Super Micro Computer (SMCI) 3 Feb 212021 Q2 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Super Micro Second Quarter Fiscal 2021 Financial Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Mr. James Kisner, Vice President of Investor Relations. sir. ahead, go Please

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

that is margin, a of other capital company's expenses, a regarding There refer today presentation limitation, information without our As discussion & will to of our income during outlook, to Investor note the differ the the gross the expectations. today's website results Please hear some that those including, materially and from Events number the to allocation risk Super will on that company available consist potential revenue, Relations and operations. reminder, call, results taxes, the COVID-XX business Presentations of including could future impact business of in tab. during cause future factors statements, Micro's you'll of are participants of a company's section under expenses, the forward-looking operating

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

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

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

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

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

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

second range. totaled mainly fiscal year-over-year of net sales and our million, guidance X% sequentially, $XXX quarter X% down Our at the midpoint up

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

seasonally expected, QX QX. improved we As after a weak

are early impact results a November, we especially that We proud worse despite significantly challenging headquarter. achieved since in our very impact as COVID-XX these which environment was of the U.S.A. operations,

the double high double partners European sales the business growth the and international a sales United Over future. the in period, demonstrates digit, offset up which the channel global to March growth Quarterly improvement around strength the same the quarter in countries our significant these States. were expect strong some and and organization had Asian many I however, digit, weakness case, we to in in world. and international and continue of very

On their aggressive the relationship high-profile and that topic strategy, these about they our purchase mentioned just our remain excited recent we call with growth last QX, in customers our [indiscernible] had of earnings new customers. our on

expand to and new quarters accounts the few sales for nurture next are efforts years. team in our their opportunity Additionally, continuing these and

The We incentive efforts programs effort this sales than actions, winning these our accounts executive other to up purpose force, win culture. supercharge with been recently have accelerate these our restore the speed original addressing with new While internal our growth of goal, on to we have demand. new to is track and our plan action. further

expanded caused capability strategy, sales. engineering will Park million we team capacity to have committed my X add will our global aggressive in and alleviate quarter, X capacity at capitalize Science for square next of new [XX] and become office online reach ourselves, I'm in on the short some operations, will logistics, credentials. Taiwan COVID-XX. transitioning economic space, will Taiwan, American We deeply in on the months. summer, billion campus is in in by and and will and our our effort Taiwan feet Technology To and the that revenue production doubling this which help Supermicro's & another market campus international within efficiently quarters Jose these with will key our scale, online X new I building production goal our is become next coming future us growth our $XXX many believe which boost to this approximately opportunities In further In building passion. Taiwan in San to term, term, start be and manufacturing and confident manufacturing much engineering effort impact To early schedule have our more to the complement strong The years. actions aggressively more TAM. long and higher set support profitability our stronger production, growth this the

building to unique on solution move block the products with approach. and technology Let's product

R&D at Our work and our Intel, NVIDIA expand are optimized AMD to portfolios. hard organizations

resource In improving X [indiscernible] and impact software over experience in and customer addition, both security. and had years. a doubled These on past we great investments the service solution our quality are making

high-product customers. new to and solutions processor, With the Ice bring our upcoming advantage, the application we Intel again quality Lake time-to-market optimized

as we as will a customer deployments request, to early and our see Lake to have believe our Ice seeding telco, key some line product platforms pleased recently. in product precisely center strong of base the optimized of trend and we application terms to our True strategy, early started and provide to our data deployment applications. hardware are well We AI customers XG

growth Ice such, a prepared become in line to product driver the coming our are key for quarters. Lake As we

steadily, company strong to and has supported business. foundation disrupt our Although COVID-XX our safely continues

progress operations, sales and team efforts, As great in to with Building further I together COVID-XX Solution, our have optimized our mentioned, the actions in focused our with impact. reduce decisive taken have business we have vertical. expand sales Taiwan -- our Block resulted application to engineering These

customer XX% our our more from last First, Taiwan few new major in operations. the accounts benefiting and quarters, product line organic business expanding gained strong server than

continue Our as as this congregators enhancements, momentum. BXB service on growth will and automation, auto well software

to a refocus on we'll Second, larger XX-K has and more and customers end calendar this later right high-profile to center this large after X about customers up add OEM X since the OEM started X small in data our months year. calendar ago, ship to to was before volume DC, scale large we data recently, filed. our ramp of started or We year. in large this plan center, category X

customers of XG, telco on we telco Third, last new have won a handful year. and IoT,

even with been environment more past as shipments and auto more in remote quarters, this working calendar which critical X start currently as customers high-volume the we has to our lots We will congregator small is COVID-XX well. to own ship starting these BXC for of with customers forced are volume greatly number and and four, year And employees. automation upside, improved our expect BXB

powerful ready We among developing and live it to for customers. have This will end. much X this sales, go been past easier the it by this and our make correlation will product engineer to communication quarter project our be years, and share

along first our long-term commitment of is $XXX if we million indeed how point last growth prove that to as to confidence announce business. give of share to I'm our in earnings momentum a that, us revenue will the enhance will proof Micro new business discussed repurchase reflect QX back success. track. activity, growth to provide in newly in a that we results XXXX our and fiscal growth are when Furthermore, will on our a of approved value focus pleased on near-term and coming investor the will share And investors be believe our QX our about more view with Super strong will in a reach of sign recent our QX stockholder we are year-on-year $XX call, our quick initiatives, our program, business I excited guidance achieved, business which the the the and that basis. our resumption soon confidence a plan, booking scale, event. unique detail billion As

are company Kevin, the organization I on manufacturer his end the as our for and his years. now call to accredited month. Vice Chief President will I Vice and quarter and been and CPA hardworking on, the over company appointment chance Senior to Kevin dedication to David is Renesas President is in as XXXX announce detail It of I was venture. to quickly. in Officer. A outlook. solution, pass Chief take the please? past he Inc. Weigand He As David our at who CFO the the Kevin America Micro X.X to President. and this of X new system succeed and Officer. our a the Electronics him U.S. fast-growing as at we a Vice to CFO improvement David in Senior additional time leadership, great leaving a over I'd success HP current and last privilege worked system design Financial one But Micro is XXX% Compliance before this only Silicon years, XX wish many pass Bauer, great May our and mean is automation. I previously came a from David to passion Super Kevin Valley, ready the the Enterprise server to hardware like where working Supermicro financial provide Kevin, with I company Super of the his in of last has appreciate not-for-profit pursue the nearly ready. grow and joined native

When improving and X company generate have announced, Super join most a am shareholders. enjoyed stronger Officer Micro so the key new and delivering this area proud foundation accomplished increasing which as and business like our grow I'd helping and serves have last be in to employees Charles providing team role I'm to challenging Chief on. yet years. for this much over you, times all. will function, a new through also to to community an to very of Thank work a there together, is with. our will you the note, Charles. team, I passion the as Financial few to make enhancing objective return value. the working focus all to my I a the have I investors. Super the the of its to executive Micro for sense words Carry operations excited continue have reach capital company's on where we organization I role to work. our To with a say company to unfinished dedicated of strong as long enabled On that personal well help association a cash, financial and

Alliance of we will goal XXX from a letter Business governance, and the in comply Science other join the we or November companies We ESG in to XXXX results accomplishments points. at to this with touch the a by global I'd our striving quarter, to the we recent important In one, A on Taiwan score out environmental initiative, Responsible of environmental, targets. into concerns, keep made to like accomplishments Mean briefly company to several increasingly include: X.X-degree we set the becoming Business manufacturing commitment with jumping to audit investors. social XXX.X social and score efforts near-perfect Based which Supermicro XXXX, quarter create is our a front, and indicating of Targets few warming our Before site recognize the received driven on December of coalition,

and not and of all long Jose burning at making green world where leading other in Supermicro a our believe computing, future history to sustainability forward our joined generations. our with computing Grid, campuses In our Energy fuels. our conjunction the a milestones of help 'XX, drive We Grid use recent RECs, commitment San energy we can these in We accomplishments the generally that, companies place Bloom wind transitioned Jose the design to in energy-efficient fossil hardware result of January believe will better Energy and fuel the Green sourcing in signifying new and cells, industry. also expertise continue its old San for

results. XQ to back turning Now

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

Turning to geographic performance.

mentioned point absence on November quarter-on-quarter. year-on-year call, expected Working of that increased costs. declined rest customers U.S. quarters stated Europe decline sales chiefly XXX sequential our OEM X down year-over-year world increased forward, contribution Our points and offset the saw gross international earnings as Europe after a points up basis be From a increased but margin cost-recovery of otherwise last a this we on XX%, rest unless strengthened a, the sales elevated On XX financial the digestion to by by metrics we the of strong margin basis Asia sequential of basis, as benefit high-profile from view, decreased due softness. From noted, that and points quarter-on-quarter, X% XX%. X%, customers, XX% of to world X%, declined basis, discussing to a will a increased Recall XXX increased non-GAAP Asia and XX%, XX to we expected was in On point was the the we pickup customer XX%. U.S. a new the sales QX on QX call. gross basis. XX.X%, the well down this basis, basis P&L. I a freight

we While points. going in forward. from costs, experienced benefit did, see do cost not similar we in We a about recovery, elevated additional we to anticipate or magnitude did freight the benefit XXX fiscal basis benefit however, QX similar

and year-on-year in X% work expenses overall more Without chiefly due performance a expense and special The in $X.X basis, GAAP million a discipline. quarter-on-quarter. operating QX NRE expenses. R&D have XQ to primarily decreased lower settlement, expense decrease to OpEx QX's expenses $XX to been audit for to an for dollar. basis The, a of loans was these last loss income from fees, year-on-year GAAP expenses contain was million performed quarter-on-quarter the On decreased X% credit million Turning remeasurement to SEC executive NRE would loss operating due $XX our factors, expense operating sequential QX OpEx million. driven dollar non-GAAP increased GAAP a significantly XX% $X.X and expense a $X.X credit -- million. GAAP of higher-than-normal lower credits down operating non-GAAP quarter-on-quarter and loss million to on by operating XX% and Other benefited was quarter. for as $XX.X Taiwan compared weaker to bonuses. sorry,

expense $X.X on million basis a This and a $X.X million GAAP non-GAAP quarter, our tax on was basis.

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

continue our to Going forward, approximately be rate XX%. we to expect tax

as quarter loss of QX an last quarter compared Lastly, a a flow QX quarter CapEx of of 'XX $XX of our venture resulting income in pocket the flow contributed cash compared in and operations million. of same $X.X quarter of the to to joint air to $X.XX loss fiscal million of year million [$X.X flow this $X in million] EPS million non-GAAP in ago. $X.XX in from million, year. revenue, of totaled a related and diluted totaled Cash $X.XX $XX $XX to $XXX last totaled QX. operations compared same cash free million as

million. balance X, shares $XXX Our $XX.XX. closing was on cash of a of million, repurchase our sheet repurchased cash X.XX in $XXX wherein net that we debt million share completed a was previously while program resulting $XX million, also average Please January announced we for price at million $XX weighted position balance bank note

July in share XX, As our announced The earnings our is new $XXX Board-level in the to program Charles release repurchase common we effective we up until for that today, mentioned have repurchase a of company to authorization million another program. stock concurrently XXXX.

stockholder cash action value we view prospects. our As commitment Charles opportunity believe and mentioned, long-term business reflects of to this our generation positive enhancing our and

capital to needs in We with execute the growth. cyclical coordination working program expect our and

metrics. capital working to Turning

quarter, days. Our XX days, target XX to XXX QX our down but conversion outside was XX still last of from cash cycle days

remains outstanding impact at we for totaled XXX some historical and days as inventory the level sales our prepared Lunar our XX New declined, While relative logistic days, the components. tightening to payable of outstanding levels the days of of of elevated XX inventory days while absolute Year was challenges Days days.

the to turning business. outlook Now for our

the in March ending million. the expect to sales XX, for million $XXX We quarter of net XXXX, $XXX range

to the due quarters the that over to earlier points lack to that We product recovery approximately ship margins X event of explained last decline we discrete XXX XXX also basis to the expect a and expect sequentially mix we in gross cost the quarter.

increase in non-GAAP new in to investing and expense operating to level the expect We taxes the year by mid-XXs payroll R&D. quarter-on-quarter our selective driven

range and diluted to expect $XX expect a mentioned per to of the share the JV our project fully We range contribution of our Charles. continue expense, We fully ongoing rate $X.X we sorry, $X.XX. of and EPS million, -- Q&A. to be roughly million. the I'm be continue forward. earlier for expense, anticipate diluted we expect now to expect our tax in And James, diluted $XX GAAP be in XXXX roughly approximately we of GAAP we're And to of earnings and and range income $X.XX inclusive non-GAAP in CapEx $X GAAP Taiwan XX% going million to total fiscal including for million expect ready be fully $X.XX to interest $X.XX fully from other to non-GAAP by to our building to

Kevin. Operator, entering and be on to XX meetings One announcement now Q&A, take questions. Technology before Conference ready quick the we February you, Thank will Goldman investors. we're with conducting attending

[Operator Capital. Loop Ananda Baruah question We from have your Instructions] from first

luck would you're or as solid You -- good to in on what remarks, and congrats love just to eye about guess layering could. to the first number sort I It's us I with the about of we if broadly Then how keep of we think get -- prepared expecting things Well, business? working follow-up a you various year with miss Kevin, more should couple I results. guess just how Congrats through I as move and would the the how a and working think speaking, context to well. is have for the good you. on on the been I And should we to catalysts spoke that in. them one like we'll you. should X. we them an out impact a Yes,

been now, I severe. is very except solid very in Yes. our business believe have so U.S.A. COVID-XX, still

Taiwan. So of operation business of our taking very we kind that, while grow in carefully aggressively are care

So COVID we expect. now is getting better as

strong Our be much -- to period. business a should much smooth getting growth

So feeling quarters the about years. good coming we have a or

mentioned Ice your to newer And you some in of of coming Lake. think Charles, hyperscale, well you when quarters, sort about Lake aspects and business, as the Ice

of mentioned us, look systems of to in most back business? which the XG -- rank Ice of the going telcos, impactful the hyperscale, you XXXX, on you for when sort you XG which if do You sort ones be those those the think would of could telco anecdotal, Lake, even

like move. we months about them. start they ago. very up ramp believe center since just on and data already start soon will OEMs volume we with And large And Yes, we everyone, in believe. a shared I I year year, to couple that next X and achieved we focus of to And this

to telco again, handful already a kind we company. the engaged telco, customers, of XG As world-class

solidly, relationship very very and long-term they be created volume small it partnership. soon, in volume, to high also move, some and expect been start follow So has will some we and will

for we growth. are very long-term So overall, our optimistic

was in here. that? going frame the Charles, to one you prepared thinking sneak Okay. a have you're Great. about analyst time I'm in for Do mentioned event. last the you believe remarks, you I one it

Yes.

mean You investor event? the

yes. event, Investor

last But control. within COVID-XX getting really we of quarter. hope of look But coming next under I bad, have take like still because so wait-and-see. now few weeks as very we Yes. the seems kind it the a because

our hope company we few the momentum so will So investment. a investor weeks, big have plan, future, event, share the I the with to in next

excellent. That's

-- weeks, the myself. So so? you just event? or In you for date may be the think having clarify it announcing few you next be just next you'll to do few I'm do of actually the weeks the Or in think just -- so

weeks, it X in for that we example, hopefully and I have guess event next the announce X to will weeks. X in

Tanwanteng Jon CJS question have We from your from Securities. next

is the A Or was seeing it counter they're I on what next very quarter, space. from seeing end another wondering moving is your like market? a cloud you're on X that's customer opposite when congratulations that. another seeing running they to thought is on in are center give they digestion My to sense were it the just Is strength from nice first of hearing And It or of spoke what Intel seems strength to what maybe they quarter Just maybe about you question and saying? they're not me Kevin, kind of why phase. just AMD? quarter. data running the seeing?

Yes.

we product strong very a Intel have As a same line. pretty the product AMD you we line. know, time, also big At have

growth if growing, know, And the of grow solution company kind is have So to have getting faster demand, market very And outstanding is will since if will data not because our to very we once you are the a so we been the once industry significant. soon. back grow. our market believe even has smoothly I we the bad, our much of flat, chance I XXXX, average, market that funded believe than we the and as of market too overall, our keep growth will to since always and position was product, kind guess XXXX be -- the

the on higher well. could the or an just absenteeism. the the impact on revenue if as the anything But impact give impact kind far, pandemic as of has don't had or employee December I can that margin of helpful. that you but business, quantify COVID color probably the else so would expenses, had seeing on on know you're into you such that some be so lockdowns if just freight then January And call the and Okay. had in You impact out either mentioned you far?

of broadly, -- X it's more very that is very now. than months impact bad -- Yes, and in kind unfortunately,

time-to-market and increase. home. from of increase logistics to [indiscernible] work some cost And even then for sort lots to our products. work Even from example, very logistic U.S.A., and customer from harder employee it's become Asia of we home of shipping see our or delay logistical, more, delay So cost ship the

ready. solution. of a for is good So all thing for congregator, help to is that to our help the difficulty auto help optimized created engineers, business, those our a application customer program which especially And sales, most our engineer together of make be for sales is solution customer use work them. best of I tool by optimized and our believe to The end able will quarter, the those this tools. getting to

I'm for be to this the very So excited available tool quarter. in

Great. Okay.

If you don't mind more... me one asking

John, Yes, the the that I echo what would Charles Kevin. from this have of said work is you is when has just reduces home, it coordination definitely organization.

push every So someone in the And all we there's that have then having just the to are to that to other like shipment, on other companies arena. some harder open confirm examples not day. side else receive

there's So like difficult, said. little more make of conducting that, Charles that like had things a different definitely lot business

if new a looking margins plans like normalized you ask, Charles, basis? what facilities and year facility the this where the this the is And all when shipping, may share of know of when the customer maybe second and and can your Understood. could without have So go summer, than have margins I some you opening have look earlier pandemic, these new go. on headwinds, you I beyond volume more or of half in some up

Yes.

they better lower want like enterprise. better another two have we our know, cost. you kind service. high-end product, And One also then of have is volume we better and We As customer customers. buy who performance, high a

we are especially capacity. a now will impact most getting the But tower operations have big. summer, have we COVID-XX, before our was and really with tied much ready, U.S.A of in early in by bigger a So operation

and So to we customers who sensitive. high can start those service cost volume buy

ago. customers excited. with to are up we very line So those about XX since months start We

already we Now are customer to are already we ready promised we established relationship and that that have them some them. support

them. small. in bit to that that of And would or much maybe for or for X% like how than little more say for big difference But a X% is X% customer, So enterprise, indeed, a that. terms X%, high-volume I impact, something

opportunity have ready we So now we are those Taiwan. very from happy

your We Chokshi Nehal from have Northland next from question Securities.

really the strong guidance. a on very gross revenue nice Congratulations a there. strong margin and outlook That's

implies we million the net should parse income, that a On the gross of the net between about for quarter? the decline. income $X midpoint OpEx margin How and that March [QB]

we ship. think declining the mix of that to be the we increases that well as gross as would we're I that cost thought because products margin shared quarter-over-quarter of Well, some going specific

would say towards in immediate quarter that you way. that the forward. put are the weigh we'll would what gross expectations I heavier the for would it probably it going weight, So That margin be

That's clarify Charles, very helpful. OEM And could you large what you by opportunity? mean then

mean to work right? -- those with The all volume, social move I operation company problems getting ready, so happened. before those we they start price, all good facility segment the Internet, with COVID-XX of especially of customers, our pandemic, indeed, really want kind Taiwan Okay. our engaged a we some high low feedback. high-volume customers, not -- did focus our those they we got them. on So of networking And demand. but have strong very because And customer. But is in

small with should we volume engaged year. like volume the now high what follow the a So we them. really some are I ship -- this just and mentioned, later And of

Okay.

with be -- referring these Internet just to the just as partnership clear, So to the to the to with and a HPs Or is get these social OEMs? large are there properties Dells networks? you

the XX well is service. in especially management thing we service our The and about already brand our quality, have for our by credibility enterprise wide, last been now, Super software, And accounts. recognized global established for name years, good Micro our

with So we customer, are directly we'll with kind ready through work some of any to OEM. any go customer or

opportunity. that open we So

Kevin. to coming Okay. And back

which shareholders past So cash few flow you free guys to XX% of the quarters, over returned very share is good. have by repurchases,

that think about a evolving policy. least near are how future basically that at is said guys that Is you what you remaining that that -- you're good investors investors rate XX%? going your to allocation growth? So I guys wanted capital evolve way you then -- XX% that But know the that And about thinking forward?

Yes.

new $XXX the through. tried roughly million valid an I that or given what share XX-month so So in I program, date the it's that think it's got to duration was

that we I've by worked more feedback stock done. that we program. with an know longer-term exactly and And take is I back got we first up and think maybe investors took that that should buyback two that feel steps approach, we a we program, have confident, what we in incremental if

it's step-by-step process. therefore, a So

grow allocation think competing thing. to of That's frame. rate adequate forces to we time I or capital $XXX hope consume continue the the the able cash be growth. that the the to XX-month our be program strongly execute flow to And the to and to for fully going million over key is have

well So as as need it's product definitely investments we development. make the R&D continue in for to continued to that

relates late mid-innings the Given being Certainly, investment of that, there. is to to kind in as on building the completed there. we're close it Taiwan, the

or it's June think something like going I to be Charles? that,

Yes, Kevin.

And for so abate million will because maintenance a capital is $X our cash to a like therefore, that consumption while million $X of quarter.

that And million we help felt about. of And And will confident pieces calendar of to cash the with so cash thinking the $XXX XXXX. continued kind get program. half that to moving generation free the we're of in second some that's the company, up

in Fantastic. the that decline. before Okay. back my of Q-on-Q was NRE I you mentioned that that question queue R&D And work part final get is

when for decision type you the what's quickly? about So talk this of Can real sets that Supermicro work?

Yes.

components. to with chief that very component with -- closely key worked we some their platforms suppliers on of our work So work our

that marketplace. we that to get believe ones key with traction really to going to vendors are work we are look so the platforms enable And in those

tend into at So those be term we the of those short They to look what's -- nature. popularity of then rather in platforms likely enter and popularity arrangements.

that like a you So rather half with multiyear to development, maybe not a year want development. share it's but I

but to not So large, close the -- because it's but those also not pretty future. for make easier bit little a commitments prospects the product they're only so are in the

to the try I'll -- also pace, Yes. basically.

to something really unique outstanding, some something some that design. have also close for want unique, really us market. customers, very We partner. to want And They outperform platform the present they

special with some we those customers, for design and pay So usually both vendors work so NRE. they and

future see typically profit of gross NRE become this revenue the you that expect of dollars return a type when to pick can drives platform What's of terms type product sales? or that you in

not for our sure, For goal NRE data. is

Our solution, customers. vendor is to together we thing design, market. approach a you When partnership. really for optimize the Same really with a then goal for work the

or or their have designed solution and easier Building design model. with to exactly Block for equipment planned, more much application center makes nature, And customers much optimized their architecture, data those Supermicro are Some something environment. unique we efficient special because of Solution

Rakers Instructions] your question from from Fargo. have next Wells Aaron We [Operator

having I with guess wanted Yes. ask on guess awesome and stand question kind we where the Supermicro. Kevin, think Congrats, also to server I the this and in this -- a that the of can great for I about past. about on working you impact cycle we

bit talked a you little Lake. So about Ice

these You've got these And server Supermicro next-generation guys expect an as see AMD the for uplift demand next-gen Milan. CPUs How come materializing? see to into profile do CPUs the you would you benefit ASP model?

Yes.

kind good the For a previous outperform XX% the new to solution. our generation you same always quarter product. months are or a or right? is few a a of for performance, process to know, Supermicro generation a earlier of few our sure, new generation, of kind we want they platform building or And As XX% that others. introduce right? up than for cloud faster technology So market it's customers, always large Traditionally, usually, lot price, they new

gaining solution, from as are that much better because share time, And we other this again. so So the indeed, service, others indeed than better quality, well. grows, have or we have we market advantage better

of Okay. around or you chain through would and that availability in over you've market constraints? indications component kind see areas you COVID alignment some supply been dovetailing There's today? the that tight challenges Have current outlook? your or you're willing couple what the any of constrained. And juggling expecting if of some you look component certain out characterize are maybe seen chain have to had. the And been that industry How kind next questions of the What's I you the quarters? off supply guess even earlier

components. saw kind a almost of different We lot constraints Yes. of all across

we a and forecast, our been engaged with a have kind partner contract. carefully So of have very have a

But growth. are challenges, smooth a this feel So and time for logistic increased. safe I our should lot our at but moment, lead increased, also there relationship, also contract we of with be costs

not? of Yes. a you question these new you know ask larger you Do customer quarters, data couple where ago, XX% center a ramp years And that to did XX% or final just over going customer of have win opportunities with you'll have future that do I situation for that sound like they're accounted think I Yes. in then the next you of was the the a wanted revenue. think that have a couple to had

try compared Hard many our hard because have customer But still goal. small to say. say, our was we to customer base more long-term to with

are with many able a so So we to bigger with more now engage partners. much capacity,

that it have happen, happen. believe yes It's to will be also I happy no, it's -- happy or to will it diversified. not So question more

attitude under where that managed. at seems So and I'm be neutral for look it pretty will

next We from Northland from Securities. question have Chokshi Nehal your

Yes.

launch that with indicated Ice the yet. like think OEM of hasn't it's the XXXX. you looks in 'XX expectation That now guys type at for that So more several I to point event available Lake at happened of time. would this call, I guidance am actually given impressed be early And particularly had that September a become an quarter XQ generally going by

XQ that that what at does your back business relative the the has strengthened context, that given would So significantly thought of be mean the 'XX call? case to rest you

Yes.

many more of have a guess, of diversified I customers. more base now vertical, -- and terms much customer in also Supermicro in line product As terms

ready are a capacity also we to a are much extension our we a our And size customer more in growth and So company Taiwan U.S.A., content. much now. to diversified -- bigger diversified with be

greater much a to these as speaking is of exposures, you exposure and what can give you're some And that to addressing? to of that your us diversity market sense Great. faster-growing the parts

Yes.

telco we on and center XX really continue globally. Also partner started focus achievement. our IoT in with last engage years market that not extend for But already that good we have And before. to we we since ago, segment a months engaged line. months some XX start not XX on about and very and we ago, did this OEM, good But to data the on IoT, product did market, for some, ago years. For we're X or focus XG, we with to example, focus example, a large about

likes much partner. to company be shopping Supermicro as So a more a one-stop indeed diversified, much service customer

So X to would fair that represent it areas that you now? just revenue be of highlighted XX% these maybe say

to $XX mentioned, great is revenue will But grow the We just a billion detail investor specifically. why, that's And company in did to share company Supermicro that more that. future. not our see we be we in near event, about

continue. Officer. time. to questions I like this conference Charles turn Executive showing now Chairman at back I'm please Liang, and to Mr. would no the Sir, further Chief

Yes. Thank meeting you, looking Thank everyone, you. and quarter. us you nice to today, for day. next Have forward joining a

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

You may now disconnect.