Penguin Solutions, Inc. (NASDAQ: PENG) reported Penguin Solutions Q3 results on July 7 from Fremont, California, with record net sales of $479 million for the third quarter of fiscal 2026 and higher earnings than the year-earlier period.
AI infrastructure work typically depends on compute systems, memory components, software and services that let customers deploy and operate clusters. Penguin Solutions reports through Advanced Computing, Integrated Memory and Optimized LED, with the latest quarter showing the largest sales contribution from Integrated Memory.
#Penguin Solutions Q3 Results Include Record Net Sales
Total net sales rose 48% from $324.3 million in the year-earlier quarter. GAAP gross profit was $133.2 million, compared with $95.1 million a year earlier, while GAAP gross margin was 27.8%, compared with 29.3%.
GAAP operating income was $50.9 million, up from $9.8 million in the prior-year period. The company reported GAAP net income attributable to Penguin Solutions of $44.7 million, compared with $2.7 million a year earlier.
GAAP diluted earnings per share were 68 cents, compared with a loss of 1 cent per share in the year-earlier quarter. Non-GAAP diluted earnings per share were 84 cents, compared with 47 cents a year earlier.
Integrated Memory net sales were $275.1 million, up from $130.1 million in the year-earlier period. Advanced Computing net sales were $137.6 million, compared with $132.5 million, and Optimized LED net sales were $66.1 million, compared with $61.6 million.
“Penguin Solutions delivered a record quarter, exceeding expectations for both net sales and EPS,” Kash Shaikh, CEO, Penguin Solutions, said in the earnings release.
#The Company Raises Its Fiscal 2026 Outlook
Penguin Solutions said it now expects full-year fiscal 2026 net sales growth of 22%, plus or minus 2%. The company’s previous outlook called for net sales growth of 12%, plus or minus 5%.
Management also raised its earnings outlook. Penguin Solutions said it expects full-year GAAP diluted EPS of $1.97, plus or minus 5 cents, and non-GAAP diluted EPS of $2.60, plus or minus 5 cents.
The prior outlook called for GAAP diluted EPS of $1.30, plus or minus 15 cents, and non-GAAP diluted EPS of $2.15, plus or minus 15 cents. The company said the updated outlook was supported by demand across its Integrated Memory and AI Infrastructure businesses.
For the first nine months of fiscal 2026, net sales were $1.16 billion, compared with $1.03 billion in the year-earlier period. GAAP operating income for the nine-month period was $96.1 million, compared with $45.7 million a year earlier.
#Cash Flow And Execution Risks Remain In Focus
The release also showed a shift in quarterly operating cash flow. Penguin Solutions used $74.8 million in operating activities during the third quarter, compared with $92.8 million of cash provided by operating activities in the year-earlier quarter.
On the balance sheet, cash and cash equivalents were $440.3 million as of May 29, 2026, compared with $453.8 million as of Aug. 29, 2025. Accounts receivable rose to $703 million from $307.9 million, while inventories increased to $498.3 million from $255.2 million.
Penguin Solutions said it added four AI Infrastructure customer logos in the third quarter. The company also said it became an NVIDIA AI Factory Specialized Partner and was recognized as Dell Technologies Global Alliances Americas AI Partner of the Year.
The company’s forward-looking statements cited risks tied to customer demand, technology industry trends, tariffs, trade rules, supply chain conditions, material costs, memory pricing, customer concentration, manufacturing execution and capital availability. Those factors could affect whether the company meets its revised fiscal 2026 outlook.
Management’s next scheduled step was a July 7 conference call to discuss the results and related matters. The company’s outlook now points to higher fiscal 2026 sales and EPS than previously projected, while execution, working capital needs and demand conditions remain central dependencies.