Penguin Solutions (PENG) Q2 2025 earnings summary

Executive summary

• Q2 FY2025 revenue reached $366 million, up 28% year-over-year, with non-GAAP EPS of $0.52, a 97% increase, and five consecutive quarters of sequential growth.

• Strong balance sheet with $647 million in cash and equivalents, bolstered by a $200 million convertible preferred share investment from SK Telecom.

• Operating income reached $18.5 million, reversing a prior year loss, and net income attributable to Penguin Solutions was $8.1 million.

• Announced intent to redomicile from the Cayman Islands to the U.S. and began breaking out redomiciliation costs.

• COO and President of Integrated Memory, Jack Pacheco, to retire at year-end 2025; 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%.

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

• Adjusted EBITDA for Q2 was $54 million, up from $33 million year-over-year.

• Cash and equivalents totaled $647 million, up $181 million year-over-year.

• Cash flow from operations was $73 million, compared to $22 million used in the prior year quarter.

Outlook and guidance

• Full-year fiscal 2025 revenue growth outlook raised to 17% year-over-year at the midpoint.

• Non-GAAP gross margin expected at 31% ±1 point; GAAP gross margin at 29% ±1 point.

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

• Non-GAAP operating expenses projected at $265 million ±$5 million.

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