Matthew Kalitri

Matthew Kalitri inquired about the implications of Penguin Solutions' inventory levels, which, despite a sequential decline, remain elevated. He asked how inventory levels should be interpreted as a leading indicator for future shipments and about the company's visibility for the remainder of the year. He also asked for more details on the customization efforts for the ICE platform to ensure compatibility with other open-source platforms.

Answer

Nate Olmstead, CFO, clarified that elevated inventory reflects overall business growth, particularly in the Integrated Memory segment (up 41% year-over-year) and price increases, but inventory days and turns remain healthy. He noted that Penguin generally buys to orders but will secure supply in constrained memory environments, leveraging its strong balance sheet. He reiterated expectations for a stronger second half, especially in Advanced Computing and Memory, contingent on supply. Mark Adams, CEO, explained that customizing ICE involves building a standalone software stack that combines Penguin's proprietary ICE platform with best-of-breed open-source components (e.g., cluster management, security, orchestration) to offer a unique, managed solution, including collaboration with companies like NVIDIA.

Matthew Kalitri inquired about Penguin Solutions' inventory levels, noting they declined sequentially but remained elevated, and asked how inventory should be viewed as a leading indicator for future shipments and the company's visibility for the remainder of the year. He also asked for more information on the customization of the ICE platform for compatibility with other open-source platforms.

Answer

CFO Nate Olmstead clarified that higher inventory levels year-over-year are due to the overall larger business, particularly in memory, and price increases, but emphasized that inventory days and turns are healthy. He reiterated expectations for a stronger second half, especially in Advanced Computing and memory, contingent on supply. CEO Mark Adams explained that the company is building a standalone software stack for AI factory rollouts, combining its ICE platform with best-of-breed open-source components (cluster management, security, orchestration) and collaborating with customers and third-party software providers like NVIDIA to create a comprehensive solution.