Sandisk Corporation · Q4 FY2026 call

The fiscal fourth quarter provided our clearest proof point yet. We delivered record revenue, gross margin and earnings per share, each above the high end of our guidance and repurchased $4.5 billion of company stock.

AI is fundamentally a memory-centric storage-intensive problem. And it is reshaping the demand equation for NAND.

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.

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.

The total expected revenue from all our NBMs we have signed is a minimum of $93.9 billion, assuming floor pricing. We believe actual revenue will be above that minimum.

The remaining performance obligation, or RPO, at the end of the quarter was $59.8 billion and would be $91.1 billion including the 2 NBMs signed after the quarter closed.

Each one of our NBMs include financial guarantees through a combination of cash deposits and financial instruments totaling $16.5 billion, which are intended to protect Sandisk if a customer fails to satisfy its purchase obligations under these agreements.

Revenue came in above the guidance range of $7,750 million to $8,250 million that we provided on our prior earnings call. Sequential revenue growth came approximately 1/3 from higher volumes and 2/3 from higher pricing.

Non-GAAP operating expenses for the fourth quarter were $484 million, representing 5.4% of revenue, down from 7.5% of revenue in the prior quarter as we generated additional operating leverage.

During the quarter, we repurchased 2,836,000 shares of our common stock for $4.5 billion.

We estimate the NAND market will exceed $300 billion in revenue in calendar year 2026, up 3x year-over-year. Looking further ahead, we estimate that the NAND market will approach $500 billion in revenue in calendar year 2027.

For the first quarter of fiscal year 2027, we expect revenue between $10.3 billion and $10.8 billion with sequential growth driven by both bit growth and higher pricing. We expect non-GAAP gross margins between 83% and 85%.

We plan to operate at higher inventory days, consistent with current levels to support our NBMs and account for higher component costs. […] The higher inventory levels reduce sellable bits to mid-teens for the full year fiscal year 2027.

we do expect to be around 80% for the new business models. As you know, there is some upside as prices continue to go up, we'll capture some of that upside as well.

a year ago, we were talking about visibility in this business of 3 months. And now we're talking over 4 years of committed financials and understanding the mix

I think mid-80s gross margin, I would characterize as a fair return. And then we want to increase visibility and durability of the franchise, right? We want to get this kind of boom and bust out of it. It doesn't work for anybody.

They're making financial commitments to us that if they don't follow through on their commitments that I think $16.5 billion in aggregate would flow to us on our balance sheet. We don't ever expect to see that money, quite frankly. It's just to align interest.

we are literally talking to the CFOs, the CEOs of the largest companies in the world. This used to be, quite frankly, just a supply chain conversation every quarter in a price negotiation 7x24.

we already have customers coming back for the second round of NBMs a quarter in. And so that gives us an enormous amount of conviction that this franchise is set up for the long term.

we see units down mid-teens for both smartphones and PCs this year, but we still see in smartphones, we see average capacity up significantly, mid-teens in PCs, we see it flat.

I would not assume that our new business models are a drag on gross margin. They are good margins.