Sandisk Corporation

Revenue for the third quarter was $5.95 billion, up 97% sequentially and up 251% year over year, versus guidance of $4.4 billion to $4.8 billion. Non-GAAP gross margin was 78.4% versus 51.1% in the prior quarter, non-GAAP operating margin was 70.9%, and non-GAAP EPS was $23.41 versus $6.20 in the prior quarter; both margin and EPS were well above guidance. Data center revenue grew 233% sequentially to $1.467 billion, edge grew 118% to $3.163 billion, and consumer was $820 million, down 10% sequentially. For Q4, Sandisk guided revenue to $7.75 billion to $8.25 billion, non-GAAP gross margin to 79% to 81%, non-GAAP operating expenses to $480 million to $500 million, and non-GAAP EPS to $30 to $33 assuming 158 million fully diluted shares.

David V. Goeckeler framed the quarter as an inflection point, emphasizing that Sandisk is evolving from a cyclical NAND supplier into a more durable, contract-backed business. He highlighted five signed multiyear partnerships, the strategic importance of AI/data center demand, and the company’s technology leadership in BiCS 8, TLC, and QLC. His tone was highly confident and upbeat, but he repeatedly noted the business is still early in this transition.

Luis Visoso focused on the financial impact of the new business models and the sharp operating leverage in the quarter. He said the three agreements signed in Q3 provide about $42 billion of minimum contractual revenue, and the five agreements signed so far include more than $11 billion of financial guarantees, with $400 million of prepayments on the Q3 balance sheet. He also cited $3.735 billion in cash and cash equivalents, $2.955 billion in adjusted free cash flow, $3.038 billion in operating cash flow, $240 million of gross capex, and the payoff of the remaining $650 million TLB balance. Guidance for Q4 called for continued strength in margin and earnings, and he added that a $6 billion buyback was authorized after the company reached its net cash target.

Analysts focused heavily on whether the new multiyear contracts lock in pricing, how much of FY27 bits are contracted, and whether margins could eventually settle higher. Management said the contracts have both fixed and variable elements, with shorter-term pricing more fixed and longer-dated pricing more variable, and said the company is not yet giving a target margin range. They also said the five agreements signed so far account for over a third of FY27 bits, that this could rise above 50%, and that Sandisk will provide an RPO metric every quarter rather than ACV-style disclosure.