Super Micro Computer, Inc. Price & Performance (SMCI)

By now, you should have received a copy of today's news release that was issued after the close of market and is posted on our website where this call is being simultaneously webcast Any forward looking statements that we make are based on facts and assumptions as of today and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted and reported results should not be considered as an indication of future performance. As a discussion of some of the risks and uncertainties relating to our business is contained in our filings with the SEC, and we refer you to those public filings including our most recent annual report on Form 10 ks. During this call, all financial metrics associated and growth rates are non GAAP measures other than revenue and cash investments. This call is being broadcast from the Supermicro Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website as a property of Our quiet period begins the close of business Friday, March 14, 2020 at Holidays.

Technology innovation, and business opportunities. As we are close to the midpoint of our I will begin by reviewing some key financial highlights from that Dec. 0 quarter. Our preliminary net revenue is projected to range between $560,000,000,0.0 and $570,000,000,0.0 making a 54% year on year increase at a midpoint Despite some negative impact on cash flow and market misperception due to that ten ks Super. We achieved a fairly good quarter. Driven by sustained AI demand from both existing and new customers. Our growth trajectory for remains promising. Highlighted by the beginning of our transition other to GPU. We expect the growth in new generation platform to accelerate as supply ramp this quarter and beyond. We have confidence that our calendar year 2025 growth could be a repeat of calendar year 2023 if not better. Assuming that supply chain can keep pace which demand Our preliminary [indiscernible] earnings was in the range of $0,.58 to $0.6 per share. Was $0,.56 last year. Representing approximately 5% year on year growth. Non GAAP gross margin was approximately 11.9% and non GAAP operating margin was approximately 7.9% Margin was temporarily under pressure due to the 10 ks delay disruption. The new product R and D investment and customer and product mix.

In a separate press release issued today. We announced a private placement of 700,000,000 in new 2.25% convertible senior notes.

Due in 2028 to support our rapid business growth immediately. We have also privately amended a portion of our existing convertible notes during 2029 with almost all investors participating in the amended notes. This will support our growth including Shibumaki for Dahoo, initiatives, data center billing block solution [indiscernible] [indiscernible] some brand new GPU platform architectural design. Before diving into the details of our operation progress, Let me begin by sharing an update regarding our financial filings. Our financial team and our new auditor BDO have been fully engaged in completing the auditor process. Based on our progress to date, we are confident that [indiscernible] From 10 ks and the first from 10 Q will be filed [indiscernible] Feb. 25. This year. As previously stated, the special committee found no evidence to support our formal auditors' reasons for resignation. However, over that, past two quarters, we have added senior leaders in corporate communication [indiscernible] legal and compliance departments. We will continue to add more top experienced leaders to build a stronger corporate foundation. For our [indiscernible] [indiscernible] global business, including the CFO, CCO and other positions. As you know, we have grown strongly we are excited to announce that our NVIDIA BlackWave products are shipping now We have begun volume shipping of both Dail Core Can you and next quarter for you NVIDIA P200 HDX system.

Meanwhile, our NVIDIA GV200 [indiscernible] for production as well. Utilizing our system building blocks, we are going to send over more brand new platforms for customers seeking further optimize higher density and even greener AI solutions. While most of the key components are ramping at a full speed, it will take some time to fulfill our current AI solution backlog. Some customers also needed more time to finish their BLOC data center fill up. At the same time, we see strong new demands are keeping coming from enterprise CSPs, Sovin entity and hyperscale. We are expanding enhancing our total liquid core data center infrastructure solution [indiscernible] Is amplified by the XAI [indiscernible] orders largest deep core AI disruptive leader in driving industry wide adoption of BLRC technology. Which reduced customers' OpEx and achieve green computing. We expect more than 30% of new data center worldwide to adopt liquid cooling temperature within the next twelve months. Driven by the rapid and continual growth of AI. [indiscernible] to be everywhere Our DRC long term investment and leadership provide a sustainable competitive edge and economics of scale far ahead of competition. Supermicro's data center billing product solution consolidated Super [indiscernible] [indiscernible] storage, water tower, solar management, on-site deployment, cabling, and service for an end to end solution The true value of data center building block solution is to save power, reduce space, and decrease water consumption resulting in up to 40% lower PCO for our customers according to our detailed calculation.

It accelerates the new data center Super image and help modernize existing infrastructure in Weiz [indiscernible] [indiscernible] [indiscernible] [indiscernible] significantly improved data center [indiscernible] and PTO [indiscernible] and time to online We are expanding our [indiscernible] Quarter after quarter. And we have become a true 1 stop shop a data center partner to to the whole industry. On the product front, our new Malaysia campus, sorry, on the production from our new Malaysia campus we will soon ship a product to our regional partners.

Our Taiwan and European production capacity are also growing significantly. In Silicon Valley, we are rapidly expanding our manufacturing site. To increase our BLOC, large scale production capacity. The U. S. [indiscernible] both and impressive 20 megawatt enabling us to produce over 1500 D LSC GPU rack. Per month in The U. S. To better support our key partners and aligning with current government initiatives, When need, we are also ready for other domestic manufacturing expansion. In various regions across The U. S. [indiscernible] strategic expansion will ensure we meet the increasing demand for our product and service. While maintaining our commitment to our chief partner for quality, security, PCO total cost of ownership, PTP, again, time to delivery, [indiscernible] [indiscernible] To summarize, we have been product and technology leader in the IT industry for over three decades.

As we continue to strengthen our internal operation and expand our U. S. And global manufacturing footprint. We aim to turn this [indiscernible] Into value for shareholder customers Our first to market advantage of delivering the most innovative AI infrastructure technology.

With Blackwire exceptional product quality service software, networking, and security. [indiscernible] to reinforce our partnership as the premier U. S. Based data center infrastructure solution provider. With our expanding technology dealership, And today's AI trends, we believe it will result in a similar growth trend for us like 2023. With that, I'm confident we will finish this fiscal year strongly with revenue in the range of $2,350,000,000,0.0 to $25,000,000,000 and I believe we have potential to reach 40,000,000,000 for fiscal year '26. Before passing the call to David, for the financial overview, I want to thank all of our partner customer, investor and Xiwu Magu team members. And express my deep appreciation for their continual support. With that, I will now turn the call to David.

Thank you, Charles. Please note these numbers are preliminary and unaudited subject to change upon completion of review by management, our audit committee Additionally, our independent audit firm has not completed its review procedures with respect to this preliminary financial information. To start, again, we expect revenues in the range of 5.6 to 5.7 up 54% year over year. Again, growth was driven by demand for Air cooled and DLC rack scale AI GPU platforms. AI related platforms, again, contributed over 70% of revenue for across enterprise and cloud service provider markets. The non GAAP gross margin is approximately 11.9% versus 13.1% last quarter, due to lower margins from product and customer mix, And you'll recall that on the earnings business update call, we guided down 100 basis points for this quarter. The non GAAP operating margin is approximately 7.9% which excludes $82,000,000 in stock based compensation expenses versus 9.7% in due to those lower gross margins. Other income and expense is approximately $8,000,000 consisting of $15,000,000 in interest and other income offset by $7,000,000 in interest expense.

The tax rate is approximately 15% for GAAP and 17% for non GAAP. Net income is will range from $3.15,000,000 dollars to $3.25,000,000 dollars and non GAAP net income $3.75,000,000 dollars to $3.92,000,000 Non GAAP net income excludes $63,000,000 in stock based compensation expenses net of the related tax effects of 19,000,000 GAAP diluted EPS is approximately $0.5 to $0,.52 versus prior guidance of $0,.48 to $0,.58 Non GAAP diluted EPS is approximately $0,.58 to $0.6 versus guidance of $0,.56 to $0,.65 We expect a GAAP diluted share count approximately $6.36,000,000 and a non GAAP diluted share count of $6.47,000,000 dollars The closing inventory was approximately 360,000,000,0.0 versus $490,000,000,0.0 last quarter.

CapEx was 28,000,000 Cash used in operations was approximately $2.40,000,000 dollars versus cash generated from operations of approximately $4.00 9,000,000 in Supermicrobe began the with approximately 210,000,000,0.0 in cash and recorded approximately $3.20,000,000 dollars in GAAP net income for the Cash was provided from lower inventory and other sources totaling 150,000,000,0.0 And then the company used cash to pay down accounts payable by $120,000,000,0.0 We realized higher other receivables from purchase rebates and prepaid inventory of $4.84,000,000 We had increased accounts receivable of $3.35,000,000 dollars We also reduced our bank loans [indiscernible] $3.46,000,000 dollars net And we incurred capital expenditures of $28,000,000 and had other uses of cash totaling 87,000,000 This resulted in a reduction in cash during the quarter of $6.60,000,000 thereby ending the company's with $140,000,000,0.0 in cash. At the December,. Now want to point out we've continued to prudently manage our working capital. [indiscernible] for the month ended Jan. 31, 2025, ended with approximately $2,000,000,000 in cash. [indiscernible] Turning to the balance sheet and working capital metrics compared to last quarter, the cash conversion cycle [indiscernible] up to one hundred and four days versus ninety seven days in Days of inventory was seventy eight days compared to the prior quarter of eighty three days.

Days sales outstanding for was forty seven days versus forty two days last quarter, while days payables outstanding was twenty one days compared to twenty eight days last quarter.

In a separate press release issued today, we announced a private placement of 700,000,000 of new 2.25% convertible senior notes due 2028. [indiscernible] we privately amended our existing $170,000,000,0.0 convertible senior notes due 2029, The company is reconfirming that no previously issued financial statements require a restatement. The company, however, made certain adjustments to the preliminary unaudited results for the that it had announced on Aug. 6, 2024. The adjustments recorded in the results for the include an increase in net sales of approximately $46,000,000 dollars and an increase in the cost of sales of due to an increase in inventory reserves of approximately 45,000,000 There was also an increase in operating expenses of approximately $5,000,000 Until the company's fiscal year 2024 financial statements are filed, The company is required to reassess its accounting estimates for financial reporting. The charge for inventory reserves results from an unanticipated decline the market value of certain components that were held in the company's inventory or on non cancelable purchase orders at the end of fiscal year twenty twenty four. [indiscernible] Collectively, these changes resulted in a downward adjustment to the previously announced preliminary unaudited fiscal year 2024 and of fiscal year twenty twenty four GAAP and non GAAP diluted net income per common share.

Of approximately $0,.09 diluted shares outstanding basis. The foregoing adjustments are to previously announced preliminary unaudited financial results and as such they do not constitute a restatement. For the [indiscernible] We are expecting net sales in the range of $5,000,000,000 to $6,000,000,000 We expect the GAAP and non GAAP gross margin to be approximately 12% We expect GAAP and non GAAP operating expenses to be up approximately $17,000,000 sequentially and GAAP and non GAAP other income and expenses to be a net expense of approximately $12,000,000 We expect GAAP net income per diluted share of $0,.36 to $0,.53 and non GAAP net income per diluted share of $0,.46 to $0,.62 The company's projections for GAAP and non GAAP net income per diluted share assume a tax rate of approximately ten point seven and twelve point seven respectively A diluted share count of approximately $6.42,000,000 shares for GAAP and a diluted share count of approximately $6.53,000,000 shares For non GAAP, The outlook for GAAP and other expenses of related tax effects of approximately $17,000,000 which are excluded from non GAAP net income per diluted share So again, I want to point out revenues for the trailing four quarters between $20,000,000,000 and $21,000,000,000 And for the fiscal year, 2025, we are updating our revenue guidance from a range of $26,000,000,000 to $30,000,000,000 to a new range of $2,350,000,000,0.0 to $25,000,000,000 So we're very happy to announce that the company has raised money through the issuance of new bonds.

And we will continue to improve our liquidity as our growth requires it. The final want to end by saying that the final financial results reported for this period may differ from the results reported here based on the review by BDO our new independent registered public accounting firm, But we expect to complete our audit by the February '25 filing extension date that we have been granted by NASDAQ. So Michael, turn it back to you.

Leila, we'll now take quick questions.

Our first question comes from Michael Ng with the company Goldman Sachs. Michael, your line is now open.

Hi, good afternoon. 2 questions for me if I could. First, I was wondering if you could talk a little bit about the $40,000,000,000 revenue outlook.

What informs your confidence there? If you could shed any light on backlog or pipeline or product roadmap that is informing the outlook, that would be great. Thank you.

Yes. I mean, our product line continue to grow. We have industry standard product line plus lots of chip reset including some confidential product under development. And we have a customer engaged with us for those projects.

So This year, even 10 ks today, we grew about 60%. Last year, we grew 110%. So the coming year, at this moment, we believe that at least we will grow 65% at this. So that's I believe a very conservative HD managed [indiscernible] capacity.

I mean, USA now our utilization rate only about 55%, Taiwan UTR ratio rate only about 60%, Malaysia UDI ratio is still about 1% only. So there are lots of room to grow for us.

Great. Thank you, Charles.

And just as my second question, I was wondering if you could talk about the the mix of Blackwell and Hopper servers in the quarter not looking for anything specific but Was it different than what you may have expected? Was Hopper stronger? Was Blackwell affected by any supply chain constraints? Thank you.

Yes.

We have both. [indiscernible] H2A for example. And then backware, we have GB200 fully ready in production. And then for B2123 HEGX, we have a 10U air cooler. Fully ready for production and then 4U liquid core fully ready for production. And we already accumulated some good volume backlog. Back order and continue to see lots of new order coming. So I believe we do not share the detail about the percentage. But basically, for sure, more and more customers like to have a big B200 and GB200.

But all of them ready.

Thank you for the thoughts, Charles. Appreciate it.

Thank you.

Next question comes from Ananda Baral with the company Loop Capital Hey, good afternoon, guys. Thanks taking the questions. And congrats on on what's a pretty pretty solid print and delivering some news here.

I could see if I could, The first is just on gross margins. Dave, what's a good way to think about June gross margins in the context of your guide, just sort of the second 1 there, this is the second part of my first question, I have a follow-up. What do you go ahead and think about gross margins through the Black Wells cycle? This is obviously a key question for people and they want to remove the concern off the table that there could be material margin pressure through the Blackwell cycle So those 2 and then I have a follow-up. Thanks.

Yes. Thank you for your question. For sure, when product becomes mature, like HEY-one 30, HEY-two 30. Then we had to face price competition strongly. But for 13 or GB-two 20? For sure, whenever they are new product, our margin will become much better. And especially talking about the cooling, we believe DLLC [indiscernible] will grow all our way to 13% or even more in next twelve months.

And in terms of liquid cooling, in last twelve months, I believe we have offered a majority of global liquid cooling. So [indiscernible] Blackwire opportunity, most of the customer, when I do go for deep cooling, I believe we have a much better position.

Can I just throw a point on there? Hey, look, let me just add that while they are focused Hey, let's take it. Ananda, most of us are focused on the gross margins and rightfully so, but don't miss critical point that we're driving operating margins above our targets.

That translates into shareholder value.

So, Ananda, this is David. 1 thing I would add is, if you look back if you look back to what happened with H100, as Charles mentioned, Supermicro was the ones that had a company that had a stable platform and which became a market leader And so that helped our margins as they crept up to 18.8. Now of course, we're targeting, we said we target 14% to 17%, but the question is, with to your point on Blackwell, What will be what will the competition be able to deliver? And I think that's going to be a big indicator of margins. We feel like we're in pretty good position because we've already [indiscernible] Yes.

Yes. I appreciate that. Appreciate that guys. And then the follow-up is on the rev guide. Charles, the $40,000,000,000 so a couple of things. You mentioned calendar year 2025 could be similar to calendar year 2024. Which is about 40% growth. So that would suggest maybe $8,000,000,000 on average in the Sept. 0, Dec. 0 quarter of revenue. And then the $40,000,000,000 the at least $40,000,000,000 for would tend to get maybe at least $12,000,000,000 on average the March 0 and June 0 quarters of fiscal year?

So is that sort of what you're talking about And then what gives the confidence I guess, what's the thought process underpinning that $40,000,000,000 in those kind of rev quarters? And is it GPUs as well as custom ASICs? As the TAM opens up? So just kind of a customer question there as well. Thanks. That's it for me. [indiscernible] Thank you. Again, whenever there are new technology, we have a good chance to grow, right? Kind of like this time, Black Whale, right?

And kind of DRC, liquid cooling and again, we have a [indiscernible] higher capacity ready for nuclear cooling compared with the market. And last year, we grew 110%. And this year, basically, we grew we will grow about 60%, right? So next year, I believe 65% is a very conservative estimation. And fortunately, I hope we can grow more than that. But That's to be conservative. Thank you.

Thank you. Our next question comes from Sameet Chatterjee with the company J. P. Morgan.

Sameet, your line is now open.

Yes. Thanks for taking my question and have a couple of questions as well. Maybe just to start off, Charles, I think the last time you mentioned, which was in 2024, that we could expect sequential revenue increases in the medium term on a quarterly basis When I sort of look back at it in hindsight, it looks like what derailed that sequential growth to some extent was the product transition from NVIDIA in going from 1 product generation to another, which also drove some change in customer behavior As you're thinking about the revenue target here for $40,000,000,000 for I mean, is there an underlying assumption that you won't see a similar customer behavior change towards [indiscernible] as NVIDIA goes through a transition again in that timeframe or is there something that I'm missing in that sort of overall product transition that we should expect from your, GPU supplier And then a quick follow-up.

Yes. I mean, for cutting the 25, for example, I believe we should be pretty able to repeat twenty twenty three. History. Twenty twenty three, [indiscernible] And we are ahead of competition. So we grew very well. In 2025, calendar year 2025, we are facing the same opportunity now. Except before I would air core and now it's duct core. And in terms of cooling, especially DUC, we have a major market share. And we have a huge capacity, 15 entry rack per month capacity ready. And we already have many customers already approved and they are deploying data center and getting ready to deploy in HyperRail. So once BlackWear in volume production, I believe we will have a strong growth And now we are just preparing [indiscernible] including system enclosure, thermal solution for sure that GPU supply from our vendor NVIDIA. So we are well prepared. And once logistic ready, are ready to ramp up our growth [indiscernible] [indiscernible] Yes. Go ahead, sorry. I mean, we are spending more effort in Asia and Europe now. In 2020, 2024, most of our market are in USA. But now our team in Asia and Europe, we're coming much ready much stronger to grow market share in Europe and Asia as well.

Got it, got it. And Charles, I'll just follow-up with a question that I'm getting from investors.

Today after the pre end, which is when we look at that sort of $40,000,000,000 revenue target, how confident are you about achieving that revenue target with the current customer engagements that you have relative to what you need in terms of additional customers and new customer engagements to get to that revenue that you're targeting? If you can share your thoughts on that, please. Thank you.

Yes. In last few years, our growth have been very strong, except 10 ks interrupt.

Right? So in that four months, five months we saw for the 10 ks impact. So our growth a little bit slowed down. But we will fix 10 ks filing very soon. And cash flow won't be a problem anymore. So Capacity here, customer is ready. So I believe for the billion dollars forecast is relatively conservative. [indiscernible] Okay. Thank you. Thanks for taking the questions.

Thank you for your question.

Our next question comes from Uplu Bhattacharya with the company Bank of America. Bhattacharya, your line is now open. Thanks for taking my questions. I have 2.

The first 1 is on gross margin.

Overall, do you think industry margins are now under secular pressure given more competition from other AI server manufacturers? And is liquid cooling really a competitive advantage which you can charge more for? Or is that also becoming commoditized since it looks like everyone seems to be offering their version of liquid cooling? So David, how are you thinking about the long term gross margin range for your business? And I have a follow-up on revenues.

Certainly. So what I would say about the gross margins, are that, number 1, what we count on is being the first to market with the very best solutions. And so so right now we have [indiscernible] GB200, for instance, and And we're very confident in its quality as a product and that's really what helps to drive good margins. So it's not just liquid cooling, it's really it's stable systems that have high quality high reliability and also really the best performance. So I think that our abilities in liquid cooling were already demonstrated in the prior quarters. And it's really our data center billing block solutions a plan for the future. And so we have a lot of things planned for the future, but data center building block solutions are 1 of those where we offer a lot more solutions for the complete data center. At all levels. So Again, we haven't changed our target margin. And yes, there is competition. There's always going to be competition. But I think that if you look at how we've performed historically, and our ability to engineer in all the latest technologies I think that's our moat, that's our advantage.

Yes. Let me add that a little bit. Okay. Thank you. I'm not seeing LRC yet. Go ahead. Yes. See, LLC, everyone talking about they have a DRG solution. But how many competitor really have a DRG people even? In high volume? I guess it's very minimal. Last year, I believe we shipped at least 60% worldwide. BLRC solution. So that means a lot of competitor indeed they are ready, but they did not experience yet. And talking about data center billing data center billing bulk solution, Not many [indiscernible] Are able to provide on-site deeper image and on-site cabling on-site servicing. And now with DRC, with [indiscernible] or even more power per rack. I believe the on-site deprogramming service become a very important value to customer. And we are a company have exactly all our experience Ola successful story.

Okay. For my follow-up, if I can ask, as new efficient AI models like Deep Sea come about, how are you thinking about the impact on your business And as we move from training to inference, what is Supermicro doing to further penetrate the enterprise vertical? I know you have enterprise customers, but for those enterprise customers who don't have large engineering presence, what is your strategy for attacking that customer base as well as for sovereign customers? Thank you for taking my questions. [indiscernible] seeking, I mean, for sure, the software can always be more efficient quarter out of quarter. So we know that. But industries expense pretty depends on financial plan. So I believe the market size won't shrink because of deep seeking And in terms of enterprise, we have been in the enterprise market for more than ten years. And our team in enterprise have been much stronger than before ever, especially with our service team management software and end to end data center solution, I believe it's the right time for us to grow quickly in enterprise segment.

Okay. Thanks for all the details. Appreciate it.

Thank you. Our next question comes from Nehal Chokshi with the Company in Northwind.

Capital Markets. Michal, your line is now open.

All right. Thank you. Quick question here.

You tell us whether or not backlog is up Q over Q from the the Dec. 0 quarter? So we don't generally give out backlog figures, Nehal.

But what we can say though is that Backlog tends to follow the chip cycle. And so when you have new chip solutions coming out, you'll see backlog start to build.

As solutions become dependable and reliable. And then they'll tail off. As the the products mature. Expectation of some of the new chips coming out, we believe that you'll see growing backlog industry wide.

Got it. Thank you. And then I apologize in advance. This question is going to sound a bit Turkish, but [indiscernible] You characterize the $40,000,000,000 target at 60% year over year growth. [indiscernible] given that is going to be around 60% year over year growth in likely impacted by the 10 ks delay Therefore, 60% year over year growth for is potentially conservative. But I mean is historical year over year growth really a good indicator of future demand Have you looked at the actual like pipeline of demand and said, yes, we believe that this is the how big is the pipeline and this is a reasonable conversion rate. And therefore $40,000,000,000 is indeed very reasonable.

Yes, very good question. From both, I mean, I've we validate the business and from all different dimension, right? I mean, from our history historical growth, last few years, we have been growth more than 60% year over year. Basically, except this year, right, according to the year because of 10 ks today and we have some cash flow constraint. So we grew we may grow only about 60% or 60%. But other than that, I believe looking forward, next few years, our growth should be every year should be more than 60%. And second, from a customer demand, from customer backlog, from customer commitment, sales commitment look like RMB40 billion is relatively very conservative target.

Great. Thank you. And if I might squeeze 1 more in. I'm sorry, but I'm not quite getting what you mean by data center building block or concrete example as far as what does that mean? Is it like basically the cooling tower design or something else. Could you put a little more concreteness behind that? [indiscernible] But I'm happy to share. I mean, it's like I was rack scale building block solution. Customers want to build in their ROX we have everything for them. Same thing, a customer want to build their data center, we will have efficient plan. And today, we offer more and more key components. For example, deep cooling, the [indiscernible] pump, right? And water tower, right? Dry tower, water towel. And then [indiscernible] I mean, anyway, all our people build a data center, need those key components. We try to provide all of them. Including software, including management tool and experience. So, I hope a customer can 1 stop shop with Chipotle Micro. To build their data center. Makes their data center time to market much quicker. And also cheaper. At lower cost, right, and quicker to build their data center. And [indiscernible] [indiscernible] [indiscernible] Thank you.

Our next question comes from John Tanwanteng with the company CGS Securities Inc. John, your line is now open.

Hi. Thank you for taking my question. Charles, I was wondering if you could break down the factors or maybe David driving the reduction in the $25,000,000 revenue guidance.

How much is maybe pricing related? How much do you think is related to delays or availability of Blackwell? On how and the impact on hopper demand and then maybe how much was related to your 10 ks and maybe customers not feeling so great about doing business with you until that's filed. Yes. I would say John, that probably the biggest factor was just the delay in new technology because we were you think about it, we were all set to go We were all set to ship with liquid cooling. We were ready. And the problem was that the not everything else was. So that was certainly a huge impact I think obviously ten ks delay was a distraction [indiscernible] it's more about technology for us because we count on being early to market. And so that's what creates the big chunks that we have. The kind that took place last year from to when we went up $150,000,000,0.0 in 1 quarter. But remember, we finished the four quarters that ended June '30 at $15,000,000,000 dollars and now here we are two quarters later and now we've now we're at a a trailing four quarters of over $20,000,000,000 So we have the dynamic to accelerate really well when the technology is there that customers want.

I think if you look at all of the spending predictions, and intentions that are out there you can see the money being put in place to spend money on data centers and on data center solutions. And that's why we're here. Got it. Thank you. And then can you talk about your capital needs and cash flow expectations going forward as you start getting in the quarter, you're maybe generating $8,000,000,000 in revenue, $12,000,000,000 in revenue as that $40,000,000,000 target.

Yes. So we're working on a number of different [indiscernible] to raise additional capital which we just did. With some of our actually the invest with our bonds. So and provided additional capital for us. So we will we've always said we want to use our balance sheet as we can to generate additional additional funding for our growth. We'll just like we're we're preparing on the engineering side, We'll also prepare on the capital side. Yes. In terms of leverage, our inventory and AI, I guess the That loan should be available very soon.

Yes, we have a very unlevered balance you as you know right now because we paid down we paid down a lot some of the bank debt and so we've paid down a lot of accounts payable. And so we're we have a very very healthy balance sheet.

Got it. Thank you.

The next question comes from Aaron C. Rakers with the company Wells Fargo. Aaron, your line is now open. [indiscernible] For taking the questions. Most of them have been answered or asked and answered, but I've got a couple here real quick. So first of all, Charles, I just want to make sure I'm clear Blackwell and the product cycle Are you shipping the GD200, the NVL 72 today?

And or if not, is that a significant factor as far as volume shipments in your current quarter guide. I've got a few others. [indiscernible] at all 72, our position is similar to other competitors, right? So we have solution for really really. Now once we have [indiscernible] Right? And other than that, our B2123 and data, I believe, is some of our advantage because we have all different kind of optimized platform, especially for 4U DRC. We have lots of demand there and we are ready to ship in volume about now.

Sorry, go ahead. [indiscernible] Chipotle, along with ship more than R3000 to the market. I believe that's about 70% of the whole market. Whole dealers in market last year. So we have a much better experience, much better solution. So when customer looking for [indiscernible] [indiscernible] the industry's average for sure.

And then my second question is really on gross margin. I apologize to ask again on this topic, but can you walk us through the variables that drove the sequential change in gross margin this last And I guess the other thing is that Charles, you mentioned some of the utilization rates in U. S. And Taiwan. Hypothetically, let's say that you're at I don't know, pick a number, 70% or 75% utilization rate How much of an impact would utilization rates have on growth margin? How do we isolate that impact?

We did not [indiscernible] 02/? [indiscernible] we've said if we can manufacture in Asia, we predict to 2 points on the margin, Aaron. Back to let's see. And then you had another question on gross margins to walk you from Q back through And because again, we forecast back in Nov. 0 that we would be down 100 basis points and that was because of the customer mix and products that we saw shipping out. Remember, we're working on we're working on more end of life products which have become more competitive as customers waiting for the new platforms by all the different technology companies. To come out. From Intel, AMD and NVIDIA. So we there is of course more people that are offering solutions But as Charles mentioned, if you going into the B200s, and the GB series, it's this is going to be perhaps a different game. And so [indiscernible] On how we got to the change in margin. And we had a little we had some extra expenses as well because we're spending more on R and D right now. And specifically in buying some of the advanced chips as we refine our engineering and production to get ready for what we consider will be very large shipments.

Coming up, Thank you, guys. On-site, the premium [indiscernible] there will be another differentiation with other competitor. Our next question comes from Quinn Bolton with the company Needham and Company.

Quinn, your line is now open.

Hi. Thanks for taking my question. Just wanted to follow-up on the GBP 200 MBL-seventy 2 question. Just sounds like you guys are ready to go, but the biggest gating factor is just support from NVIDIA.

Do you guys have a forecast from NVIDIA when you think you're going to start to see supply of the GPUs so that you can ship NBL-seventy 2 or its visibility is still pretty low on availability of the GPUs?

We already proved pretty much everything. And now just waiting for and we are in some allocation, some volume, but the volume demand is way much bigger. So we are waiting for more allocation. That hopefully very soon we can ship in much higher volume. Got it. So it's just waiting for the allocation, sounds like, is the gating factor. Got it. Thanks. And then maybe just a follow-up longer term question, Charles. On this DeepSeq impact on the industry. Certainly, it sounds like we'll get more deployment of AI models, which probably says we get more inferencing to the extent that you see more inferencing infrastructure put in place, it's probably more fragmented. I assume that that's good for Supermicro Super it's less concentrated, probably more variability of systems. But can you spend a second on whether you think a shift towards inferencing is a positive for the business? Is it neutral? Is it negative?

Yes, it's very positive. When Infiniti become more popular, become order wise trend, right? I mean, before, I mean, they may have 300 vial. Basically. But with even Xing getting popular, AI getting popular, I believe very soon there will be thousands of companies need to buy AI equipment. Or service. So we are very happy to see the market size is growing and many more customers are asking for product asking for total solution. So and with our application optimized nature, building block solution, we are able to service a variety of customer in different vertical So that's another advantage we will have. Thank you, Charles. Thank you.

Next question comes from George Wang with the company Barclays. George, your line is now open. [indiscernible] thanks for taking my question. Charles, can you talk about kind of your current pipeline to in terms of the mix of software and AI? Just especially versus three months ago, can you kind of talk about whether you are seeing an incremental kind of pipeline build from the sovereign AI of the world?

Yes. It's also increasing. I mean, before most of the demand in USA and some other large country only. But now, yes, we see many more country going to build their own AI infrastructure. Especially we're solving AI and imaging as well. So demand is kind of worldwide now and it's very exciting moment to see AI boom continue to to to be popular worldwide.

Just a quick follow-up, if I can. As we potentially head into the GV300 era, later this year or 2026, the supply chain chatter also most of it open standards as NVIDIA kind of will potentially unbundle the supply chain. So that could potentially add more customization. So So maybe directionally, can you talk about the implication to Super especially for the margin do you think that you can add a bit more customization [indiscernible] Yes. Technology always unlimited. People always come out with some idea and some demand for different vertical or different application. So we never feel our engineer had nothing to do. So always do that in our engineering manpower. So even today, we still continue higher engineering variably worldwide. So there are lots of room to optimize for different [indiscernible] And especially for invention. Right? So [indiscernible] And especially when we get into a data center billing solution, Now we are growing our Matt, to let us in the inventory. So to provide the whole solution for people who need to build a data center. So I see our market also faster growing.

Thank you. Ajay, we're out of time. Thank you for attending the Supermicro conference call Super we'll catch up with you soon.

Thank you.

That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.