SUN Bank which is valid from March 14, 2024, to March 14, 2025.

This includes a $ 60 million Import and Export Trade Facility which is unsecured, interest bearing and not guaranteed by the Company.

On April 26, 2024, the Company’s Taiwan subsidiary entered into a new credit facility with Chang Hwa Bank, updating its previous terms from October 2021 to include a combined credit limit of $ 20 million and an additional NTD 300 million.

This facility is unsecured, interest bearing and not guaranteed by the Company.

On April 26, 2024, the Company's Taiwan subsidiary entered into a $ 30 million loan agreement with First Commercial Bank Co., Ltd.

This revolving loan is valid from February 17, 2024, to February 17, 2025, interest bearing and unsecured.

The Company does not act as a guarantor for this loan.

SMCI | Q3 2024 Form 10-Q | 32

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