Super Micro Computer Inc (SMCI)

Cash conversion cycle

		Mar 31, 2025	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020
Days of inventory on hand (DOH)	days	73.81	72.00	110.25	124.45	151.57	116.39	122.79	90.34	104.60	94.99	126.58	128.33	146.00	141.32	131.61	125.69	114.88	107.63	101.73	110.48
Days of sales outstanding (DSO)	days	44.72	53.64	53.02	64.98	50.96	59.29	41.77	58.84	37.31	42.19	44.68	58.62	53.59	43.54	43.68	47.59	43.93	36.15	35.69	44.13
Number of days of payables	days	12.26	11.00	37.63	43.62	40.15	59.52	64.85	48.55	43.58	37.41	57.24	54.42	71.65	70.49	62.73	73.94	59.10	52.82	43.82	54.19
Cash conversion cycle	days	106.27	114.64	125.64	145.81	162.38	116.16	99.71	100.63	98.33	99.77	114.02	132.53	127.94	114.37	112.56	99.35	99.71	90.96	93.60	100.42

March 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 73.81 + 44.72 – 12.26
= 106.27

The analysis of Super Micro Computer Inc's cash conversion cycle (CCC) over the period from June 2020 through March 2025 reveals notable fluctuations and a discernible trend in operational efficiency and working capital management.

Initially, the CCC decreased from 100.42 days as of June 2020 to a low of 90.96 days by December 2020, indicating an improvement in cash flow management potentially driven by shorter inventory holding periods or quicker receivables collection. This downward trend persisted into early 2021, with the cycle reaching 90.96 days at year's end, reflecting a period of operational efficiency.

However, starting in early 2021, the cycle experienced a gradual lengthening. By September 2021 and December 2021, the CCC rose to 112.56 and 114.37 days respectively, suggesting either an elongation of receivables, increased inventory levels, or delays in accounts payable payments, which could impact working capital.

The upward trend continued into 2022, peaking at 132.53 days in June 2022. This substantial increase indicates a significant slowdown in cash conversion efficiency during that period. Notably, after June 2022, the cycle contracted somewhat to 114.02 days by September 2022 and further decreased to 99.77 days in December 2022, reflecting a partial recovery in operational efficiency.

In 2023, the CCC stabilized around 98-100 days during the first three quarters but rose again to 116.16 days in the final quarter of the year, signaling renewed challenges in managing cash cycle components. The subsequent period from March 2024 to September 2024 shows a decreasing trend from 162.38 days to 125.64 days, indicating a significant improvement, possibly due to better receivables management or inventory control. Nonetheless, the cycle increased again to 114.64 days in December 2024 and further to 106.27 days in March 2025, demonstrating ongoing fluctuations but generally maintaining levels below the peak observed mid-2022.

Overall, the cash conversion cycle has exhibited periods of both improvement and elongation, with notable peaks around June 2022 and December 2023, and periods of recovery in between. These fluctuations suggest variations in the company's operational efficiency, supply chain management, and credit policies over time. The observed trend towards shorter cycles in late 2022 and early 2024 indicates efforts to optimize working capital, though cyclical challenges persist in maintaining consistent operational efficiency.