SMCI - Earnings call transcript Q2 2018 | Super Micro Computer, Inc.

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Operator

Good day ladies and gentlemen, and thank you for standing by. Welcome to the Super Micro Computer, Incorporated Second Quarter Fiscal 2018 Business Update Conference Call. The company's news release issued earlier today is 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.

call recorded, this XXXX. January reminder a is Tuesday, being XX, As and XXXXXXX. replay be by XX, XXX-XXXX will the dialing replay until (XXX) A call February accessible of midnight, Tuesday, X entering pin XXXX, International callers (XXX) X should XXX-XXXX. dial Chairman Investor With Chief Kevin Relations. and Financial Executive President Hayes, Perry and Officer; us Vice Charles and Senior Senior Officer; are Chief today Liang, Bauer, Vice President, to I'd like turn now over Mr. the And to conference Hayes. Mr. ahead, go sir. please Hayes,

Perry Hayes

for the afternoon business call Good thank update ended which attending you quarter Micro's Super second December and for XXXX. XXXX, fiscal conference XX,

completed announced previously audit press As our release, in investigation the the company by has the conducted disclosed committee.

time estimated time on XXXX. conduct before at XX-K today's But the these and Additional ended second any during investigation and December to promptly the business discuss if company's financial to impact after company will XXXX from delays historical June the XX, call, year filing additional The in as this company file will the and the a XX-K. reference the results of amount to be company's of Form XX, By fiscal the predict XX for Form Based reviews be financial September as to results. analyze its Form should SEC. XXXX trends XX-Q on filed company's required received is ended to the reports quarters and adjustment. on Super now when will market quarterly is able adjusted filings the annual financial release quarter report XX-K whether on historical date such address so conference Micro the distributed to as any the copy change financial subject with company statements for close the preliminary of results other trading The to based future on unable will of is news results regular the was finalize a fiscal of available statement, on if or website. its the have that you finalized today's intends are contained will to and be at well to or provide any Form

include you start, of that we future I’ll results our remind expectations. cause are differ remarks our number that Super statements. could risk a There forward-looking to factors materially from Before Micro’s

other the You earlier we in this can recent more or most risks press our our learn issued these SEC about afternoon Form XX-K release filings. and

statements. obligation documents remarks, from of update prepared will Relations and ask any update of forward-looking the or delay financial today's company to covered The address business Officer. to should the turn call. in are to today’s any directed end the presentation results of company's sell-side Charles not Micro’s will to refer will Chief filing to analysts questions. available be Investor call which over now company's committee the Most page the assume XX-K. questions investigation the the We Executive have a today's Super Q&A be I’ll the outlooks. regarding Liang, session, All of permitted of no Chairman those website. will Questions At in audit and we non-GAAP

Charles Liang

Thank you good afternoon Perry, and everyone.

quarter. summarize second Let the me

quarter. non-GAAP $X guidance December range our revenue side $XXX in XXXX. our and this EPS XX% achieved surpassing seasonally growth Our run growth. the and of non-GAAP second and we strong by guidance enterprise our of increasing revenue investment our improve to center, enterprise infrastructure, grew with with of throughout machine large our million In by of operational the vertical to quarter able billion grow reaching base We and growth Internet were learning, the cloud control embedded, customer margin global were all million term The saw service quarter and data strong accelerated, [past software, market our in customers. in center storage, over $XXX data year-over-year We particularly and revenue along in investment quarterly supplement] AI, long increase over IoT long including global also our to and large operating exceeds we term profitability. rate spending to continued operational management

Our of completed an reached nodes total our XXX,XXX increase our season approximately season to more which of business than result in business revenue. XX%

We the being Pacific with biggest again in in growth specifically. and in every also geography, Asia grew China

large demonstrated center on and and a quarter business in wins our customers. large Supermicro with sales well. growth as in business. this is saw revenue traditional execution performance enterprise in to X.X that to our Our aggressive grow design great channel strategy Expansion volume growth our We data accelerated Internet

seeing Intel strong of also than system of We grew XXX% product family. a our Tesla Skylake The new process scalable ramp now more are quarter-over-quarter.

the low the With the XXX X we product in much that while best-in-class delivers featuring systems, convergence system multiple also BigTwin new introduced and I/O industry. solution maximum NVMe, the DIMMs only leading supporting is CPU, efficiency, a expanded It and memory, node the Skylake flexibility. watt in industry's XXX unmatched XU innovation, latency and truly processor performance All-Flash fuller non-comprised for hyper XX new

product a capacity XU All-Flash NVMe with XU Internet We All-Flash are new NGSFF an All play more NVMe extra a in our in key continues JBOF surface strong scale provide NVMe Flash XU we gain of in Samsung solutions or flash enhanced role with NVMe performance our are year-over-year. across traditional XX% petabyte growing the X.X major applications. storage growth or ruler XU for storage with certain to with and [indiscernible] single previous NVMe SuperServer Micro's product XX system. XX design storage platform NGSFF we markets just and XX% and open seeing product support storage Super than multiple the fully delivering

to new We IOPS million NVMe with up released system under delivering performance high for microseconds. storage also XX All-Flash latency design XX

to memory any and for certification to SAP X on of processor core orders While that or XU Supermicro SSD get up enterprise of are NVMe processing speed memory SuperServer customer growing announced base, terabyte with technology. All-Flash multiple leveraging steadily high large HANA and we popular

our transaction of expanded time routes. advance capability. We alongside for earth, solar analytics turnkey and to capable ago XX introduced high computing solution we the Valley with of and to NASA's power flow density, real of speed built solution running an expanded Our advanced system to partner bringing base The NASA climate and Super To X.X SAP research effective needs with simulation performance with efficient their next-scale concept computing and better accurate solution universe. Micro at systems. for meet HANA the expanded start We want combination already additional green analytics Silicon optimized Center research the get have deployed a NASA's capability have cost and to integrate headquarter. years optimize NASA is and system research. data of energy used

and and with architecture architecture and innovations to product saving our scale This deliver quarter shaper this next greener in resource our reduces green in next resource. aggregate computing of hardware design various The a contributes depreciation a cost. level Micro and storage resource to expanded to industry we conservation industry to are savings first It savings quicker. up savings computing MicroBlade the the Super architecture our beyond overall resource savings operating inter cost property design in is resources were beauty system green The just and latest more using [indiscernible] power to that open performance depreciation pleased including XX% server data versus take for consumption our pulling standard optimal management key application a of aware. center

business. deployment. with a headquarter manufacturing Valley order integration quarter Silicon manufacturing our XXXX increase target increased our facility and run and our for fuller we exceed our The strong the rack customer billion rate largest size. wins support fiscal to new based energy, Micro's rack expanded scale In also of summary, second of clean We autonomous integration Super $X one from facility momentum and features on annual rack growth scale in our capacity pipeline

We expect continue to quarters. the in growth this upcoming

focused increasing base. enterprise we Supermicro and the our strategy on X.X remain highly forward, Moving large executing customer will

a role financial the in joined Super of forward introduce multiple ago here VP of decades Micro success over Development new the experience Let as me this Bauer, our Kevin of to had company take CFO Kevin Strategy. CFO. tech time at high two year Valley. and Kevin’s Kevin to in looking X.X. Corporate over contribution in I’m Supermicro for Silicon leadership Senior including

to over it hand comment. Kevin? for me some Kevin Let brief

Kevin Bauer

Thank you, afternoon and listeners. good Charles

For those just of you have Micro, Howard who may be new CFO. I to Super as Hideshima succeeded

of integration press few August at Exar role to Strategy. summarize Chief of to I June from until January in XXXX, was its me background effort Development Since experience Officer SEC release Corporate earlier December minutes provided Let thereafter, the take Micro Senior I've Diodes at November I Super a by to with Chief from Diodes Controller that, XXXX June colleague additional President bring Between filings. its Super and through and current and February November a was XXXX his XXXX. from CFO in Corporation XXXX XXXX gained Prior Prior to Micro, these I Corporation a assisted today. in Financial and Semiconductor until company Pericom Financial to joining of a roles, assisting XXXX. Corporate which in Officer XXXX, been the Vice SVP, was sale in my to Pericom

and today to further have capability. focused of a period forecast this and financial have planning have this During number now team. my accounting you professionals staff joined value that I planning announced I financial talent existing experienced analysis information refer on with financial strengthen I which the when accounting experience. our believe can in bring Super to. with experienced broadly dedicated will press today's release our combined We preliminary Micro additional deep

of XXXX XXX XX, sales company of March Looking in third net to forward, expects million fiscal XXX million for quarter year the range XXXX. the ending the

met the results. SEC I'm is I community to ramping work number to to compliance progress with forward as making after any will financial While filing requirements. look work engaging investor Charles SEC and with excited our our Super have one complete not more comments and just we our sharing preliminary our filings, of we on priority be we about with our Again, Micro

to the back for call and Charles turn Perry now me Q&A. Let

Perry Hayes

Thank you.

that provided. will to that have we to previously, a the analyst in business directed just remind indicated will be update you session be I permitted sell-side Q&A should question have now which questions. like we would to As ask

investigation committee XX-K. relating our We audit or questions at for ready the the to will answer we��re Operator, of filing not the questions. delayed time any

Operator

from Fargo. we Aaron [Operator Instructions] go will first Wells to And Rakers

Joe Quatrochi

I there that. this Joe Aaron. anything quarter performance gave some growth you the to us first you segments I details some computing, Quatrochi like high questions last quarter if stuff like enterprise, of help to us for Is us Few give related storage of is This could, on could think kind out?

Perry Hayes

this at XX% Yes, certainly that. revenues Storage are preliminary our do these was is of Again XX% so estimates about these can that total are and up best time. numbers, about we year-over-year. our and

amazing Our again over here grew center me on computing cloud lot so this to about and about that the the was momentum. vertical continuing of accelerated a XX% over XX% computing it year-over-year that’s quarter, Internet thing is XXX% data let show go accelerated

that was embedded revenue of as was XX% base year-over-year. we for and or up we and captured that our IoT approximately do strong businesses that have also where quarter. our show you spoken a XX% they to X% Is on continues is very about and Our some overlap approximately our but little that is of some channel channel about this huge that's approximately growth times of not know customers. prior Enterprise least based so. and from Last some in things X% was bit and helpful? for this There

Joe Quatrochi

or this any when the guidance relative Yes, that look that, to a how that’s quarter partner then you. the or do just very market And think the driver performances we there due about it for upside, at particular broad-based point was was was what to underlying out, could laid helpful. to? the you maybe follow-up Thank we is

Charles Liang

strong Overall there to growth very component some than continue wide. is be will other global shortage

pretty we believe be growth continued soon. So will

Perry Hayes

we and every that remarks earlier here broad as was up add we geography. Charles it single very in vertical Every was would based. were that up in said Just

Joe Quatrochi

we do the resignation management The outlined And we and to then how and revenue relative that of audit kind just one press think the I’ll you how - maybe separate ability specially do How going completed forecast your forward? see in to those release those about related related floor. they're leadership. was about the the then just to or more that think sales are

Perry Hayes

audit you to that comment the liberty investigation we’re So, the just know on financing XX-K as related anything the audit and committee - wouldn't to discuss committee. and delayed not we definitely at

He that, name on person new So did great to press company decline stepped your head I’m in up his question sales for a often to guy. worldwide with only our in He sales, years. into is role is He is today. the were Don was but have absent many, announce when our the regard going Clegg, release that people in traveling. to a many we to the

So make company operates. he the a about and has comments. to a how wealth Kevin to of forecasting With knowledge regard like would of you future, couple it

Kevin Bauer

think very that are say skilled first in well most of like a estimates and for is size there on to focus of our of areas customers. kind that we very That one I've our for I bottoms many forecasting. terms working players as I’d up doing forecasting and of savvy companies terms the the top our of really in been are process Yes, that have

we be think do in time of that have and well to the wherewithal strength the able bench to transition. I this So

Charles Liang

mean are is in four and not we years we X.X Supermicro internal prepared that - I for expertise. change had past higher so for solid been In which sales

So our becoming is much stronger before ever. than team

Operator

next And Mark from will Davidson. D.A. question Kelleher come from our

Mark Kelleher

can team I there I expected and a expect maybe operating in. I the talk puts going little bottom dipped again on more lines your the there of Thanks. drop can if you’re expenses? little about a gross that Could kind terms you more And you and Congratulations a to pricing margin, then memory operating increased out strong revenue bit G&A. are you very there, about kind the some talk on to expectations we of, know the Where worked said we building in up is line. is takes spending finance you build know result,

Charles Liang

very revenue In stronger are couple strong. have we trend. growing Basically of continuing our next been quarter our

still price in memory go unfortunately. higher our However,

the flat, other been the net few have and about have that I been our foresee strong in very next so than margin strong a quarter, So very at we like margin guess business gross growth least.

Perry Hayes

that, add revenue. last China sounds with to just strong I’ll bit like little had mix We geographic a it quarter. very

have we're technology. to a the product have lifecycle so continue more our And to where reliance that. still We them component that in products mix Grantley impacts lot of again

in but his mentioned Charles our as XXX% low that also So, was comments base. grew it a Skylake

months now in was of our probably to see go EPS, big report margin. part the said Skylake ahead can XXXX of that the estimated then last did of the that significantly were our will is ramp make tell beginning That to And So the from We OpEx. on we based for you on we as that that that some higher. still terms of - up start able several us. we lastly significant EBIT that progress control

Mark Kelleher

be changes Just the rate one last one What the in the with we should tax law. tax assuming? rate

Kevin Bauer

forward the our So probably I go we be think tax in as to will or rate going so. mid-XXs

Operator

from Hosseini from Our Susquehanna comes Group. next Mehdi question

David Ryzhik

This Mehdi. is David Ryzhik for

in have X-K regarding January March. by bank with, that suggesting that think you I extension So to sense deadlines filed working file you a just of wanted get a to we’re an

on Just deadline that is up working really that a March see XX-K? to wanted Xth for to with think you’re the like

Perry Hayes

do previously until sinks David we time, we we as Bank We a with with that an able we with XX date. this possible. in have that auditors our March bank have described we've and and to line this happen. the can working have process the determine up as that date which America when as - announced try really conjunction will NASDAQ are independent we’re March as agreement extension of at with soon complete to But already not as hard

David Ryzhik

flexibility you that March of Bank hard a America a need you I with do date time? that if anticipate deadline more or little mean is around that And

Perry Hayes

to our David comment we’re discussions America of not this going with about Bank at time.

David Ryzhik

some And some public from TSMC came is order so Super to across we filing. Micro, there

maybe on December wanted we of Just quarter I - sense get there in a Super orders. and order what it follow was million Micro a to was $XX saw to think therefore

to Internet customer? is that data business what of that how those wanted sense is or from order sustainable a just are not So for that demand get and center

Charles Liang

business with comment don’t specific customers we Basically with condition.

had However going happy large continuing our with big to win strong. I'm lots been account very enterprise of share

we So positive. do feel very

continue grow It’s business with been us. growing in to customer indeed segment. kind had many this We of will enterprise

David Ryzhik

And environment, DRAM just you your see you you touched how to on would anticipated March and sense on today the love your component impacting relative to and how get quarter? NAND business

Charles Liang

[indiscernible] continues our have we global did some shortages price DRAM Yes, Basically components wide. even and grow temporarily, overall other the much been faster growth to average than industry. see

but getting see did with we our So shocking relationship vendor. stronger with challenge a

will challenges be but believe are I some okay. it So there

David Ryzhik

just of drive the public do was impact discussion And you wanted actually How inspector activity? actually that a cycle? there Skylake refresh believe the Do around could to vulnerabilities. a incremental meltdown that some sense get you to - foresee

Charles Liang

mean more last Yes, and quarter. quarter I grow did a we strong coming few than good quarter and question. see our next this Skylake growth indeed double over

will is overall So, business strong. Skylake overall generation go but strong next our

So especially of have customers. lot we IoT embedded

our be So growth will overall smooth I pretty believe.

David Ryzhik

just I then on any but talk if storage? think gave you one of storage about last you can next-gen storage, from revenue a was sense And XX% total total me

Charles Liang

and some storage storage overall quarter to Next-gen will grow grow next continue to more, grow generation less quarter year-over-year some but grow continues stably strongly.

Operator

Group. now We'll go Instructions] to [Operator Chokshi Nehal Maxim from

Nehal Chokshi

while for single average will be is relatively mid an Q-on-Q think usually XX% midpoint done down the the price year-over-year broad increase which see. March and the operating the at strong I is then brought dropping basis, increase guidance the digits. quarter The that’s at results range to so on Congratulations profit and XX some of a million that and least OpEx good year-over-year rather result seeing on

projecting? decline greater that of you seasonal what guys are levels So

Charles Liang

slow shortage, quarter strong big growth quarter be global of seasonally be even range over if wide to mean a component XXX. so I because to conservative will but March that we try believe shortage this more not in We XXX

Nehal Chokshi

Okay. And then…

Perry Hayes

as of are know and as Year the industry of New seasonality that - happening. for you the just lunar Nehal, well, in some right I think there's with lot events add other this March this historically quarter

So it’s with a little the hard made. gauge that comments bit to all plus Charles that,

Nehal Chokshi

reason sales of what then leadership? was the And the resignations the for

Perry Hayes

question your Nehal, appreciate know whether don't listening you're but earlier. I

at discuss committee the We’re audit liberty not investigation. to

Nehal Chokshi

those So be at I resignations to you’re related some not the way assumption indeed another. just in to by saying or say that that are that point then out liberty the audit will

bit can color driver far as the you give little as a hopefully more what’s So, here?

Perry Hayes

conclusion have your we discuss own, Nehal that our and in Again nothing is any of that releases your are the investigation. audit is or said not going press discussed committee we to

Nehal Chokshi

recognition did question audit the it's related so - one I that you be is purely what then committee's audit timing correctly? is answer And have but to which I clear that more the investigation it hopefully revenue that recall did I close can think was but was correct was on about clarification just

Perry Hayes

we previous That is in what said have press releases.

Operator

the all or our any to the is we back over remarks. turn closing additional have I'll that presenters time conference for today. And questions for

Charles Liang

a and to joining today XXXX. looking Thank Have day. for you we're strong a us Thank forward great everyone. you

Operator

your today's concludes This for Thank presentation. participation. you

Super Micro Computer (SMCI) 30 Jan 182018 Q2 Earnings call transcript