Super Micro Computer (SMCI) 29 Jan 242024 Q2 Earnings call transcript

Thank you for standing by. My name is Cole, and I'll be your conference operator today. At this time, I would like to welcome everyone to Super Micro Computer Fiscal Second Quarter 2024 Results.

With us today, Charles Liang, Founder, President and Chief Executive Officer; David Weigand, CFO; and Michael Staiger, Vice President of Corporate Development.

that, Staiger. to with over the And Michael to Instructions] I'd pass like call [Operator

and you quarter, afternoon, financial XX, Good thank results to Micro's XXXX. for discuss call the second which December for ended attending Super

and was me of the Chief Officer; available and the news is Officer. now, release and Founder, received regular have that Financial Executive you Chief from today should company's are distributed Weigand, a the With close website. Liang, By Chairman trading at Charles the David copy on company of

commentary As will company's a the that to the published Events reminder, on Investor during today's scripted tab. under in website refer is our call, company Presentations website. participants the presentation to also and a of the Relations section We've available management's

information other during regarding fiscal of taxes, and discussion fiscal full including, Please year our will forward-looking third quarter the expenses, some those capital XXXX. year without and guidance consist business limitation, of XXXX note operating income that you'll and margin, hear outlook, of including statements, future for expenses, the allocation gross the revenue, today

There to future our differ from that number expectations. risk cause results Super materially of are could a Micro's factors

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

We All of obligation no assume to website. page these update Micro's documents are forward-looking Super available Relations on the of any statements. Investor

results to financial refer presentation and outlook. of Most will non-GAAP business today's

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

to Q&A sell-side we in today's in to the is will the end remarks, and of today's analysts questions. release reconciliation have today's a GAAP At of contained addition, results ask for a presentation. In supplemental to session information attached prepared press non-GAAP

Charles. to I'll over the call now turn

year, from and $X.XX a over achieved which XXX% is $X billion afternoon, first increase with This Super revenue. our you, of share quarter performance to Thank earnings share record-breaking billion, We per of revenue and delighted $X.XX. everyone. show of last second our I'm good ever for Michael, results, quarter Micro.

single this revenue our annual XXXX. importantly, More surpassed quarter's revenue for

was and improving and strong This supply fantastic related by conditions GPU system key components. quarterly result for demand driven

and new continues along and total with solution rack-scale their customers, AI plug partner. Super more their Micro go-to gain confidence to IT play in Our infrastructure as

deep HGX Our high NVIDIA HXXX, AI to especially popularity. inferencing [ solutions rack-scale started also demand AI on computer solutions, for and ] the continued LLM-optimized grow. gaining based and The mainstream has systems learning

phase wins. other long-term and we capital The without exciting with that We million demand many to dilution additional more in cash increased offering. programs Moreover, sustainable support growth, $XXX increase short- our to we accelerating faster have is news support customer about by finally, raising our -- equity an from growth. support equity have recently flow to working are an entering we

] can Overall, and will come And many for requirements, another AI many ecosystem quarters, [ I demand if computing inferencing that related other this even years. revolution. confident feel very and many an with continue the this together last to AI echo decades not for boom

Let's go over highlights. some key financial

up $X.X of revenue original our quarter. billion fiscal for billion, end December top totaled net QX XXX% the of up First, exceeding and quarter-on-quarter, guidance $X.XX the XX% year-on-year

$X.XX, $X.XX leverage. the guidance of QX fiscal $X.XX operation of strong demonstrating exceeds Second, a range above earnings were further year and non-GAAP to ago per share continued well $X.XX

is at continued of AI for for important to of scale forefront where the innovation is Super accelerating. pace us strong is Micro Economy revolution, growth. a

vertical. and ] revolution scale for the [ the most on infrastructure innovative heading any any by are developing market almost for many rack platforms AI industry We at

in GPUs Superchip, innovation the double preparing these and ready HXXX to over years, CGX, portfolio months new AI with and high-volume CPUs GPUs, current ] CGX, leader, will have the platforms As we size X. Hopper the -- NVIDIA our production quarters. been the more Grace Gaudi X coming market be MIXXXX, for than and of BXXX All AMD optimized Gaudi [ the Intel and and MIXXXA

architectures adding are lines. the coming we further for Moreover, optimized NVIDIA product new GPU

AMD Our coming ] assembling and ] systems [ MIXXXX X our Gaudi system are Intel now, is [ soon.

performance, we our importantly, AI center. to line enterprise system center and reliability methodology in Green are More this cooling a efficiency in Computing to invest high-power data continuing innovate of improving with are technology sure while liquid platforms and in the data and make

being particularly [ readily IT total as ]. major serviced as security a the facility manufacturer more networking, are cluster solution, ] Service, integrated ], delivered manufacturing [ rack innovator, are delivered rack software an [ integrated solution deployment storage, AI from provider, features deployments for Super and of optimized and worldwide. the As and more Micro's and cluster

than deliver our can we architecture customer Leveraging efficiently block operating time-to-market building rack automation competition. and and our optimized system, more quality with advantages for production solution

continuous to ] been By this will the XXX have for Our dedicated to ] rack providing ] have we X,XXX [ racks total and improvement. factors month month, XXX quarter, TTD, kilowatt delivery, to rack in production decoding up our kilowatt PAOC high-volume manufacturing time decoding per [ rack capacity per direct-attached capability, will X,XXX June capacity racks with to by then. capacity be up [

is soon. production Netherlands facilities additional business headquarter, Valley high-volume production capacity ready [ address customer of across service At service production will USA, new facility are and near few green a we are XX% need growth our our capacity. Today, to achieving rapid ] rate R&D is months. Taiwan X adding warehouse operating ]. be time, solution optimization, in our our To -- be will same immediate Silicon and facilities, the and finished manufacturing which and challenge, they of the The about utilization quickly very critical volume rack-scale our this [

and $XX performance and building AI revenue rack-scale leadership, summarize, will The building increased our our expanding above billion. To to new plus-and-play focus accelerate with acquired robust record share customers coming support facility newly me of and strength XXXX cost will which IT shows blocks revenue capacity and the a ramp quarterly QX pipeline other industry volume, that gains. market new product be our billion of strong $X.X signs $X.X will to block, of The range in billion. new and give lower in Malaysia confidence existing continues of on build our continued of fiscal where customer facilities annual demonstrates

ending expecting revenue in to continued we forecast the billion fiscal are the June fiscal of billion. be range in XXXX to now of Additionally, strength the second half for for year full $XX.X and $XX.X

Supermicro this with X.X We model are boom. to in AI business accelerate overdrive

Micro are Micro X.X Super phase its which Super meantime, In is the expanding we business next growth, preparing for ourselves and TAM. the of

Now Micro. time the yet exciting it's certainly most for Super

partners, our customers, the employees our shareholders passing David Before Micro to for your support. strong Weigand, Super to and our call I thank again our to want our CFO,

details. Now more let me David, CFO, pass financial for to our

Fiscal and our were and XXX% $X.X of higher billion up year-over-year $X.XX initial updated recently $X.X $X.X XX% our Thank billion than XXXX you, billion. to revenues slightly to Revenues billion, quarter-over-quarter. Charles. up were above guidance billion QX guidance of $X.XX

new improving rack-scale solutions growth leading Our and driven chain. from an supply was AI by and existing customers and total IT our for demand

and continue backlog Next-generation providers Edge wins. telco and levels drive design to customers. IoT, AI CPU strong enterprise service platforms Orders cloud centers, from channel emerging and top-tier data of

up center of was of for IT by data QX GPU IoT revenues. enterprise million we Growth XX% up and revenues quarter, represented AI up was and representing total total last quarter-over-quarter, and driven and XX% CSP/large quarter. center enterprise billion, of quarter. [ rack-scale which AI, revenues QX, existing XG, data This XX% ] and and versus GPU X% During XX% represented up revenues $X.XX driven Edge customers $X.XX channel year-over-year and XX% recorded XX% XX% appliance/large telco, QX. data was XXX% quarter-over-quarter. Two or again $XX were revenues CPU versus OEM vertical, the revenues revenues year-over-year of vertical center OEM last by over revenues programs. billion XX% in verticals. XX% the AI The in of channel solutions, the upgrade appliance with this It total were large enterprise QX both representing Emerging XX%

a Server XX% XX%; mix. By geography, Europe QX X%; X%. and of XXX%, of XX% revenues U.S. rest represented On a product Europe, X% the revenue, and and increased increased increased accessories XX%, rest XXX%, by world XX% the comprised the ASPs systems decreased the the driven X%. basis, storage subsystems to and Asia, year-over-year rest basis, XX%. increased and of QX and U.S. world, the the world customer basis, Asia XX%. of year-over-year and increased and Asia U.S. increased Europe increased revenues; quarter-over-quarter revenues on a of increased represented On quarter-over-quarter XX%,

gaining and as XX% which focus The new QX to was designs non-GAAP strategic from share. margin down gross on XX.X%, was continued winning we quarter-over-quarter market

year-over-year and the and by expense was Turning higher of quarter-over-quarter million, increased a QX exchange. drew approximately bank on expense sequentially by for of benefited increased QX from operating during and XX.X% interest leverage we a basis, in $X principally driven working quarter $X to on driven we XX% $XXX facilities non-GAAP down to XX% operating On income operating XX.X% versus million. compensation expenses as by million, credit loss non-GAAP higher expenses headcount. short-term of last net capital $XX increased $XXX expense GAAP OpEx, XX% for revenues. Other Interest margin quarter-over-quarter consisting expenses. operating X% expenses to basis, QX a year-over-year million million, as foreign a was and and from quarter.

XX.X was million $XX.X tax QX The basis was a rate GAAP million $XX.X The XX.X. and tax non-GAAP on QX provision and for non-GAAP the tax rate on GAAP for basis. was a

leverage. due EPS slightly to $X.XX $X.XX recently diluted non-GAAP of and to initial end operating high $X.XX guidance guidance exceeded our $X.XX updated to of $X.XX QX our the of above of

higher was Cash accounts million flow to higher of to QX QX. receivable build generated for the operations flow by used $XXX quarter. inventory plans was during for and Strong in profitability of operations and million shipments due level the timing cash of a offset accounts QX during by payable and compared previous $XXX

in $XXX million cash $XXX versus $XX positive QX, million free million quarter. last of was resulting cash negative flow free of CapEx for flow

strong offering we a a equity fulfill balance $X.XX $XXX expand closing $XXX R&D position proceeds of discounts demand net of to price net position an last at while the raised from issuance bank X.X and underwriting shares capacity for investments strengthen million, resulting million a continued in will and capital, cash million The share. million platforms. The million, During used versus was costs of approximately $XXX sheet working per quarter. cash in leading was other executed debt sale to proceeds net our $XXX position global be in $XXX the our after and enable million quarter, of

XX by quarter, balance days days last quarter days payables decreased to days, was in Days QX compared cash by decreased days timing XX of versus days Turning Days versus XX to days to the the conversion to XX due capital of the while the the shipments metrics cycle of sheet prior XX outstanding to QX. was and by working days XX days XX during down to outstanding XX quarter. days. inventory XX sales quarter-over-quarter

Now outlook. turning to the

to as with existing March rack-scale AI strong quarter customers a we expect We and continue our IT solutions. for gain and momentum total new

sales income third ending fiscal of XXXX per XXXX, quarter non-GAAP to March $X.XX diluted to of and range in the billion $X.XX. the $X.XX $X.XX $X.X diluted of For to per net share net billion, GAAP net income of XX, share we $X.X expect

compensation include from to fiscal $XX expect non-GAAP $XX of [ of to expenses. The lower slightly operating margins in XXXX expected EPS that net than outlook expected million expenses $XX million net ], QX compensation be and included stock-based diluted includes approximately are We levels. income diluted GAAP $XXX excluded per tax approximately are non-GAAP not of million in in operating gross which GAAP QX million common expenses expenses share. year are effects for be stock-based

for to of a XX.X% other diluted per net million of a GAAP be rate assume GAAP non-GAAP projections count including approximately XX.X $X company's income of fully The rate of expense and expect income and million. non-GAAP. We and expense, a non-GAAP tax XX.X%, for diluted share share interest million for net XX QX expenses, and tax a GAAP

the be $XX CapEx XXXX. $XX of in fiscal of range expect year a and to to $XXX the million for million [ QX range to $XXX ] for We million million

range Q&A. for For the to billion are to year now range a billion. Michael, $XX.X $XX ends guidance XX, we of billion of from June our XXXX, to which billion a for XXXX, we're ready $XX.X $XX raising revenues fiscal

Cole?

[Operator Instructions] George Wang Our Barclays. first question is with from

Congrats I strong on two questions. have the guidance. quarter and

also Obviously, supply you and of versus by can about strong Firstly, quarter, talk improving of probably December kind supply both, kind for demand? demand. driven the

about backlog still talk So right you And side, maybe constraints if level? supply there also can, are you can now? on the ongoing

for stronger is the the Indeed, you still question. supply. than demand Thank Yes.

ship we will [ are even supply, even continue able bases So so if to very more. to we ], more grow capacity happy business grow be support, we to have our quicker. to And higher

the a And follow-up cooling. Okay. quick liquid just on

about kind by this talk expectation can June from expanding after total per month maybe also, racks liquid-cooled you of the cooling. I production the difference, talked and maybe racks for about You so you of immersion config to [ some year. the cooling. X,XXX year-end? mix And the about And cooling kind guys can liquid know talk air-to-liquid you have ] your within

can So forward. on going maybe double-click this you topic, thematic

Indeed, George, liquid industry. the for Yes. we you, question. Thank the cooling, leading are

data customers, their ready although center ready. time. I needs have some a like huge total capacity mean more be lots cooling, to some their more have time and need liquid ready. very mature but So they of solution we infrastructure But

we continue ourselves trend, liquid our to infrastructure. and cooling [ try data a to their the some and make ] support best including be center to providing help I think, will So believe, ready we customer,

most cooled. But I continue at [ this moment, still So air to cooling liquid shipping of percentage ] believe are the will grow.

is question Chatterjee Samik from with JPMorgan. next Our

can wins share relative of sort opportunities Congrats XQ, a going sort guiding over how by have a and the you're help the margin, if balancing the long here a -- the management And terms design to then wins as follow-up. market I did step-down have for you about and of side results you're strong moderation profitably in me that being run? just I on How here. team, Maybe do growing you're evaluating in of start into just with those side? you Maybe XQ. think understand, slight opportunities gross to a

Sure. Thanks, Samik.

we in always So customer, out. to go and a new when we win try

different and to out organization so spread the And we go try into into divisions.

on and And order new the to customers, so business, do that, to we in requires us do win which evaluate we to competitive. as take be try

balancing how value, And always that. shareholder to of are so we interest maximize in the

by pricing. And so take take -- in quickly. do order at share, really that, will to this opportunities time, being we market growing then in we more order on And are to and competitive

in The continue of grow position. question indeed we be healthy the will scale, economy to operation when is that margin to our able keep still

and a just from then guide of revenue it. to look revenue question. step-up and sort Got guide call Got XQ, here near-term the step-up the bit the midpoint a billion, to there's into When it, XQ. annual And of, XQ about, in I it. more get then at a for to bigger XQ of $X.X going less XQ

much to that when being really more -- you've the what a comes what's supply? of XQ sort revenue the about XQ How guide just trying visibility the is in to cautious Or currently by cadence pushing XQ? from that XQ of supply more to of tells in driven to is today. provided get terms bit driving bit you I'm a just in the and guide that that the

Yes.

large we and Samik, again this grew backlog, very So a which growing have quarter.

as mentioned so only constraint Charles And is supply. earlier, our really,

However, improving. supply the good that is news is

point, And conservative so to constrained supply. we have we be by because to your are still somewhat

Our next is from with Nehal question Chokshi Northland.

impressive for for [ XQ the on dynamic Great guidance quarter, regarding both March your ] thanks guide. guidance, the explanation the plus the and forward

shareholder December the for quarter, decisions. and already you're the alluded at revenue incremental accretive you Looking this, to making David,

improved in So yet that's margin, what's the driving margin the operating your tick-down gross Q-over-Q. has

margin Is respect it's with flows just revenue, opportunities. not these simply accretive clear, free talking just revenue correct? follow-on the decisions, when future making at from current so And you're still that about lower with future associated be cash to looking to shareholder

trying most really value. the return shareholder to It's about

tight that if customer, to So point, shareholders. expenses, back to large more with more know we -- bring our because volume get of to your we our of we're a able to our be control operating EPS going from

good partner a customer. So with that's decision to the it's really the really really --

Got it.

Okay. quarter? the customers you XX% And review then, the revenue for did

two, both in center said one We and had XX CSP/large we did. one data XX, We the vertical.

Jon is Securities. Our CJS question next with Tanwanteng from

my of the question You for ecosystem I growth growth. fantastic Really, congratulations first the is the what this confidence potentially beyond conversations the in you your and you. customers you backlog, was seeing decades that gives wondering, Where in books coming on and year? in demand. the years inference, are with your gives order What visibility from? confidence? that is any Charles, mentioned you

deep for learning segment strong. Yes. the Thank you generative, grow to than mean very I Yes, other continue question.

base customer growing. CPU general in opportunity also inferencing is Our

So to with of and AI. around more cloud, even verticals kind including private on data AI in and a more continue as world popular, the push private solution indeed, be inferencing well, many center so

approaching of So in a growth a direction, and -- are feedback. promised kind continued positive ] [ ] see feedback we holding [ we

way, question as And share Got gross wondering, go possible do gain? one to mentioned been generating? in inflection? you the in that's the you is a you're is this what a limit you terms that share floor it. I'm other just a ask see there different margin margin gaining when And of when pursue versus

Sure.

back set we well But to that target. March actually XXXX we've out So against in target that's of of -- done a XX% and XX%. pretty

terms Building -- we because cost to our that are And advantage the that we Block have doing into is And of one envelope. initiatives Solutions. there's way fastest Number But is the we our lower a one, that means expansion market to favor. our I'll of architected say play what lot a is -- have our of lot a thing number two, we're our that lot we're of in products.

to, different first-to-market many technology with with So are a as providers. out new lot And there's means is those. of that were be from expect we we what again, coming that AI, technologies

ourselves solutions. of to set out as advantage with come complete helps us a that And -- we first-to-market differentiate helps

that's So thing to going we to advantage. -- Super play always will that think another Micro's is that

size a deserve, of the economy a we broad Building to efficient product And we segment, because the have -- and we Especially, scale. will to Yes. still grow of to volume our scale in our so Block was have Block we every will so small middle Solutions aggressive of to healthy a volume. Solutions size vertical, have every be lot lines, more we see Building economy see continue of be to

next with is Bolton Needham. question Our Quinn from

wanted it's strong I quarter current very congratulations gains. too. Let the yourselves you the the margin here in moderated to further guess Obviously, quarter I me and share echo question, the market gross a ask on position you guys as results. forward for

guess 'XX, I in level sort thinking about try guys would is, you of gains? my question that XX% to is of you midpoint the market that the XX% aggressive and that sort of as to drive share level back right stay set be to

And growth then of supply be trend maybe year on extent a more catches slow, question, range up XX% XX% helpful. to and perhaps higher-margin on the sort to rates sort or would over to twist to of that next X margin focus in the would where Just business? thoughts demand that the may you start any

Yes.

For sure, our most important for best shareholders, the principle is whatever is for the company.

we change. the although monthly. range we in at that of that to there said And carefully adjustment will shareholders, will kind do be if So in but any range best change XX% for the are XX% evaluating for we XXXX,

on it. Charles, And Got liquid question a then, Okay. cooling.

ready. you guys some infrastructure are still the may you look like It improvements. forward, as sounds Just need

customers, -- data for your GPU generation, looking generation at look XXX-watt drives CSPs that that of the next the really X,XXX-watt that BXXX at and of it are current of sort the you that customers, [ center is Or cooling? liquid to sort that really CSP drive need But is class include liquid sort I adoption the cooling, GPUs ]? does deploy guess as

more module, XXX, with system can even per these more when In right. watts comfortable But grow even are to I or much that's critical. conditioner. XXX the per people watt yes, still well traditional air the take liquid care the And people X,XXX than still X,XXX air think You I are module, cooling current become cooler. mean with very why

centers, we that. for So have by a most that ready time, I that facility the believe of data

are our to patient the maintenance. reliability optimistic we very especially So continue to and easy very improve quality, and for

support up customer when ready, can ramp is we to quickly them. So

is Our Aaron from Wells question next Fargo. with Rakers

Great results.

around? your the when same diversity talk about just, you customers is X simple had I a I XX% Or that those are seeing you revenue customer versus customers? Just Like kind these you the are was customer think last the and bounce the quarter, from you XX%? your coming of XX% same that talk customers, curious, when XX% the XX%. that customer, about concentration is business, guess and of of question

to is in XX% point, see But the time Aaron, very a not bounce customer. your XX% a the So above, the same they we're in new customer, yes, by customer, then but a happy bouncing it's And out. customer XX%. customer the and is anytime longer-term we first do And do way.

more Yes. When And that's we economy as to is of and large-scale have and our middle-size why grow further we customers customer very well. a scale important small-size us. total the more will revenue,

as then lineup. diversity more AMD's the evolution we as follow-up, a at There's I'm coming lot here. And just product kind curious, a AI GHXXX, Yes. out, look from product VXXXs, of itself kind of quick

more characterize that growth the as growth? the expansion driven, Or the the next-generation growth forward, growth drive more driven going on you volume kind here, these how curious say you As those two growth platforms? of does would would we ASP by think diversity is driver going you just I'm unit from being forward, about about of inputs. of think

in next of will years, few our growth number. in unit be I quicker guess, terms

next So volume ASP. faster. number been I quicker growth a grow be lot, volume last our than will ASP will growing X Because the unit years, guess, step, [ ] has right? So

is Baruah Capital. with question Loop Ananda from next Our

a came it guess, -- plus I of kind Charles, that guess, count call Is X.X if the billion, but on on I I some clarification. on accurate? or math minus, congrats maybe could, the I guess, may I billion. and did with, Yes, $X.X I congrats up month, a billion And execution. XX,XXX X.X racks quarter, really that. I solid per

opportunity if midyear, I is of And getting can sort the be you about guess talking to rate we into about that question we're opportunity to make sort of run is, and that want thinking back the And interpreting you calendar I not an of like the when you're have kind get sure a that follow-up. got kind it's quarterly point, of that Just half accurately. like that of the then year? quick

Yes. -- we Again, we really green have green large-scale cooling That's computing That's we whatever liquid capacity will. everywhere. whenever a and computing make why say a we why to been can best, building help customer have other for we solutions.

we yes, capacity a the customer be ready. capacity it's So when will are there huge, but need,

very lot or flexible. indeed, also the can cooling liquid facility And combination facility cooling cooling. our is and support air of the A

not have ready liquid capacity yes, we They So air growth, necessarily all support cooling. cooling huge as but or a for well. combination, for cooling hybrid

couple you is just And have of follow-up mentioned call and the Awesome. guess a new part Charles, sort I on accelerating times -- as then think, -- your I could you guys were of words today growth. customers of Awesome. the

sort I sort And them, -- about your kind like kind be I industry you guys would that of of be complexion useful. wrapping like the like would on guess so customers into anything new guess run industries, -- any rate, projects, in that of are any context of helpful. what Anything

make and sales service process, to our Thank process you. automatic. lot of operation be we I mean a effort process spend

capacity. that's sales, for support for why we our enlarge have approach systems to automation capacity And customers support production, really more for those now. to So

are EPS. economies So to need -- very operation and scale we because economies important and of our of overall scale margin

grow we to much ready So quicker. yes, are

Congratulations.

CJS Jon question from Tanwanteng with next is Securities. Our

supporting large are as expect are more economies in against any and getting that? larger changes formula? to revenue growth a on scale been trailing was -- just than of run bigger, base you customer grow basis, there's It's OpEx you base? our of is you do you half I less to customer a if any potential such wondering your growth with limits Or as

Yes. have XX years a Indeed, long, for old company we small-volume been too company.

just volume has economy in continue scale. our this and kind started like good of our recently. grow So scale we of to grow take to And to chance economy of

scale in continue economy grow, our mean, automation again, of leverage when good I are a we why, and growing And for that's quickly. service. sales, for So for we operation position system, to

expect know cash. Great. was rate And I are Okay. that the finance need you growth more markets, you seeing, of this other to debt at to I'm the talked of to are if going about financing? wondering growth? what I do just the external you're sources just plans wondering, you're

team financial stock, of to try now diligently especially more our on working sources, has equity. been dilution Yes, very our minimize our

So we study have a ready kind [ minimum ] and there. program of we

add So capital, need more are may we ready. we when David, you something.

Yes.

we're having opportunities. echo -- number at And we're looking number different as said, said. further So a at Charles things, I'll what not a Charles of but We're so of looking just but of different Jon. we -- we dilution, mindful are

not -- so much. we because we And by as were not need is reason last to flows quarter growth. that more the And simply the working did we grew reason have capital not our was were for because as strong cash --

So you've $X billion working capital. if by grow over in to got you when a quarter, you additional -- have

fact. the plain-and-simple So that's

has inventory than continuing growing Our are been we billion, more $X to and grow.

Our Northland. last will question with from be Chokshi Nehal

Yes. have actually Great. follow-up two questions. And I

was or billion First, to capacity capacity ASPs? increased guys of earnings quarter around and said June from I you the up XX that driver call, believe XX quarter. billion, at increased the Was actually XXXX the September that's

guidance full-year a implies XX that, guidance implies to Q your relation reached X.X has June billion, in then that of that that around And your billion. capacity annualized

Malaysia gone this your increasing, capacity has is actually a largely is mix-driven, capacity your as so like-for-like driven? is online? And prior coming Or ASP up to

will number I Yes. continue to will the on, grow, gradually faster I grow ASP much while from mean our now guess. unit

why we that's more So need capacity.

billion is that X.X December, -- X.X billion. over add, I'll we Nehal, in one And thing shipped

so alone billion a And that capability. $XX establishes

then Okay. my And that seasonally typically, other question is revenue quarter, down going March is the XQ. into

goes up is quarter, the a on conversion when quarter seasonally it to be up cycle down XQ. Usually, your guiding though, revenue basis. to You're Q-o-Q cash

March revenue dynamics? expectations because cycle a you're change on however, that This quarter, your seasonality does cash conversion Q-o-Q increase, projecting

because demand, strong. is of very Yes, that it

So we strong as believe this well. a March quarter be quarter will

add David, you have to do that? anything to

Yes.

to really receive we timing, inventory it we Nehal, ship down, So comes when out. and when

So big as quarter. have a month, within activity can you even I quarter, the in mentioned December the within a

your And will so affect metrics. that

about we better was than it your expected. December that consumption recognize that least better I was cycle better what given a upside lot a significant Talking delivered we you revenue the Okay. cash. than here? had the actually cash actually you there what Was expected, a of yes, had at conversion than expected. But lot was And quarter, had had what

was. Yes. some and absolutely that [ Yes, we us -- things helped which ] prepayments had out. It customer

when more our well. leverage Yes. grows, of can economy inventory Also as we efficiently scale

Congrats guys.

conference Thank you concludes participation. all That today's for your call.

disconnect You may your now line.