Super Micro Computer, Inc.

Thank you for standing by. My name is Cole, and I'll be your conference operator today. At this time, I would like to welcome everyone to Supermicrocomputer Fiscal Second Quarter 2024 Results. With us today, Charles Liang, Founder, President, and Chief Executive Officer, David Wicken, CFO, and Michael Stager, Vice President of Corporate Development. All lines have been placed on mute to prevent any background noise. After the speaker's remarks will be a question and answer session. If you'd like to queue for a question, please press star one on your telephone keypad. It has been asked that we keep ourselves to one question and one follow-up question. And with that, I'd like to pass the call over to Michael Steger.

Good afternoon, and thank you for attending Supermicro's call to discuss financial results for the second quarter, which ended December 31st, 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 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 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 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 third quarter of fiscal year 2024 and the full fiscal year 2024. 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 fiscal 2023, and our other SEC filings. All of 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 will refer to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to the company presentation or the press release published earlier today. In addition, a reconciliation of GAAP to non-GAAP results 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 will have a Q&A session for sell-side analysts to ask questions. I'll now turn the call over to Charles.

Thank you, Michael, and good afternoon, everyone. I'm delighted to share our second quarter results, which show a record-breaking performance for Shibu Michael. We achieved revenue of $3.66 billion, a 103% increase from last year. and earnings per share of $5.59. This is our first quarter ever with over $3 billion revenue. More importantly, this single quarter revenue surpassed our annual revenue for 2021. This fantastic quarterly result was driven by strong demand and improving supply conditions. for GPU and related key system components. Our RackScale product and player IT and AI total solution continues to gain more new customers, along with their competence in Supermicro as their go-to infrastructure partner. Our AI RackScale solutions, especially the deep learning and LLM optimized based on NVIDIA HGX-H192 continue gaining high popularity. The demand for AI-influencing systems and mainstream computer solutions have also started to grow. The exciting news is that finally we are entering an accelerating demand phase from many more customer wins. We support, to support faster growth, we have increased our working capital recently by raising about $600 million with an equity offering. Moreover, we have other programs to increase our cash flow without additional equity to support short and long-term sustainable growth. Overall, I feel very confident that this AI boom will continue for another many quarters, if not many years. And together with the related inferencing and other computing ecosystem requirements, demand can last for even many decades to come. We may call this an AI revolution. Let's go over some key financial highlights. First, fiscal Q2 net revenue total $3.66 billion, up 103% year-on-year and up 73% quarter-on-quarter, exceeding the top end of our original guidance of $2.9 billion for December quarter. Second, fiscal Q2 non-GAAP earnings of $5.59 per share were well above $3.26 a year ago and exceed the guidance range of $4.40 to $4.88, all demonstrating continual strong operation leverage. Economic scale is important to us for continual strong growth. Supermicro is at a forefront of the AI revolution, where the pace of innovation is accelerating. We are heading the race by developing the most innovative AI infrastructure on many platforms at a large scale for almost any industry and for any market vertical. As the market leader, we have been preparing more than double the size of our current AI portfolio, which is the Commision, NVIDIA, CG1, CG2, Boris Harper, Superchip, H200, and B100 CPUs, GPUs. And over here is InfantSIM Optimized GPUs, AMD MI300X, MI300A, and Intel Gaudi 2 and Gaudi 3. All these new platforms will be ready for high-volume production in the coming months and quarters. Moreover, we are adding further optimized new architectures for our coming NVIDIA GPU product lines. Our AMD MS300X system is sampling now, and our Intel RTX 3.0 system is coming soon. More importantly, we are continuing to invest and innovate in data center and enterprise liquid cooling technology to make sure these high-power AI platform are in line with our green computing methodology while improving the performance, efficiency, and reliability of system in a data center. As a total IT solution innovator, manufacturer, and provider, More and more of the major deployments has been delivered as an integrated RAC solution, particularly for the AI cluster deployments. Service, networking, storage, security features, and software are optimized, validated, delivered, and serviced as an integrated RAC cluster from Shibu Mako's manufacturing facility worldwide. Leveraging our building block architecture and operating production automation system, we can deliver optimized rack solution with come-to-market and quality advantages for our customer more efficiently than competition. Our TTP, come-to-delivery factor, have been in continuous improvement. By this June quarter, we will have high-volume dedicated capacity for manufacturing 100kW to 120kW rack with liquid cooling capability, providing DLLC, direct attached liquid cooling rack capacity up to 1,500 racks per month. And our total REC production capacity will be up to 5,000 RECs per month by then. At the same time, our high-volume clean room REC scale production facility will be ready to service critical customer relations. The rapid growth of our business is driven the need of additional R&D, solution optimization, manufacturing, and service capacity. Today, our production utilization rate is about 65% across our USA, Netherlands, and Taiwan facilities. And they are quickly finished. To address this immediate capacity challenge, we are adding to new production facilities and warehouse near our Silicon Valley headquarters, which will be operating in a few months. The new Malaysia facility will focus on expanding our building blocks with lower cost and increase volume, while other new facilities will support our annual revenue capacity above $25 billion. To summarize, our record quarterly performance demonstrates our building block, right scale, plug and play IT and AI industry leadership, which continues to accelerate and shows line of strong market share gains. The continued strength of existing customer build and ramp of newly acquired customers. and a robust pipeline of new product coming in 2024, giving me confidence that fiscal Q3 revenue will be in the range of $3.7 billion to $4.1 billion. Additionally, we are expecting continual strength for the second half of fiscal 2024 and now forecast revenue for the full fiscal year ending in June to be in the range of $14.3 billion to $14.7 billion. We are in overdrive to accelerate Supermicro 3.0 business model with this AI boom. In the meantime, we are preparing ourselves for the next phase of Supermicro business growth with Supermicro 4.0 and its expanding team. Now is certainly the most exciting time yet for Supermicro. Before passing that code to Debbie Wiggin, our CFO, I want to thank again to our partners, our customers, our super micro employees, and our shareholders for your strong support. Now, let me pass to our CFO, Debbie, for more financial details.