Shares of Supermicro rose 9 percent in after-hours trading after the company predicted a big sales growth for fiscal year 2026. Investors remain concerned about a possible accounting scandal at the manufacturer.
The after-hours price jump reversed an earlier 8 percent decline during regular trading. The appreciation occurred after a comment by CEO Charles Liang during an earnings call to analysts. He explained that the increasing adoption of Supermicro’s direct-liquid cooling technology in data centers is helping the company grow its annual revenue to at least $40 billion by fiscal year 2026. That fiscal year ends midway through next calendar year.
Huge growth is conservative estimate
That positive prediction came as a surprise, reports SiliconANGLE. Wall Street analysts only expected revenue amounting to $29.18 billion for that period. An even more striking fact was that Liang said the $40 billion is a conservative estimate. This is because it is based on current demand, order backlog and existing sales commitments. So the final figure could be even higher. Liang hopes to grow even faster, he told analysts.
His comments came at the same time Supermicro presented preliminary financial results for the second quarter of fiscal 2025. The figures are not yet final. This, because the company had not yet had its books audited, after it was dumped by accounting firm Ernst & Young LLP in November.
As a result, Supermicro could only share preliminary figures, which may be updated later. The company expects quarterly sales between $5.6 billion and $5.7 billion. That would represent 54 percent year-over-year growth, but was just below the earlier forecast of $5.4 billion to $6.1 billion and below the Wall Street consensus expectation of $5.8 billion.
In addition, Supermicro expects adjusted earnings per share – excluding one-time items – of between 50 cents and 58 cents, which is below market expectations of 61 cents.
The company also revised its outlook for fiscal year 2025. Total revenue is now estimated at $23.5 billion to $25 billion, down from the previous forecast of $26 billion to $30 billion. That roughly matches the Wall Street estimate of $24.5 billion.
New auditor after scandal
During the earnings call, Liang and other executives emphasized that they are working hard to present both quarterly and annual results for fiscal year 2024 before the Feb. 25 deadline. That deadline was imposed by regulators. After being humiliated by the departure of Ernst & Young, Supermicro has now appointed BDO USA as its independent financial auditor.
Ernst & Young had pulled out because it no longer had confidence in management’s statements and no longer wanted to be associated with the financial reports it had prepared.
This happened about a month after the Wall Street Journal revealed that the U.S. Department of Justice was launching an investigation into possible financial irregularities at Supermicro. This investigation allegedly began in response to allegations made by a former employee. That whistleblower filed a lawsuit against the company. This for alleged accounting violations. Earlier, in August, shortseller Hindenburg Research LLC reported that it had discovered multiple red flags suggesting that Supermicro may be tampering with the numbers.
If the company fails to meet the Feb. 25 deadline for filing its audited financial results, it risks possible removal from the Nasdaq.
Sharp price swings
Concerns about Supermicro’s alleged irregularities have caused hefty price swings for investors. In the past five days, the stock rose 59% and is up 40% since the beginning of the year, compared with only a 2% gain for the Nasdaq. Yet the stock is still down 48% over the past 12 months.