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Introduction & Market Context
SanDisk Corporation (NASDAQ:SNDK) presented its fiscal first quarter 2026 financial results on November 6, 2025, highlighting strong revenue growth across all segments and sequential margin improvement. The company's performance reflects strengthening demand in the NAND market, with supply constraints and AI-driven growth creating favorable conditions.
According to the presentation, SanDisk is benefiting from several market tailwinds, including accelerating global datacenter and AI investments, which are expected to surpass $1 trillion by 2030, as well as a PC refresh cycle aided by Windows 11 adoption.
Quarterly Performance Highlights
SanDisk reported revenue of $2.3 billion for Q1 FY2026, representing a 21% increase quarter-over-quarter and a 23% year-over-year improvement. The company achieved a non-GAAP gross margin of 29.9%, up 3.5 percentage points sequentially but down 9 percentage points compared to the same quarter last year.
Non-GAAP diluted earnings per share reached $1.22, a substantial improvement from $0.29 in the previous quarter but below the $1.81 reported in Q1 FY2025. The company noted that bit shipments increased by mid-teens while average selling price per gigabyte rose by mid-single digits during the quarter.
SanDisk generated $488 million in operating cash flow and $448 million in adjusted free cash flow during the quarter, representing a dramatic improvement from both the previous quarter and year-ago period. The company ended the quarter with $1.4 billion in cash and cash equivalents, achieving a net cash position faster than initially expected.
Segment Performance Analysis
The presentation revealed strong performance across all three of SanDisk's end markets, with particularly robust growth in the datacenter and edge segments.
Datacenter revenue reached $269 million, increasing 26% sequentially, driven by growing momentum for the company's "Stargate" product line. SanDisk reported two qualifications underway with hyperscalers and plans for additional qualifications with another hyperscaler and a major storage OEM in calendar year 2026.
Edge market revenue grew to $1.387 billion, also up 26% quarter-over-quarter. The company attributed this growth to the PC refresh cycle and continued momentum in edge upgrades driving NAND content. SanDisk noted high single-digit capacity growth per device in smartphones and projected mid-single-digit growth in PC capacity per device for CY2025/26.
Consumer revenue increased to $652 million, up 11% from the previous quarter. The company highlighted strong partnerships in gaming, including over 900,000 co-branded Nintendo Switch 2 microSD Express Card sales in fiscal Q1 and an expanded presence in handheld gaming with SanDisk microSD for ROG Ally on Xbox.
Forward Guidance and Strategy
SanDisk provided an optimistic outlook for the second fiscal quarter, projecting revenue between $2.55 billion and $2.65 billion. The company expects non-GAAP gross margin to improve significantly to between 41% and 43%, with non-GAAP diluted earnings per share forecasted between $3.00 and $3.40.
The presentation emphasized that the majority of fiscal 2026 capital expenditures will support BiCS8 technology investments, reflecting the company's focus on next-generation flash memory technology. SanDisk's joint venture with Kioxia continues to be a cornerstone of its manufacturing strategy, with both companies collaborating on flash memory development and production.
Financial Position and Cash Flow
SanDisk's financial position has strengthened considerably, with the company achieving positive adjusted free cash flow of $448 million, representing a 482% increase quarter-over-quarter and a 399% improvement year-over-year. This robust cash generation has helped SanDisk reach a net cash position ahead of schedule.
Capital expenditures remain disciplined, with total SanDisk cash CapEx at $40 million in Q1, representing just 1.7% of revenue. The company's gross CapEx, including its share of joint venture investments, totaled $387 million or 16.8% of revenue, primarily supporting technology transitions.
The company's strong execution in a strengthening demand environment, coupled with AI-driven SSD growth and NAND demand outpacing supply, positions SanDisk well for continued performance improvement throughout fiscal 2026, according to the presentation.
Full presentation:
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