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Sandisk Corp (SNDK)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 revenue was $1.901B, up 12% q/q and 8% y/y, with non-GAAP EPS of $0.29; both exceeded the prior quarter’s guidance, driven by better-than-expected bit growth and early pricing actions .
  • Gross margin (non-GAAP) improved to 26.4% from 22.7% q/q; excluding $51M underutilization and $42M fab start-up costs, non-GAAP GM would have been 31.3%, indicating embedded margin tailwinds as BiCS8 ramps and start-up costs step down over the next two quarters .
  • Q1 2026 outlook issued: revenue $2.10–$2.20B and non-GAAP EPS $0.70–$0.90; subsequent Q1 2026 actuals significantly beat with $2.308B revenue and $1.22 non-GAAP EPS, reinforcing demand strength and pricing power .
  • Strategic catalysts: ramp of BiCS8, enterprise SSD traction (QLC, PCIe Gen5/6), and High Bandwidth Flash (HBF) roadmap with ecosystem partnership (SK Hynix), positioning SNDK for AI-driven demand in data lakes and inference workloads .

What Went Well and What Went Wrong

What Went Well

  • Q4 revenue and non-GAAP EPS exceeded guidance; “Sandisk delivered strong results this quarter, with revenue and non-GAAP EPS exceeding our guidance” — CEO David Goeckeler .
  • Mix/pricing tailwinds: implemented price increases and managed supply to undersupply, supporting margins; non-GAAP GM up 370 bps q/q and would be ~31.3% absent underutilization/start-up costs .
  • Strategic progress in datacenter: bits shipped to datacenter >12% of total; unveiling 256TB NVMe enterprise SSD on Ultra QLC, with Tier-1 customer qualifications underway, aligning with AI data lake needs .

What Went Wrong

  • Non-GAAP GM remains below prior year due to nodal transition costs and start-up impacts; Q4 non-GAAP GM 26.4% vs 36.4% y/y (down 10 ppt) .
  • GAAP profitability pressured: Q4 GAAP net loss of $23M; FY25 GAAP results include earlier goodwill impairment ($1.83B in Q3), highlighting volatility during separation and transition .
  • Underutilization and start-up costs still a headwind in Q4/Q1: ~$51M underutilization and ~$42M start-up costs in Q4; guiding ~$60M start-up costs in Q1 before step-downs in Q2/Q3 .

Financial Results

Income Statement (GAAP and Non-GAAP)

MetricQ4 2024Q3 2025Q4 2025
Revenue ($USD Billions)$1.760 $1.695 $1.901
GAAP Gross Margin (%)36.1% 22.5% 26.2%
Non-GAAP Gross Margin (%)36.4% 22.7% 26.4%
GAAP Operating Income ($USD Millions)$199 $(1,881) $18
Non-GAAP Operating Income ($USD Millions)$255 $2 $100
GAAP Net Income ($USD Millions)$120 $(1,933) $(23)
Non-GAAP Net Income ($USD Millions)$180 $(43) $42
GAAP Diluted EPS ($)$0.83 $(13.33) $(0.16)
Non-GAAP Diluted EPS ($)$1.24 $(0.30) $0.29

Notes:

  • Excluding $51M underutilization and $42M start-up costs, Q4 non-GAAP GM would have been ~31.3% .
  • Q3 included a $1.83B goodwill impairment (GAAP) .

End Market Revenue Breakdown

Segment Revenue ($USD Millions)Q4 2024Q3 2025Q4 2025
Cloud / Datacenter$170 $197 $213
Client / Edge$1,067 $927 $1,103
Consumer$523 $571 $585
Total$1,760 $1,695 $1,901

Note: Segment naming shifts in Q1 2026 to Datacenter/Edge/Consumer; Q4 2025 uses Cloud/Client/Consumer .

Key Performance Indicators

KPIQ3 2025Q4 2025
Inventory Days150 135
Adjusted Free Cash Flow ($USD Millions)$220 $77
Free Cash Flow ($USD Millions)$(18) $49
Cash & Equivalents ($USD Billions)$1.507 $1.481
Long-term Debt ($USD Billions)$1.927 $1.829
Diluted Shares (Non-GAAP, Millions)145 147

Actuals vs Wall Street Consensus (S&P Global)

MetricQ3 2025Q4 2025Q1 2026
Revenue Actual ($USD Billions)$1.695 $1.901 $2.308
Revenue Consensus ($USD Billions)$1.622*$1.829*$2.149*
EPS (Non-GAAP) Actual ($)$(0.30) $0.29 $1.22
EPS Consensus ($)$(0.387)*$0.0333*$0.891*

Values with asterisk retrieved from S&P Global.

Highlights:

  • Q4 2025 revenue beat consensus by ~$72M and non-GAAP EPS beat by ~$0.26; both are significant beats that should support positive estimate revisions .
  • Q1 2026 actuals further beat consensus revenue by ~$159M and EPS by ~$0.33, demonstrating accelerating demand/pricing .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ResultChange
Revenue ($B)Q4 2025$1.75–$1.85 Actual $1.901 Raised/Beat
Non-GAAP EPS ($)Q4 2025($0.10)–$0.15 Actual $0.29 Raised/Beat
Non-GAAP Gross Margin (%)Q4 202525.5–27.0 Actual 26.4 In-line to High End
Non-GAAP OpEx ($M)Q4 2025395–405 Actual 402 In-line
Revenue ($B)Q1 2026—$2.10–$2.20 New
Non-GAAP Gross Margin (%)Q1 2026—28.5–29.5 New
Non-GAAP OpEx ($M)Q1 2026—415–430 New
Non-GAAP Interest & Other ($M)Q1 2026—40–45 New
Non-GAAP Tax ($M)Q1 2026—35–40 New
Non-GAAP EPS ($)Q1 2026—$0.70–$0.90 New
Diluted Shares (M)Q1 2026—~148 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
AI/Technology Initiatives (HBF, BiCS8, Ultra QLC)N/AEarly BiCS8 ramp; pricing actions commenced HBF partnership with SK Hynix; sampling roadmap 2026/2027; 256TB NVMe enterprise SSD unveiled; BiCS8 scaling across PC OEMs Strengthening innovation narrative
Supply/Demand & PricingN/AActions to reduce supply; price increases started Undersupply through FY26; several products on allocation; additional price increases Tightening market supports pricing
Margins & Cost StructureN/AGM down on impairment; transition costsQ4 GM up q/q; start-up/underutilization ~300 bps drag; start-up costs to step down Q2/Q3 Improving trajectory
Datacenter SSD ProgressN/AOngoing qualifications; expanding portfolioBits >12% data center; two hyperscalers in qualification; broader customer engagement Building momentum
Tariffs/MacroN/A—Monitoring tariff dynamics; confident in navigating with global footprint Watchful, manageable
Client/Mobile Content GrowthN/A—PC capacities up mid-single digits in ’25, higher in ’26; smartphones up high single digits Content-per-unit tailwind

Note: “N/A” indicates unavailable in reviewed documents for Q2 2025.

Management Commentary

  • “With High Bandwidth Flash (HBF), we are creating a new paradigm for AI inference solutions… we expect to have HBF technology available by 2026 and product samples, including the controller device, in 2027.” — David Goeckeler, CEO .
  • “Our non-GAAP gross margin for the fourth quarter includes $51M in underutilization charges and $42M in fab startup costs… excluding these charges, our non-GAAP gross margin would have been 31.3%.” — Luis Visoso, CFO .
  • “Several of our products are on allocation, and we expect mid single digit undersupply for fiscal 2026, supporting further price increases.” — Luis Visoso, CFO .
  • “Data center represented over 12% of our total bits shipped… we are setting a new benchmark in performance, capacity and efficiency for AI-driven workloads.” — David Goeckeler, CEO .

Q&A Highlights

  • Gross margin trajectory: ~300 bps drag from underutilization/start-up in Q1; start-up costs stepping down materially in Q2 and further in Q3; underutilization approaching near-zero thereafter, barring market changes .
  • Datacenter ramp: qualification with multiple hyperscalers; 256TB Ultra QLC platform entering customer qualification (6–12 months cycle) with strong customer pull tied to AI data lakes .
  • Tariffs & geopolitical: management monitoring evolving tariff regimes; confident in navigating with global footprint (Japan fabs), awaiting clarity on specific rates .
  • Inventory & supply discipline: inventory days reduced to 135; undersupply stance maintained to support pricing and profitability .

Estimates Context

  • Q4 2025 beat: Revenue $1.901B vs consensus $1.829B*; non-GAAP EPS $0.29 vs $0.0333*, a clear beat; EBITDA actual $87M vs consensus ~$132M* (reflects start-up and underutilization costs) .
  • Q3 2025: revenue $1.695B vs $1.622B*; non-GAAP EPS $(0.30) vs $(0.387)* — modest beats despite impairment effects .
  • Q1 2026 (subsequent quarter): revenue $2.308B vs $2.149B*; non-GAAP EPS $1.22 vs $0.891* — strong demand/pricing and mix improvement .

Values with asterisk retrieved from S&P Global.

Implications:

  • Expect upward revisions to FY26 estimates for revenue/EPS and potentially margins as start-up costs fade and BiCS8 mix rises .
  • Model sensitivities: pricing (~mid-single-digit increases), datacenter qualification timing, and underutilization progression drive EPS variance .

Key Takeaways for Investors

  • Q4 delivered a clean beat on revenue and EPS with sequential margin expansion; underlying margins are stronger than reported when adjusting for temporary start-up/underutilization costs .
  • Pricing power and tight supply are durable into FY26, with several products on allocation and mid-single-digit undersupply supporting further price increases .
  • AI-driven datacenter demand (data lakes, inference) is a multi-year tailwind; Ultra QLC and PCIe Gen5/6 SSDs plus HBF roadmap enhance strategic optionality and TAM capture .
  • Margin trajectory should improve as BiCS8 ramps toward ~40–50% of bits by end FY26 and start-up costs step down meaningfully by fiscal Q3, turning headwinds into tailwinds .
  • Balance sheet strengthening: cash ~$1.5B, debt actively prepaid; inventory days reduced, adjusted FCF positive in Q4, supporting deleveraging and investment capacity .
  • Near-term trading: positive estimate momentum and favorable supply/demand/pricing likely support the stock; watch margin cadence vs guidance (start-up cost step-downs) and datacenter qualification milestones .
  • Medium-term thesis: execution on node transition, AI storage leadership, and disciplined supply/pricing underpin a margin expansion cycle and cash generation inflection .