Q4 FY2024 Earnings Call
SMCI · Preprocessing Report
2024-08-06
Quality
100%
93
Turns
14
Speakers
5
Sections
10
Exchanges
466
Claims
Quality issues

Entities by group 31

computer hardware companies 1
Supermicrocompany
company executives 3
Charles LiangpersonDavid WeigandpersonMehdi Hosseiniperson
sell-side analysts 9
Aaron RakerspersonAnanda BaruahpersonSamik ChatterjeepersonGeorge WangpersonThomas BlakeypersonNehal ChokshipersonJon TanwantengpersonRuplu BhattacharyapersonMichael Ngperson
liquid cooling solutions 1
DLCproduct
gpu compute platform 4
BlackwellproductGB200productH200productH100product
investment banks 3
Bank of AmericacompanyGoldman SachscompanyBarclayscompany
datacenter infrastructure solutions 1
Datacenter Building Block Solutionsproduct
semiconductor technology providers 1
NVIDIAcompany
technology conferences 1
COMPUTEXevent
gpu networking components 2
NVL36productNVL72product
datacenter operators 2
Prime DatacentercompanyLambda Labscompany
ai cluster infrastructure 1
AI SuperClusterstechnology
it solutions 1
Total IT Solutionsproduct
Ungrouped 1
NASDAQ 100 Indexother
REPORTING 93PROJECTING 51POSITIONING 101EXPLANATORY 26ANALYST 83

Topics 77

liquid cooling×67revenue×37margin×20customer×18rack×14data center×12capacity×10gross margin×10blackwell×9cash×8cooling×7earnings×7interest income×7ai×6capex×6supply chain×5tax×4product×4company×4dlc×4

Themes 279

guidance×12liquid cooling×11market share×8gross×4customer adoption×3energy efficiency×3us×3full-year guidance×3days outstanding×3delay×3impact×3target range×3june quarter×3fiscal 2024 growth×2build time×2competitive positioning×2short-term pressure×2non-gaap operating×2enterprise channel×2oem appliance and large datacenter×2emerging 5g telco edge/iot×2rest of world×2free cash flow×2malaysia expansion×2timing×2customer support×2dlc×2strategic new×2quarterly amount×2fiscal year 2025 guidance×2customer demand×2cooling efficiency×2datacenter space×2per month×2q4 fy2024 record×1full-year comparison×1technology and product leadership×1largest deployment×1deployment efficiency×1nasdaq 100 inclusion×1record backlog×1liquid component shortage×1non-gaap per share×1operating profitability×1shipment delay×1shortage impact×1profitability tailwind×1global deployment×1total cost of ownership×1performance and reliability×1support for ai chips×1green computing×1deployment cost parity×1lower operating cost×1delivered to customers×1datacenter strategy×1deployment mix×1datacenter retrofit×1performance improvement×1datacenter lead time reduction×1carbon footprint reduction×1customer experience priority×1competitive advantage from optimized technologies×1solution expansion×1power and cooling constraints×1rapid deployment×1time-to-online optimization×1new offering×1malaysia production ramp×1shipping volume and cost structure×1silicon valley expansion×1global expansion×1record high orders and customer growth×1long-term investment×1quarterly guidance×1high-volume rollout×1share structure×1trading commencement×1strategic initiatives×1non-gaap diluted×1q4 growth×1ai gpu revenue mix×1continued×1improvement drivers×1component bottlenecks×1geographic expansion×1concentration×1subsystems and accessories mix×1rack-scale total it solutions×1by geography×1full-year gross margin decline×1expected improvement from new platforms and manufacturing efficiencies×1higher compensation and headcount×1quarterly increase in non-gaap expenses×1other income and expense×1interest expense reduction×1provision×1rate×1effective tax rate×1below guidance×1dilution from stock and convertible offerings×1inventory and receivables build×1working capital needs to support growth×1closing balance×1fiscal year spending×1manufacturing expansion×1closing position×1net cash position×1working capital efficiency×1design wins ramp×1q1 guidance×1gaap q4 fy2024×1non-gaap q4 fy2024×1sequential improvement×1diluted assumptions×1visibility and supply contingencies×1operating growth and improvement×1long-term gross margin targets×1design wins and new availability×1engagement and new customers×1capacity growth guidance×112-month growth target×1product maturity×1gradual improvement×1hyperscale mix and margin×1hyperscale repeat orders×1hyperscale order outlook×1consistency×1silicon valley roots×1enterprise focus×1datacenter expansion×1large-scale advantage×1large customer growth×1enterprise base expansion×1enterprise software solution×1datacenter enterprise traction×1cost advantages×1conversion to revenue×1mix outlook×1possible delay×1launch push out×1product rollout delayed×1base×1schedule delays×1overall business effect×1quarterly performance×1sequential decline drivers×1lost from component shortages×1delayed due to product issues×1missing key components×1component readiness×1component availability×1deferred revenue×1market strength×1manufacturing improvement×1growth outlook×1competitive capability×1market attention×1company confidence×1confidence×1technical drivers×1follow-up×1market history×1shipments×1ai deployment×1management sentiment×1industry shift×1power reduction×1faster deployment×1shipment outlook×1future expansion×1liquid and air cooled systems×1capacity expansion×1capacity target×1market preference×1customer consultation×1customer interest×1customer base growth×1minimized×1operating cost savings×1timeline×1business mix×1quarter guidance×1back-half weighting×1quarterly cadence×1conservative posture×1delayed timing×1no q3 shipment×1small q4 volume×1engineering sample volume×1volume ramp×1customer mix×1quarterly disclosure×110-k disclosure×1liquid cooled acceleration×1ramp up×1expedite and supply chain×1efficiencies recovery×1specific accounts×1higher supply costs×1share gains×1tier 2 and tier 3×1higher mix×1new penetration×1hyperscale wins×1large-scale datacenter readiness×1large-scale datacenter growth×1enterprise and scale growth×1capital raise×112-month puts and takes×1blackwell solution×1solution rollout delay×1h100 and h200 adoption×1datacenter-wide support×1liquidity×1bank financing×1strengthening×1future financing×1pricing and volume×1blackwell support×1use cases×1cpu support×1scale economics×1strategy adoption×1blackwell demand×1deployment costs×1maturity and scale×1costs×1mainstream adoption×1value proposition×1range expectation×1forward guidance×1recovery×1software and service expansion×1datacenter building block solutions×1other income composition×1quarterly result×1offset by investment adjustments×1higher cash balances×1offset by investments×1fiscal year 2024 growth×1revenue target funding×1revenue targets×1below revenue target×1investment grade profile×1unsecured borrowing×1inter-quarter funding×1year over year decline from expansion completion×1failure rates versus air-cooled systems×1comparison with air-cooled and other dlc systems×1per-node annualized comparison×1product development×1product readiness×1customer deployment×1production scale×1efficiency and energy savings×1first-mover advantage×1solution optimization×1air-cooled solution×1liquid vs air×1thermal management×1datacenter performance×1lower failure rates with dlc cooling×1purpose×1expert solutions×1total provider×1ai rack-scale mix shifted×1ai rack-scale mix increased qoq×1growth from liquid cooled racks×1q4 fy2024 change×164 gpu rack configuration×164 gpu rack shipments×1high density per rack×1high-capacity configuration×1customer-specific×1upcoming offering×1shipment volume×1blackwell ramp×1blackwell optimized designs×1

Key Metrics 89

revenue×38gross margin×27capacity×10interest income×7shipments×6capital expenditures×5market share×5volume×5operating margin×4profitability×4operating expenses×4free cash flow×4revenue guidance×4failure rate×4build time×3tax rate×3debt×3customers×3earnings per share×2uptime×2rack capacity×2eps×2margin×2interest expense×2cash used in operations×2diluted net income per share×2backlog×2repeat orders×2mix×2revenue mix×2capacity utilization×2tco×1racks×1deployment share×1energy costs×1computing performance×1lead time×1carbon footprint×1time-to-market×1time-to-online×1production×1shipping volume×1backorders×1stock split×1average selling price×1tax provision×1diluted eps×1share count×1inventory×1property, plant and equipment×1balance sheet position×1cash conversion cycle×1days inventory outstanding×1days sales outstanding×1days payables outstanding×1net sales×1stock-based compensation expense×1other income and expense×1diluted shares outstanding×1time to online×1product mix×1demand×1manufacturing efficiency×1deployment×1adoption rate×1growth×1guidance×1share×1power×1rack per month×1power consumption×1operating costs×1purchase obligations×1expedite costs×1penetration×1asp×1working capital×1credit line×1balance sheet×1loan×1cost×1profit margin×1other income×1capex×1annualized failure rate×1performance×1customer count×1gpu count×1efficiency×1

Entities 658

Supermicro×306Charles Liang×105David Weigand×72DLC×35Blackwell×17Aaron Rakers×11Datacenter Building Block Solutions×10Mehdi Hosseini×10Ananda Baruah×9Samik Chatterjee×8George Wang×8Thomas Blakey×8Nehal Chokshi×7Bank of America×6Jon Tanwanteng×6NVIDIA×5Ruplu Bhattacharya×5Michael Ng×4Goldman Sachs×4GB200×4Barclays×4H200×3COMPUTEX×2H100×2AI SuperClusters×1NASDAQ 100 Index×1Total IT Solutions×1NVL36×1NVL72×1Prime Datacenter×1Lambda Labs×1

Business Segments 111

Server And Storage Systems×111

Sectors 158

computer hardware×71data center×37semiconductor×17artificial intelligence×10liquid cooling×9cloud computing×5server hardware×3telecommunications×2internet of things×2manufacturing×1software×1

Regions 29

Malaysia×8US×4Rest of World×3Taiwan×3Silicon Valley×2Europe×2Taipei×1United States×1Americas×1Asia×1world×1worldwide×1global×1

Metadata Distributions

Sentiment
positive 139negative 31neutral 184
Temporality
backward 86forward 86current 182
Certainty
definitive 99confident 98moderate 86tentative 70speculative 1
Magnitude
major 75moderate 200minor 79
Direction
improvement 37decline 15flat 1mixed 7none 294
Time Horizon
immediate 98near_term 142medium_term 26long_term 6unspecified 82
Verifiability
quantitative 121event 28qualitative 205
Analyst Intent
probing 27challenging 2confirming 12seeking_detail 36seeking_guidance 6

Speakers

Executives
CLCharles LiangCEODWDavid WeigandCFO
Analysts
ARAaron RakersanalystABAnanda BaruahanalystGWGeorge WanganalystJTJon TanwantenganalystMHMehdi HosseinianalystMNMichael NganalystNCNehal ChokshianalystRBRuplu BhattacharyaanalystSCSamik ChatterjeeanalystTBThomas Blakeyanalyst
Other
MSMichael StaigerirOPOperatoroperator

Sections

TypeLabelSpeaker
preamblePreambleMichael Staiger
prepared_remarksPrepared RemarksCharles Liang, David Weigand
qa_sessionQ&A Session—
closing_remarksClosing RemarksThomas Blakey
operator_signoffOperator Sign-offOperator

Q&A Exchanges 10

#AnalystFirmTurns
1
MNMichael Ng
Goldman Sachs5
2
SCSamik Chatterjee
JPMorgan6
3
RBRuplu Bhattacharya
Bank of America Merrill Lynch7
4
ABAnanda Baruah
Loop Capital11
5
ARAaron Rakers
Wells Fargo10
6
GWGeorge Wang
Barclays8
7
JTJon Tanwanteng
CJS Securities9
8
MHMehdi Hosseini
SIG13
9
NCNehal Chokshi
Northland Capital Markets10
10
TBThomas Blakey
Key Corp8

Claim Taxonomy 354

REPORTING93
resultFinancial outcome for a completed period60
metricNon-financial quantitative fact16
operationalDiscrete completed event17
PROJECTING51
guidanceQuantitative expectation with number + time28
commitmentPromise with binary verifiable outcome18
targetLong-term aspirational quantitative goal5
POSITIONING101
strategyPriority, direction, or initiative70
competitiveCompany's position or advantages5
opportunityMarket condition framed as growth driver19
riskHeadwind, constraint, or uncertainty7
EXPLANATORY26
attributionWhy a specific outcome happened4
contextNon-company macro/industry fact22
FRAMING0
thesisFalsifiable belief about how the world works0
ANALYST83
questionInterrogative seeking information54
observationRestates a fact or data point24
concernFlags a risk or challenge1
estimateAnalyst's own projection or calculation1
sentimentOpinion, praise, or critique3

Transcript

Preamble
OP
Operatoroperator
Thank you for standing by.
My name is Harry and I will be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer Incorporated SMCI US Q4 2024 Earnings Call. With us today, Charles Liang, Founder, President and Chief Executive Officer; David Weigand, CFO; and Michael Staiger, 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. [Operator Instructions] Thank you.
MS
Michael StaigerirSuper Micro Computer, Inc.
Good afternoon and thank you for attending Supermicro's call to discuss financial results for the fourth quarter, which ended June 30th, 2024. With me today are Charles Liang, Founder, Chairman and Chief Executive Officer; and David Weigand, Chief Financial Officer.
At the end of today's prepared remarks, we will have a Q&A session for sell-side analysts. Our press release was issued after close of market and is posted on our website, where this call is being simultaneously webcast. The slides that accompany this webcast can be downloaded at ir.supermicro.com.
These include statements regarding our financial outlook and operations, our strategy, technology and its advantages, our current and new product offerings, and competitive, industry and economic trends. Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted, and reported results should not be considered as an indication of future performance. A discussion of some of the risks and uncertainties relating to our business is contained in our filings with the SEC, and we refer you to those public filings, including our most recent Annual Report on Form 10-K. During this call, all financial metrics and associated growth rates are non-GAAP measures other than revenue, and cash and investments. Reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the Supermicro Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website and is the property of Supermicro. Our first quarter fiscal 2025 quiet period begins at the close of business, Friday, September 13th, 2024. And with that, I will turn it over to Charles.
Prepared Remarks
CL
Charles LiangCEOSuper Micro Computer, Inc.
Thank you, Michael. Today, I am pleased to announce another record quarterly result of $5.31 billion, a 143% year-over-year growth. For fiscal 2024, we have achieved $14.94 billion in revenue, a 110% year-over-year growth rate. To put this in perspective, our Q4 revenue has exceeded the full year revenue of fiscal 2022.
Our robust growth is driven by our technology and product leadership in the AI infrastructure market, especially with Generative AI training and inferencing. We have been scaling quickly to secure a large share of AI CSP opportunities, deploying some of the largest AI SuperClusters in the world. Leveraging our system building blocks, we build and optimize rack-scale plug and play solutions with the latest DLC liquid cooling technology, helping our customers achieve the best TTD time-to-deployment and TTO time-to-online and lowest TCO with their AI solutions. Here are some key quarterly highlights. First, Supermicro is pleased to be included in the NASDAQ 100 Index last quarter.
Fiscal Q4 net revenue totaled $5.31 billion, up 143% year-on-year with a strong record high backlog. We could ship more if not for DLC liquid cooling component shortage. Fiscal Q4 non-GAAP earnings of $6.25 per share were well above $3.51 last year, which was 78% year-on-year growth. Our Q4 operating margin is 7.8%, which is lower than what we expected due to the higher mix of hyperscale datacenter business and expedited costs of our DLC liquid cooling components in June and September quarters. Some key new components shortage delayed about $800 million of revenue shipments to July, which lowered our EPS for June and will be recognized in our September quarter.
The availability of our Malaysia facility later this calendar year and our dominating position in DLC liquid cooling total solutions will be instrumental in increasing our profitability. Supermicro is powering the largest AI factories around the world today. We believe more and more datacenters will be opting for our latest DLC liquid cooling solutions, which dramatically improves TCO relative to traditional air-cooled datacenters and is less environmentally taxing. We have proved that DLC solutions also offer higher performance and better uptime, with advantage to support the upcoming new AI chips.
At Computex Taipei, I shared that Green Computing can be free with a big bonus. This means the cost of deploying liquid cooling DLC is on par with traditional air-cooled datacenter and significantly lowers the operational power cost. Since then, we have been delivering over 1,000 highly reliable DLC racks to multiple customers. Our goal is to quickly make DLC liquid cooling to be a mainstream solution for most datacenters and AI factories that focus on increasing efficiency and performance while reducing OpEx. We are targeting 25% to 30% of the new global datacenter deployments to use DLC solutions in the next 12 months, with most deployments coming from Supermicro we believe. We are happy to help any customers transform and adapt their existing air-cooled datacenters to DLC liquid cooling in the coming years for four major reasons.
First, it helps customers save energy costs up to 40%. Second, it boosts datacenter computing performance and third, it helps pull in customers' datacenter lead times or to be more precisely reduces their time to on-line because of less electrical power required and fourth, it reduces carbon footprint for our one-and-only mother earth. As an end-to-end IT infrastructure solutions company, our customers' experience is our number one priority. By leveraging our system building block and rack scale plug and play solutions, we help our customers achieve the best time-to-market advantage with new and performance optimized technologies. Now, we are further expanding this solution to the entire datacenter. With rapid deployment of large-scale AI infrastructure, datacenters worldwide are facing power shortages and cooling inefficiency challenges. Building these new AI-ready datacenters traditionally takes a long time, averaging three years for example. Our upcoming Supermicro 4.0 DCBBS, Datacenter Building Block Solutions will reduce customers' new datacenter build time from about three years to two years. For smaller facilities or old datacenter transformation, Datacenter BBS can enable an optimized, cost-effective datacenter in less than one year or even in just six months.
This new offering will significantly improve datacenters' TTO time-to-online and cost, with full integration of AI compute, server, storage, networking, rack, cabling, DLC liquid cooling facility water tower, end-to-end management software, onsite deployment services and maintenance. We will start offering it later this calendar year. Playing a significant role in realizing our Datacenter BBS and providing additional economies of scale, our new Malaysia campus will start production this November. With its geographic advantages, we expect it to quickly ramp up shipping volume and improve our cost structure.
In the US, we are adding new buildings and production POC provisioning capacity near our Silicon Valley headquarters as well, which will further boost our monthly DLC liquid cooling rack capacity and value this fiscal year. Moreover, we are on track to expand to a few other global manufacturing locations, leveraging our strength in product design, build quality, supply chain and deployment, positioning Supermicro as one of the largest IT infrastructure company. In summary, we are entering fiscal 2025 with record-high backorders, winning products, large volume DLC liquid cooling capacity, Datacenter BBS and more new customers. While our long-term investments impact short-term profitability, they position us well for future success by providing a sustainable competitive advantage and necessary economies of scale. This gives me confidence to forecast the September quarter revenue between $6 billion to $7 billion, and fiscal 2025 revenue between $26 billion to $30 billion. Again, we anticipate that the short-term margin pressure will ease and return to normal ranges before the end of fiscal 2025, especially when our DLC liquid cooling and Datacenter Building Block Solutions start to ship in high volume later this year. Lastly, I would like to announce a 10-for-1 forward stock split of Supermicro's common stock to make ownership of Supermicro stock more accessible. We are targeting trading on a split adjusted basis commencing at market open on October 1st, 2024. Before passing the call to David Weigand, our Chief Financial Officer, I want to say thank you to our partners, customers, Supermicro employees on an incredible year where we were able to bring AI at scale to the world and to our shareholders for your continued support. David?
#1
result#2
result#3
result#4
strategy#5
strategy#6
opportunity#7
strategy#8
strategy#9
#10
operational#11
result#12
attribution#13
result#14
result#15
guidance#16
guidance#17
guidance#18
competitive#19
commitment#20
competitive#21
metric#22
commitment#23
context#24
opportunity#25
opportunity#26
metric#27
strategy#28
target#29
strategy#30
opportunity#31
opportunity#32
context#33
context#34
competitive#35
competitive#36
commitment#37
context#38
context#39
commitment#40
commitment#41
strategy#42
strategy#43
commitment#44
strategy#45
operational#46
guidance#47
strategy#48
competitive#49
target#50
risk#51
strategy#52
guidance#53
guidance#54
guidance#55
commitment#56
operational#57
commitment#58
#59
#60
DW
David WeigandCFOSuper Micro Computer, Inc.
Thank you, Charles.
We had robust growth in the fiscal year, and I am pleased with the progress we made on our strategic initiatives. For fiscal year '24, we reported revenues of $14.9 billion, representing 110% growth over fiscal year '23 revenues of $7.1 billion. Fiscal year '24 non-GAAP diluted EPS of $22.09 grew 87% over fiscal year '23 non-GAAP diluted EPS of $11.81. Between fiscal year '21 and fiscal year '24, we achieved significant operating leverage with revenues growing at a compound annual growth rate of 61% per year while non-GAAP operating expenses only grew at 19% per year. Between fiscal year '21 and fiscal year '24, gross margins have met or exceeded the target range of 14% to 17%. Non-GAAP operating margins were above the target range of 5% to 8% between fiscal year '21 and fiscal year '24 and more than doubled from 4.4% in fiscal year '21 to 10% in fiscal year '24 due to strong revenue growth and operating leverage.
Q4 revenues were $5.31 billion, up 143% year-over-year and up 38% quarter-over-quarter, and above the midpoint of guidance of $5.1 billion to $5.5 billion. Growth was driven by strong demand for next generation air-cooled and direct liquid-cooled rack-scale AI GPU platforms, representing over 70% of revenues across enterprise and cloud service provider markets where demand remains strong. We exited the year with an acceleration in innovative DLC products, a large design win pipeline and a strong backlog, positioning us for continued growth in fiscal year 2025. We expect gross and operating margins to gradually increase in the year driven by product and customer mix, manufacturing efficiencies for new DLC AI GPU clusters and new platform introductions. As Charles discussed, shipments may continue to be constrained in the short-term by supply chain bottlenecks for key new components for our advanced platforms. However, long-term gross margins will benefit from lower manufacturing costs as we scale up production in Malaysia and Taiwan, in addition to expansion in the Americas and Europe.
During Q4, we recorded $1.83 billion in the enterprise-channel vertical, representing 34% of revenues versus 49% in the last quarter, up 87% year-over-year and down 3% quarter-over-quarter. The OEM appliance and large datacenter segment revenues were $3.41 billion, representing 64% of Q4 revenues versus 50% in the last quarter, up 192% year-over-year and up 76% quarter-over-quarter. Emerging 5G, Telco, Edge/IoT revenues were $75 million or 2% of Q4 revenues. For fiscal year '24, enterprise-channel revenues grew 79% to represent 41% of total revenues. The OEM appliance and large datacenter segment grew 149% and represented 58% of total revenues. The emerging 5G, Telco, Edge/IOT segment represented 1% of total revenues. One CSP/large datacenter customer represented approximately 20% of revenues for fiscal year '24. Server and Storage Systems comprised 95% of Q4 revenue and Subsystems and Accessories represented 5%.
ASPs increased on a year-over-year and quarter-over-quarter basis driven by the value and complexity of rack-scale Total IT Solutions. By geography, US represented 61% of Q4 revenues, Asia 24%, Europe 10%, and Rest of World 5%. On a year-over-year basis, US revenues increased 94%. Asia increased 437%, Europe increased 128%, and Rest of World increased 386%. On a quarter-over-quarter basis, US revenues increased 20%, Asia increased 66%, Europe increased 74% and Rest of World increased 187%.
The Q4 non-GAAP gross margin was 11.3% versus 15.6% in Q3 due to product and customer mix, focus on winning strategic new designs with competitive pricing and higher initial costs in ramping production of new DLC AI GPU clusters. For fiscal year '24, the non-GAAP gross margin was 14.2% versus 18.1% for fiscal year '23. We have a path to improve gross margins to the target range of 14% to 17% as we introduce innovative platforms based on multiple new technologies from our strategic partners and improved manufacturing efficiencies on our DLC solutions. Q4 operating expenses on a GAAP basis increased by 15% quarter-over-quarter and 75% year-over-year to $253 million driven by higher compensation expenses and headcount. On a non-GAAP basis, operating expenses increased 11% quarter-over-quarter and 39% year-over-year to $185 million. Q4 non-GAAP operating margin was 7.1% versus 11.3% in Q3, due to the lower gross margins. Other income and expense for Q4 was $11 million, consisting of $3 million in interest expense and $14 million from interest income on higher cash balances offset by a loss from foreign exchange and other investments. Interest expenses decreased sequentially as we paid down short-term bank credit facilities. The tax provision for Q4 was $1 million on a GAAP basis and $21 million on a non-GAAP basis.
The GAAP tax rate for Q4 was 0.3% and the non-GAAP tax rate was 5%. The GAAP tax rate was 4.9% for fiscal year '24 versus 14.7% in fiscal year '23 and the non-GAAP tax rate was 10.4% in fiscal year '24 versus 15.9% in fiscal year '23. Q4 GAAP diluted earnings per share of $5.51 was below the guidance of $7.20 to $8.05 and non-GAAP diluted EPS of $6.25 was below the guidance of $7.62 to $8.42 due to lower gross margins and higher operating expenses in the quarter. The GAAP fully diluted share count increased quarter-over-quarter from 61.4 million to 64.2 million and the non-GAAP share count increased sequentially from 62 million to 64.8 million shares reflecting the effects of the two recent stock offerings and the convertible bond offering.
Q4 cash flow used in operations was $635 million compared to $1.52 billion in the previous quarter, as inventory and accounts receivable grew due to higher levels of business and the timing of shipments. For fiscal year '24, cash used in operations was $2.5 billion due to strong revenue growth of 110% and working capital needs to support large customer design wins. Q4 closing inventory was $4.4 billion in anticipation of future growth. CapEx for Q4 was $27 million resulting in negative free cash flow of $662 million for the quarter. CapEx for fiscal year '24 was $137 million up from $37 million in fiscal year '23 as we invested in new property, plant, and equipment globally, including our greenfield Malaysia plant. The Q4 closing balance sheet position was $1.7 billion, while bank and convertible note debt was $2.2 billion resulting in a net cash position of negative $504 million versus a net cash position of $252 million last quarter.
Turning to the balance sheet and working capital metrics compared to last quarter, the Q4 cash conversion cycle was 94 days versus 96 days in Q3. Days of inventory decreased by 10 days to 82 days compared to the prior quarter of 92 days. Days sales outstanding was unchanged at 37 days while days payables outstanding decreased by 8 days to 25 days.
Now turning to the outlook for Q1 fiscal year '25, we expect strong growth as we ramp new air-cooled and DLC AI GPU design wins with new and existing customers. For the first quarter of fiscal 2025, we expect net sales in the range of $6 billion to $7 billion.
GAAP diluted net income per share of $5.97 to $7.66 and non-GAAP diluted net income per share of $6.69 to $8.27. We expect gross margins to improve sequentially due to product and customer mix and improving manufacturing efficiency. GAAP operating expenses are expected to be approximately $282 million and include $84 million in stock-based compensation expenses that are not included in non-GAAP operating expenses. The outlook for Q1 of fiscal year 2025 fully diluted GAAP EPS includes approximately $48 million in expected stock-based compensation expenses, net of tax effects of $35 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense to be a net expense of approximately $20 million. The company's projections for Q1 fiscal year '25 GAAP and non-GAAP diluted net income per common share assume a GAAP tax rate of 9.9% and a non-GAAP tax rate of 14.6%, and a fully diluted share count of 65 million for GAAP and 66 million shares for non-GAAP. We expect CapEx for Q1 to be in the range of $45 million to $55 million. For fiscal year 2025, we are introducing guidance for revenues from $26 billion to $30 billion. Michael, we're now ready for Q&A.
#61
strategy#62
result#63
result#64
result#65
result#66
result#67
result#68
metric#69
strategy#70
attribution#71
risk#72
guidance#73
result#74
result#75
result#76
result#77
result#78
result#79
result#80
result#81
strategy#82
metric#83
result#84
result#85
result#86
result#87
result#88
strategy#89
result#90
result#91
result#92
result#93
result#94
result#95
result#96
result#97
result#98
result#99
result#100
result#101
result#102
result#103
result#104
strategy#105
result#106
result#107
result#108
result#109
result#110
result#111
strategy#112
guidance#113
Q&A Session
Q&A 1/10
OP
Operatoroperator
Thank you. [Operator Instructions] Our first question today is from the line of Michael Ng of Goldman Sachs. Please go ahead. Your line is now open.
MN
Michael NganalystGoldman Sachs
Hey, good afternoon. Thank you very much for the question. I guess, I have, two. Encouraged to see the revenue guidance for $26 billion to $30 billion for fiscal '25. I was wondering if you could just provide a little bit of color around the assumptions underpinning that revenue guidance and any visibility that you have in terms of backlog and some of the contingencies you might be assuming in terms of supply availability? And then secondly, I was just wondering if you could provide a little bit more color around the growth in operating margin, improvement throughout the year. Should we think about the, the long-term gross margin targets as applicable for the full year as well or exiting the year? Thank you.
result#114
result#115
result#116
guidance#117
guidance#118
guidance#119
guidance#120
guidance#121
metric#122
guidance#123
guidance#124
CL
Charles LiangCEOSuper Micro Computer, Inc.
Okay. Thank you. I mean as to what we share, I mean, we continue to gain design wins and we see lots of new product available, including DLC liquid cooling and Datacenter Building Block Solutions, we see a lot of customer engagement and also more new customer like to engage with us. So with our capacity continue to grow $26 billion to $30 billion. That's our target for the next 12 months. And as to gross margin, as what we just mentioned, our DLC liquid cooling now have been very mature. So we are able to take advantage from that and also Datacenter Building Block Solutions that provides a much better value, improve customers' Datacenter time to online and also EG customers job to build their data center. So all of those will increase our profitability gradually.
#125
MN
Michael NganalystGoldman Sachs
Thank you, Charles.
CL
Charles LiangCEOSuper Micro Computer, Inc.
Thank you.
Q&A 2/10
OP
Operatoroperator
Our next question today is from the line of Samik Chatterjee of JPMorgan. Please go ahead. Your line is now open.
SC
Samik ChatterjeeanalystJPMorgan
Yes. Hi. Thanks for taking my questions. I have a couple as well. Maybe if I can start with the gross margin performance in the quarter. I know you mentioned you had a hyperscale customer, which impacted product customer mix and margin impact there. How should we think about sustainability or sort of repeat orders from that customer? It sounds like you're saying that's part of the improvement and you probably don't see as much repeat, but just wanted to confirm if that's how we should be thinking about the hyperscale customer you had, which is that it doesn't really repeat through fiscal '25. And I have a follow-up.
#126
#127
#128
observation#129
question#130
question#131
question#132
question#133
#134
#135
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. We have been very consistent. I mean before we are Silicon Valley based, operations was in Silicon Valley. So we focus on enterprise, high-quality, higher performance customer only, that's before. But when we start to take production operation advantage from Taiwan, we start to grow large-scale datacenter customer. And now we have a huge capacity in Malaysia, it will be ready by later this year. So with the economic large-scale advantage, we are waiting for a large customer. So we will continue to grow with large customers.
At the same time, we also continue to enhance our enterprise customer base. So recently, we also see the growth in some demand from our enterprise with our software total solution, I mean Datacenter Building Block Solutions. We start to gain more attraction for the datacenter, I mean, enterprise customers as well. So we believe long-term economic scale, the enterprise customer base and overall Taiwan and Malaysia advantage cost advantage that we have a way to grow gross margin and net profit.
#136
operational#137
operational#138
guidance#139
guidance#140
strategy#141
strategy#142
guidance#143
#144
#145
SC
Samik ChatterjeeanalystJPMorgan
Got it. And for my follow-up, Charles, there have been reports more recently about the delay of the GB200 from NVIDIA. Just wondering if you can share your thoughts of how that would impact the conversion of the robust backlog or pipeline that you're looking at to revenue through the year? And is that accounted for when you talk about liquid cooling now being a materially higher portion than what you talked about at COMPUTEX. Are you taking some of those delays into account? Thank you.
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. I mean, yes, we heard NVIDIA may have some delay, right? And we treat that as a normal possibility.
When they introduced new technology, new product, they are always have a chance to — there will be a push out a little bit. In this case, it pushed out a little bit. But to us, I believe we have no problem to provide the customer with a new solution like H200 liquid cooling. We have a lot of customers like that. So although we hope better deploy in the schedule, that's good for a technology company, but this push out overall impact to us. It should be not too much.
SC
Samik ChatterjeeanalystJPMorgan
Okay. Thank you. Thanks for taking my question.
Q&A 3/10
OP
Operatoroperator
Our next question today is from the line of Ruplu Bhattacharya of Bank of America Merrill Lynch. Please go ahead. Your line is open.
RB
Ruplu BhattacharyaanalystBank of America Merrill Lynch
Hi. Thanks for taking my questions. I have two of them. The first one relates to the gross margin performance in the quarter. David, can you specify of the 430 bps sequential decline, how much was the result of the customer mix, which is the higher hyperscale customer mix versus the impact of ramping liquid cooling solutions? And how much was that impact to gross margins? And in terms of, I think, Charles, you said you lost about $800 million of revenue in the quarter because of nonavailability of components. Is that all liquid cooling related or was that related to other things like GPUs as well? Thank you.
#146
#147
#148
#149
question#150
observation#151
question#152
question#153
#154
CL
Charles LiangCEOSuper Micro Computer, Inc.
Pretty much liquid cooling key components related. But now it's much ready now. I mean when we move to July, August, we have a much liquid cooling key components are available now.
#155
strategy#156
strategy#157
DW
David WeigandCFOSuper Micro Computer, Inc.
Ruplu, it wasn't a loss. It was pushed out into the next quarter. Yes. So there was — we really — we were surprised by the amount of demand that we had in this market. And so we — our manufacturing efficiency improves — has been improving every day. And so we expect that to continue and that's going to help our gross margins going forward as we deploy liquid cooled racks at scale.
strategy#158
operational#159
commitment#160
strategy#161
strategy#162
strategy#163
RB
Ruplu BhattacharyaanalystBank of America Merrill Lynch
And is that deployment expected to be linear for these liquid cool racks throughout the year or is it more back-end loaded? Thanks. Thanks for taking my questions.
strategy#164
strategy#165
attribution#166
CL
Charles LiangCEOSuper Micro Computer, Inc.
Basically, we support a handful customer for liquid cooling. And most of them, once they try our liquid cooling, they will continue to deploy higher percentage with liquid cooling because the cost — the hardware acquisition cost is about the same, but they will save a lot of energy costs. So I believe this growth will be consistently growing.
#167
observation#168
question#169
RB
Ruplu BhattacharyaanalystBank of America Merrill Lynch
Thank you.
question#170
Q&A 4/10
OP
Operatoroperator
Our next question today is from the line of Ananda Baruah of Loop Capital. Please go ahead. Your line is open.
AB
Ananda BaruahanalystLoop Capital
Yes. Good afternoon, guys. Thanks for taking the question. Charles, you said a lot of good stuff on this call. So I'll try to just ask about one or two things here.
I guess to start, could you frame for us how the company is thinking about its liquid cooling capability relative to others who are providing liquid cooling service as well. That's been a big top of the conversation. It sounds like you guys are really high on your capability and it seems to be showing up at least in the guidance. But I think additional context around how you guys are competitively positioned and maybe some of the technical reasons why would be super useful for those. And then I just have a quick follow-up.
#185
#186
#187
observation#188
question#189
question#190
observation#191
question#192
#193
risk#194
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Thank you. I mean as you know liquid cooling have been in the market for 30 years and market share compared with overall datacenter size always small, less than 1% or close to 1%, I would have to say. But just June and July two months alone, we shipped more than 1,000 racks to the market. And if you calculate 1,000 racks, AI rack is about more than 15% on a global datacenter new deployment. So we are very happy.
We are happy that the industry pushed from air cooled to liquid cooling and to help customer save energy costs and reduce carbon footprint. At the same time, because of the liquid cooling, DLC liquid cooling datacenters require 30% to 40% less power, that's why it's met customers' datacenter availability quicker because the customers don't have to wait for higher power budget from a powering company. So overall we see more customers like our liquid cooling solution.
opportunity#195
commitment#196
result#197
guidance#198
#199
opportunity#200
strategy#201
guidance#202
question#203
AB
Ananda BaruahanalystLoop Capital
And Charles did I hear you accurately that you guys think you did 50% liquid cooling share in the June quarter?
#204
CL
Charles LiangCEOSuper Micro Computer, Inc.
I believe for June and July in last next two months we may ship at least 70% to 80% or liquid cooling compared with all the liquid cooling in the world. So for liquid cooling, we have at least 70% to 80% market share.
#205
strategy#206
AB
Ananda BaruahanalystLoop Capital
That's useful. Thank you. And then just real quick, my follow-up is you've made remarks earlier this year in the recent past about how you envision expanding your rack capacity sort of over the sort of into the future. I was just wondering if you could give us an update on how to think about, how you're thinking about rack capacity expansion for both liquid cooled and air cooled and that's it for me. Thanks.
opportunity#207
opportunity#208
#209
CL
Charles LiangCEOSuper Micro Computer, Inc.
It's a very good question.
I mean, last month, we have about 1,000 racks per month liquid cooling capacity. And today, we already grow another 50%. So now we have a 1,500 rack per month capacity. By this year-end, we will grow that to 3,000 rack per month.
That's with liquid cooling alone. So we really believe liquid cooling is a much better choice for the market and we provide kind of consultation to customers. And most of the customer when discuss with our engineering team, they love liquid cooling. And again, we are growing customer base for liquid cooling very strongly. And we're really happy for that because minimized power consumption have been common value to the world and especially save operation costs.
AB
Ananda BaruahanalystLoop Capital
And that's fiscal year fiscal year you say end of the year and the fiscal year?
CL
Charles LiangCEOSuper Micro Computer, Inc.
For the next 12 months, I believe, liquid coding will be a big portion of our business.
AB
Ananda BaruahanalystLoop Capital
Thank you.
CL
Charles LiangCEOSuper Micro Computer, Inc.
Thank you.
Q&A 5/10
OP
Operatoroperator
Our next question today is from the line of Aaron C. Rakers of Wells Fargo. Please go ahead. Your line is open.
AR
Aaron RakersanalystWells Fargo
Yes. Thanks for taking the question. I've got two as well.
I guess I want to go back to the earlier question on Blackwell just because I think it's going to be a key focal point for a lot of investors here especially as we kind of shape the full year guidance. So Charles I want to be clear. So has your guidance contemplated as we think about the December quarter, do you believe that you'll be shipping the Blackwell platform solutions for revenue in the December quarter or should we think about the full year guide is a bit more weighted to the back half of the fiscal year given some of these concerns around the timing of Blackwell availability and NVL36 and NVL72 platforms, et cetera. I'm just curious of how you want us to say for the street to think about the cadence of that full year guidance shaping up on a quarterly basis. Appreciate you're not going to give quarter-by-quarter guidance.
#210
#211
#212
observation#213
question#214
question#215
observation#216
sentiment#217
sentiment#218
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Thank you.
I mean, indeed, we are relatively very conservative. I understand Blackwell may postpone how much we don't exactly know because the new technology always what can be pushed out, right? So for Q3, for sure, we do not expect any Blackwell volume. For Q4, I mean December quarter, I guess, it will be very small. Engineering sample small volume. So the real volume, I believe, had to be March quarter next year. And that's why we foresee only $26 billion to $30 billion.
question#219
question#220
question#221
#222
#223
context#224
metric#225
operational#226
metric#227
strategy#228
opportunity#229
opportunity#230
AR
Aaron RakersanalystWells Fargo
Yes. That's very helpful. And then as a quick follow-up, I want to go back to kind of the gross margin discussion too. We talked about the impact of the DLC platforms. You talked about product mix. One of the other comments, David, you had made was that winning strategic new customers was a factor in that 430 basis point gross margin degradation. Can you help us appreciate what exactly the impact of that has been?
How that might have changed this last quarter? And then I'll flip my final one in. Any disclosure on purchase obligations coming out of this last quarter? Thank you.
metric#231
attribution#232
strategy#233
question#234
target#235
metric#236
#237
#238
observation#239
question#240
#241
context#242
DW
David WeigandCFOSuper Micro Computer, Inc.
Yes. Thanks. I'll answer those in reverse order. We don't have any announcements in terms of purchase obligations and so we'll point you to the 10-K for that. But with respect to your first question, I would say, we prepared the market for a downturn in margins or a softening of margins in our guidance last quarter. But even we were surprised by the acceleration that we saw in the liquid cooled rack market.
And so we had to ramp up our supply chain. We paid a lot of expedite costs and higher supply chain costs. So I think as the supply chain improves, we expect those efficiencies to now come back out, but that impacted us more than we had expected.
metric#243
metric#244
metric#245
target#246
target#247
strategy#248
strategy#249
opportunity#250
strategy#251
context#252
strategy#253
CL
Charles LiangCEOSuper Micro Computer, Inc.
Especially for June quarter.
question#254
DW
David WeigandCFOSuper Micro Computer, Inc.
Yes, for the June quarter.
strategy#255
AR
Aaron RakersanalystWells Fargo
Is that the majority of the — was that the majority for the 430 basis point decline?
#256
DW
David WeigandCFOSuper Micro Computer, Inc.
Well, no, I think. No, so half was targeting specific accounts like we announced last quarter. And the other half was really the higher supply costs that we encountered.
#257
AR
Aaron RakersanalystWells Fargo
Yes. Very helpful. Thank you, guys.
Q&A 6/10
OP
Operatoroperator
Our next question today is from the line of George Wang of Barclays. Please go ahead. Your line is now open.
GW
George WanganalystBarclays
Hey, guys. Thanks for taking my question.
I have two parts. Firstly, can you give more color just in terms of share gains, especially within the hyperscale arena? Traditionally, Supermicro has been more Tier 2, Tier 3 enterprise. And you guys talked about higher mix on hyperscale. Just curious does that mean you guys are winning new penetration to the hyperscale space?
#258
#259
#260
observation#261
#262
question#263
question#264
question#265
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Again like what I just mentioned with our Taiwan capacity is getting bigger and Malaysia capacity will be ready. So we're fully ready for large scale datacenter customer, but we will be selective. So that's why we foresee only $26 billion to $30 billion.
If we try to be more aggressive in a large scale, our growth can be even faster than that. But we try to grow in both ways enterprise and large scale datacenter kind of try to balance so to maintain our healthy profitability.
#266
#267
#268
strategy#269
commitment#270
commitment#271
GW
George WanganalystBarclays
Okay. Great. Just a second question, if I can squeeze in. Just as we enter the Blackwell era with liquid cooling kind of larger deployments, higher ASP, but also comes with some potential working capital need. Just in terms of the capital raise, is that fair to say you guys are sufficient or there could be some potential to come to the market? Just maybe you can talk about the puts and takes for the next 12 months.
commitment#272
commitment#273
commitment#274
guidance#275
#276
#277
CL
Charles LiangCEOSuper Micro Computer, Inc.
Liquid cooling, I mean, for sure, is necessary and it's very helpful for Blackwell solution. Although Blackwell solution pushed out a little bit.
But indeed we enable liquid cooling for H100 and H200 as well and a lot of customers are interested in our H100 and H200 liquid cooling now indeed. So liquid cooling to from our position we'd like to support the whole datacenter not just Backwell.
#278
observation#279
observation#280
concern#281
GW
George WanganalystBarclays
Okay. Can you address on the working capital if you can give any color on that?
question#282
question#283
DW
David WeigandCFOSuper Micro Computer, Inc.
Yes. So we announced a $500 million credit line with a group led by the Bank of America. And so we expect we are really working on our balance sheet and leveraging our balance sheet. And we expect to some announcements to be coming in terms of additional loan possibilities in the future.
#284
question#285
#286
#287
GW
George WanganalystBarclays
Okay. Great. I will go back to the queue. Thank you.
#288
#289
context#290
risk#291
Q&A 7/10
OP
Operatoroperator
Our next question today is from the line of Jon Tanwanteng of CJS Securities. Please go ahead. Your line is open.
JT
Jon TanwantenganalystCJS Securities
Hey, good afternoon. Thank you for taking my question. I was wondering if you could just talk, given your time to market and volume capabilities and liquid cooling, the energy and compute advantages, can you walk through what your pricing strategy is and why not pass those costs on especially relative to the value that you're providing? Is it a stronger competitive environment close to behind you or are you effectively trying to get ahead of them and get that share first?
#305
#306
#307
question#308
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes, I mean, indeed, the liquid cooling from our point of view it is really a good value to the whole market and our whole planet because of less energy consumption, right? So we enable liquid cooling primarily for Blackwell, right, because Blackwell higher power that's for sure. Lots of cases need liquid cooling. But we enable that for H100, H200 and regular CPU as well. Because overall liquid cooling once mature, once economical scale is good enough, it's good for all different kind of computing. And not exactly now, we are deploying, we are promoting. Lot of our customer continue to interest in our liquid cooling even enough for Blackwell.
observation#309
observation#310
question#311
operational#312
commitment#313
strategy#314
guidance#315
JT
Jon TanwantenganalystCJS Securities
Got it. Thank you. And then you mentioned getting back to the gross margin target range by the fiscal year-end. Can you help us narrow down a little bit more where in that target range you expect to be at the low end? Is it more towards the middle kind of help us understand how you're getting there?
strategy#316
strategy#317
#318
#319
#320
CL
Charles LiangCEOSuper Micro Computer, Inc.
Okay.
For June, it's really a unique quarter because we deploy lots of liquid cooling and we pay lots of exploration cost. So that makes our June gross margin much worse. But now, indeed, our liquid cooling technology have been getting very mature, and we have a high volume now. So that though our liquid cooling cost are now. And however we try to promote liquid cooling as a mainstream product solution. So we try not to add the value too much to customers. But, instead, we try to gain market share and make liquid cooling everywhere.
estimate#321
question#322
question#323
strategy#324
commitment#325
operational#326
strategy#327
#328
JT
Jon TanwantenganalystCJS Securities
Okay. Thank you. And any color just on where in the margin range you expect to end up?
question#329
strategy#330
operational#331
DW
David WeigandCFOSuper Micro Computer, Inc.
Well, so we, I think if you look at the guidance that we gave for Q1, we expect to be above 12% in the first quarter. And we're doing — we'll be working very hard to move back into the range as we mentioned as soon as quickly as we can.
strategy#332
commitment#333
CL
Charles LiangCEOSuper Micro Computer, Inc.
Especially with our commissioned Datacenter Building Block Solutions with more software, on-site deployment, maintenance and kind of end-to-end management service. So our profit margin should grow from a Building Block Solution for Datacenter very soon.
#334
#335
JT
Jon TanwantenganalystCJS Securities
Great. Thank you, guys.
#336
#337
Q&A 8/10
OP
Operatoroperator
Our next question is from the line of Mehdi Hosseini of SIG. Please go ahead. Your line is open.
MH
Mehdi HosseinianalystSIG
Yes. Thanks for taking my question. I just have two housekeeping item. David, what kind of other income did you have in the June quarter. You did say that you had interest income of $12 million that you realized in the June quarter?
#338
#339
question#340
question#341
context#342
DW
David WeigandCFOSuper Micro Computer, Inc.
That was a net figure, Mehdi. So we actually had $20 million of interest income, but that was offset by some adjustments too, some investment adjustments which brought down lower.
context#343
context#344
MH
Mehdi HosseinianalystSIG
But the $20 million is that interest income. The $20 million is that interest income?
strategy#345
context#346
DW
David WeigandCFOSuper Micro Computer, Inc.
$20 million was interest income, yes, from higher cash balances. That was offset by some investments.
strategy#347
opportunity#348
MH
Mehdi HosseinianalystSIG
Okay. All right. And then a question I have for Charles. Obviously, you've done a good job of doubling revenue in fiscal year '24. But you also had a negative free cash flow of $2.6 billion. And if I were to look at the high end of your revenue guide for fiscal year '25, you're on track to double revenues again. Does that mean that you're going to need to burn another $2.5 billion to $2.6 billion of free cash flow to hit those revenue targets?
#349
#350
observation#351
question#352
question#353
#354
strategy#355
CL
Charles LiangCEOSuper Micro Computer, Inc.
Not necessarily. I mean if we try to be very aggressively growing market share maybe if example we forecast on $30-something billion, right, so in that case, we may need more. But if we try to focus on below $30 billion then not necessary.
guidance#356
strategy#357
result#358
DW
David WeigandCFOSuper Micro Computer, Inc.
And Mehdi, one thing I would add to that is we believe that we have an IG profile. And as such, like I mentioned earlier, we're starting to leverage our balance sheet more with targeting toward unsecured debt. And so that will help us on an inter-quarter basis.
strategy#359
strategy#360
strategy#361
MH
Mehdi HosseinianalystSIG
Got you. Thank you. What should I assume for fiscal year '25 CapEx?
#362
#363
question#364
DW
David WeigandCFOSuper Micro Computer, Inc.
No. We don't have — we're not giving a guide at this time.
guidance#365
strategy#366
MH
Mehdi HosseinianalystSIG
Okay. But would it be down on a year-over-year basis since most of the expansion in Malaysia and US are behind us?
strategy#367
guidance#368
DW
David WeigandCFOSuper Micro Computer, Inc.
Well we have other projects going on expansion here in the US, but we'll — nothing to announce today.
#369
MH
Mehdi HosseinianalystSIG
Got you. All right. Thank you, Dave.
#370
Q&A 9/10
OP
Operatoroperator
Our next question today is from the line of Nehal Chokshi of Northland Capital Markets. Please go ahead. Your line is now open.
NC
Nehal ChokshianalystNorthland Capital Markets
Yes. Thank you. I want to talk about DLC and some of the chatter that's been out there from some competitors and that, it sounds like failure rates for DLC, broadly speaking, not necessarily for Super Micro is high relative to air-cooled. Can you comment on what is Super Micro's DLC failure rates relative to air-cooled and then also relative to other DLC solutions. And I guess maybe we can do it on a per-node basis annualized failure rates or whatever basis you want to utilize?
#371
#372
#373
question#374
question#375
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes.
We spent a lot of effort in last, I would like to say, two years to prepare our optimized DLC solution, including lots of new design, redesign, refining the components of the system. So finally, I mean, about May this year, right, we have our DLC solution for you ready. And we have more than a handful, high-profile customers who really like our DLC solution. That's why we're deploying the solution to them and that's why we paid lot of exploration charge, right? But now the good thing is our whole DLC solution has been very mature and ready for really high-volume production. So now for any customer want DLC, we are able to support them quickly and with a much reasonable cost now. So looking forward, I mean, DLC, I believe, will be a really popular solution for the world because it's more efficient, especially energy saving. So we are very happy that we establish DLC solution much ahead of anyone else. Again like June and July, I believe, we have at least 70% or 80% maybe even higher market share in the world for DLC.
And air-cooled, again, we have been — have a very optimized air-cooled solution. So we continue to promote air-cooled solution for sure.
result#376
result#377
observation#378
question#379
result#380
result#381
#382
#383
#384
observation#385
observation#386
observation#387
NC
Nehal ChokshianalystNorthland Capital Markets
And do you have any thoughts on the actual like failure rates relative to air-cooled and then relative to other suppliers DLC solutions?
question#388
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes, liquid cooling, as you know, because a very high efficient in cooling, right? So they allow CPU, GPU other components running at a lower temperature. And then in lot of case, indeed, are able to optimize customers' datacenter performance by percentage, right, a couple of percentage to even high single-digit percentage. So a lot of customers really like DLC at this moment.
strategy#389
guidance#390
guidance#391
strategy#392
NC
Nehal ChokshianalystNorthland Capital Markets
So are you saying that you actually can achieve lower failure rates with DLC because you can run the GPUs at lower temperatures.
operational#393
CL
Charles LiangCEOSuper Micro Computer, Inc.
CPU, GPU and other components at a lower temperature that which you have the kind of the whole datacenter quality, uptime, availability time.
strategy#394
NC
Nehal ChokshianalystNorthland Capital Markets
Okay. And then my follow-up question is that, I think, June 21st, you did an 8-K after market close, leasing significant datacenter space from prime datacenter and then you're leasing it back to Lambda Labs. It seems like a rather odd arrangement. Can you guys talk about the purpose of doing this?
#395
#396
question#397
context#398
DW
David WeigandCFOSuper Micro Computer, Inc.
So we consider ourselves experts in datacenter solutions. And so this is really just one more facet of being a total provider.
context#399
#400
NC
Nehal ChokshianalystNorthland Capital Markets
Okay. Thank you.
question#401
strategy#402
Q&A 10/10
OP
Operatoroperator
Thank you. And our next question is from the line of Thomas Blakey of Key Corp. Please go ahead. Your line is open.
TB
Thomas BlakeyanalystKey Corp
Hi, guys. Thanks for taking my questions. I have a few here. David, could you comment on the mix shift — mix rather of AI rack scale revenue here in the quarter? Was it — did it increase quarter-on-quarter in the June quarter?
#406
#407
observation#408
question#409
question#410
DW
David WeigandCFOSuper Micro Computer, Inc.
Absolutely. I mean our revenues went up — over a $1.5 billion and that was primarily driven by liquid cooled racks.
#411
operational#412
TB
Thomas BlakeyanalystKey Corp
Okay. Excellent. And an update maybe on the capacity utilization did that increase as well or decrease? And relatedly to that, you commented last quarter that there would be a number, I think of about 1,000 rack per month going out at a 64 GPU configuration? Could you give an update in terms of did you shipped those to the three customers? One was new in the June quarter? And again an update on the capacity utilization related to that question.
operational#413
opportunity#414
operational#415
operational#416
strategy#417
opportunity#418
operational#419
CL
Charles LiangCEOSuper Micro Computer, Inc.
Yes. Customers like our high density computing solution especially per rack. That's why you say 64 GPU or more GPU, right? So we are very efficiently provide the customer for whatever configuration they like. And very soon we will allow something even better for sure.
result#420
strategy#421
strategy#422
question#423
context#424
TB
Thomas BlakeyanalystKey Corp
So that — so to be clear is that a yes that you shipped 3,000 racks during the quarter at that configuration to those three customers?
context#425
CL
Charles LiangCEOSuper Micro Computer, Inc.
We are building that capacity for that because how many customers will move to DLC, especially when Blackwell ready. So we are very optimistic for that, especially after Blackwell in high volume production. And we have many Blackwell ready optimized system and rack scale design.
metric#426
opportunity#427
question#428
DW
David WeigandCFOSuper Micro Computer, Inc.
Yes. But Thomas the 1,000 per month was the capacity. We're not saying that we shipped 1,000 per month. But one thing I can tell you is that the efficiency, yes.
opportunity#429
#430
observation#431
sentiment#432
Closing Remarks
TB
Thomas BlakeyanalystKey Corp
That's clear. Okay.
Operator Sign-off
OP
Operatoroperator
Thank you. And we have run out of time for any further questions. So this will conclude the Super Micro Computer Incorporated Q4 2024 Earnings Call. Thank you to everyone who is able to join us today. You may now disconnect your lines.