Penguin Solutions raises annual outlook as sales hit record
Net sales rose 48% year-over-year to $478.7 million in the third fiscal quarter.
Penguin Solutions (PENG) reported record third-quarter fiscal 2026 net sales of $478.7 million.
The high-performance computing solutions provider saw a significant acceleration in growth, driven by a surge in its memory business and a subsequent upward revision of its full-year financial targets.
Net sales grew 48% compared to the $324.3 million recorded in the year-ago quarter. GAAP operating income rose 417% year-over-year to a record $50.9 million, while Non-GAAP operating income increased 67% to $64.4 million.
The Integrated Memory segment served as the primary driver of the result. Net sales for the segment more than doubled year-over-year, rising from $130.1 million in the third quarter of fiscal 2025 to $275.1 million.
Non-GAAP gross margin compressed to 28.1%. This figure declined from 31.7% in the third quarter of fiscal 2025 and 31.2% in the second quarter of fiscal 2026.
Penguin raised its full-year fiscal 2026 outlook for net sales growth to 22% (+/- 2%), up from a previous guide of 12% (+/- 5%). The company also increased its Non-GAAP EPS guidance to $2.60 (+/- 0.05) from $2.15 (+/- 0.15), and raised GAAP EPS guidance to $1.97 (+/- 0.05) from $1.30 (+/- 0.15).
To enhance its capital structure and extend debt maturities, the company announced a proposed private offering of $650.0 million in convertible senior notes due 2031. Initial purchasers have an option to buy up to an additional $100.0 million.
Penguin intends to use the offering proceeds to repay $100.0 million outstanding under its June 24, 2025 credit agreement. The company is also refinancing existing debt by exchanging approximately $135.5 million of 2.00% convertible senior notes due 2029 and $160.0 million of 2.00% convertible senior notes due 2030 for a combination of cash and common stock.