The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report and in the 2025 Annual Report. This discussion contains forward-looking statements that involve risks, uncertainties and other factors. Our actual results could differ materially from those contained in these forward-looking statements due to a number of risks, uncertainties and other factors, including those discussed below and elsewhere in this Quarterly Report and in the 2025 Annual Report. See also “Cautionary Note Regarding Forward-Looking Statements.” Our fiscal year is the 52- or 53-week period ending on the last Friday in August. Fiscal years 2026 and 2025 each contain 52 weeks. All period references are to our fiscal periods unless otherwise indicated. All tabular amounts are in thousands, except percentages. Overview On June 30, 2025, we completed the U.S. Domestication of the parent company of our corporate group, Penguin Solutions Cayman, from the Cayman Islands to the State of Delaware in the United States, resulting in Penguin Solutions Delaware becoming our publicly traded parent company and the successor issuer to Penguin Solutions Cayman. The financial information in this Quarterly Report for periods prior to the completion of the U.S. Domestication relates to Penguin Solutions Cayman. Unless stated otherwise or the context requires otherwise, the terms “Penguin Solutions,” “Company,” “we,” “our,” “us” or similar terms (i) for periods prior to the effectiveness of the U.S. Domestication, refer to Penguin Solutions Cayman and its consolidated subsidiaries and (ii) for periods at or after the completion of the U.S. Domestication, refer to Penguin Solutions Delaware and its consolidated subsidiaries. See “Explanatory Note” and “About this Quarterly Report” above. For an overview of our business, see “PART I - Item 1. Business” of the 2025 Annual Report. Factors Affecting Our Operating Performance Macro-Economic Demand Factors: Our business segments each have their own unique set of demand factors. Our Advanced Computing business is driven by demand for our High Performance Computing (HPC) and AI products, as well as traditional workload optimization and efficiency applications. We expect increased AI adoption and broader implementation by enterprises within but not limited to verticals such as financial services, oil and gas, telecommunications, government, manufacturing and education, as well as increased neocloud and sovereign AI adoption, as organizations seek scalable infrastructure solutions, though the extent and timing of such adoption and implementation may vary and may affect our results of operations. Demand in our Integrated Memory segment is driven by end-market demand from OEMs for customer-specific solutions in vertical markets such as industrial, government, networking, HPC and enterprise storage, as well as emerging demand for higher density and greater bandwidth solutions for AI deployments, and we anticipate growing demand for higher performance and reliability memory solutions, such as our CXL family of products, to support both traditional use cases and increasingly complex AI applications, although there can be no assurance that such demand will materialize as expected or at all. Finally, demand for our Optimized LED products is derived from targeted end-market applications, such as general high-power and mid-power lighting and specialty lighting, including video display and horticulture applications. However, broader macro-economic trends, including regional market demand and the global macro-economic environment, including those related to global conflicts, such as those in the Middle East and Ukraine, and the global effects thereof on international relations, transport and trade, recessionary indicators, high inflation rates, uncertainty and costs associated with trade policies and tariffs, and interest rates, can adversely affect all three segments concurrently. Shifts in the Mix and Timing of Our Net Sales: Shifts in the mix of net sales from our operating segments, and in the timing of net sales, which can vary significantly from period to period, have impacted and can continue to impact our business and results of operations, including gross and operating margins. For example, our Advanced Computing segment is subject to variability in its sales and margin profile from period to period due to factors such as the following: recognition of revenue sometimes being tied to customer decisions as to the completion of delivery and system go-live events; certain sales being affected by the timing of customer deployments and shipments or customer budget considerations; changes in customer spending on our products and services (including as a result of the macro-economic demand factors discussed above); the impact of customer churn 30 rates (including discounting and churn of significant customers from whom we derive a significant percentage of our net sales); discontinuation of certain of our products from time to time; shifts in our customer mix, including expected trends with respect to growth in demand from non-hyperscaler customers for HPC and AI solutions; and margin being driven by the proportion of higher margin software and managed services within our Advanced Computing sales. Within our Advanced Computing segment, our “AI infrastructure business” refers to customer engagements focused on AI workloads, including designing, building, deploying, and managing AI infrastructure hardware, software, and services. When we refer to our non-hyperscale AI infrastructure business, we are referring to our AI infrastructure business excluding sales to hyperscaler customers. Our AI infrastructure business is transitioning from a hyperscaler concentration toward a more diversified non-hyperscaler customer base across enterprise, neocloud, and sovereign AI, which may negatively impact our net sales during the transition. Additionally, our net sales and margins have been negatively impacted by the winding down of our Penguin Edge business, which we expect to wind down and discontinue by the end of fiscal 2026. The comparability of our results of operations against prior periods will also be affected following the wind down of our Penguin Edge business. Our resource commitments and planning for each segment are relatively fixed in the short term, and as such, variability in expected net sales mix may have direct implications for our operating income and margins. Our Integrated Memory business has gross margins which are lower than the Company average and if net sales from this business grow faster than net sales for the Company overall, it may negatively impact total Company gross margins. Our Ability to Identify, Complete and Successfully Integrate Acquisitions: A substantial portion of our growth over the last several years has been driven by acquisitions, and we intend to continue to use corporate development as an engine for growth. Within our existing segments, we plan to pursue acquisitions to expand features and functionality, expand into adjacent businesses and grow our customer base and geographic footprint. From time to time, we may seek to expand our addressable market by entering new business segments where, as we did with our Cree LED and Stratus Technologies acquisitions, we identify a business opportunity at scale with a path to being accretive to our overall operations in the near term. If we are unable to identify and complete attractive acquisitions and successfully integrate such businesses, we may not be successful in growing our net sales and/or expanding our margins. Any acquisitions we do complete may require us to incur debt or raise capital through equity financings or may subject us to unforeseen liabilities or costs, or operational challenges, that in turn impede our ability to realize the expected returns on our investment. Disruptions in Our Supply Chain May Adversely Affect Our Businesses: We depend on third-party suppliers for key components of our products as well as certain raw materials, such as commodity DRAM components from offshore foundries that we use in our specialty memory products, third-party wafers that we use in our memory and LED businesses and HPC and AI components for our Advanced Computing business; the costs of such components and raw materials may fluctuate from time to time due to market conditions. In our memory and LED businesses, we have adopted a “Fab-Light” business model to reduce our capital expenditures and operating expenses, while affording greater flexibility in adapting to shifts in demand and other market trends. Our Fab-Light business model contributed to margin expansion in our overall business. However, our reliance on third-party manufacturers exposes us to risk of supply chain disruption and lost business. For example, constrained memory supply may affect our ability to meet demand in our Integrated Memory business on a timely basis or at all, and the global semiconductor shortage, particularly during its peak, has adversely affected our results of operations. In addition, in our Advanced Computing business, where we source components from third parties, the high demand for and limited supply of AI components globally, as well as any delays in the production of such components, continues to affect our sourcing of these components and the timing of deployments. In particular, we continue to experience extended lead times for certain components that are incorporated into our overall solutions, which impacts how quickly we are able to ramp existing and new customer projects and may negatively affect gross margins due to changes in shipment timing and product mix. If such disruptions worsen or are prolonged, or if there is meaningful disruption in our supply arrangement with any of our third-party suppliers, our results of operations and financial condition may continue to be adversely affected. 31 Results of Operations Three Months Ended Nine Months Ended May 29, 2026 May 30, 2025 May 29, 2026 May 30, 2025 Net sales: Advanced Computing $ 137,583 28.7 % $ 132,498 40.9 % $ 404,750 34.7 % $ 510,081 49.5 % Integrated Memory 275,067 57.5 % 130,124 40.1 % 583,217 50.1 % 332,090 32.2 % Optimized LED 66,063 13.8 % 61,629 19.0 % 176,816 15.2 % 188,701 18.3 % Total net sales 478,713 100.0 % 324,251 100.0 % 1,164,783 100.0 % 1,030,872 100.0 % Cost of sales 345,499 72.2 % 229,168 70.7 % 841,758 72.3 % 733,329 71.1 % Gross profit 133,214 27.8 % 95,083 29.3 % 323,025 27.7 % 297,543 28.9 % Operating expenses: Research and development 21,984 4.6 % 20,222 6.2 % 59,653 5.1 % 59,940 5.8 % Selling, general and administrative 59,404 12.4 % 59,724 18.4 % 160,485 13.8 % 179,575 17.4 % Impairment of goodwill — — % 5,294 1.6 % — — % 11,373 1.1 % Other operating expense 963 0.2 % — — % 6,753 0.6 % 968 0.1 % Total operating expenses 82,351 17.2 % 85,240 26.3 % 226,891 19.5 % 251,856 24.4 % Operating income 50,863 10.6 % 9,843 3.0 % 96,134 8.3 % 45,687 4.4 % Non-operating (income) expense: Interest expense, net 650 0.1 % 573 0.2 % 1,418 0.1 % 7,152 0.7 % Other non-operating (income) expense (3,485) (0.7) % (1,439) (0.4) % (19,793) (1.7) % (1,012) (0.1) % Total non-operating (income) expense (2,835) (0.6) % (866) (0.3) % (18,375) (1.6) % 6,140 0.6 % Income before taxes 53,698 11.2 % 10,709 3.3 % 114,509 9.8 % 39,547 3.8 % Income tax provision 7,515 1.6 % 7,259 2.2 % 23,730 2.0 % 21,262 2.1 % Net income 46,183 9.6 % 3,450 1.1 % 90,779 7.8 % 18,285 1.8 % Net income attributable to noncontrolling interest 1,494 0.3 % 789 0.2 % 3,368 0.3 % 2,325 0.2 % Net income attributable to Penguin Solutions 44,689 9.3 % 2,661 0.9 % 87,411 7.5 % 15,960 1.6 % Preferred stock dividends 3,033 0.6 % 3,033 0.9 % 9,099 0.8 % 5,633 0.5 % Income available for distribution 41,656 8.7 % (372) (0.1) % 78,312 6.7 % 10,327 1.0 % Income allocated to participating securities 4,448 0.9 % — — % 8,210 0.7 % 678 0.1 % Net income (loss) available to common stockholders $ 37,208 7.8 % $ (372) (0.1) % $ 70,102 6.0 % $ 9,649 0.9 % Percentages represent percentage of total net sales. Summations of percentages may not compute precisely due to rounding. 32 Net Sales, Cost of Sales and Gross Profit Net sales increased by $154.5 million, or 47.6%, and $133.9 million, or 13.0%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, primarily driven by strong growth for our Integrated Memory segment. Integrated Memory net sales increased by $144.9 million, or 111.4%, and $251.1 million, or 75.6%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, primarily driven by strong momentum across DRAM and Flash, as accelerating AI-driven demand drove favorable pricing and increased volume. Advanced Computing net sales increased by $5.1 million, or 3.8%, and decreased by $105.3 million, or 20.6%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, with the third-quarter increase driven by strength in our non-hyperscale AI infrastructure business, partially offset by the wind down of our Penguin Edge business, and the nine-month decrease reflecting both the ongoing Penguin Edge wind down and hyperscale hardware sales in 2025 that did not recur in 2026. Optimized LED net sales increased by $4.4 million, or 7.2%, and decreased by $11.9 million, or 6.3%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, with the third quarter increase primarily attributable to stronger channel demand and higher direct sales, while the decrease for the nine-month period reflects a broad-based decline in demand across the business. Cost of sales increased by $116.3 million, or 50.8%, and $108.4 million, or 14.8%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year. The increase was primarily driven by strong growth for our Integrated Memory segment. Gross margin decreased to 27.8% in the third quarter of 2026 compared to 29.3% in the same period in 2025, and to 27.7% in the first nine months of 2026 compared to 28.9% in the same period in 2025, primarily attributable to the ongoing wind down of our Penguin Edge business and a shift in the overall mix of sales across our business units. Non-GAAP Measure of Segment Operating Income Below is a table of our operating income, measured on a non-GAAP basis, which Penguin Solutions management uses to supplement Penguin Solutions’ financial results under GAAP to analyze its operations and make decisions as to future operational plans and which management believes provides supplemental non-GAAP information that is useful to investors in analyzing and assessing our past and future operating performance. These non-GAAP measures exclude certain items, such as stock-based compensation expense; amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships, trademarks/trade names and backlog acquired in connection with business combinations); acquisition-related inventory adjustments; inventory write-off, stolen in transit shipment, net of insurance recovery; cost of sales-related restructuring; diligence, acquisition and integration expense; restructuring charges; impairment of goodwill; changes in the fair value of contingent consideration; redomiciliation costs; and other infrequent or unusual items. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in our non-GAAP measures and these intangible assets contribute to revenue generation. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Segment and Other Information.” Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, as they exclude important information about our financial results, as noted above. The presentation of these adjusted amounts varies from amounts presented in accordance with GAAP and therefore may not be comparable to amounts reported by other companies. 33 Three Months Ended Nine Months Ended May 29, 2026 May 30, 2025 May 29, 2026 May 30, 2025 GAAP operating income $ 50,863 $ 9,843 $ 96,134 $ 45,687 Stock-based compensation expense 9,996 10,251 25,195 33,362 Amortization of acquisition-related intangibles 7,224 8,439 22,241 27,033 Inventory write-off, stolen in-transit shipment, net of insurance recovery (5,783) — — — Cost of sales-related restructuring — 369 (483) 404 Diligence, acquisition and integration expense 1,058 296 1,058 1,696 Redomiciliation costs — 3,702 — 7,304 Impairment of goodwill — 5,294 — 11,373 Restructuring charges 963 — 6,753 968 Other 63 280 268 655 Non-GAAP operating income $ 64,384 $ 38,474 $ 151,166 $ 128,482 Non-GAAP operating income (loss) by segment: Advanced Computing $ (1,880) $ 24,684 $ 33,315 $ 91,734 Integrated Memory 62,188 12,457 105,775 30,543 Optimized LED 4,076 1,333 12,076 6,205 Total non-GAAP operating income by segment $ 64,384 $ 38,474 $ 151,166 $ 128,482 Advanced Computing operating income on a non-GAAP basis decreased by $26.6 million, or 107.6%, and $58.4 million, or 63.7%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, with the third-quarter decrease primarily driven by the ongoing wind down of our Penguin Edge business, while the nine-month decrease reflects both the ongoing wind down of our Penguin Edge business and the absence of hyperscale hardware sales in 2025 that did not recur in 2026. Integrated Memory operating income on a non-GAAP basis increased by $49.7 million, or 399.2%, and $75.2 million, or 246.3%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, primarily attributable to increased net sales driven by strong momentum across DRAM and Flash, as accelerating AI-driven demand supported higher pricing and increased volumes. Optimized LED operating income on a non-GAAP basis increased by $2.7 million, or 205.8%, and $5.9 million, or 94.6%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, primarily attributable to lower personnel-related expenses resulting from headcount reductions, together with improved gross profit driven by a more favorable product mix and tariff recoveries. Operating and Non-operating (Income) Expense Research and Development Research and development expense increased by $1.8 million, or 8.7%, and decreased by $0.3 million, or 0.5%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, with the third-quarter increase reflecting higher incentive compensation tied to company performance, while the nine-month decrease reflects lower personnel-related expenses from headcount reductions and reduced subcontract services in Advanced Computing. Selling, General and Administrative Selling, general and administrative expense decreased by $0.3 million, or 0.5%, and $19.1 million, or 10.6%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, primarily due to lower personnel-related expenses mainly driven by headcount reductions as well as lower subcontract services following the completion of our U.S. Domestication in 2025. 34 Other Operating (Income) Expense Other operating expenses in the first nine months of 2026 and 2025 included restructuring charges of $6.8 million and $1.0 million, respectively, primarily for employee severance costs and other benefits resulting from workforce reductions, the elimination of certain projects across our businesses and other costs associated with the ongoing wind down of our Penguin Edge business. We anticipate that such activities will continue into future quarters, for which we expect to record additional restructuring charges. Interest Expense, Net Net interest expense decreased by $5.7 million in the first nine months of 2026 compared to the same period in the prior year, primarily due to the full repayment of the Amended 2022 TLA (as defined below) in the fourth quarter of 2025. Other Non-operating (Income) Expense Other non-operating (income) expense in the first nine months of 2026 includes a net gain of $30.9 million from the disposition of equity investments, partially offset by a $10.0 million charge on impairment of a non-marketable equity investment. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Cash and Investments – Non-Marketable Equity Investments.” In addition, other non-operating (income) expense in the first nine months of 2026 and 2025 included foreign currency gains (losses). See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Other Non-operating (Income) Expense.” Income Tax Provision Income tax provision in the third quarter and first nine months of 2026 increased by $0.3 million and by $2.5 million, respectively, as compared to the same periods in the prior year, primarily attributable to higher income before income taxes driven by improved operating performance, partially offset by benefits associated with the U.S. Domestication. Our effective tax rate was 14.0% and 20.7% in the third quarter and first nine months of 2026, respectively, and was lower than the U.S. statutory tax rate of 21.0%, primarily due to return-to-provision true-ups and certain tax credits, partially offset by cross border tax costs, state income taxes, and foreign withholding tax. The effective tax rate was 67.8% and 53.8% in the third quarter and first nine months of 2025, respectively, and differed from the U.S. statutory rate primarily due to losses generated in a jurisdiction where no tax benefit can be recognized, withholding taxes, state income taxes, and nondeductible compensation paid to officers, partially offset by research and development tax credits. The global minimum tax under the Pillar Two framework became effective for us in the first quarter of 2025. While the impact on our consolidated financial statements is not expected to be material, our analysis is ongoing as the Organisation for Economic Co-operation and Development continues to release additional guidance and countries enact related legislation. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Income Taxes.” Liquidity and Capital Resources As of May 29, 2026, we had cash and cash equivalents of $440.3 million, of which $312.4 million was held by subsidiaries outside of the United States. Our principal uses of cash and capital resources have been acquisitions, repurchases of our common stock, debt service requirements, capital expenditures, investments in working capital, research and development expenditures, and other operating expenses. We expect that future capital expenditures will focus on expansion of our research and development activities, manufacturing equipment upgrades, acquisitions and IT infrastructure and software upgrades. Cash and cash equivalents generally consist of funds held in demand deposit accounts, money market funds and time deposits. We do not acquire investments for trading or speculative purposes. We may from time to time seek additional equity or debt financing. Any future equity or debt financing may be dilutive to our existing investors and may include debt service requirements and financial and other restrictive 35 covenants that may constrain our operations and growth strategies. In the event that we seek additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition. We expect that our existing cash and cash equivalents, borrowings available under our credit facilities and cash generated by operating activities will be sufficient to fund our operations for at least the next 12 months. Entry Into 2025 Credit Agreement and Repayment of 2022 TLA On February 7, 2022, Penguin Solutions Cayman and SMART Modular Technologies, Inc. (the “Borrowers”) entered into a credit agreement (the “2022 Original Credit Agreement”) with a syndicate of banks and Citizens Bank, N.A., as administrative agent that provided for (i) a term loan credit facility in an aggregate principal amount of $275.0 million (the “2022 TLA”) and (ii) a revolving credit facility in an aggregate principal amount of $250.0 million (the “2022 Revolver”), in each case, maturing on February 7, 2027. The 2022 Original Credit Agreement provided that up to $35.0 million of the 2022 Revolver was available for issuances of letters of credit. On August 29, 2022, the 2022 Original Credit Agreement was amended (the “2022 Amended Credit Agreement”) to, among other things, provide for incremental term loans so that the aggregate amount of term loans was $300.0 million (together with the 2022 TLA, the “Amended 2022 TLA”), amend the First Lien Leverage Ratio (as defined in the 2022 Amended Credit Agreement) and increase the aggregate amount of unrestricted cash and permitted investments netted from the definitions of Consolidated First Lien Debt and Consolidated Net Debt. As of November 29, 2024, there was $300.0 million of aggregate principal amount outstanding under the Amended 2022 TLA and there were no amounts outstanding under the 2022 Revolver. On June 24, 2025 (the “Refinancing Closing Date”), the Borrowers entered into a new Credit Agreement (the “2025 Credit Agreement”) by and among the Borrowers, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and an issuing bank. The 2025 Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $400 million (the “2025 Credit Facility” and the revolving loans thereunder, the “2025 Loans”), maturing on June 24, 2030 (subject to certain earlier “springing maturity” dates upon certain conditions specified in the 2025 Credit Agreement). The 2025 Credit Agreement provides that up to $35.0 million of the 2025 Credit Facility is available for issuances of letters of credit. On the Refinancing Closing Date, we borrowed $100 million under the 2025 Credit Facility and simultaneously applied such proceeds, together with $200 million cash on hand, to repay in full all borrowings and terminate all commitments under the 2022 Amended Credit Agreement. Immediately prior to the repayment and termination of the 2022 Amended Credit Agreement, we had $300 million of principal outstanding under the Amended 2022 TLA, with unamortized issuance costs of $1.8 million and an effective interest rate of 7.17%, and no amounts outstanding under the 2022 Revolver, with unamortized issuance costs of $1.5 million. Following the termination of the 2022 Amended Credit Agreement, we recognized a loss on extinguishment of debt of $2.9 million. Under the 2025 Credit Agreement, 2025 Loans bear interest at a rate per annum equal to either, at the Borrowers’ option, Term Secured Overnight Financing Rate (“Term SOFR”) rate or a base rate, in each case plus an applicable margin based on the Total Leverage Ratio (as defined in the 2025 Credit Agreement) and ranges from 1.25% to 3.00% per annum with respect to Term SOFR borrowings and from 0.25% to 2.00% per annum with respect to base rate borrowings. In addition, we are required to pay a quarterly unused commitment fee at an initial rate of 0.25%, which may increase up to a rate of 0.35% based on certain Total Leverage Ratio levels specified in the 2025 Credit Agreement. For additional details regarding the 2025 Credit Agreement, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Credit Agreement” in the 2025 Annual Report and “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt – Credit Agreement” in this Quarterly Report. 36 Convertible Senior Notes 2026 Notes In February 2020, we issued $250.0 million in aggregate principal amount of 2.25% Convertible Senior Notes due 2026 (the “2026 Notes”) pursuant to an indenture (the “2026 Indenture”) between us and U.S. Bank Trust Company National Association, as trustee. The 2026 Notes matured on February 15, 2026. On January 18, 2023, we exchanged $150.0 million principal amount of 2026 Notes for $150.0 million principal amount of new 2029 Notes (as defined below). On August 6, 2024, we repurchased $80.0 million aggregate principal amount of our 2026 Notes for $100.6 million cash (including payment for accrued interest) in privately-negotiated transactions. In the second quarter of 2026, the 2026 Notes matured and we paid the remaining principal balance of $20.0 million, plus $0.3 million of accrued and unpaid interest. As of May 29, 2026, there were no 2026 Notes outstanding. 2029 Notes In February 2023, we issued $150.0 million in aggregate principal amount of 2.00% Convertible Senior Notes due 2029 (the “2029 Notes”) pursuant to an indenture (the “2029 Indenture”), dated as of January 23, 2023, between the Company and U.S. Bank Trust Company, National Association, as trustee. The 2029 Notes will mature on February 1, 2029, unless earlier converted, redeemed or repurchased. As of May 29, 2026, $150.0 million in aggregate principal amount of 2029 Notes were outstanding. The conditional conversion feature of the 2029 Notes was triggered because the closing price of our common stock exceeded 130% of the conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ended on May 29, 2026. Consequently, the 2029 Notes are currently convertible at the option of the holders through August 28, 2026. Under the terms of the indenture governing the 2029 Notes, upon receiving a notice of conversion, we are required to settle the principal amount of the converted notes in cash. Because holders possess the unilateral right to demand conversion during the fiscal quarter ending August 28, 2026, we have reclassified the $150.0 million aggregate principal amount (net of unamortized debt issuance costs) from long-term debt to current debt on our consolidated balance sheet as of May 29, 2026. If all noteholders were to exercise their right to convert during this period, we would be obligated to pay up to $150.0 million in cash to settle the principal portion. We intend to fund any such required cash settlements utilizing our existing cash and cash equivalents, cash generated from operations, and, if necessary, available borrowing capacity under our 2025 Credit Facility. We believe these sources of liquidity are sufficient to meet our short-term obligations, including any potential cash settlements arising from the conversion of the 2029 Notes over the next 12 months. While the conversion of the 2029 Notes is at the option of the holders and outside of the Company’s control, based on current market conditions, including the trading value of the 2029 Notes in the secondary market, we do not currently anticipate significant conversion activity during the open conversion window. However, there can be no assurance that holders will not elect to convert, and we may be required to pay up to $150.0 million in cash to settle the principal portion of the 2029 Notes if all holders elect to convert. To the extent the conversion value of the 2029 Notes exceeds the principal amount, we maintain the option to settle such excess in cash, shares of our common stock, or a combination thereof. 2030 Notes On August 6, 2024 and August 14, 2024, we issued $175.0 million and $25.0 million aggregate principal amount, respectively, of our 2.00% Convertible Senior Notes due 2030 (collectively, the “2030 Notes,” and together with the 2026 Notes and the 2029 Notes, the “Convertible Senior Notes”) pursuant to, and governed by, an indenture (the “2030 Indenture”), dated August 6, 2024, between us and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes will mature on August 15, 2030, unless earlier converted, redeemed or repurchased. As of May 29, 2026, $200.0 million in aggregate principal amount of 2030 Notes were outstanding. For additional details of the terms of our Convertible Senior Notes, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Convertible Senior 37 Notes” in the 2025 Annual Report and “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes” in this Quarterly Report. Capped Calls In connection with our Convertible Senior Notes, we have entered into privately-negotiated capped call transactions, which are intended to reduce the effect of potential dilution upon conversion of our Convertible Senior Notes. The capped calls provide for our receipt of cash or shares, at our election, from counterparties if the trading price of our common stock is above the strike price on the expiration date. For additional information on our capped call transactions, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Equity – Capped Calls” in the 2025 Annual Report. Preferred Stock Investment On December 13, 2024, we closed the SKT Investment (as defined below) by SK Telecom Co., Ltd. (“SKT”). Pursuant to the SKT Purchase Agreement, we sold to Astra AI Infra LLC, an affiliate of SKT (“Astra AI Infra”), 200,000 convertible preferred shares, par value $0.03 per share, of Penguin Solutions (the “Issued Cayman CPS”), at a price of $1,000 per share or an aggregate price of $200.0 million (the “SKT Investment”). On the closing date of the SKT Investment, we and Astra AI Infra entered into an Investor Agreement (the “Investor Agreement”), and the Certificate of Designation of Convertible Preferred Shares setting forth the terms, rights, and obligations of the Issued Cayman CPS (the “CPS Cayman Certificate of Designation”) became effective. The Investor Agreement and the CPS Cayman Certificate of Designation provided for certain rights and restrictions relating to the SKT Investment, including but not limited to board representation rights, pro rata rights, registration rights and consent rights, and standstill provisions, disposition restrictions and voting obligations. On June 27, 2025, in connection with the U.S. Domestication, Penguin Solutions Delaware executed and adopted a Certificate of Designation of Convertible Preferred Stock (the “CPS Delaware Certificate of Designation”) that sets forth the terms, rights and obligations of a series of 200,000 shares of preferred stock of Penguin Solutions Delaware having a par value of $0.03 per share, designated as convertible preferred stock (the “Issued CPS”), which principal attributes remain substantially the same as prior to the U.S. Domestication, subject to changes to give effect to requirements of Delaware law. The shares of Issued CPS are convertible into shares of common stock at an initial conversion price of $32.81, subject to adjustment upon the occurrence of certain events, have an initial liquidation preference of 1x and are only redeemable at our option, subject to certain conditions. The holder of Issued CPS may convert such holder’s Issued CPS into shares of common stock at any time, provided that the Issued CPS may, at our option, automatically be converted into shares of common stock on any date following the second anniversary of the closing upon certain conditions. The Issued CPS entitles the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option. Shares of Issued CPS are not redeemable upon or repurchased upon the election of the holders of Issued CPS. Refer to the CPS Delaware Certificate of Designation of Penguin Solutions, Inc., effective as of June 27, 2025, filed hereto as Exhibit 3.3, and to the section entitled “Comparison of Rights of Cayman Islands Shareholders and Delaware Stockholders” contained in Penguin Solutions Cayman’s definitive proxy statement filed with the SEC on May 2, 2025. On June 30, 2025, effective upon consummation of the U.S. Domestication, Penguin Solutions Delaware assumed the Investor Agreement from Penguin Solutions Cayman, and Penguin Solutions Delaware and SKT amended and restated the Investor Agreement (as amended and restated, the “Amended and Restated Investor Agreement”) such that the rights and restrictions relating to SKT’s beneficial ownership of the Issued Cayman CPS in place prior to the U.S. Domestication apply in respect of SKT’s holdings of the Issued CPS following consummation of the U.S. Domestication. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Temporary Equity – Convertible Preferred Stock.” 38 Cash Flows Nine Months Ended May 29, 2026 May 30, 2025 Net cash provided by operating activities $ 11,222 $ 179,517 Net cash provided by investing activities 63,109 2,606 Net cash (used for) provided by financing activities (49,784) 144,587 Net increase in cash, cash equivalents and restricted cash $ 24,547 $ 326,710 Operating Activities: Cash flows from operating activities reflects net income, adjusted for certain non-cash items, including depreciation and amortization expense, stock-based compensation, gains and losses from investing or financing activities, and from the effects of changes in operating assets and liabilities. Net cash provided by operating activities in the first nine months of 2026 consisted primarily of net income of $90.8 million, adjusted for non-cash and non-operating items of $44.9 million. Operating cash flows were negatively affected by a $124.4 million net change in our operating assets and liabilities, primarily from the effects of an increase of $396.4 million in accounts receivable, driven by increased Integrated Memory sales, and $243.1 million in inventories to support future demand across all business units, partially offset by an increase of $505.2 million in accounts payable and accrued expenses and other liabilities primarily due to an increase in trade purchasing activities as well as an increase in deferred revenue from customer services. Net cash provided by operating activities in the first nine months of 2025 consisted primarily of net income of $18.3 million, adjusted for non-cash items of $89.2 million. Operating cash flows were positively affected by a $76.1 million net change in our operating assets and liabilities, primarily from the effects of an increase of $133.9 million in accounts payable and accrued expenses and other liabilities primarily due to an increase in deferred revenue from customer services and higher accounts payable related to the timing of trade purchases, and a decrease of $13.7 million in other assets, partially offset by an increase of $30.8 million in inventories, primarily to support future demand across both Advanced Computing and Integrated Memory, and an increase of $40.8 million in accounts receivable primarily due to increased sales. Investing Activities: Net cash provided by investing activities in the first nine months of 2026 consisted primarily of $71.7 million from proceeds from the disposition of equity investments, partially offset by $7.3 million for capital expenditures and deposits on equipment. Net cash used for investing activities in the first nine months of 2025 consisted primarily of $18.6 million net purchase of marketable investment securities and $6.1 million for capital expenditures and deposits on equipment. Financing Activities: Net cash used for financing activities in the first nine months of 2026 consisted primarily of $68.9 million of payments to acquire our common stock (including $55.7 million under our stock repurchase program), $20.0 million of repayments on our 2026 Notes, and $9.1 million in payments of preferred stock cash dividends, partially offset by $38.0 million in proceeds from restricted cash advances and $10.2 million in proceeds from the issuance of common stock from our equity plans. Net cash provided by financing activities in the first nine months of 2025 consisted primarily of $191.2 million of proceeds from the issuance of preferred shares, net of issuance costs of $8.8 million, and $7.7 million in proceeds from the issuance of ordinary shares from our equity plans, partially offset by $49.2 million of payments to acquire our ordinary shares (including $40.9 million under our share repurchase program). Critical Accounting Estimates The preparation of these financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that we believe to be reasonable under the circumstances; however, actual results could differ from those estimates. Our management believes our critical accounting estimates require management’s most difficult, subjective or 39 complex judgments and are critical in the portrayal of our financial condition and results of operations. Our discussion of critical accounting estimates is intended to supplement our summary of significant accounting policies so that readers will have greater insight into the uncertainties involved in applying our critical accounting policies and estimates. For a summary of our critical accounting estimates, see “PART II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of the 2025 Annual Report. There have been no material changes to our critical accounting estimates from those described in the 2025 Annual Report. For a summary of our significant accounting policies, see “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Significant Accounting Policies” of this Quarterly Report and “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies” of the 2025 Annual Report. There have been no material changes to our significant accounting policies from those described in the 2025 Annual Report.