We calculate basic earnings per common share (“EPS”) pursuant to the two-class method as a result of the issuance of the Issued CPS. The two-class method is an earnings allocation formula that determines EPS for common shares and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all current period earnings, distributed and undistributed, are allocated to common stock and participating securities based on their respective rights to receive dividends. The Issued CPS is considered a participating security. The Issued CPS is not included in the computation of basic EPS in periods in which we have a net loss, as the Issued CPS is not contractually obligated to share in our net losses.

With respect to the Issued CPS, diluted EPS is calculated using the more dilutive of the two-class method or if-converted method. The two-class method uses net income available to common stockholders and assumes conversion of all potential shares other than the participating securities. The if-converted method uses net income and assumes conversion of all potential shares including the participating securities.

The following table summarizes the computation of basic and diluted EPS under the two-class or if-converted method in applicable periods, as well as the anti-dilutive shares excluded:


	Three Months Ended				Six Months Ended
	February 27, 2026		February 28, 2025		February 27, 2026		February 28, 2025
Net income (loss) attributable to Penguin Solutions – Basic and Diluted	$	37,452	$	8,082	$	42,722	$	13,299


Less: Preferred stock dividends	3,033		2,600		6,066		2,600
Income available for distribution	34,419		5,482		36,656		10,699
Income allocated to participating securities	3,594		482		3,808		492
Net income available to common stockholders	$	30,825	$	5,000	$	32,848	$	10,207

Weighted-average shares outstanding – Basic	52,283		53,454		52,592		53,468
Dilutive effect of equity plans and Convertible Senior Notes	903		930		1,439		1,016
Weighted-average shares outstanding – Diluted	53,186		54,384		54,031		54,484

Earnings (loss) per share:
Basic	$	0.59	$	0.09	$	0.62	$	0.19





Diluted	$	0.58	$	0.09	$	0.61	$	0.19



Unweighted anti-dilutive shares:
Equity plans	1,035		1,049		522		1,528
Convertible Senior Notes	—		—		—		—
Preferred stock	6,096		6,096		6,096		6,096
	7,131		7,145		6,618		7,624

Upon any conversion of our Convertible Senior Notes, we will be required to pay cash in an amount at least equal to the principal portion and have the option to settle any amount in excess of the principal portion in cash and/or shares of common stock. As a result, only the amounts expected to be settled in excess of the principal portion are considered in calculating diluted earnings per share under the if-converted method.