Penguin Solutions 2025 Q3 Earnings Revenue Rises, Net Income Falls 44.6%

Penguin Solutions (PENG) reported its fiscal 2025 Q3 earnings on July 8th, 2025. The company's revenue increased by 7.9% to $324.25 million, up from $300.58 million in the previous year. However, Penguin Solutions experienced a swing to a loss of $0.01 per share from a profit of $0.11 per share, reflecting a 109.1% negative change. The net income also declined to $3.45 million, down 44.6% from $6.23 million in 2024 Q3. Despite the revenue growth, the earnings per share results indicate a challenging quarter.

Revenue

Penguin Solutions experienced a 7.9% increase in total revenue, reaching $324.25 million for Q3 2025 compared to the same period the previous year. The Advanced Computing segment generated $132.50 million, Integrated Memory contributed $130.12 million, and Optimized LED added $61.63 million. This growth underscores the company's robust performance across its business segments.

Earnings/Net Income

Penguin Solutions reported a loss of $0.01 per share for Q3 2025, a significant decline from the $0.11 per share profit in Q3 2024, marking a 109.1% negative change. The company's net income also fell to $3.45 million, a 44.6% decrease from the $6.23 million recorded in the same quarter the previous year. The EPS results reflect a challenging financial performance this quarter.

Post-Earnings Price Action Review

The investment strategy of purchasing Penguin Solutions shares following a quarterly revenue increase and holding them for 30 days has yielded strong returns over the past three years. This approach resulted in a 29.18% return, significantly surpassing the benchmark return of 2.38%, with an excess return of 26.79%. The strategy showcased a compound annual growth rate (CAGR) of 44.27%, indicating robust growth potential. However, it comes with high volatility and a maximum drawdown of -30.80%, reflecting the inherent risk associated with such an investment strategy. This performance highlights the potential benefits and risks of investing in Penguin Solutions based on its quarterly financial performance.

CEO Commentary

Mark W. Adams, CEO of Penguin Solutions, expressed satisfaction with the Q3 performance, highlighting a revenue increase to $324 million, driven by early-stage enterprise AI adoption across various sectors. He noted the company's transition from quarterly to full-year financial outlooks, emphasizing the unpredictability of AI infrastructure engagements. Adams reaffirmed the revenue growth outlook of 17% and raised the non-GAAP diluted earnings per share forecast from $1.60 to $1.80, reflecting strong operational execution. He acknowledged challenges in the macro environment but maintained optimism about the company’s strategic positioning in high-performance enterprise infrastructure solutions.

Guidance

Penguin Solutions expects full-year revenue growth of 17% year-over-year and has tightened the range for this guidance. The non-GAAP diluted earnings per share is now projected at approximately $1.80, up from the previous estimate of $1.60. Advanced Computing sales are anticipated to grow between 15% and 25%, while memory sales are expected to increase between 25% and 30%. The non-GAAP gross margin outlook remains at 31%, with operating expenses estimated at $260 million, plus or minus $5 million.

Additional News

Recently, Penguin Solutions completed its redomiciliation from the Cayman Islands to Delaware, USA, effective June 30, 2025. This strategic move was achieved through a Cayman Islands Scheme of Arrangement and was approved by Penguin Solutions' shareholders and sanctioned by the Grand Court of the Cayman Islands. The redomiciliation process involved exchanging previously issued shares of Penguin Solutions Cayman for newly issued shares of the Delaware-based entity. This restructuring aims to streamline operations and align the company with U.S. corporate governance standards. The company's Nasdaq trading symbol "PENG" remains unchanged, and it does not anticipate any significant impact on its employees or day-to-day operations due to this transition.