Solid First Quarter Driven by Operational Excellence and Memory Growth

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. (上海慧忆半导体有限公司). 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 Outlook	GAAP Outlook	Adjustments		Non-GAAP Outlook
Net sales	6% YoY Growth +/-10%	—		6% YoY Growth +/-10%
Gross margin	27% +/- 1%	2%	(A)	29% +/- 1%
Operating expenses	$307 million +/- $10 million	($57) million	(B)(C)	$250 million +/- $10 million
Diluted earnings per share	$0.85 +/- $0.25	$1.15	(A)(B)(C)(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 Outlook	GAAP Outlook	Adjustments		Non-GAAP Outlook
Net sales	6% YoY Growth +/-10%	—		6% YoY Growth +/-10%
Gross margin	27.5% +/- 1%	2%	(A)	29.5% +/- 1%
Operating expenses	$312 million +/- $10 million	($57) million	(B)(C)	$255 million +/- $10 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 (https://ir.penguinsolutions.com/investors/default.aspx) 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.

These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipate," "target," "expect," "estimate," "intend," "plan," "goal," "believe," "could," and other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of significant risks, uncertainties and other factors, many of which are outside of our control, including but not limited to: global business and economic conditions, including the impact on the financial condition of our customers, particularly in challenging macroeconomic environments, growth and demand trends in technology industries (including trends and markets related to artificial intelligence), our customer markets and various geographic regions; uncertainties in the geopolitical environment; our ability to manage our cost structure; disruptions in our operations or supply chain as a result of global pandemics, tariffs or other factors; changes in trade regulations and tariffs or adverse developments in international trade relations and agreements; changes in currency exchange rates; overall information technology spending, including changes in customer spending on our products and services; appropriations for government spending; the success of our strategic initiatives including the U.S. Domestication (as defined below) and our ability to realize the anticipated benefits thereof, our rebranding and related strategy, any existing or potential collaborations and additional investments in new products and additional capacity; acquisitions of companies or technologies and the failure to successfully integrate and operate them or customers' negative reactions to them; issues, delays or complications in integrating the operations of Stratus Technologies; failure to achieve the intended benefits of the sale of Zilia Technologies and its business, including the planned sale of our remaining 19% interest therein and the timing and closing of such sale; the impact of and expected timing of winding down the manufacturing and discontinuing the sale of products offered through our Penguin Edge business; limitations on or changes in the availability of supply of materials and components; fluctuations in material costs; the temporary or volatile nature of pricing trends in memory or elsewhere; deterioration in customer relationships; our dependence on a select number of customers, and the timing and volume of customer orders and renewals; the impact of customer churn rates, including discounting and churn of significant customers from whom we derive a significant percentage of our revenue; changes in customer demand and sales mix; production or manufacturing difficulties; competitive factors; technological changes; difficulties with, or delays in, the introduction of new products; slowing or contraction of growth in the memory market, LED market or other markets in which we participate; changes to applicable tax regimes or rates; changes to the valuation allowance for our deferred tax assets, including any potential inability to realize these assets in the future; prices for the end products of our customers; strikes or labor disputes; deterioration in or loss of relations with any of our limited number of key vendors; the inability to maintain or expand government business; potential sales of our common stock by the holder of our issued convertible preferred stock or the anticipation of such sales; and the continuing availability of borrowings under revolving lines of credit or other debt arrangements and our ability to raise capital through debt or equity financings.

These and other risks, uncertainties and factors are described in greater detail under the sections titled "Risk Factors," "Critical Accounting Estimates," "Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and "Liquidity and Capital Resources" contained in the Annual Report on Form 10-K for the fiscal year ended August 29, 2025, as updated by the risk factors, if any, contained in our Quarterly Reports on Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission (the "SEC"). Such risks, uncertainties and factors as outlined above and in such filings could cause our actual results to be materially different from such forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that we make in this press release speak only as of the date of this press release. Except as required by law, we do not undertake to update the forward-looking statements contained in this press release to reflect the impact of circumstances or events that may arise after the date that the forward-looking statements were made.

Statement Regarding Use of Non-GAAP Financial Measures

This press release and the accompanying tables contain the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP effective tax rate, non-GAAP net income, non-GAAP weighted-average shares outstanding, non-GAAP diluted earnings per share and adjusted EBITDA. Penguin Solutions' management uses these non-GAAP measures to supplement Penguin Solutions' financial results under GAAP. Management uses these measures to analyze its operations and make decisions as to future operational plans and believes that this supplemental non-GAAP information is useful to investors in analyzing and assessing the Company's past and future operating performance. These non-GAAP measures exclude certain items, such as stock-based compensation expense; amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships and trademarks/trade names and backlog acquired in connection with business combinations); acquisition-related inventory adjustments; cost of sales-related restructuring; diligence, acquisition and integration expense; redomiciliation costs; restructuring charges; (gain) loss on non-marketable equity securities; impairment of goodwill; changes in the fair value of contingent consideration; (gains) losses from changes in foreign currency exchange rates; amortization of debt issuance costs; (gain) loss on extinguishment or prepayment of debt; other infrequent or unusual items and related tax effects and other tax adjustments. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies are reflected in the Company's non-GAAP measures and these intangible assets contribute to revenue generation. Management believes the presentation of operating results that exclude certain items provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of operating results across reporting periods. Management also uses adjusted EBITDA, which represents GAAP net income (loss), adjusted for net interest expense; income tax provision (benefit); depreciation expense and amortization of intangible assets; stock-based compensation expense; cost of sales-related restructuring; diligence, acquisition and integration expense; redomiciliation costs; (gain) loss on non-marketable equity securities; impairment of goodwill; restructuring charges; loss on extinguishment of debt and other infrequent or unusual items.

Our GAAP effective tax rate can vary significantly from quarter to quarter based on a variety of factors, including, but not limited to, discrete items which are recorded in the period they occur, the tax effects of certain items of income or expense, significant changes in our geographic earnings mix or changes to our strategy or business operations. We are unable to predict the timing and amounts of these items, which could significantly impact our GAAP effective tax rate, and therefore we are unable to reconcile our forward-looking non-GAAP effective tax rate measure to our GAAP effective tax rate.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, as they exclude important information about Penguin Solutions' financial results, as noted above. The presentation of these adjusted amounts varies from amounts presented in accordance with GAAP and therefore may not be comparable to amounts reported by other companies. In addition, adjusted EBITDA does not purport to represent cash flow provided by, or used for, operating activities in accordance with GAAP and should not be used as a measure of liquidity. Investors are encouraged to review the "Reconciliation of GAAP to Non-GAAP Measures" tables below.

Explanatory Note

On June 30, 2025, we completed the redomiciliation of the parent company of our corporate group, Penguin Solutions (Cayman), Inc. (formerly known as Penguin Solutions, Inc.), a Cayman Islands exempted company ("Penguin Solutions Cayman"), from the Cayman Islands to the State of Delaware in the United States, resulting in Penguin Solutions, Inc., a Delaware corporation ("Penguin Solutions Delaware"), becoming our publicly traded parent company (the "U.S. Domestication"). Penguin Solutions Delaware is the successor issuer to Penguin Solutions Cayman. The U.S. Domestication was approved by the shareholders of Penguin Solutions Cayman and effected via a court-sanctioned scheme of arrangement under Cayman Islands law, pursuant to which each ordinary share of Penguin Solutions Cayman was exchanged for one share of common stock of Penguin Solutions Delaware, and each convertible preferred share of Penguin Solutions Cayman was exchanged for one share of convertible preferred stock of Penguin Solutions Delaware. Additional information about the U.S. Domestication was included in Penguin Solutions Cayman's definitive proxy statement on Schedule 14A, filed with the SEC on April 2, 2025.

As used in this press release, unless stated otherwise or the context requires otherwise, the terms "Penguin Solutions," "Company," "we," "our," "us" or similar terms (i) for periods prior to the consummation of the U.S. Domestication, refer to Penguin Solutions Cayman and its consolidated subsidiaries and (ii) for periods at or after the consummation of the U.S. Domestication, refer to Penguin Solutions Delaware and its consolidated subsidiaries. Throughout this press release, we refer to our equity securities (i) for periods prior to the consummation of the U.S. Domestication, as ordinary shares and/or convertible preferred shares and (ii) for periods at or after the consummation of the U.S. Domestication, as shares of common stock and/or shares of convertible preferred stock.

About Penguin Solutions

The most exciting technological advancements are also the most challenging for companies to adopt. At Penguin Solutions, we support our customers in achieving their ambitions across our Advanced Computing, Integrated Memory, and Optimized LED lines of business. With our expert skills, experience, and partnerships, we turn our customers' most complex challenges into compelling opportunities.

For more information, visit www.penguinsolutions.com.

Penguin Solutions, Inc. Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)

	Three Months Ended
	November 28, 2025		August 29, 2025			November 29, 2024
Net sales:
Advanced Computing	$	151,452	$	138,336		$	177,426
Integrated Memory		136,521		132,159			96,706
Optimized LED		55,098		67,427			66,970
Total net sales		343,071		337,922			341,102
Cost of sales		246,962		241,191			243,290
Gross profit		96,109		96,731			97,812

Operating expenses:
Research and development		18,693		19,861			19,811
Selling, general and administrative		53,092		58,602			60,536
Impairment of goodwill		—		4,690			—
Other operating expense		4,742		1,130			109
Total operating expenses		76,527		84,283			80,456
Operating income		19,582		12,448			17,356

Non-operating (income) expense:
Interest expense, net		47		153			4,396
Other non-operating (income) expense		11,675		2,941			636
Total non-operating (income) expense		11,722		3,094			5,032
Income (loss) before taxes		7,860		9,354			12,324

Income tax provision (benefit)		1,805		(1,196	)		6,360
Net income (loss)		6,055		10,550			5,964
Net income attributable to noncontrolling interest		785		1,119			747
Net income (loss) attributable to Penguin Solutions		5,270		9,431			5,217

Preferred stock dividends		3,033		3,034			—
Income available for distribution		2,237		6,397			5,217
Income allocated to participating securities		231		666			—
Net income available to common stockholders	$	2,006	$	5,731		$	5,217

Earnings (loss) per share:
Basic	$	0.04	$	0.11		$	0.10
Diluted	$	0.04	$	0.11		$	0.10

Common stock used in per share calculations:
Basic		52,900		52,553			53,482
Diluted		54,991		54,371			54,312

Penguin Solutions, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands, except percentages) (Unaudited)

	Three Months Ended
	November 28, 2025			August 29, 2025			November 29, 2024
GAAP gross profit	$	96,109		$	96,731		$	97,812
Stock-based compensation expense		1,386			1,324			1,643
Amortization of acquisition-related intangibles		5,909			5,920			5,909
Cost of sales-related restructuring		(483	)		342			(42	)
Other		—			—			(200	)
Non-GAAP gross profit	$	102,921		$	104,317		$	105,122

GAAP gross margin		28.0	%		28.6	%		28.7	%
Effect of adjustments		2.0	%		2.3	%		2.1	%
Non-GAAP gross margin		30.0	%		30.9	%		30.8	%

GAAP operating expenses	$	76,527		$	84,283		$	80,456
Stock-based compensation expense		(8,694	)		(6,490	)		(9,888	)
Amortization of acquisition-related intangibles		(1,599	)		(1,885	)		(3,846	)
Diligence, acquisition and integration expense		—			(133	)		(833	)
Redomiciliation costs ⁽¹⁾		—			(2,734	)		(1,243	)
Impairment of goodwill		—			(4,690	)		—
Restructuring charges		(4,742	)		(1,130	)		(109	)
Other⁽¹⁾		(99	)		(2,074	)		(333	)
Non-GAAP operating expenses	$	61,393		$	65,147		$	64,204

GAAP operating income	$	19,582		$	12,448		$	17,356
Stock-based compensation expense		10,080			7,814			11,531
Amortization of acquisition-related intangibles		7,508			7,805			9,755
Cost of sales-related restructuring		(483	)		342			(42	)
Diligence, acquisition and integration expense		—			133			833
Redomiciliation costs ⁽¹⁾		—			2,734			1,243
Impairment of goodwill		—			4,690			—
Restructuring charges		4,742			1,130			109
Other⁽¹⁾		99			2,074			133
Non-GAAP operating income	$	41,528		$	39,170		$	40,918

GAAP operating margin		5.7	%		3.7	%		5.1	%
Effect of adjustments		6.4	%		7.9	%		6.9	%
Non-GAAP operating margin		12.1	%		11.6	%		12.0	%
⁽¹⁾ In the second quarter of fiscal 2025 we began breaking out costs related to the U.S. Domestication from "Other." All periods presented have been adjusted to reflect this change.

Penguin Solutions, Inc. Reconciliation of GAAP to Non-GAAP Measures (In thousands, except per share amounts) (Unaudited)

	Three Months Ended
	November 28, 2025			August 29, 2025			November 29, 2024
GAAP net income (loss) attributable to Penguin Solutions	$	5,270		$	9,431		$	5,217
Stock-based compensation expense		10,080			7,814			11,531
Amortization of acquisition-related intangibles		7,508			7,805			9,755
Cost of sales-related restructuring		(483	)		342			(42	)
Diligence, acquisition and integration expense		—			133			833
Redomiciliation costs ⁽¹⁾		—			2,734			1,243
Loss (gain) on non-marketable equity investments		10,000			—			—
Impairment of goodwill		—			4,690			—
Restructuring charges		4,742			1,130			109
Amortization of debt issuance costs		658			674			953
Loss (gain) on extinguishment or prepayment of debt		—			2,908			—
Foreign currency (gains) losses		1,212			287			1,028
Other⁽¹⁾		956			2,074			133
Income tax effects ⁽²⁾		(7,552	)		(11,179	)		(4,242	)
Non-GAAP net income attributable to Penguin Solutions		32,391			28,843			26,518

Preferred stock dividends		3,033			3,034			—
Non-GAAP income available for distribution		29,358			25,809			26,518
Income allocated to participating securities		2,990			2,639			—
Non-GAAP net income available to common stockholders	$	26,368		$	23,170		$	26,518

Weighted-average shares outstanding - Diluted:
GAAP weighted-average shares outstanding		54,991			54,371			54,312
Adjustment for dilutive securities and capped calls		(1,228	)		(838	)		—
Non-GAAP weighted-average shares outstanding		53,763			53,533			54,312

Diluted earnings (loss) per share from continuing operations:
GAAP diluted earnings (loss) per share	$	0.04		$	0.11		$	0.10
Effect of adjustments		0.45			0.32			0.39
Non-GAAP diluted earnings per share	$	0.49		$	0.43		$	0.49

Net income (loss) attributable to Penguin Solutions	$	5,270		$	9,431		$	5,217
Interest expense, net		47			153			4,396
Income tax provision (benefit)		1,805			(1,196	)		6,360
Depreciation expense and amortization of intangible assets		12,819			13,206			14,961
Stock-based compensation expense		10,080			7,814			11,531
Cost of sales-related restructuring		(483	)		342			(42	)
Diligence, acquisition and integration expense		—			133			833
Redomiciliation costs ⁽¹⁾		—			2,734			1,243
Impairment of goodwill		—			4,690			—
Restructuring charges		4,742			1,130			109
Loss on extinguishment of debt		—			2,908			—
Loss (gain) on non-marketable equity investments		10,000			—			—
Other⁽¹⁾		956			2,074			133
Adjusted EBITDA	$	45,236		$	43,419		$	44,741
⁽¹⁾ In the second quarter of fiscal 2025 we began breaking out costs related to the U.S. Domestication from "Other." All periods presented have been adjusted to reflect this change.
⁽²⁾ The three months and year ended August 29, 2025 include ($8,249) as a one-time tax effect of the U.S. Domestication completed in the fourth quarter of fiscal 2025.

Penguin Solutions, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)

As of	November 28, 2025			August 29, 2025
Assets
Cash and cash equivalents	$	461,451		$	453,754
Accounts receivable, net		326,892			307,904
Accounts receivable, net - related party		15,076			—
Inventories		213,205			255,182
Other current assets		50,390			47,387
Total current assets		1,067,014			1,064,227
Property and equipment, net		90,383			92,603
Operating lease right-of-use assets		57,254			58,847
Intangible assets, net		80,568			87,754
Goodwill		145,895			145,895
Deferred tax assets		99,023			99,107
Other noncurrent assets		58,058			68,767
Total assets	$	1,598,195		$	1,617,200

Liabilities, Temporary Equity and Stockholders' Equity
Accounts payable and accrued expenses	$	347,526		$	318,761
Current debt		19,974			19,945
Deferred revenue		43,648			73,893
Other current liabilities		46,962			61,300
Total current liabilities		458,110			473,899
Long-term debt		442,333			441,893
Noncurrent operating lease liabilities		61,406			62,736
Other noncurrent liabilities		31,877			30,445
Total liabilities		993,726			1,008,973

Commitments and contingencies

Temporary equity
Preferred stock, $0.03 par value; authorized 30,000 shares; 200 shares of convertible preferred stock issued and outstanding as of November 28, 2025 and August 29, 2025. Redemption amount of 200,400 and 200,500 as of November 28, 2025 and August 29, 2025, respectively.		202,710			202,710

Penguin Solutions stockholders' equity:
Common stock, $0.03 par value; authorized 200,000 shares; 63,605 shares issued and 52,560 outstanding as of November 28, 2025; 62,756 shares issued and 52,738 outstanding as of August 29, 2025.		1,908			1,883
Additional paid-in capital		565,105			551,712
Retained earnings		48,946			46,709
Treasury stock, 11,045 and 10,018 shares held as of November 28, 2025 and August 29, 2025, respectively		(226,269	)		(206,076	)
Accumulated other comprehensive income		13			18
Total Penguin Solutions stockholders' equity		389,703			394,246
Noncontrolling interest in subsidiary		12,056			11,271
Total stockholders' equity		401,759			405,517
Total liabilities, temporary equity and stockholders' equity	$	1,598,195		$	1,617,200

Penguin Solutions, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Three Months Ended
	November 28, 2025			August 29, 2025			November 29, 2024
Cash flows from operating activities
Net income (loss)	$	6,055		$	10,550		$	5,964
Adjustments to reconcile net income (loss) from continuing operations to cash provided by (used for) operating activities
Depreciation expense and amortization of intangible assets		12,819			13,206			14,961
Amortization of debt issuance costs		658			673			953
Stock-based compensation expense		10,080			7,814			11,531
Loss on impairment of non-marketable equity investment		10,000			—			—
Impairment of goodwill		—			4,690			—
Loss on extinguishment debt		—			2,908			—
Deferred income taxes, net		85			(15,234	)		211
Other		2,129			177			(712	)
Changes in operating assets and liabilities:
Accounts receivable		(34,064	)		(15,400	)		(23,885	)
Inventories		41,977			(70,834	)		(93,380	)
Other assets		(876	)		(6,088	)		705
Accounts payable and accrued expenses and other liabilities		(17,805	)		(2,894	)		97,471
Net cash provided by (used for) operating activities		31,058			(70,432	)		13,819

Cash flows from investing activities
Capital expenditures and deposits on equipment		(2,853	)		(2,925	)		(1,836	)
Proceeds from sales and maturities of investment securities		—			38,876			3,780
Purchases of held-to-maturity investment securities		—			(12,939	)		(20,723	)
Other		(521	)		(645	)		(143	)
Net cash provided by (used for) investing activities		(3,374	)		22,367			(18,922	)

Cash flows from financing activities
Repayments of debt		—			(300,015	)		—
Payments to acquire common stock		(20,193	)		(3,080	)		(11,123	)
Payment of preferred stock cash dividends		(3,133	)		(2,760	)		—
Proceeds from issuance of common stock		3,339			1,058			3,360
Proceeds from borrowing under line of credit		—			100,000			—
Other		—			(3,255	)		—
Net cash used for financing activities		(19,987	)		(208,052	)		(7,763	)

Net increase (decrease) in cash, cash equivalents and restricted cash		7,697			(256,117	)		(12,866	)
Cash, cash equivalents and restricted cash at beginning of period		454,070			710,187			383,477
Cash, cash equivalents and restricted cash at end of period	$	461,767		$	454,070		$	370,611

View source version on businesswire.com: https://www.businesswire.com/news/home/20260106791208/en/

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Penguin Solutions Reports Q1 Fiscal 2026 Financial Results