Penguin Solutions Inc delivered a resilient Q4 2024 performance, marking the third consecutive quarter of sequential revenue growth and reinforcing the strategic pivot toward AI infrastructure, high-performance memory, and integrated software/services. Q4 revenue reached $311.1 million, with non-GAAP gross margin at 30.9% and non-GAAP EPS of $0.37, aligning with prior guidance and continuing the company’s transition from a hardware-centric model to a more software-enabled, service-oriented business model. For FY2024, Penguin reported total revenues of approximately $1.17 billion, with managed services contributing an increased share (21% of FY24 revenue, up from 17% in FY23), and non-GAAP gross margins of 31.9% on a full-year basis. Management emphasized ongoing software and AI-driven value creation, including the expansion of Penguin Solutions ClusterWare and AIM software, and highlighted the strategic importance of the SK Telecom partnership (signing a $200 million investment) as a catalyst for global expansion in AI data centers and edge computing.
Looking ahead, the company shifted to a fiscal-year outlook for 2025, guiding to ~15% revenue growth (±5 percentage points) with a split by segment: IPS 10%–25%, Memory 10%–20%, LED flat to +10%. Non-GAAP gross margin is targeted at ~32% (±1pp), with non-GAAP Opex around $275 million (±$15 million) and non-GAAP diluted EPS near $1.70 (±$0.20). The guidance reflects anticipated headwinds from global macro conditions and ongoing IPS component lead times, but it also signals meaningful optionality from software/services and partnerships that could broaden the company’s TAM. The evolution toward a more diversified mix—software, services, AI-enabled workloads, and edge solutions—appears well aligned with broader AI infrastructure adoption, though near-term profitability will depend on mix and execution against a lumpier order book.
Investors should monitor: (1) progression of the SK Telecom investment and related go-to-market initiatives; (2) the mix shift toward higher-margin software/services and its impact on gross and operating margins; (3) IPS backlog visibility and lead times given AI deployment cycles; (4) working capital dynamics and free cash flow trajectory as AI projects scale; and (5) memory/LED demand drivers, especially DDR5/CXL adoption and demand for high-density memory solutions for AI workloads.