Super Micro Computer Inc Q1 2026 Earnings Call Transcript

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

Question: Asiya Merchant - Citi Infrastructure Investments LLC - Analyst : Great. Thank you for taking my question here. The order pipeline that you guys talked about is pretty strong. And so if you can help us understand what's the components that are contributing to such a strong order outlook that you have embedded into your guidance? And if I may, you guys talked a little bit about -- or about this revenue guide that you guys are exceeding sequential growth expected post-fiscal 2Q. If you can just also help us understand how we should think about gross margins as we proceed through the year, and the OpEx to support such a strong revenue outlook? Thank you.

Question: Asiya Merchant - Citi Infrastructure Investments LLC - Analyst : That's great. If I could just on the orders that you talked about, $13 billion. I know you provided at the chip-set level. I think I was looking for just customers that are constituting that $13 billion? If you can just share some insights into how percentage of customers that are in there that contributed to such a strong order book or $13 billion? Thank you.

Question: Asiya Merchant - Citi Infrastructure Investments LLC - Analyst : Great, thank you.

Question: Ananda Baruah - Loop Capital Markets LLC - Analyst : Thanks for taking the question. A couple, if I could. Charles, the midpoint of the guide for December is $10.5 billion. And the guide for -- the update you got for the fiscal year is at least $36 billion. So if I model out $10.5 billion for each, March and June, I get sort of just over $36 billion. You're talking about a lot of $13 billion in GB300 product wins, a lot of good activity going forward. So I guess my question, Charles, is -- first one is, are you being conservative? Is there conservatism baked in to the implied March and June quarters? Or should we expect some flattening out of revenue in the coming quarters? And then I have a follow-up.

Question: Ananda Baruah - Loop Capital Markets LLC - Analyst : And Charles, you -- we're talking fiscal year expectations. But do you anticipate the strength to continue through the calendar year? There's been a lot of large deals with NeoCloud announced lately with large AI labs and hyperscalers, and that's your sweet spot customer base than NeoCloud. So should we anticipate this kind of strength without giving me a guide, but could the strength continue through the balance of the calendar year?

Question: Ananda Baruah - Loop Capital Markets LLC - Analyst : I appreciate that. Mike, just one quick clarification with David here. David, just to your prior comments about gross margin improvement through the year, is that to say that December quarter is the low watermark gross margin quarter for the fiscal year?

Question: Ananda Baruah - Loop Capital Markets LLC - Analyst : Appreciate it. Thanks a lot. Thanks, guys. 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 04, 2025 / 10:00PM, SMCI.OQ - Q1 2026 Super Micro Computer Inc Earnings Call

Question: Ruplu Bhattacharya - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hi, thanks for taking my questions. David, can you remind us how much total revenue can your manufacturing footprint support today? And when it's fully utilized, what would that number be? And at what point do you decide to add more capacity, such as adding a new plant? And if you can weave in any update to the Malaysia plant, is that now building racks? And what's the status of that plant? And I have a follow-up.

Question: Ruplu Bhattacharya - Bofa Merrill Lynch Asset Holdings Inc - Analyst : And as a follow-up, David, can I ask? You have this large project ramping over the next several quarters. How should we think about working capital and cash conversion cycle and free cash flow? And at what point would you need to tap the markets to raise more capital?

Question: Nehal Chokshi - Northland Securities Inc - Analyst : Yes. Great demand there and understandable that ramping up a new customer on the B300. But I guess, I think it was maybe a year ago, 1.5 years ago that it became apparent that you guys were helping xAI Colossus 8 -- Colossus 1 ramp up. And that was dilutive to margins at that point in time. The rationale was to get this lighthouse customer and demonstrate the Super Micro's engineering capabilities. Why is it necessary to basically do a routine repeat of this proof of Super Micro's engineering prowess?

Question: Shadi Mitwalli - Needham & Company LLC - Analyst : This is Shadi Mitwalli on for Quinn. My first question is on gross margins. I know you guys mentioned new facilities coming online and that possibly being a tailwind for gross margin over time. So I was just wondering if we can get some more color here on the timing and maybe just the overall impact of these new facilities would have.

Question: Shadi Mitwalli - Needham & Company LLC - Analyst : Great. And then my follow-up is on the Super Micro federal program you guys announced intra-quarter. I was just curious if we can get some more color on this program? And maybe what led to the creation of it? And how this initiative could position Super Micro for government contracts going forward? 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 04, 2025 / 10:00PM, SMCI.OQ - Q1 2026 Super Micro Computer Inc Earnings Call

Question: Jonathan Tanwanteng - CJS Securities Inc - Analyst : Hi, thanks for taking questions. I wanted to expand on the prior question on just the case study with Colossus last year and how you took the margin hit to land that customer and validating new technologies. Apparently you're doing it at this time with the bigger customer and at a lower margin. So I guess the question is, philosophically, I'm not asking for margin guidance, but how do you expect to grow the margin going forward from here? And like how do you prevent that from happening again? Have you seen that stronger margin from follow-on orders from the customers that you have validated your technologies to? Or is that still something that is on the comp or hasn't been possible in this environment for whatever reason?

Question: Jonathan Tanwanteng - CJS Securities Inc - Analyst : Okay. And just to clarify, have you seen the higher margins from customers where you maybe gave them better pricing or put you on investment into the initial orders, as you get follow-on orders and repeat business from them?

Question: Jonathan Tanwanteng - CJS Securities Inc - Analyst : Got it. If I could sneak in one more. Just how are you accounting for the risk of further pushouts in the revenue outlook for the year, just given you've had a couple of high-profile ones already?

Question: Jonathan Tanwanteng - CJS Securities Inc - Analyst : Got it. That's very helpful, thank you.

Question: Mark Newman - Sanford C Bernstein & Co LLC - Analyst : Hi, thanks very much for taking my question. So very encouraging to hear about the large orders, $13 billion order you mentioned. Just curious, though, there's not a lot of historical data on orders or backlog. And any color you can give on the size of the backlog of orders or how $13 billion compared to previous quarters. Just trying to understand that what's the size of the -- which we've got guidance on from some of your competitors in the past? And another follow-up question on gross margins as well.

Question: Mark Newman - Sanford C Bernstein & Co LLC - Analyst : Okay. So gross margins, I mean, I know you're trying to stay away from long-term guide, but previously, I believe you've talked about this 15% to 16% long-term target for gross margins. Is that still intact but pushed out or is that now not up for perhaps? Just curious what's the thinking on that?

Question: Brandon Nispel - KeyBanc Capital Markets Inc - Analyst : Yeah. Thanks for squeezing in taking the question. I think echoing the same comments around gross margins that looking at the guidance, it really implies 0% contribution margin. And so I think revenue growth is great, but I was hoping you could really help us understand what's on the other side of this, right, in terms of -- help us understand what this business looks like from like a free cash flow contribution standpoint, as you guys scale it. Because you can't just keep going down the path of lower and lower gross margins, especially when the revenue coming in. Is that a 0% contribution margin, again, based on the midpoint of your guys' guidance? Thank you.

Question: Brandon Nispel - KeyBanc Capital Markets Inc - Analyst : Got it. And David, are there any like one-time costs with the design wins and the upgrade pushouts that fell into this quarter in terms of like one-time costs that you're absorbing in this quarter's gross margin guidance?

Question: Brandon Nispel - KeyBanc Capital Markets Inc - Analyst : Understood. Thank you very much.