AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Evidence
Due to our building-block designs, our inventory can generally be used with multiple products, lowering working capital requirements and reducing the risk of inventory write-downs.
Business: building-block inventory reuse · Filed 31/08/2026
Due to our building-block designs, our inventory can generally be used with multiple different products, lowering working capital requirements and reducing the risk of inventory write-downs.
Business: historical modular inventory benefits · Filed 28/08/2023
In recent years, we have experienced increased competition from original design manufacturers (“ODMs”) that benefit from their scale and very low-cost manufacturing and are increasingly offering their own branded products.
Competition: increased competition from low-cost ODMs · Filed 31/08/2026
Historically, these pricing pressures have led to a continued decline of average selling prices across our business and we expect that these historical trends will continue.
Risk factors: historical average selling-price declines · Filed 31/08/2026
The remaining increases in cost of sales were driven by a $273.6 million or 891.0% increase in tariff expenses driven by new trade policies, a $79.9 million or 50.0% increase in inventory write-down adjustments resulting from excess and obsolete inventory with either insufficient demand or reduced net realizable value, and a $276.3 million or 29.2% increase due to a decrease in vendor rebates.
MD&A: realized tariff, inventory write-down and vendor-rebate changes · Filed 11/05/2026
•Gross margin decreased to 10.8% in fiscal year 2026, from 11.1% in fiscal year 2025, primarily due to our strategy to offer competitive pricing to gain market share, change in product and customer mix, and higher manufacturing related expenses.
Fiscal 2026 financial highlights: competitive pricing and gross margin · Filed 31/08/2026
The remaining increases in cost of sales were driven by a $237.7 million or 228.3% increase in tariff expenses driven by new trade policies enacted during the year and a $312.9 million or 24.9% increase due to a decrease in vendor rebates, partially offset by a $43.8 million or 18.8% decrease in inventory write-down adjustments resulting from increased sales related to some of our aged inventory products during the year.
MD&A: fiscal 2026 tariffs, reduced rebates and lower inventory write-downs · Filed 31/08/2026
During fiscal year 2026, the computer server industry experienced supply constraints for certain components, including memory and storage, as well as GPU and CPU availability, which affected the timing of certain of our product deliveries, as well as the pricing of these items.
Business: realized component constraints and delivery timing · Filed 31/08/2026
We retain full ownership of any intellectual property resulting from the design of these products and tooling.
Related-party manufacturing agreements: ownership of design and tooling IP · Filed 31/08/2026
During fiscal year 2026, we advanced our transformation into a total data center infrastructure provider through our Data Center Building Block Solutions® (“DCBBS”), an integrated offering that delivers complete, modular AI infrastructure from validated components and sub-systems, ranging from individual graphics processing units (“GPUs”) and networking switches to complete racks, site infrastructure, management software, and professional services.
Business: integrated Data Center Building Block Solutions offering · Filed 31/08/2026
Financial Highlights The following is a summary of our financial highlights for fiscal years 2026 and 2025 (in thousands, except per share amounts): Years Ended June 30, 2026 2025 Net sales $ 39,063,072 $ 21,972,042 Gross profit $ 4,227,251 $ 2,429,922 Total operating expenses $ 1,456,765 $ 1,176,928 Income from operations $ 2,770,486 $ 1,252,994 Net income $ 2,230,453 $ 1,048,854 Net income per common share - diluted $ 3.26 $ 1.68 •Net sales increased by 77.8% in fiscal year 2026, as compared to fiscal year 2025, primarily driven by fulfillment and shipment of orders to support our customers' data center deployment, including large design wins from a few customers.
Fiscal 2026 financial highlights: sales, profits and fulfilled design wins · Filed 31/08/2026
In fiscal year 2023, we announced more than 50 products supporting Intel’s new Sapphire Rapids data center CPU.
Business: fiscal 2023 product introductions · Filed 28/08/2023
In many cases, they design their products to use components from multiple suppliers.
Risk factors: customers design products for multiple suppliers · Filed 31/08/2026
The markets for our products are characterized by rapid technological change, frequent new product introductions and enhancements, substantial capital investment, changes in customer requirements, continued price pressures and a constantly evolving industry.
Risk factors: technological change and continuing price pressure · Filed 31/08/2026
•global technology vendors, such as Cisco, Dell, Hewlett-Packard Enterprise, and Lenovo; and
Competition: named global technology vendors · Filed 31/08/2026
•ODMs, such as Foxconn, Quanta Computer, and Wiwynn Corporation.
Competition: named ODM competitors · Filed 28/08/2025
An increase in our average selling price compared to the quarter ended March 31, 2025 also contributed modestly by product mix.
MD&A: average selling-price increase attributed to product mix · Filed 11/05/2026
Cost of Sales, Gross Profit, and Gross Margin Cost of sales and gross margin for fiscal years 2026, 2025, and 2024 were as follows (dollars in millions): Years Ended June 30, 2026 over 2025 Change 2025 over 2024 Change 2026 2025 2024 $ % $ % Cost of sales $ 34,835.8 $ 19,542.1 $ 12,927.8 $ 15,293.7 78.3 % $ 6,614.3 51.2 % Percentage of total net sales 89.2 % 88.9 % 86.2 % Gross profit $ 4,227.3 $ 2,429.9 $ 2,061.4 $ 1,797.4 74.0 % $ 368.5 17.9 % Gross margin 10.8 % 11.1 % 13.8 % (0.3) % (2.7) % Fiscal Year 2026 Compared with Fiscal Year 2025 The $15,293.7 million or 78.3% year-over-year increase in cost of sales was primarily driven by an increase of $14,699.8 million or 73.3% in certain products including GPU servers, HPC systems, and rack-scale solutions, consistent with the higher shipment volume during fiscal year 2026, as compared to fiscal year 2025.
MD&A: fiscal 2024–2026 gross margins and shipment-related costs · Filed 31/08/2026
The value of the transaction price allocated to the remaining performance obligations as of June 30, 2026, was approximately $2,612.0 million.
Revenue note: remaining performance obligations at June 30, 2026 · Filed 31/08/2026
Additionally, at times, deferred revenue may fluctuate due to the timing of non-refundable advance consideration received from non-cancelable contracts relating to the sale of future products.
Revenue note: non-refundable advances under non-cancelable product contracts · Filed 11/05/2026
In some instances, our agreements with our indirect sales channel partners limit our ability to reduce prices unless we make such price reductions available to them, or price protect their inventory.
Risk factors: channel price-reduction and inventory price-protection obligations · Filed 28/08/2023
Investing Activities Net cash used in investing activities during the nine months ended March 31, 2026 mostly consisted of $133.8 million of purchases of property, plant, and equipment as we continued to invest in real estate, servers, data centers, and network infrastructure, as well as investments made in equity securities of $42.0 million.
Liquidity: actual capital expenditures and equity investments · Filed 11/05/2026
SMCI | Q3 2026 Form 10-Q | 51 Table of Contents Financing Activities Net cash provided by financing activities during the nine months ended March 31, 2026 mostly consisted of net proceeds from lines of credit and term loans of $4,010.2 million, partially offset by payment for withholding taxes related to settlement of equity awards of $102.4 million.
Liquidity: net credit and term-loan proceeds during nine months ended March 31, 2026 · Filed 11/05/2026
As noted in Note 14, “Commitments and Contingencies”, in the notes to the condensed consolidated financial statements, we have current obligations related to non-cancelable purchase commitments of $10.1 billion.
Liquidity: non-cancelable purchase commitments at March 31, 2026 · Filed 11/05/2026
Vesting occurs in five tranches upon achievement of specified stock price targets ($45.00 to $110.00 per share) and revenue-based operational milestones, subject to continued service.
Stock compensation: existing CEO award vesting conditions · Filed 11/05/2026
Generally, under the policy, the CEO must retain at least 50% of all “net” shares received (“net” shares means those shares remaining after the sale or withholding of shares in payment of the exercise price, if applicable, and withholding taxes) for at least 36 months following the date on which an equity award is vested, settled or exercised, as applicable.
Executive compensation: adopted CEO stock-retention policy · Filed 03/03/2026
With respect to the 2023 CEO Performance Award, the first four tranches consisting of options for 4,000,000 shares under the 2023 CEO Performance Award have vested as of June 30, 2025.
Executive compensation: actual vesting of four CEO award tranches · Filed 28/08/2025
In connection with the internal investigation, the Company took personnel actions, including terminations, with respect to its sales, technical support and business development functions staff for violations of various company policies.
Investigation disclosure: personnel actions for company-policy violations · Filed 31/08/2026
With the assistance of the Independent Advisors, the independent directors made recommendations to further enhance the Company’s export compliance program, which the Board has adopted in full and is in the process of implementing.
Investigation disclosure: adopted export-compliance recommendations being implemented · Filed 31/08/2026
Notwithstanding the conclusion of this internal investigation, the government investigations and inquiries described above and below remain ongoing, are not bound by the conclusions of the internal investigation, and could result in enforcement actions, penalties, fines or other adverse consequences to the Company.
Investigation disclosure: ongoing government investigations and inquiries · Filed 31/08/2026
Based on these standards, our Board has determined that six of its current eight members, Judy Lin, Robert Blair, Scott Angel, Sherman Tuan, Susan Mogensen (Susie Giordano), and Tally Liu, are “independent directors” under the applicable rules and regulations of the SEC and the listing requirements and rules of the Nasdaq Stock Market.
Corporate governance: six of eight current directors determined independent · Filed 31/08/2026
As of July 31, 2026, there were 656,965,384 shares of the registrant’s common stock, $0.001 par value, outstanding, which is the only class of common stock of the registrant issued.
Cover page: common shares outstanding at July 31, 2026 · Filed 31/08/2026
As of July 31, 2025, there were 594,273,308 shares of the registrant’s common stock, $0.001 par value, outstanding, which is the only class of common stock of the registrant issued.
Cover page: common shares outstanding at July 31, 2025 · Filed 28/08/2025
SSP for our products and services can evolve over time due to changes in our pricing practices, internally approved pricing guidelines with respect to geographies, customer type, internal costs, and gross margin objectives for the related performance obligations which can also be influenced by intense competition, changes in demand for our products and services, economic and other factors.
Revenue accounting: pricing practices and competitive influences on standalone selling prices · Filed 31/08/2026
