Smart Global Holdings Reports Strong 3Q Earnings; Propels Stock 26%

Smart Global Holdings (SGH) reported impressive third-quarter fiscal 2024 earnings, leading to a 26% surge in the company’s stock price. While SGH’s overall performance was strong, the Cree LED segment was notable in the company’s earnings.

Key Highlights of Strong 3Q Earnings Report

Overall Financial Performance: SGH reported total revenues of $301 million, aligning with the midpoint of its guidance. The non-GAAP gross margin stood at 32.3%, and non-GAAP diluted earnings per share (EPS) reached $0.37, surpassing guidance expectations. These results highlight SGH’s solid financial footing and effective cost management.

Cree LED Segment: In Q3, Cree LED generated $64 million in revenue, accounting for 21% of SGH’s total sales, marking a 6% sequential growth. Although a smaller portion of SGH’s business, Cree LED’s contribution was crucial, supporting diversified revenue streams and overall profitability.

Strategic Insights

AI and HPC Focus: CEO Mark Adams emphasized SGH’s strategic positioning in the AI and high-performance computing (HPC) markets. “We believe we are uniquely positioned to enable companies across the technology ecosystem, from hyper scalers to corporate enterprises to emerging cloud service providers, in their AI design, build, deploy, and management,” said Adams. SGH’s deep expertise in HPC, which is foundational for AI technologies, allows it to address businesses’ complex needs when implementing AI at scale.

Product Innovations: SGH continued innovating across its business segments. Notably, the Cree LED segment launched the XLamp XFL LED family, tailored for specific lumen targets in flashlights and portable lighting applications. This innovation is part of SGH’s commitment to advanced lighting technology and customer success.

Operational Efficiency: Operational efficiency remained a priority, with SGH maintaining tight control over expenses. “Total SGH revenues were $301 million at the midpoint of our guidance, and non-GAAP gross margin came in at 32.3%, also at the midpoint of our guidance. Non-GAAP diluted earnings per share was $0.37 for the third quarter, which was above the midpoint of our guidance, helped by our continued control of expenses,” said COO Jack Pacheco.

AI References

The term “AI” was used 15 times throughout the call, highlighting SGH’s strategic focus on artificial intelligence and its applications. This frequent mention underscores SGH’s commitment to advancing its capabilities and offerings in the AI space, leveraging its deep experience in HPC to meet the growing demand for AI solutions.

Unfortunately, there were no questions about lighting during the conference call with investors.