Super Micro Computer at Citi’s 2025 Conference: Strategic Growth Insights

On Thursday, 04 September 2025, Super Micro Computer (NASDAQ:SMCI) presented at Citi’s 2025 Global Technology, Media and Telecommunications Conference. The discussion, led by Mike Stager, highlighted the company’s robust growth and strategic focus on innovation. While SMCI reported a strong 47% revenue increase, challenges such as maintaining gross margins were also noted.

Key Takeaways

• SMCI achieved a 47% year-over-year revenue growth.
• The company targets $33 billion in revenue by 2026.
• SMCI is expanding its data center solutions, focusing on innovation and customer choice.
• Gross margins are under pressure, currently around 10%.
• SMCI is expanding geographically into the Middle East, Southeast Asia, and Europe.

Financial Results

SMCI reported significant financial growth, with a 47% increase in revenue year-over-year. The company aims to reach $33 billion in revenue by 2026. SMCI’s cash balance stands at $5.2 billion, and they believe they can achieve $22 billion in revenue with only $2 billion in cash. Gross margins are currently around 10%, with efforts to improve them over time. The company has efficiently managed its operating expenses, growing them at roughly half the rate of revenue growth. SMCI expanded its scale customers from one in 2024 to four in 2025 and plans to add two to four more in 2026.

Operational Updates

SMCI is focusing on its Data Center Building Block Solutions (DCBBS), providing comprehensive data center solutions, including service and engineering support. The company is addressing supply chain challenges, particularly those related to AI demand and component transitions. SMCI differentiates itself through rapid product innovation, offering customers a wide choice of architectural platforms. They continue to lead in the liquid cooling market with innovations like DLC2. Strategic sourcing allows SMCI to swap components within subsystems efficiently. The company is also expanding its presence in the Middle East, Southeast Asia, and Europe.

Future Outlook

Looking ahead, SMCI is guiding for more than 50% growth in fiscal year 2026. The company aims to become the top supplier through innovation, product development, and enhanced customer experience. SMCI is focused on scaling innovation and introducing new products, particularly in cooling and thermal solutions. The company expects to expand its customer base among neo clouds and sovereign entities, providing optimized products for various applications. SMCI believes enterprises are increasingly investing in neo clouds, anticipating growth in this area.

Q&A Highlights

During the Q&A session, SMCI expressed confidence in the growth of inference-based models, which support all business areas. The company feels well-positioned against competitors like Dell, emphasizing innovation, performance, and power efficiency. SMCI is confident in its current capital stack and aims to improve gross margins, which are under pressure. Strategic priorities include maintaining a profitable business, serving a broad customer base, and becoming the leading provider through innovation.

Readers are invited to refer to the full transcript for more detailed insights.

Full transcript - Citi’s 2025 Global Technology, Media and Telecommunications Conference:

Assia, Conference Host, Citi: Have Mike Stager and Krishna here is from SMCI as well. Super Micro is here in the audience. So really excited to have Super Micro here. Thank you, Mike, for coming to our conference here. I’m I have a bunch of prepared questions that I’m gonna go through.

I’m gonna leave a few minutes here for the audience, but I do request if you do have any questions, please raise your hands, we can bring the mic to you. Mike, I’m going to kick it off. So again, thank you for coming to Citi’s Global TMT Conference. You just reported very strong growth. I think it was up close to 50% for the year.

The quarter closed sort of within range. When you sit here and you think about how demand has evolved for your company, let’s say a few months ago or even at the start of the year, was a lot of cross currents, there was deep sea, there was tariffs, there was all kind of stuff. How would you say your business performed relative to your own expectations, let’s say, the start of the year?

Mike Stager, SMCI Management, SMCI: Well, Assia, thanks for having us. Before we start, just want to please refer to our cautionary statements with regards to the safe harbor statements with, regard to statements, on our website. So from that perspective, demand has been has been great. It’s a new technology cycle in general. Mhmm.

And we had a a fantastic year in in many aspects. We had, you know, grew 47%. We grew our scale customers from one in 24 to four in 2025. We’re seeing a continual evolution from a standpoint of our customer base where neo clouds have been first and early. They’ve been growing quite rapidly.

Enterprises are following on stream, and we’re seeing a lot of sovereign activity as we move forward. So we’re well positioned in the market. And I think one of the things that just as demand shapes up, as the picture shapes up, You think about what’s going on, the hyperscalers have been soaking up quite a bit of capacity. They’ve been application optimized for AI, and they’ve been doing that in various different segments within their service offerings. And they have in house engineering.

They have chip design. They have network design, storage. They have everything. Right? So from a standpoint of what Super Micro is doing is we are bringing in the AI element.

We are bringing all those aspects, including TCBBS, to our customers that are beyond the hyperscalers, the rest of the market that’s not have these capabilities. So from a super micro perspective, we see demand evolving, and we see the product innovation and expanding within our customer base across those three different categories.

Assia, Conference Host, Citi: Okay. Within each of those three different categories, like, you know, how is Super Micro positioned? Like, you know, where do you lead? Why do you lead that? Just if you can double click on the competitive moat across those three segments.

Mike Stager, SMCI Management, SMCI: So we we have no legacy architecture basically to support, on a go on a go forward basis. We’re all about lowering the cost per watt per compute for our end customers. Charles is completely focused on the customer performance aspect and doing everything to make the systems more performative for the customer. And in the current context, with AI performance power, all these elements are extremely important to to the to the end customer, particularly the the the the early movers, the early adopters who have limited funds, so to speak, from a build out perspective and are being very, very, very focused with with their spend. So from a competitive perspective, if we can bring a better reliable system, one that uses less power, one that puts more footprint on the floor for them, Initially, that’s been a really big win, and you can see that from a standpoint of where our growth curve has been relative to our competitors and and share numbers, etcetera.

So that’s the focus. And so as you think about what’s gonna happen next, we believe there’ll be there’ll be more neo clouds coming into the fold. There’ll be enterprises are entering into the fold. They’re already doing that through some of the larger neo clouds that there are today, and we support most of those neo clouds. But there’ll be application specific and application optimized solutions for the end market that we will be developing.

So if you think about what Supermicro does best is we offer customers choice. We innovate almost every platform. We have almost every architecture platform available for end customers. And so it it becomes a differentiation point at that level because some of our competitors are just focused on building, say, one particular architectural rack, and we’re focused on the the beyond include the rack, making that better, but beyond with other proxy inferencing products, etcetera. And this goes across not just AI, but general purpose compute as well.

So we have a lot to offer our customers, and and they know that, and we can save the money. And, you know, in the in the element of the data center building block solutions, we’re bringing other components so that we can get the entirety of the data center delivered to the customer as opposed to customers like, I just need a rack. And so it becomes a rack to rack price comparison. But if the customer needs more help and we see many of them that are coming on stream, like I said, we can we can bring these the hyperscaler experience to the rest of the market. So that’s a product differentiator for us, and that helps customer wins, helps repeat customer business.

We have a very high repeat business with our customer base because we keep innovating. And we think that innovation curve is accelerating is an advantage from our perspective because we we control the design, we control the manufacturing, we control the engineering, so the entirety of the experience, and we understand that with the customer. So as the innovation comes accelerates on itself and leaves others who are still struggling to get the the current generation into the into the marketplace, we’re thinking several steps forward and what the customer will need eventually downstream.

Assia, Conference Host, Citi: And is how would you characterize, you know, you talked a little bit more about neo clouds, but we also have the sovereigns and we have the, you know, enterprises that are also adopting. The conversations, if you can, you know, is there any some differences at the speed, at where they are in terms of adoption of these, you know, not just on the rack stuff, but on the DCBS as well across these verticals?

Mike Stager, SMCI Management, SMCI: So it was interesting is, you know, obviously, 47% year over year growth is is is amazing unto itself. Right? So especially at scale, can go from 15 to 22. And we’re we we see 33 in in 2026. But the speed from a customer perspective is obviously fairly quick from a standpoint of what they want to do.

There’s many, many, many POCs. So that’s kinda how we get to market, at least from some some of the scale or more scale customers. They’ll trial equipment. They’ll get specs specs right. So in this context, you know, we’re early days in the adoption of AI in general.

Right? So you have issues like power at the data center. The data center readiness, you know, concrete’s being poured. You hear that all the time. You know, with respect to sovereigns, there’s, you know, there’s licensing elements that’s, that’s a that’s a it’s a factor.

Like, have they had the licenses? Can they ship? Have they spec ed out the data center? Right? So that kind of goes back to what we’re we’re seeing a word what we’re doing with DCBBS where we can take you know, we could retrofit a data center for them, bring the whole experience together.

We have the leading edge from a liquid cooled element. So once again, it comes back to our ability to innovate and and kind of adjust to the customer. So we have numerous customer engagements. So trying to balance that out in the context of supply, in the context of, you know, the readiness from a the customer perspective. And, you know, you can even throw financing for some of the less well heeled or the the startups where the where that’s somewhat of an element.

We don’t think that would be an element for some of the enterprises. We don’t be an element for the for the for the sovereigns, but there’s multiple tools of factors that impact the uptake. Mhmm. But again, the the speed of the uptake, we think has been been very, very good and very supportive of accelerated growth rates for our for ourselves.

Assia, Conference Host, Citi: Okay. And then, you know, AI, great tailwind for you guys, some of your peers as well, it’s also extremely lumpy. There’s no there’s transitions going on at the chip level and then all the various components that need to go to support the memory, for example, the cables, all that stuff. So just help us understand the level of visibility that you have and considering that there is so many so much lumpiness. And how what are some of the risk mitigation stuff that you do on your end, so you don’t have like terrible margins as a function of the lumpiness?

Mike Stager, SMCI Management, SMCI: So from from that perspective, the the the variance quarter to quarter, I mean, it’s quite a feat to put a significant amount of rack capacity on the floor installed, for for any customer given the constraints of the supply chain

Assia, Conference Host, Citi: Right.

Mike Stager, SMCI Management, SMCI: Where different parts, you know, if you don’t have one piece together, if the data center is not ready

Assia, Conference Host, Citi: Right.

Mike Stager, SMCI Management, SMCI: I think we had mentioned that we had one customer who, last quarter, had a design change. You know, something didn’t get specked out right from or they wanted something changed, and so that kind of impacted what what we’re doing on a on a on a move forward basis. So these elements are contributing to the variance. And the other thing that I would mention is that it’s very early days in this whole build out period. Right?

And so and and the adoption of the technology. So there’s a lot of folks that have learnings about what they’re trying to do before it becomes, you know, a a mainstream, you know, product, so to speak. That said, there’s multitudes of products and solutions being offered to the to the end customer in application optimized for vertical AI. You you’ll see neo clouds that are focused on one particular vertical as we move forward. So there’s so much happening that it’s it’s hard to, you know, capture all that at at one time against all the other factors that put variation in in in results.

But I think we’ve done a really good job of managing through that in real time. And, again, our learnings from standing up some of the largest clusters, one, is driven enterprise inbounds from our perspective because they know that we have some of the best, most reliable equipment and gear and our capabilities. So from that perspective, I think it’s it’s it’s a really puts a really good puts us in a really good position to take advantage of the expanse that we will see in this whole marketplace so we can serve more customers.

Assia, Conference Host, Citi: Okay. All right. Data center building block, DCPBS, if I got the acronym right. Just maybe, I know you touched on it a little bit earlier, but just help us understand why is it unique to Supermicro? If I talk to some of your peers, I think I hear some of the similar commentary, but just why is this unique to Supermicro?

And how do you think it accelerates your growth? Why does it accelerate your growth? And I think you already touched base on maybe the sovereigns are still kind of trying to figure out the licensing issues, etcetera. When do you see that inflection happening outside of neo clouds?

Mike Stager, SMCI Management, SMCI: So we are very focused on the customer and giving the customer the best experience they can get. They give them the best performance, the best reliability, the lowest cost per compute per watt. And the initial customer base of the initial early adopters, the the big focus. Right? We think that’ll still continue to be the focus to be application optimized in the enterprise, to be application application optimized as we expand in the Neo Cloud.

So what we’re trying to do is, like I said before, is if you have the hyperscaler, they’re doing everything in house to serve those applications. And we have the ability to do the same thing for the rest of the market. And the rest of the market’s really large. And as they adopt that and they’ve you know, there’s a there’s a a brownfield site that needs to be upgraded to air cooling excuse me, liquid cooling, but not quite all the way to full liquid. Right?

So we can bring some of those componentry into the into the mix and for the customer. And we’ll be adding more more of the pieces of what the entirety of the data center is. So a customer can call us up and say, hey. We need a data center in x y z location. We’ll be able to drop in everything that they need so that all the equipment arrives day one so they can turn on their online, they’re ready to move, and ready to roll.

So, incrementally, that changes the dynamic with the customer as opposed to a customer coming to us and say, look. I I need x amount of racks of whatever architecture. You know, what’s your price? This changes the conversation. So it includes the service element.

It includes, you know, the engineering support because the service is a little bit different, cabling, which is a pretty you know, in the connectivity element. So we’ll bring all those pieces. And even we’re, you know, we’re building the back end storage, whether it’s gonna be flash or whether it’s gonna be hard drives with our ISVs. And if you think about what we do with one of our one of our VDI software partners, we build systems for their software stack. And we’re probably one of their their better suppliers.

So what ultimately over time is that AI application rolls out, you’ll see us marry that our our stack or our data center stack, or there’s a mini data center or a large footprint, we’ll be able to bring all those things. And that’ll be a differentiator in general, and we’ll be able to serve the market. The market’s large. You know, it’s obviously competitive, but we’ve always pushed the curve on technology, and the technology curve continues to accelerate. And we’re focused on staying in that in that zone.

Assia, Conference Host, Citi: And now you guys are very I mean, when I look at your OpEx ratio, it’s like great. But just the introduction or the expansion of DCPBS as a growth driver result in increasing that OpEx?

Mike Stager, SMCI Management, SMCI: I mean, it’s the pace is a little bit ahead of where we would like to be, but generally, with half the growth rate would be the growth in OpEx. So I think historically, company has been very, very efficient.

Assia, Conference Host, Citi: Right.

Mike Stager, SMCI Management, SMCI: And, you know, that’s the goal. That’s the target to to continue with that. So I don’t think you’ll see any outsized, situations that change that parameter.

Assia, Conference Host, Citi: Okay. And then the same thing on free cash flow. Is this does this become a more working capital intense if you’re having to host a lot of the components that go beyond just the RAC? I think you talked a little bit about that. Does that become a working capital?

Mike Stager, SMCI Management, SMCI: So I think in the early days, historically, there’s been a little bit of a land grab and there’s a little bit of a working capital demand from a standpoint of from serving customers. But as you probably well know, recently, we have improved the balance sheet significantly. I think it’s when we reported last with a couple weeks ago, 5,200,000,000.0 in cash. We entered into a an AR facility that gives us a a little bit more liquidity if if we need it. We ran the business at up to 22,000,000,000 off of 2,000,000,000, I think, I believe in cash.

So we think we’re adequately funded. That said, if we and I mentioned that we scale customers. We had grew to four in 2025 from one, and we see two to four more coming into ’26. So from a timing perspective, if of four more scale customers and the four scale customers we have all hit at once, you know, might change the conversation, but we think as we move forward, you see neo that necessarily neo classic. I was gonna say sovereigns.

As the sovereigns expand, we believe that they’ll be less they should be less capital intensive because they obviously don’t need to to raise funds. And so longer term, we think that we can get free cash flow close to net income, and that’s the goal. But right now, it’s about land grab, land and expand, and and market share and innovation. So we’re focused on that element and that’s growing the size of the company. As you well know, scale and scope of the company has changed dramatically over the past couple of years.

Assia, Conference Host, Citi: Okay. So I got lots of questions on that, your growth in your major customers. It’s great you brought that up because just help us understand, what does the concentration look like today? Now you have four large customers, you’re talking about two to four more in the current fiscal year. Where are these customers, maybe vertical, geos?

Are they neo clouds? Are they enterprises?

Mike Stager, SMCI Management, SMCI: Yeah. I think the I think it’s fair to say it’s neo cloud with maybe an enterprise in the mix. We think that there’ll be an expansion in of of NeoClouds with existing ones, of course, and, the sovereign. So some context around that would be that, you know, we’ve heard instances where developers have been able to peg models that are being offered in service providers where they can run multiple test, you know, programs, and they’ve saturated systems. Context windows and reasoning models are too small, and they want if you want to expand those, obviously, you’ll need more in the the language model or the reasoning model.

You will need more capacity. And so you see hyperscalers throwing capacity into neo clouds. Right? You see enterprises putting capacity into neo clouds because they haven’t yet to build out. So you see this ecosystem where the more you use, you know, AI enabled tools, the more the the cloud based service providers you’re gonna expand.

And if we start moving into and we are seeing that, we’ll start moving into the inferencing element, you get this even more users that drive more demand within the large customers, but those ancillary customers continue to expand. So the whole footprint is at at the cusp of just I don’t wanna use the word exploding, but I just did, but it’s gonna really it will really move the needle. So we see that ahead, and what we’re trying to do is make sure that we have product for optimization for any one of those applications. So that that gives us an innovation element and a and a solutions based element that goes beyond, you know, or just give me a rack, and it’s it’s a different conversation. And that that stems from some of the neo clouds, some of the enterprises and and and certainly, the sovereigns.

Assia, Conference Host, Citi: Okay. Alright. And, again, from a geo perspective, are these I’m assuming this is not just a No. You’re thinking about these large customers?

Mike Stager, SMCI Management, SMCI: These these these we there’ll be I I believe, you know, you can obviously look at the filings, but one of them is, you know, they’re it it’s gonna expand across the base. That’s great. Yeah.

Assia, Conference Host, Citi: Okay. Just wanted to clarify.

Mike Stager, SMCI Management, SMCI: Especially, you know, we we were talking about, you know, we’ve made some announcements with respect to with some Middle East, you know, Southeast Asia, Europe. I mean, there’s activity is strong Right. Across the board.

Assia, Conference Host, Citi: Yeah. But to the extent that they become a major customer this fiscal year. Right? Do you feel pretty strong about that two to four extra customers.

Mike Stager, SMCI Management, SMCI: And and how that bakes out from a geo, I you know, we’ll see.

Assia, Conference Host, Citi: Okay. Alright. I’m gonna just see if the audience has any questions here. Please raise your hand. Oh, we have one here.

Unidentified speaker: Hi. Thank you for taking the question. Do you have confidence that the inference based models and some of these new expansion areas will overtake will be able to replace the large scale data centers once those build outs are completed?

Mike Stager, SMCI Management, SMCI: It’s a it’s a it’s a, thank you for the question. I think it’s it’s a very good one, but I think the way we see it playing out, like I said, if the context windows are too small or or or will expand, then the core language model providers, the reasoning models, they’ll just get bigger. And if they get bigger, the the number of reasoning or excuse me, the inferencing element will expand as well because more people will use it. So think of a user base expands dramatically, and we’re already seeing that the, you know, token usage is is is skyrocketing. So the this should gather steam.

So it actually should support all sides of the business, and the growth of the business should be pretty excellent. It won’t land on you know, it’s all inferencing versus it’s all training, and there’ll be new use cases to train, and there’ll be some specific training model verticals, etcetera. So it’s like I said, it’s early days, but that’s the direction we see from the customer conversations that we’re having across globe.

Assia, Conference Host, Citi: One more here.

Unidentified speaker: Could you just comment briefly on the kind of competitive situation with Dell? You had the early lead, but they’ve been ramping fairly fast on the relative side compared to you.

Mike Stager, SMCI Management, SMCI: So from a competitive perspective, we feel very well positioned. Like I said, we’re on innovating, focused on making the reference architecture from any one of our partners better, more performance oriented, or more power efficient. That’s our complete focus. We control our design, engineering, manufacturing. So those elements are very, underappreciated, I should say, from a competitive perspective.

And so, again, we have limited, we have no legacy thought process in our mind. This is all about what the next generation is going to be, how we can bring more to the customer, and to do it reliably and have really sound, solid systems. So we think those will support and continue to support our market leading position, and we’ll increase the scope and scale of the company. Our goal is clearly the number one, the number one supplier. We would argue that over time, if you look out two years, we will have the products that you will need downstream because we’re focused on bringing those to market.

And we feel very comfortable that we’ll be able to we’ll continue to be in a pretty a pretty great competitive position.

Assia, Conference Host, Citi: One more there.

Unidentified speaker: Hi, thanks for taking that question. Can you expand a little bit more on how you see funding in the case where you do need to do a more aggressive cap I guess, working capital build out and how you think about, guess, issuing more equity of the facility you mentioned or even raising more convertible debt in the future?

Mike Stager, SMCI Management, SMCI: Yes. So, again, thanks for the question. I think from a standpoint of where we are today, we feel pretty confident where we at where we are with the the capital stack that we have and the access to capital. We’ve always been or we try to be very focused on not being not dilute shareholders. So from I think that if there was anything to to be done, we would probably be to leverage the balance sheet a little bit with maybe a a revolver or something along those lines.

That all said, I and there was a caveat earlier that if four scale customers, you all said, hey. We have new we have new demands, and we had two to four more come into the into the book. We would have to think about how we would best position the capital our capital needs to to serve those customers. I’m not saying that’s gonna happen, but, you know, that would be the outside band kind of demand element. So I think we’ve done a fantastic job.

The balance sheet’s in great shape right now that should support easily our our our ambitions for the year. And so we’re in a really good spot.

Assia, Conference Host, Citi: If I can since we are talking about competition, just on margins, I mean, I think they’re hovering around 10% gross margins, So but they are down relative to the last few quarters. As you think about DC, BBS, as you think about expanding your customer concentration to more customers, could the margins move up towards a target model? Is that the scope for this year? Are we looking beyond this year?

Mike Stager, SMCI Management, SMCI: So we definitely have our eye on that, but I think that the mix is pretty important. So early days, large customers have a little bit more pricing power. There’s a little more eagerness to try to serve a couple of people. Some of the competition, you know, needed need to get a footprint to say they’re in the game. So very, very early day, a lot of pressure in that respect.

What we’re seeing as we move forward is more and more volume of customers, whether it’s in the enterprise or some of the newer near clouds that need more help, will bring more product or more services into the fold for them. And they won’t have necessarily the same dynamics, and they’ll be more in the line with where we have normally operated. So that should should rise over time. So it’ll be it’ll be a balance. We’re not saying that’s gonna happen.

Obviously, we didn’t say that was gonna happen in the next quarter or the next quarter or two, but we see that happening over time. And Charles was pretty adamant. Said, look. If if we want to accelerate the growth rate, we could we could lower the margins pretty pretty easily, but the focus is no. The focus is on a profitable business, serving a broad base of customers and, you know, becoming the the number one provider, through innovation, through product, through, you know, solid customer experience.

Assia, Conference Host, Citi: Mhmm. Okay. And then I know liquid cooling, Charles talks a lot about Super Micro’s moat and liquid cooling. Just help us understand about the adoption there, what’s going on? What’s your market share as it relates to liquid cooling?

There certain customers that are perhaps adopting it faster?

Mike Stager, SMCI Management, SMCI: So scale customers that have a liquid cooled data center already obviously are like number one candidates. We’ve moved beyond the initial liquid cooling to through DLC2, 40% improvement across the board. We’re taking all the heat out of the systems. It’s always been in our DNA to lower the power requirements and to be thermally efficient, and that obviously enters into the liquid cooling equation. So we’ve been the leader there.

We think that as we move forward, we’ll be able to take, you know, I I wanna namely 82% of the data centers might be just air cooled environments, 20% might be liquid cooled environments. There’s no data center that’s being developed that won’t incorporate liquid cooling. So and, obviously, liquid cooling customers have a little more rack concentration, so there’s a dynamic there. But we’re bringing better thermal dynamics in the HDX series and the air cooled series, whether it’s a 300 or 200 to to the market. We’re doing that the same thing on the on the CPU on the CPU side or the x 86 platforms.

We can liquid cool those. So as power becomes a constraint, it already has been a constraint. We’re focused on delivering more power and and more efficiently. And if we can do that, and we have been doing that and continue to do that, then customers will say, well, I I can save a lot more money by a super micro liquid cooled design than than not. And that’s a that’s a customer win, and it’s for us and it should be margin accretive for us as well.

Assia, Conference Host, Citi: Okay. All right. Just on the guide, I think you guys talked about fiscal twenty six, which has already kicked off for you of more than 50% growth or roughly the math there. So what gives what are you seeing now? You’ve already guided.

It’s been a month, I guess. But what are you seeing that gives conviction in that? Is that based on backlog? Some of your peers do report that. I know you don’t.

But what kind of gives you conviction in that 50% year on year growth? Admittedly, it’s not going to be a straight line. Like you said, there’s going be some quarters would see a big uptick versus, the most immediate quarter that you’ve already guided to.

Mike Stager, SMCI Management, SMCI: Just so from from that from that perspective, yeah, we we don’t give out backlog numbers. We we have excellent visibility from a from our customer base. And from that perspective, I think we feel really comfortable where where we we think we’ll end up from the year from in in the year. So and it’s based on our customer conversations, customers’ initial order potentials, etcetera. So I think we’re shaping up for another really good year.

Assia, Conference Host, Citi: Okay. Let me ask about lots of hurdles that are behind you that plagued you guys last year. I think you’re past a lot of and kind of looking forward, I think that’s what gives you conviction as well in the 50% growth. Where are we with all those recommendations that perhaps a special committee provided? Are there still things that need to be done?

Do you guys feel like, okay, all those things are behind us now and we’re well set for the growth? Or could there be I think as Charles put it, some of those impeded some of your growth last year last fiscal year?

Mike Stager, SMCI Management, SMCI: Yes. So you think about, the 47% growth, year over year was in the context of a new product launch from some of our partners or new product launches from our partners that were were were the end markets were a little you know, maybe they all went to the hyperscalers. So it was a little a little bit of a Right. An interesting launch, so to speak. You know, there was the the power constraints of some of the data centers, etcetera.

So putting a 47% growth in the context of some of the administrative challenges that we had that we cleared, the capital challenges that we may have had that we obviously cleared now that we have, you know, significant So all those things look really good. So ’26, the road ahead looks a lot smoother from our perspective, with respect to all the things that, we need to do. So if you think about the size and scope scale and the growth rate of the and the acceleration, we’ve done a lot of work on the people and processes element. And we’re very conscious of, like, getting those right and taking the time to make sure they are right as we move forward. And, certainly, you know, some, you know, some some of the press likes to take, you know, shots at some of the things that happened in the past and and and relive those things.

But we’re we’re focused on moving forward. We’re focused on the customer. We’re focused on the innovation element, and we’re putting the people and processes piece in place, and that takes a little bit of time.

Assia, Conference Host, Citi: Okay. And then inventory, I know sometimes you end up with excess inventory, whether it relates to a prior chip generation, etcetera. How well is Super Micro now with all the processes that you’ve put in place to manage that kind of risk?

Mike Stager, SMCI Management, SMCI: Yes. So that’s a that’s a great question, and it’s very forward looking from that perspective. We are concerned with that, of course. We tend to take we tend to take very little inventory risk and be careful about what we’re gonna place where. It’s probably a little bit more important now that we have multiple different platforms to go to market with, so we’re not committing or making a bet on one platform versus the other.

And, that said, if a customer comes to us and says, look, we have a scale order here. It’s, you know, it’s a certain platform. We when we mentioned the platform decisions, we’re we’re impacting some of the things in the prior quarter where, you know, there could be you know, we’re gonna do what’s right for the customer. Right? So from that perspective, we’re gonna try to make sure that we don’t have an an overhang.

And, you know, we had one a quarter or so ago, and it was it was was it was modest. I mean, we didn’t wanna have that, but it was it was a modest it was a modest a modest overhang.

Assia, Conference Host, Citi: Outside of chips, you know, what about some of the other components? I mean, there’s always supply demand imbalances that are going on there. How does Super Micro manage that? Do you tend to do strategic buys on some

Mike Stager, SMCI Management, SMCI: of the underappreciated elements of the of the company is our ability to source and source for a large amount from a goal perspective and to have choice in the building block architecture where we can swap, you know, different components within the sub sub sub subsystems themselves. So we try to be very, very careful about what we’re ordering, when we’re ordering. So it’ll be occasionally, we might we might do a strategic buy, but it would it shouldn’t it shouldn’t move the needle, so to speak. And we have a pretty good idea of what we need when we need it. But if, like, if we have a scale customer, there’s a change, sometimes we could you know, there there could be an issue, but very, very carefully managed.

Assia, Conference Host, Citi: Okay. We have a little bit more than a minute to go, Mike. So I wanna thank you, but I wanna talk to you about, you know, what are investors maybe underappreciating or what would you like the investment community to know more about Super Micro?

Mike Stager, SMCI Management, SMCI: I think I think the biggest underappreciated element is the fact that we’re innovating at scale, and we’re bringing new product. I think I’ve said this a couple times through this this discussion, that there’s a significant amount of differentiation with respect to the reliability, the the the cooling and thermal elements and all the things that we’re bringing to our end customers is is underappreciated from us from a street perspective. So I think that the fact that we’re controlling the engineering, the design, the manufacturing, and and the innovation is very underappreciated. And think one of the reasons that we’re in the position we are today is because we’re doing all those things quite well from the product at the product level.

Assia, Conference Host, Citi: Great. I’d like to thank Mike and Super Micro’s management here. Thank you very much.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.