Q1 2026 Penguin Solutions Inc Earnings Call Transcript
Key Points
- Penguin Solutions Inc (PENG) reported Q1 revenue of $343 million, up 2% sequentially and 1% year-over-year, despite not recognizing any hyperscale hardware revenue.
- Non-GAAP gross margins were 30%, reflecting favorable mix and execution in the quarter.
- The Advanced Computing business achieved revenue of $151 million, up 9% compared to last quarter, with new customer bookings in the defense and education sectors.
- The Integrated Memory business recorded $137 million in revenue, up 3% compared to the prior quarter and up 41% compared to Q1 2025.
- Penguin Solutions Inc (PENG) is seeing increasing demand for its memory solutions, driven by the transition to DDR5 technology and the need for high-performance AI computing.
- The Optimized LED business generated revenue of $55 million, down 18% sequentially, with weak demand in China and among certain large US OEM customers.
- Non-GAAP gross margin decreased by 0.8 percentage points year-over-year, primarily due to the wind down of the high-margin Penguin Edge business.
- The company's services net sales totaled $65 million, down 9% versus the prior year.
- Penguin Solutions Inc (PENG) faces challenges with customer concentration and the timing of new customer deployments, impacting revenue predictability.
- The company expects sales from the Penguin Edge business to essentially cease by the end of fiscal 2026, impacting overall sales growth.
Ladies and gentlemen, thank you for joining us, and welcome to the Penguin Solutions first quarter fiscal year 2026 financial results call. (Operator Instructions)
I will now hand the conference over to Suzanne Schmidt with Investor Relations. Please go ahead.
Thank you, operator. Good afternoon, and thank you for joining us on today's earnings conference call and webcast to discuss Penguin Solutions first quarter fiscal 2026 results.
On the call today are Mark Adams, Chief Executive Officer; and Nate Olmstead, Chief Financial Officer. You can find the accompanying slide presentation and press release for this call on the Investor Relations section of our website. We encourage you to go to the site throughout the quarter for the most current information on the company. I would also like to remind everyone to read the note on the use of forward-looking statements that is included in the press release and the earnings call presentation.
Please note that during this
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