On April 1, 2026, Penguin Solutions, Inc. (Nasdaq: PENG) unveiled its financial results for the second quarter of fiscal 2026. Despite a decline in net sales compared to the previous year, the company reported significant growth in earnings per share (EPS), marking a pivotal moment in its ongoing transformation within the rapidly evolving AI market.

2. Second Quarter Fiscal 2026 Highlights

Net Sales: The company reported net sales of $343 million, a decrease of 6% from the same quarter last year.

Gross Margin: GAAP gross margin stood at 27.3%, down 130 basis points year-over-year, while Non-GAAP gross margin improved slightly to 31.2%, up 40 basis points.

Earnings Per Share: GAAP diluted EPS was reported at $0.58, a stark increase from $0.09 in the year-ago quarter. Non-GAAP diluted EPS remained stable at $0.52 for both the current and prior quarters.

Kash Shaikh, CEO of Penguin Solutions, articulated optimism regarding the company’s position within the burgeoning AI sector. “Enterprises, governments, and neocloud providers are racing to build AI factories, as platforms scale to power the next generation of inference workloads,” he stated. He emphasized the expansion of their AI/HPC pipeline, noting the addition of five new customers, including a Tier One financial institution deploying their innovative MemoryAI™ CXL-based KV cache server.

3. Detailed Financial Results

Metric	Q2-26	Q1-26	Q2-25
Net Sales
Advanced Computing	$115,715	$151,452	$200,157
Integrated Memory	$171,629	$136,521	$105,260
Optimized LED	$55,655	$55,098	$60,102
Total Net Sales	$342,999	$343,071	$365,519
Gross Profit	$93,702	$96,109	$104,648
Operating Income	$25,689	$19,582	$18,488
Net Income	$37,452	$5,270	$34,107
Diluted EPS	$0.58	$0.04	$0.09
Non-GAAP Diluted EPS	$0.52	$0.49	$0.52

4. Business Outlook

Penguin Solutions provided an updated financial outlook for fiscal year 2026, anticipating a robust recovery in net sales and earnings:

GAAP Outlook	Adjustments	Non-GAAP Outlook
Net Sales	12% YoY Growth +/-5%	12% YoY Growth +/-5%
Gross Margin	26% +/- 0.5%	28% +/- 0.5%
Operating Expenses	$310 million +/- $5 million	$250 million +/- $5 million
Diluted EPS	$1.30 +/- $0.15	$2.15 +/- $0.15

This optimistic outlook reflects the company's strategic focus on AI and high-performance computing (HPC), highlighting its commitment to leveraging strong memory demand as a core strength.

5. Conclusion

While Penguin Solutions experienced a decline in net sales for the second quarter of fiscal 2026, its significant EPS growth and optimistic outlook for the remainder of the year showcase a resilient and adaptable business model. With continued investment in AI technologies, the company is well-positioned to capitalize on emerging trends in the market. As the demand for AI solutions expands, stakeholders and investors will be keenly watching how Penguin Solutions navigates the challenges and opportunities ahead.

6. Upcoming Conference Call

Penguin Solutions will host a conference call and webcast today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss these results in further detail. Investors and analysts can access the call through the company’s investor relations website.

Original press release