Penguin Solutions (PENG) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue reached $366 million, up 28% year-over-year, with non-GAAP diluted EPS of $0.52, a 97% increase, and GAAP diluted EPS improving to $0.09 from $(0.26) in the prior year.

• Strong performance was driven by Advanced Computing and Integrated Memory segments, with continued transformation toward AI infrastructure leadership.

• Cash and equivalents stood at $647 million at quarter end, supported by a $200 million convertible preferred share investment from SK Telecom.

• The company raised its full-year revenue growth outlook to 17% year-over-year, reflecting robust first-half results and a large advanced computing order.

• COO and President of Integrated Memory, Jack Pacheco, announced retirement effective December 31, 2025, with succession planning underway.

Financial highlights

• Non-GAAP gross margin was 30.8%, down 0.7 points year-over-year; GAAP gross margin was 28.6%, down 20 basis points.

• Non-GAAP operating margin was 13.4%, up 4.1 points year-over-year; GAAP operating margin was 5.1%, up from (1.2)% year-over-year.

• Adjusted EBITDA for Q2 was $54 million, up from $33.4 million year-over-year.

• Cash flow from operations was $73 million for the quarter, up from $(22) million in the prior year.

• Product revenue was $302 million and services revenue was $64 million, both up 28% and 30% year-over-year, respectively.

Outlook and guidance

• Full-year revenue growth outlook raised to 17% year-over-year, with non-GAAP gross margin expected at 31% ±1 point and GAAP gross margin at 29% ±1 point.

• Non-GAAP operating expenses projected at $265 million ±$5 million; diluted shares outstanding projected at 54–55 million.

• Non-GAAP full-year diluted EPS outlook raised to $1.60 ±$0.10; GAAP diluted EPS guidance is $(0.02) ±$0.10.

• Management expects sufficient liquidity to fund operations for at least the next 12 months.

• Advanced computing revenue expected to grow 15–25%, memory 20–30%, LED flat year-over-year.