What the 10-K changed
Penguin Solutions filed its annual report on 20 October 2026, covering the year to August 2026. Across that filing our record for the company moved its dated model value from $12.90 to $58.00 a share, a change of 349.6%. The revision follows a year in which the income statement improved sharply while the cash flow statement moved the other way.
Why the reported numbers moved
Trailing revenue reached $1.73bn, up 26.5% over the year. Growth also accelerated: the 26.5% rate compares with 12.0% a quarter earlier, a pickup of 14.5 percentage points. Reported profit rose faster still, with net income of $181m, up 611%, and a net margin of 10.4%. Most of that profit sits below the operating line. The operating margin was 4.0%, down 0.24 percentage points from a year earlier, so the rise in net income owed more to items beneath operating profit than to the core business earning more on each dollar of sales.
| Measure (year to August 2026, TTM) | Latest | Year on year |
|---|---|---|
| Revenue | $1.73bn | up 26.5% |
| Net income | $181m | up 611% |
| Operating margin | 4.0% | down 0.24 percentage points |
| Net margin | 10.4% | higher |
| Operating cash flow | negative $152m | turned negative |
| Free cash flow | negative $163m | turned negative |
| Free-cash-flow margin | -9.4% | down 16.75 percentage points |
| Diluted shares | up 4.8% | more shares |
Cash has not followed earnings
Free cash flow was negative $163m, and the free-cash-flow margin fell to -9.4%. A year earlier that margin was a positive 7.3%, so the move was 16.75 percentage points, and the current reading sits below the company’s earlier low of -6.7%. The cash shortfall came from operations rather than investment: operating cash flow was negative $152m, while capital spending was only $11.6m. Reported net income of $181m therefore arrived alongside negative operating cash of $152m. Profit built on accounting accruals rather than collected cash has, in this company’s past and more widely, tended to persist less reliably than cash-backed earnings.
What it means for value
Our model values Penguin Solutions on the cash flows we project for it, and two of those inputs moved in opposite directions this year. The pace of revenue growth rose to 26.5%, which raises projected cash flows, while the free-cash-flow margin fell to -9.4%, which lowers the cash available in the near term. Reported net income of $181m is the figure that climbed most. Across the filing our dated model value moved from $12.90 to $58.00 a share. The live figure in the panel below updates daily and will differ. These are model values under stated assumptions, not a comparison with the share price.
The other reading
A less cautious interpretation treats the profit as real and repeatable. Net income of $181m is a filed figure, and a business growing revenue 26.5% can plausibly carry a higher model value than one growing at 12.0%. On that view the negative free cash flow reflects timing, working capital or spending ahead of revenue, and should reverse as growth converts to cash. The filing does not settle which reading is right; it records both the stronger income statement and the weaker cash statement.
What would confirm or reverse it
The clearest test next quarter is cash. Operating cash flow turning positive, and free cash flow recovering toward its own history above -6.7%, would support the higher model value. Revenue growth holding near 26.5% rather than easing back toward 12.0% would do the same. The reverse case is cash staying negative while reported net income holds, which would widen the distance between stated profit and collected cash, alongside further dilution after the 4.8% rise in the share count.
