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, while non-GAAP operating income was $42 million, up 1% year-over-year; non-GAAP diluted EPS was $0.49, flat year-over-year.

• GAAP diluted EPS was $0.04, down from $0.10 year-over-year; GAAP net income attributable to the company was $5.3 million.

• The business is transitioning from hyperscaler and pilot programs to broader enterprise and production-scale AI deployments, with growing 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

• Net sales were $343 million, up 1% year-over-year; product revenue was $279 million, services revenue $65 million.

• Non-GAAP gross margin was 30.0%, GAAP gross margin was 28.0%, both down year-over-year.

• Non-GAAP operating margin was 12.1%, GAAP operating margin was 5.7%.

• Adjusted EBITDA was $45.2 million, up from $44.7 million year-over-year.

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

Outlook and guidance

• Fiscal 2026 outlook projects 6% year-over-year net sales growth, with non-GAAP diluted EPS at $2.00 ±$0.25 and non-GAAP gross margin at 29% ±1%.

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

• Second-half sales expected to be stronger, with 53%-54% of annual net sales in H2 as AI pipeline bookings are assumed to ship then.

• Operating expenses expected at $307 million GAAP and $250 million non-GAAP, both ±$10 million.

• Sufficient liquidity to fund operations for at least the next 12 months.