Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Super Micro Computer Incorporated First Quarter Fiscal 2019 Business Update Conference Call. The company's news releases issued earlier today are available from its website at www.supermicro.com. During the company’s presentation, all participants will be in a listen-only mode. Afterwards securities analysts will be invited to participate in the question-and-answer session, but the entire call is opened to all participants on a listen-only basis. As a reminder, this call is being recorded, Thursday, November 15, 2018. A replay of the call will be accessible until midnight, Thursday, November 29, 2018, by dialing 1 (844) 512-2921 and entering the replay pin 3001732. International callers should dial 1 (412) 317-6671. With us today are Charles Liang, Chairman and Chief Executive Officer; Kevin Bauer, Senior Vice President and Chief Financial Officer; and Perry Hayes, Senior Vice President of Investor Relations. And now I would like to turn the conference over to Mr. Hayes. Mr. Hayes, please go ahead, sir.

Good afternoon, and thank you for attending Super Micro's business update conference call for the first quarter 2019, which ended September 30, 2018. During today’s conference call Super Micro will address the company’s effort to become current with its SEC filings, the business and market trends from the first fiscal quarter of 2019 as well as the company’s preliminary financial results for the first quarter of fiscal 2019. References to any financial results are preliminary and subject to change based on finalized results contained in future filings with the SEC. By now, you should have received the copy of the news release and 8-K filings that were distributed at the close of regular trading and are available on the company's website. 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 and our earlier SEC filings. All of those documents are available from the Investor Relations page at 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. At the end of today's prepared remarks, we will have a question-and-answer session with sell-side analysts. I'll now turn the call over to Charles Liang, Chairman and Chief Executive Officer.

Thank you, Perry, and good afternoon, everyone. Let me first of all comment briefly on our first quarter performance. Our first quarter revenue was in the range of $952 million to $962 million, which compared to our quarterly guidance and represents approximately 20% increase year-over-year. Our momentum in market vertical continues with strong growth, especially in Global 2000, Storage and AI machine learning. Computer system revenue was consistent with last quarter at approximately 34% of revenue and up 56% year-over-year. Our total ASP growth continues with higher add value sale of our industry-leading technology innovation and more high-end computer systems. Kevin will provide a more detail on our financial results. The focus of our strategy in the past few years had been our Global 2000 business, which grew 132% year-over-year. Now resource-saving architecture had been the key message of that focus, leveraging our breakthrough product and further to mark advantage to deliver significant saving to customers. We've achieved greater success story with company like NASA, Intel and many other industry leaders. The resource-saving architecture reduced TCE, total cost to the environment, which brings significant TCO saving along with environmental benefits. The resource-saving chip operate – that might operate this aggregated design enables the independent upgrade of system components, by navigating and replacing the entire hardware system realizing the customer can save up to 60% in system deflation cost and reduce IT waste up to 50%. Now resource saving between [indiscernible] could only optimize power-saving design, basically, air cooling including sheer power, and cooling could deliver power with improvement in power efficiency over traditional servers. Now on top NVMe match inside support together with the resource saving feature mixed between one of the highest volume server platform in the industry today. Without stable 1U Petascale all-flash NVMe system, that when combined…

Thank you, Perry. Thank you, Charles. Today, we issued a press release announcing our solid financial results for the first quarter of fiscal 2019. We also filed a current report on Form 8-K disclosing the Company's decision to restate certain prior financial statements. First, I will address the current health of the business by providing an overview of our financial performance for the first quarter of 2019, and I will then make a few comments about the decision to restate those prior financial statements. Super Micro had a strong first quarter of revenue in net profit. As Charles mentioned, we estimate first quarter revenue within the range of $952 million to $962 million. It was approximately 40% higher year-over-year and above our guidance range of $810 million to $870 million. We grew revenue in all market verticals with key markets growing significantly year-over-year. Global 2000 grew approximately 130% year-over-year. Internet data center grew approximately 150%. While non-Internet data center grew approximately 95% year-over-year. Accelerated computing was up 26% and Embedded grew approximately 30%. On a year-over-year basis, U.S. enjoyed the highest growth at nearly 45% followed by EMEA that grew nearly 50% and Asia Pac that was up approximately 30%. Other regions grew approximately 15%. Our estimated range of gross margin on both a GAAP and non-GAAP basis was from 13.2% to 13.4%. Our customer mix contributed to the rebound in margin this quarter. Compensation costs increased across the board in both manufacturing and operating expense this quarter related to annual merit increases as well as performance bonuses or profit-sharing payments to non-executives. We also celebrated our 25th anniversary in grand fashion. We estimate non-GAAP EPS range this quarter was from $0.66 to $0.70, more than double year-over-year. For the first quarter, we estimate cash generated from operations was $50…

Thank you, sir. [Operator instructions] And we’ll take our first question from Nehal Chokshi from Maxim Group. Go ahead, sir.

Yes, thanks and congrats on an amazing quarter. 41% year-over-year growth on top of 26% year-over-year growth with prior quarter, that's massive, and 15% revenue itself. Congratulations, especially in the face of that Bloomberg Businessweek article. Could you provide some – what was the year-over-year growth for the components in revenue and the percent mix between those two? I'm sorry, between components and systems?

Yes, just one second. Nehal, this is Perry. The systems was 84% of total revenue.

Okay. And how we should grow year-over-year?

That was consistent with the last quarter. I think probably we need to look that one up and get back to you later.

Okay, all right. And then Kevin, you talked about that the guidance reflects a slowing down IT environment as well as potential impact from the Bloomberg Businessweek article. So there is no potential there having been demand called in from the December to September quarter? That's also part of that weekend guidance or it's completely the first two items that you talked about?

Well, I mean, I think there is also possible speculation that customers could have potentially ordered early to try and beat tariffs. We don't have a specific evidence of that but that could be possible.

Okay, thank you. I’ll get back in the queue.

Thank you. [Operator Instructions] We’ll take a follow-up question from Nehal Chokshi with Maxim Group. Thank you.

Thanks. All right, so the $50 million cash from operations, that's very impressive. And you mentioned that there was a 10-day increase in the cash conversion cycle, which is indeed seasonal. But I would expect that there would have been a significant consumption of cash then. And so what was the balance sheet item that did actually enable the generation of cash?

Yes, we're not disclosing too much more. I think, one thing that has helped and I’ve mentioned this before is that our shipment linearity is much better now, so we are shipping more early in the quarter and have that opportunity to kind of collect that. So I think that's a good portion of that.

Got it, okay. And then finally, with respect to the 8-K that was filed that shows the ranges of likely restatement. It looks like to me there's about a net $60 million of revenue that's shifting out from those periods of fiscal year 2015 or fiscal year 2017 into fiscal year 2018 and beyond. Is that a correct characterization, I do recognize that's really only 1% of cumulative revenues, but just want to make sure I'm understanding that correctly?

So as of late, if you're trying to understand what the impact there will be on fiscal year 2018. That will be limited to table that's shown in fiscal year 2017. And then if you recall that I mentioned that we would be continuing to apply the same procedures as fiscal year 2018, so there will be a continued roll effect.

Okay. And then finally, if I look at the net income, that's been shifted out. That's $10 million. So if you take that $10 million divide that by $16 million, that's about – 13% net income ratio? That's much higher than what your corporate average was during those periods. So what's the explanation for that? It seems like the revenue that's been shifted out tends to the higher net income margin.

Yes. So I think there is other elements in that reduction of income. If you remember, we said that the primary effects are related to sales as well as inventory. So to the extent that there are inventory debits, those won’t move into fiscal 2018.

Okay, all right. Thank you. That’s it from me. Thank you.

Nehal, the system revenues last year in the same quarter was 75%.

Okay, great. Thank you very much.

Thank you. [Operator Instructions] And next we’ll go to Hosseini with Susquehanna.

Hi, thanks so much for taking the question. David Ryzhik here for Mehdi Hosseini. Would love to dive in a little more in storage, can you remind us what you said around NexGen Storage, what the growth rate was and some of the trends you're seeing there? And I had a follow-up.

Yes, we see people really moving in NVMe [indiscernible].

Great. What was the growth rate again?

I’m looking at my notes. I see didn't share that. It's over 50%.

Storage as a whole or NexGen Storage?

That’s storage as a whole.

Understood. And would love to get your thoughts on the memory components and impact to margins. It seems like things are obviously easing. It was a headwind before. Just how are you guys thinking about the impact of DRAM and NAND flash pricing moving forward and the impact to your business?

Yes, very good question. We expect both SSD and NVMe pricing continuing to be lower and so as DRAM, pricing to become softer and softer in the next few quarters. So from this point of view, we believe all our profit – I mean profit margin will be keeping as same as before or slightly better. However, the revenue maybe slightly lower because of that cost for memory and flash are lower. But basically there are good signs to us, basically.

Okay, great. And then just for the outlook for the December quarter. What specifically have you heard? Is it just like broader macro or is it specifically based on just some customer conversations that you have had that has resulted in the lower outlook?

I would have to say it is micro business. IT industry just like I mentioned slowed a little bit over.

And just lastly, I – one of your customers in IDC for a while had announced a big acquisition in the cloud space. Just wondering if that, if you view that as an opportunity for Super Micro going forward? Just any thoughts on how that shapes up for you?

Yes, I mean, for change, basically, we see how it is positive to our business.

Thank you so much. Thank you.

Thank you.

And next question from Jon Lopez with Vertical Group.

Hi, good evening. Can you hear me okay?

Yes.

Okay, great. Thanks. I'm wondering, you made a comment in the prepared remarks relative to – it was some reference of the orders or perhaps billings measured year-on-year that you were tracking comfortably ahead. If you remind me just flushing that out a little bit. Just what do refer and just may be some level of magnitude, just given ballpark on a year-on-year basis?

Yes. What we were trying to share was that if memory serves me, we did roughly about $851 million in the quarter a year ago. And our guidance is slightly above that range. What we were trying to differentiate here was that given that were macro considerations as Charles mentioned as well as we've had the Bloomberg impact. The other key thing that we wanted to share is that, even though our guidance range is still within that metric as compared to last year, our quarter-to-date progress is ahead of that. And we think that it is healthy ahead, but we're not going to give our specific metric.

Okay, understood. I apologize. Is trying to communicate the business is sort of running better than what the year-on-year guidance implies and you're losing yourselves to account for macro considerations, et cetera?

We are saying that we have better identification than last year as it relates to getting to $850 million or $860 million or whatever within our range.

Okay, understood. Second question, could you just possibly flush out a little bit the comment you made around the article? May be specifically, just may be offer a bit of a cadence like, I'm assuming that there was sort of all hand on that scramble period directly after the article, but if could you walk us how the interaction has been? And just any anecdotes or offer a little bit more detail on the idea of customers perhaps starting to migrate back, is that sort of appear to have been largely a non-issue? Can you maybe just spend a second on that? Thanks.

Yes. So we are not going to get ahead of ourselves in that. I think we've had communications directly with customers and the way that we feel about the business is in relation to those discussions with customers.

From our couple of estimate, we don't believe it happened to our hardware. So basically, we don't believe there is chip.

Understood. I guess what I'm just trying to get a little bit sense for is was there a period like a complete freeze up around sort of customer dialogue and then bought out pretty fast or was there not that? I guess, I was trying to get a characterization here that was two months out, if you guys sort of have a feel that the crux of the problem has largely moved passed you. I understand that there is some uncertainty left, but I'm just trying to get a sense of progress, between point A and point B?

I would have to say, I mean, we don't believe their balance sheet and most of our key customers don't believe that too. So at this moment, we feel pretty comfortable for our future business.

Okay, understood. Last question, I apologize. On the December guide, can you just offer some qualitative commentary around that cloud vertical? It’s obviously been very strong for a couple of quarters. And I'm just wondering, are you guys factoring in some easing whether that’s project related or potentially pull forward related? Or just any characterization as to what that specific segment is doing as you go from calendar Q3 to calendar Q4?

Yes, we don't provide forward guidance by market vertical.

Understood. Is it too much to ask just to say whether it would be up, down or flat?

I'm not sure what you're trying to get at.

I'm just trying to get a sense…

Basically, we believe with our macro ITP may slow down relative, basically from a lot of our vendors, our competitors and industry analysis result.

Okay, thanks. Just so it's clear what I'm trying to get. That business tends to be a little bit more lumpy and project related and sometimes travel independent macro. It's been very strong for a couple of quarters. So I'm just trying to get a sense of whether you had some temporary pause in some activity that may be contributing to what you're seeing in December?

Assign it to macro.

Thank you very much for all the thoughts. Really appreciate it.

Okay. Thank you.

And at this time, it appears we have no further questions in the queue. I'd like to turn the call back over to Mr. Liang for any additional or closing comments.