Super Micro Computer, Inc.

Thank you for standing by. My name is Brianna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Supermicrocomputer Fiscal First Quarter 2024 Results Conference Call. With us today, Charles Leanne, Founder, President, Chief Executive Officer, David Ryan, CFO, and Michael Steger, 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 followed by the number one on your telephone keypad. Thank you. I will now turn today's call over to Michael Steger. Please go ahead.

Good afternoon, and thank you for attending Super Michael's call to discuss financial results for the first quarter, which ended September 30th, 2023. 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 news release of 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 that is available to participants in the investor relations section of the company's website under the events and presentations tab. We've also published management script and commentary on our website. Please note that some of the information here during our discussion table consists 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 second quarter of fiscal 2024 and the full fiscal year 2024. There are a number of risk factors that can 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 fiscal 2023, and our 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 presentations will 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. in addition to reconciliation of GAAP and non-GAAP results contained in today's press release and in the supplemental information attached to today's presentation. At the end of today's fair remarks, we'll have a Q&A session for cell site analysts to ask questions. I will now turn the call over to Charles.

Thank you, Michael, and good afternoon, everyone. Today, I am pleased to announce that we are off to a good start for Fitch Co. With first quarter revenue of 2.12 billion. We navigate tied AI, GPU, and key components supply conditions to deliver total solution and large compute cluster, especially for generative AI workload, where our back order continue to expand faster than our forecast. During the first quarter, demand for our leading AI platform in plug-and-play rack scale, especially for LLLM-optimized NVIDIA HGX H100 solutions, was the primary growth drive. Many customers had started to request direct-attached cold-play liquid cooling solution to address the energy cost, power grid constraint, and thermal challenge of this new GPU infrastructure. In some cases, customers are able to double their data center AI computing capacity using our ELC, direct attached liquid cooling solution, due to lower system power requirement, lower PUE, and higher computing density per cluster. To meet this strong demand, we have been continuously expanding our vegetation and production facilities By the coming March quarter, we expect to complete a dedicated capacity for manufacturing 100 kilowatt a rack with cooling capability. That will further expand our total rack production capacity to 5,000 racks per month in full speed mass production. The increased AI business also includes our new influencing platforms and the Telco Optimized Edge products based on NVIDIA L40s, L40, and L4, and for sure, Edge 100 as well. AI product lines. Furthermore, the upcoming Grace Harper Superchip-based MGX products for both generative AI, and influencing AI are just ready for volume production. Our AI solution portfolio also includes Intel, Gaudi 2, PCIe, Flex, PVC, Conan from tobacco, as well as AMD MI250 and MI300X and MI300A-based platforms. We fully expect many of these products to gain broad adoption and expand our share in the accelerated computing market. Let's go over some key financial highlights. Fiscal Q1 net revenue total $2.12 billion, up 14% year-on-year and down 3% quarter-on-quarter. toward a high end of our guidance range of $1.9 to $2.2 billion, despite the GPU and key components shortage during our traditional soft September quarter. Fiscal Q1 non-GAAP earnings of $3.43 per share were in line with $3.42 a year ago. towards the high end of our guidance range of $2.75 to $3.50, demonstrating continuous strong operating leverage during a traditional short quarter. We launch and deliver end-to-end liquid-cooled data center solutions. We foresee up to 20% of our data center deployments will move to liquid cooling, and for the first time, customers can get a complete large-scale liquid cooling solution from a single source with a minimum lead time of about two weeks. Supermicro is working hard to fully tackle the current AI growth opportunity by speeding up the development of more new AI-optimized platforms. Supermicro is utilizing its building block architecture to continue our first-to-market DNA with the launch of NVIDIA CG1, CG2, Grace Harper Superchip, and NVIDIA Grace GPU Superchip, as we speak. Supermicro-status MGX system provides groundbreaking computing density, energy efficiency, and easy data center deployment and serviceability. idea for hyperscale and HDR center.