Sandisk reported sharply diverging performance across its end markets during the fiscal fourth quarter of 2026 as datacenter revenue more than doubled sequentially while consumer sales declined.
Datacenter revenue increased 103% from the previous quarter to approximately $2.98 billion.
The business generated only $213 million during the prior-year quarter, indicating that quarterly datacenter revenue increased by nearly 14 times.
The increase reflects growing demand for flash storage used in artificial-intelligence infrastructure, cloud computing, enterprise applications, and data-intensive workloads.
Sandisk identified datacenter as a key growth pillar as the company expanded relationships with higher-value customers and deployed new commercial agreements.
Full-year datacenter revenue reached $5.15 billion, increasing 437% from $960 million during fiscal 2025.
Datacenter represented approximately one-third of Sandisk’s fourth-quarter revenue.
The segment also produced almost 25% of the company’s full-year revenue of $20.25 billion.
Edge remained Sandisk’s largest end market.
Quarterly Edge revenue increased 48% sequentially to $5.43 billion from $3.66 billion.
It increased approximately 392% from $1.1 billion during the prior-year quarter.
Full-year Edge revenue reached $12.16 billion, increasing 195% from $4.13 billion.
The business generated approximately 60% of Sandisk’s annual sales.
Consumer revenue moved in the opposite direction.
Quarterly consumer sales declined 32% sequentially to $556 million from $820 million.
Consumer revenue also fell 5% from $585 million during the prior-year period.
The decline demonstrates that Sandisk’s extraordinary growth was not broad-based across every end market.
Instead, the quarter was driven primarily by higher datacenter and Edge demand, along with significantly stronger pricing.
Total revenue increased 51% sequentially to $8.97 billion from $5.95 billion.
Revenue surged 372% from $1.9 billion during the prior-year quarter.
Sandisk said approximately two-thirds of the sequential revenue increase came from higher pricing and one-third resulted from higher volume.
Quarterly revenue increased by approximately $3.02 billion sequentially.
Applying management’s stated proportions suggests that roughly $2.01 billion of the increase was pricing-driven and about $1.01 billion came from volume.
Those figures are simplified estimates and do not account for changes in product or customer mix within each category.
The pricing environment produced exceptionally high margins.
GAAP gross margin reached 84.6%, increasing 620 basis points from 78.4% during the previous quarter.
Gross margin was only 26.2% during the prior-year quarter.
Quarterly gross profit reached $7.58 billion, compared with $498 million one year earlier.
Cost of revenue declined slightly to $1.38 billion from $1.4 billion despite revenue increasing by more than $7 billion.
Operating income increased to $7.04 billion from $4.11 billion sequentially and only $18 million one year earlier.
Operating profit represented approximately 78.5% of revenue.
Research and development expense increased to $348 million from $285 million one year earlier.
Selling, general and administrative expense increased to $197 million from $162 million.
Total operating expenses reached $545 million, representing only about 6% of quarterly revenue.
GAAP net income increased 91% sequentially to $6.9 billion.
Diluted GAAP EPS rose to $43.97 from $23.03.
Non-GAAP net income reached $6.16 billion, or $39.25 per diluted share.
The lower adjusted result reflected the exclusion of a substantial investment gain that increased GAAP earnings.
Sandisk recorded an $804 million gain on equity securities during the quarter.
That gain represented approximately 12% of reported net income.
The company held $1.78 billion of marketable equity securities at the end of the fiscal year.
Fiscal 2026 revenue increased 175% to $20.25 billion from $7.36 billion.
GAAP net income reached $11.43 billion, compared with a $1.64 billion loss during the prior year.
Non-GAAP net income increased to $10.99 billion from $440 million.
Full-year gross margin expanded to 71.5% from 30.1%.
Operating income reached $12.39 billion, compared with a $1.38 billion operating loss during fiscal 2025.
The prior-year result included a $1.83 billion goodwill impairment related to Sandisk’s market capitalization following its separation from Western Digital.
There was no comparable impairment during fiscal 2026.
Sandisk became a standalone publicly traded company in February 2025.
Results before the separation were prepared on a carve-out basis using records derived from Western Digital’s consolidated financial statements.
That makes portions of the year-over-year comparison less representative of an established standalone operating history.
The company also expanded its New Business Model agreements.
Sandisk announced five additional arrangements after disclosing five during its April earnings update.
The latest agreements included three with new customers and two expansions involving previously announced arrangements.
The NBM agreements appear to be having a significant financial impact.
Contract liabilities increased to approximately $1.24 billion from $25 million.
Refund liabilities rose to $1.5 billion from $126 million.
Sandisk received significant prepayments and deposits under the agreements.
Quarterly free cash flow reached $7.08 billion, but adjusted free cash flow was $5.04 billion after accounting for Flash Ventures activity and approximately $1.94 billion of NBM prepayments and deposits.
Full-year free cash flow reached $11.49 billion.
Adjusted free cash flow totaled $8.74 billion after removing the NBM-related cash flows and other adjustments.
Sandisk ended the fiscal year with $4.76 billion in cash, compared with $1.48 billion one year earlier.
The company also eliminated long-term debt, which declined from $1.83 billion to zero.
Accounts receivable increased to $4.71 billion from $1.07 billion.
Inventories rose to $2.7 billion from $2.08 billion.
The increase in receivables is consistent with the scale of the company’s revenue growth, but it also increases Sandisk’s exposure to customer payment timing and concentration.
Sandisk authorized an additional $14 billion of share repurchases.
The company had $15.5 billion of total remaining buyback authorization following the board’s decision.
The remaining authorization is approximately equal to Sandisk’s $15.74 billion of reported shareholders’ equity and more than three times its cash balance.
Treasury stock already totaled $4.54 billion at fiscal year-end.
Sandisk expects its momentum to continue during the first quarter of fiscal 2027.
Revenue is projected at between $10.3 billion and $10.8 billion.
The midpoint of $10.55 billion would represent approximately 18% sequential growth.
Non-GAAP gross margin is expected to range from 83% to 85%.
Non-GAAP diluted EPS is projected at between $44 and $46, compared with $39.25 during the fourth quarter.
Sandisk’s results demonstrate how rapidly its earnings can increase when higher datacenter demand, favorable customer mix, and rising flash-memory prices occur simultaneously.
However, the decline in consumer sales also shows that the company’s current growth is concentrated in datacenter and Edge markets rather than evenly distributed across its portfolio.
KEY QUOTES:
“We closed fiscal 2026 with a leading technology portfolio, established datacenter as a key growth pillar, and deepened our customer partnerships.”
“Our technology and products are well positioned to create value for our customers and generate growing and durable free cash flow.”
David Goeckeler, Chairman And Chief Executive Officer Of Sandisk
