Q2 FY2026 Earnings Call
SMCI · Preprocessing Report
2026-02-03
Quality
100%
59
Turns
14
Speakers
5
Sections
10
Exchanges
403
Claims

Entities by group 40

ai server manufacturers 1
Super Micro Computercompany
company executives 2
Charles LiangpersonDavid Weigandperson
data center building blocks 8
DCBBSproductCDUproductDatavaultproductData Center Building Block SolutionproductLR2AproductEDRproductEDLproductDLCproduct
sell-side analysts 6
Mark NewmanpersonJon TanwantengpersonAnanda BaruahpersonAsiya MerchantpersonKatherine MurphypersonBrandon Nispelperson
analysts 3
Ruplu BhattacharyapersonNehal ChokshipersonQuinn Boltonperson
ai server platforms 1
Vera Rubinproduct
server platforms 2
GP300productH14product
gpu platform generations 3
HeliostechnologyBlackwelltechnologyHoppertechnology
ai server solutions 3
X14productRack Scale SystemsproductRack Scale AIproduct
ai hardware providers 1
NVIDIAcompany
iot/edge market category 1
IoTtechnology
cloud service providers 1
Neo Cloudcompany
cloud gpu services 1
GPU as a Servicetechnology
reference designs 1
Blueprinttechnology
Ungrouped 6
JPMorgancompanyGoldman SachscompanyMPotherAMDcompanyGAAPotherCapExother
REPORTING 79PROJECTING 30POSITIONING 100EXPLANATORY 18ANALYST 98

Topics 74

customer×41dcbbs×37revenue×31margin×21data center×19operating×11capital×9gross margin×8manufacturing×7earnings×7guidance×7share×6component×6server×5cost×5solution×5ai×4order×4working capital×4strategy×4

Themes 246

non-gaap×7customer mix×6diversification×6margin×5profit contribution×4full-year×4strong×4gaap×4gross margin×4large-scale×3u.s.×3customer concentration×3year-over-year growth×2deployment speed×2cost pressures×2growth×2efficiency×2product expansion×2expansion×2cost improvement×2modularization and automation×2global×2oem appliance and large data center growth×2asia×2europe×2provision and rate×2guidance×2improvement×2improving×2product launch timing×2expedite×2sales ratio×2revenue contribution×2supply constraints×2price increases×2building block solution×2shortages×2component cost pressure×2sales mix×2time to market×2datavault×2order timing for new systems×2account growth and technology development×2securitization facility usage×2concentration×2mix concentration×2demand acceleration×1record quarterly revenue×1rack scale systems×1prevalidated design×1cost and efficiency×1ai infrastructure×1gpu systems×1product mix shift×1product evolution×1data center deployments×1accelerating growth×1deployment efficiency×1mix shift toward higher-margin enterprise and cloud demand×1preconfigured rapid-deployment launch×1ai cloud storage and telco edge optimization×1instant deployment and time-to-market advantage×1product cycle complexity×1production ramp×1cost structure×1ai and data center infrastructure×1q2 performance and expansion×1near-term pressure from costs and shortages×1improved through enterprise and dcbbs mix×1ai and it infrastructure strength×1faster lower-cost ai and cloud deployment×1q3 guidance×1record quarterly sales×1delayed shipments×1ramp and deployment×1record performance amid supply chain challenges×1ai-driven revenue mix×1revenue mix shift×1quarter-over-quarter growth×1large data center revenue mix×1geographic mix×1rest of world×1rest-of-world growth×1cost and mix pressure×1as a share of revenue×1sales expense pressure×1interest income and expense×1fully diluted count×1from operations×1operating drivers×1closing×1expenditure and free cash flow×1working capital facility×1refinancing facility×1net debt×1cash conversion cycle×1days of inventory×1days sales outstanding×1days payables outstanding×1sales guidance×1per share guidance×1interest expense outlook×1diluted guidance×1annual guidance×1relative to guidance×1discussion focus×1quarterly outlook×1follow-up questions×1profitability impact×1product maturity×1tariff relief×1sequential improvement×1net margin×1operating leverage×1leverage×1scale and cost reduction×1dcbbs expansion×1fiscal 2026×1quarter-over-quarter moderation×1conservatism×1sequential moderation×1build demand×1customer growth×1new product line×1early quarters×1small revenue, stronger profit×1demand and profitability×1results relative to guide×1component availability and constraints×1minimum level constrained by supply×1geographic declines and concentration×1dcbbs ramp across geographies×1upside guidance×1deployment solutions×1one-stop shop×1storage and cooling subsystems×1buildout ease×1customer adoption and support expansion×1disclosure×1target share×1capabilities expansion×1go-to-market penetration×1product development×1investment×1product breadth×1product availability×1construction modularization×1management and scaling efficiency×1solution predesigned and prevalidated×1product line expansion×1component costs and shortages×1engineering support investment×1cost impact on profitability×1december quarter impact×1broad-based increase×1transport and expedite×1ramp-up and mass shipments×1enterprise adoption×1customer preference×1ai demand×1demand-driven×1ai servers×1impact×1building blocks solution×1one-stop-shop purchasing×1assembly efficiency×1rapid system integration×1rapid deployment×1building block approach×1q2 results and guidance×1direct liquid cooling×1dry cooling towers×1competitive timing×1branding×1company approach×1with nvidia×1talent and capability×1speed advantage×1future outlook×1quarterly upside×1customer retention×1customer trend×1total-solution business strength×1broadening base×1forward growth×1large accounts×1momentum×1high×1forecast uncertainty×1value growth×1operational strength×1funding for growth×1cash for growth×1broadening and upgrading solutions×1platform transition to new systems×1interest and engagement×1timing depends on partner readiness×1partner collaboration×1fast product rollout×1commitment×1quarter and outlook×1mix and pipeline×1customer leverage×1enterprise growth×1800-volt migration×1next cycle upgrade×1gpu platform cycle×1supplier solution×1management and energy efficiency×1end-to-end plan×1early stage×1post-earnings change×1pricing and market share×1order backlog catch-up×1catch-up orders×1pricing strategy×1long-term outlook×1current range×1engineering company×1gross and net×1technology leadership×1market reach×1targeting broad market tiers×1serving broad customer base×1technology mix and customer breadth×1new capital raised×1working capital outlook×1other income above guidance×1driver of other income increase×1interest income from cash reserves×1purchase orders backlog×1immediate delivery use×1accounts receivable and inventory increase×1financing arrangements×1receivables financing×1liquidity access×1future funding access×1adequacy of liquidity×1coming quarters×1repeat business×1new business×1new logos×1successful customers×1fully diluted narrative×1narrative×1technical difficulties×1

Key Metrics 63

revenue×45gross margin×28operating expenses×8profit×7share count×5customer concentration×5customer mix×4margin×3orders×3revenue guidance×3count×3contribution×2net margin×2tax provision×2earnings per share×2inventory×2capital expenditures×2working capital×2net sales×2eps×2cost×2transportation costs×2operating expenses as a percentage of sales×2costs×2time to market×2sales growth×2other income×2interest income×2capital×2delivery time×1power consumption×1product lines×1yield rate×1capacity×1backlog×1total cost×1operating margin×1net income×1cash flow from operations×1operating cash flow×1debt×1cash×1cash conversion cycle×1days sales outstanding×1days payables outstanding×1diluted eps×1net expense×1tax rate×1shares outstanding×1customers×1guidance×1demand×1component costs×1sales×1time to delivery×1concentration×1revenue growth×1capital raised×1accounts receivable×1credit facility×1accounts receivable factoring facility×1capital access×1factoring facility×1

Entities 661

Super Micro Computer×293Charles Liang×106DCBBS×62David Weigand×61Ruplu Bhattacharya×11Mark Newman×10Jon Tanwanteng×9Vera Rubin×8Ananda Baruah×8Nehal Chokshi×8Quinn Bolton×8JPMorgan×6Asiya Merchant×6Katherine Murphy×6Goldman Sachs×6Brandon Nispel×6NVIDIA×5MP×5AMD×4Helios×4GP300×3X14×3H14×3CDU×2GAAP×2Datavault×2Rack Scale Systems×1Data Center Building Block Solution×1LR2A×1IoT×1Rack Scale AI×1CapEx×1EDR×1EDL×1Neo Cloud×1GPU as a Service×1DLC×1Blueprint×1Blackwell×1Hopper×1

Business Segments 71

Server And Storage Systems×60OEM Appliance And Large Data Center×3Asia×2Europe×2Rest Of World×2United States×1Services×1

Sectors 68

data center×31artificial intelligence×9semiconductor×7cloud computing×6server×3manufacturing×3software×2power generation×1energy storage×1edge computing×1telecommunications×1data storage×1supply chain×1transportation×1

Regions 23

U.S.×5Global×4Asia×3Europe×3Taiwan×2Malaysia×1the Netherlands×1Middle East×1international×1rest of the world×1rest-of-world×1

Metadata Distributions

Sentiment
positive 124negative 21neutral 180
Temporality
backward 76forward 51current 198
Certainty
definitive 74confident 100moderate 77tentative 74
Magnitude
major 76moderate 182minor 67
Direction
improvement 48decline 13mixed 4none 260
Time Horizon
immediate 79near_term 117medium_term 50long_term 4unspecified 75
Verifiability
quantitative 96event 16qualitative 213
Analyst Intent
probing 42challenging 3confirming 15seeking_detail 32seeking_guidance 6

Speakers

Executives
CLCharles LiangCEODWDavid WeigandCFOMSMichael Staigerexecutive
Analysts
ABAnanda BaruahanalystAMAsiya MerchantanalystBNBrandon NispelanalystJTJon TanwantenganalystKMKatherine MurphyanalystMNMark NewmananalystNCNehal ChokshianalystQBQuinn BoltonanalystRBRuplu BhattacharyaanalystMPMPanalyst
Other
OPOperatoroperator

Sections

TypeLabelSpeaker
preamblePreambleOperator
prepared_remarksPrepared RemarksCharles Liang, David Weigand, Michael Staiger
qa_sessionQ&A Session—
closing_remarksClosing RemarksMichael Staiger
operator_signoffOperator Sign-offOperator

Q&A Exchanges 10

#AnalystFirmTurns
1
ABAnanda Baruah
Loop Capital5
2
MPMP
JPMorgan5
3
AMAsiya Merchant
Citi3
4
KMKatherine Murphy
Goldman Sachs5
5
RBRuplu Bhattacharya
Bank of America5
6
NCNehal Chokshi
Northland5
7
QBQuinn Bolton
Needham & Company7
8
JTJon Tanwanteng
CJS Securities5
9
MNMark Newman
Bernstein4
10
BNBrandon Nispel
KeyCorp9

Claim Taxonomy 325

REPORTING79
resultFinancial outcome for a completed period58
metricNon-financial quantitative fact8
operationalDiscrete completed event13
PROJECTING30
guidanceQuantitative expectation with number + time25
commitmentPromise with binary verifiable outcome4
targetLong-term aspirational quantitative goal1
POSITIONING100
strategyPriority, direction, or initiative88
competitiveCompany's position or advantages5
opportunityMarket condition framed as growth driver2
riskHeadwind, constraint, or uncertainty5
EXPLANATORY18
attributionWhy a specific outcome happened7
contextNon-company macro/industry fact11
FRAMING0
thesisFalsifiable belief about how the world works0
ANALYST98
questionInterrogative seeking information63
observationRestates a fact or data point28
concernFlags a risk or challenge2
estimateAnalyst's own projection or calculation0
sentimentOpinion, praise, or critique5

Transcript

Preamble
OP
Operatoroperator
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 '26 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. [Operator Instructions] Over to you, Michael.
Prepared Remarks
MS
Michael StaigerexecutiveSuper Micro Computer, Inc.
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 scripted commentary on our website.
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 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 and involve material risks and uncertainties that could cause actual results or events to materially differ 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 for 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.
Most of today's presentation will refer to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to accompanying presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors with the means of evaluating and understanding the companies management — 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 U.S. 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. Our third quarter fiscal 2026 quiet period ends at the close — or begins at the close of business Friday, March 13, 2026. And for now, I will turn the call over to Charles.
#1
#2
#3
#4
#5
#6
#7
#8
#9
#10
#11
#12
#13
#14
#15
#16
#17
#18
#19
#20
CL
Charles LiangCEOSuper Micro Computer, Inc.
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 TWD $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 Rack Scale Systems as customers build out next-generation AI factories. Super Micro has been developing some of the largest and most complex AI cluster ever built, highlighting our unmatched capability in large-scale manufacturing on-site deployment and integration.
Most notably, our data center building block solution or DCBBS has started to gain some key customers' preference as they look for quicker time-to-deployment, TTD and quicker time-to-online TTO. This predesign, prevalidate 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 GP300 [inaudible] platforms, we are also preparing for 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 large model builder who had pricing leverage pressuring gross margin. In Q2, especially the expedite transportation costs ongoing component shortage and their volatile pricing among with tariffs 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 profitability. First and foremost, Super Micro undergoes its fourth phase of product evolution with DCBBS as its key focus.
As these data center [ deploy ] scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year '26, 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 '26, and we see that growth accelerate to at least double-digit contribution by end of calendar 2026 [inaudible] GPU, CPU life cycle. DCBBS becomes 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 from more than — grew to more than 10 key subsystems, including CDU, [ LR2A ] heat exchanger, chilled doors, power shelves, 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 category 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 improving for Super Micro. Other than developing DCBBS for better value and portability, 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 H14 [inaudible] solutions, featuring preconfigured 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 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 subsystem and expanded automation across our facilities. These efforts increase yield rate, reduce the work 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. 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 site in Taiwan, Malaysia and Netherlands and so 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. 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, tariff, international facility expansion and key component 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. Lastly, based on our broad customer back order forecast and commitment, we believe demand 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 and lower total cost. 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.
#21
strategy#22
result#23
result#24
strategy#25
competitive#26
strategy#27
strategy#28
strategy#29
attribution#30
commitment#31
result#32
result#33
#34
commitment#35
strategy#36
result#37
strategy#38
strategy#39
strategy#40
strategy#41
operational#42
strategy#43
strategy#44
operational#45
strategy#46
strategy#47
strategy#48
operational#49
strategy#50
context#51
strategy#52
strategy#53
strategy#54
operational#55
strategy#56
competitive#57
strategy#58
risk#59
result#60
opportunity#61
strategy#62
guidance#63
guidance#64
#65
#66
#67
DW
David WeigandCFOSuper Micro Computer, Inc.
Thank you, Charles. We achieved 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. 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. 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 '26, one large data center customer represented approximately 63% of total revenue. By geography, the U.S. represented 86% of Q2 revenue, Asia 9%; Europe, 3%; and the rest of the world, 2%. On a year-over-year basis, U.S. revenue increased 184%. Asia grew 53%, Europe decreased 63% and the rest of the world increased 77%. On a quarter-over-quarter basis, U.S. 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. 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. 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. 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 U.S. In January, we also closed an approximately $1.8 billion 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. 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 FY '26. 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. We expect gross margins to be up 30 basis points relative to Q2 FY '26 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. 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 GAAP and 699 million shares for non-GAAP. Capital expenditures for Q3 are expected to be in the range of $70 million 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.
#68
result#69
result#70
attribution#71
result#72
strategy#73
result#74
result#75
result#76
result#77
result#78
result#79
result#80
metric#81
metric#82
result#83
result#84
result#85
result#86
result#87
result#88
result#89
result#90
result#91
risk#92
result#93
result#94
result#95
attribution#96
result#97
result#98
result#99
result#100
result#101
result#102
result#103
result#104
result#105
attribution#106
result#107
result#108
commitment#109
operational#110
result#111
#112
metric#113
metric#114
result#115
result#116
#117
guidance#118
guidance#119
guidance#120
guidance#121
guidance#122
guidance#123
guidance#124
guidance#125
guidance#126
guidance#127
guidance#128
#129
Q&A Session
Q&A 1/10
OP
Operatoroperator
[Operator Instructions] First question is from the line of Ananda Baruah with Loop Capital.
AB
Ananda BaruahanalystLoop Capital
Yes, congrats on the solid results here relative to the guide. Just — I want to just ask about margins. And I have a few day questions they 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 expect it to be the sort of the low watermark quarter in gross margins, 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 2 quick follow-ups, Dave, just margin related after that.
observation#130
question#131
observation#132
question#133
question#134
concern#135
question#136
question#137
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Thank you for the question. Yes, the customer mix, we are improving quarter after 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 GP300 was a little bit new to us.
So a lot of expedite transportation cost. And now, I mean, product is getting mature. So those expedite transportation costs will be dramatically reduced and tariff impact also improving.
And — so overall, especially DCBBS also increasing for our — for our gross margin. So I believe our gross margin will start to improve quarter after quarter.
#138
#139
strategy#140
strategy#141
strategy#142
operational#143
result#144
strategy#145
guidance#146
result#147
guidance#148
AB
Ananda BaruahanalystLoop Capital
Charles, that's great context. Really appreciate it. And actually, Charles, one of my 2 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 or 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. 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.
#149
#150
question#151
observation#152
#153
observation#154
sentiment#155
observation#156
question#157
observation#158
question#159
#160
CL
Charles LiangCEOSuper Micro Computer, Inc.
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 [inaudible] 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.
#161
strategy#162
guidance#163
operational#164
strategy#165
Q&A 2/10
OP
Operatoroperator
Next question is from the line of Samik Chatterjee with JPMorgan.
MP
MPanalystJPMorgan
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 '26. 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 like do you see definite indications from your order trends that 4Q will imply sequential moderation? And I have a follow-up as well.
#166
observation#167
observation#168
observation#169
question#170
question#171
#172
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. 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, better cost and also more reliable and easy for management. So we are getting more and more customers come to us.
#173
guidance#174
attribution#175
metric#176
MP
MPanalystJPMorgan
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?
question#177
observation#178
question#179
observation#180
question#181
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Thank you.
I mean, as you know, DCBBS is still a new product line to us. We officially introduced that product about 6 months ago. So in the first 2 quarters, I mean, September quarter plus December quarter, indeed, it is our first 2 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 6 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 EDR for management, EDL for maintenance and our profit will continue to grow because of DCBBS especially.
#182
#183
strategy#184
operational#185
strategy#186
result#187
result#188
strategy#189
guidance#190
Q&A 3/10
OP
Operatoroperator
Next question is from the line of Asiya Merchant with Citi.
AM
Asiya MerchantanalystCiti
Good results here relative to the guide. I just had 2 quick ones. One, just 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, is that minimum $40 billion guide 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, 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 DCBBS across those various geographies for the back half of this fiscal year and into — through calendar '26?
observation#191
#192
observation#193
question#194
question#195
question#196
question#197
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes, you are right. We already consider component price keeping growing. So with that, that's why we try to be conservative kind of commit to $40 billion. If the cost — if the shortage situation improve quickly, for sure, our [inaudible] revenue will be more than that. And as to DCBBS is 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 shop. We provide not just computing node, I mean storage node, switch node and disk cooling subsystem including battery cell, including some energy backup. So it kind of makes customers' job to build a data center much easier. So the impact is global. We see global-wide more and more customers like our DCBBS solution, and we are aggressively preparing to grow the support.
context#198
strategy#199
guidance#200
guidance#201
strategy#202
strategy#203
strategy#204
strategy#205
context#206
strategy#207
Q&A 4/10
OP
Operatoroperator
Next question is from the line of Katherine Murphy with Goldman Sachs.
KM
Katherine MurphyanalystGoldman Sachs
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 '26. 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.
question#208
observation#209
question#210
question#211
question#212
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Indeed, we started to develop our DCBBS pretty much about 12 months ago. So we already consistently invested in that area. And so far, we have about 10 items, including the CDU, including chilled door, including the power shelf, battery backup, water tower, management software. So we have about 10 items available now, and we will introduce another 3 to 5 items in the 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 customers to build a data center. It's not just easier, quicker to build their data center, but also make their data center modularized. So it's easier for management, easier for maintenance and easier for scale up.
#213
operational#214
strategy#215
metric#216
operational#217
commitment#218
strategy#219
strategy#220
strategy#221
KM
Katherine MurphyanalystGoldman Sachs
Great. And just on the margin profile of DCBBS, could you remind us what you've said in the past about what that looks like relative to the sales that you typically have towards your large Neo cloud and GPU as a Service customers?
#222
question#223
CL
Charles LiangCEOSuper Micro Computer, Inc.
It's for sure, gross margin — net margin are much higher for DCBBS because it's so unique. And again, we are the first company to build predesigned, prevalidated, pre-optimized data center solution for customers. So the margin is much better, for sure, more than 20%. And we are happy to make the product line really strong, really complete as soon as possible.
result#224
competitive#225
result#226
strategy#227
Q&A 5/10
OP
Operatoroperator
The next question is from the line of Ruplu Bhattacharya with Bank of America.
RB
Ruplu BhattacharyaanalystBank of America
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 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 from these things in the March quarter? And I have a follow-up.
observation#228
observation#229
observation#230
question#231
question#232
question#233
#234
DW
David WeigandCFOSuper Micro Computer, Inc.
Yes. We don't break those things out, Ruplu, but we can just say that the costs were up in each of those areas. So in other words, 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 the past year, we've had increases as we have ramped up the new technologies and prepared for mass shipments.
#235
result#236
result#237
result#238
RB
Ruplu BhattacharyaanalystBank of America
Okay. As a follow-up, can I ask, I think — or 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? A 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 going to sell more, it's going to be more — a bigger percent of your sales. Does that mean that the customer mix is also changing? Do enterprise customers use more of these? Or what type of customer likes to use more of the DCBBS packaged solution?
#239
observation#240
question#241
question#242
question#243
question#244
observation#245
question#246
question#247
question#248
CL
Charles LiangCEOSuper Micro Computer, Inc.
Thank you for your question.
Indeed, the key component shortage at this time is 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's 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 first 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, middle-sized scale or small scale because our DCBBS just simply provide more choice for customers to go for one-stop shop or buy everything from everywhere by themselves. And obviously, one-stop shop save their time, make sure when they put the things together, it works. And quickly, when you put things together, it work and optimize. That's why it's optimized not just time to delivery, but time to online. Customers use our DCBBS, their data center can go for online, go for operation quickly. So I would like to say global people need DCBBS kind of building block solution.
#249
risk#250
context#251
strategy#252
strategy#253
guidance#254
#255
strategy#256
strategy#257
strategy#258
strategy#259
strategy#260
strategy#261
strategy#262
Q&A 6/10
OP
Operatoroperator
The next question is from the line of Nehal Chokshi with Northland.
NC
Nehal ChokshianalystNorthland
Congrats on the strong results and guidance. A little bit of different question here.
So look, Super Micro brought DLC to the market one generation faster than when it became part of NVIDIA reference architecture. It's now apparent that Super Micro has brought to the market one generation faster, dry cooling towers, which is related to higher inlet temperatures as part of Blueprint reference design. My question is that do you expect Super Micro to continue to bring to the market one generation faster the power efficiency advantages before NVIDIA makes it part of their reference architecture? Is it going to be part of Super Micro's branding?
sentiment#263
#264
observation#265
observation#266
question#267
question#268
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. As you know, NVIDIA is a very strong company, and we work with them very closely. And, however, because of our strong engineering background, our big engineering team.
So before we are able to make our total solution one generation or 6 months earlier than others. Now and in the future, I believe we will be still able to bring a total solution to market earlier than others, especially help customers 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'm very confident that our future growth should be still very strong.
strategy#269
context#270
strategy#271
metric#272
competitive#273
strategy#274
guidance#275
NC
Nehal ChokshianalystNorthland
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-plus percent customer in the March quarter? How should they traject? And then you also did sign Datavault, a pretty big contract with Datavault 6 or 9 months ago. Is that starting to ramp in as well?
#276
question#277
question#278
question#279
observation#280
question#281
CL
Charles LiangCEOSuper Micro Computer, Inc.
Basically, because our foundation is getting much stronger than before ever, especially our kind of total solution, 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 is hard to say because now our revenue will grow very fast. Very soon, I hope I can say we have more than $50 billion or $60 billion revenue, not to pay, but hopefully very soon. So more and more large customer is working with us. So that's a very exciting condition.
strategy#282
opportunity#283
target#284
guidance#285
strategy#286
strategy#287
Q&A 7/10
OP
Operatoroperator
Next question is from the line of Quinn Bolton with Needham & Company.
QB
Quinn BoltonanalystNeedham & Company
Let me add congratulations on the nice outlook. I guess, Charles, David, you had a 63% customer in the December quarter. As you look at sort of the second half of fiscal '26, 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.
sentiment#288
observation#289
question#290
question#291
#292
CL
Charles LiangCEOSuper Micro Computer, Inc.
Sometimes it's not easy to predict because customers sometimes shift their schedule of pull in or push out.
So — but overall, we are very happy that now we have many more large-scale customers. So the customer is more diversified and overall revenue will grow quickly. And at the same time, DCBBS and [ software ] grow our value. So overall, we are on a very healthy track now.
risk#293
strategy#294
attribution#295
strategy#296
strategy#297
QB
Quinn BoltonanalystNeedham & Company
Got it. So understanding that the customers can push and pull out, right now, the forecast shows increasing diversification over the next couple of quarters.
#298
observation#299
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes.
I mean because of growth still very fast, that's why now we are focused on more 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 of more diversified customer base and also more higher-value system, more higher value to solution. So that will help us grow business.
#300
strategy#301
strategy#302
strategy#303
strategy#304
QB
Quinn BoltonanalystNeedham & Company
Understood. And my follow-on, Charles, in your prepared comments, you mentioned the upcoming platform transition 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?
#305
observation#306
question#307
question#308
CL
Charles LiangCEOSuper Micro Computer, Inc.
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 customers quickly. And yes, today, we already have some good commitment from customers.
strategy#309
risk#310
strategy#311
strategy#312
strategy#313
Q&A 8/10
OP
Operatoroperator
Next question is from the line of John Tanwanteng with CJS Securities.
JT
Jon TanwantenganalystCJS Securities
Congrats on the 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. 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 could have any color there, that would be helpful.
sentiment#314
question#315
question#316
question#317
concern#318
question#319
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Thank you for the question.
Yes, we understand we need more customer, especially a more diversified customer base, enterprise. So we are very aggressively growing enterprise midsized or even kind of enterprise customers as well. So I mean, our customer diversified is a very important direction to us now. So I guess [inaudible] large customer and lots of kind of high number of enterprise accounts.
#320
#321
strategy#322
strategy#323
strategy#324
strategy#325
JT
Jon TanwantenganalystCJS Securities
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?
#326
#327
question#328
question#329
question#330
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes.
I mean that's why I say NVIDIA provides a very good solution. And based on that, we optimize the whole data center building block solution for our customers and aim to help them build the data center quicker and more reliable, easy for management and [ lower cost ] including energy consumption, including energy backup and maybe too early to say, including energy kind of grid power replacement. So we have a complete plan for the whole solution, but some other systems are still too early to say too much at this moment.
#331
context#332
strategy#333
strategy#334
strategy#335
strategy#336
Q&A 9/10
OP
Operatoroperator
Next question is from the line of Mark Newman with Bernstein.
MN
Mark NewmananalystBernstein
Congrats on a great quarter and great outlook. Just curious, if you just take a step back, I mean, what's changed? You've got a 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 Super Micro having to react to tougher pricing environment and thus winning back more share? Or is this just catching up to — as you referred to the previous quarter — previous couple of quarters, you mentioned about a few orders getting pushed out. So is this just catch-up of the orders? Or is this a reflection of a more aggressive pricing strategy?
And I guess, importantly, for me, like trying to think about forward estimates going forward, I mean you guided for the short term, but 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 — into the high single-digit, low double-digit range gross margin like you were before?
sentiment#337
question#338
question#339
question#340
question#341
question#342
question#343
question#344
question#345
question#346
CL
Charles LiangCEOSuper Micro Computer, Inc.
Thank you. As an engineering company, we, for sure, have some choice. We can continue to grow larger account aggressively or spend more effort to develop technology, the product and to grow more enterprise account. So we are doing both ways 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.
#347
strategy#348
strategy#349
strategy#350
guidance#351
#352
DW
David WeigandCFOSuper Micro Computer, Inc.
Sure.
We think that 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 in the market. And we think with those strong installations, we've broadened our reach into the market. And so we think that we're trying to target both, as Charles mentioned, both large-scale and smaller scale customers and mid-tier customers. But we want to serve 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 margins, yes.
#353
competitive#354
strategy#355
strategy#356
strategy#357
strategy#358
Q&A 10/10
OP
Operatoroperator
The next question is from the line of Brandon Nispel with KeyCorp.
BN
Brandon NispelanalystKeyCorp
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.
#359
#360
observation#361
question#362
observation#363
question#364
#365
DW
David WeigandCFOSuper Micro Computer, Inc.
Sure. The other income was just — was higher interest income that we had because our cash reserves had grown. And so we were earning good interest income.
However, that was quickly taken up by the fact that, as I mentioned last quarter, we had well in excess of $13 billion of orders for purchase orders for delivery. And so we immediately had to use that. That's why our accounts receivable, our inventory went up. And so we took in not only 2 different $2 billion or $2 billion and $1.8 billion credit facilities. We also set up an accounts receivable factoring. So we have access to over $5 billion of additional capital. And if we continue to have growth, then — we have access to additional capital in the marketplace. But right now, we think that for the current outlook, we have adequate capital to meet our needs. And when I say current, I mean [inaudible] the coming quarters.
#366
result#367
result#368
metric#369
operational#370
result#371
result#372
operational#373
result#374
guidance#375
context#376
strategy#377
BN
Brandon NispelanalystKeyCorp
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?
#378
question#379
question#380
DW
David WeigandCFOSuper Micro Computer, Inc.
So to the first question, we did not use it during the December quarter, but we have subsequently. To your second question, Super Micro has — does most of its business with repeat customers. So I'll just leave it at that.
context#381
context#382
#383
CL
Charles LiangCEOSuper Micro Computer, Inc.
But at the same time, we add a lot of…
strategy#384
DW
David WeigandCFOSuper Micro Computer, Inc.
We've added a lot of new logos at the same time. That's right. And it's because of those successful customers.
strategy#385
#386
attribution#387
BN
Brandon NispelanalystKeyCorp
Okay. But we don't know if the 63% customer is new to the 10% customer mix or if it's a previous 10% customer. Is that right?
#388
observation#389
question#390
DW
David WeigandCFOSuper Micro Computer, Inc.
Yes. I'll just refer you to the 10-Ks and Qs on that. Yes.
By the way, I do want to clarify one thing in my narrative regarding the fully diluted share count. So the GAAP fully diluted share count increased sequentially from 663 million to 694 million shares. So — and then the non-GAAP share count increased from 677 million to 709 million. So there was just a — I noticed a typo on there. So please forgive the correction.
#391
context#392
#393
strategy#394
result#395
result#396
operational#397
#398
Closing Remarks
MS
Michael StaigerexecutiveSuper Micro Computer, Inc.
All right.
Thank you, everyone, for joining. I just want to just inform you that we had heard there were some technical difficulties with the webcast provider. A replay will be provided after the call, so you can catch up on that. Thank you for joining today.
#399
#400
context#401
#402
#403
Operator Sign-off
OP
Operatoroperator
That concludes the conference call. Thank you for your participation. You may now disconnect.