Revenue and profitability highlights:
- Q1 2026 net sales: $343.1 million; YoY +1%, QoQ +2% (management and transcript corroborate sequential growth and modest YoY improvement).
- Gross margin (non-GAAP): 30.0%; YoY -0.8 percentage points; sequential -0.9 pp, reflecting mix shift from Penguin Edge wind-down.
- Operating income (non-GAAP): $42.0 million; YoY +1%; non-GAAP operating margin: 12.1%, up 0.1 pp YoY, marking the sixth consecutive quarter of YoY margin expansion.
- Net income (GAAP): $5.27 million; net income margin ~1.54% (net income figures and margins provided in the data set).
- Adjusted EBITDA: $45.0 million; YoY +1%; EBITDA margin not explicitly stated but EBITDA supports cash generation alongside non-GAAP results.
- EPS: Non-GAAP diluted EPS $0.49; flat YoY, +14% QoQ.
- Cash flow and balance sheet:
- Operating cash flow: $31.1 million; cash flow from operations up 125% YoY.
- Free cash flow: $31.1 million (as reported).
- Cash, cash equivalents and short-term investments: $461.8 million.
- Net debt: $42.3 million (cash $461.8m; debt $503.7m).
- Working capital and liquidity: DSO 51 days; DIO 38 days; DPO 55 days; CCC 35 days; inventory $213.0 million; AR $342.0 million; AP $305.0 million.
- Share repurchases: ~$15.0 million spent to repurchase ~791k shares in Q1; remaining authorization ~$96.5 million.
Guidance and outlook:
- FY2026 net sales growth midpoint: ~6%; non-GAAP diluted EPS: ~${2.00} (±$0.25).
- Gross margin: 29% ± 1 percentage point; OPEX: $250 million ± $10 million; tax rate: 22% (normalized).
- Segment outlook (full year): Advanced Computing -15% to +15%; Memory +20% to +35%; LED -15% to -5%.
- Revenue second-half skew: expected 53-54% of annual net sales in H2 as AI opportunities book and ship.
- Assumptions: no hyperscale advanced computing hardware sales; Penguin Edge wind-down largely complete by end of FY2026; procurement and supply constraints acknowledged as ongoing macro headwinds.
Strategic themes:
- Enterprise AI adoption shift and sovereign cloud opportunities are expanding Penguin’s addressable market.
- Investment in ICE ClusterWare and integration with open-source software to deliver a more complete AI infrastructure stack.
- Strengthened partnerships (NVIDIA, AMD, CDW) and channel expansions (Dell, CDW, SKT) support pipeline growth across industries including financial services, oil & gas, telecom, manufacturing, and education.
- Ongoing portfolio evolution from hardware-centric to full solutions (design, build, deploy, and manage) with a focus on throughput, reliability and AI tooling.