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Luke Kawa

Super Micro tumbles after reporting disappointing results, boosts full-year sales outlook

Super Micro Computer just released results for its fiscal Q1, the three months ended September 30, and they’re a top- and bottom-line miss — but with very strong sales guidance for the current quarter and a boost to the full-year outlook.

Shares are sinking in after-hours trading.

The Q1 results:

  • Net sales: $5 billion (compared to an estimate of $6.1 billion and guidance of about $5 billion).

  • Adjusted diluted net income per share: $0.35 (estimate: $0.41, guidance: $0.40 to $0.52).

Its fiscal Q2 guidance:

  • Net sales: $10 billion to 11 billion (estimate: $8.1 billion).

  • Adjusted diluted net income per share: $0.46 to $0.54 (estimate: $0.62).

The server giant took away some of the suspense from these results by announcing preliminary figures on October 23, saying Q1 net sales would be about $5 billion, which it attributed to “recent design wins in excess of $12 billion, requesting delivery in the second quarter of fiscal year 2026” — that is, the quarter we’re currently in. That figure was far short of the consensus estimate and its previously issued guidance for the quarter.

(Hilariously, the consensus estimate only went down to $6.1 billion from $6.5 billion after that release).

At that time, President and CEO Charlies Liang reiterated expectations for $33 billion in sales for fiscal year 2026. Management has now upped that full-year sales outlook to $36 billion. Analysts were expecting $32.6 billion.

Pushing back the timing of expected sales has been a common theme for Super Micro this calendar year.

“Though large deals tend to come with bigger discounts, the company has yet to draw a line on pricing in its effort to win them, as 2Q’s outlook implies a 7.5% gross margin vs. 9.3% in 1Q,” Bloomberg Intelligence senior industry analyst Woo Jin Ho wrote. “Though the company raised the full-year forecast by at least 9%, unless its pricing strategy changes, we don’t believe earnings will follow.”

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Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

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Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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