Penguin Solutions’ first quarter results were greeted positively by the market, with management noting robust enterprise demand and a shift from hyperscale to broader AI adoption. CEO Mark Adams discussed the company’s rapid development workshops and tailored system design capabilities, which have been important in driving new customer wins, particularly in advanced computing and memory. Management also pointed to operational discipline and lower inventory days as supporting factors, while acknowledging ongoing headwinds in the LED segment.
Is now the time to buy PENG? Find out in our full research report (it’s free for active Edge members).
Penguin Solutions (PENG) Q4 CY2025 Highlights:
- Revenue: $343.1 million vs analyst estimates of $339.1 million (flat year on year, 1.2% beat)
- Adjusted EPS: $0.49 vs analyst estimates of $0.44 (10.6% beat)
- Adjusted EBITDA: $45.24 million vs analyst estimates of $43.21 million (13.2% margin, 4.7% beat)
- Management reiterated its full-year Adjusted EPS guidance of $2 at the midpoint
- Operating Margin: 5.7%, in line with the same quarter last year
- Inventory Days Outstanding: 78, down from 96 in the previous quarter
- Billings: $262.2 million at quarter end, up 23.1% year on year
- Market Capitalization: $1.02 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Penguin Solutions’s Q4 Earnings Call
- Brian Chin (Stifel) asked about the sequential revenue trend and memory supply risks. CEO Mark Adams explained that advanced computing faces timing challenges with new customer agreements, while CFO Nate Olmstead highlighted that memory supply constraints are a key variable for full-year growth.
- Brian Chin (Stifel) followed up on channel partnerships. Adams described strengthened relationships with CDW, NVIDIA, and SKT, noting these are increasing the size and quality of the advanced computing pipeline and enabling larger enterprise opportunities.
- Manmohanpreet Singh (JPMorgan) pressed for details on enterprise AI adoption and diversification. Adams said the company is seeing an evolution from hyperscale to broader enterprise rollout, with a growing number of enterprise opportunities and increased planning for future expansion.
- Matthew Calitri (Needham & Company LLC) asked about inventory levels as a leading indicator for shipments. Olmstead responded that inventory turns are healthy, with the company generally buying to order and using its balance sheet to secure supply in a tight memory market.
- Madison de Paola (Rosenblatt Securities) questioned the impact of industry moves toward optical memory. Adams viewed recent moves by industry peers as validating Penguin’s optical memory strategy, reinforcing the company’s direction for future memory products.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be monitoring (1) the pace of enterprise and sovereign AI project bookings and deployments, (2) the ability to secure and deliver memory components amid supply constraints, and (3) ongoing efforts to diversify the customer base in advanced computing and memory. The evolution of the LED segment and expansion of key technology partnerships will also be important indicators.
Penguin Solutions currently trades at $19.37, down from $21.65 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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