Sunday, August 6, 2017

Super Micro Computer's (SMCI) CEO Charles Liang on Q4 2017 Results - Earnings Call Transcript

@CharlesLiang Thank you, Perry and good afternoon everyone. Let me summarize our fourth quarter. Revenue was $717.9 million. It’s 36.9% higher year-over-year and 13.7% higher than the previous quarter. Non-GAAP net income was $20.7 million. Non-GAAP earnings per share was $0.39 per diluted share compared to $0.38 last quarter and $0.20 last year. Non-GAAP EPS was 95.8% higher year-over-year and 20% higher than last quarter. #SuperMicro achieved new record high in revenue in the first quarter which exceeded our expectations. Throughout fiscal 2017 our revenue was over $2.5 billion or 14% better than last year. We’ve been remarkable is that our fiscal 2017 second half achieved 37.6% growth over last year, which is many multiples higher than the overall industry and any other Tier 1 vendors, which owes our payments rates and some momentum as we finish the fiscal year and coming to a major technology refresh cycle [indiscernible] Super Micro had built a strong foundation, for sustaining high gross, while maintaining profitability every quarter for 24 years. Over the last three year, we’ve made a significant investment in global production capacity operations, system solutions, quality, global service and management software. In [indiscernible] our engineering staff by over 60% bringing the most advanced in both these portfolio of server and storage, global service and management software to the market. [indiscernible] investment that we are proud the new Supermicro 3.0. Supermicro 3.0, positions us as the fastest growing Tier-1 IT Infrastructure Provider, capable of delivering first to market product innovations in global scale with quality, management software, on-site global and support to engage our rapidly growing enterprise customer base. The record high revenue in strong second half growth rate is a direct result of Supermicro 3.0 investment. With the major fundamentals in place and the new Skylake product portfolio shipping, future investment and expenses will begin to flatten driving improved profitability moving forward. The new foundation of Supermicro 3.0 has three potential locations worldwide totalling almost 3 million square feet with a [indiscernible] including dedicated record ever integration, conversion and validation combined this capacity can support annual revenue up to $5 billion on hardware alone. In 2017, we ship approximately 1.2 million [indiscernible] storage notes in systems and subsystems based on [indiscernible] estimates. This [indiscernible] is about 10% over our total number of system shipped in the world. Under Supermicro 3.0, our direct deals in large enterprise datacenter storage and people learning is expanding rapidly. We are seeing significant engagements with large enterprise customer than they were before from Fortune 100 companies in technology, social media, [indiscernible] news media, cable companies and Internet [indiscernible] We are engaging earlier for technology optimization and providing more total solutions which include complete assistance software integration, quality reputation, solution optimization, datacenter management software and global on-site service. Our channel strategy have also evolve under Supermicro 3.0, we are working more closely with the channel and with their end user to provide solutions that drive the demand to our partner. Channel accounts for 46.3% of our revenue, and we are becoming most strategic vendor to those channel partner [indiscernible] which contributed to the gross of total system revenue of 74.3% over a quarter. Under Supermicro 3.0, we also continue to invest in new product [indiscernible] to enhance our [indiscernible] solutions including our [indiscernible] of over 100 new X11 system model based on Intel [indiscernible] solutions have been optimized to deliver the high scale performance and efficiency from the new Intel processor, and latest NVMe innovations especially All-Flash and hybrid NVMe solutions. We have seen our major design wins for our new 2U 4-node, BigTwin offering in both service provider and as well as major storage OEMs. The advanced feature of our 2U 24 OEM [indiscernible] at a major financial service company. And we have seen triple digit growth in our GPU and [indiscernible] system sales. We continue to be the leader in NVMe technology, and our [indiscernible] over NVMe sale is growing dramatically. We secure several new major [indiscernible] specific robotics such as autonomous driving based on our NVMe competitive advantages. NVMe storage delivers orders of [indiscernible] better performance than Chetana Solutions. And we have over 18 optimized designs available [indiscernible] capable of delivering 16 million IOPS, which is one of the highest performance system in the whole industry. Our global service and management software have [indiscernible] for the Supermicro 3.0, they provide a Tier 1 experience for our server and storage portfolio. They create a stronger and deeper relationship with our customers. Our service teams will [indiscernible] with our enterprise customer to provide a high-speed performing in most efficient datacenter in the world. Our software tools are tightly integrate into our customer environment [indiscernible] We achieved $50 million of [indiscernible] from global service and management software in 2017, that is nearly doubled from the last year. And we will continue to double yearly moving forward. With higher margin and amortize the new model to increase profitability overtime. Looking forward, the combination of new Intel [indiscernible] processor and advanced in NVMe product make this technology transition cycle, one with our most significant activity for our customers [indiscernible] Along with the Supermicro 3.0 we have the foundation, the product and a strong pipeline to maximize the advantage of this technology transition. We believe that fiscal year 2018 will be one of the strongest years in Super Micro’s history. For more specific on our fourth quarter, let me turn it over to Howard.

https://seekingalpha.com/article/4094732-super-micro-computers-smci-ceo-charles-liang-q4-2017-results-earnings-call-transcript

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