Summary of Penguin Solutions Q4 and Full Year 2025 Earnings Call

1Key Financial Results and Metrics

Q4 Revenue: $338 million, up 9% year-over-year.

Full Year Revenue: $1.37 billion, up 17% year-over-year.

Non-GAAP Gross Margin: Q4 at 30.9%, flat year-over-year; full year at 31%, down 0.9 percentage points.

Non-GAAP Operating Income: Q4 at $39 million, up 16% year-over-year; full year at $168 million, up 39%.

Non-GAAP Diluted EPS: Q4 at $0.43, up 18%; full year at $1.90, up 53%.

Adjusted EBITDA: Q4 at $43 million, up 11%; full year at $187 million, up 28%.

2Strategic Updates and Business Highlights

Transitioned from a holding company to a provider of AI infrastructure solutions.

Expanded advanced computing pipeline and diversified customer base, including notable wins in financial services and federal sectors.

Launched first international AI infrastructure implementation in South Korea with SK Telecom.

Strengthened partnerships with NVIDIA, CDW, Insight, and Dell.

Rebranded as Penguin Solutions and moved corporate domicile to the U.S.

Closed a $200 million investment from SK Telecom and refinanced debt to improve balance sheet strength.

3Forward Guidance and Outlook

FY 2026 Revenue Growth: Expected to grow 6%, plus or minus 10%, reflecting a more back-end loaded sales year.

Advanced Computing Segment: Expected to change between -15% and +15% year-over-year, factoring in the wind down of Penguin Edge and no hardware sales to hyperscale customers.

Memory Segment: Forecasted growth of 10% to 20%.

LED Segment: Expected to change between -5% and +5%.

Non-GAAP Gross Margin Outlook: Estimated at 29.5%, reflecting pressure from lower-margin businesses.

Non-GAAP Diluted EPS: Expected around $2, plus or minus $0.25.

4Bad News, Challenges, or Points of Concern

Anticipated decline in revenue from the Penguin Edge business, which is being phased out, and no expected hardware sales to hyperscale customers in FY 2026.

Gross margin pressure expected due to the transition to lower-margin businesses such as Memory and AI hardware.

Ongoing supply chain constraints could impact project ramp-up times, particularly in advanced computing and LED segments.

5Notable Q&A Insights

Management confirmed that while there are no anticipated hardware revenues from hyperscale customers in FY 2026, they maintain ongoing service relationships and discussions for future opportunities.

The company is seeing strong pipeline growth in non-hyperscale sectors, particularly in financial services and federal sectors, which are expected to drive revenue in FY 2026.

The 75% growth in HPC AI revenue from non-hyperscalers reflects successful customer diversification efforts.

Management emphasized that while pricing in the memory market is improving, their business model focuses on value-add rather than just commodity sales, allowing for differentiation and higher margins. Overall, Penguin Solutions reported strong financial results for FY 2025 and outlined a cautious yet optimistic outlook for FY 2026, with strategic initiatives aimed at enhancing growth despite anticipated challenges in certain segments.