Supermicro (SMCI) Q4 2026 earnings call transcript

Thank you, Jen. Good afternoon and thank you for attending Super Micro's call to discuss financial results from the fourth quarter of fiscal 2026, which ended June 30th, 2026. With me today, as you know, are Charles Liang, Founder, Chairman and Chief Executive Officer and David Wiegand, 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 training 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 presentations tab. We've also published management scripting 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 2027 and the full fiscal year 27. These statements and other comments are based on management's current expectations and assumptions and involve material risks and uncertainties that could cause actual results or events to material differ from those anticipated. And you should not place undue reliance on forward looking statements. You can learn more about these risk uncertainties in the press release we issued earlier today, our most recent 10k filing for fiscal 25 and other SEC filings.

All these documents are available on the IR page at the Super Micros website. We assume no obligation to update any forward looking statements. Most of today's presentation will refer to non gap initial results and business outlook. For any explanation of our non gap initial measures, please refer to the company presentation or to our press release published earlier today. The non gap measures are presented as we believe that they provide investors with the means of evaluating and understanding of the company's management.

Evaluate the company's operating performance. These non gap measures should not be considered in isolation from as substitutes for or superior to financial measures measured prepared in accordance with us gap. In addition, the reconciliation of gaps and non gap results is contained in today's press release and in the supplement information attached to today's presentation. At the end of today's prepared marks, what Q&A session for self that analysts are fiscal 26, 27, excuse me, quite period begins at the close of business, a Friday, September 11, 2026. Oh, now turn the call over to Charles.

Thank you, Michael. And thank you. The water is being transformed. My AI and Chippo Mango is transforming as well. For my USA based a server manufacturer into a leading AI IT data center total solution company. We designed a manufacturer our total data center building blocks solutions. DCPPS in the USA with men facilities in USA, Taiwan, Manashia, and the Netherlands.

But demand for our AI IT solutions is even stronger than ever before as we are transforming into a total DCPPS company.

One stop shop company for customer food, one to build their data center or a factory quicker and better. In our free announcement, which is close over 60 billion in new orders, driven our order book and background to a new record. As we enter fiscal year 2027, while Q4 revenue came in at 11.1 billion due to some short short term customer today in power, shortage, cooling and networking.

We know this is purely a timing story. The good news is that now our customer can easily leverage our unique DCPPS total solution advantage. And upcoming new technology and product nice to accelerate their time to deployment. We call TTT and time to online. We call TTO, ensuring a strong future growth and long term value for Super Michael for many years to come.

Mostly importantly, our focus on our ability in the year in clear results. For the first quarter, I'm happy to report. And get gross margin of 17.6%. And one thousand seventy cent in that gap. I wrote early for share. This margin expansion, many came from our strategy focus on balancing customer mix and product mix, while having new.

Have enough, you are one time. Of the contribution for the quarter. Since early 2026, we had dedicated departments and resource to folks on growing enterprise customer base and have. Expand our enterprise CPU based server, storage and IoT products. Our quicker growing, inferencing and agentic AI centric product. Also, achieving hair seal profit margins for a company going forward.

Another key to this margin expansion is our BCPPS. Which delivers total solution value by seamlessly integrated GPU and CPU server.

Enterprise storage, direct and liquid solutions, CDU, chill door, water tower, high speed data switch and networking. Data center management, solar oil, and full live service services. This 20 ecosystem enabled customers to build and scale AI data center in quarters rather than years. Dramatically, reducing tissue and accelerating time to online and time to revenue for customers.

We are further elevating this value proposition with our new proactive service model. We are our data center management, solar wire and feed teams. We are automatically alert and be ready immediately to fix or maintain the failures you need. We maintain reduction of computing power as a customer data center.

And the new solar wire, as in a new solar wire with powerful management features and automatic service attached to our hardware abuse. That depends, depends customer trust and driver-on-term value.

Our BCPPS is getting very powerful and it will soon contribute a significant net income to our business. By early next quarter, more of those solar wire features and service products will be online.

On our operations side, we are circumventing this high-value strategy by achieving higher manufacturing years through factory automation, design optimization, and our highly both-style building product architecture. At the same time, we've been very focused on logistics and inventory management. So you can even continue introducing inventory, reserve, and the expertise charge.

Together, these operations are not disappearing. We have a moderate quarter to quarter margin fluctuation, driven by an even customer and product mix, supporting our goal of consistent growing growth margins.

On into our key product domain, our system building product allows us to quickly optimize every major silicon platform. While preparing first-to-to market, Bora Ruby, we are Envira 72, Nubin, HGX, and VARAS-C1, and other high-density VARAS systems.

With AMD, we launched complete new Helios product line, an MI450 total solution alongside strong APIC, CPU, MHC50, and MI3-FID5, I guess, momentous. Working with Intel, we brought HAA system to market and shipping GM6 plus platforming volume. We also dedicated on developing product for the strong demand of AGI process-based corner and finish architecture, optimized for high performance per watt, invention workloads, demonstrating our silicon pattern on steep languages in our engineering excellence.

To support a massive demand, we continue to expand our physical footprint. In Silicon Valley, we recently announced our new 32-acre PCPPS campus, featuring advanced optical fraternities, networking depth, and data center scale manufacturing, which brings our USAF footprint to nearly 4 million square feet.

Probably, our facilities in Taiwan, Malaysia, and the Netherlands are also drinking strongly to meet the demand, putting our total manufacturing capacity on track to exceed 6,000 racks per month, including more than 3,000 directly occurring racks per month. This is a 250-kWh rack for the performance.

Before I close, a quick update on our capital strategy. Following our 5.6 billion financing in June, our balance sheet for radius to pull our components to supply and business needs. Thank you to our strong catch position and more favorable customer and product mix. We currently have no plans to utilize our ATM program, which we initiated a few months ago.

At the same time, we remain focused on building financial efficiency. We need all of this operational and auto advancement. I want to emphasize that our growth momentum is accelerating where it matters most. By expanding hundreds of new enterprise customers and other customers, and leading the transition into our agenda and specialized AI workload, SuperMaggle has become a fundamental architect of today's AI platform. One-point-T, one-point-T, high-speed switch, upcoming optical networking, and our management software, including SCM, SuperMaggle, Cloud Composer, SDM, SuperMaggle Theres, Theres and the Manager, and SOM, SuperMaggle, OxTrader Manager. Deliver the complete, one-stop-shop experience, the modern enterprise, neo-cloud, and any other data in the customer needs.

Looking to feature here in 2027, our momentum gives us strong confidence to target our revenue in the range of 65 billion to 72 billion, as we are in the process of historic infrastructure of you out. We are in balance in top nine expansion, with important nine probability by focusing on growing enterprise customer base, customer mix, PCPPS solutions, and operational discipline. We are shaping the future of AI technology, while delivering two technology value to our customers. And many come within that, physical 2027, where we are strong and faster than goes again.

Thank you, and I will now turn back on to David.

Thank you, Charles. We are pleased to report record fiscal year 26 revenue of $39.1 billion, up 78% over fiscal year 25 revenues, and $22 billion in record, non-gap, fully diluted EPS of $3.63, up 76% over fiscal year 25 EPS of $2.06. Our fiscal year 26 ending backlog was at a record level, with over $60 billion in new orders received during Q4 fiscal year 26, which we expect to fulfill over the coming quarters.

Non-gap gross margins of fiscal year, for fiscal year 26, were 10.9% versus 11.2% in fiscal year 25. Our fiscal year 26, non-gap operating margins expanded to 8.1% from 7.1% in fiscal year 25. Our customer base is diversifying, and we had nine customers in fiscal year 26, with revenues greater than $1 billion each, versus four sets of customers in fiscal year 25.

Turning to fiscal Q4 fiscal year 26 results, we achieved revenue of $11.1 billion, up 93% year over year, the low end of our guidance range of $11 billion to $12.5 billion due to delays in customer readiness, and we anticipate this revenue to be recognized in subsequent quarters.

These AI solutions contributed approximately 60% of total revenue in Q4 versus over 80% in Q3, due to the timing of some large AI project ramps. Based on our backlog, we believe greater than 80% of revenues will be AI related solutions going forward.

During Q4, enterprise and channel revenue was 5.6 billion, representing 50% of total revenue, compared with 28% in the prior quarter. Revenue in this segment increased 172% year over year, and 98% quarter over quarter. During Q4, we saw a pickup in demand from enterprise and channel customers, which were upgrading their compute, storage, and network infrastructure with more efficient CPU platforms.

OEM appliance and large data center revenue was 5.5 billion, also representing 50% of total revenue, compared with 72% in the prior quarter.

Revenue in this segment increased 50% year over year, and decreased 26% quarter over quarter. For fiscal year 26, enterprise and channel revenue grew 39% and represented 31% of total revenue. The OEM appliance and large data center revenue grew 104% and represented 69% of total revenue. For fiscal year 26, we had one large data center slash CSP customer, which represented 28% of revenue.

By geography, the US represented 71% of Q4 revenue. Asia represented 11%, Europe represented 8%, and the rest of the world represented 10%. On a year over year basis, revenue in the US grew 259%. Asia decreased 50%. Europe increased 4%, and the rest of the world increased 296%. On a quarter over quarter basis, revenue in the US grew 12%, Asia decreased 13%. Europe increased 25%, and the rest of the world increased 1%.

Q4, non gap gross margin, was 17.6% versus our guidance of 8.2% to 8.4%. This was up from 10.1% in Q3. Gross margins improved by 750 basis points sequentially due to a better than anticipated customer and product mix, including the deferral of several contracts from Q4 fiscal year 26 to Q1 fiscal year 27, and perhaps the subsequent quarter.

This favorable mix contributed approximately 75% of the gross margin improvement. Lower tariff costs and lower inventory reserves drove the remaining 25% of the gross margin improvement.

Q4 gap operating expenses were 455 million up 44% year over year and 16% quarter over quarter on a non gap basis.

On a non gap basis operating expenses were 357 million, which was up 49% year over year and 28% quarter over quarter. The sequential increases in both gap and non gap operating expenses primarily reflected higher headcount related expenses and sales and marketing expenses.

Non gap operating margin was 14.3% in Q4 compared with 7.2% in Q3. Other income and expense for Q4 was a net expense of 19 million, consisting of 61 million in interest and other income offset by 80 million in interest expense related to our convertible notes and revolving credit facilities. The Q4 tax provision was 290 million on a gap basis and 316 million on a non gap basis.

The Q4 tax rate gap tax rate was 19.7% while the non gap tax rate was 20.1%. For fiscal year 26, the gap tax rate was 19.9% compared with 12.9% in fiscal year 25.

The non gap tax rate was 20.4% compared with 15.4% in fiscal year 25. Q4 gap diluted earnings per share was $1.62 compared with our guidance range of 53 cents to 67 cents. Non gap diluted earnings per share was $1.70 compared with our guidance range of 65 cents to 79 cents. The result exceeded our guidance primarily due to higher gross margins.

For fiscal year 26, gap diluted earnings per share was $3.26 compared with $1.68 in fiscal year 25. Non gap diluted earnings per share was $3.63 compared with $2.06 in fiscal year 25. The gap diluted share count increased sequentially from 692 million shares in Q3 to 705 million shares in Q4. The non gap diluted share count increased from 709 million shares to 721 million shares over the same period.

Cash provided by operating activities in Q4 was 747 million compared with cash used in operating activities of 6.6 billion in the prior quarter. For fiscal year 26, cash used in operating activities was 6.8 billion compared with cash provided by operating activities of 1.66 billion in fiscal year 25.

Q4 closing inventory was $12.9 billion up from $11.1 billion at the end of Q3. CapEx totaled $28 million in Q4 resulting in free cash flow of $722 million. For fiscal year 26, CapEx was $162 million compared with $127 million in fiscal year 25 as we invested in our expanding capacity globally. During the quarter, we completed public equity offerings, raising $5.6 billion after offering expenses, comprising $1.4 billion of common stock and $4.2 billion of mandatory convertible preferred shares.

The proceeds from these offerings will be used primarily to support increased working capital needed to support our new orders.

At quarter end, cash and cash equivalents totaled $7.5 billion. Bank borrowings and convertible note debt totaled $8.7 billion resulting in net debt of $1.2 billion compared with net debt of $7.5 billion at the end of the prior quarter.

Turning to the balance sheet and working capital metrics, the cash conversion cycle increased by 43 days from 106 days in Q3 to 149 days.

Days of inventory increased by 13 days to 119 days from 106 days in the prior quarter as we built inventory and anticipation of higher revenues going into fiscal year 27.

Days sales outstanding decreased by 26 days to 59 days from 85 days in Q3 as we realized collections from some large customers.

Days payables outstanding decreased by 56 days to 29 days versus 85 days in Q3 due to a significant reduction in our average days payables between Q3 and Q4 due to the completion of some large AI GPU projects and the timing of payments to suppliers. Going forward, we expect the cash conversion cycle to normalize based on terms that we have in our current backlog.

Now turning to the outlook for Q1 fiscal year 27, we expect net sales to be in the range of $14.5 billion to $15.5 billion. A dollar one and a dollar 10.

Based on the expected customer and product mix, we expect gross margin to be in the range of 10.4 to 10.8%. We successfully completed the issuance of $4.2 billion of mandatory convertible preferred shares in Q4 due to that issuance. Our gap and non gap EPS is computed based on the two class method in which we allocated a portion of our net income for participating convertible preferred shares.

This impacts our Q1 FY27 EPS guidance and should be considered in all EPS calculations going forward. Please see the earnings release tables for further details.

Gap operating expenses are expected to be approximately $453 million, including approximately $127 million in stock based compensation expenses, which are excluded from non gap operating expenses.

The outlook for Q1 fiscal year 2027 fully diluted gap earnings per share includes approximately $106 million and expected stock based compensation expenses. Net of tax effects of $32 million, which are excluded from non gap diluted net income per common share. We expect other income and expense, including interest expense, to result in a net expense of approximately $45 million. The company's projections for Q1 fiscal year 27 gap and non gap diluted net income per common share assume a gap tax rate of 20.1%. A non gap tax rate of 20.5% and a fully deluded share count of 745 million shares for gap and 761 million shares for non gap capital expenditures for Q1 are expected to be in the range.

And for the full fiscal year 27, we expect net sales to be in the range of 65 to 72 billion.

Michael, we're ready for Q&A now. Great, Jen. Thank you.

Okay. Thank you for the question. Yes. I mean, we will be very careful control of balance between the revenue and profitability. As you know, high volume GPU margin, usually much lower CPU storage IoT enterprise application. Only other hand, have a higher margin. So we will try to balance between the two vertical, especially last 12 months. We had continued to grow sales force in the enterprise and application. Silver application. Storage.

So looking forward, we will consider consistently growing our overall gross margin. Although we would still grow very operation, very faster than GPU, but we will focus much more than before on enterprise and CPU storage.

And also the PCPPS product line is getting mature. So we should be more and more PCPPS hardware and also software service and some street as well. So the PCPPS will be a long term much better of margin product line.

September. Yeah. So we, we, we guided to 10 to 10.4 to 10.8 for September. And we're doing everything we can, as Charles mentioned, to, you know, to find the best margins that we can.

Okay. That's great.

Yeah. It, it depends on customer makes. And when large data center order are large, for sure. AI could send it will be higher. But when they be say 80% will be AI, I believe not including too much segment. One is traditional AI. The other one is application AI.

So the pure AI will be about 60% to 70%. Well, another 10% to 20% AI will be CP base AI, or kind of a gender AI.

And the other 20% will be people traditional service voltage IOT. So again, it has ever said. As to your second question, Ananda, we expect to provide an update shortly. And that's all we can share on this call.

Yeah, I mean, I don't accept it. I would have to say 70% AI, pure AI. The other 30% is either CPU or CPU-based AI or kind of HAI application. So overall, I believe our profit margin mix will be getting better.

Yeah, so we have a lot of merging, neo clouds and NCSPs. And so they were, and some enterprise customers that were in that mix that we mentioned.

Yeah, the machine is a CPU-based AI, for example, in media now also have a beta, beta CPU-based AI, that's for me, media, and AMD CPU-based AI, AMP-based, right, and Intel-based. So now the AI is kind of a majority still GPU-based, but still the CPU-based AI is also going quickly, especially for a general AI application.

Okay. Yeah. For sure. I mean, large data centers always have power, power readiness, data center readiness concern, especially weekly cooling. So our customer base overall have a similar concern as well. But still, basically, now order a shipment name for September quarter, December quarter have been quite strong. And also, I mean, a shipment of pieces of model is a little bit special. Indeed, quite special. We have OEM business, but we also cover ODM business.

So we have lots of data centers, large data centers in the customer now, and especially kind of a neo-cloud. And at the same time, we are growing very abrasion today for enterprise service, a traditional service and storage. So although we are kind of, again, both ODM and OEM, we will continue to grow in both way.

As you know, I mean, we are one or very early liquid cooling technology data. 2010, for example, we ship, I guess, 80% plus the recording to the market. And now more and more put it for my deep cooling ready. And including a GPU, deep cooling, and CPU, deep cooling. Like a bara, looping, looping, and even a bara, bara, CPU base.

Lots of our bara CPU base, where we are doing cooling as well. And some AMD Intel CPU, also deep cooling. So overall, the liquid cooling will continue to grow quickly. And very soon, we have dominated that data center business. I believe.

And it's not as sure. So I'll address the question on the operating expenses. So there are certainly some expenses that we expect to go up and others that we expect to come down. And so we think that the levels that we have are at the proper level. And if you look at our historical growth rate in operating expenses, you know, it's less than half of our revenue growth rate.

Yeah, as a economics company, our investment in the new technology can be able to be a very progressive. For example, the high-speed switch, the optical technology. So overall, our data center total solution with our PCP as a centric and the focus will be continuously strong.

Yeah.

Hey, this is Mike Stager. I just want to chime in on the sales force, some of the sales force changes. And you probably saw that we elevated a few of our individuals, Matt Thovers, Chief Revenue Officer, Vic Mayo, Chief Business Officer. And there's been a focus on efficiency and aligning the sales force with a solution sale element to address the AI opportunity ahead, which is supportive of a better margin. So there's definitive actions in place to make those improvements. And we'll keep you posted as we go out through the year as we expand and make those changes to address market opportunity.

Take a minute. Take a minute leading company. Before we are mostly focused on engineering, production, customer service. But now we get in focus much more on enterprise and growing our overall balance, especially enterprise. As you know, the whole imagine is always better. So we are growing our sales force. A great duty now.

Sure. So I think, you know, everyone in the industry and our industry has to, you know, watch out for changes in technology. But, you know, with what we've found was with, you know, prices rising so fast, you know, a lot of times now the, some of the old inventory does get resolved at, you know, at favorably.

Nonetheless, as you point out, you don't want to get caught having to hold that inventory. There is risk in that. So what we do is we try to ensure as much as possible that we have non-councilable POs. And we also try to, you know, match our procurement along with, you know, as, along with the shipment schedules as much as possible.

Okay.

And then the most, other, and then most of our product design based on building for our solution. So, uh, lots of subsystem, uh, compatible or optimized for even product nine or even, even generation or product. So that will have us a lot in maintaining, uh, inventory when, uh, uh, technology generation change.

Sure. So I think as I mentioned in my prepared comments that we do expect, um, the, uh, the cash conversion cycle to improve. And, uh, it's not that the reason for that is when we look at our, at our, uh, at our backlog, uh, we have, uh, uh, we have improved terms. And, uh, you know, which will help us on our cash flow conversion.

So therefore, uh, we expect that, uh, this will allow us to, to carry a greater, a greater volume of business. And so we're, you know, we, uh, we're going to do everything, uh, possible to, uh, to utilize our balance sheet, which is much stronger. And if you look at our current assets and our current liabilities, it's, uh, it's stronger than most companies that you'll see, you know, out on the market.

And so we, we expect to use the strength of our balance sheet, um, as well as, uh, our, our good customer base, you know, to help us, uh, fund our, uh, our growth.

Yeah. Once we take, uh, between the 65 billion to 72 billion, I guess our cash flow now is pretty enough. But if they are chance to grow much higher revenue, then we may need them all. For example, 80 billion or beyond 80 billion. So they are some plus bd that we will, uh, carry over to control.

Yeah. That's why we, uh, focus, uh, between 65 to 72 billion. So, uh, we'd like to support, uh, as many customers as we can, but a vision has to be healthy. The margin has to be, uh, at this, um, means that a minimal, uh, financial, uh, kind of demand.

Yeah. Very good question. Yes. In last many years, we already focused on GPU market, AI market, but, uh, when covering become bigger, I mean, yes, we are so good back to focus on enterprise. CPU based market as well, including, uh, enterprise and, uh, kind of, uh, industry, uh, IoT, uh, storage based application. So, uh, we are going to, uh, make our, uh, balance between the, uh, girls, uh, revenue and, uh, land of coffee, uh, become a much more healthy balance.

And I think by the way, I'll add to that. I think we did a reasonable job, uh, year over year, because, uh, we grew our, um, our top line, uh, you know, uh, by 78%. And we grew our bottom line, uh, by almost the same amount. So, uh, I think that shows, uh, you know, on a year over your basis, uh, what, uh, what goals were after.

Uh, yes. Still lots of, uh, chance we can add our value. For example, our TCPBS solution, that over customer, uh, complete the data center, uh, view out, uh, support, uh, not just, uh, GPU, CPU storage, but, uh, order, uh, major components for data center. And other than that, uh, lots of, uh, agenda AI application. Uh, we have a lot of, uh, optimization. For example, not better, uh, space, uh, solution, uh, uh, looping, uh, H-T-X space, and, uh, lots of other, uh, workstation, uh, space.

Uh, we, we see still lots of loop. We, we can differentiate that.

Yeah, I mean, uh, yes. For example, uh, better time to market, right? Whenever, uh, CPU and GPU available, uh, we, uh, with our architecture, we are able to provide a, uh, better time to market and quality. Not just design quality, uh, production quality, uh, deployment quality, and service, uh, kind of work with customer for a whole data center deployment and, uh, putting data center to operation and maintain high available ability. Next year, our customer has a minimal available system. So we see, uh, indeed more and more customer appreciate our partnership.

So it's not just buy and go. It's kind of buy and work together.

Yeah. So, uh, you broke up just a little bit, Nahal, but I, let me, uh, answer what I thought I heard you ask. And that is, uh, we really had a combination of two things. You know, we had, uh, you know, new, new customers, uh, come in. Uh, and, uh, we all, but we also had existing customers that, uh, that were, uh, we were already selling to. And, uh, we, uh, we tightened really, we tightened the terms of those contracts. So that's what, uh, gives us a little better visibility into our, uh, cash conversion cycle.

Yeah. Thank you for that question. I mean, yes. Also, uh, sort of, uh, management, sort of, uh, and deployment, networking, uh, make sure customer have, uh, uh, eyes, uh, availability and, uh, uh, efficient, uh, maintenance. So it is a kind of combination of. So, uh, uh, for example, management, sort of, uh, I mean, uh, earlier next quarter, we will provide a proactive service package. That's, uh, the, uh, feature, the service to maintain customers, uh, uh, maximum availability.

Make sure all the server they invest, uh, are working, uh, instead of, uh, failure and waiting there, for example. So, I mean, uh, we see a very good, uh, uh, very big room to grow. So, including, uh, uh, kind of, uh, uh, switch, uh, helping with switch and how networking design, uh, management tool. So, uh, we see a big room to grow. Uh, 20% should be not far away.

Thanks, Charles.

Yeah, that's, that's a great question. Um, and, and let me say we did not, uh, book a, a tariff rebate, uh, you know, in our, in our numbers. Uh, we are, uh, we are actively pursuing refunds, but we did not take a benefit for those, uh, until we see them. Um, but we do, you know, uh, we, we're not, I think the rest of the industry is expecting that the, uh, that the tariffs may go back up. Um, maybe not being the same fashion, but they may go back up. So that's why we still kind of can look at this as a, perhaps a one time benefit, but, you know, time will, will tell.

Um, so I think that, that, uh, we had, uh, but as to rebates, your question about rebates, we did have, uh, I think a little bit higher rebates, uh, because we did, uh, we had a different, uh, mix of business, more, uh, more, uh, rebate laden. This quarter, this past quarter.

Yeah. So I, um, my, my comparisons were more, uh, quarter to quarter. Uh, you know, where we came down, um, you know, a lot on, on, on, on tariffs and on, uh, on excess and obsolete inventory. Uh, year over year, yeah, I think, uh, you know, the same things are going to hold true, uh, you know, with tariffs, you know, coming down a lot in this quarter, but the suspension of the, uh, IEP tariffs. Um, and I think, uh, there's no question that we had, um, good, uh, you know, good results on our, on our, you know, this quarter. Uh, you know, and, and, and so that, that was, this, this, that was a, uh, what we would consider a non-recurring, uh, event.

Yeah, kind of, uh, it's basically, uh, complex, uh, complicated mix. Uh, I would have to say, uh, still 70, 17% GPU, uh, maybe, uh, high 20% CPU. But still, uh, some GPU now is, uh, identical, uh, GPU or kind of agent GPU. So, uh, it's kind of, uh, in terms of coffee margin and, uh, uh, GPU is between traditional GPU and CPU.

So it's a complicated combination. But overall, with our PCPBS is growing, uh, quickly. So I believe we should be able to maintain, uh, the coffee margin we, uh, we plan for.

Yeah, yeah, long term GPU presented you will continue to grow, I believe. But again, also GPU will become a, uh, we'll use the application, uh, identical AI, uh, enterprise AI. Um, so over GPU market, I believe will be, uh, not just big, but also get into every vertical. And, um, and that's what, uh, we believe at this moment.