SMCI - Earnings call transcript Q2 2020 | 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, Inc.

Second Quarter Fiscal 2020 Earnings Conference Call. The company's news releases issued earlier today are available from its website at www.supermicro.com. Instructions]. [Operator

by this of recorded, accessible callers the Thursday, XX, reminder, XXXX. February until should is entering February replay and X-XXX-XXX-XXXX. A call XXXX, dial call in a XXXXXXX. Thursday, being X, midnight, replay at As pin X-XXX-XXX-XXXX International dialing will be

Chairman are and Officer; A Perry Chief Hayes. Kevin Chief Bauer, With us and and Officer; today Senior Financial Charles Liang, Executive Vice President -

ahead, Hayes. like now conference turn Mr. Hayes, to go Mr. would I over please the sir. to

Perry Hayes

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

on should you company's distributed now, release the website. from copy company have By available of at the trading news the received a regular close was that of the is and

the the refer team today's tab. & a in As to that to under in Relations the is Investor a website Events reminder, company company's will available participants Presentations the call, of presentation

on have this We scripted on our also results quarter's published management's commentary website.

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

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

are any statements. forward-looking All Relations page the to update assume documents on of of these We Investor available obligation Super Micro's no website.

presentation today's of will Most outlook. financial refer non-GAAP and to results

please our measures, press presentation non-GAAP refer of covered to explanation financial release the an today. to our For or earlier accompanying

presentation. ask we for a today's supplemental information session today's sell-side have non-GAAP At is today's in the release GAAP Q&A analysts press and to of reconciliation to of will in to prepared the end a questions. results addition, In remarks, attached contained

call I'll over Executive Chairman Officer. Charles Chief to now Liang, and the turn

Charles Liang

afternoon, good Kevin, you, and Thank everyone.

couple a storage of last of been of solutions. our global Micro has strong Super and years, becoming continuing the the leader Over journey server

worldwide to operational build and high new efficiently have and with roughly our product quality. many doubled more lines added products capacity our We

supporting system enterprise solutions, software customers the building Super most Now is industry-best is greener" our data it's optimized demand, the and and deliver. Micro and management providing exactly and customers it's ever what faster services, our what and blocks to centers been, "Better, channel. with complete we company plus

ahead. also operational financial we is our milestone as era an and it We begin our latest about our with controls. NASDAQ stronger than stronger confidently company say and Exchange. for relisting that important quarter and are we solutions is ever business technology I on Today total after for our opportunities the of a with Super Combined for Stock more can better new optimistic customers, company are this growth. Micro, first ready the back,

in Before Super what unique we discuss quarter's let about Micro shareholders industry. me makes our this remind results, our

DNA. First, product our innovation is

offer the only server in of our provider and in assembly are USA. majority development to solutions the most mostly product heart Valley We and staff, allows storage With dedicated and broadest quickly final some technology us with based the strength X,XXX engineering the a over Silicon engineering range engineering, worldwide, our of of with the industry. advanced our in products

technology businesses have and data intelligence and data to positions high-growth data These Super us of We innovation optimized to markets. artificial provide from center the pools uniquely cloud, service and industry key growing to technologies XG of timely DNA the on and to emerging capitalized edge. utilize solutions enable analytics. these convergence Micro's industries

the the From world. world-class for global We to center the deployed cloud, around enterprise solutions private our public have been are data solutions enterprises. delivering widely

and Red Hat a complete, our based such firmware/software SAP, solutions seamless Oracle, leading from products, few, we applications, as service hardware solutions enterprise As a certified provider name on design offer to capabilities. of software

one which be based the business to billion business model, we enterprise detail in plan of our solutions growth server/storage on investors Micro's this to solution finally, strategy block strategy companies, growing our are providers We configures market. building directly in fastest-growing and positioned through $XXX OEMs data Super the solutions later opportunities with centers, the at and events also more year. discuss And to indirectly channel.

results. turning Now to QX our

declines X% year-over-year, Our with second down and of quarter in pricing. part, seasonal initial million, typical the in were large $XXX our net which exceeded guidance to X.X% sales Sales were high due end up consistent patterns. steep component sequentially,

channel both Our and to quarter's grew grew represent revenue indirect XX% of and business or sequentially this year-over-year.

same most improved of product sequentially, enterprise DC with the time, This lines. of our coming channel the offerings our are we partner enhancing follows highly to OEM quarterly also installations programs. our DC launch also current accounts. and from than market growth Other our cloud direct At hyperscale and businesses grew focus, mega result successful the product with optimized large

in Here some our node data We lines are key growth product multiple highlights. product saw Rackmounts centers. and for

growth and help grew strong Rackmounts our new momentum. Intel was grew up strong quarter, BigTwin, continue other sequentially, Ramping in this quarter-on-quarter. systems some which AMD a due to of platform, processor-based primarily products sequentially XX% XX% This which and Ultra over will

sequential and accelerated computing offerings. growth launched saw multiple product We GPU-based new

pure GPU Our GPU interconnects per customers performance highest choose competition because performance dollar. over they with Super the Micro provide the and best solution the fastest

product deployments, this appliance IoT also telco SuperServer center cell edge, and to and tower leveraging anticipate to traditional and edge configurable We grow design the for for XG to year. solution additions standard calendar new xXX XG, bringing these compute telco proprietary announced we significantly market. Our data fully lines Embedded grew, computing, later a

the accelerate ruggedized demanding to the to AI stacks at AI hardware network and brought also workloads most edge. the optimized software combining edge, We

new the architecture. ESG focus demand resource with to saving increased saving our to Solutions our including a introduction of Computing continue supply, power XX-year attention part and the IT consideration, of investor we resource Green on industry We disaggregated lead With mission platforms, on longevity for the solutions. anticipate first

see start our revenue to to were reaccelerate. pleased we quarter, this Summarizing

a able quarter We forward company. public to NASDAQ are be also pleased to traded as this move

to the customers to technologies continue robust and server ready who fundamentals. and solutions. innovation, storage are upon our demanding on engineering TCO products focus to will Super best environmental-friendly building transforming quality, is lower Micro by We provide

I to of the will quarter more turn the call the in over review results Kevin detail. now to

Kevin Bauer

you, Thank Charles.

Our a of last revenue revenue, our of the upper guidance end and year-over-year. range. quarter was shipped exceeding X% Systems million, of fiscal volumes systems of up and $XXX This of second quarter nodes same from comprised and but a the prior sequentially first the increase from fiscal XX% quarter-on-quarter total XXXX quarter X.X% year. decrease reflects were

systems due commodity for in ASPs component declines fell to However, costs.

of down the On lower. X%, the with be year-over-year Asia EMEA challenging continued sequential XX% U.S. to XX%. Geographic our up XX%, performance and was mixed sequential with on a a basis, market market comparison, strongest growth U.S.

EMEA also increasing quarter, this by grew XX%. However, sequentially,

Asia with growth modest and had Korea other Taiwan, Asia sequential China. offsetting countries, in weakness

non-GAAP basis as P&L, on Working XX.X%, a GAAP last and higher our mix. favorable key and basis XXX was product customer, lower gross margin year than as points by costs geographic well driven down the component

quarter SEC audit the to operating review. year-on-year, opportunities. primarily fiscal XX-Q to with increased higher 'XX 'XX, expenses quarter-on-quarter XX-K by as urgency We including new R&D strong QX employee due central and first higher 'XX a filings current costs, expense, had as our get the 'XX—and well including targeting

corporate completed September basis. projects expense on of $X.X compared Concluding a a project December XXXX, tax of XXXX. G&A a approximately the rate million tax by increased go-forward restructuring to also on X, these X December in quarter that We the XX% lower as approximately results in quarter

loan. primarily to quarter, $X related to Other as exchange loss million gain foreign expense was last denominated our compared and term income a a impact on $X dollar million the Taiwan

for tax tax quarter from audit of a million. this $X.X of a of in basis XX% both non-GAAP and following release the reserves, GAAP which a benefited foreign a basis, X% Our rate on on was conclusion of jurisdiction a

a this Lastly, venture in million compared our same quarter earnings in year $X quarter $X in as previous $X.X loss the million share and a million a a a gain of loss the ago. quarter was to joint

share generated After cash and $X.XX million. And position last and non-GAAP $XX CapEx free deducting diluted to of last per closing operations Cash cash was compared totaled million. $XX $XXX totaled share earnings we per quarter generated investments of million, million. Second for from flow flow quarter $X.XX $XX $X.XX our year. diluted

days, was This XX is days, days. XX and days inventory outstanding quarter, XX. cash was days. conversion totaled below which to Days XX our XX was target of sales our Days XX cycle payable outstanding

In summary, reaccelerate. are pleased we revenues see to

as financial We also with quarter are pleased to able report a to this company NASDAQ public controls. be traded stronger

the expects Now million our quarter ending in The of outlook. turning XXXX, million. for XX, March a $XXX $XXX sales to net range to company

number see to to expect weaker cautious coronavirus In we the disruption represent the from half supported cycles outbreak. going growth given Barring healthy significant year-over-year we healthy encouraged further increasingly and technology of impacts particular, the are quarter product refreshes XXXX. are this of pipeline calendar unfolding fueling In trough trends a typically a customer second trends, and the a we constructive outbreak, forward. by by addition of seasonal in

operating to expenses, to continue invest in to growth. we will fuel regard personnel With

goal OpEx September We sequentially decline remediation by Therefore, material XXXX. June to of audit efforts. our grow the quarter the weaknesses and are in the will it March due with the testing of our full remediating also and in aggressively while June sequentially quarter, of financials will remediation

the remediation and audit expect after quarter. normal levels to September to revert We costs

in $XX period. million or in expect quarter fourth announced blackout extended million also charges are we onetime charges our We fiscal third cleanup residual nature. These address onetime matters additional that that of to incur to the $XX from

key benefits appropriate be these retention able certain of considering our Board bonus of dedicated most realized actions Board for an by lastly, is are employees. employees. long-term considering And were additional of that address to is compensation and Further, the We our both certain not matters. be taking forms to to

of and over rest which years. we buildings, completing will use be other of through two San one the the will completed cash to Regarding in two Jose 'XX, cash the in fiscal apply Taiwan,

remediation expect mentioned to related I for quarters. audit than several As normal earlier, more and costs we higher

diluted not revenue these we included to earnings range, of non-GAAP per this reminder, onetime approximately are non-GAAP a charges for as $X.XX the EPS Assuming $X.XX share And to quarter. expect range.

highlight for closing, community. In me event financial an let upcoming the

York attending Technology Susquehanna's Conference in New We on City March be Xth will XX. Annual

that, for With Q&A. it Perry back I'll to turn

Perry Hayes

remind be in I'd who may not understand Thank have in very will audio At this I'll available time. that the I that point, at this the like our just shareholders transcript you, Kevin. fact, the to call, are website, on on is remind clear. you been listening

the So refer had part understanding it, if any of transcript. you please questions to

ready now we're for Operator, questions.

Operator

[Operator Instructions].

Capital. go Baruah question first to Our Loop will with Ananda

Ananda Baruah

both Good my Hi. Kevin. Thank for afternoon. forward. progress and questions for could and be Charles continued This you taking congratulations on

you forward, starting in think, see the I revenue a Just the guys—there's you growth but stronger Kevin, for quarter, revenue year, at the comments. midpoint. expense—I'm going it believe the and half talked And Q-o-Q was second then two said the March about, X% guide opportunities. X% with also you paraphrasing I the trajectory, R&D you here of to

So in of sense Just opportunities to then get upcoming of could kind that revenue what you and of sequential are? coming you're we some quarters a us think to And talk the you'd about how tempo comfortable? the about trajectory extent can that. like revenue so those

Kevin Bauer

As coronavirus this costs—or that then of as no the refreshes highlighted to new once the little technology as in there. is end well see of out customer through year. caution like looks the convey get the have we with residual quarter, quarter of at we we our that, there that like are what we tried bit and a say is I we this that What effects knowing itself what pipeline terms

giving bit so the a of a investment give color community And don't just guidance, you longer-term results. for but we to normally little

Ananda Baruah

year? end the of the that's And calendar

Kevin Bauer

Correct.

Ananda Baruah

quickly I Got OpEx, just if it. on could. Great. then And

couple moving You mentioned OpEx in for the a sampled OpEx. you actually of parts increasing this—there's

out of OpEx give You year, the you Well, I think the gate just about the how magnitude? like audit you second costs. actually—magnitude a Can part of OpEx sense, of modeling us increasing. for purposes missed then regards to us the you'd half with And year. mentioned the increasing in to

impact normalizing. well. December on—when we—how that as to I sounds as a that rolls you're what just out should sense it's or normalizes like of expect well want we I get it saying quarter, think

Kevin Bauer

Yes.

about first talk R&D our let's So investments.

that mentioned future for we So continue to products. invest we R&D in

Another is the [indiscernible] our of to company enhance capabilities. software

focused really we And that that signalling on continue engineers. some to invest So are we software here. is of

that certainly, focused quarter, really, maybe not I As getting to in comprehended understand on OpEx, we is in this that as relates compliance really $X.X million model. it

that, 'XX, call thing tried on I booking therefore, our why to address so 'XX had both And wanted I that 'XX, audited to that out. a as we as through peak when well first we went that's and concurrently quarter

safe is March it $X.X model occur I million, that So the not to in that, think that will quarter.

I'll I and of, ecology the in that trying base, mind, so the play of give then to audits And you thereafter. was way to kind your keep reset

remediation by—we'll going be internal in be internally. intensity XXXX. [indiscernible] firm of therefore, audit So activity be audit it auditing the such then by to for we're their on as with lot results working of XXXX And dealing remediated a hopefully, the well that control, as funded would our performance as

that March kind into reset, of the I shape you, and September. a including the that's So through then to tried like quarter, increasing to give

Ananda Baruah

appreciate gentlemen. guys. Thanks I it,

Operator

Thank question you. We'll from take with SIG. our next Hosseini Mehdi

Mehdi Hosseini

couple Thank follow-ups. of you for A taking my questions.

is increase June Kevin. the Commodity prices also going OpEx and September is rise, and one for quarter. to both on First Charles your are by and

opportunities. about our revenue talking You're also

margin any early OpEx. right with missing given have a look So expansion GAAP, I gross we that thinking it something? I at Am Or expansion am year prices I and commodity like like also or now increase margin the until expect a really when the the in it's trend, XXXX I follow-up. And from way? seems shouldn't

Kevin Bauer

a Well, percentage, always I little be think that, I maybe bit articulated looking think a for prices, in that as but margin headwind. a I of to the could think improve, ways increase commodity I we're

think track I So there. you're on

Charles Liang

years two more maybe investing start quarter, in [indiscernible] ago. with We much Korea.

provide So we And of our enterprise solution unlike [indiscernible] XX customer. ago, most years Micro pretty Super through [indiscernible]. total

a [indiscernible] to adding And we total are solution we [indiscernible] value product. So can company. as our more this

Mehdi Hosseini

leads look that help are good There's not for to question, like doing view? the that what the significant get But Sure. can this currently as What we would And checks you confidence growth opportunity. and—so NASDAQ, are point. that's with you're be second just we with [indiscernible] good balances path it business? governance? next my the It's there's that a Charles. hopefully, and And also and and increased and margin you And just doing forward actually expansion to you year. share that could you Charles, improve us, rear would so a grow year

Charles Liang

are mean, solutions. we why saying—I start in the That and is we more software in invest [indiscernible] Yes. more firmware, to

are enterprise, patent. So some other much to governance mission-critical on focus and including we more the ready

our view, we [indiscernible] OEM of in very [indiscernible]. point this from So grow both and feel comfortable to in

Mehdi Hosseini

also So are the business the That's well consistent. checks in understood. key systematic you and grow, what a in Sure. the more line balances But put as and approach that place? top are that line scaling there's you bottom so

Charles Liang

Kevin, [indiscernible].

Kevin Bauer

Sure. Yes.

the entire a our the being of will COO, training hip. at ago. feed So maybe, for supportive I all communication you are joined with with compliance audit can has at Don very, the I years sales helm the of group think light share internal that is that I in instance, you terms or in the at across Charles two now and been ensuring Alex organization that, tell was it of—in very the And what ahead very the forward investing and and and year

give closed everything terms on think, way operational this a in of I with and the make are interactive what this little we to very you being just that were that's we very the quarter, aware financials. that color, to we the enhanced sure fully impacts And of to people bit understand quarter going of

so the able helps sure be that. us we resources do that And to make to all Charles have certainly

to attend investments to on us to. get helped wonderful needs on to daily up with have of as of we deal an in we chair terms a ideas a IT. as revenue that [indiscernible] has and apps other basis We know, requisite remediation that perform understand how need you follow helping efforts As brought well company in

in there's lot on the So ecosystem [indiscernible]. going a

Charles Liang

and much years much or system mature been say, with have three has compared our SAP [indiscernible]. ago. ago adding we're Yes. years pretty And two than ago. compliance now I Especially years department [indiscernible] double would operational the to we financial two in

those improved and all kind financial of So operations dramatically of function. our

Mehdi Hosseini

Great. Thank you.

Operator

Aaron Rakers our Fargo. to question move next Wells Thank we'll you. on from Then with

Aaron Rakers

questions. the Also the on results. taking being on for out Thanks congratulations

in pipeline? nature again, I And pipeline the opportunities question. to of at the of the as kind pipeline the simple you I of How curious, of remarks follow-up. just this heard is, is positive the underlies And on through on the looking it's I and that given, of looking would how you—what question do so how changed? a your about building year. you views Mehdi's turns-oriented? of then has have forward, the fairly pipeline we around the guess methodology And of obviously, I'm define course what look guys prepared kind comment business, curious just I'm the comment

Kevin Bauer

Yes.

that traditional front in we're I really probably was that new land of to that—what was understanding the customers efforts we So that trying pretty that targeted to to level find obtain is it's the us and pipeline and I of customers. the think referring in

sometimes backlog is kind is our customers. not those growing What talking business. about of to pipeline new we're So landing referred is and all things, which

Charles Liang

[indiscernible], more accounts. start Especially enterprise to have we a

the the enterprise continues regular center. of and kind [indiscernible]. products commerce and more large vendor distribution data those accounts in change by So area and They

Aaron Rakers

then product of particularly And of dynamics. tied business. there the And to be kind course little different question pipeline cycles, follow-up move cadence means a seems through the a the server cadence around what as commentary, to it's is of of the cycle Okay. kind for to that you is bit that Intel's your of XXXX,

compared [indiscernible] your kind you has the cadence CPU course that in how year? the of this the not through around So be Cooper of as on the or the of see going discussion of you to and do how whether of there and business? Cascade of server see—there's How context cycle do Lake Icelake. could lot there kind AMD out of a delays Lake, relevant And ramp any

Charles Liang

dynamic NPLs product. growing is obviously, mean more I AMD are and new quickly, Yes.

when generation new older the outperform way, they product. the basically—by technology, have products So new always

focused in a we market. team So delivering economies have and very engineering strong new on fully the the

[indiscernible], to alone big AMD a we we this have calendar prepared. year we and will year, next why chance And well are that's believe taking faster. So much I on build [indiscernible] believe

Aaron Rakers

in to the just other on quickly slip one you upward How And pricing can component front? question. your pass-through

Charles Liang

again? question Your

Aaron Rakers

How—as an had guess, of we about potentially the think ability how DRAM, move pass And year, on way higher, impact up? this I business through think how do obviously, particularly moving component guys' pass your But pricing back, around the to do we I course through at look you the pricing through on your model, that in a as perspective? comes on quickly I ASPs pricing from it's way pricing back down. as

Charles Liang

Okay. relationship with our Basically, a we have already. much vendor stronger

able And be so customers. are price to deflect our to pretty much, any we

So that overall [indiscernible]. effect should be

Kevin Bauer

to think we that. we trying be in and a to very [indiscernible]. I nimble You're always understand is there try the And delay, delay, but

Aaron Rakers

you. Thank ahead. Please Okay. go

Operator

Thank you. Nehal Chokshi to And question then move next from with Maxim on Group. our

Nehal Chokshi

a really terms a on did on to Thank where in Should—is strong across you over-index the expect construction little cash cycle? be? this conversion cash bit Looks guys board at drivers you operations it from now like level a were you. the Or actually Congratulations of quarter. the cycle. cash the conversion of

Kevin Bauer

quarter. be it our than of our an we'll a we live we'll I'm be is target. I revisit little every it refer better with. sure that project was. be—that kind the on watermark, Yes, give that because—forever and time shifted, over to update of will to do what was did think seasonalities what better But so I bit near-term target that. can to think performance, good have we course And have not range I had we there And because a fact I—like now

Nehal Chokshi

large if metrics trouble you I segment? asked am did the clearly. having guys any customer been guys this I hearing enterprise you And on give Okay. apologize has earlier, But

Kevin Bauer

of it not. No, down basically, our direct terms We and we channel. did in our indirect broke

Nehal Chokshi

got I've questions. a Okay. more couple

did—came On above the guys performance high within your the quarter, in guidance. end the obviously, you just of

you underperforming far what did prior you industry better? to it perform performance? then Or the great perform to industry. see. performed as So the Micro was Do how the think you you industry rolls your with had a guys quarter? December the than think relative And for you year-over-year the have been that's better sense was had you relative delta revenue as Super guys growth Do What expected? the few quarters, to do

Charles Liang

much a Yes. the—before, always industry. than the see slow faster We see down. we [indiscernible] grew

faster Now it's time again. to growth to get back

to So a grow will expect better we that [indiscernible]. we be able

Nehal Chokshi

embedded Is guidance? March that what's the Q in

Kevin Bauer

was you question muffled. your it? Can sorry, little repeat I'm a

Nehal Chokshi

to Yes. Charles that going the forward. faster expect grow mentioned than industry

is embedded Q Now, in March that the guidance?

Kevin Bauer

quarter. I mean, March is a very difficult

about of talking given about. beyond quarter, dynamics we're talked macro the think we just that March I the all

Nehal Chokshi

Good. but that? behind particularly what Okay. uneven, you was geographic that that could on—you comment specific? was Super mention Was did And then industry the or performance Micro reason

Kevin Bauer

everyone breakout. seen else haven't think—we industry in the I

we haven't it in I But We data soft Europe, customers. compared think necessarily. center will from go

Nehal Chokshi

Okay. Thank you.

Operator

Jon question with next Thank now Vertical you. We'll from Group. take our Lopez

Jonathan Lopez

have Thanks I you so me. bear can much with .I three. hope

the The $XXX does forward to starting lot, you come just deferred was visibility the or a really revenue deferred first and it's Can case any million. looking what's And that driving the yield better up? over to like continues that? you one, than grow balance comfortably before like us then remind different

Kevin Bauer

Yes.

think that I foremost, rather and it's enterprise who starting want business. to white customers that attacking do good stronger you're helped Certainly, that or get glove that. when expectations, performance we're So first service

it so hopefully But giving margin goes the a the build some thing service time revenue in buffer I number healthy I area pricing as in a ends that, us Micro. revenue service when the well. up the in people calls proxy add is we for it in on terms So over growing will past Super lot is being as of of contracts right length think perspective, of you're bit And revenue that in Also from terms be for. far, said is a what signing of There's is up a a line out. that little time it small by. item are deferred but of it in course a

company of for certain service proof Charles the software big and point outlined a direct So for it's Micro, a appliances is that increase degree, the from profit and to a just earlier. Super in all

Charles Liang

to service more this started Yes. And stage, at XX% here. [indiscernible] than we

So many will for come. we believe trend the next to years continue

Jonathan Lopez

December That's All right. look it the we ballpark of quarter, My right. but I looks like if and accessories exact b, subsystems don't the the that's driving up just commentary, was I lot. systems? relative disproportionately kind have business, helpful. like Great. of segment, And that your at numbers to of second that here, a drive what service was if systems one, high A, to kind nonservice level a growth

Perry Hayes

channel yes, out, we've channel, So indirect seen. that sequentially. business was than though, OEM typically channel higher both Also, what and programs the this indirect in some I The but both sell launched had indirect has That, just larger buying call business subsystems, want we've to also of systems bars I channel and direct the a logistic have grew also them. we've we've where think, number it seen of helpful. from we channel. support customers includes that includes been part the that we the the

through purchases larger of indirect channel sell, larger customers. we some from our what primarily the that's So

Kevin Bauer

Yes.

versus that of direct. Perry So one there of a I cannot to the mix and in think key quite out that channel make there. systems broke a a direct connection a kind is thing versus It is subsystems bit bit little

Jonathan Lopez

That sense. makes

into not two between expect March, kind but I'm growth thinking the normalize looking Just looking segments that for would about rate guidance, segment the to you March? of

Perry Hayes

those think see I the in same degree. contribution we'll probably from

Kevin Bauer

shift mix would however. we year-over-year, That kind when a be same might sequential see compare Yes. We of comment. the

Jonathan Lopez

to if a should the XXs quick you. so a increase come could scenario for third pieces lot the And declines just of I'm OpEx to where basis. some of just—I'm actually is level there's OpEx Okay. onetime hoping I to qualitatively. things balance the pause The expect you're trying calendar move what it this quarter, of to a because to there of non-GAAP there to on Is these as like something back in real from Got the The calendar year? it see completion? here, it ask fourth there, the looks high way. From we March we the one, but like last guiding us moving

Kevin Bauer

said. misinterpreted will so Well, off in question We And I'm that for little a glad you OpEx March is right? what million $XXX over come tried because [indiscernible] the and what OpEx I you've non-GAAP asked the be I that will quarter $X.X we what million, quarter. to say had

So trending that. And some from new then upward strip than off that baseline, we $X.X million. expense would have

So one. you already asked that

Jonathan Lopez

Okay.

the part the some just of guys into just the middle last second, late then that, in that there—are we'll of peak is of third ramp Or here you embedding through continue kind declines interim like And year? the quarter to to part fourth? sorry, the

Kevin Bauer

then it'll first be think, peak continuing actually quarter to audit I ramp. So perspective. And would be 'XX, a an from cost

Jonathan Lopez

First 'XX? quarter calendar

Kevin Bauer

June That's of the the audit the on work Xth. Yes. when of bulk is done the

Jonathan Lopez

Okay. appreciate I Great. Thanks. it.

Operator

would again you. like a Thank to that you if Once ask question is star, one.

next our take We'll Capital. question from Ananda Loop with Baruah

Kevin Bauer

ending. of the to would speaking fiscal near September XXXX. XQ 'XX in want was be quarter just I I [indiscernible] So that

Ananda Baruah

that the you we sticking you costs And you guidance, about evolution, Cool. you model, programs would how have 'XX new rolled funding—funding guys sort the least are programs, sounds how it and op sort of philosophically about anecdotally about leveraging but at thinking of 'XX about of think have right think in [indiscernible]? think More how what calendar 'XX—calendar—sort about new moving is off? as And of for calendar a—definitely like should handful theme. of—how a—more Kevin, normalized the different to think right you're What's we about the us calendar a to going excited just margin, you about all philosophically not sort to and of would with 'XX calendar This like way think question. And towards of these sort running. like audit one, things now. us have business pretty model to of

Kevin Bauer

that take we back for might forward. model mentioned out It's market, of and bit then the we us be right present to which a on redescribing call that the able Yes. a an time company we've past but or our quarter bit so, now. for going to little In now the preparing would Day in a interactions in we're mature—premature little that Analyst

answer to that question, ready quite not I'm So please.

Ananda Baruah

Analyst Okay. guided you Got year? this at some upon an you—have it. point doing guys Are Day

Kevin Bauer

Yes. spring, said We've late summer. kind early of

Ananda Baruah

Okay.

Kevin Bauer

New would do do it—we we And in so would York.

Ananda Baruah

Excellent. it. I often look forward to

Charles Liang

Super I As and like right? see may a solution, from we company. business you ago year, [indiscernible] [indiscernible] from through previous, the Micro years know, [indiscernible] not five mean, the hardware a last extend total our

moving firmware, not now including software we hardware are company, to and solution, just total but So service.

more putting value business. there, So we're our to

Operator

Thank Chokshi. question you. take our And we'll Nehal from next

Nehal Chokshi

for years. you. of past three services date? your you software to of global management What level your Thank support and is Yes. slide solutions, the X.X On personnel presentation service your then deck, and the driving support been us last global and have that's

Charles Liang

getting Our stronger, our is management the not of value, other global that, more the feature support And some cloud Kind of—it's other completed hardware, overall too. security higher [indiscernible] in those feel [indiscernible]. whole improving terms in even we we and of kind pipeline. are we system, like—in inside than team started

Nehal Chokshi

how is Okay. Could you the global far large as at any commentary staff give point as time? support in this

Kevin Bauer

are have through our tell Yes. there on We offices reasons as what partners But you that we is that work our fingertips. some I can don't number with well.

we where speak. in work has [indiscernible] partners scale, have been and So our new then strategy markets so to with

time. So think next I [indiscernible]

becomes that [indiscernible] more providing the be they're think for there's I company. to meaningful going

Nehal Chokshi

Great.

Okay. Thank you.

Operator

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

Charles Liang

great Thank you have and Thank you. one. today, us for Yes. joining a

Operator

the Super conclude your Quarter appreciate does XXXX Call. Micro Second Earnings We that do gentlemen, and Ladies participation. Fiscal you. Conference Thank

at this You time. may disconnect

Super Micro Computer (SMCI) 8 Feb 202020 Q2 Earnings call transcript