Super Micro Computer, Inc.

and 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 remark, there will be a question and answer session. To enter the queue for questions, please dial star followed by one on your telephone keypad. Thank you.

Good afternoon, and thank you for attending Supermicro's call to discuss financial results for the fourth quarter, which ended June 30th, 2024. With me today are Charles Liang, Founder, Chairman, and Chief Executive Officer and David Wiegand, Chief Financial Officer. At the end of today's prepared remarks, we'll have a Q&A session for sell-side analysts. Our press release was issued after the close of market and is posted on our website where this call is being simultaneously webcast. The slides of the company that's webcast can be downloaded at ir.supermicro.com. These include statements regarding our financial outlook and operations, our strategy, technology, and its advantages, our current new product offerings, and competitive industry and economic trends. Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted, and reported results should not be considered as an indication of future performance. A discussion of some of the risks and uncertainties related to our business is contained in our filings of the SEC, and we refer you to those public filings, including our most recent annual report on Form 10-K. During this call, all financial metrics and associated growth rates are non-GAAP measures other than revenue and cash and investments. Reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the Supermicro Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website and is the property of Supermicro. Our first quarter 2025 quiet period begins at the close of business Friday, September 13th, 2024. And with that, I will turn it over to Charles.

Thank you, Michael. Today, I'm pleased to announce another record quarterly result of $5.31 billion, 143% year-over-year growth. For fiscal 2024, we have achieved $14.94 billion in revenue, 110% year-over-year growth rate. To put this in perspective, our Q4 revenue exceeded the full year revenue of fiscal 2022. Our robust growth is driven by our technology and product leadership in the AI infrastructure market, especially with generative AI training and inventing. We have been scaling quickly to secure a large share of AI ASP opportunities deploying some of the largest AI supercast in the world leveraging our system building blocks we build and optimize the rock scale plug and play solutions with the latest dlc liquid cooling technology helping our customers achieve the best ttd come to deployment and pto come to online and lowest tco with their ai solutions here are some key quarterly highlights first super michael is pleased to be included in the net stack 100 index last quarter what's the q4 net revenue total 5.31 billion up 143 percent year on year with a strong record high backlog. We could ship more if not for DLC liquid cooling component shortage. Which the Q4 non-GAAP earning of $6.25 per share for well above $3.51 last year, which was 78% year-on-year growth. Our Q4 operating margin is 7.8%, which is lower than what we expected due to the higher mix of hyperscale data center business and expedite cost of our DLC liquid cooling components in June and September quarter. Some key new components shortage today about 800 million of revenue deep into July, which lower our EPS for June and will be recognized in our September quarter. The availability of our Malaysia facility data this calendar year and our dominating position in ELRC liquid cooling total solution will be instrumental in increasing our profitability. Hupo Micro is powering the largest AI factories around the world today. We believe more and more data centers will be opting for our largest DLC liquid cooling solution, which dramatically improve TCO relatively to a relative to a traditional air cooled data center and is less environmental taxing. We have proved that DLC solutions also offer higher performance and better uptime with advantages to support upcoming new AI chips. At Computex Taipei, I shared that boolean computing can be free with a big bonus. This means the cost of deploying liquid cooling, DLC, is on par with traditional air-cooled data center and significantly lowers the operational power cost. Since then, we have been delivering over 1,000 highly reliable DLC racks to multiple customers. Our goal is to quickly make a DLC liquid cooling to be a mainstream solution for most data centers and AI factories that focus on increasing efficiency and performance while reducing OPEX. We are targeting 25% to 30% of the new global data center deployments to use DLLC solutions in the next 12 months, with most of the deployments coming from Supermicro, we believe. We are happy to have any customers transforming and adapting their existing air-cooled data center to DLLC liquid cooling in the coming years. for four major reasons. First, it helps customers save energy costs up to 40%. Second, it boosts data center computing performance. And third, it helps growing customers' data center lead times, or to be more precisely, reduce their time to online because of less electrical power required. And fourth, It reduces carbon footprint for our one and only Mother Earth. As an end-to-end IT infrastructure solution company, our customers' experience is our number one priority. By leveraging our system building block and block-scale plug-and-play solutions, we help our customers achieve the best time-to-market advantage. with new and performance-optimized technologies. Now, we are further expanding this solution to the entire data center. With rapid deployment of large-scale AI infrastructure, data centers worldwide are facing power shortage and cooling inefficiency challenges. Building this new AI-ready data center traditionally takes a long time. averaging three years, for example. Our upcoming Supermicro 4.0 DCBBS data center building block solution will reduce customers' new data center build time from about three years to two years. For smaller facilities or older data center transformation, data center BBS can enable and optimize cost effective data center in less than one year, or even in just six months. This new offering will significantly improve data center's TTO, time to online, and cost. With full integration of AI compute, server, storage, networking, drag, tabling, DLCD cooling, facility water, power, end-to-end management software, on-site deployment service, and maintenance. We will start offering it later this calendar year. Creating a significant role in realizing our data center building block solution and providing additional economics of scale. Our new Malaysia campus will start production this November with its geographic advantages. We expect it to quickly ramp up shipping volume and improve our coastal structure. In the U.S., we are adding new buildings and production POC provisioning capacity, meaning our Silicon Valley headquarters as well. which will further boost our monthly DLOC deep cooling rack capacity and value this fiscal year. Moreover, we are on track to expand to a few other global manufacturing locations, leveraging our strengths in product design, build quality, supply chain, and deployment, positioning Supermicro as one of the largest IT infrastructure companies. In summary, we are entering fiscal 2025 with record high back orders, winning products, large volume, DLC liquid cooling capacity, data center, building block solutions, and more new customers. While our long-term investment impacts short-term profitability, their position as well for future success by providing a sustainable competitive advantage and necessary economics of scale. This has given me confidence to forecast the September quarter revenue between $6 billion to $7 billion and fiscal 2025 revenue between $26 billion to $30 billion. Again, We anticipate that the short-term margin pressure will ease and return to normal range before the end of fiscal year 2025, especially when our DLOC deep cooling and data center building block solution start to ship in high volume later this year. Lastly, I would like to announce a 10-for-1 forward stock split of Supermicro's common stock to make ownership of Supermicro stock more accessible. We are targeting trading on a split-adjusted basis. Commencing at market open on October 1st, 2024. Before passing the code to David Wagon, our CFO, I want to say thank you to our partners. customers, Supermicro employees on an incredible year where we were able to bring AI at a scale to the world and to our shareholders for your continuous support.