Super Micro Computer Inc. (NASDAQ:SMCI) reported fourth-quarter financial results after market close on Tuesday.
Below are the transcripts from the Q4 earnings call:
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Cameron(Conference Operator)
Thank you for standing by. My name is Cameron and I will be your conference operator today. At this time I would like to welcome everyone to the Super Micro Computer, Inc. SMCI (US) fourth quarter fiscal year 25 business update call. With us today are Charles Liang, Founder, President and Chief Executive Officer David Wiegand, CFO and Michael Steger, Senior Vice President of Corporate Development. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question, please press star one. Thank you.
Michael Steger(Senior Vice President of Corporate Development)
Good afternoon and thank you for attending Supermicros call to discuss financial results for the fourth quarter and full year fiscal 2025, which ended June 30, 2025. With me today are Charles Liang, founder, chairman and Chief Executive Officer and David Wiegand, Chief Financial Officer. By now you should have received a copy of the press release from the company that was distributed at the close of regular trading and is available on the Company’s website. As a reminder, during today’s call, the Company will refer to a presentation as available to participants in the Investor Relations section of the Company’s website under Events and Presentations tab. We have also published management’s scripted commentary on our website. Please note that some of the information you’ll hear during our discussion today will consist of forward looking statements including without limitation, those regarding revenue, gross margin, operating expenses, other income and expenses, taxes, capital allocation and future business outlook, including guidance for the first quarter of fiscal 2026 and the full fiscal year 2026. These statements and other comments are based on management’s current expectations and assumptions involve material risks and uncertainties that could cause actual results or events to materially different from those anticipated and you should not place undue reliance on forward looking statements. You can learn more about these risks and uncertainties in the press release we issued earlier this afternoon, Our most recent 10k for fiscal 2024 and other SEC filings. All these documents are available on the Investor Relations page of Supermicro’s website. We assume no obligation to update any forward looking statements. Most of today’s presentation refer to non GAAP Financial Results and Business Outlook. For an explanation of our non GAAP financial measures, please refer to the accompanying presentation or to our press release published earlier today. The non GAAP measures are presented as we believe that they provide investors with a means of evaluating and understanding how companies management evaluates operating performance. These non GAAP measures should not be considered in isolation from as substitutes for or superior to financial measures prepared in accordance with US gaap. In addition, a reconciliation of GAAP to non GAAP is contained in today’s press release and in the supplemental information attached to today’s presentation. At the end of today’s prepared remarks, we’ll have a Q and A session for sell side analysts. Our first quarter fiscal 2026 quiet period begins the close of business Friday, September 12, 2025 and with that I will now turn it over to Charles thank you Michael.
Charles Liang(Founder, President and Chief Executive Officer)
I will be covering our performance for fiscal 2025 and providing insights into our strategic direction for fiscal 2026. Our fiscal 2025 results represent 47% year on year revenue growth at $22 billion. This growth reflects continued strong demand for our AI and green computing solutions. Despite six months cash flow impact from the delayed filing of Our fiscal year 24.10k and delayed revenue recognition from a major new large partner. Non GAAP earnings per share were $0.41 down year over year from 50% last year, primarily due to the tariff impact, although we have taken measures to reduce the impact and we will see their results soon. Allow me to go a little deeper at June revenue shortfall in what was otherwise a stronger quarter. The shortfall stemmed from two key factors a capital constraint that limited our ability to rapidly scale production and specification changes from a major new customer that today Revenue recognition because of new ad because of some new AD features. The capital constraint was no longer an issue after we filed the fiscal year 24 10k and large customer orders are now set for recognition in September and December quarters following close collaboration to align with the customers update feature requirements. Despite these circumstances, we remain focused on our strategic priorities, optimizing our solutions and capturing market share. Notably, the number of large scale plug and play ROAC customers grew from 2 in fiscal year 24 to 4 in fiscal year 25, signaling strong momentum and continuing growth potential across our customer base. We are also on track to add a few more in fiscal year 26. We continue our leadership in AI platforms and infrastructure with a comprehensive portfolio optimized for latest GPU technologies including Nvidia B 300 and GP 300 platforms and AMD’s Mi350 and Mi355X GPUs. Our x14 and h14 GPU systems deliver breakthrough performance supporting large scale AI training and invention workloads and enterprise computing demands with exceptional efficiency. Notably, we were able to deliver our B200 systems with an industry leading time to market to our customers. We are confident our B300 and GB300 solutions will deliver a similar if not even better time to market and time to online advantages for customers helping them accelerate their AI deeper image faster than others. To further simplify our customers AI data center infrastructure deployment and time to online, we officially introduced our data center building block solution DCBBs to the market last quarter. With our DCBBs customers can harness our proven system building block advantage to adapt quickly to evolving market demands especially in response to increasing complex AI product cycles. Our modular architecture enable faster customization, streamlines production and reduce time to delivery and time to online while also optimizing quality, efficiency and ease of maintenance. In most cases, customers who use our D.C. bBs can finish building a liquid core AI data center in just 18 months instead of two to three years. When converting an existing data center or warehouse to a high density direct liquid cooling data center customer can complete the transformation in only three to six months instead of 12 or even 18 months. We have just begun deploying large scale total solutions with our DCPS to a few key customers. Key components of DC BBs include DLC solutions, the L2A sidecar, I mean liquid to air cooling CDU especially in those CDU, indirect CDU as well and trio door, powershell battery backup BPU, water or dry tower solutions and more are coming. Our atomic second generation direct liquid cooling DLRC2 system reduce power and water consumption by up to 40% while operating at a near library quite level around 50 decimal. This enable superior performance which reduce total cost of ownership and total cost to the environment TCE for modern Data Centers Several DC BPS components are now shipping or entering production very soon supporting a growing demand for high performance energy efficient data center infrastructure. Equally important, DCBBs meets the growing demand for a comprehensive one stop shop solution including software defined infrastructure, system management, AI workload optimization, networking, deployment and all different level of services. IT allows cloud service provider to reduce both capex and OPEX capital expense and operating expense. Indeed it delivers also great value to both AI focused and traditional IT data centers by seamlessly integrated DC BPS capability. With our system and RAC solution we are not only enhancing customers value but also improving our profit margins. This shift toward higher margin and revenue stream is central to our long term strategy. We also start to strategically focus on enterprise, IoT and telco markets and initiative we believe will improve both growth and net margin over time. In last two quarters we made a significant investment to optimize our solutions for enterprise customers introducing advanced server and storage systems tailored for hybrid cloud AI application and edge computing workloads. This enterprise focused strategy will continue for many years to come. Supermango has also launched an enhanced enterprise service program delivering comprehensive 24. 7 global support for high density, high performance driven data center deployment based on optimized rack scale architecture. Our IoT portfolio including embedded system and edge servers is gaining momentum across industry like manufacturing, healthcare, telco, Smart city and AI edge applications. Additionally, we have announced strategic partnership to accelerate innovation in AI and RH and telecom solutions. By expanding into this higher margin segment, we are diversifying our revenue streams and driven long term sustainable profitability that will benefit our shareholders. Our global footprint allow us to efficiently deplete optimized solution worldwide with minimal tariff impact especially after September quarter. With large and versatile manufacturing campus across the us, Taiwan, Malaysia and the Netherlands, we can deliver a comprehensive system, RAC and data and data center label building block and total solution to our customer directly and quickly. This robust global presence enable us to respond to dynamic regional demands, support cost sensitive customers seeking greater value, mitigate tariff exposure and maintain a reliance global supply chain that’s both agile and responsive. Looking ahead to Q1 fiscal year 26, I anticipate revenue between 6 billion and 7 billion driven by continuing momentum across our AI rack, plug and play DC PPS software and service business which we are delivering exceptional customer value and strengthen our profitability. I’m especially excited about our DC BBs for our full fiscal year 2026 I expect at least $33 billion total revenue supported by our expanding large and enterprise customer base, upcoming product innovation and robust DC EPS total solution. In closing, I want to thank our employees for their dedication, our customers for their trust and our investors for their continuous support. We are excited about the opportunity ahead and looking forward to updating you on our progress in the next quarter.
David Wiegand(Chief Financial Officer)
David please thank you Charles Q4 Fiscal year 25 revenues were 5.8 billion, up 8% year over year and up 25% quarter over quarter compared to our guidance of 5.6 to 6.4 billion. Growth was led by demand for next generation air cooled and liquid cooled GPU AI platforms which represented over 70% of Q4 revenues across both enterprise and cloud service provider markets. For the full year fiscal year 25 we reported revenues of 22 billion representing 47% growth over fiscal year 24. Revenues of 15 billion during Q4 we recorded 2.1 billion in the enterprise channel segment representing 36% of revenues versus 42% in the last quarter, up 7% year over year and up 6% quarter over quarter. The OEM appliance and large data center Segment revenues were 3.7 billion representing 63% of Q4 revenues versus 57% in the last quarter, up 2% year over year and up 40% quarter over quarter. Emerging 5G Telco Edge IoT segment revenues were 1% of Q4 revenues for fiscal year 25. Enterprise channel revenues grew 38% to represent 39% of total revenues. The OEM appliance and large data center segment grew 50% and represented 60% total revenues. The 5G telco edge IoT segment represented 1% of total revenues for fiscal year 25. We had four 10% plus large data center customers versus one in fiscal year 24. Server and storage systems comprised 98% of Q4 revenue and subsystems and accessories represented 2%. By geography, the US represented 38% of Q4 revenues, Asia 42%, Europe 15% and the rest of the world 5%. On a year over year basis, US revenues decreased 33%, Asia increased 91%, Europe increased 66% and rest of world decreased 3%. On a quarter over quarter basis US revenues decreased 21%, Asia increased 78%, Europe increased 100 and 96% and the rest of the world increased 53%. The Q4 non GAAP gross margin was 9.6% versus 9.7% in Q3 due to product customer mix. For fiscal year 25. The non GAAP gross margin was 11.2% versus 13.9% for fiscal year 24. Our long term goal is to gradually improve gross margins through providing complete data center building block solutions and focusing on the enterprise IoT and telco markets. We also expect to benefit from economies of scale from higher revenues, cost effective global facilities including the new Malaysia manufacturing plant and customer diversification. Q4 operating expenses on a GAAP basis increased …