Penguin Solutions (PENG) Q1 2026 earnings summary

Executive summary

• Q1 FY26 net sales reached $343 million, up 1% year over year, driven by Integrated Memory growth and operational execution, despite declines in Advanced Computing and Optimized LED.

• Non-GAAP gross margin was 30%, down 0.8 percentage points year over year, and non-GAAP operating income was $42 million, up 1% year over year.

• Non-GAAP diluted EPS was $0.49, flat year over year and up 14% sequentially; GAAP diluted EPS was $0.04, down from $0.10 year over year.

• The business is transitioning from hyperscaler-centric deployments to broader enterprise and sovereign AI opportunities, with increasing customer diversification.

• Completed U.S. redomiciliation from Cayman Islands to Delaware, now trading as Penguin Solutions, Inc. on Nasdaq as of July 1, 2025.

Financial highlights

• Total net sales were $343 million, with product net sales up 3% and services net sales down 9% year over year.

• Non-GAAP gross profit was $103 million; non-GAAP operating income was $42 million; adjusted EBITDA was $45 million, up 1% year over year.

• Cash, cash equivalents, and short-term investments totaled $461.5 million at quarter-end.

• Operating cash flow was $31.1 million, up 125% year over year.

• GAAP net income attributable to common stockholders was $2 million, down from $5.2 million year over year.

Outlook and guidance

• FY26 outlook confirmed: 6% net sales growth and $2 non-GAAP diluted EPS at the midpoint; GAAP diluted EPS guidance is $0.85 ±$0.25.

• Advanced Computing net sales expected to range from -15% to +15% year over year; Memory net sales growth raised to 20%-35%; LED net sales expected to decline -15% to -5%.

• Non-GAAP gross margin outlook adjusted to 29% ±1 percentage point; GAAP gross margin at 27% ±1%.

• Non-GAAP operating expenses expected at $250 million ±$10 million; GAAP at $307 million ±$10 million.

• Second-half sales expected to be stronger, with 53%-54% of annual net sales in H2.