Super Micro Computer Q2 Earnings Call Highlights

04 Feb 2026, 08:48 by Teresa Graham · The Cerbat Gem

Super Micro Computer (NASDAQ:SMCI) reported record results for its fiscal second quarter as the company said accelerating demand for AI infrastructure drove a rapid ramp in rack-scale systems shipments. Executives also outlined a strategy to improve profitability amid near-term gross margin pressure tied to customer mix, expedited logistics, component volatility, and tariffs, while reiterating confidence in sustained AI and IT infrastructure demand.

Record Q2 revenue driven by rack-scale AI deployments

Founder and CEO Charles Liang said the company delivered a “strong fiscal Q2” as AI infrastructure demand accelerated “across every major customer segment.” CFO David Weigand reported Q2 fiscal 2026 revenue of $12.7 billion, up 123% year-over-year and up 153% quarter-over-quarter, exceeding prior guidance of $10 billion to $11 billion.

Weigand noted Q2 revenue included approximately $1.5 billion of delayed Q1 shipments tied to “customer readiness.” Growth was driven by the “rapid ramp and deployment” of rack-scale AI solutions. AI GPU platforms represented over 90% of Q2 revenue, the company said.

By segment, Weigand said:

Enterprise channel revenue was $2.0 billion, about 16% of revenue (versus 31% in the prior quarter), up 42% year-over-year and up 29% quarter-over-quarter.
OEM appliance and large data center revenue was $10.7 billion, about 84% of revenue (versus 68% in the prior quarter), up 151% year-over-year and up 210% quarter-over-quarter.

Customer concentration and geographic mix

Super Micro disclosed notable concentration in the quarter. Weigand said one large data center customer represented approximately 63% of total revenue in Q2.

Geographically, the company reported Q2 revenue was weighted heavily toward the U.S.:

United States: 86%
Asia: 9%
Europe: 3%
Rest of world: 2%

On the call, Liang said the company is working to broaden its customer base, including by “sharpening” focus on traditional enterprise, cloud, and edge IoT customers to diversify revenue and support higher margins. Asked about diversification trends into the second half, Liang said the company has “many more large-scale” customers and expects the customer base to become more diversified, though he cautioned that timing can be influenced by customers pulling in or pushing out schedules.

Margins pressured by mix and expedite costs; management expects improvement

Management acknowledged margin compression in the quarter. Weigand reported non-GAAP gross margin of 6.4%, down from 9.5% in Q1, citing customer and product mix as well as higher freight, production, and expedited costs tied to large-scale shipments of new platforms. Liang added that components shortages and “volatile pricing,” including tariffs, also affected short-term gross margin.

Despite the lower gross margin, the company posted operating leverage. Non-GAAP operating expenses were 1.9% of revenue versus 4.1% in the prior quarter. Weigand reported:

GAAP operating expenses: $324 million (up 14% quarter-over-quarter, up 8% year-over-year)
Non-GAAP operating expenses: $241 million (up 18% quarter-over-quarter, up 6% year-over-year)
Non-GAAP operating margin: 4.5% (versus 5.4% in Q1)

On profitability, Weigand said Q2 GAAP EPS was $0.60 and non-GAAP diluted EPS was $0.69, both above the company’s prior guidance ranges, primarily due to higher revenue and operating leverage. He also corrected the quarter’s fully diluted share counts during the Q&A, stating that GAAP fully diluted shares increased from 663 million in Q1 to 694 million in Q2, while non-GAAP shares increased from 677 million to 709 million.

Looking ahead, management said they expect margins to begin improving. In response to analyst questions, Liang cited an improving customer mix, reduced expedited transportation costs as products mature, improving tariff impacts, and increasing contribution from its Data Center Building Block Solution (DCBBS). Weigand’s Q3 outlook included an expectation that gross margin would be up about 30 basis points from Q2 levels.

DCBBS highlighted as a profitability driver and differentiator

A recurring theme on the call was Super Micro’s Data Center Building Block Solution, which Liang described as a set of “pre-designed, pre-validated infrastructure building blocks” aimed at faster time to deployment and time to online, with better workload optimization and lower power and water consumption. Liang said DCBBS has helped the company gain market share in large, medium, and small AI deployments.

Liang said that in the first half of fiscal 2026, DCBBS accounted for about 4% of company profit, and he expects it to contribute meaningfully in the second half, with the contribution accelerating to “at least double” by the end of calendar 2026. He said DCBBS had grown in roughly a year to more than 10 subsystems, including cooling distribution units, heat exchangers, chilled doors, power shelves, battery backup, water and dry towers, high-speed switching, and data center management software and services, with plans to add additional categories such as transformers and next-generation power generators.

When asked about the margin profile, Liang said DCBBS gross and net margins are “much higher” and stated the margin is “more than 20%,” describing it as a unique offering that supports a one-stop shop approach for customers building data centers.

Cash flow, working capital, and financing to support growth

Weigand reported operating cash flow used in Q2 was $24 million, improved from $918 million used in the prior quarter. He said Q2 working capital reflected higher accounts receivable and inventory, partially offset by higher accounts payable. Inventory ended the quarter at $10.6 billion, up from $5.7 billion in Q1, as the company prepared for expected strength in Q3 shipments.

Capital expenditures were $21 million in Q2, leading to negative free cash flow of $45 million. To fund growth, the company expanded access to working capital, including a $2.0 billion U.S. secured revolving credit facility and an approximately $1.8 billion secured Taiwan revolving debt facility, Weigand said. The company ended the quarter with $4.1 billion in cash and $4.9 billion in bank and convertible note debt, resulting in a net debt position of $787 million.

Weigand also said the cash conversion cycle improved from 123 days in Q1 to 54 days in Q2, driven by changes in inventory, receivables, and payables. He added during Q&A that the company did not use its accounts receivable factoring facility during the December quarter, but has used it subsequently.

Guidance: Q3 at least $12.3B; full-year revenue at least $40B

For Q3 fiscal 2026, Super Micro guided to net sales of at least $12.3 billion, GAAP diluted EPS of at least $0.52, and non-GAAP diluted EPS of at least $0.60. The company also guided to GAAP operating expenses of around $354 million and capital expenditures of $70 million to $90 million.

For the full fiscal year 2026, management raised its outlook to at least $40 billion in net sales. In Q&A, Liang characterized the $40 billion figure as “relatively conservative,” citing continued growth in DCBBS and continued strong demand. Liang also said component shortages were being driven by strong industry demand, rather than reduced production capacity, and suggested revenue could be higher if shortages improved more quickly.

On upcoming product cycles, Liang said the company is preparing platforms including GB200, B200, B300 and MI350, and is also preparing for NVIDIA’s Vera Rubin and AMD’s Helios solutions in the second half of the year. He said there is significant customer interest and some commitments, though timing depends on partners’ readiness.

About Super Micro Computer (NASDAQ:SMCI)

Super Micro Computer, Inc (Supermicro) is a technology company that designs, develops and manufactures high-performance server, storage and networking solutions for enterprise, cloud, data center, high performance computing (HPC) and edge computing customers. The company’s product portfolio includes rackmount and blade servers, storage subsystems, motherboards, chassis, power supplies and networking components, with an emphasis on high-density, energy-efficient configurations and platforms optimized for GPU-accelerated workloads and artificial intelligence applications.

Headquartered in San Jose, California, Supermicro combines in-house engineering with a global manufacturing and distribution footprint to deliver configurable, application-specific systems.