Company: PENG
Filing Date: 2025-04-30
Form Type: CORRESP
Source: 0001193125-25-107591
Chunk: 3

Company: Penguin Solutions, Inc.
Filing Date: 2025-04-30
Form: CORRESP
Chunk 3
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 release. In this regard, explain the positive and negative evidence that you considered, how that evidence was weighted and how that evidence led you to determine it was appropriate to release a portion of the valuation allowance. Additionally, 
 describe the anticipated future trends included in your projections of future taxable income and the amount of pre-tax income that you need to generate to realize your deferred tax assets.                                                         |

Page 4 Response:We respectfully acknowledge the Staff’s comment. In the past, the Company maintained a valuation allowance against the deferred tax assets (“DTAs”) of its US consolidated group (the “US Group”) due primarily to the US Group’s historic generation of net operating losses (“NOLs”). For example, for fiscal year 2021 (“FY21”), the US Group experienced a tax loss of ($22.9) million. However, the US Group generated significant profits beginning in the third quarter of fiscal year 2022 (“FY22”) and continuing through the end of fiscal year 2023 (“FY23”). For FY22, the US Group generated taxable income of $12.4 million, and for FY23, the US Group generated taxable income of $41.0 million. As of FY23 year-end,the US Group had a 12-quartercumulative income position, having generated $30.5 million of taxable income in the aggregate over that period. We note that these figures represent the “taxable income” of our US Group under US federal income tax law, which differs from the pre-taxincome of our Cayman Islands parent reported under GAAP in our Form 10-Ks.The shift in profitability of the US Group was due in part to the Company’s position in a growth industry—artificial intelligence and related applications—as discussed in more detail below. At the end of FY23, the Company reversed its valuation allowance on the US Group DTAs upon considering both positive and negative evidence relevant to the decision, including recent history of profitability, market trends, forecasted profitability, historical ability to use NOLs or tax credit carryforward prior to expiration, industry cyclicality, and operating and macroeconomic risks relevant to the Company, as discussed in more detail below. The positive evidence considered at the end of FY23 was:

| 1) | The US Group had an objectively verifiable 12-quarter cumulative 
 history of profits as of the end of FY23.                        |

| 2) | The US Group operates in a growth industry. Our Advanced                                                                                                                                        
 Computing1 segment offers specialized solutions and services for