Penguin Solutions (PENG) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue reached $341.1M, up 24.4% year-over-year, driven by 49% growth in Advanced Computing and strong demand for AI infrastructure solutions.

• Non-GAAP diluted EPS was $0.49, up 108% year-over-year; GAAP diluted EPS improved to $0.10 from $(0.23) in Q1 FY24.

• Net income attributable to Penguin Solutions was $5.2M, reversing a prior year loss.

• Cash, cash equivalents, and short-term investments totaled $394M at quarter end.

• Management reaffirmed full-year outlook, shifting to annual guidance and highlighting new partnerships and strategic investments.

Financial highlights

• Non-GAAP gross margin was 30.8%, down 2.5 percentage points year-over-year due to higher hardware mix; GAAP gross margin was 28.7%.

• Product revenue was $270M, up 31% year-over-year; services revenue was $71M, up 5%.

• Adjusted EBITDA was $45M, up from $34M in Q1 FY24.

• Operating income rose to $17.4M from $1.3M in Q1 FY24; non-GAAP operating income was $41M, up 53%.

• Cash flow from operations was $14M; capital expenditures were $2M.

Outlook and guidance

• FY25 revenue/net sales expected to grow 15% year-over-year, plus or minus 5 percentage points.

• Non-GAAP gross margin for the year expected at 32% ±1 percentage point; GAAP gross margin at 30% ±1%.

• Non-GAAP diluted EPS projected at $1.50 ±$0.20; GAAP diluted EPS guidance is $0.10 ±$0.20.

• Advanced Computing revenue to grow 10%-25% year-over-year; Memory 10%-20%; LED flat to up 10%.

• Management expects existing liquidity and cash flow to fund operations for at least the next 12 months.