Sandisk (SNDK) — Earnings Preview Memo
Key Points
| Topic | Details |
|---|---|
| Next Reported Quarter | Q4 FY2026 (ending June 30, 2026) |
| Guidance (Q4 FY26) | Revenue: $7.75B–$8.25B; Non-GAAP EPS: $30.00–$33.00; Gross Margin: 79%–81% |
| Consensus (Q4 FY26) | Revenue: $8.3B; Gross Margin: 80.6%; Net Income: $5.34B; GAAP EPS: $33.17 |
| Last Year’s Q4 Actual | Revenue: $1.83B; Gross Margin: 26.3%; Net Income: $3.9M; GAAP EPS: -$0.24 |
| YoY Comparable | Extremely easy: Q4 FY25 was a trough, Q4 FY26 guide/consensus implies >300% YoY growth |
| Most Important Factors |
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Summary and Conclusions
- Sandisk is set to report a record Q4 FY26, with guidance and consensus both calling for revenue near $8B, up over 300% YoY, and gross margins approaching 80%.
- The company is coming off an extremely easy YoY comparable, as Q4 FY25 was the bottom of the cycle.
- Key focus areas for the upcoming print are:
- The pace and durability of the new business model (NBM) contracts, which now cover over 1/3 of FY27 bit shipments and are expected to rise.
- The magnitude and sustainability of data center revenue growth, which has become the largest and fastest-growing segment.
- The ability to maintain structurally higher gross margins and free cash flow as pricing normalizes and mix shifts further toward enterprise SSDs.
- CapEx discipline and any signals on supply growth above the current mid- to high-teens bit growth plan.
- Execution on the newly authorized $6B share repurchase program.
Forward Guidance and Consensus vs. Prior Year
Q4 FY26 Guidance vs. Consensus
| Metric | Company Guidance (Q4 FY26) | Consensus (Q4 FY26) | Notes |
|---|---|---|---|
| Revenue ($M) | 7,750 – 8,250 | 8,307 | Both at record levels |
| Gross Margin (%) | 79.0 – 81.0 | 80.6 | Structurally higher, up >50 pts YoY |
| Non-GAAP EPS ($) | 30.00 – 33.00 | Consensus GAAP EPS: $33.17 | |
| Net Income ($M) | 5,345 | ||
| Diluted Shares (M) | ~158 |
Q4 FY25 Actuals (Restated)
| Metric | Q4 FY25 Actual |
|---|---|
| Revenue ($M) | 1,829 |
| Gross Margin (%) | 26.3 |
| Net Income ($M) | 3.9 |
| GAAP EPS ($) | -0.24 |
YoY Comparison:
- Revenue expected to increase by over 300% YoY.
- Gross margin expected to expand by over 50 percentage points.
- EPS and net income expected to swing massively positive.
Recent Quarterly Trends (Quarterly Scope)
| Quarter | Revenue ($M) | Gross Margin (%) | Net Income ($M) | GAAP EPS ($) | Non-GAAP EPS ($) |
|---|---|---|---|---|---|
| Q3 FY26 | 5,950 | 78.4 | 3,615 | 23.03 | 23.41 |
| Q2 FY26 | 3,025 | 50.9 | 803 | 5.15 | 6.20 |
| Q1 FY26 | 2,308 | 29.8 | 112 | 0.75 | 1.22 |
| Q4 FY25 | 1,829 | 26.3 | 3.9 | -0.24 | 0.29 |
What to Watch for in the Upcoming Print
1. NBM (New Business Model) Contracts
- Progression: As of Q3 FY26, 5 NBMs signed, covering over 1/3 of FY27 bits, with $42B in minimum contractual revenue and $11B+ in financial guarantees.
- Watch for: Updated % of bits under NBM, new contracts signed, and any commentary on customer diversity (data center vs. edge/client).
- Durability: Management has emphasized these contracts are multi-year (up to 5 years), with a mix of fixed and variable pricing, and strong financial guarantees.
2. Data Center Segment Growth
- Recent Performance: Q3 FY26 data center revenue was $1.47B (+233% QoQ, +645% YoY), now 25% of total revenue.
- Watch for: Continued sequential growth, mix shift toward enterprise SSDs, and initial revenue from QLC Stargate products.
- Sustainability: Management expects data center to remain the fastest-growing and most strategic segment.
3. Margin Expansion and Pricing
- Recent Trend: Gross margin expanded from 26% in Q4 FY25 to 78% in Q3 FY26, driven by mix shift, pricing, and NBM contracts.
- Watch for: Ability to sustain 79–81% gross margin in Q4, commentary on pricing environment, and how much of the margin is locked in via NBMs vs. spot market.
- Risks: Any signs of pricing normalization or competitive pressure could impact forward margin trajectory.
4. CapEx and Supply Growth
- Current Plan: Management remains committed to mid- to high-teens bit growth, enabled by nodal transitions (BiCS8, BiCS10), not greenfield wafer additions.
- Watch for: Any change in CapEx plans, signals of supply growth above plan, or commentary on industry capacity additions (especially given tightness and rising demand).
- Efficiency: CapEx as % of revenue is falling due to operating leverage and R&D productivity.
