Super Micro Computer, Inc. (NASDAQ:SMCI) Q4 2025 Earnings Call Transcript

Super Micro Computer, Inc. (NASDAQ:SMCI) Q4 2025 Earnings Call Transcript August 5, 2025

Super Micro Computer, Inc. misses on earnings expectations. Reported EPS is $0.41 EPS, expectations were $0.4451.

Operator: Thank you for standing by. My name is Cameron and I will be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc. SMCI U.S. Fourth Quarter Fiscal Year ’25 Business Update Call. With us today are Charles Liang, Founder, President and Chief Executive Officer; David Weigand, CFO; and Michael Staiger, Senior Vice President of Corporate Development. [Operator Instructions].

Michael Thomas Staiger: Good afternoon, and thank you for attending Super Micro’s call to discuss financial results for the fourth quarter and full year fiscal 2025, which ended June 30, 2025. With me today are Charles Liang, Founder and Chief Executive Officer; and David Weigand, Chief Financial Officer. By now, you should have received a copy of the press release from the company that was distributed at the close of regular trading and is available on the company’s website. As a reminder, during today’s call, the company will refer to a presentation is available to participants in the Investor Relations section of the company’s website under Events and Presentations tab. We have also published management’s script commentary on our website.

Please note that some of the information you’ll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expenses, taxes, capital allocation and future business outlook, including guidance for the first quarter of fiscal 2026 and the full fiscal year 2026. These statements and other comments are based on management’s current expectations and assumptions involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. You can learn more about these risks and uncertainties in the press release we issued earlier this afternoon, our most recent 10-K for fiscal 2024 and other SEC filings.

All of these documents are available on the Investor Relations page of Super Micro’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 an 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 with a means of evaluating and understanding how companies management evaluates 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 U.S. GAAP. In addition, a reconciliation of GAAP and non-GAAP is contained in today’s press release and in the supplemental information attached to today’s presentation.

At the end of today’s prepared remarks, we’ll have a Q&A session for sell-side analysts. Our first quarter fiscal 2026 quiet period begins at the close of business on Friday, September 2025. And with that, I will now turn it over to Charles.

Charles Liang: Thank you, Michael. I will be covering our performance for fiscal 2025 and providing insights into our strategic direction for fiscal 2026. Our fiscal 2025 results represent a 47% year-on-year revenue growth at $22 billion. This growth reflects continue the strong demand for our AI and green computing solutions. Despite the 6 months cash flow impact from the delayed filing of our fiscal year 10-K and — revenue recognition from a major new large partner. Non-GAAP earnings per share were $0.41, down year-over-year from 50% last year, primarily due to the tariff impact, although we have taken measures to reduce the impact, and we will see their results. Allow me to go a little deeper at the June revenue shortfall in what was otherwise a stronger quarter.

Shortfall stem from 2 key factors: a capital constraint that limited our ability to rapidly scale production and specification changes from a major new customer that delay revenue recognition because of new ad of some new ad features. The capital constraints will no longer an issue after we filed the fiscal year ’24 10-K and large customer orders are now slated for recognition in September and December quarters. Following close collaboration to align with the customers’ update future requirements. Despite this circumstance, we remain focused on our strategic priorities, optimizing our solutions and capturing market share. Notably, the number of large-scale product and play customers grew from in fiscal year ’24 to 4 in fiscal year ’25, signaling strong momentum and continuing growth potential across our customer base.

We are also on track to add a few more in 3 year ’26. We continue our leadership in AI platforms and infrastructure with a comprehensive portfolio optimized for latest GPU technologies, including NVIDIA, B200 systems platforms and AMD’s [ M50 ] and MI355 GPUs. Our X14 and X14 GPU systems delivered back- to performance, supporting large-scale AI training and inventive workloads and enterprise computing demand with exceptional efficiency Notably, we were able to deliver our B200 systems with an industry-leading time to market to our customers. We are confident our B300 and GB300 solutions will deliver a similar, if not even better time to market and time to online advantages for customers, helping them accelerate their AI deployments faster than others.

To further simplify our customers’ AI data center infrastructure deployment and time to online, we officially introduced our data center building block solution. DCBBS to the market last quarter. With our DCBBS, customers can harness our proven system building product advantage to adopt quickly to evolving market demands, especially in the — to increase can replace AI product cycles. Our modular architecture enables faster customization, steam line production and reduce time to delivery and time to online. While also optimize quality, efficiency and of maintenance. In most of the cases, customers who use our DCBBS can finish building a new — cool AI [ Delta ] just 18 months is still 2 to 3 years when converting an existing data center or a warehouse to a high-density direct like cooling data center customer can complete the transformation in only 3 to 6 months instead of 12 or even 18 months.

We had just begun deploying rack-scale total sales with our DCBBS to a few key customers. Key components of DCBBS include LLC solutions, the [ 2A ], I mean like to air cooling. CPU, as per in CPU as well and — powershare, battery backup, BBU, water or dry power solutions and the more are coming. Our advance second-generation direct liquid cooling DLC 2 system reduced power and water consumption by up to 40%. While operating at nearly quite label around 50 deco. This enables superior performance with reduced total cost of ownership PO and total cost to the environment, TCE, for modern data centers. Several DCBBS components are now shipping or entering production medicine, supporting a growing demand for high-performance, energy-efficient data center infrastructure.

equally important, DCBBS meets the growing demand for a comprehensive one-stop shop solution, including software-defined infrastructure, system management, AI workload optimization networking deployment and all different levels of services. It allows cloud service provider to reduce both CapEx and OpEx capital expense and operating expense. Indeed, it delivers also great value to both AI focused and traditional IT data centers. By sims integrated DCBBS capability with our system and rec solution, we are not only enhancing customer value by also improving our profit margins. This shift towards higher margin and revenue stream is central to our long-term strategy. We also start to strategically focus on the enterprise, IoT and the telco markets and initiative, we believe will improve both growth and net margin over time.

In last 2 quarters, we made a significant investment to optimize our solutions for enterprise customers. introducing advanced server and storage systems tailored for hybrid cloud, AI application and edge computing workloads. This enterprise-focused strategy will continue for many years to come. Super Micro has also launched and enhanced enterprise service program. delivering a comprehensive 27 global support for high- density, high-performance driven data center agreement based on optimize rack-scale architecture. Our IoT portfolio, including embedded systems and AG Services is gaining momentum across the industry, like manufacturing, health care, telco, smart city and AI applications. Additionally, we have announced a strategic partnership to accelerate innovation in AI and telecom solutions.

By expanding into these higher-margin segment, we have diversified our revenue streams. And driving long-term sustainable profitability that will benefit our shareholders. Our global footprint allow us to efficiently deplete optimize the solution or win with minimum tariff impact, especially after September quarter. With large and most manufacturing campus across the U.S., Taiwan, Malaysia and Netherland. We can deliver a comprehensive system and data center label building product and total solution to our customers directly and quickly. This robust global prices enabled us to respond to diameter regional demands support cost-sensitive customers seeking greater value, mitigate tariff exposure and maintain design, global supply chain. That’s both edge and responsive.

Looking ahead to Q1 fiscal year ’26, I anticipate revenue between $6 billion and $7 billion, driven by continuing momentum across our AI drag drive and play DCBBS, software and service business, which are delivering exceptional customer value and strengthen our probity. I’m especially excited about our DC BBS for the full fiscal year 2026. I expect at least $33 billion total revenue. supported by our expanding large and enterprise customer base, upcoming product innovation and robust DCBBS total solution. In closing, I want to thank you our employees for their dedication, our customers for their trust and our investments for their continued support. We are excited about the opportunity ahead and look forward to updating you on our progress in the next quarter.

David, please?

David E. Weigand: Thank you, Charles. Q4 fiscal year ’25 revenues were $5.8 billion, up 8% year-over-year and up 25% quarter-over-quarter compared to our guidance of $5.6 million to $6.4 billion. Growth was led by demand for next-generation air-cooled and liquid-cooled GPU, AI platforms, which represented over 70% of Q4 revenues across both enterprise and cloud service provider markets. For the full year fiscal year ’25, we reported revenues of $22 billion, representing 47% growth over fiscal year ’24 revenues of $15 billion. During Q4, we recorded $2.1 billion in the enterprise channel segment represents 36% of revenues versus 42% in the last quarter up 7% year-over-year and up 6% quarter-over-quarter. The OEM appliance and large data center segment revenues were $3.7 billion, representing 63% of Q4 revenues versus 57% in the last quarter, up 2% year-over-year and up 40% quarter-over-quarter.

The emerging 5G telco edge IoT segment revenues were 1% of Q4 revenues. For fiscal year ’25, enterprise channel revenues grew 38% to represent 39% of total revenues. The OEM appliance and large data center segment grew 50% and represented 60% of total revenues. The 5G telco edge IoT segment represented 1% of total revenues. For fiscal year ’25, we had 4% — 10% plus large data center customers versus in fiscal year ’24. Server and storage systems comprised 98% of Q4 revenue and subsystems and accessories represented 2%. By geography, the U.S. represented 38% of Q4 revenues, Asia, 42%; Europe, 15%; and the rest of the world, 5%. On a year-over-year basis, U.S. revenues decreased 33%, Asia increased 91%, Europe increased 66% and Rest of World decreased 3%.

On a quarter-over-quarter basis, U.S. revenues decreased 21%, Asia increased 78%. Europe increased 196% and the Rest of World increased 53%. Q4 non-GAAP gross margin was 9.6% versus 9.7% in Q3 due to product and customer mix. For fiscal year ’25, the non-GAAP gross margin was 11.2% versus 13.9% for fiscal year ’24. Our long-term goal is to gradually improve gross margins through providing complete data center building block solutions and focusing on the enterprise, IoT and telco markets. We also expect to benefit from economies of scale from higher revenues, cost- effective global facilities, including the new Malaysia manufacturing plant and customer diversification. The Q4 operating expenses on a GAAP basis increased by 8% quarter-over-quarter and 23% year-over-year to $316 million, driven by higher compensation expenses and headcount.

On a non-GAAP basis, operating expenses increased 11% quarter-over-quarter and 29% year-over-year to $239 million. The Q4 non- GAAP operating margin was 5.3% versus 5% in Q3. Other income and expense for Q4 was a net expense of $5.7 million, consisting of $28.4 million in interest income, offset by $22.3 million in interest expense and and FX other losses of $11.8 million. The tax provision for Q4 was $19 million on a GAAP basis and $37 million on a non-GAAP basis. The GAAP tax rate for Q4 was 9% and the non-GAAP tax rate was 12%. The GAAP tax rate was 13% for fiscal year ’25 versus 5% in fiscal year ’24 and the non-GAAP tax rate was 15% in fiscal year ’25 versus 11% in fiscal year ’24. The Q4 GAAP diluted EPS was $0.31 compared to guidance of $0.30 to $0.40 and non-GAAP diluted EPS of $0.41 versus guidance of $0.40 to $0.50 due to lower gross margins and higher operating expenses in the quarter.

For fiscal year ’25, we reported GAAP diluted earnings per share of $1.68 versus $1.92 for fiscal year ’24 and non-GAAP diluted EPS of $2.06 versus $2.12 in fiscal year ’24. The GAAP fully diluted share credit count increased quarter-over-quarter from $622 million to $625 million in Q4, and the non- GAAP share count increased sequentially from 636 million to 638 million shares. Q4 cash flow generated from operations was $864 million compared to $627 million in the previous quarter. For fiscal year ’25, cash generated from operations was $1.7 billion versus cash consumed by operations of $2.5 billion in fiscal year ’24. Q4 closing inventory was $4.7 billion versus $3.9 million in Q3. CapEx and investments for Q4 was $79 million, resulting in positive free cash flow of $841 million for the quarter.

CapEx and investments for fiscal year ’25 were $183 million versus $194 million in fiscal year ’24. During the quarter, we completed a convertible bond offering, raising $2.3 billion in gross proceeds before operating expenses and the costs associated with the simultaneous covered call spread and stock buyback. The Q4 closing balance sheet cash position was $5.2 billion, while bank and convertible note debt was $4.8 billion, resulting in a net cash position of $412 million versus a net cash position of $44 million last quarter. Additionally, in July, we executed a $1.8 billion facility, which allows for the nonrecourse sale of certain qualified accounts receivables to strengthen our working capital on a discretionary basis. Turning to the balance sheet and working capital metrics compared to last quarter.

The Q4 cash conversion cycle was 98 days versus 124 days in Q3. Days of inventory decreased by 6 days to 75 days compared to the prior quarter of 81 days. Day sales outstanding were 40 days compared to 56 days in Q3. Days payables outstanding increased by 4 days to 17 days versus 13 days in Q3. Now turning to the outlook for Q1 fiscal year ’26. We expect net sales in the range of $6 billion to $7 billion. GAAP diluted net income per share of $0.30 to $0.42 and non-GAAP diluted net income per share of $0.40 to $0.52. We expect gross margins to be similar to Q4 fiscal year ’25 levels. GAAP operating expenses are expected to be approximately $329 million and to include $82 million in stock-based compensation expenses that are not included in non-GAAP operating expenses.

The outlook for Q1 of fiscal year 2026 fully diluted GAAP earnings per share includes approximately $69 million in expected stock-based compensation expenses, net of tax effects of $20 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense to be a net expense of approximately $24 million. The company’s projections for Q1 fiscal year ’26 GAAP and non-GAAP diluted net income per common share assume a GAAP tax rate of 13%, a non-GAAP tax rate of 15.5% and a fully diluted share count of 631 million for GAAP and 644 million shares for non- GAAP. We expect CapEx for Q1 to be in the range of $60 million to $80 million. And for fiscal year ’26, we expect net sales of at least $33 billion.

Michael, we’re ready for Q&A.

Michael Thomas Staiger: Great. Cameron, let’s turn it over to a question-and-answer session.

Q&A Session

Operator: [Operator Instructions]. The first question is from the line of Simon Leopold with Raymond James.

Simon Matthew Leopold: I wanted to get a better understanding of some of the bottlenecks or gating factors for sales. And what I’m looking at is we’ve got full year revenue outlook of $33 billion, so that’s better than $8 billion a quarter. And we’re looking at September being roughly $6 billion to $7 billion. So I would have thought that availability of Blackwells, GB200 could have given you maybe some more upside to September and a more linear outlook for the year, but this would suggest more of a back-end load. So if you could help us understand how you’re thinking about the cadence through that fiscal year? And what are the bottlenecks? Or what are the restraints in terms of the September quarter and availability of the chips?

Charles Liang: Yes. Basically, our business will continue to grow. Last year, because of the 10-K delay, we have some constraints. So we grew 47%. This year, we should be able to grow better than that. And you mentioned about be is some cheaper availability, some resource availability from vendor like NVIDIA. Last year, we had to wait and see. Basically, we believe the availability will be much better than the last 2 quarters. And that’s why we estimated minimum $33 billion. And by the way, our new introduction DCBBS that helps customers to build a data center quicker. Especially — the cloud ready for time to online much quicker. So that’s another factor we believe this year, I mean, 2026, we should be able to grow better than last year.

Simon Matthew Leopold: And is any of this related to customers perhaps waiting for GB300? Or is that not a factor?

Charles Liang: Yes, you are right. Some customers always waiting for coins technology, that 300 — GB300. So the good thing is we have a B300, GB300 pretty much ready to go. That’s waiting for our partner NVIDIA to support us.

Operator: The next question is from the line of Ruplu Bhattacharya with Bank of America.

Ruplu Bhattacharya: I have 2 of them. The first one is a higher-level question. Can you talk about management strategy for competing in the AI server market your focus on revenue growth and gaining market share? Or is your focus on margin expansion? And if it’s both, then what gives you confidence that you can grow revenues and grow margins in this competitive market? And I have a follow-up.

Charles Liang: Yes. Very good question. Yes, we can grow much quicker if we don’t care about the gross margin and net margin. And that’s why we introduced DCBBS center building block solution. That’s a total solution to support the customer to build their data center quicker, better and also save money, more reliable and we provide info trial need, including on-site deployment, networking, cabling, all kind of service. So we believe we can grow revenue, market share and profitability, especially our data center end-to-end software solution. So DCBBS plus all software needs, customer needs including service. So we sure are able to provide a better value to customers, not just price war.

Ruplu Bhattacharya: Okay. For my follow-up can you talk about the opportunity with sovereigns. You announced an MOU at wall during the quarter. Can you give us your thoughts on expected rollout of that opportunity? And David what margin uplift should we expect from sovereign customers versus your existing customer base for 2 CSPs, I mean how should we think about the revenue and margin opportunity here?

Charles Liang: Yes. So in sovereign AI, it brings us a very good chance. There are so many countries need to build their AI infrastructure — and those countries, those people really appreciate our DCBBS data center investor solution. So we help them to design their AI infrastructure and help them build AIU such quicker and better. So we see a very good room very big room to grow in that area. David?

David E. Weigand: Yes. And Ruplu, on the gross margin side, we are optimistic that we will be able to sell more complete data center BBS solutions with sovereigns. And so therefore, we don’t have enough experience to be forecasting specific gross margins. But we’re very optimistic that with the additional offerings that we will have that there’s upside there.

Charles Liang: There are so many contracts, especially in Europe — in Europe, in East, in Asia. So they’re all really a great — their AI infrastructure for their country. for their company. And we are working very closely with you there.

Operator: The next question is from the line of Ananda Baruah with Loop Capital.

Ananda Prosad Baruah: Yes, Two, if I could, — the first one is maybe a little bit more of a clarification. In the first 6 months of the calendar year, you guys saw — as did the industry elongated a little bit elongated customer purchase cycles, first from the HCX from the HCX GB decision- making situation in the March quarter, then the B200, B300 sort of decision-making situation in the June quarter. Charles, it sounds like it’s one of the first questions. I think it was to Sumit’s question, you may have suggested it sounds like you were suggesting there may then currently be some B300 sort of elongated customer decision-making as well. So just to clarify, are you still going through, are we still not yet to normalize customer decision-making cycles? Because if that’s the case, I think it’s useful for us to understand that as distinct from what the organic demand backdrop may be as we go through the year here? And I have a follow-up after that.

Charles Liang: Yes. As you know, NVIDIA have so many products, so many beta products, new products. And we are very happy to provide all the new technologies, new products and make them available for the market as soon as possible. Like just mentioned, we work with our partner very closely and make sure once the NVIDIA able to ship in volume, we can service customer quicker. And without DCBBS, we exactly optimized for customers’ data center, including the large data center and middle-sized data center or even small size data center. So we are very happy to support a lot of middle size and small size AI infrastructure as well. That’s part of Super Micro’s advantage. We provide a total solution and make the customers drop much easier to build their AI factory, AI infrastructure quicker and better.

Ananda Prosad Baruah: And just as a follow-up, can you guys, any context you can give us guys around the comment of large-scale data center customers expanding to 6 to 8 in fiscal ’26. Sort of what flavor of customers might that be? When do you consider someone to large scale? And what market domains like those additional large-scale data center customers fit into?

Charles Liang: Yes. Most of the large-scale AI CSP continues to have a strong demand. And we are prepared to support them as well. The testing is with a much strong cash flow now. So we are ready to support a more large-scale data center as well.

Operator: The next question comes from the line of Samik Chatterjee with JPMorgan.

Samik Chatterjee: I have to — but maybe for the first one, you talked about the data center building block solutions and that it’s still maybe a bit early for you to forecast gross margins on that front. But anything that you can help us in terms of what does a typical sales cycle? Or what are you expecting for the sales cycle on that front to look like, have any of your larger data center customers shown interest in data center building lock solutions. I guess the question more is, when should we start to see — or what should we expect in terms of material revenues in relation to when that does come into the P&L what will be the earlier if you were sort of going and talking to your customers about these solutions now what should be our expectation on this front? And I have a follow-up.

Charles Liang: Yes. Thank you. Yes, we officially advance our data center building provision last quarter. And now we have some product fully ready to ship. For example, AI computing power rec PMP that has been available for 4 years from Super Micro and kind of like CPU, right in though in rec CPU and kind of like side car, from liquid to a transformation kind of for those customers who like to go for like cooling, but do not have a cooling data center in tetra, we support them side car the product is ready to ship now like a power share and when GB200, GB300 go for rescale, I mean, use power share, we have a product ready now. And BBU, we have a product ready now as well and kind of like other tower for the cooling or dry power we are shipping now and kind of like on-site prime and networking, including cabling, ad kind of service.

We have most of those components getting ready now. And we started in September quarter, right? And then we have ramp up in a much higher volume in December. And then for sure, we’ll continue to grow in next year, March quarter and June quarter. So this data center building block solution eventually, we have someone to build their AI factory infrastructure much quicker much energy fee and also save mine. So we are very excited for our DCBBS solution.

Samik Chatterjee: Got it. Got it. And for my follow-up, you mentioned the investments that you’re making on the enterprise opportunity or edge opportunity as well I mean assuming some of those are better margin opportunities in the data center building block solutions related to your business currently on the sort of where you — around this 9%, 10% gross margin right now. Do you see an opportunity still to get back to the long-term targets that you had on the gross margin of 14% to 17%? Or like are these new opportunities necessary big enough and at a margin high enough to get you back to that 14% to 17% run rate? Or do you think the expectations of investors should be at a maybe a more modest level in terms of what the gross margin rate of the company would be in the future?

Charles Liang: Yes. Very big question. And very good question also. I mean, yes, enterprise and IoT, as you know, have a much higher margin and DCBBS service software, we still have a better margin. So we are growing in both directions. One is growing revenue and support a large scale data center at the same time growing enterprise data center total solutions and software service. So I mean, long term, I believe, 15% still our target and take how long it depends on the combination. So I believe, yes, the direction is still there. I mean we like to get back to our traditional 16%, even 17% post margin. Maybe you can add such.

David E. Weigand: Yes. I think that as Charles mentioned, we have been providing these services already. We’ve had customers with very large deployments that we’ve helped them in the build-out of their data center and with specific services. And so it’s something that we’re really focused on and we know that it will contribute to our profitability.

Charles Liang: Yes. As a silicon value-based company, for sure, we are able and we’d like to provide more value to customers, not just hardware, not just high volume product, but given kind of service solution optimization and to make the customers drove much easier.

Operator: The next question is from the line of Michael Ng with Goldman Sachs.

Michael Ng: I just have 2. First, on the greater than 10% customers for fiscal ’25. I was wondering if you could just let us know what the revenue exposures were for those customers? I can appreciate we’ll eventually get it in the 10-K, but any early color would be helpful. And then second, thank you for all the guidance on 2026. I was wondering if you could just talk about how we should think about gross margins for the full year is the first quarter gross margins that you spoke to, a good indication about how we should think about the full year.

David E. Weigand: Okay, Michael. So the 4 customers, which we’ll refer to as A, B, C and D, not in that particular but 11% — 11% and 21%. And as to your second question, we’re not going to forecast annual guides, but I want to revert back to our earlier comments that we’re doing everything that we can, especially we’re very optimistic about these data center building block solutions. And we have — we’re very quick to market we think the those 2 combinations, DCBBS and our fast time to market is our best chances for margin improvement.

Charles Liang: Yes, especially DCBBS, we are able to have a customer increase speed up their time to online, right, kind of traditionally, for example, 2 years we have them improve to spear to 18 months, 16 months. So a lot of customers are very interested to those service Charles.

Operator: The next question is from the line of Nehal Chokshi with Northland.

Nehal Sushil Chokshi: I have 2 questions. First one is, what is going to be the driver of the projected Q2 uptick to the September quarter revenue? And maybe that can also help us understand why you’re guiding to no operating leverage, I believe, effectively the guidance implies about a flat operating margin from the June quarter, September quarter.

David E. Weigand: So the — in terms of the customers, we have a lot of customers that are building out a really good deployments. And so that’s what gives us a guide to the first quarter. So we’ve been shipping AMI 355X and GB300. And so we expect that to ramp in Q1. And that’s really what’s giving us our guide.

Charles Liang: Yes. We are also gaining many more customers in Europe, Middle East and Asia now. So basically, near future should be pretty strong.

Nehal Sushil Chokshi: And why with the incremental $1 billion of revenue, we won’t see any operating margin leverage?

David E. Weigand: Well, whenever there is a — and changing over to these new platform technologies, there’s always a little bit of a ramp for us. And so that creates a little bit of a production learning curve.

Nehal Sushil Chokshi: Okay. And then my second question is that the data center building solutions — is that being pushed more as a discrete service or the value of that discrete service is fractional to Gen AI factory or is it bundled in Gen AI factory where it’s end to drive a better margin profile for that Gen AI factory?

Charles Liang: It has supported a team scale of data center — doesn’t matter generative AI or agentic AI or application, right, invention. So it’s a solution that we will define pretty taste, we validate. So when you ship to customers, a customer can put together easily. It’s kind of like kids player they go case, right? So kind of like it’s very data in advance when customers receive easy to deploy and easy for — go for online.

Nehal Sushil Chokshi: So basically, it’s the latter of the situations that I had proposed.

Charles Liang: Yes, kind of including computing power the reg decline, even the power — the water power, dry power, the battery system power module, right? So we have everything pretty built and validated in that advance.

David E. Weigand: Yes. And as Charles mentioned, Nehal, the time delivery and time to online for our customers is critical because they have end customers that they’re waiting for. So that’s a huge selling point.

Nehal Sushil Chokshi: Yes. So is that center building block solutions at least going to be representative of 10% of the deals that 10% of the deal value that you’re going to be doing in the September quarter?

Charles Liang: It will be steadily growing. I hope very soon, it will be more than 20% or even more than 30%. Because so many people provide a system convenient power, but we instead not just a convening power but total solution, a data center or a cloud total solution.

Operator: The next question is from the line of Brandon Nispel with KeyCorp.

Unidentified Analyst: I was hoping you could unpack gross margins during the quarter. Last quarter, you had provided some adjusted gross margins based on inventory reserves. Maybe you could help us understand whether there were any inventory reserves this quarter and if you’re expecting any in 1Q, including maybe potential impact from tariffs.

David E. Weigand: Yes. Thanks, Brandon. So we did mention a little bit about that last quarter. And what I would say is that they came — they did come in as expected. However, we believe that that’s not going to be the case going forward. So we think that we we’re anticipating a stabilization in that area.

Charles Liang: Yes, especially with our DCBBS and with our service function. So we have customers build a data center and make sure they go for online mostly, and that will kind of make customers been much more smooth. And those, I mean, it’s good for our inventory control as well. That’s our main best return product. So that will have that slow moving less product write-down as well. Yes. But we expect we will improve in that area.

David E. Weigand: Yes. And Brandon, with respect to tariffs, the situation is dynamic, we’re actively monitoring the tariff environment. We know there’s news coming out next week. If we have any updates, we’ll share it with you. But we can only watch and react as every other business is.

Operator: The next question is from the line of Quinn Bolton with Needham & Co.

Unidentified Analyst: This is Shane Mally on for Quinn. My first question is on the recent export licenses for NVIDIA and AMD. Just curious to see how Super Micro is positioned to potentially support these deployments? And does the got embed any of these potential shipments?

David E. Weigand: Are you referring to H20…

Ananda Prosad Baruah: Yes. H20, I believe that in the…

David E. Weigand: H20 — yes, we’re not anticipating selling those products at a quantities.

Charles Liang: Yes, at least not in high volume for us, yes.

Unidentified Analyst: Got it. And then I have a follow-up, would you clear quick clarification question from, I think, Northland. But did you say that the data center building block solutions will be around 20% to 30% of total revenue in the September quarter?

Charles Liang: No. I mean I will be maybe next year summer. So it will ramp gradually not immediately.

Operator: The next question is from the line of John Tanwanteng with CJS Securities.

Jonathan E. Tanwanteng: First one, just on the data center building block solutions. I was just wondering what the gross margin profile looks like they’re compared to the corporate average and what an incremental dollar of sales in that kind of solution adds to your gross profit?

Charles Liang: Very good data center building product solution, I believe we are the first one. So we, the first company to introduce data center total solution with building block feature, so the profit margin, the value to customers, which we both are good. Much better than a commodity product. When you were to compete with many companies, that’s the pressure for office margin, right? But data center building broad solution in Spain, we have much less competition.

Jonathan E. Tanwanteng: Okay. Great. That’s helpful. And then just on the Bz300 launch, do you expect to see yourself in yourself from competitors both pricing-wise and allocation-wise, when that reaches volume? Or is there how any reason to believe that you may see more of what you’ve seen in the B100 and [ B200 ] time frames?

Charles Liang: We work with our vendor very closely, right? And so I believe our position will be second to none. So for sure, we will be a good chance once it’s available from our vendor, we are very happy to promote quickly.

Operator: The last question is from the line of Vijay Rakesh with Mizuho.

Vijay Raghavan Rakesh: Just a quick question on this on the $33 billion guide for fiscal ’26, wondering what is contemplated in terms of revenues from the data award win that you announced.

Charles Liang: We don’t make a comment for a specific customer, but we do have a growing customer base in Europe and in Middle East. So we feel excited to grow business in the territory, Middle East, BB and I believe it will be a good percentage for Super Micro business to grow.

Vijay Raghavan Rakesh: Got it. And then on the DCBBS, obviously, a nice move with the racks and enabling your go-to-market timing, I guess. Just wondering what would be the split of a full NVL72 rac versus HDX that you’re shipping now? Or into next end of the year in the fiscal ’26, I guess.

Charles Liang: Yes, we started to ship something about now, kind of like, for example, the dip 2 air side car or a shipping now. And CPU we have been shipping for a while, right, including in the CPU, we are shipping now and BBU, we will start [ shippable ] power share leadership this quarter. And so a lot of parts, we’ve been shipping for a few months or ready to ship in volume and some others will be ready in the next few months or few quarters. So eventually, it will be really a big product line. The goal is to support all major components for customers to build their data centers, their factory. So kind of to offer a one-stop shop, I went offshore not just to save customer time, but to make sure when customers put those components together, it will all and optimize for both efficiency, quality and cost.

Operator: That was our last question. Thank you for joining today’s call. That will now conclude today’s call. Thank you for your participation, and enjoy the rest of your day.