Sandisk — Fiscal First Quarter 2027 Earnings Summary

Financial Performance:

• Reported Q1 2027 revenue of $11.031 billion, representing a 23% increase quarter-over-quarter (Q/Q) and a 378% increase year-over-year (Y/Y) compared to $2.308 billion in Q1 2026.
• GAAP net income was $8.101 billion ($52.60 diluted net income per share), up 17% Q/Q and significantly higher than the $112 million ($0.75 per share) reported in Q1 2026.
• Non-GAAP diluted net income per share was $49.51, up 26% Q/Q and significantly higher than $1.22 in Q1 2026.
• GAAP gross margin was 85.0%, up 0.4 percentage points (ppt) Q/Q and up 55.2 ppt Y/Y; Non-GAAP gross margin was 85.1%, up 0.5 ppt Q/Q and up 55.2 ppt Y/Y.
• Operating expenses were $598 million (GAAP), up 10% Q/Q and 17% Y/Y; Non-GAAP operating expenses were $513 million, up 6% Q/Q and 15% Y/Y.
• Operating income was $8.780 billion (GAAP), up 25% Q/Q and significantly higher than $176 million in Q1 2026.
• Net cash provided by operating activities was $6.363 billion, compared to $488 million in Q1 2026.
• Free cash flow was $6.309 billion, compared to $438 million in Q1 2026.
• Adjusted free cash flow was $5.696 billion, compared to $448 million in Q1 2026.
• Cash and cash equivalents ended the period at $5.136 billion, up from $4.762 billion at the start of the fiscal year.

Guidance and Future Outlook:

• Forecasted Q2 2027 revenue to be between $12.2 billion and $12.6 billion.
• Expected Q2 2027 Non-GAAP diluted net income per share (pre-split) to be between $55.00 and $57.00.
• Projected Q2 2027 GAAP gross margin to be between 84.4% and 85.4%; Non-GAAP gross margin between 84.5% and 85.5%.
• Projected Q2 2027 GAAP operating expenses to be between $677 million and $745 million; Non-GAAP operating expenses between $540 million and $560 million.
• Management expects to deliver "growing and durable free cash flow" driven by technology leadership and disciplined financial management.

Business Segments and Product Lines:

• Datacenter segment revenue was $4.802 billion, up 61% Q/Q and significantly higher than $269 million in Q1 2026.
• Edge segment revenue was $5.832 billion, up 7% Q/Q and up 320% Y/Y compared to $1.387 billion in Q1 2026.
• Consumer segment revenue was $397 million, down 29% Q/Q and down 39% Y/Y compared to $652 million in Q1 2026.
• Management noted robust and growing demand for products driving outpaced growth in the data center business.

Market and Competitive Landscape:

• Sandisk is described as a vertically integrated global semiconductor company delivering memory technologies for AI infrastructure, enterprise SSDs, consumer devices, and connected systems at the edge.
• The company relies on strategic relationships with key partners, including Kioxia Corporation.
• The press release notes risks related to competitive products, pricing trends, and fluctuations in average selling prices.

Risks and Challenges:

• Forward-looking statements are subject to risks including adverse global economic conditions, trade policies, tariffs, and trade wars.
• Risks include volatility in product demand, pricing fluctuations, inflation, interest rate changes, and potential economic recession.
• Operational risks include product defects, supply chain disruptions, delays in product ramps, and reliance on strategic relationships.
• Financial risks include share repurchase program limitations, currency exchange rate fluctuations, and cybersecurity incidents.
• The company faces risks related to the timing and impact of the announced stock split.

Management Commentary and Tone:

• David Goeckeler, Chairman and CEO, stated the company started fiscal year 2027 with "another quarter of strong performance."
• Management expressed confidence in executing the strategy outlined at Investor Day, emphasizing "technology leadership, deep customer partnerships, and disciplined financial management."
• The tone regarding the data center business was positive, citing "robust and growing demand."

Other Key Points:

• Announced an eight-for-one forward stock split effective November 19, 2026, to make stock more accessible to employees and investors; trading will begin on a post-split basis on November 20, 2026.
• Returned $5.0 billion to stockholders through the repurchase of approximately 3.2 million shares during the quarter.
• Over the past two fiscal quarters, the company repurchased 6.0 million shares, representing approximately 4% of total shares outstanding.
• The company completed the separation from Western Digital Corporation (WDC) on February 21, 2025.
• In Q1 2026, the company recognized a $10 million loss on business divestiture related to a working capital provision for a manufacturing subsidiary.
• The company holds $2.289 billion in marketable equity securities as of October 2, 2026.
• Contract liabilities decreased to $777 million from $849 million in the prior quarter.
• Non-GAAP tax expense for Q2 2027 is estimated at 14.3%.