Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $343 million, reflecting a 2% sequential increase and a 1% year-over-year increase, despite not recognizing any hyperscale hardware revenue [5][17] - Non-GAAP gross margins were 30%, which is favorable compared to the midpoint of the full-year outlook [5] - Non-GAAP operating income was $42 million, up 1% year-over-year, leading to Non-GAAP diluted earnings per share of $0.49, flat year-over-year [6][19] Business Line Data and Key Metrics Changes - Advanced Computing revenue was $151 million, up 9% compared to the previous quarter but down 15% year-over-year [9][18] - Integrated Memory revenue reached $137 million, up 41% year-over-year [11][18] - Optimized LED revenue was $55 million, down 18% sequentially [13][18] Market Data and Key Metrics Changes - The company is seeing a shift from hyperscaler deployments to broader enterprise adoption, with early signs of workloads evolving towards inference-oriented use cases [6][40] - Demand for memory products is strong across various sectors, including networking and telecommunications [11][12] Company Strategy and Development Direction - The company is transitioning from a holding company to an AI solutions provider, focusing on customer diversification and new business development [7][15] - Partnerships with ecosystem partners like Nvidia and AMD are being strengthened to support customer success in AI deployments [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for long-term success, citing a strong balance sheet and a growing customer base [16][28] - The outlook for FY26 anticipates a stronger second half compared to the first half, driven by AI opportunities in the pipeline [25][28] Other Important Information - The company signed an agreement to sell its remaining 19% stake in Zillia Technologies for $46 million, expected to close in Q3 FY26 [14] - Cash flows from operating activities increased by 125% to $31 million compared to Q1 of the previous year [23] Q&A Session Questions and Answers Question: Fiscal first half versus fiscal second half guidance - Management indicated that the second quarter revenue might see a decline, particularly in advanced computing, due to timing issues with new customer agreements [30][32] Question: Challenges or constraints in memory product shipping - Management noted that they are navigating supply constraints effectively, which has allowed for a more favorable outlook on memory revenue growth [31][34] Question: Shift from hyperscalers to enterprise deployments - Management observed an evolution towards increased enterprise opportunities, indicating a shift in capital expenditure from large hyperscalers to broader corporate applications [39][40] Question: Inventory levels as a leading indicator for future shipments - Management confirmed that while inventory levels remain elevated, they are turning inventory quickly and do not foresee concerns regarding inventory management [42]
Penguin Solutions, Inc.(PENG) - 2026 Q1 - Earnings Call Transcript