Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SanDisk Corp SNDK delivered record revenue, gross margin, and earnings per share in Q4 FY2026, all above the high end of guidance, with non-GAAP EPS of $39.25.
- The company's New Business Models (NBMs) provide over 4 years of visibility, with more than 50% of FY2027 bits and approximately 2/3 of FY2028 bits already committed, backed by $16.5 billion in financial guarantees.
- Data center revenue surged 103% sequentially to $2,977 million, growing from 12% to 38% of the portfolio year-over-year, driven by strong AI inference demand and the ramp of the QLC Stargate platform.
- Technology leadership remains a key strength, with BiCS8 ramped to majority of bit production and BiCS10 announced, positioning SanDisk Corp (SNDK) as an industry gold standard for NAND across TLC and QLC.
- The company generated $5,035 million in adjusted free cash flow (56% margin) and repurchased $4.5 billion of stock, with an additional $14 billion buyback authorization approved, reflecting strong capital returns.
- NAND market demand is robust, with the company expecting the market to exceed $300 billion in CY2026 and approach $500 billion in CY2027, with bits remaining on allocation beyond CY2027.
Negative Points
- Consumer revenue declined 32% sequentially to $556 million, impacted by pricing adjustments and softer demand in the consumer segment.
- Gross margin is guided lower to 83-85% for Q1 FY2027 from 84.6% in Q4, due to mix, higher component costs, and prudent assumptions, despite modest price increases.
- PC and smartphone markets are experiencing a period of adjustment, with units expected to decline mid-teens in CY2026, delaying growth until CY2027.
- Bit growth for FY2027 is expected to be slightly below the mid-to-high teens target due to higher inventory days required to support NBMs and component costs.
- The Q1 FY2027 revenue guidance of $10.3-$10.8 billion was viewed as lighter than some expectations, with sequential growth driven by only modest price increases as pricing is locked in under NBMs.
- Capital spending will increase year-over-year to support BiCS8 and BiCS10 transitions, though it will decline as a percentage of revenue to approximately 6%.
Q & A Highlights
Q: Can you discuss the durability of the cycle and why you are so confident in the security of the New Business Models (NBMs), given that today's supply is limited? Also, with pricing up modestly sequentially, why are gross margins guided lower?
A: David Goeckeler (CEO) stated that the company is focused on durability, not just one metric, and considers mid-80s gross margin a fair return. He emphasized that NBMs align incentives with customers through contractual structures, including $16.5 billion in financial guarantees, and that the level of customer engagement has shifted from quarterly supply chain negotiations to highly strategic, multi-year partnerships with the world's largest companies. Luis Flores (CFO) added that the gross margin guidance of 83-85% for Q1 reflects prudent assumptions on component costs and mix, not a decline in NBM profitability, which remains around 80%.
Q: What is the breakdown of volume growth in Q4, and why does the Q1 guide appear lighter than expectations? Is it volume-related, locked-in pricing, or conservatism?
A: Luis Flores (CFO) clarified that in Q4, approximately one-third of sequential revenue growth came from higher volumes and two-thirds from higher pricing. For Q1, he expects growth to come from both bit growth and modest price increases. He noted that comparing to peers requires looking over several quarters due to different timing of price increases, and that the company took significant pricing in the prior quarter.
Q: How are you thinking about the composition of NBMs across edge, hyperscalers, and data centers, and are you pursuing additional agreements with large hyperscalers?
A: Luis Flores (CFO) stated that the company is open to signing deals with strategic customers that value their products, seek 5-year agreements with year-over-year growth, and offer attractive financials. David Goeckeler (CEO) added that over 50% of supply for FY27 is already committed, stepping up to roughly two-thirds in FY28, and that some of the largest customers are already coming back to expand their commitments, reflecting a very robust demand environment.
Q: Can you provide an update on the NBM pipeline, including the number of agreements signed and the total expected revenue?
A: Luis Flores (CFO) reported that since announcing five NBMs in April, the company has signed five additional agreements—three with new customers and two expanding existing deals. In total, there are now NBMs with eight diverse data center and edge customers, with a weighted average duration of over four years. The total expected revenue from all signed NBMs is a minimum of $93.9 billion assuming floor pricing, with the remaining performance obligation (RPO) at $59.8 billion at quarter end, or $91.1 billion including two deals signed after the quarter closed.
Q: How should we think about the pace and magnitude of share buybacks, and is a dividend being considered?
A: David Goeckeler (CEO) stated that the company plans to be very consistent in executing its buyback program, having repurchased $4.5 billion in Q4 and receiving board authorization for an additional $14 billion, bringing total remaining authorization to $15.5 billion. Luis Flores (CFO) outlined capital allocation priorities: first, investing in the business; second, maintaining a strong cash balance (now completed); and third, returning cash to shareholders via buybacks, which they believe is more tax-efficient than a dividend at this point.
Q: What are your views on the KV cache opportunity, and how has the dialogue with customers changed regarding agentic AI?
A: David Goeckeler (CEO) said the KV cache opportunity continues to mature, with the company staying close to customers as it is use-case dependent. He noted that as AI models get bigger, context lengths get longer, and agentic AI multiplies demand, the requirements for NAND continue to grow. He emphasized that customers are driving architectural requirements, and the company is increasing visibility through NBMs to stay close to these evolving discussions.
Q: Can you discuss the CapEx plans for the BiCS8 and BiCS10 transitions, and whether you would consider spending more to accelerate technology transitions?
A: Luis Flores (CFO) confirmed the company remains committed to mid-to-high teens bit growth, with CapEx dollars increasing year-over-year as transitions become more expensive. He noted that capital intensity will decline to approximately 6% of revenue for the full year. For FY27, bit growth will be slightly lower than the mid-to-high teens target due to building inventory to support NBMs and higher component costs. David Goeckeler (CEO) added that the company grows primarily through nodal transitions, which is a structural advantage.
Q: With the NAND industry expected to grow to $500 billion in 2027, do you expect price normalization, and will you grow in line with, outgrow, or undergrow the industry?
A: David Goeckeler (CEO) stated that the company plans to grow with the market, transitioning to a more predictable business model with pricing, predictability, and duration. He noted that demand signals from customers extend to the end of the decade, and the company expects to grow with the market while delivering market-leading profitability. Luis Flores (CFO) added that the company expects bits to remain on allocation beyond calendar year 2027 due to demand growing faster than supply.
Q: How is the consumer business performing, and is the decline in consumer revenue an allocation choice or demand-driven?
A: David Goeckeler (CEO) explained that the consumer business moves at a different pace than transactional markets, and in the current environment, it is harder to move consumer pricing up as quickly. Luis Flores (CFO) added that prices in the consumer market have risen, impacting the TAM, but the company is happy with its market share and remains committed to the business. The decline is partly due to allocation choices as the company prioritizes higher-growth data center and edge markets.
Q: Regarding High Bandwidth Flash (HBF) and the global standard with SK hynix, how far out are samples and product releases?
A: David Goeckeler (CEO) said HBF was announced about a year and a half ago, targeting the need for a different storage and memory architecture for inference. He noted the company has made enormous progress, with deep customer conversations and significant customer endorsements at FMS. He deferred specific shipping and release dates to the upcoming Analyst Day, but expressed confidence in the technology's
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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