Super Micro Computer, Inc. (SMCI.US) will submit a compliance plan on Monday to avoid delisting risk.

According to sources familiar with the matter, artificial intelligence server company Super Micro Computer, Inc. (SMCI.US) plans to submit a compliance plan to Nasdaq before Monday to maintain its stock market trading eligibility. Previously, the company requested an extension due to needing more time to submit its latest quarterly earnings report. In the document submitted to the Securities and Exchange Commission, Super Micro Computer, Inc. disclosed that its special committee has completed its investigation into initial concerns raised by former auditor EY and expects other ongoing work to conclude soon. Additionally, the company stated that it needs more time to hire a new accounting firm and prepare its 10-Q for the first quarter of 2025, which will be done after the completion and submission of the 10-K for 2024. Super Micro Computer, Inc. was delisted from Nasdaq in August 2018 due to delayed financial reporting and relisted in January 2020. If the company is delisted again, it would be the second time. The company emphasized in a statement that they intend to take all necessary steps to meet Nasdaq's continued listing requirements as soon as possible. The purpose of submitting this plan is to avoid delisting again and ensure the company can continue trading on Nasdaq. Compliance Plan Nasdaq issued a delisting warning to Super Micro Computer, Inc. on September 17, giving them 60 days to submit a compliance plan to maintain their listing eligibility, with the final submission deadline set for Monday, November 16. If Super Micro Computer, Inc.'s plan is approved by Nasdaq, the company will receive an extension of up to 180 days to submit their annual report. Nasdaq is requesting information on the board's investigation into accounting issues, specific reasons for the reporting delays, and a timeline of actions taken by the board. When evaluating the compliance plan, Nasdaq will consider factors such as reasons for the delay, upcoming corporate events, financial condition of the company, and the likelihood of submitting audited reports. They will also consider information provided by external auditors, the SEC, or other regulatory bodies. Last week, Super Micro Computer, Inc. stated that they are working diligently to maintain their listing on Nasdaq and mentioned that the special committee has completed its investigation without finding any improper conduct. CEO Charles Liang expects to receive the committee's report, but when CNBC inquired if they had received it, the company spokesperson did not respond. If Nasdaq rejects Super Micro Computer, Inc.'s compliance plan, the company has the right to request a hearing with a panel to review the decision. The hearing request would trigger a 15-day trading suspension, and the panel has the authority to extend the deadline up to 180 days. If the request is denied, or if Super Micro Computer, Inc. fails to submit updated financial statements after receiving an extension, the company can still appeal to Nasdaq's Listing Qualifications Panel, which has the authority to provide exceptions. According to Nasdaq rules, the extension period cannot exceed 360 days from the initial delayed submission. Super Micro Computer, Inc.'s chances of getting an extension may be impacted by its past violations. One key factor that could affect the company's potential to receive an extension is whether they have violated any SEC regulations in the past. According to SEC disclosures, Super Micro Computer, Inc. faced issues with financial misstatements and delayed filing of key documents from 2015 to 2017, leading to their delisting from Nasdaq in June 2017, and relisting two years later. Analyst Matt Bryson from Wedbush Securities pointed out in a report earlier this month that Nasdaq considers a company's specific circumstances, including their compliance record, when evaluating the necessity of an extension. He has given the stock a neutral rating. Historical experiences also show that the delisting process is lengthy and complex. Super Micro Computer, Inc. missed the deadline for submitting its 2017 annual report and, although granted an extension until December, the stock was further extended in a hearing in May 2018 to be delisted in August of that year. In the short term, Super Micro Computer, Inc. faces the more immediate challenge of potential loss of customers and suppliers. Despite their compliance issues, the company produces highly sought-after products in the tech industry and their unaudited financial reports show sales growth of over 100% last year, reaching nearly $15 billion in revenue, and a healthy balance sheet. Wall Street expects Super Micro Computer, Inc. to further increase their revenue to around $25 billion in the 2025 fiscal year, based on FactSet data. However, Super Micro Computer, Inc. has stated that the delay in filing reports "has had some impact on orders." In their recent unaudited performance report for the September quarter, the growth rate did not meet Wall Street's expectations, and the performance guidance provided was relatively limited.Blackwell's supply, which has sparked speculation in the market about the relationship between Super Micro Computer, Inc. and its key suppliers.In response to this, Melius Research analyst Ben Reitzes commented in this week's report: "We believe that the difficulties faced by Super Micro Computer, Inc. are not a significant threat to NVIDIA Corporation, although customers may directly shift orders to other companies such as Dell Technologies, Inc. Class C, which could result in sales fluctuations for one or two quarters in the short term." Super Micro Computer, Inc.'s Head of Corporate Development, Michael Staiger, clarified to investors on a conference call: "We have communicated with NVIDIA Corporation and they have confirmed that their allocation strategy has not changed. We maintain a close working relationship with NVIDIA Corporation."