Super Micro says review found ‘no evidence’ of fraud after auditor resigned

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Super Micro Computer said on Tuesday that an independent probe into concerns flagged by former auditor EY had turned up no evidence of fraud or misconduct by its management or board, but its shares fell as it said it was unsure when it would file its annual report with regulators.

The server maker’s stock, which had soared off the back of hype surrounding artificial intelligence, had fallen by one-third last week after EY said it was resigning as its auditor.

In a filing on Tuesday Super Micro said that an independent special committee given the task of conducting a review into EY’s concerns had found “no evidence of fraud or misconduct on the part of management or the board of directors”. 

“The committee is recommending a series of remedial measures for the company to strengthen its internal governance and oversight functions,” it added, saying the committee expected to deliver a full report on its three-month investigation in the coming days.

Super Micro added that it was still unsure of when it would be able to file its annual 10-K report with regulators, which had been due at the end of August. Its shares were down about 12 per cent in after-hours trading.

“We are actively in the process of engaging a new auditor,” chief executive officer Charles Liang told investors on an earnings call. “We are working with urgency to become current again with our financial reporting.”

Super Micro also released preliminary quarterly results on Tuesday that were slightly below expectations. It said it expected revenue for the quarter to the end of September of between $5.9bn and $6bn, at the low end of the company’s prior guidance and below consensus estimates of $6.5bn.

It said it expected revenue of between $5.5bn and $6.1bn for the current quarter to the end of December, below Wall Street estimates for $6.8bn.

Silicon Valley-based Super Micro, a key partner to $3.4tn artificial intelligence chipmaker Nvidia, has been one of the top beneficiaries of booming investor enthusiasm for AI infrastructure, with its shares soaring more than 1,000 per cent between the start of 2023 and their peak in March of this year. 

But it has fallen sharply since then. In September the Wall Street Journal reported that the US Department of Justice was investigating the company, after a short seller report alleged accounting manipulation.

EY was hired by Super Micro in the middle of last year, and it had been carrying out its first audit of the company. It said its resignation was “due to information that has recently come to our attention which has led us to no longer be able to rely on management’s and the audit committee’s representations”. Super Micro said at the time that it disagreed with EY’s decision but was taking its concerns seriously.