Super Micro Computer, Inc. Q4 FY2025 Earnings Call

Thank you for standing by. My name is Cameron and I will be your conference operator today. I would like to welcome everyone to the Super Micro Computer, Inc. SMCI U.S. Fourth Quarter Fiscal Year '25 Business Update Call. With us today are Charles Liang, Founder, President and Chief Executive Officer; David Weigand, CFO; and Michael Staiger, Senior Vice President of Corporate Development.

Good afternoon, and thank you for attending Super Micro's call to discuss financial results for the fourth quarter and full year fiscal 2025, which ended June 30, 2025. With me today are Charles Liang, Founder and Chief Executive Officer; and David Weigand, Chief Financial Officer. By now, you should have received a copy of the press release from the company that was distributed at the close of regular trading and is available on the company's website. As a reminder, during today's call, the company will refer to a presentation that is available to participants in the Investor Relations section of the company's website under the Events and Presentations tab. We have also published management's script commentary on our website. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expenses, taxes, capital allocation and future business outlook, including guidance for the first quarter of fiscal 2026 and the full fiscal year 2026. These statements and other comments are based on management's current expectations and assumptions that involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. You can learn more about these risks and uncertainties in the press release we issued earlier this afternoon, our most recent 10-K for fiscal 2024 and other SEC filings. All of these documents are available on the Investor Relations page of Super Micro's website. We assume no obligation to update any forward-looking statements. Most of today's presentation will refer to non-GAAP financial results and business outlook. For an explanation of our non-GAAP financial measures, please refer to the accompanying presentation or to our press release published earlier today. The non-GAAP measures are presented as we believe that they provide investors with a means of evaluating and understanding how management evaluates operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with U.S. GAAP. In addition, a reconciliation of GAAP and non-GAAP is contained in today's press release and in the supplemental information attached to today's presentation. At the end of today's prepared remarks, we'll have a Q&A session for sell-side analysts. Our first quarter fiscal 2026 quiet period begins at the close of business on Friday, September 2025. And with that, I will now turn it over to Charles.

Thank you, Michael. I will be covering our performance for fiscal 2025 and providing insights into our strategic direction for fiscal 2026. Our fiscal 2025 results represent a 47% year-on-year revenue growth at $22 billion. This growth reflects continued strong demand for our AI and green computing solutions. Despite the six months cash flow impact from the delayed filing of our fiscal year 10-K and revenue recognition from a major new partner. Non-GAAP earnings per share were $0.41, down year-over-year from 50% last year, primarily due to the tariff impact, although we have taken measures to reduce this impact, and we will see the results. Allow me to go a little deeper into the June revenue shortfall in what was otherwise a stronger quarter. The shortfall stemmed from two key factors: a capital constraint that limited our ability to rapidly scale production and specification changes from a major new customer that delayed revenue recognition due to the addition of some new features. The capital constraints will no longer be an issue after we filed the fiscal year '24 10-K and large customer orders are now slated for recognition in the September and December quarters. Following close collaboration to align with the customers' updated future requirements. Despite this circumstance, we remain focused on our strategic priorities, optimizing our solutions and capturing market share. Notably, the number of large-scale product and play customers grew from one in fiscal year '24 to four in fiscal year '25, signaling strong momentum and continuing growth potential across our customer base. We are also on track to add a few more in fiscal year '26. We continue our leadership in AI platforms and infrastructure with a comprehensive portfolio optimized for the latest GPU technologies, including NVIDIA, B200 systems platforms and AMD's M50 and MI355 GPUs. Our X14 and X14 GPU systems delivered back-to-back performance, supporting large-scale AI training and intensive workloads and enterprise computing demand with exceptional efficiency. Notably, we were able to deliver our B200 systems with an industry-leading time to market to our customers. We are confident our B300 and GB300 solutions will deliver similar, if not even better time to market and time to online advantages for customers, helping them accelerate their AI deployments faster than others. To further simplify our customers' AI data center infrastructure deployment and time to online, we officially introduced our data center building block solution (DCBBS) to the market last quarter. With our DCBBS, customers can harness our proven system building product advantage to adapt quickly to evolving market demands, especially in the rapidly increasing AI product cycles. Our modular architecture enables faster customization, streamlines production and reduces time to delivery and time to online, while also optimizing quality, efficiency, and maintenance. In most cases, customers who use our DCBBS can finish building a new AI data center in just 18 months instead of the traditional two to three years when converting an existing data center or warehouse to a high-density direct liquid cooling data center, customers can complete the transformation in only three to six months instead of twelve or even eighteen months. We have just begun deploying rack-scale total sales with our DCBBS to a few key customers. Key components of DCBBS include liquid cooling solutions, power supplies, battery backup, water or dry power solutions, and more are coming. Our advanced second-generation direct liquid cooling (DLC 2) system reduced power and water consumption by up to 40%, while operating at nearly quiet levels around 50 decibels. This enables superior performance with reduced total cost of ownership (TCO) and total cost to the environment (TCE) for modern data centers. Several DCBBS components are now shipping or entering production, supporting a growing demand for high-performance, energy-efficient data center infrastructure. Equally important, DCBBS meets the growing demand for a comprehensive one-stop shop solution, including software-defined infrastructure, system management, AI workload optimization, networking deployment and different levels of services. It allows cloud service providers to reduce both capital expenditures (CapEx) and operating expenses (OpEx). Indeed, it delivers great value to both AI-focused and traditional IT data centers. By integrating DCBBS capability with our systems and solutions, we are not only enhancing customer value but also improving our profit margins. This shift towards higher margin and revenue streams is central to our long-term strategy. We also start to strategically focus on the enterprise, IoT and telco markets, initiatives we believe will improve both growth and net margin over time. In the last two quarters, we made a significant investment to optimize our solutions for enterprise customers by introducing advanced server and storage systems tailored for hybrid cloud, AI applications, and edge computing workloads. This enterprise-focused strategy will continue for many years to come. Super Micro has also launched and enhanced enterprise service programs, delivering a comprehensive 27 global support for high-density, high-performance driven data center agreement based on optimized rack-scale architecture. Our IoT portfolio, including embedded systems and AG services is gaining momentum across the industry, such as manufacturing, healthcare, telco, smart city and AI applications. Additionally, we have announced a strategic partnership to accelerate innovation in AI and telecom solutions. By expanding into these higher-margin segments, we have diversified our revenue streams and are driving long-term sustainable profitability that will benefit our shareholders. Our global footprint allows us to efficiently deplete and optimize solutions with minimal tariff impact, especially after the September quarter. With large manufacturing campuses across the U.S., Taiwan, Malaysia and the Netherlands, we can deliver comprehensive systems and data center building products and total solutions to our customers directly and quickly. This robust global presence enables us to respond to diverse regional demands, supporting cost-sensitive customers seeking greater value, mitigate tariff exposure, and maintain a well-designed global supply chain that is both agile and responsive. Looking ahead to Q1 fiscal year '26, I anticipate revenue between $6 billion and $7 billion, driven by continuing momentum across our AI-driven and play DCBBS, software and service business, which are delivering exceptional customer value and strengthening our profitability. I'm especially excited about our DCBBS for the full fiscal year 2026. I expect at least $33 billion in total revenue, supported by our expanding large and enterprise customer base, upcoming product innovation, and robust DCBBS total solutions. In closing, I want to thank our employees for their dedication, our customers for their trust, and our investors for their continued support. We are excited about the opportunity ahead and look forward to updating you on our progress in the next quarter. David, please?

Thank you, Charles. 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 billion to $6.4 billion. Growth was led by demand for next-generation air-cooled and liquid-cooled GPU AI platforms, which represented over 70% of Q4 revenues across both enterprise and cloud service provider markets. For the full year fiscal year '25, we reported revenues of $22 billion, representing 47% growth over fiscal year '24 revenues of $15 billion. During Q4, we recorded $2.1 billion in the enterprise channel segment representing 36% of revenues versus 42% in the last quarter, up 7% year-over-year and up 6% quarter-over-quarter. The OEM appliance and large data center segment revenues were $3.7 billion, representing 63% of Q4 revenues versus 57% in the last quarter, up 2% year-over-year and up 40% quarter-over-quarter. The emerging 5G telco edge IoT segment revenues were 1% of Q4 revenues. For fiscal year '25, enterprise channel revenues grew 38% to represent 39% of total revenues. The OEM appliance and large data center segment grew 50% and represented 60% of total revenues. The 5G telco edge IoT segment represented 1% of total revenues. For fiscal year '25, we had 4% to 10% of large data center customers versus in fiscal year '24. Server and storage systems comprised 98% of Q4 revenue, and subsystems and accessories represented 2%. By geography, the U.S. represented 38% of Q4 revenues, Asia 42%; Europe 15%; and the rest of the world 5%. On a year-over-year basis, U.S. revenues decreased by 33%, Asia increased by 91%, Europe increased by 66%, and the Rest of World decreased by 3%. On a quarter-over-quarter basis, U.S. revenues decreased by 21%, Asia increased by 78%, Europe increased by 196%, and the Rest of World increased by 53%. Q4 non-GAAP gross margin was 9.6% versus 9.7% in Q3 due to product and customer mix. For fiscal year '25, the non-GAAP gross margin was 11.2% versus 13.9% for fiscal year '24. Our long-term goal is to gradually improve gross margins through providing complete data center building block solutions and focusing on the enterprise, IoT, and telco markets. We also expect to benefit from economies of scale from higher revenues, cost-effective global facilities, including the new Malaysia manufacturing plant, and customer diversification. The Q4 operating expenses on a GAAP basis increased by 8% quarter-over-quarter and 23% year-over-year to $316 million, driven by higher compensation expenses and headcount. On a non-GAAP basis, operating expenses increased by 11% quarter-over-quarter and 29% year-over-year to $239 million. The Q4 non-GAAP operating margin was 5.3% versus 5% in Q3. Other income and expense for Q4 was a net expense of $5.7 million, consisting of $28.4 million in interest income, offset by $22.3 million in interest expense and FX other losses of $11.8 million. The tax provision for Q4 was $19 million on a GAAP basis and $37 million on a non-GAAP basis. The GAAP tax rate for Q4 was 9%, and the non-GAAP tax rate was 12%. The GAAP tax rate was 13% for fiscal year '25 versus 5% in fiscal year '24, and the non-GAAP tax rate was 15% in fiscal year '25 versus 11% in fiscal year '24. The Q4 GAAP diluted EPS was $0.31 compared to guidance of $0.30 to $0.40, and non-GAAP diluted EPS of $0.41 versus guidance of $0.40 to $0.50 due to lower gross margins and higher operating expenses in the quarter. For fiscal year '25, we reported GAAP diluted earnings per share of $1.68 versus $1.92 for fiscal year '24 and non-GAAP diluted EPS of $2.06 versus $2.12 in fiscal year '24. The GAAP fully diluted share count increased quarter-over-quarter from $622 million to $625 million in Q4, and the non-GAAP share count increased sequentially from 636 million to 638 million shares. Q4 cash flow generated from operations was $864 million compared to $627 million in the previous quarter. For fiscal year '25, cash generated from operations was $1.7 billion versus cash consumed by operations of $2.5 billion in fiscal year '24. Q4 closing inventory was $4.7 billion versus $3.9 million in Q3. CapEx and investments for Q4 was $79 million, resulting in positive free cash flow of $841 million for the quarter. CapEx and investments for fiscal year '25 were $183 million versus $194 million in fiscal year '24. During the quarter, we completed a convertible bond offering, raising $2.3 billion in gross proceeds before operating expenses and the costs associated with the simultaneous covered call spread and stock buyback. The Q4 closing balance sheet cash position was $5.2 billion, while bank and convertible note debt was $4.8 billion, resulting in a net cash position of $412 million versus a net cash position of $44 million last quarter. Additionally, in July, we executed a $1.8 billion facility, which allows for the non-recourse sale of certain qualified accounts receivables to strengthen our working capital on a discretionary basis. Turning to the balance sheet and working capital metrics compared to last quarter. The Q4 cash conversion cycle was 98 days versus 124 days in Q3. Days of inventory decreased by 6 days to 75 days compared to the prior quarter of 81 days. Days sales outstanding were 40 days compared to 56 days in Q3. Days payables outstanding increased by 4 days to 17 days versus 13 days in Q3. Now turning to the outlook for Q1 fiscal year '26. 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. We expect gross margins to be similar to Q4 fiscal year '25 levels. GAAP operating expenses are expected to be approximately $329 million and to include $82 million in stock-based compensation expenses that are not included in non-GAAP operating expenses. The outlook for Q1 of fiscal year 2026 fully diluted GAAP earnings per share includes approximately $69 million in expected stock-based compensation expenses, net of tax effects of $20 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 $24 million. The company's projections for Q1 fiscal year '26 GAAP and non-GAAP diluted net income per common share assume a GAAP tax rate of 13%, a non-GAAP tax rate of 15.5%, and a fully diluted share count of 631 million for GAAP and 644 million shares for non-GAAP. We expect CapEx for Q1 to be in the range of $60 million to $80 million. And for fiscal year '26, we expect net sales of at least $33 billion.

Great. Cameron, let's turn it over to a question-and-answer session.

The first question is from Simon Leopold with Raymond James.

I wanted to get a better understanding of some of the bottlenecks or gating factors for sales. And what I'm looking at is we've got full year revenue outlook of $33 billion, so that's better than $8 billion a quarter. And we're looking at September being roughly $6 billion to $7 billion. So I would have thought that availability of Blackwells, GB200 could have given you maybe some more upside to September and a more linear outlook for the year, but this would suggest more of a backend load. So if you could help us understand how you're thinking about the cadence through that fiscal year? And what are the bottlenecks? Or what are the restraints in terms of the September quarter and availability of the chips?

Yes. Basically, our business will continue to grow. Last year, because of the 10-K delay, we had some constraints. So we grew 47%. This year, we should be able to grow better than that. And you mentioned some chip availability, some resource availability from vendors like NVIDIA. Last year, we had to wait and see. Basically, we believe the availability will be much better than the last two quarters. And that's why we estimated a minimum of $33 billion. And by the way, our new introduction, DCBBS, helps customers to build a data center quicker, especially the cloud-ready time to online much faster. So that's another factor we believe this year, in 2026, we should be able to grow better than last year.

And is any of this related to customers perhaps waiting for GB300? Or is that not a factor?

Yes, you are right. Some customers are waiting for coins technology, that is GB300. The good thing is we have a B300, GB300 pretty much ready to go. That's waiting for our partner NVIDIA to support us.

I have two of them. The first one is a higher-level question. Can you talk about management strategy for competing in the AI server market? Is your focus on revenue growth and gaining market share? Or is your focus on margin expansion? And if it's both, then what gives you confidence that you can grow revenues and grow margins in this competitive market? And I have a follow-up.

Yes. Very good question. Yes, we can grow much quicker if we don't care about the gross margin and net margin. And that's why we introduced DCBBS, a center building block solution. That's a total solution to support the customer to build their data center quicker, better and also save money, more reliably, and we provide all life needs, including on-site deployment, networking, cabling, all kinds of service. So we believe we can grow revenue, market share, and profitability, especially our data center end-to-end software solution. So DCBBS plus all software needs, customer needs including service. So we are sure we are able to provide a better value to customers, not just a price war.

Okay. For my follow-up can you talk about the opportunity with sovereigns? You announced an MOU during the quarter. Can you give us your thoughts on expected rollout of that opportunity? And David, what margin uplift should we expect from sovereign customers versus your existing customer base for two CSPs? I mean how should we think about the revenue and margin opportunity here?

Yes. So in sovereign AI, it brings us a very good chance. There are so many countries needing to build their AI infrastructure, and those countries really appreciate our DCBBS data center investor solution. So we help them to design their AI infrastructure and help them build AI much quicker and better. So we see great potential in that area.

Yes, and Ruplu, on the gross margin side, we are optimistic that we will be able to sell more complete data center BBS solutions with sovereigns. So therefore, we don't have enough experience to be forecasting specific gross margins. But we're very optimistic that with the additional offerings that we will have, there’s upside there.

There are many contracts, especially in Europe, in the East, and in Asia. So they're all really a great opportunity for building their AI infrastructure for their country and for their companies. And we are working very closely with them.

Yes, two points if I may. The first is more of a clarification. In the first half of the year, you experienced, as did the industry, longer customer purchase cycles, first due to the HCX decision-making delays in the March quarter, and then with the B200 and B300 decisions in the June quarter. Charles, it seems that in response to one of Sumit's questions, you suggested that there might still be extended decision-making periods regarding the B300. Could you clarify whether we are still experiencing these elongated customer decision-making cycles? Understanding this would be helpful as we differentiate it from the organic demand outlook as we progress through the year. I have a follow-up after that.

Yes. As you know, NVIDIA has so many products, so many beta products, and new products. And we are very happy to provide all the new technologies and make them available for the market as soon as possible. Like I just mentioned, we work with our partners very closely and make sure once NVIDIA is able to ship in volume, we can service customers quickly. And with DCBBS, we are optimized for customers' data centers, including the large data centers and middle-sized data centers or even small-sized data centers. So we are very happy to support a lot of middle size and small size AI infrastructure as well. That's part of Super Micro's advantage. We provide a total solution and make it much easier for customers to build their AI infrastructure quicker and better.

And just as a follow-up, can you give any context around the comment of large-scale data center customers expanding from 6 to 8 in fiscal '26? What flavor of customers might that be? When do you consider someone to be large scale? And what market domains do those additional large-scale data center customers fit into?

Yes. Most of the large-scale AI CSP continues to have strong demand. And we are prepared to support them. The testing is with much stronger cash flow now. So we are ready to support more large-scale data centers as well.

I wanted to ask about the data center building block solutions, as it seems a bit early for you to provide forecasts on gross margins. Could you share insights on what a typical sales cycle looks like? Are any of your larger data center customers expressing interest in these solutions? Specifically, when can we expect to see material revenues reflected in the P&L? What would the timing look like if you were to discuss these solutions with your customers now? What should we anticipate regarding this matter? I also have a follow-up question.

Yes. Thank you. Yes, we officially advanced our data center building provision last quarter. And now we have some products fully ready to ship. For example, AI computing power that has been available for four years from Super Micro and kind of like CPU, right in though in rec CPU and kind of like side car, from liquid to transformation, kind of for those customers who like to go for liquid cooling, but do not have a liquid cooling data center in their setup, we support them with side car. The product is ready to ship now, like a power share, and when GB200, GB300 go for rescale, I mean, use power share, we have a product ready now. And BBU, we have a product ready now as well and other tower for cooling or dry power we are shipping now and kind of like on-site prime and networking, including cabling, all kinds of service. We have most of those components getting ready now. And we started in the September quarter, and then we will ramp up in much higher volume in December. For sure, we will continue to grow in next year, March quarter and June quarter. So this data center building block solution will eventually help someone build their AI factory infrastructure much quicker and more energy efficient, also saving costs. So we are very excited about our DCBBS solution.

Got it. And for my follow-up, you mentioned the investments that you're making on the enterprise opportunity or edge opportunity as well. I mean assuming some of those are better margin opportunities in the data center building block solutions related to your business currently around this 9%, 10% gross margin right now. Do you see an opportunity still to get back to the long-term targets that you had on the gross margin of 14% to 17%? Or do you think the expectations of investors should be maybe at a more modest level in terms of what the gross margin rate of the company would be in the future?

Yes. Very big question. And a very good question also. Yes, enterprise and IoT, as you know, have much higher margins, and DCBBS service software also have better margins. So we are growing in both directions. One is growing revenue and supporting large-scale data centers while also growing enterprise data center total solutions and software service. Long term, I believe 15% is still our target and how long it takes depends on the combination. So I believe the direction is still there. I mean we would like to get back to our traditional 16%, even 17% post margin. Maybe you can add something.

Yes, I think that, as Charles mentioned, we have been providing these services already. We've had customers with very large deployments that we've helped them in the build-out of their data center and with specific services. So it's something that we're really focused on and we know that it will contribute to our profitability.

Yes. As a silicon value-based company, we are sure we are able and we'd like to provide more value to customers, not just hardware, not just high volume product, but also to give service solution optimization and to make it much easier for customers.

I just have two. First, on the greater than 10% customers for fiscal '25. I was wondering if you could just let us know what the revenue exposures were for those customers? I can appreciate we'll eventually get it in the 10-K, but any early color would be helpful. And then second, thank you for all the guidance on 2026. I was wondering if you could just talk about how we should think about gross margins for the full year. Is the first-quarter gross margins that you spoke to a good indication of how we should think about the full year?

Okay, Michael. So the four customers, which we refer to as A, B, C, and D, had revenues of 11% and 21%. And as to your second question, we're not going to forecast annual guides, but I want to revert back to our earlier comments that we're doing everything that we can, especially we're very optimistic about these data center building block solutions. We’re very quick to market. We think those two combinations, DCBBS and our fast time to market, is our best chances for margin improvement.

Yes, especially with our DCBBS, we are able to help customers increase speed up their time to online. For example, traditionally, it takes two years, but we've improved it to 16 or 18 months. So a lot of customers are very interested in those services.

I have two questions. The first one is, what is going to be the driver of the projected Q2 uptick to the September quarter revenue? And maybe that can also help us understand why you're guiding to no operating leverage, I believe, effectively the guidance implies about a flat operating margin from the June quarter and September quarter.

So, in terms of the customers, we have a lot of customers that are building out really good deployments. And so that's what gives us a guide to the first quarter. So we've been shipping AMI 355X and GB300. And so we expect that to ramp in Q1. And that's really what's giving us our guide.

Yes. We are also gaining many more customers in Europe, the Middle East, and Asia now. So basically, the near future looks pretty strong.

And why, with the incremental $1 billion of revenue, won't we see any operating margin leverage?

Well, whenever there is a change over to these new platform technologies, there's always a little bit of a ramp for us. And so that creates a little bit of a production learning curve.

Okay. And then my second question is about the data center building solutions. Is that being presented more as a separate service, or is the value of that separate service less significant compared to the Gen AI factory, or is it included in the Gen AI factory to help improve the margin profile for that factory?

It has supported a team scale of data center – doesn’t matter generative AI or agentic AI or application, right, invention. So it's a solution that we validate. So when we ship to customers, they can put together easily. It's kind of like kids playing with blocks, right? So kind of like it's very data in advance when customers receive, easy to deploy, and easy to get online.

Yes, and as Charles mentioned, Nehal, the delivery and time to online for our customers is critical because they have end customers that they're waiting for. So that's a huge selling point.

Yes, so is the center building block solutions at least going to be representative of 10% of the deals that 10% of the deal value that you're going to be doing in the September quarter?

It will be steadily growing. I hope very soon it will be more than 20% or even more than 30%. Because so many people provide a system convenient power, but we instead provide not just a convenient power but total solution, a data center, or cloud total solution.

I was hoping you could unpack gross margins during the quarter. Last quarter, you had provided some adjusted gross margins based on inventory reserves. Maybe you could help us understand if there were any inventory reserves this quarter, and if you're expecting any in Q1, including maybe potential impact from tariffs.

Yes, thanks, Brandon. So we did mention a little bit about that last quarter. And what I would say is that they came in as expected. However, we believe that that's not going to be the case going forward. So we think that we’re anticipating stabilization in that area.

Yes, especially with our DCBBS and our service function. So we have customers building a data center and making sure they go online, mostly, and that will help our inventory control as well. That's our main best-return product. So that will lead to slow-moving product write-downs as well. Yes, but we expect to improve in that area.

This is Shane Mally on for Quinn. My first question is on the recent export licenses for NVIDIA and AMD. Just curious to see how Super Micro is positioned to potentially support these deployments? And does this involve any of these potential shipments?

Are you referring to H20...

Yes, at least not in high volume for us.

Got it. And then I have a follow-up, would you clear up a quick clarification question from, I think, Northland. But did you say that the data center building block solutions will be around 20% to 30% of total revenue in the September quarter?

No, I mean I would say maybe next year summer. So it will ramp gradually not immediately.

First one, just on the data center building block solutions. I was just wondering what the gross margin profile looks like compared to the corporate average and what an incremental dollar of sales in that kind of solution adds to your gross profit?

Very good. Data center building product solutions, I believe we are the first one. So we, the first company to introduce data center total solutions with building block features, so the profit margin and the value to customers, which we both are good. Much better than a commodity product. When you compete with many companies, that's the pressure for office margins, right? But data center building solution benefits from much less competition. We work with our vendors very closely, right? And so I believe our position will be second to none. So for sure, we will have a good chance once it's available from our vendor, we are very happy to promote quickly.

Just a quick question on the $33 billion guidance for fiscal '26, wondering what is contemplated in terms of revenues from the data award win that you announced.

We don't make a comment about a specific customer, but we do have a growing customer base in Europe and in the Middle East. So we feel excited to grow business in that territory. I believe it will be a good percentage for Super Micro business to grow. Yes, we started to ship starting now, for example, the dip 2 air side car, or are shipping now. And CPU we have been shipping for a while, right, including in the CPU, we are shipping now, and BBU, we will start shipping this quarter. And so a lot of parts, we've been shipping for a few months or ready to ship in volume, and some others will be ready in the next few months or few quarters. So eventually, it will be a big product line. The goal is to support all major components for customers to build their data centers, their factory. So we provide a one-stop shop, not just to save customer time, but to make sure when customers put those components together, it optimizes for both efficiency, quality, and cost.

That was our last question. Thank you for joining today's call. That will now conclude today's call. Thank you for your participation, and enjoy the rest of your day.