We brought on new sales leadership over the last six months to 12 months. Recently, we just hired Dave Osborne, SVP of Partnership and Alliances… working with industry partners to expand our reach and development opportunities will be critical for us as we continue to grow.
— Mark Adams
03Detailed Report
PENG
Company PENG
Period
Q3 2024
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 23, 2026
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Executive Summary
Executive Summary - Q3 2024 performance and strategic context:
- Penguin Solutions reported total revenue of $300.6 million at the midpoint of its guidance, with non-GAAP gross margin of 32.3% and non-GAAP EPS of $0.37, above the midpoint of guidance. The quarter reflects continued progress in transforming from a pure hardware provider to a solutions-oriented platform, with a meaningful contribution from services and software through IPS Penguin and newly emphasized AI/ML workflows.
- Segment highlights show IPS contributing $145 million (48% of revenue), Memory $92 million (30%), and LED $64 million (21%), underscoring a diversified mix that supports higher-margin services and software engagements alongside hardware deployments. The company notes early momentum in software and managed services, including a multi‑million-dollar non-hardware win and the AI-focused OriginAI platform, designed to simplify GPU deployment at scale.
- Balance sheet and cash flow remained robust, with cash and short‑term investments totaling $468 million post-quarter, operating cash flow of $79.8 million, and a free cash flow of $76.0 million. Leverage remains elevated due to legacy debt, but the company continues to optimize capital allocation (debt reduction, share repurchases, potential M&A opportunities) in line with its long-run growth and risk management framework.
- Near-term outlook reflects modest sequential revenue growth with continued margin discipline. The fourth quarter guidance projects roughly $325 million in revenue at the midpoint, non-GAAP gross margin around 31.5%, and non-GAAP EPS near $0.40, signaling a continued shift toward higher‑value services and software alongside a steady but improving hardware mix. Investors should monitor IPS deployment timing, memory demand cycles, and ongoing supply chain dynamics as key inputs to the model.
Key Performance Indicators
Revenue
Decreasing
300.58M
QoQ: 5.53% | YoY: -12.73%
Gross Profit
Decreasing
88.91M
29.58% margin
QoQ: 8.51% | YoY: -11.52%
Operating Income
Increasing
11.51M
QoQ: 447.55% | YoY: 582.44%
Net Income
Increasing
5.62M
QoQ: 141.23% | YoY: 122.96%
EPS
Increasing
0.11
QoQ: 142.31% | YoY: 122.00%
Revenue Trend
Margin Analysis
Financial Highlights
Financial and operational metrics (Q3 2024 unless noted otherwise):
- Revenue: $300.6 million (midpoint of guide); YoY change: -12.7%; QoQ change: +5.5%
- Gross profit: $88.906 million; gross margin 29.6% (reported 32.3% non-GAAP) with non-GAAP gross margin 32.3%; YoY gross profit change -11.5%; QoQ +8.5%
- Operating income: $11.511 million; operating margin 3.83%; YoY change +582%; QoQ +448%
- EBITDA: $26.605 million; EBITDA margin 8.85%
- Net income: $5.616 million; net margin 1.87% (YoY +123%, QoQ +141%)
- Diluted EPS (non-GAAP): $0.37; YoY +122%; QoQ +142%
- Segment mix (Q3): IPS $145 million (48%), Memory $92 million (30%), LED $64 million (21%)
- Cash and short-term investments: $468 million; cash balance at period end: $453.791 million
- Operating cash flow: $79.78 million; free cash flow: $76.003 million
- Balance sheet: total assets $1.546B; total liabilities $1.116B; stockholders’ equity $423.449 million
- Debt and leverage: total debt $729.096 million; net debt $275.305 million; debt-to-capitalization 63.3%; debt/equity 1.722x; current ratio 2.68x; quick ratio 2.18x; cash conversion cycle ~57 days (varies by metric source; DSO 41.8–63.4 days depending on basis used)
- Valuation indicators (as of period): P/B 2.40x; P/S 3.38x; P/E 45.17x; price to free cash flow 13.35x; enterprise value multiple ~48.48x
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
300.58M
-12.73%
5.53%
Gross Profit
88.91M
-11.52%
8.51%
Operating Income
11.51M
582.44%
447.55%
Net Income
5.62M
122.96%
141.23%
EPS
0.11
122.00%
142.31%
Key Financial Ratios
Gross Profit Margin
Fair
29.60%
Gross profit margin is moderate, room for improvement in cost management
Operating Profit Margin
Weak
3.83%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
1.87%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
0.36%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
1.33%
Return on equity suggests inefficient capital allocation
Current Ratio
Strong
2.68
Current ratio indicates excellent liquidity and financial flexibility
Debt to Equity
High Risk
1.72
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
High Growth
45.17x
Very high P/E indicates aggressive growth expectations, higher risk
Price to Book
Fair Value
2.40x
Price-to-book ratio reasonable for profitable companies
Management Insights Available for Members
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