Thank you for standing by. My name is Harry, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc., SMCI, US Q4 2024 earnings call. With us today, Charles Liang, Founder, President, and Chief Executive Officer, David Weigand, CFO, and Michael Staiger, Vice President of Corporate Development. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To enter the queue for questions, please dial star followed by one on your telephone keypad. Thank you. Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the fourth quarter, which ended June 30, 2024. With me today are Charles Liang, founder, chairman, and chief executive officer, and David Weigand, Chief Financial Officer. At the end of today's prepared remarks, we'll have a Q&A session for sell-side analysts. Our press release was issued after the close of market and is posted on our website, where this call is being simultaneously webcast. The slides that accompany this webcast can be downloaded at ir.supermicro.com. These include statements regarding our financial outlook and operations, our strategy, technology, and its advantages, our current new product offerings, and competitive industry and economic trends. Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted, and reported results should not be considered as an indication of future performance. A discussion of some of the risks and uncertainties related to our business is contained in our filings with the SEC, and we refer you to these, to those public filings, including our most recent annual report on Form 10-K. During this call, all financial metrics and associated growth rates are, are non-GAAP measures other than revenue and cash, and investments. Reconciliations to the most directly comparable GAAP measures are provided in our earnings press release and slides. This call is being broadcast live on the Super Micro Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website and is the property of Super Micro. Our first quarter 2025 quiet period begins at the close of business Friday, September 13, 2024. With that, I will turn it over to Charles. Thank you, Michael. Today, I'm pleased to announce another record quarterly result of $5.31 billion, 143% year-over-year growth. For fiscal 2024, we have achieved $14.94 billion in revenue, 110% year-over-year growth rate. To put this in perspective, our Q4 revenue has exceeded the full year revenue of fiscal 2022. Our robust growth is driven by our technology and product leadership in the AI infrastructure market, especially with generative AI training and inferencing. We have been scaling quickly to secure a large share of AI ASP opportunities, including some of the largest AI supercluster in the world. Leveraging our system building blocks, we build and optimize the rack scale plug-and-play solutions with the latest DLC liquid cooling technology, helping our customers achieve the best TTD, time to deployment, and TTO, time to online, and lowest TCO with their AI solutions. Here are some key quarterly highlights. First, Super Micro is pleased to be included in the Nasdaq 100 index last quarter. First, the Q4 net revenue total $5.31 billion, up 143% year-on-year, with a strong record high backlog. We could ship more, even after DLC liquid cooling components shortage. Fiscal Q4 non-GAAP earnings of $6.25 per share, far well above $3.51 last year, which was 78% year-on-year growth. Our Q4 operating margin is 7.8%, which is lower than what we expected due to the higher mix of hyperscale data center business and expedite cost of our DLC liquid cooling components in June and September quarter. Some key new components shortage delay about $1 million of revenue ship into July, which lower our EPS for June and will be recognized in our September quarter. The availability of our Malaysia facility later this calendar year and our dominating position in DLC liquid cooling total solution will be instrumental in increasing our profitability. Super Micro is powering the largest AI factories around the world today. We believe more and more data centers will be opting for our largest DLC liquid cooling solution, which dramatically improve TCO relative to a traditional air-cooled data center and is less environmental taxing. We have proved that DLC solutions also offer higher performance and better uptime, with advantages to support our upcoming new AI chips. At the Computex Taipei, I shared that green computing can be free with a big bonus. This means the cost of deploying liquid cooling, DLC, is on par with traditional air-cooled data center and significantly lowers the operational power cost. Since then, we have been delivering over 1,000 highly reliable DLC racks to multiple customers. Our goal is to quickly make a DLC liquid cooling to be a mainstream solution for most data centers and AI factories that focus on increasing efficiency and performance while reducing OpEx. We are targeting 25%-30% of the new global data center deployments to use DLC solutions in the next twelve months, with most of the deployments coming from Supermicro, we believe. We are happy to have many customers transforming and adapting their existing air-cooled data center to DLC liquid cooling in the coming years. For four major reasons. First, it helps customers save energy costs up to 40%. Second, it boosts data center computing performance. And third, it helps growing customers' data center lead times, or to be more precisely, reduce their time to online because of less electrical power required. And fourth, it reduce carbon footprint for our one and only Mother Earth. As an end-to-end IT infrastructure solution company, our customers' experience is our number one priority. By leveraging our system building block and large-scale plug-and-play solutions, we help our customers achieve the best time-to-market advantage with new and performance-optimized technologies. Now, we are further expanding this solution to the entire data center, with rapid deployment of large-scale AI infrastructure. Data centers worldwide are facing power shortage and cooling inefficiency challenges. Building these new AI-ready data centers traditionally take a long time, averaging three years, for example. Our upcoming Supermicro 4.0 DCBBS, data center building block solution, will reduce customers' new data center build time from about three years to two years. For smaller facilities or older data center transformation, data center BBS can enable and optimize cost-effective data center in less than one year or even in just six months. This new offering will significantly improve data centers' TTO, time to online, and cost, with full integration of AI compute, server, storage, networking, rack, cabling, DLC liquid cooling, facility water, power, end-to-end management software, on-site deployment service, and maintenance. We will start offering it later this calendar year. Playing a significant role in realizing our data center building block solution and providing additional economies of scale, our new Malaysia campus will start production this November. With its geographic advantages, we expect it to quickly ramp up to full volume and improve our cost structure. In the US, we are adding new buildings and production POC provisioning capacity near our Silicon Valley headquarters as well, which will further boost our monthly DLC liquid cooling rack capacity and value this fiscal year. Moreover, we are on track to expand it to a few other global manufacturing locations, leveraging our strengths in product design, build quality, supply chain, and deployment, positioning Supermicro as one of the largest IT infrastructure companies. In summary, we are entering fiscal 2025 with record high backlog, winning products, large volume DLC liquid cooling capacity, Data Center Building Block Solutions, and more new customers. While our long-term investment impacts short-term profitability, they position us well for future success by providing a sustainable competitive advantage and necessary economies of scale. This has given me confidence to forecast the September quarter revenue between $6 billion-$7 billion and fiscal 2025 revenue between $26 billion-$30 billion. Again, we anticipate that the short-term margin pressure will ease and return to a normal range before the end of fiscal year 2025, especially when our DLC liquid cooling and data center building block solution start to ship in high volume later this year. Lastly, I would like to announce, 10-for-1 forward stock split of Super Micro, the common stock, to make ownership of Super Micro stock more accessible. We are targeting trading on a split-adjusted basis, commencing at market open on, October 1, 2024. Before passing the call to, David Weigand, our CFO, I want to say thank you to our partners, customers, Super Micro employees, on an incredible year, where we were able to bring AI at a scale to the world and to our shareholders for your continued support. David? Thank you, Charles. We had robust growth in the fiscal year, and I'm pleased with the progress we made on our strategic initiatives. For fiscal year 2024, we reported revenues of $14.9 billion, representing 110% growth over fiscal year 2023 revenues of $7.1 billion. Fiscal year 2024 non-GAAP diluted EPS of $22.09 grew 87% over fiscal year 2023 non-GAAP diluted EPS of $11.81. Between fiscal year 2021 and fiscal year 2024, we achieved significant operating leverage, with revenues growing at a compound annual growth rate of 61% per year, while non-GAAP operating expenses only grew at 19% per year. Between fiscal year 2021 and fiscal year 2024, gross margins have met or exceeded the target range of 14%-17%. Non-GAAP operating margins were above the target range of 5%-8% between fiscal year 2021 and fiscal year 2024, and more than doubled from 4.4% in fiscal year 2021 to 10% in fiscal year 2024, due to strong revenue growth and operating leverage. Q4 revenues were $5.31 billion, up 143% year-over-year and up 38% quarter-over-quarter, and above the midpoint of guidance of $5.1 billion-$5.5 billion. Growth was driven by strong demand for next-generation air-cooled and direct liquid-cooled rack scale AI GPU platforms, representing over 70% of revenues across enterprise and cloud service provider markets, where demand remains strong. We exited the year with an acceleration in innovative DLC products, a large design win pipeline, and a strong backlog, positioning us for continued growth in fiscal year 2025. We expect growth and operating margins to gradually increase in the year, driven by product and customer mix, manufacturing efficiencies for new DLC AI GPU clusters, and new platform introductions. As Charles discussed, shipments may continue to be constrained in the short term by supply chain bottlenecks for key new components for our advanced platforms. However, long-term gross margins will benefit from lower manufacturing costs as we scale up production in Malaysia and Taiwan, in addition to expansion in the Americas and Europe. During Q4, we recorded $1.83 billion in the enterprise channel vertical, representing 34% of revenues versus 49% in the last quarter, up 87% year-over-year and down 3% quarter-over-quarter. The OEM appliance and large data center segment revenues were $3.41 billion, representing 64% of Q4 revenues versus 50% in the last quarter, up 192% year-over-year and up 76% quarter-over-quarter. Emerging 5G Telco Edge IoT revenues were $75 million, or 2% of Q4 revenues. For fiscal year 2024, enterprise channel revenues grew 79% to represent 41% of total revenues. The OEM appliance and large data center segment grew 149% and represented 58% of total revenues. The emerging 5G Telco Edge IoT segment represented 1% of total revenues. One CSP large data center customer represented approximately 20% of revenues for fiscal year 2024. Server and storage systems comprised 95% of Q4 revenue, and subsystems and accessories represented 5%. ASPs increased on a year-over-year and quarter-over-quarter basis, driven by the value and complexity of our rack scale total IT solutions. By geography, U.S. represented 61% of Q4 revenues, Asia 24%, Europe 10%, and Rest of World 5%. On a year-over-year basis, U.S. revenues increased 94%, Asia increased 437%, Europe increased 128%, and the Rest of World increased 386%. On a quarter-over-quarter basis, U.S. revenues increased 20%, Asia increased 66%, Europe increased 74%, and Rest of World increased 187%. The Q4 non-GAAP gross margin was 11.3% versus 15.6% in Q3, due to product and customer mix, focus on winning strategic new designs with competitive pricing and higher initial costs in ramping production of new DLC AI GPU clusters. For fiscal year 2024, the non-GAAP gross margin was 14.2% versus 18.1% for fiscal year 2023. We have a path to improve gross margins to the target range of 14%-17%, as we introduce innovative platforms based on multiple new technologies from our strategic partners and improved manufacturing efficiencies on our DLC solutions. Q4 operating expenses on a GAAP basis increased by 15% quarter-over-quarter and 75% year-over-year to $253 million, driven by higher compensation expenses and headcount. On a non-GAAP basis, operating expenses increased 11% quarter-over-quarter and 39% year-over-year to $185 million. Q4 non-GAAP operating margin was 7.1% versus 11.3% in Q3, due to the lower gross margins. Other income and expense for Q4 was $11 million, consisting of $3 million in interest expense and $14 million from interest income on higher cash balances, offset by a loss from foreign exchange and other investments. Interest expenses decreased sequentially as we paid down short-term bank credit facilities. The tax provision for Q4 was $1 million on a GAAP basis and $21 million on a non-GAAP basis. The GAAP tax rate for Q4 was 0.3%, and the non-GAAP tax rate was 5%. The GAAP tax rate was 4.9% for fiscal year 2024 versus 14.7% in fiscal year 2023, and the non-GAAP tax rate was 10.4% for fiscal year 2024 versus 15.9% in fiscal year 2023. Q4 GAAP diluted earnings per share of $5.51 was below the guidance of $7.20 to $8.05, and non-GAAP diluted EPS of $6.25 was below the guidance of $7.62 to $8.42 due to lower gross margins and higher operating expenses in the quarter. The GAAP fully diluted share count increased quarter-over-quarter from 61.4 million to 64.2 million, and the non-GAAP share count increased sequentially from 62 million to 64.8 million shares, reflecting the effects of two recent stock offerings and the convertible bond offering. Q4 cash flow used in operations was $635 million, compared to $1.52 billion in the previous quarter, as inventory and accounts receivable grew due to higher levels of business and the timing of shipments. For fiscal year 2024, cash used in operations was $2.5 billion due to strong revenue growth of 110% and working capital needs to support large customer design wins. Q4 closing inventory was $4.4 billion in anticipation of future growth. CapEx for Q4 was $27 million, resulting in negative free cash flow of $662 million for the quarter. CapEx for fiscal year 2024 was $137 million, up $37 million from in fiscal year 2023, as we invested in new property, plant, and equipment globally, including our greenfield Malaysia plant. The Q4 closing balance sheet position was $1.7 billion, while bank and convertible note debt was $2.2 billion, resulting in a net cash position of negative $504 million versus a net cash position of $252 million last quarter. Turning to the balance sheet and working capital metrics compared to last quarter, the Q4 cash conversion cycle was 94 days versus 96 days in Q3. Days of inventory decreased by 10 days to 82 days compared to the prior quarter of 92 days. Days sales outstanding was unchanged at 37 days, while days payables outstanding decreased by 8 days to 25 days. Now, turning to the outlook for Q1 fiscal year 2025. We expect strong growth as we ramp new air-cooled and DLC AI GPU design wins with new and existing customers. For the first quarter of fiscal 2025, we expect net sales in the range of $6 billion-$7 billion. GAAP diluted net income per share, per share of $5.97-$7.66, and non-GAAP diluted net income per share of $6.69-$8.27. We expect gross margins to improve sequentially due to product and customer mix and improving manufacturing efficiency. GAAP operating expenses are expected to be approximately $282 million, and include $84 million in stock-based compensation expenses that are not included in non-GAAP operating expenses. The outlook for Q1 of fiscal year 2025, fully diluted GAAP EPS, includes approximately $48 million in expected stock-based compensation expenses, net of tax effects of $30 million-$35 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 $20 million. The company's projections for Q1 fiscal year 2025 GAAP and non-GAAP diluted net income per common share, assume a GAAP tax rate of 9.9% and a non-GAAP tax rate of 14.6%, and a fully diluted share count of 65 million for GAAP and 66 million shares for non-GAAP. We expect CapEx for Q1 to be in the range of $45 million-$55 million. For fiscal year 2025, we are introducing guidance for revenues from $26 billion-$30 billion. Michael, we're now ready for Q&A. Awesome. Terry? Thank you. If you would like to ask a question, please dial star followed by one on your telephone keypad now. If you change your mind, please dial star followed by two to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally. Our first question today is from the line of Michael Ng of Goldman Sachs. Please go ahead. Your line is now open. Hey, good afternoon. Thank you very much for the question. I guess I have, I have two. Encouraged to see the revenue guidance for $26 billion-$30 billion for fiscal 2025. I was wondering if you could just provide a little bit of color around the assumptions underpinning that revenue guidance and any visibility that you have in terms of backlog and some of the contingencies you might be assuming in terms of supply availability. And then secondly, I was just wondering if you could provide a little bit more color around the gross and operating margin improvement throughout the year. Should we think about the long-term gross margin targets as applicable for the full year as well or exiting the year? Thank you. Okay, thank you. I mean, as what we share, I mean, we continue to gain design win, and we see lots of new product available, including DLC cooling and data center building block solution. We see a lot of customer engagement and also more new customer like to engage with us. So we see our capacity continue to grow. So, $26 billion-$30 billion, that's our target for next twelve months. And as to gross margin, as what we just mentioned, our DLC cooling now have been very mature. So we are able to take advantage from that, and also our Data Center Building Block Solution that provide a much better value, improve customers' data center time to online, and also our edge customers' job to build their data center. So all those will increase our profitability gradually. Thank you, Charles. Thank you. Our next question today is from the line of Samik Chatterjee of J.P. Morgan. Please go ahead. Your line is now open. Yep. Hi, thanks for taking my questions. I have a couple as well. For the—maybe if I can start with the gross margin, performance in the quarter. I know you mentioned you had a hyperscale customer which impacted product, customer mix, and margin impact there. How should we think about sustainability or sort of repeat orders from that customer? It sounds like you're saying that's part of the improvement, and you probably don't see as much repeat, but just wanted to confirm if that's how we should be thinking about, the hyperscale customer you had, which is that it doesn't really repeat through fiscal 25. I have a follow-up. Yeah, we have been very consistent. I mean, before we are Silicon Valley based operation, mostly in Silicon Valley. So we focus on enterprise, high quality, high performance customer only. That's before. But when we start to take production, operation advantage from Taiwan, we start to grow a large scale data center customer. And now we have a huge capacity in Malaysia, will be ready by later this year. So with the economic large scale advantage, we are ready for large customer. So we will continue to grow with large customer. At the same time, we also continue to enhance our enterprise customer base. So recently we also see the growth and the strong demand from our enterprise. With our software total solution, I mean, data center building block solution, we start to gain more attraction from the data center, I mean, enterprise customer as well. So we believe long term, the economic scale, the enterprise customer base, and overall, Taiwan and Malaysia advantage, cost advantage, that will help we to grow gross margin and net profit. Got it. Got it. And for my follow-up, Charles, there have been reports more recently about the delay of the GB200 from NVIDIA. Just wondering if you can share your thoughts of how that would impact the conversion of the robust backlog or pipeline that you're looking at to revenue through the year. And is that accounted for when you talk about liquid cooling now being a materially higher portion than what you talked about at Computex? Are you taking some of those delays into account? Thank you. Oh, yes. I mean, yes, we heard, NVIDIA may have some delay, right? And we treat the day as a normal possibility. When vendor introduce new technology, new product, they are always have a chance to, or in a little bit, or push out a little bit, in this case, push out a little bit. But to us, I believe we are no problem to provide the customer with a new solution like H200 liquid cooling. We have lots of customer like that. So, although we hope vendor deploy in a schedule, that's good for a technology company, but this push out, overall impact to us, it should be not too much. Great. Thank you. Thanks for taking my question. Yep. Our next question today is from the line of Ruplu Bhattacharya of Bank of America, Merrill Lynch. Please go ahead. Your line is open. Hi, thanks for taking my questions. I have two of them. The first one relates to the gross margin performance in the quarter. David, can you specify of the 430 basis points sequential decline, how much was the result of the customer mix, which is the higher hyperscale customer mix, versus the impact of ramping liquid cooling solutions, and how much was that impact to gross margins? And in terms of, I think, Charles, you said that you lost about $800 million of revenue in the quarter because of non-availability of components. Is that all liquid cooling related, or was that, you know, related to other things like GPUs as well? Thank you. Pretty much, liquid cooling key components is related, but now it's much ready now. I mean, when we move to July, August, we have a much liquid cooling key components available now. Yeah, Ruplu Bhattacharya, it wasn't a loss. It was pushed out into the next quarter. Yeah, and there was, Okay, time for this- Yeah, so there was, you know, we really were surprised by the amount of demand that we had in this market. And so our manufacturing efficiency improves, has been improving every day, and so we expect that to continue, and that's gonna help our gross margins, you know, going forward as we deploy liquid cooled racks at scale. Is that deployment expected to be linear for these liquid-cooled racks throughout the year, or is it more back-end loaded? Thanks. Thanks for taking my questions. Basically, we support handful customer for liquid cooling. And most of them, once they try our liquid cooling, they will continue to deploy higher percentage with liquid cooling because the cost, the hardware acquisition cost is about the same, but they will save lots of energy costs. So I believe this growth will be consistently growing. Thank you. Our next question today is from the line of Ananda Barua of Loop Capital. Please go ahead. Your line is open. Yeah, yeah. Good afternoon, guys. Thanks for taking the question. Charles, you said a lot of good stuff on this call, so I'll try to just ask about one or two things here. I guess to start, could you frame for us how the company is thinking about its liquid cooling capability relative to, you know, to others who are providing liquid cooling servers as well? That's been a big topic of conversation. Sounds like you guys are really high on your capability, and it seems to be showing up at least in the guidance. But I think additional context around, you know, how you guys are competitively positioned and maybe some of the technical reasons why would be super useful for us. But I just have a quick follow-up. Yeah, yeah. Thank you. I mean, as you know, liquid cooling have been in the market for 30 years, and much share compared with overall data center size, always small, less than 1% or close to 1%, I would have to say. But just June and July, two months alone, we ship more than 1,000 rack to the market... and if you calculate 1,000 rack, AI rack, it's about more than 15% on a global data center new deployment. So, we are very happy. We are helping the industry push from air-cooled to liquid-cooled, and to help customer save energy cost and reduce carbon footprint. At the same time, because of the liquid cooling, DLC liquid cooling, data centers require 30%-40% less power. That's why it's make customers' data center power budget from a powering company. So, overall, we see- Uh, Charles more and more customers like our liquid cooling solution. Charles, did I hear you accurately that you guys think you did 50% liquid cooling share in the June quarter? I believe for June and July, in that two months, we may ship at least 70%-80% for our liquid cooling, compared with the old liquid cooling in the world. So for liquid cooling, we have at least 70- That's really- -80% market share. That's useful. That's useful. Thank you. And then just real quick, my follow-up is, you've made remarks earlier this year in the recent past about how you envision expanding your rack capacity, you know, sort of into the future. I was just wondering if you could give us an update on how to think about how you're thinking about rack capacity expansion for both liquid cooled and air cooled. And that's it for me. Thanks. Yes. It's a very good question. I mean, last month, we have about 1000 rack per month liquid cooling capacity, and today, we already grow another 50%. So now we have a 1500 rack per month capacity. By this year end, we will grow that to 3000 rack per month. That's for liquid cooling alone. So we really believe liquid cooling is a much better choice for the market, and we provide a kind of consultation to customer. And most of the customer, when discuss with our engineering team, they love liquid cooling. And again, we are growing a customer base for liquid cooling very strongly. And we're really happy for that because minimize the power consumption have been a common value to the world, and especially save operation cost. That's fiscal year? Fiscal year, when you say end of the year, end of fiscal year. For the next 12 months, I believe, liquid cooling will be a big portion of our business. Thank you. Thank you. Our next question today is from the line of Aaron Rakers of Wells Fargo. Please go ahead. Your line is open. Yeah, thanks for taking the question. I've got two as well. I guess I want to go back to the earlier question on Blackwell, just because I think it's gonna be a key focal point for a lot of investors here, especially as we kind of shape the full year guidance. So, Charles, I wanna be clear. Has your guidance contemplated as we think about the December quarter, do you believe that you'll be shipping the Blackwell platform solutions for revenue in the December quarter? Or should we think about the full year guide as a bit more weighted to the back half of the fiscal year, given some of these concerns around the timing of Blackwell availability and, you know, NVL36 and NVL72 platforms, et cetera? I'm just curious of how you want us to think, or the street to think about the cadence of that full year guidance, you know, shaping up on a quarterly basis. Appreciating you're not gonna give quarter by quarter guidance, so. Yeah, thank you. I mean, indeed, we are relatively very conservative. I understand, Blackwell may postpone, how much we don't exactly know because the new technology always what can be pushed out, right? So, for Q3, for sure, we did not expect any Blackwell volume. For Q4, I mean, December quarter, I guess will be very small. Engineering sample, small volume. So the really volume, I believe, had to be, March quarter next year. And, and that's why we all- Yeah ... only $26 billion-$30 billion. Yeah, that's very helpful. And then as a quick follow-up, I want to go back to kind of the gross margin discussion, too. We talked about the impact of direct, you know, the DLC platforms. You talked about product mix. One of the other comments, David, you had made was that, you know, winning strategic new customers was a factor in that 430 basis point gross margin degradation. Can you help us appreciate what exactly, you know, the impact of that has been, how that might have changed this last quarter? And then I'll slip my final one in. Any disclosure on purchase obligations coming out of this last quarter? Thank you. Yeah, thanks. I'll answer those in reverse order. Yeah, we don't have any announcements in terms of purchase obligations, and so we'll point you to the 10-K for that. But, with respect to your first question, you know, I would say we prepared the market for a downturn in margins or a softening of margins in our guidance last quarter. But, we even we were surprised by the acceleration that we saw, you know, in the liquid cooled rack market. And so we had to ramp up our supply chain. We paid a lot of expedite costs and higher supply chain costs. So I think as the supply chain improves, we expect those efficiencies to now come back out, but that impacted us, you know, more than we had expected. Especially for June quarter? Yeah. Yeah, for the, for the June quarter. Was that the majority of the 430? Was that the majority- Well, no, I think- 430 basis points- No -decline? So half was targeting specific accounts like we announced last quarter, and the other half was really the higher, you know, supply costs that we encountered. Yep. Very helpful. Thank you, guys. Our next question today is from the line of George Wang of Barclays. Please go ahead. Your line is now open. Oh, hey, hey, guys, thanks for taking my question. I have two parts. Firstly, can you give more color just in terms of share gains, especially within the hyperscale arena? You know, traditionally, Supermicro has been more tier two, tier three, enterprise, and you guys talk about higher mix on hyperscale. Just curious, does that mean you guys are winning new penetration to the hyperscale space? Yeah, again, like what I just mentioned, we saw our Taiwan capacity is getting bigger, and Malaysia capacity will be ready. So we are fully ready for larger scale data center customer. But we will be selective, so that's why we foresee only $26 billion-$30 billion. If we try to be more aggressive in a larger scale, our growth can be even faster than that. But we try to grow in both ways, enterprise in a larger scale data center. Kind of try to balance, so to maintain our healthy profitability. Okay, great. Just a second question, if I can squeeze in. Just you know, as we enter the Blackwell era, you know, with liquid cooling, kind of larger deployments, higher ASP, but also come with some potential working capital needs. Just in terms of the capital raise, you know, is there fair to say you guys are sufficient, or there could be some potential to come to the market? Just maybe you can talk about you know, the composition takes for the next 12 months. Yeah, liquid cooling, I mean, for sure is necessary, and is very helpful for Blackwell solution. Although Blackwell solution push out a little bit, but indeed, we enable liquid cooling for H100 and H200 as well. And lots of customer are interested in our H100 and H200 liquid cooling now indeed. So liquid cooling to- Okay, great From our position, we like to support the whole data center, not just, Blackwell. Okay, just can you address on the working capital, if you can give any color on that? Yes. So we announced a $500 million credit line with a group led by the Bank of America. And so we expect—we are really, you know, working on our balance sheet and leveraging our balance sheet. And we expect, you know, some announcements to be coming in terms of, you know, additional loan possibilities in the future. Okay, great. I will go back to the queue. Thank you. Our next question today is from the line of Jon Tanwanteng of CJS Securities. Please go ahead. Your line is open. Hey, good afternoon. Thank you for taking my questions. I was wondering if you could just talk, you know, given your time to market and volume capabilities and liquid cooling, the, you know, the energy and compute advantages, can you walk through what your pricing strategy is and why not pass those costs on, especially relative to the value that you're providing? Is it, you know, a stronger competitive environment, close to behind you, or are you effectively trying to get ahead of them and get that share first? Yeah, I mean, indeed, the liquid cooling from our point of view is really a good value to the whole market and our whole planet, because that's energy consumption, right? So we enable liquid cooling primarily for Blackwell, right? Because Blackwell higher power, that for sure. Lots of case need liquid cooling. But we enable that for H100, H200, and regular CPU as well. Because overall, liquid cooling, once mature, once the economical scale is good enough, it's good for all different kind of computing. And that's exactly now we are deploying, we are promoting. Lots of our customer continue to interest in our liquid cooling, even not for Blackwell, Blackwell. Got it. Thank you. And then you mentioned getting back to the gross margin target range by the fiscal year-end. Can you help us narrow down a little bit more where in that target range you expect to be? Is it at the low end? Is it more towards the middle? Kind of help us understand how you're getting there. ... Okay, for June, it's really a unique quarter because we deploy in lots of DLC, and we paid out of proportion for our cost. So, that make our June gross margin much worse. But now, indeed, our DLC technology have been getting very mature, and we have a high volume now. So that lower our DLC cost now. However, we try to promote DLC as a mainstream product solution. So we try not to add the value too much to customers, but instead we try to gain max share and max DLC everywhere. Okay. Thank you. And any color just on where in the margin range you expect to end up? Well, so we, I think if you look at the guidance that we gave for Q1, we expect to be above 12 in the first quarter. And, we're doing, you know, we'll be working very hard to move back into, and back into the range, as we mentioned, you know, as soon as, as quickly as we can. Especially with our coming soon Data Center Building Block Solution, with more software, on-site deployment, maintenance, and kind of end-to-end management service. So our gross margin should grow from building block solution for data center very soon. Great. Thank you, guys. Our next question is from the line of Mehdi Hosseini of SIG. Please go ahead. Your line is open. Yes, sir. Thanks for taking my question. I just have two housekeeping item. David, what kind of other income did you have in the June quarter? You did say that you had an interest income of $12 million, that you realized in June quarter. That was a net figure, Mehdi. So we actually had $20 million of interest income, but that was offset by some adjustments to some investment adjustments, with which, which- But the $20 million- Brought it down lower. ... interest income? So the $20 million is interest income? $20 million was interest income, yeah, from higher cash balances. That was offset by some, This whole quarter. ... some investment. Correct. Okay. All right. Okay. And then a question I have for Charles. Obviously, you have done a good job of doubling revenue in fiscal year 2024, but you also had negative free cash flow of $2.6 billion. And if I were to look at the high end of your revenue guide for fiscal year 2025, you're on track to double revenues again. Does that mean that you're gonna need to burn another $2.5 billion-$2.6 billion of free cash flow to hit those revenue targets? Not necessary. I mean, if we try to be very aggressively growing, market share, maybe. If, for example, we forecast on, $30-something billion, right? So in that case, we may need more. But, if we try to focus on, below $30 billion, then not necessary. Mehdi, one thing I would add to that is, you know, we believe that we have, you know, an IG profile. And as such, like I mentioned earlier, we're starting to leverage our balance sheet more with targeting toward unsecured debt. And so that will help us, you know, on an inter-quarter basis. Gotcha. Thank you. Just what should I assume for fiscal year 25 CapEx? We're not giving a guide at this time. Okay. But would it be down on a year-over-year basis since most of the expansion in Malaysia and US are behind us? Well, we have other projects going on, you know, expansion here in the U.S., but nothing to announce today. Gotcha. All right. Thank you, David. Our next question today is from the line of Nehal Chokshi of Northland Capital Markets. Please go ahead. Your line is now open. Yeah, thank you. I wanna talk about DLC and some of the chatter that's been out there from some competitors. And that sounds like failure rates for DLC, broadly speaking, not necessarily for Supermicro, is high relative to air-cooled. Can you comment on what is Supermicro's DLC failure rates relative to air-cooled, and then also relative to other DLC solutions? And I guess maybe we can do it on a per node basis, annualized failure rates, or whatever basis you want to utilize. Yeah, we spent a lot of effort in last, I would like to say two years, to prepare our optimized DLC solution, including lots of new design, redesign, refining the components of the system. So finally, I mean, about May this year, right? We have our DLC solution fully ready. And we have more than a handful high profile customer who really like our DLC solution. That's why we pull in the solution to them, and that's why we paid also acceleration charge, right? But now, the good thing is our whole DLC solution has been very mature and ready for really high volume production. So now, for any customer want DLC, we are able to support them quickly and with a much reasonable cost now. So, looking at the world, I mean, at DLC, I believe will be a really popular solution for the world because it's more efficient, especially energy saving. So we are very happy that we established DLC solution much ahead of anyone else. Again, like June and July, I believe we have at least 70% or 80%, maybe even higher, market share in the world for DLC. And air-cooled, again, we have been, have a very optimized air-cooled solution. So we continue to promote air-cooled solution for sure. Do you have any thoughts on the actual, like, failure rates relative to air-cooled and then relative to other suppliers DLC solutions? Yeah, liquid cooling, as you know, because they are very high efficient in cooling, right? So they allow CPU, GPU, all the components running at a lower temperature. And they, in lots of case, indeed, are able to optimize customer's data center performance by a couple% to even a high single-digit%, right? So lots of customers really like the DLC at this moment. I see. So are you saying that you actually can achieve lower failure rates with DLC because you can run the GPUs at lower temperatures? CPU, GPU, and other components at a low, low, temperature. That will sure help, kind of the whole data center, quality, uptime, right? Availability, time. Okay. Then my follow-up question is that, I think June 21, you did an 8-K after market close, leasing significant data center space from Prime Data Centers, and then you're leasing it back to Lambda. It seems like a rather odd arrangement. Can you guys talk about the purpose of doing this? So we consider ourselves experts in the data center, you know, data center solutions, and so this is really just one more facet of, you know, being a total provider. Okay. Thank you. Thank you, and our next question is from the line of Thomas Blakey of KeyCorp. Please go ahead. Your line is open. Hi, guys. Thanks for taking my questions. I have a few here. David, can you comment on the mix shift in, or the mix rather, of AI rack scale revenue here in the quarter? Did it increase quarter-over-quarter in the June quarter? Absolutely. I mean, you know, our revenues went up 1.5, over half, $1.5 billion, and that was primarily driven by liquid-cooled racks. Okay, excellent. An update maybe on the capacity utilization. Did that increase as well or decrease? Relatedly to that, you commented last quarter that there would be a number, I think it was about 1000 of racks per month going out at a 64 GPU configuration. Could you give an update in terms of did you ship those to the 3 customers? One was new in the June quarter. Again, an update on the capacity utilization related to that question. Yeah, customer like our high-density computing solution, especially per rack. That's why you say 64 GPU or more GPU, right? So we are very efficiently provide a customer for whatever configuration they like. And very soon, we will announce something even better, for sure. So to be clear, is that a yes, that you shipped 3,000 racks during the quarter at that configuration to those three customers? We are building the capacity for that because how many customer will move to DLC, especially when Blackwell already? So we are very optimistic for that, especially after Blackwell in high volume production. And we have many Blackwell already optimized system and a rack scale design. Yeah, but, Thomas, the 1,000 per month is- was the capacity. We're not, we're not saying that we shipped 1,000 per month. The one thing I can tell you is that- That, uh- The efficiency... Yeah. Yeah. Okay. Thank you, and we have run out of time for any further questions, so this will conclude the Super Micro Computer Incorporated Q4 2024 earnings call.