tkal · SMCI Q1 FY27: Sales Rose $8.83B, Gross Profit Kept 6.8 Cents of Each New Dollar, and Customers Paid for the Ramp

SMCI Q1 FY27: Sales Rose $8.83B, Gross Profit Kept 6.8 Cents of Each New Dollar, and Customers Paid for the Ramp

Super Micro added $8.83B of sales in a quarter and kept 6.8 cents of gross profit on each new dollar, while $3.05B of customer prepayments covered most of the cash the ramp needed. Our call: total deferred revenue falls below September's $5.67B by December 31, because those deposits become deliveries faster than new ones arrive. At or above $5.67B refutes it.

Published November 4, 2026 · Post-print analysis · Super Micro Computer, Inc. · SMCI · NASDAQ · Q1 FY27, three months ended September 30, 2026 · reported November 3, 2026 after the close · figures from the Form 8-K Ex. 99.1, the FY26 Form 10-K and the call; the 10-Q is not yet filed · For analysts covering AI servers, OEM margins and the working capital behind the AI buildout

The setup

Super Micro's customers are now paying for its ramp, and it keeps very little of the extra revenue for doing the work. September net sales rose $8.83B on the quarter to $19.95B, and gross profit rose $598M, so 6.8 cents of each added dollar reached gross profit. The tell is one line in the cash flow statement: deferred revenue rose $3.05B to $5.67B, which is why operating cash flow was −$434M rather than −$3.49B. Our call is that this deposit balance falls below $5.67B by December 31, and that a balance at or above $5.67B refutes us. The balance rose in each of the last five quarters, and the CFO told analysts to expect prepayments to continue, so this is a real disagreement.

The company reported on November 3, 2026, after the close, against an August guide of $14.5B to $15.5B and an October 20 update of $18.5B to $19.5B. Net sales of $19,946M beat both. GAAP gross margin was 12.7% and non-GAAP 12.8%, against a guide of 10.4% to 10.8%. Net income was $1,594M, GAAP diluted EPS $1.75 against a guide of $0.89 to $0.98, and non-GAAP EPS $1.81 against $1.01 to $1.10. For December the company guided net sales of $19.5B to $21.5B at a gross margin of 12% to 12.5%, and it raised fiscal 2027 sales to $72B to $82B from $65B to $72B, with gross margin of 11.8% to 12.2%.

The stock closed at $31.39 on November 3 and traded near $30.14 on November 4 at 10:20 PT, down 4.0%, on a morning when Dell was down 8.4% and HPE 6.6%. It had already fallen 24.4% in the week of October 12, from $41.86 to $31.63. On the August page we said not to capitalize June's 17.5% margin until September confirmed it. September did not confirm it. It also did not fall back to the 10% we named as the refutation, so that call grades as partial, and the full-year guide now leans toward the refuting side.

Where Super Micro's September-quarter sales went: 12.7% survived cost of sales, 10.4% survived operating expense, and 8.0% reached net income. A quarter earlier the first of those numbers was 17.5%. Segment dollars are the rounded figures from the call; 5G, telco and edge is the remainder to $19,946M. $2,541M − $477M operating expense = $2,064M; less $34M interest and other, $435M tax and $1M equity investee = $1,594M.

The numbers

Net sales

$19.95B

+297.5% Y/Y · +79.4% Q/Q

Gross margin

12.7%

from 17.5% in June

Incremental gross margin, Q/Q

6.8%

$598M on $8.83B of sales

Deferred revenue

$5.67B

from $2.61B in June

Operating cash flow

−$434M

−$3.49B before deferred revenue

Inventory

$15.05B

from $12.90B in June

Super Micro Q1 FY27 · $ millions unless stated · GAAP

Line	Q1 FY27	Q4 FY26	Q1 FY26	Y/Y
Sales
Net sales	19,946	11,120	5,018	+297.5%
OEM + large data center	14,700	5,506	3,492	+321%
Enterprise + channel	4,900	5,568	1,489	+229%
Profit
Gross profit	2,541	1,943	467	+443.7%
Gross margin	12.7%	17.5%	9.3%	+3.4 pt
Operating income	2,064	1,488	182	+1,032.8%
Net income	1,594	1,178	168	+847.3%
Diluted EPS, $	1.75	1.62	0.26	+573.1%
Cash and balance sheet
Operating cash flow	(434)	747	(918)	n.m.
Before deferred revenue	(3,488)	271	(1,214)	n.m.
Deferred revenue, total	5,666	2,612	1,028	+451.1%
Inventory	15,054	12,896	5,730	+162.7%
Receivables	9,685	6,125	2,525	+283.6%
Payables	2,727	2,247	1,280	+113.1%

Source: Super Micro Form 8-K Ex. 99.1, November 3, 2026 (unaudited, preliminary); Forms 10-Q and 10-K. Line splits derived from rounded figures on the call. Notes ↓

Paid subscribers

The rest of this dive is for paid subscribers.

The headline numbers are above. The 16 sections below carry the margin arithmetic, the guide subtraction, the deposit math, the valuation work, and the dated tests that decide it.

Nine quarters: the level before the delta
The 17.5% came back as 12.7%
What the guide says after subtraction
Customers paid for the quarter
Ninety-seven days
Inventory: boxes waiting for buildings
One customer at 44%
The rest of the company
The funding stack
The trust line
Connecting the dots
The December bar
Valuation
The strongest case against this read
What we'd watch
Bottom line

Unlock the full dive →

Not ready to pay? Get the free Monday issue and one full dive a week by email.

Already a subscriber? Sign in.

Sources

Notes. Incremental gross margin = change in gross profit ÷ change in net sales: ($2,541.0M − $1,942.6M) ÷ ($19,945.8M − $11,119.8M) = 6.8%. Operating cash flow before deferred revenue = reported operating cash flow less the deferred revenue line of the cash flow statement; quarters derived from year-to-date statements (e.g. Q2 FY26 = six months less Q1). Total deferred revenue = current + non-current. AI share algebra: 0.59a + 0.41b = 17.6 and 0.71a + 0.29b = 12.8 give a = 1.2, b = 41.2. Catch-up test: $2,549.1M ÷ $17,646M = 14.4% if the $2.3B carried no margin. First half = $19,945.8M + $20,500M = $40,445.8M; second half at $77,000M = $36,554.2M. Second-half margin = ($77,000M × 12.0% − $2,549.1M − $2,511.3M) ÷ $36,554.2M = 11.4%; range uses $72,000M at 11.8% and $82,000M at 12.2%, with Q2 at midpoints. Average-based days use the mean of opening and closing balances over a 92-day quarter (91 for June). Cycle band estimate: at $20,500M sales and $17,989M cost of sales, 36, 74 and 13 days on average balances imply ending receivables $6,358M, inventory $13,885M and payables $2,356M, net $17,887M against $22,011M; adding 9.7 days to receivables takes net to about $22,209M. Enterprise and OEM prior-period dollars derived from the call's growth rates on rounded figures; 5G, telco and edge is the remainder. Preferred about $4.29B = $75M × 4 ÷ 7.00%. Top three customers at June: 23.0% + 17.1% + 12.5% = 52.6%.
Super Micro Computer — Form 8-K, Exhibit 99.1, Q1 FY27 results, November 3, 2026 ($ thousands). Three months ended September 30, 2026 / 2025: net sales 19,945,832 / 5,017,790; cost of sales 17,404,789 / 4,550,417; gross profit 2,541,043 / 467,373; research and development 227,279 / 173,314; sales and marketing 132,527 / 47,928; general and administrative 116,744 / 63,875; total operating expenses 476,550 / 285,117; income from operations 2,064,493 / 182,256; interest expense 82,539 / 24,931; income tax provision 435,491 / 40,161; net income 1,594,205 / 168,285; net cash used in operating activities 434,021 / 917,523; deferred revenue change 3,053,678 / 296,622; accounts receivable change 3,559,839; inventories change 2,477,392; prepaid change 349,754; accounts payable change 473,879; purchases of property 41,588; depreciation and amortization 15,040; inventory write-down 14,241; adjusted EBITDA 2,227,498; non-GAAP gross profit 2,549,139; receivables purchase proceeds 43,376. September 30, 2026 / June 30, 2026 balances: cash 6,897,497 / 7,521,474; receivables 9,685,158 / 6,125,414; inventories 15,053,640 / 12,895,949; accounts payable 2,727,379 / 2,247,003; deferred revenue, current 4,329,345 / 1,578,005; deferred revenue, non-current 1,336,365 / 1,034,027; lines of credit current 1,962,690; non-current 2,014,381; convertible notes 4,668,946; preferred and additional paid-in capital 4,226,258; common and additional paid-in capital 4,671,664 / 4,600,893; total equity 16,068,794. Basic and diluted shares 658,128 and 749,351. Guide: Q2 FY27 net sales $19.5B to $21.5B, GAAP EPS $1.59 to $1.83, non-GAAP EPS $1.66 to $1.90, tax about 21.2%, 753M diluted shares; FY27 net sales $72.0B to $82.0B.
Super Micro Computer — preliminary business update, October 20, 2026 (revenue $18.5B to $19.5B; gross margin 12.0% to 12.5% against 10.4% to 10.8%); Form 8-K, October 15, 2026 (CFO appointment).
Super Micro Computer — Q4 FY26 Ex. 99.1, August 11, 2026 (net sales 11,119,777; gross profit 1,942,631; income from operations 1,488,064; net income 1,178,217; "richer enterprise customer mix"; prior guide $14.5B to $15.5B and $65B to $72B).
Super Micro Computer — business update, July 21, 2026 (more than $60B of new orders).
Super Micro Computer — Form 10-K for fiscal 2026, filed August 31, 2026: purchase commitments $34.2B; inventory split 10,275,998 / 1,677,898 / 942,053; prepaid inventory 315,373; customer concentration 28.1%; receivable concentration 23.0%, 17.1%, 12.5%; one supplier 63.1% of purchases; related-party purchases 2.1%, 3.3%, 4.3% of cost of sales; advance consideration up $943.4M; JPMorgan revolver $2,000.0M and $22.4B collateral estimate; CTBC $1,763.5M; convertible notes $4,725.0M; receivables purchase agreement $1,790.0M; equity proceeds $5,638.6M; July 31 share count 656,965,384; material weakness; subpoenas and indictment. Forms 10-Q for March 2026, December 2025 and September 2025: commitments $10.1B, $3.9B, $11.6B; inventory splits; deferred revenue; prior-year cash flows. Form 10-K for fiscal 2025: commitments $1.6B. Forms 8-K, June 12 and June 15, 2026: 45,454,545 common shares, 75,000,000 depositary shares, up to $1.25B at-the-market.
SEC company facts for Super Micro (data.sec.gov): net sales, gross profit, inventories, receivables, payables, operating cash flow and write-downs, September 2024 to June 2026.
Q1 FY27 earnings call transcript (The Motley Fool), November 3, 2026: catch-up of about $2.3B, AI share 71% and 59%, enterprise and OEM dollars, geography, 44% customer, 49% and 17% receivables, deferred revenue, days of sales, inventory and payables, December gross margin, operating expense, other expense and FY gross margin guides, two-class method about $312M. Transcript, not a filing.
tkal — SMCI Q4 FY26 (the August call graded here); Oracle Q1 FY27, Micron Q4 FY26, Dell Q2 FY27, HPE Q3 FY26, NVIDIA Q2 FY27, AMD Q3 2026, SpaceX Q3 2026 and Ingram Micro Q3 2026 for the peer figures in the rope and call cards.
Market data — SMCI closes $41.855 on October 9, $31.63 on October 16 and $31.39 on November 3, 2026; SMCI $30.14, DELL $373.995 against $408.40 and HPE $49.58 against $53.10 on November 4, 2026 at about 10:20 PT (Robinhood connector). Market data, not filing figures.

SMCI Q1 FY27: Sales Rose $8.83B, Gross Profit Kept 6.8 Cents of Each New Dollar, and Customers Paid for the Ramp

The setup

The numbers

The rest of this dive is for paid subscribers.

This is one print. The pipeline runs every week.