SMART Global Holdings Inc (SGH) Q4 2024 Earnings Call Highlights: Steady Growth Amid Strategic ...

GuruFocus News
4 min read

In This Article:

  • Total Revenue for Fiscal 2024: $1.17 billion.

  • Q4 Revenue: $311 million, marking the third consecutive quarter of sequential growth.

  • Non-GAAP Gross Margin for Fiscal 2024: 31.9%.

  • Q4 Non-GAAP Gross Margin: 30.9%, down from 32.3% in the prior quarter.

  • Non-GAAP EPS for Q4: $0.37, flat sequentially and up slightly from the prior year quarter.

  • Cash and Cash Equivalents: $389 million at the end of Q4.

  • Intelligent Platform Solutions (IPS) Q4 Revenue: $149 million, 48% of total revenue.

  • Memory Business Q4 Revenue: $96 million, 31% of total revenue.

  • LED Business Q4 Revenue: $66 million, 21% of total revenue.

  • Non-GAAP Operating Margin for Q4: 10.8%, up 1.2 percentage points versus last year.

  • Adjusted EBITDA for Q4: $39 million, 13% of sales.

  • Inventory at End of Q4: $151 million, down from $177 million in the prior quarter.

  • Fiscal 2025 Revenue Growth Outlook: 15% plus or minus 5 percentage points.

  • Fiscal 2025 Non-GAAP Gross Margin Outlook: 32% plus or minus 1 percentage point.

  • Fiscal 2025 Non-GAAP EPS Outlook: Approximately $1.70 plus or minus $0.20.

Release Date: October 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • SMART Global Holdings Inc (NASDAQ:SGH) achieved its third consecutive quarter of sequential revenue growth, with Q4 revenue, gross margin, and EPS all within guidance range.

  • The company reported total revenues of $1.17 billion for fiscal 2024, with managed services revenue increasing from 17% in FY23 to 21% in FY24.

  • SGH's cash position remains strong with approximately $389 million in cash and cash equivalents and short-term investments.

  • The company is optimistic about double-digit year-over-year growth in FY25, driven by expanding customer engagements and strategic partnerships.

  • SGH is enhancing its intellectual property portfolio, filing patent applications related to its innovations in AI and high-performance computing.

Negative Points

  • Non-GAAP gross margin for Q4 was down from the previous quarter, primarily due to product mix and a lower mix of services revenue.

  • The company's cash and cash equivalents decreased by $78 million from the prior quarter, primarily due to a $125 million prepayment on a term loan and repurchasing $80 million in convertible notes.

  • SGH's services revenue decreased from $67 million in the prior quarter to $60 million in Q4, representing a decline in its share of total revenue.

  • The company faces challenges with extended lead times for certain components, impacting the ramp-up of existing and new customer projects.

  • SGH's decision to shift from quarterly to fiscal year financial outlook may reduce visibility into short-term performance, potentially causing uncertainty among investors.

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