SGH - Earnings call transcript Q1 2022 | Penguin Solutions, Inc.

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Operator

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the SGH First Quarter Fiscal 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remark there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Schmidt, your Suzanne

Suzanne Schmidt

Thank joining call us Good afternoon XXXX and you for and thank results. fiscal on quarter to SGH's you, discuss operator. webcast first today's earnings conference

today call Chief Pacheco, and the on Officer; me are Adams, Officer; Operating Financial Chief Chief Rizvi, Mark Ken Jack Executive Officer. Joining

the release on quarter encourage that the section of constitute Relations forward-looking of statements or will remind statements the are accompanying results in find earnings may we may like note you and can also to certain made materially. information expectations call company, today that that Investor go presentation and events on the conferences and I press press attend. our included including the that website. the the Please We presentation. site release of most current present the You to and information earnings would everyone slide we the for for various note use to to statements this these throughout call forward-looking the have statements our earnings read financial on differ the actual

both financial measures not as to reconciliation today's GAAP consider measures. in press considered analyzing performance. and also when should our our from, GAAP to or A included a of in We Non-GAAP isolation superior release. for encourage is you We be substitute non-GAAP to discuss results. non-GAAP GAAP all measures measures

after will who questions. then provide Rizvi, the Ken financials forward We review will call Mark which take business a CFO, begin the we and update; CEO, guidance; will Mark? with will Adams, and

Mark Adams

appreciate joining today. nice of holiday all Thank you, us hope Suzanne. you you and had We a

to our strong a fiscal off XXXX. to are We start

of gas contributed than QX. in higher 'XX. operating the the compared proud sales approximately to our I challenges revenue share $XXX oil with excellent QX to stemming serve. range, from record Solutions, Solutions the per share delivering to the leverages our Solutions ultra-scale, each extremely quarter from an turned Memory in me level, COVID the performance and first same some $X.XX and system. advanced all customer and of more requirements of the of our our compete businesses, the they businesses of upper our last gross had on shortages. in in SGH engagements We which quarter and pandemic guidance each year LED unique which Platform with the businesses. the businesses. or three era microelectronics I'm with of excellence the Common execution, to million, record amidst end non-GAAP or unprecedented at non-GAAP margins Solutions, quarterly earnings continue revenue of Expanding XX% our that and during strength was markets at Group share prior of set subsystem light solutions in our to excited of Platform government system highlights record Intelligent successes higher end team's from results. of million, of the of customers, in XX% another quarter Let across delivers of IPS is addressing $XXX the focus chain that engineering-driven our than markets XX% the Intelligent technology of helping be quarter, our the Starting or some SGH is especially specialty operating operational them supply

as QX growth fiscal managed almost revenues QX 'XX doubling progressing Our in initiative with services fiscal to compared 'XX. is well

Solutions, including I both of workloads underappreciated are technology GPUs myriad and 'XX integrating and machine few and to a is Memory for specific IPS data for in of networking components software-based the trend. a software enterprise believe still Penguin. companies are AI capable Software systems, of represented with fiscal IPS do delivering There within world positioned approximately the still support offering cooling them at With of advanced systems, extent the What infancy, storage, complete along center. services overall and QX solutions, capitalize computing we learning subsystems, in of hardware total on and this designing high-performance to XX% services while complexity their and revenue. CPUs, optimizing best-in-class well the infrastructure and we is growing

design customized the of systems workloads, systems systems the Our for HPC customers' performance XX and and commercial maximum availability. manufacture years maintain systems, for optimize our to enables in experience implement for us the best-in-class scalable

strategic is 'XX Supercompute the to place customers via announced November, AI, containerized in Computing launch Penguin Solution, of enhancing for the HPC Another HPC/AI and capabilities GovPOD high-performance, our environment past [ph] which took At our Cloud workflows. it's on-demand, service secure an supports traditional that priority business cloud. this

Penguin offering to recognition. maximize infrastructure offerings November, as to in address of a for invest our unique, team to is as-a-service major our to and was In with have testament placed Solution the the GovPOD our complex customers our and our industry that in fastest-growing to challenges help solve HPC such their This of declared Computing the XXXX. storage success environment. problems. Research secure Hyperion garnering workload-centric and compute, continue a us needs is trust We The an HPC/AI customers' customers' them provider HPC network future approach solution increasing solving Cloud to AI

to Revenue of million Revenues high-brightness growth into landscape specialty LED by architectural of line and in video, QX up driven in with the strong products quarter substantially fiscal lighting Group XXXX is when markets. when Cree was our part which this operating customer wins was our were expectations with business another turning Wolfspeed. had with $XXX and still compared Now, performance. which QX Solutions

sapphire outsourced manufacturing our strengthens The from and an in We we continue to manufacturing from markets a serve. cost to competitiveness model, on to captive wafers execute plan. transition silicon model capital-light carbide our transformation the

the road expanding the new DDRX deliver next will custom and markets lighting which lighting products These map our with line up architectural, billboard XXXX. approximately the on such third products of and to display strong core LED our high-value of fiscal Flash We customer new market are fiscal spaces. focused team has And for by high-power intellectual an of quarter DDRX, optimized been sale lighting best an our premier such Group, these efforts applications. of XX% in medical in innovative, our generation actually segments. system which application-optimized and three in of delivering our Cree networking reclassified target product include: ago Solutions application video level revenues increased of that $XXX the apples-to-apples overall of under our for revenues telecom quarter products Memory year to high-power basis, variety property the year brightness from same focus SMART customers. revenue new both differentiation X highlights deliver a value. enabling signs for Driving Recent that stage our to achieving front, and CVXXD In specialty efficiency, solutions, is quarter improved our packaging the and on exciting that design traffic addressing as Cree's we mixing grew leverage X% products and securing designs color enable product believe million result XXXX traction this as the launch were our Modular and which name, in the of innovation, wins versus year-over-year applications in cutting-edge will adjusted performance recognition QX Tier products technology, mid-power On improved while beginning LEDs, operating on industry-leading the products the brand impact the ago. extreme lighting horticulture, of targeted and and a

of we've the as ramping in on product has also we upcoming data developing of remain products on for front, road are made map The memory progress ramp production new are great leading DDRX also verticals team DDIMM One targeted And customer. transition. plan is center our We expect to center during our QX the to targeting the in and the which beginning see now solutions fiscal such cloud. at year. and a data OpenCAPI made example investments benefits Brazil on the SSD

with CXL industry's design for system several both in the are need data Tier customers X are next-generation the address and engaged center memory to in validation memory or NVDIMMs We additional module of DDRX actively and on applications. cloud

ahead or XU We DDRX profile needs very of memory opportunities density are applications. maximize VLP our industrial, developing applications, for to security serve board in computing our feel uniquely customers the expanding business play excited These space. low DDRX of and networking RDIMM storage new the help customer We're system industry's the first base. modules us for minimize positioned and VLP about and and

role and software controller-based compute And positions mid-December, myself provide overall Shareholder Meeting in well on intended success, split. diversified of memory design to ecosystem. public providing of February a Board XX, wanted years particularly our anticipate custom I've note, broaden I shareholder We directors. the more much we with the that our and company. solutions independent incorporate this more firmware for the know-how, improve comprised In the entirely is our one-third becoming Ken expertise and memory has the Our be more to will manufacturing his a Board our that being upcoming of Annual XX-plus taken our and governed approved also more hardware, announced has discussed of exception detail in goal female in independently commentary. quarter. as engineering products in a share base. with on This us completed our as of as X-for-X current integral to will in of liquidity as past, our further Board

businesses. start operational off all excellence in on are We a across focused and strong XXXX of fiscal remain our to

will efficiently and a At growth company to shareholders. over run quarter. performance time, our of margins financials the expand We value I'll and Ken? deliver hand diversification, drive and more our and Ken review financial guidance detailed for improved it continue next strive to the this increase for to for to

Ken Rizvi

Thanks, Mark.

tremendous consecutive to businesses. XXXX of strategy in income. three across ahead SGH all net A XXXX, all quarter in demonstrates of how XXXX performance our quarter XX% came for our and year Solutions to is quarter deliver ago, close our see first play SGH our with overall continuing beyond out opportunities solutions and our growth and for operating businesses. of advanced sales nearly of seventh technology first of our net The strong operating approximately We year-over-year of customers income. Memory of Today, XX% for our of Solutions three and the from the is Memory to XX% sales across represents

record remarks non-GAAP earnings our in another the an increase in year-over-year million, QX. results Net strong release the from Let first tables. results. my basis company slightly fiscal up $XXX on for me for first reported quarter turn I sales on to quarter the and which quarter XXXX GAAP a will of We quarter were first from reconciled of our another to our XX% focus and XXXX fiscal fiscal are QX.

non-GAAP end at the was helped Cree for at addition, and by ranges. margin share non-GAAP the a the growth XX% quarter, was first In both LED our basis, per earnings gross SGH a record of of year-over-year in XX% into came diluted SGH. On $X.XX higher of guidance revenue incorporation

our LED, IPS X%. which on revenues year-over-year by basis, XX% Cree XX% mainly and grew grew Memory which Excluding a Solutions driven approximately grew

IPS for another quarter, approximately record business. $XXX the had first million, revenues For of that

timing gross have margins will in given continue have quarter-to-quarter our earnings previous hardware, based quarter. the call, IPS business managed the and in As variability in to software on and services any we revenue of discussed

Group Solutions This revenues million was first our line in the of last commentary quarter. $XXX LED with had quarter. Our in

LED the Solutions fiscal quarter down into of seasonality the head revenues sequentially, fiscal to to second in for XXXX, we we second primarily As come quarter. due anticipate

fab-lite We flexible to fluctuations structure, supply. migrate of manage continue a operational demand towards to a better enabling and model more

XXXX. first discussed million Group the ago. our revenue XX%, quarter. Solutions Solutions Solutions Group record for XX.X% of a by customer $XXX when a year-over-year the margin impact gross in both and IPS from in net first also LED that Memory a Brazil basis quarters was margins both Our overall relatively performance prior the the strong. reclassification adjusted and by business margins Revenue and helped the margin grew in Group few of from Gross gross in of for had XX.X% quarter Memory gross we growth from stronger the quarter and Non-GAAP from our Specialty to revenues XX% and were from in first quarter up Memory remained SGH SGH from for up fiscal approximately

segment continued managed IPS first benefit Our mix software quarter. the to higher-margin in services from and

quarter it's in first of the will have in IPS Operating LED discussed continued million on IPS managed have past, expenses the services we software. from business due mix the expenses margin approximately for primarily our and were of first $XX.X million, up profile Solutions Solutions of or the quarter gross and in the $XX.X Operating in variability based As and up Memory inclusion businesses. our to XXXX. quarter-to-quarter hardware, investments

In fiscal helped from required first addition, offset credits which spending our million in credit. quarter the this R&D operating expenses of benefited approximately is in to XXXX $X.X in Brazil. This financial realize Brazil

for XX.X% have quarter or we of in the share diluted of per this As equal XXXX. $X.XX compared set prior quarter record the to XXXX of year currently $X.XX was previously fiscal enabling quarter XX.X% Adjusted to to $X.XX of for first ago per indicated, achieved $XX.X million fiscal expire of the share, $XX.X the sales the is was Non-GAAP EBITDA January quarter. in share of law from million in first or credit the XXXX. fiscal first earnings sales the XXXX in XXX% up and per quarter

breakdown was XXXX by follows: lighting and XX%; was storage data for telecom and and AI, Our advanced industrial, was as XX%. XX%; and XX%; markets of analytics other of quarter and was and machine net learning was the PCs network mobile first sales fiscal servers XX%; was was defense XX%; end

working to capital. turning Now,

first gross quarter. receivable XX from end $XXX last accounts quarter the in And first consistent quarter, for the flat was outstanding prior turnover were Inventory inventory million $XXX end which in by the million Our past of a IPS. compared inventory totaled $XXX basis lower a Inventory $XXX on reduction net calculated down goods driven came million, are sales Memory with the and the the X.Xx turns of Solutions quarter. totaled outstanding cost with prior X.Xx accounts This the in quarter the and at receivable, and of for quarter. with on at million $XXX were quarter. basis. $XXX last versus practice, million and first sales sold days million Days days, at days respectively,

quarter gross our the Chain As meaning related in net on Services Cash as with to profit basis, million an Chain a we Services prior the accounted and $XXX compared quarter. equivalents business which between sales for recognize at and sales. the totaled Supply on a million difference net Supply reminder, $XXX is the agent is revenue transaction net of the first end that only

flow operations with $XX.X cash compared in totaled quarter. from $XX million quarter prior First million the

quarter quarter, of chain, overall well During constraints the the given the timing up of help as continue November capital end electronic supply to to the working capital our we more our ensure our as tied meet needs in global in of the was customers.

million. and and those depreciation, the CapEx was $X.X million CapEx For you quarter $XX.X first tracking for depreciation was of

Also, adjusted X, and of split. per XXXX, earnings for record as have call The ordinary will form broaden in distributed to a Before significant intended January not announcing number liquidity ordinary milestone turning release to of outstanding February company improve impact share. ordinary to share The a shares our in for the outstanding ordinary split. shareholders not impact of is split been share shares. are the split our to share of wanted incorporate for share share XX, on the share our XXXX. does expected base. guidance, shareholder dividend that additional in and this dividend and Note The the the I and our of highlight double share of one the shares that from company the X-for-X our one data to a be the is guidance

our fiscal second turning XXXX guidance. Now, quarter to

quarter will than million, second million $XXX that XXXX variability of quarter-to-quarter $XXX IPS lower first expect seasonality for from approximately the to net range well due to We of as as business. primarily business the quarter, our from LED sales expected the our

second our margin and Our margin sales primarily IPS between quarter quarter XX%, GAAP approximately for sales lower Non-GAAP to XXXX the driven and from of sequential is expected LED be mix XX% lower for by gross in gross is businesses. expected second to XX%. XXXX of to the be overall and XX%

Our diluted compensation non-GAAP share a excluding or to quarter and guidance earnings be On to effective non-GAAP expected second plus February. $X.XX, our minus share-based Cash is million does expected to for EPS operating include expenditures range earnings is minus share of in expenses or be expense, second to we $XX approximately intangible beginning range will in non-GAAP expected be impact per be of fiscal the $X.XX, $XX not expected to GAAP plus in diluted the expense, to million. are the be are quarter million of discount adjustments, $X.XX. other amortization basis, expect debt of capital asset announcement at XXXX. the share Again, million $XX approximately second from per split the the our quarter convertible which $X.XX. $XX

count 'XX our share diluted quarter of GAAP XX on current Our price. based is be to stock shares the approximately million expected for fiscal second

for be diluted the fiscal the and our non-GAAP to includes XX note share of call. it second quarter benefit is convertible shares capped of count expected Our XXXX million approximately

count be beginning not the share will split effective Our the guidance which does of share February. incorporate from

on reconciliation the turn second current details. open Mark? to GAAP chain. before refer the in quarter for Please of questions. the non-GAAP which back to call earnings supply section the our Mark release call the forecast With to comments tables non-GAAP that, for global in measures to we for is me information concluding let the further some financial contemplates constraints the environment and the Our based fiscal

Mark Adams

updating months, coming diversification virtually all Ken. you growth all with for We today's continue on our of or to joining for in you forward your in call. look thanks open as we to lines the of Operator, support. for and the please and We appreciate person Thanks, Q&A. you strategy. execute you meeting And to

Operator

[Operator O'Malley Instructions] of the Barclays. question first Your line with comes Tom from

Your line is now open.

Tom O'Malley

for afternoon, nice like your you the on far exceeds -- business IPS questions said and taking performance results. it congrats during the XX%. quarter. know the was think My greater and Good about I was the than first looked thanks my up It expectations. guys was just up I question it

talked You led almost government kind there? about customers there helpful. of $XX those in new the there of some be awards difference color upside? the with timing U.S. million. Or would was traction the calls totaling some had some to Is previously that awards Any

Mark Adams

that was actually to likely Sure. referring $XX close is half -- you're Tom, timing. QX, QX million, second to, it The more a award

So that's little not our was in well increase bit some existing business customers as opportunities opportunities for contemplated some a accounts Today that us. in our as results some new development today. registered revenue at have of of the

Tom O'Malley

on of mentioned in that business in the your some give you just SSD perspective size then further you you look that business? over going the are that But you that ramp later big QX it's think just this out. time, us what for guys? little could your opportunity a for be And is? Helpful. can during so year. bit for what the efforts year, Could the fiscal How a like to Obviously, preamble little

Mark Adams

over a a run rate think next million And $XXX that, the something last by out hit from roughly QX. if -- roughly on starting hold the me can run Ken look business of the And quarterly million on at SSD okay, somewhere the -- a $XX of that -- roughly $XX we -- up $XXX rate a is the from kind on $XX perspective scale range. million, XX in QX XX-month of you pace. the short basis, term of is this, a Brazil looking Well, million to in business months expect could million, ramp in backwards kind and a we range just to

let that the also on that this seen chain Now, electronic is qualify supply we area shortage. an have me constraints some

about said, of be the roughly position our of of the the pretty But here Some today sit in rate overall, as business components $XX at in $XX manufacturing that we about in million we getting are pace and I million. QX $XX way like our it run good -- of to again, there we think could ones about target relative a of roughly QX. market And there. feel to SSDs million, and country be our

Tom O'Malley

nice Great, helpful. results guys. on that's Congrats the

Mark Adams

Tom. Thanks,

Operator

of Your Chin next comes Stifel. Brian question line the with from

Your line open. is now

Brian Chin

us about actually few thanks. Happy ask everyone Year questions. in first Hi, the tied a question New question, Maybe thanks there. to is My and R&D. my to first for Brazil -- financial allowing credits

understanding, a our And so underlies progress some -- of that benefit those extension that I possible there program credits from. guess the there's you based on been towards

going you've as not an such increase the in to so And be your talked may there here forward, in OpEx past.

a be two, for share that do extended? that February assuming there's extension? an And I'm that, EPS you So, high probability view would curious, of guide your program that is quarter what the

Mark Adams

of pending. Let me I'll hypothetical that maybe changes half quantify front and any to be Ken take that ask the could

As Ken background, tax -- and expiration current in the January the memory that's the in government know, a presence. pretty manufacturer the these working have and been articulated and we 'XX. country says of what you largest good Needless as the say, law to credits with of we've I both have in

of what business As a Brazil in is head Brazil. of the fact, semiconductor -- their President matter of our association the

value. government recently like of things and has lobbying the so And the the think in the pretty industry they I the impact And understand contemplated hard. been we've constraints supply

is not timing And so some way, we of credits shape it they at will today. form, tax our the these been or that a extend done think probability has call in there albeit

you for just So certainly what us on very look a sense you like the of a that the can progress, government give tax last of much especially to be QX. kind and we'll XX we might credits lot We're part posted. Ken, lobbying been these the think there's of in keep maybe over extended days. to

Ken Rizvi

Yes.

for the our an Brazil for of the that isn't month it's just gets other our end on in based one if our QX, end for that's outlined us And extended. in it's Q. actually Brian, impact business, ahead quarter law businesses even So timing quarter of there our

here in it's in like. impact look what it no QX. bit is a QX, specific If would does extended get the still QX, TBD depending there on law So

Street So If going for and in QX that QX. the away it keep on change, and obviously, now, have changes. I law, would terms of I update on look last things based the analysts after we is our that call, think what as to the we've current outlined can at as to an we just credit law

Brian Chin

Okay. broadly color. fair specifically the we'll Maybe there that challenges the enough. tuned and near more probably focus out IPS clearly, kind just All the right, some I Appreciate are I'll of business stay guess term. on in a little on bit there. but

went them in even duration your that higher availability what Because alluded be on quantify labor playing I idea You obviously work you're bit results facing a you to but the growth to our fiscal in can us something IPS down little through guess in good and of of the It revenue specifically, hardware to and you year? inventory. lot now you're this higher maybe of over and margin environment. an in want those but give terms is might operating you're obviously, right cost. and having a that And expansion or headwinds business, this also again, that be

Mark Adams

Yes.

holdover on a Because also pre- QX. went kind back specific on the should say, -- earlier inventory, shipment of, had our that in a level, an we perspective, to we this?" you all call, from and it out I mentioned "What last the is think was go as inventory right

read too movement se. the into wouldn't per inventory much I So,

I supply bullish it's a is that acknowledging we're And record quarter the pretty constraints 'XX. grew real. before, this substantially as a we're that, chain think 'XX. Having mentioned in think, are I on I business, and said that

like it don't headwind look So, I se. a at per

times complexity the technology of systems that of of the overlying tight together with goods and to and we we has in with software working of said come I think gates on the year got that suppliers of a Having I is NVIDIA, and a think lead everybody of and the the just we're systems, record strong we're else finished massive AMD, expect business that our the deliveries. these all really here. services, it are and constraints impact working with that. quarter And timing I IPS growth depth that Intel, a under. a hasn't different mean just number into had that, out integrate the on on the

So that times constraints and cautious call the we're operating out. world these is of just want we that to sense in to just the certain

Brian Chin

Okay, I fair so color. appreciate the enough. much. Thanks all

Mark Adams

you. Thank

Ken Rizvi

Brian. Thanks,

Operator

comes next line Company. Gill question Your of from the & Raji with Needham

is line Your open. now

Raji Gill

Yes, you on really my good and I momentum. echo and thank congratulations results

goal IPS to That do And XX% And volatile. And segment, be looking for Is Just quarter you in was do line. how very on on Is strong a from the percentage that? of the a in you're gross that it November, what increase a obviously, if intend quarter-by-quarter that; the on margin at it the the services. also steps? IPS for so, the from in coming very seasonality about a down to think IPS, you lumpiness mentioned there of our to revenue services? to is the respect top February. come with are basis there to least way is

Mark Adams

of that. with back get like minus. XX%, this think we'd of some I'll three Ken to model question. targeted business start and to the the me that you we've somewhere of the side, might let But over talk or I the that want years, or seasonality service next Let part neighborhood plus on how think to the about in

the keep still very what low strong only it's just very impressive consider Now the doing, at the hardware. to in. for participating little if top But growth of be beyond, mind about to are being not a selective the year business the revenue And a in in. doing 'XX margin -- we can gross we're This to a want with last see this up growth business think growth be a into be engagements the opportunities -- as bit part those we're we is of a growing type we us business well we and is when your XX% over and that line. you, services are opportunities

creation upfront the As we workloads a needs. I of the the to and our customers, our talked customers specific each lot of value design in design about around of side from their get the system business commentary, my of with optimize to

whether so And These to maintenance, it in we're upfront. proposals different, by you on our the are engage of is And hardware-only really customer transactions break/fix not kind is that for But it's and emphasizing will be the have going shop. measurement We're services precise each post-sale customer part to integration the an starts with customers. driven services, each hard we elements bit us. full we actual so that a us exact a that, deployment engagement model -- of with did these give how all on little certain with services. upfront

before a because I I'll quarter. to it hand that these lumpiness mix which you mention of quarter the also, this, issue can Ken systems and specific this or installing and shows some just quarters, in up to -- Now depending dominate on on larger deployments certain we're hardware-wise services-wise,

margin services on a number we the As did helped they of of in our our mix we've and benefit as that gross call, QX mentioned had our QX.

new where on will be will service-rich to be beginning will guide there quarters and quarters. that the hardware our quarters to we -- And a the and deployment services follow that. do best is that of But are there due very so will in installation

a business. could maybe just line Ken, the about be little trend quarter-by-quarter of overall talk it if okay, if would bit So you

Ken Rizvi

Yes.

for thanks question. the Raji, So

strong. is we've even year, grown XX% the business quarter-to-quarter. the at the type at second we dramatically. As still of as very though, We has the remains look about highlight there overall, look into that And talked year-over-year. And variability of growth to we half that tried this pipeline business,

So a in of are expectations sales we continued year, back business the the growth bit on variability, QX some that do see QX we year. half while half based a we this of downtick the our to in should or as of fiscal into for back growth the head expect little the

back specifics does provide going as but any would of and into for good not pipeline the we're QX Now head the look I QX we half XXXX. to say

Raji Gill

Are to -- you that sapphire the 'XX. the models gross completed in the happens, the Very and my Once on normalized good. And can over fab-lite of mentioned for be kind LED the what's calendar this the LED follow-up, within shift you business, presentation, maintain the level margins to and beyond could kind want is you the manufacturing transition? margins at that? that LED the that levers basis? go-forward once business you on that pull a there achieve to above other of drive Or

Mark Adams

again, think -- I Ken side. jump in the numbers will on

we've Let and how some for products has design the got little of then -- we've base some And customer platform. a used products with environments -- room to transition this to we which speaking, on me philosophically new as get go itself. do just the future got

use competitiveness you we but to opportunities. of think So cost us us we market we maybe Ken, achieved only this the have on this out can allow half. will finish some the follow transition technology that will newer not benefit as and back new

Ken Rizvi

outlined. we've yes. margin SGH of Yes, the terms of then that the which one in here segments focused aggregate And things margin done we've mean, in three the is on I profile,

to profile for business, low quarter. the range margin but would on given So is this in specifics expect won't time we I over give that any mid-XX% that

Raji Gill

and one the were question margin just the more the back. step margins then And November on I'll XX%. then quarter, In helpful. That's overall

Memory the margins LED independent, what's by the manufacturing that Memory? the But services. you the of the IPS, you've steps are a Brazil independent percentage it's and of kind of what given stronger from and improve going margins in to taken of of mentioned transition describe Memory. You on wondering Specialty was in driven Memory. could that obviously, if I'm lot That's the

Mark Adams

in businesses, Well, some job as on we're I great where we a a well, additional saw quarters. drive create can to better treating LED was IPS in all similar our QX better and little looking in end in opportunities Memory market kind of Specialty. done We mix. would opportunities a is really then also, the how say, it was Flash our this at has business than mix towards of value really prior And think I and stronger

And that's one more is the from And in yes, solution little bit given the products and so Flash bit little specialty more, nature, a controller attractive it's of configuration a custom business standpoint. differentiated. a our overall

so that help. mix And can

markets And in products, terms limited of mark when all, I kind we're allocating end app of right market kind to the to resources of opportunities all going of so and terms combine business, away the And inventory segments in you in that the the after think the of prioritizing mix it end a in issue of to commodity be specialty that we're market identifying. whether development really, differentiated terms from the it's of more you're kind side standard products products.

Raji Gill

Got it. again. Congratulations,

Mark Adams

Thanks.

Operator

line question from the Ho of next comes Deutsche Sidney with Bank. Your

open. now is line Your

Sidney Ho

taking Thanks everyone. my for Thanks, questions.

Solutions could a a DDIMM Memory this this you opportunity you questions for ramping about it does can a OpenCAPI of existing Is help be? opportunity replace you? product have you the In understand prepared I up maybe on customer. remarks, big leading new couple how And an us business. talked your offered? Or already at So that that

Mark Adams

the in It's started terms not kind of see engineering and Sure. is well in be And the the Memory we've a customer Basically, design. compute. of was range one some in really center, application example out that great a could cloud super of think done good quarter. dollars we value-add $XX of late. the environments that is a engagement, the fiscal we to opportunities. is application data this in low we're so question prior to of engineering to replacement. million this And Jack the single grow job we And somewhere that the this and year, it in and 'XX the testing to reliability XX% And of socket done million benefit This a starting even the out newer the year Specialty as DDIMM the of really asking. in XX% range. digits, business, side in $XX provided type is these company custom hasn't that cultivating Sidney, have team as in the well that a millions one of new And described stepped on high-performance Raji to in, opportunity. new that of

Sidney Ho

talked I conversations not your quarter, been there their those with in is are Has increase part taker. you your the Chain of next That's shortages they customers changes may My the any about driven question about you business be has by your of assume in -- or whatnot. risk last terms Supply worried helpful. in component where was your procurement strategy? inventory

Ken Rizvi

that tight. Sidney, that supply -- would the on chain -- say for is So really still -- I I will

think different no I to supplying global that other industry. the are than it's probably what from you're hearing electronic folks

tight to we're are it's and various so us on and our to it our doing components doing And it suppliers. customers

and that just move this flows we some we're see through you'll year. as and so navigating through ebbs And

we service I like supply are all job get companies components in customers. doing a team that our believe terms ensuring think is -- can our the we need to of chain great we

a so navigating else it overall. everybody supply we're And tight it's but like chain

Sidney Ho

margins. for if in start that going by you Appreciate report should about talk I trying Can by margin data operating one in but disclosure last going segment for a back last know just may. is segment the one how by out few we think new operating Maybe with gross margin segment business you guys providing Okay. me, now the talked operating years. to annual margin you forward? I targets the past, about about your figure

think how going So just forward. it about think to about trying to

Ken Rizvi

Yes.

of each specific outlined haven't targets We the business segments. by

this talked in ago is today. in about, EBIT achieving aggregate, think we're XX% XX%, where XX%, I target which just kind a least, of while at at XX%, we've

or we EBIT, been EBITDA outline business some to But well So, is higher current feel levels we've very achieve. targets. able -- with can of the the or in over the that we sorry, aggregate, so, I think course next operating XX the like months

and quarter-to-quarter. business as margin the I things the there it on relates be the prepared of to we've think profile that one variability, will remarks Q&A is the that specifically outlined via IPS and

at guide which the the the where so we're that and months healthy tremendously QX, that just is a margin today XX operating operating gross towards then the just in XX if But seen margin You've as profile both some overall margins overall, gross there in as months QX ago business impact ago. are of we we've in today of versus you profile business; look the is terms variability than company margins. our migrated and from different

Sidney Ho

you very much. Thank Great.

Operator

Kevin Your of next Rosenblatt. question Cassidy with comes the from line

open. now is line Your

Kevin Cassidy

results. something also there to of line, congratulations and or be this, you more or on public that me And you're of great The what just give an the would anyway. the you a and little addressing? Penguin-On-Demand a besides is interesting many commercial Thank sector? how us product can the description GovPOD agencies And sector is private version

Mark Adams

what's Yes, these for this really a compute, and benefit for model We is that the that high-performance government the an that binary. and extension is of seeing our have as-a-service on they this applications. is extension evolving. Kevin. is want economics mentioned we're with us in our I think the don't happening And this operating is of relationship we our certain this government. we kind model really to hybrid is Thanks, from in calls, just that's on-premise the with of clients utilize flexibility think question. GovPOD an Because in of clients partnerships Good and Sure. prior

And this applications because frequently overhead early used the use or doesn't this out not on applications testing to new of customers and a platform, these system. so development are really potentially on-prem ones extension is are full warrant sometimes for our sometimes in customers existing and the that

well that new out we're we center implementation our in that aren't -- -- going business. as in of high-performance works the is it And the today. and to one cultivate very flexibility own yes have customers more data platform a of have million also perspective, we've frankly, that's development I Penguin-On-Demand, that POD, contribution, in want dollars to of terms the can want clients works but we just, and as investment make target quite and AI. say called to got more their trying small as that and quarter something that to it's P-O-D. future go just in a up from So couple for Again, the it revenue a government, And that compute running an

we're So, it's it it. early us; an and is investing for opportunity in going

model cloud. the And so go-forward in a in as on our that on-prem you to hear look a more you'll basis, drive at hybrid Penguin both and about efforts

Kevin Cassidy

for competitors landscape products? this? with in the as what of competitive are And do you similar the competition? you great. seeing you Are coming ahead see Okay, your Or

Mark Adams

investing. two of high-performance the And then on-prem current are our of a Well, cloud that are is One service there's they're I of themselves think developing kind at obviously customers approach. elements compute and looking parts providers the question. strategy there's who

utilization, those capabilities -- that cloud four top environment. ours. were advisory in partners type of or the three we system of are discussions parties, one the Actually, the to they cloud latter Now, provide with design of potential providers the and where service customers in can providers, of those a our

the as And we're a trusted elements see of end the our well this in, a on-demand of as back you'll think these own vertical providers utilizing so And I to at some a offerings. of as adviser. operate kind as service we our day, that end potentially of cloud

So, customer it's while relative to quarter strike pretty the engagements developing here this that with good we're [ph]. we flexibility

Kevin Cassidy

Okay, great. Thank you.

Mark Adams

Thank you.

Operator

to time. There I are at you. no Mark Mr. further over the Adams, questions this back call turn

Mark Adams

lot 'XX. a like job forward an gross tying call the $X.XX, have today. like and a momentum with of on future did reporting that, the feel and look growth we We I'd success. to revenue, XX% and Thank of call again, to great for our of EPS end. just in set we our will Well, With QX team record thank in everyone QX joining you. record margins of The non-GAAP record

Operator

you attending. for concludes Thank today's conference This call.

may now You disconnect.

Penguin Solutions (PENG) 5 Jan 222022 Q1 Earnings call transcript