SNDK Q4 Earnings Beat Estimates, Revenues Rise on Datacenter Growth

Sandisk SNDK reported fourth-quarter fiscal 2026 non-GAAP earnings of $39.25 per share that beat the Zacks Consensus Estimate by 14.63% and jumped 68% sequentially. The company reported earnings of 29 cents per share in the year-ago quarter. 

Revenues surged 371.6% year over year to $8.97 billion and beat the consensus mark by 8%. Sequentially, revenues surged 51%. Stronger pricing, higher volumes and rapid Datacenter growth drove the upside, with Datacenter revenues hitting $2.98 billion in the reported quarter.

SNDK’s Revenue Growth Reflects Pricing Strength

Sandisk said roughly one-third of the sequential increase came from higher volumes, while two-thirds came from higher pricing. The mix shift toward higher-value customers also supported the company’s revenue expansion. The top line also exceeded management’s prior guidance range of $7.75-$8.25 billion. 

Datacenter revenues surged 103% sequentially. Growth reflected broader adoption of compute-focused TLC enterprise solid-state drives across hyperscale and AI infrastructure customers. Sandisk also began revenue shipments of its QLC Stargate platform, expanding its portfolio for high-capacity AI data lakes. 

Edge revenues were $5.43 billion, up 48% sequentially and 392% year over year. Management highlighted demand shifting toward AI-enabled devices and premium configurations, which support higher storage content in smartphones and PCs. Consumer revenues fell 32% sequentially and 5% year over year to $556 million.

SNDK’s New Business Models Improve Visibility

Sandisk has signed new business model agreements with eight Datacenter and Edge customers. These contracts have a weighted average duration of more than four years and include fixed and variable pricing elements with floors and ceilings.

The agreements represent minimum contracted revenues of $93.9 billion at floor pricing. Remaining performance obligations were $59.8 billion at quarter-end and would have been $91.1 billion including two agreements signed afterward. Financial guarantees totaled $16.5 billion. Sandisk expects the contracts to cover more than half of fiscal 2027 bits and roughly two-thirds of fiscal 2028 bits.

Sandisk’s Margins Expand on Operating Leverage

Non-GAAP gross margin expanded to 84.6% from 78.4% in the previous quarter and 26.4% reported in the year-ago quarter. The result exceeded management’s 79-81% guidance range.

Non-GAAP operating expenses were $484 million, representing 5.4% of revenues, compared with 7.5% in the previous quarter. Year over year, operating expenses increased 20%.

Non-GAAP operating margin rose to 79.2% from 70.9%, reflecting strong revenue growth and cost leverage.

Sandisk’s Cash Flow Supports Larger Buybacks

Sandisk ended the quarter with $4.76 billion in cash and cash equivalents after repurchasing 2.836 million shares for $4.5 billion. The board authorized an additional $14 billion repurchase program, lifting remaining authorization to $15.5 billion.

Cash flow from operations was $7.13 billion. Adjusted free cash flow totaled $5.04 billion, excluding $1.94 billion of customer prepayments and deposits related to the new business models. Gross capital expenditures were $562 million, or 6.3% of revenues.

SNDK’s Q1 Outlook Calls for Further Growth

For the first quarter of fiscal 2027, Sandisk expects revenues of $10.3-$10.8 billion. Sequential growth is projected to come from both bit growth and modest price increases.

Non-GAAP gross margin is expected between 83% and 85%, with operating expenses of $520-$540 million. Non-GAAP earnings are expected at $44-$46 per share. 

Sandisk expects fiscal 2027 sellable bit growth in the mid-teens as it carries higher inventory to support customer commitments.

Zacks Rank & Other Stocks to Consider

Currently, Sandisk sports a Zacks Rank #1 (Strong Buy). 

Some other top-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Onto Innovation ONTO, Inuvo INUV and Kimball Electronics KE. Each of the three stocks sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Onto Innovation, Inuvo and Kimball Electronics are set to report their quarterly results on Aug. 6, 11 and 12, respectively. Year to date, shares of Kimball Electronics and Inuvo have dropped 3.7% and 56%, respectively, while Onto Innovation have jumped 74.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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