Super Micro Computer Inc. (NASDAQ:SMCI)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited a consistent and substantial upward trend over the analyzed period. Starting from approximately 70.4 million USD in mid-2020, the figure rose significantly each year, reaching over 1.2 billion USD by mid-2025. This indicates robust growth in operational profitability.

Cost of Capital

The cost of capital fluctuated within a relatively narrow range, starting at 18.05% in mid-2020 and showing small variations over the years. It peaked slightly above 18% in mid-2023 before decreasing to 15.69% by mid-2025, suggesting modest improvements in financing costs or risk perceptions over time.

Invested Capital

Invested capital demonstrated a marked increase throughout the period. It more than doubled between mid-2021 and mid-2022, followed by continued growth to exceed 11.4 billion USD by mid-2025. This escalating invested capital base reflects significant capital investment or asset accumulation by the firm.

Economic Profit

Economic profit displayed a volatile and generally negative pattern despite increases in operational profit. The company experienced economic losses starting from negative 153.3 million USD in mid-2020, with some improvement resulting in positive economic profit of 182.5 million USD by mid-2023. However, this was followed by a decline back into larger negative values by mid-2024 and mid-2025, reaching nearly negative 597 million USD. This indicates that despite increasing NOPAT, the returns did not consistently exceed the cost of capital applied to the expanding capital base, resulting in value erosion during most periods.

The annual financial data reveals a robust and consistent upward trend in profitability metrics over the examined six-year period. Both Net Income and Net Operating Profit After Taxes (NOPAT) exhibit significant growth, indicating strong operational performance and effective cost management.

Net Income

Net Income increased steadily each year, starting at $84,308 thousand in 2020 and more than doubling to $111,865 thousand by 2021. The growth accelerated sharply in 2022 to $285,163 thousand, with further considerable increases reaching a peak of $1,152,666 thousand in 2024, before a slight decline to $1,048,854 thousand in 2025. This trajectory highlights substantial improvements in profitability and possibly increased revenue streams or enhanced efficiency.

Net Operating Profit After Taxes (NOPAT)

NOPAT displayed a closely aligned growth pattern with Net Income, reflecting consistent operational effectiveness. Beginning at $70,352 thousand in 2020, it rose to $103,035 thousand in 2021 and surged to $314,116 thousand in 2022. This upward momentum continued, reaching $1,116,783 thousand in 2024 and further increasing to $1,207,114 thousand in 2025. The increment in NOPAT underscores strengthened core operational profitability, potentially driven by improved operational leverage or cost optimization strategies.

Overall, the data indicates a strong and sustained increase in both net earnings and operating profitability over the referenced periods, which may reflect favorable market conditions, successful strategic initiatives, or enhanced operational efficiencies within the business.

The financial data reveals notable fluctuations in both income tax provision and cash operating taxes over the analyzed six-year period.

Income Tax Provision

The income tax provision exhibited a general upward trend with significant volatility. Starting from a relatively modest amount in mid-2020, there was a sharp increase in mid-2022, peaking in mid-2023. Following this peak, the provision declined notably in mid-2024 before rising again substantially by mid-2025. These fluctuations suggest variability in taxable income or changes in tax rates or regulations impacting the company’s tax liabilities over time.

Cash Operating Taxes

Cash operating taxes demonstrated a strong upward trajectory throughout the period. From mid-2020 to mid-2021, the amounts remained relatively stable, but starting mid-2022, there was a marked increase which accelerated further in the subsequent years. By mid-2025, the cash operating taxes were more than double those recorded in mid-2024, indicating increased cash outflows related to tax obligations, possibly reflecting higher taxable earnings or changes in tax payment schedules or rates.

Comparative Insights

Although both tax-related metrics have increased over time, cash operating taxes increased more consistently and dramatically compared to the income tax provision. This may indicate timing differences between tax expense recognition and actual cash payments or differences in deferred tax assets and liabilities. The disparity in trends between these two figures could merit further analysis to understand the underlying tax strategies and cash management practices.

The financial data reveals several key trends in the company’s capital structure over the analyzed periods.

Total Reported Debt & Leases

The total reported debt and leases have exhibited significant fluctuations, initially increasing from 53.8 million USD in 2020 to a peak of 620.6 million USD in 2022, followed by a reduction to 309.5 million USD in 2023. However, there is a marked and rapid increase thereafter, reaching 2.21 billion USD in 2024 and further surging to 5.06 billion USD in 2025. This indicates an aggressive leveraging strategy in the most recent years.

Total Stockholders’ Equity

Stockholders’ equity has shown steady growth throughout the period, beginning at approximately 1.07 billion USD in 2020 and rising consistently each year to reach 6.3 billion USD by 2025. The equity growth accelerated notably after 2023, suggesting substantial capital injections or retained earnings supporting equity expansion.

Invested Capital

Invested capital follows a similar upward trajectory as equity, starting from roughly 1.24 billion USD in 2020, and showing moderate growth until 2023. From 2023 onwards, the invested capital increases sharply, culminating at nearly 11.5 billion USD in 2025. This reflects a significant expansion in the company’s asset base and operational funding during the latter years.

Overall, the data demonstrates a strategic shift toward greater leverage and capital investment beginning in 2023, with both debt and equity increasing substantially. The simultaneous rise in both liabilities and equity suggests balanced financing decisions aimed at scaling operations or pursuing growth initiatives. The rapid increase in invested capital aligns with these funding changes, highlighting an expansion phase. Careful monitoring of the high debt levels in recent years would be advisable to assess financial risk and sustainability.

Economic Profit

The economic profit exhibits significant volatility over the examined periods. Starting with a substantial negative value, the loss decreases steadily through the middle years, reaching a positive peak in the year ending June 2023 at 182,517 thousand US dollars. However, this improvement is short-lived, as the economic profit sharply declines into increasingly large negative figures in the subsequent years, with losses expanding to -213,766 and -596,610 thousand US dollars in the last two reported periods.

Invested Capital

There is a clear upward trajectory in invested capital throughout the timeline, increasing from approximately 1,239 million US dollars in mid-2020 to nearly 11,494 million US dollars by mid-2025. The growth is especially pronounced from 2023 onward, with capital more than tripling between mid-2023 and mid-2024, and continuing to rise significantly into mid-2025.

Economic Spread Ratio

The economic spread ratio, representing the return above the cost of capital, follows a similar pattern to economic profit. The ratio starts at a notably negative level and improves steadily until the period ending June 2023, when it becomes positive at 7.49%. Nonetheless, this positive moment is temporary as the spread ratio reverts to negative territory in the following periods, declining to -2.78% and further to -5.19% by mid-2025.

Summary Insights

The data indicates that despite increasing invested capital, the company struggles to maintain positive economic returns consistently. The brief positive economic profit and spread ratio observed in mid-2023 suggest a temporary operational or market improvement. However, subsequent periods reveal substantial deterioration in economic profitability, implying challenges in generating adequate returns relative to the invested capital. The significant expansion of invested capital concurrent with declining economic profit and spread ratios may reflect inefficiencies or unfavorable market conditions impacting the company's ability to convert investments into value creation.

Adjusted Net Sales

Adjusted net sales have demonstrated a consistent upward trajectory over the observed periods. Beginning at approximately 3.34 billion USD, sales increased steadily each year, reaching over 22.29 billion USD by the final period. The most substantial growth occurred between the years ending in 2023 and 2024, where sales more than doubled, indicating significant expansion in revenue streams.

Economic Profit

Economic profit displayed considerable volatility throughout the timeframe. Initially, the company experienced substantial negative economic profit values, starting at around -153 million USD and improving to approximately -41 million USD by 2022. This improvement culminated in a positive economic profit of 182 million USD in 2023, denoting a period of value creation beyond the cost of capital. However, this positive result was short-lived, as economic profit sharply declined back into negative territory in the subsequent periods, reaching a low of nearly -597 million USD by 2025, suggesting challenges in sustaining profitability despite increasing sales.

Economic Profit Margin

The economic profit margin mirrored the trends observed in economic profit but remained negative for the majority of periods. The margin improved from -4.59% to near -0.78% by 2022, turning positive at 2.54% in 2023, consistent with the corresponding economic profit figure. Following this peak, the margin declined back into negative figures, settling at -2.68% by 2025. This pattern indicates that, while there was a temporary phase of improved efficiency or profitability relative to sales, the company's ability to generate returns above costs diminishes in the latter years.

Summary of Trends

The company exhibits strong revenue growth across the periods, but this expansion has not consistently translated into economic profit gains. The brief period of positive economic profit and margin in 2023 stands out as an anomaly amid generally negative profitability performance. The divergence between rapidly increasing sales and fluctuating, ultimately negative economic profit suggests rising costs or capital charges that offset the benefits of higher revenues. The data underscores the importance of controlling expenses and enhancing operational efficiency to convert growing sales volumes into sustainable economic value.