Sandisk Corporation Q1 FY2026 earnings call

• Strong quarter with revenue growth, non-GAAP earnings per share, and adjusted free cash flow. • Focus on growing revenue, expanding margins, and generating sustainable free cash flow. • Demand for NAND products outpacing supply, expected to persist. • BiCS8 technology accounted for 15% of total bits shipped, expected to reach majority by end of fiscal year '26. • Data center business gained momentum with 26% sequential revenue growth; storage-focused SSD product line Stargate growing in demand. • Edge seeing positive momentum from PC refresh cycle and premium smartphones. • Consumer business well positioned to capture seasonal demand with refreshed portfolio. • Memory Man campaign creating interest, partnerships with Nintendo strong with co-branded Switch 2 microSD Express Card sold over 900,000 units in fiscal Q1.

First quarter revenue was $2,308 million, up 21% quarter-over-quarter and 23% year-over-year. Edge revenue was $1,387 million, up 26% sequentially; consumer revenue was $652 million, up 11% quarter-over-quarter; data center revenue was $269 million, up 26% sequentially. Non-GAAP gross margin was 29.9%, up 350 basis points quarter-over-quarter. Non-GAAP operating expenses were $446 million. Non-GAAP EPS was $1.22. Adjusted free cash flow was $448 million. Cash and cash equivalents were $1,442 million, gross debt was $1,351 million, net cash position achieved.

• Second quarter revenue expected between $2,550 million and $2,650 million due to double-digit price increases and mid-single-digit bit growth. • Non-GAAP gross margin forecast between 41% and 43% for second quarter. • Non-GAAP operating expenses expected between $450 million and $475 million for second quarter. • Non-GAAP interest and other expense expected between $40 million and $45 million; non-GAAP tax expenses between $80 million and $90 million. • Non-GAAP EPS forecast between $3 and $3.40 for second quarter. • Expect to generate positive free cash flow in second quarter despite capital investments. • Fiscal 2026 CapEx plans unchanged, capital allocation priorities consistent with Investor Day.

Q: C.J. Muse with Cantor Fitzgerald asked about customer engagement evolving on allocation and bit shipment growth opportunities.

A: David V. Goeckeler and Luis Visoso discussed strategic customer prioritization, growth in data center business, and plans to grow along with market.

Q: James Schneider with Goldman Sachs inquired about supply situation and enterprise SSD market opportunity.

A: David V. Goeckeler talked about supply constraints, capital investment for BiCS8 transition, and enterprise SSD market growth.

Q: Aaron Rakers with Wells Fargo asked about enterprise SSD market opportunity relative to hard disk drives and seasonality.

A: David V. Goeckeler and Luis Visoso discussed complementary technologies, data center market inflection, and seasonality in March quarter.

Q: Joseph Moore with Morgan Stanley asked about data center demand, QLC on enterprise side, and BiCS8.

A: David V. Goeckeler discussed QLC and TLC use cases, BiCS8 enabling market presence.

Q: Mark Newman with Bernstein asked about contract term portion and HBF road map.

A: Luis Visoso and David V. Goeckeler discussed short-term contracts and HBF timeline.

Q: Karl Ackerman with BNP Paribas asked about qualifying hyperscalers and cost declines.

A: David V. Goeckeler and Luis Visoso discussed mix question and cost tailwinds.

Q: Mehdi Hosseini from SIG asked about UltraQLC 256TB update and mix shift.

A: David V. Goeckeler discussed product timing and sequential growth in data center portfolio.

Q: Ruplu Bhattacharya from Bank of America asked about bit growth by market and margins.

A: Luis Visoso discussed growth across segments and margin factors.

Q: Asiya Merchant from Citigroup asked about guide clarification and edge device growth confidence.

A: Luis Visoso and David V. Goeckeler discussed revenue growth drivers and edge device growth.

Q: Steven Fox with Fox Advisors asked about long-term agreements.

A: David V. Goeckeler discussed early stages of long-term supply conversations.

Q: Krish Sankar with TD Cowen asked about data center revenue related to AI and growth.

A: David V. Goeckeler discussed majority AI-driven growth and data center exabyte growth.

Q: Nam Kim with Arete Research asked about HBF long-term growth potential and competitive advantage.

A: David V. Goeckeler deferred on HBF market sizing and competitive advantage.

Q: Mark Miller with The Benchmark Co. asked about picking up share in data center.

A: David V. Goeckeler stated they think they're growing faster than the market.