Earnings Call Transcript - SMCI Q3 2022

Operator, Operator

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer, Inc. Fiscal Third Quarter 2022 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. It’s now my pleasure to turn the call over to Nicole Noutsios, Investor Relations. Please go ahead.

Nicole Noutsios, Investor Relations

Good afternoon. And thank you for attending Super Micro’s call to discuss financial results for the third quarter, which ended March 31, 2022. With me today are Charles Liang, Founder, Chairman and Chief Executive Officer; Patrick Wang, President, East Coast and SVP, Strategy and Corporate Development; and Dave Weigand, Chief Financial Officer. By now, you should have received a copy of the news 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 on the IR section of the company’s website under Events & Presentations tab. We have also published management’s scripted 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 fourth quarter of fiscal year 2022 and the full fiscal year 2022, our long-term revenue goal and the potential impact of COVID-19 on the company’s business and results of operations. There are a number of risk factors that could cause Super Micro’s future results to differ materially from our expectations. You can learn more about these risks in the press release we issued earlier this afternoon, our most recent 10-K filing for fiscal 2021, the 10-Q filings made thereafter and our other SEC filings. All of these documents are available on the IR section 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 to our press release published earlier today. In addition, a reconciliation of GAAP to non-GAAP results is contained in today’s press release and the supplemental information attached to today’s presentation. At the end of today’s prepared remarks, we will have a Q&A session for sell-side analysts to ask questions. I will now turn the call over to Charles.

Charles Liang, CEO

Thank you, Nicole, and good afternoon, everyone. Today, I am pleased to announce our quarterly revenue of $1.36 billion for fiscal Q3 2022, which was a 51% year-over-year growth and 16% quarter-on-quarter growth sequentially. These results are well above our guidance given three months ago and above our recently updated range given two weeks ago. The continued five quarters of strong earnings indicate our total IT solution growth strategy is working well, and we are only at the very beginning of the breakout. Now let's look at some of the key highlights from the quarter. First, again, our fiscal third quarter net revenue totaled $1.36 billion, up 51% year-on-year and up 16% quarter-on-quarter. We are above our guidance range of $1.1 billion to $1.2 billion. It's Super Micro’s fifth and 60th quarter of faster revenue progression, and we continue to execute our strong growth trajectory at three to four times higher than the overall industry's growth rate. Our fiscal third-quarter non-GAAP earnings per share was more than tripled year-over-year and stood at $1.55 compared to $0.50 from the previous year. This 210% growth was well above the higher end of our guidance range of $0.17 to $0.19, demonstrating strong operating leverages and that customers are accepting the value of our total IT solutions. Growth in our major geographies was well balanced, and our recent Taiwan expansion has contributed to our better operating margin and meeting our growing customer demand. Our results in the past five quarters show that we are on track to meet our $10 billion annual revenue target shared last year in March, and our profitability has significantly improved since then. Based on our current demand and capacity, we are forecasting at least $1.45 billion revenue for the upcoming June quarter to end fiscal 2022 on a strong note at above $5 billion yearly revenue. Looking ahead, I believe we will continue to have a strong fiscal year 2023 in the range of $6 billion to $7 billion annually and expect to reach our $10 billion yearly revenue at least one year earlier than the original plan we shared in March 2021. The fuel that accelerates our revenue comes from our success with our total IT solutions in AI, enterprise, cloud, edge telco, and customers from many other verticals. Riding on the strength and the foundation of Super Micro’s broad architecture, our total IT solutions allow customers to quickly deploy without going through the complexities of design, mediation, solutions, and integration. This strategy also positions Super Micro very profitably compared to our competition amidst the ongoing supply chain challenges. With our building growth and faster-evolving economy of scale, we can create and deliver workload-optimized solutions to customers with time-to-market advantage, quality, performance, cost, and TCO advantages. To grow our solutions and customer base faster and more effectively, we are on track with our command-center-based auto-configurator and B2B, B2C automation platforms. Many customers have tried and appreciated this intelligent database and wafer-based service over several quarters. This represents our next opportunity to scale up and scale out our application optimized solution to many more customers, 24/7 with no downtime and no manpower bandwidth limitation. The B2B and B2C automation program will be launched nationwide next week, I believe. It will dramatically improve our engineering, operations, sales, service effectiveness, and customer satisfaction while accelerating our market share gains. To enhance our total IT solution product portfolio, we have doubled our software engineering resources in the past few years to build new features for our enterprise datacenter and OEM customers. Our Super Cloud Composer and other software products manage GPU, compute, storage, and networking building broker at cloud scale, including rich analytics. Therefore, datacenter operators can make data-driven decisions to improve workflow efficiency. In the medium and long term, we see our investment throughout the datacenter management software stack enabling future infrastructure as a service and monitor as a service functionality, further enhancing our total IT solution capability and value. Our recent Taiwan and US expansions are focusing on delivering total IT solutions in volume, capable of shipping thousands of racks per month directly from Super Micro campuses, designed with green computing in mind. These energy-saving rack-scale solutions leverage our latest real air cooling and liquid technologies. More of our customers are running their datacenters with PoE close to 1.06 or better. Customers can expect lower TCO by saving energy costs while increasing performance per megawatt in their facilities significantly. In some cases, our customers increased computing capacity by up to 15% with the same energy budget. Manufacturing customers are quite pleased to receive higher-quality, higher credit rating products, which are fully optimized, integrated, and validated by Super Micro. Our R&D organizations are dedicated and hard at work to expand our new technology product lines with the upcoming new Intel, better graphics, and AMD in all our processes. We are ready to bring time-to-market advantages to our customers. We are pleased to see a strong trend in terms of customer seeding and early deployment requests. We are especially partnered closely with NVIDIA and other leading technology partners in the emerging Metaverse and Omniverse ecosystems, and we have doubled our GPU product line to support this opportunity and immersive workloads. With all of the new technologies, including PCI-E Gen 5, CXL, CDR5, the new 350 watt CPU and 700 watt GPU, our portfolio of new platforms for rack-scale total IT solutions will continue to develop and become a key growth driver for the upcoming quarters and years. In closing, our 51% year-over-year revenue growth and $1.55 quarterly EPS prove that our total IT solution strategy has been gaining customers' preference and trust in this growing market. We will continue to enhance our total IT solutions capability and value while also lowering our operational costs by leveraging our Taiwan production capacity. With our strong technical foundation, dedicated employees, server-building solutions, and application-optimized green computing products, we are quickly and consistently winning new customers and increasing their satisfaction. More importantly, our investments in command center-based B2B and B2C platforms will help us increase our customer base and market share much more efficiently. My team and I will continue to execute our growth strategies and accelerate our timelines to reach the $10 billion revenue target in the short term and also start planning for our new $20 billion midterm goal. I will now pass the call to David Weigand, our CFO, to provide further details on the quarter.

David Weigand, CFO

Thank you, Charles. I'm pleased to report solid fiscal third quarter revenue of $1.36 billion, a 51% year-on-year increase and a 16% quarter-on-quarter increase. Our revenue exceeded our initial guidance range of $1.1 billion to $1.2 billion and our recently updated range of $1.3 billion to $1.35 billion. This was our fourth consecutive quarter of revenues exceeding $1 billion. Year-to-date revenue through our fiscal third quarter increased 43% year-over-year. Our growth initiatives with the total IT solutions targeting fast-growing markets and customers with accelerated GPU and AI workloads, software-defined storage and networking, public and hybrid cloud, and edge IoT platforms are gaining momentum. These new growth drivers complement our traditional strength with enterprise, channel, and OEM customers, leading to accelerating revenue growth, expanding margins, and operating leverage. Revenues for the trailing four quarters of Q4 '21 through Q3 of fiscal year '22 totaled $4.63 billion. In the third fiscal quarter, Super Micro recorded balanced revenues across all three of our market verticals, demonstrating the resilient nature of our diversified end markets. We achieved $846 million in organic enterprise channel and AI revenues, representing 62% of Q3 revenues versus 64% last quarter. This was up 44% year-over-year and 12% quarter-over-quarter, driven by our growing list of large enterprise customers and new product offerings. Our OEM clients and large data center segment achieved $423 million in revenues, representing 31% of Q3 revenues, versus 23% last quarter, which was up 54% year-over-year and the same increase quarter-over-quarter, driven by our large, new, and existing data center customers and OEM appliance customers. Our 5G/telco, Edge, and IoT segment achieved $86 million in revenues, representing 7% of Q3 revenues versus 12% last quarter. This was up 159% year-over-year and down 39% quarter-over-quarter. This emerging segment represents a vast long-term opportunity for us, and our design win momentum and backlog continue to grow, but short-term quarter-to-quarter results can fluctuate, depending on the timing of new customer adoption and qualification cycles. Systems comprised 85% of total revenue and subsystems and accessories represented 15% of Q3 revenues. On a year-over-year basis, the volume of systems and nodes shipped, as well as system node ASPs, increased. On a quarter-over-quarter basis, the volume of systems shipped and system node ASPs increased, while nodes shipped were lower due to the product mix. We had a balanced distribution of revenues across geographies, with the US representing 56% of revenue; Asia, including Japan, 23%; Europe 15%; and the rest of the world 6%. On a year-on-year basis, US revenues increased 53%; Asia, including Japan, increased 50%; Europe increased 27%; and the rest of the world increased 184%. On a sequential basis, gross revenues increased 19%. Asia, including Japan, increased 9%; Europe increased 5%; and the rest of the world increased 124%. The Q3 gross margin was 15.6%, which was up 160 basis points quarter-over-quarter from Q2 and up 180 basis points year-on-year due to price discipline, leverage from higher factory utilization and operating efficiencies, and a continually improving product/customer mix. The quarter-on-quarter and year-on-year increase in gross margins was achieved despite continued elevated freight and supply chain costs. Turning to operating expenses. Q3 OpEx on a GAAP basis increased 7% quarter-on-quarter and 14% year-on-year to $121 million. On a non-GAAP basis, operating expenses increased 6% quarter-on-quarter and 15% year-on-year to $110 million. Our non-GAAP operating margin increased significantly to 7.5% for the quarter versus 5.2% last quarter and 3.2% a year ago, demonstrating both improvements in gross margins and operating leverage. The year-on-year and quarter-on-quarter increases on a GAAP and non-GAAP basis were driven by higher headcount and personnel costs and lower research and development NRE credits. Other income and expense was $3.1 million in income, consisting of $4.6 million in foreign exchange gains, offset by interest expense of $1.5 million, compared to a $1.8 million expense last quarter. This quarter, the tax provision was $16.2 million on a GAAP basis and $19.6 million on a non-GAAP basis. Our non-GAAP tax rate was 18.7% for the quarter. Our tax rate for GAAP and non-GAAP purposes increased again this quarter, primarily due to a significant increase in pre-tax income in fiscal 2022. Lastly, our share of income from our JV was $0.39 million this quarter compared to $0.29 million last quarter. The Q3 non-GAAP diluted earnings per share totaled $1.55, which exceeded the high end of the original guidance range of $0.70 to $0.90 and our recently updated Q3 range of $1.40 to $1.50. Increases to EPS were due to a combination of higher revenues, manufacturing efficiency, price discipline, product and customer mix, and operating leverage. Cash flow used in operations for Q3 was $228 million compared to cash flow used in operations of $53 in Q2, as accounts receivable and inventories grew due to increasing demand from our customers and to mitigate the continued impact of supply chain disruptions, including CapEx of $11 million, which made Q3's negative free cash flow total $239 million. Key uses of cash during the quarter included increases to inventory and accounts receivable and/or reductions in customer prepayments. This was offset by cash provided from increased accounts payable and short-term debt. We did not repurchase any shares in the quarter. Our closing balance sheet cash position was $247 million, while bank debt was $547 million as we drew down on our bank lines of credit to increase inventory levels as we ramped production of new platforms globally. Turning to the balance sheet and working capital metrics compared to last quarter, our Q3 cash conversion cycle remained unchanged at 98 days relative to Q2 and is above our target range of 85 to 90 days due to higher inventory levels. Days of inventory were at $117, representing a slight decrease of one day versus the prior quarter. Days sales outstanding was up by two days quarter-on-quarter compared to the previous nine days, while days payable outstanding was up by one day to 58 days. Now turning to the outlook for our business. We note that our Q4 June quarter is typically seasonally strong, and we are enthusiastic about several new customers and innovative new leading-edge total IT solutions ramping in multiple end markets. We are carefully watching the global macroeconomic situation and impacts to the supply chain from continuing COVID-19-related disruptions. For the fourth quarter of fiscal 2022, ending June 30, 2022, we expect net sales in the range of $1.4 billion to $1.48 billion, GAAP diluted net income per share of $1.45 to $1.64, and non-GAAP diluted net income per share of $1.51 to $1.69. We expect gross margins to be similar or slightly up from Q3 levels. GAAP operating expenses are expected to be approximately $121 million and include $8 million in stock-based compensation and $1 million in other expenses not included in non-GAAP operating expenses. We expect other income and expenses, including interest expense, to be a net expense of approximately $2 million, and expect a nominal contribution from our JV. Non-GAAP operating expenses are forecast to be up quarter-on-quarter from continued investment in R&D and higher personnel costs. The company's projections for GAAP and non-GAAP diluted net income per common share assume a GAAP tax rate of 17.4%, a non-GAAP tax rate of 19.4%, and a fully diluted share count of 54.3 million for GAAP and 55.79 million shares for non-GAAP. For the fiscal year ending June 30, 2022, we are raising our revenue guidance range from $4.2 billion, $4.6 billion to a new range of $4.96 billion to $5.04 billion, and raising our GAAP diluted net income per share outlook from at least $2.77 to a range of $4.16 to $4.35, and our non-GAAP diluted net income per share from at least $320 to a range of $4.53 to $4.71. The company's projections for GAAP annual net income assume a tax rate of 16.5% and a rate of 18.7% for non-GAAP net income. For fiscal year 2022, we are assuming a fully diluted share count of 53.6 million shares for GAAP and 55.1 million shares for non-GAAP. The outlook for fiscal year 2022 fully diluted GAAP earnings per share includes approximately $39 million in expected stock-based compensation and other expenses net of tax effects that are excluded from non-GAAP diluted net income per common share. Finally, we expect CapEx for the fiscal fourth quarter of 2022 to be in the range of $10 million to $15 million. Nicole, we’re ready for Q&A.

Nicole Noutsios, Investor Relations

Operator, we can now open the line up for questions.

Operator, Operator

Your first question comes from the line of Ananda Baruah with Loop Capital. Your line is open.

Ananda Baruah, Analyst

Hey, good afternoon, guys. Thanks for taking the question. Yeah, congrats on the great execution first half of this calendar year, it sounds like it's a good following through here. Two, if I could, Charles and David, what would you guys – first time we've got the chance to talk to you guys since you pre-announced. What would you guys say, you would consider to have been incremental versus 90 days ago that's leading to such strong revenue execution for both the March quarter and now the June quarter? And then I have a follow-up. Thanks a lot.

Charles Liang, CEO

Yeah. That's been utilized because of the supply chain, because there are always some invisible factors. And that's why I mean earlier I mean in March quarter, we tried to be conservative. But it turned out we have many customers really like our IP total solution, and we shipped a lot of completed rigs. Indeed, our direct scale PnP, plug and play rack solution grew a lot year-over-year. Roughly, this year compared with last year, our rack product grew about five to six times. I believe this momentum will continue to be strong in the next 12 months. So we expect another three to five times direct scale PnP product line growth. So that's why, I mean, the growth has been a little bit surprising for us.

Ananda Baruah, Analyst

That's great context, Charles. I'm going to ask what the next natural follow-up is since you indicated that you expect another three to five times growth. Is the long-term growth rate of 17% to 23% still appropriate, or should it be stronger as you look ahead to the next couple of years? Thanks.

Charles Liang, CEO

Next couple of years can be very strong. But again, it depends on our global supply chain situation. As David has mentioned, COVID-19 is still challenging us, and also macroeconomic conditions. So if it is not much worse, I believe our growth rate year-over-year will continue to grow.

Ananda Baruah, Analyst

Okay. Thanks a lot. I appreciate it. Thanks so much.

Patrick Wang, President, East Coast and SVP, Strategy and Corporate Development

Hey, Ananda, this is Patrick. I'm just going to jump in here. You also noted that Charles talked about his expectations on fiscal 2023 and the implied growth rate there. So that's another data point.

Charles Liang, CEO

Yes. Next year, I mean, fiscal 2023 at this moment, I believe $6 billion to $7 billion will be a relatively conservative estimation.

Operator, Operator

Your next question comes from the line of Mehdi Hosseini with SIG. Your line is open.

Mehdi Hosseini, Analyst

Yes. And thanks for taking my question and actually, I have a couple of follow-ups. Charles, as you look into next fiscal year, how do you see seasonal trends impacting your September quarter? I ask that because you're doing really well, especially with the diversification of revenue. It would help us understand how to factor in the seasonal aspect and how you would set up the company for a $6 billion to $7 billion revenue run rate in fiscal year 2023. And I have a follow-up.

Charles Liang, CEO

Thank you. Very good question. Indeed, traditionally, September will be our slow season. But this time can be quite different, because we have a very strong back order now. Again, many high-profile customers really like our rack-scale plug and play solution. So we are preparing for significant growth in that segment. I believe this year, September, we will have a great quarter. It can be even better than the June quarter.

Mehdi Hosseini, Analyst

Okay. Thanks for that color. And then a question for David. You've had three consecutive quarters of cash burn. Given the strength and your backlog, should we assume that you're going to burn cash again in the June quarter?

David Weigand, CFO

Yes, Mehdi, I think that as our expansion increases, as we have to add accounts receivable and inventory, we will continue to use cash. But we're using it for customers and for inventory. So we would consider that to be really strong uses.

Mehdi Hosseini, Analyst

Okay. Thank you.

Operator, Operator

Your next question comes from the line of Nehal Chokshi with Northland Capital Markets. Your line is open.

Nehal Chokshi, Analyst

Yes, thank you and congrats on the awesome results and amazing guidance. Would you say that the component availability situation has improved at all quarter-to-date or during the March quarter relative to the December quarter?

Charles Liang, CEO

A few months ago, we thought the situation would gradually get better, but there are still some areas that remain very tight. This is why we continue to experience issues with supply chain availability. While some components have seen significant improvements, others are still facing serious shortages. Therefore, we are putting in a lot of effort to enhance that situation.

Nehal Chokshi, Analyst

Okay. And so clearly, guidance indicates that there was no pull-in of demand, especially in the context of how Intel guided. Thus, the share gains that you guys are putting up appear to be very sustainable. Still, I'd like to hear your pushback that Super Micro's lower lead-time and better management of these constrained components are not leading to these massive share gains that you're seeing at this point in time?

Charles Liang, CEO

Indeed, with the right-scale present solution, we plan in advance with our customers to understand their future demand, and we plan ahead to flow all the different components we need. Then we are able to ship the complete racks to customers relatively efficiently and in a timely manner compared to others. So, I believe this is one of the reasons we are able to grow. We will continue to expand our customer base and offer them rack scale solutions. We have prepared to double our rack-scale capacity in the coming quarter. Indeed, in the June quarter. We feel confident we can continue to assist customers with their supply chain challenges.

Nehal Chokshi, Analyst

Okay, great. And then cash consumption was actually in line with what I had expected. And I presume that was also in line with what you guys had expected given the revenue outperformance, considering that the cash conversion cycle was a bit flat quarter-to-quarter. A, is that correct? Was it in line with what you had expected given the revenue outperformance?

David Weigand, CFO

No, it was, Nehal. We also have to look out to Q4 and beyond in planning our inventory levels. So, it is going in line. I mean, the fact that we have the high growth rate of 51% year-over-year is definitely going to continue to challenge working capital.

Nehal Chokshi, Analyst

Yes, yes. And as such, there's been no share buybacks, right, because all the cash is needed to finance the growth at this point in time, given the massive growth you're seeing?

David Weigand, CFO

Yes, exactly right.

Nehal Chokshi, Analyst

Okay. And given that the cash consumption is tracking what you would expect given the revenue growth that you're putting up, does this give you incremental confidence to utilize debt to support your non-GAAP earnings, rather than waiting for a slowdown in the business before you can really start a share repurchase program in earnest?

David Weigand, CFO

Well, we also have to watch the overall environment. And so we're trying to strike a balance.

Charles Liang, CEO

Yes, we are discussing the possibility, but given the macroeconomic environment still has lots of unknown factors, we are trying to be very careful.

Nehal Chokshi, Analyst

All right, fair guys. Congratulations.

Charles Liang, CEO

Thank you.

Operator, Operator

Your next question comes from Jon Tanwanteng with CJS Securities. Your line is open.

Jon Tanwanteng, Analyst

Hi. Good afternoon, everyone. Thank you for taking my question, and congratulations on a really great quarter and the outlook. My first question is about your improving component supply. I'm curious about how much of a corresponding drop you're seeing in component prices. Is that the case? Should we expect improvements in gross margins going forward, possibly towards the high end of the charge range?

Charles Liang, CEO

Indeed, it's hard to say because of the core situation in Asia, especially Taiwan and Mainland China is still very serious. So, I believe it's difficult to predict. Although we are doing our part and believe the situation will improve, at this moment, we don't have a clear idea of how fast it will happen. David, would you like to add something?

David Weigand, CFO

Yes. To answer the second part of your question, Jon, we did experience some gross margin expansion from higher efficiency, meaning that we actually had higher throughput in our factories at a lower per unit cost. Thus, we do expect this to continue, especially as we ramp up production in Taiwan. We look forward to further margin expansion.

Charles Liang, CEO

Indeed, one factor we haven’t previously discussed, but I'd like to take the chance to share with everyone, is that with our continued growth in rack-scale product lines. Indeed, with our current facilities in the USA and Taiwan, as our business continues to grow, our current capacity can support revenue growth up to $12 billion. So our capacity looks strong. Looking forward, as volumes continue to grow over the coming quarters, our gross margins and net profits will continue to benefit from economies of scale.

Jon Tanwanteng, Analyst

Got it. That's great insight. Thank you. And it's really great to see that capacity. My second question is regarding cash flow; some people have touched on this a little bit. Is it in your interest to raise permanent financing to support the growth? Or do you plan to continue to rely on your revolving credit? How should we think about your ability to fund the growth that you've seen?

Charles Liang, CEO

We are exploring the possibility, depending on the macroeconomic conditions. If the macroeconomic conditions continue to be healthy, we may try to be more aggressive in leveraging bank financing. Otherwise, we may choose to remain conservative.

Operator, Operator

Your next question is from Ananda Baruah with Loop Capital. Your line is open.

Ananda Baruah, Analyst

Hey, thanks guys for taking the follow-up. I guess, sort of, piggybacking Charles off of one of the last questions. How much of the revenue upside for the March and June quarter is from new demand that you may have been conservative about relative to how much do you think was demand that you have been getting indications about, but that supply chain became available for? What I'm trying to get a sense of is how much of this is supply chain related? And is the follow-through dependent to an extent on the new supply chain continuing to get released? I appreciate both comments.

Charles Liang, CEO

Yeah, very good question. Indeed, our demand continues to grow stronger and stronger. The real limitation now is indeed the supply chain for us. That's why we spend time every day to figure out how to improve the supply chain. The demand is strong and keeps growing due to our better technology and total solutions and the strong support we are receiving.

Ananda Baruah, Analyst

That's really helpful. Just a quick follow-up. In the prepared remarks, you mentioned that total IT solutions are driving overall demand. I think you also referred to completed racks. Can you provide any insights into what you're observing in terms of customer engagement? It seems that these IT solutions could significantly boost revenue at this moment, especially considering their increasing importance in the first half of this calendar year. Is the follow-through partly reliant on the continued release of new supply chain elements? I appreciate the comments.

Charles Liang, CEO

Yes. In our supply chain, David, do you want to add something, or Patrick? The supply chain has been puzzling us for many quarters, as you know. Our current customers and some new customers indeed all have a strong demand, and we are working hard to fulfill that demand. David?

David Weigand, CFO

Yes, Ananda, we are seeing really high demand in the AI and ML area. The workloads being addressed there and the solutions we provide are being well received by our customers. The engagements we are in are driving our growth over the last three to four quarters.

Patrick Wang, President, East Coast and SVP, Strategy and Corporate Development

This is Patrick, I'll talk to that. I'll jump in here. The supply chain topic is something we've discussed quite a bit; it's not unique to us. But I have to give kudos to the operations team at Super Micro. Without their efforts, we would not have the supplies we need. On the other hand, customers truly appreciate our products. We have strong products, and we're targeting high-profile customers. We're seeing strong engagement, and so the results speak for themselves. We're all pretty happy here.

Charles Liang, CEO

I agree, supply chain and cash flow are areas in which we will continue to work hard, exploring how we can utilize or further grow our supply chain and more efficiently manage our cash flow.

Ananda Baruah, Analyst

Excellent. Thanks for the context, you guys.

Operator, Operator

There are no further questions at this time. Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.