Super Micro Computer(US:SMCI)2024-04-30 23:39Financial Data and Key Metrics Changes - Fiscal Q3 2024 revenues were $3.85 billion, up 200% year-over-year and 5% quarter-over-quarter [3][26] - Non-GAAP earnings per share for Q3 were $6.65, representing over 308% year-over-year growth [26][81] - Non-GAAP gross margin was 15.6%, slightly up from 15.5% quarter-over-quarter [31] - Operating expenses on a GAAP basis increased by 14% quarter-over-quarter and 72% year-over-year to $219 million [53] Business Line Data and Key Metrics Changes - Server and Storage Systems comprised 96% of Q3 revenue, while Subsystems and Accessories represented 4% [30] - Enterprise/channel vertical revenues were $1.88 billion, representing 49% of revenues, up 190% year-over-year [51] - OEM appliance and large data center vertical revenues were $1.94 billion, representing 50% of revenues, up 222% year-over-year [51] Market Data and Key Metrics Changes - U.S. represented 70% of Q3 revenues, Asia 20%, Europe 7%, and Rest of World 3% [52] - Year-over-year revenue increases: U.S. up 242%, Asia up 257%, Europe up 30%, Rest of World up 87% [52] Company Strategy and Development Direction - The company is focused on significant investments in production, operation, management software, and customer service to sustain rapid growth [2] - The company aims to lead the AI revolution by deploying NVIDIA HGX H100 SuperCluster solutions and developing new generative AI systems [27][46] - The company is preparing to produce over 2,000 liquid cooling racks per month to meet increasing demand [28] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about continued AI growth for many quarters to come [2] - The company expects strong growth in Q4 as the supply chain improves with new customer design wins [34] - Management indicated that the rapid growth is raising complexity in scaling capacity but is confident in overcoming these challenges [28] Other Important Information - The company raised $3.28 billion through a convertible note and secondary equity offering to support growth [2] - The cash conversion cycle was 96 days, with days of inventory increasing to 92 days due to key component purchases [55][122] - The company expects Q4 net sales in the range of $5.1 billion to $5.5 billion [34] Q&A Session Summary Question: Can you provide more color on share gains related to new solutions? - Management indicated that they are gaining market share, especially with their rack-scale plug-and-play solutions that reduce lead time for customers [5][59] Question: What is the trajectory of inventory as supply comes on? - Management explained that inventory increased due to preparing for strong revenue growth in Q4 and the need for liquid cooling systems [6][100] Question: Can you clarify the 21% customer mentioned in the prepared remarks? - Management confirmed that the 21% customer was the same as last quarter, and they are transitioning to identify customers A, B, and C for clarity [15][64] Question: What are the expectations for gross margins in the coming quarters? - Management stated that while they aim for a gross margin range of 14% to 17%, they may need to be aggressive in pricing to gain market share [62][71] Question: How is the company preparing for cash usage expectations? - Management indicated that the proceeds from recent capital raises are primarily allocated for Q4 shipments and to support growth [80][112]