Penguin Solutions, Inc.

and answers at the end. I would now like to turn the conference over to our host, Suzanne Schmidt with Investor Relations. Suzanne, you may proceed.

Thank you, operator. Good afternoon and thank you for joining us on today's earnings conference call and webcast to discuss SGH's third quarter fiscal 2024 results. On the call today are Mark Adams, Chief Executive Officer, Jack Pacheco, Chief Operating Officer, and Nate Olmstead, Chief Financial Officer. You can find the accompanying slide presentation and press release for this call on the investor relations section of our website. We encourage you to go to the site throughout the quarter for the most current information on the company. I would also like to remind everyone to read the note on the use of forward-looking statements that is included in the press release and the earnings call presentation. Please note that during this conference call, the company will make projections and forward-looking statements, including but not limited to statements about the company's growth trajectory and financial outlook. Forward-looking statements are based on current beliefs and assumptions and are not guarantees of future performance and are subject to risks and uncertainties, including, without limitation, the risks and uncertainties reflected in the press release and the earnings call presentation filed today, as well as in the company's most recent annual and quarterly reports. The forward-looking statements are representative only as of the date they are made, and except as required by applicable law, we assume no responsibility to publicly update or revise any forward-looking statements. We will also discuss both GAAP and non-GAAP financial measures. Non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. A reconciliation of the GAAP to non-GAAP measures is included in today's press release and accompanying slide presentation. And with that, let me turn the call over to Mark Adams, CEO. Mark?

Thanks, Suzanne. Welcome and thank you all for joining our fiscal 2024 Q3 earnings call. We hope you had a nice July 4th holiday. I am very pleased with the execution by our team in the third quarter. Our financial results are clear evidence of our transformation into a high performance, high availability enterprise solutions provider. We continue to make progress in areas such as growing new customer engagements, advancing our software and service offerings and driving operational efficiency. We believe we are uniquely positioned to enable companies across the technology ecosystem from hyperscalers to corporate enterprises to emerging cloud service providers in their AI design, build, deploy, and management. We have 25 years of deep experience in high performance computing, or HPC, which is the very foundation upon which AI technologies like advanced multiprocessor cluster computing were built. With our heritage in the deployment of complex HPC infrastructure solutions, we have the expertise and know-how to address the complexity that businesses face when implementing AI at scale. Let me turn to our third quarter financial results. All key metrics came in at or above the midpoint of our guides. Revenues totaled $300.6 million in line with the midpoint of our guidance range. Non-GAAP gross margin of 32.3% was slightly above the midpoint of our guide, and we achieved non-GAAP EPS of 37 cents, which was well above the midpoint of our guidance range. We exited Q3 with a strong balance sheet with cash and short-term investments of $468 million. Looking ahead, We are excited about the opportunities for us to serve new and existing customers in HPC and AI. I have mentioned our deep experience, which differentiates us as a partner that can rapidly and reliably deploy advanced systems. We have a proven record of accelerating time to deployment, maximizing the potential of a given system, creating unique software to manage elements of a customer's infrastructure environment and even expanding systems already in production with almost no downtime. Many of our customers work with us from the design phase of their AI journey, but we have also seen an increase in interest from customers who have started a deployment and face challenges that they then turn to us to solve. From initial data center design, to systems-level architecture development, to the integration of complex technologies such as compute, memory, storage, networking, and cooling to post-implementation management, leveraging our software and service portfolio, we serve the role of a trusted partner in the development and deployment of these complex AI solutions. We'll share more detail in our positioning and growth strategy at NetSuite Analyst Day in New York City. Before I review our individual business lines performance, I wanted to take the opportunity to welcome Nate Olmsted as our CFO. Nate was most recently CFO of Logitech, a multi-billion dollar international technology company. While at Logitech, he managed a business that scaled from 2.8 billion to 4.5 billion in revenue and from approximately $6 billion to $10 billion in market cap. Prior to joining Logitech, Nate spent 16 years at HP and HPE in various executive roles, where he had responsibilities spanning from business planning to investor relations to operational finance. Now on to our individual business line performance. Starting with our Intelligent Platform Solutions, or IPS business, featuring our Penguin branded solutions. Our Penguin team has decades of experience with a wide range of HPC infrastructure solutions, enabling us to address the complex needs of our customers. We are sometimes compared to high revenue, low margin, hardware oriented businesses, a baseline that doesn't align with our solutions oriented engagement model. Today, we design, build, deploy, and manage a complex portfolio of hardware, software, and managed services for HPC solutions and AI applications on-premise, at the edge, and in the cloud. In Q3, 48% of our overall revenues come from IPS, which totals $145 million in the quarter and was the largest component of our overall revenue. We are seeing increased activity in our Penguin business with some key customer wins, including a multi-million dollar non-hardware win, meaning that Pendulum was brought in to provide software and managed services only. We've also secured follow-on orders from customers across the hyperscaler, defense, and education verticals. In addition, we've achieved our biggest wins to date with our ZTC Edge and ZTC Endurance fault-tolerant computing platform, both of which address the critical need for reliable solutions at the edge. Last month, we announced our Origin AI solution, Penguin's AI factory offering, which productizes our decades of knowledge and learnings to simplify and accelerate the deployment and management of GPUs at scale. This platform integrates Penguin's intelligent cluster management software and expertise with proven AI architectures, enabling enterprises to harness the power of AI without the time and resource investment typically required to build and manage AI infrastructure from scratch. You will hear more about this at our analyst day next week and hear from some of the new executives we brought on board to bolster our go-to-market and sales development capabilities. This quarter's achievement highlights the pivotal role we can play in advancing AI and HPC. We believe we are in the early stages of this transformative market opportunity. Our unique experience is vital to enable customers who are looking for reliable and scalable AI solutions. Turning to our memory business, which operates under the Smart Modular brand. Working closely with our customers in the areas of HPC and AI, supercomputing, network and telecom, storage and data centers, we develop and manufacture high performance, high reliability memory solutions that leverage our decades of expertise in advanced memory technology. For Q3, revenue came in at $92 million. or 30 percent of total SGH sales. Sales improved from Q2 levels, as we expected, and we believe will continue to improve from here. Margins were lower than we expected due to mixed and higher-priced memory purchases. During the quarter, we achieved a number of important milestones in product development and customer engagement in our advanced memory solutions. area of new product development, we saw strong designing and customer sampling activity for our new 8-DIM DDR5 CXL add-in card, which enables compute performance by increasing memory capacity and speed. And we achieved an important milestone with our 4-DIM add-in card, which was the first add-in card to pass the standards test set forth by the CXL Consortium Industry Group Importantly, this ensures compatibility and reliability for customers using CXL technology. In Q3, we also received our first 8GIM CXL add-in card production sale to an AI compute vendor. In addition, we introduced our E3.S non-volatile CXL design combining DRAM and NAND devices. This new design operates like a DRAM module, but retains data even when powered off, thanks to our custom backup and restore architecture that leverages NAND's non-volatile capabilities. This is especially important for AI and high-performance computing applications, as it ensures that critical data is not lost, making these systems more reliable and efficient. Our accomplishments this past quarter not only reinforce our leadership in advanced memory solutions, but also underscores the indispensable role of memory in HPC and AI. Efficient high-capacity memory is essential to unlocking the power of GPU-based processors in AI and to manage the vast amounts of data and complex computations required by AI applications. Smart's heritage in the design, manufacture, and deployment for high-performance, high-availability memory solutions positions us well to enhance the overall performance of our customers' AI systems. Finally, our Cree LED business, which produces application-optimized LEDs for products and markets such as specialty lighting, video screens, gaming displays, outdoor horticulture, and architectural lighting. In the third fiscal quarter of 2024, LED Solutions revenue grew by 6% sequentially to a total of $64 million, or 21% of total SGA sales. Backlog and channel visibility are improving, and the team is continuing to innovate for its customers while keeping operating expenses in line with current business scale. During the quarter, the team also continued to focus on developing advanced lighting solutions. Cree LED announced its new XLAMP XFL LED family, designed for peak performance in flashlights and portable lighting. Each LED in the XFL family is tailored for specific lumen targets, accelerating the design process for manufacturers and enabling quicker market delivery of high-value products. This innovation underscores our commitment to advanced lighting technology and supporting our customer success. Importantly, Creo ID's advanced R&D capabilities and robust IP portfolio generated through decades of technology leadership set the stage for sustained innovation and future growth. Ongoing IP assertion activities across Multiple rule LED applications support and facilitate these growth opportunities. The broader market environment in LED continues to suggest that consolidation is likely in the sector at some point. Cree's outsourced manufacturing capital white model positions us very well competitively as we return to profitability with strong gross margin performance vis-a-vis our competitors. In light of the fact that Nate just joined us at CFO two weeks ago. I've asked Jack to review our Q3 financial performance and our guidance for next quarter. Jack?