Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Super Micro Computer 2020 Business Update Conference Call. The company's news releases issued earlier today are available from its website at www.supermicro. Com.
As a reminder, this call is being recorded. Thursday, November 14, 2019. A replay of the call will be accessible until midnight, Thursday, November 28, 20 19 by dialing 1-844-512-2921 and entering replay 1371. International callers should dial 1-four twelve-three 17-6671. With us today are Charles Yang, Chairman and Chief Executive Officer Kevin Bauer, Senior Vice President And Chief Financial Officer and Perry Hayes, Senior Vice President, Investor 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 fiscal 2020. Which ended September 30, 2019. During today's conference call, Super Micro will address the company's preliminary financial results for the first quarter of fiscal year 2020 and the company's efforts to become current with its remaining SEC filings. 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 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.
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 and the press release we issued earlier this afternoon, our most recent 10 K filing for 2017, and our other SEC filings. Website. We assume no obligation to update any forward looking statements.
Most of today's presentation will refer to non GAAP financial results and outlook. At the end of today's prepared remarks, we will have a Q and A session for sell side analysts to ask Quest I'll now turn the call over to Charles Leon, Chairman and Chief Executive Officer.
Thank you, Perry. Good afternoon, everyone. Our first quarter revenue will be in the range of $788,000,000 to $798,000,000 which exceeded the midpoint of our quarterly guidance of Our non GAAP gross margin will be in the range of 16.1% to 16.3%. Non GAAP earnings per share, within the range of $0.61 to $0.65 compared to the range of $6 to $0.70 last year in the range of $0.57 to $0.61 last quarter. System revenue was approximately 80% of total revenue.
System ASPs were lower year over year due to lower memory and SSD pricing, which impacts revenue. We see continued demand in the channel where the breadth of our portfolio and first to market innovation, allow our partners to offer application optimized solutions to their customers. In addition to seasonality in the September quarter, there were several factors impacting our top line revenue. And overall industry wide slowdown due to economic uncertainty. Some puts in purchasing from major data center customers and price reductions on key components used in our systems.
As we hope by our PR and industry analysts. Server revenue has been done in 2019. And we saw that trend continue for our business in the September quarter. However, as we reach the end of this quarter, we began to see signals of stabilization and early signs of seasonal strength. Our key customers and we began increasing our inventory to take advantage of opportunities.
Shipo Michael has long received that application optimally product will maximize our growth. We continue to develop new product and solution offerings across major server and storage markets. Including total solution, AI Machine Learning, 5g, IoT, and datacenter. Combining the advantage that we'll introduce to our green computing and resource savings platform. We delivered completed solution offerings with red hair, William Ware, Nvidia, and SAP providing certified and tested considerations that can reduce risk and accelerate ROI for our customers.
Our as well in between hyperconvert infrastructure continued to be the most optimized solution for new generation storage customer, delivering the best in class feature support house capable NVMe, flexible IO and high TDP of India, 2nd generation GeoM Scalable prospects. With SAP, we delivered the 2U 4 way super service as part of our Intel Select solutions, with up to 12 terabytes of memory, that brings the power and cost saving of Intel data centers persistent memory to the SAP HANA platforms. As we cooperate with NVIDIA, home and EGX Edge solution, allowing customers to manage their AI applications on Super Micro's extensive edge GPU in a cloud native environment. Moreover, we introduced a new class of 5 g rating software defined networking platform that can be optimized to deliver accelerated AI infotainment to LAN, Networkage. On A and B side, we started shipping Ciplo Microbetween systems.
Based on the 2nd generation APIC Processes, which doubled the Qualcomm of Cornelius Generation A plus system and provide a much better performance and value. Last of another list, we had begun to deliver a set of of LOMET, the base July system for that targets for megadata Center. This product I uniquely optimized for the specific requirements of high volume scale datacenter customer. Our feeding power solution allow us to leverage our existing product designs and customize the performance efficiency and cost requirements on demand. We see a similar opportunity for cloud data centers optimized design and have A 4 underway to deliver additional ophthalmic specialized products.
Looking ahead, we see the pace of process of refresh cycle accelerating and has rated our sales with the next X11 product update in the coming quarter. For example, we had kicked off developing of our next generation X12 architectures for a complete family refrigeration. This new architecture we'll take a full advantage of upcoming innovations of retail new processors, like PCIe Jane 4, more flexible IO, higher performance architecture and new storage form factors. We have already started engaging with selected alpha customers. Important to achieving our credit growth, we continue to invest and improve our operational efficiency and scale.
Building a stronger global foundation, we have increased our capacity in engineering manufacturing, operations and service in our key strategic locations. This includes over 200,000 square feet of new facilities space in our San Jose Green Computing Park. And more at our next three quarters. In summary, our low market conditions have been challenging we continue to deliver significant server and storage innovations to the market. More importantly, we have mobilized our R and D sale and operations to grow the discipline and focus needed to expand our market share.
From the density, we are more confident than ever in the strength of our product and operation improvement. Which will empower us to achieve our business goals.
Thank you, Charles. First, I will address the current health of the business by providing an overview of our financial performance for the first quarter of fiscal 2020. I will then make a few comments about our progress on our SEC filings. As Charles mentioned earlier, we estimate our fiscal 1st quarter revenue within the range of $788,000,000 to $798,000,000. Geographies were lower on a year over year basis with EMEA approximately 21% lower, Asia, 22% lower, and the U.
S. 18% lower. Our estimated gross margin range on a GAAP and non GAAP basis were from 16% to 16.2% 16.1% to 16.3%, respectively. Our margins improved from last year and benefited from lower key component costs as well as favorable customer, geographic and product mix. Our operating expenses were slightly lower this quarter due to lower reserves for bad debt offset by the effect from annual salary increases and higher research and development expenses.
We estimate our non GAAP diluted EPS range this quarter was from $0.61 to $0.65 per diluted share. Due to the need to rebuild inventory this quarter for seasonal demand, cash flow generated from operations was lower than recent quarters. At $5,500,000. After deducting for CapEx and investments of 13,300,000 our free cash flow was negative $7,800,000. Our closing cash position was a robust $239,000,000 This quarter, our cash conversion cycle was 89 days.
The day sales outstanding was 43 days, web days payable at standing was 48 days, with inventory days increasing to 93. Our cash conversion cycle target remains 85 to 90 days. Now let me comment on the progress fiscal 2018 financials for audit. We are now able to report that we have also completed work on the fiscal 2019 financials under both the 605606 revenue recognition standards. And submitted them for audit at the end of September.
Concurrent with the financial statement audit, we have continued the testing and assessment of our internal controls over financial reporting. As a result, we have prepared draft of our SEC filings. The team remains laser focused on becoming fully current on our SEC filings which also includes the 10 Q filing for this first quarter of fiscal 2020.
As indicated previously, we will to ask questions.
Session. You. In the queue have been have had an opportunity to ask a question. And we'll go first to Nehal Chokshi of Maxim Group. Please go ahead.
Yeah. Thanks. And, congratulations on, solid results. Relative to the guidance, especially on the, gross margin, very nicely done there. On the, guidance here, looks like, at the midpoint, you're guiding to up 5% Q over Q.
How does that compare to your typical seasonality?
So in general, we believe that it's similar to our normal seasonality. As Charles outlined, we saw some signs of stabilization and a little bit of growth as we enter into the next quarter. So we believe it's in line.
Okay. And I think you gave the color on why the gross margin was up year over year. And I think one of the elements was, component costs, declining rapidly. And that's certainly true on a year over year basis, but I was under impression on a q over q basis. There has been some pressure.
Yet, you did see strong gross margin on a q over q basis. So Could you tease that out as far as why did you also see the strong Q over Q gross margin?
Yes, I think, we had mentioned last quarter that as compared to the quarter previous to that, but still there was some mix and customer influences that are in there. And certainly that was the case this quarter as it rebounded back. So we continue to look, that gross margin, trying to ensure that we make some periodic progress over time that we have talked about for quarters on quarters. But without getting into too specific details, we're really calling out the fact that on a sequential basis, this is really going to be a customer and mix orientation and it will be less of the impact on a sequential basis related to the component changes.
Understood. Okay. And It looks like there was about $2,500,000 of incremental OpEx on a q over q basis. A, is that correct? B, you help, guide us, which buckets we should attribute those to?
You mean in terms of, in yeah. For
the September quarter. Yep.
Yes. So I called out that, the key things in terms of the sequential basis were really that we had less bad debt And then in addition to that, as we go into the September quarter, our annual merit increases are always effective with our fiscal new year January And then as Charles had mentioned, we had some new new product development initiatives that were sequentially increased quarter over quarter.
Got it. Okay. I'm going to yield before for now. Thank you.
Our next question comes from Aaron Rakers of Wells Fargo. Please go ahead.
Yeah. Thanks for taking the questions. You know, I want to first just ask you kind of on a demand environment. I know you talked about you know, demand, you know, the demand environment being somewhat, you know, challenging, but you you also mentioned that you started to see signs of improvement there's been some kind of mixed data points on some of the hyperscale, you know, cloud demand, you know, some suggesting that there might be a push out in server refresh cycles. I'm just curious of how would you characterize the cadence of your customers as it relates to kind of server refreshes?
Do you think that there could be any kind of a pause in front of some of the timing around things like Cooper Lake from Intel or even ice lake? Just any kind of color on what you're seeing as far as purchasing behavior, for the customers and particularly that, you know, some of the hyperscale customers you have.
For sure, it's a very dynamic market. And that's why we say a new process is getting available So as a technology leading company, we have a very strong new product available each month or each quarter. So, overall, we feel pretty positive as to the macro market, the whole industry demand. And at this moment, we feel it's still kind of hard to predict, but overall, we feel on our prepared.
But I think on the backup, you should be reminded you this number of times that in our exposure to hyperscalers is not near as much as some of the other compares that you may have in mind.
Okay. Fair enough. And then on on the com as a as my follow-up on the component, you know, pricing dynamics, you know, I know, you know, just kind of thinking about the progression as you see going forward between DRAM and SSD pricing, there's been some, you know, indication that the, you know, SSD pricing seems to be stabilizing and maybe turning a bit higher. DRAM, however, continues to be on a downward trend. Just as you think about the current quarter, how would you characterize what you're seeing from a component pricing environment perspective?
Yes. I mean, after many years improvement, our procurement department have been a much stronger than before ever. And also our economic scale have us. As to, otherwise, say, NVMe and especially SSD, right? Prices are getting, growing and, beer and price continue on slowly drop in, right.
So both, I guess, about offset in next few months, I believe.
Okay. I'll slip one final one in. There's obviously some changes in the competitive landscape from a server CPU perspective. You know, you mentioned in the trans, you know, in your prepared remarks, you know, the progression with Rome or the 2nd generation AMD Processors, would you characterize your ability to maybe leverage a bit of a changing competitive landscape in server CPUs? What what are you seeing in terms of the demand profile profile the appetite for AMD relative to server CPUs versus say Intel?
Our A and B platform outperform the previous generation, A and B solution, a lot more Qualcomm almost double Qualcomm. So performance, at the event that she will have, the product line to go So we feel pretty positive for AMD product line. As to India product line, again, our product line has been stronger than before ever. So we have a good feeling for those in Brazil. Thank you.
Or closing comments.
Thank you for joining us today and have a great day. See you next time. Bye.
2020 Business Update Conference Call. We do appreciate your participation. You may disconnect at this time. Thank