Super Micro targets at least $33B revenue in fiscal 2026 with expanded DCBBS solutions

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

Management View

• CEO Charles Liang highlighted that fiscal 2025 ended with 47% year-on-year revenue growth at $22 billion, attributing this to strong demand for AI and green computing solutions. He explained, “Shortfall stem from 2 key factors: a capital constraint that limited our ability to rapidly scale production and specification changes from a major new customer that delay revenue recognition because of new ad of some new ad features.” Liang noted that these capital constraints have been resolved and large customer orders are expected to be recognized in the coming quarters. He reported, “the number of large-scale product and play customers grew from in fiscal year ’24 to 4 in fiscal year ’25, signaling strong momentum and continuing growth potential across our customer base.”
• Liang emphasized leadership in AI platforms, mentioning optimization for NVIDIA B200 systems and AMD’s M50 and MI355 GPUs. He introduced the data center building block solution (DCBBS), stating, “customers who use our DCBBS can finish building a new — cool AI [ Delta ] just 18 months is still 2 to 3 years.” He added that DCBBS is now being deployed to key customers and will be expanded.
• Strategic investments have led to a focus on enterprise, IoT, and telco markets, with tailored server and storage systems for hybrid cloud, AI, and edge computing workloads. Liang announced, “Additionally, we have announced a strategic partnership to accelerate innovation in AI and telecom solutions.”
• CFO David Weigand stated, “Q4 fiscal year ’25 revenues were $5.8 billion, up 8% year-over-year and up 25% quarter-over-quarter compared to our guidance of $5.6 million to $6.4 billion.” He detailed that “AI platforms…represented over 70% of Q4 revenues across both enterprise and cloud service provider markets.” Weigand noted a shift in revenue mix towards OEM appliance and large data center segments, and provided a detailed geographic breakdown. He said, “Q4 non-GAAP gross margin was 9.6% versus 9.7% in Q3 due to product and customer mix.”

Outlook

• Liang projected Q1 fiscal 2026 revenue between $6 billion and $7 billion, and stated, “for the full fiscal year 2026. I expect at least $33 billion total revenue.” He expressed confidence in DCBBS and large enterprise customer growth as key drivers. Weigand added, “We expect net sales in the range of $6 billion to $7 billion. GAAP diluted net income per share of $0.30 to $0.42 and non-GAAP diluted net income per share of $0.40 to $0.52.”
• Management expects gross margins to be similar to Q4 fiscal 2025 levels and plans for Q1 CapEx of $60 million to $80 million.

Financial Results

• Q4 revenues were $5.8 billion. Enterprise channel segment contributed $2.1 billion and OEM appliance/large data center segment $3.7 billion. Non-GAAP gross margin was 9.6%, and non-GAAP operating margin was 5.3%. Q4 GAAP diluted EPS was $0.31 and non-GAAP diluted EPS was $0.41. Cash flow from operations was $864 million, with a closing inventory of $4.7 billion. CapEx for Q4 was $79 million. Closing cash position was $5.2 billion, and net cash position was $412 million.
• The company completed a $2.3 billion convertible bond offering and executed a $1.8 billion facility to strengthen working capital. The Q4 cash conversion cycle improved to 98 days versus 124 days in Q3.

Q&A

• Simon Matthew Leopold, Raymond James: Asked about sales bottlenecks and cadence for fiscal 2026. Liang answered, “we believe the availability will be much better than the last 2 quarters…we estimated minimum $33 billion.”
• Ruplu Bhattacharya, Bank of America: Asked about balancing revenue growth and margin expansion. Liang responded, “we introduced DCBBS center building block solution…we believe we can grow revenue, market share and profitability.”
• Bhattacharya follow-up on sovereign customers. Liang said, “in sovereign AI, it brings us a very good chance…we see a very good room very big room to grow in that area.” Weigand added, “we are optimistic that we will be able to sell more complete data center BBS solutions with sovereigns.”
• Samik Chatterjee, JPMorgan: Asked about timing and margin expectations for DCBBS. Liang said, “we have some product fully ready to ship…we started in September quarter, right? And then we have ramp up in a much higher volume in December.” On long-term margin targets, Liang responded, “long term, I believe, 15% still our target and take how long it depends on the combination.”
• Michael Ng, Goldman Sachs: Asked about 10%+ customer exposure and gross margin outlook. Weigand disclosed, “the 4 customers…11% — 11% and 21%.” He said, “we’re not going to forecast annual guides, but…we’re very optimistic about these data center building block solutions.”
• Nehal Sushil Chokshi, Maxim: Asked about drivers of Q2 uptick and operating margin leverage. Weigand replied, “we’ve been shipping AMI 355X and GB300…that’s really what’s giving us our guide.” On margin leverage, “there’s always a little bit of a ramp for us…production learning curve.”

Sentiment Analysis

• Analysts pressed for clarity on revenue cadence, margin expansion, customer concentration, and DCBBS adoption, reflecting a neutral to slightly positive tone, with recurring requests for specifics about growth drivers and margin improvement.
• Management maintained a confident tone in prepared remarks, repeatedly expressing optimism: “we are confident our B300 and GB300 solutions will deliver a similar, if not even better time to market,” and “we are very optimistic about these data center building block solutions.”
• Compared to the previous quarter, analysts’ tone shifted from cautious to more constructive, while management’s confidence was more assertive, emphasizing operational improvements and growth prospects.

Quarter-over-Quarter Comparison

• Guidance for Q1 fiscal 2026 and the full year shifted from a cautious approach in Q3 to explicit targets of $6–$7 billion for Q1 and at least $33 billion for the full year. Previous quarter guidance was more tentative, without a full-year forecast.
• Strategic focus moved from announcing the launch of DCBBS to reporting initial deployments and planning broader rollouts. Management highlighted a greater emphasis on margin improvement via higher-value solutions.
• Key metrics improved: revenues increased, cash flow from operations strengthened, and the cash conversion cycle shortened significantly. Gross margin remained steady, while operating expenses rose due to higher compensation and headcount.
• Management’s tone advanced from cautious optimism to strong confidence regarding execution and growth.
• Analysts’ focus shifted from macroeconomic and tariff impacts to specifics around DCBBS, customer expansion, and margin trajectory.

Risks and Concerns

• Management cited lingering risks in tariff exposure, capital constraints (now resolved), and customer decision cycles influenced by new technology launches. Weigand stated, “the situation is dynamic, we’re actively monitoring the tariff environment.”
• Inventory management and margin stabilization were addressed, with management highlighting improved inventory controls and expectations for less product write-down ahead.
• Analysts raised concerns about operating leverage, margin trajectory, and the pace of DCBBS adoption, with management reiterating efforts to ramp services and solutions for improved profitability.

Final Takeaway

Super Micro’s Q4 2025 call underscores a strategic pivot towards higher-margin, comprehensive solutions, notably DCBBS, as the company sets an ambitious target of at least $33 billion in revenue for fiscal 2026. Management’s confidence is reinforced by improved operational metrics, robust cash flow, and expanding enterprise and sovereign customer bases, while persistent focus remains on margin improvement and global diversification to mitigate risks and sustain growth.

Read the full Earnings Call Transcript