Solid First Quarter Driven by Operational Excellence and Memory Growth
FREMONT, Calif.--(BUSINESS WIRE)--January 06, 2026--
Penguin Solutions, Inc. ("Penguin Solutions," "we," "us," or the "Company") (NASDAQ: PENG) today reported financial results for the first quarter of fiscal 2026.
First Quarter Fiscal 2026 Highlights
-- Net sales of $343 million, up 1% versus the year-ago quarter
-- GAAP gross margin of 28.0%, down 70 basis points versus the year-ago
quarter
-- Non-GAAP gross margin of 30.0%, down 80 basis points versus the
year-ago quarter
-- GAAP diluted EPS of $0.04 versus $0.10 in the year-ago quarter
-- Non-GAAP diluted EPS of $0.49 for the current and year-ago quarter
"In Q1 we expanded our pipeline and made progress on our strategic priorities, while delivering solid operating results," said Mark Adams, CEO of Penguin Solutions. "We continue to see signs of a shift in the AI market toward enterprise adoption and production-scale deployments, with workloads evolving from training environments into inference-driven use cases. This aligns well with our strengths in solution design, integration, and management. We remain focused on executing with discipline, deepening partnerships, and innovating across our core businesses."
Penguin Solutions Reaches Agreement to Divest Remaining Interest in Brazil Memory Module Business
On December 29, 2025, SMART Modular Technologies $(LX)$ S.à r.l. ("Seller"), a wholly owned indirect subsidiary of the Company, entered into a Stock Transfer Agreement (the "Stock Transfer Agreement"), by and among Seller, Lexar Europe B.V. ("Buyer"), Zilia Technologies Indústria e Comércio de Componentes Eletrônicos Ltda. ("Zilia Technologies") (formerly SMART Modular Technologies do Brasil - Indústria e Comércio de Componentes Ltda.), Shenzhen Longsys Electronics Co., Ltd., and Shanghai Intelligent Memory Semiconductor Co., Ltd. ( ). Pursuant to the Stock Transfer Agreement, Seller will sell to Buyer Seller's remaining 19% interest in Zilia Technologies for a purchase price of $46.08 million (the "Transaction"). Upon the closing of the Transaction, we will no longer hold any interest in Zilia Technologies. The closing is subject to certain customary closing conditions and is expected to occur on or about March 30, 2026 and no later than April 28, 2026.
Zilia Technologies assembles and tests standards-based, commodity memory modules for electronics manufacturers that sell devices to Brazilian consumers.
Quarterly Financial Results
GAAP (1) Non-GAAP (2)
---------------------------- ----------------------------
(in thousands,
except per
share amounts) Q1-26 Q4-25 Q1-25 Q1-26 Q4-25 Q1-25
--------------- -------- -------- -------- -------- -------- --------
Net sales:
Advanced
Computing $151,452 $138,336 $177,426 $151,452 $138,336 $177,426
Integrated
Memory 136,521 132,159 96,706 136,521 132,159 96,706
Optimized
LED 55,098 67,427 66,970 55,098 67,427 66,970
------- ------- ------- ------- ------- -------
Total net sales $343,071 $337,922 $341,102 $343,071 $337,922 $341,102
======= ======= ======= ======= ======= =======
Gross profit $ 96,109 $ 96,731 $ 97,812 $102,921 $104,317 $105,122
Operating
income (loss) 19,582 12,448 17,356 41,528 39,170 40,918
Net income
(loss)
attributable
to Penguin
Solutions 5,270 9,431 5,217 32,391 28,843 26,518
Diluted
earnings
(loss) per
share $ 0.04 $ 0.11 $ 0.10 $ 0.49 $ 0.43 $ 0.49
(1) GAAP represents U.S. Generally Accepted Accounting Principles.
(2) Non-GAAP represents GAAP excluding the impact of certain activities.
Further information regarding the Company's use of non-GAAP measures
and reconciliations between GAAP and non-GAAP measures are included
within this press release.
Business Outlook
As of January 6, 2026, Penguin Solutions is providing the following financial outlook for fiscal year 2026:
Updated GAAP Non-GAAP
Outlook Outlook Adjustments Outlook
----------- --------------- ------------------------------- ---------------
6% YoY Growth 6% YoY Growth
Net sales +/-10% -- +/-10%
Gross
margin 27% +/- 1% 2% $(A)$ 29% +/- 1%
$307 million $250 million
Operating +/- $10 ($57) +/- $10
expenses million million $(B)$(C) million
Diluted
earnings
per share $0.85 +/- $0.25 1.15 (A)(B)(D)$(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
===
(1) Primarily reflects net losses associated with non-marketable equity
securities.
Previous GAAP Non-GAAP
Outlook Outlook Adjustments Outlook
------------- --------------- ----------------------------- ---------------
6% YoY Growth 6% YoY Growth
Net sales +/-10% -- +/-10%
Gross margin 27.5% +/- 1% 2% (A) 29.5% +/- 1%
$312 million $255 million
Operating +/- $10 ($57) +/- $10
expenses million million (B)(C) million
Diluted
earnings per
share $0.89 +/- $0.25 $1.11 (A)(B)(C)(D)(E) $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 adjustments 8
(D) Estimated income tax effects (19)
(E) Estimated effect of allocation of earnings to participating
securities (7)
---
$ 61
===
First Quarter Fiscal 2026 Earnings Conference Call and Webcast Details
Penguin Solutions will hold a conference call and webcast to discuss the first quarter fiscal 2026 results and related matters today, January 6, 2026, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Interested parties may access the call by registering online at https://events.q4inc.com/analyst/915576911?pwd=gG3IB56p, at which time registrants will receive dial-in information as well as a conference ID. The live webcast will also be accessible from the Penguin Solutions investor relations website on the Events page, along with the related earnings press release and slide presentation. The webcast replay will be made available on the Quarterly Results page after the call concludes. An archived version of the webcast will be available on the Penguin Solutions investor relations website for approximately one year after the webcast date.
Use of Forward-Looking Statements
This press release contains 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; statements regarding the extent and timing of and expectations regarding Penguin Solutions' future net sales, sales mix and expenses; statements regarding Penguin Solutions' strategic transformation, agreement to divest its remaining interest in Zilia Technologies, business momentum, and emerging leadership position; statements regarding long-term effective tax rates; and statements regarding the business and financial outlook for fiscal year 2026 described under "Business Outlook" above.
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