Q4 2025 Super Micro Computer Inc Earnings Call

Cameron: Thank you for standing by. My name is Cameron, and I will be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc. SMCI US fourth quarter fiscal year 25 business update call. With us today are Charles Liang, founder, president, and chief executive officer David Weigand, CFO, and Michael Staiger, senior vice president of corporate development. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star one. Thank you.

Thank you for standing by. My name is Cameron and I will be your conference operator. Today at this time, I would like to welcome everyone to the super micro computer Inc. Smci us.

Fourth quarter fiscal year, 25 business update, call with us today are Charles Liang, founder president and chief executive officer David wegan CFO and Michael stagger, senior vice president of corporate development. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session if you would like to ask a question. Please, press star 1. Thank you.

Michael Staiger: Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the fourth quarter and full year of fiscal 2025, which ended June 30, 2025. With me today are Charles Liang, founder, chairman, and chief executive officer, and David Weigand, chief financial officer. By now, you should have received a copy of the press release from the company that was distributed at the close of regular trading and is available on the company's website. As a reminder, during today's call, the company will refer to a presentation that is available to participants in the investor relations section of the company's website under the events and presentations tab. We have also published management's scripted commentary on our website.

uh, good afternoon and thank you for attending super micros call to discuss Financial results for the fourth quarter and full year of fiscal 2025, which ended June 30th 2025 with me today are Charles Liang, founder chairman and chief executive officer and David Juan Chief Financial Officer

Michael Staiger: Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including without limitation those regarding revenue, gross margin, operating expenses, other income and expenses, taxes, capital allocation, and future business outlook, including guidance for the first quarter of fiscal 2026 and the full fiscal year 2026. These statements and other comments are based on management's current expectations and assumptions that involve material risks and uncertainties that could cause actual results or events to materialize different from those anticipated, and you should not place undue reliance on forward-looking statements. You can learn more about these risks and uncertainties in the press release we issued earlier this afternoon, our most recent 10-K for fiscal 2024, and other SEC filings. All of these documents are available on the investor relations page of Super Micro's website. We assume no obligation to update any forward-looking statements.

By now you should have received a copy of the press release from the company that was distributed to close a regular uh, trading and is available in the company's website. As a reminder. During today's call, the company will refer to a presentation is available. The participants in the investor relations section of the company's website under your events and presentations table. We have also published management scripted commentary on our website. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements including without limitation those regarding Revenue. Growth margin operating expenses other income and expenses, taxes Capital, allocation and future business Outlook. Including guidance for the first quarter of fiscal 2026 and the full fiscal year 2026, these statements and other comments are based on Management's, current expectations, and assumptions involved, material risks, and uncertainties that could cause actual results or events that material is different from those anticipated and you should not Place undue Reliance on 4 looking statements. You can learn more about these risks and uncertainties in the press release. We issued earlier this afternoon our most recent 10K for fiscal 2024 and another sec.

Michael Staiger: Most of today's presentation will refer to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to the company presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors with a means of evaluating and understanding how companies' management evaluates operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP. In addition, a reconciliation of GAAP and non-GAAP is contained in today's press release and in the supplemental information attached to today's presentation. At the end of today's prepared remarks, we'll have a Q&A session for Southside analysts. Our first quarter of fiscal 2026 quiet period begins at the close of business Friday, September 12th, 2025.

Filing. All these documents are available on the investor relations page of Supervisors website. We assume no obligation to update any forward-looking statements. Most of today's presentation, will refer to non-gaap financial results in business outlook for explanation of our non-gaap financial measures. Please refer to the company you presentation or to our press release published earlier today. The non-gaap measures are presented as we believe that they provide investors with a means of evaluating and understanding how companies management evaluates operating performance of these. Non-gaap measures should not be considered in isolation from as substitutes for or Superior to financial measures prepared in accordance with us. Gaap in addition, a Reconciliation of gaap and non-gaap is contained in today's press release, and in the supplemental information, attached to today's presentation at the end of today's prepared remarks. We'll have a, a Q&A session for Southside analysts

Michael Staiger: And with that, I will now turn it over to Charles.

Charles Liang: Thank you, Michael. I will be covering our performance for fiscal 2025 and providing insights into our strategic direction for fiscal 2026. Our fiscal 2025 results represent a 47% year-on-year revenue growth at $22 billion. This growth reflects continued strong demand for our AI and green computing solutions. Despite the six months cash flow impact from the delayed filing of our fiscal year 24 10-K and delayed revenue recognition from a major new large partner, non-GAAP earnings per share were 41 cents down year over year from 50% last year, primarily due to the tariff impact. Although we have taken measures to reduce the impact, and we will see their results soon. Allow me to go a little deeper at the June revenue shortfall in what was otherwise a stronger quarter.

Our first, our first quarter of fiscal 2026, quite a period begins with the close of business Friday, September 12th 2025 and with that, I will now turn it over to Charles.

Thank you, Michael. I will be covering our performance for Fitch Co 20135 and providing insights into our strategic direction for future code, 2026.

Our physical 2025 results represent a 47% year-on-year Revenue growth at a 22 billion dollars. This growth reflects continued strong demand for our Ai and Green Computing Solutions.

Despite the uh, 6 months cash flow impact from the debate filing of our physical year, 24. Thank you, and be their revenue recognition from a major uh, new large partners.

N-gap earnings per share were 41 cents, down year over year from 50 cents last year, primarily due to the Terrace impact.

uh allow me to go a little deeper at the June Revenue show for in what was uh, otherwise

Charles Liang: The shortfall stemmed from two key factors: a capital constraint that limited our ability to rapidly scale production, and specification changes from a major new customer that delayed revenue recognition because of some new add features. The capital constraint was no longer an issue after we filed the fiscal year 24 10-K, and the large customer orders are now slated for recognition in September and December quarters. Following closed collaboration to align with the customer's update feature requirements. Despite this circumstance, we remain focused on our strategic priorities, optimizing our solutions and capturing market share. Notably, the number of large-scale product and player-like customers grew from two in fiscal year 24 to four in fiscal year 25, signaling strong momentum and continuing growth potential across our customer base. We are also on track to add a few more in fiscal year 26.

Uh, a stronger, uh quarter.

The show stemmed from a 2R that limited our ability to rapidly scale potential and specification changes from a major new customer that today, uh, revenue recognition because of...

Uh, new ad.

Uh, because of some new ad features.

The capital constraint will no longer an issue of the we filed the, uh, physical year, 2410 case, and the large customer orders are now saved for recognition in September and December quarters.

Following uh, close, uh, collaboration to align with the customers update feature requirements.

Despite this circumstance, we remain focused on our strategic priorities: optimizing our solutions and capturing market share. Notably, the...

Number of uh large scale Plug and Play Rock. Customer Grew From 2 in F year 24 to 4 in physical year 25.

Signaling strong momentum and continuing growth potential across our customer base.

Charles Liang: We continue our leadership in AI platforms and infrastructure with a comprehensive portfolio optimized for the latest GPU technologies, including NVIDIA B300 and GB300 platforms, and AMD's MI350 and MI355X GPUs. Our X14 and H14 GPU systems deliver breakthrough performance, supporting large-scale AI training and invention workloads and enterprise computing demands with exceptional efficiency. Notably, we were able to deliver our B200 systems with an industry-leading time-to-market to our customers. We are confident our B300 and GB300 solutions will deliver a similar, if not even better, time-to-market and time-to-online advantages for customers, helping them accelerate their AI deployments faster than others. To further simplify our customers' AI data center infrastructure deployment and time-to-online, we officially introduced our data center building block solution, DCBBS, to the market last quarter.

We are also on track to add a few more in physical year 26.

We continue our leadership, in AI platforms and infrastructure with the comprehensive portfolio. Uh optimized for the latest GPU Technologies, including Nvidia, brillante and GB 300 platforms and amds, and actually 5050 and mi3. 555 action uh gpus

our expert team and h-14 GPU systems deliver breakthrough, performance supporting a large scale, AI training, and envisioning workloads, and Enterprise Computing demands, which exceptional efficiency

Notably, we were able to deliver our P200 systems.

Uh, with an industry leading time to Market to our customers.

We are confident our peace and gb30 solutions will deliver a similar if not even better A Time To market and come to online. Um advantages.

For customer.

Uh, helping them, uh, accelerate their AI, uh, deeper emails, faster than others.

To further simplify our customers, AI data center infrastructure, the deeper element, and time to online. We officially introduced our data center building block solution

Charles Liang: With our DCBBS, customers can harness our proven system building block advantage to adapt quickly to evolving market demands, especially in response to increasing complex AI product cycles. Our modular architecture enables faster customization, streamlines production, and reduces time to delivery and time to online, while also optimizing quality, efficiency, and ease of maintenance. In most cases, customers who use our DCBBS can finish building a liquid-cooled AI data center in just 18 months instead of two to three years. When converting an existing data center or a warehouse to a high-density direct liquid cooling data center, customers can complete the transformation in only three to six months instead of 12 or even 18 months. We have just begun deploying rack-scale total solutions with our DCBBS to a few key customers.

DCPS to the market. The last quarter with our DC PBS, customers can harness our Improvement system, Building Product advantage to adopt uh quickly to evolving Market demands.

Especially in the response to increasing uh, complex, AI product Cycles.

our modular architecture enable faster customization, uh steam lines, uh, production and uh, reduce time to delivery and time to online while also optimize quality deficiency and easy of maintenance,

In most of the cases customers who use our dcbs can finish building a liquid, uh, core AI data center in just 18 months instead of 2 to 3 years.

when converting an existing data center or Warehouse to a high density, direct liquid cooling data, center customer can complete the transformation and only 3 to 6 months instead of

12 or even 80 months.

Charles Liang: Key components of DCBBS include DLC solutions, the air-to-air side cut, I mean, liquid-to-air cooling, CDU, especially in low CDU, indirect CDU as well, and triple power share, battery backup, BBU, water or dry power solutions, and more are coming. Our advanced second-generation direct liquid cooling DLC2 system reduces power and water consumption by up to 40% while operating at a near library quite level, around 50 decimals. This enables superior performance which reduces total cost of ownership, TCO, and total cost to the environment, TCE, for modern data centers. Several DCBBS components are now shipping or entering production very soon, supporting a growing demand for high-performance, energy-efficient data center infrastructure. Equally important, DCBBS meets the growing demand for a comprehensive one-stop shop solution, including software-defined infrastructure, system management, AI workload optimization, networking deployment, and all different levels of services.

We had just begun deeply in rock scale total Solutions with our DCPS to a few key customers.

Include the ERC Solutions.

The error to a psychopath. I mean uh, liquid to air Cooling.

CTE, especially in those CDU. Uh, interact city as well. And choto Powershell.

Battery backup.

CPU.

Water or dry Power Solutions.

And more are coming.

Our at the base.

Uh, second-generation Direct Liquid Cooling (DLC 2) system reduces power and water consumption by up to 40% while operating at a near-library quiet level around 50 decibels.

This enable Superior performance which reduce total cost of ownership PCO and total cost to the environment tce for modern data centers.

uh several DC Pas components are now shipping or entering production medicine supporting and growing demand for high performance energy efficient data center infrastructure,

equally important DCPS meets the growing demand for the

for a comprehensive OneStop, shop solution.

Charles Liang: It allows cloud service providers to reduce both CAPEX and OPEX, capital expense and operating expense. Indeed, it delivers also greater value to both AI-focused and traditional IT data centers. By seamlessly integrating DCBBS capability with our system and rack solution, we are not only enhancing customers' value but also improving our profit margins. This shift toward higher margin and revenue stream is central to our long-term strategy. We are also starting to strategically focus on the enterprise IoT and the telco markets. Initiative, we believe will improve both growth and net margin over time. In the last two quarters, we made a significant investment to optimize our solutions for enterprise customers, introducing advanced server and storage systems tailored for hybrid cloud, AI application, and edge computing workloads. This enterprise-focused strategy will continue for many years to come.

Including software defined infrastructure system management, AI workload, optimization, networking deployment, and all different level of services.

It allows cloud service providers to reduce both cat packs and Opex Capital expense and operating expense indeed. It delivers also where the value to both AI, focus and traditional it data centers.

By simply integrated DCPS capability with our system and resolution. We are not only enhancing customer's value, but also improving our profit margins.

This.

Shifting toward higher margin and revenue streams is central to our long-term strategy.

We are also start to.

Uh, strategically focused on the Enterprise iot and the Techo markets.

And initiative, We Believe.

uh,

Well, improve both growth and net margin over time.

In the last two quarters, we made a significant investment to optimize our solutions for enterprise customers. Introducing...

Advanced service systems Taylor uh, for hybrid Cloud, AI application and Edge computing workloads.

Charles Liang: Supermicro has also launched an enhanced enterprise service program, delivering comprehensive 24/7 global support for high-density, high-performance-driven data center deployment based on optimized rack-scale architecture. Our IoT portfolio, including embedded systems and edge servers, is gaining momentum across the industry, like manufacturing, healthcare, telco, smart city, and the AI edge applications. Additionally, we have announced strategic partnerships to accelerate innovation in AI and the edge and telecom solutions. By expanding into this higher margin segment, we are diversifying our revenue streams and driving long-term sustainable profitability that will benefit our shareholders. Our global footprint allows us to efficiently deploy optimized solutions worldwide with minimal tariff impact, especially after the September quarter. With large and most higher manufacturing campus across the US, Taiwan, Malaysia, and the Netherlands, we can deliver a comprehensive system rack and data center level building block and total solution to our customers directly and quickly.

This Enterprise Focus strategy will continue for many years to come.

Super mango has also launched and enhance Enterprises service program.

delivering uh, comprehensive 24/7, Global support for high density, uh, high performance driven data centers deep agreement based on optimize

Rack scale architecture.

Our iot portfolio, including embedded system and Edge servers is gaining momentum across industry like the manufacturing, uh, Health Care, hair, code, simar city, and the aih applications.

Additionally, we have alarms strategic partnership to accelerate innovation in.

Ai and age and uh, Telecom Solutions.

by expanding into this higher margin segment, we have, um,

Diversifying our revenue streams and driven long-term, uh, sustainable profitability that we are benefit our shareholders.

Our Global Food print allow us to uh efficiently debris.

Uh, optimize the solution worldwide with minimal terrorist impact, uh, especially after September quarter.

Charles Liang: This robust global presence enables us to respond to dynamic regional demands, support the cost-sensitive customers seeking greater value, mitigate tariff exposure, and maintain a reliance global supply chain that's both agile and responsive. Looking ahead to Q1, fiscal year 26, I anticipate revenue between 6 billion and 7 billion, driven by continuing momentum across our AI rack, product and play, DCBBS, software, and service business, which are delivering exceptional customer value and strengthening our profitability. I'm especially excited about our DCBBS for the full fiscal year 2026. I expect at least $33 billion total revenue, supported by our expanding large and enterprise customer base, upcoming product innovation, and robust DCBBS total solution. In closing, I want to thank our employees for their dedication, our customers for their trust, and our investors for their continued support.

And quickly.

This robust Global presence enable us to uh response to Dynamic Regional demands.

Supported Coastal sensitive customers, seeking greater value. Uh, mitigated.

Har for exposure and maintainer. Uh, designs Global Supply Chain. That's both edgier. And, uh, responsive

Looking ahead to q1 uh physical year 26. I am teacher revenue between 6 billion and 7 billion drives uh, continuing momentum across our AI ra ra, and play tcps solware and service business.

Uh which are delivered are exceptional, customer value and uh strengthen our profitability.

I'm especially excited about our DCP BBs for our for our physical year 2026. I expect as at least a 333 billion dollars, total revenue supported by our expanding Dutch and Enterprise customer base.

Upcoming product Innovation and the past pcps total solution.

Encouraging. I want to thank you. Our uh,

Charles Liang: We are excited about the opportunity ahead and look forward to updating you on our progress in the next quarter. David, please.

Employees for their dedication, our customers for their trust and our investors for their continuous support.

We are excited about the opportunity ahead and uh look forward to uh updating you on our progress, in the next quarter.

David Weigand: Thank you, Charles. Q4 fiscal year 25 revenues were 5.8 billion, up 8% year over year and up 25% quarter over quarter compared to our guidance of 5.6 to 6.4 billion. Growth was led by demand for next-generation air-cooled and liquid-cooled GPU AI platforms, which represented over 70% of Q4 revenues across both enterprise and cloud service provider markets. For the full year, fiscal year 25, we reported revenues of 22 billion, representing 47% growth over fiscal year 24 revenues of 15 billion. During Q4, we recorded 2.1 billion in the enterprise channel segment, representing 36% of revenues versus 42% in the last quarter, up 7% year over year, and up 6% quarter over quarter. The OEM appliance and large data center segment revenues were 3.7 billion, representing 63% of Q4 revenues versus 57% in the last quarter, up 2% year over year and up 40% quarter over quarter.

David please.

Thank you. Charles

You for Cisco year 25.

Up 8% year-over-year and up 25% quarter over quarter compared to our guidance of 5.6 to 6.4 billion.

Growth was led by demand for next generation, air-cooled and liquid-cooled GPU AI platforms, which represented over 70% of Q4 revenues across both enterprise and cloud service provider markets.

For the full year. Fiscal year 25 we reported revenues of 22 billion representing 47% growth over. Fiscal year 24 revenues of 15 billion.

During Q4, we recorded 2.1 billion and the Enterprise Channel, segment representing 36% of revenues versus 42%. In the last quarter up 7% year-over-year and up 6%, quarter over quarter.

The OEM Appliance and large data center segment revenues were 3.7 billion representing 63% of Q4 revenues versus 57% in the last quarter.

David Weigand: The emerging 5G telco edge IoT segment revenues were 1% of Q4 revenues. For fiscal year 25, enterprise channel revenues grew 38% to represent 39% of total revenues. The OEM appliance and large data center segment grew 50% and represented 60% of total revenues. The 5G telco edge IoT segment represented 1% of total revenues. For fiscal year 25, we had four 10% plus large data center customers versus one in fiscal year 24. Server and storage systems comprised 98% of Q4 revenue, and subsystems and accessories represented 2%. By geography, the US represented 38% of Q4 revenues, Asia 42%, Europe 15%, and the rest of the world 5%. On a year-over-year basis, US revenues decreased 33%, Asia increased 91%, Europe increased 66%, and the rest of the world decreased 3%.

Up 2% year-over-year and up 40% quarter over quarter.

The emerging 5G Telco, Edge iot segment, revenues were 1% of Q4 revenues.

For fiscal year, 25 Enterprise Channel, revenues grew 80 through 38% to represent, 39% of total revenues, the OEM Appliance and large data center. Segment grew 50% and represented 60% of total revenues.

The 5G Telco Edge iot segment represented, 1% of total revenues.

For fiscal year 25. We had 4

10% plus large data center. Customers versus 1 in fiscal year 24.

Server and storage systems. Comprise 98% of Q4 revenue and subsystems and accessories represented 2%.

By geography, the US represented 38% of Q4 revenues.

Asia 42%.

David Weigand: On a quarter-over-quarter basis, US revenues decreased 21%, Asia increased 78%, Europe increased 196%, and the rest of the world increased 53%. The Q4 non-GAAP gross margin was 9.6% versus 9.7% in Q3 due to product customer mix. For fiscal year 25, the non-GAAP gross margin was 11.2% versus 13.9% for fiscal year 24. Our long-term goal is to gradually improve gross margins through providing complete data center building block solutions and focusing on the enterprise IoT and telco markets. We also expect to benefit from economies of scale from higher revenues, cost-effective global facilities, including the new Malaysia manufacturing plant, and customer diversification. The Q4 operating expenses on a GAAP basis increased by 8% quarter over quarter and 23% year over year to $316 million, driven by higher compensation expenses and headcount.

Europe, 15% and the rest of the world 5% on a year-over-year basis. Us revenues, decreased 33% Asia, increased 91% Europe, increased 66% and rest of world, decreased 3%,

On a quarter over quarter basis us revenues decreased to 21%. Asia increased 78% Europe, increased 196% and the rest of the world increased 53%.

The Q4 non-gaap gross margin was 9.6% versus 9.7% in Q3 due to product customer mix.

For fiscal year 25, the non-gaap gross margin was 11.2% versus 13.9% for fiscal year 24.

Gross margins through providing complete Data Center building, block Solutions, and focusing on the Enterprise iot and Telco markets.

We also expect to benefit from economies of scale from higher revenues cost, effective Global facilities including the new Malaysia manufacturing plant and customer diversification.

David Weigand: On a non-GAAP basis, operating expenses increased 11% quarter over quarter and 29% year over year to $239 million. The Q4 non-GAAP operating margin was 5.3% versus 5% in Q3. Other income and expense for Q4 was a net expense of $5.7 million, consisting of $28.4 million in interest income, offset by $22.3 million in interest expense, and FX and other losses of $11.8 million. The tax provision for Q4 was $19 million on a GAAP basis and $37 million on a non-GAAP basis. The GAAP tax rate for Q4 was 9%, and the non-GAAP tax rate was 12%. The GAAP tax rate was 13% for fiscal year 25 versus 5% in fiscal year 24, and the non-GAAP tax rate was 15% in fiscal year 25 versus 11% in fiscal year 24.

the Q4 operating expenses on a gap basis, increased by 8% quarter over quarter and 23% year-over-year to 316 million driven by higher compensation, expenses and headcount

On a non-gaap basis. Operating expenses increased 11% quarter or over quarter and 29% year-over-year to 239 million.

The Q4 non-gaap operating. Margin was 5.3% versus 5% in Q3.

Other income and expense for Q4 was a net expense of 5.7 million consisting of 28.4 million in interest income, offset by 22.3 million, and interest expense and FX and other losses of 11.8 million.

The tax Provisions for Q4, was 19 million. On a gap basis, and 37 million on a non-gaap g basis.

The GAAP tax rate for Q4 was 9%, and the non-GAAP tax rate was 12%.

David Weigand: The Q4 GAAP diluted EPS was 31 cents compared to guidance of 30 cents to 40 cents, and non-GAAP diluted EPS of 41 cents versus guidance of 40 cents to 50 cents due to lower gross margins and higher operating expenses in the quarter. For fiscal year 25, we reported GAAP diluted earnings per share of $1.68 versus $1.92 for fiscal year 24, and non-GAAP diluted EPS of $2.06 versus $2.12 in fiscal year 24. The GAAP fully diluted share current count increased quarter over quarter from $622 million to $625 million in Q4, and the non-GAAP share count increased sequentially from $636 million to $638 million shares. Q4 cash flow generated from operations was $864 million compared to $627 million in the previous quarter. For fiscal year 25, cash generated from operations was $1.7 billion versus cash consumed by operations of $2.5 billion in fiscal year 24.

The Gap tax rate was 13% for fiscal year, 25 versus 5% in fiscal year 24. And the non-gaap tax rate was 15% in in fiscal year 2 5 4,

Q4 Gap diluted.

EPS was 31 cents compared to guidance of 30 cents to 40 cents and non-gaap diluted EPS of 41% versus guidance of 40 cents to 50 cents due to a lower gross margins and higher operating expenses in the quarter.

For fiscal year 2025, we reported GAAP diluted earnings per share of $1.68 versus $1.92 for fiscal year 2024, and non-GAAP diluted EPS of $2.66 versus $2.12 in fiscal year 2024.

The Gap fully diluted. Share current count increased quarter over quarter from 622 million, to 625 million in Q4.

And the non-gaap share count, increased sequentially from 636 million to 638 million shares.

Q4 cash flow generated from operations, was 864 million.

Compared to 627 million in the previous quarter.

David Weigand: Q4 closing inventory was $4.7 billion versus $3.9 billion in Q3. Capex and investments for Q4 was $79 million, resulting in positive free cash flow of $841 million for the quarter. Capex and investments for fiscal year 25 were $183 million versus $194 million in fiscal year 24. During the quarter, we completed a convertible bond offering raising $2.3 billion in gross proceeds before operating expenses and the costs associated with the simultaneous covered call spread and stock buyback. The Q4 closing balance sheet cash position was $5.2 billion, while bank and convertible note debt was $4.8 billion, resulting in a net cash position of $412 million versus a net cash position of $44 million last quarter. Additionally, in July, we executed a $1.8 billion facility, which allows for the non-recourse sale of certain qualified accounts receivables to strengthen our working capital on a discretionary basis.

For fiscal year, 25 cash generated from operations was 1.7 billion versus cash consumed by operations of 2.5 billion, in fiscal year 24.

Q4 closing inventory was 4.7 billion versus 3.9 billion in Q3.

Capex and Investments for Q4.

Was 79 million resulting in positive, free cash, flow of 841 million for the quarter?

Capex and Investments for fiscal year. 25 were 183 million versus 194 million in fiscal year 24.

During the quarter, we completed a convertible Bond offering raising 2.3 billion dollars in Gross proceeds before operating expenses and the costs. So it's associated with the simultaneous covered, call spread, and stock buyback.

The Q4 closing balance sheet, cash position was 5.2 billion while bank and convertible. No debt was 4.8 billion resulting in a net cash position of 4212 million versus a net cash position of 44 Million last quarter.

David Weigand: Turning to the balance sheet and working capital metrics compared to last quarter, the Q4 cash conversion cycle was 98 days versus 124 days in Q3. Days of inventory decreased by 6 days to 75 days compared to the prior quarter of 81 days. Day sales outstanding were 40 days compared to 56 days in Q3. Day payables outstanding increased by 4 days to 17 days versus 13 days in Q3. Now turning to the outlook for Q1 fiscal year 26, we expect net sales in the range of $6 billion to $7 billion, GAAP diluted net income per share of $0.30 to $0.42, and non-GAAP diluted net income per share of $0.40 to $0.52. We expect gross margins to be similar to Q4 fiscal year 25 levels.

Additionally in July, we executed a 1.8 billion facility which allows for the non-recourse sale of certain qualified accounts receivables to strengthen our working capital on a discretionary basis.

Turning to the balance sheet and working capital metrics compared to last quarter. The Q4 cash conversion cycle was 98 days. Versus 124 days in Q3

Days of inventory decreased by 6 days to 75 days compared to the prior quarter of 81 days.

23.

days, payables outstanding increased by 4 days to 17 days versus 13 days in Q3

Now, turning to the outlook for q1 fiscal year. 26, we expect net sales in the range of 6 billion to 7 billion.

Gap saluted, net income per share of 30 cents to 42 cents and non-gaap diluted. Net income per share of 4 cents to 52 cents.

David Weigand: GAAP operating expenses are expected to be approximately $329 million and to include $82 million in stock-based compensation expenses that are not included in non-GAAP operating expenses. The outlook for Q1 of fiscal year 2026, fully diluted GAAP earnings per share includes approximately $69 million in expected stock-based compensation expenses, net of tax effects of $20 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense, to be a net expense of approximately $24 million. The company's projections for Q1 fiscal year 26 GAAP and non-GAAP diluted net income per common share assume a GAAP tax rate of 13%, a non-GAAP tax rate of 15.5%, and a fully diluted share count of $631 million for GAAP and $644 million shares for non-GAAP. We expect Capex for Q1 to be in the range of $60 to $80 million.

We expect gross margins to be similar to Q4 fiscal year. 25 levels.

Gap. Operating expenses are expected to be approximately 329 million and to include 82 million in stock-based compensation expenses that are not included in non-gaap operating expenses.

The outlook for q1 of fiscal year, 2026 fully diluted Gap. Earnings per share includes approximately 69 million in expected. Stocks based compensation expenses, net of tax effects of 20 million which are excluded from non-gaap to looted net income per common share.

We expect other income and expenses including interest expense to be a net expense of approximately 24 million.

The company's projections for Q1 fiscal year 26, GAAP and non-GAAP diluted net income per common share, assume a GAAP tax rate of 13%, a non-GAAP tax rate of 15.5%, and a fully diluted share count of 631 million for GAAP and 644 million shares for non-GAAP.

David Weigand: And for fiscal year 26, we expect net sales of at least $33 billion. Michael, we're ready for Q&A.

We expect capex for q1 to be in the range of 60 to 80 million.

And for fiscal year 26, we expect net sales of at least 33 billion.

Cameron: Great. Cameron, let's turn it over to a question and answer session.

Michael, we're ready for Q&A.

Cameron: Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question, and we will pause here briefly as questions are registered. The first question is from the line of Simon M. Leopold with Raymond James. You may proceed.

Great. Um, Cameron. Let's turn it over to, uh, question and answer session.

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star. Followed by 1 on your telephone keypad. If you'd like to remove your question. Press star, followed by 2 again to ask a question, press star 1. And as a reminder, if you are using a speaker-phone, please remember to pick up your handset before asking a question and we will pause here briefly as questions or registered.

The first question is from the line of Simon M, Lee of hon. With Raymond James. You may receive

Simon M. Leopold: Thanks for taking the question. I wanted to get a better understanding of some of the bottlenecks or gating factors for sales. And what I'm looking at is we've got full-year revenue outlook of $33 billion, so that's better than $8 billion a quarter. And we're looking at September being roughly $67 billion. So I would have thought that availability of Blackwells, GB200s could have given you maybe some more upside to September and a more linear outlook for the year, but this would suggest more of a back-end load. So if you could help us understand how you're thinking about the cadence through that fiscal year and what are the bottlenecks or what are the restraints in terms of the September quarter and the availability of the chips. Thank you.

I wanted to, to get a better understanding of some of the the bottlenecks or gating factors for sales. And what I'm I'm looking at is we've got full year Revenue Outlook of 33 billion so that's better than 8 billion a quarter. And we're looking at September being roughly, 6 to 7 billion. So I would have thought that availability of of black Wells, GB 200, could have given you maybe some more upside to September in a more linear outlook for the year, but this would suggest more of a back-end load. So if you could help us, understand how you're thinking about the Cadence through that fiscal year and what are the bottlenecks or what are the restraints in terms of the September quarter um and the availability of the of the chips. Thank you.

Charles Liang: Yeah. Basically, our vision is to continue to grow. Last year, because of 10-K delay, we had some constraints. So we grew 47%. This year, we should be able to grow better than that. And you mentioned about a bottleneck. Yes, some chip availability, some resource availability from vendors, like NVIDIA. That's still we had to wait and see. Basically, we believe their availability will be much better than last two quarters. And that's why we estimated minimum $33 billion. And by the way, our new introduction, DCBBS, that helps customers to build a data center quicker, especially make their cloud ready for time-to-online much quicker. So that's another factor we believe this year, I mean, 2026, we should be able to grow better than last year.

Yeah basically, our business work continues to grow uh last year because of 10K. Today we have some constraints. So we grew a 47% this year, we should be able to grow better than that. And you mentioned about a bottleneck is some cheaper a bit of bdp. Uh, some resources are availability from vendor, like, Nvidia, not still, uh, we had to

Wait and see. Basically, we believe their availability will be much better than the last two quarters, and that's why we estimate a minimum of $33 billion.

And by the way, our newer introduction tcps, uh, that have customer to build a data center quicker, especially make their cloud ready for time to online much quicker. So, that's another Factor. We believe, uh, this year, I mean 2026. We should be able to grow, uh, better than last year.

Simon M. Leopold: And is any of this related to customers perhaps waiting for GB300s, or is that not a factor?

And and is any of this related to customers perhaps waiting for GB 300s, or is that not a factor?

Charles Liang: Yes, you are right. Some customers are always waiting for a coming soon technology, like a B300, GB300. So the good thing is we have a B300, GB300 pretty much ready to go. That's waiting for our partner, NVIDIA, to support us.

Some customer always waiting for coming soon technology that be 300 GB 300. So, uh, the good thing is, we have a b, 300 GB. 300, pretty much ready to go. Just waiting for our partner, Nvidia to support us.

Simon M. Leopold: Great. Thanks for taking the questions.

Great. Thanks for taking the question.

Cameron: The next question is from the line of Rufy Bhattacharya with Bank of America. You may proceed.

The next question is from the line of group. We about to chario with Bank of America. You may receive

Michael Ng: Hi. Thanks for taking my questions. I have two of them. The first one is a higher-level question. Can you talk about management strategy for competing in the AI server market? Is your focus on revenue growth and gaining market share, or is your focus on margin expansion? And if it's both, then what gives you confidence that you can grow revenues and grow margins in this competitive market? And I have a follow-up.

Hi, thanks for taking my question. I have 2 of them. The first 1 is a higher level question, can you talk about management strategy for competing in the AI server Market? Is your focus on Revenue growth and gaining market share? Whereas your focus on margin expansion and if it's both then what gives you confidence that you can grow revenues and grow margins in this competitive market and I have a follow-up.

Charles Liang: Yeah, very good question. Yes, we can grow much quicker if we don't care about the gross margin and net margin. And that's why we introduced the DCBBS data center building block solution. That's a total solution to support the customer to build a data center quicker, better, and also save money, more reliable. And we provide all the infrastructure needs, including on-site deployment, networking, cabling, all different kinds of services. So we believe we can grow revenue, market share, and profitability, especially our data center end-to-end software solution. So DCBBS plus all the software needs, customer needs, including service. So we are sure able to provide better value to customers, not just price war.

Yeah, very good question. Yes. Um, we can grow much quicker. If, uh, we don't care about the gross margin and net margin, and that's why we introduced the DCPS data center between Pro Solution. That's uh, total solution to support the customer to build a data center quicker better and also a save money more reliable. And we provide the uh order uh info to your need. Including

Uh, on site the agreement, uh, networking cabling, uh, all different kind of service. So we believe, uh, we can grow, uh, Revenue, Max share and profitability, um, especially our, uh, data center end to end. Uh, solo are solution. So DCPS plus all our solo are, uh, need customer need, including service. So uh we we sure uh able to provide a better value to customer, not just price work.

Michael Ng: Okay. Thanks for that.

Charles Liang: And not the price war.

Okay, thanks for that.

Michael Ng: Charles, for my follow-up, can you talk about the opportunity with Sovereigns? You announced an MOU with Datavolt during the quarter. Can you give us your thoughts on the expected rollout of that opportunity? And David, what margin uplift should we expect from Sovereign customers versus your existing customer base, such as Tier 2 CSPs? I mean, how should we think about the revenue and margin opportunity here? Thank you.

Can I for my follow, can you talk about the the opportunity with sovereigns? Uh, you announced an mou with data World during the quarter? Can you give us your thoughts, on expected rollout of that opportunity and David, what margin uplift should we expect from Sovereign customers versus your existing customer base? Uh, suggest here to csps. I mean, how should we think about the revenue and margin opportunity here? Thank you.

Charles Liang: Yeah. The Sovereign AI is putting us a very good chance. There are so many countries that need to build their AI infrastructure, and those countries, those people really appreciate our DCBBS data center infrastructure total solution. So we help them to design their AI infrastructure and help them build an AI infrastructure quicker and better. So we see a very good room, a very big room to grow in that area. David.

Yeah, the 7 as a very good chance. Uh, there are so many country need to build that their AI invoice structure. And, uh, those countries, those people, uh, really appreciate our DC PBS, uh, data center in in solution, so we have them, uh, to design.

Uh, they are AI infrastructure and help them build the AIU structure quicker and better. So, uh, we see a, a very good Doom, uh, very big room to grow in that area.

David Weigand: Yeah. And Rufu, on the gross margin side, you know we are optimistic that we will be able to sell more complete data center BBS solutions with Sovereigns. And so, therefore, we don't have enough experience to be forecasting specific gross margins, but we're very optimistic that with the additional offerings that we will have, that there's upside there.

Charles Liang: Yeah. There are so many countries, especially in Europe, in Europe, in the Middle East, in Asia. So they are all very aggressively trying to build their AI infrastructure for their country, for their company. And we are working very closely with them.

Yeah, and blue blue on the gross margin side. You know, we are uh, we are optimistic that we will be able to um to sell more uh complete data center BBS Solutions. Uh, you know, you know with sovereigns and so therefore uh we don't have a lot enough experience to to be forecasting, specific gross margins. But we're very optimistic that with the additional uh offerings that we will have that. There's upside there.

Yeah, there are so many countries, especially in Europe, in Europe, in Middle East in Asia. So they are, they all are very, uh, uh, upgrade to be. That they are, uh, AI inverse structure for their country, for their company. And we are, uh, working very closely with them.

David Weigand: All right. Thank you for all the detail.

All right, thank you for all the details.

Cameron: The next question is from the line of Ananda Barua with Loop Capital. You may proceed.

The next question is from the line of Anand burua with loop capital, you may proceed.

Ananda Baruah: Yeah, guys, thanks for taking the question. Two, if I could, the first one is maybe a little bit more of a clarification. In the first six months of the calendar year, you guys saw, as did the industry, a little bit elongated customer purchase cycles. You know, first from the HGX GB decision-making situation in the March quarter, then the B200, B300 sort of decision-making situation in the June quarter. Now, Charles, it sounds like to one of the first questions, I think it was to Simon's question, you may have suggested, it sounds like you were suggesting there may then currently be some B300 sort of elongated customer decision-making as well. So just to clarify, are you still going through, are we still not yet to normalize customer decision-making cycles?

Ananda Baruah: Because if that's the case, I think it's useful for us to understand that as distinct from what the organic demand backdrop may be as we go through the year here. And anyway, I have a follow-up after that. Thanks.

Sounds like to, to 1 of the first questions. I think it was to Simon's question. You may have suggested it sounds like you. You, you were suggesting there may then currently be some B300 uh you know, sort of elongated decision uh customer decision making as well. So just to clarify, are you still going through? Are we still not yet to normalize customer decision-making Cycles? Because if that's the case, I think it's useful for us to understand that as distinct from what the organic demand backdrop may be as we go through as we go through the year here and and anyway I have a follow-up after that. Thanks

Charles Liang: Yeah. As you know, NVIDIA has so many products, so many better products, new products, and we are very happy to provide all the new technology, new products, and make them available for the market as soon as possible. Like you just mentioned, B300, GB300, we work with our partner very closely and make sure once NVIDIA is able to ship in volume, we can service customers quicker. And with our DCBBS, we objectively optimize for customers' data centers, including the large data centers and medium-sized data centers or even small-sized data centers. So we are very happy to support a lot of medium-sized and small-sized AI infrastructure as well. That's part of Super Micro's advantage. We provide a total solution and make customers' jobs much easier to build their AI factory, AI infrastructure quicker and better.

Yeah, as you know in video, I have so many people that so many people product new product and we are very happy to, uh, provide the order new technologies, new products, and make them available for the market as soon as possible. Like, you just mentioned B3, uh, GP 3000. We work with our partner very closely and, uh, make sure once the, uh, Nvidia able to ship it in volume, uh, we we can service customer, uh, quicker and, uh, without PCP PPS. Uh, we ejected the optimized for, uh, customers data center, uh, including the large Data Center and middle size.

Or even small size data center. So, uh, we we, we are very happy to support. A lot of minnows size and small size, uh, AI infrastructure as well. That's part of Superman's Advantage. We provide a total solution and make a customers job much easier to build their um,

AI Factory. Uh,

AI infrastructure, quicker and better.

Ananda Baruah: And just as a follow-up, can you guys, any context you can give us, guys, around the comment of large-scale data center customers expanding to six to eight in fiscal 26? What sort of what flavor of customers might that be? You know, when do you consider someone to be large-scale and what market domains might those additional large-scale data center customers fit into? Thanks.

And okay, just as the follow up, can you guys any contacts? You can give us. Uh, guys around the comment of uh,

Large scale data center customers, expanding to, to 6 to 8 in fiscal 26. What, you know, sort of what, uh, what flavor of customers might that be, you know, when you consider someone to be large scale, and uh, what, what Market domains like those, uh, those additional, uh, large scale data set of customers fit into

Charles Liang: Yes. Most of the larger-scale AI CSPs continue to have a strong demand. And we are prepared to support them as well. The good thing is with a much stronger cash flow now. So we are ready to support more large-scale data centers as well.

Uh, yes, most of the large scale, uh, AI CSP, uh, companion to have a strong demand and, uh, we are, uh, we have prepared to support them as well. Uh, the good thing is with much strong, uh, cash flow now. Um, so we are ready to support them.

More large scale data centers as well.

Ananda Baruah: Okay. Thanks, guys. Appreciate it.

Okay, thanks guys.

Appreciate it.

Cameron: The next question comes from the line of Sameek Chatterjee with JP Morgan. You may proceed.

The next question comes from the line of Sikh chattery with JP Morgan. You may proceed.

Sameek Chatterjee: Hi. Thanks for taking my question. I have two, but maybe for the first one, you talked about the data center building block solutions and that it still may be a bit early for you to forecast gross margins on that front. But anything that you can help us in terms of what does a typical sales cycle or what are you expecting for a sales cycle on that front to look like? Have any of your larger data center customers shown interest in data center building block solutions? I guess the question more is when should we start to see or what should we expect in terms of material revenues in relation to when that does come into the P&L? What would be the earliest if you were sort of going and talking to your customers about these solutions now? What should be our expectation on this front?

hi, thanks for

Sameek Chatterjee: I have a follow-up. Thank you.

Um, but maybe for the first 1, uh, you talked about the data center building block Solutions and um, that is still may be a bit early for you to forecast. Gross. Margins on that front but, um, anything that you can help us in terms of what does a typical sales cycle, or what do you expecting for a sales cycle, on that front to look like have any of your larger data center? Customers shown interest in um Data Center building block Solutions, I guess the question more is when should we start to see or what should we expect in terms of material revenues and and relation to when that does come come into the p&l? Uh, what would be the earliest if you were sort of going and talking to your customers about these Solutions? Now, what is what should be our expectation on this part? I have a follow up, thank you.

Charles Liang: Yeah. Thank you. Yeah. We, obviously, launched our data center building block solution last quarter. And now we have some products fully ready to ship. For example, the AI computing power rack, PMP, that has been available for four years from Super Micro and kind of like CDU, right, in-rack CDU and kind of like side car L2A, right, from liquid to air transformation. Kind of for those customers who would like to go for liquid cooling but do not have a liquid cooling data center infrastructure ready, we support them side car. And the product is ready to ship now, like a PowerShell, right? Kind of when GB200, GB300 go for rack scale, I mean, use PowerShell. We have a product ready now. And BBU, we have a product about ready now as well.

Yeah thank you. Yeah we officially Advance our data in the billing process Solution that's called her and now we have a sum product uh fully ready to ship for example now.

AI computing power. Uh, ra PMP that has been available for uh 4 years from shipu Michael and kind of like um,

Uh CDU right. Even though in like CPU and kind of like a side car, um it all to a right uh from degree to are uh transformation. Uh,

Charles Liang: And kind of like a water tower for liquid cooling or dry tower, we are shipping now. And kind of like on-site deployment and networking, including the cabling, all different kinds of services. We have most of those components getting ready now. And we started shipping in September quarter, right? And then we are doing part in a much higher volume in December. And then for sure, we are continuing to grow in next year, March quarter and June quarter. So this data center building block solution, eventually, we will help customers to build their AI factory infrastructure much quicker and much energy efficient and also safer manner as well. So we are very excited for our DCBBS solution.

English graduate, we support them psycha and the product is ready to ship now, uh, like a Powershell, right? Kind of when uh, gb200 GB 300 go for uh, ra scale. I mean, use uh, uh, Power Swift. We have a product ready now and BPU. We have a product about ready now as well, and kind of like a uh water tower for liquid cooling or dry Tower. Uh we are shipping now and kind of like a on site deeper email and networking uh including a cabling uh audio and kind of service. Uh we have a

Uh, most of those components get into it now, and we start to ship is September quarter.

Right? And then we are doing part in a much higher volume in December. And then for sure, we continue to grow in uh next year, March quarter in June quarter. So this uh Data Center building block solution eventually. We have customer to build their AI uh Factory uh, invoice structure much quicker and uh uh Mia energy efficient and also safe, uh man as well.

So so we are very excited for our, uh, dcpp as uh, solution.

Sameek Chatterjee: Got it. Got it. And for my follow-up, you mentioned the investments that you're making on the enterprise opportunity or edge opportunity as well. I mean, assuming some of those are better margin opportunities, including the data center building block solutions related to your business currently on the sort of where you're around this 9, 10 percent gross margin right now. Do you see an opportunity still to get back to the long-term targets that you had on the gross margin of 14 to 17, or like are those are these new opportunities necessarily big enough and at a margin high enough to get you back to that 14 to 17 run rate, or do you think the expectations for investors should be at a maybe a more modest level in terms of what the long-term gross margin rate of the company would be in the future?

Got it, got it. And for my follow-up, you mentioned, um, the uh Investments that you're making on the Enterprise opportunity or Edge opportunity as well. I mean, assuming some of those are better margin opportunities including the data center, building block Solutions related to your uh business currently on the sort of where you're around this 9, 10 gross margin right now. Do you see an opportunity still to get back to the long-term targets that you had on the gross margin of 14 to 17? Or like are those are these new opportunities necessarily big enough and at a margin high enough to get you back to that, 14 to 17, run rate, or do you think the expectations for investors should be at a uh maybe a more more modest level in terms of what the long term. Gross margin ratio of the company uh would be in the future.

Charles Liang: Yeah, very good question. And very good question also. I mean, yes, enterprise and IoT, as you know, have a much higher margin. And DCBBS service, software, for sure have a better margin. So we are growing in both directions. One is growing revenue and support a large-scale data center and at the same time growing enterprise data center total solutions, software service. So I mean, long term, I believe 15%, 16% still our target. And take how long, it depends on a combination. So I believe, yes, the direction is still there. I mean, we like to get back to our traditional 16%, even 17% profit margin. Maybe you can add something.

Yeah. Very quick question, and, uh, very good question also. I mean, yes, uh, Enterprise in, uh, iot as, you know, I have a much higher margin and TCP is a service so aware, which you have a better margin. So we are growing uh in both Direction 1 is growing revenue and support a large scale data center at the same time growing in the Enterprise uh data center solution, s service. So I mean a long term I believe uh

David Weigand: Yeah, I think that, you know, as Charles mentioned, we have been providing these services already. We've had customers with very large deployments that we've helped them in the build-out of their data center and with specific services. And so it's something that we're really focused on. And we know that it'll contribute to our profitability.

15% 16% still our Target and take how long, uh, it depends on the combination. So I believe yes, the direction still there, I mean, know, we like to get back to, uh, our traditional 16% even 17% power margin, maybe you can add a subject.

Charles Liang: Yeah, as a Silicon Valley-based company, for sure, we are able and we like to provide more value to customers, not just hardware, not just high-volume products, but all different kinds of services, solution optimization, and to make customers' jobs much easier.

Yeah, I think that, uh, you know, as Charles mentioned, we have been providing these Services already, we've had customers with very large, uh, deployments that we've, uh, helped them and in the building out of their Data Center and, uh, with specific services. And so, it's something that, uh, we're really focused on. And when we and we know that it'll contribute to our our profitability

Yeah, as a Silicon Valley based company for sure we we are able and we like to provide the more value to customer not just Hardware not just iodium product but the all different kind of service uh solution optimization and uh to make a customer's job much easier.

Sameek Chatterjee: Got it. Great. Thank you.

That's great. Thank you.

Cameron: The next question is from the line of Michael Ng with Goldman Sachs. You may proceed.

The next question will be from Michael N. with Goldman Sachs. You may proceed.

Michael Ng: Hey, good afternoon. Thank you for the questions. I just have two. First, on the greater than 10% customers for fiscal 25, I was wondering if you could just let us know what the revenue exposures were for those customers. I can appreciate we'll eventually get it in the 10K, but any early color would be helpful. And then second, thank you for all the guidance on 2026. I was wondering if you could just talk about how we should think about gross margins for the full year. Is the first quarter gross margins that you spoke to a good indication about how we should think about the full year? Thank you very much.

Hey, good afternoon, thank you for the questions. Um, I just have have to um

First on the greater than 10% customers for fiscal. 25. I was wondering if you could, um, just let us know what the the revenue exposures were for. Those customers. I, I can appreciate, we'll, we'll eventually get it in the 10K. But, um, any you know, early color would be would be helpful. Um, and then, uh, second, um, thank you for all the, the guidance, on, on 2026. Um, I was wondering if you could just talk about, um, you know, how you how we should think about, uh, gross margins for the full year. Um, is the the first quarter gross margins that you spoke to um, a good indication about how we should think about the full year. Thank you very much.

David Weigand: Okay, Michael. So the four customers, which we'll refer to as A, B, C, and D, not in that particular order, but 11%. So we had three 11% and a 21%. And as to your second question, we're not going to forecast annual guides, but I want to revert back to our earlier comments that we're doing everything that we can, especially we're very optimistic about these data center building block solutions. And we're very quick to market. We think those two combinations, DCBBS and our fast time to market, are our best chances for margin improvement.

So the, uh, the 4 customers which we'll refer to as A, B, C, and D, um, you know, not in that particular order. But, uh, 11% we had 3, 11.

And uh, you know, as as to your second question, you know, we we um, we're not going to forecast, uh, annual uh guides. But, you know, I want to revert back to our earlier comments that we're doing everything that we can, especially we're very optimistic about these Data Center building blocks Solutions and uh, and and, you know, we have, we're very quick to Market. We think those those 2 combinations dcbs and our fast time to Market is our is our best chances for um, margin Improvement.

Charles Liang: Yeah, especially with our DCBBS, we are able to have a customer increase a speed up their time to online, right? Kind of traditionally, for example, two years, we have them improve to a speed up to 18 months, 16 months. So lots of customers are very interested in those services.

yeah, it's basic dcpp is, uh,

as based out tcbb is, uh,

We are able to have a customer increase as speed up their uh time to online, right? Kind of a traditionally, for example, 2 years we have them uh,

Improve to speed up to.

80 months, 60 months. So, lots of customer are very interested to uh those service.

Sameek Chatterjee: Thank you, Charles.

Thank you. Charles

David Weigand: Thank you.

Thank you.

Cameron: The next question is from the line of Nihal Chakshi with Northland. You may proceed.

The next question is from the line of Nihal Chokshi with Northland. You may proceed.

Sameek Chatterjee: Yeah, thank you. I have two questions. First one is, what is going to be the driver to projected Q2 uptick for the September quarter revenue? And maybe that can also help us understand why you're guiding to no operating leverage. I believe effectively the guidance implies about a flat operating margin from the June quarter to September quarter.

Yeah, thank you. I have two questions. First, what is going to be the driver projected to update the September quarter revenue? And maybe that can also help us understand why you're guiding to no operating leverage. I believe effectively the guidance implies about a flat operating margin from the June quarter to the September quarter.

David Weigand: So the, you know, in terms of the customers, we have a lot of customers that are building out really good deployments. And so that's what gives us our guide to the first quarter. So we've been shipping MI355X and GB300. And so we expect that to ramp in Q1. And that's really what's giving us our guide.

Charles Liang: Yeah, we are also getting many more customers in Europe, Middle East, and Asia now. So basically, the near future should be pretty strong.

So, the, uh, you know, in terms of, uh, of the, of, the, of the customers, uh, we have, uh, we have a lot of customers that are, that are, uh, building out a really good deployments and uh, so that's what gives us, uh, our guide, you know, to the first quarter. So we, we have, we've been shipping. Uh, you know, Ami 355x and GB 300. And uh, and so we expect that to, uh, you know, to ramp in in q1. And that's really what's, uh, what's giving us. Our, our guide,

Yeah, we are also uh uh gaining uh um many more customer in Europe, Middle East and Asia now. So uh basically uh the uh near future, I should be a pretty strong.

Sameek Chatterjee: And why, with the incremental billion dollars in revenue, we won't see any operating margin leverage?

And and why would the incremental billion dollars of Revenue? We won't see any operating Leverage.

David Weigand: Well, whenever there is a, you know, in changing over to these new platform technologies, there's always a little bit of a ramp for us. And so that creates a little bit of a production learning curve.

Well, whenever there is a, you know, in changing over to these new, uh, new, uh, platform Technologies. Uh, there's always a little bit of a ramp for us and so that, that creates a little, a little bit of a, uh, of a, a production learning curve.

Sameek Chatterjee: Okay. And then my second question is that the data center building block solutions, is that being pitched more as a discrete service where the value of that discrete service is fractional to the GenAI factory, or is it bundled into a GenAI factory where it's meant to drive a better margin profile for that GenAI factory?

Okay. And then my second question is that the data center building blocks are uh, Solutions? Is that being pitched for as a discrete service? Where the value of that discrete service is fractional to the Gen AI Factory or is a bundled in to Jedi Factory, where it's meant to drive, a better margin profile for that Genai. Actually

Charles Liang: It is supported all different scales of data centers. That doesn't matter generative AI or agentic AI or application, right, invention. So it's a solution that we are defined pretty tasty, pretty validated. So when we ship to customers, a customer can put it together easily. It's kind of like a kid's player, Lego castle, right? So kind of it's validated in advance when customers receive easy to deploy and easy to quickly go for online.

Uh, it is support all, even scale of data center, that doesn't matter generative AI or, uh, agentic AI or application, right? Uh, invention. So, uh, it's a solution that we are, uh, we are defined, uh, pretty tastes pretty validated. So, when we ship to customer a customer, can put it together easily, it's kind of like a kids player, uh, Lego castle, right? So kind of it's validated in advance when customer receive easy to, um,

People and easy for quickly. Go for online.

Sameek Chatterjee: So basically, it's the latter of the situations I had proposed.

So basically it's the latter of the situation. So I had proposed.

Charles Liang: Yeah, kind of including the computing power, the rack, the liquid cooling, even the power, the water tower, dry tower, the battery system, the power module, right? So we have everything pre-built and validated in advance.

In advance.

David Weigand: Yeah, and as Charles mentioned, the time to delivery and time to online for our customers is critical because they have end customers that they're waiting for. So that's a huge selling point.

Yeah. And as Charles mentioned, um, they all the the time to time to delivery and time to online, you know, for our customers is uh is critical because they have, you know, they have in customers that they're waiting for. So that's the that's a huge uh you know selling point

Sameek Chatterjee: Yeah. So is data center building block solutions at least going to be representative of 10% of the deals that 10% of the deal value that you're going to be doing in the September quarter?

Yeah, so is Data Center building block Solutions. Uh

It's going to represent 10% of the deals, and 10% of the deal value that you're going to be doing in the September quarter.

Charles Liang: It will be steadily growing. I hope very soon it will be more than 20% or even more, more than 30% because so many people provide the system computing power, but we instead not just computing power, but total solution, a data center or cloud total solution.

Uh, it will be uh, stability growing. Uh, I hope very soon. It will be more than 20% or even more more than 30% because there are so many people provide the uh system, uh, convenient power, but we instead not just convenient power, but total solution a data center or Cloud total solution.

Sameek Chatterjee: Great. Thank you very much.

Great, thank you very much.

David Weigand: Thank you.

Thank you.

Cameron: The next question is from the line of Brandon Nispo with KeyCorp. You may proceed.

The next question is from the line of Brandon Knispel with KeyCorp. You may receive.

Simon M. Leopold: Hey, guys. Thanks for taking the question. I was hoping you could unpack gross margins during the quarter. Last quarter, you had provided some adjusted gross margins based on inventory reserves. I was hoping you could help us understand whether there were any inventory reserves this quarter and if you're expecting any in one queue, including maybe potential impacts from tariffs. Thank you.

Hey guys. Uh, thanks for taking the question. I was hoping you could unpack gross margins during the quarter. Last quarter, you had provided some adjusted gross margins based on inventory reserves. I was hoping you could help us understand whether there were any inventory reserves this quarter. And if you're expecting any in Q1, including maybe potential impacts from tariffs. Thank you.

David Weigand: Yeah, thanks, Brandon. So yeah, we did mention a little bit about that last quarter. And what I would say is that they did come in as expected. However, we believe that that's not going to be the case going forward. So we think that we're anticipating a stabilization in that area.

Yeah, thanks. Um, Brandon. So yeah, we did. Um, mention a little bit about that last last quarter. And and what I would say is that, uh, they they, uh, they came they did come in as as expected. However, we believe that uh, that's uh, not going to be the case going forward. So we think that uh um, you know, we uh,

Charles Liang: Yeah, especially with our DCBBS and with our service function. So we have customers build a data center and make sure they go for online smoothly. And that will kind of make customers' business much more smooth. And those, I mean, it's good for our inventory control as well. That's our main return product. So that will have less slow movement, less product write-down as well.

David Weigand: Yeah, but.

Charles Liang: So we expect we will improve in that area.

David Weigand: Yeah. And Brandon, with respect to tariffs, you know the situation is dynamic. We're actively monitoring the tariff environment. We know there's news coming out next week. You know if we have any updates, we'll share it with you. But we can only watch and react as every other business is.

We, we were anticipating, uh, a stabilization in that, in that area. Yeah, it's basically we sell our TCP PPS and we sell our service, uh, function. So we have customer build a Data Center and make sure they go for all nice. Most of the, and that way, uh, kind of met Cosmos being is much more smooth. And just, I mean, uh, uh, is it good for our inventory control as well? That's I made. That's the temple that. So that way, I have uh, less uh uh, slow movement. Uh that's uh uh hold on right now as well. Yeah. But so we expect we will improve in the area. Yeah. And Brandon with respect.

To the tariffs, you know, the, the Situation's, Dynamic, we're actively monitoring, uh, the Tariff environment, and we know there's news coming out next week. Um, you know, if we have any updates, we'll, we'll share it with you. But, uh, we we, uh, we we can only, uh, watch and react as, as every other businesses.

Simon M. Leopold: Thanks for taking the questions.

Thanks for taking the questions.

Cameron: The next question is from the line of Quinn Bolton with Needham & Co. You may proceed.

The next question is from the line of Quinn Bolton with Needham & Co. You may receive.

Sameek Chatterjee: Hey, guys. This is Shaunie McWally on for Quinn. Thanks for letting me ask a question. My first question is on the recent export licenses for NVIDIA and AMD. Just curious to see how Supermicro is positioned to potentially support these deployments. And does the guide embed any of these potential shipments?

Hey guys, this is shotty milvali on for Quinn. Thanks for letting me ask a question. Uh my first question is on the recent export licenses for NVIDIA and AMD just curious to see how super micro is positioned. The potentially support these deployments and does the god embed any of these potential shipments?

David Weigand: Are you referring to H20?

Are you referring to H20?

Sameek Chatterjee: Yes. H20, I believe that NVIDIA is providing.

David Weigand: Are you referring to H20?

Sameek Chatterjee: Yes.

Yes, H2, I believe that and.

Yeah.

David Weigand: Yeah. We're not anticipating selling those products at any quantities.

Charles Liang: Yeah, not at least the non-high-volume products. Yeah.

Yeah, we're not, we're not anticipating uh, selling those uh those those products at at at any quantities.

Yeah, not at. This is the 9 high volume for us. Yeah.

Sameek Chatterjee: Got it. And then I have a follow-up, which is a clarification question from, I think, Northland. But did you say that the data center building block solutions will be around 20 to 30 percent of total revenue in the September quarter?

Got it. And then my I have a follow-up. Uh, which is a clear a quick clarification question from, uh, I think Northland but did you say that the data center building block Solutions will be around 20 to 30% of total revenue in the September quarter?

Charles Liang: No. I mean, that will be further away, maybe next year's summer. So it will ramp up gradually, not immediately.

Uh, no. I mean that would be uh for that wait, maybe uh next year summer. So it will drop a gradually not immediately.

Sameek Chatterjee: Got it. Thank you.

Got it. Thank you.

Cameron: The next question is from the line of John Tomwensing with CJS Securities. You may proceed.

The next question is from the line of John Tom 1 thing with CJs Securities. You may proceed.

Sameek Chatterjee: Hi. Good afternoon, and thank you for taking my questions. First one, just on the data center building block solutions, I was just wondering what the gross margin profile looks like there compared to the corporate average and what an incremental dollar of sales in that kind of solution adds to your gross profit. You know.

Like, they're compared to the corporate average than what an incremental dollar of sales in that, in that kind of solution, uh, adds to your gross profit.

Charles Liang: Very good question. Data center building block solution, I believe we are the first one. So we are the first company to introduce data center total solution with building block feature. So the profit margin, the value to customers for sure both are good, much better than a commodity product when you had to compete with many companies. That's the pressure for profit margin, right? But the data center building block solution instead, we have much less competition.

You know, a very good question. I believe we are the first to what. So uh, um, we uh, the first company to introduce data center total solution with building block feature. So uh, the P, imagine, uh, the value to customer for sure. Both are good.

Much better than, uh, a commodity product when you had to compete with man.

Company that's the, uh, pressure for...

Of margin, but the data center building block solution instead, uh, we have machete competition.

Sameek Chatterjee: Okay. Great. Thank you. That's helpful. And then just on the B300 launch, do you expect to see yourself distancing yourself from competitors, both pricing-wise and allocation-wise, when that reaches volume, or is there any reason to believe that you may see more of what you've seen in the B100 and B200 timeframe?

Okay, great, thank you. That's helpful. And then, um, just on the B300 launch, do you expect to see yourself this to see yourself on competitors? Both pricing wise and and allocation wise, uh, when that is that reaches volume, or is there, how many reason to believe that you may see more of of what you've seen, uh, in the B100 and b200 um time frames?

Charles Liang: We work with our vendor very closely, right? And so I believe our position will be a second to none. So for sure, it will be a good chance. Once it's available from our vendor, we are very happy to promote quickly.

Uh, we work with our vendor very closely, right? And, uh, so I believe our position will be a second to none. So, uh, uh, for sure will be a good chance, uh, once it's available from our vendor. Uh, we are very happy to, uh, promote, uh, quickly.

Sameek Chatterjee: Okay. Great. Thank you.

Okay, great. Thank you.

Charles Liang: Thank you.

Thank you.

Cameron: The last question is from the line of Vijay Rakesh with Mizuho. You may proceed.

The last question is from the line of Vijay rakhesh with meizuo you may receive.

Charles Liang: Yeah. Hey, Charles and David. Just a quick question. On the 33 billion guide for fiscal 26, I'm wondering what is contemplated in terms of revenues from the Data Vault wind that you announced? We don't make a comment for a specific customer, but we do have a growing customer base in Europe and in the Middle East. So we feel excited to grow business in the territory of the Middle East, BV. And I believe it will be a good percentage for Supermicro business to grow.

Yeah. Hey it's Austin there. Uh this uh quick question on this on the 33 billion guide for fiscal 26 1 Thing, what is contemplated in terms of revenues from the data World um uh you know data world win that you announced

Uh, we don't make a comment for specific customers, but we do have a growing customer base in Europe and in the Middle East. So we feel excited to, uh, uh, grow business, uh, in the territory Middle East, BV. And uh, uh,

For.

Simon M. Leopold: Got it. And then on the DCBBS, obviously, a nice move with the racks and enabling your go-to-market timing, I guess. Just wondering what would be the split of a full NVL 72 rack versus HGX that you're shipping now or into the end of the year, end of fiscal 26, I guess?

Got it. And then on the dcbs, obviously, uh, nice move with the racks and enabling your go to market, uh, timing. I guess just wondering what, what would be the split of a full nvl 72 rack versus 8X that you, uh, that you're shipping now?

Or into the end of the year, end of this year.

Charles Liang: Yeah. We started shipping something about now, kind of like, for example, the liquid to air side car, we are shipping now. And CDU, we have been shipping for a while, right, including in-row CDU, we are shipping now. And BBU, we will start shipping very soon. PowerShell, we are ready to ship this quarter. And so lots of parts we have been shipping for a few months or ready to ship in volume. And some others will be ready in the next few months or few quarters. So eventually, it will be really a big product line. The goal is to support all the major components for customers to build their data center, their AI factory. So kind of to offer a one-stop shop.

Yeah, we start to ship assumption uh about now kind of like, for example, the D to are uh side car or we had uh shipping now and CTE we have been shipping for. Um,

For a while, right? Including, uh, uh.

In.

In in those CPU. Uh, we are shipping now and, uh, PPU. We will start shipping a power shelf. We are ready to ship this quarter and

So, so lots of parts we have been, uh, uh...

Uh, shipping for a few months is ready to ship in volume, and some others will be ready in the next few months or a few quarters. So eventually, it will be really, uh, big. Uh,

Product line. The goal is to support all the major components for customers to build their data center, their AI factory.

Charles Liang: And one-stop shop is not just to save customer time, but to make sure when customers put those components together, it will work and optimize for both efficiency, quality, and cost.

So, kind of to offer a one-stop shop and one-stop shop, not just to sell customers time, but to make sure when customers put those components together, it works and optimizes.

For both efficiency.

Quality and cost.

Simon M. Leopold: Got it. Thanks.

Got it, thanks.

Charles Liang: Great. Thank you. Thank you.

All right, great.

Thank you.

Cameron: That was our last question. Thank you for joining today's call. That will now conclude today's call. Thank you for your participation and enjoy the rest of your day.

Thank you. Thank you.

That was our last question. Thank you for joining today's call.

That will now conclude today's call. Thank you for your participation and enjoy the rest of your day.