Penguin Solutions Rebrands, Boosts AI Computing Sales Amid Strategic Shift

TL;DR

**PENG is making a calculated bet on AI and high-performance computing, and while the rebranding is a good start, execution on growth will be key to justify the strategic pivot.**

AI Summary

Penguin Solutions, Inc. (PENG) reported net sales of $648.4 million for its Advanced Computing segment in fiscal year 2025, an increase from $554.6 million in 2024, but a decrease from $749.7 million in 2023. The company completed its U.S. Domestication on June 30, 2025, moving its parent company from the Cayman Islands to Delaware. On October 15, 2024, the company rebranded from "SMART Global Holdings, Inc." to "Penguin Solutions, Inc." and changed its ticker from "SGH" to "PENG," reflecting a strategic shift towards an enterprise solutions provider focused on AI complexity. The divestiture of an 81% interest in SMART Brazil was completed on November 29, 2023, with its operations now reported as discontinued. The acquisition of Stratus Technologies, completed on August 29, 2022, involved a cash purchase price of $225.0 million and a $50.0 million earnout paid in Q2 2024. The Advanced Computing segment, encompassing Penguin Solutions, Penguin Computing, Stratus, and Penguin Edge brands, focuses on HPC and AI solutions, including the OriginAI infrastructure and Stratus's fault-tolerant computing platforms like ztC Endurance, which boasts 99.99999% availability.

Why It Matters

Penguin Solutions' rebranding and U.S. Domestication signal a strategic pivot towards high-growth AI and HPC markets, crucial for investors seeking exposure to next-generation computing. The company's focus on end-to-end solutions, including its OriginAI and Stratus fault-tolerant platforms, positions it to compete with larger players in the enterprise solutions space. This shift could attract new customers in government, hyperscale, and financial services, while the divestiture of SMART Brazil streamlines operations. Employees benefit from a clearer strategic direction and focus on cutting-edge technology, potentially fostering innovation and growth within the company.

Risk Assessment

Risk Level: medium — The company's forward-looking statements highlight significant risks, including global economic conditions, geopolitical uncertainties, and the ability to manage cost structure. The Advanced Computing segment's net sales fluctuated significantly, from $749.7 million in 2023 to $554.6 million in 2024, then up to $648.4 million in 2025, indicating market volatility and potential challenges in consistent revenue generation.

Analyst Insight

Investors should monitor Penguin Solutions' quarterly reports for sustained growth in its Advanced Computing segment and successful integration of its AI and HPC initiatives. Evaluate customer adoption rates for OriginAI and Stratus ztC platforms, as these are critical to validating the strategic shift and realizing anticipated benefits.

Financial Highlights

revenue

$648.4M

revenue Growth

+17.0%

Revenue Breakdown

Key Numbers

• $648.4M — Advanced Computing Net Sales (Net sales for fiscal year 2025, showing growth from 2024)
• $554.6M — Advanced Computing Net Sales (Net sales for fiscal year 2024, a decrease from 2023)
• $749.7M — Advanced Computing Net Sales (Net sales for fiscal year 2023, the highest reported in the period)
• $1.05B — Aggregate Market Value (Market value of non-affiliate common equity as of February 28, 2025)
• 52,859,335 — Common Stock Outstanding (Shares outstanding as of October 15, 2025)
• $225.0M — Stratus Technologies Acquisition Price (Cash purchase price for Stratus Technologies acquisition on August 29, 2022)
• $50.0M — Stratus Earnout Payment (Contingent consideration paid in Q2 2024 for Stratus Technologies)
• 2,900 — Employees Worldwide (Approximate number of employees at the end of fiscal 2025)
• 99.99999% — Stratus ztC Endurance Availability (Guaranteed availability for Stratus ztC Endurance compute platforms)
• 81% — SMART Brazil Divestiture (Interest divested in SMART Brazil on November 29, 2023)

Key Players & Entities

• Penguin Solutions, Inc. (company) — Registrant and rebranded entity
• PENG (company) — Nasdaq Global Select Market ticker symbol
• SMART Global Holdings, Inc. (company) — Former corporate name of Penguin Solutions, Inc.
• Stratus Technologies (company) — Acquired company specializing in fault-tolerant computing
• SMART Brazil (company) — Divested entity from Integrated Memory segment
• Lexar Europe B.V. (company) — Acquirer of 81% interest in SMART Brazil
• Nasdaq Global Select Market (regulator) — Exchange where PENG common stock is traded
• U.S. Securities and Exchange Commission (regulator) — Regulatory body for 10-K filing
• Delaware (regulator) — State of incorporation after U.S. Domestication
• Cayman Islands (regulator) — Former jurisdiction of incorporation

FAQ

Risk Factors

• Integration of Acquired Businesses [medium — operational]: The company has completed the acquisition of Stratus Technologies for $225.0 million plus a $50.0 million earnout. Successful integration of Stratus's operations and technologies, such as their fault-tolerant computing platforms, is critical for realizing the expected synergies and benefits. Failure to integrate effectively could disrupt operations and impact financial performance.
• Reliance on Key Brands and Technologies [medium — operational]: Penguin Solutions relies on its brands including Penguin Computing, Stratus, and Penguin Edge. The success of the Advanced Computing segment, which generated $648.4 million in FY2025, is tied to the performance and innovation of these brands and their offerings like OriginAI and ztC Endurance. Any disruption to these brands or technologies could negatively affect revenue.
• U.S. Domestication and Tax Implications [low — regulatory]: The company completed its U.S. Domestication from the Cayman Islands to Delaware on June 30, 2025. While this move is intended to simplify the corporate structure, it may introduce new regulatory compliance requirements and potential tax implications in the United States that could affect financial reporting and operations.
• Competitive Landscape in HPC and AI [high — market]: The Advanced Computing segment operates in the highly competitive High-Performance Computing (HPC) and Artificial Intelligence (AI) markets. Competitors may offer similar or superior solutions, potentially impacting Penguin Solutions' market share and pricing power. The company's ability to innovate and differentiate its offerings, such as OriginAI, is crucial.
• Divestiture of Non-Core Assets [low — operational]: The divestiture of an 81% interest in SMART Brazil on November 29, 2023, indicates a strategic focus on core competencies. However, the execution of such divestitures can be complex and may involve ongoing liabilities or operational adjustments that could impact overall business performance.
• Rebranding and Strategic Shift [medium — market]: The rebranding from SMART Global Holdings, Inc. to Penguin Solutions, Inc. on October 15, 2024, signifies a strategic shift towards an enterprise solutions provider focused on AI complexity. The success of this rebranding and strategic pivot is not guaranteed and could face challenges in market perception and customer adoption.
• Employee Base and Global Operations [medium — operational]: With approximately 2,900 employees worldwide, including significant operations in the United States, China, and Malaysia, Penguin Solutions faces operational risks related to managing a global workforce and diverse geographical locations. Disruptions in any of these regions could impact the company's ability to deliver solutions.
• Dependence on Key Customers [medium — financial]: While not explicitly detailed in the provided text, enterprise solution providers often rely on a concentration of key customers. A loss of significant customers in the Advanced Computing segment could materially impact revenue, especially given the $648.4 million in sales reported for FY2025.

Industry Context

Penguin Solutions operates in the dynamic and rapidly evolving sectors of High-Performance Computing (HPC) and Artificial Intelligence (AI) infrastructure. This market is characterized by intense competition, rapid technological advancements, and significant investment from both established tech giants and emerging players. The increasing demand for AI-driven solutions and complex data processing fuels growth, but also necessitates continuous innovation and strategic partnerships to maintain a competitive edge.

Regulatory Implications

The recent U.S. Domestication from the Cayman Islands to Delaware on June 30, 2025, may introduce new U.S. federal and state regulatory compliance requirements. While intended to streamline operations, companies undergoing such transitions must ensure adherence to all relevant U.S. corporate governance and tax laws.

What Investors Should Do

1. Monitor integration progress of Stratus Technologies
2. Assess market reception of the Penguin Solutions rebranding and AI focus
3. Analyze competitive positioning in HPC and AI
4. Evaluate the impact of the U.S. Domestication

Key Dates

• 2025-06-30: U.S. Domestication Completed — Parent company moved from Cayman Islands to Delaware, potentially simplifying corporate structure and U.S. tax compliance.
• 2025-10-15: Common Stock Outstanding Record Date — Indicates the number of shares outstanding (52,859,335) as of this date, relevant for per-share calculations.
• 2024-10-15: Rebranding and Ticker Change — SMART Global Holdings, Inc. became Penguin Solutions, Inc. (PENG), signaling a strategic shift towards AI solutions.
• 2024-02-28: Aggregate Market Value — The market value of non-affiliate common equity was $1.05 billion as of this date, indicating investor valuation.
• 2024-02-01: Stratus Technologies Earnout Payment — A $50.0 million earnout was paid for the Stratus acquisition, impacting cash flow and acquisition cost.
• 2023-11-29: SMART Brazil Divestiture — An 81% interest in SMART Brazil was divested, with its operations now reported as discontinued, streamlining the business.
• 2022-08-29: Stratus Technologies Acquisition — Acquisition completed for $225.0 million cash, forming a key part of the Advanced Computing segment.

Glossary

U.S. Domestication

The process of changing a company's place of incorporation from an offshore jurisdiction (like the Cayman Islands) to the United States. (Penguin Solutions completed this on June 30, 2025, moving its parent company to Delaware, which can impact tax and regulatory frameworks.)

Discontinued Operations

A segment of a business that a company has disposed of or is planning to dispose of, and whose operations and cash flows will be eliminated from the ongoing business. (The operations of SMART Brazil are reported as discontinued following the divestiture of an 81% interest, meaning their financial results are separated.)

Earnout

A provision in a merger or acquisition agreement that allows the seller to receive additional compensation if the acquired business meets certain performance targets after the sale. (Penguin Solutions paid a $50.0 million earnout in Q2 2024 for the Stratus Technologies acquisition, indicating contingent future payments based on performance.)

Fault-Tolerant Computing

A type of computing system designed to continue operating even when one or more of its components fail, often used for mission-critical applications. (Stratus Technologies' ztC Endurance platform, part of Penguin Solutions' Advanced Computing segment, offers extremely high availability (99.99999%) based on this principle.)

High-Performance Computing (HPC)

The use of supercomputers and parallel processing techniques to solve complex computational problems. (Penguin Solutions' Advanced Computing segment focuses on HPC and AI solutions, indicating a market for powerful, specialized computing infrastructure.)

OriginAI

A specific infrastructure solution offered by Penguin Solutions for AI workloads. (This is a key product within the Advanced Computing segment, highlighting the company's focus on the growing AI market.)

Aggregate Market Value

The total market value of a company's publicly traded shares, typically calculated by multiplying the number of outstanding shares by the current market price per share. (Reported as $1.05 billion as of February 28, 2025, this metric provides an indication of the company's overall valuation by the market.)

Enterprise Solutions Provider

A company that offers a range of technology products and services designed to meet the complex needs of businesses. (Penguin Solutions rebranded to reflect this focus, particularly in the area of AI complexity, indicating a strategic shift in its business model.)

Year-Over-Year Comparison

Penguin Solutions (formerly SMART Global Holdings) shows a notable increase in Advanced Computing net sales, rising from $554.6 million in FY2024 to $648.4 million in FY2025, a positive growth of approximately 17.0%. This growth contrasts with the decline seen from FY2023 ($749.7 million) to FY2024. The company also completed its U.S. Domestication and rebranded, signaling strategic shifts. Specific details on margin changes, net income, and debt levels compared to the prior year's filing are not available in the provided text.

Key Financial Figures

• $0.03 — ange on which registered Common stock, $0.03 par value per share PENG Nasdaq Global
• $225.0 m — osing, we paid a cash purchase price of $225.0 million, subject to certain adjustments.
• $50.0 million — pay, contingent consideration of up to $50.0 million (the "Stratus Earnout") based on the gr
• $648.4 m — nced Computing segment had net sales of $648.4 million, $554.6 million and $749.7 millio
• $554.6 million — egment had net sales of $648.4 million, $554.6 million and $749.7 million in 2025, 2024 and 20
• $749.7 million — s of $648.4 million, $554.6 million and $749.7 million in 2025, 2024 and 2023, respectively.
• $464.2 m — egrated Memory segment had net sales of $464.2 million, $356.4 million and $443.3 millio
• $356.4 million — egment had net sales of $464.2 million, $356.4 million and $443.3 million in 2025, 2024 and 20
• $443.3 million — s of $464.2 million, $356.4 million and $443.3 million in 2025, 2024 and 2023, respectively.

Filing Documents

• peng-20250829.htm (10-K) — 2655KB
• pengq4-25form10xkex41.htm (EX-4.1) — 70KB
• pengq4-25form10xkex104.htm (EX-10.4) — 76KB
• pengq4-25form10xkex1017.htm (EX-10.17) — 45KB
• pengq4-25form10xkex191.htm (EX-19.1) — 82KB
• pengq4-25form10xkex211.htm (EX-21.1) — 7KB
• pengq4-25form10xkex231.htm (EX-23.1) — 3KB
• pengq4-25form10xkex311.htm (EX-31.1) — 10KB
• pengq4-25form10xkex312.htm (EX-31.2) — 10KB
• pengq4-25form10xkex321.htm (EX-32.1) — 4KB
• pengq4-25form10xkex322.htm (EX-32.2) — 4KB
• pengq4-25form10xkex971.htm (EX-97.1) — 53KB
• image_0.jpg (GRAPHIC) — 53KB
• image_02.jpg (GRAPHIC) — 8KB
• image_1.jpg (GRAPHIC) — 0KB
• image_12.jpg (GRAPHIC) — 0KB
• image_2.jpg (GRAPHIC) — 5KB
• image_21.jpg (GRAPHIC) — 5KB
• peng-20250829_g1.jpg (GRAPHIC) — 61KB
• peng-20250829_g2.jpg (GRAPHIC) — 428KB
• peng-20250829_g3.jpg (GRAPHIC) — 87KB
• 0001616533-25-000061.txt ( ) — 16897KB
• peng-20250829.xsd (EX-101.SCH) — 103KB
• peng-20250829_cal.xml (EX-101.CAL) — 193KB
• peng-20250829_def.xml (EX-101.DEF) — 567KB
• peng-20250829_lab.xml (EX-101.LAB) — 1199KB
• peng-20250829_pre.xml (EX-101.PRE) — 900KB
• peng-20250829_htm.xml (XML) — 2117KB

Business

Business 5 Item 1A

Risk Factors

Risk Factors 16 Item 1B Unresolved Staff Comments 51 Item 1C Cybersecurity 51 Item 2

Properties

Properties 52 Item 3

Legal Proceedings

Legal Proceedings 53 Item 4 Mine Safety Disclosures 53 PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6 [Reserved] 56 Item 7 Management ' s Discussion and Analysis of Financial Condition and Results of Operations 57 Item 7A

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 70 Item 8

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 72 Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 120 Item 9A

Controls and Procedures

Controls and Procedures 120 Item 9B Other Information 122 Item 9C Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 122 PART III Item 10 Directors, Executive Officers and Corporate Governance 123 Item 11

Executive Compensation

Executive Compensation 123 Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 123 Item 13 Certain Relationships and Related Transactions, and Director Independence 123 Item 14 Principal Accountant Fees and Services 123 PART IV Item 15 Exhibits and Financial Statement Schedules 124 Item 16 Form 10-K Summary 127

Signatures

Signatures 128 2 Cautionary Note Regarding Forward-Looking Statements This Annual Report on Form 10-K ("Annual Report") and the documents incorporated herein by reference contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995 that are not historical in nature, that are predictive or that depend upon or refer to future events or conditions. These statements may include, but are not limited to, statements regarding future events or our future financial or operating performance, the extent and timing of, and expectations regarding, our future revenues and expenses and customer demand, statements regarding our objectives and development of our services and capabilities, statements regarding the deployment of our products and services, statements regarding our reliance on third parties, statements regarding our rebranding initiatives and strategy, and statements using words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "plan," "target," "commit," "potential," "should" and similar words and the negatives thereof. These forward-looking statements are based on our current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of significant risks, uncertainties and other factors, many of which are outside of our control, including but not limited to, global business and economic conditions including the impact on the financial condition of our customers, particularly in challenging macroeconomic environments, growth and demand trends in technology industries (including trends and markets related to artificial intelligence ("AI")), our customer markets and various geographic regions; uncertainties in the geopolitical environment; our ability to manage our

Business

Item 1. Business Overview At Penguin Solutions, we understand the boundless potential of technology and support our customers in turning cutting-edge ideas into outcomes—faster, and at any scale. With over two decades of experience as trusted advisors, Penguin Solutions is an end-to-end technology company solving complex challenges in computing, memory and LED solutions. Penguin Solutions designs, builds, deploys and manages high-performance, high-availability enterprise solutions, allowing customers to achieve their breakthrough innovations. We do this in partnership with our customers—customizing solutions while facilitating rapid time to value, optimized long-term performance, high availability, and greater return on investment. As of the end of fiscal 2025, Penguin Solutions employed approximately 2,900 employees worldwide, with most located in the United States, China, and Malaysia. We believe that our employees are the cornerstone of our success. To support their efforts, we aim to provide inclusive and equitable workplaces maintained through ongoing intentional actions. On October 15, 2024, we changed our corporate name from "SMART Global Holdings, Inc." to "Penguin Solutions, Inc." and changed our Nasdaq Global Select Market ticker symbol from "SGH" to "PENG." The changes to the corporate name and ticker symbol did not have any impact on our legal entity structure, financial statements or previously reported financial information. On June 30, 2025, we consummated the U.S. Domestication of the parent company of our corporate group from the Cayman Islands to the State of Delaware in the United States. For more information about the U.S. Domestication, see "About This Annual Report" above. Business Segments The most exciting technological advancements are also the most challenging for companies to adopt. We support our customers in achieving their ambitions across our computing, memory, and LED solutions. With our expert skills, experience and partners

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