Super Micro Computer (SMCI) 3 Nov 202021 Q1 Earnings call transcript

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Super Micro Computer, Inc.

First Quarter Fiscal 2021 Financial Results Conference Call. A press release issued earlier today is available on Super Micro's website at www.supermicro.com.

During the presentation, all participants will be in listen-only mode. be participate will session. the analysts securities invited in to question-and-answer Afterwards, entire all to is on The open basis. participants cal a listen-only

us Chief reminder, to With at call. I Chief Vice sir. presentation ir.supermicro.com. of Kisner, available are ir.supermicro.com. and at, online being An Charles is replay of Bauer, the and A investor posted call be this XX Investor QX will would November also Kisner, commentary A be Chairman today Executive turn management Mr. to please a Senior be webcast will conference Liang, will webcast XXXX. the replay go transcript months recorded Relations. via and James accessible like for results of President a Vice Financial the over X, related ahead, Kevin now Kisner. of As Officer; Tuesday, to President, and Officer; call Mr. following the

attending Good the financial for afternoon website. close XXXX. to the release the received September you ended XXXX, By and trading that for regular a is quarter XX, and now, discuss Company the distributed should was results thank of from news on of which of at have fiscal you Supermicro's copy available call the first Company's

tab. Company reminder, the of Company's that the a participants As during a Investor today's Events Relations section website Presentations will presentation in & to refer call, is the the available to under

those scripted could results on gross business commentary forward-looking today future information potential cause operating including of published regarding our will We our and Supermicro's the the to are discussion materially limitation that results you’ll of and impact other from that outlook expectations. and of income margin, There the COVID-XX differ expenses, operations. including number management's factors a have our of taxes, future risk capital allocation, without revenue, Company’s of business statements, expenses, Please during also on website. note hear some consist

and SEC risks afternoon, in we XX-K other our these issued about more learn XXXX the earlier release this recent filings. most for our can You press filing

on of non-GAAP Relations Most outlook. update page these of results presentation website. to refer and any documents assume are available obligation All business We the to will forward-looking financial statements. of no Investor today's Supermicro's

an non-GAAP refer to presentation earlier our financial our explanation For the today. of accompanying please release to measures, press or published

In addition, have of today's ask to in now end turn questions. to non-GAAP in the is Officer. today's press the information to a Chairman of we session reconciliation remarks, attached GAAP Chief to a I'll analysts Liang, prepared release sell-side Charles? and contained At supplemental call will presentation. Executive over for Q&A results the today's and Charles

good results. financial our Thank Today, afternoon, fiscal we you, everyone. XXXX James, have and first released quarter

let’s take a some highlights Now, from quarter. look the at

year-over-year down $XXX fiscal X% sales quarter million, Our net totaled XX% first sequentially. and

share earnings Our and compared year of was $X.XX last $X.XX of the fiscal XXXX. non-GAAP in in QX QX to quarter both per same fiscal

and earnings ranges. As year, revenue midpoints QX we our quarter from were quarter above a has This strong been the continued in June. COVID-XX, after pleased to guidance we challenges seasonally low despite our traditionally the expected, deliver of

is in that functions aggressively COVID-XX in impact our will Taiwan much At adjusting than less We areas to essential the California, our growing are headquarters. still there of have normal as efficiently be the lots where impact. by been been the a state operations, business can deemed although and time, same and and EMEA regarding U.S. R&D further we new of have COVID improved be the sales

will support growth force just production, order is for operation I coming much the and in U.S. Coast. I new much discuss continued confidence now cost have in stronger a revenue in approximately with profitability campus productivity EMEA headquarters our as opportunities the September serve quarters challenges scale billion and capitalization capability our efforts, in and strategy. better growth to campus lower revenue quarter, global will we of especially cost reduction our Taiwan effort the I after growth. of believe, be with that During and reach bigger enhancing and up, have we and beginning Taiwan in later. our years. recent in This APAC, our market current key many combined capacity sum our turnaround starts higher economy on profitability $XXX and customers TAM, Taiwan East to while our sales the in to To getting

U.S. geographic achieving territories. the West a share Coast, great have this market aim pretty success at we duplicate We and in to successful been other in

me a stated I three the calls. quarter review two that new growth traditional our to in drivers minute spend conference Let business past end the and

our businesses; business; Telco and First, and second, our large cloud software public our fourth, channel new and new and datacenter, organic third, business. business; and global OEM services XG, Edge enterprise our

the of made have each four We drivers. progress good growth in

accounts new our gained top added scale to companies. and of more have couple customers We cloud enterprise a

We also top Asia more couple partners see gain adoptions worldwide. USA Moreover, the and each of territories. continues and a our EMEA, telco to have we software won of in service business

business growth in to telco us. I be and large a growth continued cloud new the markets, have we foundation we nurtured, built extra going the and and and of With will pipelines the progress Especially areas is customer in OEM these believe expected big the each the have XG forward. revenue

take Before and the slowdown recall moment causes want moving our past to of technology I and three onto business years. to over share the disruptions products, a and

management for a significant First, our to years. XXXX followed in XX-K June delisting delay employees over three our by and was distraction

disruption and a the our ago, and had a effect few on business this resolved morale. employee months were Although lasting concerns issues all

just enterprise resumed U.S. However, and we December slowed were as now. that focus. and our we delisting to quickly Unfortunately, badly from XXXX, our recovering channel are and has in spending down emerged and COVID-XX traditional came stock growth

that strong. want Regardless March. and these Supermicro end I operations this sales, been impacted challenges you performance still Our of of disruptions, and has is with share production the since to

between allows with of record overcome foundation the ways find to faster only growth hardware stand and We us annual uninterrupted XX% about IPO our alone compounded a XXXX, well rate longest In strong the that to industry as rate, at the growth compounded time XX these above we X% and annual growth challenges. XXXX since solutions calendar inception. grew U.S. server over in the Our years period. company of same at the

in Our should keep these investors facts mind.

or are that even prove able the growth We very will better same trajectory recreate soon. to we

technology Moving products. on to and

lines unique NVIDIA, and smart organization extensive growth strong at our to Solution Our AMD our Block R&D expand Building Intel portfolios. product with in is work and

coming AI Supermicro leading new lines product the leader. broadest and will true be Intel industry will that Lake prove Ice soon the Our again platforms hardware

XU, the Some in introduced generation. These AI EPYC upcoming XU or either systems technology include end-to-end with GenX Lake deliver and and PCI-E processors We XU that AI following. systems AI available Xx inference over training quarter are the based latest Xx the processors. highlights performance previous the Ice improvement AMD Intel

we data XG, applications. True as importantly provide strategy, Lake AI Intel’s exactly our product new to will mega absolutely history. soon center XXX the is is our most for best line upcoming to well be be strongest going Ice as product line product as line ready available. ship platforms hardware and the product XXX to telco as application-optimization Second, our believe CPU our It will in

XX% X key a were with per most accelerated collaborating a also watt, GreenXXX the the green we GPU record-breaking a for efficient By XU And number gigaflops with system server, presently. VXXX XG. certified Supercomputer achieved the the Level we enabler transition also world’s XX.XX NVIDIA previous Networks, NEBS Third, delivered record. the our first-to-market higher Preferred with worldwide one in to than

phase capacity in generations preserve only energy with Given our our pipelines, and designing is milestone. and efficiency. products Green online also new for Company future than four in program system big the finish and We is one production strong years growth is five extra IT, this efforts put deeper reflective started of which of product investing in drivers, that Taiwan, leadership branch, transaction offer automation mission to and to BXC have our Company business Other planet system. our the BXB this ago our help business business recently the our the unbeaten operation

able our be November. of quickly After to up few online. customers to will that, phase open this in the are open we aim configurations some select to our X sales and and This a help sales order we our product it easily to customers Now, to weeks.

in further While kicked sales center-based and and already will we software continue us stronger features configuration We the and satisfaction. will than summary, hurt structure and dramatically business a up phase are optimize Supermicro believe now. In innovative the command X speed big optimization, to This tune three that and sales customer has fine totally improve to challenges soon efficiency, behind off we that scale be years X our program phase with before. are ever performance much service been badly back, past and we quality.

day, we a to to to BXC stronger call have appreciate AI, a time. the automation in D, we unique we our our join infrastructure quarter. term growth soon. of Company and and during will top new Chief business years. share drivers; we Taiwan, the new business in much top profitability organic and C, events B, lower and to to the for the E, business developing our us we business; future that IT more key our scope BXB Officer, will about and business at the software of larger and XG product aim the Supermicro new As new coming will that technologies And include: to that patience and including have we scale, near the one quarters additional these continue re-accelerate service to employee support now campus on foundation our to will into schedule our times, investor build player. I and to will the Welcome and campus grow Kevin telco, globally, become four upcoming Cloud lines pass difficult details cost; our Financial program. status; I in Large and progress our very the and our long analyst our investments efficiently your been The our that growth believe Taiwan and shown provide Bauer, A, topics fast reward the At and leverage success. details much the with investors in I providers business

Thank you, Charles.

fiscal increased System reflects last quarter quarter-on-quarter Systems quarter and systems XX% Our and were the from year XX% $XXX of and the from revenue fiscal of a volumes quarter a sequentially decline first revenue and year-over-year. fourth down and of This ASPs decrease X% XXXX. shipped million. year-on-year year nodes total same year-over-year. of totaled comprised

profile we quarter-on-quarter, elevated a quarter-on-quarter. X% U.S. unless commerce on in year-over-year and high our basis geographic saw gross August on pauses On declined reduction we metrics improve XX%. customers the EMEA in at Working chiefly the points I with basis, performance, otherwise XX% internet point to what that a P&L, strong customer cycle first and expected points a sequential normal were from EMEA financial the XX%, by From noted, forward, this the a stated to that will OEM, June XX XXX demand business Asia by Charles XX%, declined new to time customers basis earlier. points cloud following customers. and a XX.X%, increased basis, of and was down gross large declined up XXX on This down due mentioned basis U.S. non-GAAP margin on highly call, sequentially. enterprise sequential From freight declined a Turning view, of basis, XX declined Asia quarter was X%, and provider costs. offset basis. QX Recall, point service coupled we be at to commodity earnings the margin sales demand year-on-year discussing

we we As basis in of quarter accrued factors, improvement these points. did recovery a by see costs benefited periods prior from roughly XXX that paid also this but anticipated, for

non-GAAP increase compared $X.X that increased on expenses, was last $XX.X to operating to quarter. QX X% OpEx a basis, expenses operating sequential million year-on-year quarter’s loss our incentive The to operating and GAAP recovery Other OpEx XX% million. expense and the million. last Turning GAAP included $XX basis of in in operating expenses primarily income due a expense $X.X benefitted non-GAAP as to a a quarter-on-quarter one-time expenses from On $XX including Recall, to a employees. to QX million $X.X million. decreased XX% quarter-on-quarter fact debt was loss interest bad awards

related This $X.X a GAAP expense to million from a In on quarter cases, compensation. stock-based was million tax this our deductions and non-GAAP basis tax larger on quarter basis. benefited both $X.X

quarter. the for rate was tax non-GAAP Our XX.X%

Going expect XX%, our prior slightly rate. rate expectation forward, an we below tax our of to approximate XX%

fiscal driven QX the changes contributed and of quarter million, as this $X $X.X Cash venture the totaled fourth XXXX. of capital. to from from $X.X in from last of by in resulting same $X.XX in flow diluted from June of working cash quarter flow and an ago. last million joint totaled quarter flow improvement quarter driven largely EPS income quarter million to compared the million compared CapEx cash of of free of as $X.XX the in both million $XXX $XXX $XX a in quarter, non-GAAP our operations income $XX million, negative million. operations Lastly, income year totaled same year

in $XXX balance million, we our October that new XX, completed bank announced XXbX-X Our with The our which million debt occurs closing shares is program $XX the common balance we million, was of X.XX release a XXXX authorized million the weighted at And repurchase or today, until while I’ll share sheet In are funds stock of everyone share announced reminded cash cash its whichever a restricted million under in was until earnings that to quarter-end our first. program. Board cash, repurchase purchased exhausted $XXX $XX repurchase Directors another before plan, a price previously authorized concurrently effective up wherein we Company resulting $XX of average position, program to net of million. $XX.XX. a has excludes

opportunistic capital approach strategy. fine as share taking a allocation repurchase we longer-term We are our currently tune and tactical to

working metrics, from XX to outside our of XXX our QX up [XXX to cash cycle conversion days] XX of range days days, was last Turning capital quarter, (sic) target days. XX

XX days. XXX days elevated inventory While sales the relative absolute was while outstanding level days declined, level days sales inventory of outstanding XX days of at history And days payables our quarter-on-quarter. to lower given remains the totaled

range The to to XX, XXXX million December our the $XXX million. for in net of for sales outlook Now, turning expects a business. ending quarter Company the $XXX

gross sequentially mentioned decline discrete recovery freight. expect overhead driven the XXX points earlier by to margins expected increase cost We XXX an in approximately basis to to due and higher costs event

level be We flattish Non-GAAP expect expense operating quarter-on-quarter. to

fully by range $XX expect be for acceleration volatility Company the CapEx million Taiwan I'll of inclusive and focused by momentum the $XX resurgence our for fiscal James COVID-XX ardently of by took rate the R&D, EPS through on our in range mean-time, non-GAAP anticipate earlier selectively selectively the we’re guiding we offset to costs to in to is quarter lower While our described in investing headcount. late that, remain this call the as by We reduce project In to tax mentioned audit to very Charles. and million the expect in EPS non-GAAP turn we the to diluted presented actions and to We building XXXX the business of rebuild of to With $X.XX to be back XX% forward. going fully be We of GAAP $X.XX the in be the Charles. $X.XX. range to $X.XX diluted now Q&A. GAAP the

Thank you, questions. ready take we Operator, to Kevin. are

[Operator Securities. Certainly. of comes from the first line question Jon CJS Instructions] Tanwanteng Your with

open. Your line is

of And these for one in Good margin you more about customers thank source cloud impact and results. revenue for my they your My first you your the factor Can little Hi. is, I the bit mentioned how you internet taking as that the quarter? guys end strength guidance afternoon, profile think, talk into a questions. market, of a everybody. and QX next and

hear up bit you and it if it's little a repeat I question. We're the Jon, hearing speak whose the can having line is. We don't -- question? barely some can please Jon. trouble know

your internet quarter. customers in cloud as and profile the the mentioned forward. how you could I strength if just saying of those was source a into wondering talk was going they and about you I margin of guidance factor

Sure.

our not some the different was customers. margin margin these might profile our this first what I kind So, of opposed appreciably think, fortunately, of of take was from that, of to some as other say profile our customers. would

that we will on hope go So, expect basis well. and forward that a as true hold

you And be two maybe internally? that and form -- about launches you. can talk new quarters, Thank next then, puts see takes, over relative whether the COVID, concerns you're election demand how it. with you it the launches new and developing the market and product doing Got

predict. that's It's may the streaming business But, networking, you created keep cloud streaming decline we to in the as gently. And good communication, hard some demand Yes. video and right, know, strong. video still And channel have continue social to at why time, cloud, territory. enterprise may and large customers same

Taiwan And we we operation as some in -- territory. lower that's well. for our Taiwan, from have cost So, that why getting started demand manufacturer especially

Great. That's moving my strategically the quantify better much acceleration off you, going question. about it lead maybe if maybe into to over into from both the and next you there, How a near was the positions how go ask term? you good benefit expected and I Taiwan it. can

Yes.

and me follow. Let may Kevin start

for, So, mid-term I and investment would short-term, mean, long-term. it's say I

means is lower XX% So, operation, much about to now this Taiwan that in USA our in basically it's XX%. cost than

product, will in greatly it’s Taiwan our US that term. middle quickly COVID-XX leveraged we in clearer, impact. significant much advantage. term mature we in no leverage, see we become there And much short-term, believe more much I see our operation with And Taiwan basically long why gradually, almost good in the hit for that's So, And and possibility Taiwan. and for in advantage and than Taiwan, worse is capacity

Choski from question with line Nehal the comes of Markets. Next Northland Capital

open. is line Your

strong results on all buyback. especially a free around, cash executing and Yes. share on a flow Thanks. And congratulations great

that Can seeing discuss that confidence in? you point growth improvement improved? referencing which time areas of are you improvement year-over-year that here. guys as what that mentioned from recent exactly has well in gives bottoming where you You And profile demand you you areas noticed are recent that is

So, how it in have. we think the We gently just of was that period of I based December guidance think, we we upon that improve that kind is to visibility some navigated challenging. in a terms quarter gave here, going

some new we get as also, better longer their for think, some those when quarter. we the plans visibility are customers, of length, little I their bit a that March in of times talked about such for to lead the materials

tangible that that therefore, accelerate perfect I it's of we able of And those not on is that's some else there's in feeds to there information some but believe anything there don't so, out that have quarter-by-quarter be people's you continue of us think, that, plans, as I Charles. visibility to some to make to. evidence know to if addition latch

I streaming profile, Nehal, quarter, after for just high-volume ship high time ramp to XG, of cloud, good high I mentioned, and for I data to large center large in some to customer impact the partnership. larger And telco. And it we to on And started however, some. a some last we accounts, up. mean, video takes example, Yes. started we started mean, especially very focus gain COVID-XX, very volume, accounts

mean June quarter year, March So, like quarter, I and some help. bigger we next I see see quarter, help. Kevin say, December will believe much we'll

I with Yes. one from longer scale of a that are products customers new time that that ordering is visibility. that understand actually community investment thought that thing some us bit some better us lead of give these little rack

see. I

slide on And markets here the growth is I that and vertical have nice key Okay. your drivers. question second

you bit had still a bit how margin new guys vision, can talked Supermicro does evolution in look within long-term this terms actually a in it, margin talk expansion. a potential is that little itself? vision X.X of that previously And of opportunity might of an a And that you profile? about. for present of Supermicro this think, about way X.X And that that implied I was the presenting

that a X.X I over. question. good mentioned The all Very the that we XX-K of Supermicro project. unfortunately, is delay thing three years delayed of about now Yes. our our mean, it’s good ago, outcome

execute X.X to now Supermicro our So, stronger. we started

edge XG, and software For telco business, and global example, service.

a will and become So quarter-over-quarter. significant that been helping has we our business much help

will we data been that even and cloud, to growing, and business to cloud invest has continue As in center area. private

significant very say. So, it even and driver should especially be us short-term, would in long-term, long-term mid-term I for a

Your from next Rakers question with Fargo. comes Aaron line of the Wells

I about server just a wanted to cycle. question ask

are prepared have your see Lake, calendar processors. How Intel remarks, six? channels system system, Ice referenced like 'XX? unit like AMD with from you you You sounds your ASP also overall about guys about It you you relative about Intel's think to in eight trend to ASP sales. growth you in continue increases think Milan setup the memory of the thinking the as do How in

just even more but drive, customers and software, More the CPU, total total application now appreciate Yes. some solutions, our really including telecom memory, management not software. hard and including solution

complete it's solution. moving little NVMe, yes, memory, cloud spatial total we where kind say our you a and right even solution SSD will share total very soon including we a goal, with of a our about are has total solution. mention we So bit forward more to much. to a And been -- private But, early too But long-term solution. and too

similar up environment. and topic. And how this into strong sequential up bit quarter, very just you. you you're on on current a sets What on the pricing flash quite expectations, next and a that I'm then, far pricing basis. curious on sticking as as Thank any seeing trends, what of year? quarter in your thoughts maybe Gross margin a component DRAM embedding are Okay. was

Yes. mean scale economical will help us. I

help So, business same margin service our will And new we margin software help profit is that business, now. growing economic are ratio. revenue, as to gross At time, drive, will And with our global the value the and scale. the well. grow that our getting then our the

with Next Nick question comes the line from of Heisler SIG.

you Kevin, year 'XX? play the OpEx going of the rest follow-ups. actually can help for how understand you. I a out couple to is have Mehdi Thank us It's of Hosseini. fiscal

of this September took in similar that said fruit kind actually trimmed quarter. a did bore think, the I the end We headcount. some So, We of some we that here December quarter. in actions kind at of we trim

if terms said hiring, be give in our June views mentioned our a merit I quarter-over-quarter, of But to the time anyone appreciably think to that's earlier, if March the forward think little or now to we going pace as course a look think, going we're is Taiwan-based Charles the on non-GAAP we time, basis of hire OpEX -- of that I over has as I think, I of lifts bit it's drift and And think that's feel looking to trying we're you hover increases. quarter, the we for. what may somewhat of mid-XXs in for here. period were that flat, appropriate in I COVID a

the CapEx increase market. Yes. for the then, going to times asking questions. Taiwan, double-digit two Got a X-time capacity. your has you in you expansion given CapEx And and the to given by over one it. But, able over to end be revenue, increased more not been how past, have period. your years? the How you opportunities in already think $X we in One think diversify can CAGR of that and over double about it that term, last next the Is to or revenue Charles, you, the to billion right wider -- target, the the of us or could two revenue years. growth, give more if way there. next you're year envision two in increase X X you're In two a in longer me hit that a given I'm seems effectively the In target to should X meantime, opportunities? used to a range

mean, may right, mean, mean, yearly question. I yearly. to you I our has good as much DNA, been growth XXXX a -- know, since XX% Yes. compound about very mean, our year XXXX pretty I XXXX, I

or get X And return just than take don't growth -- won't the more is us, to COVID-XX reason opportunity to operation, I we hopefully, no we better. back will with yearly. impact, COVID-XX Taiwan delay confident here lower We'll the cost, digital, get but we behind or growth us. with rate challenging to we have XX% that almost Taiwan can now enable very growth X soon, hopefully believe So, although no feel I digital very back cannot XX% we not in

very feel So, next very good least. at I excited a years -- the few to in have and

in it or hopefully, a context, rate, Okay. And either Kevin, Taiwan? higher. think I to U.S. disclose San about which And will region San is you comparing rate for utilization business. margin that Jose be a Jose versus don't how want I'm specific higher to Taiwan, absolute should if U.S., with utilization

now, the is utilization right U.S. higher. Well,

I in that that. at the little because the more leverage get a think, the think than utilization marquee was Asia Europe and U.S. location that you a basis, off prepared remarks on customers. these time, to some increase, heard we my new current go-forward we'll suffering bit I the But, and got where are U.S. of capacity needs obviously

moving U.S. building. of I fair it is say the that bit to Taiwan the forward a little we're think a active pause with -- not with it's where also the with building under construction at moment. We're taking

may out, those built to basis, tilt to, like think, get full I $X on have once billion. both get a we capacity almost

think about So, we that to the necessary. your time, as we're capabilities. would I that and question. the of the of its that's But, over at, building talking course answer be looking profile I'm just kind Shell

$X facility our the capacity too reach much Indeed, pretty investment cap Yes. much to increase because billion, ready won't here.

Yes.

to kind of understanding CapEx going And is modest be. of then So the describes. previous to that back in we now after And talked go to buildings maintenance. done, an have that's I you going about these where get calls, how our

Loop. question comes next with the from Baruah Ananda of line Your

few I could. if A me, for

will drivers about quarter? think think incremental are should how tell we you us in business what your December the you sequential influence Could quarter? start, revenue the to December the in Just of the that biggest the aspects

conservative. try be to we COVID-XX, With

$XXX range of kind telco conservative XG, number. we business. a all I large high-profile And give mentioned, that's are just we video in hope and million. customer steaming million a today, a So of cloud, we $XXX again, it's gaining why to

I next be quarters So, good believe our quarter should few to grow.

Yes.

also Ananda, the pause return in that think, of I we're going took see September. to customers the some

Got it.

comment your that sounds more so the on-prem about... And of on-prem, Kevin? classic like. it Is appreciate I right, Some Charles,

a long customers, OEMs and gave including I of list such. expected

it’s So, broad.

first with And just of of remarks, question relative to be the don't it. in of or don't better, of like I things I the then, it that or stair improvement sounded of the December. think get And up. slight kind take demand and aren't calendar Ice Lake half -- sounded Lake, Ice to I half, that it think you I together kind together. to next it. of play make in in the the first are in But, to Ice not? to can stitched step year my Those prepared mention of Ice of does guess want in Lake, Got regardless intended like words, And degree to stitch availability want regards maybe was just Charles, made Lake kind a but you what spirit is, that

Yes.

now may ready of Lake early we product this production, year next year. [Indiscernible] Once all you or ever, product strongest in line line. can be ship. know, As Intel will Intel have CPU available And Ice very the be available soon, to now. end the

So, we all are ready.

pretty sounds availability like think significant when impact will a it you that And have occurs.

Yes.

available. new to We CPU are waiting be for the

the to November you how experience you October month did quarter? start experience you linearity? And you sorry, what do And feel of far how did great. September a So seeing sort context question, December guys how this start, And the it of in are -- to so about Okay, just quarter? how this -- linearity quarter? in does in

Ice in You terms or business? mean overall of Lake

Thanks. overall. Overall,

our operation the of stronger, Overall, And better those is reasons. second just And will Number pretty months. those business created and very-high is team last in for grow. us customer couple are is predictable. Taiwan, getting for getting we strong profile the some be just some one, getting we current ready, believe to grow ramp-up I in few ready a team

So, we good year in have future, next year a us. be feeling calendar strong for a should very near especially the

Instructions] Group. from Lopez of [Operator comes next line question with Your Vertical Jon the

Your is open. line

dropped influencing off? just deferred And just I or couple there had unit I'm line is, it over clarification, volumes of quarters. last pretty a the is could, the I out item? of up want flattened last years just is wondering, else something Kevin, have that attach, It's one kind which trended is of that of because function nicely. if couple

Well, there service and the entered through but of in into if commodity for very contracts that percentage that as XXXX, is of you it's a some car revenue. recall, elevated part true also XXXX the attach, early costs, we had

So, some more historically. contracts had expensive we

want do on and our we think, in offshore I frank. to attach to be attach the We continue other, to regions some we on some working than work need do rate. rates, better

Got you.

helpful. Okay. That's really

walk calendar you if wondering that bit, guys from a my does the a to could activity? just How slowed bookings look just quarter there QX us here? QX that appreciable exiting occur QX? the calendar recollection, was exited as pretty linearly? there in activity exiting calendar pretty prior sharply. Did that I'm pretty Secondly, like rewind bookings versus Was little you Can increase say had you

It's gotten healthier. I mean, hence guidance. the

Fair point.

it remember you just center, back I what XX% more a if around quick years, you us could. guys guys cloud, maybe was business for that where give rough oscillated the but couple that then, now? Can I around if called can't back data My ones, recollection is, Two level. of Okay. or it of Internet a sits look sense you

Yes. that the was to, where pretty is referring that I splitting a now. day We But, revenue now. it you're topography greater back are greater diversified large, our quite it right out of right still is XX% And we're in different segment now. that will segments that than the that customer, not is, in

to right are like Are perhaps here? the think three perhaps thing. about guys for talk is you is Maybe guys two, point, about differently use how the cases? vertical? diversifying for customer sounds talk of now base about this Got Are maybe just perhaps you it reentering there say, you what doing Kevin, one years bit second are, a geographic spread now. that different term, you. kind that versus a about better And did, a -- more of how ago? that mean, a little bit vertical you Is pursuing just you Maybe I just guys on think lack you that way

USA. Maybe getting in bigger. our operation our share. in we saw much I course, facility lower mean, can it’s And I than Taiwan of

that few much So, the last will more start aggressively advantage, with to we that years. than market now approach

words, the other in very that territory So, actually focus will soon. we on

of line the CGS from Tanwanteng comes question next Jon Securities. Your with

line Your is open.

Hi.

it's Just advantage fair you those to versus customers a cost say else to win that this moving Is you that’s whatever to quick the point it the of follow-on that to Taiwan question. enabling bringing to be at may table?

Yes. they aggressive but Because a those more large price. data a center, lot, buy they want

ready So, to our customers operation, that. are service Taiwan with much like we now

I to the time. Liang. further no will turn back at this call over questions Charles are There

joining a and And to very a forward you. in today, for you person, Thank have Thank seeing us lot day. soon. you great hopefully looking

and you call. today's Ladies conference Thank participating. this gentlemen, concludes for

may You now disconnect.