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Q3 FY25 Financial Results Nasdaq: PENG July 8, 2025
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This presentation and the oral communications made during the course of this presentation containforward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that are not historical in nature, that are predictive or that depend upon or refer to future events or conditions. These statements may include, but are not limited to, statements concerning or regarding future events and future financial and operating performance of Penguin Solutions, Inc. ("Penguin Solutions," "we,""us," or "our"); statements regarding the extent and timing of and expectations regarding Penguin Solutions' future net sales and expenses and customer demand; statements regarding existing and potential collaborations or partnerships; statements regarding the business and financial outlook for the fiscal year, statements regarding the deployment of Penguin Solutions’ products and services and statements regarding Penguin Solutions’ strategic objectives and development of its services and capabilities. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “forecast,” “estimate,” “intend,” “plan,” “potential,” “goal,” “believe,” “could,”“should” and other words of similar meaning. Forward-looking statements provide Penguin Solutions' current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of significant risks, uncertainties and other factors, manyof which are outside of Penguin Solutions' control, including but not limited to, global business and economic conditions, including the impact on the financial condition of Penguin Solutions’ customers, particularly in challenging macroeconomic environments, growth trends in technology industries (including trends and markets related to artificial intelligence), Penguin Solutions' customer markets and various geographic regions; uncertainties in the geopolitical environment; ability to manage Penguin Solutions’ cost structure; disruptions in Penguin Solutions' operations or supply chain as a result of global pandemics or otherwise; the ability to manage Penguin Solutions' cost structure; changes in trade regulations and tariffs or adverse developments in international trade relations and agreements; changes in currency exchange rates; overall information technology spending, including changes in customer spending on Penguin Solutions’ products and services; appropriations for government spending; the success of Penguin Solutions' strategic initiatives including Penguin Solutions' redomiciliation to the United States (the “U.S. Domestication”) and its ability to realize the anticipated benefits thereof, rebranding and related strategy, any existing or potential collaborations and additional investments in new products and additional capacity; acquisitions of companies or technologies and the failure to successfully integrate and operate them or customers’ negative reactions to them; issues, delays or complications in integrating the operations of Stratus Technologies; the failure to achieve the intended benefits of the sale of SMART Brazil and its business; the impact of and expected timing of winding down the manufacturing and discontinuing the sale of products offered through Penguin Solutions’ Penguin Edge business; limitations on, or changes in the availability of, supply of materials and components; fluctuations inmaterial costs; the temporary or volatile nature of pricing trends in memory or elsewhere; deterioration in customer relationships; Penguin Solutions’ dependence on a select number of customers, the timing and volume of customer orders and renewals; the impact of customer churn rates, including discounting and churn of significant customers from whom Penguin Solutions derives a significant percentage of its revenue; production or manufacturing difficulties; competitive factors; technological changes; difficultieswith, or delays in, the introduction of new products; slowing or contraction of growth in the memory market, the LED market or other markets in which we participate; changes to applicable tax regimes or rates; changes to the valuation allowance for Penguin Solutions' deferred tax assets, including any potential inability to realize these assets in the future; prices for the end products of Penguin Solutions' customers; strikes or labor disputes; deterioration in or loss of relations with any of Penguin Solutions' limitednumber of key vendors; the inability to maintain or expand government business; and the continuing availability of borrowings under term loans and revolving lines of credit or other debt arrangements and Penguin Solutions' ability to raise capital through debt or equity financings. These and other risks, uncertainties and factors are described in greater detail under the sections titled “Risk Factors,” “Critical Accounting Estimates,” “Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Liquidity and Capital Resources” contained in Penguin Solutions' Annual Report on Form 10-K for the fiscal year ended August 30, 2024, as updated by the risk factors contained in Penguin Solutions’ Quarterly Reports on Form 10-Q and in Penguin Solutions' other filings with the U.S. Securities and Exchange Commission. Such risks, uncertainties and factors as outlined above, and in such SEC filings, could cause Penguin Solutions' actual results to be materially different from such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that we make in this presentation speak only as of the date of this presentation. Except asrequired by law, we do not undertake to update the forward-looking statements contained in this presentation. Statement Regarding Use of Non-GAAP Financial Measures: This presentation contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP effective tax rate, non-GAAP net income, non-GAAP weighted-average shares outstanding, non-GAAP diluted earnings per share and Adjusted EBITDA. Penguin Solutions' management uses non-GAAP measures to supplement Penguin Solutions' financial results under GAAP. Management uses these measures to analyze its operations and make decisions as to future operational plans and believes that this supplemental non-GAAP information is useful to investors in analyzing and assessing Penguin Solutions' past and future operating performance. These non-GAAP measures exclude certain items, such as share-based compensation expense, amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships and trademarks/trade names acquired in connection with business combinations), cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, restructuring charges, impairment of goodwill, changes in the fair value of contingent consideration, (gains) losses from changes in foreign currency exchange rates, amortization of debt issuance costs, (gain) loss on extinguishment or prepayment of debt, other infrequent or unusual items and related tax effects and other tax adjustments. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in Penguin Solutions' non-GAAP measures and these intangible assets contribute to revenue generation. Management believes the presentation of operating results that exclude certain items provides useful supplemental information to investors and facilitates the analysis of Penguin Solutions' core operating results and comparison of operating results across reporting periods. Management also uses adjusted EBITDA, which represents GAAP net income (loss), adjusted for net interest expense, income tax provision (benefit), depreciation and amortization of intangible assets, share-based compensation expense, cost of sales-related restructuring,diligence, acquisition and integration expense, redomiciliation costs, restructure charges, loss on extinguishment of debt and other infrequent or unusual items. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, as they exclude important information about Penguin Solutions' financial results, as noted above. The presentation of these adjusted amounts varies from amounts presented in accordance with GAAP and therefore may not be comparable to amounts reported by other companies. In addition, adjusted EBITDA does not purport to represent cash flow provided by, or used for, operating activities in accordance with GAAP and should not be used as a measure of liquidity. Investors are encouraged to review the “GAAP to Non-GAAP Reconciliations" in the appendix at the end of this presentation. Penguin Solutions' fiscal year is the 52- or 53-week period ending on the last Friday in August. © 2025 Penguin Solutions, Inc. All rights reserved. | 2 Disclaimer
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Speakers 3 Mark Adams President and CEO Nate Olmstead SVP and CFO © 2025 Penguin Solutions, Inc. All rights reserved. |
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Q3 FY25 Financial Highlights © 2025 Penguin Solutions, Inc. All rights reserved. | 4 Revenue of $324M, up 7.9% vs. year-ago quarter Revenue Non-GAAP gross margin of 31.7% Gross Margin Non-GAAP Diluted EPS of $0.47, up 25% vs. year-ago quarter EPS Non-GAAP operating income of $38M, up 15% vs. year-ago quarter; Non-GAAP operating margin of 11.9% Operating Income Non-GAAP gross margin, Non-GAAP diluted EPS, Non-GAAP operating income, and Non-GAAP operating margin are non-GAAP measures. For reconciliations to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix.
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Enterprise AI Adoption © 2025 Penguin Solutions, Inc. All rights reserved. | 5 Momentum across financial services, energy, defense, education, and neo-cloud market segments Enterprises progressing from PoCs to full AI deployments 2025-2026 expected to mark acceleration in large-scale build-outs in the market
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Solving the Complexity of AI © 2025 Penguin Solutions, Inc. All rights reserved. | 6 Trusted partner helping our customers harness the power of advanced computing. 25+ Years of Expertise Decades of AI, HPC, Fault Tolerant, and Edge computing success AI & HPC Solutions Design, build, deploy, and manage AI and HPC infrastructure Fault-tolerant Solutions Support continuous availability of critical applications and data Infrastructure Software Manage and optimize AI factories and HPC clusters Professional, Managed, and Support Services End-to-end services and support for advanced computing NVIDIA Certified Dell Authorized NVIDIA Managed Services Elite Solution Provider and Dell Authorized Partner
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Business Review © 2025 Penguin Solutions, Inc. All rights reserved. | 7
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Advanced Computing 8 • Quarterly Performance – $132M of revenue, down sequentially due to timing of a large hyperscaler deployment in Q2 • New Business Momentum – Closed five new customer bookings, including in federal, energy, and biotech segments – Continued investment in channel partnerships for long- term growth opportunities • Differentiation and Platform Investments – Trusted advisor delivering custom, tech-agnostic AI infrastructure – Building out Penguin ICE ClusterWare platform for cluster lifecycle management – Ongoing expansion of Penguin Solutions services to support post-deployment operations © 2025 Penguin Solutions, Inc. All rights reserved. |
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Integrated Memory © 2025 Penguin Solutions, Inc. All rights reserved. | 9 • Strong Quarterly Growth – $130M of revenue, up 24% sequentially – Driven by robust demand across computing, networking, and telecom customers – DRAM and NAND pricing stable, with balanced inventory levels at major customers • Positioned for AI Memory Demands – Enterprises increasingly requiring high bandwidth, high reliability memory for AI workloads – Early traction for CXL-based products, with sample orders from OEMs and AI computing companies – Customer qualification momentum reinforcing confidence in broader adoption • Innovation Pipeline – R&D focused on CXL memory pooling to enable higher bandwidth and larger memory access – Continued investment in Optical Memory Appliance, with first shipments expected late fiscal 2026 / early fiscal 2027
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Optimized LED 10 • Quarter Performance – $62M revenue, up slightly vs. prior quarter – Top-line impacted by tariff-related costs and uncertainty related to products from Huizhou, China – Operations remained resilient despite macro uncertainty • Positioning for Long-Term Value – Focused on high-performance LED product portfolio – Backed by strong IP and brand reputation – Capital-lite operating model designed to support long- term efficiency and flexibility © 2025 Penguin Solutions, Inc. All rights reserved. | 9
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Advancing Our Strategic Priorities © 2025 Penguin Solutions, Inc. All rights reserved. | 11
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Partnership Momentum SK Telecom & SK hynix 12 Building Momentum with SK Telecom Expanding Collaboration with SK hynix Focusing on Partnership Opportunities • Progressing on AI data center infrastructure initiatives • Exploring joint opportunities aligned to SK Telecom’s AI strategy • Partnership could provide strategic commercial value beyond financial investment • Targeting systems-level memory solutions for custom, low-volume, high-mix markets • Builds on SMART Modular’s long- standing relationship with SK hynix • Evaluating both domestic and international partners to expand reach and deliver AI infrastructure at scale © 2025 Penguin Solutions, Inc. All rights reserved. |
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Strengthening Corporate Foundation © 2025 Penguin Solutions, Inc. All rights reserved. | 13 • On June 26, announced a refinancing that strengthens o ur balance sheet by: − Reducing gross leverage − Extending debt maturity − Establishing new $400M revolving credit facility Capital Structure Improvements • On June 30, completed redomiciliation of Penguin S olutions, Inc. to the United States (Delaware): − Supports ongoing transformation − Aligns with strategic long- term goals Corporate Realignment
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Financial Review © 2025 Penguin Solutions, Inc. All rights reserved. | 14
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Non-GAAP Q3 FY25 Results 15 $324M Revenue 31.7% Non-GAAP Gross Margin 11.9% Non-GAAP Operating Margin $0.47 Non-GAAP Diluted EPS Non-GAAP Gross Margin, Non-GAAP Operating Margin and Non-GAAP Diluted EPS are non-GAAP measures. For reconciliations to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix. © 2025 Penguin Solutions, Inc. All rights reserved. |
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Q3 FY25 Revenue Detail 1 16 Advanced Computing 41% Optimized LED 19% Integrated Memory 40% Revenue by Segment Revenue Breakdown – Total of $324M Services Revenue $66M Product Revenue $259M © 2025 Penguin Solutions, Inc. All rights reserved. | 1. Summations may not compute precisely due to rounding.
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($M except per share amounts) Q3 FY25 Q2 FY25 Q3 FY24 Net sales $324 $365 $301 Advanced Computing $132 $200 $145 Integrated Memory $130 $105 $92 Optimized LED $62 $60 $64 Non-GAAP gross profit2 $103 $112 $97 Non-GAAP operating expenses2 $64 $63 $64 Non-GAAP operating income2 $38 $49 $33 Non-GAAP net income2 $31 $34 $20 Non-GAAP diluted earnings per share2 $0.47 $0.52 $0.37 Adjusted EBITDA2 $45 $54 $39 © 2025 Penguin Solutions, Inc. All rights reserved. | 17 Q3 FY25 Non-GAAP Operating Results 1 1. Summations may not compute precisely due to rounding. 2. Non-GAAP gross profit, Non-GAAP operating expenses, Non-GAAP operating income, Non-GAAP net income, Non-GAAP diluted earnings per share, and Adjusted EBITDA are non-GAAP measures. For reconciliations to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix.
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($M) Q3 FY25 Q2 FY25 Q3 FY24 Working Capital Net Accounts Receivable $293 $330 $212 Days Sales Outstanding 47 days 50 days 42 days Inventory $184 $200 $177 Days of Inventory 36 days 37 days 43 days Accounts Payable $272 $238 $192 Days Payable Outstanding 53 days 44 days 47 days Cash Conversion Cycle 30 days 43 days 38 days Cash Flow Cash, Cash Equivalents and Short-Term Investments (at period end) $736 $647 $467 Cash Flows from Operations $97 $73 $80 Capital Expenditures & Depreciation CapEx $2 $2 $4 Depreciation $5 $5 $6 © 2025 Penguin Solutions, Inc. All rights reserved. | 18 Q3 FY25 Balance Sheet and Cash Flow Highlights Net accounts receivable, days sales outstanding, days of inventory and days payable outstanding are calculated on a gross sales and gross cost of goods sold basis, which were $563M and $468M, respectively, for Q3 FY25, $596M and $492M, respectively, for Q2 FY25, and $461M and $372M, respectively, for Q3 FY24.
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Our Outlook © 2025 Penguin Solutions, Inc. All rights reserved. | 19
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GAAP Outlook Adjustments Non-GAAP Outlook Net Sales 17% YoY Growth+/- 2% — 17% YoY Growth+/- 2% Gross margin 29% +/- 0.5% 2% (A) 31% +/- 0.5% Operating expenses $340 million +/- $5 million $(80) million (B)(C)(E) $260 million +/- $5 million Diluted earnings per share $0.04 +/- $0.05 $1.76 (A)(B)(C)(D)(E)(F)(G) $1.80 +/- $0.05 Diluted shares 54 million — 54 million Non-GAAP adjustments: (in millions) (A) Stock-based compensation and amortization of acquisition-related intangibles included in cost of sales $ 31 (B) Stock-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A 48 (C) Goodwill impairment 16 (D) Loss on extinguishment of debt 3 (E) Other adjustments 16 (F) Estimated income tax effects (11) (G) Estimated effect of allocation of earnings to participating securities (8) $ 95 © 2025 Penguin Solutions, Inc. All rights reserved. | 20 FY 2025 Outlook
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Solving complexity. Accelerating results. © 2025 Penguin Solutions, Inc. All rights reserved. | 21 • Contact information goes here
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22 GAAP to Non-GAAP Reconciliations © 2025 Penguin Solutions, Inc. All rights reserved. |
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© 2025 Penguin Solutions, Inc. All rights reserved. | 23 GAAP to Non-GAAP Reconciliations
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© 2025 Penguin Solutions, Inc. All rights reserved. | 24 GAAP to Non-GAAP Reconciliations
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© 2025 Penguin Solutions, Inc. All rights reserved. | 25 Convertible Dilution Note: Dilution in thousands of shares