Super Micro Computer, Inc.

Good afternoon and thank you for attending Supermicro's call to discuss financial results for the fourth quarter and full year of fiscal 2025, which ended June 30th, 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 to close a 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 have 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 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 of all material risks and uncertainties that could cause actual results or events to material 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 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 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 a company's management evaluates operating performance. These non-GAAP measures should not be considered in isolation from as these for or superior to financial measures prepared in accordance with U.S. GAAP. In addition, a reconciliation of GAAP and 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&A session for Southside analysts. Our first quarter fiscal 2026 quiet period begins at the close of business Friday, September 12, 2025, and with that, I will now turn it over to Charles.

Charles. Thank you, Michael. I will be covering our performance for fiscal 2025 and providing insights into our strategic direction for fiscal 2026. Our fiscal 2025 results represent a 47% -on-year revenue growth at $22 billion. This growth reflects continuing the strong demand for our AI and green computing solutions. Despite the six-month cash flow impact from the filing of our fiscal year, and the full 10K and the revenue recognition from a major new large partner, non-GAAP earnings per share were 41 cents down year over year from 50% last year, primarily due to the tariff impact. A row, we have taken measures to reduce the impact, and we will see the results soon. Allow me to go a little deeper at the June revenue show fall in what was otherwise a stronger quarter. The show fall stemmed from a 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 a new ad, because of some new ad features. The capital constraint was no longer an issue after we filed the fiscal year 2026, and large customer orders are now set for recognition in September and December quarters. Following close collaboration to align with the customer's 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 player rack customers grew from two in fiscal year 2024 to four in fiscal year 2025, signaling strong momentum and continuing growth potential across our customer base. We are also on track to add a few more in fiscal year 2026. We continue our leadership in AI platforms and infrastructure with a comprehensive portfolio optimized for latest GPU technologies, including NVIDIA B330 and GB330 platforms, and AMD's MI350 and MI355X GPUs. Our X14 and H14 GPU systems deliver breakthrough performance, supporting large-scale AI training and envisioning workloads and enterprise computing demands with exceptional efficiency. Notably, we were able to deliver our B200 systems with an industry-leading -to-market to our customers. We are confident our B300 and GB300 solutions will deliver a similar, if not even better, -to-market and -to-online advantages for customers, helping them accelerate their AI deployment faster than others. To further simplify our customers' AI data center infrastructure deployment and -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 compressed AI product cycles. Our modular architecture enables faster customization, streamline production and reduce time to delivery and time to online, while also optimize quality, efficiency, and easy maintenance. In most cases, customers who use our DCBBS 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, customers 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 DCBBS to a few key customers. Key components of DCBBS include DLLC solutions, the L2A liquid to air cooling, CDU especially in low CDU, InduX CDU as well, and ChioDor, PowerShell, Battery Backup, BBU, water or dry tower solutions, and more are coming. Our advance second generation direct liquid cooling DLLC2 system reduce power and water consumption by up to 40 percent while operating at a near library quite a bit, around 50 decimal. This enables superior performance which reduce total cost of ownership TCO and total cost to the environment TCE for modern data centers. Several DCBBS components are now shipping or entering production medicine, supporting a growing demand for high-performance, energy-efficient data center infrastructure. Equally important, DCBBS meets the growing demand for a comprehensive -stop-shop solution, including software-defined infrastructure, system management, AI workload optimization, networking, deployment, and all different levels of services. It allows cloud service providers to reduce both CAPEX and OPEX capital expense and operating expense. Indeed, it delivers also value to both AI focus and traditional IT data centers. By seamlessly integrating DCBBS capability with our system and direct solution, we are not only enhancing customer value but also improving our profit margins. This shift toward higher margin and revenue stream is central to our long-term strategy. We are also strategically focused on enterprise, IoT, and TECO markets. An initiative we believe will improve both growth and net margin over time. In the 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. SuperMega also launched and enhanced enterprise service programs, delivering comprehensive 24-7 global support for high-density, -performance-driven data center deployment based on optimized rack-scale architecture. Our IoT portfolio, including embedded systems and edge servers, is gaining momentum across industry, like manufacturing, healthcare, TECO, smart city, and AI edge applications. Additionally, we have launched strategic partnership to accelerate innovation in AI edge and telecom solutions. By expanding into this higher margin segment, we are diversifying our revenue streams and achieving long-term sustainable profitability that will benefit our shareholders. Our global footprint allows us to efficiently degrade optimized solutions worldwide, with minimal tariff impact, especially after the September quarter. With a large and versatile manufacturing campus across the US, Taiwan, Malaysia, and the Netherlands, we can deliver a comprehensive system rack and data center building block and total solution to our customers directly and quickly. This robust global presence enables us to respond to dynamic regional demands, support cost-sensitive customers, seeking greater value, mitigate tariff exposure, and maintain a reduced global supply chain that's both agile and responsive. Looking ahead to Q1, fiscal year 2016, I anticipate revenue between $6 billion and $7 billion, driven by continuing momentum across our AI rack, plug and play, DCPPS, software, and service business, which are delivering exceptional customer value and strengthening our profitability. I'm especially excited about our DCPPS for the full fiscal year 2026. I expect at least $33 billion total revenue, supported by our expanding Dutch and enterprise customer base, upcoming product innovation, and robust DCPPS total solution. In closing, I want to thank our employees for their dedication, our customers for their trust, and our investors for their continued support. We are excited about the opportunity ahead and look forward to updating you on our progress in the next quarter. 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 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. The 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% of total revenues. The 5G telco edge IoT segment represented 1% of total revenues. For fiscal year 25, we had 4 10% plus large data center customers versus 1 in fiscal year 24. Server and storage systems comprised 98% of Q4 revenue, and subsystems and accessories represented 2%. By geography, the U.S. represented 38% of Q4 revenues. Asia, 42%. Europe, 15%. And the rest of the world, 5%. On a year over year basis, U.S. revenues decreased 33%. Asia increased 91%. Europe increased 66%. And the rest of the world decreased 3%. On a quarter over quarter basis, U.S. revenues decreased 21%. Asia increased 78%. Europe increased 196%. And the rest of the world increased 53%. The Q4 non-GAAP gross margin was .6% versus .7% in Q3 due to product-customer mix. For fiscal year 25, the non-GAAP gross margin was .2% versus .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. The Q4 operating expenses on a GAAP basis increased by 8% quarter over quarter and 23% year over year to $316 million driven by higher compensation expenses and headcount. On a non-GAAP basis, operating expenses increased 11% quarter over quarter and 29% year over year to $239 million. The Q4 non-GAAP operating margin was .3% versus 5% in Q3. Other income and expense for Q4 was a net expense of $5.7 million, consisting of $28.4 million in interest income offset by $22.3 million in interest expense and FX and other losses of $11.8 million. The tax provision for Q4 was $19 million on a GAAP basis and $37 million on a non-GAAP basis. The GAAP tax rate for Q4 was 9% and the non-GAAP tax rate was 12%. The GAAP tax rate was 13% for fiscal year 25 versus 5% in fiscal year 24. And the non-GAAP tax rate was 15% in fiscal year 25 versus 11% in fiscal year 24. The Q4 GAAP diluted EPS was 31 cents compared to guidance of 30 cents to 40 cents and non-GAAP diluted EPS of 41 cents versus guidance of 40 cents to 50 cents due to lower gross margins and higher operating expenses in the quarter. For fiscal year 25, we reported GAAP diluted earnings per share of $1.68 versus $1.92 for fiscal year 24 and non-GAAP diluted EPS of $2.06 versus $2.12 in fiscal year 24. The GAAP fully diluted share current count increased quarter from $622 million to $625 million in Q4 and the non-GAAP share count increased sequentially from $636 million to $638 million shares. Q4 cash flow generated from operations was $864 million compared to $627 million in the previous quarter. For fiscal year 25, cash generated from operations was $1.7 billion versus cash consumed by operations of $2.5 billion in fiscal year 24. Q4 closing inventory was $4.7 billion versus $3.9 billion in Q3. CapEx and investments for Q4 was $79 million resulting in positive free cash flow of $841 million for the quarter. CapEx and investments for fiscal year 25 were $183 million versus $194 million in fiscal year 24. During the quarter, we completed a convertible bond offering raising $2.3 billion in gross proceeds before operating expenses and the costs associated with the simultaneous covered call spread and stock buyback. The Q4 closing balance sheet cash position was $5.2 billion while bank and convertible note debt was $4.8 billion resulting in a net cash position of $412 million versus a net cash position of $44 million last quarter. Additionally, in July, we executed a $1.8 billion facility which allows for the non-recourse sale of certain qualified accounts receivables to strengthen our working capital on a discretionary basis. Turning to the balance sheet and working capital metrics compared to last quarter, the Q4 cash conversion cycle was 98 days versus 124 days in Q3. Days of inventory decreased by 6 days to 75 days compared to the prior quarter of 81 days. Day sales outstanding were 40 days compared to 56 days in Q3. Days payables outstanding increased by 4 days to 17 days versus 13 days in Q3. Now turning to the outlook for Q1 fiscal year 26, we expect net sales in the range of $6 billion to $7 billion. Gap diluted net income per share of $0.30 to $0.42 and non-GAP diluted net income per share of $0.40 to $0.52. We expect gross margins to be similar to Q4 fiscal year 25 levels. Gap operating expenses are expected to be approximately $329 million and to include $82 million in stock-based compensation expenses that are not included in non-GAP operating expenses. The outlook for Q1 of fiscal year 2026, fully diluted GAP earnings per share includes approximately $69 million in expected stock-based compensation expenses, net of tax effects of $20 million which are excluded from non-GAP diluted net income per common share. We expect other income and expenses including interest expense to be a net expense of approximately $24 million. The company's projections for Q1 fiscal year 26 gap and non-GAP diluted net income per common share assume a GAP tax rate of 13%, a non-GAP tax rate of .5% and a fully diluted share count of $631 million for GAP and $644 million shares for non-GAP. We expect CAPEX for Q1 to be in the range of $60 million to $80 million. And for fiscal year 26, we expect net sales of at least $33 billion. Michael, we're ready for Q&A.

Great. Cameron, let's turn it over to question and answer session.

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to remove your question, press star followed by two. Again, to ask a question, press star one. And as a reminder, if you are using a speaker phone, please remember to pick up your handset before asking a question and we will pause here briefly as questions are registered. The first question is from the line of Simon M. Leopold with Raymond James. You may proceed.

Thanks for taking the question. I wanted to get a better understanding of some of the bottlenecks or gating factors for sales. And what I'm looking at is we've got full year revenue outlook of $33 billion. So that's better than $8 billion a quarter. And we're looking at September being roughly $67 billion. So I would have thought that availability of Blackwell's EV200s could have given you maybe some more upside to September and a more linear outlook for the year. But this would suggest more of a back end load. So if you could help us understand how you're thinking about the cadence through that fiscal year and what are the bottlenecks or what are the restraints in terms of the September quarter and the availability of the chips. Thank you.

Yeah, basically our business will continue to grow. Last year because of 10K delay, we have some constraints. So we grew 47%. This year we should be able to grow better than that. And you mentioned about bottlenecks. Yes, some chip availability, some resource availability from vendors like Nvidia. That still we had to wait and see. Basically we believe their availability will be much better than last two quarters. And that's why we estimate minimum $33 billion. And by the way, our new introduction DCPPS that help customers to build data center quicker, especially MacDowell cloud ready for time to online much quicker. So that's another factor we believe this year, I mean, 2026, we should be able to grow better than last year.

And is any of this related to customers perhaps waiting for GV300s or is that not a factor?

Yes, you are right. Some customers are always waiting for coming soon technology that the GV300. So the good thing is we have a GV300 pretty much ready to go. That's waiting for our partner Nvidia to support us.

Great. Thanks for taking the question.

The next question is from the line of Rupee Batachario with Bank of America. You may proceed.

Hi, thanks for taking my questions. I have two of them. The first one is a higher level question. Can you talk about management strategy for competing in the AI server market? Is your focus on revenue growth and gaining market share? Or is your focus on margin expansion? And if it's both, then what gives you confidence that you can grow revenues and grow margins in this competitive market? And I have a follow-up.

Yeah, very good question. Yes, we can grow much quicker if we don't care about the growth margin and net margin. And that's why we introduced the PCPPS data center building solution. That's a total solution to support the customer to build a data center quicker, better, and also save money, more reliable. And we provide all the infrastructure needed, including on-site deployment, networking, cabling, all different kinds of service. So we believe we can grow revenue, market share, and profitability, especially our data center -to-end solar wear solution. So PCPPS plus solar wear need, customer need, including service. So we are sure able to provide a better value to customers, not just price war.

Okay, thanks for that. Can I, for my follow-up, can you talk about the opportunity with Sovereign? You announced an MOU with DataWall during the quarter. Can you give us your thoughts on expected rollout of that opportunity? And David, what margin uplift should we expect from Sovereign customers versus your existing customer base, such as Tier 2 CSPs? I mean, how should we think about the revenue and margin opportunity here? Thank you.

Yeah, Sovereign AI brings us a very good chance. There are so many countries that need to build their AI infrastructure. And those countries, those people really appreciate our PCPPS data center infrastructure total solution. So we help them to design their AI infrastructure and help them build their AI infrastructure quicker and better. So we see a very good room, very big room to grow in that area. David?

Yeah, and Ruplu, on the gross margin side, we are optimistic that we will be able to sell more complete data center BBS solutions with Sovereign. And so therefore, we don't have enough experience to be forecasting specific gross margins, but we're very optimistic that with the additional offerings that we will have, that there's upside there.

Yeah, there are so many countries, especially in Europe, in Europe, in the Middle East, in Asia. So they all are very aggressively that will build their AI infrastructure for their country, for their company. And we are working very closely with them.

All

right. Thank you for all the details.

The next question is from the line of Ananda Barua with Loop Capital. You may proceed.

Yeah, guys, thanks for taking the question. Two, if I could. The first one is maybe a little bit of a clarification. In the first six months of the calendar year, you guys saw, as did the industry, elongated, a little bit elongated customer purchase cycles. First from the HDX GB decision-making situation in the March quarter, then the B200, B300 sort of decision-making situation in the June quarter. Now, Charles, it sounds like, to one of the first questions, I think it was to Simon's question, you may have suggested, sounds like you were suggesting there may then currently be some B300, you know, sort of elongated decision, customer decision-making as well. So just to clarify, are you still going through, are we still not yet to normalize customer decision-making cycles? Because if that's the case, I think it's useful for us to understand that as distinct from what the organic demand backdrop may be as we go through the year here. And anyway, I have a

so many beta products, new products, and we are very happy to provide all the new technology, new products, and make them available for the market as soon as possible. Like you just mentioned, B300, GB300, we work with our partners very closely and make sure once Nvidia is able to put in volume, we can service customers quicker. And we thought we actually optimized for customer data centers, including the large data center and middle-sized data center, or even small-sized data center. So we are very happy to support a lot of middle-sized and small-sized AI infrastructure as well. Not part of Superman's advantage. We provide a total solution and make the customer's job much easier to build their AI factory, AI infrastructure quicker and better.

And just as a follow-up, can you guys, any context you can give us guys around the comment of large-scale data center customers expanding to six to eight and fiscal 26? What flavor of customers might that be? When do you consider someone to be large-scale? And what market domains might those additional large-scale data center customers fit into? Thanks.

Yes, most of the large-scale AI CSP continues to have a strong demand. And we are prepared to support them as well. The vision is with much strong cash flow now. So we are ready to support more large-scale data centers as well.

Okay, thanks guys. Appreciate it.

The next question comes from the line of Samik Chatterjee with JP Morgan. You may proceed.

Hi, thanks for taking my question. I have two, but maybe for the first one, you talked about the data center building block solutions and that it's still maybe a bit early for you to forecast gross margins on that front. But anything that you can help us in terms of what does a typical sales cycle or what are you expecting for a sales cycle on that front to look like? Have any of your larger data center customers shown interest in data center building block solutions? I guess the question more is when should we start to see or what should we expect in that coming to the P&L? What would be the earliest if you were going and talking to your customers about these solutions? Now, what should be our expectation on this front? I will follow up. Thank

you. Yes, thank you. We officially announced our data center building block solution last quarter. And now we have some products fully ready to ship. For example, the AI computing power rack PMP that has been available for four years from Shippo Micro and kind of like CTU, in-dragg CTU, and kind of like a sidecar from liquid to air transformation and for those customers who are not to go for liquid cooling but do not have a liquid cooling data center infrastructure ready, we support them sidecar. And the product is ready to ship now like a power shelf. When GB2 entry, GB3 entry go for rack scale, use a power shelf, we have a product ready now. And BBU, we have a product about ready now as well. And kind of like a water tower for liquid cooling or dry tower, we are shipping now. And kind of like on-site equipment and networking, including a cabling, audio kind of service. We have most of those components getting ready now. And we started to ship in September quarter, right? And then we are doing much higher volume in December. And then for sure, we'll continue to grow in next year, March quarter and June quarter. So this data center building block solution eventually will help customers to build their AI factory infrastructure much quicker and much energy efficient and also safer as well. So we are very excited for our DCPPS solution.

Got it. Got it. And for my follow up, you mentioned the investments that you're making on the enterprise opportunity or edge opportunity as well. I mean, assuming some of those are better margin opportunities, including the data center building block solutions related to your business currently on the sort of where you're around this 9, 10% gross margin right now. Do you see an opportunity still to get back to the long-term targets that you had on the gross margin of 14 to 17? Or are these new opportunities necessarily big enough and at a margin high enough to get you back to that 14 to 17 run rate? Or do you think the expectations of investors should be at maybe a more modest level in terms of what the long-term gross margin rate of the company would be in the future?

Yeah, very big question and very good question also. I mean, yes, enterprise and IoT, as you know, have a much higher margin. And DCPPS service software, we should have a better margin. So we are growing in both directions. One is growing revenue and support a large scale data center, and at the same time growing enterprise data center total solution software service. So I mean, long term, I believe 15%, 16% still our target and take how long, it depends on combination. So I believe, yes, the direction is still there. I mean, we'd like to get back to our traditional 16%, even 17% post margin. Maybe you can add a subject.

Yeah, I think that, you know, as Charles mentioned, we have been providing these services already. We've had customers with very large deployments that we've helped them in the build of their data center and with specific services. And so it's something that we're really focused on. And we know that it'll contribute to our profitability.

Yeah, as a Silicon Valley based company, for sure, we are able and we'd like to provide more value to customers, not just hardware, not just high volume products, but all different kinds of service, solution optimization, and to make a customer's job much easier. Great. Thank you.

The next question is from the line of Michael and with Goldman Sachs. You may proceed.

Hey, good afternoon. Thank you for the questions. I just have two. First, on the greater than 10% customers for fiscal 25, I was wondering if you could just let us know what the revenue exposures were for those customers. I can appreciate. We'll eventually get it in the 10K, but any early color would be helpful. And then second, thank you for all the guidance on 2026. I was wondering if you just talk about how we should think about gross margins for the full year. Is the first quarter gross margins that you spoke to a good indication about how we should think about the full year? Thank you very much.

Okay, Michael. So the four customers, which we'll refer to as A, B, C, and D, not in that particular order, but 11%, with three 11% and a 21%. And as to your second question, we're not going to forecast annual guides, but I want to revert back to our earlier comments that we're doing everything that we can, especially, and we're very optimistic about these data center building block solutions. And we're very quick to market. We think those two combinations, DCPBS and our fast time to market, is our best chances for margin improvement.

Yeah, especially with our DCPBS. Especially our DCPBS, we are able to have a customer increase, a speed up their time to online. Traditionally, for example, two years, we have them improve to speed up to 18 months, 16 months. So lots of customers are very interested in those services.

Thank you, Charles. Thank you.

The next question is from the line of Nihal Chakshi with Northland. You may proceed.

Yeah, thank you. I have two questions. First one is, what is going to be the driver to project a tier two uptick to the September quarter revenue? And maybe that can also help us understand why you're guiding to no operating leverage. I believe effectively the guidance implies about a flat operating margin from the June quarter to September quarter.

So in terms of the customers, we have a lot of customers that are building out really good deployments. And so that's what gives us a guide to the first quarter. So we've been shipping AMI-355X and GB300. And so we expect that to ramp in Q1. And that's really what's giving us our guide.

Yeah, we are also gaining many more customers in Europe, Middle East and Asia now. So basically, the near future should be pretty strong.

And why with the incremental billion dollars of revenue, we won't see any operating margin leverage?

Well, whenever there is a, you know, in changing over to these new platform technologies, there's always a little bit of a ramp for us. And so that creates a little bit of a production learning curve.

Okay. And then my second question is that the data center building blocks or solutions, is that being pitched for as a discrete service where the value of that factory, where it's meant to drive a better margin profile for that gen.ai factory?

It is supported on the scale of data center. That doesn't matter, generative AI or agent AI or application, right? So it's a solution that we define pretty paced, pretty validated. So when we ship to customers, a customer can put it together easily. It's kind of like a kids' play, they go castle, right? So kind of it's validated in advance when customers receive easy to deploy and easy for quickly go for online. So

basically, it's the latter of the situations that I have proposed.

Yeah, kind of including computing power, the rack, the deep cooling, even the water tower, a dry tower, the battery system, the power module, right? So we have everything pre-built and validated in advance. Yeah. And as

Charles mentioned, they all, the time to delivery and time to online for our customers is critical because they have customers that they're waiting for. So that's a huge selling point.

Yeah. So is data center building block solutions at least going to be representative of 10% of the deals that, 10% of the deal value that you're going to be doing in September quarter?

Yeah. It will be steadily growing. I hope very soon it will be more than 20% or even more, more than 30%. Because so many people provide a system computing power, but we instead, not just computing power, but total solution, a data center or cloud total solution.

Great. Thank you very much. Thank you.

The next question is from the line of Brandon Nispel with Key Corp. You may proceed.

Hey guys. Thanks for taking the question. I was hoping you could unpack gross margins during the quarter. Last quarter you had provided some adjusted gross margins based on inventory reserves. I was hoping you could help us understand whether there were any inventory reserves this quarter and if you're expecting any in one queue, including maybe potential impacts from tariffs. Thank you.

Yeah. Thanks, Brandon. So we did mention a little bit about that last quarter. And what I would say is that they came, they did come in as expected. However, we believe that not going to be the case going forward. So we think that we're anticipating a stabilization in that area.

Yeah. Especially with our DCPBS and with our service function. So we have customer builder data center and make sure they go online smoothly. And that will kind of make customers business much more smooth. And just, I mean, it's good for our inventory control as well. That's a return product. So that way I have less slow moving, less product write down as well.

Yeah.

But we expect we are improving the area.

Yeah. And Brandon, with respect to tariffs, the situation is dynamic. We're actively monitoring the tariff environment. We know there's news coming out next week. If we have any updates, we'll share it with you. But we can only watch and react as every other business is.

Thanks for taking the questions.

The next question is from the line of Quinn Bolton with Needham & Co. You may proceed.

Hey, guys. This is Shadi Mewali on for Quinn. Thanks for letting me ask the question. My first question is on the recent export licenses for NVIDIA and AMD. Just curious to see how Super Micro is positioned to potentially support these deployments. And does the God embed any of these potential shipments?

Are you referring to H20?

Yes. H20, I believe that. Are you referring to H20?

Yeah. Yeah, we're not anticipating selling those products at any quantities.

Yeah, at least to the nine high volume.

Got it. And then my follow up, which is a clarification question from I think Northland. But did you say that the data center building solutions will be around 20 to 30 percent of total revenue in the September quarter?

No. I mean, that will be for the week, maybe next year, summer. So it will be gradually, not immediately.

Got it. Thank you. The next question is from the line of John Tomoenteng with CJS Securities. You may proceed.

Hi, good afternoon and thank you for taking my questions. First one, just on the data center building block solutions. I was just wondering what the gross margin profile looks like there compared to the corporate average and what an incremental dollar of sales in that kind of solution adds to your gross profit?

You know, very good question. Data center building block solution, I believe we are the first one. So we are the first company to introduce data center total solution with building block feature. So the profit margin, the value to customer ratio, both are good. Much better than commodity product. When you pressure for profit margin. But the data center building block solution instead, we have much less competition.

Okay, great. Thank you. That's helpful. And then just on the B300 launch, do you expect to see yourself distancing yourself from competitors, both pricing-wise and allocation-wise when that reaches volume? Or is there any reason to believe that you may see more of what you've seen in the B100 and B200 timeframes?

We work with our vendor very closely, right? And so I believe our position will be second to none. So for sure, it will be a good chance. Once it's available from our vendor, we are very happy to promote quickly.

Okay, great. Thank you. Thank you.

The last question is from the line of Vijay Rakesh with Mizuho. You may proceed.

Yeah, hey, it's Austin. Just a quick question on this, on the 33 billion guide for fiscal 26. One thing, what is contemplated in terms of revenues from the data vault, data vault that you announced?

We don't make a comment for specific customers, but we do have a growing customer base in Europe and in the Middle East. So we feel excited to grow business in the territory, Middle East, BV. And I believe it will be a good percentage for super market business to grow.

Got it. And then on the DCDBS, obviously, a nice move with the racks and enabling your -to-market timing, I guess. Just wondering what would be the split of a full NVL-72 rack versus a DX that you're shipping now or into the end of the year, end of fiscal 26 areas?

Yeah, we start to ship something about now, kind of like, for example, the liquid to air sidecar we are shipping now. And CDU, we have been shipping for a while, including in indoor CDU, we are shipping now. And BVU, we will start shipping very soon. PowerShell, we are ready to ship this quarter. And so lots of parts we have been shipping for a few months or ready to ship in volume. And some other will be ready in the next few months or few quarters. So eventually it will be a really big product line. The goal is to support all the major components for customers to build their data center, their AI factory. So kind of to offer a one-stop shop. And one-stop shop is not just to save customers time, but to make sure when customers put those components together, it works and optimizes for both efficiency, quality, and cost.

Got it. Thanks.

Thank you.

Thank

you.

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