Super Micro Computer, Inc. Common Stock 2026 Q4 Earnings Call

Release we issued earlier today, our most recent 10-K filing for fiscal 2025 and other SEC filings. All these documents are available on the IR page of Supermicro's website. We assume no obligation to update any forward-looking statements. Most of today's presentation will refer to non-GAAP financial results and business outlook. For any 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 the means of evaluating and understanding how the company's management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with the U.S. GAAP. In addition, a reconciliation of GAAP to non-GAAP results is contained in today's press release and in the supplemental information attached to today's presentation.

At the end of today's presentation, I will marshal a Q&A session for sell-side analysts. Our fiscal 2027 quiet period begins at the close of business of Friday, September 11, 2026. I will now turn the call over to Charles.

Thank you, Michael, and thank you all for joining today's call. Fiscal year 2026 was a historic milestone for Supermicro as we nearly doubled our revenue year-over-year, growing from $22 billion last year to $39 billion fiscal year 2026. The world is being transformed by AI, and Supermicro is transforming as well. From a U.S.A.-based server manufacturer into a leading AI IT data center total solution company. We design and manufacture our total Data Center Building Block Solutions, DCBBS, in the U.S.A. with main facilities in U.S.A., Taiwan, Malaysia, and the Netherlands. The demand for our AI IT solutions is even stronger than ever before as we are transforming into a total DCBBS company. A one-stop shop company for customers who want to build their data center or AI factory quicker and better.

In our pre-announcement, we disclosed over $60 billion in new orders, driving our order book and backlog to new record levels as we enter fiscal year 2027. While Q4 revenue came in at $11.1 billion due to some short-term customer delay in power shortage, cooling, and networking. We know this is purely a timing story. The good news is that now our customer can easily leverage our unique DCBBS total solution advantage and upcoming new technology and product lines to accelerate their time to deployment, we call TTD, and time to online, we call TTO, ensuring a strong future growth and long-term value for Supermicro for many years to come. Most importantly, our focus on profitability is yielding clear results. For the first quarter, I am happy to report non-GAAP gross margin of 17.6% and $1.70 in non-GAAP dilute earnings per share.

This margin expansion mainly came from our strategy focused on balancing customer mix and product mix while having a few one-time positive contribution for the quarter. Since early 2026, we added dedicated departments and resources to focus on growing enterprise customer base and have expanded our enterprise CPU-based server storage and IoT product lines. Our quicker growing infrastructure and agentic AI-centric products are also driving healthier profit margins for the company going forward. Another key to this margin expansion is our DCBBS, which delivers total solution value by seamlessly integrated GPU and CPU server, enterprise storage, direct liquid cooling solutions, CDU, chill door, water tower, high-speed data switch and networking, Supermicro Data Center Management software, and full lifecycle services. This turnkey ecosystem enable customers to build and scale AI data center in quarters rather than years, dramatically reducing TCO and accelerating time to online and time to revenue for customers.

We are further elevating this value proposition with our new proactive service model, where our data center management software and field teams will automatically alert and be ready immediately to fix or maintain the failures unit, preventing reduction of computing power at the customer data center. As a new software with powerful management features and automatic service attached to our hardware builds, they deepen customer trust and drive long-term value. Our DCBBS is getting very powerful, and it will soon contribute a significant net income to our business. By early next quarter, more of those software features and service products will be online. On the operation side, we are complementing this high-value strategy by driving higher manufacturing yields through factory automation, design optimization, and our highly versatile building block architecture.

At the same time, we remain very focused on logistics and inventory management, significantly reducing inventory reserve and expedite charge. Together, these operational disciplines will help moderate quarter-to-quarter margin fluctuation driven by uneven customer and product mix, supporting our goal of consistent growing gross margins. Turning to our key product roadmap. Our system building block allows us to quickly optimize every major silicone platform. Through our long-term NVIDIA partnership, we are shipping volume SKU across the GB200 NVL72, HGX B200, NVIDIA B200 MV4, and NVIDIA RTX 6000 Pro product lines while preparing first to market for Rubin, Vera Rubin NVL72, Rubin HGX, and Vera CPU, and other high-density Vera systems. With AMD, we launched complete new Helios product line and Instinct MI450 total solution alongside strong EPYC CPU, MI350, and Instinct MI355X momentum. Working with Intel, we brought Puzzle Edge AI system to market and shipping GM6 Plus platform in volume.

We also dedicated on developing product for the strong demand of Arm AGI CPU processor base, codename Phoenix architecture optimized for high performance per watt inferencing workloads, demonstrating our silicone partners' deep confidence in our engineering excellence. To support a massive demand, we continue to expand our physical footprint. In Silicon Valley, we recently announced our new 32-acre DCBBS campus, featuring advanced optical photonics networking lab and data center scale manufacturing, which brings our U.S.A. footprint to nearly 4 million square feet. Globally, our facilities in Taiwan, Malaysia, and the Netherlands are also ramping strongly to meet the demand, putting our total manufacturing capacity on track to exceed 6,000 racks per month, including more than 3,000 direct liquid cooling racks per month. Especially, most of our DLC rack production lines support the most dense densities 250 KW rack platforms. Before I close, a quick update on our capital structure.

Following our $5.6 billion financial in June, our balance sheet fully supports our component supply and business needs. Thank you to our strong cash position and more favorable customer and product mix. We currently have no plan to utilize our ATM program, which we initiated a few months ago. At the same time, we remain focused on building financial efficiency. Within all of this operational and product advancement, I want to emphasize that our growth momentum is accelerating where it matters most. By expanding hundreds of new enterprise customers and other customers and leading the transition into agentic and specialized AI workloads, Supermicro has become a fundamental architect of today's AI backbone.

Our DCBBS total solution, spanning CPU and GPU, compute, storage, energy, and 1.6T high-speed switch, upcoming optical networking, and our management software suite, including SCM, SuperCloud Composer, SVM, Supermicro Data Center Management and SOM, Supermicro Orchestration Manager, delivers the complete one-stop shop experience that modern enterprise, Neocloud, and any other data center customer needs. Looking to fiscal year 2027, our momentum give us strong confidence to target our revenue in the range of $65 billion-$72 billion, as we are in the process of historic infrastructure build-out. We are balancing top-line expansion with bottom-line profitability by focusing on growing enterprise customer base, customer mix, DCBBS solutions, and operational discipline. We are shaping the future of AI technology while delivering true technology value to our customers. I am very confident that fiscal 2027 will be our strong and fastest growth year again.

Thank you, and I will now turn the call to David.

Thank you, Charles. We are pleased to report record fiscal year 2026 revenue of $39.1 billion, up 78% over fiscal year 2025 revenues and $22 billion in record non-GAAP, fully diluted EPS of $3.63, up 76% over fiscal year 2025 EPS of $2.06. Our fiscal year 2026 ending backlog was at a record level, with over $60 billion in new orders received during Q4 fiscal year 2026, which we expect to fulfill over the coming quarters. Non-GAAP gross margins for fiscal year 2026 were 10.9% versus 11.2% in fiscal year 2025. Our fiscal year 2026 non-GAAP operating margins expanded to 8.1% from 7.1% in fiscal year 2025. Our customer base is diversifying, and we had nine customers in fiscal year 2026 with revenues greater than $1 billion each versus four such customers in fiscal year 2025.

Turning to fiscal Q4, fiscal year 2026 results, we achieved revenue of $11.1 billion, up 93% year-over-year and up 9% quarter-over-quarter. Revenue was near the low end of our guidance range of $11 billion-$12.5 billion due to delays in customer readiness, and we anticipate this revenue to be recognized in subsequent quarters. Our AI solutions contributed approximately 60% of total revenue in Q4 versus over 80% in Q3 due to the timing of some large AI project ramps. Based on our backlog, we believe greater than 80% of revenues will be AI-related solutions going forward. During Q4, enterprise and channel revenue was $5.6 billion, representing 50% of total revenue, compared with 28% in the prior quarter. Revenue in this segment increased 172% year-over-year and 98% quarter-over-quarter.

During Q4, we saw a pickup in demand from enterprise and channel customers, which were upgrading their compute, storage, and network infrastructure with more efficient CPU platforms. OEM appliance and large data center revenue was $5.5 billion, also representing 50% of total revenue, compared with 72% in the prior quarter. Revenue in this segment increased 50% year-over-year and decreased 26% quarter-over-quarter. For fiscal year 2026, enterprise and channel revenue grew 39% and represented 31% of total revenue. The OEM appliance and large data center revenue grew 104% and represented 69% of total revenue. For fiscal year 2026, we had one large data center/CSP customer, which represented 28% of revenue. By geography, the U.S. represented 71% of Q4 revenue. Asia represented 11%, Europe represented 8%, and the rest of the world represented 10%. On a year-over-year basis, revenue in the U.S. grew 259%. Asia decreased 15%. Europe increased 4%, and the rest of the world increased 296%.