Penguin Solutions, Inc.(PENG) - 2025 Q4 - Annual Results

Company Overview and Fiscal Highlights Penguin Solutions reported strong fiscal 2025 performance, achieving growth, GAAP profitability, and a new stock repurchase authorization Fiscal 2025 & Q4 2025 Performance Highlights Penguin Solutions reported strong financial results for fiscal year 2025 and the fourth quarter, with significant growth in net sales and a turnaround from GAAP loss to profit, alongside a substantial increase in Non-GAAP EPS Fiscal Year 2025 Key Financial Highlights | Metric (FY25) | FY25 Value | FY24 Value | Change | | :------------ | :--------- | :--------- | :----- | | Net Sales | $1.37 billion | $1.17 billion | +17% | | GAAP EPS | $0.28 | ($0.85) | Up | | Non-GAAP EPS | $1.90 | $1.25 | +53% | Fourth Quarter Fiscal 2025 Key Financial Highlights | Metric (Q4 FY25) | Q4 FY25 Value | Q4 FY24 Value | Change | | :--------------- | :------------ | :------------ | :----- | | Net Sales | $338 million | $311 million | +9% | | GAAP Gross Margin | 28.6% | 28.0% | +60 bps | | Non-GAAP Gross Margin | 30.9% | 30.9% | Flat | | GAAP Diluted EPS | $0.11 | ($0.46) | Up | | Non-GAAP Diluted EPS | $0.43 | $0.37 | +16.2% | CEO Commentary CEO Mark Adams highlighted fiscal 2025 as a year of strong execution and significant progress in the company's transformation into an enterprise AI infrastructure solutions provider, emphasizing momentum in core businesses and emerging leadership in AI implementations - CEO Mark Adams stated that Fiscal 2025 was a year of strong execution and meaningful progress in the company's transformation from a holding company structure to an enterprise AI infrastructure solutions company[3] - The results highlight momentum in core businesses and Penguin Solutions' position as an emerging leader in designing, building, deploying, and managing enterprise AI implementations[3] Common Stock Repurchase Authorization The Audit Committee approved a new $75 million common stock repurchase authorization, bringing the total over four years to $225 million, allowing for flexible repurchases without an expiration date - On October 6, 2025, the Audit Committee of the Board of Directors approved a $75 million common stock repurchase authorization[3] - This new authorization brings total stock repurchase authorizations over the last four years to $225 million[3] - The stock repurchase authorization has no expiration date, may be suspended or terminated by the Audit Committee at any time, and does not obligate the Company to acquire any amount of common stock[3] Detailed Financial Results Penguin Solutions' annual and quarterly financial results detail net sales, profitability, and EPS across GAAP and Non-GAAP measures Annual Financial Results (GAAP & Non-GAAP) Penguin Solutions reported significant annual growth in net sales and profitability for fiscal year 2025, driven by strong performance in Advanced Computing and Integrated Memory segments, with a notable shift from GAAP net loss to net income Annual Financial Results (in thousands, except per share amounts) | Metric | FY25 GAAP | FY24 GAAP | FY25 Non-GAAP | FY24 Non-GAAP | | :-------------------------------- | :-------- | :-------- | :------------ | :------------ | | Net Sales: | | | | | | Advanced Computing | $648,417 | $554,552 | $648,417 | $554,552 | | Integrated Memory | $464,249 | $356,426 | $464,249 | $356,426 | | Optimized LED | $256,128 | $259,818 | $256,128 | $259,818 | | Total net sales | $1,368,794| $1,170,796| $1,368,794 | $1,170,796 | | Gross profit | $394,274 | $340,776 | $424,600 | $373,981 | | Operating income | $58,135 | $18,295 | $167,652 | $120,257 | | Net income (loss) attributable to Penguin Solutions | $25,391 | ($44,324) | $120,325 | $66,907 | | Diluted earnings (loss) per share | $0.28 | ($0.85) | $1.90 | $1.25 | Quarterly Financial Results (GAAP & Non-GAAP) In Q4 FY25, Penguin Solutions demonstrated sequential and year-over-year growth in net sales and improved profitability, particularly in the Integrated Memory segment, with both GAAP and Non-GAAP EPS showing positive trends Quarterly Financial Results (in thousands, except per share amounts) | Metric | Q4-25 GAAP | Q3-25 GAAP | Q4-24 GAAP | Q4-25 Non-GAAP | Q3-25 Non-GAAP | Q4-24 Non-GAAP | | :-------------------------------- | :--------- | :--------- | :--------- | :------------- | :------------- | :------------- | | Net Sales: | | | | | | | | Advanced Computing | $138,336 | $132,498 | $149,355 | $138,336 | $132,498 | $149,355 | | Integrated Memory | $132,159 | $130,124 | $95,832 | $132,159 | $130,124 | $95,832 | | Optimized LED | $67,427 | $61,629 | $65,961 | $67,427 | $61,629 | $65,961 | | Total net sales | $337,922 | $324,251 | $311,148 | $337,922 | $324,251 | $311,148 | | Gross profit | $96,731 | $95,083 | $87,086 | $104,317 | $102,753 | $96,007 | | Operating income (loss) | $12,448 | $9,843 | $8,791 | $39,170 | $38,474 | $33,739 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $2,661 | ($24,547) | $28,843 | $31,128 | $20,007 | | Diluted earnings (loss) per share | $0.11 | ($0.01) | ($0.46) | $0.43 | $0.47 | $0.37 | Business Outlook Penguin Solutions projects fiscal year 2026 financial performance, detailing net sales, gross margin, operating expenses, and diluted EPS, alongside Non-GAAP adjustments Fiscal Year 2026 Business Outlook Penguin Solutions projects continued growth for fiscal year 2026, with anticipated net sales growth of 6% YoY and improved GAAP and Non-GAAP diluted EPS, alongside stable diluted shares Fiscal Year 2026 Financial Outlook | Metric (FY26 Outlook) | GAAP Outlook | Non-GAAP Outlook | | :-------------------- | :---------------- | :---------------- | | Net Sales | 6% YoY Growth +/-10% | 6% YoY Growth +/-10% | | Gross Margin | 27.5% +/- 1% | 29.5% +/- 1% | | Operating Expenses | $312 million +/- $10 million | $255 million +/- $10 million | | Diluted earnings per share | $0.89 +/- $0.25 | $2.00 +/- $0.25 | | Diluted shares | 55 million | 55 million | Non-GAAP Adjustments for Outlook The fiscal year 2026 Non-GAAP outlook incorporates specific adjustments for stock-based compensation, amortization of acquisition-related intangibles, other adjustments, estimated income tax effects, and allocation of earnings to participating securities Non-GAAP Adjustments for FY26 Outlook (in millions) | Non-GAAP Adjustment | Amount | | :---------------------------------------------------------------- | :----- | | Stock-based compensation and amortization of acquisition-related intangibles included in cost of sales | $30 | | Stock-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A | $49 | | Other adjustments | $8 | | Estimated income tax effects | ($19) | | Estimated effect of allocation of earnings to participating securities | ($7) | | Total | $61 | Corporate Information and Disclosures This section details earnings call information, forward-looking statements, non-GAAP financial measures, U.S. domestication, and company overview Earnings Conference Call and Webcast Details Penguin Solutions scheduled a conference call and webcast for October 7, 2025, to discuss Q4 and full year fiscal 2025 results, accessible via phone and the company's investor relations website - A conference call and webcast to discuss the fourth quarter and full year fiscal 2025 results was scheduled for October 7, 2025, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time)[10] - Interested parties could access the call by dialing +1-833-470-1428 (United States) or +1-404-975-4839 (international) using access code 561265[10] - The earnings presentation and a live webcast were accessible from the Company's investor relations website (https://ir.penguinsolutions.com/investors/default.aspx) and would remain available for approximately one year[10] Use of Forward-Looking Statements This section outlines that the press release contains forward-looking statements, which are predictive and subject to significant risks and uncertainties, including global economic conditions, industry trends, and operational factors, cautioning investors against undue reliance - This press release contains forward-looking statements concerning future events, financial and operating performance, strategic transformation, business momentum, and the business and financial outlook for fiscal year 2026[11] - These statements are subject to a number of significant risks, uncertainties, and other factors, many of which are outside of the company's control, including global business and economic conditions, growth trends in technology industries (e.g., AI), geopolitical environment, and supply chain disruptions[12][13] - Investors are cautioned not to place undue reliance on any forward-looking statements, and the company does not undertake to update them except as required by law[14] Statement Regarding Use of Non-GAAP Financial Measures Penguin Solutions uses non-GAAP financial measures to supplement GAAP results, excluding items like stock-based compensation and acquisition-related amortization, to provide investors with a clearer view of core operating performance, while emphasizing that these measures are not substitutes for GAAP - Penguin Solutions' management uses non-GAAP measures (e.g., non-GAAP gross profit, operating income, diluted earnings per share) to supplement GAAP financial results, believing this supplemental information is useful to investors in analyzing and assessing the Company's past and future operating performance[15] - These non-GAAP measures exclude certain items such as stock-based compensation expense, amortization of acquisition-related intangible assets, cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, and impairment of goodwill[15] - The long-term projected non-GAAP effective tax rate was reduced from 28% to 25% in Q3 FY25 due to changes in geographic earnings mix, and further to 22% for fiscal 2026 as a result of the U.S. Domestication[17] Explanatory Note on U.S. Domestication The company completed its redomiciliation from the Cayman Islands to Delaware on June 30, 2025, making Penguin Solutions, Inc., a Delaware corporation, the new publicly traded parent company, with shareholders exchanging Cayman shares for Delaware stock - On June 30, 2025, Penguin Solutions completed the redomiciliation of its parent company, Penguin Solutions (Cayman), Inc., from the Cayman Islands to the State of Delaware in the United States[19] - Penguin Solutions, Inc., a Delaware corporation, became the publicly traded parent company (the 'U.S. Domestication'), succeeding Penguin Solutions Cayman[19] - Each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share for one share of convertible preferred stock[19] About Penguin Solutions Penguin Solutions assists customers in adopting advanced technological advancements across its core business lines: Advanced Computing, Integrated Memory, and Optimized LED, leveraging expertise and partnerships to address complex challenges - Penguin Solutions supports customers in achieving their ambitions across its Advanced Computing, Integrated Memory, and Optimized LED lines of business[21] - The company utilizes its expert skills, experience, and partnerships to transform customers' most complex challenges into compelling opportunities[21] Unaudited Consolidated Financial Statements Penguin Solutions' unaudited consolidated financial statements include operations, balance sheets, cash flows, and GAAP to Non-GAAP reconciliations Consolidated Statements of Operations The Consolidated Statements of Operations show Penguin Solutions' revenue, cost of sales, operating expenses, and net income (loss) for the three months and year ended August 29, 2025, and August 30, 2024, highlighting the shift from a net loss to net income year-over-year Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Q4 FY25 | Q3 FY25 | Q4 FY24 | FY25 | FY24 | | :------------------------------------- | :------ | :------ | :------ | :--- | :--- | | Total net sales | $337,922| $324,251| $311,148| $1,368,794| $1,170,796| | Gross profit | $96,731 | $95,083 | $87,086 | $394,274| $340,776| | Total operating expenses | $84,283 | $85,240 | $78,295 | $336,139| $322,481| | Operating income | $12,448 | $9,843 | $8,791 | $58,135 | $18,295 | | Net income (loss) attributable to Penguin Solutions | $9,431 | $2,661 | ($24,547)| $25,391 | ($52,472)| | Diluted earnings (loss) per share | $0.11 | ($0.01) | ($0.46) | $0.28 | ($1.00) | Reconciliation of GAAP to Non-GAAP Measures This section provides detailed reconciliations between GAAP and Non-GAAP financial measures for gross profit, operating expenses, operating income, net income, diluted EPS, and Adjusted EBITDA, highlighting the impact of various adjustments such as stock-based compensation and acquisition-related intangibles Reconciliation of GAAP to Non-GAAP Operating Metrics (in thousands, except percentages) | Metric | Q4 FY25 GAAP | Q4 FY25 Non-GAAP | FY25 GAAP | FY25 Non-GAAP | | :--------------------------------- | :----------- | :--------------- | :-------- | :------------ | | Gross Profit | $96,731 | $104,317 | $394,274 | $424,600 | | Gross Margin | 28.6% | 30.9% | 28.8% | 31.0% | | Operating Expenses | $84,283 | $65,147 | $336,139 | $256,948 | | Operating Income | $12,448 | $39,170 | $58,135 | $167,652 | Reconciliation of GAAP to Non-GAAP Net Income, EPS, and Adjusted EBITDA (in thousands, except per share amounts) | Metric | Q4 FY25 GAAP | Q4 FY25 Non-GAAP | FY25 GAAP | FY25 Non-GAAP | | :--------------------------------------- | :----------- | :--------------- | :-------- | :------------ | | Net income (loss) attributable to Penguin Solutions | $9,431 | $28,843 | $25,391 | $120,325 | | Diluted earnings (loss) per share | $0.11 | $0.43 | $0.28 | $1.90 | | Adjusted EBITDA | $43,419 | N/A | $186,565 | N/A | Consolidated Balance Sheets The Consolidated Balance Sheets present the company's financial position as of August 29, 2025, and August 30, 2024, showing increases in total assets, cash, and accounts receivable, alongside a decrease in long-term debt and the introduction of preferred stock Consolidated Balance Sheet Highlights (in thousands) | Metric | August 29, 2025 | August 30, 2024 | | :------------- | :-------------- | :-------------- | | Total current assets | $1,064,227 | $867,704 | | Total assets | $1,617,200 | $1,474,506 | | Total current liabilities | $473,899 | $327,596 | | Long-term debt | $441,893 | $657,347 | | Total liabilities | $1,008,973 | $1,075,298 | | Preferred stock | $202,710 | — | | Total stockholders' equity | $405,517 | $399,208 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows detail the cash generated from or used in operating, investing, and financing activities for the reported periods, indicating a net increase in cash for FY25 despite a decrease in Q4, with significant debt repayments and stock repurchases Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q4 FY25 | FY25 | FY24 | | :------------------------------------------------------ | :------ | :--- | :--- | | Net cash provided by (used for) operating activities | ($70,432) | $109,084 | $77,185 | | Net cash provided by (used for) investing activities | $22,367 | $24,973 | $107,585 | | Net cash used for financing activities | ($208,052) | ($63,464) | ($210,101) | | Net increase (decrease) in cash, cash equivalents and restricted cash | ($256,117) | $70,593 | ($26,587) | | Cash, cash equivalents and restricted cash at end of period | $454,070 | $454,070 | $383,477 |