Super Micro Computer (SMCI, Financial) is set to submit a compliance plan to Nasdaq, aiming to maintain its stock market trading eligibility. This comes after the company requested an extension for filing its latest quarterly earnings report. The company has formed a special committee which has concluded an investigation into preliminary concerns raised by its former auditor, EY, and expects other ongoing activities to wrap up soon.
The company highlighted the necessity of additional time to hire a new accounting firm and to prepare its 10-Q form for the first quarter of 2025, which will occur after completing and submitting the 2024 10-K form. Super Micro Computer was previously delisted from Nasdaq in August 2018 for delayed financial report submissions but relisted in January 2020. To avoid another delisting, the firm stated its intention to take all necessary steps to satisfy Nasdaq's continuous listing requirements.
Nasdaq issued a delisting warning to Super Micro Computer on September 17, granting a 60-day period to submit a compliance plan, with a deadline of November 16. Approval of this plan could provide up to 180 days for the company to delay its annual report filing. Nasdaq requires detailed information on the board's investigation into accounting issues, the reasons for the report delays, and the board's action timeline.
Factors such as the reasons for the delays, impending corporate events, financial status, and the likelihood of submitting an audited report will be considered by Nasdaq when evaluating the compliance plan. While the company's special committee completed its investigation and found no misconduct, Super Micro Computer is working diligently to retain its Nasdaq listing status.
Should Nasdaq reject the compliance plan, Super Micro Computer can request a hearing, triggering a 15-day delisting suspension period. The hearing panel can extend the deadline for up to 180 days. The company's past regulatory violations, including financial misstatements and delayed submissions between 2015 and 2017, complicate its chances for an extension. These issues led to a previous delisting in June 2017, with relisting occurring two years later.
In the short term, Super Micro Computer faces challenges such as potential customer and supplier loss. Despite compliance issues, it remains a rapidly growing enterprise within the tech industry. The company's unaudited financials indicate a significant sales increase last year, reaching nearly $15 billion, with Wall Street projecting sales to rise to approximately $25 billion in the fiscal year 2025.
Nevertheless, the delayed report submission has impacted orders. Recent unaudited September quarter results fell short of Wall Street expectations, offering limited performance guidance. Slower growth partly results from insufficient supplies of Nvidia's next-generation Blackwell chips, sparking concerns about the relationship with key suppliers. Melius Research analyst Ben Reitzes remarked that Super Micro Computer's challenges are unlikely to pose a major threat to Nvidia, though some customers may redirect orders to companies like Dell, potentially causing short-term sales fluctuations.
Michael Staiger, Director of Corporate Development at Super Micro Computer, assured investors that the communication with Nvidia indicates no change in allocation strategy, confirming the close cooperation between the companies.
