Company: PENG
Filing Date: 2025-04-30
Form Type: CORRESP
Source: 0001193125-25-107591
Chunk: 5

Company: Penguin Solutions, Inc.
Filing Date: 2025-04-30
Form: CORRESP
Chunk 5
---
 verifiable factors underlying the analysis, including the US Group’s recent cumulative profitability and history of using NOLs and tax credit carryforwards before they expired. The Company assigned comparatively less weight to the evidence, both positive and negative, that was less objectively verifiable insofar as it used objectively verifiable market data, worldwide economic conditions, Company market share, and past performance to make predictions regarding future performance. In this regard, the Company observes that there was more objectively verifiable positive evidence than negative evidence, in addition to there being more positive evidence overall. Based on management’s review of all available evidence and the sources of taxable income, the Company concluded that, as of the end of FY23, it was more-likely-than-notthat the US Group would be able to realize its DTAs and that a full valuation allowance was not required. As a result, the Company released the valuation allowance against the US Group’s DTAs in the end of the fourth quarter of FY23, resulting in a GAAP benefit to the Company’s provision for income taxes of ($69.8) million.

Page 6 As of the end of FY23, the US Group’s expected profitability levels were projected to exceed the minimum amount of taxable income required to realize the US Group’s DTAs reinstated through the valuation allowance release. At the end of FY23, to realize its deferred tax assets, the US Group needed (i) an estimated taxable income of $32 million for FY24 (less than its taxable income the prior fiscal year) and (ii) to remain profitable on a long-term basis thereafter. The actual financial results from FY24 validated the FY24 forecast that the Company relied upon when deciding to release the valuation allowance at the end of FY23. In FY24, the US Group experienced profitability, and the business continued to grow, further increasing the US Group’s cumulative 12-quarterprofitability. As a result, the US Group has to date experienced three consecutive years of net income (FY22, FY23, and FY24). The Company’s second quarter FY25 earnings, which the Company reported on April 2, 2025, also validate the decision made by the Company to release the valuation allowance at the end of FY23. Please feel free to contact me at 202-736-8715or svonalthann@sidley.com with any questions or comments. Thank you for your time and attention with respect to this matter.

| Sincerely,           |
| /s/ Sara von Althann |
|