Attached files
| file | filename |
|---|---|
| EX-99.1 - PRESS RELEASE OF SUPER MICRO COMPUTER, INC. - Super Micro Computer, Inc. | exhibit991q3-2017.htm |
| 8-K - FORM 8-K - Super Micro Computer, Inc. | form8-kq3x2017.htm |
1 We Keep IT Green™
Earnings Conference Presentation
FY2017 Q3
April 27, 2017
Charles Liang, CEO
Howard Hideshima, CFO
2
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may relate, among other things, to our expected
financial and operating results, our ability to build and grow Supermicro, the benefit of our products and our ability to achieve our goals, plans and
objectives.
Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that
could cause our actual results to differ materially from those anticipated. These include, but are not limited to: our dependence on continued
growth in the markets for X86 based servers, blade servers and embedded applications, increased competition, difficulties of predicting timing of
new product introductions, customer acceptance of new products, poor product sales, difficulties in establishing and maintaining successful
relationships with our distributors and vendors, shortages or price fluctuations in our supply chain, our ability to protect our intellectual property
rights, our ability to control the rate of expansion domestically and internationally, difficulty managing rapid growth and general political, economic
and market conditions and events.
For a further list and description of risks and uncertainties, see the reports filed by Supermicro with the Securities and Exchange Commission.
Supermicro disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Supplemental information, condensed balance sheets and statements of operations follow. All monetary amounts are
stated in U.S. dollars.
Safe Harbor Statement
3
Non-GAAP gross margin in this presentation excludes stock-based compensation expense. Non-GAAP net income and net income per share in
this presentation exclude stock-based compensation expense and the related tax effect of the applicable items. Management presents non-
GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses the non-GAAP
financial measures for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating
budgets and to determine appropriate levels of operating and capital investments.
Management also believes that the non-GAAP financial measures provide additional insight for analysts and investors in evaluating the
Company's financial and operating performance. However, these non-GAAP financial measures have limitations as an analytical tool, and are not
intended to be an alternative to financial measures prepared in accordance with GAAP.
Pursuant to the requirements of SEC Regulation G, detailed reconciliations between the Company's GAAP and non-GAAP financial results is
provided at the end of the press release that was issued announcing the Company’s operating and financial results for the quarter ended March
31, 2017. In addition, a reconciliation from GAAP to non-GAAP results is contained in the financial summary attached to today’s presentation and
is available in the Investor Relations section of our website at www.supermicro.com in the Events and Presentations section. Investors are
advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings.
Non-GAAP Financial Measures
4 We Keep IT Green™
Charles Liang
Chairman and Chief Executive Officer
5
Q3 FY2017 Non-GAAP Financial Highlights
(in millions, except per share data)
Change
Q3'17 YoY Sequential
Revenue $631.1 18.5% -3.2%
Profit after Tax $20.3 7.0% -18.8%
EPS $0.38 5.6% -20.8%
$533 $524 $529
$652 $631
$0.36
$0.20
$0.32
$0.48
$0.38
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$-
$100
$200
$300
$400
$500
$600
$700
Q3'16 Q4'16 Q1'17 Q2'17 Q3'17
Revenue and EPS Trends
Revenue EPS
6
Revenue Trends
Direct/OEM = 54.0% in Q3’17 Systems = 70.0% in Q3’17
$-
$100
$200
$300
$400
$500
$600
$700
Q3'16 Q4'16 Q1'17 Q2'17 Q3'17
69.9% 65.5% 67.6%
68.1% 70.0%
30.1%
34.5% 32.4%
31.9% 30.0%
Revenue by Subsystem/System
$'s in millions
Systems Subsystem
$0
$100
$200
$300
$400
$500
$600
$700
Q3'16 Q4'16 Q1'17 Q2'17 Q3'17
54.4% 53.2% 50.0%
53.8% 54.0%
45.6% 46.8% 50.0%
46.2% 46.0%
Revenue by Customer Group
$'s in millions
Direct / OEM Channel
7
Q3 Revenue Mix & Growth Highlights
Storage up 28.7% YoY
Next Gen up 74.2% YoY
NVMe design win traction
IOT up 38.0% YoY
Accelerated computing up 176.3% YoY
Deep learning, machine learning, and
Artificial Intelligence ~6% revenue
Enterprise Datacenter up 578.6% YoY
MicroBlade & BigTwin traction
X11 Skylake systems coming
Regional growth
Asia up 92.0%, China up 138.9% YoY
United
States
52.9% Europe
18.2%
Asia
23.9%
Others
5.0%
Revenue by Region
Storage
22.5%
IDC
10.7%
IOT
10.5%
Other
56.3%
Market Verticals
Other includes HPC,
Enterprise, and Channel
8
Vertical Markets
45-Bay JBOD
Top Loading
• 45 Hot-swap 3.5" SAS3/SATA3
drive bays + 2 rear 2.5“
• 6 optional NVMe
% of Revenue: 22.5%
STORAGE
High capacity File
and Object
storage, Backup,
Archive and Cold
storage
% of Revenue: 10.7%
CLOUD
Compute Intensive and Mission-Critical
Applications, Financial Analysis,
Edge Device
High reliability fanless robust design
• Low Power Consumption (9W, 4 core)
• Extreme operation temperature -20 to 60C
• Wall/VESA/DIN Rail mounting
• 7 yr long life cycle
% of Revenue: 10.5%
IoT
Industrial
Automation
Commercial
Appliance
Enviroment
Monitor
Highest performing multi-node system
• 205 Watt CPU Support
• Full 24 DIMMs of memory per node
• 24 All-Flash NVMe or Hybrid Drives
• Three PCI-E 3.0 options per node
SYS-2028BT-HNC0R+
SSG-6048R-E1CR60N
BigTwin
SYS-E100-9AP
9
Vertical Markets
MicroBlade
0.1U per Computing Node
• Up to 40°Coperating temperature
• 20% power savings per node vs. 1U
and OCP
Enterprise
Not just lower
TCO but also
lower initial HW
acquisition cost
% of Revenue: 5.9%
Accelerated
Computing
SuperBlade
Blade computing without the premium
• DP Skylake-EP and beyond
• Up to 255W CPU support
• 200G/100Gps High-speed interconnect
• NVMe Support
Seeding and Early
Deployment Now!
X11 Skylake
Deep Learning, AI and HPC Optimized
• 4 Tesla P100 in 1U
• GPU Direct RDMA support
• Up to 80 GB/s GPU-to-GPU NVLINK
3U MicroBlade
1U Pascal
SYS-1028GR-TXR
Increasing Revenue
10
Progression to Tier 1 Provider
Innovation
Presence
Subsystem Server System
Total Solution
Motherboards
and server
building blocks
Architecture
innovation: BigTwin,
NVMe/Simply Double,
SuperBlade, BBP as
well as GPU/co-
processor solutions
Market Channel:
Distributors/VARs
Verticals:
Cloud, Enterprise,
Accelerated Computing
Fortune 1000:
Brand recognition
Domestic
Asia Pacific
EMEA
Complete solutions:
Management software,
Openstack and Global
Service.
Optimized offerings for
every refresh cycle.
11 We Keep IT Green™
Howard Hideshima
Chief Financial Officer
12
Q3 Revenue
Market Vertical QoQ
Storage -10.3%
IDC -25.2%
IOT 2.0%
HPC -1.7%
Enterprise -38.3%
Channel -3.6%
Systems
85K systems shipped
ASP of $5,198 up 8.9% Q/Q
139K nodes shipped
ASP $3,179 up 3.8% Q/Q
Server
Systems
70%
Subsystems
&
Accessories
30%
Systems
Storage
22.5%
IDC
10.7%
IOT
10.5%
HPC
5.9%
Enterprise
Channel
47.1%
Market Verticals
3.3% Note: Channel is 46% without
overlap with HPC and Storage
13
Non-GAAP Margins
Gross Margin Compare
40 basis points lower QoQ
Prices increases for memory and SSD’s
continued this quarter with only slight
improvement to offset
Utilization was lower at 55%
90 basis points lower YoY
Component pricing, maturing Grantley
product lines and lower utilization
Operating Margin Compare
130 basis points lower QoQ
FX impact from revaluation of offshore loans
was negative
100 basis points lower YoY
Increased compensation expenses primarily
in R&D
14.9%
14.1%
15.2%
14.4% 14.0%
5.3%
3.1%
4.7%
5.6%
4.3%
Q3'16 Q4'16 Q1'17 Q2'17 Q3'17
Non-GAAP Margin Trends
Gross Margin Operating Margin
14
Summary P&L non-GAAP
(in millions, except per share data)
Change
Q3'17 YoY Sequential Q3'16 Q2'17
Operating Expense $61.4 $10.3 $4.2 $51.1 $57.2
Operating Expense Ratio 9.7% 0.1% 0.9% 9.6% 8.8%
Operating Income $27.2 -$1.1 -$9.2 $28.3 $36.5
Net Income $20.3 $1.3 -$4.7 $19.0 $25.0
EPS $0.38 $0.02 -$0.10 $0.36 $0.48
Diluted Common Share Count 53.0 53.1 52.6
Effective Quarterly
Tax Rate 23.7% 32.0% 30.5%
15
Cash and Cash Conversion Cycle
Cash & cash equivalents and short &
long-term investments: $110.5M
Down $21.0M QoQ
Down $68.6M YoY
Cash Conversion Cycle (QoQ)
A/R up $24.4M
Inventory up $43.0M
CCC up 12 days
Debt: $145.5M
Short-term debt: $113.3M
Long-term debt: $32.2M
Q3'17 Q2'17 Change
Cash Equivalents &
Investments $110.5 $131.5 $(21.0)
Accounts Receivable $391.3 $366.9 $24.4
Inventory $642.3 $599.3 $43.0
Accounts Payable $348.7 $341.9 $6.8
DSO 54 49 5
DIO 103 91 12
DPO 57 52 5
Cash Cycle Days 100 88 12
16 We Keep IT Green™
Supplemental Financials
Third Quarter Fiscal 2017
Ended March 31, 2017
17
Revenue Trend
Y/Y 13.1% -8.6% 1.8% 2.0% 18.5%
Seq. -16.6% -1.6% 0.9% 23.3% -3.20%
$0
$100
$200
$300
$400
$500
$600
$700
Q3'16 Q4'16 Q1'17 Q2'17 Q3'17
$533 $524 $529
$652 $631
Supermicro Revenue Trend
$'s in millions
18
Q3 FY2017 YTD Summary Statement of Cash Flow
($’s millions)
9 Months Ended 9 Months Ended
31-Mar-17 31-Mar-16
Net Income $52.2 $65.1
Depreciation and amortization $11.8 $9.5
Stock-based comp expense $14.0 $11.8
Other reserves $1.2 -$0.3
Net change in AR, Inventory, AP -$200.7 -$8.4
Other prepaids and liabilities $31.2 $15.2
Cash flow from operations -$90.3 $92.8
Capital expenditures -$23.3 -$25.1
Free cash flow -$113.5 $67.7
Net cash - investing activities -$0.3 -$1.0
Net cash - financing activities $40.5 $13.2
Effect of exchange rate fluctuation
on cash and cash equivalents $0.2 $1.1
Net change in cash -$73.2 $81.0
19
Non-GAAP Financial Summary
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q3'17 Q2'17 Q3'16
Net Sales $631.1 $652.0 $532.7
Non-GAAP Gross Margin 14.0% 14.4% 14.9%
Non-GAAP Operating Expenses $61.4 $57.2 $51.1
Non-GAAP Operating Income $27.2 $36.5 $28.3
Non-GAAP Net Income $20.3 $25.0 $19.0
Non-GAAP Net Income per share $0.38 $0.48 $0.36
Fully diluted shares for calculation 53.0 52.6 53.1
20
Prior Period Net Income Comparisons
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q3'17 Q2'17 Q3'16
Net Income (GAAP) $16.7 $22.0 $16.7
Stock-based Compensation Expense (tax affected)* $3.7 $3.0 $2.3
Net Income (Non-GAAP)* $20.3 $25.0 $19.0
Diluted Net Income per common share (GAAP) $0.32 $0.43 $0.32
Stock-based Compensation Expense (tax affected)* $0.06 $0.05 $0.04
Diluted Net Income per share (Non-GAAP)* $0.38 $0.48 $0.36
Shares used in diluted EPS calculation (Non-GAAP) * 53.0 52.6 53.1
21
Quarterly Net Income (Loss) GAAP to Non-GAAP Reconciliation
(in millions, except per share data)
* Note: Non-GAAP, please see Non-GAAP financial measures on page 3.
Q3'17 Q2'17 Q1'17 Q4'16 Q3'16
Net income (GAAP) $16.7 $22.0 $13.5 $7.0 $16.7
Adjustments:
Stock-based compensation expense $4.8 $4.7 $4.5 $4.4 $3.9
Income tax effects of adjustments $(1.2) $(1.7) $(1.3) $(1.0) $(1.6)
Net income (Non-GAAP)* $20.3 $25.0 $16.7 $10.4 $19.0
Diluted Net Income per share (GAAP) $0.32 $0.43 $0.26 $0.13 $0.32
Adjustments: $0.06 $0.05 $0.06 $0.07 $0.04
Diluted Net Income per share (Non-GAAP)* $0.38 $0.48 $0.32 $0.20 $0.36
Diluted shares used in GAAP per share calculation
51.9 51.5 51.1 52.3 52.2
Diluted shares used in Non-GAAP per share calculation 53.0 52.6 52.2 53.0 53.1