Super Micro Computer, Inc.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Supermicro Computer Incorporated first quarter fiscal 2020 business update conference call. The company's news releases issued earlier today are available from its website at www.supermicro.com. During the company's presentation, all participants will be in a listen-only mode. Afterwards, securities analysts will be invited to participate in a question-and-answer session. but the entire call is open to all participants on a listen-only basis. As a reminder, this call is being recorded Thursday, November 14, 2019. A replay of the call will be accessible until midnight Thursday, November 28, 2019 by dialing 1-844-512-2921 and entering replay PIN 9981371. International callers should dial 1-412-2921 317-6671. With us today are Charles Yang, Chairman and Chief Executive Officer, Kevin Bauer, Senior Vice President and Chief Financial Officer, and Perry Hayes, Senior Vice President, Investor Relations. And now I would like to turn the conference over to Mr. Hayes. Mr. Hayes, please go ahead, sir.

Good afternoon, and thank you for attending Supermicro's Business Update Conference Call for the first quarter fiscal 2020. which ended September 30th, 2019. During today's conference call, Supermicro will address the company's preliminary financial results for the first quarter of fiscal year 2020 and the company's efforts to become current with its remaining SEC filings. References to any financial results are preliminary and subject to change based on finalized results contained in future filings with the SEC. By now, you should have received a copy of the news release from the company that was distributed at the close of regular trading and is available on the company's website. Before we start, I'll remind you that our remarks include forward-looking statements. There are a number of risk factors that could cause Supermicro's future results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon our most recent 10-K filing for 2017, and our other SEC filings. All of those 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 will refer to non-GAAP financial results and outlook. At the end of today's prepared remarks, we will have a Q&A session for sell-side analysts to ask questions. I'll now turn the call over to Charles Leon, Chairman and Chief Executive Officer.

Thank you, Perry, and good afternoon, everyone. Our first quarter revenue will be in the range of $788 million to $798 million, which exceeds the midpoint of our quarterly guidance of $780 million. Our non-GAAP gross margin will be in the range of 16.1% to 16.3%. Non-GAAP earnings per share were in the range of $0.61 to $0.65 compared to the range of $0.66 to $0.70 last year and the range of $0.57 to $0.61 last quarter. System revenue was approximately 80% of total revenue. System ASPs were lower year over year due to lower memory and SSD pricing, which impact revenue. We see continued demand in the channel where the breadth of our portfolio and force to market innovation allow our partners to offer application-optimized solutions to their customers. In addition to seasonality in the September quarter, There were several factors impacting our top-nine revenue. An overall industry-wide slowdown due to economic uncertainty. Some posts in purchasing from major data center customers and price reductions on key components used in our systems. As reported by our PR and industry analysts, several revenues have been down in And we saw that trend continue for our business in the September quarter. However, as we reached the end of this quarter, we began to see signals of stabilization and early signs of seasonal strength from our key customers. And we began increasing our inventory to take advantage of the opportunities. Simple Micro has long insisted that application-optimized products will maximize our growth. We continue to develop new product and solution offerings across major server and storage markets, including Total Solutions, AI Machine Learning, 5G, IoT, and data centers. Combining the advantages that were introduced to our green computing and resource savings platforms. We delivered complete solution offerings with Red Hat, VMware, NVIDIA, and SAP, providing certified and tested configurations that can reduce risk and accelerate ROI for our customers. Our ultra-high-convert InfoChartra continues to be the most optimized solution for new generation storage customers, delivering the best-in-class feature, support, hard-shockable NVMe, flexible I.O., and high TDP of Intel second-generation Xeon scalable processors. With SAP, we delivered the 2U four-way shipper service As part of our Intel Slack solution, with up to 12 terabytes of memory, that brings the power and cost savings of Intel Data Center's system memory to the SAP HANA platform. We cooperate with NVIDIA on an EGX edge solution, allowing customers to manage their AI applications on Supermicro's extensive edge GPU in a cloud-native environment. Moreover, we introduced a new class of 5G-ready software-defined networking platform that can be optimized to deliver accelerated AI inferencing to the network edge. On A and B side, we start shipping super micro-bit twin systems. based on a second-generation APIC processor, which double the code count of previous generation A-plus systems and provide much better performance and value. Last but not least, we have begun to deliver a set of off-road maps, specialized system products, targets for metadata centers. These products are uniquely optimized for the specific requirements of high-volume-scale data center customers. Our solution allows us to leverage our existing product design and customized performance, efficiency, and cost requirements on demand. We see a similar opportunity for cloud data center optimized design and have A4 on the way to deliver additional off-road map specialized products. Looking ahead, we see the pace of processor refresh cycle accelerating and have rated our sales with the next X11 product update in the coming quarter. Order down the road, we have kicked off developing of our next-generation X12 architectures, for a complete family refresh. These new architectures will take full advantage of the upcoming innovations of Intel new processors, like PCIe Gen 4, more flexible I.O., higher-performance architecture, and new storage form factors. We have already started engaging with selected alpha customers. Important to achieving our current goals, we continue to invest and improve our operational efficiency and scale. Building a stronger global foundation, we have increased our capacity in engineering, manufacturing, operations, and service in our key strategic locations. This includes over 200,000 square feet of new facility space. in our San Jose green computing path, and more at our Netherlands headquarters. In summary, although market conditions have been challenging, we continue to deliver significant server and storage innovations to the market. More importantly, we have mobilized our R&D, sales, and operations to grow the discipline and focus needed to Expand our market share. Fundamentally, we are more confident than ever in the strength of our product and operation improvement, which will empower us to achieve our business goals. And now, I will hand the section over to Ken.