Super Micro Computer Inc (NASDAQ: SMCI) Q4 2025 Earnings Call dated Aug. 05, 2025
Corporate Participants:
Michael Staiger — Senior Vice President, Corporate Development
Charles Liang — Founder, President, Chief Executive Officer, Chairman of the Board
David Weigand — Senior Vice President, Chief Financial Officer
Analysts:
Simon Leopold — Analyst
Ruplu Bhattachary — Analyst
Ananda Baruah — Analyst
Samik Chatterjee — Analyst
Michael Ng — Analyst
Nehal Choski — Analyst
Brandon Nispel — Analyst
Shadi Mitwalli — Analyst
Jon Tanwanteng — Analyst
Vijay Rakesh — Analyst
Presentation:
Operator
Thank you for standing by. My name is Cameron and I will be your conference operator today. At this time, 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. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.
Michael Staiger — Senior Vice President, Corporate Development
Good afternoon and thank you for attending Supermicro’s call to discuss financial results for the fourth quarter and full-year fiscal 2025, which ended June 30th, 2025. With me today are Charles Liang, Founder, Chairman 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 as available to participants in the Investor Relations section of the company’s website under Events and 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 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 involve material risks and uncertainties that could cause actual results or events to materially different 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 these documents are available on the Investor Relations page of Supermicro’s website. We assume no obligation to update any forward-looking statements. Most of today’s presentation 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 companies 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 US GAAP. In addition, a reconciliation of GAAP to 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 south side analysts, our first quarter fiscal 2026 quiet period begins the close of business Friday, September 12, 2025.
And with that, I will now turn it over to Charles.
Charles Liang — Founder, President, Chief Executive Officer, Chairman of the Board
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 47% year-on-year revenue growth at $22 billion. This growth reflects continued strong demand for our AI and green computing solutions despite six months cash flow impact from the delayed filing of our fiscal year ‘24,10-K and delayed revenue recognition from a major new large 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 the impact and we will see their results soon.
Allow me to go a little deeper at June revenue shortfall in what was otherwise a stronger quarter. The shortfall stem from two key factors, a capital constraint that limited our ability to rapidly scale production and specification changes from a major new customer that today, revenue recognition because of new ad –because of some new ad features. The capital constraint was no longer an issue after we filed the fiscal year ’24, 10-K and large customer orders are now set for recognition in September and December quarters, following close collaboration to align with the customers update feature requirements. Despite these circumstances, we remain focused on our strategic priorities, optimizing our solutions and capturing market share.
Notably, the number of large scale plug and play Rack customers grew from 2 in fiscal year ’24 to 4 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 latest GPU technologies including NVIDIA B300 and GB300 platforms and AMD’s MI350 and MI355X GPUs. Our X14 and H14 GPU systems deliver breakthrough performance supporting large scale AI training and invention workloads and enterprise computing demands 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 a similar if not even better time to market and time to online advantages for customers helping them accelerate their AI deployment faster than others. To further simplify our customers AI data center infrastructure deployment and time to online, we officially introduced our Datacenter Building Block Solutions, 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 response to increasing complex AI product cycles.
Our modular architecture enable faster customization, streamlines production and reduce time to delivery and time to online while also optimizing quality, efficiency and easy of maintenance. In most cases, customers who use our DCBBS can finish building a liquid cooler AI data center in just 18 months instead of two to three years. When converting an existing data center or warehouse to a high density direct liquid cooling data center customer can complete the transformation in only three to six months instead of 12 or even 18 months. We have just begun deploying large scale total solutions with our DCBBS to a few key customers.
Key components of DCBBS include DLC solutions, the L2A sidecar, I mean liquid to air cooling, CDU especially, in those CDU, indirect CDU as well and chilled doors, PowerShell, battery backup, BBU, water or dry tower solutions and more are coming. Our atomic second generation Direct Liquid Cooling DLC-2 system reduce power and water consumption by up to 40% while operating at a near library quite level around 50 decimal. This enable superior performance which reduce total cost of ownership and total cost to the environment TCE for modern data centers. Several DCBBS components are now shipping or entering production very soon 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 all different level of services. IT allows cloud service provider to reduce both capex and opex capital expense and operating expense. Indeed, it delivers also great value to both AI focused and traditional IT data centers by seamlessly integrated DCBBS capability with our system and rack solution, we are not only enhancing customers value but also improving our profit margins. This shift toward higher margin and revenue stream is central to our long-term strategy.
We also start to strategically focus on enterprise, IoT and telco markets and initiative we believe will improve both growth and net margin over time. In last two quarters, we made a significant investment to optimize our solutions for enterprise customers introducing advanced server and storage systems tailored for hybrid cloud, AI application and edge computing workloads. This enterprise focused strategy will continue for many years to come. Supermicro has also launched an enhanced enterprise service program delivering comprehensive 24/7 global support for high density — high performance driven data center deployment based on optimized rack scale architecture. Our IoT portfolio including embedded system and edge servers is gaining momentum across industry like manufacturing, healthcare, telco, smart city and AI edge applications.
Additionally, we have announced strategic partnership to accelerate innovation in AI at the edge and telecom solutions. By expanding into this higher margin segment, we are diversifying our revenue streams and driven long-term sustainable profitability that will benefit our shareholders. Our global footprint allow us to efficiently deplete optimized solution worldwide with minimal tariff impact especially after September quarter. With large and versatile manufacturing campus across the U.S., Taiwan, Malaysia and the Netherlands, we can deliver a comprehensive system, rack and data and data center label building block and total solution to our customer directly and quickly. This robust global presence enable us to respond to dynamic regional demands, support cost sensitive customers seeking greater value, mitigate tariff exposure and maintain a reliance global supply chain that’s 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 rack, plug and play DCBBS software and service business which we are delivering exceptional customer value and strengthen our profitability. I’m especially excited about our DCBBS. For a full fiscal year 2026, I expect at least $33 billion total revenue supported by our expanding large and enterprise customer base, upcoming product innovation and robust DCBBS total solution. In closing, I want to thank our employees for their dedication, our customers for their trust and our investors for their continuous support. We are excited about the opportunity ahead and look forward to updating you on our progress in the next quarter.
David, please.
David Weigand — Senior Vice President, Chief Financial Officer
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. 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 the total revenues. The 5G Telco/Edge IoT segment represented 1% of total revenues. For fiscal year ’25, we had four 10% plus large data center customers versus one 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 33%, Asia increased 91%, Europe increased 66% and rest of world decreased 3%. On a quarter-over-quarter basis, U.S. revenues decreased 21%, Asia increased 78%, Europe increased 196% and the rest of the world increased 53%. The Q4 non-GAAP gross margin was 9.6% versus 9.7% in Q3 due to product 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. 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 11% quarter-over-quarter and 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 and 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 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 billion 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 cost 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 to 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.
Michael, we’re ready for Q&A.
Michael Staiger — Senior Vice President, Corporate Development
Great. Cameron, let’s turn it over to question-and-answer session.
Questions and Answers:
Operator
Thank you. We will now begin the Q&A session. [Operator Instructions] The first question is from the line of Simon M. Leopold with Raymond James. You may proceed.
Simon Leopold
Thanks for taking the question. 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 Blackwell’s GB200s 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 back-end 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. Thank you.
Charles Liang
Yeah, basically, our business will continue to grow last year because of 10-K today, we have some constraints. So, we grew 47%. This year, we should be able to grow better than that. And you mentioned about bottleneck. Yes, some chip availability, some resource availability from vendor like NVIDIA. Last year, we had to wait and see.
Basically, we believe their availability will be much better than last two quarters and that’s why we estimate minimum $33 billion. And by the way, our new introduction, DCBBS that help customers to build a data center quicker, especially, make their cloud ready for time to online much quicker. So that’s another factor, we believe this year, I mean 2026 we should be able to grow better than last year.
Simon Leopold
And is any of this related to customers perhaps waiting for GB300s or is that not a factor?
Charles Liang
Yes, you are right. Some customers always waiting for coming soon technology like a B300, GB300. So, the good thing is we have a B300, GB300 pretty much ready to go just waiting for our partner NVIDIA to support us.
Simon Leopold
Great, thanks for taking the question.
Operator
The next question is from the line of Ruplu Bhattachary with Bank of America. You may proceed.
Ruplu Bhattachary
Hi, thanks for taking my questions. 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.
Charles Liang
Yeah, very good question. Yes, we can grow much quicker if we don’t care about gross margin and net margin. And that’s why we introduced that DCBBS data center building block solution. That’s a total solution to support a customer to build a data center quicker, better and also, save money, more reliable. And we provide all our infrastructure need including on-site deployment, networking, cabling, all different kind 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 or software need customer need including service. So, we were sure able to provide better value to customer, not just price war.
Ruplu Bhattachary
Okay, thanks for that, Charles. Can I for my follow-up…
Charles Liang
Thank you.
Ruplu Bhattachary
Can you talk about the opportunity with sovereigns? You announced an MOU with DataVolt 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? Suggest tier 2 CSPs. I mean how should we think about the revenue and margin opportunity here? Thank you.
Charles Liang
Yeah, sovereign AI bring us a very good chance. There are so many country need to build their AI infrastructure and those countries, those people really appreciate our DCBBS data center infrastructure total solution. So, we help them to design their AI infrastructure and help them build AI infrastructure quicker and better. So, we see a very good doom — very big room to grow in that area. David?
David Weigand
Yeah, 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. And 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 that there’s upside there.
Charles Liang
Yeah, there are so many countries, especially in Europe — in Europe, in Middle East, in Asia. So, they all are very aggressively [Indecipherable] to build their AI infrastructure for their country, for their company and we are working very closely with them.
Ruplu Bhattachary
All right, thank you for all the details.
Operator
The next question is from the line of Ananda Baruah with Loop Capital. You may proceed.
Ananda Baruah
Yeah guys, thanks for taking the question two if I could, the first one is maybe a little bit more of a clarification. You — in the first six months of the calendar year you guys saw, as did the industry elongated — a little bit elongated customer purchase cycles. You know first from the HGX, from the HGX GB decision making situation in the March quarter, then the B200, B300 sort of decision making situation in the June quarter. Now Charles, it sounds like to one of the first questions.
I think it was to Simon’s question you may have suggested. Sounds like you — you’re suggesting there may then currently be some B300, sort of elongated decision customer decision making as well. So just to clarify, are you still going through — are we still not yet to normalize customer decision making cycles? Because if that’s the case, I think it’s useful for us to understand that as distinct from what the organic demand backdrop may be as we go through — as we go through the year here. And anyways, I have a follow-up after that. Thanks.
Charles Liang
Yeah, as you know, NVIDIA have so many products, so many better products, new product and we are very happy to provide all the new technology, new product and make them available for the market as soon as possible like you just mentioned B300, GB300. We work with our partner very closely and make sure once NVIDIA able to ship it in volume, we can service customer quicker.
And without DCBBS, we exactly optimize for customers data center including a large data center and middle size data center or even small size data center. So we are very happy to support a lot of middle size and small size AI infrastructure as well. That’s part of Supermicro’s advantage. We provide a total solution and make a customer’s job much easier to build their AI factory — AI infrastructure quicker and better.
Ananda Baruah
And just as a follow-up can you guys any context you can give us — guys around the comment of large scale data center customers expanding to 6 to 8 in fiscal ’26. What sort of — what flavor of customers might that be? When do you consider someone to be large scale and what market domains like those additional large scale data center customers? Thanks.
Charles Liang
Yes, most of the large scale AI CSP continue to have a strong demand and we are prepared to support them as well. The good thing is with much strong cash flow now, so, we are ready to support a more large scale data center as well.
Ananda Baruah
Okay, thanks, guys. Appreciate it.
Operator
The next question comes from the line of Samik Chatterjee with JPMorgan. You may proceed.
Samik Chatterjee
Hi, thanks for taking my question. I have two, but maybe for the first one, you talked about the data center building block solutions and that it’s still maybe a bit early for you to forecast gross margins on that front. But anything that you can help us in terms of what does a typical sales cycle or what are you expecting for a sales cycle on that front look like? Have any of your larger data center customers shown interest in Data Center Building Block Solutions?
I guess the question more is when should we start to see or what should we expect in terms of material revenues in relation to when that does come into the P&L? What would be the earliest if you were sort of going and talking to your customers about these solutions now, what should be our expectation on this front? And I have a follow-up. Thank you.
Charles Liang
Yeah, thank you. Yeah. We officially announced our Data Center Building Block Solutions last quarter and now, we have some product fully ready to ship. For example, the AI Computing Power Rack, PnP that has been available for four years from Supermicro and kind of like CPU, right? Indoor — indirect CPU and kind of like a sidecar L2A. Right. From liquid-to-air transformation kind of for those customers who like to go for liquid cooling but do not have a liquid cooling data center infrastructure ready, we support them sidecar and the product is ready to ship now like a PowerShell, right, kind of when GB200, GB300 go for rack scale.
I mean use PowerShell, we have a product ready now and BBU, we have a product about ready now as well and kind of like a water tower for liquid cooling or dry power. We are shipping now and kind of like on-site deeper email and networking including the cabling, all [Phonetics] kind of service. We have most of those components getting ready now and we started shipping in September quarter, right, and then we have ramp up in a much higher volume in December and then for sure, we’ll continue to grow in next year March quarter and June quarter.
So, this Datacenter Building Block Solution eventually will help customer to build their AI factory infrastructure much quicker and much energy efficient and also save money as well. So, we are very excited for our DCBBS solution.
Samik Chatterjee
Got it, 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 including the Datacenter Building Block Solutions related to your business currently on the sort of where you’re 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 are these new opportunities necessarily big enough and at a margin high enough to get you back to that 14% to 17% run rate? Or do you think the expectations of investors should be at a maybe a more modest level in terms of what the long-term gross margin range of the company would be in the future?
Charles Liang
Yeah, very big question and very good question also. I mean yes, Enterprise and IoT as you know have a much higher margin and DCBBS service software we should have a better margin. So, we are growing in both directions. One is growing revenue and support a large scale data center, at the same time growing enterprise data center total solutions software service. So, I mean, long term, I believe 15%, 16%, stay our target and take how long it depends on a combination. So I believe yes, the direction is still there. I mean we like to get back to our traditional 16%, even 17% power margin. Maybe you can add a subject?
David Weigand
Yeah, 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. And so, it’s something that we’re really focused on and we know that it’ll contribute to our profitability.
Charles Liang
Yeah, as a Silicon Valley-based company for sure we are able and we like to provide more value to customer. Not just hardware, not just high volume product, but all different kind of service solution optimization and to make a customer’s job much easier.
Samik Chatterjee
Great, thank you.
Operator
The next question is from the line of Michael Ng with Goldman Sachs. You may proceed.
Michael Ng
Hey, good afternoon. Thank you for the questions. 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 about how we should think about the full year? Thank you very much.
David Weigand
Okay, Michael, so the four customers which we’ll refer to as A, B, C and D, not in that particular order but 11%. We had three 11% and a 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 Datacenter Building Block Solutions. And we have — 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.
Michael Ng
Thank you, David.
Charles Liang
Yeah, especially, with our DCBBS — especially, our DCBBS. We are able to have a customer increase a speed of their time to online, right? Kind of traditionally, for example, two years, we have them improved to a sphere to 18 months, 16 months. So, lots of customers are very interested to those service.
Michael Ng
Thank you, Charles.
David Weigand
Thank you.
Operator
The next question is from the line of Nehal Choski with Northland. You may proceed.
Nehal Choski
Yeah, thank you. I have two questions. First one is what what is going to be the driver to projected Q2 uptick to 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, September quarter.
David Weigand
So, the — 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 our guide to the first quarter. So, we’ve been shipping MI355X and GB300 and so, we expect that to ramp in Q1 and that’s really what’s giving us our guide.
Charles Liang
Yeah. We are also gaining many more customers in Europe, Middle East and Asia now. So basically, the near future should be pretty strong.
Nehal Choski
And why would the incremental billion dollars of revenue we won’t see any operating margin leverage?
David Weigand
Well, whenever there is a — in changing 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.
Nehal Choski
Okay. And then my second question is that the Datacenter Building Block Solutions, is that being pitched more as a discrete service where the value of that discrete service is fractional to the gen AI factory or is it bundled in to gen AI factory where it’s meant to drive a better margin profile for that gen AI factory?
Charles Liang
It is supported or even scale of data center — that doesn’t matter, generative AI or agentic AI or application, right? Invention. So, it’s a solution that we are defined pre-test, pre-validate, so, when we ship to customer, a customer can put it together easily. It kind of like a kids play LEGO Castle, right? So, kind of it’s validated in advance when customer receive easy to deeper easy and easy for — quickly go for online.
Nehal Choski
So basically, it’s the latter of the situations that I have proposed.
Charles Liang
Yeah. Kind of including computing power, the rack, the deep cooling, even the power, the water power, dry power, the battery system, the power module, right? So, we have everything pre-built and validated in advance.
David Weigand
Yeah. And as Charles mentioned, Nehal, the time to delivery and time to online for our customers is critical because they have — they have end customers that they’re waiting for. So that’s a huge selling point.
Nehal Choski
Yeah. So, is Datacenter 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?
Charles Liang
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 system computing power, but we instead not just computing power, but total solution, a data center or cloud total solution.
Nehal Choski
Great, thank you very much.
David Weigand
Thank you.
Operator
The next question is from the line of Brandon Nispel with KeyCorp. You may proceed.
Brandon Nispel
Hey, guys, thanks for taking the question. I was hoping you could unpack gross margins during the quarter. Last quarter, you had provided some adjusted gross margins based on inventory reserves. Hoping you could help us understand whether there were any inventory reserves this quarter. And if you’re expecting any in 1Q including maybe potential impact from tariffs. Thank you.
David Weigand
Yeah, thanks, Brandon. So yeah, we did mention a little bit about that last last quarter and what I would say is that they came — they did come in as expected. However, we believe that that’s not going to be the case going forward. So, we think that we’re anticipating a stabilization in that area.
Charles Liang
Yeah. Especially, with our DCBBS and with our service function. So, we have customer build a data center and make sure they go for online mostly and that will kind of make customers business much more smooth and this, I mean it’s good for our inventory control as well. That’s our main less return product. So that will have less slow moving, less product write down as well. Yeah. But we expect we will improve in that area.
David Weigand
Yeah. And Brandon, with respect to tariffs, the situation is dynamic. We’re actively monitoring the tariff environment. We know there’s news coming out next week. If we have any updates, we’ll share it with you. But we can only watch and react as every other business is.
Brandon Nispel
Thanks for taking the questions.
Operator
The next question is from the line of Quinn Bolton with Needham & Co. You may proceed.
Shadi Mitwalli
Hey guys, this is Shadi Mitwalli on for Quinn. Thanks for letting me ask the question. My first question is on the recent export licenses for NVIDIA and AMD. Just curious to see how Supermicro is positioned to potentially support these deployments. And does the guide embed any of these potential shipments?
David Weigand
Are you referring to H20?
Shadi Mitwalli
Yes, H20, I believe that in the and I…
David Weigand
Are you referring to the H20…
Shadi Mitwalli
Yes.
David Weigand
Yeah, we’re not anticipating selling those products at any quantities.
Charles Liang
Yeah, not at least the 9% [Phonetics] high volume for us. Yeah.
Shadi Mitwalli
Got it. And then my — I have a follow up which is a clarification question from I think Northland. But did you say that the Datacenter Building Block Solutions will be around 20% to 30% of total revenue in the September quarter?
Charles Liang
No, I mean that will be further away, maybe next year summer. So it will ramp gradually, not immediately.
Shadi Mitwalli
Got it. Thank you.
Operator
The next question is from the line of Jon Tanwanteng with CJS Securities. You may proceed.
Jon Tanwanteng
Hi, good afternoon, and thank you for taking my questions. First one just on the Datacenter Building Block Solutions. I was just wondering what the gross margin profile looks like there compared to the corporate average and what an incremental dollar of sales in that kind of solution as to your gross profit.
Charles Liang
You know, very good question. Datacenter Building Block Solutions, I believe we are the first one. So, we — the first company to introduce data center total solution with building block feature. So the profit margin, the value to customer for sure both are good. Much better than commodity product. When you had to compete with many companies, that’s the pressure for profit margin, right? But the data center building block solution instead we have much less competition.
Jon Tanwanteng
Okay, great. Thank you, that’s helpful. And then just on the B300 launch, do you expect expect to see yourself distancing yourself from competitors both pricing wise and allocation wise when that is that reaches volume or is there any reason to believe that you may see more of what you’ve seen in the B100 and B200 timeframes?
Charles Liang
We work with our vendor very closely, right? And so, I believe our position will be a second to none. So for sure will be a good chance once it’s available from our vendor, we are very happy to promote quickly.
Jon Tanwanteng
Okay, great. Thank you.
Charles Liang
Thank you.
Operator
The last question is from the line of Vijay Rakesh with Mizuho. You may proceed.
Vijay Rakesh
Yeah, hey, Charles and David. Just a quick question on this — on the $33 billion guide for fiscal ’26, wondering what is contemplated in terms of revenues from the DataVolt win that you announced.
Charles Liang
We don’t make a comment for specific customer but we do have a growing customer base in Europe and in Middle East. So, we feel exciting to grow business in the territory Middle East, BB and believe it will be a good percentage for Supermicro business to grow.
Vijay Rakesh
Got it. And then on the DCBBS, obviously, nice move with the racks and enabling your go-to-market timing, I guess, just wondering what would be the split of a full NVL72 rack versus HGX that you — that you’re shipping now or into end of the year — end of fiscal ’26 failures.
Charles Liang
This — yeah, we started ship assumption [Phonetics] about now. Kind of like for example the Duke to air sidecar we had shipping now and CDU, we have been shipping for a while, right? Including in indoor CDU, we are shipping now and BBU, we will start shipping PowerShell, we are ready to ship this quarter and so, lots of parts we have been shipping for a few months or ready to ship in volume and some other will be ready in next few months or few quarter.
So eventually, it will be really big product line. The goal is to support all the major components for customer to build their data center, their AI factory. So, kind of to offer one-stop shop. One-stop shop not just to save customer time but to make sure when customers put those components together, it work and optimize for both efficiency, quality and cost.
Vijay Rakesh
Got it. Thanks.
Charles Liang
Great. Thank you.
David Weigand
Thank you.
Operator
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.