Overview
SanDisk
SNDK · NASDAQQ1 FY2027Semiconductors · NAND / Flash Storage
Since the Report − 13.5%
Revenue grew 377.9% year over year, EPS beat the estimate by 6.7%; the stock fell 3.8% in its first reaction.
- RevenueQ1
- $11.03B
- ▲ 378% YoY · 3.1% Beat
- EPSAdjusted
- $49.51
- Estimate $46.41 · 6.7% Beat
Verdict
BUYSanDisk's revenue of $11.03 billion beat the estimate by 3.1%, and adjusted EPS of $49.51 beat by 6.7%. Data center revenue grew 61% in a single quarter, but the stock could not hold its early after-hours gain and ended extended trading down 3.8%. The measure to watch now is whether the data center share keeps rising.
Close on Report DayOct 29
$1,330.05▼ 3.8%Report-Day Move
- Market Cap(Today)
- ≈ $166 B
- 1Y Return(At Report)
- + 551%
- P/E(At Today's Price · $118.37 · Trailing 12M)
- 9.7
- Net Margin(Trailing 12M)
- 56.5%
Earnings Summary
In 30 Seconds- Revenue of $11.03 billion beat the estimate by 3.1%, and adjusted EPS of $49.51 beat by 6.7%.
- Data center revenue grew 61% sequentially and reached 43.5% of total revenue.
- The stock first rose 3.4% after hours, but after a 550% gain over the past year it could not hold on and ended extended trading down 3.8%.
The Numbers
Data Center Revenue
$4.80B
Sequential ▲ 61% · Share 43.5%
Adjusted Gross Margin
85.1%
Prior Quarter 84.6% · ▲ 0.5 Points
Free Cash Flow
$6.31B
57% of Revenue · Buyback $5.0B
Stock Reaction
▼ 3.8%
After-Hours Close 8 P.m. ET · High +3.4%
Quarterly Revenue ($ Billion)
2.31
Q1 26 · $2.31 B
3.03
Q2 26 · $3.03 B · QoQ + 31.1%
5.95
Q3 26 · $5.95 B · QoQ + 96.7%
8.97
Q4 26 · $8.97 B · QoQ + 50.7%
11.03
Q1 27 · $11.0 B · QoQ + 23.0% · YoY + 377.9%
12.2–12.6
Q2 27E · 12.2–12.6 · QoQ + 12.4% · YoY + 309.9%
- Q1 26
- Q2 26
- Q3 26
- Q4 26
- Q1 27
- Q2 27E
Q2 FY27 Company Guidance
- Q2 Revenue12.2 – 12.6 billion12.2 billion12.6 billion
Midpoint 12.4 · Market Expectation 12.31In Line ✓
- Q2 Adjusted EPS55 – 57 $55 $57 $
Midpoint 56.00 · Q1 Actual 49.5113.1% Sequential Increase ▲
- Q2 Adjusted Gross Margin84.5% – 85.5%84.5%85.5%
Q1 Actual 85.1%Flat
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±2.1% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Edge$5.83 BShare 52.9%▲ 320.0% YoY
- Data Center$4.80 BShare 43.5%
Year ago $269M
- Consumer$397 MShare 3.6%▼ 39.0% YoY
Key Metrics
Operating Cash Flow
$6.36 B
Press Release
Adjusted Free Cash Flow
$5.70 B
Press Release
Share Repurchases
$5.00 B
Press Release
Cash and Cash Equivalents
$5.14 B
Press Release
Inventories
$3.02 B
Press Release
Adjusted Operating Margin
80.4%
Press Release
Shares are computed over the segment total: $11.0 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“In general, we're hearing from our customers that they have underestimated the amount of NAND they need to run their infrastructure. 100% of excess cash is going to go back to shareholders.”
- Customers Underestimated NAND Needs
- Long-term Agreements Take the Lead
- All Excess Cash to Shareholders
Summary and Review
Summary
SanDisk's revenue rose 378% year over year to $11.03 billion. Revenue also grew 23% from the prior quarter. The market expected $10.70 billion, a 3.1% beat. Revenue also topped the high end of the company's $10.3-10.8 billion guidance. Adjusted EPS came in at $49.51, beating the $46.41 estimate by 6.7%. The revenue and earnings gates are open. The midpoint of second-quarter revenue guidance is $12.4 billion. That is 0.7% above the $12.31 billion estimate, so the guidance gate is in line.
The stock closed October 29 down 5.3% at $1,330.05. After hours it climbed to $1,375.75 at 4:31 p.m. ET, up 3.4%. The direction turned during and after the earnings call. After-hours trading ended at 8:00 p.m. ET at $1,279.50, down 3.8%. The market did not read this report as a surprise; it read it as an expected strong quarter. The stock has gained 550.8% over the past year. From that base, a 3% revenue beat could not keep the price up.
The score is 77 and the verdict is buy; it rates the quarter, not the stock. The revenue and earnings gates are open and the guidance gate is in line, which places the score in the 70-79 band. The 39% drop in the consumer segment and cyclical pricing risk keep it off the top of that band. The company also announced an 8-for-1 stock split. The split does not change the company's value. On the call, about half of fiscal 2027 bits were tied to long-term agreements.
Full Review
Data center is becoming the main engine.
Data center revenue was $4.80 billion. It was $2.98 billion in the prior quarter, a 61% sequential increase. A year ago this segment brought in only $269 million. Its share of total revenue rose from 33.2% to 43.5%. A year ago that share was just 11.7%. Last quarter's expected developments included the sustainability of data center demand. This quarter, demand did not just hold; it accelerated. In the release, CEO David Goeckeler wrote that the data center business drove growth. On the call, management said it expects NAND bit demand to grow about 40% in calendar 2027. The company named three U.S. hyperscalers among its customers. The Edge segment rose 7% sequentially to $5.83 billion. Its annual growth was 320%. Edge is still the largest segment, but the gap is closing fast. Its share fell to 52.9%. The gap between the two segments narrowed to $1.03 billion.
Margins hold flat near the peak.
Adjusted gross margin was 85.1% and GAAP gross margin was 85.0%. It was 84.6% in the prior quarter and 29.9% a year ago. The sequential gain is 0.5 points; the annual gain is 55.2 points. Most of that jump comes from the low price base of a year ago. Adjusted operating expenses were $513 million, just 4.7% of revenue. In the prior quarter they were $484 million. Adjusted operating margin reached 80.4%. Adjusted net income was $7.62 billion. GAAP net income was $8.10 billion, including a $513 million gain on equity securities. For the second quarter, the company guides adjusted gross margin to 84.5-85.5%. The 85.0% midpoint means margins are holding flat. On the call, CFO Luis Visoso said about 60% of sequential revenue growth came from volume and 40% from price. Second-quarter guidance includes a modest price increase. This shows the company's pricing power remains intact.
The consumer segment is shrinking.
Consumer segment revenue was $397 million. It fell 39% year over year and 29% sequentially. The segment's share of total revenue dropped to 3.6%. The weight of the retail channel in the revenue mix is falling fast. This mix shift helps margins, but it weakens the company's presence in retail. Last quarter this line was $556 million. In the same quarter a year ago it was $652 million. Because the amount is small, the impact on total revenue is limited. Still, two straight quarters of decline suggest the segment is no longer a strategic priority. Growth in Edge also slowed; its 7% sequential gain lagged far behind data center. The source of growth increasingly rests on a single customer group.
Cash goes to buybacks and a split.
Operating cash flow was $6.36 billion. Capital spending was only $54 million. Free cash flow was $6.31 billion, or 57% of revenue. After subtracting customer prepayments under long-term agreements, adjusted free cash flow was $5.70 billion. Free cash flow came in below the prior quarter's $7.08 billion. Accounts receivable rose $1.88 billion in the quarter. The company repurchased about 3.2 million shares for $5.0 billion. The diluted share count fell from 157 million to 154 million. The balance sheet carries no debt, and cash stands at $5.14 billion. On the call, Goeckeler said all excess cash will go back to shareholders. The company signed two new long-term agreements in the quarter. About half of fiscal 2027 bits and about two-thirds of fiscal 2028 bits are tied to them. The company also announced an 8-for-1 stock split. The stock will trade split-adjusted from November 20.
Next quarter, watch one line.
This quarter's story is revenue's center of gravity shifting to the data center. Next quarter, watch one line: the data center share. If it stays above 43.5%, the margin story holds and growth quality is improving. If it falls below 40%, this quarter may have been a one-off wave of orders. The second check is where second-quarter revenue lands within the $12.2-12.6 billion guidance range. For a general framework on reading earnings day, see our guide. If the share passes 50%, SanDisk's revenue base will rest mostly on the data center for the first time. After the split, per-share amounts will be divided by eight.
Looking Ahead
Strengths and Risks
6 Strengths · 5 RisksStrengths
6- Revenue of $11.03 billion beat the estimate by 3.1% and topped the high end of guidance.
- Data center revenue rose 61% sequentially to $4.80 billion.
- Adjusted gross margin of 85.1% was 0.5 points above the prior quarter.
- Free cash flow of $6.31 billion reached 57% of revenue.
- The company bought back $5.0 billion of stock in the quarter and carries no debt.
- The company signed two new long-term agreementsAbout half of fiscal 2027 bits are tied to them.
Risks
5- The consumer segment fell 39% year over year to $397 million.
- The Edge segment grew only 7% sequentially.
- Margins sit near 85%A turn in NAND prices could pull them down quickly.
- After a 550.8% gain over the past year, the bar for expectations is very high.
- Free cash flow of $6.31 billion came in below the prior quarter's $7.08 billion.
What to Watch
2- 8-for-1 stock split: the stock will trade split-adjusted from November 20, 2026.
- Q2 FY27 earnings (~late January 2027)Revenue guidance is $12.2-12.6 billion.
Upcoming Earnings
To Understand This