Annual report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 29, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-38102 PENGUIN SOLUTIONS, INC. (Exact name of registrant as specified in its charter) Delaware 36-5142687 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 45800 Northport Loop West Fremont, CA 94538 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (510) 623-1231 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.03 par value per share PENG Nasdaq Global Select Market Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large Accelerated Filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company ☒ ☐ ☐ ☐ ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the common stock on the Nasdaq Global Select Market on February 28, 2025 (the last business day of the registrant’s most recently completed second fiscal quarter) was approximately $1.05 billion. Common stock held by each executive officer and director, and their affiliated holders, have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of October 15, 2025, the registrant had 52,859,335 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended August 29, 2025. 1
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Table of Contents Page PART I Item 1 Business 5 Item 1A Risk Factors 16 Item 1B Unresolved Staff Comments 51 Item 1C Cybersecurity 51 Item 2 Properties 52 Item 3 Legal Proceedings 53 Item 4 Mine Safety Disclosures 53 PART II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6 [Reserved] 56 Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 57 Item 7A Quantitative and Qualitative Disclosures About Market Risk 70 Item 8 Financial Statements and Supplementary Data 72 Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 120 Item 9A Controls and Procedures 120 Item 9B Other Information 122 Item 9C Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 122 PART III Item 10 Directors, Executive Officers and Corporate Governance 123 Item 11 Executive Compensation 123 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters123 Item 13 Certain Relationships and Related Transactions, and Director Independence 123 Item 14 Principal Accountant Fees and Services 123 PART IV Item 15 Exhibits and Financial Statement Schedules 124 Item 16 Form 10-K Summary 127 Signatures 128 2
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Cautionary Note Regarding Forward-Looking Statements This Annual Report on Form 10-K (“Annual Report”) and the documents incorporated herein by reference contain “forward- looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 regarding future events or our future financial or operating performance, the extent and timing of, and expectations regarding, our future revenues and expenses and customer demand, statements regarding our objectives and development of our services and capabilities, statements regarding the deployment of our products and services, statements regarding our reliance on third parties, statements regarding our rebranding initiatives and strategy, and statements using words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “target,” “commit,” “potential,” “should” and similar words and the negatives thereof. These forward-looking statements are based on our current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of significant risks, uncertainties and other factors, many of which are outside of our control, including but not limited to, global business and economic conditions including the impact on the financial condition of our customers, particularly in challenging macroeconomic environments, growth and demand trends in technology industries (including trends and markets related to artificial intelligence (“AI”)), our customer markets and various geographic regions; uncertainties in the geopolitical environment; our ability to manage our cost structure; disruptions in our operations or supply chain as a result of global pandemics, tariffs or other factors; 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 our products and services; appropriations for government spending; the success of our strategic initiatives including our U.S. Domestication (as defined below) and our ability to realize the anticipated benefits thereof, our 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 Storm Private Holdings I Ltd. (together with its subsidiaries, “Stratus Technologies”); the failure to achieve the intended benefits of the sale of SMART Brazil (as defined below) and its business; the impact of and expected timing of winding down the manufacturing and discontinuing the sale of products offered through our Penguin Edge business; limitations on or changes in the availability of supply of materials and components; fluctuations in material costs; the temporary or volatile nature of pricing trends in memory or elsewhere; deterioration in customer relationships; our dependence on a select number of customers and the timing and volume of customer orders and renewals; the impact of customer churn rates, including discounting and churn of significant customers from whom we derive a significant percentage of our revenue; production or manufacturing difficulties; competitive factors; technological changes; difficulties with, or delays in, the introduction of new products; slowing or contraction of growth in the memory market, LED market or other markets in which we participate; changes to applicable tax regimes or rates; changes to the valuation allowance for our deferred tax assets, including any potential inability to realize these assets in the future; prices for the end products of our customers; strikes or labor disputes; deterioration in or loss of relations with any of our limited number of key vendors; the inability to maintain or expand government business; potential sales of our common stock following the end of the lock-up period on the holder of our Issued CPS (as defined below) or the anticipation of such sales; and the continuing availability of borrowings under revolving lines of credit or other debt arrangements and our 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 this Annual Report and the risks discussed in our other SEC filings. Such risks, uncertainties and factors as outlined above and in such filings could cause actual results of Penguin Solutions to be materially different from such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on any forward- looking statements. The forward-looking statements included in this Annual Report are made only as of the date of this Annual Report. We do not intend, and have no obligation, to update or revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this Annual Report, except as required by law. About This Annual Report On June 30, 2025, we consummated the redomiciliation of the parent company of our corporate group, Penguin Solutions (Cayman), Inc., a Cayman Islands exempted company (formerly known as Penguin Solutions, Inc., “Penguin Solutions Cayman”), from the Cayman Islands to the State of Delaware in the United States, resulting in Penguin Solutions, Inc., a Delaware corporation (“Penguin Solutions Delaware”), becoming our publicly traded 3
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parent company (the “U.S. Domestication”). The U.S. Domestication was approved by the shareholders of Penguin Solutions Cayman and effected via a court-sanctioned scheme of arrangement under Cayman Islands law, pursuant to which each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share of Penguin Solutions Cayman was exchanged for one share of convertible preferred stock of Penguin Solutions Delaware. As used herein, unless stated otherwise or the context requires otherwise, the terms “Penguin Solutions,” “Company,” “Registrant,” “we,” “our,” “us” or similar terms (i) for periods prior to the consummation of the U.S. Domestication, refer to Penguin Solutions Cayman and its consolidated subsidiaries and (ii) for periods at or after the consummation of the U.S. Domestication, refer to Penguin Solutions Delaware and its consolidated subsidiaries. Throughout this Annual Report, we refer to our equity securities (i) for periods prior to the consummation of the U.S. Domestication, as ordinary shares and/or convertible preferred shares and (ii) for periods at or after the consummation of the U.S. Domestication, as shares of common stock and/or shares of convertible preferred stock. For a description of our equity securities following the U.S. Domestication, refer to the “Description of the Registrant’s Capital Stock” filed as Exhibit 4.1 hereto. The common stock of Penguin Solutions Delaware began trading on The Nasdaq Global Select Market on July 1, 2025 (the first trading day following the U.S. Domestication) under the symbol “PENG”, which is the same symbol under which Penguin Solutions Cayman ordinary shares previously traded. Our fiscal year is the 52- or 53-week period ending on the last Friday in August. Fiscal years 2025, 2024 and 2023 contained 52, 53 and 52 weeks, respectively. All period references are to our fiscal periods unless otherwise indicated. Penguin Solutions, Penguin Computing, Penguin Edge, the Penguin Solutions logo, SMART Modular Technologies, SMART, Cree LED, Stratus, Stratus Technologies, and our other trademarks or service marks appearing in this Annual Report are our trademarks or registered trademarks. Trade names, trademarks and service marks of other companies appearing in this Annual Report are the property of their respective holders. Certain information included herein or elsewhere, such as on our website or related materials, is disclosed in response to certain third-party frameworks or stakeholder expectations. However, such information, even if significant, is not necessarily material for purposes of our SEC filings, even if we use “material” or similar language. Particularly in the sustainability context, “materiality” is subject to multiple definitions that differ from — and are often more expansive than — the definition under U.S. federal securities laws. 4
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PART I Item 1. Business Overview At Penguin Solutions, we understand the boundless potential of technology and support our customers in turning cutting-edge ideas into outcomes—faster, and at any scale. With over two decades of experience as trusted advisors, Penguin Solutions is an end-to-end technology company solving complex challenges in computing, memory and LED solutions. Penguin Solutions designs, builds, deploys and manages high- performance, high-availability enterprise solutions, allowing customers to achieve their breakthrough innovations. We do this in partnership with our customers—customizing solutions while facilitating rapid time to value, optimized long-term performance, high availability, and greater return on investment. As of the end of fiscal 2025, Penguin Solutions employed approximately 2,900 employees worldwide, with most located in the United States, China, and Malaysia. We believe that our employees are the cornerstone of our success. To support their efforts, we aim to provide inclusive and equitable workplaces maintained through ongoing intentional actions. On October 15, 2024, we changed our corporate name from “SMART Global Holdings, Inc.” to “Penguin Solutions, Inc.” and changed our Nasdaq Global Select Market ticker symbol from “SGH” to “PENG.” The changes to the corporate name and ticker symbol did not have any impact on our legal entity structure, financial statements or previously reported financial information. On June 30, 2025, we consummated the U.S. Domestication of the parent company of our corporate group from the Cayman Islands to the State of Delaware in the United States. For more information about the U.S. Domestication, see “About This Annual Report” above. Business Segments The most exciting technological advancements are also the most challenging for companies to adopt. We support our customers in achieving their ambitions across our computing, memory, and LED solutions. With our expert skills, experience and partnerships, we help turn our customers’ most complex challenges into compelling opportunities. We aim to deliver the highest quality products and services through our customer-centered approach. Drawing on our extensive knowledge in specialized domains, we bring customers new ideas and tailored solutions that can meet their most pressing needs. By combining leading-edge technologies with our unique software and services, we demonstrate our commitment to customer success. Over the past few years, we have been transforming our business from a holding company structure to a global enterprise solutions provider. As part of this transformation, on October 15, 2024, we rebranded as Penguin Solutions , reflecting our ongoing commitment to delivering leading-edge solutions that solve the complexity of AI. Along with the update of our company brand, we revised how we describe our business segments. Today we have Advanced Computing, Integrated Memory and Optimized LED. Divestiture of SMART Brazil On November 29, 2023, we completed the divestiture of an 81% interest in SMART Modular Technologies do Brasil – Indústria e Comércio de Componentes Ltda. (“SMART Brazil”) to Lexar Europe B.V. (“Lexar Europe”), an affiliate of Shenzhen Longsys Electronics Co. Ltd. Presentation of SMART Brazil as Discontinued Operations: In accordance with authoritative guidance under U.S. GAAP, we have presented the balance sheets, results of operations and cash flows of SMART Brazil operations in this Annual Report, including in the accompanying consolidated financial statements and notes, as discontinued operations for all periods presented. The SMART Brazil operations were previously reported as part ® 5
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of our Integrated Memory segment. Unless otherwise noted, discussion within this Annual Report relates solely to our continuing operations and excludes the SMART Brazil operations. See “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Divestiture of SMART Brazil.” Acquisition of Stratus Technologies On August 29, 2022, we completed the acquisition of Stratus Technologies. At the closing, we paid a cash purchase price of $225.0 million, subject to certain adjustments. In addition, the seller had the right to receive, and we were obligated to pay, contingent consideration of up to $50.0 million (the “Stratus Earnout”) based on the gross profit performance of the Stratus Technologies business during the first full 12 fiscal months following the closing. In the second quarter of 2024, we paid in full $50.0 million related to the Stratus Earnout. See “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Business Acquisitions – Stratus Technologies.” Our Products and Services Advanced Computing Our Advanced Computing segment offers high-performance and high-availability computing platforms and services that span the continuum from core to edge to cloud. Within our Advanced Computing segment, we offer products under the Penguin Solutions , Penguin Computing , Stratus , and our Penguin Edge product brands. Our Penguin Solutions and Penguin Computing hardware, software, and services focus on technical computing for core and cloud environments via advanced high-performance computing (“HPC”) and AI solutions. With our Stratus product brand, we offer simplified, protected, and autonomous fault-tolerant computing solutions in data centers and at the edge also through hardware, software, and services. We provide these leading-edge advanced computing solutions to customers in the education, energy, financial services, healthcare life sciences, government, hyperscale, and manufacturing markets. Our Advanced Computing segment had net sales of $648.4 million, $554.6 million and $749.7 million in 2025, 2024 and 2023, respectively. AI and HPC Data Centers Penguin Solutions designs, builds, deploys, and manages HPC and AI infrastructure solutions that reliably enable the world’s most advanced, data intensive workloads for more than 25 years. Our expert insights and strong relationships with best-in- class compute, networking, storage and software technology partners result in highly efficient and scalable AI systems for our customers. We aim to quickly deliver production-ready AI factories, seamlessly scale them to meet customers’ expanding AI needs, and continually optimize infrastructure performance to maximize customers’ return on investment throughout the lifecycle. We can meet the needs of customers’ specific AI workloads across a broad range of industries from hyperscalers and government agencies to financial services firms and manufacturing companies. Our solutions include Penguin Solutions OriginAI — an AI infrastructure solution for customers deploying GPUs at scale (hundreds to thousands of GPUs). OriginAI can accelerate AI deployment and deliver predictable performance. This is achieved through proven, pre-defined architectures integrated with validated technologies and backed by the Penguin Solutions ICE ClusterWare™ software platform and our expert services for designing, building, deploying, and managing AI infrastructure. ICE ClusterWare is a hardware-agnostic, intelligent software platform for managing, scaling, and optimizing AI infrastructure. It provides a unified cluster management environment, combining open-source, industry-standard and third- party tools with Penguin Solutions’ proprietary software innovations. With these solutions and services, we seek to mitigate customers’ AI skill gaps, accelerate their AI deployments, optimize their AI systems, and maximize their return on investment. Fault Tolerant Computing Our Stratus brand products are designed to ensure the continuous availability of customers’ critical data and applications in data centers and edge locations. Our Stratus zero-touch computing (ztC) platforms deliver fault tolerance that is simple to install, interoperable with existing systems, manageable by time-constrained IT or OT (operational technology) teams, and protected from interruptions and threats. For over 40 years, our fault tolerant computing solutions have provided reliable and redundant computing that supports Fortune 500 companies as ® ® ® TM ® 6
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well as small-to-medium sized businesses in securely and remotely turning critical data into actionable intelligence. As a result, IT and OT professionals across financial services, oil and gas, transportation, healthcare, retail and discrete manufacturing rely on our platforms and services to mitigate operational, financial, and reputational risk and support “always on” availability. Our solutions include the Stratus ztC Endurance™ compute platforms which are designed to deliver 99.99999% availability. The Stratus ztC Endurance and its Automated Uptime Layer with Smart Exchange™ capability delivers intelligent, predictive fault tolerant computing within an easily serviced modular architecture. These platforms evolve from the built-in fault tolerance and proactive health monitoring found in our fully integrated and continuously available Stratus ftServer platforms. Additionally, the Stratus ftServer V series platforms deliver advanced availability, performance and scalability for high-volume, high-risk transaction processing. The Stratus ztC Edge platform brings high availability and fault tolerance to IT constrained edge environments, such as retail locations and manufacturing sites, in a secure, highly automated Class 1, Div 2-certified computing platform. Lastly, our Stratus everRun software protects virtualized workloads on third-party hardware. Our Stratus platforms and software are backed by expert services professionals dedicated to customer success. Discontinued Computing Solutions By approximately the end of calendar 2025, we expect to fully discontinue our Penguin Edge product portfolio, which had brought together our SMART Embedded Computing™ (“SMART EC”) and SMART Wireless Computing™ (“SMART Wireless”) brands under the unified Penguin Edge brand. Penguin Edge technology has become obsolete and is only sold to a small number of customers who we expected to phase out the technology. See “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Intangible Assets and Goodwill.” Integrated Memory Our Integrated Memory segment solves memory limitations experienced within high-performance, high-availability computing solutions through the design, development, and advanced packaging of specialty memory and storage solutions. Within our Integrated Memory segment, we offer products under the SMART Modular Technologies product brand. Products include dynamic random access memory (“DRAM”) modules, solid-state/flash storage and other advanced integrated memory solutions critical to networking and telecom, data analytics, AI and ML. Our Integrated Memory segment also offers SMART Supply Chain Services, which provides customized, integrated supply chain services to enable our customers to better manage supply chain planning and execution, reduce costs and increase productivity. Our Integrated Memory segment had net sales of $464.2 million, $356.4 million and $443.3 million in 2025, 2024 and 2023, respectively. Memory Products Our SMART Modular Technologies memory solutions have been helping customers across diverse industries and demanding applications—including data centers, networking, industrial automation, rugged environments, and emerging AI and cloud infrastructure. For over 30 years through innovative design, development, and advanced packaging of specialty integrated memory and storage solutions, our solutions have solved complex, cutting-edge memory challenges. Our robust portfolio ranges from today’s leading-edge memory technologies to standard and DRAM and flash storage products, as well as ruggedized and custom memory and storage solutions for diverse applications in a wide range of markets. We collaborate closely with global original equipment manufacturers (“OEM”) throughout their design process across multiple projects to create solutions for demanding applications with differentiated requirements. This includes unique form factors, with specific firmware, higher density, lower power, specific and greater durability and reliability compared to standard solutions. We are a primary supplier of longer-lifecycle solutions to OEM customers for diverse end markets within industrial, government, networking and communications, enterprise storage and computing as well as other vertical markets. We offer an extensive portfolio of memory products available in standard and rugged form factors. Our offerings include an extensive lineup of DRAM modules across a variety of DRAM technologies, including legacy synchronous DRAM, double data rate (“DDR”), DDR2, DDR3 and leading-edge, high-performance DDR4 and DDR5 DRAM devices. These technologies are incorporated into standard memory, enterprise memory, and hybrid integrated memory solutions in both standard and rugged formats. Our DRAM modules encompass a broad range of form factors and functions, including dual in-line memory modules (“DIMMs”), differential DIMMs ® ® ® ® 7
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(“DDIMM”), load reduced DIMMs, registered DIMMs, unbuffered DIMMs, small-outline DIMMs, and mini-DIMMs for industrial, government, networking and communications, enterprise storage and computing and other vertical markets. These memory modules come in configurations of up to 288 pins and densities of up to 256 gigabytes. \We utilize advanced printed circuit board and device packaging and stacking technologies to achieve cost-effective, high-density solutions. Our products are designed to meet the quality requirements of enterprise class systems pursuant to the stringent specifications required for various high-speed applications. Our Integrated Memory segment also offers Zero Failure Rate (“Zefr ”) memory modules to support powerful HPC platforms that process massive amounts of data. A Zefr memory module undergoes a rigid proprietary screening process which is performed on OEM original memory modules or SMART Modular Technologies memory modules to deliver ultra-high reliability for demanding workloads. SMART Zefr aims to deliver the industry’s highest levels of memory uptime and reliability and, for example, enhances the reliability and uptime of our Stratus ztC Endurance platform. Additionally, we support leading-edge and emerging interconnect standards such as Compute Express Link (“CXL”), an industry standard, open protocol for low latency GPU interconnects. SMART CXL Memory is available as a memory expansion add-in-card (AIC) in our Penguin Solutions Altus AMD EPYC™ based servers, providing expansive memory for AI workloads. We also design and manufacture embedded and removable flash memory products in a variety of form factors and capacities, incorporated into storage and hybrid-integrated memory solutions in standard and rugged formats. Our flash memory products include solid-state drives (“SSDs”), Serial Advanced Technology Attachment (SATA) and PCIe NVMe products in 2.5" enclosures, M.2, EDSFF, and other module form factors. We also offer flash component products such as embedded MultiMediaCard and embedded and removable USB products, and SD and microSD Card configurations. Our flash memory capabilities include customized firmware development. Supply Chain Services We offer a wide array of supply chain services including procurement, logistics, inventory management, temporary warehousing, programming, kitting and packaging services. We tailor our supply chain service offerings to meet the specific needs of our customers and enable our customers to manage supply chain planning and execution, which reduces costs and increases productivity. Our supply chain services are based on our proprietary software platform, which is then integrated with customers’ procurement management systems as well as our suppliers’ distribution management systems. Our global footprint allows us to provide these services to customers and their manufacturing partners in many regions of the world. In addition, our global inventory management capabilities enable us to manage a vast array of customer and supplier part numbers across worldwide manufacturing and logistics hubs, which helps our customers minimize inventory levels while maintaining reliable delivery and availability of supply. Optimized LED Our Optimized LED segment offers a broad portfolio of application-optimized LEDs focused on improving lumen density, intensity, efficacy, optical control and/or reliability. Backed by expert design assistance and superior sales support, our Optimized LED products enable our customers to develop and market LED-based products for lighting, video displays and specialty lighting applications. This segment was formed after our acquisition of Cree LED in March 2021 and offers products under the Cree LED brand. Our Optimized LED segment had net sales of $256.1 million, $259.8 million, and $248.3 million in 2025, 2024, and 2023, respectively. Cree LED For over 30 years, Cree LED has been a leader in LED lighting technology, offering innovative and differentiated LED solutions to a broad base of customers across multiple market segments. The Cree LED product offering includes both chips and packaged LED components. Our Cree LED chip products include blue and green LED chips based on gallium nitride and related materials. These chips are used in a number of applications and are available in a range of brightness levels, wavelengths (colors) and sizes. Products using our blue and green LED chips can be found in automotive, video displays, gaming displays, heart rate monitors and function indicator lights. Customers also combine our blue LED chips with phosphors to create white LEDs, which are used for indoor and outdoor illumination, medical and industrial applications and automotive interior lighting, indicators, headlamps and daytime running lights. ® ® ® 8
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Our Cree LED XLamp , J Series and high-brightness product lines feature packaged LED components. The XLamp and J Series components meet a broad range of market needs for lighting applications, including general illumination (both indoor and outdoor applications), portable, architectural, signal and transportation lighting. Our high-brightness LED components consist of surface mount device (“SMD”) and through-hole packaged LED products. Our SMD LED component products are available in a full range of colors and are suitable for a variety of applications, including video, signage, general illumination, transportation, gaming and specialty lighting. Our through-hole packaged LED component products are available in a full range of colors and are primarily designed for the signage market. Manufacturing and Test Overview We have manufacturing and testing facilities that support one or more of our business segments, which are primarily located in the United States, Malaysia and China. Our manufacturing facilities in Newark and Fremont, California and Penang, Malaysia, which support our Integrated Memory and Advanced Computing operations, are all certified in one or more of the following: ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018. We also have a manufacturing facility in Huizhou, China for Optimized LED that is ISO9001:2015, ISO14001:2015 and IATF16949:2016 certified. In addition, we have a test and integration facility in Tempe, Arizona for our Penguin Edge product portfolio, which is part of our Advanced Computing business segment. We are a member of the Responsible Business Alliance (“RBA”), and our manufacturing facilities in Malaysia and California currently comply with the RBA Code of Conduct, which increasingly is a business requirement of our customers. Product testing is an important aspect of our manufacturing operations. We have established substantial technical expertise in the testing of products for high-end applications. Our extensive testing capabilities not only help to ensure a low defect rate but also enable us to sell specialized testing as an additional service. We design customer-specific testing processes that differ from the core focus of standard providers. We have achieved stringent quality targets across a broad spectrum of system applications and customer-specific designs. Our staff includes experienced test engineers who have developed proprietary testing routines and parameters that, when combined with our advanced test equipment, enable us to diagnose problems in components as well as system design, characterize the performance of new products and provide high quality products at volume. Advanced Computing Within Advanced Computing, we utilize three primary methods of fulfilling product demand: using third-party contract manufacturers, building products to order based on sourced components, and configuring products to order. In each case, we use components and subassemblies acquired from a wide range of vendors. For our fault tolerant products, we primarily use third-party manufacturers with assembly in our Ireland facility for certain product lines. For our HPC and AI products, we have developed capabilities for design and development of large-scale systems and dense HPC and AI clusters that have significant power and cooling requirements, with manufacturing and testing conducted at our Fremont, California facility. Our extensive experience in manufacturing and validating HPC and AI clusters has equipped us with the playbooks and best practices needed to move quickly. The Penguin Edge products, which are expected to be discontinued by approximately the end of calendar 2025, are manufactured, assembled, and tested at our manufacturing facilities in Newark, California and Tempe, Arizona. Integrated Memory Our Integrated Memory manufacturing operations benefit from our many years of design experience and our existing library of proven designs that stress high manufacturability and quality. Over 30 years of manufacturing experience enables us to move quickly to high-volume production of new products, which is paramount in helping our customers achieve rapid time-to-market for their latest innovations. Our design efficiencies, high level of automation and expertise in advanced manufacturing processes power our build-to-order approach and help enable us to achieve high manufacturing yields, reduced direct labor costs and quick turnaround of both small and large production orders. For certain customers in our Integrated Memory segment, we employ extensive software-based electrical and thermal simulations and test our designs on high-end functional testers utilizing a broad array of test suites. These tests are designed to meet the quality requirements of enterprise-class systems with stringent specifications ® ® 9
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required for various high-speed and high-compute applications. We also conduct design verification testing of hardware, firmware, system integration and reliability. We continually work to improve our test routines and associated software. For our specialty memory products, we have developed a high-volume, fully automated reliability testing and screening capability that substantially exceeds standard industry practices. These capabilities enable us to reduce the occurrence of early-life failures and weak module fallout, which can save our customers from the significant expenses associated with replacing products that fail after field deployment. Optimized LED While we do not own or operate wafer fabrication facilities, we have capabilities for subsequent stages of the product manufacturing cycle. In our manufacturing facilities in Huizhou, China, we receive LED chips from third-party wafer fabrication facilities, prepare and package dies into LED components, test components, and in some cases, assemble components on substrates or printed circuit boards to manufacture LED products. Through our years of investment and experience, we have developed expertise in LED technology that results in brighter, more efficient and lower cost LED chips and components for a broad range of lighting applications. Customers We believe that our customers look to us as a strategic partner based on our high-performance, high-availability, application- specific products, quality, technical support and global footprint. We also provide customized, integrated supply chain services for certain customers to assist them with the management and execution of their procurement and distribution processes. We believe our close collaboration with customers, customer-specific designs, long-lifecycle solutions and proprietary supply chain services create significant customer value. Our products are generally manufactured on a build-to-order basis. Our sales are made primarily pursuant to customer purchase orders and are not based on long-term supply agreements. We sell our products and solutions directly and through third-party channels, including distributors, value-added resellers, independent software vendors and systems integrators, to a diversified base of local and global OEM, enterprise and government customers. In Advanced Computing, we sell our HPC and AI products to enterprise and government customers in AI cloud services, energy, financial services, hyperscale, and education; fault-tolerant computing products and services to enterprise customers in financial services, telecom, energy, transportation, healthcare, retail and industrial automation; and Penguin Edge products to OEM customers, system integrators and through distribution to government, telecom infrastructure, industrial, network edge computing and transportation. In our Integrated Memory segment, we sell memory solutions to OEM customers in industrial, government, networking and communications, enterprise storage and compute, and other vertical markets. Our Optimized LED segment sells LED chips and components to manufacturers and electronic component distributors. We sell our Optimized LED products and solutions using both channel and direct sales to a diverse base of local and global OEM and contract manufacturers that together support a broad range of customers. We also utilize third-party sales representatives that generally do not maintain product inventory. A substantial portion of our Optimized LED products are sold to distributors that stock inventory and sell our products to their customers, which include value-added resellers, manufacturers who incorporate our products into their own manufactured goods and end-users of our products. Like other global semiconductor component suppliers, our Optimized LED segment has historically experienced seasonally lower sales during the earlier part of the calendar year and may see similar trends in the future. In 2025, 2024, and 2023, sales to our ten largest end customers (including sales to contract manufacturers and original design manufacturers (“ODMs”) at the direction of such end customers) accounted for 66%, 58%, and 60% of total net sales respectively. See “Item 1A. Risk Factors – Risks Related to Our Business – We depend on a select number of customers for a significant portion of our revenue” and “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Concentrations.” Suppliers To address the needs of our customers, we have developed and maintained relationships with leading suppliers and contract manufacturers located in Asia, Europe and the Americas. Our semiconductor suppliers include many 10
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of the world’s largest memory manufacturers, including Samsung Semiconductor, Inc., Micron Technology, Inc., SK hynix, Inc., International Business Machines Corporation, and Kioxia Holdings Corporation. They also include some of the world’s largest providers of computing, communications and graphics processers, including Intel Corporation (“Intel”), Advanced Micro Devices, Inc. and TD SYNNEX Corporation; as well as providers of subsystems including Intel; networking products including Super Micro Computer, Inc. and Juniper Networks, Inc.; and suppliers of software products. Our contract manufacturers include NEC Corporation, Advantech Co., Ltd. and Celestica Inc. We often work with our suppliers in bidding for customers’ design-in opportunities. We also work closely with our suppliers to better ensure that needed materials are available and delivered on time. Our established global network of materials sourcing is designed to help ensure that our pricing remains competitive and to allow us to provide a stable source of supply for our customers. We believe that our longstanding relationships with leading suppliers put us in a favorable position to procure sufficient quantities of materials, including during periods of industry shortages. Our flexible and responsive global manufacturing capabilities, inventory management systems and global IT systems allow us to move materials from one site to another in a cost-efficient manner and often deploy what might otherwise be excess inventory among other products and customers. In our Advanced Computing and Integrated Memory segments, we purchase a significant portion of our materials from suppliers on a purchase order basis and generally do not have long-term commitments from our suppliers. Our Optimized LED segment has a number of supply agreements with third-party providers for LED chips in wafer or discrete form. See “Item 1A. Risk Factors – Risks Related to Our Business – We depend on a small number of sole or limited source suppliers.” Global macroeconomic headwinds and evolving industry dynamics have contributed to supply constraints across our business segments. These supply challenges, combined with geopolitical factors including tariffs, have increased material costs and, in some cases, affected delivery timelines. Sales, Support and Marketing We sell our products both directly and through third-party channels to global OEMs as well as enterprise, government and other end customers located across North America, Asia and Europe. Our sales and marketing efforts are conducted through an integrated process that engages our direct sales force, e-commerce, customer service representatives and on-site field application engineers (“FAE”) alongside a network of independent sales representatives, distributors, integrators and resellers. Larger customers are also often supported by dedicated sales and support teams. Our sales and marketing efforts also include a high level of involvement from our senior executives. Our on-site FAEs work closely with our sales team to provide product design support to our customers. Our FAEs collaborate with our customers, providing us with insight into their business models and product roadmaps and enabling us to identify early-stage opportunities that can help grow our business. Our integrated sales network and FAEs together allow us to be more responsive to our customers and more successful in navigating each customer’s unique and often complex design qualification and/or bid proposal processes. Our marketing activities include advertising in technical journals; publishing articles in leading industry periodicals; hosting webinars; publishing white papers, electronic newsletters and blogs; and utilizing direct email solicitation. We participate in many industry trade shows worldwide and have active memberships in a number of industry organizations, including the Joint Electron Device Engineering Council, SD Card Association, Storage Networking Industry Association, CXL Consortium, Trusted Computing Group, Open Compute Project, Sensor Open Systems Architecture Consortium, Peripheral Component Interconnect Special Interest Group and Illuminating Engineering Society. Research and Development The timely development of new products and services is essential to maintaining our competitive position. Our primary research and development (“R&D”) activities are conducted at our R&D centers in the United States (Durham, North Carolina; Fremont, California; Irvine, California; Maynard, Massachusetts; Newark, California; Tempe, Arizona and Tewksbury, Massachusetts) and in Huizhou, China; Bangalore, India; New Taipei City, Taiwan; and Penang, Malaysia. Our R&D activities focus on driving innovation in our products and services as well as continuous process improvement for procurement, test and manufacturing. 11
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Our research and product development for Advanced Computing includes high-availability server architecture and design, high-availability software development (including virtualization, operating systems and systems management); server selection and occasional design; designs to enable integration of racks and clusters, including power and cooling design, evaluation, and deployment; storage system design and evaluation; high-performance network design; component testing for switches; cables and interface devices; development of software-defined storage systems; and embedded computer boards and systems. Our product development in Integrated Memory includes innovations for next-generation DRAM products, including DDR5, DRAM, and emerging interconnect standards such as CXL, enterprise memory and flash-based products, as well as associated firmware development. We continue to develop a broad offering of flash-based products for industrial, government, communications and enterprise storage and compute markets. Our engineering team is focused on firmware development, systems engineering and integration, system and platform validation, applications, and product and reliability engineering for new products. R&D in our Optimized LED segment includes innovations for next-generation LED products, including chips, packages for high-power general illumination, next generation direct-view video displays and specialty applications such as horticulture lighting, architectural, torch and emergency vehicles. We plan to continue R&D focused on the innovation and design of these and other new products that address the needs of our customers, with a focus on faster-growing markets. Our advanced engineering and design capabilities enable us to address our customers’ increasingly complex needs. We design our products to be compatible with existing industry standards and, where appropriate, develop and promote new standards and provide custom solutions to meet customers’ requirements. An important aspect of our R&D is understanding the challenges presented by our customers’ requirements and addressing them using our industry knowledge, proprietary technologies and technical expertise. By working closely with our customers and suppliers, we are able to deliver technically advanced products designed to meet customer-specific needs with competitive solutions that satisfy our customers’ memory, storage and compute requirements; shorten their time-to-market; and enhance the performance of their end products and applications. R&D expenses were $79.8 million, $81.5 million and $90.6 million in 2025, 2024 and 2023, respectively. As of August 29, 2025, we had approximately 430 R&D personnel worldwide. Competition Our businesses compete with numerous global and local companies. The principal competitive factors in our markets include the ability to meet customer-specific requirements and provide high product quality, strong technical support, technologically advanced products and services, advanced testing capabilities, flexible and global delivery options, reliable supply and reasonable pricing. Across our Penguin Solutions business segments, our principal competitors include: • Specialty memory products providers; • Memory semiconductor manufacturers that also manufacture DRAM modules and Flash products; • Supply chain service providers, including distributors and third-party logistics providers; • Compute and storage systems providers; • Semiconductor and subsystem manufacturers; • Embedded computing platforms and systems providers; • Providers of System-on-Modules (SoMs) and Single-Board Computers (SBCs); • LED product manufacturers; • Enterprise IT server vendors; and • Manufacturers of industrial computers. With respect to our Advanced Computing segment, with our fault tolerant solutions we primarily compete with manufacturers of enterprise servers and industrial computers. Our HPC and AI business competes primarily with global manufacturers of HPC and AI products and services. Within our Integrated Memory segment, we compete against memory module providers and, to a lesser extent, large semiconductor manufacturers that utilize a portion of their capacity to manufacture memory modules. 12
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Within our Optimized LED segment, we compete with companies that manufacture and/or sell nitride-based LED chips as well as manufacturers of LED components concentrated primarily in indoor and outdoor lighting; specialty lighting including torch lamps (flashlights), horticulture and color-changing architectural lighting; signs and signals; and transportation. Some of our global competitors are large international companies that have substantially greater financial, technical, marketing, distribution and other resources as well as greater name recognition and longer-standing relationships with customers and suppliers than we do. These competitors tend to have limited customization and service capabilities and are generally focused on higher-volume memory, storage, or compute products that are manufactured to industry-standard specifications. We believe that our close collaboration with customers, customer-specific designs, long-lifecycle solutions, superior products and proprietary supply chain services create significant customer loyalty that may provide an advantage when competing against large international companies. In addition, some of our competitors are also our suppliers or customers. See “Item 1A. Risk Factors – Risks Related to Our Business – We depend on a select number of customers for a significant portion of our revenue” and “– We depend on a small number of sole or limited source suppliers.” Intellectual Property Intellectual property is an important aspect of our business. We actively seek to protect and leverage our intellectual property to promote our business interests. As of August 29, 2025, we owned or exclusively licensed approximately 1,650 patents, which are set to expire between 2025 to 2050, and had 442 pending patent applications. We continually review our development efforts to assess the existence and patentability of new intellectual property, which we work to protect as appropriate. We believe the duration and scope of our most relevant patents are sufficient to support our business, which as a whole is not significantly dependent on any particular patent or other intellectual property rights. To protect our intellectual property, we rely upon a combination of patent, copyright, trade secret and trademark laws; contractual restrictions such as nondisclosure agreements, licenses and intellectual property assignment agreements; and policies and procedures. We pursue the registration of our domain names and trademarks in various jurisdictions and register trademarks in the United States and other countries as warranted. We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information. Additionally, we actively monitor data on our computer networks to assure compliance with data use policies. However, these laws, procedures and policies provide only limited protection and any of our intellectual property rights may be challenged, invalidated, infringed or misappropriated. Furthermore, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States, which means that we may be unable to protect our proprietary technology in certain jurisdictions. While many of our products contain proprietary aspects and are protected by patents, some of our products are built around mature industry standards and have less patent protection. For these products, we rely on trade secret rights to protect our proprietary interests. The absence of patent protection means that we cannot prevent our competitors from reverse- engineering and duplicating those products. Moreover, some of our product solutions incorporate open source software that is available under public licenses such as the GNU General Public License. We maintain policies and procedures to evaluate open source software used in our products and strive to minimize the risk of our proprietary intellectual property being inadvertently pulled under such licenses. Human Capital At Penguin Solutions, we aim to put people first by nurturing a culture that supports creativity and growth. We value our employees and understand the importance of their contributions as well as personal development. We believe that at the best workplaces, employees feel inspired, engaged, valued and included. As part of our “people first” mindset, we are dedicated to advancing our people strategy by developing our talent, maintaining an engaged workforce and offering programs and rewards that attract and retain the best talent. At the core of our people strategy is a commitment to maintaining a safe and inclusive culture where individuals can achieve their highest potential, regardless of background. 13
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Employees As of August 29, 2025, we had approximately 2,900 full-time employees (excluding contractors) in locations across the globe, including in the United States, China and Malaysia. We have never experienced a work stoppage at any of our locations and take pride in our good employee relations. Employee Engagement and Development Continuous growth requires ongoing investment in people, innovation and new opportunities. We are always working to improve our communications between employees and management teams in order to advance our company goals and enhance the employee experience. We aim to develop capable leadership that can meet the challenges of business growth while instilling a supportive and inclusive company culture. At all locations, we provide our employees with performance assessments and evaluations. We place a priority on identifying talent throughout the organization and providing them with development and coaching opportunities through our newly adopted annual talent calibration and succession planning process. We also provide employees with access to technical and leadership training and training on workplace culture and enrichment, covering topics such as harassment, healthy work environments, inclusion, and global ethics and compliance. Inclusion and Belonging We strive to promote a workforce where individuals feel welcome and included. We know that a sense of belonging can help us to achieve our highest potential, helping to consistently raise the bar and drive innovation forward. This philosophy applies to all levels of our organization, including our executive leadership team and our Board of Directors. Our commitment to providing employees with an inclusive and nondiscriminatory work environment is outlined in our non-discrimination policy, though for the avoidance of doubt such policy is not incorporated herein by reference. Through this policy, we aim to articulate people-oriented, fair treatment principles for the recruitment, promotion, performance evaluation, compensation, training and retirement of all employees. We have established a council comprised of employees from across the organization focused on creating a working environment that offers equal opportunity employment so that all workers are treated with fairness and respect. The council enables us to expand on our strategy to nurture an inclusive work environment through initiatives such as employee resource groups which are open to individuals regardless of background, and efforts to recruit leadership from the widest pool of eligible talent. Wellness, Health and Safety We strive to provide and maintain a safe work environment and prioritize employee well-being throughout our operations. Our wellness program is supported by a committee that provides information and events throughout the year on health as well as mental and financial well-being. We also support mental health and wellness through our Employee Assistance Program, which offers free and confidential counseling and support for our employees and members of their households. Compensation and Benefits We offer compensation and benefits programs designed to motivate and reward our employees based on our pay-for- performance philosophy. We are committed to paying market competitive wages to attract key talent and work to help promote pay equality across equal quality and levels of work. Our bonus program links employee compensation to Penguin Solutions’ business performance. We also offer an Employee Stock Purchase Plan, equity compensation, retirement benefits and, in the United States, a 401(k) match program. Environmental Regulations Our operations and properties are subject to various federal, state, local, foreign and international environmental laws and regulations that govern, among other things, environmental licensing and registries, protection of flora and fauna, air and noise emissions, use of water resources, wastewater discharges, management and disposal of hazardous and non- hazardous materials and wastes, reverse logistics (take-back policy) and remediation of releases of hazardous materials. We cannot be certain that future identification of environmental concerns or conditions, more vigorous regulatory enforcement, enactment of more stringent laws and regulations or other 14
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unanticipated events will not arise in the future. Additionally, certain environmental laws may impose liability without regard to fault or the legality of the original conduct. These developments could give rise to material environmental liabilities and related costs that could have a material adverse effect on our business, financial condition and results of operations. Available Information Our address and principal U.S. executive offices are located at 45800 Northport Loop West, Fremont, California 94538 and our telephone number at this address is (510) 623-1231. Our principal website is www.penguinsolutions.com. Information contained on or accessible through our website is not a part of this Annual Report. Through our website, we make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to Sections 13(a) or Section 15(d) of the Exchange Act, as soon as reasonably practicable after they have been electronically filed with, or furnished to, the SEC. The SEC maintains a website (www.sec.gov) containing reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. 15
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Item 1A. Risk Factors You should carefully consider the risks and uncertainties described below and the other information in this Annual Report, including “PART II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. Our business, financial condition or results of operations could be materially and adversely affected if any of these risks occurs and, as a result, the market price of our common stock could decline and you could lose all or part of your investment. As noted above in “Item 1. Business,” the financial results and operations of SMART Brazil have been presented as discontinued operations. While the divestiture of our SMART Brazil business continues to pose certain risks and uncertainties described below, unless otherwise noted, the financial results included in the risks below relate solely to our continuing operations and do not include the operations of SMART Brazil. This Annual Report also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” for additional information. Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including the risks facing our company described below and elsewhere in this Annual Report. Risk Factor Summary The following is a summary of the principal risks described below in this Annual Report. The following summary should not be considered an exhaustive summary of the material risks facing us, and it should be read in conjunction with the “Risk Factors” section and the other information contained in this Annual Report. Risks Related to Our Business • Changing worldwide economic conditions could adversely affect our results of operations and financial condition. • Our results of operations fluctuate from quarter to quarter, which make them difficult to predict. • We have experienced losses in the past and may experience losses in the future. • We compete in historically cyclical markets. • Fluctuations in average selling prices may have a material adverse effect on our business, results of operations and financial condition. • Tariffs or other trade restrictions or taxes have had in the past, and could have in the future, an adverse impact on our business, results of operations and financial condition. • We depend on a select number of customers for a significant portion of our revenue. • Issues in the development of, our investment in, and use of AI or AI technologies, combined with an uncertain regulatory environment, may result in a material adverse impact on our business • The markets that we serve are highly competitive. • We may be unable to optimally match purchasing and production to customer demand, which may have a material adverse effect on our business, results of operations and financial condition. • Our future success depends on our ability to develop new products and services. • Our customers often require that our products undergo a lengthy and expensive process of evaluation and qualification without any assurance of net sales. • If our OEM customers decide to utilize standardized solutions instead of our specialty products, our net sales and market share may decline. • We depend on a small number of sole or limited source suppliers. • We may be unable to adapt to technological change or maintain or improve our manufacturing efficiency. • Disruption of our operations at any one of our manufacturing facilities would substantially harm our business. • We are subject to a number of procurement laws and regulations. • Products that fail to meet specifications, are defective or that are otherwise incompatible with end uses could impose significant costs on us. • Actual or perceived failures or breaches of our information and security systems, or those of our customers, suppliers or business partners, could expose us to losses. • Actual or perceived non-compliance with applicable data privacy and security laws, or that of our customers, suppliers or business partners, could expose us to losses. 16
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• Some of our offerings utilize open source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business or make it easier for competitors to enter our markets and compete with us. • We could be prevented from selling or developing our software if our licenses are not enforceable or are modified so as to become incompatible with other open source licenses. • Contracts with the U.S. Government may be terminated, cancelled or modified. • Our indemnification obligations to our customers and suppliers could require us to pay substantial damages. • We may need to raise additional funds, which may not be available on acceptable terms or at all. • We have in the past made, and may in the future make, acquisitions, investments and/or alliances, which involve numerous risks. • We may fail to realize the anticipated benefits of our acquisitions or the sale of our SMART Brazil business. • We have incurred, and may in the future incur, impairment charges related to our goodwill, which could have a material adverse effect on our business, results of operations and financial condition. • We may incur liabilities relating to additional Brazilian withholding tax in connection with the sale of our Brazil business. • The sale of our Brazil business could impair our ability to protect our trademarks and brand. • If we are not able to maintain, develop and enhance our brand and our reputation, our business and results of operations may be adversely affected. • We rely on third parties to sell a portion of our products and services. • We may be unable to protect our intellectual property. • Legal proceedings and claims could have a material adverse effect on our business, results of operations or financial condition. • We may be required to pay royalties or obtain licenses to sell certain products. • The anticipated benefits of the U.S. Domestication may not be realized. • Changes in tax laws or potential adjustments by tax authorities could materially increase our tax expense, and our ability to use our tax attributes is limited. • We reversed the valuation allowance for a significant portion of our deferred tax assets in the fourth quarter of 2023, and we may not be able to realize these assets in the future. Our deferred tax assets may also be subject to additional valuation allowances, which could have a material adverse effect on our business, results of operations and financial condition. • The U.S. Domestication may adversely impact our effective tax rate. • We could incur substantial costs or liabilities as a result of violations of environmental laws. • We may be unable to successfully manage environmental or social sustainability initiatives, in whole or in part, which could lead to less opportunity for us to have sustainability investors and partners and could negatively impact our reputation or options for capital acquisition. • Our worldwide operations, and those of our suppliers, business partners and customers, may be disrupted by events outside of our control, including the effects of climate change, natural disasters, man-made disasters or other events, as well as societal and governmental responses to such events. Risks Related to Our International Operations • Our business is subject to the risks generally associated with international business operations. • We are subject to the taxation requirements of the jurisdictions in which we operate, and if we fail to qualify for certain tax incentives or to comply with local tax regulations, we may suffer financial losses. • Changes in foreign currency exchange rates could materially adversely affect our business, results of operations or financial condition. • If enacted, exchange controls may limit our ability to receive dividends and other distributions from our foreign subsidiaries. • High rates of inflation could have a material adverse effect on our business, results of operations and financial condition. • We may have limited legal recourse under the laws of China if disputes arise under our agreements with third parties. Risks Related to Our Debt • Our indebtedness, and the terms of our debt instruments, including our credit agreement and the agreements governing our Convertible Senior Notes (as defined below) and capped call transactions, 17
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could impair our financial condition, harm our ability to operate our business or hinder third-party acquisition attempts, and affect the value of our debt and common stock. Risks Related to Our Common Stock • The trading price of our common stock has been and may continue to be volatile, and actual or perceived future sales of our common stock could cause our stock price to fall. • If our estimates or judgments relating to our critical accounting estimates are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. • Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could delay, defer, discourage, or prevent a takeover attempt. • We do not anticipate paying any cash dividends on our common stock in the foreseeable future. • Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third- party claims against us and may reduce the amount of money available to us. • Our amended and restated certificate of incorporation contains exclusive forum provisions. General Risk Factors • Worldwide economic and political conditions, including terrorist attacks as well as other factors, may adversely affect our operations and cause fluctuations in demand for our products. Risks Related to Our Business Changing worldwide economic conditions could adversely affect our results of operations and financial condition. The United States and global economies are facing increased levels of inflation, higher interest rates and potential recession. Adverse changes in economic conditions could harm our results of operations and financial condition in a variety of ways. For example, regional or global economic downturns could have an impact on the financial condition of our customers, particularly in challenging macroeconomic environments, and adversely affect demand for our products, which could adversely affect our revenue and potentially result in write-offs of excess or obsolete inventory. Inflation could also drive increases in our costs of revenue and operations, which we may not be able to successfully pass along to our customers. Higher interest rates could result in increased cash usage to service our variable rate indebtedness and increase the cost to us of refinancing our indebtedness. Our results of operations fluctuate from quarter to quarter, which make them difficult to predict. Our quarterly results of operations have fluctuated in the past and may fluctuate in the future. As a result, our past quarterly results of operations are not necessarily indicative of future performance. Furthermore, we may not be able to maintain the margins we have achieved in recent periods. Our results of operations in any given quarter can be and have been influenced by numerous factors, many of which we are unable to predict or are outside of our control, including: • the loss of, significant reduction in, or variability in the timing of sales to, or demand from, one or more key customers, which can be affected by factors such as the timing of customer deployments or customer budget considerations; • customer churn rates, including discounting and churn of significant customers from whom we derive a significant percentage of our revenue; • changes in customer spending on our products and services; • the timing, size and effectiveness of our investment in research and development for new and innovative products, including AI solutions; • the timing, size and effectiveness of our marketing efforts; • the acquisition of other companies or technologies, the failure to successfully integrate and operate them, or customers’ or suppliers’ negative reactions to them; • a disruption in, or termination of, our supply relationship with one or more key suppliers; 18
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• supply shortages that may impact our ability to manufacture products for our customers and may result in rising prices of the materials we need to manufacture our products; • our failure to develop new or enhanced products and introduce them in a timely manner; • the wind down or discontinuation of products, such as products offered through our Penguin Edge business; • the timing of our entry into new contracts or timing of revenues recognized from our customers, which can be affected by factors such as singular large-scale projects in one period not recurring in subsequent periods or customer decisions as to the completion of delivery and system go-live events; and • other factors described in this “Risk Factors” section. Due to the various factors mentioned above and other factors, the results of any prior quarterly or annual period should not be relied upon as an indication of our future operating performance. In one or more future periods, as has happened in the past, our results of operations may fall below the expectations of securities analysts and investors. In that event, the market price of our common stock would likely decline. In addition, the market price of our common stock may fluctuate or decline regardless of our operating performance. We have experienced losses in the past and may experience losses in the future. Our business has experienced quarterly and annual operating losses. For example, in 2024, we had a net loss of $52.5 million. Our ability to achieve or maintain profitability depends in part on revenue growth from, among other things, increased demand for our integrated memory solutions, products and related service offerings in our current markets, growth in our Advanced Computing and Optimized LED segments, the performance of our acquired companies, as well as our ability to expand into new markets, including those related to AI. We may not be successful in achieving the revenue and revenue growth necessary to achieve and maintain profitability. Moreover, as we continue to expend substantial funds for research and development projects, enhancements to sales and marketing efforts, integration of acquisitions and to otherwise operate our business, we cannot assure you that we will achieve or maintain profitability on an annual or quarterly basis even if our revenue does grow. We compete in historically cyclical markets. Historically, the markets in which we compete have been highly cyclical and have experienced significant downturns often connected with, or in anticipation of, maturing product lifecycles of both component suppliers and electronic equipment manufacturers and/or declines in general economic conditions. These downturns have been characterized by diminished product demand, production overcapacity, high inventory levels and accelerated erosion of selling prices and inventory values. Our business depends on the continued growth of technology utilization, the electronics industry and on end-user demand for our customers’ products. Economic downturns often have had an adverse effect upon manufacturers and end- users of electronics products. The timing of new product developments, the lifecycle of existing electronics products and the level of acceptance and growth of new products can also affect demand for our products. Downturns in the markets we serve could have a significant negative impact on the demand for our products. Additionally, due to changing conditions, our customers have experienced and may in the future experience periods of excess inventory that could have a significant adverse impact on our sales. During a downturn in any of the markets that we serve, there is also a higher risk that some of our trade receivables become delinquent or even uncollectible and that our inventory would decrease in value. We cannot predict the timing or the severity of the cycles within our industries. In particular, it is difficult to predict how long and to what levels any industry upturn or downturn, or general economic strength or weakness, will last or develop. Reduced demand for our products could have a material adverse effect on our business, results of operations and financial condition. Fluctuations in average selling prices may have a material adverse effect on our business, results of operations and financial condition. The markets for our Integrated Memory products have historically been characterized by declines in average selling prices. Our average selling prices may decline due to several factors, including general declines in demand for our products and excess supply of DRAM and flash memory components, including as a result of overcapacity. In the past, transitions to smaller design geometries and other factors causing overcapacity in memory markets have led to significant increases in the worldwide supply of memory components. If not accompanied by increases in demand, supply increases usually result in significant declines in component prices and, in turn, declines in the average selling prices and profit margins of our products. During periods of oversupply, our net sales may decline 19
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if we fail to increase sales volume of existing products or to introduce and sell new products in quantities sufficient to offset declines in selling prices. Our efforts to increase sales or to introduce new products to offset the impact of declines in average selling prices may not be successful. Furthermore, our competitors and customers also impose significant pricing pressures on us. Declines in average selling prices have in the past had, and may again in the future have, a material adverse effect on our business, results of operations and financial condition. Declines in average selling prices also might enable OEMs to pre- install higher density memory modules into new systems at existing price points, thereby reducing the demand for future memory upgrades. In addition, our net sales and gross profit may be negatively affected by shifts in our product mix during periods of declining average selling prices. Tariffs or other trade restrictions or taxes have had in the past, and could have in the future, an adverse impact on our business, results of operations and financial condition. We source a significant portion of our materials from, manufacture products in, and sell products in foreign countries, including China, making the price and availability of our merchandise susceptible to international trade risks and other international conditions. The United States has implemented new tariffs and significant increases and changes to existing tariffs, including on goods from China, and has proposed further changes and new tariffs. In response to such tariffs announced by the United States, other countries have imposed or are considering imposing new or increased tariffs on certain imports from the United States. There is currently significant uncertainty about the future relationship between the United States and other countries with respect to tariffs, trade policies, taxes and other related government regulations, which have and will likely to continue to evolve rapidly and unpredictably, and we cannot predict whether, and to what extent, current tariffs will continue or trade policies will change in the future or their impact on our business. Economic and political uncertainty caused by the U.S. tariffs imposed on goods from China and other countries by the current administration, and any corresponding tariffs and related retaliatory actions or currency devaluations from China or such other countries in response, has negatively impacted and may in the future negatively impact our business. In addition, many of our customers also rely on international trade and may experience impacts similar to our own, which could in turn affect their relationship with us. Furthermore, the imposition of additional tariffs, duties, border adjustment taxes or other trade restrictions by the United States have resulted in the adoption of additional or increased tariffs or other trade restrictions by other countries. Tariffs have in the past increased, and may in the future, increase our cost of materials, particularly within our LED business, and have in the past caused us and may in the future cause us to increase prices to our customers, which we believe may have reduced or may in the future reduce demand for our products. Our price increases or other efforts to address these risks may not be sufficient to fully offset the impact of tariffs and may result in lowering our margin on products sold. The volatility and unpredictability of international trade policies and conditions add further complexity to our operations, making it challenging to forecast and plan effectively. The adoption and expansion of trade restrictions and tariffs, quotas and embargoes, the occurrence or threat of a trade war or other governmental action related to tariffs or trade agreements or policies, has the potential to adversely impact demand for our products, our costs, our customers, our suppliers and the world and U.S. economies, which in turn could have a material adverse effect on our business, results of operations and financial condition. We depend on a select number of customers for a significant portion of our revenue. Our principal customers include global distributors, enterprise users, government agencies and OEMs that compete in the computing, networking, communications, storage, aerospace, mobile, industrial automation, Internet of Things (“IoT”), industrial IoT, government, military and lighting markets. In 2025, 2024 and 2023, sales to our ten largest end customers (including sales to contract manufacturers or ODMs at the direction of such end customers) accounted for 66%, 58% and 60% of net sales, respectively. In 2025, 2024 and 2023, we had two, one and one customers account individually for over 10% of our net sales. In some cases, our customers also compete with us and/or are our major suppliers. We expect that sales to relatively few customers, including distributors in our Optimized LED business, will continue to account for a significant percentage of our net sales for the foreseeable future. However, we can provide no assurance that any of these customers or any of our other customers will continue to utilize our products or our services at current levels, or at all, since sales of our products are made primarily pursuant to purchase orders and are not based on long-term supply agreements. The select number of customers from whom we derive a significant percentage of our sales, and the timing and volume of customer orders and renewals, some of which are substantial, may be significantly reduced due to several factors including discounting, churning of significant customers, incorporating work in-house, or reduced spending due to economic pressures among others. Although we have master agreements with some of our 20
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customers, these agreements govern the terms and conditions of the relationship and do not typically contain requirements for them to purchase minimum volumes. Because of the uncertainty of the timing, volume and renewals or non-renewals of orders from our customers, sales to our customers have varied from period to period and may vary significantly in the future, and our ability to forecast our sales have been, and may in the future be, difficult. Our customer concentration may also subject us to perceived or actual bargaining leverage that our key customers may have, given their relative size and importance to us. Since a large percentage of our sales is to a small number of customers that are primarily large enterprises or OEMs, these customers are able to exert, have exerted and we expect will continue to exert, pressure on us to make concessions on price and on terms and conditions which can adversely affect our business, results of operations and financial condition. If our key customers seek to negotiate their agreements on terms less favorable to us and we accept such unfavorable terms, such unfavorable terms may have a material adverse effect on our business, results of operations and financial condition. Additionally, our services include point-in-time services, such as design and implementation, as well as longer-term managed services that are typically subject to renewal after an initial term of a year or sometimes longer. Accordingly, unless and until we diversify and expand our customer base, our future success will significantly depend upon the timing and volume of business from our largest customers and the financial and operational success of these customers. Furthermore, many of our customer and supplier markets are characterized by a limited number of large companies. Industry consolidation and company failures could decrease the number of potential significant customers for our products and services. The decrease in the number of potential significant customers will increase our reliance on key customers and, due to the increased size of these companies, may negatively impact our bargaining position and thus our profit margins. If we were to lose one of our key customers or have a key customer cancel a key program or otherwise significantly reduce its volume of business with us or fail to pay us in full for the goods or services purchased from us, our sales and profitability would be materially reduced and our business and financial condition would be seriously harmed. Issues in the development of, our investment in, and use of AI or AI technologies, combined with an uncertain regulatory environment, may result in a material adverse impact on our business, results of operations and financial condition, reputational harm, liability or other adverse consequences to our business operations. We are making significant investments in AI initiatives, including designing, building, deploying and managing AI and HPC infrastructure. AI and accelerated computing technologies, markets and related demand trends are complex and rapidly evolving, and we face significant competition from other companies, including companies with greater resources than ours, and an evolving regulatory landscape. If we do not develop and timely offer AI solutions or keep pace with the product offerings of our competitors, or if demand for such products does not grow as anticipated, our business could be adversely affected. We may incur significant costs, invest substantial resources, and experience delays without achieving a return on investment or capitalizing on opportunities presented by AI. The introduction of AI technologies into our internal business practices and the use of our proprietary software to manage AI compute environments may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, or other complications that could materially and adversely affect our business, results of operations or financial condition. Existing laws and regulations may apply to us or our customers or partners in new ways, and new laws and regulations may be instituted, the effects of which are difficult to predict. The intellectual property ownership and license rights, including copyright, surrounding AI technologies has not been fully addressed by courts or national or local laws or regulations, and any use or adoption of third-party AI technologies into our products and services may result in exposure to claims of copyright infringement or other intellectual property misappropriation. The evolution of the technology industry, including the formation of strategic alliances among major technology companies in the AI sector, can result in rapid and significant changes to market dynamics and the competitive landscape. Failure to anticipate, adapt to, or successfully implement business strategies in response to such industry shifts could affect our ability to serve our customers’ evolving needs, maintain competitive positioning and achieve our business objectives, resulting in a material adverse effect on our business, results of operations and financial condition. We are working to incorporate generative AI technologies for use by our personnel for internal business purposes, such as software coding tools. These generative AI technologies could generate output that is infringing, and we could be subject to claims or lawsuits, including for infringement of third-party intellectual property rights as a 21
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result of the output of such generative AI technologies. While some providers of AI technologies offer to indemnify their end users for any copyright or other intellectual property infringement claims arising from the output of their AI technologies, we may not be successful in adequately recovering our losses in connection with such claims. In addition, we may experience difficulties in enforcing the intellectual property rights, to the extent we seek to protect output generated using generative AI technologies. The United States Copyright Office has previously denied copyright protection for content generated by AI technologies, and the United States Patent and Trademark Office (the “USPTO”) has similarly stated that an AI tool cannot be an “inventor” of a patent, rendering it impossible to obtain patent protection for inventions created solely by AI technologies. The Supreme Court of the United Kingdom has reached a similar conclusion, stating that AI systems cannot be named as an “inventor” for UK patent law purposes. The rapid evolution of AI technologies and regulations requires the application of resources to help to ensure that AI is implemented responsibly in order to minimize unintended, harmful impact. There is a risk that AI technologies could produce inaccurate or misleading content or other discriminatory or unexpected results or behaviors, such as hallucinatory behavior that can generate irrelevant, nonsensical, or factually incorrect results, all of which could harm our reputation, business, or customer relationships. The development and use of AI technologies presents emerging ethical and social issues, and if we enable or offer solutions that draw scrutiny or controversy due to their perceived or actual impact on customers or on society as a whole, we may experience brand or reputational harm, competitive harm and/or legal liability. The markets that we serve are highly competitive. The markets that we serve are characterized by intense competition. Our competitors include many large domestic and international companies that have substantially greater financial, technical, marketing, distribution and other resources, greater name recognition, broader product lines, lower cost structures and longer-standing relationships with customers and suppliers than we do. As a result, our competitors may be able to respond better to new or emerging technologies, such as generative AI, or standards and to changes in customer requirements. Further, some of our competitors are in better financial and marketing positions from which to influence industry acceptance of a particular product or service standard or competing technology than we are. Our competitors may also be able to devote greater resources to the development, promotion and sale of products and services, and may be able to deliver competitive products and services at a lower price than we can. In addition to competing with certain portions of our product and services offerings, certain of our competitors are also our significant customers, suppliers, or both. Finally, China’s stated national policy to be a global leader in all segments of the semiconductor industry by 2030 has resulted in and may continue to cause increased competitive capability in China. Across all of our markets, we also expect to face new companies that may enter our existing or future markets with similar or alternative offerings, which may be less costly or provide additional features. We also face competition from current and prospective customers that evaluate our capabilities against the merits of manufacturing products or developing solutions internally. Competition may also arise due to the development of cooperative relationships among our current and potential competitors and/or suppliers or third parties to increase the ability of their offerings to address the needs of our prospective customers. Accordingly, it is possible that new competitors or alliances among competitors and/or suppliers may emerge and acquire significant market share. Competitive pressure has led in the past and may continue to lead to intensified price competition resulting in lower net sales and lower profit margins which could negatively impact our financial performance. Our efforts to maintain and improve our competitive position, or our failure to do so, could have a material adverse effect on our business, results of operations and financial condition. We may be unable to optimally match purchasing and production to customer demand, which may have a material adverse effect on our business, results of operations and financial condition. In most cases we do not obtain long-term purchase orders or commitments from our customers, but instead we work with our customers to develop non-binding estimates or forecasts of future requirements. Utilizing these non-binding estimates or forecasts, we make significant decisions based on our estimates of customer requirements including determining the levels of business that we will seek and accept, production scheduling, component purchasing and procurement commitments, inventory levels, product development or customization, personnel 22
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and production facility needs and other resource requirements. Customers may cancel, reduce or delay orders that were either previously made or anticipated, often with little or no notice to us, and generally without penalty, which can result in us having underutilized resources or excess materials. Conversely, customers may require rapid increases in production, which can challenge our resources and can reduce profit margins. We may not have sufficient capacity at any given time to meet our customers’ demands. As many of our costs and operating expenses are relatively fixed, reduction in customer demand has had in the past, and could in the future have, a material adverse effect on our business, results of operations and financial condition. Additionally, we have had in the past and expect we could again have in the future, inventory write-downs and/or write-offs due to obsolescence, excess quantities (including due to decreased demand) and declines in market value below our costs. In particular, if product obsolescence causes product demand to decrease or we fail to forecast demand accurately, we could be required to write-off inventory or record underutilization charges, which would have a negative impact on our profit margins and our profitability. Any one or more of these occurrences could have a negative impact on our results of operations and financial condition. Our future success depends on our ability to develop new products and services. The markets that we serve are subject to rapid technological change, product obsolescence, frequent new product introductions and feature enhancements, changes in end-user requirements, evolving industry standards, and frequent innovations and disruptions in the markets in which we compete for products and services. Our ability to successfully compete and to continue to grow our business depends in significant part upon our ability to develop, introduce and sell new and enhanced products and services on a timely and cost-effective basis, and to anticipate and respond to changing customer requirements and competition. We have invested and expect to continue to invest heavily in research and development for new and innovative products, including AI solutions. In addition, we have invested and expect to continue to invest significant time and capital into developing infrastructure, employee training and marketing efforts to expand our services offerings. However, there can be no guarantee that our evolving business strategy or our efforts will be successful or that our new products or services will gain market acceptance, be price competitive or result in any significant increase in our net sales. If these investments fail to provide the expected returns, then such failure could have a material adverse effect on our business, results of operations and financial condition. Additionally, we have experienced, and may experience in the future, delays and unanticipated expenses in the development and introduction of new products and services. A failure to develop products with required feature sets or performance standards, or delays in the development, introduction and qualification of new products or services, could significantly reduce our return on investment as well as our net sales, provide a competitor a first-to-market advantage and allow a competitor to achieve greater market share, or cause our customers to cancel their orders (generally without penalty), all of which would have a material adverse effect on our business, results of operations and financial condition. Our customers often require that our products undergo a lengthy and expensive process of evaluation and qualification without any assurance of net sales. Our products are often incorporated into customers’ systems at the design stage. We rely on OEM and other customers to select our product designs, which we refer to as design wins, and then to qualify our products for production buys. With OEM and other customers, we often incur significant expenditures in the development of new products without any assurance that the customer will select our products for purchase. Furthermore, even if a customer designs one of our products into its system, we cannot be assured that they will qualify or use our product in production, that the customer’s product will be commercially successful or that we will receive significant orders as a result of that design win or qualification. Generally, our customers are not obligated to purchase our products even if we achieve a design win. If we are unable to achieve design wins or if our customers’ systems incorporating our products are not commercially successful, it could have a material adverse effect on our business, results of operations and financial condition. In addition, because the qualification process is both product-specific and platform-specific, our existing customers sometimes require us to re-qualify our products, or to qualify our new products, for use in new platforms or applications, which can be time-consuming and cause reductions in our net sales during the design and qualification period. Likewise, when our suppliers discontinue production of components, it may be necessary for us to design and qualify new products for our customers. Such customers may require of us or we may decide to purchase an estimated quantity of discontinued components necessary to help to ensure a steady supply of 23
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existing products until products with new components can be qualified. Purchases of this nature may not be available, or they may affect our liquidity. Additionally, our estimation of quantities required during a transition may be incorrect, which could adversely impact our results of operations through lost revenue opportunities or charges related to excess and obsolete inventory. We must devote substantial resources, including design, engineering, sales, marketing and management efforts, to qualify our products with existing and prospective customers in anticipation of sales. Significant delays in the qualification process could result in an inability to keep up with rapid technological change or new, competitive technologies. If we delay or do not succeed in qualifying a product with an existing or prospective customer, we will not be able to sell that product to that customer, which may result in us losing potential revenue and holding excess or obsolete inventory, any of which may have a material adverse effect on our business, results of operations and financial condition. If our OEM customers decide to utilize standardized solutions instead of our specialty products, our net sales and market share may decline. Many of our specialty products are specifically designed for our OEM customers’ systems or products. In an effort to reduce costs, a number of our OEM customers design standardized or commodity components, modules or subsystems into their products. Although we also manufacture standard components, modules and subsystems, an increase in such efforts by our customers could reduce the demand for our higher priced specialized or customized solutions, which in turn would have a significant negative impact on our business, results of operations and financial condition. In addition, when customers utilizing custom solutions choose to adopt a standard instead of custom or specialty components, modules or subsystems, new competitors producing standard components, modules or subsystems may take a portion of our customers’ business previously purchased from us. We depend on a small number of sole or limited source suppliers. We are dependent upon a small number of sole or limited source suppliers for certain materials, including certain critical components or subsystems, we use in manufacturing our products. Purchases from our two largest suppliers were $0.6 billion, $0.4 billion and $0.5 billion in each of 2025, 2024 and 2023, respectively. Certain of our suppliers also compete with us in one or more of our markets. We purchase almost all of our materials from our suppliers on a purchase order basis and generally do not have long-term commitments from suppliers. Our suppliers are not required to supply us with any minimum quantities, and there is no assurance that our suppliers will supply the quantities of components we may need to meet our production goals. The markets in which we operate have in the past experienced, are currently experiencing, and may in the future experience, shortages, long lead times and price fluctuations in certain materials, including certain critical components and raw materials that we use in manufacturing our products. These shortages cause some suppliers to place their customers, including us, on supply allocation. As a result, we may not be able to obtain the materials that we need to fill customer orders in a timely fashion or at all. If any of our suppliers experience quality control or intellectual property infringement problems, this may further impact our ability to fill customer orders. Furthermore, our products that utilize that supplier’s materials may be disqualified by one or more of our customers and we may not be able to fill their orders. A disruption in or termination of our supply relationship with any of our significant suppliers or our inability to develop relationships with new suppliers, if required, would cause delays, disruptions or reductions in product manufacturing and shipments or require product redesigns which could damage relationships with our customers, increase our costs, reduce our margins or increase the prices we need to charge for our products and could materially and adversely affect our business, results of operations and financial condition. Additionally, there are increasing expectations in various jurisdictions that companies monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, as well as consider a wider range of potential environmental and social matters, including the end-of-life considerations for products. Compliance can be costly, require us to establish or augment programs to diligence or monitor our suppliers, or to design supply chains to avoid certain regions altogether. Failure to comply with such regulations can result in fines, reputational damage, or import ineligibility for our products or product components, or otherwise adversely impact our business, results of operations and financial condition. 24
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We may be unable to adapt to technological change. The industries in which we conduct business are characterized by constant and rapid technological changes and product obsolescence. For example, new manufacturing process technologies using smaller feature sizes and offering better performance characteristics are generally introduced every one to two years. The introduction of new manufacturing process technologies allows us to increase the functionality of our products while at the same time optimizing performance parameters, decreasing power consumption and/or increasing storage capacity. In order to remain competitive, it is essential that we secure the capabilities to develop and qualify new manufacturing process technologies. If we are delayed in transitioning to new technologies, our business, results of operations and financial condition could be materially adversely affected. If the lifecycle of a product is shortened as a result of the introduction of a new technology, we may be forced to transition our manufacturing capabilities to a new configuration more quickly than originally planned. This can result in increased capital and other expenditures and decreases in demand for the older technology products. As a result, we may be required to record additional obsolescence charges or an impairment on our long-lived assets, including facilities and equipment, as well as intangible assets, which would increase our expenses. When new technologies are introduced, our capacity and the capacity of our suppliers to manufacture the new products often cannot meet the demand or expected timelines, and product shortages or delays can arise. If we or our suppliers cannot support such demand or expected timelines, we may not be able to fill customer orders or participate in new markets as they emerge, and our relationships with customers and our business, results of operations and financial condition could be adversely impacted. We may not be able to maintain or improve our manufacturing efficiency. Our manufacturing efficiency can significantly affect our results of operations, and we cannot be sure that we will be able to maintain or increase our manufacturing efficiency to the same extent as our competitors. During periods when we are implementing new process technologies, manufacturing facilities may not be fully productive and may experience higher than acceptable defect rates. We may fail to achieve acceptable yields or may experience product delivery delays as a result of, among other things, capacity constraints, delays in the development of new process technologies, increased defect rates, changes in our process technologies, upgrades or expansion of existing facilities, impurities or other difficulties in the manufacturing process. Any of these occurrences could adversely impact our relationships with customers, cause harm to our reputation in the marketplace, cause customers to move future business to our competitors or cause us to make financial concessions to our customers. Improving our manufacturing efficiency in future periods is dependent on our ability to: • develop advanced process technologies and advanced products that utilize those technologies; • successfully transition to more advanced process technologies; • continue to reduce test times; • ramp product and process technology improvements rapidly and effectively to commercial volumes across our facilities; • achieve acceptable levels of manufacturing output and yields, which may decrease as we implement more advanced technologies; and • maintain our quality controls and rely upon the quality and process controls of our suppliers. Disruption of our operations at any one of our manufacturing facilities would substantially harm our business. We rely on a limited number of production facilities for each of our various product lines. A disruption at one of our manufacturing facilities could adversely impact our manufacturing operations and consequently our customer relations and our business. Such a disruption could result from, among other things, severe or chronic weather conditions, including in connection with climate change, local outbreaks of infectious diseases, sustained process abnormalities, government intervention, waste disposal issues, power failures or other circumstances, or from ramp-up related challenges, such as obtaining sufficient raw materials, hiring of qualified factory personnel, installation and efficient operation of new equipment and management and coordination of our logistics networks within our global operations. We maintain insurance to protect against certain claims associated with business interruption, however, our insurance may not cover all or any part of a particular loss. Since a large percentage of our production is done in a small number of facilities, a disruption to operations, or a loss that is in excess of, or 25
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excluded from, our insurance coverage could adversely impact our business, results of operations and financial condition. We are subject to a number of procurement laws and regulations. With respect to a portion of our business, we must comply with and are affected by laws and regulations relating to the award, administration and performance of government contracts in the United States and other countries. Government contract laws and regulations affect how we do business with our customers and impose certain risks and costs on our business. A violation of specific laws and regulations by us, our employees, others working on our behalf, a supplier or a venture partner, could harm our reputation and result in the imposition of fines and penalties, the termination of our contracts, suspension or debarment from bidding on or being awarded contracts, loss of our ability to export products or services and civil or criminal investigations or proceedings. A termination arising out of our default may expose us to liability and may have a material adverse effect on our ability to compete for future contracts and orders. Additionally, if an audit or investigation uncovers improper or illegal activities, we may be subject to civil or criminal penalties and administrative sanctions, including reductions of the value of contracts, contract modifications or terminations, forfeiture of profits, suspension of payments, penalties, fines and suspension or prohibition from doing business with the government. We could also suffer serious reputational harm if allegations of impropriety were made against us. Similar government oversight exists in most other countries where we conduct business. Products that fail to meet specifications, are defective or that are otherwise incompatible with end uses could impose significant costs on us. If our products are defectively manufactured, contain defective components or are used in defective or malfunctioning systems, we could be subject to warranty and product liability claims and product recalls, safety alerts or advisory notices. For example, certain of our products are used in transportation safety devices in the rail industry. These products are certified by independent auditors to safety integrity level 4 standards. In the event that our products fail to perform as expected, accidents and significant losses could occur. While our contracts for the sale of these products typically contain disclaimers, there can be no assurance that we would be insulated from liability in the event of an accident. While we have product liability insurance coverage, it may not be adequate to satisfy claims made against us. We also may be unable to obtain insurance in the future at satisfactory rates or in adequate amounts. Investigations, warranty and product liability claims and product recalls, regardless of their ultimate outcome, could have an adverse effect on our business, financial condition and reputation and on our ability to attract and retain customers. In addition, we may determine that it is in our best interest to accept product returns in circumstances where we are not contractually obligated to do so to maintain good relations with our customers. Accepting product returns may adversely impact our results of operations and financial condition. Further, quality issues in customer installations have occurred in the past and could occur in the future, which have in the past affected, and could possibly affect in the future, customer relationships, demand for products and our reputation. Quality issues and potential impact to our reputation may adversely affect our results of operations and financial condition. Actual or perceived failures or breaches of our information and security systems, or those of our customers, suppliers or business partners, could expose us to losses. We rely on computer systems, hardware, software, technology infrastructure and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”). We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services. Additionally, we sometimes provide network connections and system access to customers and vendors to facilitate product builds and collaborative development processes, which creates potential additional attack vectors and potential additional entry points for cybersecurity incidents that could compromise our systems or data. We and certain of our third-party service providers have experienced cybersecurity incidents, though none have materially impacted our Company, including our operations or financial condition. There can be no guarantee that future cyberattacks or events, whether originating from us, our suppliers or our customers, will not materially impact our Company generally or our IT Systems or data or that of critical service providers specifically. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and data. Those risks include data security incidents, cybersecurity events, data breaches, ransomware 26
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attacks or other compromises of the IT Systems we or that our vendors use to provide services or process data on our behalf, which may lead to compromised network security and misappropriation or compromise of our information or that of third parties, system disruptions or lead to shutdowns. Cyberattack actors include criminal hackers, hacktivists, state-sponsored intrusions, and may involve industrial espionage, employee malfeasance and human or technological error. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers and other third parties to disclose information or unwittingly provide access to systems or data. The risk of such attacks includes attempted breaches not only of our own products, services and systems, but also those of customers, contractors, business partners, vendors and other third parties. Our products, services and systems may be used in critical company, customer, government or other third-party operations, or involve the storage, processing and transmission of sensitive data, including valuable intellectual property, classified information, other proprietary or confidential data, regulated data and personal information of employees, customers and others. In our on-demand and hosted solutions, we process, store and transmit data provided by our customers, which may include sensitive and personal data. We also manage, store, transmit and otherwise process various sensitive personal or confidential data related to our company and our employees in the regular course of business. Successful breaches, employee malfeasance or human or technological error could materially impact our business due to, for example, unauthorized access to, disclosure, modification, misuse, loss or destruction of company, customer, government or other third party data or systems; theft of sensitive, regulated, classified or confidential data including personal information and intellectual property; the loss of access to critical data or systems through distributed denial-of-service attacks, denial-of- service attacks, ransomware attacks, supply chain attacks, destructive attacks or other means; and business delays, service or system disruptions or denials of service. Further, hardware and operating system software and applications that we produce or procure from third parties may contain significant defects in design or manufacture, including “bugs” and other problems that could materially disrupt the operation of such systems. Given the nature of complex systems, software and services like ours, and the scanning tools that we deploy across our networks, infrastructure and products, we regularly identify and track security vulnerabilities. We are unable to comprehensively guarantee patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches will be applied before vulnerabilities are exploited by a threat actor. If attackers are able to exploit critical vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises could materially impact our and our customers’ systems and data. The information technology systems we and our vendors use are vulnerable to outages, breakdowns or other damage or interruption from service interruptions, system malfunction, natural disasters, terrorism, war, and telecommunication and electrical failures. For example, in July 2024, a software update by CrowdStrike Holdings, Inc. (“CrowdStrike”), a cybersecurity technology company, caused widespread crashes of Windows systems into which it was integrated. Although we have not experienced any material impacts as a result of the CrowdStrike software update, we have and expect to continue in the future to experience other third-party software- and service-related incidents and/or operational disruptions, which may materially affect our business, results of operations and financial condition. Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools (including AI) that circumvent controls, evade detection and even remove forensic evidence. Further, the use of AI technologies by us, our customers, suppliers, and third-party service providers, among others, introduces unique and/or unknown vulnerabilities. As a result, there can be no assurance that the systems we have designed to protect against cyberattacks, or our cybersecurity risk management program and processes, will be fully implemented, complied with or sufficient to identify, detect or prevent material consequences arising from such attacks in the future. In addition, we have acquired and continue to acquire companies with cybersecurity vulnerabilities and/or unsophisticated security measures, which exposes us to significant cybersecurity, operational, and financial risks. The costs to address product defects or any of the foregoing security problems and security vulnerabilities before or after a cyber incident could be significant. Remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions. We could lose existing or potential customers for outsourcing services or other information technology solutions in connection with any actual or perceived security vulnerabilities in our products. In addition, breaches of our IT Systems or security measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or other third parties could expose us, our customers or other third parties affected to a risk of loss or misuse of this 27
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information, result in regulatory enforcement, litigation and potential liability, damage our brand and reputation or otherwise harm our business. Further, we rely in certain limited capacities on third-party data management providers and other vendors whose own security vulnerabilities or problems may have similar detrimental effects on us. Actual or perceived non-compliance with applicable data privacy and security laws, or that of our customers, suppliers or business partners, could expose us to losses. We are subject to laws, rules and regulations in the United States and other countries relating to the collection, use, transmission, processing and security of user and other data. Our ability to execute transactions and to possess, process, transmit and use personal information and data in conducting our business, for example with respect to our marketing efforts, which include email marketing and telemarketing, subjects us to legislative and regulatory obligations that, among other things, may require us to expend time, financial and other resources to monitor and interpret ever-evolving and complex data privacy and security laws. In particular, certain states have adopted new or modified privacy and security laws and regulations that may apply to our business, for example, the California Consumer Privacy Act (“CCPA”) imposes obligations on businesses that process personal information of California residents. Among other things, the CCPA: requires disclosures to such residents about the data collection, use and disclosure practices of covered businesses; provides such individuals expanded rights to access, delete and correct their personal information and opt-out of certain transfers of personal information; requires covered businesses enter into specific contractual provisions with service providers that process California resident personal information on the covered business’s behalf; and provides such individuals with a private right of action and statutory damages for data breaches. The enactment of the CCPA has prompted a wave of similar laws being passed in the United States, which creates the potential for a patchwork of overlapping but different state laws. For example, since the CCPA went into effect, comprehensive privacy statutes that share similarities with the CCPA are now in effect and enforceable in numerous states. We cannot predict the full impact of these laws on our business or operations. Many other states are currently reviewing or proposing the need for greater regulation of the collection, sharing, use and other processing of information related to individuals for marketing purposes or otherwise, and there remains increased interest at the federal level as well. Additionally, other jurisdictions outside of the United States have or have recently enacted privacy and cybersecurity laws, such as the United Kingdom and the European Union that have enacted the UK General Data Protection Regulation and the EU General Data Protection Regulation respectively and Brazil which has enacted the Lei Geral de Proteção de Dados, creating the potential for a patchwork of overlapping but different laws. We have incurred, and will continue to incur, significant expenses to comply with mandatory privacy and security standards and protocols under applicable laws, regulations, industry standards and contractual obligations. Despite such expenditures, we may face regulatory and other legal actions in the event of perceived or actual non-compliance with such applicable obligations. Many of these laws would also require us to notify regulators and customers, employees or other individuals of any data security breach as described above. The various data privacy enactments impose significant obligations and compliance with these requirements depends in part on how particular regulators apply and interpret them. In addition, as a contractor to the Department of Defense (“DoD”), we are contractually required to protect “controlled unclassified information” and comply with DoD cybersecurity requirements, including controls specified in the National Institute of Standards and Technology Special Publication 800-171. The DoD has implemented certain information security requirements and obligations relating to the Cybersecurity Maturity Model Certification (“CMMC”). When incorporated into our contracts or solicitations, we will need to comply with the CMMC and flow down such requirements, as appropriate, to our vendors and suppliers. The laws, rules and regulations relating to privacy and data security are in some cases relatively new and the interpretation and application of these laws are uncertain. Any failure or perceived failure by us to comply with data privacy laws, rules, regulations, industry standards and other requirements could result in proceedings or actions against us by individuals, consumer rights groups, government agencies or others. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust. If any of these events were to occur, our business, results of operations and financial condition could be materially adversely affected. 28
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Some of our offerings utilize open source software, which may pose particular risks to our proprietary software, products and services in a manner that could harm our business. Many of our Advanced Computing offerings, including Linux-based products and Penguin Solutions’ ClusterWare products, incorporate software components licensed under various open source licenses. Open source software is made available under licenses that in some instances may subject us to certain unfavorable conditions, including requirements that we offer our proprietary software, or portions of our proprietary software, which incorporates or links to such open source software, for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using such open source software, and that we license such modifications or derivative works under the terms of the applicable open source licenses. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. We could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could implicate aspects of our proprietary code. These claims could result in litigation and could require us to make our software source code freely available to the public, purchase a costly license or cease offering the implicated products or services. Such claims may require us to re-engineer our offerings to avoid an undesirable open source license or infringement, which may be costly and time-consuming. Additionally, some open source software may include generative AI technologies or other software that incorporates or relies on generative AI models or other AI technologies. The use of such software may expose us to risks as the intellectual property ownership and license rights, including copyrights, surrounding AI technologies, has not been fully interpreted by courts or national or local laws or regulations, and any use or adoption of third-party AI technologies into our products and services may result in exposure to claims of copyright infringement or other intellectual property misappropriation. In addition, the use or modification of third- party generative AI models that are made available under an open source or similar license could introduce inaccuracies or vulnerabilities that we are unable to anticipate, detect, or control. If the licensor for such generative AI technologies developed their models by training on data that was inaccurate, biased or for which it did not have the appropriate rights, we could be subject to claims or lawsuits, including for infringement of third-party intellectual property. In addition, our usage of open- source generative AI technologies may require us to license our data or intellectual property to third parties and limit our ability to protect our intellectual property rights or proprietary data. In addition to risks related to open source license requirements, usage of open source software can lead to greater risks than use of third-party commercial software. Increased risks arise in part because open source licensors generally do not provide updates, warranties, support, indemnities or other contractual protections regarding infringement claims or the quality of the code, including with respect to security vulnerabilities where open source software may be more susceptible. These third- party open source providers could experience service outages, data loss, privacy breaches, cyberattacks, ransomware and other events relating to the applications and services they provide that could diminish the utility of these services, which could harm our business as a result. To the extent that Advanced Computing offerings depend upon the successful operation and continued updates and support of the open source software it uses, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of Advanced Computing offerings, delay the release of new product solutions, result in a failure of our offerings and injure our reputation. If open source programmers fail to adequately further develop and enhance open source technologies, we would have to rely on other parties to develop and enhance our offerings or we would need to develop and enhance our offerings with our own resources. We cannot predict whether further developments and enhancements to these technologies would be available from reliable alternative sources. Moreover, if third-party software programmers fail to adequately further develop and enhance open source technologies, the development and adoption of these technologies could be stifled and our offerings could become less competitive. Any of these risks could be difficult to eliminate or manage and, if not addressed, could have a material adverse effect on our business, financial condition and results of operations. We may also use AI technologies, including tools provided by third parties, to develop or assist in the development of our own software code. While use of such tools could make our development process more efficient, AI technologies have sometimes generated content that is “substantially similar” to open source code on which the AI tool was trained or which is used by the AI tool. If the AI technologies we use generate code that is the same or too similar to open source code, we risk not properly attributing the author of such code, we may not 29
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be abiding by the applicable licensing requirements and we may lose protection of our own proprietary code that is commingled with such code. Open source software may make it easier for competitors, some of which may have greater resources than we have, to enter our markets and compete with us. One of the characteristics of open source software is that anyone may modify and redistribute the existing open source software and use it to compete with us. Such competition can develop without the degree of overhead and lead time required by traditional proprietary software companies. It is possible for competitors with greater resources than ours to develop their own open source solutions or acquire a smaller business that has developed open source offerings that compete with our offerings, potentially reducing the demand for, and putting price pressure on, our offerings. In addition, some competitors make their open source software available for free download and use on an ad hoc basis or may position their open source software as a loss leader. We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operating margins and loss of market share. Additionally, any failure by us to provide high-quality technical support, or the perception that we do not provide high-quality technical support, could harm our reputation and negatively impact our ability to sell subscriptions for our open source offerings to existing and prospective customers. If we are unable to differentiate our open source offerings from those of our competitors or compete effectively with other open source offerings, our business, financial condition, results of operations and cash flows could be adversely affected. In our Advanced Computing business, we regularly contribute software source code under open source licenses and have made other technology we developed available under other open licenses, and we include open source software in our products. For example, we have contributed certain technology related to our products to the OCP Foundation, a non-profit entity that shares and develops such information with the technology community, under the Open Web Foundation License. As a result of our open source contributions and the use of open source in our products, we may license or be required to license or disclose code and/or innovations that turn out to be material to our business and may also be exposed to increased litigation risk. As a result of making certain of our technology available to third parties, the value of our brands and other intangible assets may be diminished and competitors may be able to more effectively mimic our products, services and methods of operations which could have an adverse effect on our business and financial results. Likewise, if the protection of our proprietary rights is inadequate to prevent unauthorized use or appropriation by third parties, the value of our brands and other intangible assets may be diminished and competitors may be able to more effectively mimic our products, services and methods of operations. Any of these events could have an adverse effect on our business and financial results. We could be prevented from selling or developing our software if our licenses are not enforceable or are modified so as to become incompatible with other open source licenses. A number of our Advanced Computing offerings have been developed and licensed under the GNU General Public License and similar open source licenses. These licenses state that any program licensed under them may be liberally copied, modified and distributed. It is possible that a court would hold these licenses to be unenforceable or that someone could assert a claim for proprietary rights in a program developed and distributed under them. Additionally, if any of the third-party open source components of our offerings may not be liberally copied, modified or distributed, then our ability to distribute or develop all or a portion of our offerings could be adversely impacted. In addition, licensors of open source software employed in our offerings may, from time to time, modify the terms of their license agreements in such a manner that those license terms may become incompatible with other open source licenses in our offerings or our end user license agreement, and thus could, among other consequences, prevent us from distributing the software code subject to the modified license. Contracts with the U.S. Government may be terminated, cancelled or modified. Certain of the U.S. Government programs in which we participate as a contractor or subcontractor may extend for several years and include one or more base years and one or more option years. Under some contracts, the government generally has the right not to exercise options to extend or expand our contracts and may otherwise terminate, cancel, modify or curtail our contracts at its convenience. Any decision by a government agency not to 30
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exercise contract options or to terminate, cancel, modify or curtail any major programs or contracts would adversely affect our revenues, revenue growth and our ability to achieve or maintain profitability. We may experience periodic performance issues under certain of our contracts. Depending on the nature and value of the contract, a performance issue or termination for default could cause our actual results to differ from those anticipated and could harm our reputation and our results of operations and financial condition. Our indemnification obligations to our customers and suppliers could require us to pay substantial damages. A number of our product sales and product purchase agreements provide that we will defend, indemnify and hold harmless our customers and suppliers from damages and costs which may arise from various matters including, without limitation, product warranty claims or claims for injury or damage resulting from defects in, or usage of, our products or the products of our suppliers. In addition, we currently have in effect a number of agreements in which we agree to defend, indemnify and hold harmless our customers and suppliers from damages and costs which may arise from the infringement or alleged infringement by our products of third-party patents, trademarks or other intellectual property rights. We periodically have to respond to claims and may have to litigate indemnification obligations in the future. Indemnification obligations could require us to expend significant amounts of money to defend claims and/or to pay damages or settlement amounts. We maintain insurance to protect against certain claims associated with the use of our products; however, our insurance may not cover all or any part of a claim asserted against us. Our insurance does not cover intellectual property infringement in most instances. A claim brought against us that is in excess of, or excluded from, our insurance coverage could adversely impact our business, results of operations and financial condition. We may need to raise additional funds, which may not be available on acceptable terms or at all. We may need to raise additional funds, which we may seek to obtain through, among other avenues, public or private equity offerings and debt financings. Additional funds may not be available on terms acceptable to us, or at all. If we issue equity or convertible debt securities to raise additional funds, our existing stockholders may experience dilution and the new equity or debt securities may have rights, preferences and privileges senior to those of our then existing stockholders, such as was the case in connection with the issuance of the series of 200,000 shares of preferred stock of Penguin Solutions Delaware, par value $0.03 per share, designated as convertible preferred stock (the “Issued CPS”) as described in more detail in “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Preferred Stock Investment.” If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization, as well as impose financial and operating covenants that could restrict the operations of our business. In a rising interest rate environment, debt financing will become more expensive and may have higher transactional and servicing costs. In addition, our existing indebtedness may limit our ability to obtain additional financing in the future, as discussed in greater detail below under “Risks Relating to Our Debt – Our indebtedness could impair our financial condition and harm our ability to operate our business.” In 2025, 2024 and 2023, we spent $9.0 million, $19.4 million and $39.4 million, respectively, on capital expenditures, which we used, among other things, to expand manufacturing and test capacity as well as research and development. In the first quarter of 2023, we closed our acquisition of Stratus Technologies. The consideration for this acquisition consisted of approximately $225 million in cash, plus an earnout of up to $50 million based on the gross profit performance of the Stratus Technologies business during the first full 12 fiscal months following the closing of the acquisition. In the second quarter of 2024, we paid in full $50.0 million related to the earnout. We plan to continue exploring additional acquisition opportunities in the future. If adequate capital is not available when needed, we may be required to modify our business model and operations to reduce spending. This could cause us to be unable to execute our business plan, take advantage of future opportunities or respond to competitive pressures or customer requirements. It may also cause us to delay, scale back or eliminate some or all of our research and development programs, or to reduce or cease operations, which could adversely impact our business, results of operations and financial condition. 31
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We have in the past made, and may in the future make, acquisitions, investments and/or alliances, which involve numerous risks. As part of our business and growth strategy, we have in the past and may in the future acquire or make significant investments in businesses, products or technologies, such as our acquisitions of Stratus Technologies, Cree’s LED business, SMART EC, SMART Wireless and Penguin Computing. Any acquisitions or investments would expose us to the risks commonly encountered in acquisitions of businesses or technologies. Such risks include, among others: • problems integrating the purchased operations, technologies, systems, processes, products or personnel; • unanticipated costs or expenses associated with an acquisition or investment, including write-offs of tangible assets as well as goodwill or other intangible assets; • negative effects on results of operations resulting from an acquisition or investment; • adverse effects on existing business relationships with suppliers and customers; • the risk that suppliers (such as Wolfspeed, Inc.) or customers of an acquired business are unable or unwilling to do business with us following the acquisition; • risks associated with entering markets in which we have little or no prior experience, such as the market for LED products that we entered following our acquisition of Cree’s LED business and markets with complex government regulations; • loss of key employees of the acquired business; and • potential risks and liabilities associated with acquired businesses, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, litigation or other claims in connection with the acquired company, including claims from terminated employees, former stockholders or other third parties, and other known and unknown liabilities. Problems encountered in connection with an acquisition could divert the attention of management, utilize scarce corporate resources and otherwise harm our business. Acquisitions may also lead to increased operational complexity, and effectively streamlining operations and processes of acquired businesses or entities requires management attention and expenditures. To the extent that we make any future acquisitions, we could issue common stock that would dilute our existing stockholders’ percentage ownership, incur substantial additional debt (such as the Purchase Price Note we issued in connection with the acquisition of Cree’s LED business), expend cash and reduce our cash reserves or assume additional liabilities. Furthermore, acquisitions may require material charges and could result in adverse tax consequences, substantial depreciation, deferred compensation charges, liabilities under earnout provisions, the amortization of amounts related to deferred compensation and identifiable purchased intangible assets or impairment of goodwill or other intangibles, any of which could negatively impact our business, results of operations and financial condition. We are unable to predict whether or when any prospective acquisition candidate will become available or the likelihood that any acquisition will be completed. We may expend significant resources and management time pursuing an acquisition that we are unable to consummate, including for reasons outside of our control. Even if we do find suitable acquisition opportunities, we may not be able to consummate the acquisitions on commercially acceptable terms or at all, or may not realize the anticipated benefits of any acquisitions we do undertake, including our acquisition of Cree’s LED business. Our investments in private companies are subject to risk of loss of investment capital. These investments are inherently risky because the markets for the technologies or products they may have under development are typically in the early stages and may never materialize. We could lose our entire investment in these companies. We may fail to realize the anticipated benefits of our acquisitions. We closed the acquisition of Stratus Technologies in August 2022. As we continue to integrate this business into our operations and portfolio, our ability to realize some or all of the anticipated benefits of the acquisition may be impacted by the following: • difficulties in the assimilation and successful integration of the operations, sales functions, technologies, products, systems, processes, personnel and development capabilities; • failure to maintain and expand the customer bases of our acquired business; • difficulties in leveraging the Stratus Technologies research and development and product development capabilities to expand our products portfolio; • our failure to protect and expand their intellectual property and patent portfolios; • unanticipated costs, including write-offs of tangible assets as well as goodwill or other intangible assets, litigation or other contingent liabilities associated with the acquisition; 32
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• the diversion of management’s attention from other business concerns; • adverse effects on existing business relationships with suppliers and customers; • risks associated with entering markets in which we have little or no prior experience and markets with complex government regulations; and • loss of key employees of the acquired business. Any of these risks or other risks arising from the integration of Stratus Technologies’ business into our operations could have a material adverse effect on our business, financial condition or results of operations and could cause the impact of the acquisition to be dilutive to our company. We have incurred, and may in the future incur, impairment charges related to our goodwill, which could have a material adverse effect on our business, results of operations and financial condition. We have a significant amount of goodwill. As of August 29, 2025, we had goodwill of $145.9 million, which represented 9% of our total assets as of such date. This balance reflects the recent charges recognized for the full impairment of goodwill associated with our Penguin Edge business under our Advanced Computing segment. The carrying value of goodwill may be reduced if we determine that goodwill is impaired. We test goodwill for impairment in the fourth quarter of each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The testing of goodwill for impairment requires us to make significant estimates about future performance and cash flows, as well as other assumptions. These estimates can be affected by numerous factors, including potential changes in economic, industry or market conditions; changes in business operations; changes in competition or changes in the price of our common stock and market capitalization and other relevant events and factors affecting the fair value of the reporting unit. Changes in these factors, or changes in actual performance compared with estimates of our future performance, may affect the fair value of goodwill and could result in an impairment charge. We may incur liabilities relating to additional Brazilian withholding tax in connection with the sale of our Brazil business. In connection with the sale of a majority of our interest in SMART Brazil to Lexar Europe, Lexar Europe withheld (from the purchase price otherwise payable to us) Brazilian capital gains tax (Iposto de Renda na Fonte Sobre Ganho de Capital), with such tax being imposed on the excess of the purchase price over our tax basis in the SMART Brazil equity interests sold by us. The calculation of tax basis was based on our interpretation of current Brazilian law. We believe our interpretation and calculations are correct, but if the Brazilian tax authorities were to successfully challenge our determination of the amount of withholding tax due, we would be required to indemnify Lexar Europe in respect of any additional withholding taxes (together with any interest and penalties imposed). The amount of such additional withholding taxes and our liability in respect of such taxes could be substantial. We may not achieve the intended benefits of the sale of our Brazil business. We may not realize some or all of the anticipated benefits from the sale of our Brazil business and such failure to realize anticipated benefits could have a material adverse effect on our business, financial condition or results of operations. The sale of our Brazil business could impair our ability to protect our trademarks and brand. In connection with the sale of our SMART Brazil business, we permitted Lexar Europe and the divested businesses to use of the word “SMART” in combination with pre-approved words and logos in trademarks, domain names, logos and other source identifiers solely in Brazil (the “New Marks”). To prevent potential consumer confusion and protect our brands, and as a closing condition to the sale of our SMART Brazil business, we entered into an agreement with Lexar Europe and the divested subsidiaries that includes a number of restrictions on Lexar Europe’s and the divested business’ use of the New Marks, including that: (i) the New Marks may not be used outside of Brazil or in connection with products that will be consumed or exported outside of Brazil, (ii) the New Marks may only be used in connection with certain business and products, (iii) the word “SMART” may not be used alone as a brand name or source identifier and (iv) the New Marks must comply with certain font, style, format and color restrictions to avoid similarity with our logos. 33
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While we have the foregoing contractual protections, there are no assurances (i) that Lexar Europe and the divested businesses will adhere to the contract or (ii) that customers or potential customers of our products and of Lexar Europe’s and its affiliates’ products will not have confusion as to source given the joint use of “SMART,” which could lead to dilution of our rights in our “SMART” marks and/or reputational harm. If disputes arise in the future with respect to the contractual restrictions, we may not be able to successfully resolve these types of conflicts to our satisfaction. Although we changed our name from SMART Global Holdings, Inc. to Penguin Solutions, Inc. on October 15, 2024, the “SMART” brand is critical to our business and any consumer confusion, tarnishing or dilution of the “SMART” brand may have a material impact on our business. If we are not able to maintain, develop and enhance our brand and our reputation, our business and results of operations may be adversely affected. We believe that maintaining, developing and enhancing our brand and our reputation is critical to our relationships with our existing customers, suppliers and business partners and our ability to attract new customers and business partners. The successful promotion of our business will depend on a number of factors, including our marketing efforts, and ultimately our ability to continue to develop attractive products and to continue to provide services valued by customers. Although we believe it is important for our growth, our brand promotion activities may not be successful or yield increased revenue. On October 15, 2024, we rebranded and changed our name from SMART Global Holdings, Inc. to Penguin Solutions, Inc. This rebranding is a continuation of our strategic transformation over the past several years and reflects our focus on delivering leading-edge solutions that seek to solve the complexity of AI. However, customers, suppliers and business partners may be confused by the name change and investors may not perceive the expected benefits of our rebranding or business strategic efforts, which could materially and adversely impact our business, results of operations, financial condition and trading price of our common stock. We rely on third parties to sell a portion of our products and services. Sales of our products to some of our OEM customers are accomplished, in part, through the efforts of third-party sales representatives and, particularly in the case of our LED business, third-party distributors. We are unable to predict the extent to which these third-party sales representatives and distributors will be successful in marketing and selling our products. Moreover, many of these third-party sales representatives and distributors also market and sell competing products and may more aggressively pursue sales of our competitors’ products. Our third-party sales representatives and distributors may terminate their relationships with us at any time on short or no notice. Our future performance may also depend, in part, on our ability to attract and retain additional third-party sales representatives and distributors that will be able to market and support our products effectively, especially in markets in which we have not previously sold our products. If we cannot retain our current third-party sales representatives and distributors or recruit additional or replacement third-party sales representatives and distributors or if these sales representatives or distributors are not effective, it could have a material adverse effect on our business, results of operations and financial condition. We may be unable to protect our intellectual property. Our success is dependent, in part, upon protecting our intellectual property rights. We rely on a combination of trade secrets, trademarks, copyrights, patents and other forms of intellectual property rights, contractual restrictions and confidentiality procedures to establish and protect our proprietary technology. Much of the intellectual property created in our Integrated Memory and Advanced Computing segments exists in the form of know-how and trade secrets. As such, few patents are sought or procured on products created in these business areas. The absence of patent protection for these products means that we cannot prevent our competitors from reverse-engineering, independently developing, or duplicating them, which could harm our competitive position, sales and results of operations. We seek to protect our confidential proprietary information, in part, by confidentiality and non-disclosure agreements and invention assignment agreements with our employees, consultants, advisors, contractors and collaborators. However, we cannot be certain that such agreements have been entered into with all relevant parties. Furthermore, we cannot be certain that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. In addition, our trade secrets, know-how, and other proprietary information may be stolen, used in an unauthorized manner, or compromised through a direct intrusion 34
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by private parties or foreign actors, including those affiliated with or controlled by state actors. Such misappropriation of our proprietary information can occur through cyber intrusions into our computer systems, physical theft through corporate espionage, or other means. Misappropriation of proprietary information can also occur through other routes, including by our collaborators, licensees that do not comply with the terms of licenses, potential licensees that were ultimately not granted licenses, or other parties who reverse engineer our solutions. See also “Actual or perceived failures or breaches of our information and security systems, or those of our customers, suppliers or business partners, could expose us to losses.” If any of our confidential proprietary information were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position. We also protect our intellectual property through patent protection, particularly in our Optimized LED segment, but our patents do not cover all of our technologies, methods and systems and our competitors or others may design around our patented technologies. If any of our issued patents are found to be invalid or if any of our patent applications are rejected, our ability to exclude competitors from making, using, importing or selling the same or similar products as us could be compromised. Further, when we seek patent protection for a particular technology, there is no assurance that the applications we file will result in issued patents or that if patents do issue as a result that they will allow us to effectively block competitors creating competing technology. We also rely on trademark registrations and have registered, or have applied to register, those trademarks that we believe are important to our business with the USPTO and in many foreign jurisdictions. We cannot assure that our applications will be approved or that these registrations will prevent imitation, counterfeiting or other infringement of our name or the infringement of our other intellectual property rights. Third parties may also oppose our trademark applications and registrations or otherwise challenge our use of the trademarks. Imitation, unauthorized use, or misuse of our name or trademarks in a manner that projects lesser quality or carries a negative connotation of our brand image or services could have a material adverse effect on our business, financial condition and results of operations. To assert control over the use of our trademarks, we rely on contractual protections with our customers and we implement quality control measures and monitoring techniques intended to protect our trademarks from unauthorized use or other misuse. However, no assurances can be given that those contracts will not be breached, and we cannot be certain that the actions we have taken to establish, police and protect our trademarks or our resources will be adequate to prevent or detect infringing use by others. If disputes arise in the future, we may not be able to successfully resolve these types of conflicts to our satisfaction. In addition, because we conduct a substantial portion of our operations and sell a large percentage of our products outside of the United States, our ability to protect our intellectual property may be constrained. The laws of certain countries in which we operate our business or sell products may not protect proprietary rights to the same extent or in the same ways as the laws in the United States. As such, we may not be able to effectively leverage or defend our intellectual property rights in foreign countries and markets due to applicable intellectual property laws and procedures, which could undermine our business interests. It is also possible that certain of our suppliers or other partners will either not protect or not respect our intellectual property rights, and that we may have difficulty enforcing our intellectual property rights while maintaining our business relationships with those partners. Moreover, policing unauthorized use of our technologies, trade secrets and intellectual property may be difficult, expensive and time-consuming, particularly in foreign countries where the laws may not be as protective of intellectual property rights as those in the United States and where mechanisms for enforcement of intellectual property rights may be weak. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights. Our inability to secure or enforce our intellectual property rights could have a material adverse effect on our business, results of operations and financial condition. Legal proceedings and claims could have a material adverse effect on our business, results of operations or financial condition. We are currently involved, and may in the future become involved, in legal proceedings, claims or government and administrative investigations, including any identified under “Item 3. Legal Proceedings.” For example, from time to time, third parties may assert claims against us alleging infringement of their intellectual property rights on technologies that are important to our business. In addition, litigation or other actions may be necessary to protect our intellectual property rights, to determine the validity and scope of the proprietary rights of others or to defend 35
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against third party claims of infringement and/or invalidity. The steps we take to prevent misappropriation, infringement or other violations of the intellectual property of others may not be successful. For instance, there may be issued patents held by third parties of which we are not aware, that if found to be valid and enforceable, could be alleged to be infringed by our current or future technologies or products. There may also be pending patent applications of which we are not aware, that may result in issued patents, which could be alleged to be infringed by our current or future technologies or products. Litigation and other legal and administrative processes, whether as plaintiff, defendant or otherwise, could result in substantial costs and diversion of resources and management attention and could have a material adverse effect on our business, results of operations and financial condition, whether or not such litigation or other processes are ultimately determined in our favor. In the event of an adverse result in, or a settlement of, a litigation matter, we could be required to pay substantial damages or settlement amounts; cease the manufacture, use, import and sale of certain products or components; expend significant resources to develop or acquire rights to use non-infringing technology; and/or discontinue the use of certain processes or obtain licenses and pay one-time fees and/or on-going royalties to use the infringing or allegedly infringing technology. The occurrence of any of the foregoing could result in unexpected expenses or require us to recognize an impairment of our assets, which would reduce the value of our assets and increase our expenses. We may be required to pay royalties or obtain licenses to sell certain products. The markets in which we operate are constantly undergoing rapid technological change and evolving industry standards. From time to time, third parties may claim that we are infringing upon technology to which they have proprietary rights and that we require a license to manufacture and/or sell certain of our products. If we are unable to supply certain products at competitive prices due to royalty payments we are required to make or are unable to supply them at all because we were unable to secure a required license, our customers might make claims against us, cancel orders or seek other suppliers to replace us. Any of these outcomes could have a material adverse effect on our business, results of operations and financial condition. The anticipated benefits of the U.S. Domestication may not be realized. On June 30, 2025, we consummated the U.S. Domestication. We may not realize the anticipated benefits of the U.S. Domestication. The achievement of such benefits is, in many significant respects, subject to factors beyond our control, including the responses of third parties with whom we conduct business, the terms of future contractual relationships, and the reactions of investors. Additionally, the anticipated benefits from the U.S. Domestication may not outweigh the direct and indirect costs and expenses incurred in connection with the transaction. Failure to realize those benefits could have a material and adverse effect on our business, results of operations, or financial condition. The U.S. Domestication may adversely impact our effective tax rate. Although we do not currently expect the U.S. Domestication to increase our effective tax rate, there is a risk that our effective tax rate may nonetheless increase following the U.S. Domestication. Our effective tax rate could change materially after the U.S. Domestication, which may adversely affect our financial results, including our earnings and cash flow in future periods, and may fluctuate significantly from period to period. Our effective tax rate is based upon the application of currently applicable income tax laws, regulations and treaties, as well as current judicial and administrative interpretations of those rules in various jurisdictions, including jurisdictions outside the United States. In light of these factors, there can be no assurance that our effective tax rate will not increase in future periods, including as a result of and following the U.S. Domestication. Moreover, U.S. tax laws significantly limit the ability of U.S. corporations to redomicile outside of the United States. Accordingly, if our effective tax rate were to increase as a result of the U.S. Domestication, our business and financial performance could be adversely affected. Changes in tax laws or potential adjustments by tax authorities could materially increase our tax expense. We are a multinational company subject to taxation in multiple jurisdictions. Our future effective tax rates could be adversely affected by various factors, including the resolution of tax audits with tax authorities in the United States and abroad; adjustments to income taxes upon finalization of various tax returns; increases in non-deductible 36
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expenses for tax purposes, such as write-offs of acquired in-process research and development or impairments of goodwill related to acquisitions; changes in available tax credits; changes in tax laws, regulations, or tax rates; changes in the interpretation or application of tax laws; fluctuations in the proportion of net sales or earnings generated in countries with particularly high or low statutory tax rates; changes in tax exemptions available in certain jurisdictions or in connection with certain transactions; or changes in the valuation of our deferred tax assets and liabilities. Taxable income in any jurisdiction depends in part on whether local tax authorities accept our operational practices and intercompany transfer pricing as being conducted on an arm’s-length basis. Due to inconsistencies in how taxing authorities apply the arm’s-length standard and the limited protection provided by treaties, transfer pricing challenges by tax authorities could, if successful, substantially increase our income tax expense. While we currently benefit from preferential tax treatment in certain foreign jurisdictions, most notably Malaysia, such treatment is contingent upon our continued compliance with specific conditions and may be subject to change. Further changes in tax laws could arise as a result of the base erosion and profit shifting project that was undertaken by the Organisation for Economic Co-operation and Development (“OECD”). For example, the OECD introduced an international tax framework under Pillar Two, which establishes a global minimum tax rate of 15%. This framework has been adopted by several jurisdictions, including those in which we operate, effective January 1, 2024, with additional jurisdictions expected to implement similar measures. The effect of Pillar Two taxes is applicable for our fiscal year ended August 29, 2025. We continue to monitor developments in jurisdictions that are expected to implement Pillar Two in the future, and we have evaluated the potential impact of the enactment of Pillar Two by such jurisdictions on our consolidated financial statements. We regularly assess the likelihood of outcomes resulting from tax examinations in the United States and abroad to determine the adequacy of our provision for taxes and have recorded reserves for potential adjustments that may result from ongoing examinations. We believe these estimates are reasonable; however, there can be no assurance that the final determination of any examinations will align with our estimates. Any significant variance between the results of tax examinations and our estimates, any failure to continue to receive any beneficial tax treatment in any of our foreign locations or any increase in our future effective tax rates due to any of the factors set forth above or otherwise could reduce our net income and have a material adverse effect on our business, results of operations, and financial condition. Our ability to use our tax attributes is limited. As of August 29, 2025, we had U.S. federal and state net operating loss carryforwards of $23.6 million and $36.2 million, respectively. If not utilized, the federal net operating loss carryforwards will begin to expire in 2027. State net operating loss carryforwards of $35.9 million will begin to expire in 2031, while the remaining state net operating loss carryforwards do not expire. In addition, we have U.S. federal and state research and development credit carryforwards of $8.5 million and $4.5 million, respectively, and $1.2 million of foreign tax credit carryforwards. If not utilized, the federal research and foreign tax credits will begin to expire in 2032. If not utilized, $2.0 million of state credits will begin to expire in 2030, while $2.5 million of state credits do not expire. In addition, we have Section 163(j) interest expense carryforwards of $99.0 million from the acquisition of Stratus Technologies and $318.5 million from the U.S. Domestication, both of which do not expire. Net operating loss carryforwards in Hong Kong of $29.6 million do not expire. Federal and state tax attributes can be subject to an annual limitation under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable state tax laws. Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change taxable income may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by certain “5-percent shareholders” (including groups of stockholders) that exceeds 50 percentage points (by value) over a rolling three-year period. Similar rules may apply under state tax laws. Our net operating loss, tax credit and Section 163(j) interest expense carryforwards are subject to limitations per Sections 382 and 383 of the Code. We have experienced ownership changes in the past and may experience ownership changes in the future as a result of transactions involving our common stock, some of which may be outside of our control. Consequently, our ability to utilize our pre-change net operating loss, tax credit, and Section 163(j) interest expense carryforwards to offset post-change U.S. federal and state taxable income could be further limited. 37
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We reversed the valuation allowance for a significant portion of our deferred tax assets in the fourth quarter of 2023, and we may not be able to realize these assets in the future. Our deferred tax assets may also be subject to additional valuation allowances, which could have a material adverse effect on our business, results of operations, and financial condition. Determining whether a valuation allowance for deferred tax assets is appropriate requires significant judgment and an evaluation of all positive and negative evidence. At each reporting period, we assess the need for, or the adequacy of, a valuation allowance against our deferred tax assets. In the fourth quarter of fiscal year 2025, based on the weight of all the positive and negative evidence, we concluded that it was more likely than not that we would be unable to realize the benefit of interest expense carryforward attributes inherited as part of the U.S. Domestication. Therefore, we recorded a valuation allowance against that deferred tax asset in the same period that it was inherited. In the fourth quarter of fiscal year 2023, based on the weight of all the positive and negative evidence, we concluded that it was more likely than not that we will realize certain federal and state net deferred tax assets based on three significant pieces of positive evidence occurring during the year ended August 25, 2023: (1) achieving three-year cumulative earnings, (2) recent use of deferred tax assets including available tax attribute carryforwards and (3) forecasted growth and profitability. Therefore, we reversed the valuation allowance on those deferred tax assets in fiscal year 2023. Our conclusion that it is more likely than not that we will realize certain federal and state net deferred tax assets considers our estimate of future taxable income. Our estimate of future taxable income is based on internal projections which primarily consider historical performance, but also include various internal estimates and assumptions as well as certain external data. We believe all of these inputs to be reasonable, although inherently subject to judgment. If actual results differ significantly from these estimates of future taxable income, we may need to reestablish a valuation allowance for some or all of our deferred tax assets. Establishing an allowance on our net deferred tax assets could have a material adverse effect on our business, results of operations and financial condition. We could incur substantial costs or liabilities as a result of violations of environmental laws. Our operations and properties are subject to various federal, state, local, foreign and international environmental laws and regulations governing, among other things, environmental licensing and registries, protection of flora and fauna, air and noise emissions, use of water resources, wastewater discharges, management and disposal of hazardous and non-hazardous materials and wastes, reverse logistics (take-back policy) and remediation of releases of hazardous materials. Our failure to comply with present and future requirements, or the management of known or identification of new or unknown contamination, could cause us to incur substantial costs, including cleanup costs, indemnification obligations, damages, compensations, fines, suspension of activities and other penalties, investments to upgrade our facilities or change our processes or curtailment of operations. Additionally, certain environmental laws may impose liability without regard to fault or the legality of the original conduct. The identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations or other unanticipated events may arise in the future and give rise to material environmental liabilities and related costs. The occurrence of any of the foregoing could have a material adverse effect on our business, results of operations and financial condition. We may be unable to successfully manage environmental or social sustainability initiatives, in whole or in part, which could lead to less opportunity for us to have sustainability investors and partners and could negatively impact our reputation or options for capital acquisition. There is scrutiny from investors, customers, policymakers, and other stakeholders regarding companies’ management of climate change, human capital, and various other environmental and social sustainability matters, and we expect to be subject to further scrutiny as a listed company with growing operations. We engage in various voluntary initiatives (including disclosures) to manage such matters or to respond to stakeholder 38
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expectations, but such initiatives can be costly and may not have the desired effect. Our management of climate, human capital, and other sustainability matters continues to evolve rapidly, in many instances due to factors that are out of our control, and we cannot guarantee that our approach will align with the expectations or preferences of any particular stakeholder. For example, we may ultimately be unable to complete certain initiatives or reach certain targets or goals. Similarly, many sustainability actions or statements rely on methodologies, standards, technology, and data that continue to evolve, including in ways we cannot predict. In recent years, there have been increasingly sophisticated complaints against companies for alleged deficiencies in their disclosures, methodologies, or actions related to sustainability matters. Various stakeholders also have different, and at times conflicting, expectations. From a regulatory perspective, various policymakers have adopted (or are considering adopting) requirements for companies to undertake various disclosures or other actions on climate, human capital or other sustainability matters. These requirements, however, are not uniform, which can increase the cost and complexity of compliance and associated risks. Moreover, some policymakers have sought to constrain companies’ consideration of various environmental and social sustainability matters, Advocates and opponents of such matters are increasingly resorting to activism, including litigation, to advance their perspectives. Addressing stakeholder expectations and regulatory requirements entails costs and any failure to successfully navigate such expectations, including any evolving interpretations of existing governmental laws, may result in reputational harm (including under various ratings or certification programs), loss of customers or contracts, regulatory or investor engagement, or other adverse impacts to our business. Increased regulation and increased stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks we face associated with environmental, social and regulatory matters. Additionally, many of our customers and suppliers are subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us. Our worldwide operations, and those of our suppliers, business partners and customers, may be disrupted by events outside of our control, including the effects of climate change, natural disasters, man-made disasters or other events, as well as societal and governmental responses to such events. Our operations in different parts of the world could be subject to natural disasters or severe weather conditions, or an accident that damages or otherwise adversely affects any of our operations, assets or infrastructure, or the operations, assets or infrastructure of one or more of our suppliers, business partners or customers. Earthquakes, hurricanes, monsoons, cyclones, droughts, extreme wind conditions, severe storms, heatwaves, wildfires and floods could damage our property and assets, require us to shut down operations or have either of those effects on third parties on whom we rely. For example, our U.S. headquarters in Fremont, California, manufacturing and research and development facility in Newark, California and our Penguin Computing operations in Fremont, California are located near major earthquake fault lines. Our manufacturing facility in Penang, Malaysia is located in an area that is also prone to natural disasters, such as cyclones, monsoons and floods. In the event of a major earthquake, cyclone, monsoon or other natural or man-made disaster, we could experience business interruptions, destruction of facilities and/or loss of life, any of which could materially adversely affect our business. In addition, the outbreak of war, political unrest or terrorist activity, diseases, epidemics or pandemics in any of the locations in which we conduct business could severely disrupt our business or the business of our customers and suppliers, which could in turn materially adversely affect our business. Since a large percentage of our production is done in a small number of facilities, a disruption to operations could have a material adverse effect on our business, results of operations and financial condition. Climate change and other environmental and social pressures are expected to increase the intensity and frequency of many such disasters, as well as contribute to various chronic changes in the physical environment, such as sea-level rise or changes in ambient temperature or precipitation patterns, which may also adversely impact our or our third-parties’ operations. While we may take various actions to mitigate our business risks associated with climate change and other natural and catastrophic events, this may require us to incur substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk. For example, to the extent catastrophic events become more frequent, it may adversely impact the availability or cost of insurance. Additionally, we may be subject to risks associated with societal efforts to mitigate or otherwise respond to climate change, including but not limited to increased regulations and evolving stakeholder expectations. Changing 39
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market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations. Public health crises, such as pandemics, epidemics, or widespread outbreaks of infectious disease, have had, and could in the future have, an adverse effect on our business, financial condition and results of operations. The occurrence of pandemics, epidemics, or widespread outbreaks of infectious diseases, as well as the imposition of related public health measures and travel and business restrictions or other actions that may be taken by governmental authorities in an effort to contain such pandemics, epidemics or outbreaks, have had, and could in the future have, a material adverse effect on our business, customer relationships, and cash flows. For example, the COVID-19 pandemic adversely impacted sales volumes of certain of our product lines and also disrupted our product development, marketing and corporate development activities and adversely affected the economies and financial markets within many countries, including countries in which we conduct business. While we have developed, and continue to develop, strategies to help mitigate the negative effects of potential public health crises on our business and operations, such efforts may prove to be insufficient. The duration and extent of the impact of any public health crises cannot be accurately assessed or predicted at this time, and could adversely impact our business, financial condition, and results of operations. Risks Related to Our International Operations Our business is subject to the risks generally associated with international business operations. Sales outside of the United States accounted for 43%, 43% and 39% of our net sales in 2025, 2024 and 2023, respectively. In addition, a significant portion of our product design and manufacturing is performed at our facilities in Malaysia and China, and a significant amount of our product design activities are performed in Taiwan and India. As a result, our business is and will continue to be subject to the risks generally associated with international business operations in Malaysia, China, Taiwan, India and other foreign countries, including: • compliance with numerous changing, and sometimes conflicting legal regimes on matters as diverse as tax, anticorruption, import/export controls and quotas, local manufacturing requirements, trade restrictions, tariffs, taxation, sanctions, immigration, internal and disclosure control obligations, securities regulation, anti-competition, data privacy, employment regulations and labor relations, and labor and human rights laws and expectations; • changes in social, political and economic conditions, including as a result of changes of administration, political regimes or sentiment in countries in which we operate or with which we do business; • transportation delays; • power and other utility shutdowns or shortages; • limitations on foreign investment; • disruptions in or lack of adequate infrastructure; • challenges protecting intellectual property and trade secrets; • exchange or currency controls and fluctuations, restrictions on currency convertibility and volatility of foreign exchange markets; • increased trade wars; • corruption or adverse political situations; • governmental intervention in local economies, industries, or the operations of specific companies, including us or our competitors; • changes or instability in local labor conditions, including strikes, work stoppages, protests and changes in employment regulations, increases in wages and the conditions of collective bargaining agreements; • compliance with travel restrictions, stay-at-home or work location conditions or other government or voluntary restrictions relating to epidemics or pandemics; • difficulties recruiting, employing and retaining qualified personnel to manage and oversee our local operations, sales and other activities; • difficulties in managing and overseeing employees and operations in locations far from senior management, which could result in compliance, control or other issues; • difficulties in obtaining governmental approvals and extension of existing incentives; 40
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• difficulties in collecting accounts receivable; • expropriation and nationalization of our assets in a particular jurisdiction; and • restrictions, or increases in existing tax rates, on repatriation of cash, dividends or profits. Some of the foreign countries in which we do business or have operations have been subject to social and political instability in the past, and interruptions in operations could occur in the future. Our net sales, results of operations and financial condition could be adversely affected by any of the foregoing factors. We are subject to the taxation requirements of the jurisdictions in which we operate, and if we fail to qualify for certain tax incentives or to comply with local tax regulations, we may suffer financial losses. We are subject to changes in tax laws, treaties and regulations or the interpretation or enforcement thereof in the Cayman Islands, United States, Malaysia, Ireland and other jurisdictions in which we or any of our subsidiaries operate or are resident. We have structured our operations in a manner designed to maximize our benefit from various government incentives and/or tax holidays extended to manufacturers in Malaysia to encourage investment and employment, and to minimize our tax liability in other jurisdictions such as the United States to the extent permitted by law. Our interpretations and conclusions regarding these tax incentives are not binding on any taxing authority. Additionally, we have been in the past and may in the future be subject to tax assessments by the relevant authorities in the jurisdictions in which we operate and we have been in the past and may in the future be involved in legal disputes with regulatory or governmental authorities relating to these assessments. If our assumptions about, or interpretation or implementation of, tax and other laws are incorrect; if tax laws or regulations are substantially modified or rescinded; if the tax incentives from which we benefit in the jurisdictions in which we operate are substantially modified or rescinded; if we fail to meet the conditions of any of the tax incentives; or if we do not prevail in disputes with tax authorities, we could suffer material adverse tax and other financial consequences including owing significant amounts of taxes and penalties that would increase our expenses, reduce our profitability and adversely affect our cash flows, results of operations and financial condition. Changes in foreign currency exchange rates could materially adversely affect our business, results of operations or financial condition. Our international sales and our operations in foreign countries expose us to certain risks associated with fluctuating currency values and exchange rates. Because some of our sales are denominated in U.S. dollars, increases in the value of the U.S. dollar could increase the price of our products so that they become relatively more expensive to customers in a particular country, possibly leading to a reduction in sales and profitability in that country. Volatility of currencies in countries where we conduct business, most notably the U.S. dollar, Chinese renminbi, Malaysian ringgit, Japanese yen, euro, British pound, South Korean won, New Taiwan dollar, Hong Kong dollar and South African rand have had and may in the future have an effect on our liquidity and results of operations. Gains and losses on the conversion to U.S. dollars of the associated monetary assets and liabilities, as well as profits and losses incurred in certain countries, may contribute to fluctuations in the value of our assets and our results of operations. We also have costs and expenses that are denominated in foreign currencies, and decreases in the value of the U.S. dollar could result in increases in such costs that could have a significant negative impact on our results of operations. In addition, fluctuating values between the U.S. dollar and other currencies can result in currency gains which are used in the computation of foreign taxes and can increase foreign taxable income. If enacted, exchange controls may limit our ability to receive dividends and other distributions from our foreign subsidiaries. We conduct all of our operations through subsidiaries and are dependent on dividends or other intercompany transfers of funds from our subsidiaries to meet our obligations. If enacted, restrictions on intercompany dividends or other distributions in certain jurisdictions could have a material adverse effect on our ability to transfer funds from certain subsidiaries. Certain foreign jurisdictions permit temporary restrictions on conversions of currency into foreign currencies and on remittances to foreign investors of proceeds from their investments under certain circumstances. Any imposition of restrictions on conversions and remittances could hinder or prevent us from converting foreign currencies into U.S. dollars and remitting dividends, distributions or the proceeds from operations. In addition, an increase in the existing tax rates applicable to the remittance of dividends or any other 41
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intercompany transfer of funds, as well as the enactment of any new tax related to such transfers, may either affect our ability to transfer funds from our subsidiaries or significantly reduce the amounts subject to transfer. High rates of inflation could have a material adverse effect on our business, results of operations and financial condition. If countries where we operate experience substantial inflation or deflation in the future, our business may be materially adversely affected. In addition, we may not be able to adjust the prices we charge our customers to offset the impact of inflation on our expenses, leading to an increase in our expenses and a reduction in our net operating margin. This could have a material adverse impact on our business, results of operations and financial condition. We may have limited legal recourse under the laws of China if disputes arise under our agreements with third parties. The Chinese government has enacted certain laws and regulations dealing with matters such as corporate organization and governance, foreign investment, currency control, commerce, taxation and trade. However, the implementation, interpretation and enforcement of these laws and regulations is still evolving, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If disputes arise under our agreements with other parties doing business in China, we face the risk that such party may breach any such agreement or otherwise engage in conduct relating to their relationship with us that could otherwise give rise to liability under U.S. law. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government. Any rights we may have to specific performance, or to seek an injunction under Chinese law, in either of these cases, may be limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Our Debt Our indebtedness could impair our financial condition and harm our ability to operate our business. We have a significant amount of debt outstanding as of August 29, 2025, including the debt described in “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.” Our indebtedness may have important consequences, including, but not limited to, the following: • increasing our vulnerability to general economic downturns and adverse industry conditions; • limiting our ability to obtain additional financing; • requiring us to dedicate a significant portion of our cash flows from operations to the payment of interest and principal on our debt, which would reduce the funds available to us for our working capital, capital expenditures or other general corporate requirements; • increasing our exposure to rising interest rates from variable rate indebtedness; • diluting the interests of our existing stockholders to the extent common stock are issued upon conversion of our Convertible Senior Notes (as defined below); • limiting our flexibility in planning for, or reacting to, changes in our business and industry; • placing us at a competitive disadvantage compared to our competitors with less indebtedness or more liquidity; and • limiting our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes. Our ability to make scheduled payments on, to refinance or to pay off our debt obligations when due depends on the financial condition and operating performance of our business. This, to a certain extent, is subject to prevailing economic and competitive conditions, including general conditions prevailing in the financial markets and global economy, and to certain financial, business, regulatory and other factors beyond our control, including the risks described herein. Our business may not generate sufficient cash flows from operations, and future borrowings may not be available to us under our debt arrangements, including the 2025 Credit Agreement (as defined below), in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. In addition, certain of our debt is subject to terms that may require the use of significant cash in the future under certain circumstances. 42
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For example, holders of our 2.25% Convertible Senior Notes due 2026 (the “2026 Notes”), our 2.00% Convertible Senior Notes due 2029 (the “2029 Notes”) and our 2.00% Convertible Senior Notes due 2030 (the “2030 Notes,” collectively, the “Convertible Senior Notes”), may, subject to a limited exception, require us to repurchase their Convertible Senior Notes following a “fundamental change,” as described in more detail in “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes.” In addition, all conversions of the Convertible Senior Notes will be settled partially or entirely in cash. We may not have enough available cash or be able to obtain financing at the time we are required to repurchase the Convertible Senior Notes or pay the cash amounts due upon conversion. Applicable law, regulatory authorities and the agreements governing our other indebtedness, including the 2025 Credit Agreement, may restrict our ability to repurchase the Convertible Senior Notes. Our failure to repurchase the Convertible Senior Notes or to pay the cash amounts due upon conversion when required will constitute a default under the relevant indenture. A default under such indenture or the fundamental change itself could also lead to a default under agreements governing our other indebtedness, which may result in that other indebtedness becoming immediately payable in full. We may not have sufficient funds to satisfy all amounts due under the other indebtedness and the Convertible Senior Notes. If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance all or a portion of our debt or sell certain of our assets on or before the maturity of our debt. We may not be able to restructure or refinance any of our debt on commercially reasonable terms, or at all, which could cause us to default on our debt obligations and impair our liquidity, which in turn could cause the acceleration of other indebtedness under certain of our debt agreements which could exacerbate our liquidity problems. Any refinancing of our indebtedness will likely be at higher interest rates in the current environment and may require us to comply with more onerous covenants that could further restrict our business operations. If we are not able to repay our debt obligations as they become due, or if we are not able to refinance or restructure our debt obligations before they become due, this could cause us to default on our debt obligations and impair our liquidity. In addition, if our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets or seek additional capital. These alternative measures may not be available to us, may not be successful and may not permit us to meet our scheduled debt service obligations, which could result in substantial liquidity problems. The 2025 Credit Agreement restricts our ability to dispose of our assets and use the proceeds from the disposition. We may not be able to consummate any such disposition or dispositions or to obtain the proceeds which we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. Any of these circumstances could have a material adverse effect on our business, results of operations and financial condition. Our credit agreement may limit our flexibility in operating our business. Penguin Solutions Cayman, and certain of our subsidiaries, are party to a Credit Agreement dated as of June 24, 2025 (the “2025 Credit Agreement”) as described in more detail in “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.” This agreement contains, and future credit agreements may contain, restrictive covenants that limit our ability to engage in specified transactions and prohibit us from voluntarily prepaying certain of our other indebtedness. For instance, the covenants in the 2025 Credit Agreement limit the ability of Penguin Solutions Cayman and certain of its subsidiaries to, among other things: • incur additional indebtedness; • create liens on assets; • engage in mergers or consolidations; • sell assets; • pay dividends, make distributions or repurchase capital stock; • make investments, loans or advances; • repay or repurchase certain subordinated debt (except as scheduled or at maturity); • create restrictions on the payment of dividends or other amounts to us from our restricted subsidiaries; • make certain acquisitions; • engage in certain transactions with affiliates; and • amend material agreements governing our subordinated debt and fundamentally change our business. 43
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Under the 2025 Credit Agreement, we also are required to satisfy and maintain certain specified financial ratios. Our ability to meet those financial ratios could be affected by events beyond our control, and there can be no assurance that we will meet those ratios. The failure to comply with any of these covenants would cause a default under the relevant credit agreement. A default, if not waived, could result in acceleration of the outstanding indebtedness under the 2025 Credit Agreement as well as under the Convertible Senior Notes, in which case such indebtedness would become immediately due and payable. If any default occurs, we may not be able to pay our debt or borrow sufficient funds to refinance it. Even if new financing is available, it may not be available on terms that are acceptable to us. Complying with these covenants may cause us to take actions that we otherwise would not take or not take actions that we otherwise would take. Provisions in the Convertible Senior Notes and their respective indentures could delay or prevent an otherwise beneficial takeover of us. Certain provisions in the Convertible Senior Notes and their respective indentures could make a third-party attempt to acquire us more difficult or expensive. For example, if a takeover constitutes a “fundamental change”, then noteholders will have the right to require us to repurchase their Convertible Senior Notes for cash. In addition, if a takeover constitutes a “make-whole fundamental change” (as defined in the relevant indenture), then we may be required to temporarily increase the conversion rate. In either case, and in other cases, our obligations under the Convertible Senior Notes and their respective indentures could increase the cost of acquiring us or otherwise discourage a third party from acquiring us, including in a transaction that noteholders or holders of our common stock may view as favorable. Our capped call transactions may affect the value of our debt and common stock. In connection with the pricing of the Convertible Senior Notes, we entered into privately-negotiated capped call transactions (“Capped Calls”) with certain financial institutions. The Capped Calls are expected generally to reduce the potential dilution to our common stock upon any conversion of the Convertible Senior Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Senior Notes, as the case may be, with such reduction and/or offset subject to a cap. In connection with establishing their initial hedges of the Capped Calls, the Capped Call counterparties or their respective affiliates likely purchased our common stock concurrently with the pricing of the Convertible Senior Notes. In addition, the Capped Call counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions and prior to the maturity of the Convertible Senior Notes (and are likely to do so during any Observation Period (as defined in the relevant indenture) related to a conversion of Convertible Senior Notes). This activity could cause or avoid an increase or a decrease in the market price of our common stock or the Convertible Senior Notes. The potential effect, if any, of these transactions and activities on the trading price of our common stock or the Convertible Senior Notes will depend in part on market conditions. Any of these activities could adversely affect the trading price of our common stock or the Convertible Senior Notes. Risks Related to Our Common Stock The trading price of our common stock has been and may continue to be volatile. The market price of the securities of technology companies can be especially volatile. Broad market and industry factors may adversely affect the market price of our common stock regardless of our actual operating performance. The market price of our common stock has been in the past and could be in the future subject to wide fluctuations in response to the risk factors listed in this section and others beyond our control, including those risks described herein as well as: • the failure of financial analysts to cover our company; • negative or inaccurate coverage by financial analysts; 44
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• changes in financial estimates by financial analysts, any failure by us to meet or exceed any of these estimates or changes in the recommendations of any financial analysts that elect to follow our company or our competitors; • changes in the market valuations of other companies operating in our industry; • announcement of, or expectation of, additional financing efforts or potential collaborations; • future sales of our common stock, including common stock issuable upon conversion of our Issued CPS; • stock price and volume fluctuations attributable to inconsistent trading volume levels of our common stock; • the impact of the U.S. Domestication; and • general economic and market conditions. In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of certain companies’ securities, securities class action litigation has been instituted against these companies. This litigation, if instituted against us, could adversely affect our financial condition or results of operations. If our estimates or judgments relating to our critical accounting estimates are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in “PART II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to business acquisitions, income taxes, inventory valuation, impairment of long-lived assets, goodwill and identified intangible assets and revenue recognition. If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations may be adversely affected and may fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock. Future sales of our common stock in the public market, or the perception that these sales may occur, could cause our stock price to fall. Sales of substantial amounts of our common stock in the public market, including sales of our common stock by our directors or officers, or sales by us or our affiliates pursuant to one or more effective registration statements or shares of common stock issuable upon conversion of our Issued CPS, or otherwise, or the perception that these sales may occur, could cause the market price of our common stock to decline. This could also impair our ability to raise additional capital through the sale of our equity securities. Under our amended and restated certificate of incorporation, we are authorized to issue up to 200 million shares of common stock, of which 52.7 million shares of common stock were outstanding as of August 29, 2025. In addition, certain of our existing stockholders, convertible preferred stockholders, and holders of options, restricted stock unit awards or performance-based awards, in the event they become exercisable, have the right to demand that we file a registration statement covering the offer and sale of their common stock and shares issuable under such options and awardsunder the Securities Act and to require us to include their securities on a registration statement filed by us. For instance, on August 27, 2025, we filed a registration statement for the resale from time to time of up to 6,096,103 shares of our common stock by the selling securityholder (the “Selling Securityholder”), consisting of 6,096,103 shares of common stock initially issuable upon the conversion of the Issued CPS held by the Selling Securityholder. Pursuant to their registration rights, following the expiration of the initial lock-up term and subject to the terms of the lock-up provisions under the Investor Agreement (as defined below), the Selling Securityholder may, from time to time, sell, transfer, or otherwise dispose of any or all of their securities. The dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. In the 45
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future, we may also issue securities in connection with investments, acquisitions, or capital raising activities, which could constitute a material portion of our then-outstanding shares of common stock. We cannot predict the size of any future sales or issuances of our common stock or the effect, if any, that such future sales and issuances would have on the market price of our common stock. Any such issuance of additional securities or any exercise of registration rights or the prospect of any such sales, could materially impact the market price of our common stock and could impair our ability to raise capital through future sales of equity securities. Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could delay, defer, discourage, or prevent a takeover attempt. Our amended and restated certificate of incorporation and amended and restated bylaws contain, and the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”) contains, provisions which could have the effect of delaying, deferring, discouraging or preventing acquisitions of the Company that some stockholders may favor. These provisions provide for the following: • a classified board of directors with three-year staggered terms, who can only be removed for cause, and only by the affirmative vote of the holders of at least 66 2/3% of the voting power of all then-outstanding voting stock entitled to vote at an election of directors, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to set the size of the board of directors and to elect a director to fill a vacancy, however occurring, including by an expansion of the board of directors, which prevents stockholders from being able to fill vacancies on our board of directors; • the ability of our board of directors to authorize the issuance of shares of undesignated preferred stock and to determine the price and other terms of those shares, including voting or other rights or preferences, without stockholder approval, which could impede the success of any attempt to change control of the Company and be used to significantly dilute the ownership of a hostile acquirer; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • in addition to our board of directors’ ability to adopt, amend, or repeal our amended and restated bylaws, our stockholders may adopt, amend, or repeal our amended and restated bylaws only with the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of voting stock of the Company entitled to vote generally in an election of directors; • the required approval of at least 66 2/3% of the voting power of all then outstanding shares of the Company entitled to vote thereon, voting together as a single class, to adopt, amend, or repeal certain provisions of our amended and restated certificate of incorporation; • the requirement that any action required or permitted to be taken by its stockholders must be effected at a duly called annual or special meeting of its stockholders and may not be taken by written consent in lieu of a meeting; however, any action required or permitted to be taken by the holders of our convertible preferred stock, voting separately as a series or class, may be taken by written consent; • the requirement that a special meeting of stockholders may be called only by or at the direction of our board of directors, the chairperson of our board of directors, or our chief executive officer or president, thus prohibiting a stockholder from calling a special meeting; • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to bring other business before a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us; • certain litigation against us can only be brought in Delaware; and • the limitation of liability of, and provision of indemnification to, our directors and officers. These provisions, alone or together, could delay, defer, discourage or prevent hostile takeovers and changes in control or changes in our management. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire. 46
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As a Delaware corporation, we are also subject to provisions of the Delaware General Corporation Law, including Section 203 thereof, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our amended and restated certificate of incorporation, amended and restated bylaws or the Delaware General Corporation Law that has the effect of delaying, deferring, discouraging or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain our future earnings, if any, for the foreseeable future, to repay indebtedness and to fund the development and growth of our business. We do not intend to pay any dividends to holders of our common stock. In addition, certain of our agreements, including the 2025 Credit Agreement, the Securities Purchase Agreement that we entered into with SKT on July 14, 2024 (the “SKT Purchase Agreement”) and the Certificate of Designation of Convertible Preferred Stock we executed and adopted on June 27, 2025 (the “CPS Delaware Certificate of Designation”) contain restrictions on our ability to pay dividends. As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in our common stock. Holders of shares of Issued CPS are entitled to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option. Shares of Issued CPS are not redeemable upon or repurchased upon the election of the holders of Issued CPS. Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and our indemnification agreements that we have entered or intend to enter into with our directors and officers provide that: • we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful; • we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law; • we are required to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, except that such directors or officers will undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification; • the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons; and • we may not retroactively amend our amended and restated bylaw provisions to reduce our indemnification obligations to directors, officers, employees, and agents. Our directors’ and officers’ liability insurance policies may not be available to us in the future at a reasonable rate, may not cover all potential claims for indemnification, and may not be adequate to indemnify us for all liability that may be imposed. Our amended and restated certificate of incorporation provides for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, and that the federal district courts of the United States will be the 47
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exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. Our amended and restated certificate of incorporation provides that unless we consent in writing to the selection of an alternative forum, (a) the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court for the District of Delaware or other state courts of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on behalf of the Company, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder to the Company or our stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws (as either may be amended from time to time), or (iv) any action, suit or proceeding asserting a claim against the Company that is governed by the internal affairs doctrine; and (b) the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint. Any person or entity purchasing or otherwise acquiring any interest in any security of the Company will be deemed to have notice of and consented to these provisions. Nothing in our amended and restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Exchange Act, from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law. We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi- forum litigation. If a court were to find the choice of forum provision that is contained in our amended and restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, results of operations, and financial condition. For example, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act. The choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our current or former director, officer or stockholder to the Company, which may discourage such claims against us or any of our current or former director, officer or stockholder to the Company and result in increased costs for investors to bring a claim. General Risk Factors Worldwide economic and political conditions as well as other factors may adversely affect our operations and cause fluctuations in demand for our products. Uncertainty in global economic and political conditions poses a risk to the overall economy, as consumers and businesses have made it difficult for customers, suppliers and us to accurately forecast and plan future business activities. Declines in the worldwide semiconductor market, economic conditions or consumer confidence would likely decrease the overall demand for our products. Other factors that could cause demand for our products to fluctuate include: • a downturn in the computing, networking, communications, storage, aerospace, government, mobile or industrial markets; • changes in consumer confidence caused by changes in market conditions, including changes in the credit markets, expectations for employment and inflation and energy prices; • changes in the level of customers’ components inventory; • competitive pressures, including pricing pressures, from companies that have competing products, architectures, manufacturing technologies and marketing programs; • changes in technology or customer product needs; • strategic actions taken by our competitors; 48
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• market acceptance of our products; • changes in prevailing or available interest rates or liquidity of the domestic capital and lending markets; • exchange rates and currency controls and restrictions on the movement of capital out of country; • recent and potential bank failures; • inflation; and • changes to tax, trade and regulatory policies, including as a result of changes in administration. If demand for our products decreases, our manufacturing or assembly and test capacity could be underutilized, and we may be required to record an impairment on our long-lived assets, including facilities and equipment, as well as intangible assets, which would increase our expenses. In addition, if product demand decreases or we fail to forecast demand accurately, we could be required to write-off inventory or record underutilization charges, which would have a negative impact on our profitability. If product demand increases more or faster than anticipated, we may not be able to add manufacturing or assembly and test capacity fast enough to meet market demand. These changes in demand for our products, and changes in our customers’ product needs, could have a variety of negative effects on our competitive position and our financial results, and in certain cases, may reduce our net sales, increase our costs, lower our profit margins or require us to recognize impairments of our assets. The occurrence of any of the foregoing could have a material adverse effect on our business, results of operations and financial condition. We and others are subject to a variety of laws, regulations, or industry standards that may have a material adverse effect on our business, results of operations or financial condition. Our business is subject to regulation by various U.S. federal and state governmental agencies. Such regulation includes, without limitation, the radio frequency emission regulatory activities of the Federal Communications Commission, the antitrust regulatory activities of the Federal Trade Commission (the “FTC”) and the Department of Justice, the consumer protection laws of the FTC, the import/export regulatory activities of the Department of Commerce, the product safety regulatory activities of the Consumer Products Safety Commission, the regulatory activities of the Occupational Safety and Health Administration, the environmental regulatory activities of the Environmental Protection Agency, the labor regulatory activities of the Equal Employment Opportunity Commission, the export control regulatory activities of the Department of State and tax and other regulations by a variety of regulatory authorities in each of the areas in which we conduct business. We are also subject to similar, and in some cases additional, regulation in other countries where we conduct business, including import and export laws and foreign currency control. In certain jurisdictions, such regulatory requirements may be more stringent and complex than in the United States. We are also subject to a variety of U.S. federal and state employment and labor laws and regulations, including, without limitation, the Americans with Disabilities Act, the Federal Fair Labor Standards Act, the Worker Adjustment and Restructuring Notification Act and other regulations related to working conditions, wage-hour pay, overtime pay, employee benefits, anti-discrimination and termination of employment. Like other companies operating or selling internationally, we face risks of non-compliance with the U.S. Foreign Corrupt Practices Act (the “FCPA”) and other laws which generally prohibit direct and indirect improper payments to foreign government officials and political parties for the purpose of securing an unfair business advantage. In addition, because we have operations and suppliers in China and adjacent jurisdictions, we have exposure and risks associated with the Uyghur Forced Labor Prevention Act (“UFLPA”) and other global laws against forced labor. The UFLPA prohibits the importation of articles, merchandise, apparel and goods mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (Xinjiang) of the People’s Republic of China (PRC), or by entities identified by the U.S. government on the UFLPA Entity List. Forced labor concerns have rapidly become a global area of interest and is a topic that will likely be subject to new regulations in the markets we operate within. If we fail to comply with these laws and regulations, we may be subject to detention, seizure and exclusion of imports, as well as penalties, costs and restrictions on export and import privileges that could have an adverse effect on our business, financial condition and results of operations. We are also subject to similar or even more restrictive anticorruption laws imposed by the governments of other countries where we do business, such as laws that prohibit commercial bribery, including the UK Bribery Act and the Malaysian Anticorruption Act. We make sales, are subject to government regulation and operate in countries known to present heightened risks of public corruption. Although we have implemented policies and controls to mitigate risks of non-compliance, our business activities create the risk of unauthorized conduct by one or more of our employees, consultants, customs brokers, freight forwarders, third party representatives or distributors that could 49
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be in violation of various laws including the FCPA or similar local regulations. In addition, we may be held liable for actions taken by such parties even if such parties themselves are not subject to the FCPA or similar laws. Investigations into allegations of such misconduct can be costly, and any determination that we have violated the FCPA or similar laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities that could have a material adverse effect on our business, results of operations and financial condition. Our China operations are subject to national, regional and local regulation. The regulatory environment in China continues to evolve, and officials in the Chinese government exercise broad discretion in deciding how to interpret and apply regulations. It is possible that the Chinese government’s current or future interpretation and application of existing or new regulations will negatively impact our China operations, result in regulatory investigations or lead to fines or penalties. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, disbarment from government projects, fines, damages, civil and criminal penalties or injunctions and reputational damage that could harm our business, results of operations and financial condition. In addition, from time to time we have received, and may receive in the future, correspondence from former employees and parties with whom we have done business, threatening to bring claims against us alleging that we have violated one or more regulations related to customs, labor and employment, foreign currency control or other laws or regulations. An adverse outcome in any litigation or proceeding related to such matters could require us to pay damages, attorneys’ fees and/or other costs. If any governmental sanctions were to be imposed, or if we were not to prevail in any civil action or criminal proceeding, our business, results of operations and financial condition could be materially adversely affected. In addition, responding to any litigation or action would likely result in a significant diversion of management’s attention and resources and a significant increase in professional fees. Our success depends on our ability to attract, retain and motivate highly skilled employees. Our future results of operations depend in significant part upon the continued contributions of our key senior management and technical personnel, many of whom hold critical institutional knowledge and expertise and would be difficult to replace. Our future results of operations also depend in significant part upon our ability to attract, train and retain qualified management, including for manufacturing and quality assurance, engineering, design, finance, marketing, sales and support. We are continually recruiting such personnel in various parts of the world. However, competition for such personnel across all of our markets can be strong. Our ability to attract, retain and motivate such personnel depends in part on our ability to offer competitive compensation packages, including salary, cash incentive compensation and stock-based compensation along with other benefits and workplace policies, and we can provide no assurance that we will be successful in attracting or retaining such personnel now or in the future. In addition, particularly in the high-technology industry, the value of stock options, restricted stock unit awards or other stock-based compensation is an important element in the retention of employees. Declines in the value of our common stock could adversely affect our ability to retain employees and we may have to take additional steps to make the equity component of our compensation packages more attractive to attract and retain employees. These steps could result in dilution to stockholders. The loss of any key employee, the failure of any key employee to adequately perform in his or her current position, our inability to attract, train and retain skilled employees as needed or the inability of our key employees to expand, train and manage our employee base as needed, could have a material adverse effect on our business, results of operations and financial condition. Worldwide political conditions and threats of terrorist attacks may adversely affect our operations and demand for our products. Armed conflicts around the world, including those in Ukraine and Israel, as well as the global response to such conflicts, including the imposition of sanctions by the United States and other countries, could create or exacerbate risks facing our business. Political and economic instability could have an impact on our sales, our supply chain, our ability to deliver products to our customers, and demand for our products. More generally, various events could cause consumer confidence and spending to decrease. 50
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We have evaluated our operations, vendor contracts and customer arrangements, and to date the hostilities have not directly had a material and adverse effect on our financial condition or results of operations. However, if the hostilities persist, escalate or expand, risks we have identified in this report may be exacerbated. For example, if our supply or customer arrangements are disrupted due to sanctions or expanded sanctions, involvement of countries where we have operations or relationships or rising energy prices, our business could be materially disrupted. Further, the use of state-sponsored cyberattacks could expand as part of the conflict, which could adversely affect our ability to maintain or enhance our cybersecurity and data protection measures. Additionally, the occurrence or threat of terrorist attacks may in the future adversely affect demand for our products. In addition, such attacks may negatively affect our operations directly or indirectly and such attacks or other armed conflicts may directly impact our facilities or those of our suppliers or customers. Such attacks may make travel and the transportation of our products more difficult and more expensive, ultimately having a negative effect on our business. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Cybersecurity Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems, internal networks and information. We have aligned our cybersecurity risk management program with recognized security frameworks such as the National Institute of Standards and Technology Cybersecurity Framework and ISO standards. This does not imply that we meet any particular technical standards, specifications or requirements, only that we use these frameworks as a guide to help us identify, assess and manage cybersecurity risks relevant to our business. Key elements of our cybersecurity risk management program include, but are not limited to, the following: • risk assessments designed to help identify material cybersecurity risks to our critical systems and information; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees; • an information security event response plan that includes procedures for responding to cybersecurity events; • an information security event response team (the “Response Team”) principally responsible for managing our response to cybersecurity events; and • a third-party risk management process for key IT vendors based on our assessment of their criticality to our operations and respective risk profile. During 2025, we did not identify any risks from cybersecurity threats, including as a result of any previous cybersecurity events, that materially affected us, including our business strategy, results of operations or financial condition. However, we face ongoing and increasing cybersecurity risks, including from bad actors that are becoming more sophisticated and effective over time, and if realized, these risks are reasonably likely to materially affect us. Additional information on the cybersecurity risks we face is discussed in “Item 1A. Risk Factors.” Cybersecurity Governance Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Cybersecurity and Technology Risk Management Committee of the Board of Directors (the “Cybersecurity Committee”) oversight of cybersecurity and other information technology risks. The Cybersecurity Committee oversees management’s implementation of our cybersecurity risk management program. 51
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The Cybersecurity Committee receives regular reports from our Chief Information Officer (“CIO”) regarding any significant cybersecurity events, as well as any events with lesser impact potential. The CIO periodically reports to the Board of Directors regarding cybersecurity risks and our cybersecurity risk management program. Board members periodically receive presentations on cybersecurity topics from our CIO or external experts as part of the Board of Directors’ continuing education on topics that impact public companies. Our CIO, who is a member of our management team, is primarily responsible for assessing and managing our material risks from cybersecurity threats. Our CIO has over two decades of IT experience, including in applications, infrastructure, development, security and governance, and has presented as a featured speaker at numerous IT and security conferences. Our management team, including our CIO, has overall responsibility for our corporate cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants. The Response Team, which includes our CIO and other members of our management team, has primary responsibility for assessing and managing our response to cybersecurity events. Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate and remediate cybersecurity risks and events through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; tabletop training exercises; and alerts and reports produced by security tools deployed in the IT environment. Item 2. Properties Our U.S. headquarters are located in Fremont, California. We lease or own various facilities described below for our design, manufacture, research and development and sales and marketing activities. We believe that our 52
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existing facilities are suitable and adequate for our present purposes. The following is a summary of our principal facilities as of August 29, 2025: Location Square Feet (in 000s) ManufacturingProcurement R&D Sales Supply Chain Services Durham, NC 102 X X X Fremont, CA 86 X X X X Huizhou, China 824 X X X Maynard, MA 69 X X X Newark, CA 79 X X X X X Penang, Malaysia 139 X X X X X Tempe, AZ 50 X X X X In addition to the principal facilities in the table above, we lease additional facilities in the United States, China, Hong Kong, Ireland, Japan, Scotland, Singapore and Taiwan. Item 3. Legal Proceedings For a discussion of legal proceedings, see “Item 1A. Risk Factors” and “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Commitments and Contingencies.” Item 4. Mine Safety Disclosures Not applicable. 53
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PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is listed on the Nasdaq Global Select Market under the trading symbol “PENG.” Holders of Record As of October 15, 2025, there were 37 registered holders of record of our common stock (not including beneficial holders of our common stock held in street name by brokers and other institutions on behalf of stockholders). As of October 15, 2025, there was one registered holder of record of our preferred stock, the Issued CPS. Common Stock Dividends On January 3, 2022, our Board of Directors declared a share dividend of one ordinary share, $0.03 par value per share, for each outstanding ordinary share owned, to shareholders of record as of January 25, 2022. The dividend was paid on February 1, 2022. We have not paid any cash dividends on our common stock, and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. Any future determination to pay dividends on our common stock will be made at the discretion of our Board of Directors subject to applicable laws and will depend on, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. The Issued CPS entitles the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option. Other than dividend payments to the holder of Issued CPS, we currently intend to retain all available funds and future earnings to support operations and to finance the growth and development of our business. During fiscal 2025, we did not record any paid in-kind dividends. See “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Preferred Stock Investment” and “– Temporary Equity” of this report for further discussion of the Issued CPS. Securities Authorized for Issuance under Equity Compensation Plans Information regarding securities authorized for issuance under our equity compensation plans is incorporated herein by reference to “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of Part III of this Annual Report. Recent Sales of Unregistered Securities As previously disclosed in our Current Report on Form 8-K12B filed with the SEC on June 30, 2025, the U.S. Domestication was effected via a court-sanctioned scheme of arrangement under Cayman Islands law, pursuant to which each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share of Penguin Solutions Cayman was exchanged for one share of convertible preferred stock of Penguin Solutions Delaware. The issuance of 52,401,114 shares of Penguin Solutions Delaware capital stock pursuant to the scheme of arrangement was exempt from registration under Section 3(a)(10) of the Securities Act, which exempts from the registration requirements any security that is issued in exchange for one or more bona fide outstanding securities where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court expressly authorized by law to grant such approval. Please refer to Penguin Solutions Cayman’s definitive proxy statement on Schedule 14A filed with the SEC on May 2, 2025 for additional information about the U.S. Domestication. 54
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Issuer Purchases of Equity Securities Common Stock Repurchase Authorization On April 4, 2022, our Board of Directors approved a $75.0 million stock repurchase authorization (the “2022 Authorization”), under which we may repurchase our outstanding common stock from time to time through open market purchases, privately- negotiated transactions or otherwise. On each of January 8, 2024 and October 6, 2025, the Audit Committee of the Board of Directors approved additional $75.0 million stock repurchase authorizations (the “2024 Authorization” and “2025 Authorization,” respectively, and together, the “Current Authorizations”). The Current Authorizations, which consist solely of amounts approved pursuant to the 2024 Authorization and 2025 Authorization as all amounts under the 2022 Authorization have been utilized, have no expiration date but may be suspended or terminated by the Board of Directors at any time. As of August 29, 2025, an aggregate of $36.5 million remained available for the repurchase of our common stock under the 2024 Authorization. Certain of our agreements, including the 2025 Credit Agreement, the SKT Purchase Agreement and the CPS Delaware Certificate of Designation, contain restrictions that limit our ability to repurchase our common stock. The following table sets forth information relating to repurchases of our equity securities during the three months ended August 29, 2025: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs May 31, 2025 - June 27, 2025 16,207 $ 18.26 16,207 $ 36,510,000 June 28, 2025 - July 25, 2025 — $ — — $ 36,510,000 July 26, 2025 - August 29, 2025 — $ — — $ 36,510,000 16,207 $ 18.26 16,207 Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act, except as shall be expressly set forth by specific reference in such filing. The following graph illustrates a comparison of cumulative total returns for our common stock, the Russell 2000 Index and the Nasdaq Electronic Components Index from August 31, 2020 through August 31, 2025. We operate on a 52- or 53-week fiscal year, which ends on the last Friday in August. As a result, the last day of our fiscal year 55
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varies. For consistent presentation and comparison to the industry indices shown herein, we have calculated our stock performance graph as of August 31 for each year. Note: Management cautions that the stock price performance information shown in the graph above may not be indicative of current stock price levels or future stock price performance. The stock performance graph assumes $100 was invested in our common stock and in the other indices on August 31, 2020. Any dividends paid during the period presented were assumed to be reinvested. The performance was plotted using the following data: August 31, 2020 August 31, 2021 August 31, 2022 August 31, 2023 August 31, 2024 August 31, 2025 Penguin Solutions, Inc. $ 100 $ 192 $ 146 $ 205 $ 164 $ 192 Russell 2000 Index $ 100 $ 147 $ 121 $ 126 $ 150 $ 163 Nasdaq Electronic Components Index$ 100 $ 144 $ 128 $ 145 $ 183 $ 283 Item 6. [Reserved] 56
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and notes for the year ended August 29, 2025. This discussion contains forward looking statements that involve risks, uncertainties and other factors. Our actual results could differ materially from those contained in these forward-looking statements due to a number of risks, uncertainties and other factors, including those discussed below and elsewhere in this report. See also “Cautionary Note Regarding Forward-Looking Statements” and “PART I – Item 1A. Risk Factors.” Our fiscal year is the 52- or 53-week period ending on the last Friday in August. Fiscal years 2025, 2024 and 2023 contained 52, 53 and 52 weeks, respectively. All period references are to our fiscal periods unless otherwise indicated. All financial information for our subsidiaries in Brazil is included in our consolidated financial statements on a one-month lag because their fiscal years ended on July 31 of each year. In connection with the completion of the divestiture of an 81% interest in SMART Brazil, we ceased consolidating the operations of SMART Brazil in our financial statements as of the November 29, 2023 disposal date. As a result, financial information for the first quarter of 2024 includes the four-month period for the SMART Brazil operations from August 1, 2023 to November 29, 2023. All tabular amounts are in thousands. Overview For an overview of our business, see “PART I – Item 1. Business.” On June 30, 2025, we completed the U.S. Domestication of the parent company of our corporate group, Penguin Solutions Cayman, from the Cayman Islands to the State of Delaware in the United States, resulting in Penguin Solutions Delaware becoming our publicly traded parent company and the successor issuer to Penguin Solutions Cayman. The financial information in this Annual Report for periods prior to the completion of the U.S. Domestication relates to Penguin Solutions Cayman. Unless stated otherwise or the context requires otherwise, the terms “Penguin Solutions,” “Company,” “we,” “our,” “us” or similar terms (i) for periods prior to the effectiveness of the U.S. Domestication, refer to Penguin Solutions Cayman and its consolidated subsidiaries and (ii) for periods at or after the completion of the U.S. Domestication, refer to Penguin Solutions Delaware and its consolidated subsidiaries. See “About this Annual Report,” above. Divestiture of SMART Brazil On November 29, 2023, we completed the divestiture of an 81% interest in SMART Brazil to Lexar Europe B.V., an affiliate of Shenzhen Longsys Electronics Co. Ltd. Presentation of SMART Brazil as Discontinued Operations: In accordance with authoritative guidance under U.S. GAAP, we have presented the balance sheets, results of operations and cash flows of SMART Brazil operations in this Annual Report, including in the accompanying consolidated financial statements and notes, as discontinued operations for all periods presented. The SMART Brazil operations were previously reported as part of our Integrated Memory segment. Unless otherwise noted, discussion within this Annual Report relates solely to our continuing operations and excludes the SMART Brazil operations. See “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Divestiture of SMART Brazil.” Acquisition of Stratus Technologies On August 29, 2022, we completed the acquisition of Stratus Technologies. At the closing, we paid a cash purchase price of $225.0 million, subject to certain adjustments. In addition, the seller had the right to receive the Stratus Earnout based on the gross profit performance of the Stratus Technologies business during the first full 12 fiscal months following the closing. Throughout 2023, we adjusted the fair value of the Stratus Earnout by an aggregate of $29.0 million and, as of August 25, 2023, current liabilities included $50.0 million for the amount payable in connection with the Stratus Earnout. In the second quarter of 2024, we paid in full $50.0 million related to the Stratus Earnout. 57
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See “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Business Acquisitions – Stratus Technologies.” Factors Affecting Our Operating Performance Macro-Economic Demand Factors. Our business segments each have their own unique set of demand factors. Our Advanced Computing business is driven by demand for our HPC and AI products, as well as traditional workload optimization and efficiency applications. We expect increased AI adoption and broader implementation by enterprises within but not limited to verticals such as financial services, energy, government and education, as well as increased sovereign AI adoption, as organizations seek scalable infrastructure solutions, though the extent and timing of such adoption and implementation may vary and may affect our results of operations. Demand in our Integrated Memory segment is driven by end-market demand from OEMs for customer-specific solutions in vertical markets such as industrial, government, networking, HPC and enterprise storage, as well as emerging demand for higher density and greater bandwidth solutions for AI deployments, and we anticipate growing demand for higher performance and reliability memory solutions, such as our CXL family of products, to support both traditional use cases and increasingly complex AI applications, although there can be no assurance that such demand will materialize as expected or at all. Finally, demand for our Optimized LED products is derived from targeted end- market applications, such as general high-power and mid-power lighting and specialty lighting, including video display and horticulture applications. However, broader macro-economic trends, including global conflicts impacting international relations, recessionary indicators, high inflation rates, uncertainty and costs associated with trade policies and tariffs, and interest rates, can adversely affect all three segments concurrently. Shifts in the Mix and Timing of Our Revenue. Shifts in the mix of revenue from our operating segments, and in the timing of revenue, which can vary significantly from period to period, have impacted and can continue to impact our business and results of operations, including gross and operating margins. For example, our Advanced Computing segment has shown solid growth, but is subject to variability in its sales and margin profile from period to period due to factors such as the following: recognition of revenue sometimes being tied to customer decisions as to the completion of delivery and system go- live events; certain sales being affected by the timing of customer deployments and shipments or customer budget considerations; changes in customer spending on our products and services (including as a result of the macro-economic demand factors discussed above); the impact of customer churn rates (including discounting and churn of significant customers from whom we derive a significant percentage of our revenue); discontinuation of certain of our products from time to time; shifts in our customer mix, including expected trends with respect to growth in demand from non-hyperscaler customers for HPC and AI solutions; and margin being driven by the proportion of higher margin software and managed services within our Advanced Computing sales. Our resource commitments and planning for each segment are relatively fixed in the short term, and as such, variability in expected revenue mix may have direct implications for our operating income and margins. Additionally, our revenue and margins will be negatively impacted by the winding down of our Penguin Edge business, which we expect to wind down and discontinue by approximately the end of calendar 2025. The comparability of our results of operations against prior periods will also be affected following the wind down of our Penguin Edge business. Our Ability to Identify, Complete and Successfully Integrate Acquisitions. A substantial portion of our growth over the last several years has been driven by acquisitions, and we intend to continue to use corporate development as an engine for growth. Within our existing segments, we plan to pursue acquisitions to expand features and functionality, expand into adjacent businesses and grow our customer base and geographic footprint. From time to time, we may seek to expand our addressable market by entering new business segments where we identify a business opportunity at scale with a path to being accretive to our overall operations in the near term. If we are unable to identify and complete attractive acquisitions and successfully integrate such businesses, we may not be successful in growing our revenue and/or expanding our margins. Any acquisitions we do complete may require us to incur debt or raise capital through equity financings or may subject us to unforeseen liabilities or costs, or operational challenges, that in turn impede our ability to realize the expected returns on our investment. Disruptions in Our Supply Chain May Adversely Affect Our Businesses. We depend on third-party suppliers for key components of our products as well as certain raw materials, such as commodity DRAM components from offshore foundries that we use in our specialty memory products, third-party wafers that we use in our memory and LED businesses and HPC and AI components for our Advanced Computing business; the costs of such components and raw materials may fluctuate from time to time due to market conditions. In our memory and LED businesses, we have adopted a “Fab-Light” business model to reduce our capital expenditures and operating expenses, while affording greater flexibility in adapting to shifts in demand and other market trends. Our Fab-Light 58
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business model contributed to margin expansion in our overall business. However, our reliance on third-party manufacturers exposes us to risk of supply chain disruption and lost business. For example, the global semiconductor shortage, particularly during its peak, has adversely affected our results of operations. In addition, in our Advanced Computing business, where we source components from third parties, the high demand for and limited supply of AI components globally, as well as any delays in the production of such components, continues to affect our sourcing of these components and the timing of deployments. In particular, we continue to experience extended lead times for certain components that are incorporated into our overall solutions, which impacts how quickly we are able to ramp existing and new customer projects and may negatively affect gross margins due to changes in shipment timing and product mix. If such disruptions worsen or are prolonged, or if there is meaningful disruption in our supply arrangement with any of our third-party suppliers, our results of operations and financial condition may continue to be adversely affected. Results of Operations Year ended August 29,2025 % of net sales August 30,2024 % of net sales August 25,2023 % of net sales Net sales: Advanced Computing $ 648,417 47.4 % $ 554,552 47.4 % $ 749,708 52.0 % Integrated Memory 464,249 33.9 % 356,426 30.4 % 443,264 30.8 % Optimized LED 256,128 18.7 % 259,818 22.2 % 248,278 17.2 % Total net sales 1,368,794 100.0 % 1,170,796 100.0 % 1,441,250 100.0 % Cost of sales 974,520 71.2 % 830,020 70.9 % 1,026,079 71.2 % Gross profit 394,274 28.8 % 340,776 29.1 % 415,171 28.8 % Operating expenses: Research and development 79,801 5.8 % 81,537 7.0 % 90,565 6.3 % Selling, general and administrative 238,177 17.4 % 233,880 20.0 % 260,722 18.1 % Impairment of goodwill 16,063 1.2 % — — % 19,092 1.3 % Change in fair value of contingent consideration — — % — — % 29,000 2.0 % Other operating expense 2,098 0.2 % 7,064 0.6 % 7,047 0.5 % Total operating expenses 336,139 24.6 % 322,481 27.5 % 406,426 28.2 % Operating income 58,135 4.2 % 18,295 1.6 % 8,745 0.6 % Non-operating (income) expense: Interest expense, net 7,305 0.5 % 28,378 2.4 % 36,421 2.5 % Other non-operating expense 1,929 0.1 % 21,084 1.8 % 11,837 0.8 % Total non-operating expense 9,234 0.7 % 49,462 4.2 % 48,258 3.3 % Income (loss) before taxes 48,901 3.6 % (31,167) (2.7)% (39,513) (2.7)% Income tax provision (benefit) 20,066 1.5 % 10,618 0.9 % (49,203) (3.4)% Net income (loss) from continuing operations 28,835 2.1 % (41,785) (3.6)% 9,690 0.7 % Net loss from discontinued operations — — % (8,148) (0.7)% (195,384) (13.6)% Net income (loss) 28,835 2.1 % (49,933) (4.3)% (185,694) (12.9)% Net income attributable to noncontrolling interest 3,444 0.3 % 2,539 0.2 % 1,832 0.1 % Net income (loss) attributable to Penguin Solutions $ 25,391 1.9 % $ (52,472) (4.5)% $ (187,526) (13.0)% (1) Summations of percentages may not compute precisely due to rounding. Net Sales, Cost of Sales and Gross Profit Net sales increased by $198.0 million, or 16.9%, in 2025 compared to the prior year, primarily due to higher sales from our Advanced Computing and Integrated Memory business segment. Advanced Computing net sales increased by $93.9 million, or 16.9%, compared to the same period in the prior year, primarily due to higher hardware sales driven by increased demand for AI solutions and HPC. Integrated Memory net sales increased by $107.8 million, or 30.3%, compared to the same period in the prior year, primarily due to higher sales volumes of flash and DRAM products stemming from improved market demand. Optimized LED net sales decreased by $3.7 million, or 1.4%, compared to the same period in the prior year, primarily due to lower direct sales across China and Europe. (1) (1) (1) 59
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Net sales decreased by $270.5 million, or 18.8%, in 2024 compared to the prior year, primarily due to lower sales and weakness in our Advanced Computing and Integrated Memory segments, partially offset by moderate growth in our Optimized LED segment. Advanced Computing net sales decreased by $195.2 million, or 26.0%, primarily related to lower hardware sales year over year due to the unpredictable nature of large project engagements, which may not occur with the same frequency or scale each year. Integrated Memory net sales decreased by $86.8 million, or 19.6%, primarily due to lower sales volumes of flash and DRAM products to our OEM customers, driven by macroeconomic environment challenges. Optimized LED net sales increased by $11.5 million, or 4.6%, primarily due to higher demand as channel partners addressed low inventory carrying levels. Cost of sales increased by $144.5 million, or 17.4%, in 2025 compared to the prior year, primarily due to our Advanced Computing and Integrated Memory segments having increased products sales for the year. Cost of sales decreased by $196.1 million, or 19.1%, in 2024 compared to the prior year, primarily due to our Advanced Computing and Integrated Memory segments, which had lower material and production costs from lower sales, as well as lower personnel-related expenses mainly driven by cost reduction efforts. Gross margin decreased to 28.8% in 2025 compared to 29.1% in 2024 primarily due to unfavorable mix from higher product revenue in our Advanced Computing segment and a higher mix of Integrated Memory sales. Gross margin increased to 29.1% in 2024 compared to 28.8% in 2023 primarily due to favorable mix from higher service revenue in our Advanced Computing segment. Non-GAAP Measure of Segment Operating Income Below is a table of our operating income, measured on a non-GAAP basis, which Penguin Solutions management uses to supplement Penguin Solutions’ financial results under GAAP to analyze its operations and make decisions as to future operational plans, and which management believes provides supplemental information that is useful to investors in analyzing and assessing our past and future operating performance. These non-GAAP measures exclude certain items, such as stock- based compensation expense; amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships, trademarks/trade names and backlog acquired in connection with business combinations); acquisition-related inventory adjustments; diligence, acquisition and integration expense; restructuring charges; impairment of goodwill; changes in the fair value of contingent consideration; redomiciliation costs; and other infrequent or unusual items. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in our non-GAAP measures and these intangible assets contribute to revenue generation. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Segment and Other Information.” 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 our 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. 60
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Year ended August 29,2025 August 30,2024 August 25,2023 GAAP operating income $ 58,135 $ 18,295 $ 8,745 Stock-based compensation expense 41,176 43,160 39,228 Amortization of acquisition-related intangibles 34,838 39,272 44,601 Flow-through of inventory step up — — 2,599 Cost of sales-related restructuring 746 2,136 6,813 Diligence, acquisition and integration expense 1,829 8,772 20,869 Redomiciliation costs 10,038 470 — Impairment of goodwill 16,063 — 19,092 Change in fair value of contingent consideration — — 29,000 Restructuring charges 2,098 7,064 7,047 Other 2,729 1,088 1,800 Non-GAAP operating income $ 167,652 $ 120,257 $ 179,794 Non-GAAP operating income by segment: Advanced Computing $ 115,009 $ 95,291 $ 110,975 Integrated Memory 43,639 22,413 73,639 Optimized LED 9,004 2,553 (4,820) Total non-GAAP operating income by segment $ 167,652 $ 120,257 $ 179,794 In 2025 we began breaking out costs related to the U.S. Domestication from “Other.” All periods presented have been adjusted to reflect this change. Advanced Computing operating income increased by $19.7 million, or 20.7%, in 2025 compared to the prior year primarily due to increased net sales driven by increased demand for AI solutions, as well as lower subcontract services, partially offset by increased operating expenses, mainly driven by increased personnel-related expenses stemming from bonus achievement. Advanced Computing operating income decreased by $15.7 million, or 14.1%, in 2024 compared to the prior year primarily due to lower sales from our Penguin Computing business, partially offset by lower operating expenses, mainly driven by personnel-related expenses due to lower headcount and lower subcontract services. Integrated Memory operating income increased by $21.2 million, or 94.7%, in 2025 compared to the prior year primarily due to increased net revenue, partially offset by increased operating expenses, mainly driven by increased personnel costs stemming from bonus achievement. Integrated Memory operating income decreased by $51.2 million, or 69.6%, in 2024 compared to the prior year primarily due to lower sales and gross profit due to lower sales volumes of flash and DRAM products. Optimized LED operating income increased by $6.5 million, or 252.7%, in 2025 primarily due to higher gross profit, stemming from a more favorable product mix. Optimized LED operating loss improved by $7.4 million, or 153.0%, in 2024 primarily due to higher revenue from increased demand, better factory leverage and product mix and lower personnel-related expenses due to headcount reductions. Operating and Non-operating (Income) Expense Research and Development Research and development expense decreased by $1.7 million, or 2.1%, in 2025 compared to the prior year, primarily due to lower personnel-related expenses mainly driven by headcount reductions, as well as lower subcontract services mainly driven by Advanced Computing. Research and development expense decreased by $9.0 million, or 10.0%, in 2024 compared to the prior year, primarily due to lower personnel-related expenses mainly driven by headcount reductions, as well as lower subcontract services mainly driven by Advanced Computing. (1) (1) (1) 61
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Selling, General and Administrative Selling, general and administrative expense increased by $4.3 million, or 1.8%, in 2025 compared to the prior year, primarily due to higher personnel-related expenses stemming from increased bonus achievement as a result of Company performance, partially offset by decreased professional services driven by increased cost in the prior year due to the SMART Brazil divestiture referenced above. Selling, general and administrative expense decreased by $26.8 million, or 10.3%, in 2024 compared to the prior year, primarily due to lower diligence, acquisition and integration expense, lower personnel-related expenses, mainly driven by headcount reductions, and lower amortization expense of intangible assets. Impairment of Goodwill In the second quarter of 2023, we initiated a plan pursuant to which we intend to wind down manufacturing and discontinue the sale of certain products offered through our Penguin Edge business by approximately the end of calendar 2025. In connection therewith and with the preparation of the financial statements included in this Annual Report, we assessed goodwill associated with our Penguin Edge business within our Advanced Computing segment and concluded it is now fully impaired. As a result, we recorded impairment charges of $16.1 million and $19.1 million in 2025 and 2023, respectively, to impair the carrying value of Penguin Edge goodwill. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Intangible Assets and Goodwill.” Change in Fair Value of Contingent Consideration Our acquisitions of Stratus Technologies in the first quarter of 2023 included contingent consideration. We estimate the fair value of the contingent consideration as of the date of acquisition and subsequently recognize changes in the fair value in results of operations. During 2023, we recorded charges of $29.0 million to adjust the fair value of the contingent consideration. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Business Acquisitions.” Other Operating (Income) Expense Other operating expense in 2025, 2024, and 2023 included restructuring charges of $2.1 million, $7.1 million, and $7.0 million, respectively, primarily for employee severance costs and other benefits resulting from workforce reductions, the elimination of certain projects across our businesses and other costs associated with the wind down of our Penguin Edge business. We anticipate that such activities will continue into future quarters and anticipate recording additional restructuring charges. Interest Expense, Net Net interest expense decreased by $21.1 million, or 74.3%, in 2025 compared to the prior year, primarily due to principal payments made on the Amended 2022 TLA (as defined below) during the last half of fiscal 2024 along with the full repayment in the last quarter of fiscal 2025. Net interest expense decreased by $8.0 million, or 22.1%, in 2024 compared to the prior year, primarily due to higher interest income resulting from higher cash and investment balances, partially offset by higher interest expense from the Amended 2022 TLA. Other Non-operating (Income) Expense Other non-operating (income) expense in 2025, 2024 and 2023 included losses of $2.9 million, $22.8 million, and $15.9 million, respectively, from the extinguishment or prepayment of debt. Other non-operating (income) expense in 2024 also included net gains of $0.2 million from the disposition of assets. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.” Income Tax Provision (Benefit) Our provision for income taxes increased by $9.4 million, or 89.0%, in 2025 compared to 2024 primarily due to an increase in profit before tax in jurisdictions subject to income tax. Our provision for income taxes increased by $59.8 million, or 121.6%, in 2024 compared to 2023 primarily due to the tax benefit on the release of the U.S. federal and state valuation allowance in 2023, partially offset by tax addbacks for nondeductible goodwill impairment and additional uncertain tax positions recorded in 2023. 62
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In 2025, our tax expense of $20.1 million and effective tax rate of 41.0% differed from the U.S. statutory tax rate primarily due to losses generated in a jurisdiction where no tax benefit can be recognized, non-deductible expenses, return to provision adjustments, and foreign withholding taxes, offset in part by benefits from the U.S. Domestication (net of valuation allowance) and tax credits. In 2024, our tax expense of $10.6 million and effective tax rate of (34.1)% differed from the U.S. statutory tax rate primarily due to losses generated in a jurisdiction where no tax benefit can be recognized, non-deductible expenses and foreign withholding taxes, offset in part by benefits associated with decreases in reserves for uncertain tax provisions and U.S. federal and state tax credits. In 2023, our tax benefit of $49.2 million and effective tax rate of 124.5% differed from the U.S. statutory tax rate primarily due to a release of the U.S. federal and state valuation allowance. The effective tax rate benefit from the valuation allowance release was offset with detriments associated with losses generated in jurisdictions with rates lower than the U.S. statutory tax rate, increases in reserves for uncertain tax provisions, foreign withholding taxes and goodwill impairment for financial reporting purposes with no tax basis. We have operations in Malaysia, where we have tax incentive arrangements for our pioneer status activities and our global supply chain business. The statutory tax rate for Malaysia is 24%. This Malaysia arrangement for the pioneer status activities is scheduled to expire in August 2028 and is subject to certain conditions, with which we have fully complied in 2025, 2024, and 2023. This Malaysia arrangement for the global supply chain activities is scheduled to expire in August 2028 and is subject to certain conditions, with which we have partially complied in 2025 and 2024 and fully complied in 2023. The impact of partial compliance is reflected within the 2025 and 2024 income tax provisions. Our effective income tax rate in the future may be higher depending on a combination of our overall and jurisdictional profitability, the general expectation that future tax holidays may have tax rates greater than our prior approved tax holidays, and the impact of the Organisation for Economic Co-operation and Development's Pillar Two Model rules which aims to implement a global minimum tax of 15%. For additional information, see “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Income Taxes.” Net Income (Loss) From Discontinued Operations As discussed above, we have presented the results of SMART Brazil as discontinued operations in our consolidated statements of operations for all periods presented. As of August 25, 2023, SMART Brazil was classified as held for sale. Accordingly, in 2023 we evaluated the carrying value of the net assets of SMART Brazil (including $206.3 million recognized within stockholder’s equity related to the cumulative translation adjustment from SMART Brazil), estimated costs to sell and expected proceeds and concluded the net assets were impaired. As a result, we recognized an impairment charge of $153.0 million in 2023 to write down the carrying value of the net assets of SMART Brazil. In addition, we concluded that the outside basis of SMART Brazil inclusive of any withholding taxes should be recognized upon the classification as held for sale as of August 25, 2023. Accordingly, we recognized withholding taxes on the expected capital gain and deferred tax liabilities of $28.6 million in 2023. In the first quarter of 2024, we completed the divestiture, and in connection therewith, recognized an additional loss of $8.9 million. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Divestiture of SMART Brazil.” Liquidity and Capital Resources As of August 29, 2025, we had cash, cash equivalents and short-term investments of $453.8 million, of which $315.5 million was held by subsidiaries outside of the United States. Our principal uses of cash and capital resources have been acquisitions, debt service requirements, capital expenditures, investments in working capital, research and development expenditures, and other operating expenses. We expect that future capital expenditures will focus on expansion of our research and development activities, manufacturing equipment upgrades, acquisitions and IT infrastructure and software upgrades. Cash and cash equivalents generally consist of funds held in demand deposit accounts, money market funds and time deposits. We do not acquire investments for trading or speculative purposes. We may from time to time seek additional equity or debt financing. Any future equity or debt financing may be dilutive to our existing investors and may include debt service requirements and financial and other restrictive covenants that may constrain our operations and growth strategies. In the event that we seek additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional 63
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capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition. We expect that our existing cash and cash equivalents, short-term investments, borrowings available under our credit facilities and cash generated by operating activities will be sufficient to fund our operations for at least the next 12 months. Entry Into 2025 Credit Agreement and Repayment of 2022 TLA On February 7, 2022, Penguin Solutions Cayman and SMART Modular Technologies, Inc. (the “Borrowers”) entered into a credit agreement (the “2022 Original Credit Agreement”) with a syndicate of banks and Citizens Bank, N.A., as administrative agent that provided for (i) a term loan credit facility in an aggregate principal amount of $275.0 million (the “2022 TLA”) and (ii) a revolving credit facility in an aggregate principal amount of $250.0 million (the “2022 Revolver”), in each case, maturing on February 7, 2027. The 2022 Original Credit Agreement provided that up to $35.0 million of the 2022 Revolver was available for issuances of letters of credit. On August 29, 2022, the 2022 Original Credit Agreement was amended (the ”2022 Amended Credit Agreement”) to, among other things, provide for incremental term loans of $300.0 million (together with the 2022 TLA, the “Amended 2022 TLA”), amend the First Lien Leverage Ratio (as defined in the 2022 Amended Credit Agreement) and increase the aggregate amount of unrestricted cash and permitted investments netted from the definitions of Consolidated First Lien Debt and Consolidated Net Debt. As of August 30, 2024, there was $300.0 million of aggregate principal amount outstanding under the Amended 2022 TLA and there were no amounts outstanding under the 2022 Revolver. On June 24, 2025 (the “Refinancing Closing Date”), the Borrowers entered into a new Credit Agreement (the “2025 Credit Agreement”) by and among the Borrowers, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and an issuing bank. The 2025 Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $400 million (the “2025 Credit Facility” and the revolving loans thereunder, the “2025 Loans”), maturing on June 24, 2030 (subject to certain earlier “springing maturity” dates upon certain conditions specified in the 2025 Credit Agreement). The 2025 Credit Agreement provides that up to $35.0 million of the 2025 Credit Facility is available for issuances of letters of credit. On the Refinancing Closing Date, we borrowed $100 million under the 2025 Credit Facility and simultaneously applied such proceeds, together with $200 million cash on hand, to repay in full all borrowings and terminate all commitments under the 2022 Amended Credit Agreement. Immediately prior to the repayment and termination of the 2022 Amended Credit Agreement, we had $300 million of principal outstanding under the Amended 2022 TLA, with unamortized issuance costs of $1.8 million and an effective interest rate of 7.17%, and no amounts outstanding under the 2022 Revolver, with unamortized issuance costs of $1.5 million. Following the termination of the 2022 Amended Credit Agreement, we recognized a loss on extinguishment of debt of $2.9 million. Under the 2025 Credit Agreement, 2025 Loans bear interest at a rate per annum equal to either, at the Borrowers’ option, Term Secured Overnight Financing Rate (“Term SOFR”) rate or a base rate, in each case plus an applicable margin based on the Total Leverage Ratio (as defined in the 2025 Credit Agreement) and ranges from 1.25% to 3.00% per annum with respect to Term SOFR borrowings and from 0.25% to 2.00% per annum with respect to base rate borrowings. In addition, we are required to pay a quarterly unused commitment fee at an initial rate of 0.25%, which may increase up to a rate of 0.35% based on certain Total Leverage Ratio levels specified in the 2025 Credit Agreement. For additional details regarding the 2025 Credit Agreement, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Credit Agreement.” Convertible Senior Notes 2026 Notes In February 2020, we issued $250.0 million in aggregate principal amount of 2.25% Convertible Senior Notes due 2026 (the “2026 Notes”) pursuant to an indenture (the “2026 Indenture”) between the Company and U.S. Bank Trust Company National Association, as trustee. The 2026 Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased. 64
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On January 18, 2023, we exchanged $150.0 million principal amount of 2026 Notes for $150.0 million principal amount of new 2029 Notes (as defined below). On August 6, 2024, we repurchased $80.0 million aggregate principal amount of our 2026 Notes for $100.6 million cash (including payment for accrued interest) in privately-negotiated transactions. See “Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Debt - Convertible Senior Notes - Repurchase of Convertible Senior Notes” in this 2025 Annual Report. As of August 29, 2025, $20.0 million in aggregate principal amount of 2026 Notes were outstanding. 2029 Notes In February 2023, we issued $150.0 million in aggregate principal amount of 2.00% Convertible Senior Notes due 2029 (the “2029 Notes”) pursuant to an indenture (the “2029 Indenture”), dated as of January 23, 2023, between the Company and U.S. Bank Trust Company, National Association, as trustee. The 2029 Notes will mature on February 1, 2029, unless earlier converted, redeemed or repurchased. As of August 29, 2025, $150.0 million in aggregate principal amount of 2029 Notes were outstanding. 2030 Notes On August 6, 2024 and August 14, 2024, we issued $175.0 million and $25.0 million aggregate principal amount, respectively, of our 2.00% Convertible Senior Notes due 2030 (collectively, the “2030 Notes,” and together with the 2026 Notes and the 2029 Notes, the “Convertible Senior Notes”) pursuant to, and governed by, an indenture (the “2030 Indenture”), dated August 6, 2024, between us and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes will mature on August 15, 2030, unless earlier converted, redeemed or repurchased. As of August 29, 2025, $200.0 million in aggregate principal amount of 2030 Notes were outstanding. For additional details of the terms of our Convertible Senior Notes, refer to “PART II - Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Debt - Convertible Senior Notes” in this 2025 Annual Report. Capped Calls In connection with our Convertible Senior Notes, we have entered into privately-negotiated capped call transactions, which are intended to reduce the effect of potential dilution upon conversion of our Convertible Senior Notes. The capped calls provide for our receipt of cash or shares, at our election, from counterparties if the trading price of our common stock is above the strike price on the expiration date. For additional information on our capped call transactions, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Equity – Capped Calls” in this 2025 Annual Report. Divestiture of SMART Brazil In November 2023, we completed the divestiture of SMART Brazil. In connection with the divestiture, we sold an 81% interest and retained a 19% interest in SMART Brazil. At the closing of the transaction, we received cash of $143.0 million, net of tax, from the sale. In addition, we received a deferred payment of $24.3 million (net of $4.2 million withholding tax) in May 2025. Refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Divestiture of SMART Brazil.” Preferred Stock Investment On December 13, 2024, we closed the SKT Investment (as defined below) by SK Telecom Co., Ltd. (“SKT”). Pursuant to the SKT Purchase Agreement, we sold to Astra AI Infra LLC, an affiliate of SKT (“Astra AI Infra”), 200,000 convertible preferred shares, par value $0.03 per share (the “Issued Cayman CPS”) at a price of $1,000 per share or an aggregate price of $200.0 million (the “SKT Investment”). On the closing date of the SKT Investment, we and Astra AI Infra entered into an Investor Agreement (the “Investor Agreement”), and the Certificate of Designation of Convertible Preferred Shares setting forth the terms, rights and obligations of the Issued Cayman CPS (the “CPS Cayman Certificate of Designation”) became effective. The Investor Agreement and the CPS Cayman Certificate of Designation provided for certain rights and restrictions relating to the SKT Investment, including but not limited to board representation rights, pro rata rights, registration rights and consent rights, and standstill provisions, disposition restrictions and voting obligations. 65
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On June 27, 2025, in connection with the U.S. Domestication, Penguin Solutions Delaware executed and adopted a Certificate of Designation of Convertible Preferred Stock (the “CPS Delaware Certificate of Designation”) that sets forth the terms, rights and obligations of the Issued CPS, which principal attributes remain substantially the same as prior to the U.S. Domestication, with changes to give effect to requirements of Delaware law. The shares of Issued CPS are convertible into shares of common stock of Penguin Solutions at an initial conversion price of $32.81 per ordinary share, subject to adjustment upon the occurrence of certain events, have an initial liquidation preference of 1x and are only be redeemable at our option, subject to certain conditions. The holder of Issued CPS may convert such holder’s Issued CPS into shares of common stock at any time, provided that the Issued CPS may, at our option, automatically be converted into shares of common stock on any date following the second anniversary of the closing upon certain conditions. The Issued CPS entitle the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option. Shares of Issued CPS are not redeemable upon or repurchased upon the election of the holders of Issued CPS. Refer to the CPS Delaware Certificate of Designation filed as Exhibit 3.3 hereto, and to the section entitled “Comparison of Rights of Cayman Islands Shareholders and Delaware Stockholders” contained in Penguin Solutions Cayman’s definitive proxy statement on Schedule 14A filed with the SEC on May 2, 2025. On June 30, 2025, effective upon consummation of the U.S. Domestication, Penguin Solutions Delaware assumed the Investor Agreement from Penguin Solutions Cayman, and Penguin Solutions Delaware and SKT amended and restated the Investor Agreement (as amended and restated, the “Amended and Restated Investor Agreement”) such that the rights and restrictions relating to SKT’s beneficial ownership of the Issued Cayman CPS in place prior to the U.S. Domestication apply in respect of SKT’s holdings of the Issued CPS following consummation of the U.S. Domestication. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Preferred Stock Investment.” Contractual Obligations For information regarding our debt obligations, see “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.” For our operating lease obligations, see “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Leases.” For our purchase obligations, see “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Commitments and Contingencies.” Cash Flows Year ended August 29,2025 August 30,2024 August 25,2023 Net cash provided by operating activities from continuing operations$ 113,183 $ 105,521 $ 63,677 Net cash used for investing activities from continuing operations (3,377) (11,804) (281,184) Net cash provided by (used for) financing activities from continuing operations(63,464) (209,495) 237,221 Net increase in cash and cash equivalents from discontinued operations24,251 90,447 22,520 Effect of changes in currency exchange rates — (1,256) 4,765 Net increase (decrease) in cash, cash equivalents and restricted cash$ 70,593 $ (26,587)$ 46,999 Operating Activities: Cash flows from operating activities reflects net income, adjusted for certain non-cash items, including depreciation and amortization expense, stock-based compensation, changes in the fair value of contingent consideration, gains and losses from investing or financing activities and from the effects of changes in operating assets and liabilities. Net cash provided by operating activities from continuing operations in 2025 was $113.2 million, comprised primarily of net income of $28.8 million, adjusted for non-cash items of $103.5 million. Operating cash flows were negatively affected by a $19.1 million net change in our operating assets and liabilities, primarily from the effects of an increase of $101.6 million of inventories primarily to support future demand across both Advanced Computing and Integrated Memory and an increase of $56.2 million in accounts receivable primarily due to timing of cash receipts, partially offset by an increase of $131.0 million in accounts payable and accrued expenses and other liabilities primarily due to higher accounts payable related to the timing of purchases from suppliers and an increase in deferred revenue from customer services, along with a decrease of $7.7 million in other assets. 66
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Net cash provided by operating activities from continuing operations in 2024 was $105.5 million, comprised primarily of net loss of $41.8 million, adjusted for non-cash items of $121.6 million. Operating cash flows were favorably affected by a $25.7 million net change in our operating assets and liabilities, primarily from the effects of an increase of $54.3 million in accounts payable and accrued expenses and other liabilities and a decrease of $23.8 million inventories, partially offset by an increase of accounts receivable of $32.5 million and the payment of $29.0 million of contingent consideration, which related to our 2023 acquisition of Stratus Technologies. The increase in accounts payable and accrued expenses and other liabilities was primarily due to timing of payments, as well as higher deferred revenue resulting from amounts received from customers in advance of satisfying performance obligations. Net cash provided by operating activities from continuing operations in 2023 was $63.7 million, comprised primarily of net income of $9.7 million, adjusted for non-cash items of $119.3 million. Operating cash flows were adversely affected by a $65.4 million net change in our operating assets and liabilities, primarily from the effects of decreases of $256.1 million in accounts payable and accrued expenses and other liabilities and the payment of $73.7 million of contingent consideration, which related to our 2021 acquisition of the Optimized LED business, partially offset by the effect of decreases of $162.5 million in accounts receivable and $95.2 million in inventories. The decreases in both accounts payable and accrued expenses and inventories were primarily due to lower inventories in our Integrated Memory and Advanced Computing segments. The decrease in accounts receivable was primarily due to lower gross sales in our Integrated Memory segment. Investing Activities: Net cash used for investing activities from continuing operations in 2025 consisted primarily of $9.0 million used for capital expenditures and deposits on equipment, partially offset by net sales of marketable investment securities of $7.3 million. Net cash used for investing activities from continuing operations in 2024 consisted primarily of $19.4 million used for capital expenditures and deposits on equipment and $11.0 million of purchases of non-marketable investment securities, partially offset by net maturities of marketable investment securities of $19.9 million. Net cash used for investing activities from continuing operations in 2023 consisted primarily of $213.1 million net cash used for the acquisition of Stratus Technologies, $39.4 million used for capital expenditures and deposits on equipment and $25.0 million used for the purchases of marketable investment securities. Financing Activities: Net cash used for financing activities from continuing operations in 2025 was $63.5 million, consisting primarily of $300.0 million in principal payments of debt, $52.3 million of payments to acquire common stock (including $41.2 million under our stock repurchase program), and $7.9 million cash paid for dividends to the holder of Issued CPS, partially offset by $191.2 million of proceeds from the issuance of the Issue CPS, $100.0 million of proceeds from amounts drawn from the 2025 Credit Facility, and $8.8 million in proceeds from the issuance of common stock from our equity plans. Net cash used for financing activities from continuing operations in 2024 was $209.5 million, consisting primarily of $351.3 million in principal repayment of debt, $21.3 million of payments to acquire ordinary shares, $21.0 million payment of contingent consideration related to our 2023 acquisition of Stratus Technologies and $16.3 million of payments to acquire capped calls in connection with the issuance of our 2030 Notes, partially offset by $192.7 million in net proceeds from the issuance of our 2030 Notes and $9.8 million in proceeds from the issuance of ordinary shares from our equity plans. Net cash provided by financing activities from continuing operations in 2023 was $237.2 million, consisting primarily of $295.3 million in net proceeds from our term loan and $43.0 million in proceeds from the issuance of ordinary shares from our equity plans, partially offset by $28.1 million payment of contingent consideration related to our 2021 acquisition of our Optimized LED business, $24.7 million of payments to acquire ordinary shares, $21.6 million in principal repayment of debt, and $14.1 million payment of premium in connection with our convertible note exchange. Critical Accounting Estimates The preparation of these financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that we believe 67
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to be reasonable under the circumstances; however, actual results could differ from those estimates. Our management believes the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management’s most difficult, subjective or complex judgments. Our discussion of critical accounting estimates is intended to supplement our summary of significant accounting policies so that readers will have greater insight into the uncertainties involved in applying our critical accounting policies and estimates. For a summary of our significant accounting policies, see “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies.” Business Acquisitions: Accounting for acquisitions requires us to estimate the fair value of consideration paid and the individual assets and liabilities acquired, which involves a number of judgments, assumptions and estimates that could materially affect the amount and timing of costs recognized in subsequent periods. We typically obtain independent third-party valuation studies to assist in determining fair values, including assistance in determining future cash flows, discount rates and comparable market values. Items involving significant assumptions, estimates and judgments include the following: • Fair value of consideration paid or transferred (including contingent consideration); • Inventory, including estimated future selling prices, timing of product sales and completion costs for work in process; • Property, plant and equipment, including determination of values in a continued-use model; • Intangible assets, including valuation methodology, estimates of future revenues and costs, profit allocation rates attributable to the acquired technology and discount rates; • Debt and other liabilities, including discount rate and timing of payments; and • Deferred taxes, including projections of future taxable income and tax rates. The valuation of contingent consideration in connection with an acquisition may be inherently challenging due to the dependence on the occurrence of future events and complex payment provisions. Estimating the fair value of contingent consideration at an acquisition date and in subsequent periods involves significant judgments, including projecting future average selling prices, future sales volumes, manufacturing costs and gross margins. To project average selling prices and sales volumes, we review recent sales volumes, existing customer orders, current prices and other factors such as industry analyses of supply and demand, seasonal factors, general economic trends and other information. To project manufacturing costs, we must estimate future production levels and costs of production, including labor, materials and other overhead costs. Actual selling prices and sales volumes, as well as levels and costs of production, can often vary significantly from projected amounts. Income Taxes: We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires the assessment of our performance and other relevant factors. Realization of deferred tax assets is dependent on our ability to generate future taxable income. Our income tax provision or benefit is dependent, in part, on our ability to forecast future taxable income in various jurisdictions. Such forecasts are inherently difficult and involve significant judgments including, among others, projecting future average selling prices and sales volumes, manufacturing and overhead costs and other factors that significantly impact our analyses of the amount of net deferred tax assets that are more likely than not to be realized. Inventories: Inventories are stated at the lower of cost or net realizable value. In our Optimized LED segment, cost is determined on a first-in, first-out basis. For all other segments, inventory value is determined on a specific identification basis for material and an allocation of labor and manufacturing overhead. At each balance sheet date, we evaluate ending inventories for excess quantities and obsolescence, including analyses of sales levels by product family, historical demand and forecasted demand in relation to inventory on hand, competitiveness of product offerings, market conditions and product life cycles. From time to time, our customers may request that we purchase and maintain significant inventory of raw materials for specific programs. Such inventory purchases are evaluated for excess quantities and potential obsolescence and could result in a provision at the time of purchase or subsequent to purchase. Inventory levels may fluctuate based on inventory held under service arrangements. Our provision for excess and obsolete inventory is also impacted by our arrangements with our customers and/or suppliers, including our ability or inability to resell such inventory to them. 68
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Goodwill and Intangible Assets: We test goodwill for impairment in our fourth quarter each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of the reporting unit with goodwill is less than its carrying value. For reporting units for which we conclude that it is more likely than not that the fair value is more than its carrying value, goodwill is considered not impaired and we are not required to perform the goodwill impairment test. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance and other relevant events and factors affecting the fair value of the reporting unit. For reporting units for which this assessment concludes that it is more likely than not that the fair value is below the carrying value, goodwill is tested for impairment by determining the fair value of the reporting unit and comparing it to the carrying value of the net assets assigned to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, goodwill is considered not impaired. If the carrying value of the reporting unit exceeds its fair value, we would record an impairment loss up to the difference between the carrying value and implied fair value. Determining when to test for impairment, the reporting units, the assets and liabilities of the reporting unit and the fair value of the reporting unit requires significant judgment and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates, forecasted manufacturing costs, budgets and other expenses developed as part of our long-range planning process. We test the reasonableness of the output of our long-range planning process by calculating an implied value per share and comparing that to current stock prices, analysts’ consensus pricing and management’s expectations. These estimates and assumptions are used to calculate projected future cash flows for the reporting unit, which are discounted using a risk-adjusted rate to estimate a fair value. We base fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. We test other identified intangible assets with definite useful lives when events and circumstances indicate the carrying value may not be recoverable by comparing the carrying amount to the sum of undiscounted cash flows expected to be generated by the asset. Estimating fair values involves significant assumptions, including future sales prices, sales volumes, costs and discount rates. Revenue Recognition: We recognize revenue based on the transfer of control of goods and services and apply the following five-step approach: (1) identification of a contract with a customer, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract and (5) recognition of revenue as performance obligations are satisfied. Applying the five-step approach in determining whether to recognize revenue at a point in time or over time requires significant judgment. A portion of our revenue is from sales of customized product which, in some cases, are non-cancellable and/or non-refundable. Significant judgment is required to determine when control passes to the customer and whether and when our performance obligations have been satisfied. This determination can significantly affect the timing of recognizing revenue. Product Revenue: Product revenue is generally recognized when control of the promised goods is transferred to customers. Contracts with customers are generally short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery. We estimate a liability for returns using the expected value method based on historical rates of return. In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction price. We use the expected value method, based on historical price adjustments and current pricing trends, to estimate the amount of revenue recognized from sales to distributors. Differences between the estimated and actual amounts are recognized as adjustments to revenue. Noncancellable, nonrefundable customized product sales are recognized over time on a cost-incurred basis. In connection with these arrangements, customers obtain control and benefit from products as they are completed. The terms for these arrangements provide us with a legally enforceable right to receive payment, including a reasonable profit margin upon customer cancellation, for performance completed to date. Accordingly, we recognize revenue over time as we complete the manufacture of these products. A portion of our revenue is derived from the sale of customized products. In certain cases, we recognize revenue when control of the underlying assets passes to the customer when the customer is able to direct the use of, and obtain substantially all of the remaining benefit from, the assets; the customer has the significant risks and rewards associated with ownership of the assets; and we have a present right to payment. Under the terms of 69
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these arrangements, we cannot repurpose products without the customer’s consent and accordingly, we recognize revenue at the point in time when products are completed and made available to the customer. Service Revenue: Our service revenue is derived from professional services and supply chain services. Professional services include solution design, system installation, software automation and managed support services related to HPC and storage systems. Supply chain services include procurement, logistics, inventory management, temporary warehousing, kitting and packaging. While we take title to inventory under such arrangements, control of such inventory does not transfer to us as we do not, at any point, have the ability to direct the use, and thereby obtain the benefits, of the inventory. Service revenue also includes extended warranty, on-site services and subscriptions to our HPC environment. Agent Services: We provide certain services on an agent basis, whereby we procure product, materials and services on behalf of our customers and then resell such product, materials or services to our customers. Gross amounts invoiced to customers in connection with these agent services include amounts related to the services performed by us in addition to the cost of the product, materials and services procured. However, only the amount related to the agent component is recognized as revenue in our results of operations. We generally recognize revenue for these procurement, logistics and inventory management services upon the completion and/or acceptance of such services, which typically occurs at the time of shipment of product to the customer. Amounts we invoice to customers for the cost of product, materials and services performed, which remain unpaid as of the end of a reporting period, are included in accounts receivable. Additionally, the cost of product and materials procured for customers under these agent services, which remain on hand as of the end of a reporting period, are included in inventories. Amounts in accounts receivable and inventories impact the determination of cash flows from operating activities. Determining whether we are the principal or agent in these transactions requires significant judgment. This determination affects the amount of revenue we recognize; a principal recognizes revenues at the gross amount received for the goods and services, while an agent recognizes revenue at the net amount. The impact of this determination significantly impacts the amount of revenue and cost of sales we recognize. Transaction Price: The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. We allocate the transaction price to each distinct product and service based on its relative standalone selling price. The standalone selling price for products primarily involves the cost to produce the deliverable plus the anticipated margin and for services is estimated based on our approved list price. A portion of our service revenue is from professional services, including installation and other services and hardware and software related support. Each contract may contain multiple performance obligations, which requires the transaction price to be allocated to each performance obligation. We allocate the consideration to each performance obligation based on the relative selling price, determined as the best estimate of the price at which we would transact if we sold the deliverable regularly on a stand-alone basis. Contract Costs: As a practical expedient, we recognize the incremental costs of obtaining a contract, specifically commission expenses, that have an amortization period of less than 12 months, as an expense when incurred. Additionally, we account for shipping and handling costs, if any, that occur after control transfers to the customer as a fulfillment activity. We record shipping and handling costs related to revenue transactions within cost of sales as a period cost. Item 7A. Quantitative and Qualitative Disclosure About Market Risk Foreign Exchange Risk Our international sales and our operations in foreign countries subject us to risks associated with fluctuating currency values and exchange rates. Because a significant portion of our sales are denominated in U.S. dollars, increases in the value of the U.S. dollar could increase the price of our products so that they become relatively more expensive to customers in a particular country, possibly leading to a reduction in sales and profitability in that country. In addition, we have certain costs that are denominated in foreign currencies, and decreases in the value of the U.S. dollar could result in increases in such costs, which could have a material adverse effect on our results of operations. 70
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As a result of our international operations, we generate a portion of our net sales and incur a portion of our expenses in currencies other than the U.S. dollar, such as the Japanese yen, Malaysian ringgit and Chinese renminbi. We present our consolidated financial statements in U.S. dollars and remeasure certain assets and liabilities into U.S. dollars at applicable exchange rates. Consequently, increases or decreases in the value of the U.S. dollar may affect the value of these items with respect to our non-U.S. dollar businesses in our consolidated financial statements, even if their value has not changed in their local currency. Our customer pricing and material cost of sales are generally based on U.S. dollars. Accordingly, the impact of currency fluctuations to our consolidated statements of operations is primarily to our other costs of sales (i.e., non-material components) and our operating expenses as those items are typically denominated in local currency. Our consolidated statements of operations are also impacted by foreign currency gains and losses arising from transactions denominated in a currency other than the U.S. dollar. These translations could significantly affect the comparability of our results between financial periods or result in significant changes to the carrying value of our assets and liabilities. As a result, changes in foreign currency exchange rates impact our reported results. Based on our monetary assets and liabilities denominated in foreign currencies as of August 29, 2025 and August 30, 2024, we estimate that a 10% adverse change in exchange rates versus the U.S. dollar would result in losses recorded in non- operating expense of $2.7 million and $2.5 million, respectively, to revalue these assets and liabilities. Interest Rate Risk We are subject to interest rate risk in connection with our variable-rate debt. As of August 29, 2025, we had $100.0 million outstanding under the 2025 Credit Agreement. In addition, the 2025 Credit Facility under the 2025 Credit Agreement provides for additional borrowings of up to $300.0 million for a total commitment of $400.0 million. Assuming that we would satisfy the financial covenants required to borrow and that the amounts available under the 2025 Credit Facility were fully drawn, a 1.0% increase in interest rates would result in an increase in annual interest expense and a decrease in our cash flows of $4.0 million per year. As of August 29, 2025, we had cash, cash equivalents and short-term investments of $453.8 million. We maintain our cash and cash equivalents in deposit accounts, money market funds with various financial institutions and in short-duration fixed income securities. Due to the short-term nature of these instruments, we believe that we do not have any material exposure to changes in the fair value of these investments as a result of changes in interest rates. Increases or decreases in interest rates would be expected to augment or reduce future interest income by an insignificant amount. 71
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Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Page Consolidated Balance Sheets 73 Consolidated Statements of Operations 74 Consolidated Statements of Comprehensive Income (Loss) 75 Consolidated Statements of Stockholders’ Equity 76 Consolidated Statements of Cash Flows 77 Notes to Consolidated Financial Statements 78 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 118 72
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Penguin Solutions, Inc. Consolidated Balance Sheets (In thousands, except par value amount) As of August 29, 2025 August 30, 2024 Assets Cash and cash equivalents $ 453,754 $ 383,147 Short-term investments — 6,337 Accounts receivable, net 307,904 251,743 Inventories 255,182 151,213 Other current assets 47,387 75,264 Total current assets 1,064,227 867,704 Property and equipment, net 92,603 106,548 Operating lease right-of-use assets 58,847 60,349 Intangible assets, net 87,754 121,454 Goodwill 145,895 161,958 Deferred tax assets 99,107 85,078 Other noncurrent assets 68,767 71,415 Total assets $ 1,617,200 $ 1,474,506 Liabilities, Temporary Equity and Stockholders' Equity Accounts payable and accrued expenses $ 318,761 $ 219,090 Current debt 19,945 — Deferred revenue 73,893 63,954 Other current liabilities 61,300 44,552 Total current liabilities 473,899 327,596 Long-term debt 441,893 657,347 Noncurrent operating lease liabilities 62,736 60,542 Other noncurrent liabilities 30,445 29,813 Total liabilities 1,008,973 1,075,298 Commitments and contingencies Temporary equity Preferred stock, $0.03 par value; authorized 30,000 shares; 200 shares of convertible preferredstock issued and outstanding as of August 29, 2025, redemption amount of $200,500; no sharesissued or outstanding as of August 30, 2024 202,710 — Penguin Solutions stockholders’ equity: Common stock, $0.03 par value; authorized 200,000 shares; 62,756 shares issued and 52,738shares outstanding as of August 29, 2025; 60,226 shares issued and 53,277 shares outstanding asof August 30, 2024 1,883 1,807 Additional paid-in capital 551,712 513,335 Retained earnings 46,709 29,985 Treasury stock, 10,018 shares and 6,949 shares held as of August 29, 2025 and August 30, 2024,respectively (206,076) (153,756) Accumulated other comprehensive income 18 10 Total Penguin Solutions stockholders’ equity 394,246 391,381 Noncontrolling interest in subsidiary 11,271 7,827 Total stockholders' equity 405,517 399,208 Total liabilities, temporary equity and stockholders' equity $ 1,617,200 $ 1,474,506 The accompanying notes are an integral part of these consolidated financial statements. 73
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Penguin Solutions, Inc. Consolidated Statements of Operations (In thousands, except per share amounts) Year ended August 29,2025 August 30,2024 August 25,2023 Net sales: Products $ 1,072,738 $ 925,827 $ 1,192,890 Services 263,706 244,969 248,360 Related party 32,350 — — Total net sales 1,368,794 1,170,796 1,441,250 Cost of sales: Products 863,136 722,634 916,005 Services 111,384 107,386 110,074 Total cost of sales 974,520 830,020 1,026,079 Gross profit 394,274 340,776 415,171 Operating expenses: Research and development 79,801 81,537 90,565 Selling, general and administrative 238,177 233,880 260,722 Impairment of goodwill 16,063 — 19,092 Change in fair value of contingent consideration — — 29,000 Other operating expense 2,098 7,064 7,047 Total operating expenses 336,139 322,481 406,426 Operating income 58,135 18,295 8,745 Non-operating (income) expense: Interest expense, net 7,305 28,378 36,421 Other non-operating expense 1,929 21,084 11,837 Total non-operating expense 9,234 49,462 48,258 Income (loss) before taxes 48,901 (31,167) (39,513) Income tax provision (benefit) 20,066 10,618 (49,203) Net income (loss) from continuing operations 28,835 (41,785) 9,690 Net loss from discontinued operations — (8,148) (195,384) Net income (loss) 28,835 (49,933) (185,694) Net income attributable to noncontrolling interest 3,444 2,539 1,832 Net income (loss) attributable to Penguin Solutions $ 25,391 $ (52,472) $ (187,526) Preferred stock dividends 8,667 — — Income available for distribution 16,724 (52,472) (187,526) Income allocated to participating securities 1,263 — — Net income (loss) available to common stockholders$ 15,461 $ (52,472) $ (187,526) Basic earnings (loss) per share of common stock: Continuing operations $ 0.29 $ (0.85) $ 0.16 Discontinued operations — (0.15) (3.94) $ 0.29 $ (1.00) $ (3.78) Diluted earnings (loss) per share of common stock: Continuing operations $ 0.28 $ (0.85) $ 0.15 Discontinued operations — (0.15) (3.80) $ 0.28 $ (1.00) $ (3.65) Common stock used in per share calculations: Basic 53,154 52,428 49,566 Diluted 54,368 52,428 51,322 The accompanying notes are an integral part of these consolidated financial statements. 74
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Penguin Solutions, Inc. Consolidated Statements of Comprehensive Income (Loss) (In thousands) Year ended August 29,2025 August 30,2024 August 25,2023 Net income (loss) $ 28,835 $ (49,933) $ (185,694) Other comprehensive income (loss), net of tax: Cumulative translation adjustment — (6,352) 15,686 Cumulative translation adjustment reclassified to net income (loss) — 212,321 — Gain (loss) on investments 8 5 5 Comprehensive income (loss) 28,843 156,041 (170,003) Comprehensive income attributable to noncontrolling interest 3,444 2,539 1,832 Comprehensive income (loss) attributable to Penguin Solutions$ 25,399 $ 153,502 $ (171,835) The accompanying notes are an integral part of these consolidated financial statements. 75
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Penguin Solutions, Inc. Consolidated Statements of Stockholders’ Equity (In thousands) Common Preferred Shares Issued Amount Shares Issued Amount Additional Paid-in Capital Retained Earnings Treasury Shares Accumulated Other Comprehensive Income (Loss) Total Penguin Solutions Stockholders’ Equity Non- controlling Interest in Subsidiary Total Equity As of August 26, 2022 52,880 $ 1,586 — $ — $448,112 $251,344 $(107,776) $ (221,655) $ 371,611 $ 6,935 $378,546 Net income (loss) — — — — — (187,526) — — (187,526) 1,832 (185,694) Other comprehensiveincome (loss) — — — — — — — 15,691 15,691 — 15,691 Shares issued underequity plans 4,662 140 — — 42,904 — — — 43,044 — 43,044 Repurchase of shares — — — — — — (24,671) — (24,671) — (24,671) Purchase of 2029Capped Calls — — — — (15,090) — — — (15,090) — (15,090) Settlement of 2026Capped Calls — — — — 10,786 — — — 10,786 — 10,786 Stock-basedcompensationexpense — — — — 40,813 — — — 40,813 — 40,813 Distribution tononcontrolling interest — — — — — — — — — (2,009) (2,009) Adoption of ASU 2020-06 — — — — (50,822) 18,639 — — (32,183) — (32,183) As of August 25, 2023 57,542 1,726 — — 476,703 82,457 (132,447) (205,964) 222,475 6,758 229,233 Net income (loss) — — — — — (52,472) — — (52,472) 2,539 (49,933) Other comprehensiveincome (loss) — — — — — — — 205,974 205,974 — 205,974 Stock issued underequity plans 2,684 81 — — 9,728 — — — 9,809 — 9,809 Repurchase of shares — — — — — — (21,309) — (21,309) — (21,309) Purchase of 2030Capped Calls — — — — (16,300) — — — (16,300) — (16,300) Stock-basedcompensationexpense — — — — 43,204 — — — 43,204 — 43,204 Distribution tononcontrolling interest — — — — — — — — — (1,470) (1,470) As of August 30, 2024 60,226 1,807 — — 513,335 29,985 (153,756) 10 391,381 7,827 399,208 Net income — — — — — 25,391 — — 25,391 3,444 28,835 Other comprehensiveincome (loss) — — — — — — — 8 8 — 8 Stock issued underequity plans 2,530 76 — — 8,728 — — — 8,804 — 8,804 Repurchase of shares — — — — — — (52,320) — (52,320) — (52,320) Stock-basedcompensationexpense — — — — 41,176 — — — 41,176 — 41,176 Issuance of preferredstock — — 200 6 191,177 — — — 191,183 — 191,183 Preferred stockdividends — — — — — (8,667) — — (8,667) — (8,667) Preferred stockreclassified toTemporary equity — — (200) (6) (202,704) — — — (202,710) — (202,710) As of August 29, 2025 62,756 $ 1,883 — $ — $551,712 $ 46,709 $(206,076) $ 18 $ 394,246 $ 11,271 $405,517 The accompanying notes are an integral part of these consolidated financial statements. 76
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Penguin Solutions, Inc. Consolidated Statements of Cash Flows (In thousands) Year Ended August 29, 2025 August 30, 2024 August 25, 2023 Cash flows from operating activities Net income (loss) $ 28,835 $ (49,933) $ (185,694) Net loss from discontinued operations — (8,148) (195,384) Net income (loss) from continuing operations 28,835 (41,785) 9,690 Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities: Depreciation expense and amortization of intangible assets 56,216 65,716 71,632 Amortization of debt issuance costs 3,493 3,724 4,064 Stock-based compensation expense 41,176 43,160 39,228 Impairment of goodwill 16,063 — 19,092 Change in fair value of contingent consideration — — 29,000 Loss on extinguishment debt 2,908 22,763 15,924 Deferred income taxes, net (14,112) (11,042) (63,603) Other (2,293) (2,689) 4,008 Changes in operating assets and liabilities: Accounts receivable (56,160) (32,495) 162,515 Inventories (101,610) 23,765 95,217 Other assets 7,653 9,098 6,767 Accounts payable and accrued expenses and other liabilities 131,014 54,306 (256,133) Payment of acquisition-related contingent consideration — (29,000) (73,724) Net cash provided by operating activities from continuing operations 113,183 105,521 63,677 Net cash used for operating activities from discontinued operations (4,099) (28,336) 40,710 Net cash provided by operating activities 109,084 77,185 104,387 Cash flows from investing activities Capital expenditures and deposits on equipment (9,012) (19,424) (39,421) Proceeds from sales and maturities of investment securities 66,361 39,395 — Purchases of held-to-maturity investment securities (59,066) (19,503) (25,015) Purchases of non-marketable investments — (11,000) (4,150) Acquisition of business, net of cash acquired — — (213,073) Other (1,660) (1,272) 475 Net cash used for investing activities from continuing operations (3,377) (11,804) (281,184) Net cash provided by investing activities from discontinued operations 28,350 119,389 (17,385) Net cash provided by investing activities 24,973 107,585 (298,569) Cash flows from financing activities Repayments of debt (300,015) (351,337) (21,634) Payments to acquire common stock (52,320) (21,309) (24,671) Payment of acquisition-related contingent consideration — (21,000) (28,100) Net cash paid for settlement and purchase of capped calls — (16,300) (4,304) Distribution to noncontrolling interest — (1,470) (2,009) Proceeds from debt — 192,694 295,287 Proceeds from issuance of common stock 8,804 9,809 43,045 Payment of premium in connection with convertible note exchange — — (14,141) Payment of preferred stock cash dividends (7,860) — — Proceeds from issuance of convertible preferred stock, net of issuance costs 191,182 — — Proceeds from borrowing under line of credit 100,000 — — Fees paid for revolving line of credit financing (3,255) — — Other — (582) (6,252) Net cash provided by (used for) financing activities from continuing operations (63,464) (209,495) 237,221 Net cash used for financing activities from discontinued operations — (606) (805) Net cash provided by (used for) financing activities (63,464) (210,101) 236,416 Effect of changes in currency exchange rates — (1,256) 4,765 Net increase (decrease) in cash, cash equivalents and restricted cash 70,593 (26,587) 46,999 Cash, cash equivalents and restricted cash at beginning of period 383,477 410,064 363,065 Cash, cash equivalents and restricted cash at end of period $ 454,070 $ 383,477 $ 410,064 Cash, cash equivalents and restricted cash at end of period: Continuing operations $ 454,070 $ 383,477 $ 365,563 Discontinued operations — — 44,501 $ 454,070 $ 383,477 $ 410,064
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The accompanying notes are an integral part of these consolidated financial statements. 77
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Penguin Solutions, Inc. Notes to Consolidated Financial Statements (Tabular amounts in thousands, except per share amounts) Significant Accounting Policies Basis of Presentation U.S. Domestication: On June 30, 2025, we consummated the redomiciliation of the parent company of our corporate group, Penguin Solutions (Cayman), Inc., formerly known as Penguin Solutions, Inc., a Cayman Islands exempted company (“Penguin Solutions Cayman”), from the Cayman Islands to the State of Delaware in the United States, resulting in Penguin Solutions, Inc., a Delaware corporation (“Penguin Solutions Delaware”), becoming our publicly traded parent company (the “U.S. Domestication”). The U.S. Domestication was approved by the shareholders of Penguin Solutions Cayman and effected via a court-sanctioned scheme of arrangement under Cayman Islands law, pursuant to which each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share of Penguin Solutions Cayman was exchanged for one share of convertible preferred stock of Penguin Solutions Delaware. The accompanying consolidated financial statements include the accounts of Penguin Solutions Cayman and its consolidated subsidiaries prior to the consummation of the U.S. Domestication and the accounts of Penguin Solutions Delaware and its consolidated subsidiaries after the consummation of the U.S. Domestication, and have been prepared in accordance with accounting principles generally accepted in the United States of America. Unless stated otherwise or the context otherwise requires, references to “Penguin Solutions,” “we,” “us,” “our,” and the “Company” in the accompanying consolidated financial statements (i) for periods prior to the consummation of the U.S. Domestication refer to Penguin Solutions Cayman and its consolidated subsidiaries and (ii) for periods at or after the consummation of the U.S. Domestication refer to Penguin Solutions Delaware and its consolidated subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Company Name Change: On October 15, 2024, we changed our name from SMART Global Holdings, Inc. to Penguin Solutions, Inc. The change reflects our focus on key areas such as artificial intelligence (“AI”) infrastructure deployment, advanced memory enterprise solutions and high-performance computing (“HPC”). Presentation of SMART Brazil as Discontinued Operations: On June 13, 2023, we entered into an agreement to divest of an 81% interest in SMART Modular Technologies do Brasil – Indústria e Comércio de Componentes Ltda. (“SMART Brazil”). We concluded that, as of August 25, 2023, (i) the net assets of SMART Brazil met the criteria for classification as held for sale and (ii) the proposed sale represented a strategic shift that was expected to have a major effect on our operations and financial results. On November 29, 2023, we completed the divestiture. The balance sheets, results of operations and cash flows of SMART Brazil have been presented as discontinued operations for all periods presented. SMART Brazil was previously included within our Integrated Memory segment. See “Divestiture of SMART Brazil.” Unless otherwise noted, amounts and discussion within these notes to the consolidated financial statements relate to our continuing operations. Reclassifications: Certain reclassifications have been made to prior period amounts to conform to current period presentation. Fiscal Year: Our fiscal year is the 52- or 53-week period ending on the last Friday in August. Fiscal years 2025, 2024 and 2023 contained 52, 53 and 52 weeks, respectively. All period references are to our fiscal periods unless otherwise indicated. Financial information for our subsidiaries in Brazil was included in our consolidated financial statements on a one-month lag because their fiscal years ended on July 31 of each year. In connection with the completion of the divestiture of an 81% interest in SMART Brazil, we ceased consolidating the operations of SMART Brazil in our financial statements as of the November 29, 2023 disposal date. As a result, financial information for the first 78
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quarter of 2024 included the four-month period for our SMART Brazil operations from August 1, 2023 to November 29, 2023. Cash, Cash Equivalents and Short-term Investments Cash equivalents include highly liquid investments, readily convertible to known amounts of cash, with original maturities of three months or less. Investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Cash paid for interest, net of amounts capitalized, was $26.2 million, $47.7 million and $41.8 million for 2025, 2024 and 2023, respectively. Income taxes paid, net of refunds, were $34.5 million, $13.1 million and $35.5 million for 2025, 2024 and 2023, respectively. Derivative Instruments We use derivative instruments to manage our exposure to changes in currency exchange rates from certain monetary assets and liabilities denominated in currencies other than the U.S. dollar. Derivative instruments are measured at their fair values and recognized as either assets or liabilities. The accounting for changes in the fair value of derivative instruments is based on the intended use of the derivative and the resulting designation. For derivative instruments that are not designated for hedge accounting, gains or losses from changes in fair values are recognized in other non-operating (income) expense. We do not use foreign currency contracts for speculative or trading purposes. Fair Value Measurements We measure and report certain financial assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. U.S. GAAP has established a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that can be obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party might use in pricing an asset or liability. The fair value hierarchy is categorized into three levels, based on the reliability of inputs, as follows: • Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities; • Level 2 – Valuations based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and • Level 3 – Valuations based on unobservable inputs for the asset or liability. Functional Currency The functional currency for all of our operations is the U.S. dollar. Monetary balances recorded in currencies other than the U.S. dollar are remeasured into U.S. dollars at prevailing exchange rates in effect as of the end of each reporting period. Gains or losses resulting from the remeasurement of monetary balances are recognized in other non-operating (income) expense. Goodwill We test goodwill for impairment in the fourth quarter of each year, or more frequently if indicators of an impairment exist, to determine whether it is more likely than not that the fair value of a reporting unit with goodwill is less than its carrying value. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance and other relevant events and factors affecting the fair value of a reporting unit. In 2025 and 2023, we recorded aggregate goodwill impairment charges of $16.1 million and $19.1 million, respectively under the Penguin Edge reporting unit. No impairment was recognized in 2024. Other than these impairment charges, there has been no impairment of goodwill for any of our other reporting units. See “Intangible Assets and Goodwill.” 79
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Income Taxes We recognize current and deferred income taxes based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences and carryforwards recognized for financial reporting and income tax purposes. Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases, utilizing tax rates that are expected to apply in the years in which temporary differences are expected to be recovered or settled. We recognize valuation allowances to reduce deferred tax assets to the amounts that we estimate, based on available evidence and management judgment, will more likely than not be realized. We record a valuation allowance in the period the determination is made that all or part of the net deferred tax assets will not be realized. We record interest and penalties related to unrecognized tax benefits in tax expense. Intangible Assets Intangible assets are stated at cost and amortized on a straight-line basis over their estimated useful lives of generally 5 to 19 years for technology, 6 to 8 years for customer relationships and 5 to 10 years for trademarks and trade names. Intangible assets are retired in the period they become fully amortized. We review the carrying value of identified intangible assets for impairment when events and circumstances indicate that their carrying value may not be recoverable from the estimated future cash flows expected to result from their use and/or disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to the amount by which the carrying value exceeds the estimated fair value of the identifiable intangible assets. Inventories Inventories are stated at the lower of cost or net realizable value. In our Optimized LED segment, cost is determined on a first-in, first-out basis. For our other segments, inventory value is determined on a specific identification basis for material and an allocation of labor and manufacturing overhead. At each balance sheet date, we evaluate ending inventories for excess quantities and obsolescence, including analyses of sales levels by product family, historical demand and forecasted demand in relation to inventory on hand, competitiveness of product offerings, market conditions and product life cycles. Leases We have operating leases through which we acquire or utilize facilities, offices and equipment in our manufacturing operations, research and development activities and selling, general and administrative functions. In determining the lease term, we assess whether it is reasonably certain we will exercise options to renew or terminate a lease and when or whether we would exercise an option to purchase the right-of-use asset. Measuring the present value of the initial lease liability requires exercising judgment to determine the discount rate, which we base on interest rates for similar borrowings issued by entities with credit ratings similar to ours. We recognize right-of use assets and corresponding lease liabilities for leases with an initial term of more than 12 months and do not separate lease and non-lease components. Recognized leases are included in operating lease right-of-use assets and corresponding lease liabilities are included in other current liabilities or noncurrent operating lease liabilities. For operating leases of buildings, we account for non-lease components, such as common area maintenance, as a component of the lease and include the components in the initial measurement of our right-of-use assets and corresponding liabilities. Operating lease assets are amortized on a straight-line basis over the lease term. Property and Equipment Property and equipment is stated at cost and depreciated using the straight-line method over estimated useful lives of generally 2 to 8 years for equipment, 5 to 40 years for buildings and building improvements and 2 to 5 years for furniture, fixtures and software. Land leases are amortized using the straight-line method over their lease terms, which expire from 2057 to 2082. We review the carrying value of property and equipment for impairment when events and circumstances indicate that the carrying value of an asset or group of assets may not be recoverable from the estimated future cash flows 80
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expected to result from its use and/or disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to the amount by which the carrying value exceeds the estimated fair value of the assets. Research and Development Research and development expenditures are expensed in the period incurred. Revenue Recognition We recognize revenue based on the transfer of control of goods and services and apply the following five-step approach: (1) identification of a contract with a customer, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract and (5) recognition of revenue as performance obligations are satisfied. Product Revenue: Product revenue is generally recognized when control of the promised goods is transferred to customers. Contracts with customers are generally short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery. We estimate a liability for returns using the expected value method based on historical rates of return. In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction price. We use the expected value method, based on historical price adjustments and current pricing trends, to estimate the amount of revenue recognized from sales to distributors. Differences between the estimated and actual amounts are recognized as adjustments to revenue. Noncancellable, nonrefundable customized product sales are recognized over time on a cost-incurred basis. In connection with these arrangements, customers obtain control and benefit from products as they are completed. The terms for these arrangements provide us with a legally enforceable right to receive payment, including a reasonable profit margin, upon customer cancellation for performance completed to date. Accordingly, we recognize revenue over time as we complete the manufacture of these products. A portion of our revenue is derived from the sale of customized products. In certain cases, we recognize revenue when control of the underlying assets passes to the customer when the customer is able to direct the use of, and obtain substantially all of the remaining benefit from, the assets; the customer has the significant risks and rewards associated with ownership of the assets; and we have a present right to payment. Under the terms of these arrangements, we cannot repurpose products without the customer’s consent and accordingly, we recognize revenue at the point in time when products are completed and made available to the customer. Service Revenue: Our service revenue is derived from professional services and supply chain services. Professional services include solution design, system installation, software automation and managed support services related to HPC and storage systems. Revenue from professional services and managed services is recognized based on the nature of the service and terms of the agreements based on the transfer of control. Design and system installations revenue is recognized upon completion of the services, whereas, managed support services and extended warranties revenue is recognized over-time as the services are provided. Supply chain services includes procurement, logistics, inventory management, temporary warehousing, kitting and packaging. While we take title to inventory under such arrangements, control of such inventory does not transfer to us as we do not, at any point, have the ability to direct the use, and thereby obtain the benefits, of the inventory. Revenue from supply chain services is recognized on a net basis as the service is provided to the customer. Revenue for these services is typically recognized at the point in time when the underlying goods are shipped to the customer. Agent Services: We provide certain services on an agent basis, where we procure product, materials and services on behalf of our customers and then resell such product, materials or services to our customers. Gross amounts invoiced to customers in connection with these agent services include amounts related to the services performed by us in addition to the cost of the product, materials and services procured. However, only the amount related to the agent component is recognized as revenue in our results of operations. We generally recognize revenue for these procurement, logistics and inventory management services upon the completion and/or acceptance of such services, which typically occurs at the time of shipment of product to the customer. Amounts we invoice to customers for the cost of product, materials and services performed, which remain unpaid as of the end of a reporting period, are included in accounts receivable. Additionally, the cost of product and materials procured for customers under these agent services, which remain on hand as of the end of a reporting period, are included in 81
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inventories. Amounts in accounts receivable and inventories impact the determination of cash flows from operating activities. Transaction Price: The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. We allocate the transaction price to each distinct product and service based on its relative standalone selling price. The standalone selling price for products primarily involves the cost to produce the deliverable plus the anticipated margin and for services is estimated based on our approved list price. A portion of our service revenue is from professional services, including installation and other services and hardware and software related support. Each contract may contain multiple performance obligations, which requires the transaction price to be allocated to each performance obligation. We allocate the consideration to each performance obligation based on the relative selling price, determined as the best estimate of the price at which we would transact if it sold the deliverable regularly on a stand-alone basis. Contract Costs: As a practical expedient, we recognize the incremental costs of obtaining a contract, specifically commission expenses, that have an amortization period of less than 12 months as an expense when incurred. Additionally, we account for shipping and handling costs, if any, that occur after control transfers to the customer as a fulfillment activity. We record shipping and handling costs related to revenue transactions within cost of sales as a period cost. Stock-Based Compensation Stock-based compensation is measured at the grant date, based on the fair value of the award, and recognized as expense under the straight-line attribution method over the requisite service period. We account for forfeitures as they occur. Treasury Shares Treasury shares are carried at cost. When treasury shares are retired, any excess of the repurchase price paid over par value is allocated between additional capital and retained earnings. Use of Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Estimates and judgments are based on historical experience, forecasted events and various other assumptions. Significant items subject to such estimates and assumptions include business acquisitions and divestitures, income taxes, inventories, goodwill and intangible assets, property and equipment, revenue recognition and stock-based compensation. Actual results could differ from the estimates made by management. Related Party Transactions A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate family members, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Preferred Stock Investment On December 13, 2024, we closed the SKT Investment (as defined below). Pursuant to the terms of the Securities Purchase Agreement (the “SKT Purchase Agreement”) by and between Penguin Solutions and SK Telecom Co., Ltd. (“SKT”), we sold to Astra AI Infra LLC (“Astra AI Infra”), an affiliate of SKT, 200,000 convertible preferred shares, par value $0.03 per share, of Penguin Solutions (the “Issued Cayman CPS”) at a price of $1,000 per share or an aggregate price of $200.0 million (the “SKT Investment”). 82
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Additionally, on the closing date of the SKT Investment, we and Astra AI Infra entered into an Investor Agreement (the “Investor Agreement”), and the Certificate of Designation relating to the Issued Cayman CPS (the “CPS Cayman Certificate of Designation”) became effective. The Investor Agreement and the CPS Cayman Certificate of Designation provided for certain rights and restrictions relating to the SKT Investment, including but not limited to board representation rights, pro rata rights, registration rights and consent rights, and standstill provisions, disposition restrictions and voting obligations. Amended and Restated Investor Agreement On June 30, 2025, effective upon consummation of the U.S. Domestication, Penguin Solutions Delaware assumed the Investor Agreement from Penguin Solutions Cayman and Penguin Solutions Delaware and SKT amended and restated the Investor Agreement (as amended and restated, the “Amended and Restated Investor Agreement”) such that the rights and restrictions relating to SKT’s beneficial ownership of the Issued Cayman CPS in place prior to the U.S. Domestication apply in respect of SKT’s holdings of Issued CPS (as defined below) following consummation of the U.S. Domestication. Delaware Certificate of Designation for Convertible Preferred Stock On June 27, 2025, in connection with the U.S. Domestication, Penguin Solutions Delaware executed and adopted a Certificate of Designation of Convertible Preferred Stock (the “CPS Delaware Certificate of Designation”) that sets forth the terms, rights and obligations of a series of 200,000 shares of preferred stock of Penguin Solutions Delaware, par value $0.03 per share, designated as convertible preferred stock (the “Issued CPS”). The principal attributes of the Issued Cayman CPS and the Issued CPS are substantially the same, with changes to give effect to requirements of Delaware law. The Issued CPS have an initial liquidation preference of 1x. Shares of Issued CPS are not redeemable upon or repurchased upon the election of the holders of shares of Issued CPS and are only redeemable, at our option, in one installment upon notice, provided that no such notice shall be sent until at least five years after the date of the closing of the SKT Investment. The shares of Issued CPS vote together with the common stock, par value $0.03 per share, of Penguin Solutions, on an as- converted basis, and entitle the holder to receive dividends of six percent per annum, cumulative, payable quarterly in-kind or in cash at our option, subject to certain conditions. The holder of shares of Issued CPS may convert the shares of Issued CPS into common stock at any time, provided that the Issued CPS may, at our option, automatically be converted into common stock on any date following the second anniversary of the closing of the SKT Investment upon which the volume-weighted average price of the common stock for any 15 consecutive trading day period equals or exceeds 150% of the then-applicable conversion price. The shares of Issued CPS are convertible into common stock at an initial conversion price of $32.81, subject to adjustment upon the occurrence of certain events. Holders of Issued CPS are also entitled to certain protective provisions. For more details, refer to the CPS Delaware Certificate of Designation, filed as Exhibit 3.3 hereto, to the description of theIssued CPS contained in the description of the Registrant’s capital stock, filed as Exhibit 4.1 hereto, and to the information under the heading “Comparison of Rights of Cayman Islands Shareholders and Delaware Stockholders” in Penguin Solutions Cayman’s definitive proxy statement on Schedule 14A filed with the SEC on May 2, 2025. Assumption and Amendment and Restatement of Equity Plans Effective upon the completion of the U.S. Domestication, Penguin Solutions Delaware assumed Penguin Solutions Cayman’s equity incentive plans and all outstanding awards and rights thereunder and amended and restated each plan in the form of the Amended and Restated 2017 Stock Incentive Plan, the Amended and Restated 2021 Inducement Plan and the Amended and Restated 2018 Employee Stock Purchase Plan (together with any applicable predecessor plans, the “Incentive Plans”), to provide, among other things, that Penguin Solutions Delaware common stock will be issued, held, available for issuance orused to measure or satisfy benefits as appropriate under the Incentive Plans, in substitution for Penguin Solutions Cayman ordinary shares. The assumed awards and rights have substantially the same terms and conditions that applied prior to the consummation of the U.S. Domestication (including any applicable vesting and change in control provisions and the U.S. Domestication did not constitute a change in control for the purposes of such provisions). 83
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Divestiture of SMART Brazil Overview of Transaction On November 29, 2023, we completed the divestiture of SMART Brazil pursuant to the terms of that certain Stock Purchase Agreement (the “Brazil Purchase Agreement”), by and among SMART Modular Technologies (LX) S.à r.l., a société à responsabilité limitée governed by the laws of the Grand Duchy of Luxembourg and a wholly owned subsidiary of Penguin Solutions (the “Brazil Seller”), Lexar Europe B.V., a company organized under the laws of The Netherlands (the “Brazil Purchaser”), Shenzhen Longsys Electronics Co., Ltd., a company limited by shares governed by the laws of the People’s Republic of China (“Longsys”), solely with respect to certain provisions therein, Shanghai Intelligent Memory Semiconductor Co., Ltd., a limited liability company governed by the laws of the People’s Republic of China and, solely with respect to certain provisions therein, Penguin Solutions. Pursuant to the Brazil Purchase Agreement, Brazil Seller sold to Brazil Purchaser, and Brazil Purchaser purchased from Brazil Seller, 81% of Brazil Seller’s right, title and interest in and to the outstanding quotas of SMART Brazil, with Brazil Seller retaining a 19% interest in SMART Brazil (the “Retained Interest”) (the “Brazil Divestiture”). At the closing of the Brazil Divestiture, Brazil Purchaser paid to Brazil Seller (based on a total enterprise value of $204.6 million for SMART Brazil) an upfront cash purchase price, subject to certain customary adjustments as set forth in the Brazil Purchase Agreement. In addition, pursuant to the Brazil Purchase Agreement, Brazil Seller has a right to receive, and Brazil Purchaser is obligated to pay, (i) a deferred payment due 18 months following the closing and (ii) subject to and at the time of exercise of the Put/Call Option (as defined below), an additional deferred cash adjustment equal to 19% of the amount of SMART Brazil’s net cash as of the closing (as calculated pursuant to the Brazil Purchase Agreement). Put/Call Option: Pursuant to the Brazil Purchase Agreement, at the closing, SMART Brazil, Brazil Seller, Brazil Purchaser and Longsys entered into a Quotaholders Agreement, which provides Brazil Seller with a put option to sell the Retained Interest in SMART Brazil to Brazil Purchaser (the “Put Option”) during three exercise windows following SMART Brazil’s fiscal years ending December 31, 2026, December 31, 2027 or December 31, 2028 (the “Exercise Windows”), with such Exercise Windows beginning on June 15, 2027 and ending on July 15, 2027, beginning on June 15, 2028 and ending on July 15, 2028 and beginning on June 15, 2029 and ending on July 15, 2029, respectively. A call option has also been granted to Brazil Purchaser to require Brazil Seller to sell the Retained Interest to Brazil Purchaser during the Exercise Windows (together with the Put Option, the “Put/Call Option”). The price for the Put/Call Option is based on a 100% enterprise value of 7.5x net income for SMART Brazil for the preceding fiscal year at the time of exercise. Total consideration in exchange for the sale of an 81% interest in SMART Brazil amounted to $194.1 million which included cash at closing of $164.9 million, a deferred payment with fair value of $25.4 million and a deferred cash adjustment with a fair value of $3.7 million. The deferred payment, comprised of a notional amount of $28.4 million discounted at 7.5%, was received in May 2025. The deferred payment is included in other current assets in the accompanying consolidated balance sheets for prior periods presented. The fair value of the deferred cash adjustment, comprised of a notional amount of $4.8 million discounted at 7.5%, equal to 19% of the amount of SMART Brazil’s net cash as of the closing (as calculated pursuant to the Brazil Purchase Agreement). The deferred cash adjustment, which is accounted for as a derivative financial instrument, is due at the time of exercise of the Put/Call Option and was included in other noncurrent assets in the accompanying consolidated balance sheet. Presentation of SMART Brazil Operations As of August 25, 2023, we concluded that the net assets of SMART Brazil met the criteria for classification as held for sale. In addition, the divestiture of SMART Brazil was expected to have a major effect on our operations and financial results. As a result, we have presented the results of operations, cash flows and financial position of SMART Brazil as discontinued operations in the accompanying consolidated financial statements and notes for all periods presented. A disposal group classified as held for sale is measured at the lower of its carrying amount or fair value less costs to sell. Accordingly, we evaluated the carrying value of the net assets of SMART Brazil (including $206.3 million 84
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recognized within stockholders’ equity related to the cumulative translation adjustment from SMART Brazil), estimated costs to sell and expected proceeds and concluded the net assets were impaired as of August 25, 2023. As a result, we recognized an impairment charge of $153.0 million in the fourth quarter of 2023 to write down the carrying value of the net assets of SMART Brazil. In addition, we concluded that the outside basis of SMART Brazil inclusive of any withholding taxes should be recognized upon the classification as held for sale as of August 25, 2023. Accordingly, we recognized withholding taxes on the expected capital gain and deferred tax liabilities of $28.6 million in 2023. Assets and liabilities of SMART Brazil as of the November 29, 2023 disposal date and as of August 25, 2023 were as follows: As of November 29, 2023 August 25, 2023 Cash and cash equivalents $ 40,927 $ 44,501 Accounts receivable, net 16,482 17,055 Inventories 26,103 25,877 Other current assets 17,800 17,732 Total current assets 101,312 105,165 Property and equipment, net 66,870 58,321 Operating lease right-of-use assets 6,912 5,213 Goodwill 19,856 20,668 Other noncurrent assets 27,490 34,243 Total assets 222,440 223,610 Impairment of SMART Brazil assets (153,036) (153,036) Total assets, net of impairment 69,404 70,574 Accounts payable and accrued expenses 20,576 25,867 Current debt 3,872 4,006 Other current liabilities 1,023 1,030 Total current liabilities 25,471 30,903 Long-term debt 11,938 13,689 Noncurrent operating lease liabilities 5,686 4,614 Noncurrent deferred tax liabilities 28,564 28,564 Other noncurrent liabilities 93 — Total liabilities 71,752 77,770 Net assets (liabilities) of discontinued operations $ (2,348) $ (7,196) Reported as: Current assets of discontinued operations $ 70,574 Current liabilities of discontinued operations 77,770 Net assets (liabilities) of discontinued operations $ (7,196) 85
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The following table presents the results of operations for SMART Brazil: Year ended August 30, 2024 August 25, 2023 Net sales $ 55,159 $ 185,377 Cost of sales 50,560 184,016 Gross profit 4,599 1,361 Operating expenses: Research and development 157 5,887 Selling, general and administrative 5,421 12,509 Other operating (income) expense 64 657 Total operating expenses 5,642 19,053 Operating income (loss) (1,043) (17,692) Non-operating (income) expense: Loss from divestiture of 81% interest in SMART Brazil 10,888 153,036 Interest (income) expense, net (1,262) (4,174) Other non-operating (income) expense 138 996 Total non-operating (income) expense 9,764 149,858 Income (loss) before taxes (10,807) (167,550) Income tax provision (benefit) (2,659) 27,834 Net income (loss) from discontinued operations $ (8,148) $ (195,384) Loss from Divestiture of SMART Brazil The following table presents the calculation of the loss from the divestiture of an 81% interest in SMART Brazil: Proceeds, less costs to sell and other expenses: Consideration $ 194,092 Costs to sell and other expenses (4,150) 189,942 Basis in 81% interest in SMART Brazil: Net assets of SMART Brazil 145,194 Cumulative translation adjustment 212,397 357,591 Gain on revalue of 19% Retained Interest in SMART Brazil 3,725 Pre-tax loss on divestiture of 81% interest in SMART Brazil 163,924 Income tax provision 26,580 Loss on divestiture of 81% interest in SMART Brazil $ 190,504 (1) The sale of an 81% interest in SMART Brazil resulted in the de-consolidation of SMART Brazil and, accordingly, the release of the related cumulative translation adjustment. Included in the basis calculation above is the balance of cumulative translation adjustment for SMART Brazil as of the closing. The release of the cumulative translation adjustment is included in net income (loss) from discontinued operations in the accompanying consolidated statement of operations. (2) In connection with the transaction, we revalued our 19% Retained Interest in SMART Brazil based on the implied value for 100% of SMART Brazil, adjusted for lack of control premium. As of August 29, 2025, the carrying value of our remaining 19% interest in SMART Brazil was $37.8 million and was included in other noncurrent assets in the accompanying consolidated balance sheet as a non- marketable equity investment as of August 29, 2025. (1) (2) 86
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Recognition Periods: The loss from the divestiture of an 81% interest in SMART Brazil was recognized as follows: Three Months Ended December 1,2023 August 25,2023 Total Pre-tax loss on divestiture of 81% interest in SMART Brazil $ 10,888 $ 153,036 $ 163,924 Income tax provision (benefit) (1,984) 28,564 26,580 Loss on divestiture of 81% interest in SMART Brazil $ 8,904 $ 181,600 $ 190,504 Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023- 07, Segment Reporting (Topic 280): Improvements to Segment Reporting Disclosures, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The guidance is effective for the Company's annual periods beginning in 2025 and interim periods beginning in the first quarter of fiscal year 2026. The Company adopted the standard on August 29, 2025. See “Segment and Other Information.” Recently Issued Accounting Standards In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350- 40): Improvements to the Accounting for and Disclosure of Internal-Use Software, which replaces the previous stage-based model for capitalizing internal-use software development costs with a principles-based approach. Under the new guidance, capitalization begins when management authorizes and commits to funding a project and it is probable the project will be completed and used as intended. The ASU also incorporates website development guidance into ASC 350-40 and introduces the concept of “significant development uncertainty,” which, if present, would delay capitalization. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, including interim periods within those years, with early adoption permitted at the beginning of an annual period. The new guidance may be applied prospectively, retrospectively, or using a modified prospective approach. We are currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures, though we do not expect there to be a material impact. In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arisingfrom transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. We are currently evaluating the potential impact of adopting ASU 2025-05 on our consolidated financial statements and disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses, as well as a qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. This ASU also requires disclosure of the total amount of selling expenses and an entity’s definition of selling expenses. The amendments in this ASU are effective for us in 2028 for annual reporting and in 2029 for interim reporting, with early adoption permitted and may be applied prospectively or retrospectively. We do not expect ASU 2024-03 to have an impact on our financial position, results of operations and cash flows. We are currently evaluating the impact on our consolidated financial statement disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU are intended to increase transparency through improvements to annual disclosures primarily related to income tax rate reconciliation and income taxes paid. The amendments in this 87
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ASU are effective for us in 2026 for annual reporting, with early adoption permitted. The ASU may be applied on a prospective basis, although retrospective application is permitted. We are evaluating the timing and effects of this ASU on our income tax disclosures. Business Acquisitions Stratus Technologies On August 29, 2022 (the “Stratus Acquisition Date”), we completed the acquisition of Storm Private Holdings I Ltd., a Cayman Islands exempted company (“Stratus Holding Company” and together with its subsidiaries, “Stratus Technologies”), pursuant to the terms of that certain Share Purchase Agreement (the “Stratus Purchase Agreement”), dated as of June 28, 2022, by and among Penguin Solutions, Stratus Holding Company and Storm Private Investments LP, a Cayman Islands exempted limited partnership (the “Stratus Seller”). Pursuant to the Stratus Purchase Agreement, among other matters, the Stratus Seller sold to Penguin Solutions, and Penguin Solutions purchased from the Stratus Seller, all of the Stratus Seller’s right, title and interest in and to the outstanding equity securities of Stratus Holding Company. Stratus Technologies is a global leader in simplified, protected and autonomous computing platforms and services in the data center and at the edge. For more than 40 years, Stratus Technologies has provided high-availability, fault-tolerant computing to Fortune 500 companies and small-to-medium sized businesses enabling them to securely and remotely run critical applications with minimal downtime. Stratus Technologies operates as part of Penguin Solutions’ Advanced Computing segment. The acquisition of Stratus Technologies further enhances Penguin Solutions’ growth and diversification strategy and complements and expands Penguin Solutions’ Advanced Computing business in data center and edge environments. Purchase Price: At the closing of the transaction, we paid the Stratus Seller a cash purchase price of $225.0 million, subject to certain adjustments. In addition, the Stratus Seller had the right to receive, and we were obligated to pay, contingent consideration of up to $50.0 million (the “Stratus Earnout”) based on the gross profit performance of Stratus Technologies during the first full 12 fiscal months following the closing of the acquisition. In the second quarter of 2024, we paid in full $50.0 million related to the Stratus Earnout. Cash paid was utilized, in part, to settle the outstanding debt of Stratus Technologies as of the closing of the transaction and was recognized as a component of consideration transferred. As a result, the assets acquired and liabilities assumed do not include an assumed liability for the outstanding debt of Stratus Technologies. The purchase price for Stratus Technologies was as follows: Cash $ 225,000 Additional payment for net working capital adjustment 17,246 Fair value of Stratus Earnout 20,800 $ 263,046 (1) Includes $14.4 million paid at closing and $2.8 million paid in the second quarter of 2023 upon completion of the review of the working capital assets acquired and liabilities assumed. Contingent Consideration: The Stratus Earnout was accounted for as contingent consideration. As of the Stratus Acquisition Date, the fair value of the Stratus Earnout was estimated to be $20.8 million and was valued using a Monte Carlo simulation analysis in a risk-neutral framework with assumptions for volatility, market price of risk adjustment, risk-free rate and cost of debt. The fair value measurement was based on significant inputs, not observable in the market, including forecasted gross profit, comparable company volatility, discount rate and cost of debt. The fair value of the Stratus Earnout was estimated based on the Company’s evaluation of the probability and amount of the Stratus Earnout to be achieved based on the expected gross profit of Stratus Technologies, using an estimated gross profit volatility of 33.4% and a discount rate of 7.3% as of the Stratus Acquisition Date. (1) 88
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Valuation: We estimated the fair value of the assets and liabilities of Stratus Technologies as of the Stratus Acquisition Date. The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed as follows: Cash and cash equivalents $ 29,174 Accounts receivable 26,685 Inventories 10,890 Other current assets 6,536 Property and equipment 7,292 Operating lease right-of-use assets 9,216 Intangible assets 123,700 Goodwill 125,929 Other noncurrent assets 11,661 Accounts payable and accrued expenses (32,656) Other current liabilities (36,723) Noncurrent operating lease liabilities (7,067) Other noncurrent liabilities (11,591) Total net assets acquired $ 263,046 The goodwill arising from the acquisition of Stratus Technologies was assigned to our Advanced Computing segment. None of the goodwill recognized is deductible for income tax purposes. The fair values and useful lives of identifiable intangible assets were as follows: Amount Estimated useful life (in years) Technology $ 82,000 5 Customer relationships 27,800 8 Trademarks/trade names 10,000 9 In-process research and development 3,900 N/A $ 123,700 • Technology intangible assets were valued using the multi-period excess earnings method based on the discounted cash flow and technology obsolescence rate. Discounted cash flow requires the use of significant unobservable inputs, including projected revenue, expenses, capital expenditures and other costs, and discount rates calculated based on the cost of equity adjusted for various risks, including the size of the acquiree, industry risk and other risk factors. • Customer relationship intangible assets were valued using the multi-period excess earnings method, which is the present value of the projected cash flows that are expected to be generated by the existing intangible assets after reduction by an estimated fair rate of return on contributory assets required to generate the customer relationship revenues. Key assumptions included discounted cash flow, estimated life cycle and customer attrition rates. • Trademark/trade name intangible assets were valued using the relief from royalty method, which is the discounted cash flow savings accruing to the owner by virtue of the fact that the owner is not required to license the trademarks/trade names from a third party. Key assumptions included attributable revenue expected from the trademarks/trade names, royalty rates and assumed asset life. • In-process research and development (“IPR&D”) relates to next generation fault tolerant architecture. IPR&D is indefinite-lived and will be reviewed for impairment at least annually. IPR&D was valued based on discounted cash flow, which requires the use of significant unobservable inputs, including projected revenue, expenses, capital expenditures and other costs. Amortization of this technology over an estimated useful life of 10 years commenced in the second quarter of 2024 upon completion of research and development efforts. 89
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Cash and Investments As of August 29, 2025 and August 30, 2024, all of our debt securities, the fair values of which approximated their carrying values, were classified as held to maturity. As of August 29, 2025, restricted cash, which is included in other noncurrent assets, was $0.3 million. Cash, cash equivalents and short-term investments were as follows: August 29, 2025 August 30, 2024 As of Cash and Cash Equivalents Short-term Investments Cash and Cash Equivalents Short-term Investments Cash $ 426,870 $ — $ 354,037 $ — Level 1: Money market funds 26,884 — 29,110 — U.S. Treasury securities — — — 6,337 $ 453,754 $ — $ 383,147 $ 6,337 Non-marketable Equity Investments As of August 29, 2025 and August 30, 2024, other noncurrent assets included $53.0 million of non-marketable equity investments, which are accounted for under the measurement alternative at cost less impairment, if any. In the event an observable price change occurs in an orderly transaction for an identical or a similar investment, the carrying value of investments would be remeasured to fair value as of the date the observable transaction occurred, with any resulting gains or losses recorded in results of operations. Accounts Receivable In the third quarter of 2023, we entered into a trade accounts receivable sale program with a third-party financial institution to sell certain of our trade accounts receivable on a non-recourse basis pursuant to a factoring arrangement. This program allows us to sell certain of our trade accounts receivables up to $60.0 million. As of August 29, 2025, there have been no trade accounts receivables sold under this program. Inventories As of August 29, 2025 August 30, 2024 Raw materials $ 92,393 $ 75,514 Work in process 32,002 18,742 Finished goods 130,787 56,957 $ 255,182 $ 151,213 As of August 29, 2025 and August 30, 2024, 21% and 14%, respectively, of total inventories were owned and held under our logistics services program. Property and Equipment As of August 29, 2025 August 30, 2024 Equipment $ 90,160 $ 89,848 Buildings and building improvements 69,245 70,462 Furniture, fixtures and software 46,784 48,027 Land 14,983 16,126 221,172 224,463 Accumulated depreciation (128,569) (117,915) $ 92,603 $ 106,548 90
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As of August 29, 2025 and August 30, 2024, depreciation expense for property and equipment was $20.6 million and $25.7 million, respectively. Intangible Assets and Goodwill August 29, 2025 August 30, 2024 As of Gross Amount Accumulated Amortization Gross Amount Accumulated Amortization Intangible assets: Technology $ 144,445 $ (83,375) $ 142,539 $ (58,948) Customer relationships 33,000 (13,602) 72,500 (45,556) Trademarks/trade names 15,786 (8,500) 27,964 (17,045) $ 193,231 $ (105,477) $ 243,003 $ (121,549) In 2025 and 2024, we capitalized $1.9 million and $1.4 million, respectively, for intangible assets, with weighted-average useful lives of 18.6 years and 18.2 years, respectively. Amortization expense for intangible assets was $35.6 million, $40.0 million and $45.1 million in 2025, 2024 and 2023, respectively. Amortization expense is expected to be $30.3 million for 2026, $29.7 million for 2027, $10.0 million for 2028, $6.1 million for 2029 and $5.4 million for 2030 and $6.2 million for 2031 and thereafter. In connection with our acquisition of Stratus Technologies, we capitalized $3.9 million of in-process research and development related to next generation fault tolerant architecture. Amortization of this technology commenced in the second quarter of 2024. Goodwill by segment AdvancedComputing Integrated Memory Total Balance as of August 25, 2023 Gross $ 166,330 $ 14,720 $ 181,050 Accumulated impairment losses (19,092) — (19,092) Carrying value 147,238 14,720 161,958 Balance as of August 30, 2024 Gross 166,330 14,720 181,050 Accumulated impairment losses (19,092) — (19,092) Carrying value 147,238 14,720 161,958 Impairment losses during the year-ended August 29, 2025 $ (16,063) $ — $ (16,063) Balance as of August 29, 2025 Gross 166,330 14,720 181,050 Accumulated impairment losses (35,155) — (35,155) Carrying value $ 131,175 $ 14,720 $ 145,895 During the second quarter of 2023, we initiated a plan within our Advanced Computing segment pursuant to which we are winding down manufacturing and discontinuing the sale of products offered through our Penguin Edge business by approximately the end of calendar 2025. The Penguin Edge technology is becoming obsolete and is only sold to a small number of customers who we expect to phase out the technology. In each quarter of 2025, to assess the fair value of the Penguin Edge business and reporting unit for the purpose of goodwill impairment, we utilized a discounted cash flow model using assumptions for how a market participant would value the business based on expected future cash flows through the expected completion of the wind down. We used this valuation approach because there were no comparable transactions in the marketplace of a similar business being sold while in the process of winding down. Further, since the Penguin Edgebusiness has no expansion or product initiatives, those expected future cash flows incorporated expected revenues, the costs associated with fulfilling customer contracts, and the costs associated with winding down the Penguin Edge business. In determining the fair value of the Penguin Edge business, it was our expectation that the business would continue to be profitable and generate positive free cash flow through the wind down of the business. We calculated the expected remaining cash flows based on existing contracts, future expected orders based on historical order volumes, and future expected orders identified through customer engagements for last-time buy planning, which were expected to fully consume all inventory on hand. Net estimated discounted cash flows were calculated by taking the total 91
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proceeds expected from sales, minus cash outflows for costs associated with fulfilling customer contracts, operating expenses, collection of receivables recognized as of August 29, 2025, and costs associated with the wind down of the Penguin Edge business. We assumed no capital expenditures because we are no longer investing in the business. We applied a discount rate of 16.25%, which we believe reflects the return a market participant would require when purchasing the Penguin Edge business given the risk profile of the remaining operations and the limited future cash flows from winding down. However, given the short period of time associated with the remaining cash flows for the business, changes to the discount rate would not have produced a materially different fair value estimate. Since the Penguin Edge business is no longer investing in growth initiatives and operating costs are significantly lower than for an ongoing business, we observed a positive present value of future expected cash flows, which we then compared to the carrying value of the business. Based on our analysis, the fair value of the Penguin Edge business was determined to be lower than its carrying value,resulting in an impairment charge for the remaining goodwill balance of $16.1 million for the year-ended August 29, 2025. The goodwill impairments were recorded to align the carrying value of the Penguin Edge reporting unit with the fair value of the Penguin Edge reporting unit as of the end of the respective reporting periods. The goodwill impairment loss recognized reduced the Penguin Edge reporting unit’s carrying value to zero. Accounts Payable and Accrued Expenses As of August 29, 2025 August 30, 2024 Accounts payable $ 267,498 $ 182,037 Salaries, wages and benefits 34,169 22,819 Income and other taxes 15,304 11,863 Other 1,790 2,371 $ 318,761 $ 219,090 (1) Included accounts payable for property and equipment of $1.7 million and $0.4 million as of August 29, 2025 and August 30, 2024, respectively. Debt As of August 29, 2025 August 30, 2024 Amended 2022 TLA $ — $ 297,297 2030 Notes 193,906 192,778 2029 Notes 147,987 147,439 2026 Notes 19,945 19,833 2025 Loans 100,000 — 461,838 657,347 Less current debt (19,945) — Long-term debt $ 441,893 $ 657,347 Credit Agreement On February 7, 2022, Penguin Solutions Cayman and Penguin Solutions Corporation (formerly known as SMART Modular Technologies, Inc.) (collectively, the “Borrowers”) entered into a credit agreement (the “2022 Original Credit Agreement”) with a syndicate of banks and Citizens Bank, N.A., as administrative agent (the “Administrative Agent”) that provided for (i) a term loan credit facility in an aggregate principal amount of $275.0 million (the “2022 TLA”) and (ii) a revolving credit facility in an aggregate principal amount of $300.0 million (the “2022 Revolver”), in each case, maturing on February 7, 2027. The 2022 Original Credit Agreement provided that up to $35.0 million of the 2022 Revolver was available for issuances of letters of credit. On August 29, 2022, the Borrowers entered into an amendment (the 2022 Original Credit Agreement, as amended by this amendment and subsequent amendments, the “2022 Amended Credit Agreement”) with and (1) 92
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among the lenders party thereto and the Administrative Agent, which (i) provided for incremental term loans under the 2022 Amended Credit Agreement in an aggregate amount of $300.0 million (the “Incremental Term Loans” and together with the 2022 TLA, the “Amended 2022 TLA”), which Incremental Term Loans were on the same terms as the term loans incurred under the 2022 Original Credit Agreement, (ii) increased the maximum First Lien Leverage Ratio (as defined in the 2022 Amended Credit Agreement) financial covenant from 3.00:1.00 to 3.25:1.00 and (iii) increased the aggregate amount of unrestricted cash and permitted investments netted from the definitions of Consolidated First Lien Debt and Consolidated Net Debt under the 2022 Amended Credit Agreement from $100.0 million to $125.0 million. Simultaneously with amending the 2022 Original Credit Agreement, the Borrowers applied a portion of the proceeds of the Incremental Term Loans to (i) finance a portion of the purchase price for the acquisition of Stratus Technologies and (ii) prepay in full the $101.8 million outstanding under the LED Earnout Note (as defined below). In connection with our prepayment of the LED Earnout Note, we recognized a gain of $0.8 million in the first quarter of 2023, which is included in other non-operating (income) expense in the accompanying consolidated statements of operations. On June 24, 2025 (the “Refinancing Closing Date”), the Borrowers entered into a new Credit Agreement (the “2025 Credit Agreement”) by and among the Borrowers, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and an issuing bank. The 2025 Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $400.0 million (the “2025 Credit Facility” and the revolving loans thereunder, the “2025 Loans”), maturing on June 24, 2030. The 2025 Credit Agreement provides that up to $35.0 million of the 2025 Credit Facility is available for issuances of letters of credit. On the Refinancing Closing Date, we borrowed $100.0 million under the 2025 Credit Facility, and simultaneously applied such proceeds, together with $200.0 million cash on hand, to repay in full all borrowings and terminate all commitments under the 2022 Amended Credit Agreement. Immediately prior to the repayment and termination of the 2022 Amended Credit Agreement, we had $300.0 million of principal outstanding under the Amended 2022 TLA, with unamortized issuance costs of $1.8 million and the effective interest rate was 7.17%, and no amounts outstanding under the 2022 Revolver, with unamortized issuance costs of $1.5 million. Following the extinguishment of the 2022 Amended Credit Agreement, we recognized a loss on extinguishment of $2.9 million. Interest and Fees: Under the 2025 Credit Agreement, 2025 Loans bear interest at a rate per annum equal to either, at our option, a Term Secured Overnight Financing Rate (“Term SOFR”) rate or a base rate, in each case plus an applicable margin based on the Total Leverage Ratio (as defined in the 2025 Credit Agreement) and ranges from 1.25% to 3.00% per annum with respect to Term SOFR borrowings and from 0.25% to 2.00% per annum with respect to base rate borrowings. In addition, we are required to pay a quarterly unused commitment fee at an initial rate of 0.25%, which may increase up to a rate of 0.35% based on certain Total Leverage Ratio levels specified in the 2025 Credit Agreement. Security: The 2025 Credit Agreement is jointly and severally guaranteed on a senior basis by certain subsidiaries of the Parent Borrower (as defined in the 2025 Credit Agreement) organized in the United States and the Cayman Islands. In addition, the 2025 Credit Agreement is secured by a pledge of the capital stock of, or equity interests in, certain subsidiaries of the Parent Borrower and by substantially all of the assets of certain subsidiaries of the Parent Borrower organized in the United States and the Cayman Islands. Covenants: The 2025 Credit Agreement contains customary representations and warranties and affirmative covenants, as described in the 2025 Credit Agreement. The 2025 Credit Agreement also contains a number of negative covenants that, among other things, restrict, subject to certain exceptions, the Borrowers’ ability and the ability of the Borrowers’ subsidiaries to: incur additional indebtedness; create liens on assets; engage in mergers or consolidations; sell assets; pay dividends; make distributions or repurchase capital stock; make investments, loans or advances; repay or repurchase certain subordinated debt (except as scheduled or at maturity); create restrictions on the payment of dividends or other amounts to the Borrowers from the Borrowers’ restricted subsidiaries; make certain acquisitions; engage in certain transactions with affiliates; amend material agreements governing the Borrowers’ subordinated debt and fundamentally change the Borrowers’ business. 93
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The 2025 Credit Agreement also includes the following financial maintenance covenants tested on the final day of each fiscal quarter: • First Lien Leverage Ratio (as defined in the 2025 Credit Agreement) of 3.25 to 1.00; • Total Leverage Ratio of 4.50 to 1.00; provided, that in connection with any Material Acquisition (as defined in the 2025 Credit Agreement), at the election of the Borrowers, the maximum Total Leverage Ratio for the next four quarterly testing periods after such Material Acquisition has been consummated will be increased to 5.00 to 1.00; provided further, that (x) no more than two such elections may be made during the term of the 2025 Credit Agreement and (y) following the first such election, no subsequent election may be made unless the Total Leverage Ratio has been less than or equal to 4.50 to 1.00 as of the last day of at least two consecutive quarterly testing periods following the expiration of the first increase; and • Interest Coverage Ratio (as defined in the 2025 Credit Agreement) of at least 3.00 to 1.00. For purposes of calculating the First Lien Leverage Ratio and the Total Leverage Ratio, the consolidated debt of the Parent Borrower and its Restricted Subsidiaries (as defined in the 2025 Credit Agreement) is reduced by up to $175.0 million of the aggregate amount of unrestricted cash and Permitted Investments (as defined in the 2025 Credit Agreement) of the Parent Borrower and its Restricted Subsidiaries. Other: As of August 29, 2025, there was $100.0 million outstanding under the 2025 Loans and unamortized issuance costs were $3.6 million. Convertible Senior Notes Repurchase of Convertible Senior Notes On August 6, 2024, we repurchased $80.0 million aggregate principal amount of our 2.25% Convertible Senior Notes due 2026 (the “2026 Notes”) for $100.6 million cash (including payment for accrued interest) in privately-negotiated transactions. The repurchase was accounted for as debt extinguishment. Accordingly, we recognized a loss in the fourth quarter of 2024, included in other non-operating expense, of $20.4 million, consisting of $19.7 million premium paid to extinguish the 2026 Notes and $0.7 million for the write-off of unamortized issuance costs. Convertible Senior Notes Exchange On January 18, 2023, we entered into separate, privately-negotiated exchange agreements with a limited number of holders of our 2026 Notes to exchange $150.0 million principal amount of the 2026 Notes for (i) $150.0 million in aggregate principal amount of new 2.00% Convertible Senior Notes due 2029 (the “2029 Notes”) and (ii) an aggregate of $15.6 million in cash, with such cash payment representing $14.1 million of premium paid for the 2026 Notes in excess of par value and $1.5 million of accrued and unpaid interest on the 2026 Notes (collectively, the “Exchange Transactions”). The 2029 Notes were issued pursuant to, and are governed by, an indenture (as supplemented, the “2029 Indenture”), dated as of January 23, 2023, between the Company and U.S. Bank Trust Company, National Association, as trustee. Transactions involving contemporaneous exchanges between the same debtor and creditor in connection with the issuance of a new debt obligation and satisfaction of an existing debt obligation are accounted for as debt extinguishments if the debt instruments have substantially different terms. An exchange is deemed to have substantially different terms if: • The present value of the remaining cash flows of the old instrument differs by more than 10% of the present value of the cash flows of the new instrument, or • The change in the fair value of the conversion option immediately before and after the exchange is greater than 10% of the carrying value of the debt instrument immediately prior to the exchange. We concluded that the exchanged 2026 Notes and the 2029 Notes had substantially different terms, and accordingly, we accounted for the Exchange Transactions as the extinguishment of the 2026 Notes and the issuance of the 2029 Notes. As a result, we recognized an extinguishment loss in the second quarter of 2023, included in other non-operating expense, of $16.7 million consisting of the premium paid to extinguish the 2026 Notes and $2.5 million for the write-off of unamortized issuance costs. 94
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2030 Notes On August 6, 2024 and August 14, 2024, we issued $175.0 million and $25.0 million aggregate principal amount, respectively, of our 2.00% Convertible Senior Notes due 2030 (collectively, the “2030 Notes”) pursuant to, and governed by, an indenture (as supplemented, the “2030 Indenture”), dated August 6, 2024, between us and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes bear interest at a rate of 2.00% per annum on the principal amount thereof, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2025, to the noteholders of record of the 2030 Notes as of the close of business on the immediately preceding February 1 and August 1, respectively. The 2030 Notes will mature on August 15, 2030 (the “2030 Maturity Date”), unless earlier converted, redeemed or repurchased. The initial conversion rate of the 2030 Notes is 35.7034 shares of common stock per $1,000 principal amount of the 2030 Notes, which represents an initial conversion price of approximately $28.01 per share of common stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the 2030 Indenture. Upon conversion, we are required to pay cash in an amount at least equal to the principal portion and have the option to settle any amount in excess of the principal portion in cash and/or shares of common stock. Conversion Rights: Holders of the 2030 Notes may convert them under the following circumstances: i. during any fiscal quarter commencing after the fiscal quarter ended on November 29, 2024 (and only during such fiscal quarter) if the last reported sale price per share of common stock exceeds 130% of the conversion price for at least 20 trading days, whether or not consecutive, in the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter; ii. during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “2030 Notes Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day of the 2030 Notes Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day; iii. upon the occurrence of certain corporate events or distributions on our common stock, as provided in the 2030 Indenture; iv. if we call the 2030 Notes for redemption; and v. on or after February 15, 2030 until the close of business on the second scheduled trading day immediately before the 2030 Maturity Date. Cash Redemption at Our Option: We have the right to redeem the 2030 Notes, in whole or in part, at our option at any time, and from time to time, on or after August 20, 2027 and on or before the 31st scheduled trading day immediately before the 2030 Maturity Date, at a cash redemption price equal to the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the 2030 Notes are “freely tradable” (as defined in the 2030 Indenture) and all accrued and unpaid additional interest, if any, has been paid in full as of the date we send the related redemption notice, and if the last reported per share sale price of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the redemption notice date for such redemption and (ii) the trading day immediately before the date we send such notice. In addition, we have the right to redeem all, but not less than all, of the 2030 Notes if certain changes in tax law occur. Calling any 2030 Note for redemption will constitute a make-whole fundamental change with respect to such note, in which case the conversion rate applicable to the conversion of such note will be increased in certain circumstances if it is converted after it is called for redemption. 2029 Notes The 2029 Notes bear interest at a rate of 2.00% per annum on the principal amount thereof, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2023, to the noteholders of record of the 2029 Notes as of the close of business on the immediately preceding January 15 and July 15, respectively. The 2029 Notes will mature on February 1, 2029 (the “2029 Maturity Date”), unless earlier converted, redeemed or repurchased. 95
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The initial conversion rate of the 2029 Notes is 47.1059 shares of common stock per $1,000 principal amount of the 2029 Notes, which represents an initial conversion price of approximately $21.23 per share of common stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the 2029 Indenture. Upon conversion, we are required to pay cash in an amount at least equal to the principal portion and have the option to settle any amount in excess of the principal portion in cash and/or common stock. Conversion Rights: Holders of the 2029 Notes may convert them under the following circumstances: i. during any fiscal quarter commencing after the fiscal quarter ended on May 26, 2023 (and only during such fiscal quarter) if the last reported sale price per share of common stock exceeds 130% of the conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter; ii. during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “2029 Notes Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day of the 2029 Notes Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day; iii. upon the occurrence of certain corporate events or distributions on our common stock, as provided in the 2029 Indenture; iv. if we call the 2029 Notes for redemption; and v. on or after August 1, 2028 until the close of business on the second scheduled trading day immediately before the 2029 Maturity Date. Cash Redemption at Our Option: We have the right to redeem the 2029 Notes, in whole or in part, at our option at any time, and from time to time, on or after February 6, 2026 and on or before the 40th scheduled trading day immediately before the 2029 Maturity Date, at a cash redemption price equal to the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported per share sale price of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the redemption notice date for such redemption and (ii) the trading day immediately before the date we send such notice. In addition, we have the right to redeem all, but not less than all, of the 2029 Notes if certain changes in tax law occur. Calling any 2029 Note for redemption will constitute a make-whole fundamental change with respect to such note, in which case the conversion rate applicable to the conversion of such note will be increased in certain circumstances if it is converted after it is called for redemption. 2026 Notes In February 2020, we issued $250.0 million in aggregate principal amount of 2026 Notes. The 2026 Notes are general unsecured obligations, bear interest at an annual rate of 2.25% per year, payable semi-annually on February 15 and August 15, and mature on February 15, 2026 (the “2026 Maturity Date”), unless earlier converted, redeemed or repurchased. The 2026 Notes are governed by an indenture (as supplemented, the “2026 Indenture” and, together with the 2030 Indenture and the 2029 Indenture, the “Indentures”) between us and U.S. Bank Trust Company National Association, as trustee. After the effect of the share dividend paid in the second quarter of 2022, the conversion rate of the 2026 Notes is 49.2504 shares of common stock per $1,000 principal amount of notes, which represents a conversion price of approximately $20.30 per share of common stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the 2026 Indenture. On January 18, 2023, we exchanged $150.0 million principal amount of 2026 Notes for $150.0 million principal amount of new 2029 Notes. As a result, as of August 30, 2024, $100.0 million in aggregate principal amount of 2026 Notes were outstanding. On August 6, 2024, we repurchased $80.0 million aggregate principal amount of our 2026 Notes for $100.6 million cash (including payment for accrued interest) in privately-negotiated transactions. As of August 29, 2025, $20.0 million in aggregate principal amount of 2026 Notes were outstanding. See “Repurchase of Convertible Senior Notes” and “Convertible Senior Notes Exchange.” First Supplemental Indenture to Indenture Governing the 2026 Notes: On August 26, 2022, Penguin Solutions entered into the First Supplemental Indenture (the “2026 First Supplemental Indenture”) to the 2026 Indenture governing the 2026 Notes. The 2026 First Supplemental Indenture became effective on August 27, 2022. Pursuant to the 2026 First Supplemental Indenture, Penguin Solutions irrevocably elected (i) to eliminate Penguin Solutions’ option to elect Physical Settlement (as defined in the 2026 Indenture) on any conversion of the 2026 Notes that occurs on or after the date of the 2026 First Supplemental Indenture and (ii) with respect to any 96
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Combination Settlement (as defined in the 2026 Indenture) for a conversion of the 2026 Notes, the Specified Dollar Amount (as defined in the 2026 Indenture) that will be settled in cash per $1,000 principal amount of the 2026 Notes shall be no lower than $1,000. As a result of our election, upon conversion, we are required to pay cash in an amount at least equal to the principal portion. We will settle any amount in excess of principal with respect to conversions of the 2026 Notes in common stock. Conversion Rights: Holders of the 2026 Notes may convert them under the following circumstances: i. during any fiscal quarter commencing after the fiscal quarter ended on May 28, 2020 (and only during such fiscal quarter) if the last reported sale price per share of common stock exceeds 130% of the conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter; ii. during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “2026 Notes Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day of the 2026 Notes Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day; iii. upon the occurrence of certain corporate events or distributions on our common stock, as provided in the 2026 Indenture; iv. if we call the 2026 Notes for redemption; and v. on or after August 15, 2025 until the close of business on the second scheduled trading day immediately before the 2026 Maturity Date. Cash Redemption at Our Option: We have the right to redeem the 2026 Notes, in whole or in part, at our option at any time, and from time to time, on or after February 21, 2023 and on or before the 40th scheduled trading day immediately before the 2026 Maturity Date, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any. However, the repurchase right is only applicable if the last reported per share sale price of our common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the redemption notice date for such redemption. In addition, we have the right to redeem all, but not less than all, of the 2026 Notes if certain changes in tax law occur. Calling any 2026 Note for redemption will constitute a make-whole fundamental change with respect to such note, in which case the conversion rate applicable to the conversion of such note will be increased in certain circumstances if it is converted after it is called for redemption. Ranking Our convertible notes are senior, unsecured obligations of the Company and are equal in right of payment with our existing and future senior, unsecured indebtedness, senior in right of payment to our existing and future indebtedness that is expressly subordinated to the respective notes and effectively subordinated to our existing and future senior, secured indebtedness, to the extent of the value of the collateral securing that indebtedness. Our convertible notes are structurally subordinated to all other existing and future indebtedness and other liabilities, including trade payables and (to the extent the Company is not a holder thereof) preferred equity, if any, of our subsidiaries. Make-Whole Fundamental Change Upon the occurrence of a “make-whole fundamental change” (as defined in each of our convertible note indentures), we will in certain circumstances increase the conversion rate for a specified period of time. In addition, upon the occurrence of a “fundamental change” (as defined in each of our convertible note indentures), holders of the notes may require us to repurchase their notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of fundamental change includes certain business combination transactions and certain de-listing events with respect to our common stock. Ordinary Share Change Event and 2025 Supplemental Indentures The consummation of the U.S. Domestication on June 30, 2025 and the transactions associated therewith constituted an “Ordinary Share Change Event” (as defined in each of the Indentures) pursuant to the terms of the 97
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Indentures. As a result, noteholders had a 35-trading-day window, beginning on June 30, 2025, where such noteholders had the option to convert their convertible senior notes pursuant to the terms of the Indentures. On June 30, 2025, immediately following the consummation of the U.S. Domestication, Penguin Solutions Delaware entered into that certain (i) Second Supplemental Indenture, dated as of June 30, 2025 (the “2026 Second Supplemental Indenture”), by and among Penguin Solutions Delaware, Penguin Solutions Cayman and U.S. Bank Trust Company, National Association, a national banking association organized under the laws of the United States of America, as trustee (in such capacity, the “Trustee”), to the 2026 Indenture; (ii) First Supplemental Indenture, dated as of June 30, 2025 (the “2029 First Supplemental Indenture”), by and among Penguin Solutions Cayman, Penguin Solutions Delaware and the Trustee, to the 2029 Indenture; and (iii) First Supplemental Indenture, dated as of June 30, 2025 (the “2030 First Supplemental Indenture,” and together with the 2026 Second Supplemental Indenture and the 2029 First Supplemental Indenture, the “2025 Supplemental Indentures”), by and among Penguin Solutions Cayman, Penguin Solutions Delaware and the Trustee, to the 2030 Indenture. In connection with the U.S. Domestication and the associated “Ordinary Share Change Event” under each Indenture, the 2025 Supplemental Indentures entered into as described in the foregoing paragraph provide that (i) our convertible senior notes will, in each case, be fully and unconditionally guaranteed by Penguin Solutions Delaware and (ii) Penguin Solutions Cayman will satisfy its conversion obligations under the convertible senior notes by paying or delivering, as applicable and in accordance with the terms of the Indentures, either (x) solely cash or (y) a combination of cash and common stock of Penguin Solutions Delaware, together, if applicable, with cash in lieu of fractional shares of common stock. Pursuant to the terms of the Supplemental Indentures, Penguin Solutions Delaware agreed to deliver such common stock when issuable under the applicable Indentures. Convertible Senior Note Interest Unamortized debt issuance costs are amortized over the terms of our 2026 Notes, 2029 Notes and 2030 Notes using the effective interest method. As of August 29, 2025 and August 30, 2024, the effective interest rate for our 2026 Notes was 2.83%. As of August 29, 2025 and August 30, 2024, the effective interest rate for our 2029 Notes was 2.40%. As of August 29, 2025, the effective interest rate for our 2030 Notes was 2.65%. Aggregate interest expense for our convertible notes consisted of contractual stated interest and amortization of issuance costs and included the following: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Contractual stated interest $ 7,430 $ 5,470 $ 5,397 Amortization of debt issuance costs 1,788 1,167 1,160 $ 9,218 $ 6,637 $ 6,557 LED Earnout Note Part of our consideration for the acquisition of the Optimized LED business was the possibility of an earnout payment of up to $125.0 million based on the revenue and gross profit performance of the Optimized LED business in Cree’s first four full fiscal quarters following the closing, with a minimum payment of $2.5 million. In the third quarter of 2022, we issued an unsecured promissory note to Cree for this earnout in the amount of $101.8 million (the “LED Earnout Note”). The LED Earnout Note bore interest at LIBOR plus 3.0%, payable quarterly, and was scheduled to mature on March 27, 2025. In the first quarter of 2023, and substantially simultaneously with entering into the First Amendment, we repaid in full the $101.8 million outstanding under the LED Earnout Note. In connection with our prepayment of the LED Earnout Note, we recognized a gain of $0.8 million in the first quarter of 2023, which is included in other non-operating income in the accompanying consolidated statements of operations. 98
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Maturities of Debt As of August 29, 2025, maturities of debt were as follows: 2026 $ 20,000 2027 — 2028 — 2029 150,000 2030 300,000 2031 and thereafter — Less unamortized debt issuance costs (8,162) $ 461,838 Leases We have operating leases through which we utilize facilities, offices and equipment in our manufacturing operations, research and development activities and selling, general and administrative functions. Sublease income was not significant in any period presented. The components of operating lease expense were as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Fixed lease cost $ 11,486 $ 12,894 $ 16,574 Variable lease cost 2,433 1,834 1,386 Short-term lease cost 1,903 2,086 2,266 $ 15,822 $ 16,814 $ 20,226 Cash flows used for operating activities included payments for operating leases of $8.0 million, $9.0 million and $7.7 million in 2025, 2024 and 2023, respectively. Acquisitions of right-of-use assets were $10.5 million, $2.3 million and $10.8 million in 2025, 2024 and 2023, respectively. As of August 29, 2025 and August 30, 2024, the weighted-average remaining lease term for our operating leases was 9.0 years and 10.1 years, respectively, and the weighted-average discount rate was 6.1% respectively. Certain of our operating leases include one or more options to extend the lease term for periods from two to five years. In determining the present value of our operating lease liabilities, we have assumed we will not extend any lease terms. As of August 29, 2025, minimum payments of lease liabilities were as follows: 2026 $ 9,687 2027 9,615 2028 9,606 2029 9,665 2030 9,835 2031 and thereafter 43,812 92,220 Less imputed interest (23,734) Present value of total lease liabilities $ 68,486 Commitments and Contingencies Commitments As of August 29, 2025, we had commitments of $25.5 million for purchase obligations, a substantial majority of which will be due within one year. Purchase obligations include payments for the acquisition of inventories, property and equipment and other goods or services of either a fixed or minimum quantity. 99
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Product Warranty and Indemnities We generally provide a limited warranty that our products are in compliance with applicable specifications existing at the time of delivery. Under our standard terms and conditions of sale, liability for certain failures of product during a stated warranty period is usually limited to repair or replacement of defective items or return of amounts paid for such items. Our warranty obligations are not material. We are party to a number of agreements in which we have agreed to defend, indemnify and hold harmless our customers and suppliers from damages and costs, which may arise from product defects as well as from any alleged infringement by our products of third-party patents, trademarks or other proprietary rights. We believe our internal development processes and other policies and practices limit our exposure related to such indemnities. Maximum potential future payments cannot be estimated because many of these agreements do not have a maximum stated liability. However, to date, we have not had to reimburse any of our customers or suppliers for any significant losses related to these indemnities. We have not recorded any liability for such indemnities. Contingencies From time to time, we may be involved in legal matters that arise in the normal course of business. Litigation in general, and intellectual property, employment and stockholder litigation in particular, can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. We regularly review contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. Temporary Equity Convertible Preferred Stock On December 13, 2024, we closed the SKT Investment. Pursuant to the terms of the SKT Purchase Agreement, we sold to Astra AI Infra 200,000 Issued Cayman CPS at a price of $1,000 per share or an aggregate price of $200.0 million. At the time of issuance, we evaluated the terms and conditions of the Issued Cayman CPS. Based on this evaluation, we determined that the Issued Cayman CPS did not contain redemption features that were outside the Company’s control and therefore initially classified the Issued Cayman CPS as permanent equity within the consolidated balance sheet. On June 30, 2025, we completed the U.S. Domestication, at which time each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share of Penguin Solutions Cayman was exchanged for one share of convertible preferred stock of Penguin Solutions Delaware. Inconnection with this event, we reassessed the classification of the Issued CPS. The terms of the Issued CPS are substantially the same as those of the Issued Cayman CPS. However, the Cayman governing documents included protective provisions that set forth the Company's ability to solely control redemption features. These provisions are not explicitly included in the Company's amended and restated certificate of incorporation or the CPS Delaware Certificate of Designation. The Company evaluated the absence of these provisions in the Delaware governing documents and determined that the CPS should be classified as temporary equity beginning June 30, 2025. Accordingly, the Issued CPS was reclassified to temporary equity effective June 30, 2025. In accordance with SEC guidance on redeemable equity securities, we reclassified the Issued CPS out of permanent equity at its fair value as of the date of the U.S. Domestication. The reclassification resulted in an adjustment to additional paid-in capital, representing the difference between the historical carrying amount and the fair value at the reclassification date. This adjustment had no impact on the Company’s net income, comprehensive income, or cash flows. As of June 30, 2025, we recorded $202.7 million of Issued CPS within temporary equity on the consolidated balance sheet.As of August 29, 2025, we did not adjust the carrying values of the Issued CPS to the redemption values of such shares because a deemed liquidation event did not occur and the shares were not probable of becoming redeemable in the future as of the consolidated balance sheet date. 100
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Amended and Restated Investor Agreement On June 30, 2025, effective upon consummation of the U.S. Domestication, Penguin Solutions Delaware assumed the Investor Agreement from Penguin Solutions Cayman and Penguin Solutions Delaware and SKT amended and restated the Investor Agreement such that the rights and restrictions relating to SKT’s beneficial ownership of the Issued Cayman CPS inplace prior to the U.S. Domestication apply in respect of SKT’s holdings of Issued CPS following consummation of the U.S. Domestication. Delaware Certificate of Designation for Convertible Preferred Stock On June 27, 2025, in connection with the U.S. Domestication, Penguin Solutions Delaware executed and adopted the CPS Delaware Certificate of Designation that sets forth the terms, rights and obligations of the Issued CPS. The principal attributes of the Issued Cayman CPS and the Issued CPS are substantially the same, subject to changes to give effect to requirements of Delaware law. Refer to the Certificate of Designation of Penguin Solutions, Inc., effective as of June 27, 2025, filed as Exhibit 3.3 hereto, to the description of the Issued CPS contained in the description of the Registrant’s capital stock, filed as Exhibit 4.1 hereto, and to the information under the heading “Comparison of Rights of Cayman Islands Shareholders and Delaware Stockholders” in Penguin Solutions Cayman’s definitive proxy statement on Schedule 14A filed with the SEC on May 2, 2025. Conversion A holder of Issued CPS may convert such holder’s Issued CPS into common stock at any time, provided that the shares of Issued CPS may, at our option, automatically be converted into common stock on any date following the second anniversary of the closing of the SKT Investment upon which the volume-weighted average price of the common stock for any fifteen consecutive trading day period equals or exceeds 150% of the then-applicable conversion price. The shares of Issued CPS are convertible into common stock at an initial conversion price of $32.81, subject to customary adjustment upon the occurrence of certain events (including share subdivision and consolidation, certain dividends and distributions, and any reclassification or share exchange). Dividends The shares of Issued CPS entitle the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option, subject to certain conditions, including a stock issuance limitation. In 2025, we declared $8.7 million of preferred dividends, with $7.9 million paid in cash in 2025,and $0.5 million of accrued preferred dividends as of as of August 29, 2025. Liquidation Preference In case of a Liquidation Trigger Event (as defined in the CPS Delaware Certificate of Designation), each holder of Issued CPS will be entitled to receive, in preference to holders of common stock, the greater of (i) the original issue price plus accrued but unpaid dividends (whether or not declared) to the date of the applicable Liquidation Trigger Event to the extent such accrued but unpaid dividends are not compounded dividends as of such time and (ii) the amount such holder of Issued CPS would receive had such holder, immediately prior to such Liquidation Trigger Event, converted the shares of Issued CPS into shares of common stock. The liquidation preference associated with the Issued CPS was $1,000 per share at August 29, 2025. Voting Rights Except as specified under applicable law, each holder of Issued CPS will be entitled to vote or consent as a single class with the holders of common stock on all matters submitted for a vote of or consent by holders of common stock, such number of votes equal to the largest number of whole shares of common stock in which all Issued CPS held of record by such holder could then be converted. Director Designation Rights SKT (through Astra AI Infra) is entitled to nominate one director if the total number of directors of the Company is eleven or less, and two directors if the total number of directors of the Company is twelve or more, to be elected or appointed to the Board of Directors of the Company (any such director, an “Investor Designee”). The right to nominate an Investor Designee continues until such time as SKT and its subsidiaries and affiliates (including Astra 101
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AI Infra) beneficially own less than five percent of the common stock then issued and outstanding (calculated on a fully-diluted basis) directly or by holding Issued CPS. Company Redemption Rights Holders of Issued CPS do not have pre-emptive, subscription, or redemption rights. We may repurchase the Issued CPS in one installment upon notice to the holders of Issued CPS, provided that no such notice shall be sent until at least five years after the date of the closing of the SKT Investment. Equity Penguin Solutions Stockholders’ Equity Common Stock Repurchase Authorization On April 4, 2022, our Board of Directors approved a $75.0 million stock repurchase authorization (the “2022 Authorization”), under which we may repurchase our outstanding common stock from time to time through open market repurchases, privately-negotiated transactions or otherwise. On each of January 8, 2024 and October 6, 2025, the Audit Committee of the Board of Directors approved additional $75.0 million stock repurchase authorizations (the “2024 Authorization” and “2025 Authorization,” respectively, and together with the 2022 Authorization, the “Current Authorizations”). The Current Authorizations, which consists solely of amounts approved pursuant to the 2024 Authorization and 2025 Authorization as all amounts under the 2022 Authorization have been utilized, has no expiration date but may be suspended or terminated by the Board of Directors at any time. In 2025, 2024 and 2023, we repurchased 2.5 million, 0.9 million and 0.5 million shares, respectively, for $41.2 million, $13.9 million and $8.4 million, respectively, under the 2022 and 2024 Authorizations. As of August 29, 2025, an aggregate of $36.5 million remained available for the repurchase of our common stock under the 2024 Authorization. Certain of our agreements, including the 2025 Credit Agreement and the Certificate of Designation, contain restrictions that limit our ability to repurchase our common stock. Other Stock Repurchases Common stock withheld as payment of withholding taxes and exercise prices in connection with the vesting or exercise of equity awards are treated as common stock repurchases. In 2025, 2024 and 2023, we repurchased 597 thousand, 377 thousand and 506 thousand shares of common stock as payment of withholding taxes for $11.1 million, $7.4 million and $10.9 million, respectively. In connection with the Exchange Transactions in the second quarter of 2023, we repurchased 326 thousand shares of common stock for $5.4 million. See “Debt – Convertible Senior Notes – Convertible Senior Notes Exchange.” Capped Calls In connection with our convertible notes, we have entered into privately-negotiated capped call transactions, which are intended to reduce the effect of potential dilution upon conversion of our convertible notes. The capped calls associated with the 2026 Notes provide for our receipt of shares from the counterparties if the trading price of our common stock is above the strike price on the expiration date of the capped calls. The capped calls associated with the 2029 Notes and 2030 Notes provide for our receipt of cash or shares, at our election, from counterparties if the trading price of our common stock is above the strike price on the expiration date. The capped calls are subject to anti-dilution adjustments substantially similar to those applicable to the corresponding convertible notes. The cost of capped calls, which are considered capital transactions, were recognized as decreases to additional paid-in capital. Capped calls are separate transactions, each between the Company and the counterparties to the various capped calls, and are not part of the terms of any of the convertible notes and do not affect any holder’s rights under the convertible notes or related indentures. Holders of any of the convertible notes do not have any rights with respect to any of the capped calls. As of August 29, 2025, the dollar value of cash or common stock that we would receive from our outstanding capped calls upon their expiration dates range from $0, if the trading price of our common stock is at or below the 102
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strike prices for each of the capped calls at expiration, to $158.4 million, if the trading price of our common stock is at or above the cap prices for each of the capped calls. Settlement of a capped call prior to its expiration date may be for an amount different than the value at expiration. The following table presents information related to outstanding capped calls as of August 29, 2025: Expiration Date Strike Price Cap Price Shares Maximum Value at Expiration 2026 Capped Calls February 15, 2026$ 20.3044 $ 27.0725 4,925 $ 33,333 2029 Capped Calls February 1, 2029$ 21.2288 $ 29.1375 7,066 55,883 2030 Capped Calls August 15, 2030$ 28.0085 $ 37.7038 7,141 69,231 19,132 $ 158,447 As part of the Exchange Transactions, we settled a portion of the 2026 Capped Calls in a notional amount of $150.0 million, equal to the amount of the 2026 Notes exchanged. In connection therewith, we received cash of $10.8 million, which was recognized as an increase in additional paid-in capital in the second quarter of 2024. Other Comprehensive Income Changes in accumulated other comprehensive income (loss) by component for 2025 were as follows: Gains (Losses) on Investments As of August 30, 2024 $ 10 Other comprehensive income (loss) before reclassifications 18 Reclassifications out of accumulated other comprehensive income — Other comprehensive income (loss) 18 As of August 29, 2025 $ 28 In connection with our divestiture of an 81% interest in SMART Brazil, we reclassified $212.4 million of cumulative translation adjustment related to SMART Brazil from other accumulated comprehensive income to results of operations in the first quarter of 2024. See “Divestiture of SMART Brazil.” Noncontrolling Interest in Subsidiary We have a 51% ownership interest in Cree Venture LED Company Limited (“Cree Joint Venture”), with the remaining 49% ownership interest held by San’an Optoelectronics Co., Ltd (“San’an”). The Cree Joint Venture has a five-member board of directors, three of which are designated by us and two of which are designated by San’an. As a result of our majority voting interest, we consolidate the operations of the Cree Joint Venture and report its results of operations within our Optimized LED segment. The Cree Joint Venture has a manufacturing agreement pursuant to which San’an supplies it with mid-power LED products and we and the Cree Joint Venture have a sales agent agreement pursuant to which we are the independent sales representative of the Cree Joint Venture. The Cree Joint Venture produces and delivers to market high performing, mid-power lighting class LEDs in an exclusive arrangement serving the markets of North and South America, Europe and Japan, and serves China markets and the rest of the world on a non-exclusive basis. The 49% ownership interest held by San’an is classified as noncontrolling interest. Cash and other assets of the Cree Joint Venture are generally not available for use by us in our other operations. 103
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Fair Value Measurements August 29, 2025 August 30, 2024 As of Fair Value Carrying Value Fair Value Carrying Value Assets: Derivative financial instruments $ 4,223 $ 4,223 $ 3,929 $ 3,929 Liabilities: Amended 2022 TLA $ — $ — $ 300,015 $ 297,297 2030 Notes 224,048 193,906 199,160 192,778 2029 Notes 197,363 147,987 178,760 147,439 2026 Notes 25,713 19,945 23,918 19,833 The deferred cash adjustment resulting from the divestiture of an 81% interest in SMART Brazil is accounted for as a derivative financial instrument and is revalued at the end of each reporting period. The asset’s fair value, as measured on a recurring basis, was based on Level 2 measurements, including market-based observable inputs of interest rates and credit- risk spreads. The fair value of the Amended 2022 TLA, as measured on a non-recurring basis, was estimated based on Level 2 measurements, including discounted cash flows and interest rates based on similar debt issued by parties with credit ratings similar to ours. The fair values of our convertible notes, as measured on a non-recurring basis, were determined based on Level 2 measurements, including the trading prices of the notes. Equity Plans Our Amended and Restated 2017 Stock Incentive Plan (the “2017 Plan”) provides for the issuance of equity awards to our employees, directors and consultants. Such awards include both incentive and non-qualified options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based awards, such as performance-based restricted stock awards (“PRSAs”) and performance-based restricted stock units (“PSUs”). As of August 29, 2025, 4.8 million of our common stock were available for issuance under the 2017 Plan. Our Amended and Restated 2021 Stock Inducement Plan (the “Inducement Plan”) provides for the issuance of equity awards to provide inducements for certain individuals to enter into employment with us within the meaning of Rule 5635(c)(4) of the Nasdaq Marketplace Rules, and to motivate such persons to contribute to, and to enable them to share in, any long-term growth and financial success we may experience. Such awards include options, stock appreciation rights, RSAs, RSUs and performance-based awards such as PRSAs and PSUs. As of August 29, 2025, 1.9 million of our common stock were available for issuance under the Inducement Plan. Our Amended and Restated 2018 Employee Stock Purchase Plan (“ESPP”) has been offered to substantially all employees since April 2018 and generally permits eligible employees to purchase our common stock through payroll deductions of up to 15% of their eligible compensation, subject to certain limitations. As of August 29, 2025, 2.0 million shares of our common stock were available for issuance under the ESPP. Options and RSUs generally vest over a period of four years, and options generally have a ten-year term. The disclosures related to our restricted awards, stock options and employee stock purchase plan include both our continuing and discontinued operations. 104
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Restricted Stock Awards and Restricted Stock Units Awards (“Restricted Awards”) Shares Weighted- Average Grant Date Fair Value Per Share Aggregate Intrinsic Value Outstanding as of August 30, 2024 4,199 $ 21.12 $ 87,006 Granted 2,137 $ 18.85 Vested (1,803) $ 20.91 Forfeited and cancelled (689) $ 19.15 Outstanding as of August 29, 2025 3,844 $ 21.49 $ 93,751 Restricted Award activity was as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Restricted awards granted 2,137 2,085 2,579 Weighted-average grant date fair value per share $ 18.85 $ 22.96 $ 17.77 Aggregate vesting date fair value of shares vested $ 33,911 $ 36,286 $ 31,686 Restricted Awards include grants with service, performance and/or market conditions with restrictions that generally lapse after a three- to four-year service period. Awards with market conditions are based on either the Company’s stock price or the Company’s total stockholder return relative to companies included in a market index. For awards with market conditions, the number of shares that will vest will vary between 0% and 200% of target amounts, depending upon the Company’s achievement level over the specified performance period. The fair value of awards with market conditions were fixed at the grant date using a Monte Carlo simulation analysis and were based on significant inputs not observable in the market. As of August 29, 2025, total unrecognized compensation costs for unvested Restricted Awards was $68.3 million, which was expected to be recognized over a weighted-average period of 2 years, 6 months, 18 days. Stock Options As of August 29, 2025, there were 0.5 million stock options outstanding, which are generally exercisable in increments of either one-fourth or one-third per year beginning one year from the date of grant. Stock options generally expire seven to ten years from the date of grant. The total intrinsic value for options exercised was $2.3 million, $2.6 million and $19.9 million in 2025, 2024 and 2023, respectively. Shares Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding as of August 30, 2024 724 $ 12.72 4.33$ 5,911 Granted — $ — Exercised (197) $ 9.95 Forfeited and cancelled (5) $ 16.09 Outstanding as of August 29, 2025 522 $ 13.74 3 years, 3 months, 29 days$ 5,426 Exercisable as of August 29, 2025 522 $ 13.74 3 years, 3 months, 29 days$ 5,426 The fair value of stock options is estimated on the date of grant using the Black-Scholes option pricing model. The expected volatility is based on the historical volatilities of the common stock of comparable publicly traded companies. The expected term of options granted represents the weighted-average period of time that options granted are expected to be outstanding. We apply the simplified approach in which the expected term is the mid- 105
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point between the vesting date and the expiration date. The risk-free interest rate is based on the average U.S. Treasury yield curve at the end of the quarter in which the option was granted. As of August 29, 2025, there were no unrecognized compensation costs for unvested options. Employee Stock Purchase Plan The purchase price of shares under our ESPP is equal to 85% of the lower of the fair market value of our common stock on either the first or last day of each offering period, which is generally six months. Compensation expense is calculated as of the beginning of the offering period as the fair value of the employees’ purchase rights utilizing the Black-Scholes option valuation model and is recognized over the offering period. Under the ESPP, employees purchased 529 thousand shares of common stock for $6.8 million in 2025, 584 thousand shares for $6.8 million in 2024 and 602 thousand shares for $6.6 million in 2023. Stock-Based Compensation Expense Stock-based compensation expense for our continuing operations was as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Stock-based compensation expense by caption: Cost of sales $ 6,136 $ 7,113 $ 6,334 Research and development 6,300 7,120 6,016 Selling, general and administrative 28,740 28,927 26,878 $ 41,176 $ 43,160 $ 39,228 Income tax benefits for stock-based awards were $5.9 million, $6.6 million and $6.7 million in 2025, 2024 and 2023, respectively. Employee Savings and Retirement Plan We have a 401(k) retirement plan under which U.S. employees may make contributions, subject to Internal Revenue Service annual contribution limits, to various savings alternatives, none of which include direct investment in the Company’s common stock. We may make matching contributions, which vest immediately, at our discretion. Contribution expense for our 401(k) plan was $4.7 million, $3.9 million and $4.6 million in 2025, 2024 and 2023, respectively. Revenue and Customer Contract Balances We disaggregate revenue by segment and geography and by product and service revenue. See “Segment and Other Information.” Net Sales and Gross Billings We provide certain services on an agent basis, whereby we procure product, materials and services on behalf of our customers and then resell such product, materials or services to our customers. As a result, we recognize only the amount related to the agent component as revenue in our results of operations. The cost of products, materials and services invoiced to our customers under these arrangements, but not recognized as revenue or cost of sales in our results of operations, were as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Cost of materials and services invoiced in connection with logistics services$ 893,715 $ 518,685 $ 765,796 106
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Customer Contract Balances As of August 29, 2025 August 30, 2024 Contract assets $ 1,929 $ 1,801 Contract liabilities: Deferred revenue $ 89,943 $ 76,178 Customer advances 21,525 6,036 $ 111,468 $ 82,214 (1) Contract assets are included in other current and noncurrent assets. (2) Contract liabilities are included in other current and noncurrent liabilities based on the timing of when our customers are expected to take control of the asset or receive the benefit of the service. Contract assets represent amounts recognized as revenue for which we do not have the unconditional right to consideration. Deferred revenue represents amounts received from customers in advance of satisfying performance obligations. As of August 29, 2025, we expect to recognize revenue of $73.9 million of the balance of $89.9 million in the next 12 months and the remaining amount thereafter. In 2025, we recognized revenue of $63.1 million from satisfying performance obligations related to amounts included in deferred revenue as of August 30, 2024. In addition, as of August 29, 2025, other current liabilities included $15.3 million that is not included in the above remaining performance obligations. While this liability relates to amounts received from customers in connection with arrangements that are cancellable at the customer’s discretion, we have not had to refund any such amounts to our customers in the periods presented. Customer advances represent amounts received from customers for advance payments to secure product. In 2025, we recognized revenue of $0.5 million from satisfying performance obligations related to amounts included in customer advances as of August 30, 2024. As of August 29, 2025 and August 30, 2024, other current liabilities included $17.7 million and $12.2 million, respectively, for estimates of consideration payable to customers, including estimates for pricing adjustments and returns. Other Operating (Income) Expense In recent periods, we executed plans that included the elimination of certain projects across our businesses, which resulted in workforce reductions. In connection therewith, we recorded restructuring charges of $2.1 million and $7.1 million in the first year months of 2025 and 2024, respectively, consisting solely of employee severance costs and other benefits, reflected in Other Operating (Income) Expense in the Consolidated Statements of Operations. These charges were primarily concentrated in the period management defined, committed, and communicated the plan, and therefore, they were accrued and recorded in the respective period announced. We anticipate there will be additional restructuring activities in future quarters, for which we will record additional charges. The following table summarizes the liabilities directly attributable to us that were recognized under the plans discussed above: As of August 25, 2023 $ 1,367 Additions $ 7,064 Cash payments $ (7,582) As of August 30, 2024 $ 849 Additions 2,098 Cash payments (1,884) As of August 29, 2025 $ 1,063 (1) (2) 107
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The 2024 beginning restructuring liability balance was $1.4 million, which was fully settled in 2024. The $0.8 million balance as of August 30, 2024 was fully settled in the year ended August 29, 2025. The unpaid balance as of August 29, 2025 is expected to be fully paid in 2026. Other Non-operating (Income) Expense Year ended August 29, 2025 August 30, 2024 August 25, 2023 Loss on extinguishment or prepayment of debt $ 2,908 $ 22,763 $ 15,924 Loss (gain) on disposition of assets 76 179 (2,986) Other (1,055) (1,858) (1,101) $ 1,929 $ 21,084 $ 11,837 Income Taxes Income (loss) before provision for income taxes consisted of the following: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Income (loss) before income taxes: U.S. $ 39,438 $ 38,246 $ 20,118 Non-U.S. 9,463 (69,413) (59,631) $ 48,901 $ (31,167) $ (39,513) Income tax provision (benefit) consisted of the following: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Income tax provision (benefit): Current: Federal $ 17,444 $ 10,930 $ 3,253 State 4,000 1,821 2,417 Foreign 12,768 9,253 8,418 34,212 22,004 14,088 Deferred: Federal (12,227) (6,815) (51,540) State (1,099) 540 (6,998) Foreign (820) (5,111) (4,753) (14,146) (11,386) (63,291) Income tax provision (benefit) $ 20,066 $ 10,618 $ (49,203) 108
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In applying the statutory tax rate in the effective income tax rate reconciliation below, we used the U.S. statutory tax rate rather than the Cayman Islands zero percent tax rate. The table below reconciles our tax provision (benefit) based on the U.S. federal statutory rate to our effective tax rate: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Statutory tax rate $ 10,269 21.0 % $ (6,545) 21.0 % $ (8,298) 21.0 % Foreign income taxes at different rates 6,665 13.6 % 15,870 (50.9)% 16,992 (43.0)% State income tax, net of federal benefit1,903 3.9 % 2,278 (7.3)% 2,793 (7.1)% Goodwill impairment — — % — — % 2,876 (7.3)% Tax on uncertain tax positions 313 0.6 % (3,825) 12.3 % 5,679 (14.4)% Stock-based compensation 135 0.3 % (100) 0.3 % (538) 1.4 % Change in valuation allowance 69,669 142.5 % 1,111 (3.6)% (69,789) 176.6 % Non-deductible expenses (non-taxable income) 2,177 4.5 % 1,053 (3.4)% 2,151 (5.4)% Foreign withholding tax 2,429 5.0 % 4,548 (14.6)% 3,371 (8.5)% Tax credits (1,814) (3.7)% (3,337) 10.7 % (4,339) 11.0 % Effect of cross-border tax laws 1,409 2.9 % — — % — — % U.S. Domestication (75,126) (153.6)% — — % — — % Return to Provision 2,283 4.7 % — — % — — % Other (246) (0.7)% (435) 1.4 % (101) 0.2 % Effective tax rate $ 20,066 41.0 % $ 10,618 (34.1)% $ (49,203) 124.5 % For 2025, the primary difference between the U.S. federal statutory tax rate and the effective tax rate was due to losses in jurisdictions where no tax benefit can be recognized prior to the U.S. Domestication, non-deductible expenses, return to provision adjustments, and foreign withholding taxes, partially offset by benefits from the U.S. Domestication (net of valuation allowance) and tax credits. As a result of the U.S. Domestication, we inherited $75.1 million of certain tax attributes, including interest expense carryforwards and capitalized R&D carryforwards. The utilization of certain of these tax attributes is subject to various limitations under the Internal Revenue Code and applicable regulations, restricting the extent to which attributes generated in periods prior to the U.S. Domestication may be used to offset future consolidated taxable income. Under our current structure the Company has no ability to utilize a portion of these attributes. Accordingly, the Company has recorded a $69.7 million valuation allowance against such portion which is not expected to be realized. 109
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Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes as well as carryforwards. Deferred tax assets and liabilities consisted of the following: As of August 29, 2025 August 30, 2024 Deferred tax assets: Accruals and allowances $ 16,868 $ 13,868 Deferred revenue 371 1,838 Stock-based compensation 2,028 3,027 Research and other tax credit carryforwards 4,479 4,762 Capitalized research and development 29,584 22,059 Operating lease liabilities 15,823 15,199 Tax amortizable goodwill 13,370 14,097 Interest carryforward 91,125 21,873 Intangible assets 11,704 5,039 Loss carryforwards 10,690 11,908 Gross deferred tax assets 196,042 113,670 Valuation allowance (73,443) (3,774) Net deferred tax assets 122,599 109,896 Deferred tax liabilities: Operating right-of-use assets 13,531 13,306 Property and equipment 9,346 10,717 Brazil capital gains tax — 4,138 Other liabilities 922 1,143 Gross deferred tax liabilities 23,799 29,304 Net deferred tax assets $ 98,800 $ 80,592 Reported as: Deferred tax assets $ 99,107 $ 85,078 Deferred tax liabilities (included in other noncurrent liabilities) (307) (4,486) Net deferred tax assets $ 98,800 $ 80,592 We assess positive and negative evidence for each jurisdiction to determine whether it is more likely than not existing deferred tax assets will be realized. In 2025, we recorded $69.0 million of valuation allowance on interest expense carryforward attributes inherited as part of the U.S. Domestication due to uncertainty regarding the realizability of these deferred tax assets. We also have a valuation allowance against certain acquired state and foreign tax attributes due to expected limitations on utilization. We will continue to monitor the need for a valuation allowance against our remaining deferred tax assets. As of August 29, 2025, we had U.S. federal and state net operating loss carryforwards of $23.6 million and $36.2 million, respectively. If not utilized, the federal net operating loss carryforwards will begin to expire in 2027. State net operating loss carryforwards of $35.9 million will begin to expire in 2031, while the remaining state net operating loss carryforwards do not expire. In addition, we had U.S. federal and state research and development credit carryforwards of $8.5 million and $4.5 million, respectively, and $1.2 million of foreign tax credit carryforwards. If not utilized, the federal research and foreign tax credits will begin to expire in 2032. If not utilized, $2.0 million of state credits will begin to expire in 2030, while $2.5 million of state credits do not expire. In addition, we had Section 163(j) interest expense carryforwards of $99.0 million from the acquisition of Stratus Technologies as well as $318.5 million from the U.S. Domestication, both of which do not expire. Net operating loss carryforwards in Hong Kong of $29.6 million do not expire. Federal and state tax attributes can be subject to an annual limitation under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and state tax laws. Further, under Section 382 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards to offset its post-change taxable income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by certain “5-percent shareholders” (including 110
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groups of stockholders) that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. Our net operating loss, tax credit and section 163(j) interest expense carryforwards are subject to limitations per Sections 382 and 383 of the Code. We have experienced ownership changes in the past, and we may experience ownership changes in the future as a result of future transactions in our common stock, some changes of which may be outside of our control. As a result, our ability to use our pre-change net operating loss, tax credit and section 163(j) interest expense carryforwards to offset post-change U.S. federal and state taxable income may be subject to additional limitations. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into U.S. law. Certain provisions were applicable to the Company beginning in 2025 while other provisions will become implemented in future periods. As a result of OBBBA we expect a decrease to our deferred tax assets and income tax payable resulting from the restoration of full expensing of U.S. research and experimentation expenditures. We do not expect any current or ongoing material impact to our effective tax rate as a result of the OBBBA. Activity related to our deferred tax valuation allowance was as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Balance at beginning of period $ 3,774 $ 2,663 $ 52,267 Charged (credited) to operations 69,669 1,111 (69,789) Charged to other accounts — — (4,073) Business acquisitions — — 24,258 Balance at end of period $ 73,443 $ 3,774 $ 2,663 (1) During the period ended August 25, 2023, SMART Embedded Computing B.V. entered liquidation, resulting in the existing Netherlands NOL carryforwards being considered to have a remote likelihood of being utilized. Accordingly, a deferred tax asset of $4.1 million was written off and the related valuation allowance released. We choose to maintain flexibility to repatriate excess cash from all jurisdictions where needed, to manage debt balances. Provisions have been made for deferred income taxes on undistributed earnings of foreign subsidiaries to the extent that dividend payments by such foreign subsidiaries are expected to result in additional tax liability, which is primarily related to foreign withholding taxes which are not individually or cumulatively significant. We have operations in Malaysia, where we have tax incentive arrangements for our pioneer status activities and our global supply chain operations. The statutory rate for Malaysia is 24%. During the year ended August 25, 2025 the incentive agreement for the pioneer status activities was amended and extended to 2031. As of August 29, 2025, the global supply chain operation incentives were scheduled to expire in August 2028. Both incentive agreements are subject to certain conditions, with which we have fully complied for the pioneer status activities incentive in 2025, 2024, and 2023, and partially complied for the global supply chain operations incentive in 2025 and 2024 and fully complied in 2023. The effect of the tax incentive arrangements noted above reduced our income tax provision by $1.8 million ($0.03 per diluted share) in 2025, $1.2 million ($0.02 per diluted share) in 2024 and $10.4 million ($0.20 per diluted share) in 2023. Below is a reconciliation of our unrecognized tax benefits: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Beginning unrecognized tax benefits $ 21,428 $ 25,603 $ 18,920 Acquired balances — — 871 Increases related to prior year tax provisions — 129 6,271 Increases related to current year tax provisions 495 1,099 4,248 Decreases related to prior year tax provisions (602) (5,348) (3,468) Lapse of statute of limitation (280) (55) (1,239) Ending unrecognized tax benefits $ 21,041 $ 21,428 $ 25,603 As of August 29, 2025 and August 30, 2024, the total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, was $18.3 million and $18.7 million, respectively. Amounts accrued for interest (1) 111
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and penalties related to uncertain tax positions were not material for any period presented. The resolution of tax audits or expiration of statute of limitations could also reduce our unrecognized tax benefits. Although the timing of final resolution is uncertain, the estimated potential reduction in our unrecognized tax benefits in the next 12 months would not be material. We and our subsidiaries file income tax returns with the U.S. federal government, various U.S. states and various foreign jurisdictions throughout the world. We regularly engage in discussions and negotiations with tax authorities regarding tax matters, including transfer pricing, and we continue to defend any and all such claims presented. Our U.S. federal and state tax returns remain open to examination for 2007 through 2024. In addition, tax returns that remain open to examination in non-U.S. subsidiaries, including Malaysia, Luxembourg, Ireland, United Kingdom, Hong Kong and China, vary by country. We believe that adequate amounts of taxes and related interest and penalties have been provided and any adjustments as a result of examinations are not expected to materially adversely affect our business, results of operations or financial condition. Earnings Per Share We calculate basic earnings per common share (“EPS”) pursuant to the two-class method as a result of the issuance of the Issued Cayman CPS on December 13, 2024. The two-class method is an earnings allocation formula that determines EPS for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all current period earnings, distributed and undistributed, are allocated to common stock and participating securities based on their respective rights to receive dividends. The Issued CPS is considered a participating security. The Issued CPS is not included in the computation of basic EPS in periods in which we have a net loss, as the Issued CPS is not contractually obligated to share in our net losses. With respect to the Issued CPS, diluted EPS is calculated using the more dilutive of the two-class method or if-converted method. The two-class method uses net income available to common stockholders and assumes conversion of all potential shares other than the participating securities. The if-converted method uses net income and assumes conversion of all potential shares including the participating securities. Dilutive potential common stock include outstanding stock options, unvested restricted stock units, convertible senior notes and convertible preferred stock. 112
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The following table summarizes the computation of basic and diluted EPS under the two-class or if-converted method in applicable periods, as well as the anti-dilutive shares excluded: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Net income (loss) from continuing operations $ 25,391 $ (44,324) $ 7,858 Net income (loss) from discontinued operations — (8,148) (195,384) Net income (loss) attributable to Penguin Solutions – Basic and Diluted$ 25,391 $ (52,472) $ (187,526) Less: Preferred stock dividends 8,667 — — Income available for distribution 16,724 (52,472) (187,526) Income allocated to participating securities 1,263 — — Net income available to common stockholders $ 15,461 $ (52,472) $ (187,526) Weighted-average shares outstanding – Basic 53,154 52,428 49,566 Dilutive effect of equity plans and Convertible Senior Notes 1,214 — 1,756 Weighted-average shares outstanding – Diluted 54,368 52,428 51,322 Basic earnings (loss) per common share: Continuing operations $ 0.29 $ (0.85) $ 0.16 Discontinued operations — (0.15) (3.94) $ 0.29 $ (1.00) $ (3.78) Method used: Two-Class Diluted earnings (loss) per common share: Continuing operations $ 0.28 $ (0.85) $ 0.15 Discontinued operations — (0.15) (3.80) $ 0.28 $ (1.00) $ (3.65) Unweighted anti-dilutive shares: Equity plans 945 5,184 2,238 Convertible Senior Notes — — — Preferred stock 6,096 — — 7,041 5,184 2,238 Upon any conversion of our convertible notes, we will be required to pay cash in an amount at least equal to the principal portion. We will settle any amount in excess of principal with respect to conversions of the 2026 Notes in common stock. and we have the option to settle in cash and/or common stock for the 2029 Notes and 2030 Notes. As a result, only the amounts expected to be settled in excess of the principal portion are considered in calculating diluted earnings per share under the if- converted method. Segment and Other Information Segment information presented below is consistent with how our Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, evaluates our results of operations to make decisions about allocating resources and assessing performance using segment net sales, cost of sales, operating expenses, and operating income (loss). The CODM is regularly provided this segment information to assess relative segment performance and allocate resources to the segment in the annual planning process. We have the following three business units, which are our reportable segments: • Advanced Computing: Our Advanced Computing group, under our Penguin Computing and Stratus brands, offers specialized platform solutions and services for HPC, AI, machine learning, advanced modeling and the internet of things that span the continuum of edge, core and cloud. Our solutions are designed specifically for customers across multiple markets, including hyperscale, financial services, energy, government, education, healthcare and others. 113
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• Integrated Memory: Our Integrated Memory group, under our SMART Modular Technologies brand, provides high- performance and reliable integrated memory solutions through the design, development and advanced packaging of leading-edge to extended lifecycle products. These specialty products are tailored to meet customer-specific requirements across networking and communications, enterprise storage and computing, including server applications and other vertical markets. These products are marketed to original equipment manufacturers and to commercial and government customers. The Integrated Memory group also offers SMART Supply Chain Services, which provides customized, integrated supply chain services to enable our customers to better manage supply chain planning and execution, reduce costs and increase productivity. • Optimized LED: Our Optimized LED group, under our Cree LED brand, offers a broad portfolio of application- optimized LEDs focused on improving lumen density, intensity, efficacy, optical control and/or reliability. Backed by expert design assistance and superior sales support, our LED products enable our customers to develop and market LED-based products for general lighting, video displays and specialty lighting applications. Segments are determined based on sources of sales, types of customers and operating performance. There are no differences between the accounting policies for our segment reporting and our consolidated results of operations. Operating expenses directly associated with the activities of a specific segment are charged to that segment. Certain other indirect operating income and expenses are generally allocated to segments based on their respective percentage of net sales. We do not identify (other than goodwill) or report internally our assets nor allocate certain expenses and amortization, interest, other non-operating (income) expense or taxes to segments. August 29, 2025 Advanced Computing Integrated Memory Optimized LED Total Net sales: $ 648,417 $ 464,249 $ 256,128 $ 1,368,794 Less: Costs of goods sold 404,032 362,612 177,549 944,193 Operating expense 129,376 57,998 69,575 256,949 Operating income: $ 115,009 $ 43,639 $ 9,004 167,652 Reconciliation of profit (loss) Stock-based compensation expense (41,176) Amortization of acquisition-related intangibles (34,838) Cost of sales-related restructuring (746) Diligence, acquisition and integration expense (1,829) Redomiciliation costs (10,038) Impairment of goodwill (16,063) Restructuring charges (2,098) Other (2,729) Total unallocated (109,517) Total non-operating expense (9,234) Income (loss) before taxes $ 48,901 114
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August 30, 2024 Advanced Computing Integrated Memory Optimized LED Total Net sales: $ 554,552 $ 356,426 $ 259,818 $ 1,170,796 Less: Costs of Goods Sold 324,152 283,821 188,838 796,811 Operating Expense 135,109 50,192 68,427 253,728 Segment operating income: $ 95,291 $ 22,413 $ 2,553 120,257 Reconciliation of profit (loss) Stock-based compensation expense (43,160) Amortization of acquisition-related intangibles (39,272) Cost of sales-related restructuring (2,136) Diligence, acquisition and integration expense (8,772) Redomiciliation costs (470) Restructuring charges (7,064) Other (1,088) Total unallocated (101,962) Total non-operating expense (49,462) Income (loss) before taxes $ (31,167) August 25, 2023 Advanced Computing Integrated Memory Optimized LED Total Net sales: $ 749,708 $ 443,264 $ 248,278 $ 1,441,250 Less: Costs of Goods Sold 488,602 314,247 181,853 984,702 Operating Expense 150,131 55,378 71,245 276,754 Segment operating income: $ 110,975 $ 73,639 $ (4,820) 179,794 Reconciliation of profit (loss) Stock-based compensation expense (39,228) Amortization of acquisition-related intangibles (44,601) Flow through of inventory step up (2,599) Cost of sales-related restructuring (6,813) Diligence, acquisition and integration expense (20,869) Impairment of goodwill (19,092) Change in fair value of contingent consideration (29,000) Restructuring charges (7,047) Other (1,800) Total unallocated (171,049) Total non-operating expense (48,258) Income (loss) before taxes $ (39,513) 115
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Depreciation included in segment operating income was as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 Advanced Computing $ 7,946 $ 9,495 $ 9,196 Integrated Memory 4,053 3,873 3,891 Optimized LED 8,580 12,352 13,411 $ 20,579 $ 25,720 $ 26,498 Related Party Transactions From time to time, we may enter into an agreement with a related party in the ordinary course of business. These agreements are reviewed and approved or ratified by the Audit Committee of the Board pursuant to our related person transaction policy. We follow Accounting Standards Codification 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions, under which related parties are defined as members of our Board of Directors, affiliates of the Company, management and principal owners of our outstanding stock and members of their immediate families. Related parties also include any other person or entity with significant influence over our management or operations. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. We assess related parties each reporting period. On May 26, 2025, we entered into an agreement with SKT, a related party, under which we anticipate providing solutions to support SKT’s future AI data center infrastructure initiatives. SKT, through Astra AI Infra, a special purpose vehicle formed by SKT, holds more than 10% of the voting interest of the Company. Additionally, Min Yong Ha, an executive of SKT, is a member of our Board of Directors. For the year ended August 29, 2025, we recognized a total transaction amount of $50.7 million for cash received for payment on the fulfillment of AI hardware solutions and installation services, of which $32.4 million of the order was completed and recognized as revenue for the year ended August 29, 2025. The remaining $18.3 million is recorded as contract liability. Concentrations Our concentrations of credit risk consists principally of cash and cash equivalents, investments and accounts receivable. Our revenues and related accounts receivable reflect a concentration of activity with certain customers. We generally do not require collateral or other security to support accounts receivable. We perform periodic credit evaluations of our customers to minimize collection risk on accounts receivable and maintain allowances for potentially uncollectible accounts. A significant portion of our net sales is concentrated with a select number of customers. Sales to our ten largest customers were 66%, 58% and 60% of total net sales in each of 2025, 2024 and 2023, respectively. As of August 29, 2025, two Integrated Memory customers accounted for more than 10% of accounts receivable. Net sales to certain customers each exceeded 10% of our total net sales in the past three years. Net sales to an Advanced Computing customer were 18.2%, 18.4% and 23.3% of total net sales in 2025, 2024 and 2023, respectively. Net sales to an Integrated Memory customer was 14.1% of total net sales in 2025. No other customers accounted for more than 10% of our total net sales in 2025, 2024 and 2023. We rely on a limited number of suppliers for a significant portion of our raw materials. Purchases from our two largest suppliers were $0.6 billion, $0.4 billion and $0.5 billion in each of 2025, 2024 and 2023, respectively. As of August 29, 2025 and August 30, 2024, accounts payable and accrued expenses included $77.4 million and $63.4 million, respectively, for amounts owed to our two largest suppliers in each of 2025 and 2024. 116
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Geographic Information Net sales by geographic area, based on customer ship-to location, were as follows: Year ended August 29, 2025 August 30, 2024 August 25, 2023 United States $ 776,506 $ 672,751 $ 877,416 China 186,848 190,654 192,104 Europe 96,999 114,298 114,118 Mexico 147,298 27,301 9,902 Other 161,143 165,792 247,710 $ 1,368,794 $ 1,170,796 $ 1,441,250 Long-lived assets, including property and equipment and right-of-use assets, by geographic area were as follows: As of August 29, 2025 August 30, 2024 United States $ 107,380 $ 116,901 China 33,180 37,229 Malaysia 8,655 8,660 Other 2,235 4,107 $ 151,450 $ 166,897 Quarterly Financial Data (Unaudited) The table below sets forth selected quarterly financial data from our continuing operations: Q4 FY25 Q3 FY25 Q2 FY25 Q1 FY25 Q4 FY24 Q3 FY24 Q2 FY24 Q1 FY24 Net sales $ 337,922 $ 324,251 $ 365,519 $ 341,102 $ 311,148 $ 300,580 $ 284,821 $ 274,247 Gross profit 96,731 95,083 104,648 97,812 87,086 88,906 81,934 82,850 Operating income (loss) 12,448 9,843 18,488 17,356 8,791 11,511 (3,312) 1,305 Net income (loss) attributable toPenguin Solutions 9,431 2,661 8,082 5,217 (24,547) 5,616 (13,620) (11,773) Preferred stock dividends 3,034 3,033 2,600 — — — — — Income available for distribution 6,397 (372) 5,482 5,217 (24,547) 5,616 (13,620) (11,773) Income allocated to participatingsecurities 666 — 482 — — — — — Net income (loss) available to commonstockholders 5,731 (372) 5,000 5,217 (24,547) 5,616 (13,620) (11,773) Earnings (loss) per share: Basic $ 0.11 $ (0.01) $ 0.09 $ 0.10 $ (0.46) $ 0.11 $ (0.26) $ (0.23) Diluted $ 0.11 $ (0.01) $ 0.09 $ 0.10 $ (0.46) $ 0.10 $ (0.26) $ (0.23) Shares used in per share calculations: Basic 52,553 53,130 53,454 53,482 53,071 52,570 52,031 52,068 Diluted 54,371 53,738 54,384 54,312 53,071 54,283 52,031 52,068 117
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Penguin Solutions, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Penguin Solutions, Inc. and subsidiaries (the “Company”) as of August 29, 2025 and August 30, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for each of the three years in the period ended August 29, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 29, 2025 and August 30, 2024, and the results of its operations and its cash flows for each of the three years in the period ended August 29, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 29, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated October 21, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition — Refer to the Significant Accounting Policies and Revenue and Customer Contract Balances notes to the financial statements Critical Audit Matter Description The Company had $1.37 billion of revenue for the year ended August 29, 2025, of which $648 million related to the Advanced Computing segment. A portion of the Company’s revenue is derived from the sale of customized products. The Company recognizes revenue when control of the underlying assets passes to the customer, which is when the customer is able to direct the use of and obtain substantially all of the remaining benefit from the assets, the customer has the significant risks and rewards associated with ownership of the assets, and the Company has a present right to 118
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payment. Under the terms of these arrangements, the Company cannot repurpose products without the customer’s consent and accordingly, the Company recognizes revenue at the point in time when products are completed and made available to the customer. A portion of the Company’s service revenue is from professional services, including installation and other services as well as hardware and software related support. Each contract may contain multiple performance obligations, which requires the transaction price to be allocated to each performance obligation. The Company allocates the consideration to each performance obligation based on the relative selling price, determined as the best estimate of the price at which the Company would transact if it sold the deliverable regularly on a stand-alone basis. We identified both the evaluation of performance obligations and the determination of the timing of recognition as performance obligations are satisfied in certain contracts within the Advanced Computing segment to be a critical audit matter. This required a high degree of auditor judgment and an increased extent of audit effort. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s identification of performance obligations and the recognition of revenue as performance obligations are satisfied for the Advanced Computing segment included the following, among others: – We tested the effectiveness of internal controls related to revenue for the Advanced Computing segment including those related to the identification of the performance obligations and the recognition of revenue as performance obligations were satisfied. – We evaluated management’s significant accounting policies related to revenue recognition for compliance with generally accepted accounting principles. – We selected a sample of contract documents for customers in the Advanced Computing segment and performed the following procedures: • Obtained and read the arrangement with the customer for each selection, including the contract, amendments, purchase order, and other documents (together the “contractual documents”) that were part of the arrangement, each as applicable. • Held inquiries with management outside of accounting, as needed, to identify the performance obligations in the contract and assist in evaluating when performance obligations are satisfied. • Assessed the terms and conditions in the contractual documents and evaluated the appropriateness of management’s application of their accounting policies in the evaluation of performance obligations and the recognition of revenue as performance obligations are satisfied. /s/ DELOITTE & TOUCHE LLP San Jose, California October 21, 2025 We have served as the Company’s auditor since 2014. 119
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures An evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of August 29, 2025 to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of August 29, 2025 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. The effectiveness of our internal control over financial reporting as of August 29, 2025 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K. Changes in Internal Control Over Financial Reporting During the fourth quarter of fiscal year 2025, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 120
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Penguin Solutions, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Penguin Solutions, Inc. and subsidiaries (the “Company”) as of August 29, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 29, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended August 29, 2025, of the Company and our report dated October 21, 2025, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ DELOITTE & TOUCHE LLP San Jose, California October 21, 2025 121
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Item 9B. Other Information During the fiscal quarter ended August 29, 2025, no officers or directors of Penguin Solutions adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408 of Regulation S-K). Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections Not applicable. 122
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PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by Item 10 is incorporated herein by reference to our 2025 Proxy Statement for our next Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after August 29, 2025. We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees, and that is available on our website (www.penguinsolutions.com) under “Governance.” The Code of Business Conduct and Ethics is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002, as amended, and Item 406 of Regulation S-K. In addition, we intend to promptly disclose on our website (1) any amendment to our Code of Business Conduct and Ethics that applies to our directors or our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our Code of Business Conduct and Ethics that is granted to a director or one of these specified officers, the name of such person who is granted the waiver and the date of the waiver. Item 11. Executive Compensation The information required by Item 11 is incorporated herein by reference to our 2025 Proxy Statement for our next Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after August 29, 2025. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by Item 12, including Securities Authorized for Issuance Under Equity Plans, is incorporated herein by reference to our 2025 Proxy Statement for our next Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after August 29, 2025. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by Item 13 is incorporated herein by reference to our 2025 Proxy Statement for our next Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after August 29, 2025. Item 14. Principal Accountant Fees and Services The information required by Item 14 is incorporated herein by reference to our 2025 Proxy Statement for our next Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after August 29, 2025. 123
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PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this report: 1. Financial Statements. See “PART II – Item 8. Financial Statements and Supplementary Data.” 2. Financial Statement Schedules. Certain financial statement schedules have been omitted since they are either not required, not applicable or the information is otherwise included. 3. Exhibits. See “Index to Exhibits” below. INDEX TO EXHIBITS Incorporated by Reference ExhibitNo. Description FiledHerewith Form File No. Exhibit FilingDate 2.1* Share Purchase Agreement, dated as of June 28, 2022, byand among SMART Global Holdings, Inc., a Cayman Islandsexempted company, Storm Private Holdings I Ltd., a CaymanIslands exempted company, and Storm Private InvestmentsLP, a Cayman Islands exempted limited partnership 8-K 001-38102 2.1 08/29/2022 2.2* Stock Purchase Agreement, dated as of June 13, 2023, byand among SMART Modular Technologies (LX) S.à r.l., asociété à responsabilité limitée governed by the laws ofGrand Duchy of Luxembourg, Lexar Europe B.V., a companyorganized under the laws of The Netherlands, ShenzhenLongsys Electronics Co., Ltd., a company limited by sharesgoverned by the laws of the People’s Republic of China,solely with respect to certain provisions therein, ShanghaiIntelligent Memory Semiconductor Co., Ltd., a limited liabilitycompany governed by the laws of the People’s Republic ofChina, and, solely with respect to certain provisions therein,SMART Global Holdings, Inc., a Cayman Islands exemptedcompany 8-K 001-38102 2.1 06/13/2023 2.3* Letter Agreement, dated as of October 24, 2023, to thatcertain Stock Purchase Agreement, dated as of June 13,2023, by and among SMART Modular Technologies (LX) S.àr.l., a société à responsabilité limitée governed by the laws ofGrand Duchy of Luxembourg, Lexar Europe B.V., a companyorganized under the laws of The Netherlands, ShenzhenLongsys Electronics Co., Ltd., a company limited by sharesgoverned by the laws of the People’s Republic of China,solely with respect to certain provisions therein, ShanghaiIntelligent Memory Semiconductor Co., Ltd., a limited liabilitycompany governed by the laws of the People’s Republic ofChina, and, solely with respect to certain provisions therein,SMART Global Holdings, Inc., a Cayman Islands exemptedcompany 10-Q 001-38102 2.1 01/09/2024 3.1 Amended and Restated Certificate of Incorporation of Penguin Solutions, Inc., effective as of June 27, 2025 8-K12B 001-38102 3.1 06/30/2025 3.2 Amended and Restated Bylaws of Penguin Solutions, Inc., effective as of June 30, 2025 8-K12B 001-38102 3.3 06/30/2025 3.3 Certificate of Designation of Convertible Preferred Stock, effective as of June 27, 2025 8-K12B 001-38102 3.2 06/30/2025 4.1 Description of the Registrant’s Capital Stock X 4.2 Form of Common Stock Certificate S-8 POS 333-286347 4.1 06/30/2025 4.3 Indenture, dated February 11, 2020, between SMART Global Holdings, Inc. and U.S. Bank National Association, as Trustee 8-K 001-38102 4.1 02/11/2020 4.4 Form of 2.25% Convertible Senior Notes due 2026 (included as Exhibit A to the Indenture filed as Exhibit 4.3) 8-K 001-38102 4.1 02/11/2020 4.5 First Supplemental Indenture with respect to 2.25%Convertible Senior Notes due 2026, dated August 26, 2022,between SMART Global Holdings, Inc. and U.S. Bank TrustCompany, National Association, as Trustee 8-K 001-38102 4.1 08/29/2022 124
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4.6 Second Supplemental Indenture in respect of the 2026 Notes,dated as of June 30, 2025, by and among Penguin SolutionsDelaware, Penguin Solutions Cayman and U.S. Bank TrustCompany, National Association, a national bankingassociation organized under the laws of the United States ofAmerica, as trustee 8-K12B 001-38102 4.1 06/30/2025 4.7 Indenture, dated as of January 23, 2023, between SMARTGlobal Holdings, Inc. and U.S. Bank Trust Company, NationalAssociation, as Trustee 8-K 001-38102 4.1 01/23/2023 4.8 Form of certificate representing the 2.000% ConvertibleSenior Notes due 2029 (included as Exhibit A to the Indenturefiled as Exhibit 4.7) 8-K 001-38102 4.2 01/23/2023 4.9 First Supplemental Indenture in respect of the 2029 Notes, dated as of June 30, 2025, by and among Penguin Solutions Delaware, Penguin Solutions Cayman and U.S. Bank Trust Company, National Association, a national banking association organized under the laws of the United States of America, as trustee 8-K12B 001-38102 4.2 06/30/2025 4.10 Indenture, dated as of August 6, 2024, between SMART Global Holdings, Inc. and U.S. Bank Trust Company, National Association, as Trustee 8-K 001-38102 4.1 08/06/2024 4.11 Form of certificate representing the 2.00% Convertible SeniorNotes due 2030 (included as Exhibit A to the Indenture filedas Exhibit 4.10) 8-K 001-38102 4.1 08/06/2024 4.12 First Supplemental Indenture in respect of the 2030 Notes, dated as of June 30, 2025, by and among Penguin Solutions Delaware, Penguin Solutions Cayman and U.S. Bank Trust Company, National Association, a national banking association organized under the laws of the United States of America, as trustee 8-K12B 001-38102 4.3 06/30/2025 4.13 Amended and Restated Investor Agreement, dated as of June 30, 2025, by and between Penguin Solutions Delaware and Astra AI Infra LLC 8-K12B 001-38102 4.4 06/30/2025 10.1** Penguin Solutions, Inc. Amended and Restated 2017 Stock Incentive Plan 8-K12B 001-38102 10.3 06/30/2025 10.2** Form of Restricted Stock Unit Award Agreement (Stock- Settled) under the Penguin Solutions, Inc. Amended and Restated 2017 Stock Incentive Plan S-8 POS 333-286347 99.4 06/30/2025 10.3** Form of Restricted Stock Unit Award Agreement (Cash- Settled) under the Penguin Solutions, Inc. Amended and Restated 2017 Stock Incentive Plan S-8 POS 333-286347 99.5 06/30/2025 10.4** Form of Performance Stock Unit Award Agreement under the Penguin Solutions, Inc. Amended and Restated 2017 Stock Incentive Plan X 10.5** Penguin Solutions, Inc. Amended and Restated 2021 Inducement Plan 8-K12B 001-38102 10.5 06/30/2025 10.6** Form of Restricted Stock Unit Award Agreement (Stock- Settled) under the Penguin Solutions, Inc. Amended and Restated 2021 Inducement Plan S-8 POS 333-286347 99.6 06/30/2025 10.7** Form of Restricted Stock Unit Award Agreement (Cash- Settled) under the Penguin Solutions, Inc. Amended and Restated 2021 Inducement Plan S-8 POS 333-286347 99.7 06/30/2025 10.8** Form of Performance Stock Unit Award Agreement under the Penguin Solutions, Inc. Amended and Restated 2021 Inducement Plan S-8 POS 333-286347 99.9 06/30/2025 10.9** Penguin Solutions, Inc. Amended and Restated 2018 Employee Stock Purchase Plan 8-K12B 001-38102 10.4 06/30/2025 10.10** Offer Letter by and between SMART Global Holdings, Inc. and Mark Adams, dated August 12, 2020 8-K 001-38102 10.1 08/13/2020 10.11** Offer Letter by and between SMART Global Holdings, Inc.and Joseph Clark, dated September 6, 2022 10-Q 001-38102 10.1 04/09/2024 10.12** Amended and Restated Offer Letter by and between Penguin Solutions, Inc. and Anne Kuykendall, effective as of September 25, 2023 10-Q 001-38102 10.1 04/02/2025 125
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10.13** Offer Letter by and between SMART Global Holdings, Inc.and Nathan Olmstead, dated June 18, 2024 10-Q 001-38102 10.2 07/09/2024 10.14** Amended and Restated Employment Agreement between SMART Modular Technologies, Inc. and Jack Pacheco 10-Q 001-38102 10.2 03/22/2018 10.15** Transition Agreement, effective as of April 10, 2025, by andbetween SMART Modular Technologies, Inc. and JackPacheco 10-Q 001-38102 10.18 07/08/2025 10.16** Amended and Restated Offer Letter by and between SMARTGlobal Holdings, Inc. and Peter Manca, dated May 23, 2024 10-K 001-38102 10.15 10/24/2024 10.17** Separation Agreement by and between Penguin Solutions,Inc. and Peter Manca, effective as of August 10, 2025 X 10.18 Form of Indemnification and Advancement Agreement forDirectors and Officers 8-K12B 001-38102 10.1 06/30/2025 10.19** Independent Director Compensation Policy 8-K12B 001-38102 10.2 06/30/2025 10.20 Form of Confirmation for the Base Capped Call Transactions 8-K 001-38102 99.1 02/11/2020 10.21 Form of Confirmation for the Additional Capped Call Transactions 8-K 001-38102 99.2 02/11/2020 10.22 Promissory Note, dated March 1, 2021, made by SMARTGlobal Holdings, Inc. in favor of CreeLED, Inc. 8-K 001-38102 10.1 03/03/2021 10.23 Form of Earnout Note 8-K 001-38102 10.2 03/03/2021 10.24 Promissory Note, dated June 24, 2022, made by CreeLED,Inc. in favor of Wolfspeed, Inc. 8-K 001-38102 10.1 06/29/2022 10.25 Form of confirmation for the Capped Call Transactions 8-K 001-38102 10.1 01/23/2023 10.26 Securities Purchase Agreement, dated July 14, 2024, by andbetween SK Telecom Co., Ltd. and SMART Global Holdings,Inc. 8-K 001-38102 10.1 07/16/2024 10.27 Form of Confirmation for the Base Capped Call Transactions 8-K 001-38102 10.1 08/06/2024 10.28 Form of Confirmation for the Additional Capped Call Transactions 8-K 001-38102 10.1 08/14/2024 10.29*** Credit Agreement, dated as of June 24, 2025, by and amongPenguin Solutions, Inc., SMART Modular Technologies, Inc.,the lenders party thereto and JPMorgan Chase Bank, N.A., asAdministrative Agent, Collateral Agent and an Issuing Bank 8-K 001-38102 10.1 06/26/2025 19.1 Insider Trading and Confidentiality Policy of the Registrant X 21.1 List of Subsidiaries of the Registrant X 23.1 Consent of Independent Registered Public Accounting Firm X 24.1 Power of Attorney (contained in the signature page to this Annual Report on Form 10-K) X 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1**** Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 32.2**** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 97.1 Clawback Policy of the Registrant X 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document X 126
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101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X * Portions of this exhibit have been excluded pursuant to Rule 601(b)(2)(ii) of Regulation S-K. The omitted information is both not material and is the type that the registrant treats as private or confidential. ** Constitutes a management contract or compensatory plan or arrangement. *** Certain schedules and exhibits have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted attachment to the Securities and Exchange Commission on a confidential basis upon request. **** The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Annual Report are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report, irrespective of any general incorporation language contained in such filing. Item 16. Form 10-K Summary Not applicable. 127
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Penguin Solutions, Inc. Date: October 21, 2025 By: /s/ Mark Adams Mark Adams President and Chief Executive Officer Date: October 21, 2025 By: /s/ Nate Olmstead Nate Olmstead Senior Vice President and Chief Financial Officer POWER OF ATTORNEY AND SIGNATURES KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mark Adams, Nate Olmstead and Anne Kuykendall, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. /s/ Mark Adams President, Chief Executive Officer and Director October 21, 2025 Mark Adams (Principal Executive Officer) /s/ Nate Olmstead Senior Vice President and Chief Financial Officer October 21, 2025 Nate Olmstead (Principal Financial and Accounting Officer) /s/ Penelope Herscher Chairperson of the Board of Directors October 21, 2025 Penelope Herscher /s/ Min Yong Ha Director October 21, 2025 Min Yong Ha /s/ Bryan Ingram Director October 21, 2025 Bryan Ingram /s/ Sandeep Nayyar Director October 21, 2025 Sandeep Nayyar /s/ Mark Papermaster Director October 21, 2025 Mark Papermaster /s/ Mary Puma Director October 21, 2025 Mary Puma /s/ Maximiliane Straub Director October 21, 2025 Maximiliane Straub 128
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Exhibit 4.1 DESCRIPTION OF CAPITAL STOCK The following summary describes the capital stock of Penguin Solutions, Inc. (“Penguin Solutions,” the “Company,” “we,” “us” or “our”) and certain provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws, the Amended and Restated Investor Agreement, dated as of June 30, 2025, by and between Penguin Solutions andAstra AI Infra LLC (the “Investor Agreement”), the Certificate of Designation of Convertible Preferred Stock of Penguin Solutions, Inc. (the “Certificate of Designation”), and the General Corporation Law of the State of Delaware (the “DGCL”). This summary does not purport to be complete and is qualified by reference to our Amended and Restated Certificate ofIncorporation, our Amended and Restated Bylaws, the Investor Agreement, and the Certificate of Designation, each of which has been previously filed with the Securities and Exchange Commission (the “SEC”) and is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part, as well as to the applicable provisions of theDGCL. General Our authorized capital stock consists of 200,000,000 shares of common stock, $0.03 par value per share, and 30,000,000 shares of preferred stock, $0.03 par value per share. Common Stock Voting Rights Shares of our common stock are entitled to one vote per share. Our stockholders will not be entitled to cumulative voting for the election of directors. As a result, subject to the special rights of the holders of one or more outstanding series of preferred stock to elect directors, at a duly called or convened meeting of stockholders at which a quorum is present, a plurality of thevotes cast will be able to elect all of the directors then standing for election. Conversion Rights Shares of our common stock are not convertible into any other security. Dividends Subject to preferences that may be applicable to any then outstanding preferred shares, holders of our common stock areentitled to receive dividends, if any, as may be declared from time to time by our Board of Directors (our “Board”) out of legally available funds. Dividends may be paid in cash, in property or in shares of our capital stock. Declaration and payment of any dividend will be subject to the discretion of our Board. The time and amount of dividends will be dependent upon our results ofoperations, financial condition, contractual restrictions and capital requirements, the provisions of Delaware law affecting the payment of distributions to stockholders and any other factors our Board may consider relevant. Liquidation In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to share ratably in the fundsand net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock, including, if applicable, the Issued Convertible Preferred Stock (as defined below). Pre-Emptive, Redemption and Similar Rights Holders of shares of our common stock do not have pre-emptive, subscription, or redemption rights. There are no redemption or sinking fund provisions applicable to our common stock. Fully Paid and Non-Assessable All of the outstanding shares of our common stock are fully paid and non-assessable.
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Preferred Stock General Our Amended and Restated Certificate of Incorporation authorizes our Board to issue preferred stock in one or more seriesand to determine the preferences, limitations and relative rights of any shares of preferred stock that it shall choose to issue, without vote or action by the stockholders. Pursuant to this authority, our Board created a series of 200,000 shares of our preferred stock having a par value of $0.03 per share, designated as convertible preferred stock (the "Issued ConvertiblePreferred Stock"), which has the rights, preferences, powers, privileges, designations and restrictions, including voting rights, dividend rights, conversion rights, company redemption rights and liquidation preferences provided for under Delaware law and the Certificate of Designation. Issued Convertible Preferred Stock Ranking Issued Convertible Preferred Stock ranks, with respect to dividend rights and rights upon voluntary or involuntary liquidation,dissolution or winding up of our affairs: • senior to all classes or series of our common stock and all classes or series of our capital stock now or hereafter authorized, issued or outstanding expressly designated as ranking junior to shares of Issued Convertible Preferred Stock;• on parity with any other class or series of our capital stock expressly designated as ranking on parity with shares of Issued Convertible Preferred Stock; and • junior to any other class or series of our capital stock expressly designated as ranking senior to Issued ConvertiblePreferred Stock, none of which exists on the date hereof. The term “capital stock” does not include convertible or exchangeable debt securities. Shares of Issued Convertible PreferredStock will also rank junior in right of payment to other existing and future debt obligations. Dividends Holders of shares of Issued Convertible Preferred Stock are entitled to receive, whether or not there are funds legally available for the payment of dividends, cumulative dividends at the rate of 6.000% per annum on the sum of (i) the originalissue price thereof, plus (ii) any compound dividends thereon (“Accumulated Stated Value”). If, as and when declared by our Board, such dividends shall be payable in cash quarterly in arrears on or about the 15th dayof February, May, August and November of each year commencing on August 15, 2025 (each, a “Dividend Payment Date”). Any such dividends that we do not elect to declare and pay in cash shall compound quarterly on the applicable Dividend Payment Date and will be added to the then current Accumulated Stated Value. However, to the extent compoundeddividends with respect to any Dividend Payment Date would result in the number of shares of common stock into which the shares of Issued Convertible Preferred Stock would be converted being in excess of the Common Stock Issuance Limitation (as defined in the Certificate of Designation) for any or all holders of shares of Issued Convertible Preferred Stock, then, to theextent of such excess, we will declare the applicable dividend and make the dividend payment on such Dividend Payment Date in cash. The amount of any dividend payable on shares of Issued Convertible Preferred Stock for each dividend period is computed on the basis of a 360-day year consisting of twelve 30-day months. A “dividend period” is, other than in the case of the initial dividend period, the respective period commencing on and including each Dividend Payment Date and ending on, andincluding, the calendar day preceding the next Dividend Payment Date. The initial dividend period commenced on June 30, 2025 and concluded on August 14, 2025. An amount equal to the accrued but unpaid dividends owed to former holders ofPenguin Solutions Cayman (as defined below) convertible preferred shares prior to the completion of the U.S. Domestication (as defined below) on June 30, 2025 was added to the amount of the dividend paid on the initial dividend payment date. Dividends will be payable to holders of record of shares of Issued Convertible Preferred Stock as they appear in our stockrecords at the close of business on the applicable record date, which will be February 1, May 1, August 1 and November 1, or such other record date designated by our Board as the record date for the payment of dividends that does not precede the date 2
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upon which the resolution fixing such date is adopted and is not more than 60 days prior to the applicable Dividend Payment Date. Liquidation Preference Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, before any distribution or payment will be made to holders of our common stock or any other class or series of our capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, junior to Issued Convertible Preferred Stock, theholders of shares of Issued Convertible Preferred Stock are entitled to be paid out of our assets legally available for distribution to stockholders, after payment of or provision for our debts and other liabilities (including any class or series of capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, seniorto shares of Issued Convertible Preferred Stock), a liquidation preference of the greater of (a) the amount such holder would receive had such holder converted their shares of Issued Convertible Preferred Stock to shares of our common stock at the Conversion Price (as defined below) immediately prior to such voluntary or involuntary liquidation, dissolution or winding upand (b) such holder’s Liquidation Preference (as defined in the Certificate of Designation). If, upon our voluntary or involuntary liquidation, dissolution or winding up, our available assets are insufficient to pay the full amount of the liquidating distributions on all outstanding shares of Issued Convertible Preferred Stock and the corresponding amounts payable on all shares of eachother class or series of our capital stock ranking, as to rights upon voluntary or involuntary liquidation, dissolution or winding up, on parity with shares of Issued Convertible Preferred Stock in the distribution of assets, then holders of shares of IssuedConvertible Preferred Stock and each such other class or series of capital stock ranking, as to rights upon any voluntary or involuntary liquidation, dissolution or winding up, on parity with shares of Issued Convertible Preferred Stock share ratably in any distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectivelyentitled. Holders of shares of Issued Convertible Preferred Stock are entitled to written notice of any distribution in connection with anyvoluntary or involuntary liquidation, dissolution or winding up of our affairs not less than 10 days prior to the voluntary or involuntary liquidation, dissolution or winding up. After payment of the full amount of the liquidating distributions to which they are entitled, holders of shares of Issued Convertible Preferred Stock have no right or claim to any of our remaining assets.Each of (a) any transaction (or series of related transactions) following which our pre-transaction stockholders no longer hold equity securities representing at least a majority of the voting power to elect our Board and (b) the sale, lease, exclusive license, or other disposition of all or substantially all the assets of our Company and our subsidiaries, whether by purchase,and sale, merger, consolidation, or otherwise, will be deemed to constitute a liquidation, dissolution or winding up of our affairs unless the holders of at least two-thirds (2/3rds) of the then outstanding shares of Issued Convertible Preferred Stock elect otherwise by written notice sent to us at least 5 days prior to the effective date of any such event. Company Redemption Right Shares of Issued Convertible Preferred Stock are not redeemable upon or repurchased upon the election of the holders of Issued Convertible Preferred Stock. Beginning on December 13, 2029 and provided that all authorizations or approvals necessary to enable holders of Issued Convertible Preferred Stock to convert such shares into our common stock, and for such holders to own such shares of our common stock, have been obtained, we may, at our option, if we have funds legally available for the purpose of redemption,upon not fewer than 30 and not more than 60 days’ prior written notice, redeem all (and not less than all) outstanding shares of Issued Convertible Preferred Stock, at any time or from time to time, for cash at a redemption price of the Accumulated Stated Value, together with all accrued and unpaid dividends (whether or not declared) to the date of redemption, withoutinterest, to the extent such accrued and unpaid dividends are not Compounded Dividends (as defined in the Certificate of Designation) as of such time. We will deliver notices of redemption not less than 30 nor more than 60 days prior to the redemption date. In addition to any information required by law or by the applicable rules of any exchange upon which IssuedConvertible Preferred Stock may be listed or admitted to trading, each notice will state: • the redemption date; • the redemption price; • the Conversion Price (as defined below); and• that we will redeem all shares of Issued Convertible Preferred Stock on the redemption date. 3
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All shares of Issued Convertible Preferred Stock that are so redeemed will be automatically and immediately cancelled and retired and may not be reissued, sold or transferred. Notwithstanding receipt of a redemption notice, each holder of Issued Convertible Preferred Stock shall have the ability to convert such holder’s Issued Convertible Preferred Stock into our common stock based on the then-applicable ConversionPrice prior to the redemption date. Voluntary Conversion At any time and from time to time, each holder of Issued Convertible Preferred Stock has the right to convert any number or all of the shares of Issued Convertible Preferred Stock held by such holder into our common stock. To effect such a voluntary conversion, a holder of Issued Convertible Preferred Stock must provide written notice to our transfer agent indicating the number of shares of Issued Convertible Preferred Stock they wish to convert and, if applicable,any event on which such conversion is contingent. This notice must include the holder’s name or the names of any nominees in whose name the shares of our common stock are to be issued. The conversion is effective at the close of business on the day the notice is received by the transfer agent, or once all contingent events (if any) have occurred, whichever is later, and atsuch time the shares of our common stock issuable upon such conversion are deemed to be outstanding. We will then register the holder or their nominees as the official holders of the full number of shares of our common stock issued uponconversion and will pay cash for any fractional shares that would otherwise be issued, as described below. The number of shares of our common stock into which each share of Issued Convertible Preferred Stock is convertible isequal to the quotient obtained by dividing (i) the product of (a) the number of shares of Issued Convertible Preferred Stock to be converted multiplied by (b) the sum of (1) the Accumulated Stated Value and (2) accumulated Compounded Dividends, and (3) all accrued and unpaid dividends (whether or not declared) up to but excluding the date of conversion, by (ii) theConversion Price in effect at the time of conversion. The “Conversion Price” initially equals $32.80784 per share and is subject to adjustment as described below. The Conversion Price is subject to pro rata adjustments for any subdivisions of the outstanding shares of our common stock, combination or consolidation of the outstanding shares of our common stock, dividends or other distributions payable in shares of our common stock to holders of our common stock as follows: • if we effect a subdivision of the outstanding shares of our common stock, the Conversion Price in effect immediately before the subdivision shall be proportionately decreased such that the number of shares of our common stockissuable upon conversion of each share of Issued Convertible Preferred Stock increases in proportion to the increase in the total number of shares of our common stock outstanding; • if we combine or consolidate the outstanding shares of our common stock, the Conversion Price in effect immediatelybefore the combination or consolidation shall be proportionately increased such that the number of shares of our common stock issuable upon conversion of each share of Issued Convertible Preferred Stock decreases in proportion to the decrease in the total number of shares of our common stock outstanding; and• if we make or issue, or fix a record date for, a dividend or other distribution payable in shares of our common stock to holders of shares of our common stock, the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately before such event by a fraction, the numerator of which is the total number of shares of ourcommon stock outstanding immediately prior to such event, and the denominator of which is the sum of (a) the total number of shares of our common stock outstanding immediately prior to such event plus (b) the number of shares of our common stock issuable in payment of such dividend or distribution. Mandatory Conversion Effective as of the Mandatory Conversion Time (as defined below) and provided that the Mandatory Conversion Conditions (as defined below) have been satisfied, we shall be entitled to require all (but not less than all) outstanding Issued ConvertiblePreferred Stock to be converted into our common stock at the Conversion Price in effect immediately prior to such conversion. 4
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The “Mandatory Conversion Time” means a date following December 13, 2026 upon which the daily volume weighted average price of our common stock on each day of any 15 consecutive trading day period following December 13, 2026(ending on the trading day immediately prior to delivery of a Mandatory Conversion Notice) equals or exceeds 150% of the Conversion Price. The “Mandatory Conversion Conditions” are as follows: (i) all authorizations or approvals necessary to enable holders of Issued Convertible Preferred Stock to convert such shares into our common stock, and for such holders to own such shares of our common stock, have been obtained, (ii) an effective shelf registration statement covers the resale of our common stockissued upon conversion and (iii) such shares of our common stock are listed on Nasdaq or, in certain scenarios, the New York Stock Exchange or both such exchanges. We shall provide written notice of a mandatory conversion (a “Mandatory Conversion Notice”) no later than 10 business days following the Mandatory Conversion Time. The Mandatory Conversion Notice must state: • that we have exercised our mandatory conversion right; • the date of the Mandatory Conversion Time and the date for settlement of such mandatory conversion; • the Conversion Price at the Mandatory Conversion Time; and• a certification that all authorizations or approvals necessary to enable holders of Issued Convertible Preferred Stock to convert such shares into our common stock, and for such holders to own such shares of our common stock, havebeen obtained. As soon as practicable following the Mandatory Conversion Notice, we will register our common stock due upon conversion toeach holder or their respective nominee(s) and deliver to such holders cash in lieu of fractional shares otherwise issuable upon such conversion. We cannot exercise our mandatory conversion right in respect of any Issued Convertible Preferred Stock as to which a redemption notice has been duly delivered by us. No Maturity, Sinking Fund or Mandatory Redemption Issued Convertible Preferred Stock has no maturity date and we are not required to redeem Issued Convertible Preferred Stock at any time. Accordingly, Issued Convertible Preferred Stock will remain outstanding indefinitely, unless we decide, at our option, to exercise our redemption right or mandatory conversion right, or holders of Issued Convertible Preferred Stockexercise their voluntary conversion right. Shares of Issued Convertible Preferred Stock are not subject to any sinking fund. Voting Rights Holders of Issued Convertible Preferred Stock have the voting rights set forth in the Certificate of Designation relating to such shares. Except as prohibited by applicable law, each holder of Issued Convertible Preferred Stock is entitled to (i) vote as a single class with the holders of our common stock on all matters submitted for a vote of holders of our common stock, (ii) inconnection with such vote, vote a number of votes equal to the largest number of whole shares of common stock in which all Issued Convertible Preferred Stock held of record by such holder could then have been converted pursuant to the conversion procedures described above at the applicable record date for such vote or, absent such a record date, at the date such vote istaken, and (iii) receive notice of and attend all stockholders’ meetings (or receive notice of proposed action by written resolutions and the right to provide or withhold consent) and receive copies of all notices and other materials sent by us to the holders of our common stock relating to such meetings. For so long as SK Telecom Co., Ltd. (“SK”) or its subsidiaries or affiliates together beneficially own Issued Convertible Preferred Stock (and our common stock issued with respect thereto) representing at least 5% of our common stock thenoutstanding, calculated on a fully-diluted basis (such period, the “Director Period”), SK and its affiliates that hold Issued Convertible Preferred Stock, acting together, may nominate to be elected or appointed to our Board: (i) one director, if thetotal number of directors is 11 or fewer, and (ii) two directors, if the total number of directors is 12 or greater (any such director, an “Investor Designee”), provided that each such director meets customary qualification requirements and is reasonably acceptable to our Board at the time of his or her designation. The rights of SK and its affiliates with respect to theInvestor Designees are not transferable to a third party without our prior written consent. 5
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During the Director Period (i) our Board shall nominate the Investor Designee(s) or their designated successors for appointment or re-appointment at the applicable stockholder meetings and use commercially reasonable efforts to cause suchInvestor Designees to be appointed or re-appointed, (ii) we shall use reasonable best efforts to cause the appointment of each Investor Designee, including voting all unrestricted proxies in their favor and recommending approval of their appointment, and (iii) neither we nor our Board will decrease the size of our Board if such decrease would require an InvestorDesignee to resign. If an Investor Designee resigns, is removed, or otherwise vacates his or her office as a director during the Director Period, SKand its affiliates that hold Issued Convertible Preferred Stock, acting together, have the right to select a replacement Investor Designee subject to the requirements set forth above. Subject to compliance with the foregoing sentence, our Board will be required to appoint such replacement to serve the remaining term of the departing Investor Designee within 20 days followingreceipt of such replacement’s name and relevant background information. So long as any shares of Issued Convertible Preferred Stock remain outstanding, we will not take certain specified actions asprovided in the Certificate of Designation (such as amending our Amended and Restated Certificate of Incorporation in a manner adverse to the powers, rights, preferences, restrictions or privileges of the Issued Convertible Preferred Stock, declaring a dividend or repurchasing shares (subject to exceptions), or issuing additional shares of Issued ConvertiblePreferred Stock), without the prior written consent or affirmative vote of the holders of at least two-thirds (2/3rds) of the then- outstanding Issued Convertible Preferred Stock. In addition, for so long as SK or its subsidiaries or affiliates together beneficially own Issued Convertible Preferred Stock (or our common stock issued with respect thereto) representing at least 7.5% of the issued and outstanding shares of ourcommon stock, calculated on a fully-diluted basis, we may not, without the prior written consent or waiver of SK or such subsidiaries or affiliates or the approval of our Board (including the vote or consent of each Investor Designee), incur, assume or otherwise become liable for Indebtedness (as defined in the Certificate of Designation) if, as a result thereof, the TotalLeverage Ratio (as defined in the Certificate of Designation) would exceed 5.00 to 1.00 as of the last day of any fiscal quarter of ours. Notwithstanding any provisions to the contrary in our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, the holders of shares of Issued Convertible Preferred Stock are permitted to act by written consent. Book-Entry Procedures Issued Convertible Preferred Stock is only issued via book-entry to the applicable account(s) registered in the name of theholders thereof. Annual Stockholder Meetings Our Amended and Restated Bylaws provide that annual stockholder meetings will be held at a date, place (if any) and time, as exclusively selected by our Board. To the extent permitted under applicable law, we may, but are not obligated to, conductmeetings by remote communications, including by webcast. Private Placement Investor and Registration Rights Investor Agreement General On July 14, 2024, Penguin Solutions (Cayman), Inc., a Cayman Islands exempted company (formerly known as SMARTGlobal Holdings, Inc., “Penguin Solutions Cayman”), entered into a Securities Purchase Agreement with SK (the “Purchase Agreement”), pursuant to which it sold in a private placement (the “2024 Private Placement”) 200,000 convertible preferredshares to SK, to be directly held by a special purpose vehicle formed by SK to consummate the investment, Astra AI Infra LLC, a Delaware limited liability company and wholly-owned subsidiary of SK (“Astra,” generally referenced together with SK and its subsidiaries and affiliates in this subsection as “SK” for convenience). In connection with the 2024 Private Placement,Penguin Solutions Cayman also entered into an investor agreement with Astra, dated December 13, 2024, pursuant to which it agreed to register for resale the shares of common stock issuable to SK in the 2024 Private Placement (the “Existing Investor Agreement”). In connection with the 6
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redomiciliation of the parent company of our corporate group from the Cayman Islands to the State of Delaware in the United States (the “U.S. Domestication”), the Existing Investor Agreement, providing for certain rights and restrictions relating to SK’sinvestment in Penguin Solutions Cayman’s convertible preferred shares, was amended and assumed by us, such that the existing rights and restrictions applied in respect of SK’s holdings of the Issued Convertible Preferred Stock following the consummation of our U.S. Domestication. Standstill The Investor Agreement contains a standstill restriction that, subject to certain exceptions, restricts SK and its affiliates from acquiring additional shares of our common stock or other securities exercisable into our common stock, making tender offers or similar offers for shares of our common stock, or engaging in certain other activities that could lead to a change of controlof us, in each case without the approval of us or our Board. The standstill will remain in place until the later of (i) December 13, 2025 or (ii) 30 days after no Investor Designee (as defined in the Investor Agreement) serves on our Board. Restrictions on Transfer The Investor Agreement contains a “lock-up” period during which neither SK nor its affiliates are permitted to dispose of theirshares of Issued Convertible Preferred Stock or certain shares of our common stock acquired by them, in each case without the approval of a majority of the directors of our Board (exclusive of the vote of the director designee of SK). The initial lock-up term will last until December 13, 2025; certain restrictions on the volume of certain dispositions of shares of Issued Convertible Preferred Stock to certain parties last until December 13, 2026. Voting Requirements Pursuant to the voting requirements contained in the Investor Agreement, SK and its affiliates are required (i) for so long asthe standstill is in effect, to vote their shares of Issued Convertible Preferred Stock in accordance with the recommendation of our Board and (ii) for so long as the shares of Issued Convertible Preferred Stock purchased by SK remain outstanding, to vote such shares of Issued Convertible Preferred Stock in accordance with the recommendation of our Board on all mattersfor which the shares of Issued Convertible Preferred Stock are entitled to vote as a separate class and for which their prior consent is not required pursuant to the Certificate of Designation. Investor Designees The Investor Agreement contains additional terms governing the Investor Designees consistent with those discussed above in“—Voting Rights”. Participation Rights The Investor Agreement provides SK and its affiliates owning Issued Convertible Preferred Stock the right to purchase a portion of certain new securities issued by us as required to maintain their ownership of us on a fully diluted basis. Such newsecurities are expected to be made available for purchase by SK and its affiliates on the same terms and conditions applicable to, and for the same price paid by, the purchaser(s) in such issuance of new securities. Registration Rights Pursuant to our obligations under the Investor Agreement, on August 27, 2025 we filed a shelf registration statement on FormS-3 with the SEC (Registration No. 333-289893) covering, among other things, the resale of our common stock issued upon the conversion of SK’s shares of Issued Convertible Preferred Stock, or certain other securities issued in respect of SK’s shares of Issued Convertible Preferred Stock. Pursuant to the Investor Agreement, we agreed to use commerciallyreasonable efforts to maintain the effectiveness of the registration statement from once it is declared effective until the earlier of the date that: (i) all of the “Registrable Securities” (as such term is defined in the Investor Agreement) have been soldpursuant to such registration statement or (ii) such Registrable Securities cease to be Registrable Securities. Subject to certain limitations, we anticipate SK may deliver take-down notices to us indicating that it will sell, pursuant to either an underwritten or non-underwritten offering, certain of the securities covered by the shelf registration statement. SK will also beentitled to make certain requests for demand registrations and will have certain “piggyback” rights to include its registrable securities in certain registration statements filed by us. 7
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Information Rights The Investor Agreement provides that we shall, at SK’s written request and subject to certain exceptions, give SK reasonable access to the books, records and financial information relating to the operations of our Company and our subsidiaries, to the extent reasonably requested by SK in connection with the preparation of SK’s financial statements or tax returns, or asrequired in connection with SK’s compliance with its obligations under applicable laws and regulations relating to foreign exchange transactions. Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and Bylaws and Delaware Law The DGCL contains and our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws containprovisions that may delay, defer, or discourage another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our Board, which we believe mayresult in an improvement of the terms of any such acquisition in favor of our stockholders. However, they will also give our Board the power to discourage acquisitions that some stockholders may favor. Delaware Anti-Takeover Statute We are subject to Section 203 of the DGCL, which prohibits persons deemed “interested stockholders” from engaging in a “business combination” with a publicly-held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interestedstockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of the voting power of a corporation’s voting stock and a “businesscombination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by our Board, such as discouraging takeover attempts that might result in a premium over the market price of ourcommon stock. Undesignated Preferred Stock The ability to issue undesignated preferred stock makes it possible for our Board to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions mayhave the effect of deterring hostile takeovers or delaying or preventing changes in control or management of us. Stockholder Action and Special Stockholder Meetings Our Amended and Restated Certificate of Incorporation provides that except as otherwise provided in the Amended and Restated Certificate of Incorporation or in the applicable certificate of designation related to any series of preferred stock(including the Issued Convertible Preferred Stock), any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of its stockholders and may not be effected by any consent in writing by its stockholders. Our Amended and Restated Certificate of Incorporation further provides, subject to the special rights of theholders of one or more outstanding series of preferred stock (including the holders of Issued Convertible Preferred Stock), that special meetings of our stockholders may be called only by or at the direction of our Board, the Chairperson of our Board or our Chief Executive Officer or President, thus prohibiting a stockholder (in his, her or its capacity as a stockholder) fromcalling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a proposal or for stockholders to take any action, including the removal of directors. Advance Notice Requirements for Stockholder Proposals and Director Nominations Our Amended and Restated Bylaws provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our Amended and Restated Bylaws also specify certain requirements regarding the form and content of a stockholder’s notice.These provisions might preclude our stockholders from bringing matters before the annual meeting of stockholders or from making nominations for directors at the annual meeting of stockholders if the proper procedures are not followed. 8
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We expect that these provisions might also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. Supermajority Requirements for Certain Amendments of Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws Certain amendments to our Amended and Restated Certificate of Incorporation require the approval of 66-2/3% of the voting power of all then-outstanding shares of our Company entitled to vote thereon, voting together as a single class. Composition of Our Board of Directors; Election and Removal of Directors; Filling Vacancies Our Board determines by resolution the total number of directors that will constitute the whole board of directors. Subject to the special rights of the holders of one or more outstanding series of preferred stock to elect directors (including the Issued Convertible Preferred Stock), in any election of directors at a duly called or convened meeting of stockholders at which aquorum is present, a director nominee for our Board is elected by the affirmative vote of a plurality of the votes cast with respect to such director. An incumbent director who is nominated for an election and fails to receive a plurality of the votes present and voting for such director’s re-election would be expected to tender their resignation to us. Subject to the special rights of the holders of one or more outstanding series of preferred stock to elect directors (including theholders of Issued Convertible Preferred Stock), our directors are divided into three staggered classes, with each director assigned into one of the three classes and the directors in each such class serving initial terms expiring at the first, second, and third annual meetings of stockholders following the completion of the U.S. Domestication, respectively, and subsequentterms expiring at the annual meeting of stockholders in the third year following the year of such directors’ respective elections. Additionally, subject to maintaining certain ownership thresholds, the holders of Issued Convertible Preferred Stock have the right to nominate one director to our Board if the total number of our directors is 11 or less, and two directors if the totalnumber of our directors is 12 or more. The division of our Board into three classes with staggered three-year terms may delay or prevent stockholder efforts to effecta change of its management or a change in control. We expect that additional directorships resulting from an increase in the number of directors, if any, will be distributed among the three classes so that, as nearly as possible, each class shall consist of one third of the board of directors. Our Amended and Restated Certificate of Incorporation provides that, subject to the special rights of the holders of one or more outstanding series of preferred stock (including the Issued Convertible Preferred Stock) to elect directors, our directorsmay be removed only for cause and only by the affirmative vote of the holders of at least 66-2/3% of the voting power of all then-outstanding voting stock entitled to vote at an election of directors. Furthermore, subject to (i) the special rights of the holders of one or more outstanding series of preferred stock to elect directors and (ii) the rights of our stockholders to fill avacancy created by the removal of a director at a meeting of stockholders held for that purpose, a majority of our Board has the exclusive right to appoint a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director. This system of electing and removing directors and filling vacancies may tend to discourage a thirdparty from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors. Choice of Forum Our Amended and Restated Certificate of Incorporation provides that, except for claims for which the U.S. federal courts havejurisdiction, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for the following: any derivative action, suit or proceeding brought on our behalf; any action, suit or proceeding asserting a claim of a breach of fiduciary duty; any action, suit or proceeding arising pursuant to theDGCL, our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. 9
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Limitations of Liability and Indemnification Our Amended and Restated Certificate of Incorporation provides that we have the power to provide rights to indemnification and advancement of expenses to, among others, our current and former directors and officers. The DGCL provides that the certificate of incorporation may not eliminate or limit the liability of: • a director or officer for any breach of the director or officer’s duty of loyalty to us or our stockholders; • a director or officer for acts or omissions not in good faith or which involve intentional misconduct or a knowingviolation of law; • a director pursuant to Section 174 of the DGCL; • a director or officer for any transaction from which the director or officer derived an improper personal benefit; or• an officer in any action by or in the right of us. Our Amended and Restated Bylaws provide that we must indemnify our directors and officers to the fullest extent permitted bylaw. We are also required to advance certain expenses (including attorneys’ fees) to our directors and officers and are expressly authorized to carry directors’ and officers’ insurance providing indemnification for our directors and officers for some liabilities. We have entered into agreements to indemnify our directors and executive officers as determined by our Board. Webelieve that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. The limitation of liability and indemnification provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for analleged breach of fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damages. Listing Our common stock is currently listed on Nasdaq under the symbol “PENG”. We will not seek to list the Issued Convertible Preferred Stock. Transfer Agent and Registrar The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent andregistrar’s address is 150 Royall Street, Suite 101, Canton, Massachusetts 02021. 10
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Exhibit 10.4 Performance Stock Unit Award Agreement Under the Penguin Solutions, Inc. Amended and Restated 2017 Stock Incentive Plan Notice of Grant Date of Grant: [xx/xx/xxxx] Name of Participant: [First Name Last Name] Target Number of Units:[xx] Performance Period: [x] through [x], subject to Addendum A Penguin Solutions, Inc., a Delaware corporation (the “Company”), hereby grants to the above-named participant (“Participant”), as of the date of grant set forth above (the “Grant Date”), the target number of performance stock units set forth above (the “PSUs”), with each PSU representing the right to receive a share of common stock of the Company, par value $0.03 per share (a “Share”), subject to the terms of the Penguin Solutions, Inc. Amended and Restated 2017 Stock Incentive Plan (the “Plan”) and the restrictions, including service and performance conditions, described below in this Performance Stock Unit Award Agreement, including Addendum A attached hereto (this “Agreement”). The provisions of Addendum A are incorporated by reference herein and made a part of the Agreement; to the extent any provision in Addendum A conflicts with any provision set forth elsewhere in the Agreement, the provision set forth in Addendum A shall control. Capitalized terms not otherwise defined herein shall have the same meaning set forth in the Plan. 1. Vesting. Subject to the terms of this Agreement, the Award shall vest with respect to the number ofPSUs, if any, as determined pursuant to the terms of Addendum A, subject to the satisfaction of the followingservice and performance conditions (together, the “Vesting Conditions”): (a) Service Condition. Participant must continue employment through the Certification Date (the“Service Condition”). (b) Performance Condition. The Company’s [xxx] must equal or exceed the applicable thresholdlevel of performance set forth in Addendum A, [and such other conditions as set forth in Addendum A must be met,each] as determined by the Committee. To the extent that the Vesting Conditions are met, the PSUs shall vest in asingle lump sum at the close of business on the day that the Compensation Committee (the “Committee”) certifiesthe achievement of the Performance Goal[s] set forth in Addendum A (the “Certification Date”). SuchCertification Date shall occur as soon as reasonably practicable following the last day of the Performance Period.Until the Committee has made such a determination, none of the Vesting Conditions will be considered to havebeen satisfied. Notwithstanding the foregoing and subject to Section 2(b) below, the PSUs may be subject to othervesting terms to the extent expressly provided in a written Employment Agreement with Participant, if the terms ofsuch Employment Agreement have been approved by the Committee. Page 1 of 9
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(c) Fractional PSU Vesting. In the event Participant would vest in a fractional portion of a PSUbased on attainment of the Performance Goal[s], such fractional portion will be rounded down to the nearest wholenumber. 2. Termination of Employment; Change in Control. (a) Forfeiture of Unvested Performance Stock Units upon Termination. Except as provided in awritten Employment Agreement with Participant or any amendment thereto, the terms of which have beenapproved by the Committee, immediately upon termination of Participant’s employment for any reason (includingParticipant’s death or disability), any PSUs which have not vested shall be forfeited without consideration. TheCompany shall have the exclusive discretion to determine the date of termination of Participant’s employment forpurposes of the forfeiture of unvested PSUs pursuant to this Section 2(a), including whether Participant may still beconsidered to be in employment while on a leave of absence or during any applicable notice period. (b) Treatment of Performance Stock Units upon a Change in Control. Notwithstanding Section 1above or any terms in Participant’s Employment Agreement, (i) upon a Change in Control that occurs on or beforethe first anniversary of the Grant Date, the Performance Goal[s] applicable to the PSUs shall be deemed to besatisfied at the target performance level and the Target Number of Units (as designated in Notice of Grant andAddendum A) shall immediately vest as of the date of the Change in Control; and (ii) upon a Change in Controlthat occurs more than one year following the Grant Date, the number of PSUs (if any) that vest as of the date of theChange in Control will be determined based on actual performance during the Performance Period through the dateof the Change in Control, as determined by the Committee pursuant to the terms of Addendum A. Any PSUs thatdo not vest upon a Change in Control or otherwise shall be forfeited without consideration. (c) Treatment of Forfeited Shares. Any Shares forfeited pursuant to this Section 2 or otherwise, shall be returned to the Plan and made available for re-grant. 3. Conversion into Shares of Common Stock. Shares issuable pursuant to the terms of this Agreementwill be issued on, or as soon as practicable following, the Certification Date, or if applicable, the date of the Changein Control where the PSUs vest pursuant to Section 2(b) notwithstanding any payment timing terms to the contraryin any Employment Agreement. As a condition to such issuance, Participant shall have satisfied his or herobligations with respect to Tax-Related Items as specified in Section 4 of this Agreement and shall have completed,signed and returned any documents and taken any additional action that the Company deems appropriate to enableit to accomplish the delivery of the Shares. In no event will the Company be obligated to issue a fractional Share,unless otherwise determined by the Committee. Notwithstanding the foregoing, (i) the Company shall not beobligated to deliver any Shares during any period when the Company determines that the conversion of a PSU orthe delivery of Shares hereunder would violate any federal, state or other applicable laws and/or may issue Sharessubject to any restrictive legends that, as determined by the Company’s counsel, is necessary to comply withsecurities or other regulatory requirements, and (ii) the date on which Shares are issued may include a delay inorder to provide the Company such time as it determines appropriate to address tax withholding and otheradministrative matters (but in no event later than the deadline required to comply with the “short-term deferral”exemption under Section 409A of the Code). (a) Without limiting the generality of the foregoing, the Committee may require an opinion ofcounsel acceptable to it to the effect that any subsequent transfer of Shares issued upon the vesting and settlementof the PSUs does not violate the Securities Act, and may issue stop-transfer orders covering such Shares. Page 2 of 9
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4. Tax Withholding. (a) Regardless of any action the Company or, if different, any Affiliate that employs Participant(the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account orother tax-related withholding items related to Participant’s participation in the Plan and legally applicable toParticipant (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items isand remains Participant’s responsibility and may exceed the amount (if any) actually withheld by the Company orthe Employer. Participant further acknowledges that the Company and/or the Employer (i) make no representationsor undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PSUs,including, but not limited to, the grant, vesting or settlement of the PSUs, the issuance of the Shares pursuant tosuch settlement, the subsequent sale of Shares and the receipt of any dividends, and (ii) do not commit to and areunder no obligation to structure the terms of this Agreement, the grant or any aspect of the PSUs to reduce oreliminate Participant’s liability for Tax-Related Items or to achieve a particular tax result. Further, if Participant issubject to tax in more than one jurisdiction, Participant acknowledges that the Company and/or the Employer (orformer employer, as applicable) may be required to withhold or account for Tax-Related Items in more than onejurisdiction. (b) Except as provided in Section 4(c) and Section 4(d) below, any withholding obligations withrespect to Tax-Related Items incurred in connection with the PSUs shall be satisfied in one or more of the followingmanners: (i) if the Shares are publicly traded at the time of the Tax-Related Items withholding event, by theautomatic sale by or on behalf of Participant of Shares that are issued under the PSUs (in which case the Companymay permit or require such Shares to be sold as part of a block trade with other Plan participants) with the proceedspaid to the Company for remittance to the appropriate taxing authorities, or (ii) if and only to the extent permittedby the Company in its sole discretion: (A) by the Company withholding Shares that would otherwise be issuedunder the vested PSUs (with a value up to but not in excess of the statutory maximum amount of Tax-Related Itemsrequired to be withheld by law); (B) by payment by Participant to the Company by wire or by check (which amountshall be due within two (2) business days following the day the applicable taxable event arises, unless otherwisedetermined by the Company); or (C) unless prohibited by applicable law, by the Company or the Employerwithholding such Tax-Related Items from wages or other amounts otherwise owed to Participant. (c) Notwithstanding Section 4(b) above, in the event that the withholding obligations withrespect to Tax-Related Items incurred in connection with the PSUs arise on a date on which the sale of Shareswould otherwise be prohibited by the Company’s insider trading policy, then provided that the PSUs do not vestprior to the expiration of the applicable cooling-off period in Rule 10b5-1(c)(1)(ii)(B) under the Exchange Act,measured from the Grant Date (the “Cooling-Off Period”), any such Tax-Related Items withholding obligationsshall be satisfied by the automatic and mandatory sale by or on behalf of Participant of sufficient Shares that areissued under the PSUs to pay the Tax-Related Items obligations (in which case the Company may permit or requiresuch Shares to be sold as part of a block trade with other Plan participants) with the proceeds paid to the Companyfor remittance to the appropriate taxing authorities. It is the Company’s intent that the mandatory sale of Shares tocover withholding obligations for Tax-Related Items pursuant to this Section 4(c) shall constitute an “eligible sell-to-cover transaction” (as described in Rule 10b5-1(c)(1)(ii)(D)(3) under the Exchange Act) and shall satisfy theaffirmative defense conditions of Rule 10b5-1(c)(1) under the Exchange Act. In this regard, Participant certifiesthat Participant is not aware of any material, nonpublic information regarding the Company or any securities of theCompany as of the Grant Date; provided that if Participant is in possession of such material nonpublic informationas of the Grant Date, then the mandatory sale of Shares pursuant to this Section 4(c) shall become a Page 3 of 9
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binding contract as of the first date thereafter on which Participant is not in possession of material nonpublicinformation and as of the date any sales are effected pursuant to this Section 4(c), Participant will not effect suchsales on the basis of material nonpublic information regarding the Company or any securities of the Company ofwhich Participant was aware at the Grant Date. Further, Participant certifies that he or she is entering into the sell-to-cover arrangement in this Section 4(c) in good faith and not as a part of a plan or scheme to evade theprohibitions of Rule 10b5 under the Exchange Act. If the sale of Shares pursuant to this Section 4(c) is prohibitedby a legal, contractual or regulatory restriction applicable to Participant or to the broker effecting the sale, or isprevented by a market disruption or similar issue, or if the Tax-Related Items withholding obligation arises at atime other than the vesting and associated settlement of the PSUs or prior to the expiration of the Cooling-OffPeriod or at a time when the Shares are not publicly traded, then the withholding obligations with respect to Tax-Related Items may be satisfied in one or more of the following manners, as determined by the Company in its solediscretion: (i) by the Company withholding Shares that would otherwise be issued under the PSUs (with a value upto but not in excess of the statutory maximum amount of Tax-Related Items required to be withheld by law); (ii) bypayment by Participant to the Company by wire or by check (which amount shall be due within two (2) businessdays following the day the applicable taxable event arises, unless otherwise determined by the Company); or (iii)unless prohibited by applicable law, by the Company or the Employer withholding such Tax-Related Items fromwages or other amounts otherwise owed to Participant. (d) Notwithstanding Section 4(b) and Section 4(c) above, if Participant is subject to Section 16of the Exchange Act, the withholding obligations for Tax-Related Items will be satisfied by the Companywithholding Shares that would otherwise be issued under the PSUs (with a value up to but not in excess of thestatutory maximum amount of Tax-Related Items required to be withheld by law), and not by the automatic sale byor on behalf of Participant of Shares that are issued under the PSUs. (e) The Company or the Employer may withhold or account for Tax-Related Items byconsidering applicable minimum statutory withholding rates or other applicable withholding rates, includingmaximum rates applicable in Participant’s jurisdiction. In the event of over-withholding, Participant may receive arefund of any over-withheld amount in cash (with no entitlement to the equivalent in Shares), or if not refunded,Participant may need to seek a refund from the applicable tax authority. In the event of under-withholding,Participant may be required to pay any additional Tax-Related Items directly to the applicable tax authority or tothe Company and/or the Employer. If the obligation for Tax-Related Items is satisfied by withholding Shares, fortax purposes, Participant is deemed to have been issued the full number of Shares subject to the vested PSUs,notwithstanding that a number of the Shares is held back solely for the purpose of paying the Tax-Related Items.The Company may refuse to issue or deliver the Shares or the proceeds from the sale of Shares, if Participant failsto comply with Participant’s obligations in connection with the Tax-Related Items. 5. Lock-up Period. Participant agrees that the Company (or a representative of the underwriter(s)) may,in connection with any underwritten registration of the offering of any securities of the Company under theSecurities Act, require that Participant not sell, dispose of, transfer, make any short sale of, grant any option for thepurchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Shares orother securities of the Company held by Participant, for a period of time specified by the underwriter(s) (not toexceed one hundred eighty (180) days) following the effective date of the registration statement of the Companyfiled under the Securities Act; provided that transactions pursuant to Section 4 hereof shall be exempt from anysuch lock-up request. Participant further agrees to execute and deliver such other agreements as may be reasonablyrequested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary togive further effect thereto. In order Page 4 of 9
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to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to Participant’sShares until the end of such period. The underwriters of the Company’s shares are intended third party beneficiariesof this Section 5 and shall have the right, power and authority to enforce the provisions hereof as though they werea party hereto. 6. Restrictions on Transfer. Except as expressly required by applicable law, Participant understandsand agrees that the PSUs may not be sold, given, transferred, assigned, pledged or otherwise hypothecated and anyattempt to sell, give, transfer, assign, pledge or otherwise hypothecate all or any portion of the PSUs will be voidand wholly without effect. Notwithstanding the foregoing, a transfer of the PSUs will be effective if and to theextent permitted by the Committee in its sole discretion in response to a written Participant request, subject tocompliance with applicable law. 7. Certificates. Unless otherwise determined by the Board, any Shares due to Participant under thisAgreement shall be maintained in uncertificated form through book-entry registration with the Company (or, asapplicable, its transfer agent or stock plan administrator) or otherwise as permitted by applicable law. Any suchbook-entry records, or certificates if issued, shall carry such appropriate legends, and such written instructions shallbe given to the Company transfer agent, as may be deemed necessary or advisable by counsel to the Company inorder to comply with the requirements of the Securities Act, any state securities laws or any other applicable laws. 8. Stockholder Rights. Participant will have no voting or other rights as the Company’s otherstockholders with respect to the Shares until issuance of the Shares to Participant. 9. No Employment/Service Rights. Neither this Agreement nor the grant of the PSUs shall (a) create aright to, or be interpreted as forming an employment or service contract with the Company or any Affiliate, or aright to continue in the employ or service of the Company or any Affiliate; or (b) interfere in any way with the rightof the Company or any Affiliate to determine the terms of Participant’s employment or service and to terminateParticipant’s employment or service. 10. Nature of the Grant. In accepting the grant of the PSUs, Participant acknowledges, understands andagrees as follows: (a) The Plan is established voluntarily by the Company, it is discretionary in nature and, to theextent permitted by the Plan, it may be modified, amended, suspended or terminated by the Company at any time,to the extent permitted by the Plan; (b) The grant of the PSUs is exceptional, voluntary and occasional and does not create anycontractual or other right to receive future grants of performance stock units, or other awards or benefits in lieu ofperformance stock units; (c) All decisions with respect to future performance share grants or other awards or benefits, ifany, will be at the sole discretion of the Committee; (d) Participant is voluntarily participating in the Plan; (e) The PSUs and Shares subject to the PSUs, and the income from and value of same, are notintended to replace any pension rights or pension compensation; Page 5 of 9
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(f) The PSUs and Shares subject to the PSUs, and the income from and value of same, are notpart or normal or expected compensation or salary for any purpose, including, but limited to, calculating anyseverance, resignation, termination, payment in lieu of notice, redundancy, dismissal, end-of-service payments,holiday pay, bonuses, long-service awards, leave-related payments, non-U.S. pension or retirement or welfarebenefits or similar mandatory payments; (g) The future value of the underlying Shares is unknown, indeterminable and cannot bepredicted with certainty; (h) No claim or entitlement to compensation or damages shall arise from forfeiture of PSUsresulting from the termination of Participant’s employment or service (for any reason whatsoever, whether or notlater found to be invalid or in breach of employment laws in the jurisdiction where Participant is employed orprovides services or the terms of Participant’s Employment Agreement, if any); and (i) Unless otherwise agreed with the Company, the PSUs and the Shares subject to the PSUs,and the income from and value of same, are not granted as consideration for, or in connection with, the serviceParticipant may provide as a director of an Affiliate. 11. Terms of Plan, Interpretations. This Agreement and the terms and conditions herein set forth aresubject in all respects to the terms and conditions of the Plan, which shall be controlling; provided that in the eventof a conflict between Section 4 hereof and Section 15(g) of the Plan regarding the satisfaction of withholding taxliabilities, the provisions of Section 4 hereof shall control. All interpretations or determinations of the Committeeshall be binding and conclusive upon Participant and Participant’s legal representatives on any question arisinghereunder. Participant acknowledges that Participant has received and reviewed a copy of the Plan. 12. Notices. The Company may require any notice hereunder to be transmitted, submitted or received,by the Company or Participant, electronically in accordance with the procedures established by the Company forsuch notice. Otherwise, all notices hereunder to the party shall be delivered or mailed to the following addresses: If to the Company: Penguin Solutions, Inc. Attn: Stock Plan Administrator 39870 Eureka Drive Newark, California 94560 If to Participant: At the last address for Participant in the Company’s records. Such addresses for the service of notices may be changed at any time provided notice of such change is furnished in advance to the other party. 13. Entire Agreement. This Agreement contains the entire understanding of the parties hereto in respectof the subject matter contained herein. This Agreement together with the Page 6 of 9
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Plan supersedes all prior agreements and understandings between the parties hereto with respect to the subjectmatter hereof. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws ofthe State of Delaware, without application of the conflict of laws principles thereof. For purposes of litigating anydispute that arises directly or indirectly from or relates to the PSUs granted under the Plan and/or this Agreement,the Company and Participant submit to the exclusive jurisdiction of the State of Delaware, U.S.A., and agree thatsuch litigation shall be conducted only in the courts of the State of Delaware or the federal courts located inDelaware, and no other courts. 15. Code Section 409A. The parties intend that this Agreement and the benefits provided hereunder beexempt from the requirements of Section 409A of the Code (together with any Department of Treasury regulationsand other interpretive guidance issued thereunder, including without limitation any such regulations or otherguidance that may be issued after the date hereof, “Section 409A”) to the maximum extent possible. However, tothe extent that the PSUs (or any portion thereof) may be subject to Section 409A, the parties intend that thisAgreement and such benefits comply with the deferral, payout, and other limitations and restrictions imposed underSection 409A and this Agreement shall be interpreted, operated and administered in a manner consistent with suchintent. Notwithstanding any other provision of the Plan or this Agreement, the Committee shall have the right in itssole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so)to adopt such amendments to the Plan or this Agreement, or adopt other policies and procedures (includingamendments, policies and procedures with retroactive effect), or take any other actions, as the Committeedetermines are necessary or appropriate either for the PSUs to be exempt from the application of Section 409A orto comply with the requirements of Section 409A. For purposes of the Plan and this Agreement, to the extentnecessary to avoid accelerated taxation and/or tax penalties under Section 409A, a termination of employment shallnot be deemed to have occurred for purposes of settlement of any portion of the PSUs unless such terminationconstitutes a “separation from service” within the meaning of Section 409A. Each amount to be paid under thisAgreement shall be construed as a separately identified payment for purposes of Section 409A. In addition,notwithstanding anything herein to the contrary, if upon termination of employment, a Participant is deemed to be a“specified employee” within the meaning of that term under Section 409A, then, to the extent the settlement of thePSUs following such termination of employment is considered the payment of “non-qualified deferredcompensation” under Section 409A payable on account of a “separation from service” that is not exempt fromSection 409A, such settlement shall be delayed until the date that is the earlier of (i) the expiration of the six-monthperiod measured from the date of such “separation from service” or (ii) the date of Participant’s death. 16. Insider Trading/Market Abuse Laws. Participant acknowledges that, depending on Participant’scountry, the Plan broker’s country, or the country in which Shares are listed, Participant may be subject to insidertrading and/or market abuse laws which may affect Participant’s ability to accept, acquire, sell or otherwise disposeof Shares, rights to such Shares (e.g., PSUs) or rights linked to the value of Shares under the Plan during such timesas Participant is considered to have “material nonpublic information” or “inside information” regarding theCompany (or similar type matters as defined by the laws or regulations in the relevant jurisdiction). Local insidertrading laws and regulations may prohibit the cancellation or amendment of orders Participant places before he orshe possessed inside information. Furthermore, Participant could be prohibited from (i) disclosing insideinformation to any third party (other than on a “need to know” basis) and (ii) “tipping” third parties or causing themotherwise to buy or sell securities (including fellow employees or service providers). Any restrictions under theseor similar laws or regulations are separate from, in addition to, and may Page 7 of 9
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differ from, any restrictions that may be imposed under the Company’s insider trading policy. Participantacknowledges that it is his or her responsibility to comply with any applicable restrictions, and that Participantshould speak to his or her personal advisor on this matter. 17. Imposition of Other Requirements. The Company reserves the right to impose other requirements onParticipant’s participation in the Plan, on the PSUs and on any Shares acquired under the Plan, to the extent theCompany determines it is necessary or advisable for legal or administrative reasons, and to require Participant tosign any additional agreements or undertakings that may be necessary to accomplish the foregoing. 18. Foreign Asset/Account Reporting. Participant acknowledges that there may be foreign asset and/oraccount reporting requirements which may affect Participant’s ability to acquire or hold Shares acquired under thePlan or cash received from participating in the Plan (including from any dividends paid on Shares acquired underthe Plan) in a brokerage or bank account outside Participant’s country. Participant may be required to report suchaccounts, assets or transactions to the tax or other authorities in Participant’s country. Participant also may berequired to repatriate sale proceeds from the sale of Shares or other funds received as a result of participation in thePlan to Participant’s country through a designated bank or broker within a certain time after receipt. Participantacknowledges that it is his or her responsibility to be compliant with any such requirements, and should consult hisor her personal legal advisor for any details. 19. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor isthe Company making any recommendations regarding Participant’s participation in the Plan or his or heracquisition or sale of the underlying Shares. Participant should consult with his or her own personal tax, legal andfinancial advisors regarding Participant’s participation in the Plan before taking any action related to the Plan. 20. Electronic Delivery and Participation. The Company may, in its sole discretion, decide to deliverany documents related to participation in the Plan by electronic means or to request Participant’s consent toparticipate in the Plan by electronic means. By participating in the Plan, Participant consents to receive suchdocuments by electronic delivery and agrees to participate in the Plan through an on-line or electronic systemestablished and maintained by the Company or a third party designated by the Company. 21. Language. If Participant has received this Agreement or any other document related to the Plantranslated into a language other than English and if the meaning of the translated version is different than theEnglish version, the English version will control, unless otherwise required by applicable law. 22. Waiver. Participant acknowledges that a waiver by the Company of a breach of any provision of thisAgreement or the Plan shall not operate or be construed as a waiver of any other provision of this Agreement or thePlan, or of any subsequent breach by Participant or any other Person who holds outstanding PSUs or other Awardsunder the Plan. 23. Severability. The provisions of this Agreement are severable and if any one or more provisions aredetermined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall neverthelessbe binding and enforceable. Page 8 of 9
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ADDENDUM A PERFORMANCE GOAL SCHEDULE [INSERT THE RELEVANT PERFORMANCE GOALS AND ANY SPECIFIC DEFINITIONS RELATED TO SUCH GOALS HERE] The Performance Goals shall be determined by the Committee in accordance with the Plan and may relate to one or more performance measures, including but not limited to the following performance measures or such other measures, each as determined in writing by the Committee and subject to such modifications as specified by the Committee: cash flow; cash flow from operations; earnings (including, but not limited to, earnings before interest, taxes, depreciation and amortization or some variation thereof); earnings per share, diluted or basic; earnings per share from continuing operations; net asset turnover; inventory turnover; capital expenditures; debt; debt reduction; working capital; return on investment; return on sales; net or gross sales; market share; economic value added; cost of capital; change in assets; expense reduction levels; productivity; delivery performance; safety record and/or performance; environmental record and/or performance; share price; return on equity; total or relative increases to stockholder return; return on invested capital; return on assets or net assets; revenue; income or net income; operating income or net operating income; operating profit or net operating profit; gross margin, operating margin or profit margin; and completion of acquisitions, business expansion, product diversification, new or expanded market penetration, and other non- financial operating and management performance objectives. The Committee may determine that certain adjustments shall apply, in whole or in part, in such manner as determined by the Committee, to exclude or include the effect of specified events that occur during a Performance Period. Performance measures may be determined either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary entity thereof, either individually, alternatively or in any combination, and measured over a period of time including any portion of a year, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous fiscal years’ results or to a designated comparison group, in each case as specified by the Committee. 1 1 Page 9 of 9
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EXHIBIT 10.17 Separation Agreement This Separation Agreement (the “Agreement”) is entered into by and between Peter Manca (the “Employee”) andPenguin Solutions, Inc. (the “Company”), effective as of the eighth day after the date the Employee signs this Agreement (the“Effective Date”), if not revoked in accordance with Section 5(b). Reference is made to that certain amended and restatedemployment offer letter between the Employee and the Company dated May 23, 2024 (the “Offer Letter”). In considerationof the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound,agree to the terms set forth in this Agreement. In order to accept this Agreement, the Employee must return a signed copy ofthis Agreement to Anne Kuykendall at [***] no earlier than the Separation Date (as defined below) and no later than the 21day after the date this Agreement was first delivered to the Employee, and if a signed copy of this Agreement is not returnedby such date, or the Employee revokes this Agreement within seven days after signing it in accordance with Section 5(b), thisAgreement shall be null and void in its entirety. 1. Termination of Employment. Effective on July 28, 2025, the Employee’s role as President of AdvancedComputing and status as an officer of the Company terminated. Effective on August 1, 2025 (the “Separation Date”), theEmployee’s employment with the Company will terminate. 2. Severance. In accordance with Section 6(b) of the Offer Letter, and in consideration for the Employee’sacceptance of and agreement to the covenants set forth in this Agreement, the Employee shall receive (i) an aggregate amountequal to $375,000 (representing 75% of the Employee’s annual base salary as of the date hereof), (ii) a prorated bonus amountunder the Company’s annual bonus program with respect to the portion of the 2025 fiscal year for which the Employeeprovided services as an employee (i.e., the portion of the 2025 fiscal year beginning on August 30, 2024 and ending on theSeparation Date), with the actual amount to be based on the determination by the Company’s compensation committee ofCompany performance through the Separation Date and (iii) payment or reimbursement of the cost of health benefitcontinuation coverage under COBRA during the period (the “COBRA Period”) starting on the Separation Date and endingon the earlier of (x) nine months following the end of the month in which the Separation Date falls or (y) the date theEmployee becomes eligible for health benefits with another employer (collectively, the “Severance Benefits”). TheSeverance Benefits to be paid pursuant to clause (i) above shall be paid in accordance with the Company’s regular payrollpractices in substantially equal installments over the 12-month period following the Separation Date, with the first installmentto be paid no later than the Company’s second regular payroll date following the Effective Date, inclusive of any installmentsthat would have been paid if the Effective Date had been the Separation Date. The Severance Benefits to be paid pursuant toclause (ii) above shall be paid at the same time annual bonuses for the Company’s 2025 fiscal year are paid to the Company’sother executives. The Severance Benefits to be paid pursuant to clause (iii) above shall be paid no later than the due date ofsuch COBRA continuation coverage premiums, provided that if the Company is unable to continue to cover the Employeeunder its group health plans without penalty under applicable law (including without limitation, Section 2716 of the PublicHealth Service Act), then an amount equal to each remaining Company subsidy installment during the COBRA Period shallthereafter be paid to the Employee on, or as soon as administratively practicable after, the date the related premium is due.The payment of all Severance Benefits are subject to the Employee’s compliance with this Agreement. 3. Other Matters Related to Termination. (a) The Employee agrees that he has received all Accrued Amounts (as defined in the Offer Letter) for allwork performed for the Company and its affiliated entities (collectively, the “Company Entities”) through the SeparationDate that is due and payable on or prior to the Separation Date. The Employee acknowledges and agrees that the SeveranceBenefits and the payments referenced in this Section 3 are in complete satisfaction of any and all compensation or benefitsdue to the Employee from any of the Company Entities for services provided to any of the Company Entities through theSeparation Date, including under the Offer Letter, and that no further compensation or benefits are owed or will be paid to theEmployee. st
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(b) Except for any right the Employee may have to healthcare coverage through the last day of the monthin which the Separation Date occurs, as well as his right to continue his participation and that of his eligible dependents in theCompany’s medical, dental, and vision plans under COBRA, the Employee’s participation in all employee benefit plans of theCompany will end as of the Separation Date, in accordance with the terms of those plans. The Employee acknowledges thathe will not earn paid time off or other similar benefits after the Separation Date. The Employee will receive information abouthis COBRA continuation rights under separate cover. (c) Within 30 days following the Separation Date, the Employee must submit his final expensereimbursement statement reflecting all business expenses the Employee incurred through the Separation Date, if any, forwhich the Employee seeks reimbursement, and, in accordance with Company policy, reasonable substantiation anddocumentation for the same. The Company will reimburse the Employee for the Employee’s authorized and documentedexpenses within 30 days of receiving such statement pursuant to its regular business practices. (d) The Employee agrees to return to the Company, on or before the Separation Date, (i) any documentsand other materials (whether in hard copy, on electronic media or otherwise) related to the business of the Company Entities(in each case to the extent that such documents and other materials contain confidential information of the Company Entities)and (ii) any keys, access cards, credit cards, computer hardware and software, telephones and telephone-related equipmentand any other similar property of any of the Company Entities in the Employee’s possession or control. The Employee agreesthat he will not, following the Separation Date, attempt to access or use any computer or computer network or system of anyof the Company Entities. The Employee agrees to provide to the Company, on or before the Separation Date, passwordsnecessary or desirable to obtain access to, or that would assist in obtaining access to, all information which the Employee haspassword-protected on any computer equipment, network or system of any of the Company Entities. (e) The Employee will be deemed to have resigned from any and all positions and offices that theEmployee holds with the Company Entities as of July 28, 2025 (provided that the Employee shall remain an employee of theCompany until the Separation Date), without any further action required therefor (collectively, the “Resignations”). TheCompany, on its own behalf and on behalf of each of the Company Entities, hereby accepts the Resignations, and theEmployee agrees to sign and return such documents confirming the Resignations as the Company Entities may reasonablyrequire. (f) All payments made by the Company under this Agreement shall be reduced by any tax or otheramounts required to be withheld by the Company under applicable law and all other lawful deductions authorized by theEmployee. 4. Certain Covenants and Agreements. The covenants and agreements (the “Restrictive Covenants”) set forthin the Employment Confidential Information and Invention Assignment Agreement between the Employee and the Company(the “Confidentiality Agreement”) will remain in effect following the Separation Date. The Employee hereby reaffirms andagrees to comply with the Confidentiality Agreement, and the Arbitration and Class Action Waiver Agreement between theEmployee and the Company. Additionally, the Employee agrees that he shall not make any written or oral statements aboutany of the Released Parties (as defined below) that are negative or disparaging, implied or expressed, or that are intended todamage the Company’s business reputation or goodwill. Notwithstanding the foregoing, nothing in this Agreement orotherwise shall preclude the Employee from (a) communicating or testifying truthfully to the extent required by law to anyfederal, state, provincial or local governmental agency or in response to a subpoena to testify issued by a court of competentjurisdiction, or otherwise pursuant to legal process, (b) responding publicly to incorrect, disparaging or derogatory publicstatements by the Company to the extent reasonably necessary to correct or refute such public statements or (c) disclosing actsin good faith thought to be unlawful. The Employee agrees to cooperate with the Company in the defense of any legal matterinvolving any matter that arose during the Employee’s employment with any Company Entity, and with all governmentauthorities on matters pertaining to any investigation, litigation or administrative proceedings pertaining to any CompanyEntity; provided that the Company will reimburse the Employee for any reasonable travel and out of pocket expenses theEmployee incurs in providing such cooperation. The Employee agrees to promptly 2
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notify the Company if the Employee becomes eligible for health benefits with another employer while still receiving COBRAcontinuation subsidies under this Agreement. 5. Release. As a condition to receiving the Severance Benefits, the Employee hereby agrees to the followingprovisions. (a) In consideration for the benefits outlined in the Agreement, to which the Employee is not otherwiseentitled, the Employee, on the Employee’s own behalf and on behalf of the Employee’s heirs, family members, executors,agents, and assigns, hereby releases the Company as follows (the “Release”): the Employee generally and completely releasesthe Company Entities and their directors, officers, employees, shareholders, partners, agents, attorneys, predecessors,successors, parent and subsidiary entities, insurers, affiliates, and assigns (together with the Company Entities, the “ReleasedParties”) from any and all claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown,fixed or contingent (hereinafter called “Claims”), which the Employee now has or may hereafter have against the ReleasedParties, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof,including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to theEmployee’s hire, employment, separation from employment, or remuneration by the Released Parties, or any of them,including Claims arising under federal, state, or local laws relating to employment, Claims of any kind that may be brought inany court or administrative agency, any Claims arising under the Age Discrimination in Employment Act (the “ADEA”); TitleVII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991; the Equal Pay Act; the Civil Rights Act of1866; the Family and Medical Leave Act of 1993; the Americans with Disabilities Act of 1990; the False Claims Act; theEmployee Retirement Income Security Act; the Worker Adjustment and Retraining Notification Act, the Fair Labor StandardsAct, the Sarbanes-Oxley Act of 2002; the Massachusetts Fair Employment Practices Law; the Massachusetts Civil RightsAct; the Massachusetts Equal Rights Act; the Massachusetts Minimum Fair Wage Act; the Massachusetts Plant Closing Law;the Massachusetts Wage Act; the Massachusetts Equal Pay Act; the Massachusetts Parental Leave Act; the MassachusettsSexual Harassment Statute; each as amended; and any and all other federal, state and local laws, statutes, executive orders,regulations municipal ordinances, common law, and any other jurisdiction worldwide; Claims for breach of contract; Claimsarising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment,retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/orbreach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort,including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees. This Releasedoes not apply to (x) any claims which cannot be released as a matter of law, (y) any rights under this Agreement, or (z) anyclaims that Employee may have as a result of the indemnifications that employee may be entitled to as a current or formerofficer or director of any of the Company Entities as a matter of common law or under the Company’s indemnification anddirectors and officers insurance coverage. (b) The Employee acknowledges that the Employee is knowingly and voluntarily waiving and releasingany rights the Employee has under the ADEA, and the applicable rules and regulations promulgated thereunder, and that theconsideration given for the waiver and release is in addition to anything of value to which the Employee was already entitled.The Employee further acknowledges that the Employee has been advised by this writing, as required by the ADEA, that: (i)the Employee’s waiver and release under this Agreement do not apply to any rights or claims that arise after the date theEmployee signs this Agreement; (ii) the Employee has the right to consult with an attorney prior to signing this Agreement;(iii) the Employee has up to 21 days after the date this Agreement was first presented to the Employee to consider thisAgreement (although the Employee may choose voluntarily to sign this Agreement earlier), and in the event of any changes tothis Agreement, whether or not material, Employee waives the restarting of the 21 day period; (iv) the Employee has sevendays after the Employee signs this Agreement to revoke it; and (v) this Agreement will not be effective until the date on whichthe revocation period has expired, which will be the eighth day after the Employee signs this Agreement, assuming theEmployee has returned it to the Company by such date. In order to revoke this Agreement, the Employee must provide writtennotice that he is revoking it within the applicable seven-day timeframe to Anne Kuykendall at [***]. 3
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(c) In granting the general release herein, the Employee acknowledges that the Employee has read andunderstands California Civil Code section 1542, which states: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY. The Employee expressly waives and relinquishes all rights and benefits under that section and any law of any jurisdiction of similar effect. 6. Cessation of Payments. In the event that the Employee (i) commits a material breach of this Agreement, (ii)files any charge, claim, demand, action or arbitration with regard to the Employee’s employment, compensation ortermination of employment under any federal, state, local or foreign law, or an arbitration under any industry regulatory entity,except in either case for a claim for breach of this Agreement or failure to honor the obligations set forth herein or (iii)materially violates any of the Restrictive Covenants, the Employee will immediately forfeit any right to the unpaid SeveranceBenefits, and, to the extent permitted by applicable law, the Employee will be required to repay the net amount of anySeverance Benefits previously paid to the Employee (taking into account any taxes withheld). Notwithstanding the foregoing,if an alleged breach of this Agreement or violation of a Restrictive Covenant (a) occurs more than 12 months after theSeparation Date and (b) does not relate to any non-disparagement or confidentiality obligations of the Employee, theEmployee will not be required to repay Severance Benefits as set forth in this Section 6. 7. Certain Exceptions. (a) Nothing in this Agreement or otherwise limits the Employee’s ability to (i) communicate directlywith, cooperate with or provide information, including documents, not otherwise protected from disclosure by any applicablelaw or privilege, to any federal, state or local government agency or commission (each, a “Government Agency”), includingwithout limitation the U.S. Securities and Exchange Commission (the “SEC”), the U.S. Commodity Futures TradingCommission, the U.S. Department of Justice, the U.S. Equal Employment Opportunity Commission, or the U.S. NationalLabor Relations Board, without notifying or seeking permission from the Company, (ii) exercise any rights the Employee mayhave under Section 7 of the U.S. National Labor Relations Act, or (iii) discuss or disclose information about unlawful acts inthe workplace, such as harassment or discrimination based on a protected characteristic or any other conduct that Employeehas reason to believe is unlawful. The Company may not retaliate against the Employee for any of these activities, andnothing in this Agreement requires the Employee to waive any monetary award or other payment that the Employee mightbecome entitled to from the SEC or any other Government Agency or self-regulatory organization. Moreover, nothing in thisAgreement or otherwise prohibits the Employee from notifying the Company that the Employee is going to make a report ordisclosure to law enforcement. (b) Further, nothing in this Agreement precludes the Employee from filing a charge of discrimination orunfair labor practice with the U.S. Equal Employment Opportunity Commission or a like charge or complaint with a state orlocal fair employment or labor Government Agency. However, the Employee may not receive a monetary award or any otherform of personal relief from the Company in connection with any such charge or complaint that the Employee has filed or isfiled on the Employee’s behalf. (c) Pursuant to the Defend Trade Secrets Act of 2016, the Employee and the Company acknowledge andagree that the Employee will not have criminal or civil liability under any federal or state trade secret law for the disclosure ofa trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, orto an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law or (ii) is made in acomplaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition and 4
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without limiting the preceding sentence, if the Employee files a lawsuit for retaliation by the Company for reporting asuspected violation of law, the Employee may disclose the trade secret to the Employee’s attorney and may use the tradesecret information in the court proceeding, if the Employee (x) files any document containing the trade secret under seal and(y) does not disclose the trade secret, except pursuant to court order. 8. Section 409A. This Agreement and the payments to be made hereunder are intended to comply with, or beexempt from, Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgatedthereunder (“Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted andconstrued to be in compliance therewith or exempt therefrom. For purposes of Section 409A (including, without limitation,for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), the Employee’s right to receive any installment paymentsunder this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each suchinstallment payment shall at all times be considered a separate and distinct payment. The Company and the Employeeacknowledge that the termination of the Employee’s employment with the Company is intended to constitute an involuntaryseparation from service for purposes of Section 409A. 9. Miscellaneous. This Agreement constitutes the entire agreement between the parties with respect to thesubject matter hereof and supersedes all prior agreements and understandings, both oral and written, between the parties withrespect to such subject matter, including without limitation the Offer Letter. The provisions and obligations of this Agreementthat are intended to survive upon termination of this Agreement shall survive. This Agreement and the rights and obligationshereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts withoutregard to its principles of conflict of laws. This Agreement may be signed in counterparts, each of which shall be an original,with the same effect as if the signatures thereto and hereto were upon the same instrument. No amendment, modification,termination or waiver of any provisions of this Agreement and no consent to any departure by any party therefrom shall in anyevent be effective unless the same shall be in writing and signed by the parties hereto, and then such waiver or consent shallbe effective only in the given instance and for the specific purpose for which given. 10. Assignment. Neither this Agreement nor any right or interest hereunder shall be assignable by the Employee,his beneficiaries or legal representatives without the Company’s prior written consent. The Company may assign thisAgreement to any successor or assign (whether directly or indirectly, by purchase, merger, consolidation or otherwise) to allor substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company and itspermitted successors and assigns. [Remainder of Page Intentionally Left Blank] 5
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates set forth below. PENGUIN SOLUTIONS, INC. By: /s/ Mark Adams Name: Mark Adams Date: Title: President and Chief Executive Officer 8/2/2025 THE EMPLOYEE HEREBY ACKNOWLEDGES THAT THE EMPLOYEE HAS READ THIS AGREEMENT, THAT THE EMPLOYEE FULLY KNOWS, UNDERSTANDS AND APPRECIATES ITS CONTENTS, AND THAT THE EMPLOYEE HEREBY ENTERS INTO THIS AGREEMENT VOLUNTARILY AND OF THE EMPLOYEE’S OWN FREE WILL. ACCEPTED AND AGREED: /s/ Peter Manca Peter Manca Date: 8/2/2025 6
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Exhibit 19.1 Penguin Solutions, Inc. Insider Trading and Confidentiality Policy There are regular opportunities to trade in securities issued by or relating to Penguin Solutions, Inc. (together with its subsidiaries, the “Company” or “Penguin Solutions”). With those opportunities comes the responsibility to comply with federal and state securities laws that prohibit insider trading. Violation of these laws carries severe consequences. This policy (the “Policy”) sets forth Company rules and procedures intended to prevent insider trading. It is your obligation to understand and comply with this Policy. In all cases, the responsibility for determining whether you are in possession of material, nonpublic information rests with you, and any action on the part of Penguin Solutions or its directors, officers, or employees does not in any way constitute legal advice or insulate you from liability under applicable securities laws. 1.0 Application This Policy applies to all Company directors, officers, and employees, certain designated consultants and contractors that may access material, nonpublic information about Penguin Solutions, and their family members (each a “Covered Person” or “you”). For purposes of this Policy, a “family member” includes a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than a tenant or domestic employee) who shares such person’s home. This Policy also applies to any entities that you control or that are controlled by individuals subject to this Policy, including any corporations, partnerships or trusts, and transactions by such entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account; provided, however, that this Policy does not apply to any such entity that engages in the investment of securities in the ordinary course of its business (e.g., an investment fund or partnership) if such entity has established its own insider trading controls and procedures in compliance with applicable securities laws. It also applies to former employees and directors and their family members for so long as they have material, nonpublic information about Penguin Solutions. Rev. June 2025 Page 1 of 11 Penguinsolutions.com
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2.0 Prohibited Activities 2.1 No Trading Except During Trading Windows Directors, officers, employees holding director or more senior positions (i.e., Level 11 and more senior employees), and all employees within the finance and legal departments, and their family members, may only trade or gift (“transact”) in Company securities during a “Trading Window” unless such trade or gift is made pursuant to a properly qualified, adopted and submitted Rule 10b5-1 Trading Plan which is discussed in Section 4.1 of this Policy. Penguin Solutions typically has one Trading Window per quarter. Each Trading Window (a) opens at the open of market after one full Trading Day has passed following Penguin Solutions’ issuance of a press release (or other method of broad public dissemination) announcing earnings and (b) closes at the close of market on the fifteenth calendar day (or if such day is a non-Trading Day, on the most recent Trading Day prior to such day) of the last month of the then-current fiscal quarter . For the purposes of this policy, a “Trading Day” means a day on which the Nasdaq Stock Market is open for trading. For example, if Penguin Solutions issues an earnings press release or a press release containing material, nonpublic information on a Tuesday, and the Nasdaq Stock Market is open for trading on Wednesday, the Trading Window would open at the open of market on Thursday. If Penguin Solutions issues an earnings press release or a press release containing material, nonpublic information on a Friday, and the Nasdaq Stock Market is open for trading on Monday, the Trading Window would open at the open of market on Tuesday. From time to time, the Company may impose event-specific special blackout periods during which some or all Company executive officers and directors, and certain other employees as designated by the Compliance Officer, are prohibited from trading in Company securities. 2.2 No Trading or Tipping When in Possession of Material, Nonpublic Information You may not transact in Company securities if you are in possession of material, nonpublic information about Penguin Solutions, unless such trade or gift is made pursuant to a properly qualified, adopted and submitted Rule 10b5-1 Trading Plan as discussed in Section 4.1 of this Policy. Definition of Material Information It is difficult to describe exhaustively what constitutes “material” information, and for the purposes of this Policy, you should assume that any information, positive or negative, that is substantially likely to be of significance to an investor in determining whether to purchase, sell or hold Company stock or is likely to have a significant effect on the market price of the Company’s stock would be “material.” Information may be “material” even if it is only a part of the total mix of available information that is significant to the For the avoidance of doubt, if the then-current fiscal quarter ends in the first week of a month, then the Trading Window will close on the fifteenth calendar day of the preceding month. 1 1 Rev. June 2025 Page 2 of 11 Penguinsolutions.com
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investor, and the information alone would not determine the investor’s decision. Examples of “material” information include: • Internal financial information that departs in any way from what the market would expect • Changes in sales, earnings, or dividends • An important financing transaction • Stock splits or other transactions relating to Company stock • Sales or purchases by Penguin Solutions of its own securities • Mergers, tender offers, or acquisitions of other companies • Major purchases or sales of assets • Major management changes • Major litigation or regulatory developments • Significant process or product developments • Gain or loss of a major customer or supplier • Major transactions with other companies or entities, such as joint ventures or licensing agreements • The extent to which external events, including but not limited to pandemics, have had or will have a material impact on Penguin Solutions’ operating results • A cybersecurity or data security incident deemed by the Company to be material Note that this list is merely illustrative and not exhaustive. Definition of Nonpublic Information “Nonpublic” information is any information that has not yet been disclosed generally to the public. In order for information to be considered “public,” it must be widely disseminated in a manner that makes it generally available to investors in a method, such as through a press release, a filing with the U.S. Securities and Exchange Commission or a conference call that complies with the requirements set forth in Regulation FD. The Compliance Officer shall have sole discretion to decide whether information is public for purposes of this Policy. The circulation of rumors, even if accurate and reported in the media, does not constitute public dissemination. In addition, even after a public announcement, a reasonable period of time may need to lapse in order for the market to react to the information. Rev. June 2025 Page 3 of 11 Penguinsolutions.com
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Prohibition on Trading or Tipping You may not transact in Company securities while in possession of material, nonpublic information about Penguin Solutions, even during a Trading Window. Furthermore, if Penguin Solutions releases material, nonpublic information to the press, or the information is reported by the press, you may not transact in Company securities until one full Trading Day has passed. If you learn of material, nonpublic information about another company, such as a supplier, customer, or joint venture partner, or you learn that Penguin Solutions is planning a major transaction with another company (such as an acquisition), you must not transact in the securities of that company until such information has been made public for at least one full Trading Day. From time to time, a subset of Covered Persons may be aware of material, nonpublic information about a specific event, such as an acquisition. In such case, Penguin Solutions may impose a blackout period during which those Covered Persons cannot transact in Company securities. Covered Persons are prohibited from giving “tips” on material, nonpublic information, that is, directly or indirectly disclosing such information to any other person, including family members and relatives, so that they may transact in Company stock. These prohibitions continue for as long as a Covered Person has material, nonpublic information about the Company, including following termination of any such individual’s service to or employment with Penguin Solutions. 2.3 No Short Sales, Hedging, Margin Accounts, or Pledging You may not engage in short sales, defined as the sale of stock that you do not own or a sale that is consummated by the delivery of stock borrowed by or on account of you. You may not enter into hedging or monetization transactions or similar arrangements with respect to Company stock, including the purchase or sale of puts or calls or the use of any other derivative instruments. Hedging transactions may insulate you from upside or downside price movement in Company stock, which can result in the perception that you no longer have the same interests as Penguin Solutions’ other stockholders. You may not hold Company securities in a margin account nor pledge Company securities as collateral for a loan. Securities held in a margin account or pledged as collateral for a loan may be sold without your consent by the broker if you fail to meet a margin call or by the lender in foreclosure if you default on the loan. A margin or foreclosure sale that occurs when you are aware of material, nonpublic information may, under some circumstances, result in unlawful insider trading. Rev. June 2025 Page 4 of 11 Penguinsolutions.com
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3.0 Special Trading Procedures for Insiders Because officers and directors subject to the reporting obligations under Section 16 of the Securities Exchange Act of 1934 (“Insiders”) regularly have access to material, nonpublic information in the course of performing their duties, they must comply with additional procedures in order to transact in Company securities, even if such trade or gift is during an open window and the Insider believes they do not have any material, nonpublic information. 3.1 Pre-clearance Procedures Reasonably in advance of the planned transaction, an Insider must submit a preclearance request (attached hereto as Exhibit A) to the Compliance Officer via email. The Insider must obtain written pre-approval from the Compliance Officer or their designee prior to proceeding with the proposed transaction, which generally will be approved within 24 hours. In the event of a proposed transaction by the Compliance Officer, such pre-clearance request shall be submitted to the Chief Financial Officer. If a proposed trade or gift receives pre-clearance, the trade or gift must be effected within five business days of receipt of pre-clearance unless a specific exception has been granted in writing by the Compliance Officer or their designee prior to expiration of the four business day period. If the Insider becomes aware of material, nonpublic information before the trade or gift is executed, the pre-clearance is void and the trade or gift must not be completed. Transactions not effected within the time limit become subject to pre-clearance again. If a proposed trade or gift is denied pre-clearance, the Insider must refrain from initiating any transaction in securities of the Company. A response from Penguin Solutions’ legal department that a trade or gift request has been denied must be kept confidential to avoid signaling to other employees that something nonpublic and material may be happening with respect to Penguin Solutions. The Compliance Officer does not assume the responsibility for, and approval of the Compliance Officer does not protect the Insider from, the consequences of prohibited insider trading. None of the Company, the Compliance Officer, or the Company’s other employees will have any liability for any delay in reviewing, or refusal of, a request for pre-clearance. 3.2 Reporting Obligations Insiders must provide the Compliance Officer with a copy of any trade order or confirmation relating to the purchase or sale or gift of Company securities within one business day of any such transaction. This information is necessary to enable us to monitor trading by executive officers and directors and ensure that all such trades or gifts are properly reported. Your adherence to this policy is vital to your protection as well as Penguin Solutions’. Rev. June 2025 Page 5 of 11 Penguinsolutions.com
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3.3 Short-swing Trading/Control Stock/Section 16 Reports Insiders should take care not to violate the prohibition on short-swing trading (Section 16(b) of the Securities Exchange Act of 1934) and the restrictions on sales by control persons (Rule 144 under the Securities Act of 1933, as amended), and should confirm that all appropriate Section 16(a) reports (Forms 3, 4 and 5), and any notices of sale required by Rule 144 are completed and filed in a timely manner. 4.0 Exceptions 4.1 Pre-approved 10b5-1 Trading Plans Rule 10b5-1 (“Rule 10b5-1”) under the Securities Exchange Act of 1934 provides an affirmative defense against a claim of insider trading liability under the federal securities laws if a trade is made pursuant to a written contract, plan or instruction entered into in accordance with Rule 10b5-1 (a “10b5-1 Trading Plan”). Transactions pursuant to a pre-approved 10b5-1 Trading Plan are not subject to the Trading Window requirements or the prohibition on trading when in possession of material, nonpublic information. Penguin Solutions will permit certain Covered Persons to enter into a 10b5-1 Trading Plan provided that the plan: • Is expressly authorized by the Compliance Officer; • Is documented in writing; • Is established in an open Trading Window, as discussed in Section 2.1 of this Policy, and when such person does not have material, nonpublic information as discussed in Section 2.2 of this Policy; • Includes a “Cooling Off Period” under which no purchases or sales may occur: - For Insiders, that extends to the later of 90 days after adoption or modification of a 10b5-1 Trading Plan or two business days after filing of the Form 10-K or Form 10-Q covering the fiscal quarter in which the 10b5-1 Trading Plan was adopted, up to a maximum of 120 days; and - For employees and any other persons, other than the Company, that extends 30 days after adoption or modification of a 10b5-1 Trading Plan; • For Insiders, includes a representation in the 10b5-1 Trading Plan that the Insider is (a) not aware of any material, nonpublic information about the Company or its securities and (b) adopting the 10b5-1 Trading Plan in good faith and not as part of a plan or scheme to evade Rule 10b5-1; Rev. June 2025 Page 6 of 11 Penguinsolutions.com
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• Has been entered into in good faith at a time when the individual was not in possession of material, nonpublic information about the Company and not otherwise in a blackout period, and the person who entered into the 10b5-1 Trading Plan has acted in good faith with respect to the 10b5-1 Trading Plan; • Either (1) specifies the amounts, prices, and dates of all transactions under the 10b5-1 Trading Plan or (2) provides a written formula, algorithm, or computer program for determining the amount, price, and date of the transactions, and (3) prohibits the individual from exercising any subsequent influence over the transactions; and • Complies with the other requirements of Rule 10b5-1. The Compliance Officer may impose such other conditions on the implementation and operation of the 10b5-1 Trading Plan as the Compliance Officer deems necessary or advisable. Any modification to a pre-approved 10b5-1 Trading Plan (including, without limitation, the amount, price or timing of a purchase or sale) may occur only during an open trading window and, in any event, when you do not possess material, nonpublic information. Modifications to and terminations of a 10b5-1 Trading Plan must be pre- approved by the Chief Legal Officer or Compliance Officer. Modifications of a 10b5-1 Trading Plan that change the amount, price or timing of the purchase or sale of the securities underlying a 10b5-1 Trading Plan will trigger a new Cooling Off Period. A Covered Person may not have more than one 10b5-1 Trading Plan at any given time except under the limited circumstances permitted by Rule 10b5-1 (i.e., all transactions under the later adopted 10b5-1 Trading Plan may only begin after all transactions under the earlier adopted 10b5-1 Trading Plan have been completed or expired and after the observance of the applicable cooling-off period) and subject to preapproval by the Compliance Officer. The Company reserves the right to publicly disclose, announce, or respond to inquiries from the media regarding the adoption, modification, or termination of a 10b5-1 Trading Plan and non-Rule 10b5-1 trading arrangements, or the execution of transactions made under a 10b5-1 Trading Plan. The Company also reserves the right from time to time to suspend, discontinue, or otherwise prohibit transactions under a 10b5-1 Trading Plan if the Compliance Officer or the Board of Directors, in his, her or its discretion, determines that such suspension, discontinuation, or other prohibition is in the best interests of the Company. Compliance of a 10b5-1 Trading Plan with the terms of Rule 10b5-1 and the execution of transactions pursuant to the 10b5-1 Trading Plan are the sole responsibility of the person initiating the 10b5-1 Trading Plan, and none of the Company, the Compliance Officer or the Company’s other employees assumes any liability for any delay in reviewing and/or refusing to approve a 10b5-1 Trading Plan submitted for approval, nor the legality or consequences relating to a person entering into, informing the Company of, or trading under, a 10b5-1 Trading Plan. Rev. June 2025 Page 7 of 11 Penguinsolutions.com
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4.2 Certain Transactions Related to Employee Benefits Exercise of Stock Options The trading prohibitions and restrictions set forth in this Policy do not apply to the exercise of an option to purchase securities of Penguin Solutions when payment of the exercise price is made in cash or by net exercise (where Penguin Solutions accepted vested shares of common stock under the stock option as payment for the exercise price). However, the securities acquired upon the exercise of an option are subject to all of the requirements of this Policy. This Policy applies to the sale of Company securities to satisfy part or all of the exercise price of an option, any exercise of a stock appreciation right, any sale of stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option. Vesting and Tax Withholding The trading prohibitions and restrictions set forth in this Policy do not apply to the vesting of restricted stock or restricted stock units or withholding by Penguin Solutions of stock upon vesting of restricted stock units or settlement of restricted stock units to satisfy applicable tax withholding requirements. Employee Stock Purchase Plan Transactions The trading prohibitions and restrictions set forth in this Policy do not apply to purchases of Company stock in Penguin Solutions’ Amended and Restated 2018 Employee Stock Purchase Plan (“ESPP”) resulting from your periodic contribution of money to the plan pursuant to your payroll deduction. They do apply, however, to sales of Company stock purchased pursuant to the ESPP, enrollments in the ESPP and elections to increase the percentage of your periodic contributions to the plan after your enrollment in the ESPP. This Policy continues to apply to your transactions in Penguin Solutions stock or the stock of other public companies even after your employment or directorship with Penguin Solutions has terminated. If you are in possession of material, nonpublic information when your relationship with Penguin Solutions concludes, you may not transact in Penguin Solutions stock or the stock of such other company until the information has been publicly disseminated or is no longer material. * * * Rev. June 2025 Page 8 of 11 Penguinsolutions.com
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THESE ARE VERY SERIOUS MATTERS. INSIDER TRADING IS ILLEGAL AND CAN RESULT IN JAIL SENTENCES AS WELL AS CIVIL PENALTIES, INCLUDING TRIPLE DAMAGES. EMPLOYEES WHO VIOLATE THIS POLICY MAY BE SUBJECT TO DISCIPLINARY ACTION BY PENGUIN SOLUTIONS, INCLUDING DISMISSAL FOR CAUSE. IF YOU HAVE ANY QUESTION OR DOUBT ABOUT THE APPLICABILITY OR INTERPRETATION OF THIS POLICY OR THE PROPRIETY OF ANY DESIRED ACTION, PLEASE SEEK CLARIFICATION FROM OUR CHIEF LEGAL OFFICER. DO NOT TRY TO RESOLVE UNCERTAINTIES ON YOUR OWN. Rev. June 2025 Page 9 of 11 Penguinsolutions.com
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EXHIBIT A Date of pre-clearance form submission: ________________, 20__ Date of transaction: ________________, 20__ Pursuant to the Penguin Solutions, Inc. (the “Company”) Insider Trading and Confidentiality Policy (the “Policy”), the undersigned hereby requests pre-clearance of the below described transaction as required by the Policy. The undersigned intends to execute a transaction in Penguin Solutions’ securities on the date noted above, which is after the date of this Pre-Clearance Request Form submission noted above. The general nature of the transaction is as follows (insert description, including number of shares of common stock/other securities, broker, seller or buyer and other relevant information): ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ The undersigned is not in possession of material nonpublic information (as defined in the Policy) about Penguin Solutions and will not enter into the transaction if the undersigned comes into possession of material nonpublic information about Penguin Solutions between the date hereof and the proposed trade execution date. The undersigned has read and understands the Policy and certifies that the above proposed transaction will not violate the Policy. The undersigned agrees to advise Penguin Solutions promptly if, as a result of future developments, any of the foregoing information becomes inaccurate or incomplete in any respect. The undersigned understands that Penguin Solutions may require additional information about the transaction, and agrees to provide such information upon request. Very truly yours, ___________________________________ Pre-clearance request must be submitted prior to the transaction. 2 2 Rev. June 2025 Page 10 of 11 Penguinsolutions.com
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Name: Title: Approved: Compliance Officer Date of pre-clearance approval: ________________, 20__ Deadline for completing transaction: ________________, 20__ If approved, the trade must be effected within five business days of receipt of approval unless a specific exception has been granted in writing by the Compliance Officer or their designee prior to expiration of the four business day period. 3 3 Rev. June 2025 Page 11 of 11 Penguinsolutions.com
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Exhibit 21.1 Penguin Solutions, Inc. Subsidiaries of the Registrant Name * State or Other Jurisdiction ofIncorporation or Organization Penguin Solutions (Cayman), Inc. Cayman Islands Saleen Intermediate Holdings, Inc. Cayman Islands SMART Worldwide Holdings, Inc. Cayman Islands SMART Modular Technologies (Global), Inc. Cayman Islands SMART Modular Technologies (DH), Inc. Cayman Islands Penguin Solutions (SMART Modular), Inc. (CI) Cayman Islands Penguin Solutions Corporation California SMART Modular Technologies (DE), Inc. Delaware Penguin Computing, Inc. California Penguin Solutions (PENG) Ireland Limited Ireland * The subsidiaries of the Registrant do not do business under any name other than as listed above.
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Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement Nos. 333-289893 and 333-227451 on Form S-3 and Registration Statement Nos. 333-218605, 333-221534, 333-223880, 333-227449, 333-230578, 333-234541, 333-249619, 333-253064, 333-257724, 333-264150, 333-271121, 333-271123, 333-278587, 333-278588, 333-286345, 333-286347 on Form S-8 of our reports dated October 21, 2025, relating to the financial statements of Penguin Solutions, Inc. and the effectiveness of Penguin Solutions, Inc.’s internal control over financial reporting appearing in this Annual Report on Form 10- K for the year ended August 29, 2025. /s/ DELOITTE & TOUCHE LLP San Jose, California October 21, 2025
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EXHIBIT 31.1 RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Mark Adams, certify that: 1. I have reviewed this Annual Report on Form 10-K of Penguin Solutions, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: October 21, 2025 By: /s/ Mark Adams Mark Adams President and Chief Executive Officer
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EXHIBIT 31.2 RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Nate Olmstead, certify that: 1. I have reviewed this Annual Report on Form 10-K of Penguin Solutions, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: October 21, 2025 By: /s/ Nate Olmstead Nate Olmstead Senior Vice President and Chief Financial Officer
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EXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350 In connection with the Annual Report of Penguin Solutions, Inc. (the “Company”) on Form 10-K for the period ended August 29, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Adams, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 21, 2025 By: /s/ Mark Adams Mark Adams President and Chief Executive Officer
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EXHIBIT 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350 In connection with the Annual Report of Penguin Solutions, Inc. (the “Company”) on Form 10-K for the period ended August 29, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nate Olmstead, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 21, 2025 By: /s/ Nate Olmstead Nate Olmstead Senior Vice President and Chief Financial Officer
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Exhibit 97.1 Penguin Solutions, Inc. Clawback Policy The Board of Directors (the “Board”) of Penguin Solutions, Inc., a Delaware corporation (the “Company”) believes that it is in the best interests of the Company and its stockholders to create and maintain a culture that emphasizes integrity and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. Consistent with that philosophy, the Board has adopted this Clawback Policy (the “Policy”) as of June 30, 2025 (the “Effective Date”). Capitalized terms used in this Policy that are not otherwise defined, have the definitions set forth in Section 11.0. 1.0 Persons Subject to This Policy This Policy shall apply to current and former Officers of the Company. Each Officer shall be required to sign an acknowledgment pursuant to which such Officer will agree to be bound by the terms of, and comply with, this Policy; however, any Officer’s failure to sign any such acknowledgment shall not negate the application of this Policy to such Officer. 2.0 Compensation Subject to This Policy This Policy shall apply to Incentive-Based Compensation. For purposes of the recovery of Erroneously Awarded Compensation pursuant to Section 3.1 below, the date on which Incentive-Based Compensation is “received” shall be determined under the Applicable Rules, which generally provide that Incentive-Based Compensation is “received” when the relevant Financial Reporting Measure is attained or satisfied, without regard to whether the grant, vesting or payment of the Incentive-Based Compensation occurs after the end of that period. 3.0 Recovery of Compensation 3.1 Erroneously Awarded Compensation In the event that the Company is required to prepare a Restatement, the Company shall recover, reasonably promptly, the portion of any Incentive-Based Compensation that is Erroneously Awarded Compensation, unless the Committee has determined that recovery would be Impracticable. Recovery shall be required in accordance with the preceding sentence regardless of whether the applicable Officer engaged in misconduct or otherwise caused or contributed to the requirement for the Restatement and regardless of whether or when restated financial statements are filed by the Company. Rev. June 2025 Page 1 of 7 Penguinsolutions.com
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3.2 Misconduct In the event that the Board determines, in its discretion, that a current or former Officer has been involved in Misconduct, the Independent Directors of the Board shall have the right, in their discretion, to require the recovery, reasonably promptly, of all or a portion of any Incentive-Based Compensation. For clarity, the recovery of compensation under this Policy will not give rise to any person’s right to voluntarily terminate employment for “good reason,” or due to a “constructive termination” (or any similar term of like effect) under any plan, program or policy of or agreement with the Company or any of its affiliates. 4.0 Manner of Recovery; Limitation on Duplicative Recovery The Committee shall, in its sole discretion, determine the manner of recovery of any Erroneously Awarded Compensation pursuant to Section 3.1 and the recovery of any Incentive-Based Compensation pursuant to Section 3.2, which may include, without limitation, reduction or cancellation by the Company or an affiliate of the Company of Incentive-Based Compensation or Erroneously Awarded Compensation, reimbursement or repayment by any person subject to this Policy, and, to the extent permitted by law, an offset of the Incentive-Based Compensation or Erroneously Awarded Compensation against other compensation payable by the Company or an affiliate of the Company to such person. Notwithstanding the foregoing, unless otherwise prohibited by Applicable Rules, to the extent this Policy provides for recovery of Incentive-Based Compensation or Erroneously Awarded Compensation already recovered by the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 or Other Recovery Arrangements (as defined in Section 8.0), the amount of Incentive-Based Compensation or Erroneously Awarded Compensation already recovered by the Company from the recipient of such Incentive-Based Compensation or Erroneously Awarded Compensation may be credited to the amount of Incentive-Based Compensation or Erroneously Awarded Compensation required to be recovered pursuant to this Policy from such person. 5.0 Administration This Policy shall be administered, interpreted and construed by the Committee, which, unless otherwise expressly provided in this Policy, is authorized to make all determinations necessary, appropriate or advisable for such purpose. Notwithstanding the foregoing, the Board shall administer, interpret and construe Section 3.2 of this Policy, and it may also re-vest in itself the authority to administer, interpret and construe this Policy in accordance with applicable law, and in such event references herein to the “Committee” shall be deemed to be references to the Board. Subject to any permitted review by the applicable national securities exchange or association pursuant to the Applicable Rules, all determinations and decisions made by the Committee and/or the Board pursuant to the provisions of this Policy shall be final, conclusive and binding on all persons, including the Company Rev. June 2025 Page 2 of 7 Penguinsolutions.com
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and its affiliates, stockholders and employees. The Committee may delegate administrative duties with respect to this Policy to one or more directors or employees of the Company, as permitted under applicable law, including any Applicable Rules. 6.0 Interpretation Section 3.1 and the related applicable sections of this Policy will be interpreted and applied in a manner that is consistent with the requirements of the Applicable Rules, and to the extent this Policy is inconsistent with such Applicable Rules, it shall be deemed amended to the minimum extent necessary to ensure compliance therewith. 7.0 No Indemnification; No Liability The Company shall not indemnify or insure any person against the loss of any Erroneously Awarded Compensation pursuant to this Policy, nor shall the Company directly or indirectly pay or reimburse any person for any premiums for third-party insurance policies that such person may elect to purchase to fund such person’s potential obligations under this Policy. None of the Company, an affiliate of the Company or any member of the Committee or the Board shall have any liability to any person as a result of actions taken under this Policy and each member of the Committee and the Board will be fully indemnified by the Company to the fullest extent available under applicable law and the Company’s governing documents with respect to any actions taken under this Policy. The foregoing sentence will not limit any other rights to indemnification of the members of the Board under applicable law and the Company’s governing documents. 8.0 Application; Enforceability Effective as of the Effective Date, the Policy shall supersede and replace in its entirety the Clawback Policy effective December 6, 2022 and the Policy for Recovery of Erroneously Awarded Compensation effective October 2, 2023, in each case, adopted by Penguin Solutions, Inc., a Cayman Islands exempted company. Except as stated herein and otherwise determined by the Committee or the Board, the adoption of this Policy does not limit any other clawback, recoupment, forfeiture or similar policies or provisions of the Company or its affiliates, including any such policies or provisions of such effect contained in any employment agreement, bonus plan, incentive plan, equity-based plan or award agreement thereunder or similar plan, program or agreement of the Company or an affiliate or required under applicable law (“Other Recovery Arrangements”). The remedies specified in this Policy shall not be exclusive and shall be in addition to every other right or remedy at law or in equity that may be available to the Company or an affiliate of the Company. Rev. June 2025 Page 3 of 7 Penguinsolutions.com
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9.0 Severability The provisions in this Policy are intended to be applied to the fullest extent of the law; provided, however, to the extent that any provision of this Policy is found to be unenforceable or invalid under any applicable law, such provision will be applied to the maximum extent permitted, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under applicable law. 10.0 Amendment and Termination The Board or the Committee may amend, modify or terminate this Policy in whole or in part at any time and from time to time in its sole discretion. This Policy will terminate automatically when the Company does not have a class of securities listed on a national securities exchange or association. 11.0 Definitions “Applicable Rules” means Section 10D of the Exchange Act, Rule 10D-1 promulgated thereunder, the listing rules of the national securities exchange or association on which the Company’s securities are listed, and any applicable rules, standards or other guidance adopted by the Securities and Exchange Commission or any national securities exchange or association on which the Company’s securities are listed. “Committee” means the committee of the Board responsible for executive compensation decisions comprised solely of independent directors (as determined under the Applicable Rules), or in the absence of such a committee, a majority of the independent directors serving on the Board. “Erroneously Awarded Compensation” means the amount of Incentive-Based Compensation received by a current or former Officer that exceeds the amount of Incentive-Based Compensation that would have been received by such current or former Officer based on a restated Financial Reporting Measure, as determined on a pre-tax basis in accordance with the Applicable Rules. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Financial Reporting Measure” means any measure determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures derived wholly or in part from such measures, including GAAP, IFRS and non-GAAP/IFRS financial measures, as well as stock price and total stockholder return. “GAAP” means United States generally accepted accounting principles. “IFRS” means international financial reporting standards as adopted by the International Accounting Standards Board. “Impracticable” means (a) the direct costs paid to third parties to assist in enforcing recovery would exceed the Erroneously Awarded Compensation; provided that the Company (i) has made reasonable Rev. June 2025 Page 4 of 7 Penguinsolutions.com
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attempts to recover the Erroneously Awarded Compensation, (ii) documented such attempt(s), and (iii) provided such documentation to the relevant listing exchange or association, (b) to the extent permitted by the Applicable Rules, the recovery would violate the Company’s home country laws pursuant to an opinion of home country counsel; provided that the Company has (i) obtained an opinion of home country counsel, acceptable to the relevant listing exchange or association, that recovery would result in such violation, and (ii) provided such opinion to the relevant listing exchange or association, or (c) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and the regulations thereunder. “Incentive-Based Compensation” means (i) with respect to a Restatement under Section 3.1, any compensation that is granted, earned, or vested based wholly or in part upon the attainment of one or more Financial Reporting Measures and received by a person: (a) after beginning service as an Officer; (b) who served as an Officer at any time during the performance period for that compensation; (c) while the issuer has a class of its securities listed on a national securities exchange or association; and (d) on or after October 2, 2023 and during the applicable Three- Year Period; and (ii) with respect to Misconduct under Section 3.2, any compensation that is granted, earned, or vested based wholly or in part upon the attainment of one or more Financial Reporting Measures and received by a person: (a) after beginning service as an Officer; (b) who served as an Officer at any time during the performance period for that compensation; (c) while the issuer has a class of its securities listed on a national securities exchange or association; (d) on or after December 6, 2022 and during the three completed fiscal years immediately preceding the end of the fiscal year in which the Company discovered such Misconduct; and (e) who was or is responsible for the Misconduct. “Misconduct” means actions which, in the determination of the Board, have caused or could cause direct financial harm to stockholders or reputational risk to the Company that is material, or a criminal investigation, where such actions did not ultimately result in a Restatement. “Officer” means each person who serves as an executive officer of the Company, as defined in Rule 10D-1(d) under the Exchange Act. “Restatement” means an accounting restatement to correct the Company’s material noncompliance with any financial reporting requirement under securities laws, including restatements that correct an error in previously issued financial statements (a) that is material to the previously issued financial statements or (b) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. “Three-Year Period” means, with respect to a Restatement, the three completed fiscal years immediately preceding the date that the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare such Restatement, or, if earlier, the date on which a court, regulator or other legally authorized body directs the Company to prepare such Restatement. The “Three-Year Period” also includes any transition period (that results from a change in the Company’s fiscal year) within or immediately following the three completed fiscal years identified in the preceding Rev. June 2025 Page 5 of 7 Penguinsolutions.com
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sentence. However, a transition period between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to 12 months shall be deemed a completed fiscal year. ****** Rev. June 2025 Page 6 of 7 Penguinsolutions.com
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ACKNOWLEDGMENT AND CONSENT TO CLAWBACK POLICY The undersigned has received a copy of the Clawback Policy (the “Policy”) adopted by Penguin Solutions, Inc. (the “Company”). For good and valuable consideration, the receipt of which is acknowledged, the undersigned agrees to the terms of the Policy and agrees that compensation received by the undersigned may be subject to reduction, cancellation, forfeiture and/or recoupment to the extent necessary to comply with the Policy, notwithstanding any other agreement to the contrary. The undersigned further acknowledges and agrees that the undersigned is not entitled to indemnification in connection with any enforcement of the Policy and expressly waives any rights to such indemnification under the Company’s organizational documents or otherwise. ___________________ Date ________________________________________ Signature ________________________________________ Name ________________________________________ Title Rev. June 2025 Page 7 of 7 Penguinsolutions.com