PENG Financial Analysis

Analysis Date: 1/27/2025

Business Model

Penguin Solutions generates revenue through three main business segments: Advanced Computing, Integrated Memory, and Optimized LED

Revenue Sources

• Advanced Computing: $177.4M (52% of revenue)
• Integrated Memory: $96.7M (28% of revenue)
• Optimized LED: $67.0M (20% of revenue)

Revenue Distribution by Channel

• Advanced Computing grew 49% YoY

Income Statement Analysis

• Revenue growth of 24.4% YoY driven by 49% growth in Advanced Computing
• Gross margin declined 150 basis points YoY to 28.7%
• Operating income improved significantly to $17.4M from $1.3M

Balance Sheet Analysis

• Strong cash position of $370.3M
• Inventory increased significantly QoQ from $151.2M to $247.0M

Cash Flow Analysis

• Operating cash flow decreased YoY but remained positive at $13.8M
• Higher investing cash outflow due to increased investment in securities

Capital Allocation

Company maintains focus on strategic investments while managing share repurchases ($11.1M in Q1) and maintaining strong cash position

Management Commentary

Strong performance highlighted by 49% YoY increase in Advanced Computing revenue

Management affirms full-year outlook

Overall Sentiment: Positive and confident about continued execution of strategy

Recommendation

Rating: Buy

Reason for Rating: Strong growth in core Advanced Computing segment and positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/27/2025, 2:25:12 PM