Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $343 million, up 2% sequentially and 1% year over year, despite not recognizing any hyperscale hardware revenue [5][17] - Non-GAAP gross margins were 30%, reflecting a favorable mix and execution in the quarter [5][17] - 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][20] Business Line Data and Key Metrics Changes - Advanced Computing revenue was $151 million, up 9% compared to the prior quarter but down 15% year over year [9][18] - Integrated Memory revenue was $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][10] - Demand signals for the memory portfolio are strong across various sectors, including networking and telecommunications [11] 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 [8][14] - Partnerships with ecosystem partners like NVIDIA and AMD are being strengthened to support customer success in AI deployments [14][15] 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 growing customer base [15][28] - The outlook for fiscal year 2026 anticipates a solid performance, with expectations for stronger second-half sales driven by AI opportunities [24][25] Other Important Information - The company signed an agreement to sell its remaining 19% stake in Zilia Technologies for $46 million, expected to close in Q3 of fiscal 2026 [14] - Cash flows from operating activities increased by 125% to $31 million compared to Q1 of last year [23] Q&A Session Summary Question: Fiscal first half versus fiscal second half guidance - Management indicated that the second quarter revenue is expected to be down, with advanced computing likely driving the sequential decline [30][33] Question: Challenges or constraints in shipping products - Management noted that they are navigating supply constraints effectively, which has allowed for a more favorable outlook for memory revenue [31][32] Question: Enterprise engagements and diversification efforts - Management highlighted a shift from hyperscalers to broader enterprise applications, with a strong pipeline of opportunities [46][49] Question: Inventory levels as a leading indicator for future shipments - Management stated that inventory levels are healthy and that they are buying to orders rather than forecasts [51][52] Question: Customization of ICE to be compatible with open-source platforms - Management is working on building a software stack that combines their ICE platform with best-of-breed third-party software [54][55] Question: Changes in optical memory and related technologies - Management did not see any immediate changes but acknowledged the validation of market opportunities in enhancing bandwidth performance [58]
Penguin Solutions, Inc.(PENG) - 2026 Q1 - Earnings Call Transcript