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FINWIRES

Research Alert: Smci: Q3 Sees Margin Recovery But Revenue Miss; Cash Outflows Strain Liquidity

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

Q3 FY 26 results were mixed as revenue of $10.24B (+123% Y/Y) missed consensus expectations of $12.45B, though non-GAAP EPS of $0.84 easily beat the $0.62 estimate. Gross margin recovered meaningfully to 9.9% (+30 bps Y/Y, +370 bps Q/Q) from Q2's record low of 6.3%. These mixed results may give investors pause, especially with the sales miss and ongoing credibility risks following export control violations by former senior management, raising questions in our view. Q4 guidance calls for revenue of $11.0B-$12.5B (midpoint $11.75B vs. Street $11.31B) and non-GAAP EPS of ~$0.72 vs. consensus $0.56. We are nervous about the company's strained liquidity position as cash declined to $1.29B from $4.09B while debt increased to $8.8B from $4.9B, driven by $6.6B in operating cash outflows (vs. $1.9B expected) primarily from $10B in accounts payable payments. We expect additional pressure from inventory buildup for the Blackwell platform ramp amid export control fines and working capital requirements.

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