SMCI - Earnings call transcript Q4 2018 | Super Micro Computer, Inc.

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Super Micro Computer, Incorporated Fourth Quarter Fiscal 2018 Business Update Conference Call. The company's news releases issued earlier today are available from its website at www.supermicro.com.

During the company's presentation, all participants will be in a listen-only mode. be entire participate all call a basis. will session, a participants analysts listen-only the but is securities invited in to question-and-answer on Afterwards, open to

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

Perry Hayes

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

Super company's and close trends releases fourth finalized news and from to References preliminary copy current should the regular fourth you for are company's the During estimated and and that and the results of financial website. SEC. market now, quarter trading today's on two the from address file call, in for change company results results any distributed based subject future on contained By with are financial XXXX. filings, company's a business the fiscal at filings have of quarter SEC available were received XXXX, of to to Micro delinquent fiscal efforts year conference the will the the the of the state its

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

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

prepared forward-looking a statements. will be to permitted available remarks, to results sell-side over assume At are the Chief end outlooks. will presentation Financial obligation Most we'll today's Investor any Bauer, call refer session, in which documents Kevin Relations We of now Officer. website. Q&A of non-GAAP have from questions. no of to Super those turn to I'll Micro's update today's ask the the analysts of financial All page and

Kevin Bauer

Thank news good our is first complete of you, remain good and Perry, by reports. the overshadowed day efforts our afternoon. the undeterred status. trading filing our results Today our because are quarterly very in We to financial

this of the of the matter necessary. is, as particularly, quarter as that by reviewing requiring must is filing you question of completed be are has by terms towards matter, that The deployed in process to exception not our end not have the diligently able no transaction to asking be revenue worked restatement identified of Appeal us analysis timely the they resources file of transactions through nor is the on earlier have that But NASDAQ revenue is testing. concluded purchase so to result of it near part ultimately reviewed a the deadline August cash company have an transactions been XX, why This to matching we're the thorough, shipping listing given each and XXXX. order not and timing our We've the found flows for financial the We similar progress by by order statements, having to To and to be granted SEC this company Panel committee's this XXXX tremendous long? and could to the audit findings relates issues, when revenue. investigation. financial completing the deadline answer The impacted recognized, the involved in but made significant standards XXXX our was reports. of we specific date, taking

As we're of our that thousands a in at reviewing example of revenue is that has an third-parties a me let detail reviews. archive arisen transactions issue or documentation issues, high however, an this and are locating approach. of number There on-site, share entails using business, volume the structured in

this for the from slip we for We an shipping of the revenue for customers factory what our of one next. to of shipping are example our looking appropriate those recognized. The it The as quarter have If valid for their even in issue date of can customer provided which believes is agreements review transactions. though revenue end one recognized is from of accounting the terms quarter unintended into review must time-to-time with be the to the thousands transactions its free main package company recognizing ex-works offered adjusted consequence shipping the transaction This products at way, from own converting quarter for the customers, arrange are we had revenue the that is company the revenue. the cause shipments shipments to up in to FOB an transaction dock. transaction. would pick This

determined any filed any statements. financial We our be timing of whether the will magnitude previously have of yet adjustment not material to

closely KPMG controls to appreciate diligently the impact, engaged KPMG us our auditor financial over to assist Deloitte. with financial and we assessment complete statements work the assess the review, and continue and complete working both of also to independent job. We the with complete to reporting. are efforts of and review, our our internal We've We

SEC group working the process closely with filings. toward Finally, to progress well are as on we bank agent inform all as our testing the our of also completing the

believe not Thankfully, however, time, all our a fourth healthy but this as our reflect. result grown that not the have to of has our fund project far and expect during delinquent by to the SEC we the to reports, complete We're we in file future. adequate able and date lines As the we review which business a will company. growth today too continued of credit to continue is quarter of remains date result, this

financial It range of overview strong $XXX a performance to had markets of year-over-year. year-over-year significantly revenue XXXX, grew embedded profit. data up market in Turning computing $XXX enjoyed the brief fourth XX%, the achieved data up highest grew in the and approximately With center We US X% quarter Asia-Pac Accelerated We growth within regions On tripled was Global quarter diluted year-over-year. grew billion. followed of Micro fourth share range verticals that X.X year-over-year fiscal XXXX Super fourth quarter over basis, than the $X.XX grew million this our by non-GAAP to EMEA XX%, during quintupled revenue, strong earnings to estimate was estimate per approximately of revenue storage we of was a million. fourth XX%, We and more key Other net and channel the and all revenue fully were that up quarterly higher a was quarter X% and year of growing XX% grew XX% XX%. more Internet $X.XX. center than XX%. respectively. XX% year-over-year. nearly with year-over-year. non-Internet revenue

of estimated non-GAAP was and to range gross XX%. GAAP both margin the on Our basis XX.X% from

customer a was $X.XX, double this this Our almost quarter high quarter. estimate was record range non-GAAP EPS We year-over-year. affected and which $X.XX to margin mix primarily

operations cash working we capital. mentioned from Last manage of we fourth cash the $X the of our effort generated free After fourth $XX For our to million, flow we quarter, $XX for deducting was estimate estimate quarter, million. million CapEx quarter.

working This to quarter. days sales the in payable. to in XX inventory reducing purchases, more precisely linearity quarter, We our improved was timing by shipment collections and days concurrent improvements diligently, our strong is conversion XX business outstanding cycle by achieved cash performance filing from we days that days by financial All days improved offset reduced on due reduced all, our being in and reports. prior we and

turn comments. over his for to Let Charles it me now

Charles Liang

Personally, Kevin, much in This, profit, you, and efforts record foundation. feel I I high we innovation. and my however, not I'm affected the denominated product Micro's unparalleled our everyone. to meantime, introduce are In substantial a disappointed this revenue continue we in afternoon, and complete filing unfortunate achieving and confidence good Thank cannot very how strong development. convey Super to that new progress pain SEC our filings, Despite payment. has

We audit Completion this happen making SEC committed big step. our and as never sure possible the first will again. soon completing our are filing to is of as problem

We accelerates our and our been [indiscernible] our financial to have being USA-based the asset that across and to growth the our global companies. technology process need meet and management operations. the scale change operations in sure the customer strong new infrastructure skill, to investing made standard A add already highest of experience. is and business large financial people, and We operations. rapidly make and growing further to We of business improve company. experience deliver meet a has improve need flawless

the [indiscernible] continued to Vice never new a revenue We a Audit, last also the leadership Officer strengthened team. caused Internal Micro's stronger. technology and product delay disruption XX-K new in been and Super year, recognition the by our has Compliant Chief business Today, despite and filing. of add President our XX%

Record million, success Our quarterly fourth year-over-year, and and profit focus. of and XXX billion Super XXXX. this our in strong XX% of revenue With the revenue, market XXX high. are revenue approximately record quarter X.X range a to Micro continued will million higher fiscal of was be for new our product indicators surpassed strong

applications. expand to deliver Big game-changing performance. new products [indiscernible] leadership that continue Data with our We and technology

All-Flash Tesla view VXXX partnered a and the [indiscernible]. of million and throughput most delivered can with more any deliver and opportunities new X GPUs partnered up abilities AI XU of that in NVIDIA PetaFLOPS That is to to high-performance IOPS. XX powerful deliver For platform. a XX-year with system same storage high machine the in learning, up our confident combines petabyte than at history. have of SuperServer, time in That class am store. I NVMe our to We we the data NVIDIA can technical compact XX

reporting cost focused low meeting SEC and obligation We for are operating clearly on our business.

great opportunities, many machine Super forward upcoming continue in will XXXX, to And facing now, resource these bring future XG I for learning. our the Micro, have the us, I are opportunities transition, sharing quarters. for things The enterprise we great market will am to innovation. technologies especially looking over be enabling and to on of as at to new hand more Global AI Kevin. We exciting which going

Kevin Bauer

your indicated remind should the provided. to sell-side relating delayed directed have or because this XX-K time, with committee who we Q&A for to that We the session decline question Operator, business questions. like be at previously, ask to would litigation. pending the I our may to to of update you of be questions. answer we a questions ready investigations permitted will audit have analysts, As that filing just will we're

Operator

Chokshi go And first Instructions] Group. with we’ll to Nehal Maxim [Operator

Nehal Chokshi

on. going Thank Kevin, color delayed that's really on stock is reacting you the of as and you know, really But and phenomenal great the some to results. filing examples

statement believe that made still you the but significant to is not second these to work is release do. press file You there at end far the a does filings the that too today, ability away, that say in it

bridge help you in the -- and can the delta verbal between X-K? So, what's comment the filing what's in the and

Kevin Bauer

Yeah.

amount true substantial So, do. a we I of have think is work to that it still

I have pretty what good the think it in terms later the able see remain to able we that is process, to now are to visibility what future process. on being takes we've actually in of the it that, to in be complete said we

that's one of still there's is to them but it's fair string a So would visibility, amount how that I do. together better

Nehal Chokshi

Okay.

relative started review process be fair say? investigation to late, done defined a to needs to established was that Is the on relatively the when a year what ago. that to about transaction was So,

Kevin Bauer

the certainly the we that so processes see of it in, a investigation in bit able were to we of evolving. to terms results came certainly do, were more Well, need was the as little

Nehal Chokshi

be to transactions. for reviewed you've just clear, review, of significant left And Okay. transactions hundreds but said, you already

through a more like you are are what XX% needs way to like XX%, way way XX% through, or So, XX% the you of reviewed? of only through, the be fraction to are you

Kevin Bauer

taken and that approach detail. transactions are smaller really We you going can't I of can go of transactions. now Yes. is What the into we've level towards largest that share with

Nehal Chokshi

Okay. Understood.

June Q-over-Q your above the the typical margin mix, offsetting be three of growth, fundamental basis onto points had tick at and as should down an did Q-over-Q, well. competitive so pricing, see the gross and stuff, drivers also volume for And all that's lever that X,XXX then input at can potential you you these quarter, costs, about XX% you seasonality. that parse midpoint that So have -- should between been upside component,

So three how a maybe if comment factor held would have been, on positive can also volume items the you of much constant? were other

Kevin Bauer

That's a lot.

industry the fact you So, aware I’ll tell certainly we that that, is of are growing. the

that. are from We benefiting

enterprise significant mix, in it that the the just the margin lot of we looked with a share terms to had quarter-over-quarter wins We I happy you that will are some with do of are with our getting. at I of as customers. mix

is the are So that have related some sometimes that products on that to we the to deals. of larger others they aggressiveness buy, related

So that's those primary factors. think two I -- were the

Nehal Chokshi

that pricing say has more environment relative to you the a quarter ago? Would competitive become

Kevin Bauer

I wouldn't universally, that say no.

Operator

go to Fargo. Wells Aaron next We’ll Rakers with

Jake Wilhelm

Hi. Rakers. some you wondering results. color their if Congrats of you're This Aaron give is I [indiscernible]. Wilhelm behalf the was me Jake on traction, on seeing with AMD's with strong could what on

Charles Liang

Yes.

and the products last more we You AMD popular, quarter. can ship much kind been products see of than have getting

So the change should be continued.

Jake Wilhelm

the me on traction was you seeing could Thank some Intel's product challenges? and with also you're wondering if that give Optane I you. around color Intel's XX-nanometer

Charles Liang

Yeah.

kind higher Again Intel want in great area. that product and [indiscernible] Optane earliest And bandwidth a player we solution latency, of line, the excellent the provides lower ship in market. to have We continue we’re a people technology Optane technology.

technology Intel, and we we As to feel as overall this of to tried XX-nanometer moment, optimistic from still. observe very

Operator

[Operator Let’s Group. Maxim Nehal follow-up take Instructions] a Chokshi with from

Nehal Chokshi

All right. Thanks.

midpoint points basis consider than X,XXX more your I'd is seasonal. guidance X,XXX is XX% So Q-over-Q, or down which what

some nothing seasonal below far sure past give more growth Obviously, than wanted you guidance? there's make what's it color Q-over-Q as quarters, you to incredible did just have can to So that? two as over but some the

Kevin Bauer

No.

quarter do think I as it to I think, is anything there the Hopefully, guidance. really view our we'll is of relates primary seasonal, unusual well. this don't

Charles Liang

be quarter, this quarter, would September to XXX and a still Now, that with million, strong million quarter be will -- basically. XXX guidance, our

Nehal Chokshi

for color there? September And Can plans OpEx quarter. give Okay. non-GAAP you any

Kevin Bauer

not than giving Yeah. We're revenue moment. any at guidance other the

Nehal Chokshi

provide system quarter? volume, And for Okay. June and color All to able node to right. are ASP, on volume, node you system some going the be ASP

Kevin Bauer

No.

Operator

We’ll Jon Lopez Group. go Vertical to next with

Jon Lopez

specifically apparent if me the that second referenced release, hundreds restatement wondering moment, the you in believe of same spend by of review then it's to that don't conclusion sentence, in release, necessary. the not you Hi. because that you in I'm offered the just wording Thanks. a is can a really the and transactions press the you

last you as what of what points found you've focus bit hundreds and guess I exactly I'm what one is through you little conclude that have what led are expand work necessary? a that, And in can part is, would and of that transactions So of hoping gone the you upon restatement these has not you necessary. what conclude be to make then, that might a prospectively

Kevin Bauer

outs So that seeing the predominant quarters. across pattern that we're the is there are ins and

other And the so, each that's so out far, operandi of what degree to a they've really kind great is. modus and netted primary

Jon Lopez

you that periods progression Okay. that And you've is uniform 'XX congestion another? through versus period these over more speak across it little in more fairly a just the you fiscal of I the 'XX? i.e., bit analysis or see period could do one to mean, referenced,

Kevin Bauer

doesn't big say difference in can't distortions, it not pattern. to there's really significant I there's fact Yes, that of by the but the that speak been that, virtue a

Jon Lopez

Okay. Understood.

FYXX -- offer period transactions are that’s at 'XX provided don't you you has reference went I understand when of as lack better and this term been the some or you based activities just as focus part of motion that issue? on FYXX this well that all. filings, not clarification And second SEC could I a was you you've discovered but is for immunized for The hoping reviewing fiscal into of a

Kevin Bauer

have gone have can how through like come the Well, to that that over investigation, we year have it with I quarters relates our ‘XX. the as to as on share eye things estimated you had the we've we and

to you the so we've go the been of transactions at to that. So end, still as will we through some We improving speak. go but have have incorporated

Jon Lopez

question the the through processes separate the just to that there what recollection then outcomes? procedures be to of and And to there credit transitioned The commentary revisit go be Are that tied you was it’s those would have was topic a Can which that met? My lines. is would your now I over Understood. next do foggy, credit you this timeframe recollection the around side deadline little on SEC documents. be have quickly? won't the or my filing just contingencies some

Kevin Bauer

Yes.

So was term. one-year it way was structured line, the it the that a credit that is

If in closed remember, you we this April.

or so dates, nature filings. it. therefore, that's the of our term of it those II, then that one-year one we it credit would earlier had delinquent for completion able upon So, phase actually expanded facility, of convert to II phase And of be an the allowed into

Charles Liang

[indiscernible]

Kevin Bauer

right. That's

Jon Lopez

amount still that change. you what like is could that but driving right, on mean, as could your That's saying And access to term? that. I some have that I you're No. of change suppose sounds it one-year credit duration

Kevin Bauer

That's correct.

Jon Lopez

Okay.

just when approximately does Sorry, like you end? remind that could duration

Kevin Bauer

third like April, of week It's the I believe.

Charles Liang

XXXX.

Kevin Bauer

Yeah. XXXX.

Jon Lopez

Understood. Okay.

reason have that situation at for process is a that would so, perspective? point, And you'd unresolved, there separate undertake from be to the whatever then

Kevin Bauer

a We're little getting Yeah. ahead ourselves. of

Jon Lopez

a you if quick the couple what in of subsystems, mind. real business, of me? to the relative Sorry, split systems between portion did June just guys service your offer business a questions compared on rough just to you the wouldn't business, excuse accessories Can

Kevin Bauer

Yeah.

XX% business systems the quarter. our was So in about last roughly

Jon Lopez

Okay, expect segment XX%. And change the would into you looking in September? splits material a

Charles Liang

continuing systems still The grow business is stronger. to

Jon Lopez

outgrow the the systems continue will I'm subsystems business? sorry, business to

Kevin Bauer

talking You're verticals? amongst

Jon Lopez

No. the the sizable you reportable are to segment buckets? go two split as segments, have into other between between of just at was asking subsystems the service really September, any just June you shift I business, the revenue XX%, in those anticipating system from we looking I'm kind every

Kevin Bauer

systems, a of movement. and have been to kind it slow that towards It's increase No. continue would

Jon Lopez

Understood. Okay.

question gross on side. And last the margin sorry the

some trajectory. on become I a bill more heard a think of guess, mean, bit just bit I you've I'm said you little what earlier, component material I seen favorable. obviously the more little portions I of for looking

that was assuming to toward several continue buckets I'm mean of more I'm expect I'm not be materials sounds related. think bill other is the cost margin gross you quarters the to was continues XX's, the trend wouldn't obviously asking the that next you extent side Your a to I to went up But saying as begin as favorable. there to the improvement would that a like It quantify we expect favorably, just mid vertically back an extent. low way. reason XX's. to directionally gross just bit margins about range, you your hyperscale that to trend that

Kevin Bauer

overtime. improvement Modest

Operator

the at back appears like for it Mr. additional we And to turn I'd to closing Liang over any this no call questions. have further time, or comments.

Charles Liang

for very and you a you everyone Thank see joining us day. Have great Thank soon. you.

Operator

Thank appreciate you, do Business does ladies and Conference conclude That gentlemen. Fourth XXXX your Super Update the Quarter participation. Micro We Call. Fiscal

You at Thank you. time. may this disconnect

Super Micro Computer (SMCI) 21 Aug 182018 Q4 Earnings call transcript