Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Super Micro Computer Incorporated Third Quarter Fiscal 2016 Conference Call. The company's news release issued earlier today is available from its website at www.supermicro.com. In addition, during today's call, the company will refer to the slide presentation that is made available to participants, which can be accessed in a downloadable PDF format on its website at www.supermicro.com in the Investor Relations section under the Events & Presentations tab. During the company's presentation, all participants will be in a listen-only mode. Afterwards, securities, analysts and institutional portfolio managers will be invited to participate in a question-and-answer session, but the entire call is open to all participants in a listen-only basis. As a reminder, this call is being recorded Thursday, April 28, 2016. A replay of the call will be accessible until midnight, May 12, by dialing 1-877-870-5176 and the entering conference ID number 1162246. International callers should dial 1-858-384-5517. With us today are Charles Liang, Chairman and Chief Executive Officer; Howard Hideshima, Chief Financial Officer; and Perry Hayes, Senior Vice President, Investor Relations. And now I would now like to turn the conference over to Mr. Hayes. Mr. Hayes, please go ahead, sir.

Good afternoon everyone and thank you for attending Super Micro's conference call on financial results for the third quarter fiscal 2016, which ended March 31, 2016. By now, you should have received a copy of today's news release that was distributed at the close of regular trading and is available on the company's website. As a reminder, during today's call, the company will refer to a presentation that is available to participants in the Investor Relations section of the company's website under the events and presentations tab. Please turn to slide two. Before we start, I'll remind you that our remarks include forward-looking statements. 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 Form 10-K for fiscal 2015, and our other SEC filings. All of those documents are also available from the Investor Relations page of Super Micro's website. We assume no obligation to update any forward-looking statements. Most of today's presentation will refer to non-GAAP financial results and outlooks. For an explanation of our non-GAAP financial measures, please refer to slide three of this presentation or 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 in the supplemental information attached to today's presentation. I'll now turn the call over to Charles Liang, Chairman and Chief Executive Officer.

Thank you, Perry, and good afternoon, everyone. Please turn to slide four. First, let me provide you with the highlights of our fiscal third quarter. Our revenue was $532.7 million, it’s 16.6% over from that quarter and 13.1% higher year-over-year. Year-to-date revenue grew 19% over the same third quarter period last year. Non-GAAP net income was $19 million it’s 15% from last quarter and 23.8% lower year-over-year. Non-GAAP earnings per share was $0.36 per diluted share compared to $0.73 last quarter and $0.47 last year. In the seasonally weaker second quarter, we saw softer market demand than anticipated therefore results for this quarter were at the low end over our revenue due to some softness with some key customers. January and February were particular while March show improved momentum. However, revenue continues to grow at industry leading pace by growing 13.1% over last year. This growth was led by our two strongest segment of [indiscernible] and cloud as well as storage. We’re confident that Super Micro will continue to consistently gain market share and grow multiple times by industry’s growth rate. Strategically, we remain focused on our core market with the cloud and storage which are growing faster than the overall market. In addition we continue to grow our computer system business mostly through our direct sales. Computer Systems Incorporated over a component into a turnkey solutions deliver our data customer experience high revenue and value and account for 70% of our total revenue in the quarter. Internet data center and cloud was 26% of total revenue, up 40% year-over-year. We’re participating in the overall move to the cloud with our key customers in this segment including several order in global cloud data centers. We continue to work closely with these leading cloud industry providers at a scale as well…

Thank you, Charles and good afternoon everyone. I will focus my remarks on earnings, gross margins, operating expenses and similar items on a non-GAAP basis to reflect adjustment to exclude compensation expenses. A reconciliation of GAAP to non-GAAP is included in the financial statements of the company and today's earnings release and in the supplemental detail in the slide presentation accompanying the conference call. Let me begin with the review of the third quarter income statement. Please turn to slide eight. Revenue was $532.7 million, up 13.1% from the same quarter a year ago, and down 16.6% sequentially. The increase in revenues from last year was primarily due to our increase in Server Solutions, which was up 23.3% led by our growth in cloud datacenter of 14.4% and storage of 23.3% year-over-year. On a geographic basis, we had strong growth in the U.S., up 19.3%, as well as growth in parts of Europe and Asia. Our Services and Software business has also grown by 147% which continues to show investments we have made in developing our complete solutions platforms are ramping. The sequential decrease in revenues was primarily due to seasonal weakness and software demand from larger customers. Our direct customer business was down 22%, and our distributor revenue was down 9%. Complete Servers was down 17.9%, and subsystems and accessory business was down 13.4%. And our cloud datacenter business was decreased by 27.1%. Turning to product mix. The proportion of revenues from server systems was 69.9% of total revenues, which was up from 64.1% in the same quarter a year ago and down from 71% last quarter. ASPs per servers was $4,400 per unit, which is up from $3,900 last year and consistent with last quarter. We shipped approximately 85,000 servers in the quarter and 950,000 subsystems and accessories.…

Thank you, Howard. We see significant opportunities with Super Micro to continue our industry leading growth in the next quarter and long term. We are actively participating and leading the IT evolution to the cloud. We are helping the market to accelerate the shift to software defined big data and cloud based solutions. With our extensive application up to many product portfolio and first to marketing innovation., we are well positioned for solid growth in the long term and will continue to outpace overall industry growth story. Operator at this time we are ready for questions.

Thank you, sir. [Operator Instructions] And we will first go to Aaron Rakers with Stifel.

Okay, great. This is Joe Quatrochi on for Aaron. Maybe couple of questions if I could. First kind of going back to some of the utilization that you are talking about, how do we think about your investments and your manufacturing footprint, you’ve outlined over the past several quarters relative to the demand environment that you are seeing currently and then kind of in connection with that are you still supporting the 3 billion revenue target?

Very good question. Indeed we have been very aggressively expanding our global operation including Asia and Europe. And that’s why we are in better on those factors for CT, to hire people, train people and now our utilization rate although only 60% now we believe that we’ll continue to grow quickly. And as to 3 billion target I guess it won’t be too far away maybe in one or two quarter from our original expectation because of our macro economy.

So just I’m clear that pushed out from fiscal 2017 and into the fisca1 year over the course?

Yes, maybe from two quarter to end of calendar year 2017.

Okay thank you that's helpful. And then just one more if I could can you maybe talk about the demand that you are seeing for Broadwell and then maybe the timing of [indiscernible]?

Yes, I mean we [indiscernible] much better performance per dollar and perform well, we did see quicker growth and together we saw NVMe kind of available across our product line, we did, we do expect quicker growth with our NVMe solutions.

Thank you.

Thank you.

And we will next go to Mark Kelleher with D.A. Davidson.

Great, thanks for taking the question. If we look at, let me start at the revenue line if we look at the strong December you guys posted was there an element of pulling in of orders do you think from the March quarter and if the follow-on to that you lifted a lot of areas that were very strong where were some area that were weak whether products or regions and then could you specifically talk about how your government business is doing? Thanks.

Hey Mark, this is Howard. Yes with regards to [indiscernible] to say in the quarter between as December and March quarter there was no that I say I think the seasonality is really the big story between the two quarters. Again December quarter was seasonally strong as it was for the industry and quite frankly for ourselves as well then there is some softness that happens right after that in the March quarter. The big difference between the two quarters is primarily seasonality but we did see some softness in some of our customers as well.

Any particular vertical?

I think you saw that like I said, if you want to call it was pretty wide spread around variety of different markets that we talked about here.

Especially big data center, pricing it would be more competition that's something we saw.

Yes, we talked a little bit about the product mix with regards to selling more datacenter optimized products, the DC products that refer to on the phone and that is specifically geared toward the I will call hyper scale, kind of guy.

Alright and then just one quick second question. If I look at gross margin and utilization and try to match those up, what should we expect, should we expect that utilization slowly increases and gross margins kind of hang here around 15% or does that get filled up quickly. How do we think about gross margin versus utilization?

Yes, Mark we have just brought on board as Charles and I both mentioned, increased expansion primarily here in the US and in Europe to match up with some of the great opportunities that we see there and also our goal is to go on and expand in further parts of the US and in Europe. So again, we are hopeful that as we fill the opportunities up there that we will continue to fill up the demand capacity.

Okay. Thanks.

Thank you. We will next go to Alex Kurtz with Sterne Agee.

Hey guys you can hear me okay.

Yes.

Hey Howard. So I just want to understand the short form the direct business, it sounds like there wasn't in the datacenter business right because that nicely 26% year-over-year or may be up in the 20s year-over-year. So I guess what I’m trying to understand here is, are there a couple of large enterprise direct customers that you usually sell through the channel that drove the short fall here?

Yes, we are continuously growing in the enterprise as well especially software defined storage and cloud as well. But last quarter unfortunately the big order from some big datacenter kind of slowing down that impact us a lot for the March quarter.

I know Charles, but would you classify those orders of those large customers as attritional like internet datacenter customer or more like an enterprise customer like a fortune 100 or fortune 5000 kind of company?

Direct sales.

What was that Howard?

Direct sales.

Okay. And then, taking another turn at this Broadwell release, any policy around the Broadwell pipelines as you guys are building up that channel? I know this historically been the air pockets around that kind of a release cycle?

Yes, we do see some customers start to have [indiscernible] for our Broadwell and not just Broadwell, again NVMe solution. Our NVMe solution have been exactly the strongest player at this time I believe.

I guess, so would you say that beyond seasonality there was some specific pipeline pause or have new chip releases?

We did have some pipeline waiting for shipping the Broadwell and NVMe solution.

Okay, alright. Thanks guys.

Thank you.

We will next take a question from Mehdi Hosseini with SIG.

Yes, thanks guys this is Bill Grinstead in for Mehdi. I wanted to take another turn on gross margins here. I know you guys gave a few bullets for why it was more pressured year-over-year but even comparing against your fiscal first quarter, the September quarter similar revenue volume, but the gross margin was still down 50 to 100 basis points and so I was wondering if you guys could lay out for us or weight the impacts of lower utilization versus how your revenue makes in the datacenter that might be able to hone in kind of what gross margin is going to look like going forward? Thank you.

I guess the last quarter another factor to lower gross margin was the market going down right so key component was memory and hard drive prices are lower than before. And other than that utilization rate now we have plenty enough space so we can continue to grow our revenues without investing more on those facilities so that's some positive sign.

Just to add to what Charles said to, I understand that we just bought some of our investments on board for our capacity that weren’t there in September. So again, if you are comparing September quarter versus the March quarter with regard to two seasonally weaker, there was some different investment that we just brought online for further capacity and utilization that is in particular this quarter.

Okay, great that's helpful. And then, again on the Broadwell launch and you guys have historically spoken about the pause that was just referenced kind of leading up to one of these refreshes. And then, the big revenue quarter, the big paint of demand the kind of unleashes and that would be in the June quarter here. But the midpoint of guidance is up 14% and I understand you guys called out some macro weakness and you pushed out the three billion target of it. But are you guys seeing the normal type of activity that your headquarters testing all the different sockets, the normal type of demand leading into one of these refreshes would you characterize this any differently?

We would be, our growth will be very strong still multiple time or industry average gross rate. However, again the macro environment looks like it will be solved that's why we would be more conservative.

And would the softness be characterized on the datacenter side or the enterprise side or across the board?

Yes, we do see kind of [indiscernible] datacenter pricing become more competitive than before. And again, as you know we are selective to take [indiscernible].

Okay. Alright thank you guys.

Thank you.

We will next go to Rich Kugele with Needham.

In for Rich just sticking with the gross margin at the low end of your guidance range what would you expect gross margin to be?

We haven't given specific gross margin guidance on the ranges there, so I think you guys can trace it back along the EPS.

Okay thank you.

We will next go to Nehal Chokshi with Maxim Group.

Thank you. Could you talk about the progress you are seeing with the larger enterprise center plus you mentioned your software services were up around 47% year-over-year if I recall correctly I think you were talking about doubling or tripling of that opportunity. So could you revisit that where you guys are at relative here of your expectations one two quarters ago?

Yes, we do see, our management survey defines [indiscernible] for cloud continue to grow quickly. Again 2x or 3x yearly. And we believe this change will continue.

Okay, thank you.

Thank you. And this does conclude the question-and-answer session of our conference call and I would like to turn the conference back to Mr. Liang for any closing remarks.

Thank you for joining us today and we look forward to talking to you again at the end of this quarter. Thank you everyone, have a great day.

Thank you ladies and gentlemen that does conclude the Super Micro third quarter fiscal year 2016 conference call. We do appreciate your participation, you may disconnect at this time. Thank you.