Penguin Solutions beats estimates and raises guidance on growing AI infrastructure demand

Shares of the artificial intelligence infrastructure management company Penguin Solutions Inc. traded higher after-hours today after it posted a solid earnings and revenue beat and raised its full year outlook.

The company reported earnings before certain costs such as stock compensation of 52 cents per share, crushing the analyst consensus estimate, which called for earnings of just 35 cents. It also delivered revenue of $365.5 million, up 28% from a year earlier and well ahead of the $344.4 million analyst target.

The increased revenue meant Penguin was able to deliver a net profit of $8.1 million in the quarter, rebounding from a $13.6 million net loss in the same period one year earlier.

Penguin, which was known as Smart Global Holdings until it rebranded last year, provides AI infrastructure management services to so-called “hyperscale” data center operators and Fortune 500 companies in the financial services, energy and manufacturing industries. The company built up a reputation for working with high-performance computing systems before pivoting to focus exclusively on AI last year.

When it comes to AI infrastructure, data center operators require a more intelligent and integrated approach compared to traditional information technology systems, with compute environments set up to optimize efficiency, scalability and cost-effectiveness. In doing this, Penguin enables its customers to run their AI infrastructure at peak performance while minimizing operational complexity.

Its flagship product, ICE ClusterWare, is a hardware-agnostic software platform that automates the management of AI infrastructure, enabling customers to create highly optimized compute environments that can be scaled up or down as required.

Penguin Chief Executive Mark Adams (pictured) said the company is growing fast as more enterprises ramp up their AI investments.

“Our results reinforce our capabilities in managing the complexity of AI for our valued customers,” he said. “We are making progress in transforming Penguin into a leader in high-performance, high-availability infrastructure solutions.

Penguin delivered impressive numbers in its two main business segments. Its Advanced Computing Unit, which encompasses its AI infrastructure management platform, saw revenue grow 42% from a year earlier to $200 million. Meanwhile, the Integrated Memory segment, which offers high-performance and high-reliability memory for AI applications, delivered $105 million in sales, up 26%.

The company also operates a separate business called Optimized LED, which sells application-optimized light-emitting diode chips and components to lighting systems and display manufacturers. Revenue there was flat from a year ago at $60.1 million, the company said.

With the AI industry showing no signs of slowing down anytime soon, Penguin felt confident enough to increase its full year fiscal 2025 forecast. The company said it’s now expecting full year revenue growth of 17%, give or take 3%, compared to its prior forecast of 15%, give or take 5%. If it hits the mark, that would mean $1.4 billion in full-year revenue.

Wall Street analysts are looking for full year revenue of $1.36 billion, which would represent growth of just 13%.

Investors liked what they saw, and the numbers only reinforced optimism around the company. Penguin’s stock, which had already gained 4% during the regular trading session, rose by another 4% in after-hours trading. However, the stock is still down almost 6% in the year to date.

Image: Yahoo Finance

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