Welcome to the Penguin Solutions fourth quarter and full year fiscal two thousand and twenty-four earnings conference call. I would now like to pass the conference over to our host, Suzanne Schmidt of Investor Relations. Suzanne, you may proceed. Thank you, operator. Good afternoon, and thank you for joining us on today's earnings conference call and webcast to discuss Penguin Solutions' fourth quarter and full year fiscal 2024 results. On the call today are Mark Adams, Chief Executive Officer, Jack Pacheco, Chief Operating Officer, and Nate Olmstead, Chief Financial Officer. You can find the accompanying slide presentation and press release for this call on the Investor Relations section of our website. We encourage you to go to the site throughout the quarter for the most current information on the company. I would also like to remind everyone to read the note on the use of forward-looking statements that is included in the press release and the earnings call presentation. Please note that during this conference call, the company will make projections and forward-looking statements, including but not limited to, statements about the company's growth, trajectory, and financial outlook. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including, without limitation, the risks and uncertainties reflected in the press release and the earnings call presentation filed today, as well as in the company's most recent annual and quarterly reports. The forward-looking statements are representative only as of the date they are made, and except as required by applicable law, we assume no responsibility to publicly update or revise any forward-looking statements. We will also discuss both GAAP and non-GAAP financial measures. Non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. A reconciliation of the GAAP to non-GAAP measures is included in today's press release and accompanying slide presentation. With that, let me now turn the call over to Mark Adams, CEO. Mark? Thank you, Suzanne. Welcome, and thank you all for joining our earnings call. This is a significant day for us, as today, we are officially Penguin Solutions, Inc., and our ticker symbol on Nasdaq is now PENG. Our rebranding is more than just a name change. It reinforces our ongoing transformation from a holding company structure into a global enterprise solutions provider, tackling one of today's biggest business challenges: solving the complexity of AI infrastructure. Fiscal 2024 was a pivotal year for us. We achieved a number of key milestones and continued to strengthen our leadership team. In November, we completed the majority stake divestiture of our Brazil business, dedicating our strategic focus to the enterprise market. In May, we announced that Pete Manca, formerly an executive at Dell, joined us as President of IPS, bringing a wealth of experience to our AI enterprise-focused business. In June, we further strengthened our leadership team with the appointment of Nate Olmstead, former Chief Financial Officer at Logitech, as our CFO, expanding the depth and breadth of our financial capabilities. And in July, we announced what we expect to be a transformative partnership with SK Telecom, helping position us for future global growth and innovation in AI and edge computing. In Q4, revenue, gross margin, and EPS were all within our guidance range, and we achieved our third consecutive quarter of sequential revenue growth. As we enter fiscal 2025, we remain optimistic about our ability to expand our customer engagements, and thus, based on our outlook, we believe we are positioned for double-digit year-over-year growth in FY 2025. Now, let's take a look at the broader market landscape. 2024 has been a landmark year for AI infrastructure across all industries, marked by major technological advancements and significant hardware investments. We believe the next phase of this market evolution is shifting towards more production-ready AI deployments, integrating these advanced systems into business operations, enabling AI to drive high-impact commercial outcomes. This is where Penguin Solutions excels. With over 25 years of experience in high-performance computing, and more recently, AI, we are a trusted partner that enterprises can depend on to navigate this new era of digital transformation. Next, let's turn to our financial performance. For fiscal 2024, we reported total revenues of $1.17 billion. Our managed services revenue now represents a larger share of our sales, growing from 17% in FY 2023 to 21% in FY 2024. Our gross profit has improved on a full year basis, with non-GAAP gross margins at 31.9%. In Q4, revenue across all three business segments grew sequentially from Q3. Non-GAAP gross margin for the quarter was down versus Q3, primarily due to product mix, but still within our guidance range. We delivered a non-GAAP EPS of $0.37, in line with last quarter, and our cash position remains strong, with approximately $389 million in cash and cash equivalents and short-term investments. Let me now provide more detail on our business segments. Intelligent Platform Solutions, or IPS, accounted for 48% of our Q4 revenue, reaching $149 million, driven by AI deployments and managed services across hyperscalers, cloud service providers, or CSPs, and enterprise customers. We continue to focus heavily on securing new customer wins. Examples of recent customer orders include a hardware, software, and service engagement at one of the world's largest gaming companies and a pilot program at a leading financial institution. Our strategy is clear: Penguin Solutions helps our customers manage the complexity of AI, from early-stage design work all the way through deployment and ongoing managed services. In line with this, we are increasing our investment in software development and AI-driven solutions. One area of particular focus is intelligent software, which can enhance how organizations build, deploy, and scale AI models, while also improving the efficiency of managing compute resources, including seamless workflow support across hybrid and multi-cloud environments. For example, we are scaling Penguin Solutions Clusterware and Assured Infrastructure Module, or AIM software, which focuses on high-level system monitoring and management of large-scale AI infrastructures. As we advance our software and services capabilities, we are also enhancing our intellectual property portfolio by filing related patent applications, many of which are results of our robust IP capture program to secure the enduring value of our innovations. Our memory business contributed 31% of Q4 revenue, and we believe it is positioned for growth heading into FY 2025, driven by the recovery among networking and telecom customers, as well as increased demand from enterprise customers driven by AI workloads. In our traditional networking, telecom, and industrial markets, we saw significant DDR5 design and activity, especially for very low-profile DIMMs and ECC SO-DIMMs. We introduced our CFexpress product line, leveraging PCIe Gen 4 technology, to offer a compact form factor with exceptional endurance, performance, and reliability, important for customers seeking high-performance, low-density storage solutions. Specialty memory also has a critical role to play in emerging areas like AI, big data, and enterprise IT. As we develop future memory solutions to meet the performance demand for more complex workloads, we recognize that technologies like AI modeling and in-memory database are increasingly constrained by memory and capacity, a problem sometimes referred to as the memory wall. To address this market need, we have launched DDR5 CXL Add-in Card products, and we're seeing strong sampling activity and positive OEM customer feedback for both four-DIMM and eight-DIMM models, positioning us to meet the growing demand of AI infrastructure. We are also actively investing in pioneering research in technological areas like silicon photonics and external memory appliances. As AI workloads continue to scale and become increasingly memory-centric, our efforts will enable us to better meet future demands, positioning us to capitalize on emerging opportunities and deliver greater value to our customers. Additionally, our Zero Failure Rate, Zefr technology, is designed to provide high reliability for mission-critical environments. By minimizing memory failures, Zefr not only helps prevent delays in processing, but also can significantly improve our customers' ROI by producing more consistent, reliable outcomes. Our LED business showed 3% sequential growth in Q4 and 5% growth for the full year and represented 21% of total Q4 revenue. The Cree LED brand continues to lead in high-performance lighting applications with significant product launches and IP protection efforts, safeguarding its more than 1,500 patents. We are seeing increasing design win activity and believe we can capture additional market share in FY 2025. As we look to fiscal year 2025, four key initiatives drive our overall company strategy. First, solve our customers' most complex AI challenges. Our rebranding to Penguin Solutions highlights our focus on AI and HPC, aligning us with the broader AI deployment trends, with 80% of enterprises expected to implement AI by 2026. Second, partner for growth and global expansion. We anticipate our planned partnership with SK Telecom will accelerate our growth and global reach, particularly in AI data centers and edge computing solutions. Third, expand our software and services offering. We will continue to focus on moving up the IT stack, investing in AI software solutions and services that help businesses better manage and orchestrate their AI infrastructure, enabling seamless workflows across hybrid and multi-cloud environments. With this focus, Penguin Solutions offers customers a more integrated and higher-value AI infrastructure. And finally, number four, innovate relentlessly. Our ongoing commitment to innovation continues to drive our differentiation in the market. By solving for intense compute requirements and expanding our expertise in high-capacity, high-performance memory, we are continuing to enhance our value proposition. We're investing in new technologies such as low-power compute architectures, high-performing memory solutions, and advanced cooling products, helping us to stay at the forefront of industry trends. As processing and networking technologies evolve, we believe we are well-positioned to integrate these innovations and help our customers harness the full potential of their IT investments, and with that, I will now turn the call over to Nate for the financial review. Thanks, Mark. I will focus my remarks on our non-GAAP results, which are reconciled to GAAP in our earnings release tables and in the investor materials on our website. Now let me turn to our fourth quarter results. Revenue, gross margin, and EPS were all within the ranges we provided on our last earnings call. Total Penguin Solutions revenues were $311 million, up sequentially for the third consecutive quarter, and non-GAAP gross margin came in at 30.9%. Non-GAAP operating margin was 10.8%, up 1.2 percentage points versus last year, and non-GAAP diluted earnings per share was $0.37 for the fourth quarter, which was flat sequentially and up slightly versus the prior year quarter. In the fourth quarter of 2024, our overall services revenue totaled $60 million, or 19% of revenue, down from $67 million, or 22% of revenue, in the prior quarter. Product revenues were $251 million in the fourth quarter, up 8% sequentially. Fourth quarter revenue by business segment was as follows: IPS, $149 million, or 48% of our total revenue, memory, $96 million, which was 31% of our total revenue, and LED, $66 million, or 21% of our total revenue. Non-GAAP gross margin for Penguin Solutions in the fourth quarter was 30.9%, down from 31.7% in the year-ago quarter, driven primarily by lower memory volumes that were partially offset by improved mix within IPS. Gross margin was down sequentially from 32.3% in the prior quarter, primarily due to a lower mix of services revenue. Non-GAAP operating expenses for the fourth quarter were $62 million, down from $64 million in the third quarter, primarily due to lower variable expenses. Operating expenses were down 11% versus the prior year quarter, primarily due to lower variable expenses and actions we took to reduce our fixed costs. Non-GAAP operating income was $34 million, up 1% versus last quarter and up 11% versus the prior year quarter, which translated into a 1.2 percentage point increase in operating margin versus Q4 last year. Non-GAAP diluted earnings per share for the fourth quarter of 2024 were $0.37, flat with last quarter and up slightly versus $0.35 in the year-ago quarter. Adjusted EBITDA for the fourth quarter of 2024 was $39 million, or 13% of sales, flat with last quarter's percentage and up slightly versus $38 million, or 12% of sales, in the year-ago quarter. Turning to balance sheet highlights. For working capital, our net accounts receivables totaled $252 million, compared to $212 million last quarter. Days sales outstanding came in at 49 days, up from 42 days in the prior quarter, due to different sales linearity within the quarters. Inventory totaled $151 million at the end of the fourth quarter, down from $177 million at the end of the prior quarter. Days of inventory was 36 days, down from 44 days in the prior quarter, primarily due to the timing of receipts and shipments. Accounts payable were $182 million at the end of the quarter, down from $192 million in Q3. Days payable outstanding was 43 days, compared to 47 days last quarter, due to the timing of purchases and payments. Our cash conversion cycle was 42 days, compared to 38 days last quarter, due to the timing of sales and shipments within Q4 compared to the prior quarter. Consistent with past practice, net accounts receivables, days sales outstanding, and inventory days are calculated on a gross sales and gross cost of goods sold basis, which were $470 million and $383 million, respectively, for the fourth quarter. As a reminder, the difference between gross and net revenue is related to our memory business' logistics services, which is accounted for on an agent basis, meaning that we only recognize the net profit on logistics services as revenue. Cash and cash equivalents and short-term investments totaled $389 million at the end of the fourth quarter, down $78 million from the prior quarter. This fluctuation was due primarily to a $125 million prepayment on our term loan, repurchasing $80 million in principal amount of our convertible notes, and lower cash from operations, partially offset by the issuance of $200 million of new convertible notes. Fourth quarter cash flows used for operating activities totaled $12 million, compared to $80 million generated from operating activities in the prior quarter. The decrease was due primarily to increased net working capital in Q4, stemming from differences in sales linearity quarter over quarter. We did not have any share repurchases in our fourth quarter under our share buyback program. Since our initial share repurchase authorization in April 2022, we have used a total of $72 million to repurchase 4.1 million shares through the end of fiscal 2024. In the fourth quarter, we made a $125 million prepayment on our term loan, bringing the remaining principal to $300 million as of the end of the quarter. Our net debt at the end of Q4 was $281 million. For those of you tracking capital expenditures and depreciation, capital expenditures were $6 million in the fourth quarter, and depreciation was $5 million. Before turning to our outlook, I want to reiterate the recent transaction we announced in July, the signing of a strategic $200 million investment from SK Telecom, which underscores our commitment to expanding our capabilities in AI infrastructure and high-performance computing. We aim to collaborate with SK Telecom in areas such as advanced end-to-end AI solutions, broadening our AI software solutions portfolio, and developing innovative edge products and high-performance, high-availability compute solutions. We believe the planned collaboration will increase our global reach, enhance our offerings, and position us to capture growth opportunities in the rapidly evolving AI landscape. We remain on track to close the investment around the end of calendar 2024 or early in calendar 2025, subject to regulatory approvals, and are excited to share more details with you after that time. As the transaction has not closed, we are not including any impact from it in our financial projections. Now, turning to our outlook. We have decided to shift from providing a quarterly financial outlook to providing a fiscal year outlook. We believe this change provides a broader perspective on our business dynamics, especially in relation to AI infrastructure, and better aligns with our emphasis on executing on our long-term vision and strategic objectives. We will continue to focus on sustainable value creation and driving crisp execution in both the short and long term. With that in mind, our outlook for fiscal 2025 revenue is for year-over-year growth of 15%, plus or minus five percentage points. Our revenue outlook for the full year reflects the following: For IPS, we expect revenues to grow between 10% and 25% year over year. For memory, we expect revenues to grow between 10% and 20% year over year. And for LED, we expect revenues to be flat to up 10% year over year. Our non-GAAP gross margin for the full year is expected to be 32%, plus or minus 1 percentage point. Our non-GAAP operating expenses for the full year are expected to be $275 million, plus or minus $15 million. Our non-GAAP full-year diluted earnings per share is expected to be approximately $1.70, plus or minus $0.20. And finally, our non-GAAP diluted share count is expected to be approximately 56.3 million shares for the year. As a reminder, we are utilizing a long-term projected non-GAAP tax rate of 28%, which reflects currently available information. While we expect to use this normalized non-GAAP tax rate through 2025, the long-term non-GAAP tax rate may be subject to changes for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or changes to our strategy or business operations. Our outlook for fiscal year 2025 is based on the current environment, which contemplates, among other things, the global macroeconomic headwinds and ongoing supply chain constraints, especially as it relates to our IPS business. This includes extended lead times for certain components that are incorporated into our overall solutions, impacting how quickly we can ramp existing and new customer projects. We continue to manage our operations in a prudent manner as we navigate a challenging environment, while also investing in our long-term growth. Please refer to the non-GAAP financial information section and the reconciliation of GAAP to non-GAAP measure table in our earnings release for further details, and now let me turn it over to Mark for a few remarks prior to Q&A. Thanks, Nate. In conclusion, we remain laser focused on achieving our strategic goals. Market tailwinds from growth in AI deployments and higher performing memory requirements remain favorable. We believe that Penguin Solutions is ideally positioned to lead in the AI and HPC markets, and we are focused on continued growth while helping our customers navigate their AI journeys. Operator, we are now ready to take questions. We will now begin our question and answer session. At this time, if you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. Our first question comes from Nick Doyle with the company Needham. Nick, your line is now open. Hi, guys. Thanks for letting me ask a couple questions. First one, do you have any updated thoughts on how you're sizing this services and software opportunity with the tier twos? Maybe how many potential customers do you see in this pipeline? Yeah. I would just say that we typically don't disclose customer information on a call, but from a market opportunity today, we have talked about 20% of the corporate revenue is in the software and services, primarily services today. But we're, as we announced another transaction this quarter in Q4 with a large consumer gaming company, you know, we continue to believe that software is gonna be a material part of business over the long run. We're just not disclosing any financial metrics around that today as we are in the early stages. Okay. Maybe I could just follow up on that one. I mean, what, in your opinion, led you to win this large consumer gaming company? I mean, across the board with the service software? Yeah, good question. So at our Analyst Day, when we introduced the concept of managing complexity, and it's something you heard on our prepared remarks today, I think the market really doesn't appreciate what that complexity really is. And so, the decision criteria around how and why we win these deals is because companies, for whatever reason, sometimes go off and try to do these either by themselves or with companies who are more traditionally hardware systems providers. And typically, the tools that we deploy, you know, kind of ensure more success in these implementations. And part of that software, part of it is the ability to manage the environment, whether it's the GPU reliability, whether it's networking performance and uptime. And so these things that we have been doing for many years, both in HPC and more recently in AI, they're capabilities that we have that we believe differentiate us. And yeah, we've had last quarter, we announced one, which was a tier two CSP. This quarter is a very large gaming company, and it really has to do with the level of expertise companies have available and how much they want to take on themselves, and just being more of a hardware OEM acquirer and do it themselves. The fact of the matter is that, you know, we continually see customers who are, you know, they go out and try on their own, but they don't know how to monitor GPU reliability, or they don't know how to isolate and define a network issue ahead of time through diagnostics. These are the type of things that this complexity we raise, you know, whether it's in cooling or whether it's in power management or what have you, any of these areas, for most of them, we're, you know, we have tool sets that allow us to deploy our software and our capabilities as a service organization to provide the best ROI for our customers. Great. And then, just kind of zooming out, you know, visibility has always been an issue with the company, and I get that. I mean, it's hard to pinpoint lumpy CSP hardware orders. I know Nate gave a couple points on why you're shifting to guide a full year, but I guess I just ask, what gives you the confidence to guide to that number, which is, I'd say, less visible, you know, instead of three months ahead? Thanks. I'll take that, and then maybe let Nate jump in. Look, we continually are looking at our business on a go-forward basis. The visibility is one aspect that you're raising. It is true, we've talked about it on nearly every earnings call, the lumpiness, and what that does to our ability to forecast. But remember, it's not just our ability to see what's in front of us from a commit standpoint, from a booking standpoint. The other issue we face is in the area of deployment predictability, about timing. And so in any given quarter, depending on, you know, what's in the backlog and what's being shipped, and then at the customer, you know, deployed and recognizable from an accounting standpoint, there's additional forecast complexity for us. And so, we thought it was better for our business to be able to, as we convert to Penguin Solutions, we thought it was better for our business to show you the confidence we have in the business over a longer horizon, because we think that that teases out some of the noise on when things will be installed, deployed, and booked from a revenue standpoint. Nate, anything else you add? Sure. Yeah, I think some of the things, you know, that I look at, Mark and I look at are, you know, what is our backlog, what is the timing of service renewals look like, what is the sell-through and sell-out characteristics in LED, specific customers and memory, and what their demand profile looks like. So we have a number of things that we look at. Several and many of those actually do give us some confidence and visibility over the longer term. But as Mark said, sometimes the timing of especially on the AI, AI infrastructure side, the timing of the booking and the revenue recognition can be challenging, because of the complexity of those orders and the complexity of the problems that we're solving for customers. Thanks, guys. Thanks, Nick. Thank you. Our next question comes from Brian Chin with the company Stifel. Brian, your line is now open. Hi there. Good afternoon. Thanks for letting us ask a few questions. Maybe the first one here, IPS revenue grew sequential, yet a little lower than expected. And I apologize if I missed an explanation, if it was provided, but can you discuss sort of if and why any revenue might have shifted out of that quarter, and whether it catches in the following quarter? And then kind of connected to that, and definitely appreciative of the longer horizon fiscal year guide, but can you give us some idea of fiscal one Q, sort of how that trends top and bottom line, or at least some sense of how maybe second half loaded you anticipate revenue being in the upcoming fiscal year? Hey, Brian, this is Nate. So I think on the first one, yes, there was some business in IPS that, as Mark was alluding to, sometimes it's difficult to know when all the operational boxes will get checked and when things will be recognized as revenue. So we did have some of that occur in Q4, which will slip into Q1 and Q2, and that's reflected in the guidance. I think as far as how the year looks, you know, really, we're focused on the full year outlook. I think, you know, the business doesn't change dramatically unless we have large wins overnight. So I think the trajectory of the business in Q4 is a pretty good place to start as we look out into fiscal year 2025. Okay. All right. Fair enough. Maybe drilling in a little bit, over time, I think the market, you know, can appreciate maybe the increased diversity of the engagements, and your go-to-market strategy. I'm just curious, what has been the customer reception thus far with the production-ready, less customized Origin AI solution? How much faster time to revenue is this than kind of the customized engagements? And do you expect Origin AI to become a bigger contributor to revenue by fiscal second half? I think just candidly, Brian, as Mark, I think, fiscal second half might be aggressive from a materiality standpoint, to think that Origin AI would be, you know, a major contributor. The reason why is, one of-- as you think about the three different types of customers we have, we've got hyperscalers who've had large procurement dollars, we also have, tier two service providers, again, larger deployments, and then you've got these enterprise customers that, you know, typically aren't starting with massive deployments. Again, meaningful multimillion-dollar deployments, but they tend to do things in smaller sizes, so to speak, upfront, proof of concept or single application type AI implementations. Why I bring that up is because, Origin AI is particularly strong in the last category, which should help us grow, but the implementations out of the gate might be a little smaller. But I will call out one thing, the reference customer win in Q4 with the global gaming company, was an Origin AI win for us. And so, I think, you know, the validation is great, but I would also say that, it'll take us a little time to build that funnel up. I would hesitate to say it's gonna be second half of twenty-five. Okay. Yeah, fair enough. Then maybe one question that also ties into the fiscal year outlook. I think your guidance reflects OpEx growing somewhat roughly the rate of your revenue growth thereabout. Do you envision increasing that target any after the SKT transaction closes, or is your outlook already reflected those kind of any boost in spending you might do after you receive the proceeds? Yeah. Hey, Brian, Nate here. Actually, we're planning on growing OpEx at about half the rate of revenue growth at the midpoint of the guidance. So maybe take another look on that. But, you know, I think we are. This is a year of some investment, especially on software, as we think that's, you know, critical to the long-term success. But I'm also variabilizing a lot of that spend, too. So, you know, as the year unfolds, it gives us an opportunity to throttle up or down, speed things up, slow things down a little bit on OpEx as necessary. But I would characterize this as a year of greater investment than last year. Okay. Yeah. Thank you. Yeah, the only other thing I would add to that is, if you look back four years at our track record of operating the company with, you know, an improved mindset, I'm pretty confident and proud of our efforts there, that when the markets have turned, whether it be memory or LED or the likes, or when we faced customer concentration issues in the past four years, I think we've demonstrated that we'll be prudent and dial in operating expenses accordingly. And to Nate's point on variability, we watch it very carefully. You know, that's what got us to sixteen quarters in a row of profitability and positive EPS and a stronger balance sheet, is just watching the investments carefully, so we can obviously position ourselves for growth, but not at the risk of the company's balance sheet. Our next question comes from Kevin Cassidy with the company Rosenblatt Securities. Kevin, the line is now open. Yes, thanks for taking my question. Just along the lines when you're describing the three types of customers, the enterprise customers. So a couple of weeks ago, Accenture announced an agreement with NVIDIA, and of course, they would be targeting enterprise-side customers. Does that validate your business strategy? And do you see that Accenture, is that more of a competitor, or do you think there's an opportunity there to work with them? Yeah, I don't think of it more in a competitive landscape because I think at the level that we're talking about, it's more... We are more in the infrastructure category, so to speak. And I think from what I have found with Accenture is they're a little bit higher level in terms of application layer and security layer and commercial investment thesis. And I think it's a big add. You know, as we think about our future, I think there's probably more opportunity for us to cooperate with those types of firms who are out advising boards and CEOs on the commercial rationale and maybe the application layer than I think they are spending a lot of time on infrastructure. By the way, Kevin, Okay, great. I have not seen that. If that was specific to infrastructure, I missed it, and I missed it in your question. No, it was just in general, that as you know, AI starts moving to the enterprise customers, you know, that it seems that's your largest opportunity. You know, you have Tier two? Correct. But I think as a Fortune 500 company started adopting it, that's where- That's right It would move into your wheelhouse. Yeah. But then also on the guidance, you know, gross margin is flat, and I know you're focused on adding more services and software. Is this, I guess, are you just being more conservative or, you know, I guess, how does that dynamic work as far as your service? Yeah, fair enough. I think, look, I think if you contemplate the guide, especially around the Penguin Computing piece of it, I think Nate said somewhere between 10% and 25% growth this year. And Kevin, we've always said to the investor community that, you know, especially when we get into some high growth times, the gross margin kind of balances out because some of the infrastructure, hardware related, is at lower margins. Now, certainly not where our competitors are or the people we get lumped in with. We're not talking about 11%, like some other competitors or mid-teens, but you can imagine that higher, you know, lower margin hardware offsets. And so in some sense, it's actually a good sign that we're growing and the systems will lead, and then hopefully over time, software and services will catch up and take a, and be margin accretive. But as we win new customers, especially during the infrastructure hardware deployment phase, which is normally phase zero and phase one, you're gonna see some of that. I think we've got enough resilience in the business to guide as we guided, but that can have an impact on gross margin from quarter to quarter. Maybe just a couple more points on that one. I think, you know, certainly there's a range that we gave on gross margin, so it does leave some room for some margin - gross margin expansion, really depending on business mix. And along those lines, you know, we did call out that memory is expected to accelerate its growth year over year from 10% to 20%, and that's a lower margin category. So a little bit of pressure to offset some of the expansion potential in IPS. Last point I'd probably make, just on the P&L overall, we are expecting to see some expansion of operating margin again. And so while there's perhaps not as much in the guide or in the outlook at the gross margin level, because we're growing OpEx slower than revenue, there is some nice expansion in operating margin, reflected in that. Okay, that, that's positive. Thank you. Thanks, Kevin. Our next question comes from Thomas O'Malley, with the company Barclays. Thomas, your line is now open. Hi, this is Kyle Bluestein in for Tom O'Malley. Thanks for taking the time or taking my question. Could you guys talk a little bit about when you expect the software and services to kind of layer on the other revenue parts from selling all the hardware? I know you guys talked about, like, a little lag in it, and then it being gross margin accretive afterwards, but any updates on when you'd expect it or what the typical lead time is when you have a hardware win? You know, the way to think about it, we do get, sometimes, services upfront, but again, it's a fraction thereof in terms of the hardware upfront, and then what we have is, as we've mentioned on prior calls, we basically have what you should think of as annual service agreements with our customers, and those get renewed every twelve months, and typically at the end of a calendar year, where most of our customers operate, and so every year, we go through the process of adding new customers, and sometimes services wind down, what have you. When you think about our business, if you look at how services play out, normally year one, if you looked at a gross margin transaction for a new customer, is probably lower in gross margin than year two and year three, 'cause services become such a higher piece of the revenue of that customer. All right. Makes sense. Thank you, guys. Thanks. At this time, there are no other questions registered in the queue. Again, if you would like to ask a question, please press star followed by one. Our next question comes from Ananda Baruah with the company Loop Capital. Ananda, you may proceed. Hey. Thanks, guys, for taking the question. Yeah, I guess just a couple for me. You know, you guys talked to the analyst. Well, I guess on the software and services, really, services and maybe software, if it belongs, expansion opportunity. Is there opportunity to also partner with some of the infrastructure vendors, server vendors, any of the other infrastructure vendors, aside from just customers, for that opportunity? And I have a quick follow-up also. Thanks. Absolutely part of our go-to-market strategy as we've evolved. Historically, we've been primarily a direct-to-customer engagement model, and over the last six months, we've invested in resources and are in active engagement discussions with both OEMs, who some might even consider competitors. We don't think of it that way, to be able to provide software and services on top of hardware. And then others are more in the integrated infrastructure type model. And so it's a long-winded way of saying absolutely part of our go-to-market strategy, and we're making pretty good progress there. Mark, that's super helpful. I guess the follow-up is, maybe this is for Nate, just on the guide for your service software and service compute software and services group. Any context you can provide about what portion of the growth is impacted by services and software expansion versus hardware? Anything there would be helpful. Thanks. That's just for me. Yeah. Thanks, Ananda. You know, I think Mark, what Mark alluded to is that early in a deal, it tends to be more hardware, hardware-heavy in terms of the revenue recognition, and I think this is a year of some growth, as you can see in the outlook. So probably not see a really large swing in the software-hardware mix in 2025. Of course, that could change, depending on the types of deals we get. We certainly are pursuing some things that are more services-centric. But just based on sort of core base assumptions, I would sort of assume you know, not a lot of change in that mix, perhaps a little bit of increase. But again, you've got memory growing quickly as well, which will offset some of that. Nate, down the road, would that dynamic have the potential to alter to some degree? Meaning, as you sorta consummate some of these software and services, you know, sort of partnership deals, as distinct from the hardware, I would just imagine that dynamic has an opportunity to shift down the road. Yes. I agree with that. I think that that is true, and you know, it's also operationally, when we look at things in our pipeline, when we look at new opportunities, we always talk about the services opportunity that are part of those as well. It's a real key focus for us and a core metric. Cool. Thanks. Thanks a lot, guys. Thank you. The next question comes from Kevin Cassidy, with the company Rosenblatt Securities. Kevin, your line is now open. Yes, thanks for letting me ask a follow-up question. The SK Telecom, what, I guess, what is it that would be holding this up? Or, you know, why does it have to wait till the end of the year, maybe beginning of next year? What other issues need to be resolved? Yeah, Kevin, it's interesting because that type of agreement is treated very similar to an M&A agreement relative to two parties, one being U.S.-based and one not being U.S.-based, and SK Telecom being Korean. And so, it just has to do with more of U.S. oversight, so to speak, and just normal protocol. We have not seen any hiccups, but it does add a little more time to the process. And so even at the time of the announcement, we knew that, and we suggested, I think it was the end of the calendar year, as a possible timing of close. I don't think we're changing that today. It's just the part of the process that you would not normally have if it was a U.S. to U.S. investor, nearly as much as U.S. oversight for any type of investment by a foreign entity into a U.S. entity. Okay. Thank you. At this time, there are no more questions registered in queue, so I'd like to pass the conference back over to our hosting team, Mark Adams, for closing remarks. Thank you, operator, and thank you all for your questions today and for joining us on the call. As we close, I want to reiterate the fiscal ninety-four, sorry, fiscal twenty-four was a transformative year for our company, now Penguin Solutions. We've made significant strides in positioning ourselves to lead in AI and high-performance computing, investing not just in the hardware and infrastructure, but also in the software and services that will help drive the next phase of our business. We enter fiscal twenty twenty-five, guided by a clear strategy focused on capturing opportunities in AI infrastructure and advanced memory solutions. With a solid financial foundation, innovative product offerings, and strategic partnerships, I believe we are well positioned to capitalize on the demand for AI on-premises, in the cloud, and at the edge. We are excited about the path ahead and remain committed to delivering value to both our customers and shareholders through execution, innovation, and operational excellence. Thank you again for your continued support. We look forward to updating you on our progress in the quarters to come. That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.