Super Micro Computer Inc. (NASDAQ:SMCI)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes exhibited a consistent upward trend from 2020 to 2025. Starting at approximately 70.4 million USD in 2020, it increased steadily each year, reaching over 1.2 billion USD by 2025. The most significant growth occurred between 2021 and 2023, indicating a substantial enhancement in operational profitability during this period.

Cost of Capital

The cost of capital showed moderate fluctuations over the six-year period. It slightly decreased from 18.11% in 2020 to a low of 15.74% in 2025, with a minor peak at 18.32% in 2023. The overall declining trend in cost of capital may suggest improved financing conditions or a change in the company's capital structure, potentially reducing financing expenses.

Invested Capital

Invested capital increased markedly, especially after 2021. From around 1.24 billion USD in 2020, it nearly doubled by 2022 and then surged dramatically in 2024 and 2025, reaching approximately 11.5 billion USD. This significant investment growth may reflect aggressive expansion, acquisitions, or substantial asset accumulation within the company over these years.

Economic Profit

Economic profit remained negative for most years, except for a notable positive result in 2023. Starting with a negative 154 million USD in 2020, it improved progressively through 2022 and peaked positively at 181 million USD in 2023. However, it reversed sharply into substantial negative values in 2024 and 2025, reaching losses above 600 million USD. This volatility indicates that despite growing profitability and investment, the company was largely unable to generate returns surpassing its cost of capital, particularly in the latter years.

Overall Analysis

The data reveals a company that has significantly expanded its invested capital and improved operational profits over the years. However, the economic profit figures expose challenges in value creation, as returns have often failed to exceed the cost of capital. The peak in economic profit during 2023 is an exception, suggesting that certain conditions or strategic actions that year temporarily enhanced value creation. The subsequent decline warns of inefficiencies or diminishing returns on the substantial investments made. The declining cost of capital may mitigate some financing burdens but has not fully translated into sustained economic profit. Continuous monitoring of investment efficiency and capital utilization is advisable.

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 a highly volatile trend over the examined periods. Initially, the firm reported significant negative economic profits, starting at -154,033 thousand USD and improving somewhat by 2021 and 2022, reaching -41,875 thousand USD. In 2023, the economic profit shifted into positive territory with a value of 181,096 thousand USD, indicating an improvement in value creation during that year. However, the subsequent years reversed this positive trend markedly, with substantial declines to -217,994 thousand USD in 2024 and an even steeper decline to -602,255 thousand USD in 2025, reflecting considerable economic losses and deterioration in profitability.

Invested Capital

The invested capital shows a consistent upward trajectory throughout the period analyzed. Beginning at 1,239,197 thousand USD in 2020, the invested capital experienced steady increments through 2021 (1,282,041 thousand USD) and substantial growth in 2022 (2,222,919 thousand USD) and 2023 (2,437,425 thousand USD). This growth accelerated dramatically in the last two years, reaching 7,676,769 thousand USD in 2024 and nearly doubling to 11,494,019 thousand USD by 2025. This rapid expansion suggests significant investment in assets or capital base over the recent years.

Economic Spread Ratio

The economic spread ratio, which measures the spread between return on invested capital and cost of capital, parallels the fluctuations observed in economic profit. It starts at a considerably negative level (-12.43%) in 2020, gradually improving through 2021 (-9.57%) and nearing break-even in 2022 (-1.88%). By 2023, the ratio turns positive at 7.43%, implying that returns exceeded capital costs during that year. However, the ratio falls back into negative territory afterward, reaching -2.84% in 2024 and worsening to -5.24% in 2025, signaling a decline in operational efficiency and profitability relative to the cost of capital.

Summary

Overall, the data reflect a complex financial profile characterized by significant capital investment growth alongside volatile and ultimately deteriorating economic profitability. The spike in economic profit and positive economic spread in 2023 indicates a temporary operational improvement, but the subsequent sharp declines suggest challenges in sustaining value creation relative to the expanded capital base. The marked increase in invested capital raises questions about capital utilization efficiency in the most recent periods, given the concurrent decline in economic profit and spread.

Adjusted Net Sales

The adjusted net sales exhibit a strong upward trend over the reviewed periods. Starting at approximately 3.34 billion US dollars in mid-2020, sales increased steadily each year, reaching nearly 22.29 billion US dollars by mid-2025. This indicates substantial revenue growth, with the most pronounced acceleration occurring from mid-2023 onwards.

Economic Profit

The economic profit figures demonstrate significant volatility throughout the periods. Initially, the company experienced negative economic profit, with losses of 154 million US dollars in mid-2020 and reducing losses to approximately 42 million US dollars by mid-2022, indicating a gradual improvement. In mid-2023, economic profit turned positive for the first time at about 181 million US dollars. However, this was followed by a sharp reversal with substantial negative economic profit recorded in mid-2024 and mid-2025, reaching losses of approximately 218 million and 602 million US dollars respectively. This suggests challenges in sustaining profitability relative to the capital costs despite revenue growth.

Economic Profit Margin

The economic profit margin mirrors the fluctuations seen in economic profit, remaining negative for most periods. It improved from -4.61% in mid-2020 to -0.8% by mid-2022, before turning positive at 2.52% in mid-2023, indicating a brief period of profitability in terms of returns on sales. Subsequently, it declined again to negative values of -1.44% and -2.7% in mid-2024 and mid-2025, respectively. This trend underscores difficulties in maintaining efficient profit generation relative to the company's sales volume over the longer term.

Summary

Overall, the company exhibits strong revenue growth across the examined periods. However, despite increasing sales, the economic profit and economic profit margin reveal persistent challenges in generating consistent economic value beyond cost of capital. The temporary improvement in mid-2023 was not maintained, as evidenced by the renewed large negative economic profits and margins thereafter. This pattern indicates potential issues with cost management, investment efficiency, or competitive pressures affecting profitability despite expanding sales.