Penguin Solutions, Inc. Q1 FY2025 earnings call

Mark Adams noted the company achieved strong financial results in Q1 fiscal 2025 with revenue up 24% year over year to $341 million. Non-GAAP earnings per share were $0.49, a 108% increase. Strategic priorities include relentless innovation in differentiated technology, expanding software and services offerings, and growing go-to-market partnerships. The company is investing in R&D to further differentiate products and services, expanding Origin AI offerings, working with chip providers like NVIDIA, AMD, etc., and making progress on the Optical Memory Appliance (OMA). Partnerships with SK Telecom and Dell were announced, with opportunities for collaboration in advanced computing, memory solutions, and other technology areas.

For the first quarter of fiscal 2025, Advanced Computing generated revenue of $177 million, accounting for 52% of the company's total revenue, with a year-over-year increase of 49%. Integrated Memory had revenue of $97 million, making up 28% of total revenue, and saw a 13% year-over-year growth. Optimized LED recorded revenue of $67 million, representing 20% of total revenue, with a 4% year-over-year decline.

The company affirms its fiscal 2025 outlook with revenue expected to grow 15% plus or minus 5 percentage points. For Advanced Computing, full-year revenue is projected to grow between 10% and 25% year over year. Memory revenue is expected to grow between 10% and 20% year over year. LED revenue is expected to be flat to up 10% year over year. Non-GAAP gross margin for the full year is anticipated to be 32% plus or minus 1 percentage point. Non-GAAP operating expenses for the full year are expected to be $275 million plus or minus $15 million. Non-GAAP diluted earnings per share are expected to be approximately $1.50 plus or minus $0.20.

Risks include global macroeconomic headwinds and ongoing supply chain constraints, particularly affecting Advanced Computing with extended lead times for certain components. The LED industry's oversupply capacity condition also poses a risk.

Q: Michael Ng inquired about the Dell partnership and the timing of Advanced Computing revenue.

A: Mark Adams stated the Dell partnership leverages both companies' strengths to drive scale, and the large customer shipment in Q2 is from a hyperscaler and a federal systems integrator.

Q: Brian Chin asked about the role of the SK Telecom investment.

A: Mark Adams said Penguin can play a role in SK Telecom's AI infrastructure projects in Korea, with opportunities in various technology areas through collaboration.

Q: Nick Doyle questioned the inventory increase and the Daktronics deal.

A: Nate Olmstead responded that the inventory increase is related to a large customer order, and the Daktronics deal validates the company's IP and protects innovation in LED technology.

Q: Alex Valera asked about potential partnerships with hyperscalers or telcos.

A: Mark Adams said Penguin's value proposition is more relevant for enterprises rather than hyperscalers, as enterprises value the differentiated solutions offered.

Q: Rustam Conga asked about the ROI from the SC24 event.

A: Mark Adams mentioned the event helps with lead generation and storytelling for larger-scale deployments.

Q: Madison DePaola asked about the exclusivity of the Daktronics licensing agreement.

A: Mark Adams replied that the licensing agreement with Daktronics is not exclusive.