Supermicro Q2 2026 Super Micro Computer Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q2 2026 Super Micro Computer Inc Earnings Call
2 fiscal year 26 Financial results call with us today are Charles Liang, founder president and chief executive officer David weekend CFO and Michael Sagar 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, all lines. If you needed during the presentation portion of the call, if an opportunity for questions and answers at the end, if you would like to ask a question, please press star 1 on your telephone keypad over to you, Michael.
Operator: to fiscal year 2026 financial results 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 speakers' remarks, there will be a question-and-answer session. All lines will be muted during the presentation portion of the call. An opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. Over to you, Michael.
Operator: to fiscal year 2026 financial results 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 speakers' remarks, there will be a question-and-answer session. All lines will be muted during the presentation portion of the call. An opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. Over to you, Michael.
Speaker #1: Okay, so understanding that customers can push in and pull out right now, the forecast shows increasing diversification over the next couple of quarters.
Michael Staiger: Thank you. Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the second quarter and full year fiscal 2026, which ended December 31, 2025. With me today, as you know, is Charles Liang, Founder, Chairman, 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 IR section of the company's website under Events and Presentations tab. We've also published management's scripted commentary on our website.
Michael Staiger: Thank you. Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the second quarter and full year fiscal 2026, which ended December 31, 2025. With me today, as you know, is Charles Liang, Founder, Chairman, 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 IR section of the company's website under Events and Presentations tab. We've also published management's scripted commentary on our website.
Speaker #2: I mean, because of growth, they are very fast. That's why now we are focused on more about how to kind of maybe what should I say?
Speaker #2: Kind of how to drive more money to grow even faster, right? So if we have more cash, for sure we can grow even faster.
Thank you. Uh, good afternoon and thank you for attending supermarket's call to discuss Financial results for second quarter and full year fiscal 2026 which ended in December 31st 2025 with me today as you know, as Charles Dean founder, chairman chief executive officer uh and David W and 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 is available to participants in the IR section of the company's website under events and presentations table. We also published a management scripting commentary on our website. Please note that some of the information you'll hear during the discussion table consists of 4, looking at these 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 third quarter of fiscal 2026 and full fiscal year 2026, these statements and other comments are based on Management's, current expectations, and assumptions,
Speaker #2: But even if we do not grab more money, I guess because of a diversified customer base, and also more higher-value system, more higher-value totals, solution. So that will help us grow business.
Michael Staiger: Please note that some of the information you'll hear during the discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income expenses, taxes, capital allocation, and future business outlook, including guidance for the third quarter of fiscal 2026 and 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 to materially 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 filing, fiscal 2025, and other SEC filings. All these documents are available on the IR page of Super Micro's website. We assume no obligation to update any forward-looking statements.
Michael Staiger: Please note that some of the information you'll hear during the discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income expenses, taxes, capital allocation, and future business outlook, including guidance for the third quarter of fiscal 2026 and 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 to materially 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 filing, fiscal 2025, and other SEC filings. All these documents are available on the IR page of Super Micro's website. We assume no obligation to update any forward-looking statements.
Speaker #1: Understood. And my follow-on, Charles, in your preferred comments, you mentioned the upcoming platform transitions to Vera Rubin and the Helio system from AMD. I'm just wondering, have you guys started to get orders for those systems for delivery in the second half, or is it too early to start to get orders for those systems?
Speaker #1: Thank you for standing by. My name is Matt, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Q2 2026 financial results call.
Speaker #2: Yes, we have a lot of highly interested customers. Some are already engaged, and we hope we can deliver as soon as possible. But still, it depends on our partner.
Speaker #1: With us Computer, Inc. Q2, fiscal year today are Charles Liang, founder, president, and chief executive officer; David Weigand, CFO; and Michael Staiger, senior vice president placed on mute to prevent any background of corporate development.
Michael Staiger: Most of today's presentation refers to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to the accompanying presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors the means of evaluating and understanding the company's management, as management evaluates the company's 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 to non-GAAP results 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 will have a Q&A session for sell-side analysts.
Michael Staiger: Most of today's presentation refers to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to the accompanying presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors the means of evaluating and understanding the company's management, as management evaluates the company's 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 to non-GAAP results 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 will have a Q&A session for sell-side analysts.
Speaker #2: Depends on when they are Vera Rubin or AMD solution will be ready. So we are working very closely with them. Once they are available, we like to deliver to customer quickly.
Material risk is uncertainties, it could cause actual results or events, materially 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, this afternoon, our most recent 10K, filing, fiscal, 2025, and other FCC filings. All these documents are available on the IR, uh, page of supermarkets website. We see no obligation to update any forward-looking statements, most of today's presentation work for the non-gaap financial results in business outlook for an explanation of our non-gaap financial investors. Please refer to a company increase presentation or to our press release published earlier today. The non-gaap measures are presented as we believe that they provide investors. The means of evaluating and understanding the company's management at managers evaluate the company's 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 to reconciliation of gaap between non-gaap results. This contains in today's
Speaker #1: noise. All lines have been After the speaker's remarks, there will be a question-and-answer session. All lines, if you need it during the presentation portion of the call, have an opportunity for questions and answers at the end.
Speaker #2: And yesterday, we already have some good commitment from customers.
Speaker #1: If you would like to ask a question, please press star one on your telephone keypad. Over to you,
Speaker #1: Michael. Thank you.
Speaker #1: Excellent. Thank
press release and is end in the supplemental information attached to today's presentation. At the end of today's remarks, we will have a Q&A session for cell size analysts our third quarter fiscal 2026 quiet period and the clothes, or begins at the close of business Friday, March 13th 2026 and for now I will turn the call over to you Charles
Speaker #1: you.
Speaker #2: Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the second quarter and full year fiscal 2026, which ended December 31, 2025.
Speaker #2: Thank
Speaker #2: you. Thank you for your
Speaker #3: Next question's from the line of John Tomlinson with CJS Securities. You're allowed to open.
Thank you, Michael, and thank you all for joining. Uh, today's call.
Speaker #2: With me today is, you know, Charles Liang, founder, chairman, 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 on our website.
Speaker #4: Hi, thank you for taking my questions, and congrats on a nice quarter and outlook there. I just wanted to ask a little bit more about the big versus smaller customer mix that you're expecting in the future, and the pipeline that you see.
Michael Staiger: Our Q3 fiscal 2026 quiet period ends at the close, or begins at the close of business Friday, 13 March 2026. For now, I will turn the call over to you, Charles.
Michael Staiger: Our Q3 fiscal 2026 quiet period ends at the close, or begins at the close of business Friday, 13 March 2026. For now, I will turn the call over to you, Charles.
She put Michael deliver a strong fist Q2 as AI. Um, infrastructure demands continues to accelerate across every major. Uh customer segments.
Speaker #2: and is available on the company's As a reminder, during today's call, the company will refer to its presentation as available to the company's website.
Speaker #4: Are you expecting smaller customers to become a greater percentage of sales, or is it the opposite? And the reason I ask that is because these bigger customers seem to have that pricing leverage you mentioned.
For a quarter, we achieved a record 12.68 billion.
Speaker #2: Participants in the IR section, under the Events and Presentations tab, we've also published management's scripted commentary on our website. Please note that some of the information you'll hear during the discussion table consists of limitations.
Charles Liang: Thank you, Michael, and thank you all for joining today's call. Super Micro delivered a strong fiscal Q2 as AI infrastructure demand continues to accelerate across every major customer segment. For the quarter, we achieved a record $12.68 billion in revenue, including $1.5 billion deferred from a type of account last quarter, representing 123% year-over-year growth. This strong performance reflects the sustained momentum of our AI solutions and the large-scale systems as customers build out next generation AI factories. Super Micro has been developing some of the largest and most complex AI clusters ever built, highlighting our unmatched capability in large-scale manufacturing, on-site deployment, and integration.
Charles Liang: Thank you, Michael, and thank you all for joining today's call. Super Micro delivered a strong fiscal Q2 as AI infrastructure demand continues to accelerate across every major customer segment. For the quarter, we achieved a record $12.68 billion in revenue, including $1.5 billion deferred from a type of account last quarter, representing 123% year-over-year growth. This strong performance reflects the sustained momentum of our AI solutions and the large-scale systems as customers build out next generation AI factories. Super Micro has been developing some of the largest and most complex AI clusters ever built, highlighting our unmatched capability in large-scale manufacturing, on-site deployment, and integration.
Speaker #4: If you could have any color to that, that would be helpful. Thank you.
Speaker #4: you. Yeah.
In Revenue including 1.5 billion before the former couple of account last quarter representing 123% year-over-year growth.
Speaker #2: Thank you for the question. Yes, we understand we need more customers, especially a more diversified customer base—enterprise. So we are very aggressively growing enterprise, mini-sized, or even kind of enterprise customers as well.
Speaker #2: Those regarding revenue, gross forward-looking statements, including without margin, operating expenses, other income and expenses, taxes, capital allocation, and future business outlook, including guidance for the third quarter of fiscal 2026 and full fiscal year 2026.
This strong performance, reflects the sustained momentum of our AI Solutions and the direct scale systems as customer. You are next Generation, AI factories.
Speaker #2: These statements and other comments are based on management's current expectations and assumptions and involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Speaker #2: So, I mean, our customer direction is to us now. So I guess we were globals, large customer, and lots of kind of high number of enterprise accounts.
People have been developing some of the largest and most complex uh AI clusters uh ever build.
Speaker #2: And you should not place undue reliance on forward-looking statements. You can learn more about these earlier. This afternoon, our most recent 10-K filing for fiscal 2025, another SEC filing.
Highlighting our unmatched capability in larger scale. Manufacturing on site agreement and integration.
Speaker #2: All these documents are available on the IR page of Super Micro's website. We see no obligation to update any forward-looking statements. Most of today's results and business outlook.
Most notably our data center, building blocks solution, or DC BBs.
Speaker #3: Okay, got it. And then just on the Vera Rubin question—and I guess the migration to the 800-volt data center—I was wondering if there’s any opportunity for you to drive greater differentiation in this next cycle upgrade compared to the past couple.
as part to gain some key, customers preference, as
Speaker #2: Our explanation of our non-GAAP financial measures please refer to accompanying presentation. Or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors the means of evaluating and understanding the company's management to evaluate the company's operating performance.
Speaker #3: Is there anything about the whole platform and data center architecture that would give you more or less opportunity compared to the last cycle of Blackwell and Hopper?
Charles Liang: Most notably, our data center building block solution, or DCBBS, has started to gain some key customers' preference as they look for a quicker time to deployment, TTD, and quicker time to online, TTO. These pre-designed, pre-validated infrastructure building blocks not only speed up customers' data center builds, but they also save cost with better workload optimization and with minimal power and water consumption. DCBBS will significantly help us gain market share in large, medium, and small AI infrastructure deployments. With GB300, B200, B300, and MI350 platforms, we are also preparing for the upcoming NVIDIA Vera Rubin and AMD Helios solutions for the second half this year. While we continuously growing AI factory build out, customer and product mix are shifting, shifting more to a large model builder who has pricing leverage, pressuring gross margin.
Charles Liang: Most notably, our data center building block solution, or DCBBS, has started to gain some key customers' preference as they look for a quicker time to deployment, TTD, and quicker time to online, TTO. These pre-designed, pre-validated infrastructure building blocks not only speed up customers' data center builds, but they also save cost with better workload optimization and with minimal power and water consumption. DCBBS will significantly help us gain market share in large, medium, and small AI infrastructure deployments. With GB300, B200, B300, and MI350 platforms, we are also preparing for the upcoming NVIDIA Vera Rubin and AMD Helios solutions for the second half this year. While we continuously growing AI factory build out, customer and product mix are shifting, shifting more to a large model builder who has pricing leverage, pressuring gross margin.
Speaker #2: Yeah, I mean, that's why I say immediate provider is a very good solution. And based on that, we optimize the whole data center building pro solution for our customer.
Speaker #2: 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 to non-GAAP results is contained in today's press release and in the supplemental information attached to today's presentation.
They looking for quicker, time to develop PPD and quicker time to online PTO. This, uh, pre-design predicted infrastructure, uh, building blocks, not only speed up, customers data, center view, but they also safe host with special workload, optimization and with minimal, power and water consumption.
Speaker #2: And aim to help them build a data center quicker and more reliable, easy for management, and lower their cost—including energy consumption, including energy backup, and maybe, too early to say, including energy, kind of green power replacement.
Speaker #2: At the end of today's prepared sell-sided analysts. Our third quarter fiscal remarks, we will have a Q&A session for 2026 quiet period ends at the close or begins at the close of business Friday, March 13th, 2026.
Speaker #2: Charles.
Speaker #3: Thank you, Michael, and thank you all for
We are also preparing for the upcoming Nvidia Vera, Rubin and AMD Helios a solutions for the second half this year.
Speaker #3: Joining today's call. And for now, I will turn the call over to the call. Super Micro delivers a strong fiscal Q2 as AI infrastructure demand continues to accelerate.
Speaker #2: So we have a complete plan for the whole solution. Systems are still too early to say too much at this moment.
Speaker #3: Okay. Thank you very
Speaker #3: Across every major, customer segment, for the quarter, we achieved a record 12.68 billion in revenue, including 1.5 billion before the former top of account last quarter.
Speaker #3: much. Thank
While we continuously growing AI, Factory view, our customer and product mix are shifting a shift more to, um, large model builder, who has pricing leverage pressure in gross margin.
Speaker #3: Thank you for your question. Next question is from the line of Malik Newman with Bernstein. You're allowed to
Speaker #3: open. Hi.
In Q2 especially the expertise Transportation cost.
Ongoing components shortage.
Speaker #4: Yes, Mark Newman. Thanks for taking my question. Congrats on a great quarter and great outlook. Just curious, if we just take a step back—I mean, what's changed?
Speaker #3: Representing 123% year-over-year growth. reflects the This strong performance sustained momentum of our AI solutions and the direct-scale systems as customers throughout next generation AI factories.
And their Border Tire pricing among with terrorists and impact our short-term gross margin.
as such, I would like to take a moment to highlight our key strategies to address this and efficiently, strengthen our long-term possibility,
Charles Liang: In Q2, especially, the expedited transportation costs, ongoing components shortage, and their volatile pricing, among which tariffs, have impact our short-term gross margin. As such, I would like to take a moment to highlight our key strategies to address this and efficiently strengthen our long-term profitability. First and foremost, Super Micro undergoes its fourth phase of product evolution, with DCBBS as its key focus. As these data center deploys scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year 2026, DCBBS solutions accounted for 4% of our profit. We expect this part of our profit to grow and meaningfully contribute to the second half of fiscal 2026, and we see that growth accelerated to at least double this contribution by end of calendar 2026.
Charles Liang: In Q2, especially, the expedited transportation costs, ongoing components shortage, and their volatile pricing, among which tariffs, have impact our short-term gross margin. As such, I would like to take a moment to highlight our key strategies to address this and efficiently strengthen our long-term profitability. First and foremost, Super Micro undergoes its fourth phase of product evolution, with DCBBS as its key focus. As these data center deploys scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year 2026, DCBBS solutions accounted for 4% of our profit. We expect this part of our profit to grow and meaningfully contribute to the second half of fiscal 2026, and we see that growth accelerated to at least double this contribution by end of calendar 2026.
Speaker #3: developing some of the Super Micro has been largest and most AI clusters complex ever built. Highlighting our unmatched capability in large-scale manufacturing on-site deployment and integration.
First and foremost, super micro undergoes is first, place of product Evolution. We see ccps as is key focused as these data center. People is
Scale.
Speaker #3: Most notably, our data center building block solution or DCBBS has started to gain some key customers' preference as they look for a quicker, time-to-deployment TTP and quicker time-to-online TTO.
Dcpp as is and we have become an increasingly important part of our value. In the first half of physical year, 26 dcpp as a Solutions accountable 4% of our profit.
We expect this part of our profit to grow and meaningfully contribute to the second half of physical 26.
Speaker #3: This pre-designed pre-validated infrastructure building blocks not only speed up customers' data center builds, but they also save costs with better workload optimization and with minimal power and water consumption.
And we see that growth accelerated to at least double this contribution by end of calendar 2026.
Speaker #3: DCBBS will significantly help us gain market share in large, medium, and small AI infrastructure deployments. With GP300B, 200B, 300, and MI350 platforms, we are also preparing for the upcoming NVIDIA Vera Rubin and AMD Helios solutions for the second half of this year.
Which Compares GPU CPU life, cycle BCPS become critical helpful to the value of our server and storage products by enhancing the data center. You will try your time to delivery and time to online reducing power and water consumption and cost division. That is simplifying data center management and maintenance.
Charles Liang: With compressed GPU, CPU life cycle, DCBBS become critical helpful to the value of our server and storage products by enhancing the data center infrastructure, time to delivery and time to online, reducing power and water consumption, and cost efficiently simplifying data center management and maintenance. In just about 1 year, our DCBBS product lines grew to more than 10 key subsystems, including CDU, L2A Heat Exchanger, chill doors, power cells, battery backup, water tower, Dry Towers, high-speed switching, data center management software, and service. We are expanding this product line to include more new categories, such as transformer, next-generation power generators, device for energy backup, and grid power replacement, further strengthening customer value, accelerating deployment, and supporting long-term profit margin improvement for Super Micro.
Charles Liang: With compressed GPU, CPU life cycle, DCBBS become critical helpful to the value of our server and storage products by enhancing the data center infrastructure, time to delivery and time to online, reducing power and water consumption, and cost efficiently simplifying data center management and maintenance. In just about 1 year, our DCBBS product lines grew to more than 10 key subsystems, including CDU, L2A Heat Exchanger, chill doors, power cells, battery backup, water tower, Dry Towers, high-speed switching, data center management software, and service. We are expanding this product line to include more new categories, such as transformer, next-generation power generators, device for energy backup, and grid power replacement, further strengthening customer value, accelerating deployment, and supporting long-term profit margin improvement for Super Micro.
in just about 1 year, our ccps Port 9 through for more than
Speaker #3: While we continuously grow in AI factory throughout customer and product mix, shifting more to a large model builder who has pricing leverage, pressuring gross margin in Q2—especially the expedite transportation costs, ongoing components shortage, and their volatile pricing, among which tariffs impact our short-term gross margin.
Through to more than 10 key subsistence, including CPU.
a lot to a heat, exchanger
to your doors.
Power Shields?
Battery backup.
Water. Power dry power.
Highspeed switching.
Data center management, software and service.
We are expanding this product to, including more new categories such as
Transformer.
Next Generation, power generators.
Device for energy, backup and green power replacement.
Speaker #3: As such, I would like to take a moment to highlight our key strategies to address these and efficiently strengthen our long-term profitability. First, foremost, Super Micro undergoes its fourth phase of product evolution with DCBBS as its key focus.
For the strengthening customer value accelerating deeper image and supporting long-term profit margin Improvement for super micro.
Other than the developing ccps for better value and portability. We are also sharpening our focus on traditional Enterprise.
Speaker #3: As this data center deploys, scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year 26, DCBBS solutions account for 4% of our profit.
Cloud and Edge iot customers to further, diversify Revenue with higher margin.
In addition.
Charles Liang: Other than developing DCBBS for better value and profitability, we are also sharpening our focus on traditional enterprise, cloud, and edge IoT customers to further diversify revenue with higher margin. In addition, we have introduced our X14 and Edge 14, both series solutions featuring pre-configured systems that ship directly from our factory, enabling rapid deployment, optimized for specific AI, cloud storage, and telco edge workloads. These servers are ready to power and immediately and reinforce Super Micro's core value, time to market advantage for enterprise customer, channel partner, and SMB end users. We are also driving meaningful cost improvement through enhanced design for manufacturing, DFM, and quality driven engineering. We have introduced more modularized subsystems and expanded automation across our facilities. These efforts increase yield rate, reduce rework, and enable us to bring new platform to volume production even faster and with higher quality.
Charles Liang: Other than developing DCBBS for better value and profitability, we are also sharpening our focus on traditional enterprise, cloud, and edge IoT customers to further diversify revenue with higher margin. In addition, we have introduced our X14 and Edge 14, both series solutions featuring pre-configured systems that ship directly from our factory, enabling rapid deployment, optimized for specific AI, cloud storage, and telco edge workloads. These servers are ready to power and immediately and reinforce Super Micro's core value, time to market advantage for enterprise customer, channel partner, and SMB end users. We are also driving meaningful cost improvement through enhanced design for manufacturing, DFM, and quality driven engineering. We have introduced more modularized subsystems and expanded automation across our facilities. These efforts increase yield rate, reduce rework, and enable us to bring new platform to volume production even faster and with higher quality.
Speaker #3: We expect this part of our profit to grow meaningfully contributing to the second half of fiscal 26. And we see that growth accelerated to at least double this contribution by end of calendar 2026.
We have introduced our expert team and agent 14, go serious Solutions, featuring police configure systems that ship directly inform our Factory enabling rapid Improvement.
Optimized for specific, AI cloud storage, and Teo Edge workloads.
This Server. Uh, ready to power.
Speaker #3: With compressed GPU and CPU lifecycle, DCBBS becomes critically helpful to the value of our server and storage products by enhancing the data center infrastructure time-to-delivery and time-to-online.
And immediately and reinforce super micros code value, time to Market Advantage for Enterprise customer Channel, partner and SMB and users.
Speaker #3: Reducing power and water consumption and cost, efficiently simplifying data center management and maintenance. In just about one year, our DCBBS product lines grew to more than 10 key subsystems, including CDU, L2A heat exchanger, chill doors, power cells, battery backup, water tower, dry towers, high-speed switching, data center management software, and service.
We are also driving meaningful cost Improvement through enhance design for manufacturing BFF and quality driven engineering.
This efforts, increase e, reduce reward and enable us to bring new platform to volume.
Even faster.
And with higher quality.
Speaker #3: We are expanding these product lines to include more new categories such as transformer, next generation power generators, device for energy backup, and grid power replacement.
I support our cycle to shorten and Technical complexity increase this design for manufacturing advancement, uh, essential for scale, efficiency, and long-term margin Improvement.
Speaker #3: Further strengthening customer value, accelerating deployment, and supporting long-term profit margin improvement for Super developing DCBBS Micro. Other than for better value and profitability, we are also sharpening our focus on traditional enterprise cloud and edge IoT customers.
Charles Liang: As product cycle shorten and technical complexity increase, this design for manufacturing advancement are essential for scale, efficiency, and long-term margin improvement. While executing these, DFM initiatives, we are also continuous to expand our global manufacturing footprint aggressively and strategically. Our Silicon Valley facility remains the cornerstone of our US operation, delivering faster time to market, strong security, and higher quality integration. Internationally, new production sites in Taiwan, Malaysia, and Netherlands, and soon the Middle East, are ramping to increase capacity, support regional solving AI requirements, and most importantly, optimize our overall cost structure. In summary, as the only company with more than 32 years of robust server and storage focus, Super Micro is quickly evolving into a leading AI platform and data center infrastructure total solution provider.
Charles Liang: As product cycle shorten and technical complexity increase, this design for manufacturing advancement are essential for scale, efficiency, and long-term margin improvement. While executing these, DFM initiatives, we are also continuous to expand our global manufacturing footprint aggressively and strategically. Our Silicon Valley facility remains the cornerstone of our US operation, delivering faster time to market, strong security, and higher quality integration. Internationally, new production sites in Taiwan, Malaysia, and Netherlands, and soon the Middle East, are ramping to increase capacity, support regional solving AI requirements, and most importantly, optimize our overall cost structure. In summary, as the only company with more than 32 years of robust server and storage focus, Super Micro is quickly evolving into a leading AI platform and data center infrastructure total solution provider.
While executing this dfm initiatives. We are also continuous to expand our Global manufacturing improvements aggressively and strategically our Silicon Valley facilities Remain. The Cornerstone of our us operation delivering faster time to Market strong security.
and,
Higher quality integration.
Speaker #3: To further diversify revenue with higher margin, in addition, we have introduced our X14 and H14 Go-Series solutions, featuring pre-configured systems that ship directly from our factory, enabling rapid deployment.
Internationally new production sites in Taiwan Malaysia and nested. And soon the Middle East are ramping to increase, uh, capacity, support Regional solving.
Are requirements and mostly importantly. Optimize our overall cost structure.
Speaker #3: Optimized for specific AI cloud storage and telco edge workloads. These server ready-to-power and immediately and reinforced Super Micro's core value time-to-market advantage for enterprise customer channel partner and SMB end users.
In summary as the only company with more than 32 years, of robust server, and storage focus is quickly, evolving into a leading AI platform and data center infrastructure total solution provider.
Strong Q2 performance rapid expansion of dcbs.
Deep deeper and more customer engagement and the global uh capacity Investments.
Speaker #3: We are also driving meaningful cost improvement through enhanced design for manufacturing DFM and quality-driven engineering. We have introduced more modularized subsystems and expanded automation across our facilities.
Position as well for long-term growth.
While on near 10 margin pressure from.
Uh uh, customer mix.
Service.
Charles Liang: Strong Q2 performance, rapid expansion of DCBBS product line, deeper and more customer engagement, and the global capacity investment position us well for long-term growth. While near-term margin pressure from customer mix, tariffs, international facility expansion, and key component shortage, like memory and storage shortage. Our focus on enterprise business, design for manufacture improvement, and the faster growing DCBBS portfolio all help us gain new customers, support our higher growth, and a net margin going forward. Lastly, based on our broad customer backorder forecast and commitment, we believe demands for AI and IT infrastructure remain unprecedentedly strong. Our DCBBS solution is exactly what customers need to build out their AI and cloud much faster, leaner, and lower total cost.
Charles Liang: Strong Q2 performance, rapid expansion of DCBBS product line, deeper and more customer engagement, and the global capacity investment position us well for long-term growth. While near-term margin pressure from customer mix, tariffs, international facility expansion, and key component shortage, like memory and storage shortage. Our focus on enterprise business, design for manufacture improvement, and the faster growing DCBBS portfolio all help us gain new customers, support our higher growth, and a net margin going forward. Lastly, based on our broad customer backorder forecast and commitment, we believe demands for AI and IT infrastructure remain unprecedentedly strong. Our DCBBS solution is exactly what customers need to build out their AI and cloud much faster, leaner, and lower total cost.
Uh, International facility expansion, and key components shortage, like, memory, and storage shortage.
Our focus on Enterprise business.
Speaker #3: These efforts increase ERA reduce rework and enable us to bring new platform to volume production even faster and with higher quality. As product cycle shorten and technical complexity increase, these design for manufacturing advancement are essential for scale efficiency and long-term margin improvement.
Uh, design for manufacturing Improvement and the faster growing pcbs portfolio. All help us get new customers support.
Higher growth and net margin going forward.
Last study based on our, uh, broad customer back order. Uh, forecast and commitment, we believe it makes for AI and it invoice, charger, remain, unprecedentedly, strong,
Speaker #3: While executing these DFM initiatives, we are also continuing to expand our global manufacturing footprint aggressively and strategically. Our Silicon Valley facility remains the cornerstone of our U.S. operation, delivering faster time-to-market, strong security, and higher quality integration internationally. New production sites in Taiwan, Malaysia, and the Netherlands, and soon the Middle East, are ramping to increase capacity, support regional solutions for AI requirements, and, most importantly, optimize our overall cost structure.
Our dcpp is a solution, is exactly what customer need to build out. Their Ai and Cloud much faster.
Greener and lower total cost.
Which they mine. I'm confident to guide at least 12.3 billion for Q3 and up our full year Revenue. Guidance back to at least 40 billion dollars.
I look forward to sharing our progress with you next quarter.
Thank you.
Now I will send it over to them. Thank you Charles.
Charles Liang: With that in mind, I'm confident to guide at least $12.3 billion for Q3 and up our full year revenue guidance back to at least $40 billion. I look forward to sharing our progress with you next quarter. Thank you. Now I will turn it over to David.
Charles Liang: With that in mind, I'm confident to guide at least $12.3 billion for Q3 and up our full year revenue guidance back to at least $40 billion. I look forward to sharing our progress with you next quarter. Thank you. Now I will turn it over to David.
Speaker #3: In summary, as the only company with more than 32 years of robust server and storage focus, Super has grown into a leading AI platform and data center infrastructure total solution provider.
We received record Q2 fiscal year, 26 revenue of 12.7 billion up 123% year-over-year and up, 153% quarter over quarter compared to our guidance of 10 billion to 11 billion.
Q2 Revenue included approximately 1.5 billion in delayed, q1 shipments, due to customer readiness.
David Weigand: Thank you, Charles. We achieved record Q2 fiscal year 2026 revenue of $12.7 billion, up 123% year-over-year, and up 153% quarter-over-quarter, compared to our guidance of $10 billion to 11 billion. Q2 revenue included approximately $1.5 billion in delayed Q1 shipments due to customer readiness. Growth was driven this quarter by the rapid ramp and deployment of our rack scale AI solutions. Despite supply chain challenges in the industry, our global manufacturing team executed well in delivering record revenue. Order strength remains strong from global large data center and enterprise customers. AI GPU platforms, which represent over 90% of Q2 revenue, continue to be the key growth driver.
David Weigand: Thank you, Charles. We achieved record Q2 fiscal year 2026 revenue of $12.7 billion, up 123% year-over-year, and up 153% quarter-over-quarter, compared to our guidance of $10 billion to 11 billion. Q2 revenue included approximately $1.5 billion in delayed Q1 shipments due to customer readiness. Growth was driven this quarter by the rapid ramp and deployment of our rack scale AI solutions. Despite supply chain challenges in the industry, our global manufacturing team executed well in delivering record revenue. Order strength remains strong from global large data center and enterprise customers. AI GPU platforms, which represent over 90% of Q2 revenue, continue to be the key growth driver.
Speaker #3: Strong Q2 performance, rapid expansion of the DCBBS product line, and deeper Micro is quickly evolving with more customer engagement and global capacity investment. These position us well for long-term growth.
Growth was driven this quarter by the rapid ramp and deployment of our rack sale rack scale, AI Solutions.
Despite supply chain challenges in the industry are Global manufacturing team executes well in delivering record Revenue.
Speaker #3: While near-term margin pressure from customer mix tariffs international facility expansion and key components shortage like memory and storage shortage. Our focus on enterprise business design for manufacturing improvement and the faster growing DCBBS portfolio all help us gain new customers support higher growth and net margin going forward.
Order strength remains strong from Global large Data, Center and Enterprise customers.
AI GPU platforms, which represent over 90% of Q2 Revenue, continue to be the key growth driver.
During Q2 the Enterprise Channel Revenue.
Segments, total 2 billion dollars representing about 16% of Revenue versus 31% in the prior quarter.
That's up 42%, year-over-year and up 29% quarter over quarter.
Speaker #3: Lastly, based on our broad customer backorder forecast and commitment, we believe demands for AI and IT infrastructure remain unprecedentedly strong. Our DCBBS solution is exactly what customers need to build out their AI and cloud much faster, greener.
David Weigand: During Q2, the enterprise channel revenue segment totaled $2 billion, representing about 16% of revenue versus 31% in the prior quarter. That's up 42% year-over-year and up 29% quarter-over-quarter. The OEM appliance and large data center segment revenue was $10.7 billion, representing approximately 84% of Q2 revenue versus 68% in the last quarter. This was up 151% year-over-year and up 210% quarter-over-quarter. For Q2 FY 2026, one large data center customer represented approximately 63% of total revenue. By geography, the US represented 86% of Q2 revenue, Asia, 9%, Europe, 3%, and the rest of the world, 2%.
David Weigand: During Q2, the enterprise channel revenue segment totaled $2 billion, representing about 16% of revenue versus 31% in the prior quarter. That's up 42% year-over-year and up 29% quarter-over-quarter. The OEM appliance and large data center segment revenue was $10.7 billion, representing approximately 84% of Q2 revenue versus 68% in the last quarter. This was up 151% year-over-year and up 210% quarter-over-quarter. For Q2 FY 2026, one large data center customer represented approximately 63% of total revenue. By geography, the US represented 86% of Q2 revenue, Asia, 9%, Europe, 3%, and the rest of the world, 2%.
The OEM Appliance and large data center. Segment Revenue was 10.7 billion. Representing approximately 8.84% of Q2 Revenue versus 68% in the last quarter.
Quarter over quarter.
For Q2 FY, 26 1 large data center customer represented approximately 63% of total revenue.
Speaker #3: And lower total that in mind, I'm confident to cost. With guide at least 12.3 billion for Q3 and up our full year revenue guidance back to at least 40 billion dollars.
By geography, the US represented 86% of Q2 Revenue Asian 9%, Europe, 3%, and the rest of the world 2%.
On a year-over-year basis. Us Revenue, increased 184%, Asia group 53%, Europe, decreased 63%, and the rest of the world, increased 77%.
Speaker #3: you next quarter. Thank you. Now I will turn it over to David.
Speaker #2: Thank you,
Speaker #2: Charles. We received—I look forward to sharing record Q2 fiscal year '26 revenue of $12.7 billion, up 123% year over year and up 153% quarter over quarter.
On a quarter over quarter basis us Revenue increased 496%, Asia decreased 49% Europe decreased 51% and the rest of the world increased 53%.
David Weigand: On a year-over-year basis, US revenue increased 184%, Asia grew 53%, Europe decreased 63%, and the rest of the world increased 77%. On a quarter-over-quarter basis, US revenue increased 496%, Asia decreased 49%, Europe decreased 51%, and the rest of the world increased 53%. The Q2 non-GAAP gross margin was 6.4% versus 9.5% in Q1. Gross margins were impacted by customer and product mix, as well as higher freight, production, and expedite costs as we began to ship new platforms on a large scale. We had significant operating leverage during the quarter, with total non-GAAP operating expenses representing 1.9% of revenue versus 4.1% last quarter.
David Weigand: On a year-over-year basis, US revenue increased 184%, Asia grew 53%, Europe decreased 63%, and the rest of the world increased 77%. On a quarter-over-quarter basis, US revenue increased 496%, Asia decreased 49%, Europe decreased 51%, and the rest of the world increased 53%. The Q2 non-GAAP gross margin was 6.4% versus 9.5% in Q1. Gross margins were impacted by customer and product mix, as well as higher freight, production, and expedite costs as we began to ship new platforms on a large scale. We had significant operating leverage during the quarter, with total non-GAAP operating expenses representing 1.9% of revenue versus 4.1% last quarter.
The Q2 non-gaap gross margin was 6.4% versus 9.5% in q1.
Speaker #2: Compared to our guidance of 10 billion to 11 billion. Q2 revenue included approximately 1.5 billion in delayed Q1 shipments due to customer readiness. Growth was driven this quarter by the rapid ramp and deployment of our Rackscale AI solutions.
Gross margins were impacted by customer and product mix as well as higher Freight production and expedite costs. As we began to shift new platforms on a large scale.
We had significant operating leverage during the quarter with total non-gaap operating. Expenses representing 1.9% of Revenue versus 4.1% last quarter.
Speaker #2: Despite supply chain challenges in the industry, our global manufacturing team executed well in delivering record revenue. Order strength remains strong from global large data center and enterprise customers.
Q2 Gap. Operating expenses worth 324 million up 14% quarter over quarter and up 8% year-over-year.
On a non-gaap basis. Operating expenses were 241 million
Speaker #2: AI GPU platforms Q2 revenue continue to be which represent over 90% of the key growth driver. During Q2, the enterprise channel revenue segment totaled 2 billion 16% of revenue versus dollars representing about 31% in the prior quarter.
which was up 18% quarter over quarter and up 6% year-over-year.
Rate of expenses were up to quarter over quarter, largely due to higher sales expenses.
David Weigand: Q2 GAAP operating expenses were $324 million, up 14% quarter-over-quarter and up 8% year-over-year. On a non-GAAP basis, operating expenses were $241 million, which was up 18% quarter-over-quarter and up 6% year-over-year. Operating expenses were up quarter-over-quarter, largely due to higher sales expenses. Non-GAAP operating margin for Q2 was 4.5%, compared to 5.4% in Q1. Other income and expense for Q2 totaled a net income of $26 million, reflecting $51 million in interest income on higher cash balances, partially offset by $25 million in interest expense, primarily related to our convertible notes.
David Weigand: Q2 GAAP operating expenses were $324 million, up 14% quarter-over-quarter and up 8% year-over-year. On a non-GAAP basis, operating expenses were $241 million, which was up 18% quarter-over-quarter and up 6% year-over-year. Operating expenses were up quarter-over-quarter, largely due to higher sales expenses. Non-GAAP operating margin for Q2 was 4.5%, compared to 5.4% in Q1. Other income and expense for Q2 totaled a net income of $26 million, reflecting $51 million in interest income on higher cash balances, partially offset by $25 million in interest expense, primarily related to our convertible notes.
Non-gaap operating margin for Q2 was 4.5% compared to 5.4% in q1.
Speaker #2: That's up 42% year over year and up 29% quarter over quarter. The OEM appliance and large data center segment revenue was 10.7 billion representing approximately 84% of Q2 revenue versus 68% in the last quarter.
Other income and expense for Q2 totaled. A net income of 26 million reflecting 51 million in interest income on higher cash. Balances partially offset by 25 million in interest expense primarily related to to our convertible notes.
Speaker #2: This was up 151% year over year and up 210% quarter over quarter. For Q2 FY26, one large data center customer represented approximately 63% of total revenue.
The tax Provisions for Q2 was 999 million on a gap basis and 122 million on a non-gaap basis. Resulting in a gap tax rate of 19.8% and a non-gaap tax rate of 20.6%.
Speaker #2: By geography, the US represented 86% of Q2 revenue; Asia rest of the world 2%. On a year-over-year basis, US revenue increased 184%; Asia grew 53%; Europe decreased 63%; and the rest of the world increased 77%.
David Weigand: The tax provision for Q2 was $99 million on a GAAP basis and $122 million on a non-GAAP basis, resulting in a GAAP tax rate of 19.8% and a non-GAAP tax rate of 20.6%. Q2 GAAP EPS was $0.60 compared to guidance of $0.37 to $0.45, and non-GAAP diluted EPS was $0.69 versus guidance of $0.46 to $0.54, due to higher revenue and operating leverage. The GAAP fully diluted share count increased sequentially from 663 million in Q1 to 673 million in Q2, and the non-GAAP share count increased from 677 million to 688 million over the same period.
David Weigand: The tax provision for Q2 was $99 million on a GAAP basis and $122 million on a non-GAAP basis, resulting in a GAAP tax rate of 19.8% and a non-GAAP tax rate of 20.6%. Q2 GAAP EPS was $0.60 compared to guidance of $0.37 to $0.45, and non-GAAP diluted EPS was $0.69 versus guidance of $0.46 to $0.54, due to higher revenue and operating leverage. The GAAP fully diluted share count increased sequentially from 663 million in Q1 to 673 million in Q2, and the non-GAAP share count increased from 677 million to 688 million over the same period.
Q2 gaap EPS was 60 cents compared to guidance of 37 cents to 45 cents and non-gaap diluted EPS was 69 cents versus guidance of 46 cents to 54 cents due to higher revenue and operating Leverage
Speaker #2: On a quarter-over-quarter basis, US revenue increased 496%; Asia decreased 49%; Europe decreased 51%; and the rest of the world increased 53%. The Q2 non-GAAP gross margin was 6.4% versus 9.5% in Q1.
The Gap, Floyd's, looted share count, increase sequentially, from 663 million in q1 to to 673 million in Q2. And the non-gaap share count increase from 677 million to 688 million over the same period.
Speaker #2: Gross margins were impacted by customer and product mix, as well as higher freight, production, and expedite costs as we began to ship new platforms on a large scale.
Cash flow used in operations for Q2 was 24 million compared to 918 million used in the prior quarter.
Speaker #2: We had significant operating leverage during the quarter with total non-GAAP operating expenses representing 1.9% of revenue versus 4.1% last quarter. Q2 GAAP operating expenses were 324 million up 14% quarter-over-quarter and up 8% year over year.
On a quarter over quarter basis, Q2 operating cash flow reflected higher, net income offset by higher accounts, receivable and inventory levels, and a aided by higher accounts. Payables,
David Weigand: Cash flow used in operations for Q2 was $24 million, compared to $918 million used in the prior quarter. On a quarter-over-quarter basis, Q2 operating cash flow reflected higher net income, offset by higher accounts receivable and inventory levels, and aided by higher accounts payables. Q2 closing inventory was $10.6 billion, up from $5.7 billion in Q1, as we prepared for continuing strength in Q3 shipments. CapEx for Q2 totaled $21 million, resulting in negative free cash flow of $45 million for the quarter. During the December quarter, we expanded our access to working capital to fund growth, executing a $2 billion cash flow base secured revolving credit facility in the US. In January, we also closed an approximately $1.8 billion secured Taiwan revolving debt facility.
David Weigand: Cash flow used in operations for Q2 was $24 million, compared to $918 million used in the prior quarter. On a quarter-over-quarter basis, Q2 operating cash flow reflected higher net income, offset by higher accounts receivable and inventory levels, and aided by higher accounts payables. Q2 closing inventory was $10.6 billion, up from $5.7 billion in Q1, as we prepared for continuing strength in Q3 shipments. CapEx for Q2 totaled $21 million, resulting in negative free cash flow of $45 million for the quarter. During the December quarter, we expanded our access to working capital to fund growth, executing a $2 billion cash flow base secured revolving credit facility in the US. In January, we also closed an approximately $1.8 billion secured Taiwan revolving debt facility.
Q2 closing inventory was 10.6 billion up from 5.7 billion in q1 as we prepared for continuing strength in Q3 shipments.
Speaker #2: On a non-GAAP basis, operating expenses were 241 million which was up 18% quarter-over-quarter and up 6% year over year. Operating expenses were up quarter-over-quarter largely due to higher expenses.
Capex for Q2 total 21 million, resulting in negative free, cash flow of 45 million for the core.
During the December quarter, we expanded our access to working capital to fund growth, executing a 2 billion dollar cash flow based secured revolving credit facility in the US.
Speaker #2: Non-GAAP operating margin for Q2 was 4.5% compared to 5.4% in Q1. Other income and expense for Q2 totaled a net income of 26 million, reflecting 51 million in interest income on higher cash balances partially offset by 25 million in interest expense primarily related to our convertible notes.
In January, we also closed an approximately 1.8 billion dollars. Secured Taiwan revolving debt facility.
At quarter end, our cash position, totaled 4.1 billion while bank. And convertible note debt was 4.9 billion resulting in a net debt position of 787 million compared to a net debt position of 579 million in the prior quarter.
Speaker #2: The tax provision for Q2 was 99 million dollars on a GAAP basis and 122 million on a non-GAAP basis. Resulting in a GAAP tax rate of 19.8% and a non-GAAP tax rate of 20.6%.
David Weigand: At quarter end, our cash position totaled $4.1 billion, while bank and convertible note debt was $4.9 billion, resulting in a net debt position of $787 million, compared to a net debt position of $579 million in the prior quarter. Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly improved from 123 days in Q1 to 54 days in Q2. Days of inventory decreased by 42 days to 63 days, versus 105 days in the prior quarter. Days sales outstanding increased by 6 days to 49 days, versus 43 days in Q1, while days payables outstanding increased by 32 days to 58 days, versus 26 days in Q1. Turning to the outlook for Q3 FY2026, we expect net sales to be at least $12.3 billion.
David Weigand: At quarter end, our cash position totaled $4.1 billion, while bank and convertible note debt was $4.9 billion, resulting in a net debt position of $787 million, compared to a net debt position of $579 million in the prior quarter. Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly improved from 123 days in Q1 to 54 days in Q2. Days of inventory decreased by 42 days to 63 days, versus 105 days in the prior quarter. Days sales outstanding increased by 6 days to 49 days, versus 43 days in Q1, while days payables outstanding increased by 32 days to 58 days, versus 26 days in Q1. Turning to the outlook for Q3 FY2026, we expect net sales to be at least $12.3 billion.
Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly, improved from 123 days in q1 to 54 days in Q2.
Speaker #2: Q2 GAAP EPS was 60 cents compared to guidance of 37 cents to 45 cents and non-GAAP diluted EPS was 69 cents versus guidance of 46 cents to 54 cents due to higher revenue and operating leverage.
Days of inventory. Decreased by 42 days, to 63 days versus 105 days in the prayer Court.
Payables outstanding increased by 32 days to 58 days versus 26 days in q1.
Speaker #2: The GAAP fully diluted share count increased sequentially from 663 million in Q1 to 673 million in Q2. And the non-GAAP share count increased from 677 million to 688 million over the same period.
Turning to the outlook for Q3 FY 26, we expect net sales to be at least 12.3 billion.
Gap diluted, net income per share of at least 52 cents and non-gaap diluted. Net income per share of at least 60 cents.
Speaker #2: Cash flow used in operations for Q2 was $24 million, compared to $918 million used in the prior quarter. On a quarter-over-quarter basis, Q2 operating cash flow reflected higher net income, offset by higher accounts receivable and inventory levels, and aided by higher accounts payables.
We expect gross margins to be up 30 basis points, relative to Q2 FY 2 6.
David Weigand: GAAP diluted net income per share of at least $0.52, and non-GAAP diluted net income per share of at least $0.60. We expect gross margins to be up 30 basis points relative to Q2 FY 2026 levels. GAAP operating expenses are expected to be around $354 million, which include approximately $74 million in stock-based compensation expenses that are excluded from non-GAAP operating expenses. The outlook for Q3 of fiscal year 2026, fully diluted GAAP EPS, includes approximately $62 million in expected stock-based compensation expenses, net of the tax effects of $19 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense, to result in a net expense of approximately $22 million.
David Weigand: GAAP diluted net income per share of at least $0.52, and non-GAAP diluted net income per share of at least $0.60. We expect gross margins to be up 30 basis points relative to Q2 FY 2026 levels. GAAP operating expenses are expected to be around $354 million, which include approximately $74 million in stock-based compensation expenses that are excluded from non-GAAP operating expenses. The outlook for Q3 of fiscal year 2026, fully diluted GAAP EPS, includes approximately $62 million in expected stock-based compensation expenses, net of the tax effects of $19 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense, to result in a net expense of approximately $22 million.
gaap operating expenses are expected to be around 354 million, which include approximately, 74 million in stock based compensation expenses that are excluded from non-gaap operating expenses
Speaker #2: Q2 revenue was $2 billion in Q1 as we prepared, up from $5.7 billion Q3 shipments. CapEx for Q2 totaled $21 million, resulting in negative free cash flow of $45 million for the quarter.
The outlook for Q3 of fiscal year, 2026 fully diluted, gaap, EPS includes approximately 62 million and expected stock-based compensation expenses. Net of the tax effects of 19 million which are excluded from non-gaap to alluded net income per commissioner.
Speaker #2: During the December quarter, we expanded our access to working capital to fund growth executing a 2 billion dollar cash flow based secured revolving credit facility in the US.
We expect other income and expenses including interest expense to result in a net expense of approximately 22 million.
Speaker #2: In January, we also closed an approximately 1.8 billion dollars secured Taiwan revolving debt facility. At quarter end, our cash position totaled 4.1 billion while bank and convertible note debt was 4.9 billion.
The company's projections for Q3 FY. 26 gaap and non-gaap diluted net income per common, share, assume a tax rate of 19.6%, a non-gaap tax rate of 20.2% and a fully diluted share count of 684 million for Gap and 699 million shares for non-gaap.
Capital expenditures for Q3 are expected to be in the range of 70 to 90 million.
Speaker #2: We ended the quarter in a net debt position of $787 million, compared to a net debt position of $579 million in the prior quarter. Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly improved from 123 days in Q1 to 54 days in Q2.
David Weigand: The company's projections for Q3 FY2026 GAAP and non-GAAP diluted net income per common share assume a tax rate of 19.6%, a non-GAAP tax rate of 20.2%, and a fully diluted share count of 684 million for GAAP and 699 million shares for non-GAAP. Capital expenditures for Q3 are expected to be in the range of $70 to 90 million. For full fiscal year 2026, we expect at least $40 billion in net sales. Michael, we're now ready for Q&A.
David Weigand: The company's projections for Q3 FY2026 GAAP and non-GAAP diluted net income per common share assume a tax rate of 19.6%, a non-GAAP tax rate of 20.2%, and a fully diluted share count of 684 million for GAAP and 699 million shares for non-GAAP. Capital expenditures for Q3 are expected to be in the range of $70 to 90 million. For full fiscal year 2026, we expect at least $40 billion in net sales. Michael, we're now ready for Q&A.
For full fiscal year 2026, we expect at least 40 billion in net sales.
Michael. We're now ready for Q&A?
Great. Uh, Matthew can you uh, roll the queue?
Speaker #2: Days of inventory decreased by 42 days to 63 days versus 105 days in the prior quarter. Days sales outstanding increased by 6 days to 49 days versus 43 days in Q1 while days payables outstanding increased by 32 days to 58 days versus 26 days in Q1.
If you would like to ask a question, please press star. Followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please. Press star. Followed by 2 again to ask a question, press star, 1 as a. Reminder, if you're using a speaker-phone, please remember to pick up your handset before asking your question, we will pause here briefly as questions registered.
First question is from the line of a non do borrower with loop capital. Your line is now open.
Michael Staiger: Great. Matthew, can you roll the queue?
Michael Staiger: Great. Matthew, can you roll the queue?
Operator: If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions register. First question is from the line of Ananda Baruah with Loop Capital. Your line is now open.
Operator: If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions register. First question is from the line of Ananda Baruah with Loop Capital. Your line is now open.
Speaker #2: Turning to the outlook for Q3 FY26, we expect net sales to be at least $12.3 billion. GAAP diluted net income per share of at least $0.52, and non-GAAP diluted net income per share of at least $0.60.
Hey, yeah. Thanks guys. Good afternoon. Thanks for taking the question. And uh yeah. Congrats on the on the solid results here relative to the guys. Um I just I want to just ask about margins uh and have a few day question though. I want to ask you here but they're all margin related. Um, I guess the first is with regards,
Speaker #2: We expect gross margins to be up 30 basis points relative to Q2 FY26 levels. GAAP operating expenses are expected to be around $354 million, which include approximately $74 million in stock-based compensation expenses that are excluded from non-GAAP operating expenses.
so you mentioned, I think, 90 days ago,
Ananda Baruah: Hey, yeah, thanks, guys. Good afternoon. Thanks for taking the question. And yeah, congrats on the solid results here relative to the guide. I wanna just ask about margins, and I have a few day questions I wanna ask you here, but they're all margin related. I guess the first is with regard to, you mentioned, I think, 90 days ago, that December quarter, you expected to be the sort of the low watermark quarter in gross margin, and you're guiding for Q over Q improvement for the March quarter. Do you still think that things progress expansive from here, Charles? You made some comments around customer mix. It's been a headwind. Do you think it continues to improve? And I have two quick follow-up today, just margin related after that. Thanks.
Ananda Baruah: Hey, yeah, thanks, guys. Good afternoon. Thanks for taking the question. And yeah, congrats on the solid results here relative to the guide. I wanna just ask about margins, and I have a few day questions I wanna ask you here, but they're all margin related. I guess the first is with regard to, you mentioned, I think, 90 days ago, that December quarter, you expected to be the sort of the low watermark quarter in gross margin, and you're guiding for Q over Q improvement for the March quarter. Do you still think that things progress expansive from here, Charles? You made some comments around customer mix. It's been a headwind. Do you think it continues to improve? And I have two quick follow-up today, just margin related after that. Thanks.
That December quarter, you expected to be the sort of the low water mark quarter in in gross margin.
And your guiding for Cuba que Improvement for the March quarter. Um,
Speaker #2: The outlook for Q3 of fiscal year 2026 fully diluted GAAP EPS includes approximately 62 million in expected stock-based compensation expenses net of the tax effects of 19 million which are excluded from non-GAAP diluted net income per comma share.
do you still think that things progress? Expansive from here, Charles you made some, uh, some comments around customer mix.
Uh, it's been a headwind. Do you think it continues to improve? And I have 2, quick follow-ups today just margin related after that. Thanks.
Speaker #2: We expect other income and expenses, including interest expense, to result in a net expense of approximately $22 million. The company's projections for Q3 FY26 GAAP and non-GAAP diluted net income per share assume a tax rate of 19.6%, a non-GAAP tax rate of 20.2%, and a fully diluted share count of 684 million for GAAP and 699 million shares for non-GAAP.
Yeah, thank you for the question. Yes, the customer mix, uh, we uh, Improvement, uh, quarter of the quarter. Now, we have, uh, many more large scale customer. I would like to say so that way improve our, uh, possibility, uh, the other factor is
Charles Liang: Yeah, thank you for the question. Yes, the customer mix, we are improving, quarter over quarter. Now we have, many more, large scale customer, I would like to say. So that will improve our, profitability. The other factor is, last quarter, I mean, the December quarter, the GPU reentry, was a little bit new to us, so a lot of, expedite, transportation costs. And now, I mean, our product is getting mature, so, those, expedite, transportation costs will be dramatically, reduced. And, tariff impact also are improving. And, so overall, especially at DCBBS, also increasing, for our net, for our, gross margin. So I believe our gross margin will start to, improve quarter over quarter.
Charles Liang: Yeah, thank you for the question. Yes, the customer mix, we are improving, quarter over quarter. Now we have, many more, large scale customer, I would like to say. So that will improve our, profitability. The other factor is, last quarter, I mean, the December quarter, the GPU reentry, was a little bit new to us, so a lot of, expedite, transportation costs. And now, I mean, our product is getting mature, so, those, expedite, transportation costs will be dramatically, reduced. And, tariff impact also are improving. And, so overall, especially at DCBBS, also increasing, for our net, for our, gross margin. So I believe our gross margin will start to, improve quarter over quarter.
Speaker #2: Capital expenditures for Q3 are expected to be in the range of $70 to $90 million. For the full fiscal year 2026, we expect at least $40 billion in net sales.
Speaker #2: Michael, we're now ready for Q&A. Great. Matthew, can you roll the
Last quarter, I mean the December quarter uh, gp3 entry uh was a little bit new to us. So a lot of expertise uh Transportation costs. And now I mean product is getting more cheaper. So, uh, those uh, expertise, uh, Transportation costs will be tremendously reduced and Terry for impact also Improvement. And, uh, so overall, uh, especially a TCP PPS, also include
Speaker #3: If you would like to ask a question, please press star followed by the number one.
Speaker #3: one on your telephone keypad. If for any reason cue? you would like to remove that question, please press star followed by two. Again, to ask a question, press star one.
Original for our net, uh, for our, uh, gross margin. So I believe our gross margin will start to improve quarter out of the quarter.
Speaker #3: As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered.
Speaker #3: First question from the line of Ananda Barua with Loop Capital. Your line is now open.
Speaker #3: open. Hey, yeah, thanks guys.
Speaker #4: Good afternoon. Thanks for taking the question, and yeah, congrats on the solid results here relative to the guide. I want to just ask about margins.
Ananda Baruah: Charles, that's great context. Really appreciate it. Actually, Charles, one of my two clarifications here is from something you said in your prepared remarks. You said higher net margin. So I guess you just clarified you expect gross margin to go up. Maybe this is a Charles Dave question. Dave, you mentioned OpEx leverage. The OpEx as a percentage of sales was really attractive this quarter. It's like 1.5%, I guess less than 2%. But should we expect? I think it's the second quarter in a row you drove OpEx leverage last quarter, this September quarter for the first time in a while. But now you have this really attractive, the most attractive OpEx as a percentage of revenue in a while.
Ananda Baruah: Charles, that's great context. Really appreciate it. Actually, Charles, one of my two clarifications here is from something you said in your prepared remarks. You said higher net margin. So I guess you just clarified you expect gross margin to go up. Maybe this is a Charles Dave question. Dave, you mentioned OpEx leverage. The OpEx as a percentage of sales was really attractive this quarter. It's like 1.5%, I guess less than 2%. But should we expect? I think it's the second quarter in a row you drove OpEx leverage last quarter, this September quarter for the first time in a while. But now you have this really attractive, the most attractive OpEx as a percentage of revenue in a while.
Speaker #4: And I have a few vague questions I want to ask you here, but they're all margin related. I guess the first is with regards to, you mentioned I think 90 days ago that December quarter you expected to be the sort of the low watermark quarter in gross margins.
Speaker #4: And your guidance for Q-over-Q improvement for the March quarter—do you still think that things progress expansively from here? Charles, you made some comments around customer mix; it's been a headwind. Do you think it continues to improve?
Should we expect? I think it's the second quarter in a row. You you, you you drove off X leverage last quarter. Just uh, September quarter for the first time in a while, but now you have this really attractive, uh, the most attractive Opex is presented to revenue in a while. So are you is the company entering a period of not only gross margin expansion but Opex dollar leverage as well. Structurally and and that's it from me guys. Thanks.
Speaker #4: And I have two quick follow-ups, Dave, just margin related after that. Thanks.
Ananda Baruah: So are you, is the company entering a period of not only gross margin expansion, but OpEx dollar leverage as well, structurally? And that's it for me, guys. Thanks.
Ananda Baruah: So are you, is the company entering a period of not only gross margin expansion, but OpEx dollar leverage as well, structurally? And that's it for me, guys. Thanks.
Speaker #5: Yeah, thank you for the question. Yes, the customer mix we improving quarter after quarter. have many Now we more large scale customer I would like to say.
Speaker #5: So that way improve our profitability. The other factor is last quarter I mean December quarter GP3 entry was a little bit new to us.
Yes, exactly. I mean economical scale, we have us to improve uh, uh, the cost our cost, right? So that will impact our gross margin and especially operation margin and, uh, again, uh, tcps for issue for Michael, for more business, in service in, uh, uh, South aware, uh, in, uh, overall infrastructure. Uh,
Charles Liang: Yes, exactly. I mean, economies of scale will help us to improve the cost, our cost, right? So that will impact our gross margin and especially our operating margin. And again, DCBBS, Supermicro for more business in service, in software, in overall infrastructure service to customer. So all those factors are positive to our margin improvement.
Charles Liang: Yes, exactly. I mean, economies of scale will help us to improve the cost, our cost, right? So that will impact our gross margin and especially our operating margin. And again, DCBBS, Supermicro for more business in service, in software, in overall infrastructure service to customer. So all those factors are positive to our margin improvement.
Service to customer so. Oh, those factors are positive to our uh, margin Improvement.
Speaker #5: So, lots of expedite transportation cost, and now—I mean, the product is getting mature, so those expedite transportation costs will be tremendously reduced. And Tally for impact also improving.
Very helpful contact. Thank you guys. Really appreciate it.
Thank you. Thank you for your question. Next question is from the line of Sonic chattery with JP Morgan. You'll have to open.
Speaker #5: And so overall especially a DCPPS also increasing for our net for our gross margin. So I believe our gross margin will start to improve quarter after
Ananda Baruah: Very helpful context. Thank you, guys. Really appreciate it.
Ananda Baruah: Very helpful context. Thank you, guys. Really appreciate it.
Charles Liang: Thank you.
Charles Liang: Thank you.
Operator: Thank you for your question. Next question is from the line of Samik Chatterjee with J.P. Morgan. Your line is now open.
Operator: Thank you for your question. Next question is from the line of Samik Chatterjee with J.P. Morgan. Your line is now open.
Speaker #5: quarter. Charles, that's great context.
Speaker #4: Really appreciate it. And actually, Charles, one of my two clarifications here is from something you said in your prepared remarks. You said higher net margin and so I guess you just clarified you expect gross margin to go Charles-Dave question.
Hi. This is mp on behalf of Forex strategy. Uh I just wanted to double click on your full year guidance. You said 40 billion for FY 26 if I back into the implied 4 q number that implies significant quarter over quarter. Moderation. So is that just conservatism uh being embedded into the full year outlook or like do you see definite indications from your audience, that 4q will imply sequential moderation? And I have a follow up as well.
Samik Chatterjee: Hi, for taking question. This is MP on behalf of Samik Chatterjee. I just wanted to double click on your full year guidance. You said $40 billion for FY 2026. If I back into the implied Q4 number, that implies significant quarter-over-quarter moderation. So is that just conservatism being embedded into the full year outlook? Or, like, do you see definite indications from your order trends that Q4 will imply sequential moderation? And I have a follow-up as well.
Samik Chatterjee: Hi, for taking question. This is MP on behalf of Samik Chatterjee. I just wanted to double click on your full year guidance. You said $40 billion for FY 2026. If I back into the implied Q4 number, that implies significant quarter-over-quarter moderation. So is that just conservatism being embedded into the full year outlook? Or, like, do you see definite indications from your order trends that Q4 will imply sequential moderation? And I have a follow-up as well.
Speaker #4: Dave, you mentioned OpEx leverage. The OpEx is a percentage of sales. Was really attractive this quarter. It's like one and a half percent I guess less than 2%.
Speaker #4: But should we expect I think it's the second quarter in a row you drove OpEx leverage last quarter September quarter for the first time in a while and now you have this really attractive the most attractive OpEx percentage of revenue in a while.
Charles Liang: Yeah, I believe we say minimum $40 billion is a relatively conservative number. So, our business indeed will continue to grow, especially our DCBBS that attract a lot of customers who want to build a data center quicker, less power consumption, less cost, I mean, data cost, and also more reliable and easy for management. So we are getting more and more customer come to us.
Charles Liang: Yeah, I believe we say minimum $40 billion is a relatively conservative number. So, our business indeed will continue to grow, especially our DCBBS that attract a lot of customers who want to build a data center quicker, less power consumption, less cost, I mean, data cost, and also more reliable and easy for management. So we are getting more and more customer come to us.
Yeah, I believe, uh, we say minimum 40 period is relatively conservative number. So, our vision is, uh, interior work, especially our PC PPS. That attract, lots of customer who want to build a data center quicker. Uh, that's power consumption, uh, that's Coast. Uh, I mean data coast and uh, also, uh, more reliable and easy for management. So we are getting more and more, uh, customer come to us
Speaker #4: So, are you—is the company entering a period of not only gross margin expansion but OpEx dollar leverage as well, structurally? And that's it for me, guys.
Speaker #4: thanks. Yes, exactly.
Speaker #5: I mean, economical scale will help us to improve our cost, right? So that will impact our gross margin, and especially our operating margin.
Thank you and for my follow-up. I wanted to ask about dcbs you highlighted. Uh it being 4% of profits in first half, can you please uh help us understand like the contribution in terms of revenues and then you also said it will increase to double digit contribution by end of calendar year. So how does that uh translate to overall? Gross margin trajectory. Thank you.
Samik Chatterjee: Thank you. And for my follow-up, I wanted to ask about DCBBS. You highlighted, it being 4% of profits in first half. Can you please, help us understand, like, the contribution in terms of revenues? And then you also said it will increase to double-digit contribution by end of calendar year. So how does that, translate to overall gross margin trajectory? Thank you.
Samik Chatterjee: Thank you. And for my follow-up, I wanted to ask about DCBBS. You highlighted, it being 4% of profits in first half. Can you please, help us understand, like, the contribution in terms of revenues? And then you also said it will increase to double-digit contribution by end of calendar year. So how does that, translate to overall gross margin trajectory? Thank you.
Speaker #5: And again, DCPPS brings Super Micro for more business in service in software in overall infrastructure service to customer. So all those factors are positive to our margin
Yeah, thank you. I mean as you know TCP PS is still a new product to us. Uh we offer incentives that for the about 6 months ago. So uh now first 2 quarter, I mean uh September quarter plus December quarter. Indeed is our first 2 quarter. So ra that you wish more but because of the coffee is much better. So overall is a contributor about 4% to our uh,
Charles Liang: Yeah, thank you. I mean, as you know, DCBBS is still a new product line to us. We officially introduced that product about six months ago. So, in the first two quarters, I mean, September quarter plus December quarter, indeed, is our first two quarters. So the revenue is still relatively small, but because the profit is much better, so overall it contributed about 4% to our overall profit in last six months. And looking forward, it will continue to grow very quickly. So we are very happy to see more and more customers like DCBBS to speed up their data center build out with easier for management, easier for maintenance, and our profit will continue to grow because of DCBBS especially.
Charles Liang: Yeah, thank you. I mean, as you know, DCBBS is still a new product line to us. We officially introduced that product about six months ago. So, in the first two quarters, I mean, September quarter plus December quarter, indeed, is our first two quarters. So the revenue is still relatively small, but because the profit is much better, so overall it contributed about 4% to our overall profit in last six months. And looking forward, it will continue to grow very quickly. So we are very happy to see more and more customers like DCBBS to speed up their data center build out with easier for management, easier for maintenance, and our profit will continue to grow because of DCBBS especially.
Speaker #5: improvement. Very helpful
Speaker #4: context. Thank you guys. Really appreciate it.
Speaker #5: you.
Speaker #3: Thank you for your question. Next question is from the line of Sonic Chattergee with JP Morgan. You'll have now Thank open.
Speaker #6: Hi. This is MP on behalf of Sonic Chattergee. I just wanted to double click on your full year guidance. You said 40 billion dollars for FY26.
Overall profit, uh, in last 6 months and looking for, well, it will continue on the grow very quickly. So we are very happy to see, uh, uh, more and more customer like tcps to speed up their data center. The View out, uh, with uh, EDR for management easier for maintenance and, uh, our power work because of BCP PSI, especially
Speaker #6: If I back into the implied 4Q number that implies significant quarter over quarter moderation. So is that just conservatism being embedded into the full year outlook or do you see definite indications from your order trends that 4Q will imply sequential moderation?
Thank you.
Thank you for your question. Thank you. Next question, is from the line of AA Merchants with City. Your line is now open.
Speaker #6: And I have a follow-up as well.
Speaker #5: Yeah, I believe we say minimum $40 billion is a relatively conservative number. So our business indeed will continue to grow, especially our DCPPS that attract lots of customers who want to build a data center quicker, less power cost—I mean, better cost.
Samik Chatterjee: Thank you.
Samik Chatterjee: Thank you.
Operator: Thank you for your question.
Operator: Thank you for your question.
Samik Chatterjee: Thank you.
Samik Chatterjee: Thank you.
Operator: Next question is from the line of Asiya Merchant with Citi. Your line is now open.
Operator: Next question is from the line of Asiya Merchant with Citi. Your line is now open.
Asiya Merchant: Great, thank you for taking my question, and good results here relative to the guide. I just had two quick ones. One, just, you know, there's a lot of discussion about component availability, supply constraints. If you could just talk to us about your guide and relative to that, you know, is that minimum $40 billion guide, you know, a constraining number, given the supply constraints? In other words, if supply wasn't an issue, could that number be greater? And then just on customer concentration, you know, I think the commentary suggested that some of the geos did decline on a year-on-year basis, as well as on a quarter-on-quarter basis. So again, relative to the guide, how should we think about the ramp of DC PBS across those various geographies for the back half of this fiscal year and into through calendar 2026?
Asiya Merchant: Great, thank you for taking my question, and good results here relative to the guide. I just had two quick ones. One, just, you know, there's a lot of discussion about component availability, supply constraints. If you could just talk to us about your guide and relative to that, you know, is that minimum $40 billion guide, you know, a constraining number, given the supply constraints? In other words, if supply wasn't an issue, could that number be greater? And then just on customer concentration, you know, I think the commentary suggested that some of the geos did decline on a year-on-year basis, as well as on a quarter-on-quarter basis. So again, relative to the guide, how should we think about the ramp of DC PBS across those various geographies for the back half of this fiscal year and into through calendar 2026?
Speaker #5: consumption less And also more reliable and easy for management. So we are getting more and more customers come to us.
Great. Thank you for taking my question and, uh, good results. See your relative to the guide. Um, I just had 2 quick ones, 1 just, you know, there's a lot of discussion about component availability Supply constraints, if you could just talk to us about your guide and relative to that, you know, is that minimum 40 billion guide, you know, a constraining number given the supply constraints. Um, in other words, if Supply was in an issue could that number be greater and then just on customer concentration, you know, I think the commentary suggested that some of the GEOS, um, did decline on a year-over-year basis, as well as on a quarter on quarter basis. So again, relative to the guy, how should we think about the ramp of dcbs?
Speaker #6: Thank you. And for my follow-up, I wanted to ask about DCPPS. You highlighted it being 4% of profits and first half. Can you please help us understand the contribution in terms of revenues?
Across those various geographies for the back half of this fiscal year.
Yeah, thank you.
Speaker #6: And then you also said it will increase to double-digit contribution by the end of the calendar year. So, how does that translate to the overall gross margin trajectory?
Yeah you are right. We already considered uh uh components price keeping growing so which day that's why we tried to be conservative.
Speaker #6: Thank
Speaker #6: you.
Speaker #5: Yeah, thank you. I mean, as you—
Speaker #5: DCPPS is still a new product line to us. We officially introduced that product about six months ago. So the first two quarters—I mean September quarter plus December quarter—indeed is our first two quarters.
Charles Liang: Yeah.
Charles Liang: Yeah.
Asiya Merchant: Thank you.
Asiya Merchant: Thank you.
Charles Liang: Yeah, you are right. We already considered component prices keeping growing. So with that, that's why we try to be conservative, kind of commit to $40 billion. Even the cost, even the shortage situation improve quickly, for sure, our revenue will be more than that. And as to DCBBS, it's globally, almost every region, customer like DCBBS, because it helps them easier to build a data center. It's kind of like a one-stop show, one-stop shop. We provide not just computing, no, I mean storage node, switching node, and liquid cooling subsystem, including battery cell, including some energy backup. So it kind of make customers job to build a data center much easier. So the impact is global.
Charles Liang: Yeah, you are right. We already considered component prices keeping growing. So with that, that's why we try to be conservative, kind of commit to $40 billion. Even the cost, even the shortage situation improve quickly, for sure, our revenue will be more than that. And as to DCBBS, it's globally, almost every region, customer like DCBBS, because it helps them easier to build a data center. It's kind of like a one-stop show, one-stop shop. We provide not just computing, no, I mean storage node, switching node, and liquid cooling subsystem, including battery cell, including some energy backup. So it kind of make customers job to build a data center much easier. So the impact is global.
Speaker #5: So the revenue still relatively small but because of the profit is much better. So overall it contributes about 4% to our overall profit in last six will continue to grow very quickly.
Speaker #5: So the revenue still relatively small but because of the profit is much better. So overall it contributes about 4% to our overall profit in last six will continue to grow very quickly. months.
Speaker #5: So And looking forward it we are very happy to see more and more customers like DCPPS to speed up their data center build out.
Speaker #5: With easier management, easier maintenance, and our profit will continue to grow because of DCPPS especially.
Uh, kind of commit to 40 billion. Uh, it would a cost, uh, it would a shortage situation improve quickly. For sure, our Revenue will be more than that and, uh, as to DCPS is a globally, uh, almost every region customer, like a TCP is because, uh, it helped them easier to build a data center. It's kind of like a 1-stop show, uh, 1 Stop Shop. Uh, we provide the 90 years Computing know. I mean, um, storage now, switch to know and, uh, uh, Nick cooling, uh, subsystem including, uh, uh, battery cell, including a, uh, some energy back up. So it's kind of make customers, uh, job to build a data center, much easier. So, the impact is global, uh, we see a, uh, Global wide more and more customer like our DCPS solution and
We are aggressively preparing, uh, to grow the support.
Speaker #6: Thank you.
Speaker #3: Thank you for your question. Next.
Speaker #5: Thank you.
Speaker #3: question is from the line of Asiya Merchant with City. Your line is now
Thank you.
Speaker #3: open. Great.
Speaker #7: Thank you for taking my question and good results here relative to the guide. I just had two quick ones. One just there's a lot of discussion about component availability supply constraints.
Thank you for your question. Next question is from the line of Katherine Murphy with gold, Miss action on that open.
Charles Liang: We see, worldwide, more and more customers like our DCBBS solution, and we are aggressively preparing to grow the support.
Charles Liang: We see, worldwide, more and more customers like our DCBBS solution, and we are aggressively preparing to grow the support.
Speaker #7: If you could just talk to us about your guide, and relative to that, is the minimum $40 billion guide a constraining number given the supply constraints?
Speaker #7: In other words, if supply wasn't an issue, could that number be greater? And then, just on customer commentary, it was suggested that some of the GOs did decline on a quarter-on-quarter basis.
Ruplu Bhattacharya: Thank you.
Ruplu Bhattacharya: Thank you.
Operator: Thank you for your question. The next question is from the line of Katherine Murphy with Goldman Sachs. Your line is now open.
Operator: Thank you for your question. The next question is from the line of Katherine Murphy with Goldman Sachs. Your line is now open.
Thank you very much. Um, to ask another question, on the, the new DC BBS disclosure, um, encouraging to hear that growing to double digits. Sheriff profit, by the end of calendar, 26, can you talk about the Investments that you need to make here to expand the the capabilities? I know, Charles you mentioned some and the prepared remarks, as well as your your go. To market offering to have this increased penetration of dcbs and then I have a quick follow-up as well.
Katherine Murphy: Thank you very much. To ask another question on the new DCBBS disclosure, encouraging to hear that growing to double-digit share of profit by the end of calendar 2026. Can you talk about the investments that you need to make here to expand the capabilities? I know, Charles, you mentioned some in the prepared remarks, as well as your go-to-market offering to have this increased penetration of DCBBS. And then I have a quick follow-up as well.
Katherine Murphy: Thank you very much. To ask another question on the new DCBBS disclosure, encouraging to hear that growing to double-digit share of profit by the end of calendar 2026. Can you talk about the investments that you need to make here to expand the capabilities? I know, Charles, you mentioned some in the prepared remarks, as well as your go-to-market offering to have this increased penetration of DCBBS. And then I have a quick follow-up as well.
Charles Liang: Yeah, we indeed, we start to develop our DCBBS pretty much about 12 months ago. So we already are consistently investing in that area. And so far, we have about 10 items, including a CDU, including a Triode, including a power shelf, battery backup, water tower, right, management software. So we have about 10 items available now, and we will introduce another 3 to 5 items in next few months or next few quarters. So, the data center building block solution will be getting more complete, and that's why it will be easier for customer to build a data center. It's not just easier, quicker to build a data center, but also, make their data center modularized. So it's easier for management, easier for maintenance, and easier for scale out.
Charles Liang: Yeah, we indeed, we start to develop our DCBBS pretty much about 12 months ago. So we already are consistently investing in that area. And so far, we have about 10 items, including a CDU, including a Triode, including a power shelf, battery backup, water tower, right, management software. So we have about 10 items available now, and we will introduce another 3 to 5 items in next few months or next few quarters. So, the data center building block solution will be getting more complete, and that's why it will be easier for customer to build a data center. It's not just easier, quicker to build a data center, but also, make their data center modularized. So it's easier for management, easier for maintenance, and easier for scale out.
Yeah, we indeed that we start to develop our dcpp as a pretty much about 12 months ago. So we already, uh, consistently, uh, invested in that area and so far, we have about 10 item, uh, including the CDU, including a chiota or, including a power shift, battery backup, uh, water tower. Right? Uh, management solo. Yeah. So we have about 10 item available now and we will introduce another, uh, 3 to 5 items in the next few months or next few quarters. So, uh, the data center building block solution will be get
In more complete and that's why the web easier uh, for customer to build a data center. It's not just easier quicker to build their data center but also make their data center, uh, marginalized. So it's easier for management easier for maintenance and easier for scale up.
Great, thank you very much and just on the the margin profile of DC BBS? Could you remind us what you said in the past about what that looks like relative to the sales that you typically have towards your large nio cloud and GPU as a service customers?
Oh, is it much for sure, gross margin and margin are much higher for DCPS because uh it's so unique and uh, again, we are the first to the company. Uh,
Katherine Murphy: Great. Thank you very much. Just on the margin profile of DCBBS, could you remind us what you said in the past about what that looks like relative to the sales that you typically have towards your large NeoCloud and GPU as a service customers?
Katherine Murphy: Great. Thank you very much. Just on the margin profile of DCBBS, could you remind us what you said in the past about what that looks like relative to the sales that you typically have towards your large NeoCloud and GPU as a service customers?
Charles Liang: Oh, it's much for sure, gross margin, net margin are much higher for DCBBS because, it's so unique. And, again, we are the first company, build, pre-designed, pre-validated, pre-optimized, data center, solution for customer. So the margin is much better, for sure, more than, more than 20%. And, we, we are happy to, make the product line really strong, really complete as soon as possible.
Charles Liang: Oh, it's much for sure, gross margin, net margin are much higher for DCBBS because, it's so unique. And, again, we are the first company, build, pre-designed, pre-validated, pre-optimized, data center, solution for customer. So the margin is much better, for sure, more than, more than 20%. And, we, we are happy to, make the product line really strong, really complete as soon as possible.
View that uh uh pretty design, pretty, valid date, uh, pretty optimized, uh, data center, uh, solution for customer. So the margin is much better but you are more than more than 10%. And, uh, we we are happy to uh, uh, make the product line, really strong, really complete as soon as possible.
Thank you very much.
Thank you.
Thank you for your question. Next question is from the line of roof lottario with Bank of America. Your line is not open.
Katherine Murphy: Thank you very much.
Katherine Murphy: Thank you very much.
Charles Liang: Thank you.
Charles Liang: Thank you.
Operator: Thank you for your question. The next question is from the line of Ruplu Bhattacharya with Bank of America. Your line is now open.
Operator: Thank you for your question. The next question is from the line of Ruplu Bhattacharya with Bank of America. Your line is now open.
Hi. Thanks for taking my questions. Uh, for the first 1, Alaska, follow up on margins David, you mentioned, expedite cost, uh, component cost increases shortages, and I think last quarter, you talked about increased investments in engineering support and services to help new customers. Can you help us size? All of these things? How much did they impact? Gross margins in the December quarter? And what's baked into guidance as impact on these things in in the March quarter? And I have a follow-up?
Ruplu Bhattacharya: Hi, thanks for taking my questions. For the first one, I'll ask a follow-up on margins. David, you mentioned expedite costs, component cost increases, shortages, and I think last quarter you talked about increased investment in engineering, support and services to help new customers. Can you help us size all of these things? How much did they impact gross margins in the December quarter, and what's baked into the guidance as impact from these things in the March quarter? And I have a follow-up.
Ruplu Bhattacharya: Hi, thanks for taking my questions. For the first one, I'll ask a follow-up on margins. David, you mentioned expedite costs, component cost increases, shortages, and I think last quarter you talked about increased investment in engineering, support and services to help new customers. Can you help us size all of these things? How much did they impact gross margins in the December quarter, and what's baked into the guidance as impact from these things in the March quarter? And I have a follow-up.
David Weigand: Yeah. We don't break those things out, Ruplu, but we can just say that the costs were, you know, up in each of those areas. So in other words, you know, higher, higher transportation and expedite in order to move things around and get things delivered to the customer faster. But we have - I can tell you that over, you know, the past year, we've had, you know, increases as we have, you know, ramped up the new technologies and prepared for, you know, mass shipments.
David Weigand: Yeah. We don't break those things out, Ruplu, but we can just say that the costs were, you know, up in each of those areas. So in other words, you know, higher, higher transportation and expedite in order to move things around and get things delivered to the customer faster. But we have - I can tell you that over, you know, the past year, we've had, you know, increases as we have, you know, ramped up the new technologies and prepared for, you know, mass shipments.
Areas. So, in other words, you know, higher higher transportation and, and expedite in order to move things around and get things delivered to the customer faster. Um, but we have, I can tell you that over, you know, the past year we've had, um, you know, increases. Um, as we have, you know, ramped up the new technologies and and prepared for, you know, mesh shipments.
Ruplu Bhattacharya: Okay. As a follow-up, can I ask? I think it's Charles talked about component shortages, and you're being a little conservative on the guide. Are component shortages, like, which areas are they in? And then component cost increases, are they actually impacting data center demand, either on the AI side or on the regular non-GPU server side? Are component cost increases a real factor? And if I can sneak one more in, this DCBBS product that you have, can we infer anything about the type of customers who are buying that? Like, if you're thinking that you're gonna sell more, it's gonna be more, a bigger percent of your sales. Does that mean that the customer mix is also changing?
Ruplu Bhattacharya: Okay. As a follow-up, can I ask? I think it's Charles talked about component shortages, and you're being a little conservative on the guide. Are component shortages, like, which areas are they in? And then component cost increases, are they actually impacting data center demand, either on the AI side or on the regular non-GPU server side? Are component cost increases a real factor? And if I can sneak one more in, this DCBBS product that you have, can we infer anything about the type of customers who are buying that? Like, if you're thinking that you're gonna sell more, it's gonna be more, a bigger percent of your sales. Does that mean that the customer mix is also changing?
Okay, as a follow-up, can I ask? Uh, I think you, uh, Charles talked about component shortages and you're being a little conservative on the guy, our component shortages, like, which areas are they in? And then component cost increases are they actually impacting data center demand, either on the AI side or on the, on the regular, uh, non GPU server side. Our component cost increases the real factor. And, and, uh, if I can think 1 more in this DC bvs, uh, the product that you have, can we infer anything about the type of customers who are buying that? Like, if you're thinking that you're going to sell more is going to be more a bigger percent of your sales. Does that mean that the customer mixes also changing do innovate customers use more of these or what type of customers uh likes to use more of the DC BBS, uh, packaged Solutions? Thanks for taking my question.
Yeah, thank you for your question, indeed. Uh, uh,
Key components shortage. This time is main main reason because uh, uh,
Ruplu Bhattacharya: Do innovative customers use more of these, or what type of customer likes to use more of the DCBBS packaged solutions? Thanks for taking my question.
Ruplu Bhattacharya: Do innovative customers use more of these, or what type of customer likes to use more of the DCBBS packaged solutions? Thanks for taking my question.
Ai and the large scale Center, demand are growing. So the short is because the
Charles Liang: Yeah, thank you for your question. Indeed, the key components shortage this time is the main, the main reason, because the AI and the large data center demand are growing. So the shortage, because the demand is getting so strong, not because of production capacity is reduced. So that is a good sign. So basically, it's because the industry are growing, and we are part of the major growing company. So that's why I believe the impact to us, yes, the cost will be impact, but won't hurt us too much. That's for the question. And second, I mean DCBBS, who need the DCBBS? I would like to say all the people like to build a data center, doesn't matter they are large scale, medium-sized scale, or small scale.
Charles Liang: Yeah, thank you for your question. Indeed, the key components shortage this time is the main, the main reason, because the AI and the large data center demand are growing. So the shortage, because the demand is getting so strong, not because of production capacity is reduced. So that is a good sign. So basically, it's because the industry are growing, and we are part of the major growing company. So that's why I believe the impact to us, yes, the cost will be impact, but won't hurt us too much. That's for the question. And second, I mean DCBBS, who need the DCBBS? I would like to say all the people like to build a data center, doesn't matter they are large scale, medium-sized scale, or small scale.
Demand, uh, is getting so strong. Not because of production capacity is reduced, so that's a good sign. So, basically it's, uh, because the industry are growing and, uh, we are part of the major growing company. So that's why I believe, uh, the impact to us.
Yes, the cost will be impact but uh, won't hurt us too much.
That for this question.
Charles Liang: Because, our DCBBS is just simply to provide more choice for customer to go for, one-stop shop or buy everything from, everywhere by themselves. And obviously, one-stop shops save their time, make sure when they put the things together, it work. And, quickly, when they put the things together, it work and optimize. That's why it's optimized, time, not just time to delivery, but time to online. Customer use our DCBBS, their data center can go for online, go for operation quickly. So, I would like to say global, people need a DCBBS kind of, building block solution.
Charles Liang: Because, our DCBBS is just simply to provide more choice for customer to go for, one-stop shop or buy everything from, everywhere by themselves. And obviously, one-stop shops save their time, make sure when they put the things together, it work. And, quickly, when they put the things together, it work and optimize. That's why it's optimized, time, not just time to delivery, but time to online. Customer use our DCBBS, their data center can go for online, go for operation quickly. So, I would like to say global, people need a DCBBS kind of, building block solution.
And second, I mean DCPS who need the tcps. I would like to say all the people, like to view the data center that matter, they are large scale or size scale, or small scale because uh, our dcpp is just simply to provide more choice for customer to go for, uh, 1 Stop Shop or buy a vision for my Everywhere by themselves. And obviously, uh, 1 Stop Shop, save their time. Make sure when they put the things together, it work and, uh, quickly when they put the things together, it, work and optimize, that's why it's optimized. The the time 9 years of time to delivery but time to
9 customer user DCPS near data center can go for online go for operation quickly.
So, uh, I would like to say a global people need a ccpp as a kind of uh uh, building block solution.
Okay, thank you for the details.
Thank you.
Thank you for your question.
Next question is from the line of nihal chokshi with Northland, your line is now open.
Yeah, thank you. Congratulations. Um,
a little bit of a different question here. So, look, super microbot brought DLC to the market 1, generation faster than when it became part of Nvidia reference architecture.
Ruplu Bhattacharya: Okay, thanks for the details.
Ruplu Bhattacharya: Okay, thanks for the details.
Charles Liang: Thank you.
Charles Liang: Thank you.
Now, parents of Supermarket was brought to the market 1 generation, faster, dry, cooling towers.
Operator: Thank you for your question. Next question is from the line of Nehal Chokshi with Northland. Your line is now open.
Operator: Thank you for your question. Next question is from the line of Nehal Chokshi with Northland. Your line is now open.
Nehal Chokshi: Yeah, thank you. Congrats on the strong results and guidance. A little bit of different question here. So look, Supermicro brought DLC to the market one generation faster than when it became part of NVIDIA reference architecture. Now, apparently, Supermicro has brought to the market one generation faster dry cooling towers, which is related to higher inlet temperatures as part of Rubin reference design. My question is that, do you expect Supermicro to continue to bring to the market one generation faster the power efficiency advantages before NVIDIA makes it part of their reference architecture? Is this gonna be part of Supermicro's branding?
Nehal Chokshi: Yeah, thank you. Congrats on the strong results and guidance. A little bit of different question here. So look, Supermicro brought DLC to the market one generation faster than when it became part of NVIDIA reference architecture. Now, apparently, Supermicro has brought to the market one generation faster dry cooling towers, which is related to higher inlet temperatures as part of Rubin reference design. My question is that, do you expect Supermicro to continue to bring to the market one generation faster the power efficiency advantages before NVIDIA makes it part of their reference architecture? Is this gonna be part of Supermicro's branding?
Uh which is related to the higher Inlet temperatures as part of Ruben reference to time. My question is that do you expect super micro to continue to bring to the market 1, generation faster, the power efficiency advantages before Nvidia makes it part of their reference architecture. Is this going to be part of super micros branding?
Charles Liang: Yeah, as you know, NVIDIA are a very strong company, and we work with them very closely. And, however, because our strong engineering background, our big engineering team, so before we are able to make our total solution 1 generation or 6 months earlier than others. Now, and in the future, I believe we'll be still able to bring a total solution to market earlier than others, especially help customer build a data center, build their cloud, AI cloud, time to online quicker than others. If not, 6 months earlier, at least 3 months or 4 months earlier. And that's still a big help. So I, I'm very confident that our future growth should be still very strong.
Charles Liang: Yeah, as you know, NVIDIA are a very strong company, and we work with them very closely. And, however, because our strong engineering background, our big engineering team, so before we are able to make our total solution 1 generation or 6 months earlier than others. Now, and in the future, I believe we'll be still able to bring a total solution to market earlier than others, especially help customer build a data center, build their cloud, AI cloud, time to online quicker than others. If not, 6 months earlier, at least 3 months or 4 months earlier. And that's still a big help. So I, I'm very confident that our future growth should be still very strong.
Operator: Thank you for standing by. My name is Matt, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc. Q2 fiscal year 2026 financial results 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. All lines will be muted during the presentation portion of the call, an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. Over to you, Michael.
It's great. And then for my follow-up, question, your 10% customer? Um,
Was that the primary driver of The Upside that you saw in the quarter? Do you expect them to remain a 10 plus percent customer in the March quarter? How should they trajekt? And then you also did sign Data Vault, uh, a pretty big contract with data Volta 6 or 9 months ago, is that starting to ramp in as well?
Nehal Chokshi: Great. And then for my follow-up question, your 10% customer, was that the primary driver of the upside that you saw in the quarter? Do you expect them to remain a 10+% customer in the March quarter, or how should they traject? And then you also did sign DataVolt, a pretty big contract with DataVolt, 6 or 9 months ago. Is that starting to ramp in as well?
Nehal Chokshi: Great. And then for my follow-up question, your 10% customer, was that the primary driver of the upside that you saw in the quarter? Do you expect them to remain a 10+% customer in the March quarter, or how should they traject? And then you also did sign DataVolt, a pretty big contract with DataVolt, 6 or 9 months ago. Is that starting to ramp in as well?
Michael Staiger: Thank you. Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the second quarter and full year fiscal 2026, which ended December 31, 2025. With me today, as you know, is Charles Liang, founder, chairman, 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 IR section of the company's website under Events and Presentations tab. We've also published management's scripted commentary on our website.
Uh basically because our foundation uh is getting much stronger, MP forever, especially our uh kind of total solution and data center been involved. The total solution is strong so we are getting for all day. Uh, the customer
Charles Liang: Basically, because our foundation is getting much stronger than before ever, especially our kind of total solution, like data center building block, total solution is strong. So we are gaining broadly good customer from the older territory. So more than 10% or not, I have to say, because now our revenue will grow very fast. Very soon, I hope I can say we have more than $50 or $60 billion revenue. Not today, but hopefully very soon. So more and more large customer is working with us. So that's a very exciting condition.
Charles Liang: Basically, because our foundation is getting much stronger than before ever, especially our kind of total solution, like data center building block, total solution is strong. So we are gaining broadly good customer from the older territory. So more than 10% or not, I have to say, because now our revenue will grow very fast. Very soon, I hope I can say we have more than $50 or $60 billion revenue. Not today, but hopefully very soon. So more and more large customer is working with us. So that's a very exciting condition.
Michael Staiger: Please note that some of the information you'll hear during the discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income expenses, taxes, capital allocation, and future business outlook, including guidance for the third quarter of fiscal 2026 and full fiscal year 2026. These statements and other comments are based on management's current expectations and assumptions, involve material risks and uncertainties that could cause actual results or events to be materially 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 filing, fiscal 2025, and other SEC filings. All these documents are available on the IR page of Super Micro's website. We assume no obligation to update any forward-looking statements.
From the, the order territory. So uh uh, more than 10% or not, I have to have have to say because now our Revenue will grow very fast very soon. I hope I can say we have a morning 50 or 60 billion dollars in Revenue not today but probably very soon. So, uh, more and more as a customer uh, is working with us. So that's very exciting condition.
Okay, thank you.
Thank you. Thank you for your question.
Next question is from the line of Quinn Bolton with needam and Company. You don't have to open
Nehal Chokshi: Thank you.
Nehal Chokshi: Thank you.
Charles Liang: Thank you.
Charles Liang: Thank you.
Operator: Thank you for your question. Next question is from the line of Quinn Bolton with Needham & Company. Your line is now open.
Operator: Thank you for your question. Next question is from the line of Quinn Bolton with Needham & Company. Your line is now open.
Hey, get said, let me add the congratulations on the nice Outlook. Um, I guess Charles stated you had a 63% customer in the December quarter, as you look at sort of the second half of fiscal 26. He expect Revenue to diversify, significantly, or do you think that that large customer continues to be pretty concentrated, uh, in the March, and the June quarter? And then it's got a follow up.
Michael Staiger: Most of today's presentation refers to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to accompanying presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors the means of evaluating and understanding the company's management to evaluate the company's 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 the US GAAP. In addition, a reconciliation of GAAP to non-GAAP results 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 will have a Q&A session for sell-side analysts.
Quinn Bolton: Hey, get set. Let me add the congratulations on the nice outlook. I guess Charles stated you, you had a 63% customer in the December quarter. As you look at sort of the second half of fiscal 2026, do you expect revenue to diversify significantly, or do you think that that large customer continues to be pretty concentrated, in the March and the June quarters? And then I've got a follow-up.
Quinn Bolton: Hey, get set. Let me add the congratulations on the nice outlook. I guess Charles stated you, you had a 63% customer in the December quarter. As you look at sort of the second half of fiscal 2026, do you expect revenue to diversify significantly, or do you think that that large customer continues to be pretty concentrated, in the March and the June quarters? And then I've got a follow-up.
So sometime, it's not easy to put it thick because customers sometimes shift. So, but we are very happy that now we have a, a minimum large scale customer. So, uh, the customer is more Diversified and overall Revenue. We are a little quicker and at the same time BCPS and solo are uh, grow our value. So, uh, although we are on a very healthy track now.
Charles Liang: It's sometimes not easy to predict, 'cause customers sometimes shift their schedule of pulling or pushing out. But overall, we are very happy that now we have many more large-scale customer. The customer is more diversified, and overall revenue will grow quickly. And at the same time, DCBBS and software grow our value. Overall, we are on a very healthy track now.
Charles Liang: It's sometimes not easy to predict, 'cause customers sometimes shift their schedule of pulling or pushing out. But overall, we are very happy that now we have many more large-scale customer. The customer is more diversified, and overall revenue will grow quickly. And at the same time, DCBBS and software grow our value. Overall, we are on a very healthy track now.
California understanding that. That customers can push in and pull out right now. The forecast shows increasing diversification over the next couple quarters.
Michael Staiger: Our Q3 of fiscal 2026 quiet period ends at the close, or begins at the close of business Friday, 13 March 2026. For now, I will turn the call over to you, Charles.
Charles Liang: Thank you, Michael, and thank you all for joining today's call. Super Micro delivered a strong fiscal Q2 as AI infrastructure demand continues to accelerate across every major customer segment. For the quarter, we achieved a record $12.68 billion in revenue, including $1.5 billion before the former type of account last quarter, representing 123% year-over-year growth. This strong performance reflects the sustained momentum of our AI solutions and the large-scale systems as customers build out next-generation AI factories. Super Micro has been developing some of the largest and most complex AI clusters ever built, highlighting our unmatched capability in large-scale manufacturing, on-site deployment, and integration.
Yeah, I mean that because of the growth still very fast. That's why now we are focused on more about, uh, uh, how to, uh, uh,
kind of, uh, uh maybe uh,
Quinn Bolton: Got it. So understanding that the customer has been pushing to pull out, right now, the forecast shows increasing diversification over the next couple of quarters.
Quinn Bolton: Got it. So understanding that the customer has been pushing to pull out, right now, the forecast shows increasing diversification over the next couple of quarters.
I'll let you guys see kind of a
Charles Liang: Yeah, I mean, because of the growth still very fast. That's why now we are focused on more on about how to kind of maybe what should I say? Kind of how to grab more money to grow even faster, right? So if we have more cash, for sure, we can grow even faster. But even if we do not grab more money, I guess, because a more diversified customer base and also more higher value system, more higher value totals solution, so that will help us grow business.
Charles Liang: Yeah, I mean, because of the growth still very fast. That's why now we are focused on more on about how to kind of maybe what should I say? Kind of how to grab more money to grow even faster, right? So if we have more cash, for sure, we can grow even faster. But even if we do not grab more money, I guess, because a more diversified customer base and also more higher value system, more higher value totals solution, so that will help us grow business.
Uh, how to where I have, a more money to grow even faster. Right? So if we have a more cash for sure, we can grow in move faster. But even if we, we do not whatever more money, I guess, because the amount, uh, Diversified customer base, and also more higher value system, more higher value, totals solution. So that will help us grow.
And my follow on Charleston in your preferred comments. You you mentioned the upcoming platformer, transitions to Vera Rubin and and The Helio system from AMD. I'm just wondering have you guys started to get orders for those systems for delivery in the second half? Or is it too early to start to get orders for those systems?
Quinn Bolton: Understood. And then my follow-on, Charles, in your prepared comments, you mentioned the upcoming platform transitions to Vera Rubin and the Helios system from AMD. I'm just wondering, have you guys started to get orders for those systems for delivery in the second half, or is it too early to start to get orders for those systems?
Quinn Bolton: Understood. And then my follow-on, Charles, in your prepared comments, you mentioned the upcoming platform transitions to Vera Rubin and the Helios system from AMD. I'm just wondering, have you guys started to get orders for those systems for delivery in the second half, or is it too early to start to get orders for those systems?
Charles Liang: Most notably, our data center building block solution, or DCBBS, has started to gain some key customer preference as they look for a quicker time to deployment, TTD, and quicker time to online, TTO. These pre-designed, pre-validated infrastructure building blocks not only speed up customers' data center builds, but they also save cost with better workload optimization and with minimal power and water consumption. DCBBS will significantly help us gain market share in large, medium, and small AI infrastructure deployments. With GB300, B200, B300, and MI350 platforms, we are also preparing for the upcoming NVIDIA Vera Rubin and AMD Helios solutions for the second half this year. While we continuously growing AI factory build out, customer and product mix are shifting, shift more to a large model builder who has pricing leverage, pressuring gross margin.
Charles Liang: Yes, we have a lot of highly interested customers. Some already engaged, and we hope we can deliver as soon as possible. But still, it depends on our partner. Depends on when their Vera Rubin or AMD solution will be ready. So we are working very closely with them. Once they are available, we like to deliver to customer quickly. And then, yes, today, we already have some good commitment from customer.
Charles Liang: Yes, we have a lot of highly interested customers. Some already engaged, and we hope we can deliver as soon as possible. But still, it depends on our partner. Depends on when their Vera Rubin or AMD solution will be ready. So we are working very closely with them. Once they are available, we like to deliver to customer quickly. And then, yes, today, we already have some good commitment from customer.
Uh, yes, we have a lot of, uh, highly interested. Customer some already engaged and, uh, we we hope we can deliver as soon as possible but still it depends on our partner. Uh, depends on when they uh better Ruben or uh, as solution will be ready. So we are working very closely with them. Once they are available uh we like to deliver to customer quickly and yes, today we already have some good commitment from customer.
Excellent, thank you.
Thank you.
Thank you for your question.
Next question is from the line of John Tom wining with CJs Securities you want to open.
Quinn Bolton: Excellent. Thank you.
Quinn Bolton: Excellent. Thank you.
Charles Liang: Thank you.
Charles Liang: Thank you.
Operator: Thank you for your question. Next question is from the line of Jon Tanwanteng with CJS Securities. Your line is now open.
Operator: Thank you for your question. Next question is from the line of Jon Tanwanteng with CJS Securities. Your line is now open.
Sales or is it the opposite? And the reason I asked that is because these bigger customers seem to have that pricing leveraging mentioned. Um, if you could have any callers, that would be helpful. Thank you.
Jon Tanwanteng: Hi, thank you for taking my questions, and congrats on a nice quarter and outlook there. I just wanted to ask a little bit more about the big versus smaller customer mix that you expect in the future and the pipeline that you see. Are you expecting smaller customers to become a greater percentage of sales, or is it the opposite? And the reason I ask that is because these bigger customers seem to have that pricing leverage you mentioned. If you have any color there, that would be helpful. Thank you.
Jon Tanwanteng: Hi, thank you for taking my questions, and congrats on a nice quarter and outlook there. I just wanted to ask a little bit more about the big versus smaller customer mix that you expect in the future and the pipeline that you see. Are you expecting smaller customers to become a greater percentage of sales, or is it the opposite? And the reason I ask that is because these bigger customers seem to have that pricing leverage you mentioned. If you have any color there, that would be helpful. Thank you.
Yeah, thank you for the question. Yes, we understand. We need a more customer, especially a more, uh, diverse right, customer base. Uh, Enterprise. So we are very aggressively growing, uh, uh,
Charles Liang: In Q2, especially, the expedited transportation costs, ongoing components shortage, and their volatile pricing, among which tariffs, have impacted our short-term gross margin. As such, I would like to take a moment to highlight our key strategies to address this and efficiently strengthen our long-term profitability. First and foremost, Super Micro undergoes its fourth phase of product evolution, with DCBBS as its key focus. As this data center deploys scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year 2026, DCBBS solutions accounted for 4% of our profit. We expect this part of our profit to grow and meaningfully contribute to the second half of fiscal 2026, and we see that growth accelerated to at least double this contribution by end of calendar 2026.
Charles Liang: Yes, thank you for the question. Yes, we understand we need a more customer, especially a more diversified customer base, enterprise. So we are very aggressively growing enterprise mid-size or even kind of enterprise customers well. So I mean, our customer diversify is very important direction to us now. So, I guess, we will grow both, a large customer and, lots of, kind of high number of enterprise account.
Charles Liang: Yes, thank you for the question. Yes, we understand we need a more customer, especially a more diversified customer base, enterprise. So we are very aggressively growing enterprise mid-size or even kind of enterprise customers well. So I mean, our customer diversify is very important direction to us now. So, I guess, we will grow both, a large customer and, lots of, kind of high number of enterprise account.
Uh, Enterprise, uh, uh, media size, uh, or even kind of Enterprise customers where so, I mean, uh, our customer diversify is very important direction to us now. So, uh, I guess, uh, we were a global boost, a large customer, and lots of, uh, uh, hi kind of High, um, number of, uh, Enterprise account.
Operator: Thank you for standing by. My name is Matt, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc. Q2 fiscal year 2026 financial results 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. All lines will be muted during the presentation portion of the call, an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. Over to you, Michael.
Okay. Got it and then um, just on the very Ruben question. Um, and I guess the migration to it to the 800 volt data center. I was wondering if there's any opportunity for you to drive greater differentiation. In this next cycle, upgrade compared to the past couple. Um is there anything about the whole platform and data center architecture that? Let me give you more of that opportunity compared to the last cycle of Blackwell and Hopper.
Jon Tanwanteng: Okay, got it. And then, just on the Vera Rubin question, and I guess the migration to the 800-volt data center. I was wondering if there's any opportunity for you to drive greater differentiation in this next cycle upgrade compared to the past couple. Is there anything about the whole platform and data center architecture that gives you more or less opportunity compared to the last cycle of Blackwell and Hopper?
Jon Tanwanteng: Okay, got it. And then, just on the Vera Rubin question, and I guess the migration to the 800-volt data center. I was wondering if there's any opportunity for you to drive greater differentiation in this next cycle upgrade compared to the past couple. Is there anything about the whole platform and data center architecture that gives you more or less opportunity compared to the last cycle of Blackwell and Hopper?
Yeah, I mean, and that's why I say, Nvidia provider, very good solution. And based on that, we optimize that, uh, the whole Data Center building power solution, for our customer and aim to help them with the data center quicker, and more reliable, easy for management. And the lower cost, including energy consumption, including
Energy backup. And uh,
Charles Liang: Yeah, I mean, that's why I say NVIDIA provide a very good solution. And based on that, we optimize the whole data center building block solution for our customer, and aim to help them build a data center quicker and more reliable, easy for management and a lower air cost, including energy consumption, including energy backup, and maybe too early to say, including energy kind of green power replacement. So we have a complete plan for the whole solution, but some other system are still too early to say too much at this moment.
Charles Liang: Yeah, I mean, that's why I say NVIDIA provide a very good solution. And based on that, we optimize the whole data center building block solution for our customer, and aim to help them build a data center quicker and more reliable, easy for management and a lower air cost, including energy consumption, including energy backup, and maybe too early to say, including energy kind of green power replacement. So we have a complete plan for the whole solution, but some other system are still too early to say too much at this moment.
Michael Staiger: Thank you. Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the second quarter and full year fiscal 2026, which ended December 31, 2025. With me today, as you know, is Charles Liang, founder, chairman, 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 IR section of the company's website under Events and Presentations tab. We've also published management's scripted commentary on our website.
Charles Liang: With compressed GPU, CPU life cycle, DCBBS become critical helpful to the value of our server and storage products by enhancing the data center infrastructure time to delivery and time to online, reducing power and water consumption, and cost efficiently simplifying data center management and maintenance. In just about one year, our DCBBS product lines grew to more than 10 key subsystems, including CDU, L2A heat exchanger, trio doors, power cells, battery backup, water tower, dry towers, high-speed switching, data center management software, and service. We are expanding this product line to include in more new categories, such as transformer, next generation power generators, device for energy backup, and grid power replacement, further strengthening customer value, accelerating deployment, and supporting long-term profit margin improvement for Super Micro.
Maybe 2 early to say, including energy, uh, uh, kind of, uh, uh, G power replacement. So we have a complete plan for the whole, uh, solution. But, uh, some other systems are still too early to say too much at this moment.
Okay, thank you very much.
Thank you.
Thank you for your question.
Next question is from the line of Malik Newman with BS open.
Hi, yes, Mark Newman. Um, thanks for taking my question. I congrats to get on great call on great Outlook. Um, just curious. Um,
Michael Staiger: Please note that some of the information you'll hear during the discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income expenses, taxes, capital allocation, and future business outlook, including guidance for the third quarter of fiscal 2026 and full fiscal year 2026. These statements and other comments are based on management's current expectations and assumptions, involve material risks and uncertainties that could cause actual results or events to be materially 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 filing, fiscal 2025, and other SEC filings. All these documents are available on the IR page of Super Micro's website. We assume no obligation to update any forward-looking statements.
Jon Tanwanteng: Okay. Thank you very much.
Jon Tanwanteng: Okay. Thank you very much.
Charles Liang: Thank you.
Charles Liang: Thank you.
Operator: Thank you for your question. Next question is from the line of Mark Newman with Bernstein. Your line is now open.
Operator: Thank you for your question. Next question is from the line of Mark Newman with Bernstein. Your line is now open.
And let's just take a step back. I mean, what's what's what's changed? You've, you've you've got um uh you know big step up here in sales um gross margins down quite a lot. Um, but you're guiding forwards for uh, solid sales to continue. So is this is this, um,
Mark Newman: Hi. Yes, Mark Newman. Thanks for taking my question, and congrats on great quarter and great outlook. Just curious, you know, just take a step back. I mean, what's changed? You've got, you know, big step up here in sales, gross margins down quite a lot, but you're guiding forward for solid sales to continue. So is this just a reflection of a tougher pricing environment and Supermicro having to react to tougher pricing environment and thus winning back more share? Or is this just catching up to, as you refer to the previous quarter, previous couple of quarters, you mentioned about a few orders getting pushed out.
Mark Newman: Hi. Yes, Mark Newman. Thanks for taking my question, and congrats on great quarter and great outlook. Just curious, you know, just take a step back. I mean, what's changed? You've got, you know, big step up here in sales, gross margins down quite a lot, but you're guiding forward for solid sales to continue. So is this just a reflection of a tougher pricing environment and Supermicro having to react to tougher pricing environment and thus winning back more share? Or is this just catching up to, as you refer to the previous quarter, previous couple of quarters, you mentioned about a few orders getting pushed out.
Michael Staiger: Most of today's presentation refers to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to accompanying presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors the means of evaluating and understanding the company's management to evaluate the company's 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 the US GAAP. In addition, a reconciliation of GAAP to non-GAAP results 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 will have a Q&A session for sell-side analysts.
Charles Liang: Other than developing DCBBS for better value and profitability, we are also sharpening our focus on traditional enterprise, cloud, and edge IoT customers to further diversify revenue with higher margin. In addition, we have introduced our X14 and Edge14, both series solutions featuring pre-configured systems that ship directly from our factory, enabling rapid deployment, optimized for specific AI, cloud storage, and telco edge workloads. These servers are ready to power on immediately, and reinforce Super Micro's core value time-to-market advantage for enterprise customers, channel partners, and SMB end users. We are also driving meaningful cost improvement through enhanced design for manufacturing, DFM, and quality-driven engineering. We have introduced more modularized subsystems and expanded automation across our facilities. These efforts increase yield rate, reduce rework, and enable us to bring new platforms to volume production even faster and with higher quality.
Just uh, uh, a reflection of uh, a tougher pricing environment and and and super micro having to react to tougher practicing environment and thus, uh, winning back more share. Um, or is this just, uh, catching up to, as you prefer to the previous quarter, previous previous previous previous, couple of quarters. You, you mentioned about, uh, a few orders being getting pushed out. So is this just catch up of the orders or is this a reflection of a of a more, um, aggressive, uh, pricing strategy and I guess importantly, for me like trying to think about forward estimates, going forwards. Um, I mean, you guided for the short term but you know, how do we think about gross margins longer term is this?
Mark Newman: So is this just catch up of the orders, or is this a reflection of a more aggressive pricing strategy? And I guess accordingly, for me, like trying to think about forward estimates going forward, I mean, you guided for the short term, but, you know, how do we think about gross margins longer term? Is this, this kind of range here to stay, or are we looking at getting back to, you know, into the low, you know, high single digit, low double-digit range, gross margin like you were before? Thanks so much.
Mark Newman: So is this just catch up of the orders, or is this a reflection of a more aggressive pricing strategy? And I guess accordingly, for me, like trying to think about forward estimates going forward, I mean, you guided for the short term, but, you know, how do we think about gross margins longer term? Is this, this kind of range here to stay, or are we looking at getting back to, you know, into the low, you know, high single digit, low double-digit range, gross margin like you were before? Thanks so much.
This kind of range, uh, here to stay. Or are we looking at getting back to? Um, you know, into the uh, low, you know, High single digit low, double digit range, gross margin, like you were before. Thanks very much.
Michael Staiger: Our Q3 of fiscal 2026 quiet period ends at the close, or begins at the close of business Friday, 13 March 2026. For now, I will turn the call over to you, Charles.
Yeah, thank you as the engineering company. You know, we for sure, have some choice. We can continue grow larger time.
Charles Liang: Thank you, Michael, and thank you all for joining today's call. Super Micro delivered a strong fiscal Q2 as AI infrastructure demand continues to accelerate across every major customer segment. For the quarter, we achieved a record $12.68 billion in revenue, including $1.5 billion before the former type of account last quarter, representing 123% year-over-year growth. This strong performance reflects the sustained momentum of our AI solutions and the large-scale systems as customers build out next-generation AI factories. Super Micro has been developing some of the largest and most complex AI clusters ever built, highlighting our unmatched capability in large-scale manufacturing, on-site deployment, and integration.
Charles Liang: Yeah, thank you. As an engineering company, you know, we for sure have some choice. We can continue to grow larger account aggressively or spend more effort to develop technology good product and to grow more enterprise account. So, we are doing both way, basically. And so the gross margin, net margin ratio, we are expecting to grow to a double digit as soon as possible. David, you may add something.
Charles Liang: Yeah, thank you. As an engineering company, you know, we for sure have some choice. We can continue to grow larger account aggressively or spend more effort to develop technology good product and to grow more enterprise account. So, we are doing both way, basically. And so the gross margin, net margin ratio, we are expecting to grow to a double digit as soon as possible. David, you may add something.
David Weigand: Sure. We think that, you know, we've established ourselves with a number of deployments that we've made as being really the premier provider of the most current technologies that are available on the market. We think with those strong installations, we have, you know, we've broadened our reach into the market. We think that, you know, we're trying to target, you know, both, as Charles mentioned, both large scale and smaller scale customers and mid-tier customers. We wanna serve, you know, all the customer bases that are out there, and that are attracted to our products with, and bring them the very best technologies. We think ultimately that drives the-
David Weigand: Sure. We think that, you know, we've established ourselves with a number of deployments that we've made as being really the premier provider of the most current technologies that are available on the market. We think with those strong installations, we have, you know, we've broadened our reach into the market. We think that, you know, we're trying to target, you know, both, as Charles mentioned, both large scale and smaller scale customers and mid-tier customers. We wanna serve, you know, all the customer bases that are out there, and that are attracted to our products with, and bring them the very best technologies. We think ultimately that drives the-
Charles Liang: As product cycle shorten and technical complexity increase, this design for manufacturing advancement are essential for scale, efficiency, and long-term margin improvement. While executing these, DFM initiatives, we are also continuous to expand our global manufacturing footprint aggressively and strategically. Our Silicon Valley facility remains the cornerstone of our US operation, delivering faster time to market, strong security, and higher quality integration. Internationally, new production site in Taiwan, Malaysia, and Netherlands, and soon the Middle East, are ramping to increase capacity, support regional solving, AI requirement, and most importantly, optimize our overall cost structure. In summary, as the only company with more than 32 years of robust server and storage focus, Super Micro is quickly evolving into a leading AI platform and data center infrastructure total solution provider.
You've got, um, uh, you know, a big step up here in sales. Um, gross margins down quite a lot. Um, but you're guiding forward for, uh, solid sales to continue. So is this, is this, um,
Charles mentioned both large-scale and uh, um, you know, smaller scale, customers and mid mid tier customers. But, uh, we want to serve, you know, all all of our, all the customer bases that are out there, uh, and that are attracted to our products with and bring them the very best Technologies.
We think ultimately that drives the margins. Yeah.
Charles Liang: Most notably, our data center building block solution, or DCBBS, has started to gain some key customer preference as they look for a quicker time to deployment, TTD, and quicker time to online, TTO. These pre-designed, pre-validated infrastructure building blocks not only speed up customers' data center builds, but they also save cost with better workload optimization and with minimal power and water consumption. DCBBS will significantly help us gain market share in large, medium, and small AI infrastructure deployments. With GB300, B200, B300, and MI350 platforms, we are also preparing for the upcoming NVIDIA Vera Rubin and AMD Helios solutions for the second half this year. While we continuously growing AI factory build out, customer and product mix are shifting, shift more to a large model builder who has pricing leverage, pressuring gross margin.
Go ahead.
Thank you for your question. Uh, we just think that's the
Next question is from the line of branding.
Charles Liang: Thank you much.
Charles Liang: Thank you much.
David Weigand: Margins. Yes.
David Weigand: Margins. Yes.
Charles Liang: Go ahead.
Charles Liang: Go ahead.
Operator: Thank you for your question.
Operator: Thank you for your question.
David Weigand: We just think that's the... Yeah.
David Weigand: We just think that's the... Yeah.
Just uh uh a reflection of uh, a tougher pricing environment and and and super micro having to react to tougher, pricing environment and thus winning back more share. Um, or is this just, uh, catching up to, as you refer to the previous quarter, previous previous, couple of quarters. You, you mentioned about, uh, a few orders in getting pushed out. So is this just catch up of the orders or is this a reflection of a of a more um, aggressive uh fighting strategy and I guess? Importantly for me like trying to think about forward estimates, going forwards. Um, I mean, you guided for the short term but you know, how do we think about gross margins longer term is this?
You guys, uh, just I think a couple of quick clarification questions, um, 1 for data data. You raised a new capital, this quarter, maybe just help us understand how you're thinking about working capital, uh, for the the rest of this year and then other income came in about 50 million dollars above your guide, really? What? Drove that. And then just 1 quick uh follow-up question. Thanks.
Operator: Next question is from the line of Brandon Nispel with KeyBanc Capital Markets. Your line is now open.
Operator: Next question is from the line of Brandon Nispel with KeyBanc Capital Markets. Your line is now open.
Brandon Nispel: Guys, just I think a couple of quick clarification questions. One for David. David, you raised some new capital this quarter. Maybe just help us understand how you're thinking about working capital, for the rest of this year. And then other income came in about $50 million above your guide. Really, what drove that? And then just one quick follow-up question. Thanks.
Brandon Nispel: Guys, just I think a couple of quick clarification questions. One for David. David, you raised some new capital this quarter. Maybe just help us understand how you're thinking about working capital, for the rest of this year. And then other income came in about $50 million above your guide. Really, what drove that? And then just one quick follow-up question. Thanks.
Is this kind of range, uh, here to stay? Or are we looking at getting back to, um, you know, into the, uh, low, you know, high single-digit, low double-digit range, like we were at before? Thanks very much.
Yeah, thank you. As the engineering company, you know, we for sure have some choice. We can continue to grow, larger, time.
Sure. Yeah, their income was just was higher uh, interest income that we had because our our cash reserves had uh, you know, had grown. And so we were earning good interest income. However, that was, uh, quickly taken up by the fact that as I, as I mentioned last quarter, we had well in excess of 13 billion of orders for for, uh, you know, for purchase orders for delivery. And so I, we immediately had to use that.
David Weigand: Sure. The other income was just, was higher, interest income that we had, 'cause our, our cash reserves had, you know, had grown, and so we were earning good interest income. However, that was quickly taken up by the fact that, as I, as I mentioned last quarter, we had, well in excess of $13 billion of orders for, for, you know, for purchase orders for delivery. And so I-- we immediately had to use that. That's why the, you know, our accounts receivable, our inventory went up. And so we took in not only, you know, two different $2 billion or, or $2 and $1.8 billion dollars credit facilities. We also set up an accounts receivable, you know, factoring. So we have access to, you know, over $5 billion of additional capital.
David Weigand: Sure. The other income was just, was higher, interest income that we had, 'cause our, our cash reserves had, you know, had grown, and so we were earning good interest income. However, that was quickly taken up by the fact that, as I, as I mentioned last quarter, we had, well in excess of $13 billion of orders for, for, you know, for purchase orders for delivery. And so I-- we immediately had to use that. That's why the, you know, our accounts receivable, our inventory went up. And so we took in not only, you know, two different $2 billion or, or $2 and $1.8 billion dollars credit facilities. We also set up an accounts receivable, you know, factoring. So we have access to, you know, over $5 billion of additional capital.
Charles Liang: Strong Q2 performance, rapid expansion of DCBBS product line, deeper and more customer engagement, and the global capacity investment position us well for long-term growth. While near-term margin pressure from customer mix, tariffs, international facility expansion, and key component shortage, like memory and storage shortage, our focus on enterprise business, design for manufacture improvement, and the faster-growing DCBBS portfolio all help us gain new customer, support higher growth, and net margin going forward. Lastly, based on our broad customer backorder, forecast, and commitment, we believe demand for AI and IT infrastructure remain unprecedentedly strong. Our DCBBS solution is exactly what customer need to build out their AI and cloud much faster, greener, and lower total cost.
Charles Liang: In Q2, especially, the expedited transportation costs, ongoing components shortage, and their volatile pricing, among which tariffs, have impacted our short-term gross margin. As such, I would like to take a moment to highlight our key strategies to address this and efficiently strengthen our long-term profitability. First and foremost, Super Micro undergoes its fourth phase of product evolution, with DCBBS as its key focus. As this data center deploys scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year 2026, DCBBS solutions accounted for 4% of our profit. We expect this part of our profit to grow and meaningfully contribute to the second half of fiscal 2026, and we see that growth accelerated to at least double this contribution by end of calendar 2026.
That's why the, you know, uh, our accounts receivable, our inventory went up and so we took in not only, uh, you know, 2 different 2 billion dollar or or 2 and 1.8 billion dollars credit facilities. We also set up an accounts receivable, uh, you know factoring. So we have access to, you know, over 5 billion of additional capital. And, you know, if if, uh, if we continue to have growth then we'll, we'll, we have access to additional, uh, capital in the marketplace. But, uh, right now we think that, uh, uh, you know, for the, for the current Outlook, we have, uh, adequate Capital to, to meet our needs.
And when I say current, I mean, you know, I appreciate the colors.
David Weigand: And, you know, if we continue to have growth, then we'll have access to additional capital in the marketplace. But right now, we think that, you know, for the current outlook, we have adequate capital to meet our needs. And when I say current, I mean, you know, coming quarters.
David Weigand: And, you know, if we continue to have growth, then we'll have access to additional capital in the marketplace. But right now, we think that, you know, for the current outlook, we have adequate capital to meet our needs. And when I say current, I mean, you know, coming quarters.
Uh, aggressively over, spend more effort to develop technology, uh, good products and to grow more Enterprise account. So, uh, we are doing both way basically. And, uh, so the gross margin net margin, which you we are, um, expecting to grow to a double digit, uh, as soon as possible. Maybe, you may have some sure, we we think that, uh, you know, we've established ourselves with a number of deployments that we've made as being really, the premier provider of the, of the most current technologies that are available on the market. And we think with those strong installations we have, um, you know, we've broadened our reach into the market. And so, we think that, uh, you know, we're we're trying to Target, you know, both as Charles mentioned both large scale and, uh, uh, you know, smaller scale, customers and mid mid mid.
Got it. Um, just on the the factoring uh the securitization facility. Did you utilize that at all, this quarter? Um, and then on the 63% customer was that a previous 10% customer.
Thanks.
To your customers, but we want to serve, you know, all—all of our, all the customer bases that are out there, uh, and that are attracted to our products, and bring them the very best technologies.
We think ultimately that drives the margins. Yes.
So to, to the first uh, question, we did not uh, use it during the December quarter.
Brandon Nispel: Appreciate the color. Got it. Just on the factoring, the securitization facility, did you utilize that at all this quarter? And then on the 63% customer, was that a previous 10% customer? Thanks.
Brandon Nispel: Appreciate the color. Got it. Just on the factoring, the securitization facility, did you utilize that at all this quarter? And then on the 63% customer, was that a previous 10% customer? Thanks.
Go ahead.
But we have subsequently to your, to your second question.
Thank you for your question. Oh, we just think that's the
Super micro has a does most of its business with repeat customers.
Charles Liang: With that in mind, I'm confident to guide at least $12.3 billion for Q3 and up our full year revenue guidance back to at least $40 billion. I look forward to sharing our progress with you next quarter. Thank you. Now I will turn it over to Dennis.
next question is from the line of branding.
Guys. Uh,
David Weigand: So to the first question, we did not use it during the December quarter, but we have subsequently. To your second question, Super Micro does most of its business with repeat customers, so I'll just leave it at that.
David Weigand: So to the first question, we did not use it during the December quarter, but we have subsequently. To your second question, Super Micro does most of its business with repeat customers, so I'll just leave it at that.
So, I'll just, I'll just leave it at that, but at the same time, we added lots of, we've added a lot of, we added a lot of new logos at the same time, that's right. Yeah. And it's because of those successful customers, okay? But
Charles Liang: With compressed GPU, CPU life cycle, DCBBS become critical helpful to the value of our server and storage products by enhancing the data center infrastructure time to delivery and time to online, reducing power and water consumption, and cost efficiently simplifying data center management and maintenance. In just about one year, our DCBBS product lines grew to more than 10 key subsystems, including CDU, L2A heat exchanger, trio doors, power cells, battery backup, water tower, dry towers, high-speed switching, data center management software, and service. We are expanding this product line to include in more new categories, such as transformer, next generation power generators, device for energy backup, and grid power replacement, further strengthening customer value, accelerating deployment, and supporting long-term profit margin improvement for Super Micro.
Okay, but we don't know if the 63% of customer is new to the 10% customer mix.
Or if it's an a previous 10%. Customer, is that right?
David Weigand: Thank you, Charles. We achieved record Q2 fiscal year 2026 revenue of $12.7 billion, up 123% year-over-year, and up 153% quarter-over-quarter, compared to our guidance of $10 billion to $11 billion. Q2 revenue included approximately $1.5 billion in delayed Q1 shipments due to customer readiness. Growth was driven this quarter by the rapid ramp and deployment of our rack scale AI solutions. Despite supply chain challenges in the industry, our global manufacturing team executed well in delivering record revenue. Order strength remains strong from global large data center and enterprise customers. AI GPU platforms, which represent over 90% of Q2 revenue, continue to be the key growth driver.
Clarification questions. Um, one for David. David, you raised some new capital this quarter. Maybe just help us understand how you're thinking about working capital for the rest of this year. And then other income came in about $50 million above your guide—really, what drove that? And then just one quick follow-up question. Thanks.
Charles Liang: But at the same time, we added lots of,
Charles Liang: But at the same time, we added lots of,
Yeah, I'll just I'll just refer you to the to the uh the 10ks and q's on that.
David Weigand: We've added a lot of-
David Weigand: We've added a lot of-
Charles Liang: Customer base.
Charles Liang: Customer base.
David Weigand: We've added a lot of new logos at the same time. That's right.
David Weigand: We've added a lot of new logos at the same time. That's right.
Okay. Thanks for taking the questions. Yeah, yeah.
Charles Liang: Yeah.
Charles Liang: Yeah.
David Weigand: It's because of those successful customers.
David Weigand: It's because of those successful customers.
Brandon Nispel: Okay, but we don't know if the 63% of customer is new to the 10% customer mix or if it's an ex-- a previous 10% customer, is that right?
Brandon Nispel: Okay, but we don't know if the 63% of customer is new to the 10% customer mix or if it's an ex-- a previous 10% customer, is that right?
David Weigand: Yeah. I'll just refer you to the 10-Ks and 10-Qs on that.
David Weigand: Yeah. I'll just refer you to the 10-Ks and 10-Qs on that.
Sure. Yeah, their income was just was higher uh, interest income that we had because our our cash reserves had uh, you know, had grown. And so we were earning good interest income. However, that was quickly taken up by the fact that, as I, as I mentioned last quarter, we had well in excess of 13 billion of orders for for, you know, for purchase orders for delivery and so I we immediately had to use that. That's why the, you know, uh our accounts receivable, our inventory went up and
Brandon Nispel: Okay. Thanks for taking the question.
Brandon Nispel: Okay. Thanks for taking the question.
David Weigand: Yeah. Yeah. Yeah, by the way, I do wanna clarify one thing in my, in my narrative, regarding the fully diluted share count. So the, the, the GAAP fully diluted share count increased sequentially from 663 to 694 million shares. So, and then the non-GAAP share count increased from 677 million to 709 million. So there was just a, noticed a, a typo on there, so please, forgive the, the, the correction.
David Weigand: Yeah. Yeah. Yeah, by the way, I do wanna clarify one thing in my, in my narrative, regarding the fully diluted share count. So the, the, the GAAP fully diluted share count increased sequentially from 663 to 694 million shares. So, and then the non-GAAP share count increased from 677 million to 709 million. So there was just a, noticed a, a typo on there, so please, forgive the, the, the correction.
Yeah, by the way, I do want to clarify 1 thing in my, uh, in my narrative, um, regarding the, uh, the fully diluted share count. So the, the the Gap fully diluted share count, increased sequentially from 663 to 694 million shares. Uh, so and then the non-gaap share counts increased from 677 million to 79 million. So, there was just a, a notice, a typo on there. So please forgive the, uh, the
Correction.
David Weigand: During Q2, the enterprise channel revenue segment totaled $2 billion, representing about 16% of revenue versus 31% in the prior quarter. That's up 42% year-over-year and up 29% quarter-over-quarter. The OEM appliance and large data center segment revenue was $10.7 billion, representing approximately eighty-four percent of Q2 revenue versus 68% in the last quarter. This was up 151% year-over-year and up 210% quarter-over-quarter. For Q2 FY 2026, one large data center customer represented approximately 63% of total revenue. By geography, the US represented 86% of Q2 revenue, Asia, 9%, Europe, 3%, and the rest of the world, 2%.
Yep. All right um thank you for joining. I just want to just inform you that we had heard. There were some technical difficulties with our webcast provider. Um a replay will be provided after the call so uh you can catch up on that. Uh thank you for joining today.
That concludes the conference call. Thank you for your participation may. Now disconnect your lines.
So we took in not only, uh, you know, two different $2 billion, or, or $2 and $1.8 billion credit facilities. We also set up an accounts receivable, uh, you know, factoring. So we have access to, you know, over $5 billion of additional capital. And, you know, if, if, uh, if we continue to have growth, then we'll, we'll, we have access to additional, uh, capital in the marketplace. But, uh, right now we think that, uh, uh, you know, for the, for the current outlook, we have, uh, adequate capital to, to meet our needs.
And when I say current, I mean I appreciate the color.
Charles Liang: Other than developing DCBBS for better value and profitability, we are also sharpening our focus on traditional enterprise, cloud, and edge IoT customers to further diversify revenue with higher margin. In addition, we have introduced our X14 and Edge14, both series solutions featuring pre-configured systems that ship directly from our factory, enabling rapid deployment, optimized for specific AI, cloud storage, and telco edge workloads. These servers are ready to power on immediately, and reinforce Super Micro's core value time-to-market advantage for enterprise customers, channel partners, and SMB end users. We are also driving meaningful cost improvement through enhanced design for manufacturing, DFM, and quality-driven engineering. We have introduced more modularized subsystems and expanded automation across our facilities. These efforts increase yield rate, reduce rework, and enable us to bring new platforms to volume production even faster and with higher quality.
Michael Staiger: All right, thank you everyone for joining. Just wanna inform you that we had heard there were some technical difficulties with our webcast provider. A replay will be provided after the call, so you can catch up on that. Thank you for joining today.
Michael Staiger: All right, thank you everyone for joining. Just wanna inform you that we had heard there were some technical difficulties with our webcast provider. A replay will be provided after the call, so you can catch up on that. Thank you for joining today.
% customer.
Thanks.
Operator: That concludes the conference call. Thank you for your participation. You may now disconnect your lines.
Operator: That concludes the conference call. Thank you for your participation. You may now disconnect your lines.
So to the first, uh, question, we did not use it during the December quarter.
But we have, subsequently, to your— to your second question.
Super Micro does most of its business with repeat customers.
David Weigand: On a year-over-year basis, US revenue increased 184%, Asia grew 53%, Europe decreased 63%, and the rest of the world increased 77%. On a quarter-over-quarter basis, US revenue increased 496%, Asia decreased 49%, Europe decreased 51%, and the rest of the world increased 53%. The Q2 non-GAAP gross margin was 6.4% versus 9.5% in Q1. Gross margins were impacted by customer and product mix, as well as higher freight, production, and expedite costs as we began to ship new platforms on a large scale. We had significant operating leverage during the quarter, with total non-GAAP operating expenses representing 1.9% of revenue versus 4.1% last quarter.
So, I'll just—I'll just leave it at that. But at the same time, we added lots of—we've added a lot of—we added a lot of new logos at the same time, that's right. Yeah. And it's because of those successful customers, okay? But
Okay, but we don't know if the 63% of customers are new to the 10% customer mix.
Or if it's a previous 10% customer, is that right?
Yeah, I'll just I'll just refer you to the to the uh the 10ks and q's on that.
Okay, thanks for taking the questions. Yeah, yeah.
David Weigand: Q2 GAAP operating expenses were $324 million, up 14% quarter-over-quarter and up 8% year-over-year. On a non-GAAP basis, operating expenses were $241 million, which was up 18% quarter-over-quarter and up 6% year-over-year. Operating expenses were up quarter-over-quarter, largely due to higher sales expenses. Non-GAAP operating margin for Q2 was 4.5%, compared to 5.4% in Q1. Other income and expense for Q2 totaled a net income of $26 million, reflecting $51 million in interest income on higher cash balances, partially offset by $25 million in interest expense, primarily related to our convertible notes....
Charles Liang: As product cycle shorten and technical complexity increase, this design for manufacturing advancement are essential for scale, efficiency, and long-term margin improvement. While executing these, DFM initiatives, we are also continuous to expand our global manufacturing footprint aggressively and strategically. Our Silicon Valley facility remains the cornerstone of our US operation, delivering faster time to market, strong security, and higher quality integration. Internationally, new production site in Taiwan, Malaysia, and Netherlands, and soon the Middle East, are ramping to increase capacity, support regional solving, AI requirement, and most importantly, optimize our overall cost structure. In summary, as the only company with more than 32 years of robust server and storage focus, Super Micro is quickly evolving into a leading AI platform and data center infrastructure total solution provider.
Yeah, yeah, by the way, I do want to clarify one thing in my, uh, in my narrative, um, regarding the, uh, the fully diluted share count. So, the GAAP fully diluted share count increased sequentially from 663 to 694 million shares. Uh, so, and then the non-GAAP share count increased from 677 million.
To $709 million. So there was just a notice, a typo on there. So please forgive the—
The.
Correction.
All right. Um, thank you, everyone, for joining. I just want to inform you that we had heard there were some technical difficulties with our webcast provider. A replay will be provided after the call, so you can catch up on that. Thank you for joining today.
That concludes the conference call. Thank you for your participation. You may now disconnect your lines.
David Weigand: The tax provision for Q2 was $99 million on a GAAP basis and $122 million on a non-GAAP basis, resulting in a GAAP tax rate of 19.8% and a non-GAAP tax rate of 20.6%. Q2 GAAP EPS was $0.60 compared to guidance of $0.37 to $0.45, and non-GAAP diluted EPS was $0.69 versus guidance of $0.46 to $0.54, due to higher revenue and operating leverage. The GAAP fully diluted share count increased sequentially from 663 million in Q1 to 673 million in Q2, and the non-GAAP share count increased from 677 million to 688 million over the same period.
Charles Liang: Strong Q2 performance, rapid expansion of DCBBS product line, deeper and more customer engagement, and the global capacity investment position us well for long-term growth. While near-term margin pressure from customer mix, tariffs, international facility expansion, and key component shortage, like memory and storage shortage, our focus on enterprise business, design for manufacture improvement, and the faster-growing DCBBS portfolio all help us gain new customer, support higher growth, and net margin going forward. Lastly, based on our broad customer backorder, forecast, and commitment, we believe demand for AI and IT infrastructure remain unprecedentedly strong. Our DCBBS solution is exactly what customer need to build out their AI and cloud much faster, greener, and lower total cost.
David Weigand: Cash flow used in operations for Q2 was $24 million, compared to $918 million used in the prior quarter. On a quarter-over-quarter basis, Q2 operating cash flow reflected higher net income, offset by higher accounts receivable and inventory levels, and aided by higher accounts payables. Q2 closing inventory was $10.6 billion, up from $5.7 billion in Q1, as we prepared for continuing strength in Q3 shipments. CapEx for Q2 totaled $21 million, resulting in negative free cash flow of $45 million for the quarter. During the December quarter, we expanded our access to working capital to fund growth, executing a $2 billion cash flow-based secured revolving credit facility in the US. In January, we also closed an approximately $1.8 billion secured Taiwan revolving debt facility.
Charles Liang: With that in mind, I'm confident to guide at least $12.3 billion for Q3 and up our full year revenue guidance back to at least $40 billion. I look forward to sharing our progress with you next quarter. Thank you. Now I will turn it over to Dennis.
David Weigand: At quarter end, our cash position totaled $4.1 billion, while bank and convertible note debt was $4.9 billion, resulting in a net debt position of $787 million, compared to a net debt position of $579 million in the prior quarter. Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly improved from 123 days in Q1 to 54 days in Q2. Days of inventory decreased by 42 days to 63 days, versus 105 days in the prior quarter. Day sales outstanding increased by 6 days to 49 days, versus 43 days in Q1, while days payables outstanding increased by 32 days to 58 days, versus 26 days in Q1. Turning to the outlook for Q3 FY 2026, we expect net sales to be at least $12.3 billion.
David Weigand: Thank you, Charles. We achieved record Q2 fiscal year 2026 revenue of $12.7 billion, up 123% year-over-year, and up 153% quarter-over-quarter, compared to our guidance of $10 billion to $11 billion. Q2 revenue included approximately $1.5 billion in delayed Q1 shipments due to customer readiness. Growth was driven this quarter by the rapid ramp and deployment of our rack scale AI solutions. Despite supply chain challenges in the industry, our global manufacturing team executed well in delivering record revenue. Order strength remains strong from global large data center and enterprise customers. AI GPU platforms, which represent over 90% of Q2 revenue, continue to be the key growth driver.
David Weigand: GAAP diluted net income per share of at least $0.52 and non-GAAP diluted net income per share of at least $0.60. We expect gross margins to be up 30 basis points relative to Q2 FY 2026 levels. GAAP operating expenses are expected to be around $354 million, which include approximately $74 million in stock-based compensation expenses that are excluded from non-GAAP operating expenses. The outlook for Q3 of fiscal year 2026, fully diluted GAAP EPS, includes approximately $62 million in expected stock-based compensation expenses, net of the tax effects of $19 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense, to result in a net expense of approximately $22 million.
David Weigand: During Q2, the enterprise channel revenue segment totaled $2 billion, representing about 16% of revenue versus 31% in the prior quarter. That's up 42% year-over-year and up 29% quarter-over-quarter. The OEM appliance and large data center segment revenue was $10.7 billion, representing approximately eighty-four percent of Q2 revenue versus 68% in the last quarter. This was up 151% year-over-year and up 210% quarter-over-quarter. For Q2 FY 2026, one large data center customer represented approximately 63% of total revenue. By geography, the US represented 86% of Q2 revenue, Asia, 9%, Europe, 3%, and the rest of the world, 2%.
David Weigand: The company's projections for Q3 FY2026 GAAP and non-GAAP diluted net income per common share assume a tax rate of 19.6%, a non-GAAP tax rate of 20.2%, and a fully diluted share count of 684 million for GAAP and 699 million shares for non-GAAP. Capital expenditures for Q3 are expected to be in the range of $70 to 90 million. For full fiscal year 2026, we expect at least $40 billion in net sales. Michael, we're now ready for Q&A.
David Weigand: On a year-over-year basis, US revenue increased 184%, Asia grew 53%, Europe decreased 63%, and the rest of the world increased 77%. On a quarter-over-quarter basis, US revenue increased 496%, Asia decreased 49%, Europe decreased 51%, and the rest of the world increased 53%. The Q2 non-GAAP gross margin was 6.4% versus 9.5% in Q1. Gross margins were impacted by customer and product mix, as well as higher freight, production, and expedite costs as we began to ship new platforms on a large scale. We had significant operating leverage during the quarter, with total non-GAAP operating expenses representing 1.9% of revenue versus 4.1% last quarter.
Michael Staiger: Great. Matt, can you roll the queue?
Operator: If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions register. First question is from the line of Ananda Baruah with Loop Capital. Your line is now open.
Ananda Baruah: Hey. Yeah, thanks, guys. Good afternoon. Thanks for taking the question. And yeah, congrats on the, on the solid results here relative to the guide. I want to just ask about margins, and I have a few day questions I want to ask you here, but they're all margin related. I guess the first is with regard to... You mentioned, I think 90 days ago, that December quarter, you expected to be the sort of the low watermark quarter in, in gross margin, and you're guiding for Q-over-Q improvement for the March quarter. Do you still think that things progress expansive from here, Charles? You made some, some comments around customer mix. It's been a headwind. Do you think it continues to improve? And I have two quick follow-up today, just margin related after that. Thanks.
David Weigand: Q2 GAAP operating expenses were $324 million, up 14% quarter-over-quarter and up 8% year-over-year. On a non-GAAP basis, operating expenses were $241 million, which was up 18% quarter-over-quarter and up 6% year-over-year. Operating expenses were up quarter-over-quarter, largely due to higher sales expenses. Non-GAAP operating margin for Q2 was 4.5%, compared to 5.4% in Q1. Other income and expense for Q2 totaled a net income of $26 million, reflecting $51 million in interest income on higher cash balances, partially offset by $25 million in interest expense, primarily related to our convertible notes....
Charles Liang: ... Yeah, thank you for the question. Yes, the customer mix, we are improving, quarter out of quarter. Now we have many more large scale customer, I would like to say. So that will improve our profitability. The other factor is, last quarter, I mean, December quarter, the GPU re-entry was a little bit new to us, so lots of expedite transportation costs. And now, I mean, our product is getting mature, so those expedite transportation costs will be dramatically reduced. And tariff impact also improving. And so overall, especially at DCBBS, also increasing, for our gross margin. So I believe our gross margin will start to improve quarter out of quarter.
David Weigand: The tax provision for Q2 was $99 million on a GAAP basis and $122 million on a non-GAAP basis, resulting in a GAAP tax rate of 19.8% and a non-GAAP tax rate of 20.6%. Q2 GAAP EPS was $0.60 compared to guidance of $0.37 to $0.45, and non-GAAP diluted EPS was $0.69 versus guidance of $0.46 to $0.54, due to higher revenue and operating leverage. The GAAP fully diluted share count increased sequentially from 663 million in Q1 to 673 million in Q2, and the non-GAAP share count increased from 677 million to 688 million over the same period.
David Weigand: Cash flow used in operations for Q2 was $24 million, compared to $918 million used in the prior quarter. On a quarter-over-quarter basis, Q2 operating cash flow reflected higher net income, offset by higher accounts receivable and inventory levels, and aided by higher accounts payables. Q2 closing inventory was $10.6 billion, up from $5.7 billion in Q1, as we prepared for continuing strength in Q3 shipments. CapEx for Q2 totaled $21 million, resulting in negative free cash flow of $45 million for the quarter. During the December quarter, we expanded our access to working capital to fund growth, executing a $2 billion cash flow-based secured revolving credit facility in the US. In January, we also closed an approximately $1.8 billion secured Taiwan revolving debt facility.
Ananda Baruah: Charles, that's great context. Really appreciate it. And actually, Charles, one of my two clarifications here is from something you said in your prepared remarks. You said higher net margin, and so I guess you just clarified you expect gross margin to go up. Maybe this is a Charles Dave question. Dave, you mentioned OpEx leverage. The OpEx as a percentage of sales was really attractive this quarter. It's like 1.5%, I guess less than 2%. But should we expect? I think it's the second quarter in a row, you drove OpEx leverage last quarter, this September quarter, for the first time in a while. But now you have this really attractive, the most attractive OpEx as a percentage of revenue in a while.
Ananda Baruah: So, is the company entering a period of not only gross margin expansion, but OpEx dollar leverage as well, structurally? And that's it for me, guys. Thanks.
David Weigand: At quarter end, our cash position totaled $4.1 billion, while bank and convertible note debt was $4.9 billion, resulting in a net debt position of $787 million, compared to a net debt position of $579 million in the prior quarter. Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly improved from 123 days in Q1 to 54 days in Q2. Days of inventory decreased by 42 days to 63 days, versus 105 days in the prior quarter. Day sales outstanding increased by 6 days to 49 days, versus 43 days in Q1, while days payables outstanding increased by 32 days to 58 days, versus 26 days in Q1. Turning to the outlook for Q3 FY 2026, we expect net sales to be at least $12.3 billion.
Charles Liang: Yes, exactly. I mean, economical scale will help us to improve the cost, our cost, right? So that will impact our gross margin and especially our operation margin. And, again, DCBBS, Super Micro for more business in service, in software, in overall infrastructure service to customer. So all those factors are positive to our margin improvement.
Ananda Baruah: Very helpful context. Thank you, guys. Really appreciate it.
Charles Liang: Thank you.
Operator: Thank you for your question. Next question is from the line of Samik Chatterjee with JPMorgan. Your line is now open.
[Analyst] (JPMorgan): Hi, thank you. This is MP on behalf of Samik Chatterjee. I just wanted to double click on your full year guidance. You said $40 billion for FY 2026. If I back into the implied Q4 number, that implies significant quarter-over-quarter moderation. So is that just conservatism, being embedded into the full year outlook? Or, like, do you see definite indications from your order trends that Q4 will imply sequential moderation? And I have a follow-up as well.
David Weigand: GAAP diluted net income per share of at least $0.52 and non-GAAP diluted net income per share of at least $0.60. We expect gross margins to be up 30 basis points relative to Q2 FY 2026 levels. GAAP operating expenses are expected to be around $354 million, which include approximately $74 million in stock-based compensation expenses that are excluded from non-GAAP operating expenses. The outlook for Q3 of fiscal year 2026, fully diluted GAAP EPS, includes approximately $62 million in expected stock-based compensation expenses, net of the tax effects of $19 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense, to result in a net expense of approximately $22 million.
Charles Liang: Yeah, I believe, we say minimum $40 billion is relatively a conservative number. So, our business, indeed will continue to grow, especially our DCBBS, that, attract a lot of customer who want to build a data center quicker, less power consumption, less cost, I mean, better cost, and, also, more reliable and easy for management. So we are getting more and more, customer come to us.
David Weigand: The company's projections for Q3 FY2026 GAAP and non-GAAP diluted net income per common share assume a tax rate of 19.6%, a non-GAAP tax rate of 20.2%, and a fully diluted share count of 684 million for GAAP and 699 million shares for non-GAAP. Capital expenditures for Q3 are expected to be in the range of $70 to 90 million. For full fiscal year 2026, we expect at least $40 billion in net sales. Michael, we're now ready for Q&A.
[Analyst] (JPMorgan): Thank you. For my follow-up, I wanted to ask about DCBBS. You highlighted it being 4% of profits in first half. Can you please help us understand, like, the contribution in terms of revenues? And then you also said it will increase to double-digit contribution by end of calendar year. How does that translate to overall gross margin trajectory? Thank you.
Charles Liang: Yeah, thank you. I mean, as you know, DCBBS is still a new product line to us. We officially introduced that product about six months ago. So, the first two quarters, I mean, September quarter plus December quarter, indeed, is our first two quarters. So the revenue is still relatively small, but because the profit is much better, so overall, it contributed about 4% to our overall profit in last six months. And looking forward, it will continue to grow very quickly. So we are very happy to see more and more customers like DCBBS to speed up their data center build out with easier for management, easier for maintenance, and our profit will continue to grow because of DCBBS especially.
Michael Staiger: Great. Matt, can you roll the queue?
Operator: If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions register. First question is from the line of Ananda Baruah with Loop Capital. Your line is now open.
Ananda Baruah: Hey. Yeah, thanks, guys. Good afternoon. Thanks for taking the question. And yeah, congrats on the, on the solid results here relative to the guide. I want to just ask about margins, and I have a few day questions I want to ask you here, but they're all margin related. I guess the first is with regard to... You mentioned, I think 90 days ago, that December quarter, you expected to be the sort of the low watermark quarter in, in gross margin, and you're guiding for Q-over-Q improvement for the March quarter. Do you still think that things progress expansive from here, Charles? You made some, some comments around customer mix. It's been a headwind. Do you think it continues to improve? And I have two quick follow-up today, just margin related after that. Thanks.
[Analyst] (JPMorgan): Thank you.
Operator: Thank you for your question.
[Analyst] (JPMorgan): Thank you.
Operator: Next question is from the line of Asiya Merchant with Citi. Your line is now open.
Asiya Merchant: Great, thank you for taking my question, and good results here relative to the guide. I just had two quick ones. One, just, you know, there's a lot of discussion about component availability, supply constraints. If you could just talk to us about your guide, and relative to that, you know, is that minimum $40 billion guide, you know, a constraining number given the supply constraints? In other words, if supply wasn't an issue, could that number be greater? And then just on customer concentration, you know, I think the commentary suggested that some of the geos did decline on a year-on-year basis as well as on a quarter-on-quarter basis. So again, relative to the guide, how should we think about the ramp of DC BBS across the various geographies for the back?
Charles Liang: ... Yeah, thank you for the question. Yes, the customer mix, we are improving, quarter out of quarter. Now we have many more large scale customer, I would like to say. So that will improve our profitability. The other factor is, last quarter, I mean, December quarter, the GPU re-entry was a little bit new to us, so lots of expedite transportation costs. And now, I mean, our product is getting mature, so those expedite transportation costs will be dramatically reduced. And tariff impact also improving. And so overall, especially at DCBBS, also increasing, for our gross margin. So I believe our gross margin will start to improve quarter out of quarter.
Ananda Baruah: Charles, that's great context. Really appreciate it. And actually, Charles, one of my two clarifications here is from something you said in your prepared remarks. You said higher net margin, and so I guess you just clarified you expect gross margin to go up. Maybe this is a Charles Dave question. Dave, you mentioned OpEx leverage. The OpEx as a percentage of sales was really attractive this quarter. It's like 1.5%, I guess less than 2%. But should we expect? I think it's the second quarter in a row, you drove OpEx leverage last quarter, this September quarter, for the first time in a while. But now you have this really attractive, the most attractive OpEx as a percentage of revenue in a while.
Ananda Baruah: So, is the company entering a period of not only gross margin expansion, but OpEx dollar leverage as well, structurally? And that's it for me, guys. Thanks.
Charles Liang: Yes, exactly. I mean, economical scale will help us to improve the cost, our cost, right? So that will impact our gross margin and especially our operation margin. And, again, DCBBS, Super Micro for more business in service, in software, in overall infrastructure service to customer. So all those factors are positive to our margin improvement.
Ananda Baruah: Very helpful context. Thank you, guys. Really appreciate it.
Charles Liang: Thank you.
Operator: Thank you for your question. Next question is from the line of Samik Chatterjee with JPMorgan. Your line is now open.
Samik Chatterjee: Hi, thank you. This is MP on behalf of Samik Chatterjee. I just wanted to double click on your full year guidance. You said $40 billion for FY 2026. If I back into the implied Q4 number, that implies significant quarter-over-quarter moderation. So is that just conservatism, being embedded into the full year outlook? Or, like, do you see definite indications from your order trends that Q4 will imply sequential moderation? And I have a follow-up as well.
Charles Liang: Yeah, I believe, we say minimum $40 billion is relatively a conservative number. So, our business, indeed will continue to grow, especially our DCBBS, that, attract a lot of customer who want to build a data center quicker, less power consumption, less cost, I mean, better cost, and, also, more reliable and easy for management. So we are getting more and more, customer come to us.
Samik Chatterjee: Thank you. For my follow-up, I wanted to ask about DCBBS. You highlighted it being 4% of profits in first half. Can you please help us understand, like, the contribution in terms of revenues? And then you also said it will increase to double-digit contribution by end of calendar year. How does that translate to overall gross margin trajectory? Thank you.
Charles Liang: Yeah, thank you. I mean, as you know, DCBBS is still a new product line to us. We officially introduced that product about six months ago. So, the first two quarters, I mean, September quarter plus December quarter, indeed, is our first two quarters. So the revenue is still relatively small, but because the profit is much better, so overall, it contributed about 4% to our overall profit in last six months. And looking forward, it will continue to grow very quickly. So we are very happy to see more and more customers like DCBBS to speed up their data center build out with easier for management, easier for maintenance, and our profit will continue to grow because of DCBBS especially.
Samik Chatterjee: Thank you.
Operator: Thank you for your question.
Samik Chatterjee: Thank you.
Operator: Next question is from the line of Asiya Merchant with Citi. Your line is now open.
Asiya Merchant: Great, thank you for taking my question, and good results here relative to the guide. I just had two quick ones. One, just, you know, there's a lot of discussion about component availability, supply constraints. If you could just talk to us about your guide, and relative to that, you know, is that minimum $40 billion guide, you know, a constraining number given the supply constraints? In other words, if supply wasn't an issue, could that number be greater? And then just on customer concentration, you know, I think the commentary suggested that some of the geos did decline on a year-on-year basis as well as on a quarter-on-quarter basis. So again, relative to the guide, how should we think about the ramp of DC BBS across the various geographies for the back?
