$SMCI Here is exactly what the company said in the conf. call about cash and possible dilution.
Starting at the 43:40 mark
Ruplu Bhattacharya
Research Analyst
0:43:40
Okay. Thanks for the details there. As a follow-up, can I ask, the business is scaling towards
$70 billion of annual revenue, right? How should we think about working capital intensity and operating cash conversion in FY 2027? I think Charles said something about this in his prepared remarks. I did not fully catch that. David, do you expect in FY 2027 the growth to be self-funded from operating cash flow? Or will the company need incremental external financing to support inventory and receivables beyond the rates that you had recently had? Thank you. Thanks for taking my questions.
David Weigand
SVP and CFO
0:44:18
Sure, Ruplu. I think, as I mentioned in my prepared comments, that we do expect the cash conversion cycle to improve, and the reason for that is when we look at our backlog, we have improved terms, which will help us on our cash flow conversion. Therefore, we expect that this will allow us to carry a greater volume of business. We are going to do everything possible to utilize our balance sheet, which is much stronger. If you look at our current assets and our current liabilities, it is stronger than most companies that you will see out on the market. We expect to use the strength of our balance sheet, as well as our good customer base to help us fund our growth.
Charles Liang
Founder, President, CEO, and Chairman of the Board
0:45:21
Yeah. Once we take between
$65 billion to
$72 billion, I guess our cash flow now is pretty enough. But if there are chances to grow much higher revenue, then we may need more cash flow. For example,
$80 billion or beyond
$80 billion. There are some possibilities like that, but we will carefully control.
SO, it was kind of like we don't think we will need more dilution BUT if there are opportunities for growth BEYOND 80B then he wasn't going to rule it out.
Therein lies my concerns. They had 60B backlog june 30th. They were growing 1B a DAY in orders in June. Its been 93 days since then.
This is NOW the vera rubin ordering time we're in.
Even if we take orders at half the june rate we could be at 90B-100B + in backlog.
We also see them hiring worldwide like mad.
We also saw them bring on Cisco and oracle and SAP and NetApp and whomever else.
He said at 80B +, we might need more funds.
So, take it from there. That is my near term CAUTION and what it's based on. At the same time, our market value is SO low its totally ridiculous. If they are now doing this kind of business would we REALLY go back into the upper 20's with dilution? I'm hard pressed to think that.
But, maybe mid to upper 30s? By rights we should be higher than that because our market value is so low. But, we know how the manipulators work.
Anyways, I took my position down SOME from where it was in the mid 30's. I'm taking some gains. But still at a whopping 60% portfiolio because i'm bullish. as HELL. At the 60% level if this did fall i will re-average it out. If we go up to 45-50 i probably will go 40% portfolio, Again, taking some more gains but willing to reaverage this out in a pullback. Or, if it doesn't pullback ...great. I think we are in the unknown period at this point. But i think that business is sizzling. Flaming hot.
And , they have other things they can do besides dilution as they discuss.
Here is the link to the last conf. call with the above comments about possible dilution OVER 80B. And, we might be there. We will find out! :)
https://finance.yahoo.com/quote/SMCI/earnings/SMCI-Q4-2026-earnings_call-660964.html
