$PENG Q3 FY26 Review: The Sandbag Gets Bigger
$PENG printed the best quarter in company history and raised guidance for the second straight quarter.
9 Ventures | Equity Research | July 7, 2026
$PENG printed the best quarter in company history and raised guidance for the second straight quarter. Management dropped a preliminary FY27 view that I think undersells what this business can actually do. Here’s the review, and the updated bottoms-up model through FY30.
Q3 was a clean beat across every line
Record net sales of $479 million, up 48% year over year and 40% sequentially. Non-GAAP diluted EPS of $0.84, up 79% year over year and 62% sequentially, crushing the FactSet estimate of $0.54. Non-GAAP operating income hit a third quarter record of $64 million, up 67% year over year, and operating margin expanded to 13.4%.
Segment breakdown:
Integrated Memory: $275 million, up 111% year over year and 60% sequentially. Both volume and pricing drove this. Memory is now 57% of total company revenue.
Advanced Computing: $138 million, up 4% year over year and 19% sequentially. The headline growth number looks soft, but the mix underneath is the real story. Non-hyperscaler AI infrastructure within this segment grew 81% year over year and is now 58% of segment revenue, up from 33% a year ago. Hyperscaler and Penguin Edge wind-down are dragging the reported number down while the actual AI infrastructure business scales hard.
Optimized LED: $66 million, up 7% year over year. Steady, cash-generative, not the story.
AI-driven businesses (Memory plus non-hyperscaler AI infrastructure) were 74% of total company revenue and grew 104% year over year. Management said demand is outpacing net sales growth in both of these businesses, which is building backlog into Q4. That’s the kind of statement you want to hear from a company that just beat by 55%.
Penguin added four new AI Infrastructure logos in Q3, bringing the trailing four quarter total to 13 new logos, with 7 of those logos already increasing business with Penguin in the timeframe. One new data point worth flagging: management said they picked up a Hyperscaler customer in the memory business this quarter, contributing to volume growth. On the call, Kash Shaikh was explicit that this is not a large contributor yet and is consistent with the existing FY26 run rate, not some immediate multi-hundred-million dollar customer.
Opex leverage is already showing up. Q3 non-GAAP opex was $70.4 million on $478.7 million revenue, or 14.7% of revenue, up $8.7 million sequentially from Q2’s $61.7 million. Backing into Q4 off the full year opex guide of $260 million ± $5 million, nine month opex of $193.4 million implies roughly $66.6 million for Q4, which against the ~$505 million implied Q4 revenue works out to about 13.2% of revenue. Opex is growing in dollar terms every quarter, but slower than revenue. That’s the leverage story in one data point.
CFO transition: Nate Olmstead steps down July 8th, and Aaron Johnson, VP of Finance and Accounting, steps in as interim CFO while a formal search runs. Management framed it as a smooth handoff with no change to operating philosophy. Worth tracking, but not a thesis-changing event on its own.