Super Micro Computer Inc. (NASDAQ:SMCI)

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed substantial growth over the evaluated period, increasing from 70,352 thousand USD in 2020 to 1,207,114 thousand USD projected for 2025. The growth was especially pronounced between 2021 and 2022, and again between 2022 and 2024, indicating an improving profitability trajectory.

Cost of Capital

The cost of capital displayed a fluctuating trend, starting at 18.08% in 2020 and slightly decreasing to 15.72% by 2025. While there were minor oscillations year-on-year, the general trend points toward a moderate reduction in capital costs over time.

Invested Capital

Invested capital showed a significant upward trend, rising from 1,239,197 thousand USD in 2020 to a projected 11,494,019 thousand USD in 2025. This increase was especially notable between 2023 and 2025, reflecting substantial investment or asset growth.

Economic Profit

Economic profit values were negative for most years except in 2023, where it was positive at 181,843 thousand USD. The figure declined steeply again into negative territory afterward, reaching -599,287 thousand USD by 2025. This suggests that despite rising profits, the returns did not consistently exceed the cost of capital, especially in the later years.

Summary

The data indicates a company experiencing strong growth in operating profit and significant increases in invested capital. However, the cost of capital remained relatively high, and economic profit was mostly negative, except for a brief positive period in 2023. This pattern suggests that while operational efficiency and revenue generation improved, the company’s investments did not consistently generate returns above their cost, implying potential challenges in value creation over the longer term.

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.

Over the examined periods, the economic profit demonstrates notable volatility with a clear deterioration in the latest years. Initially, economic profit improved from a negative $153,659 thousand in mid-2020 to a less negative $41,280 thousand by mid-2022, even transitioning into positive territory at $181,843 thousand in mid-2023. However, this positive trend reversed sharply, with economic profit plunging to negative values again, reaching -$215,771 thousand in mid-2024 and further declining to -$599,287 thousand by mid-2025.

Invested capital has generally trended upward over the years, indicating increased capital deployment in the business. The capital base grew from approximately $1,239,197 thousand in mid-2020 to $2,437,425 thousand by mid-2023, nearly doubling within three years. This was followed by an even more substantial increase in the subsequent years, culminating in $11,494,019 thousand by mid-2025, representing a nearly fivefold increase from mid-2023 levels. The significant expansion in invested capital in the most recent periods suggests aggressive investment or asset accumulation.

The economic spread ratio, which measures the return on invested capital relative to its cost, mirrors the economic profit trends. It was negative throughout most periods, indicating that returns were generally below the cost of capital. The ratio improved from -12.4% in mid-2020 to a near-breakeven and slightly positive 7.46% in mid-2023, suggesting an enhanced ability to generate returns exceeding the cost of capital during that period. However, the ratio slipped back into negative figures thereafter, declining to -2.81% in mid-2024 and -5.21% in mid-2025, implying returns once again failed to cover capital costs.

In summary, the data reveal a period of recovery and improved profitability around mid-2023, followed by a sharp reversal characterized by worsening economic profit and economic spread despite a significant increase in invested capital. This divergence points to diminishing returns on the substantially increased capital base in recent years, raising concerns about capital efficiency and the sustainability of value creation going forward.

The financial data reveals significant fluctuations over the analyzed periods, highlighting both growth and volatility in key metrics.

Adjusted net sales

There is a pronounced upward trend in adjusted net sales, increasing consistently from approximately $3.34 billion in mid-2020 to about $22.29 billion projected by mid-2025. This indicates robust revenue growth over the five-year span, with the most substantial increases occurring from 2022 onwards.

Economic profit

The economic profit figures show considerable volatility. Initially, the company experienced negative economic profit, with losses diminishing from around -$154 million in 2020 to -$41 million in 2022. A positive economic profit of approximately $182 million is recorded in 2023, representing a notable temporary turnaround. However, this improvement is short-lived as economic profit turns negative again dramatically in 2024 and 2025, declining to -$216 million and further to -$599 million, respectively. This pattern points to irregular profitability despite growing sales.

Economic profit margin

The economic profit margin follows similarly fluctuating trends. Margins start at -4.6% in 2020, improving steadily to a near break-even level of -0.79% by 2022, and then turning positive to 2.53% in 2023. Subsequently, margins again decline into negative territory, reaching -1.43% in 2024 and -2.69% in 2025. This cyclical pattern of profit margins reflects the shifts in economic profit, suggesting challenges in sustaining profitability relative to sales growth.

In summary, the company demonstrates strong top-line growth in adjusted net sales, but this has not been consistently translated into sustainable economic profit. The temporary improvement in 2023 followed by a steep decline in subsequent years points to underlying issues affecting long-term profitability despite the revenue expansion. The fluctuating economic profit margin underscores potential variability in cost management or other operational factors impacting financial performance.