Detailed narrative
Record Q4 and the second-half inflection
After roughly flat first-half sales, growth accelerated to 48% in Q3 and 68% in Q4, giving second-half growth of 58%; FY26 net sales were about $1.73B, up about 26%. Management attributes the acceleration to the AI factory platform strategy launched mid-year, a sharper data-center focus and go-to-market effort aimed at neo clouds and enterprise.
Q4 net sales and EPS exceeded the outlook, and FY26 operating income reached a record $241M, up 44%. Bookings grew faster than net sales in AI infrastructure and memory and the company ended the year with record backlog.
AI infrastructure and neo-cloud momentum
Advanced computing grew 11% YoY in Q4, but non-hyperscale AI infrastructure grew 99% and rose to 66% of the segment, offsetting traditional business runoff. Six new AI infrastructure customers were added in Q4, including four neo clouds, a quant trading firm and an enterprise.
Named wins include a Korean-tech-backed neo cloud on GB-300 NVL72, a public neo cloud with over $3B of signed contracts, Lektra, and a neo cloud with $10B contracted compute for a Norway deployment. Management says neo-cloud unit economics are similar to enterprise on-prem factories, and that most projects have already started.
Integrated memory: price and volume
Memory hit a record $341M, 60% of company sales, with both volume and pricing rising on data-center and agentic-AI inference demand. FY26 memory sales were $924M, up 99%, lifting memory to 53% of sales from 34%. Management says backlog is well above revenue recognized in the quarter and extends at least four quarters.
CXL memory expansion cards, KV-cache solutions and a new supply arrangement with a leading memory supplier support continued growth, though management concedes memory is cyclical.
Margins and operating leverage
Gross margin improved 70bps sequentially to 28.8% on memory profitability, partly offset by lower advanced computing margins; FY gross margin fell 1.7pp to 29.3% on AI infrastructure hardware mix. Opex grew only 4% for the year, a 3.4pp decline as a share of sales, which management ties to India-based engineering (95%+), Taiwan memory engineering, Malaysia manufacturing and internal AI productivity tools.
Segment margins are not disclosed, though management said AI infrastructure hardware wins may pressure margins, offset by high cluster software and services attach.
Working capital, balance sheet and financing
Receivables, inventory and payables all scaled with gross billings and higher memory costs, producing operating cash outflow in Q4 and FY26. The company closed a $750M 0% convertible due 2031 with capped call, exchanged about $296M of 2029/2030 converts for cash and shares, and repaid the $100M credit facility, ending with $647M cash.
Capex remained asset-light at $12M for the year. The new convert increased the share count, which is why sequential EPS growth trailed operating income growth.
FY27 outlook and leadership
FY27 guidance was raised well above the ~30% preliminary view, with advanced computing and memory both guided higher and LED flat; EPS is expected to grow faster than sales. Management says the earlier view was directional and that bookings and conversion visibility now support a formal outlook.
Stephen Comin (transcribed as '[ Stephen Coming ]') joins as CFO; Aaron Johnson, interim CFO since July, returns to Vice President of Finance and Accounting. Management cited extended component lead times and deployment timing as quarterly cadence risks.