{
  "docId": "019dd923-622c-750b-8b99-2f79335352dd",
  "docSlug": "81a891429a42",
  "documentTitle": "Super Micro Computer, Inc. (SMCI)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2023-01-10 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 7,
  "pageCount": 36,
  "prevPage": 6,
  "nextPage": 8,
  "slideType": "thesis_headline",
  "function": "diagnose_problem",
  "density": "overcrowded",
  "nDataPoints": 6,
  "notes": "The slide uses a sidebar-body layout to present three distinct pillars of the short thesis.",
  "elementsJson": [
    "headline_text",
    "paragraph"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b99-2f79335352dd/7",
  "deckHref": "/decks/019dd923-622c-750b-8b99-2f79335352dd",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b99-2f79335352dd.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b99-2f79335352dd#slide-7",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "The last time this occurred was during a financial restatement period.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-14d8-75c0-8c88-cb020375e69b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.8,
        "x": 0.15,
        "y": 0.68
      },
      "kind": "list",
      "text": "2) SMCI's cash interest expense is higher than its reported interest expense on the income statement. We estimate its Q1 interest expense should have been $2.3 million vs. the $4.0 million cash interest expenses reported.",
      "attrs": null,
      "subkind": "numbered",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "33941145-fb48-42a3-95f5-a82e0a0311b1",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.8,
        "x": 0.15,
        "y": 0.56
      },
      "kind": "list",
      "text": "1) SMCI recently experienced a large quarterly increase in deferred revenue of $86.0 million, with $69.6 million of the increase described as a non-cancellable, non-refundable advance cash consideration.",
      "attrs": null,
      "subkind": "numbered",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "7bb0e6a5-0544-44be-ab8e-0429fa9b175f",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.8,
        "x": 0.15,
        "y": 0.85
      },
      "kind": "list",
      "text": "3) SMCI appears to be keeping two sets of books for its inventory, one reported under FIFO to creditors and another under the weighted average cost method to equity investors.",
      "attrs": null,
      "subkind": "numbered",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "efb226d4-fe5c-40d0-a391-9521c7929bbd",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.8,
        "x": 0.15,
        "y": 0.48
      },
      "kind": "paragraph",
      "text": "Recall that SMCI has a documented history of prematurely booking revenues, understating expenses and improperly accounting for inventory. In this context we are troubled by a few recent observations:",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "307549b2-9d45-426b-9247-282b25ea4e71",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.8,
        "x": 0.15,
        "y": 0.16
      },
      "kind": "paragraph",
      "text": "SMCI appears to now be targeting larger customers, which carries with it greater risks such as bigger discounts and margin concessions along with worsening payment terms. In fact, we find that SMCI's working capital has intensified and its debt dependency to fund cash flow deficits has been increasing.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "cc20b19a-66c5-49f1-aad1-ca85a7b5c964",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.8,
        "x": 0.15,
        "y": 0.32
      },
      "kind": "paragraph",
      "text": "SMCI began disclosing a rise in customer concentration in early 2022, but without disclosing who has been driving its recent performance. In the most recent quarter, 21.9% of revenues were from this lone customer.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "d37c14c5-9fe9-4c8f-b628-5404c64c5e82",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.1,
        "w": 0.65,
        "x": 0.3,
        "y": 0.05
      },
      "kind": "title",
      "text": "Spruce Point Issues A \"Strong Sell\" Opinion On Super Micro Computer (SMCI) With 40% - 50% Downside Risk",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "24b0fc3d-7c56-4849-a854-8a64fe0b734f",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "c4917b2b-47df-439f-a109-4f9b909425cb",
      "evidence": "The slide explicitly lists accounting anomalies and 'two sets of books' as evidence for a short thesis.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 20,
      "from": 6,
      "beatId": "fb4f2331-b59b-4508-9091-4407fae41e4d",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Struggle",
      "beatSlug": "overcoming-monster-the-struggle",
      "evidence": "Detailed critique of SMCI's financials and business practices",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Development",
      "parentBeatSlug": "development"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}