George Wang: Hey, guys. Congrats on the strong June guide. I’d like to put in two parts. Quickly, just not asking for specific guidance for FY ’25 or the September, December quarter, but any sort of high-level kind of color you can provide just to think about how to model the September, December and also the FY ’25? And also kind of related, kind of can you parse out kind of utilization in the March quarter? And also kind of what’s the expected utilization kind of cadence for the next few quarters?
Charles Liang: Yeah. As you know, we have a lot of new product coming soon, right, to support NVIDIA, H200, B100, B200, GB200, and AMD MI300 and Intel Gaudi2, Gaudi3. So, we have a lot of new product already, and plus, liquid cooling, DLC, we are ready to ship high volume product. So for sure, I mean, calendar — I mean, fiscal year ’25, I mean, for September, December quarter, we will be — we will have a strong growth. And I believe this strong growth will continue for many quarter to come if not many years. I believe it will be many years.
Operator: Thank you. The next question is from the line of Ananda Baruah with Loop Capital. Your line is now open.
Ananda Baruah: Yeah. Thanks guys for taking the question. Really appreciate it. And Charles, let me maybe, the remarks you made a moment ago about the strong ongoing growth, does that — could that mean that you could also grow sequentially from this point forward for a little bit, just given the market share gain opportunities, the components coming online that you talked about in the new products? Any context on the way to think about sequential growth sort of in the coming quarters would be helpful as well. Thanks.
Charles Liang: Yeah. As you know, traditionally, in last 10 years, right, I mean, September quarter and March quarter always our soft quarter. But now with AI demand growing so strong, so we basically are able to grow sequentially. So, although, March and September still a little bit weak, but, basically, because of strong AI growth and our market share growing, so the sequential growth will become normal. And, basically, I mean, we have even better technologies than before ever, and now economies of scale become much bigger. Malaysia campus, production will be ready by end of this calendar year. So, we see lots of positive factor to grow our business.
Operator: Thank you. The next question is from the line of Jon Tanwanteng with CJS Securities. Your line is now open.
Jon Tanwanteng: Hi. Thank you for taking my questions. I was wondering if you could talk a little bit more to the gross margin and if you expect them to go structurally higher at some point in the near future, in the coming quarters. Especially if Malaysia ramps, you get economies of scale there as you transition to GPU products and you add more liquid cooling. Is there a point where that starts to revert higher? Or do you expect it to remain at a relatively constant level for the foreseeable future?
Charles Liang: Again, the AI platform is getting popular, right? So, there are more and more competitor as well. So, we will try to keep a balance. To grow market share, we may, sometimes, some deal, we may have to be a little bit more aggressive in pricing. But, overall, we try to keep a balance. David, you may add something.
David Weigand: Yeah. And also, I agree with your point that Malaysia will also offer some opportunity to us. And we’re also at a transition time when there’s a lot of new — we have a lot of new platforms that are coming out and the customers are highly anticipating. And those platforms are built on some emerging technologies that from many different areas. And we — Supermicro’s strength again is its fast time to market, and we expect with these — with the emerging technologies and our new platforms and our liquid cooling to be first out there with very compelling solutions. So, we think those things are all going to be helping our margins.
Operator: Thank you. The next question is from the line of Mehdi Hosseini with SIG. Your line is now open.
Mehdi Hosseini: Yes, thanks for taking the question. A couple for me. Regarding the channel customer, the 17% of the customer, have you ever had the channel customer that big? I believe in the past you’ve talked about the 21 — 20%-plus customer, but I think this is new. Can you clarify this?
David Weigand: So, this is an existing customer and we actually had a higher customer back in 2022, Mehdi, but I think they were around [22%] (ph). But this is still a really good customer, really good opportunity.
Mehdi Hosseini: Okay. Great. And then, one question for you David on the cash flow. Actually, there was a — I believe there are two items. There is a $110 million of cash burn in operation and then there was also a non-current asset. Am I missing something here? These two items were big items that had an impact to overall cash flow. Is that correct?
David Weigand: Sure. We had a number of things that impacted us. I think in non-current assets, we had deferred taxes grew by quite a bit this year — or this quarter, and so that was something unusual. And then, let’s see, I think those are — I think that’s the only unusual item, was a deferred tax grew a lot and that’s what lowered our tax rate — our quarterly tax rate as well.
Operator: Thank you. The next question is from the line of Nehal Chokshi with Northland Capital. Your line is now open.
Nehal Chokshi: Thank you, and congrats on a strong guide here. Talk about the guide here, inventory increased $1.5 billion Q-over-Q, and David, as you mentioned, you like to see inventory increase. I do too, because it’s a strong indicator of things to come. And you’ve guided June quarter to increase by $1.6 billion Q-over-Q. If I do this math where I’m looking at the inventory at the quarter-end and then the four-quarter revenue, typically, it’s around 60% to 70% of revenue. But with your March Q ending inventory and your current June Q guidance, that equates to about 85% of projected revenue. So, can you just explain what seems to be a little bit more usual inventory buildup given the revenue guidance range?
David Weigand: Sure, absolutely. That’s a fair question. So, we actually got a substantial amount of inventory in the last week of the quarter, okay, which obviously we’re not going to be able to ship. But we took in $700 million in the last week of the quarter. So that’s not something that — that’s something that has to do with when inventory arrives. And so, we — it hurts our cash flow. But you know what? It doesn’t matter, because we need that inventory for Q4 shipments.
