Super Micro Computer Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Ng - Goldman Sachs Group Inc - Analyst : Hey, good afternoon. Thank you for the question. Just on the business fundamentals. Revenue came in at the lower end of the guidance. I was wondering if you could speak to that? And whether you're seeing any market share losses as a result of some of the delayed financial filings? And how do you feel about the $26 billion to $30 billion full-year revenue guidance that you previously gave out? And are you hearing from any customers that once this resolution occurs, they'll be able to step up some of their orders? Or is it a gating factor? Thank you.

Question: Michael Ng - Goldman Sachs Group Inc - Analyst : Great. And for David, just on the full year guidance.

Question: Michael Ng - Goldman Sachs Group Inc - Analyst : Great. Thank you, Charles. Thank you, David.

Question: Samik Chatterjee - PMorgan Chase & Co - Analyst : Thank you, guys. Thanks for taking my question. I guess maybe to sort of talk about the gross margins here. You had robust gross margins in the quarter, but you're guiding it down. It seems like maybe it's a bit more choppy in terms of gross margins depending on customer mix. Does the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 10:00PM, SMCI.OQ - Q1 2025 Super Micro Computer Inc Earnings Call sort of progression before getting back to the 14% to 17% that you talked about earlier still remain sort of the base case? Or are you having to sort of discount more or be more aggressive on pricing on the current generation products? And as separate sort of a side question, just I know you're not commenting on related to the filings, but any management changes or any changes in how you operate that you're planning or thinking about to sort of overall improve things in terms of getting more sort of more disciplined around and more control around the financial reporting? Thank you.

Question: Samik Chatterjee - PMorgan Chase & Co - Analyst : Thank you. Thanks for taking my question.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah, thanks for taking the questions. A couple if I can as well. I just -- Charles, I want to go back. I think when you guys had originally guided this quarter, I think the guidance range is like $6 billion to $7 billion. You came in at about $500 million at the midpoint short of that. I guess, given the comments to the prior question, are you assigning that to just the timing of Blackwell? Or was there something that changed in the demand or the timing of deployments this last quarter? I'd also add in there. I think last quarter when you had set that guide, I think there was like $800 million of sales that you had alluded to as being pushed out of last quarter into the fiscal first quarter. Did that all close? I'm just trying to bridge that gap for me between the delta and the guide relative to the business update today.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah, okay. And then two other quick questions, if I can. So first of all, I mean, you mentioned $5 billion of inventory coming out of this quarter. Any thoughts of where that might trend coming out of this next quarter embedded in your outlook that you provided today? And then I apologize for asking, I know that you're not going to address the special committee dynamic. But -- any thoughts on the timing of an auditor of getting an auditor or sign anything you can share on that front? I appreciate that you ask we're not talking much about that, but I'm curious, any comments on that front. of getting an auditor assigned, anything you can share on that front. I appreciate that, yes, we're not talking much about that. But I'm curious to see any comments on that front.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah. Thanks, guys.

Question: Ananda Baruah - Loop Capital LLC - Analyst : yeah guys. good afternoon. Thanks for taking the questions. Two if I could. I guess the first is on gross margin sort of -- well, I guess really the question is, Dave, should we still expect it to improve as we go through the fiscal year as you were previously anticipating?

Question: Ananda Baruah - Loop Capital LLC - Analyst : Yeah. Thanks for the margin context. I appreciate that. And the follow-up is just I guess just a general working capital financing question. This question comes up -- has come up with a lot with investors. And could you just give us -- really, the question is can you explain sort of the access to capital situation as we go forward? And I guess, really, how would you like the investment community to think about the access to capital situation?

Question: Ananda Baruah - Loop Capital LLC - Analyst : Okay, guys thanks sdo much. Thank you.

Question: George Wang - Barclays Capital LLC - Analyst : Hey, guys. Thanks for taking my question. I have two quick ones. Firstly, can you kind of double-click on which quarter do you think that you will start booking the Blackwell revenue? Last time, you guys alluded to sometime in the June quarter. Just curious whether that is still on track. Just any kind of high level in terms of when do you think the (inaudible) is going to show up in the P&L? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 10:00PM, SMCI.OQ - Q1 2025 Super Micro Computer Inc Earnings Call

Question: George Wang - Barclays Capital LLC - Analyst : Got it. That's helpful. Just a quick one, if I can. Just how to think about gross margin in the area of Blackwell versus Hopper? Just curious if you can talk about puts and takes on the gross margin for the GB 200, especially in light of reference design from NVIDIA, any kind of incremental value add from Supermicro just as we kind of hand to the Blackwell, just in relation to the profitability and the kind of margin profile? Thank you.

Question: George Wang - Barclays Capital LLC - Analyst : Okay, thanks a lot, Charles. I'll go back in the queue.

Question: Nehal Chokshi - Northland Securities Inc - Analyst : Yes, thank you for taking my question. A couple of questions, please. First, Dave, any 10% customer exposures in the quarter and the upcoming quarter?

Question: Nehal Chokshi - Northland Securities Inc - Analyst : Could you give us some detail as far as what percent of overall revenue due to 10% customers represent in the September quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 10:00PM, SMCI.OQ - Q1 2025 Super Micro Computer Inc Earnings Call

Question: Nehal Chokshi - Northland Securities Inc - Analyst : Okay. Great. And then, Charles, I think there's a strong feeling in the investment community that the Chairman and CEO roles, if separated, could be quite beneficial to Supermicro. From your perspective, what is the benefit Supermicro separating these roles.

Question: Nehal Chokshi - Northland Securities Inc - Analyst : And just to be clear, do you see it potentially being in the best interest of the shareholder of that separating these roles there?

Question: Nehal Chokshi - Northland Securities Inc - Analyst : Thank you for taking my question

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Hi. Charles, on the September quarter, in December quarter, just wondering how many liquid cool racks we are shipping in September and (inaudible) in December?

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Got it. And when you say down sequentially into December quarter on the H200, any idea on how much that is sequentially?

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Got it. (multiple speakers) Sorry. I think, David, on the number 16 deadline, are you guys comfortable that you will have an auditor and file a plan to the Nasdaq?

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Got it.

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Got it. Thank you.

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Hi, good afternoon and thank you for taking my question. I was wondering, Charles or David, could you break out what your expected revenue in (inaudible) was supposed to be in the Q1 guidance and what you have implied in the Q2 guidance finance, first of all? And then second, do you see a risk of supply or allocations due to this auditor and filing issue. Especially from NVIDIA, just would they possibly maybe hold back some just until you figure it out? Or are they supporting you through this and just meeting your orders and especially with the new technology?

Question: Mehdi Hosseini - Susquehanna International Group LLP - Analyst : Yes. Thanks for taking my question. David, from what I understand regarding cash flow, it seems like there was a onetime positive impact your days of inventory went up, but you were able to significantly increase your operating cash flow. Did I hear you correct? And if so, what is the item that helped you with positive operating cash flow?

Question: Mehdi Hosseini - Susquehanna International Group LLP - Analyst : I understand, but your DSO went up -- I'm sorry, your days of inventory went up. And I think from what I heard from you, your DSO didn't change. So was that improvement in operating cash flow all driven by working capital reduction? Or was there something outside of working capital to help you?

Question: Mehdi Hosseini - Susquehanna International Group LLP - Analyst : Sure, sure. Got it. And then, Charles, maybe you can help us give us an update on your total capacity, especially with the Malaysia expansion? And how is the utilization of the global installed capacity tracking?

Question: Quinn Bolton - Needham & Company - Analyst : Hey, guys. Thanks for taking my question. I guess I just wanted to follow up on the kind of the slightly weaker than expected first half really sounds like it's just customers waiting for new Blackwell chips. Are you guys seeing that starting to show up in the order books, meaning, you're building backlog for either the NBL rack or Blackwell B200 systems. So you see a nice building backlog for those systems. Obviously, you don't know when you'll get the chips, but that gives you confidence for a much stronger second half once Blackwell starts to ship? Or is it too early for you guys to be actually getting those orders or POs at this point?

Question: Quinn Bolton - Needham & Company - Analyst : So the backlog for Blackwell, you're seeing that building on your order books?

Question: Quinn Bolton - Needham & Company - Analyst : Okay. And second, a follow-up question for David. You've recently sort of filed new credit agreements with both of your banks just setting a date when you would after provide the audited financials. To the extent that you don't hit that date, what happens? Do you just have to go renegotiate new credit agreements? Do the banks at that point, have the right to effectively call those term loans? Just Wondering if you might be able to address what happens with both the bank debt and if there's any risk to the convertible debt if you don't provide audited financials within the prescribed time.

Question: Quinn Bolton - Needham & Company - Analyst : Thank you.