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First Quarter FY26 Financial Results Nasdaq: PENG January 6, 2026
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This presentation and the oral communications made during the course of this presentation contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that are not historical in nature, that are predictive or that depend upon or refer to future events or conditions. These statements may include, but are not limited to, statements concerning or regarding future events and the future financial and operating performance of Penguin Solutions, Inc., a Delaware corporation (“Penguin Solutions,” “we” “us,” or “our”); statements regarding the extent and timing of and expectations regarding Penguin Solutions’ future net sales, sales mix and expenses and customer demand; statements regarding Penguin Solutions’ strategic transformation and business momentum; statements regarding long-term effective tax rates; statements regarding existing and potential collaborations or partnerships; statements regarding the business and financial outlook for the fiscal year 2026, statements regarding the deployment of Penguin Solutions’ products and services; statements regarding potential stock repurchases and statements regarding Penguin Solutions’ strategic objectives and development of its services and capabilities. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “forecast,” “estimate,” “intend,” “plan,” “potential,” “goal,” “believe,” “could,” “should” and other words of similar meaning. Forward-looking statements provide Penguin Solutions’ current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of significant risks, uncertainties and other factors, many of which are outside of Penguin Solutions’ control, including but not limited to, global business and economic conditions, including the impact on the financial condition of Penguin Solutions’ customers, particularly in challen ging macroeconomic environments, growth and demand trends in technology industries (including trends and markets related to artificial intelligence), Penguin Solutions’ customer markets and various geographic regions; uncertainties in the geopolitical environment; the ability to manage Penguin Solutions’ cost structure; disruptions in Penguin Solutions’ 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 Penguin Solutions’ products and services; appropriations for government spending; the success of Penguin Solutions’ strategic initiatives including Penguin Solutions’ redomiciliation to the United States and its ability to realize the anticipated benefits thereof, rebranding and related strategy, any existing or potential collaborations and additional investments in new products and additional capacity; acquisitions of companies or technologies and the failure to successfully integrate and operate them or customers’ negative reactions to them; issues, delays or complications in integrating the operations of Stratus Technologies; the failure to achieve the intended benefits of the sale of Zilia Technologies (formerly, SMART Modular Brazil) and its business, including the planned sale of Penguin Solutions’ remaining 19% interest therein and the timing and closing of such sale; the impact of and expected timing of winding down the manufacturing and discontinuing the sale of products offered through Penguin Solutions’ Penguin Edge business; limitations on, or changes in the availability of, supply of materials and components; fluctuations in material costs; the temporary or volatile nature of pricing trends in memory or elsewhere; deterioration in customer relationships; Penguin Solutions’ dependence on a select number of customers, the timing and volume of customer orders and renewals; the impact of customer churn rates, including discounting and churn of significant cu stomers from whom Penguin Solutions derives a significant percentage of its revenue; changes in customer demand and sales mix; 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, the LED market or other markets in which we participate; changes to applicable tax regimes or rates; changes to the valuation allowance for Penguin Solutions’ deferred tax assets, including any potential inability to realize these assets in the future; prices for the end products of Penguin Solutions’ customers; strikes or labor disputes; deterioration in or loss of relations with any of Penguin Solutions' limited number of key vendors; the inability to maintain or expand government business; potential sales of our common stock by the holder of our issued convertible preferred stock or the anticipation of such sales; and the continuing availability of borrowings under term loans and revolving lines of credit or other debt arrangements and Penguin Solutions’ ability to raise capital through debt or equity financings. These and other risks, uncertainties and factors are described in greater detail under the sections titled “Risk Factors,” “Critical Accounting Estimates,” “Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Liquidity and Capital Resources” contained in the Annual Report on Form 10-K for the fiscal year ended August 29, 2025, as updated by the risk factors contained in Penguin Solutions’ Quarterly Reports on Form 10-Q and in Penguin Solutions' other filings with the U.S. Securities and Exchange Commission (“SEC”). Such risks, uncertainties and factors as outlined above, and in such SEC filings, could cause Penguin Solutions’ actual results to be materially different from such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that we make in this presentation speak only as of the date of this presentation. Except as required by law, we do not undertake to update the forward-looking statements contained in this presentation to reflect the impact of circumstances or events that may arise after the date that the forward-looking statements were made. Statement Regarding Use of Non -GAAP Financial Measures: This presentation contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP effective tax rate, non-GAAP net income, non-GAAP weighted-average shares outstanding, non-GAAP diluted earnings per share and adjusted EBITDA. Penguin Solutions' management uses non-GAAP measures to supplement Penguin Solutions’ financial results under GAAP. Management uses these measures to analyze its operations and make decisions as to future operational plans and believes that this supplemental non-GAAP information is useful to investors in analyzing and assessing Penguin Solutions’ past and future operating performance. These non-GAAP measures exclude certain items, such as stock-based compensation expense, amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships and trademarks/trade names and backlog acquired in connection with business combinations), acquisition-related inventory adjustments, cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, restructuring charges, (gain) loss on non-marketable equity securities, impairment of goodwill, changes in the fair value of contingent consideration, (gains) losses from changes in foreign currency exchange rates, amortization of debt issuance costs, (gain) loss on extinguishment or prepayment of debt, other infrequent or unusual items and related tax effects and other tax adjustments. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies are reflected in Penguin Solutions' non-GAAP measures and these intangible assets contribute to revenue generation. Management believes the presentation of operating results that exclude certain items provides useful supplemental information to investors and facilitates the analysis of Penguin Solutions’ core operating results and comparison of operating results across reporting periods. Management also uses adjusted EBITDA, which represents GAAP net income (loss), adjusted for net interest expense, income tax provision (benefit), depreciation expense and amortization of intangible assets, stock-based compensation expense, cost of sales-related restructuring, diligence, acquisition and integration expense, redomiciliation costs, (gain) loss on non-marketable equity securities, impairment of goodwill, restructuring charges, loss on extinguishment of debt and other infrequent or unusual items. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, as they exclude important information about Penguin Solutions' financial results, as noted above. Th e presentation of these adjusted amounts varies from amounts presented in accordance with GAAP and therefore may not be compara ble to amounts reported by other companies. In addition, adjusted EBITDA does not purport to represent cash flow provided by, or used for, operating activities in accordance with GAAP and should not be used as a measure of liquidity. Investors are encouraged to review the “GAAP to Non-GAAP Reconciliations” in the appendix at the end of this presentation. Penguin Solutions’ fiscal year is the 52- or 53-week period ending on the last Friday in August. © 2026 Penguin Solutions, Inc. All rights reserved. | 2 Disclaimer
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Speakers 3 Mark Adams President and CEO Nate Olmstead SVP and CFO © 2026 Penguin Solutions, Inc. All rights reserved. |
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Q1 FY26 Financial Highlights © 2026 Penguin Solutions, Inc. All rights reserved. | 4 Net sales of $343M, up 1% YoY Net Sales Non-GAAP gross margin of 30.0%, down 0.8 percentage points YoY Gross Margin Non-GAAP operating income of $42M, up 1% YoY; Non-GAAP operating margin of 12.1%, up 0.1 percentage points YoY Operating Income Non-GAAP diluted EPS of $0.49, flat YoY EPS Results reflect solid execution Non-GAAP gross margin, Non-GAAP operating income, Non-GAAP operating margin and Non-GAAP diluted EPS are non-GAAP measures. For reconciliations to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix.
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Entering Wave 2 AI Is Happening in Waves © 2026 Penguin Solutions, Inc. All rights reserved. | 5 Enterprise inference expected to drive next phase of AI infrastructure 1 Hyperscale AI Consumption for Training 100’s of Solutions 2 Enterprise AI Model Development, Fine Tuning and Private Model Creation Dedicated Model Inference at Scale Multi-Model Agentic AI
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© 2026 Penguin Solutions, Inc. All rights reserved. | 6 Penguin Solutions OriginAI Factory Architecture VALIDATED HARDWARE All Servers, Racks, Network, Storage SOFTWARE Penguin and 3 rd Party Software BUILD Design and In-Factory Build SERVICES 3 Years of On-Site Deployment and Managed Services SPARES Inventory/Spares Management AVAILABILITY SLA-Based System Availability WARRANTY 3-Year Warranty and Support on All Hardware, Software, Network, and Storage Our OriginAI ® solution is pre-validated and scalable Production-Ready AI Infrastructure Solution
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Solving Complexity and Accelerating Results in AI © 2026 Penguin Solutions, Inc. All rights reserved. | 7 Leveraging our experience and expertise to help customers harness the full power of accelerated computing 25+ Years Experience 89,000+ GPUs Deployed & Managed 3.3+ Billion Hours of GPU Runtime
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Business Review © 2026 Penguin Solutions, Inc. All rights reserved. | 8
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Advanced Computing • Net sales of $151M in Q1, up 9% vs. Q4 FY25 • New customer wins in defense and education & research • Expanding pipeline across financial services, oil and gas, telecom, manufacturing, education and sovereign AI • Rising demand for rapid, production-ready AI deployments • Launched “Rapid Development” workshops to help customers accelerate AI deployment decisions • Differentiated architecture design, ICE ClusterWare TM software platform, and managed services 9© 2026 Penguin Solutions, Inc. All rights reserved. |
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Integrated Memory 10 • Revenue of $137M in Q1, up 41% YoY • Strong demand across networking, telecom, and computing markets • Early CXL shipments and expanding customer qualifications • Continued investment in memory pooling and optical memory architectures • Growing enterprise and large-scale customer engagement • Over 30 years of specialty memory expertise positions Penguin to capitalize on higher- performance, higher-reliability memory needs in the AI era © 2026 Penguin Solutions, Inc. All rights reserved. |
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Optimized LED • Net sales of $55M in Q1, down 18% YoY • Continued demand weakness in China, with softness among select large U.S. OEM customers • Focus remains on profitability, leveraging a specialty product portfolio • Benefits from industry-leading IP and a capital- light, outsourced front-end model • Operating income of $3.5M, up 24% sequentially, despite revenue headwinds © 2026 Penguin Solutions, Inc. All rights reserved. | 11
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Positioned for Scaled Enterprise AI Adoption 12 Planned $46M sale of remaining 19% stake in Zilia Technologies (formerly SMART Modular Brazil) Simplifying Corporate Structure Enhance ecosystem partnerships to support enterprise AI at scale Deepening Partnerships Combined investments in inference-focused systems, advanced memory, software, and managed services Investing in Technologies Support investments for future growth Strengthening Balance Sheet Our transition from a holding company to an AI solutions provider © 2026 Penguin Solutions, Inc. All rights reserved. |
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Financial Review © 2026 Penguin Solutions, Inc. All rights reserved. | 13
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Q1 FY26 Results 14 $343M Net Sales 30.0% Non-GAAP Gross Margin 12.1% Non-GAAP Operating Margin $0.49 Non-GAAP Diluted EPS Non-GAAP gross margin, Non-GAAP operating margin and Non-GAAP diluted EPS are non-GAAP measures. For reconciliations to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix. © 2026 Penguin Solutions, Inc. All rights reserved. | Up 1% YoY Down 0.8 percentage points YoY Up 0.1 percentage points YoY Flat YoY
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Q1 FY26 Net Sales Detail 1 15 Revenue by Segment Revenue Breakdown – Total of $343M Services Revenue $65M Product Revenue $279M © 2026 Penguin Solutions, Inc. All rights reserved. | Advanced Computing 44% Optimized LED 16% Integrated Memory 40% 1. Summations may not compute precisely due to rounding.
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($M except per share amounts) Q1 FY26 Q4 FY25 Q1 FY25 Net sales $343 $338 $341 Advanced Computing $151 $138 $177 Integrated Memory $137 $132 $97 Optimized LED $55 $67 $67 Non-GAAP gross profit 2 $103 $104 $105 Non-GAAP operating expenses 2 $61 $65 $64 Non-GAAP operating income 2 $42 $39 $41 Non-GAAP net income 2 $32 $29 $27 Non-GAAP diluted earnings per share 2 $0.49 $0.43 $0.49 Adjusted EBITDA 2 $45 $43 $45 © 2026 Penguin Solutions, Inc. All rights reserved. | 16 Operating Results 1 1. Summations may not compute precisely due to rounding. 2. Non-GAAP gross profit, Non-GAAP operating expenses, Non-GAAP operating income, Non-GAAP net income, Non-GAAP diluted earnings per share, and Adjusted EBITDA are non-GAAP measures. For reconciliations to the most directly comparable financial measures prepared in accordance with GAAP, please see the appendix.
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($M) Q1 FY26 Q4 FY25 Q1 FY25 Working Capital Net Accounts Receivable $342 $308 $276 Days Sales Outstanding 51 days 51 days 45 days Inventory $213 $255 $247 Days of Inventory 38 days 51 days 49 days Accounts Payable $305 $267 $244 Days Payable Outstanding 55 days 54 days 49 days Cash Conversion Cycle 35 days 49 days 46 days Cash Flow Cash, Cash Equivalents and Short-T erm Investments (at period end) $461 $454 $394 Net Cash from Operating Activities from Continuing Operations $31 $(70) $14 Capital Expenditures & Depreciation CapEx $3 $3 $2 Depreciation $5 $5 $5 © 2026 Penguin Solutions, Inc. All rights reserved. | 17 Q1 FY26 Balance Sheet and Cash Flow Highlights Net accounts receivable, days sales outstanding, days of inventoryand days payable outstanding are calculated on a gross sales and gross cost of goods sold basis, which were $605M and $509M, respectively, for Q1 FY26, $550M and $453M, respectively, for Q4 FY25, and $554M and $456M, respectively, for Q1 FY25.
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Stock Repurchase Update 18 • Repurchased 791K shares for $15M in Q1 FY26 • Since April 2022, we have repurchased 7.4M shares for $128M • As a reminder, the Audit Committee approved a new $75M stock repurchase authorization in October 2025, bringing total stock repurchase authorizations over the last four years to $225M Stock Repurchases © 2026 Penguin Solutions, Inc. All rights reserved. |
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Our Outlook © 2026 Penguin Solutions, Inc. All rights reserved. | 19
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GAAP Outlook Adjustments Non-GAAP Outlook Net sales 6% YoY Growth +/- 10% — 6% YoY Growth +/- 10% Gross margin 27% +/- 1% 2% (A) 29% +/- 1% Operating expenses $307 million +/- $10 million $(57) million (B)(C) $250 million +/- $10 million Diluted earnings per share $0.85 +/- $0.25 $1.15 (A)(B)(C)(D)(E)(F) $2.00 +/- $0.25 Diluted shares 55 million — 55 million Non-GAAP adjustments (in millions) (A) Stock-based compensation and amortization of acquisition-related intangibles included in cost of sales $ 30 (B) Stock-based compensation and amortization of acquisition-related intangibles included in R&D and SG&A 49 (C) Other operating adjustments 8 (D) Other non-operating adjustments(1) 3 (E) Estimated income tax effects (20) (F) Estimated effect of allocation of earnings to participating securities (7) $ 63 © 2026 Penguin Solutions, Inc. All rights reserved. | 20 FY 2026 Outlook (1) Primarily reflects net losses associated with non -marketable equity securities.
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Solving complexity. Accelerating results. • Contact information goes here
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© 2026 Penguin Solutions, Inc. All rights reserved. | 22 GAAP to Non-GAAP Reconciliations 1. In the second quarter of fiscal 2025 we began breaking out costs related to the U.S. Domestication from “Other.” All periods presented have been adjusted to reflect this change.
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© 2026 Penguin Solutions, Inc. All rights reserved. | 23 GAAP to Non-GAAP Reconciliations 1. In the second quarter of fiscal 2025 we began breaking out costs related to the U.S. Domestication from “Other.” All periods presented have been adjusted to reflect this change. 2. The three months and year ended August 29, 2025 include ($8,249) as a one-time tax effect of the U.S. Domestication completed in the fourth quarter of fiscal 2025.
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© 2026 Penguin Solutions, Inc. All rights reserved. | 24 GAAP to Non-GAAP Reconciliations 1. In the second quarter of fiscal 2025 we began breaking out costs related to the U.S. Domestication from “Other.” All periods presented have been adjusted to reflect this change.
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© 2026 Penguin Solutions, Inc. All rights reserved. | 25 Convertible Dilution Note: Dilution in thousands of shares