How did Sandisk perform in fiscal Q1 2026 compared with the prior quarter and the prior year?

Revenue rose 21% sequentially to $2.31 billion and 23% year over year. Sequentially, GAAP operating income jumped from $18M to $176M and GAAP net income moved from a $23M loss to $112M. Year over year, however, GAAP operating income fell 40% from $291M and GAAP net income fell 47% from $211M, reflecting a sharp decline in gross margin.

What is driving the margin decline year over year?

Gross margin fell from 38.6% to 29.8% on a GAAP basis, and from 38.9% to 29.9% non-GAAP. The 8-K does not provide a detailed explanation of the cause, so investors should review the earnings presentation and the Form 10-Q for pricing, mix, and cost commentary.

What does the Q2 fiscal 2026 guidance imply?

Guidance calls for revenue of $2.55B to $2.65B, roughly 11% to 15% sequential growth at the midpoint, and non-GAAP gross margin of 41.0% to 43.0%, a substantial expansion of about 11 points from Q1. Non-GAAP diluted EPS of $3.00 to $3.40 implies a large earnings step-up, which depends heavily on achieving the margin target.

Are there any one-time items or unusual charges in the quarter?

Yes. The company recorded $9M in business separation costs related to its spin-off from Western Digital, a $10M loss on a business divestiture tied to a working capital support provision in an amended equity purchase agreement, and $53M in stock-based compensation. These are excluded from non-GAAP results. Management states that the timing of certain future charges cannot be reasonably predicted, so some non-GAAP adjustments may recur.

How is the balance sheet and cash position?

Cash and cash equivalents were $1,442M at October 3, 2025, down slightly from $1,481M. Long-term debt fell from $1,829M to $1,331M after a $500M repayment, and total shareholders' equity rose to $9,381M. Operating cash flow of $488M and free cash flow of $438M were strong, and the company says it has reached a net cash positive position ahead of plan.

SNDK 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed November 6, 2025. Cited figures are marked; the original filing is the authoritative source.

Sandisk (SNDK) reported fiscal first quarter 2026 results (quarter ended October 3, 2025) with revenue of $2.31 billion^a, up 21% sequentially and 23% year over year, and above its guidance range.

GAAP diluted EPS was $0.75^b and non-GAAP diluted EPS was $1.22, up 321% sequentially on a non-GAAP basis. However, GAAP gross margin of 29.8% and non-GAAP gross margin of 29.9% were both down roughly 9 points year over year, and operating income fell 40% year over year on a GAAP basis. The sequential recovery is strong, but profitability remains well below the prior-year level, so investors should weigh the margin trajectory against the top-line rebound.

Demand indicators were the main positive. Edge revenue rose 26% sequentially and Consumer rose 11%, while Datacenter revenue grew 26% sequentially to $269 million^c, though it is still down 10% year over year. Management cited two hyperscalers in qualification, a third hyperscaler and a top storage OEM planned for CY26, and BiCS8 reaching 15% of bits shipped with a majority of production expected by fiscal year-end 2026.

Cash flow improved markedly, with operating cash flow of $488 million^d and free cash flow of $438 million, and the company said it reached its net cash positive milestone ahead of plan. Guidance for fiscal Q2 2026 calls for revenue of $2.55 billion to $2.65 billion, non-GAAP gross margin of 41.0% to 43.0%, and non-GAAP diluted EPS of $3.00 to $3.40 on roughly 155 million diluted shares. The guidance implies a sharp step-up in margins, which is the key execution risk to monitor.

The 8-K also discloses a $10 million loss on a business divestiture and ongoing business separation costs from Western Digital, both excluded from non-GAAP results. Note that this 8-K furnishes the earnings release under Item 2.02, so the information is not deemed filed under Section 18 of the Exchange Act.

02—Key points

Key Highlights

Q1 FY26 revenue of $2,308M, up 21% sequentially and 23% year over year, above the guidance range.
GAAP diluted EPS of $0.75 and non-GAAP diluted EPS of $1.22, versus $0.29 non-GAAP in the prior quarter; year over year, non-GAAP EPS fell 33% from $1.81.
Gross margin of 29.8% GAAP and 29.9% non-GAAP, up 3.6 points sequentially but down about 9 points from 38.6% a year earlier.
Edge revenue up 26% sequentially to $1,387M and Consumer up 11% to $652M; Datacenter up 26% sequentially to $269M but down 10% year over year.
Q2 FY26 guidance: revenue of $2.55B to $2.65B, non-GAAP gross margin of 41.0% to 43.0%, and non-GAAP diluted EPS of $3.00 to $3.40.
Operating cash flow of $488M and free cash flow of $438M; cash and equivalents of $1,442M, with long-term debt reduced to $1,331M after a $500M repayment in the quarter.
Management says the company reached its net cash positive milestone ahead of plan; BiCS8 accounts for 15% of bits shipped and is expected to be the majority of production by fiscal year-end 2026.

03—Questions

Frequently Asked Questions

How did Sandisk perform in fiscal Q1 2026 compared with the prior quarter and the prior year?
Revenue rose 21% sequentially to $2.31 billion and 23% year over year. Sequentially, GAAP operating income jumped from $18M to $176M and GAAP net income moved from a $23M loss to $112M. Year over year, however, GAAP operating income fell 40% from $291M and GAAP net income fell 47% from $211M, reflecting a sharp decline in gross margin.
What is driving the margin decline year over year?
Gross margin fell from 38.6% to 29.8% on a GAAP basis, and from 38.9% to 29.9% non-GAAP. The 8-K does not provide a detailed explanation of the cause, so investors should review the earnings presentation and the Form 10-Q for pricing, mix, and cost commentary.
What does the Q2 fiscal 2026 guidance imply?
Guidance calls for revenue of $2.55B to $2.65B, roughly 11% to 15% sequential growth at the midpoint, and non-GAAP gross margin of 41.0% to 43.0%, a substantial expansion of about 11 points from Q1. Non-GAAP diluted EPS of $3.00 to $3.40 implies a large earnings step-up, which depends heavily on achieving the margin target.
Are there any one-time items or unusual charges in the quarter?
Yes. The company recorded $9M in business separation costs related to its spin-off from Western Digital, a $10M loss on a business divestiture tied to a working capital support provision in an amended equity purchase agreement, and $53M in stock-based compensation. These are excluded from non-GAAP results. Management states that the timing of certain future charges cannot be reasonably predicted, so some non-GAAP adjustments may recur.
How is the balance sheet and cash position?
Cash and cash equivalents were $1,442M at October 3, 2025, down slightly from $1,481M. Long-term debt fell from $1,829M to $1,331M after a $500M repayment, and total shareholders' equity rose to $9,381M. Operating cash flow of $488M and free cash flow of $438M were strong, and the company says it has reached a net cash positive position ahead of plan.

04—Continue

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