Sandisk Q4 Earnings Call Highlights
Key Points
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- Record results: Sandisk reported fiscal fourth-quarter revenue of $8.97 billion, up 372% year over year, with an 84.6% non-GAAP gross margin and EPS of $39.25. Growth was driven primarily by higher pricing and strong NAND demand.
- Data centers and AI are key growth drivers: Data-center revenue rose 103% sequentially to $2.98 billion and represented 38% of the company’s bits by the end of fiscal 2026, supported by AI inference and enterprise SSD demand.
- Strong outlook and customer commitments: Sandisk forecast fiscal first-quarter revenue of $10.3 billion to $10.8 billion and expects long-term customer agreements to represent more than half of its bits in fiscal 2027. The company also authorized an additional $14 billion for share repurchases.
Sandisk (NASDAQ:SNDK) reported record fiscal fourth-quarter revenue, gross margin and earnings per share, with results exceeding the high end of its prior outlook as the company cited growing demand for NAND storage tied to AI inference workloads and data-center expansion.
Fourth-quarter revenue totaled $8.97 billion, up 51% sequentially and 372% from a year earlier. The company said approximately one-third of sequential revenue growth came from higher volumes and two-thirds came from pricing. Non-GAAP gross margin reached 84.6%, compared with 78.4% in the preceding quarter and 26.4% a year earlier, while non-GAAP earnings per share rose to $39.25 from $23.41 in the prior quarter.
For the full fiscal year, Sandisk reported revenue of $20.25 billion, up 175% year over year, with bit growth in the mid-teens. CEO David Goeckeler said the company’s strategy during the year centered on technology leadership, expanded data-center exposure, longer-term customer agreements, supply-chain capabilities and capital returns.
Data Center Becomes a Larger Growth Driver
Data-center revenue was $2.98 billion in the fiscal fourth quarter, rising 103% sequentially. Edge revenue, which includes products used in smartphones, PCs, tablets and other devices, was $5.43 billion, up 48% sequentially. Consumer revenue declined 32% from the previous quarter to $556 million.
For the full year, data-center revenue totaled $5.15 billion, up 437% year over year. Goeckeler said data center represented roughly 12% of Sandisk’s bits a year ago and had grown to 38% of the portfolio at the end of fiscal 2026, making it the company’s fastest-growing end market.
The company attributed the shift partly to demand from AI inference, which Goeckeler described as a memory-centric and storage-intensive workload. Sandisk has expanded its enterprise SSD offerings for hyperscale and AI infrastructure customers and began revenue shipments of its QLC-based Stargate platform during the quarter.
Goeckeler also said Sandisk is developing High Bandwidth Flash technology for evolving AI memory and storage architectures. During the question-and-answer session, he said the company has advanced substantially from its initial work on the technology and is in discussions with cloud and device customers, but did not provide a commercial shipment timeline.
Long-Term Customer Agreements Expand
CFO Luis Visoso said Sandisk signed five additional new business model agreements, or NBMs, since the company announced five agreements in April. The new deals included three agreements with new customers and two expansions of previously signed arrangements. Three closed before the end of the fourth quarter and two closed after quarter-end.
Sandisk now has NBMs with eight data-center and edge customers. The agreements extend up to five years, with a weighted average duration of more than four years. The company expects NBMs to account for more than 50% of its bits in fiscal 2027 and roughly two-thirds in fiscal 2028.
The agreements include fixed and variable pricing components, with the variable portions subject to floors and ceilings. Visoso said the company expects attractive margins even at floor pricing and said NBM margins should be “around 80%,” while potential price increases could provide upside.
Total expected revenue under signed NBMs is at least $93.9 billion assuming floor pricing, Sandisk said. Remaining performance obligations stood at $59.8 billion at quarter-end, or $91.1 billion including the two agreements completed after the quarter closed. The agreements also include financial guarantees totaling $16.5 billion through cash deposits and financial instruments intended to protect Sandisk if customers fail to meet purchase obligations.
Management said it would remain selective in pursuing additional agreements, focusing on strategic customers, multiyear duration, growing volume requirements and attractive financial terms.
Cash Flow, Buybacks and Fiscal First-Quarter Outlook
Sandisk generated $7.13 billion in operating cash flow during the quarter. Adjusted free cash flow was $5.04 billion, representing a 56% margin and excluding $1.94 billion in NBM prepayments and deposits included in operating cash flow. Gross capital expenditures totaled $562 million, or 6.3% of revenue.
The company ended the quarter with $4.76 billion in cash and cash equivalents. It repurchased 2.84 million shares for $4.5 billion during the quarter and announced that its board authorized an additional $14 billion share-repurchase program, bringing total remaining authorization to $15.5 billion.
Visoso said the company’s capital-allocation priorities remain investing in the business and returning cash to shareholders. He said management currently views share repurchases as the preferred method for returning capital, rather than dividends.
For the fiscal first quarter of 2027, Sandisk forecast revenue of $10.3 billion to $10.8 billion, with both bit growth and higher pricing contributing to sequential growth. The company expects non-GAAP gross margin of 83% to 85%, non-GAAP operating expenses of $520 million to $540 million and non-GAAP EPS of $44 to $46 based on 155 million diluted shares.
Sandisk expects capital spending to rise year over year as it ramps BiCS8 and BiCS10 technology, though capital investment is expected to decline to about 6% of revenue for the full fiscal year. Management said it plans to maintain higher inventory levels to support NBMs and account for higher component costs, reducing sellable-bit growth to the mid-teens in fiscal 2027.
The company estimates the NAND market will exceed $300 billion in calendar 2026 and approach $500 billion in calendar 2027. Management expects customer demand to continue exceeding its supply and said it expects bits to remain on allocation beyond calendar 2027.
About Sandisk (NASDAQ:SNDK)
SanDisk Corporation offers flash storage solutions. The Company designs, develops and manufactures data storage solutions in a range of form factors using flash memory, controller, firmware and software technologies. The Company operates through flash memory storage products segment. Its solutions include a range of solid state drives (SSD), embedded products, removable cards, universal serial bus (USB), drives, wireless media drives, digital media players, and wafers and components. It offers SSDs for client computing applications, which encompass desktop computers, notebook computers, tablets and other computing devices.
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