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Super Micro Computer is a developer and manufacturer of server and storage solutions and specializes in cloud-computing and data center infrastructure. The company’s modular, open-architecture server and storage systems have gained popularity because of the AI boom, and it has become a key supplier for companies adding or building AI infrastructure. Super Micro Computer faced significant headwinds in 2024 after its auditor resigned and it faced a potential delisting, but it has since regained compliance with Nasdaq listing requirements.

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Super Micro Computer (SMCI): Company Profile, Stock Price, News, Rankings

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Super Micro Computer

super micro computer

Thank you for standing by. My name is Matt, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc. Q2 fiscal year 26 financial results 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. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. All lines will be muted during the presentation portion of the call. An opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. Over to you, Michael.

Thank you. Good afternoon, and thank you for attending Supermicro's call to discuss financial results for the second quarter and full year fiscal 2026, which ended December 31, 2025. With me today, as you know, is Charles Liang, Founder, Chairman, 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 that is available to participants in the IR section of the company's website under Events and Presentations tab. We've also published management's scripted commentary on our website.

Please note that some of the information you'll hear during the discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income expenses, taxes, capital allocation, and future business outlook, including guidance for the third quarter of fiscal 2026 and full fiscal year 2026. These statements and other comments are based on management's current expectations and assumptions involved, material risks and uncertainties that could cause actual results or events to be materially different 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 filing, fiscal 2025, and other SEC filings. All these documents are available on the IR page of Super Micro's website.

We assume no obligation to update any forward-looking statements. Most of today's presentation refer to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to 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 the company's management, as 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 prepared remarks, we will have a Q&A session for sell-side analysts.

Our third quarter fiscal 2026 quiet period ends at the close or begins at the close of business Friday, March 13, 2026, and for now, I will turn the call over to Charles.

Thank you, Michael, and thank you all for joining today's call. Super Micro delivered a strong fiscal Q2 as AI infrastructure demand continues to accelerate across every major customer segment. For the quarter, we achieved a record $12.68 billion in revenue, including $1.5 billion before the former type of account last quarter, representing 123% year-over-year growth. This strong performance reflects the sustained momentum of our AI solutions and the large-scale systems as customers build out next-generation AI factories. Super Micro has been developing some of the largest and most complex AI supercluster ever built, highlighting our unmatched capability in large-scale manufacturing, on-site deployment, and integration.

Most notably, our Data Center Building Block Solution, or DCBBS, has started to gain some key customer preference as they look for quicker time to deployment, TTD, and quicker time to online, TTO. These pre-designed, pre-validated infrastructure building blocks not only speed up customers' data center builds, but they also save cost with better workload optimization and with minimal power and water consumption. DCBBS once again recently helped us gain market share in large, medium, and small AI infrastructure deployments. With GB200, B200, B300, and MI350 platforms, we are also preparing for the upcoming NVIDIA Vera Rubin and AMD Helios solutions for the second half of this year. While we continuously growing AI factory build out, customer and product mix are shifting more to a large model builder who has pricing leverage, pressuring gross margin.

In Q2, especially, the expedited transportation costs, ongoing components shortage, and their volatile pricing, among which tariffs, have impacted our short-term gross margin. As such, I would like to take a moment to highlight our key strategies to address this and efficiently strengthen our long-term profitability. First and foremost, Super Micro undergoes its fourth phase of product evolution with DCBBS as its key focus. As this data center deploys scale, DCBBS is and will become an increasingly important part of our value. In the first half of fiscal year 2026, DCBBS solutions accounted for 4% of our profit. We expect this part of our profit to grow and meaningfully contribute to the second half of fiscal 2026, and we see that growth accelerated to at least double this contribution by end of calendar 2026.

With compressed GPU, CPU life cycle, DCBBS become critical helpful to the value of our server and storage products by enhancing the data center infrastructure, time to delivery and time to online, reducing power and water consumption, and cost efficiently simplifying data center management and maintenance. In just about one year, our DCBBS product lines grew to more than 10 key subsystems, including CDU, L2A heat exchanger, chilled doors, power shelves, battery backup, water tower, dry towers, high-speed switching, data center management software and service. We are expanding this product line to include more new categories, such as transformer, next generation power generators, device for energy backup, and grid power replacement, further strengthening customer value, accelerating deployment, and supporting long-term profit margin improvement for Super Micro.

Other than developing DCBBS for better value and profitability, we are also sharpening our focus on traditional enterprise, cloud, and edge IoT customers to further diversify revenue with higher margin. In addition, we have introduced our X14 and H14, both series solutions featuring pre-configured systems that ship directly from our factory, enabling rapid deployment, optimized for specific AI, cloud storage, and telco edge workloads. These servers are ready to power up immediately and reinforce Super Micro's core value, time to market advantage for enterprise customer, channel partner, and SMB end users. We are also driving meaningful cost improvement through enhanced Design for Manufacturing, DFM, and quality premium engineering. We have introduced more modularized subsystems and expanded automation across our facilities. These efforts increase yield rate, reduce rework, and enable us to bring new platform to volume production even faster and with higher quality.

As product cycle shorten and technical complexity increase, these Design for Manufacturing advancement are essential for scale, efficiency, and long-term margin improvement. While executing these, DFM initiatives, we are also continuous to expand our global manufacturing footprint aggressively and strategically. Our Silicon Valley facility remains the, cornerstone of our U.S. operation, delivering faster time to market, strong security, and higher quality integration. Internationally, new, production sites in Taiwan, Malaysia, and Netherlands, and soon the Middle East, are ramping to increase, capacity, support regional sovereign AI requirements, and most importantly, optimize our overall cost structure. In summary, as the only company with more than 32 years of robust server and storage focus, Super Micro is quickly evolving into a leading AI platform and data center infrastructure total solution provider.

Strong Q2 performance, rapid expansion of DCBBS product line, deeper and more customer engagement in the global capacity investment, position us well for long-term growth. While near-term margin pressure from customer mix, tariffs, international facility expansion, and key components shortage, like memory and storage shortage, our focus on enterprise business, design for manufacturing improvement and the faster growing DCBBS portfolio all help us gain new customers, support a higher growth and a net margin going forward. Lastly, based on our broad customer backorder forecast and commitment, we believe demands for AI and IT infrastructure remain unprecedentedly strong. Our DCBBS solution is exactly what customers need to build out their AI and cloud much faster, greener, and lower total cost.

With that in mind, I'm confident to guide at least $12.3 billion for Q3 and up our full year revenue guidance back to at least $40 billion. I look forward to sharing our progress with you next quarter. Thank you. Now I will turn it over to Dave.

Thank you, Charles. We achieved record Q2 fiscal year 2026 revenue of $12.7 billion, up 123% year-over-year, and up 153% quarter-over-quarter, compared to our guidance of $10 billion-$11 billion. Q2 revenue included approximately $1.5 billion in delayed Q1 shipments due to customer readiness. Growth was driven this quarter by the rapid ramp and deployment of our rack-scale AI solutions. Despite supply chain challenges in the industry, our global manufacturing team executed well in delivering record revenue. Order strength remains strong from global large data center and enterprise customers. AI GPU platforms, which represent over 90% of Q2 revenue, continue to be the key growth driver.

During Q2, the enterprise channel revenue segment totaled $2 billion, representing about 16% of revenue versus 31% in the prior quarter. That's up 42% year-over-year and up 29% quarter-over-quarter. The OEM appliance and large data center segment revenue was $10.7 billion, representing approximately 84% of Q2 revenue versus 68% in the last quarter. This was up 151% year-over-year and up 210% quarter-over-quarter. For Q2 FY 2026, one large data center customer represented approximately 63% of total revenue. By geography, the US represented 86% of Q2 revenue, Asia 9%, Europe 3%, and the rest of the world, 2%.

On a year-over-year basis, US revenue increased 184%, Asia grew 53%, Europe decreased 63%, and the rest of the world increased 77%. On a quarter-over-quarter basis, US revenue increased 496%, Asia decreased 49%, Europe decreased 51%, and the rest of the world increased 53%. The Q2 non-GAAP gross margin was 6.4% versus 9.5% in Q1. Gross margins were impacted by customer and product mix, as well as higher freight, production, and expedite costs as we began to ship new platforms on a large scale. We had significant operating leverage during the quarter, with total non-GAAP operating expenses representing 1.9% of revenue versus 4.1% last quarter.

Q2 GAAP operating expenses were $324 million, up 14% quarter-over-quarter and up 8% year-over-year. On a non-GAAP basis, operating expenses were $241 million, which was up 18% quarter-over-quarter and up 6% year-over-year. Operating expenses were up quarter-over-quarter, largely due to higher sales expenses. Non-GAAP operating margin for Q2 was 4.5% compared to 5.4% in Q1. Other income and expense for Q2 totaled a net income of $26 million, reflecting $51 million in interest income on higher cash balances, partially offset by $25 million in interest expense, primarily related to our convertible notes.

The tax provision for Q2 was $99 million on a GAAP basis and $122 million on a non-GAAP basis, resulting in a GAAP tax rate of 19.8% and a non-GAAP tax rate of 20.6%. Q2 GAAP EPS was $0.60, compared to guidance of $0.37-$0.45, and non-GAAP diluted EPS was $0.69 versus guidance of $0.46-$0.54 due to higher revenue and operating leverage. The GAAP fully diluted share count increased sequentially from 663 million in Q1 to 673 million in Q2, and the non-GAAP share count increased from 677 million to 688 million over the same period.

Cash flow used in operations for Q2 was $24 million, compared to $918 million used in the prior quarter. On a quarter-over-quarter basis, Q2 operating cash flow reflected higher net income, offset by higher accounts receivable and inventory levels, and aided by higher accounts payables. Q2 closing inventory was $10.6 billion, up from $5.7 billion in Q1, as we prepared for continuing strength in Q3 shipments. CapEx for Q2 totaled $21 million, resulting in negative free cash flow of $45 million for the quarter. During the December quarter, we expanded our access to working capital to fund growth, executing a $2 billion cash flow based secured revolving credit facility in the U.S. In January, we also closed an approximately $1.8 billion secured Taiwan revolving debt facility.

At quarter end, our cash position totaled $4.1 billion, while bank and convertible note debt was $4.9 billion, resulting in a net debt position of $787 million, compared to a net debt position of $579 million in the prior quarter. Turning to the balance sheet and working capital metrics, the cash conversion cycle significantly improved from 123 days in Q1 to 54 days in Q2. Days of inventory decreased by 42 days to 63 days, versus 105 days in the prior quarter. Days Sales Outstanding increased by 6 days to 49 days, versus 43 days in Q1, while days payables outstanding increased by 32 days to 58 days, versus 26 days in Q1. Turning to the outlook for Q3 FY 2026, we expect net sales to be at least $12.3 billion.

GAAP diluted net income per share of at least $0.52 and non-GAAP diluted net income per share of at least $0.60. We expect gross margins to be up 30 basis points relative to Q2 FY 2026 levels. GAAP operating expenses are expected to be around $354 million, which include approximately $74 million in stock-based compensation expenses that are excluded from non-GAAP operating expenses. The outlook for Q3 of fiscal year 2026, fully diluted GAAP EPS, includes approximately $62 million in expected stock-based compensation expenses, net of the tax effects of $19 million, which are excluded from non-GAAP diluted net income per common share. We expect other income and expenses, including interest expense, to result in a net expense of approximately $22 million.

The company's projections for Q3 FY 2026 GAAP and non-GAAP diluted net income per common share assume a tax rate of 19.6%, a non-GAAP tax rate of 20.2%, and a fully diluted share count of 684 million for GAAP and 699 million shares for non-GAAP. Capital expenditures for Q3 are expected to be in the range of $70 million-$90 million. For full fiscal year 2026, we expect at least $40 billion in net sales. Michael, we're now ready for Q&A.

If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. We'll pause here briefly as questions register. First question is from the line of Ananda Baruah with Loop Capital. Your line is now open.

Hey, yeah, thanks, guys. Good afternoon. Thanks for taking the question. And, yeah, congrats on the solid results here relative to the guide. I just want to ask about margins, and I have a few follow-up questions I want to ask you here, but they're all margin related. I guess the first is with regard to, you mentioned, I think 90 days ago, that December quarter, you expected to be the sort of the low watermark quarter in gross margin, and you're guiding for quarter-over-quarter improvement for the March quarter. Do you still think that things progress expansively from here, Charles? You made some comments around customer mix. It's been a headwind. Do you think it continues to improve? And I have two quick follow-ups, just margin related after that. Thanks.

Yeah, thank you for the question. Yes, the customer mix, we are improving quarter-over-quarter. Now we have many more large scale customer, I would like to say. So that will improve our profitability. The other factor is last quarter, I mean, December quarter, GB300 inventory was a little bit new to us, so lots of expedite transportation costs. And now, I mean, product is getting mature, so those expedite transportation costs will be dramatically reduced. And tariff impact also improving. And so overall, especially at DCBBS, also increasing for our net, for our gross margin. So I believe our gross margin will start to improve quarter-over-quarter.

Charles, that's great context. Really appreciate it. And actually, Charles, one of my two clarifications here is from something you said in your prepared remarks. You said higher net margin, and so I guess you just clarified you expect gross margin to go up. Maybe this is a Charles Dave question. Dave, you mentioned OpEx leverage. The OpEx as a percentage of sales was really attractive this quarter. It's like 1.5%, I guess less than 2%. But should we expect, I think it's the second quarter in a row, you drove OpEx leverage last quarter, this September quarter, for the first time in a while. But now you have this really attractive, the most attractive OpEx as a percentage of revenue in a while.

So, are you—is the company entering a period of not only gross margin expansion, but OpEx dollar leverage as well, structurally? And, and that's it for me, guys. Thanks.

Yes, exactly. I mean, economies of scale will help us to improve the cost, our cost, right? So that will impact our gross margin and especially our operating margin. Again, DCBBS, proprietary SuperMicro for more business in service, in software, in overall infrastructure, service to customer. So all those factors are positive to our margin improvement.

Very helpful context. Thank you, guys. Really appreciate it.

Thank you for your question. Next question is from the line of Samik Chatterjee with J.P. Morgan. Your line is now open.

Hi, this is MP on behalf of Samik Chatterjee. I just wanted to double click on your full-year guidance. You said $40 billion for FY 2026. If I back into the implied 4Q number, that implies significant quarter-over-quarter moderation. So is that just conservatism being embedded into the full-year outlook? Or, like, do you see definite indications from your order trends that 4Q will imply sequential moderation? And I have a follow-up as well.

Yeah, I believe we say minimum $40 billion is a relatively conservative number. So, our business indeed will continue to grow, especially our DCBBS, that attract a lot of customers who want to build a data center quicker, less power consumption, less cost, I mean, data cost, and also more reliable and easy for management. So we are getting more and more customers come to us.

Thank you. For my follow-up, I wanted to ask about DCBBS. You highlighted, it being 4% of profits in first half. Can you please, help us understand, like, the contribution in terms of revenues? And then you also said it will increase to double-digit contribution by end of calendar year. So how does that, translate to overall gross margin trajectory? Thank you.

Yeah. Thank you. I mean, as you know, DCBBS is still a new product line to us. We officially introduced that product about six months ago. So, the first two quarter, I mean, September quarter plus December quarter, indeed, is our first two quarter. So the revenues still relatively small, but because the profit is much better. So overall, it contributed about 4% to our overall profit in last six months. And looking forward, it will continue to grow very quickly. So we are very happy to see more and more customers like DCBBS to speed up their data center build out with easier for management, easier for maintenance, and our profit will continue to grow because of DCBBS especially.

Next question is from the line of Asiya Merchant with Citi. Your line is now open.

Great. Thank you for taking my question, and good results here relative to the guide. I just had two quick ones. One, just, you know, there's a lot of discussion about component availability, supply constraints. If you could just talk to us about your guide, and relative to that, you know, is that minimum $40 billion guide, you know, a constraining number, given the supply constraints? In other words, if supply wasn't an issue, could that number be greater? And then just on customer concentration, you know, I think the commentary suggested that some of the geos did decline on a year-on-year basis, as well as on a quarter-on-quarter basis. So again, relative to the guide, how should we think about the ramp of DC BPS across those various geographies for the back half of this fiscal year and through calendar 2026?

Yeah, you are right. We already considered component supplies keeping growing. So with that, that's why we try to be conservative kind of commit to $40 billion. Even the cost even the shortage situation improve quickly, for sure our revenue will be more than that. As to DCBBS, is globally almost every region, customer like DCBBS, because it helps them easier to build a data center. It's kind of like a one-stop shop. one-stop shop. We provide not just computing node, I mean, storage node, switching node, and liquid cooling subsystem, including battery backup, including some energy backup. So it kind of make customers job to build a data center much easier. So the impact is global.

We see global wide, more and more customer like our DCBBS solution, and we are aggressively preparing to grow the support.

Thank you for your question. Next question is from the line of Catherine Murphy with Goldman Sachs. Your line is now open.

Thank you very much. To ask another question on the new DCBBS disclosure, encouraging to hear that growing to double-digit share of profit by the end of calendar 2026. Can you talk about the investments that you need to make here to expand the capabilities? I know, Charles, you mentioned some in the prepared remarks as well as your go-to-market offering to have this increased penetration of DCBBS. And then I have a quick follow-up as well.

Yeah, we indeed, we start to develop our DC BBS pretty much about 12 months ago. So we already are consistently investing in that area. And so far we have about 10 items, including a CDU, including a chilled door, including a power shelf, battery backup, water tower, right, management software. So we have about 10 items available now, and we will introduce another 3-5 items in next few months or next few quarters. So the data center building block solution will be getting more complete, and that's why it will be easier for customers to build a data center. It's not just easier, quicker to build their data center, but also make their data center modularized. So it's easier for management, easier for maintenance, and easier for scale out.

Great. Thank you very much. And just on the margin profile of DCBBS, could you remind us what you said in the past about what that looks like relative to the sales that you typically have towards your large neocloud and GPU as a service customers?

Oh, it's much for sure. Gross margin, net margin are much higher for DCBBS because it's so unique. And again, we are the first company build pre-designed, pre-validated, pre-optimized data center solution for customer. So the margin is much better, for sure, more than, more than 20%. And we are happy to make the product line really strong, really complete as soon as possible.

Thank you for your question. Next question is from the line of Ruplu Bhattacharya with Bank of America. Your line is now open.

Hi, thanks for taking my questions. For the first one, I'll ask a follow-up on margins. David, you mentioned expedite costs, component cost increases, shortages, and I think last quarter you talked about increased investment in engineering support and services to help new customers. Can you help us size all of these things? How much did they impact gross margins in the December quarter, and what's baked into guidance as impact from these things in the March quarter? And I have a follow-up.

Yeah, we don't break those things out, Ruplu, but we can just say that the costs were, you know, up in each of those areas. So in other words, you know, higher transportation and expedite in order to move things around and get things delivered to the customer faster. But we have... I can tell you that over, you know, the past year, we've had, you know, increases as we have, you know, ramped up the new technologies and prepared for, you know, mass shipments.

Okay. As a follow-up, can I ask? I think it's, Charles talked about component shortages, and you're being a little conservative on the guide. Are component shortages, like, which areas are they in? And then component cost increases, are they actually impacting data center demand, either on the AI side or on the, on the regular, non-GPU server side? Are component cost increases a real factor? And, if I can sneak one more in, this DCBBS, product that you have, can we infer anything about the type of customers who are buying that? Like, if you're thinking that you're going to sell more, it's going to be more, a bigger percent of your sales. Does that mean that the customer mix is also changing?

Do enterprise customers use more of these, or what type of customers likes to use more of the DCBBS packaged solutions? Thanks for taking my questions.

Yeah, thank you for your question. Indeed, the key component shortage this time is the main, the main reason, because the AI and the large data center demand are growing. So the shortage, because the demand is getting so strong, not because the production capacity is reduced. So that is a good sign. So basically, it's because the industry are growing, and we are part of the major growing company. So that's why I believe the impact to us-... Yes, the cost will be impact, but won't hurt us too much. That's for the question. And second, I mean, DCBBS, who need the DCBBS? I would like to say all the people like to build a data center. Doesn't matter if they are large scale, middle size scale, or small scale.

Because, our DCBBS is just simply to provide more choice for customer to go for, one-stop shop or buy everything from, everywhere by themselves. And obviously, one-stop shop save their time, make sure when they put the things together, it work. And, quickly, when they put the things together, it work and optimize. That's why it's optimized, time, not just time to delivery, but time to online. Customer use our DCBBS, their data center can go for online, go for operation quickly. So, I would like to say global, people need a DCBBS kind of, building block solution.

Thank you for your question. Next question is from the line of Nehal Chokshi with Northland. Your line is now open.

Yeah, thank you. Congrats on the strong results and guidance. A little bit of different question here. So look, Super Micro brought DLC to the market one generation faster than when it became part of NVIDIA reference architecture. Now, apparently, Super Micro has brought to the market one generation faster, dry cooling towers, which is related to the higher inlet temperatures as part of reference design. My question is that, do you expect Super Micro to continue to bring to the market one generation faster, the power efficiency advantages before NVIDIA makes it part of their reference architecture? Is this going to be part of Super Micro's branding?

Yeah, as you know, NVIDIA a very strong company, and we work with them very closely. However, because our strong engineering background, our big engineering team, so before we are able to make our total solution one generation or six months earlier than others. Now, and, in the future, I believe we'll be still able to bring a total solution to market earlier than others, especially help customer build a data center, build their cloud, AI cloud, time to online quicker than others. If not, six months earlier, at least three months or four months earlier, and that's still a big help. So I, I'm very confident that our future growth should be still very strong.

Great. And then for my follow-up question, your 10% customer, was that the primary driver of the upside that you saw in the quarter? Do you expect them to remain a 10%+ customer in the March quarter, or how should they project? And then you also did sign DataVolt, a pretty big contract with DataVolt, six or nine months ago. Is that starting to ramp in as well?

Basically, because our foundation is getting much stronger than before ever, especially our kind of total solution, right? Data center building block total solution is strong. So we are gaining broadly good customer from the older territory. So more than 10% or not, I have to say, because now our revenue will grow very fast. Very soon, I hope I can say we have more than $50 or $60 billion revenue. Not today, but hopefully very soon. So more and more large customer is working with us. So that's a very exciting condition.

Thank you for your question. The next question is from the line of Quinn Bolton with Needham and Company. Your line is now open.

Hey, guys. Let me add a congratulations on the nice outlook. I just heard, David, you had a 63% customer in the December quarter. As you look at sort of the second half of fiscal 2026, do you expect revenue to diversify significantly? Or do you think that that large customer continues to be pretty concentrated in the March and the June quarters? And then I've got a follow-up.

It's sometimes not easy to predict, 'cause customers sometimes shift their schedule of pulling or pushing out. But overall, we are very happy that now we have many more large-scale customer. The customer is more diversified, and overall revenue will grow quickly. And at the same time, DCBBS and software grow our value. So, overall, we are on a very healthy track now.

Got it. So, understanding that the customer has been pushing and pulling out, right now, the forecast shows increasing diversification over the next couple of quarters?

Yeah, I mean, because of the growth, still very fast. That's why now we are focused more on how to grab more money to grow even faster, right? So if we have more cash, for sure, we can grow even faster. But even if we don't, we do not have more money, I guess, because a more diversified customer base and also more higher value system, more higher value totals solution. So that will help us grow business.

Understood. My follow on, Charles, in your prepared comments, you mentioned the upcoming platform transitions, the Vera Rubin and the Helios system from AMD. I'm just wondering, have you guys started to get orders for those systems for delivery in the second half, or is it too early to start to get orders for those systems?

Yes, we have a lot of highly interested customers. Some already engaged, and we hope we can deliver as soon as possible. But still, it depends on our partner. Depends on when their Vera Rubin or AMD solution will be ready. So we are working very closely with them. Once they are available, we like to deliver to customer quickly. And yes, today, we already have some good commitment from customer.

Thank you for your question. Next question is from the line of Jon Tanwanteng with CJS Securities. Your line is now open.

Hi, thank you for taking my questions, and congrats on a nice quarter and outlook there. I just wanted to ask a little bit more about the big versus smaller customer mix that you expect in the future and the pipeline that you see. Are you expecting smaller customers to become a greater percentage of sales, or is it the opposite? And the reason I ask that is because these bigger customers seem to have that pricing leverage you mentioned. If you have any color there, that would be helpful. Thank you.

Yeah, thank you for the question. Yes, we understand we need a more customer, especially a more diversified customer base, enterprise. So we are very aggressively growing enterprise mid-size or even kind of enterprise customers well. So, I mean, our customer diversify is very important direction to us now. So, I guess, we will grow both large customer and lots of kind of high number of enterprise account.

Okay. Got it. And then, just on the Vera Rubin question, and I guess the migration to the 800-volt data center, I was wondering if there's any opportunity for you to drive greater differentiation in this next cycle upgrade compared to the past couple. Is there anything about the whole platform and data center architecture that gives you more or less opportunity compared to the last cycle of Blackwell and Hopper?

Yeah, I mean, that's why I say NVIDIA provide a very good solution. And based on that, we optimize the whole data center building block solution for our customer, and aim to help them build a data center quicker and more reliable, easy for management and lower their costs, including energy consumption, including energy backup, and maybe too early to say, including energy kind of grid power replacement. So we have a complete plan for the whole solution, but some other system are still too early to say too much at this moment.

Thank you for your question. Next question is from the line of Mark Newman with Bernstein. Your line is now open.

Hi. Yes, Mark Newman. Thanks for taking my question and congrats to get on great quarter and great outlook. Just curious, you know, if you just take a step back, I mean, what's changed? You've got a big step up here in sales, gross margins down quite a lot, but you're guiding forward for solid sales to continue. So is this just a reflection of a tougher pricing environment and just Micro having to react to tougher pricing environment and thus winning back more share? Or is this just catching up to, as you refer to the previous quarter, previous couple quarters, you mentioned about a few orders then getting pushed out.

So is this just catch up of the orders, or is this a reflection of a more aggressive pricing strategy? And I guess accordingly, for me, like trying to think about forward estimates going forward, I mean, you guided for the short term, but, you know, how do we think about gross margins longer term? Is this kind of range here to stay, or are we looking at getting back to, you know, into the low, you know, high single digit, low double digit range, gross margin like you were before? Thanks very much.

Yeah. Thank you. As an engineering company, you know, we for sure have some choice. We can continue to grow larger account aggressively or spend more effort to develop technology, good product and to grow more enterprise account. So, we are doing both ways, basically. And, so the gross margin, net margin ratio, we are expecting to grow to a double digit as soon as possible. Maybe you may add something?

Sure. We think that, you know, we've established ourselves with a number of deployments that we've made as being really the premier provider of the most current technologies that are available on the market. We think with those strong installations, you know, we've broadened our reach into the market. So, we think that, you know, we're trying to target, you know, both, as Charles mentioned, both large scale and, you know, smaller scale customers and mid-tier customers. But we wanna serve, you know, all of our customer bases that are out there, and that are attracted to our products and bring them the very best technologies. We think ultimately that drives the margins. Yes.

Next question is from the line of Brandon Nispel with KeyCorp. Your line is now open.

Guys, just I think a couple of quick clarification questions. One for David. David, you raised some new capital this quarter. Maybe just help us understand how you're thinking about working capital, for the rest of this year. And then other income came in about $50 million above your guide. Really, what drove that? And then just one quick follow-up question. Thanks.

Sure. The other income was just, was higher, interest income that we had because our, our cash reserves had, you know, had grown, and so we were earning good interest income. However, that was quickly taken up by the fact that, as I mentioned last quarter, we had well in excess of $13 billion of orders for, for, you know, for purchase orders for delivery. And so we immediately had to use that. That's why the, you know, our accounts receivable, our inventory went up, and so we took in not only, you know, two different $2 billion or $2 and $1.8 billion credit facilities. We also set up an accounts receivable, you know, factoring. So we have access to, you know, over $5 billion of additional capital.

And, you know, if we continue to have growth, then we'll—we have access to additional capital in the marketplace. But right now, we think that, you know, for the current outlook, we have adequate capital to meet our needs. And when I say current, I mean-

Got it. Just on the, the factoring, the securitization facility, did you utilize that at all this quarter? And then on the 63% customer, was that a previous 10% customer? Thanks.

To the first question, we did not use it during the December quarter, but we have subsequently. To your second question, Super Micro does most of its business with repeat customers, so I'll just leave it at that.

Super Micro Computer (SMCI) Q2 2026 Earnings Call Transcript

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