Penguin Solutions Q4 Revenue Jumps 68%, FY2027 Outlook Raised

Penguin Solutions Inc. (Nasdaq: PENG) reported record fiscal fourth-quarter results as demand for integrated memory and non-hyperscale AI infrastructure lifted net sales 68% year over year to $567 million. The company also raised its fiscal 2027 outlook from the preliminary view shared in the prior quarter, forecasting approximately 40% revenue growth, plus or minus 10 percentage points.

AI-driven businesses accounted for 78% of fourth-quarter sales and grew 141% from a year earlier. Penguin defines this category as its Integrated Memory business plus the non-hyperscale AI infrastructure portion of Advanced Computing.

Non-GAAP operating income reached $90 million in the quarter ended Aug. 28, 2026, up from $39 million a year earlier, while non-GAAP net income increased to $71 million from $29 million. Non-GAAP diluted earnings per share rose 133% to $1.00 from $0.43, and adjusted EBITDA more than doubled to $93 million from $43 million.

On a GAAP basis, fourth-quarter operating income was $69.5 million, compared with $12.4 million a year earlier. GAAP net income attributable to Penguin Solutions rose to $93.2 million from $9.4 million, while diluted EPS increased to $1.29 from $0.11. The quarter included a $33.2 million inducement expense associated with conversions of the company’s 2029 and 2030 notes, as well as a $75.9 million non-GAAP tax adjustment.

Integrated Memory leads segment growth

Integrated Memory was the largest growth driver, with quarterly sales climbing 158% to a record $341 million. The segment contributed 60% of company revenue, up from a smaller share a year earlier as AI-related demand expanded.

Penguin added two memory customers during the quarter. For the full year, it signed 15 new customers and expanded 29 existing relationships. Management said it is concentrating on data-center memory and believes demand tied to AI workloads will be more durable than a traditional cyclical memory upturn.

The company highlighted new business with a global AI server manufacturer and an expanded relationship with a next-generation AI inference provider. Its memory product roadmap includes CXL expansion cards, a MemoryAI key-value cache appliance and a photonics appliance intended to expand high-bandwidth GPU memory.

Advanced Computing revenue increased 11% to $154 million, with non-hyperscale AI infrastructure sales rising 99%. AI infrastructure represented 66% of the segment’s quarterly revenue.

The company won six new AI infrastructure customers in the quarter, including four neocloud providers, a large quantitative trading firm and an enterprise customer. It also added a supplier to improve component availability and support demand. Across fiscal 2026, Penguin reported 17 new AI infrastructure customers and 12 expanded engagements.

Optimized LED revenue rose 7% to $72 million. The company said the business generated positive cash flow and continued executing its product innovation roadmap.

Full-year sales reach $1.73 billion

Fiscal 2026 revenue increased 26% to $1.73 billion. Integrated Memory sales nearly doubled to $924 million from $464 million, offsetting declines in Advanced Computing, where revenue fell to $559 million from $648 million, and Optimized LED, where sales decreased to $249 million from $256 million.

Full-year non-GAAP operating income rose to $241 million from $168 million, while adjusted EBITDA increased to $256 million from $187 million. Non-GAAP diluted EPS advanced to $2.87 from $1.90. GAAP operating income was $165.6 million, compared with $58.1 million in fiscal 2025, and GAAP diluted EPS increased to $2.60 from $0.28.

Profitability improved at the operating level even as gross margins narrowed. Fourth-quarter non-GAAP operating margin expanded to 15.8% from 11.6%, while non-GAAP gross margin declined to 28.8% from 30.9%. For the full year, non-GAAP operating margin increased to 13.9% from 12.2%, while non-GAAP gross margin fell to 29.3% from 31.0%.

Working-capital requirements remained a constraint on cash flow. Net cash used in operating activities from continuing operations was $163 million in the fourth quarter, compared with $70 million a year earlier. Inventory increased to $749 million from $255 million, and net accounts receivable rose to $796 million from $308 million. Cash, cash equivalents and short-term investments ended the period at $647 million, up from $454 million a year earlier.

Fiscal 2027 outlook

For fiscal 2027, Penguin expects net sales to grow about 40% year over year, with a range of plus or minus 10 percentage points. The company projects a GAAP gross margin of 27%, plus or minus two percentage points, and a non-GAAP gross margin of 28%, also plus or minus two points.

GAAP operating expenses are expected to be $329 million, plus or minus $10 million, while non-GAAP operating expenses are forecast at $275 million, plus or minus $10 million. Penguin projects GAAP diluted EPS of $3.50, plus or minus $0.70, and non-GAAP diluted EPS of $4.45, plus or minus $0.70, based on approximately 63 million diluted shares.

Management’s outlook depends in part on AI-related demand, customer bookings and backlog conversion, component availability and the timing of deployments. The company also identified macroeconomic conditions, customer concentration, order timing, tariffs and trade restrictions, foreign-exchange movements, supply-chain disruptions, memory pricing, technology shifts and competition among factors that could cause actual results to differ from its expectations.

Separately, Penguin appointed Stephen Cumming as chief financial officer. Cumming previously served as CFO of infrastructure-as-a-service provider Edgio and held senior finance roles at Cambium Networks, Kenandy, Atmel, Fairchild and National Semiconductor.