Albertsons Companies Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 30, 2024

There are 14 speakers on the call.

Operator

Thank you for standing by. My name is Joel, and I will be your conference operator today. At this time, I would like to welcome everyone to the Super Micro Computer fiscal Q3 2024 results on April 30, 2024. With us today are Charles Liang, Founder, President and Chief Executive Officer David Wiegand, CFO and Michael Stager, Vice President of Corporate Development. All lines have been placed on mute to prevent any background noise.

Operator

After the speakers' remarks, there will be a question and answer session. Thank you.

Speaker 1

Good afternoon and thank you for attending Super Micro's call to discuss financial results for the Q3, which ended March 31, 2024. With me today 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 news 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 that is available to participants in the Investor Relations section of the company's website under the Events and Presentations tab. We have published management's scripted commentary on our website.

Speaker 1

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 and other income and expenses, taxes, capital allocation and future business outlook, including guidance for the Q4 of fiscal year 2024 and the full fiscal year 2024. 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 most recent 10 ks filing for fiscal 2023 and our other SEC filings. All these documents are available on the Investor Relations page of Super Micro's website. We assume no obligation to update any forward looking statements.

Speaker 1

Most of today's presentation will 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. 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. At the end of today's prepared remarks, we will have a Q and A session for sell side analysts to ask questions. I'll now turn the call over to Charles.

Speaker 2

Thank you, Michael, and good afternoon, everyone. We achieved another record breaking quarter with revenue of $3,850,000,000 a 200% increase from the same time last year and the non GAAP earnings per share of $6.65 up more than 308% year on year. Tubemacro is at fall from for the current AI revolution. These strong results reflect the continued demand for our rack scale plug and play total AI solutions. We continue to face some supply chain challenge due to new products that require new key components, especially, fixed cooling DLLC related components and believe this situation will gradually improve in the coming quarters.

Speaker 2

To sustain this rapid growth, we are making significant investment in production, operation, management software, cloud features and customer service to further increase our customer base and putting more value to them. To support this scale up, we raised an additional $3,280,000,000 through a convertible node and secondary equity offering in the quarter. We like to support strong short and long term growth with minimal equity dilution. Overall, I remain optimistic that AI growth will continue for many quarters, if not many years to come. We have long recognized that AI is accelerating the need for deep coding, and we have invested heavily into high quality optimized direct deep cooling DLLC solutions for high end CSP and NCPs.

Speaker 2

With GPU reaching 700 watts and more than 1,000 watts, efficiently managing the heat from this AI system have become critical for many customers, especially as new data centers. I am pleased to announce that our new DLLC, deep cooling, building block and large scale total solution technology are finally fully ready for high volume production. With our DLLC cooling technology, customer can reduce their expense on cooling expense, saving data center space and allocate a greater portion of their finite power resource to computing instead of cooling, which align with our green computing DNA well. Now let's go over some key financial highlights. Pifomacro is pleased to be included in the prestigious S and P 500 index last quarter.

Speaker 2

Basically, Q3 net revenue totaled $3,850,000,000 up 200% year on year within our aggressive original guidance of March quarter. If not limited by some key component shortage, we could have delivered more. Fiscal Q3 non GAAP earnings of $6.65 per share were well above $1.63 last year, which was about 308% year on year growth. Our increasing economic of scale contributed to better net profit. Our year over year operating margin and net income both continue to improve, and we continue to expect further benefit as we bring our Malaysia facility online data in this calendar year.

Speaker 2

This fast growing quarter was driven by end user wanting to accelerate their deployment of the latest generation AI platform. Through our building block solution, we provide optimized AI solution at a scale, offering a time to market advantage and shorter lead time over our competition. Additionally, our rack scale plug and play total solutions, especially with Nickelodeon DLLC, ensure optimal system performance while saving energy costs up to 40% at a data center scale, delivering much more value to customers. We are leading the AI revolution by deploying NVIDIA HGX H100 Super Class solutions to our customers, housed in our new 100 ksor racks with 2 to 3 times higher power density than traditional racks from others. At NVIDIA GTC last month, we unveiled our next generation blackware products, including the GB200 MVA 72 solutions.

Speaker 2

To further grow our AI portfolio, we are now strongly focused on delivering new generative AI and influencing optimized systems based on the upcoming next generation NVIDIA H200, V100, V200, GH200 and GP200 GPUs, as well as Intel GaBi 2, GaBi 3 and AMD, Mi 300x and Mi 308 GPUs. Most of the OEMs support both AR cooling and DLLC cooling. As ChipMOS is transitioning to our next generation of X14 and X14 product lines, featuring the industry's broadest SKUs of Intel Xeon 6 Processor based and AMD Tubing based platforms. We are fully ready for high volume production and offer early online access for testing and validation through our Jumpstart cloud service. Meanwhile, our X14 and X14 storage solutions addressing the specific requirements of accelerating the AI data pipeline with partners like Vika and VES Data and many others.

Speaker 2

The rapid growth of our business is raising the complexity to scale our capacity. Our production team are making aggressive progress on re chopping the new Silicon Valley facility and scale up our Taiwan and Malaysia factories. We have secured the parts and acquired additional warehouse for our next phase of enterprise and data center business. We are currently on track to produce over 2,000 deep cooling DLLC racks per month of AI server with volumes steadily increasing. Each DLL 0x support up to 100 kw or even 120 kw.

Speaker 2

And at this moment, we are focusing on delivering more than 1,000 racks of NVIDIA HGX AI Supercomputer. H rack supports 64 piece H100, H200 for B200 GPUs. With Adaptive CRC, Liquid Cooling Technology, to 3 industry leading customers from April to June of this quarter. These 3 deployments will be among the world's largest DRC-twenty cooling AI clouds, potentially saving our customers up to 40% of energy cost compared to standby air core deployment by our competition. Special thank you to NVIDIA and our close technology partner for this fantastic collaboration.

Speaker 2

I believe this is just the beginning of our long term high volume ELC nuclear cooling mission. Green Computing can be free with a big bonus. Let's go for green. In summary, we had a strong quarter with multicast. Jupyter Micro is uniquely capable of delivering new technologies to market faster with our integrated rack scale plug and play solutions, in house engineering, building block architecture and green computing DNA.

Speaker 2

With a robust pipeline of new product in calendar year 2024, we are confident fiscal Q4 revenue will be in the range of $5,100,000,000 to $5,500,000,000 This will raise our fiscal revenue guidance to $14,700,000,000 to $15,100,000,000 an increase to our recent fiscal 2024 guide. We continue to win market share and remain committed to executing our growth plan across all verticals. This remains truly the most exciting time yet for ShipPoint Mining Group, and I believe this strong year over year growth will continue in our fiscal 2025, especially with our new leading and ready to ship DLLC, liquid cooling, rack scale plug and play solution and technologies. Before passing the call to David Wiegand, our Chief Financial Officer, I want to thank you again to our partner, our customer, our employees and our shareholders for your strong support. David?

Speaker 3

Thank you, Charles. Fiscal Q3 twenty twenty four revenues were $3,850,000,000 up 200% year over year and 5% quarter over quarter. Q3 growth was again led by AI GPU platforms, which represented more than 50% of revenues with AI GPU customers in both the enterprise and cloud service provider markets. We expect strong growth in Q4 as the supply chain continues to improve with new air cooled and liquid cooled customer design wins. During Q3, we recorded $1,880,000,000 in the enterprise channel vertical, representing 49% of revenues versus 40% last quarter, up 190% year over year and 26% quarter over quarter, driven by industry recognition of our solution price performance metrics and reliability.

Speaker 3

The OEM appliance and large data center vertical revenues were $1,940,000,000 representing 50% of Q3 revenues versus 59% in the last quarter, up 2 22% year over year and down 10% quarter over quarter. 1 existing CSP large data center customer represented 21% of Q3 revenues and one existing enterprise channel customer represented 17% of revenues. Emerging 5 gs telco edge IoT revenues were $37,000,000 or 1% of Q3 revenues. Server and storage systems comprised 96% of Q3 revenue and subsystems and accessories represented 4%. ASPs increased on a year over year and quarter over quarter basis.

Speaker 3

By geography, U. S. Represented 70% of Q3 revenues, Asia 20%, Europe 7% and Rest of World 3%. On a year over year basis, U. S.

Speaker 3

Revenues increased 242%, Asia increased 257%, Europe increased 30% and the rest of the world increased 87%. On a quarter over quarter basis, U. S. Revenues increased 3%, Asia increased 17%, Europe increased 3% and the rest of the world decreased 11%. The Q3 non GAAP gross margin was 15.6%, up slightly quarter over quarter from 15.5% as we continue to focus on winning strategic new designs, gaining market share and improving manufacturing efficiencies.

Speaker 3

Q3 operating expenses on a GAAP basis increased by 14% quarter over quarter and 72% year over year to $219,000,000 driven by higher compensation expenses and headcount. On a non GAAP basis, operating expenses increased 8% quarter over quarter and 43% year over year to 166,000,000 dollars Q3 non GAAP operating margin was 11.3%, which was in line with Q2 levels. Other income and expense for Q3 was $3,800,000 consisting of $6,000,000 in interest expense and a gain of $10,000,000 principally from foreign exchange. Interest expenses decreased sequentially as we paid down short term bank credit facilities. The GAAP tax rate was negative 5.2%, resulting in a tax benefit of $20,000,000 for Q3.

Speaker 3

The non GAAP tax rate for Q3 was 6%, resulting in Q3 tax expense of $27,000,000 GAAP and non GAAP tax rates were lower due to the impact of higher R and D tax credits and tax benefits from employee stock grants exercised. Q3 GAAP EPS diluted EPS of 6 $0.56 and Q3 non GAAP diluted EPS of $6.65 exceeded the high end of guidance through record revenues, stable gross margins and operating margins and lower tax rates. The GAAP share count increased from 58,100,000 to 61,400,000 and the non GAAP share count increased sequentially from $59,000,000 to $62,000,000 shares as a result of the 2 stock offerings and to a lesser extent the convertible bond offering. Cash flow used in operations for Q3 was $1,500,000,000 compared to cash flow usage of $595,000,000 during the previous quarter as we grew inventory and accounts receivable for higher levels of business. Cash flows from strong profitability was offset by higher inventory, a large portion of which was received late in Q3 and higher accounts receivable from increasing revenues.

Speaker 3

Our Q3 closing inventory was $4,100,000,000 which increased by 67% quarter over quarter from $2,500,000,000 in Q2 due to the purchase of key components. CapEx was $93,000,000 for Q3 resulting in negative free cash flow of $1,600,000,000 for the quarter. During the quarter, we raised $1,550,000,000 from a 0 coupon 5 year convertible bond offering due in 2029, net of underwriting discounts and offering expenses. We also raised approximately $1,730,000,000 in net proceeds from the sale of 2,000,000 shares at a price of $8.75 per share. Proceeds from these transactions will be used to strengthen our working capital, enable continued investments in R and D and expand global capacity to fulfill strong demand for our leading platforms.

Speaker 3

The closing balance sheet position was $2,100,000,000 while bank and convertible note debt was $1,900,000,000 resulting in a net cash position of $252,000,000 versus a net cash position of $350,000,000 last quarter. Turning to the balance sheet and working capital metrics compared to last quarter. The Q3 conversion cycle was 96 days versus 61 days in Q2. Days of inventory increased by 25 days to 92 days compared to the prior quarter of 67 days due to key component purchases for higher expected Q4 revenues. Days sales outstanding increased by 8 days quarter over quarter to 37 days, while days payables outstanding decreased by 2 days to 33 days.

Speaker 3

Now turning to the outlook for Q4. We expect strong growth as the supply chain continues to improve with new air cooled and liquid cooled customer design wins. For the Q4 of fiscal 2024 ending June 30, 2024, we expect net sales in the range of $5,100,000,000 to 5,500,000,000 dollars GAAP diluted net income per share of $7.20 to $8.05 and non GAAP diluted net income per share of $7.62 to $8.42 We expect gross margins to be down sequentially as we focus on driving strategic market share gains. GAAP operating expenses are expected to be approximately $226,000,000 and include $55,000,000 in stock based compensation expenses that are not included in non GAAP operating expenses. The outlook for Q4 of fiscal year 2024 fully diluted GAAP EPS includes approximately $30,000,000 in expected stock based compensation expenses, net of tax effects of $28,000,000 which are excluded from non GAAP diluted net income per common share.

Speaker 3

We expect other income and expenses, including interest expense, to be a net expense of approximately $8,000,000 The company's projections for Q4 GAAP and non GAAP diluted net income per common share assume a GAAP tax rate of minus 2.9 percent, a non GAAP tax rate of 2.6% and a fully diluted share count of 64,800,000 for GAAP and 65,300,000 shares for non GAAP. We expect CapEx for Q4 to be in the range of $55,000,000 to $65,000,000 For fiscal year 2024, ending June 30, 2024, we are raising our guidance for revenues from a range of $14,300,000,000 to 14,700,000,000 to a range of $14,700,000,000 to $15,100,000,000 and establishing guidance for GAAP net income per diluted share of $21.61 to $22.46 and non GAAP net income per diluted share of $23.29 to $24.09 Our projections for GAAP and non GAAP net income per diluted share assume a tax rate of approximately 3.6% and 9.2% respectively and a fully diluted share count of 61,200,000 shares for GAAP and fully diluted share count of 61,800,000 shares for non GAAP. The outlook for fiscal year 2024 GAAP net income per diluted share includes approximately $116,000,000 in expected stock based compensation, net of related tax effects of $98,000,000 that are excluded from non GAAP net income per diluted share.

Speaker 3

We're now ready for questions.

Operator

Absolutely. We will now begin the question and answer session. Our first question is from the line of Ruplu Bhattacharya with Bank of America. Your line is now open.

Speaker 4

Hi, thank you for taking my questions and congrats on the strong guidance. I have two questions. First, I wanted to ask a question on liquid cooling. Do you design most of the components for liquid cooling racks in house? And as such, do you think you would be able to charge more for liquid cooled racks?

Speaker 4

And can this be accretive to gross margins?

Speaker 2

Yes, very good question. Yes, we design lots of key components for DLC, liquid cooling system, because we care quality and maintenance and also time to market. So we design lots of key components, while we leverage 3rd party components as well. So it's a combination. And yes, I mean, at Decorin, we try to charge customer with minimum premium and customer can save kind of air condition equipment cost because cool down by liquid, right?

Speaker 2

So at the same time, customer was safe, lots of TCO up to 40% of energy cost. That's why we try to promote a slogan. Green Computing can be free with big bonus. Customer pay a very minimal premium, but they save up to 40% of energy cost. So I believe a lot of customers will go for that direction.

Speaker 2

And indeed, we already have a handful of customers have a big order. And that's why this quarter alone, I mean, June quarter, we are preparing more than 1,000 deveco cooling drag for those early bird. And I believe the demand will continue growing very strong.

Operator

Thank you. The next question is from the line of Samik Chatterjee with JPMorgan. Your line is now open.

Speaker 5

Yes. Hi. Thanks for taking my question. I guess in the press release, Charles, you mentioned the visibility into share gains as the new solutions ramp. And I was curious if you can sort of give us a bit more color there in terms of when you're thinking about share gains, are these relative to the next generation GB200 product with NVIDIA?

Speaker 5

And is this more in relation to sort of hyperscalers? Are you expanding the number hyperscalers that you're engaged with as you move to these new solutions? Just any more color in terms of the visibility around these share gains? Where is that coming from? And is that more in relation to the next product generation from NVIDIA?

Speaker 5

Thank you.

Speaker 2

Okay. Thank you. I mean, yes, we continue to gain much share, especially our direct scale plug and play solution that reduce customers lead time and also reduce customers time to online. With our rack scale program play, customer able to put the system deploy the system online in next day or next few days instead of next few weeks. So time to online saving is a big advantage to customer.

Speaker 2

At the same time, the deep cooling that have customer safe energy power. So customer can allocate, relocate the energy power to power more computing equipment instead of waste of power for air cool. So, semi money that benefit lots of leading customer and also a black scale plug and play that make customer come to online. So we continue to gain more new customer, while our old customer continue to grow start to grow faster with our beta offering. So GB200, right?

Speaker 2

GB200, each rack will be around 100 ks watt. So lots of customers like that and we have them build their deep cooling system and optimize their data center for liquid cooling. So we are growing customer base stronger enough.

Operator

Thank you. The next question is from the line of Michael Ng with Goldman Sachs. Your line is now open.

Speaker 6

Hey, good afternoon. Thank you very much for the question. I wanted to ask about gross margins, strong gross margins for the quarter. I know you're guiding to a sequential decline in gross margins. If our math is right, I think that implies 13.5% to 14% gross margins for the June quarter sorry, for the June quarter.

Speaker 6

Is that the right way to think about gross margins on a go forward basis? Do you still feel comfortable with the prior 14% to 17% long term gross margins? And any comments just around AI server gross margins in general? And if there are any ancillary services and support that can help improve the margins on just the product sales? Thank you very much.

Speaker 3

Yes. So our target is still 14% to 17%. If you look at our guide for Q2 I'm sorry, for Q3, we actually guided slightly down and we ended up slightly up. And so it's very hard to guide exactly on the margins. There is a range.

Speaker 3

And in fact, I think the guide inside of the models last time was even more conservative. So I would say we build conservative we build conservatively and then seek to overachieve. So I think if you look at our guide for revenue and for OpEx, you'll be able to determine our guide there. But our target is definitely to stay in the 14% to 17% range.

Operator

Thank you. The next question is from the line of Aaron Rakers with Wells Fargo. Your line is now open.

Speaker 7

Yes. Thanks for taking the question. I'll try and slip in to here if I can. So I guess one of the just kind of housekeeping questions is a very significant increase in inventory this quarter. I know you said it came in towards the end of the quarter.

Speaker 7

How do we think about the trajectory of inventory as the supply comes on? Do you expect inventory to stay at this level? Do you expect it to start to come down? I'm just kind of curious to how we think flow through kind of looks as you take on more supply. And then just a quick housekeeping thing too is that the 21% customer you referenced in the prepared remarks, is that the same customer, large customer you had last quarter?

Speaker 7

Or how has that evolved? Thank you.

Speaker 2

Two reasons, we had to increase inventory. One is because Q4, I mean June quarter, we will have a strong revenue growth. 2nd reason because we're preparing for high volume liquid cooling. Again, we have more than 1,000 of 100 kwah, I mean, the liquid cooling rack, we had to ship to customer in Q4. And devequeline, as you know, is pretty new.

Speaker 2

So we had to prepare enough inventory so that we can deliver the recurring drug scale product to customer on time or with minimum lead time. So both factor indeed is a positive factor, though. And with our economic scale continue to grow, indeed our inventory average day indeed will slightly improve.

Speaker 3

Yes. So Aaron, my take on that is I hope that our inventory continues to grow because that means there's a reason behind it. So it's tied to sales. So to your second question, the 21% customer was the same as last quarter. And I wanted to let you know that in the queue, we're going to be moving to customer A, customer B, customer C, because as we add more customers, we'll try to make it easier to make those distinguishments.

Operator

Thank you. The next question is from the line of George Wong with Barclays. Your line is now open.

Speaker 8

Hey, guys. Congrats on the strong journey guide. I'd like to put in 2 parts. Quickly, just not asking for specific guidance for A25 for the September, December quarter, but any sort of high level kind of color you can provide just to think about how to model the September, December and also the FY25? And also kind of related, kind of can you pass out kind of utilization in the March quarter?

Speaker 8

And also kind of what's the expected utilization kind of cadence for the next few quarters?

Speaker 2

Yes. As you know, we have a lot of new product coming soon, right, to support NVIDIA H. Two hundred and twenty, B. One hundred and twenty, GB. Two hundred and twenty and AMD Mi 300 and Intel Galli 2 Galli 3.

Speaker 2

So we have those new products already and plus de cooling, DLLC, we are ready to ship high volume product. So for sure, I mean, calendar I mean, fiscal year 2025, I mean, for September, December quarter, we will have a strong growth. And I believe this strong growth will continue for many quarters to come if not many years. I believe it will be many years.

Operator

Thank you. The next question is from the line of Ananda Baruah with Loop Capital. Your line is now open.

Speaker 9

Yes. Thanks guys for taking the question. Really appreciate it. And Charles, let me maybe the remarks you made a moment ago about the strong ongoing growth, Does that could that mean that you could also grow sequentially from this point forward for a little bit, just given the market share gain opportunities, the components coming online that you talked about in the new products? Any context on the way to think about sequential growth sort of in the coming quarters would be helpful as well.

Speaker 9

Thanks.

Speaker 2

Yes. As you know, traditionally, in last 10 years, right, I mean, September quarter March quarter, always our solid quarter. But now with the AI demand growing so strong, so we basically are able to grow sequentially. So although March and September still are a little bit weak, but basically because of strong air growth and our MAX share growing, so sequential growth will become normal. And basically, I mean, we have even better technologies than before ever and now economic scale become much bigger.

Speaker 2

Malaysia campus production will be ready by end of this calendar year. So we see lots of positive factor to grow our business.

Operator

Thank you. The next question is from the line of Jon Tanwanteng with CJS Securities. Your line is now open.

Speaker 10

Hi, thank you for taking my questions. I was wondering if you could talk a little bit more to the gross margins and if you expect them to go structurally higher at some point in the near future, in the coming quarters, especially as Malaysia ramps, you get economies of scale there as you transition to GPU products and you add more liquid cooling. Is there a point where that starts to revert higher? Or do you expect it to remain at a relatively constant level for the foreseeable future?

Speaker 2

Again, the AI platform is getting popular, right? So they are more and more competitive as well. So we will try to keep a balance. To grow market share, we may sometimes some deal, we may have to be a little bit more aggressive in pricing. But overall, we try to keep a balance.

Speaker 2

Maybe you may add something.

Speaker 3

Yes. And also, I agree with your point that Malaysia will also offer some opportunity to us. And we're also at a transition time when there's a lot of new we have a lot of new platforms that are coming out and the customers are highly anticipating. And those platforms are built on some emerging technologies that from many different areas. And we Super Micro's strength again is its fast time to market.

Speaker 3

And we expect with these with the emerging technologies and our new platforms and our liquid cooling to be first out there with very compelling solutions. So we think those things are all going to be helping our margins.

Operator

Thank you. The next question is from the line of Mehdi Hosseini with SIG. Your line is now open.

Speaker 11

Yes, thanks for taking the question. A couple for me. Regarding the channel customer, the 17% of the customer, have you ever had the channel customer that big? I believe in the past you've talked about a 21%, 20% plus customer, but I think this is new. Can you clarify this?

Speaker 3

So this is an existing customer and we actually had a higher customer back in 2022, Medi, but I think they were around 22. But this is still a really good customer, really good opportunity.

Speaker 11

Okay, great. And then one question for you, David, on the cash flow. Actually, there was a I believe there are 2 items. There is $110,000,000 of cash burn in operation and then there was also a non current asset. Am I missing something here?

Speaker 11

These two items were big items that had an impact to overall cash flow. Is that correct?

Speaker 3

Sure. We had a number of things that impacted us. I think in non current assets, we had deferred taxes grew by quite a bit this year or this quarter. And so that was something unusual. And then let's see.

Speaker 3

I think those are I think that's the only unusual item was deferred taxes grew a lot and that's what lowered our tax rate, our quarterly tax rate as well.

Operator

Thank you. The next question is from the line of Nehal Chokshi with Northland Capital. Your line is now open.

Speaker 12

Thank you and congrats on a strong guide here. Talked about the guide here. Inventory increased $1,500,000,000 Q over Q and Dave as you mentioned you like to see inventory increase, I do too, because it's a strong indicator of things to come. And you've guided June quarter to increase by $1,600,000,000 Q over Q.

Speaker 1

If I do this math where

Speaker 12

I'm looking at the inventory at the quarter end and then the 4th quarter revenue, typically it's around 60% to 70% of revenue. But with your March 2 ending inventory and your current June 2 guidance, that equates to about 85% of projected revenue. So can you just explain what seems to be a little bit more usual inventory buildup given the revenue guidance range?

Speaker 3

Sure. Absolutely. That's a fair question. So we actually got a substantial amount of inventory in the last week of the quarter, okay, which obviously we're not going to be able to ship. But we took in $700,000,000 in the last week of the quarter.

Speaker 3

So that's not something that that's something that has to do with when inventory arrives. And so we it hurts our cash flow, but you know what, it doesn't matter because we need that inventory for Q4 shipments.

Speaker 2

Yes. Again, two reasons, right? Q4, we will have a strong revenue. So we had to prepare for Q4. And also, I mean, dek cooling, I mean, it's new.

Speaker 2

So we had to prepare enough safety inventory for dek cooling demand for June quarter and September quarter as well. So that's another reason why we have a slightly higher inventory now.

Speaker 3

Yes. And I want to add, Nehal, that that's exactly why we did capital raises too is to prepare for these Q4 shipments. And so that we could make those large purchases and we hope to continue that.

Operator

Thank you. The next question is from the line of Matt Berson with Wedbush. Your line is now open.

Speaker 13

Hi, thanks for taking my question. I would be thinking with Wicked Coiling ramping in fiscal Q4 and not the harp on the gross margin issue, but that you would be seeing a benefit to gross margins. And I guess my question is, is there any chance that either with the liquid cooling solutions or with your other solutions that you're again seeing some penetration at those larger customers and specifically hyperscalers and that's why we're seeing gross margins come down. And I guess just one clarification for Dave. Any of you can provide the magnitude that revenues were affected by your inability to procure components in fiscal Q3?

Speaker 13

Thanks.

Speaker 2

Let me add that a little bit. Because liquid cooling is new to us, so to speed up quick support for some of our very important customer on June quarter, Indeed, we had to pay some premium to speed up the supply. So we spent a bunch of A for there. Maybe you may add.

Speaker 3

Yes. So the two questions, Matt, I would say, 1st of all, to the gross margin question. Again, I try to give my philosophy is give a conservative and then we're to beat that. And we were able to do that in Q3 and we'll do everything we can do it can do to beat it in Q4. But it will depend also on what we ship.

Speaker 3

As to the magnitude of revenue, I'll go back to the fact that our backlog is at a record high. And so what that means is that every quarter we could have shipped more if we had more parts. And so therefore, it's an ongoing problem and we don't rely on that as an excuse. The fact of the matter is we're glad to be able to produce the products that we're producing for some of the best companies in the world. And so we continue we will continue to do that and we're very beat by the fact that the supply chain continues to improve each quarter.

Operator

Thank you. The next question is a follow-up from Jon Tanwanteng with CJS Securities. Your line is now open.

Speaker 10

Hi, thanks for the follow-up. I was wondering if you could speak to your cash usage expectations over the next quarter or 2. Are the proceeds from your recent capital raises all spoken for as you look to the growth in the pipeline and the record backlog you spoke to? Or do you think that's more in reserve for growth further down the line?

Speaker 3

Yes. So the way I would answer that is that, I hope I have I need more capital, John, because that means that we're booking that we're growing revenues even faster. So we've got capital adequate to get us through the current market, which means today. But in a week, that we hope that that changes and we hope that we've got orders that require even more capital. So all I can say is I hope that I'm hoping for the needs for more capital.

Speaker 2

Yes. We believe our revenue will continue to grow strong and that's why we need more capital to grow faster. If we grow 20%, 30%, we may have enough capital now. But if we grow much faster, then for sure we need more capital to grow stronger.

Operator

Thank you. Our final question today is a follow-up from the line of Nehal Chokshi with Northland Capital. Your line is now open.

Speaker 12

Hey, thanks. Thanks for the follow-up question. This is for Charles. Charles, with the capital base that you have now, I hear you, Dave, that you hope that you will need more capital. But with the capital base that you have now, technology advantage that you've always had that you've added to, is there anything else that you need in order to become the number one vendor?

Speaker 2

Yes, indeed, our brand is very ambitious. Let me use that word. We have a very ambitious brand. So we try to continue to grow very strong, kind of 3x to 5x faster than our industry's average. So when that case happen, and we believe so, we hope so, then for sure we need more capital.

Operator

Thank you.

Speaker 2

Thank you.

Operator

With that.

Speaker 2

Thank you. I'll see you next quarter.

Operator

Thank you. That concludes today's conference call. Thank you all for your participation. Have an excellent rest of your day.

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Earnings Conference Call
Albertsons Companies Q3 2024
00:00 / 00:00
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