Sandisk Corporation (SNDK) — Earnings Preview
Key Points
- Q1 FY27 Guidance: Revenue expected between $10.3B and $10.8B, gross margin 83–85%, EPS $44–$46.
- Consensus for Q1 FY27: Revenue ~$10.7B, gross margin ~84.4%, EPS ~$46.9.
- Q4 FY26 Actuals: Record revenue of $9.0B (+372% YoY), gross margin 84.6%, EPS $39.25, free cash flow $5.0B.
- YoY Comparison: Q1 FY27 faces a very strong comparable, as Q1 FY26 revenue was $2.1B with gross margin 29.1%—the company is coming off a period of extraordinary growth and margin expansion.
- NBM Penetration: Over 50% of bits in FY27 and ~2/3 in FY28 are under New Business Models (NBMs) with multi-year, financially guaranteed contracts at ~80% gross margin floors.
- Data Center Mix: Data center now 38% of portfolio (Q4 FY26), up from 12% a year ago; management expects further mix shift toward data center.
- Capital Returns: $4.5B in buybacks in Q4 FY26; new $14B authorization announced.
- Key Focus Areas for Next Earnings: NBM ramp, sustainability of margins, data center growth, supply/demand discipline, and capital allocation.
Most Important Factors to Watch Next Quarter
| Factor | Why It Matters | What to Watch For |
|---|---|---|
| NBM Ramp & Coverage | NBMs drive visibility, margin durability, and reduce cyclicality | % of bits/revenue under NBMs, new signings, customer diversity, renewal/expansion activity |
| Gross Margin Sustainability | Margins have reached historic highs (Q4 FY26: 84.6%) | Ability to maintain 83–85% GM, especially as pricing growth moderates and mix shifts |
| Data Center Growth | Data center is now the largest and fastest-growing segment | Data center revenue/mix, sequential growth, new product ramps (Stargate QLC, BiCS10, HBF progress) |
| Pricing vs. Volume Dynamics | Recent growth has been price-driven; volume growth is now more important | Contribution of price vs. bit growth to revenue, any signs of price normalization or elasticity |
| Supply/Demand Discipline | Industry risk is overbuild; SNDK targets mid- to high teens bit growth | Any change in bit growth plans, CapEx discipline, commentary on industry supply response |
| Edge/Consumer Trends | Edge/consumer units down in '26, expected to stabilize in '27 | Signs of stabilization or rebound in PC/smartphone units/content, edge NBM adoption |
| Capital Allocation | Massive buybacks, strong FCF generation | Pace of buybacks, cash balance, any commentary on dividends or M&A |
| HBF/AI Memory Roadmap | High-bandwidth flash (HBF) is a potential future driver | Progress on HBF sampling, customer engagement, timeline for revenue contribution |
Quarterly Financials — Actuals and Consensus
Quarterly Results and Guidance ($M except per-share)
| Period | Revenue | Gross Margin (%) | EBITDA | Net Income | EPS (GAAP) | Free Cash Flow/Share | Notes |
|---|---|---|---|---|---|---|---|
| Q4 FY26 (A) | 8,965 | 84.6 | 39.25 | Record quarter, $4.5B buybacks | |||
| Q1 FY27 (G) | 10,300–10,800 | 83–85 | 44–46 | Company guidance | |||
| Q1 FY27 (Cons) | 10,680 | 84.4 | 8,653 | 7,202 | 46.9 | 32.6 | Consensus estimate |
| Q1 FY26 (A) | 2,149 | 29.1 | 266 | 131 | 0.65 | 0.71 | Last year’s comparable |
Notes: (A) = Actual, (G) = Guidance, (Cons) = Consensus. Q4 FY26 actuals per company; Q1 FY27 consensus per compiled estimates.
Annual Financials — Actuals and Consensus
| Fiscal Year | Revenue | Gross Margin (%) | EBITDA | Net Income | EPS (GAAP) | Free Cash Flow/Share | Notes |
|---|---|---|---|---|---|---|---|
| FY2026 (A) | 20,248 | 69.8 | 66.47 | 58.7 | +175% YoY revenue, margin inflection | ||
| FY2025 (A) | 7,276 | 30.2 | 835 | 382 | -11.47 | 0.79 | Pre-inflection, tough year |
| FY2027 (Cons) | 48,952 | 84.6 | 39,338 | 33,134 | 217.4 | 188.3 | Consensus estimate |
Segment Revenue Breakdown — Q4 FY26 ($M)
| Segment | Revenue | QoQ Growth | YoY Growth | Mix (%) |
|---|---|---|---|---|
| Data Center | 2,977 | +103% | +n/a | 38 |
| Edge | 5,432 | +48% | +n/a | 61 |
| Consumer | 556 | -32% | +n/a | 6 |
Note: Mix does not sum to 100% due to rounding and segment overlap.
Summary and Conclusions
Sandisk is entering Q1 FY27 with record momentum, but faces a very strong YoY comparable after a year of unprecedented growth and margin expansion. The company’s transformation is anchored by its New Business Models (NBMs), which now cover over half of bits shipped and are expected to reach two-thirds by FY28, providing multi-year demand visibility, financial guarantees, and ~80% gross margin floors.
Key preview themes:
- Margin durability: Investors will scrutinize whether Sandisk can sustain gross margins in the mid-80s as price increases moderate and volume becomes a bigger driver.
- NBM execution: The pace of new NBM signings, customer diversity (notably in edge/PC/smartphone), and any early renewals or expansions will be critical.
- Data center mix: With data center now 38% of bits (up from 12% a year ago), continued outperformance here is essential, especially as edge/consumer units remain soft.
- Supply discipline: Management continues to target mid- to high teens bit growth, resisting calls to chase higher demand with more aggressive CapEx. Any deviation from this stance would be notable.
- Capital returns: After $4.5B in buybacks last quarter and a new $14B authorization, the pace and scale of repurchases will be watched closely.
- HBF/AI memory: Progress on high-bandwidth flash (HBF) and its potential to drive incremental growth beyond the current model will be a key long-term focus.
Year-over-year, Sandisk is coming off a “tough comp” — Q1 FY26 revenue was $2.1B with 29.1% gross margin, compared to Q1 FY27 guidance of $10.3–$10.8B and 83–85% gross margin. The market will be looking for evidence that these levels are sustainable, not just a one-time spike.
Bottom line: The next earnings report will be a test of Sandisk’s ability to deliver on its new business model, maintain industry-leading margins, and continue to execute on data center growth and disciplined capital allocation. Any signs of NBM churn, margin compression, or supply/demand imbalance will be closely scrutinized.
Additional Tables
NBM Penetration and Guidance
| Fiscal Year | % Bits Under NBM | NBM Gross Margin Floor | NBM Revenue Minimum ($B) | NBM Duration (avg, yrs) |
|---|---|---|---|---|
| FY27 | >50 | ~80% | 93.9 | >4 |
| FY28 | ~66 | ~80% | >4 |
Guidance — Q1 FY27
| Metric | Guidance Range | Context Notes |
|---|---|---|
| Revenue | $10.3B–$10.8B | Sequential growth from both bits and pricing |
| Gross Margin | 83%–85% | Slightly down from Q4 FY26 actual (84.6%) |
| OpEx | $520M–$540M | Includes R&D, higher stock comp taxes |
| EPS (non-GAAP) | $44–$46 | 155M diluted shares |
Management Commentary Highlights
- On NBM durability: “We expect our NBMs to represent more than 50% of our bits in fiscal year 2027, and approximately 2/3 of our bits in fiscal year 2028. NBMs are quickly becoming our predominant way of doing business.”
- On margin floors: “Pricing for our NBMs include both fixed and variable elements with a variable portion subject to floors and ceilings. We expect attractive margins even at floor pricing.”
- On capital returns: “Sandisk's Board of Directors has authorized an additional $14 billion share repurchase program, bringing our total remaining authorization to $15.5 billion.”
- On supply/demand: “We, therefore, expect bits to remain on allocation beyond calendar year 2027.”
- On data center: “A year ago, Datacenter represented roughly 12% of our bits. Exiting fiscal year '26, it represents 38% of our portfolio and is our fastest-growing end market.”
Conclusion
Sandisk’s next earnings will be a critical checkpoint for the durability of its new business model, margin structure, and data center-led growth. The company is coming off a period of exceptional performance and faces high expectations for continued execution, especially as the industry watches for any signs of normalization or competitive response.
