Sandisk (SNDK) Q4 FY26 earnings call: guidance and Q&A

Are NBM margins still around 80% as previously guided, and should investors expect buybacks of approximately $5 billion per quarter, representing 10% of market cap annually?

Management confirmed NBMs are expected to be around 80% gross margin, with potential upside. They expressed confidence in consistent execution of the buyback program, noting the $4.5 billion executed in Q4 from a $6 billion authorization, and the new $14 billion authorization.

“Ben, we -- not to pick a specific number, but we do expect to be around 80% for the new business models. As you know, there is some upside as prices continue to go up, we'll capture some of that upside as well.”

asked by Benjamin Reitzes · answered by Luis Visoso

Could you provide the volume/pricing breakdown for Q4 revenue growth and clarify if the Q1 guidance, which seems lighter than expected, is volume-related, due to less price upside, or conservatism?

For Q4, approximately one-third of revenue growth came from higher volumes and two-thirds from higher pricing. For Q1, growth is expected from both bit growth and modest price increases. The company emphasized that the Q1 guide reflects a balance of factors, including prior pricing actions and ongoing market dynamics.

“So on Q4, Mark, what we mentioned is that about 1/3 of the growth came from incremental bits and 2/3 came from pricing. So you have that split there. And obviously, as you compare us versus others, there is a different timing on when price increases were taken.”

asked by Mark Newman · answered by Luis Visoso

What are the opportunities with NVIDIA's CMX standard and Storage-Next, and what is the timeline for samples/shipping of the global standard HBF product with SK Hynix?

Management sees significant innovation in inference memory architectures as an opportunity, especially with storage being critical. They are working closely with hyperscalers via NBMs to align roadmaps. HBF, announced 1.5 years ago, has made enormous progress, with more details on shipping and release dates to be provided next week at Analyst Day, following deep customer conversations and recent advisory board additions.

“As we scale inference, we think it provides an enormous opportunity. The biggest -- the way we're thinking about this is staying very close to our customers because they're going to be the ones that define what the architecture is in the future.”

asked by David Gibson · answered by David V. Goeckeler

How is Sandisk thinking about the desired mix of NBM customers across Edge, hyperscalers, and AI Datacenters, and are additional hyperscaler agreements being pursued? Also, what is the holistic capital allocation strategy, including programmatic buybacks and potential dividends?

Sandisk is open to NBMs with strategic customers across all segments (Datacenter and Edge) that value products, commit to 5-year agreements with growth, and offer attractive financials. They have made incredible progress with 4+ years of visibility and are selective but still in deep conversations with additional customers. Capital allocation prioritizes business investment (OpEx, CapEx, JV), then a strong cash balance, and finally returning cash to shareholders via share buybacks, which are currently preferred over dividends for tax efficiency.

“So first of all, we really started this journey just 2-plus quarters ago. Here we are with a little bit more than 50% of our supply for fiscal year '27, which we're a month in now, is already committed. We understand the financials. We understand exactly where it's going. We already have POs for the year from those customers.”

asked by James Schneider · answered by David V. Goeckeler

Why is gross margin guided lower if pricing is up modestly? And what gives Sandisk confidence in the durability of NBMs and an elongated cycle?

The gross margin guide reflects a balance of factors, including mix and prudent assumptions, with the high end still above the prior quarter. Durability is a key focus, aiming to reduce boom-and-bust cycles. NBMs provide contractual structures with financial commitments ($16.5B aggregate guarantees) and deep strategic engagement with CFOs/CEOs of major companies, ensuring aligned incentives and long-term visibility. Customers are already seeking to expand NBMs, reinforcing confidence in demand.

“So why do we have conviction that these customers are going to hang in there with us? There's lots of reasons for that. Number one is we put a contractual structure in place where we align our incentives. They're making financial commitments to us that if they don't follow through on their commitments that I think $16.5 billion in aggregate would flow to us on our balance sheet.”

asked by Christopher Muse · answered by David V. Goeckeler