Sandisk Corporation
Loading chart...
Item 1. Business
Separation from Western Digital Corporation
Prior to February 21, 2025, we were wholly owned by Western Digital Corporation (“WDC”). As of February 21, 2025, we separated from WDC (the “separation”) and became a standalone publicly traded company, trading under the stock symbol “SNDK” on the Nasdaq Global Select Market. For more information about the separation, see Part II, Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operation and Part II, Item 8., Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K.
General
Sandisk is a leading developer, manufacturer and provider of data storage devices and solutions based on NAND flash technology. With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for AI workloads in datacenters, edge devices, and consumers. Our technologies enable everyone from students, gamers, and home offices to the largest enterprises and public clouds to produce, analyze, and store data. Our solutions include a broad range of solid-state drives, embedded products, removable cards, universal serial bus drives and wafers and components. Our broad portfolio of technology and products addresses multiple end markets of “Cloud,” “Client” and “Consumer.”
Through the Client end market, we provide our original equipment manufacturer and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalizes on the strength of our product brand recognition and vast presence around the world. Cloud is comprised primarily of products for datacenters, cloud service providers, and private cloud customers.
We hold a strong position in the Consumer end market and have significant consumer brands and franchises globally, with valuable patent portfolios containing approximately 7,900 granted patents and approximately 3,200 pending patent applications worldwide. We have extensive customer, partner and channel relationships across a number of end-markets and geographies and have a rich heritage of innovation and operational excellence, a wide range of intellectual property assets, broad research and development capabilities and large-scale, efficient manufacturing supply chains. The strong growth in the amount, value and use of data continues, creating a global need for larger, faster, and more capable storage solutions.
We are a customer-focused organization that has developed deep relationships with industry leaders to continue to deliver innovative solutions to help users capture, store and transform data across a boundless range of applications. We help original equipment manufacturers address storage opportunities and solutions to capture and transform data into a myriad of devices and edge technologies. We have also built strong consumer brands with tools to manage vast libraries of personal content and to push the limits of what’s possible for storage. At Sandisk, we continue to transform ourselves to address the growth in data by providing what we believe to be the broadest range of storage technologies in the industry with a comprehensive product portfolio and global reach.
Industry
We operate in the data storage industry. The ability to access, store and share data from anywhere on any device is increasingly important to our customers and end users. From the intelligent edge to the cloud, data storage is a fundamental component underpinning the global technology architecture. Our strengths in innovation and cost leadership, diversified product portfolio and broad routes to market provide a foundation upon which we are solidifying our position as an essential building block of the digital economy. We believe there is a tremendous market opportunity flowing from the rapid global adoption of the technology architecture built with cloud infrastructure tied to intelligent endpoints all connected by high-performance networks. The value and urgency of data storage at every point across this architecture have never been clearer.
The increase in computing complexity and advancements in artificial intelligence, along with growth in cloud computing applications, connected mobile devices and Internet-connected products, and edge devices is driving unabated growth in the volume of digital content to be stored and used. We believe our expertise and innovation in flash technology enable us to bring powerful solutions to a broader range of applications. We continuously monitor the full array of flash-based storage technologies, including reviewing these technologies with our customers, to ensure we are appropriately resourced to meet our customers’ storage needs.
Flash Technology
5
Flash products provide non-volatile data storage based on flash technology. We develop and manufacture solid state storage products for a variety of applications including enterprise or cloud storage, client storage, automotive, mobile devices and removable memory devices. Over time, we have successfully developed and commercialized successive generations of 2- and 3-dimensional flash technology with increased numbers of storage bits per cell in an increasingly smaller form factor, further driving cost reductions. We devote significant research and development resources to the development of highly reliable, high-performance, cost-effective flash-based technology and are continually pursuing developments in next-generation flash-based technology capacities. We are leveraging our expertise, resources and strategic investments in non-volatile memories to explore a wide spectrum of persistent memory and storage class memory technologies. We have also initiated, defined and developed standards to meet new market needs and to promote wide acceptance of flash storage standards through interoperability and ease of use.
Our Data Solutions
Our broad portfolio of technology and products addresses multiple end markets of “Cloud,” “Client” and “Consumer” and are comprised of the Sandisk™ brand. Certain of our products will also be sold for a limited transitional period under the Western Digital®, WD® and other brands under license from WDC.
Cloud represents a large and growing end market comprised primarily of products for public or private cloud environments and enterprise customers. We provide the Cloud end market with an array of high-performance enterprise solid state drives. Our high-performance enterprise class solid state drives include high-performance flash-based solid state drive and software solutions that are optimized for performance applications providing a range of capacity and performance levels primarily for use in enterprise servers and supporting high-volume online transactions, AI-related workloads, data analysis and other enterprise applications.
Through the Client end market, we provide numerous data solutions that we incorporate into our client’s devices, which consist of solid state drive desktop and notebook PCs, gaming consoles and set top boxes, as well as flash-based embedded storage products for mobile phones, tablets, notebook PCs and other portable and wearable devices, automotive applications, Internet of Things, and industrial and connected home applications. Our solid state drives are designed for use in devices requiring high performance, reliability and capacity with various attributes such as low cost per gigabyte, quiet acoustics, low power consumption and protection against shocks.
We serve the Consumer end market with a portfolio of solid state drives and removable flash, including cards and universal serial bus flash drives, through our retail and channel routes to market. We offer client portable solid state drives with a range of capacities and performance characteristics to address a broad spectrum of the client storage market. Our removable cards are designed primarily for use in consumer devices, such as mobile phones, tablets, imaging systems, cameras and smart video systems. Our universal serial bus flash drives are used in the computing and consumer markets and are designed for high performance and reliability.
Competition
Our industry is highly competitive. We believe we are well positioned with our leading flash product portfolio, premium consumer brand, differentiated semiconductor innovation engine and leadership in driving cost efficiency. Nevertheless, we face strong competition from other manufacturers of flash in the Cloud, Client and Consumer end markets. We compete with vertically integrated suppliers such as Kioxia, Micron Technology, Inc., Samsung Electronics Co., Ltd., SK Hynix, Inc., Yangtze Memory Technologies Co., Ltd. and numerous smaller companies that assemble flash into products.
Business Strategy
Our overall strategy is to leverage our innovation, technology and execution capabilities to be an industry-leading and broad-based developer, manufacturer and provider of storage devices and solutions that support the infrastructure that has enabled the unabated proliferation of data. We strive to successfully execute our strategy through the following foundational elements in order to create long-term value for our customers, partners, investors and employees:
•Innovation and Cost Leadership: We continue to innovate and develop advanced technologies across platforms to deliver timely new products and solutions to meet growing demands for scale, performance and cost efficiency in the market.
•Broad Product Portfolio: We leverage our capabilities in firmware, software and systems to deliver compelling and differentiated integrated storage solutions to our customers that offer the best combinations of performance, cost, power consumption, form factor, quality and reliability, while creating new use cases for our solutions in emerging markets.
6
•Operational Excellence: We are focused on delivering the best value for our customers in Cloud, Client and Consumer end markets through a relentless focus on appropriately scaling our operations to efficiently support business growth; achieving best in class cost, quality and cycle-time; maintaining industry leading manufacturing capabilities; and having a competitive advantage in supply-chain management.
Our strategy provides the following benefits, which distinguish us in the dynamic and competitive data storage industry:
•a varied product portfolio that establishes us as a leading developer and manufacturer of integrated products and solutions, making us a more strategic supply partner to our customers;
•efficient and flexible manufacturing capabilities, allowing us to leverage our flash research and development and capital expenditures to deliver innovative and cost-effective storage solutions to multiple markets;
•deep relationships with industry leaders across the data ecosystems that give us the broadest routes to market; and
•industry leading consumer brand awareness and global retail distribution presence.
Research and Development
We devote substantial resources to the development of new products and the improvement of existing products. We focus our engineering efforts on optimizing our product design and manufacturing processes to bring our products to market in a cost-effective and timely manner. For a discussion of associated risks, see Part I, Item 1A., Risk Factors of this Annual Report on Form 10-K.
Patents, Licenses and Proprietary Information
We rely on a combination of patents, trademarks, copyright and trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights.
We have approximately 7,900 granted patents and approximately 3,200 pending patent applications worldwide. We continually seek additional U.S. and international patents on our technology. We believe that, although our active patents and patent applications have considerable value, the successful manufacturing and marketing of our products also depend upon the technical and managerial competence of our staff. Accordingly, the patents held and applied for cannot alone ensure our future success.
In addition to patent protection of certain intellectual property rights, we consider elements of our product designs and processes to be proprietary and confidential. We believe that our non-patented IP, particularly some of our process technology, is an important factor in our success. We rely upon non-disclosure agreements, contractual provisions and a system of internal safeguards to protect our proprietary information. Despite these safeguards, there is a risk that competitors may obtain and use such information. The laws of foreign jurisdictions in which we conduct business may provide less protection for confidential information than the laws of the U.S.
We rely on certain technology that we license from other parties to manufacture and sell our products. We believe that we have adequate cross-licenses and other agreements in place in addition to our own intellectual property portfolio to compete successfully in the storage industry. For a discussion of associated risks, see Part I, Item 1A., Risk Factors of this Annual Report on Form 10-K.
Manufacturing
We believe that we have significant know-how, unique product manufacturing processes, test and tooling, execution skills, human resources and training to continue to be successful and to adjust our manufacturing operations as necessary. We strive to maintain manufacturing flexibility, high manufacturing yields, reliable products and high-quality components. The critical elements of our production are high volume and utilization, low-cost assembly and testing, strict adherence to quality metrics and maintaining close relationships with our strategic component suppliers to access best-in-class technology and manufacturing capacity. We continually monitor our manufacturing capabilities to respond to the changing requirements of our customers and maintain our competitiveness and position as a data technology leader.
Flash manufacturing requires complex processes involving the production and assembly of precision components with narrow tolerances and rigorous testing. The manufacturing processes involve a number of steps that are dependent on each other and occur in “clean room” environments. These processes require skill in process engineering and efficient space utilization in order to keep the operating costs of these specialized manufacturing environments under control. We continually evaluate our manufacturing processes in an effort to increase productivity, sustain and improve quality and decrease manufacturing costs. We continually evaluate which steps in the manufacturing process would benefit from automation and how automated manufacturing processes can improve productivity and reduce manufacturing costs. We also leverage contract manufacturers when strategically advantageous.
7
Operations
Our flash offerings consist of flash-based memory, controllers and firmware and other components. Substantially all of our flash-based memory is obtained from our joint ventures with Kioxia, which provides us with leading-edge, high-quality and low-cost flash memory wafers. While substantially all of our flash memory supply utilized for our products are purchased from these ventures, from time to time we also purchase flash memory from other flash manufacturers. Controllers are primarily designed in-house and manufactured by third-party foundries or acquired from third-party suppliers. Our assembly and test operations comprise in-house assembly and test facilities located in Penang, Malaysia and other contract manufacturers, and the assembly and test facility owned and operated by SDSS Venture. SDSS is 20% owned by Sandisk and 80%
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. You should read this information in conjunction with the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and notes thereto for the fiscal year ended June 27, 2025, included in our Annual Report on Form 10-K. See also “Forward-Looking Statements” immediately prior to Part I, Item 1 in this Quarterly Report on Form 10-Q.
Unless otherwise indicated or the context requires, references herein to specific years and quarters are to our fiscal years and fiscal quarters. As used herein, the terms “we,” “us,” “our,” and the “Company” refer to Sandisk Corporation and its subsidiaries.
Overview
Sandisk is a leading developer, manufacturer and provider of data storage devices and solutions based on NAND flash technology. With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for artificial intelligence (“AI”) workloads in datacenters, edge devices, and consumer applications. Our technologies enable everyone from students, gamers, and home offices to the largest enterprises and public clouds to produce, analyze, and store data. Our solutions include a broad range of solid-state drives (“SSD”), embedded products, removable cards, universal serial bus drives and wafers and components. Our broad portfolio of technology and products addresses multiple end markets of “Datacenter” (formerly referred to as “Cloud”), “Edge” (formerly referred to as “Client”), and “Consumer.”
The Datacenter end market is comprised primarily of products for datacenters, cloud service providers, and private cloud customers. Through the Edge end market, we provide our original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalize on the strength of our product brand recognition and vast points of presence around the world.
Our fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, we report a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal year 2025, which ended on June 27, 2025, was comprised of 52 weeks, with each fiscal quarter consisting of 13 weeks. Fiscal year 2026 is comprised of 53 weeks and ends on July 3, 2026, with the first fiscal quarter consisting of 14 weeks.
The Separation
On October 30, 2023, Western Digital Corporation (“WDC”) announced that its board of directors (the “WDC Board of Directors”) authorized WDC management to pursue a plan to separate the Company into an independent public company (the “separation” or the “spin-off”). The separation received final approval by the WDC Board of Directors and was completed on February 21, 2025. Prior to February 21, 2025, the Company was wholly owned by WDC.
On February 21, 2025, WDC executed the spin-off of the Company through WDC’s pro rata distribution of 116,035,464, or 80.1%, of the Company’s outstanding shares of common stock to holders of WDC’s common stock. Each WDC stockholder received one-third (1/3) of one share of the Company’s common stock for each share of WDC’s common stock held by such WDC stockholder as of February 12, 2025, the record date of the distribution. Upon completion of the separation, WDC owned 28,827,787, or 19.9%, of the outstanding shares of the Company’s common stock. Following the distribution, the Company became an independent publicly listed company, and on February 24, 2025, the Company began trading as an independent, publicly traded company under the stock symbol “SNDK” on Nasdaq.
On June 9, 2025, WDC disposed of 21,314,768, or 14.6%, of our common stock through an exchange of our common stock for WDC debt held by WDC creditors, which shares were sold by affiliates of the WDC creditors in a registered public offering by the Company. On February 18, 2026, WDC disposed of 5,821,135 outstanding shares of the Company through an exchange of Sandisk’s common stock for WDC debt held by WDC creditors, which shares were sold by affiliates of the WDC creditors in a registered public offering by us. All expenses for these offerings were paid for by us. Following this transaction, WDC continued to retain 1,691,884 of the outstanding shares of the Company’s common stock and, as of March 19, 2026, the sale of such shares is no longer subject to restriction.
36
Financing Activities
Prior to the separation, the Company received financing from certain of WDC’s subsidiaries in the form of borrowings under revolving credit agreements and promissory notes to fund activities primarily related to Flash Ventures. Additional information regarding our outstanding notes due to (from) Western Digital Corporation is included in Part I, Item 1, Note 10, Related Parties and Related Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
As discussed in Part I, Item 1, Note 8, Debt of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, on February 21, 2025, the Company entered into a loan agreement comprised of a seven-year Term Loan B facility in an aggregate principal amount of $2.0 billion (the “Term Loan Facility”) and a five-year revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $1.5 billion, including up to $150 million for letters of credit.
On February 21, 2025, the Company borrowed $2.0 billion under its Term Loan Facility. The Company used a portion of the proceeds of the borrowing to make a net distribution payment of $1.5 billion to WDC, with the remainder to be used for general corporate purposes of the Company. The proceeds of the Revolving Credit Facility may be used by the Company for working capital and general corporate purposes.
On March 4, 2026, the Company settled in full the remaining outstanding principal amounts of the Term Loan Facility, plus accrued interest, using cash on hand. In connection with the early settlement of the Term Loan Facility, the Company recognized a loss on debt extinguishment of $46 million resulting from the write-off of the remaining unamortized issuance costs.
As of April 3, 2026, the Company has drawn no amounts under the Revolving Credit Facility.
Operational Update
In the third quarter, we continued to observe that the rapid growth of AI infrastructure is driving demand for high-performance storage products, and AI adoption is driving the need for NAND storage to support these workloads, leading to increased revenues when compared to prior periods. The current demand environment has led to pricing shifts that have positively impacted our business, and we expect these favorable pricing trends to have a positive impact on our revenue and cash flows from operations. We expect these conditions to persist through calendar year 2026 and beyond. Accordingly, we expect to invest in, and allocate resources to, high-value opportunities for both the short-term and long-term benefit of our customers and the Company.
The Trump Administration has made a number of changes in U.S. trade policy, including the imposition of tariffs under the authority of the International Emergency Economic Powers Act, which the U.S. Supreme Court found unlawful in February 2026, the creation of a refund process for such tariff duties, and the imposition of new tariffs under other statutory authorities. Currently, the majority of our products sold in the U.S. are exempt from tariffs, but additional tariff increases, or the loss of applicable exemptions, would increase the cost of goods sold for our products sold in the U.S., which could negatively impact our margins and financial performance. Increases in the price of our products in response to increased costs may adversely impact demand for those products in the U.S., which could also negatively impact our performance and financial results. Future trade policies and regulations in the U.S. and other countries, the terms of any trade arrangements that may be negotiated between the U.S. and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance.
We will continue to actively monitor developments impacting our business and may take additional responsive actions that we determine to be in the best interest of our business and stakeholders.
37
Basis of Presentation
On February 21, 2025, the Company became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the separation, the Company’s historical consolidated financial information was derived from WDC’s consolidated financial statements and accounting records and prepared as if the Company existed on a standalone basis. The financial statements for all periods presented, including the historical results of the Company prior to February 21, 2025, are now referred to as “Consolidated Financial Statements” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the policies and practices that are generally accepted in the industry in which it operates, consistent with prior statements.
The following discussion reflects the Company’s financial condition and results of operations as set forth in the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
For additional information, including a discussion of the basis of presentation for periods prior to and post separation, see Part I, Item 1, Note 1, Organization and Basis of Presentation of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
38
Results of Operations
Overview
The following table sets forth, for the periods presented, selected summary information from our Condensed Consolidated Statements of Operations by U.S. dollars and percentage of net revenue(1):
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| April 3, 2026 | March 28, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Revenue, net | $ | 5,950 | 100.0 | % | $ | 1,695 | 100.0 | % | $ | 4,255 | 251 | % | |||||||||||||||||||||||
| Cost of revenue | 1,288 | 21.6 | 1,313 | 77.5 | (25) | (2) | |||||||||||||||||||||||||||||
| Gross profit | 4,662 | 78.4 | 382 | 22.5 | 4,280 | 1120 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | 337 | 5.7 | 285 | 16.8 | 52 | 18 | |||||||||||||||||||||||||||||
| Selling, general and administrative | 161 | 2.7 | 139 | 8.2 | 22 | 16 | |||||||||||||||||||||||||||||
| Goodwill impairment | — | — | 1,830 | 108.0 | (1,830) | (100) | |||||||||||||||||||||||||||||
| Loss on debt extinguishment | 46 | 0.8 | — | — | 46 | 100 | |||||||||||||||||||||||||||||
| Business separation costs | 7 | 0.1 | 9 | 0.5 | (2) | (22) | |||||||||||||||||||||||||||||
| Total operating expenses | 551 | 9.3 | 2,263 | 133.5 | (1,712) | (76) | |||||||||||||||||||||||||||||
| Operating income (loss) | 4,111 | 69.1 | (1,881) | (111.0) | 5,992 | (319) | |||||||||||||||||||||||||||||
| Interest and other income (expense): | |||||||||||||||||||||||||||||||||||
| Interest income | 12 | 0.2 | 6 | 0.4 | 6 | 100 | |||||||||||||||||||||||||||||
| Interest expense | (6) | (0.1) | (16) | (0.9) | 10 | (63) | |||||||||||||||||||||||||||||
| Other income (expense), net | (10) | (0.2) | (10) | (0.6) | — | — | |||||||||||||||||||||||||||||
| Total interest and other income (expense), net | (4) | (0.1) | (20) | (1.1) | 16 | (80) | |||||||||||||||||||||||||||||
| Income (loss) before taxes | 4,107 | 69.0 | (1,901) | (112.1) | 6,008 | (316) | |||||||||||||||||||||||||||||
| Income tax expense | 492 | 8.3 | 32 | 1.9 | 460 | 1438 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 3,615 | 60.7 | $ | (1,933) | (114.0) | 5,548 | (287) | |||||||||||||||||||||||||||
39
| Nine Months Ended | |||||||||||||||||||||||||||||||||||
| April 3, 2026 | March 28, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Revenue, net | $ | 11,283 | 100.0 | % | $ | 5,454 | 100.0 | % | $ | 5,829 | 107 | % | |||||||||||||||||||||||
| Cost of revenue | 4,393 | 38.9 | 3,740 | 68.6 | 653 | 17 | |||||||||||||||||||||||||||||
| Gross profit | 6,890 | 61.1 | 1,714 | 31.4 | 5,176 | 302 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | 980 | 8.7 | 847 | 15.5 | 133 | 16 | |||||||||||||||||||||||||||||
| Selling, general and administrative | 479 | 4.2 | 411 | 7.5 | 68 | 17 | |||||||||||||||||||||||||||||
| Goodwill impairment | — | — | 1,830 | 33.6 | (1,830) | (100) | |||||||||||||||||||||||||||||
| Loss on debt extinguishment | 46 | 0.4 | — | — | 46 | 100 | |||||||||||||||||||||||||||||
| Business separation costs | 25 | 0.2 | 50 | 0.9 | (25) | (50) | |||||||||||||||||||||||||||||
| Employee termination and other | (2) | — | 5 | 0.1 | (7) | (140) | |||||||||||||||||||||||||||||
| (Gain) loss on business divestiture | 10 | 0.1 | (34) | (0.6) | 44 | (129) | |||||||||||||||||||||||||||||
| Total operating expenses | 1,538 | 13.6 | 3,109 | 57.0 | (1,571) | (51) | |||||||||||||||||||||||||||||
| Operating income (loss) | 5,352 | 47.5 | (1,395) | (25.6) | 6,747 | (484) | |||||||||||||||||||||||||||||
| Interest and other income (expense): | |||||||||||||||||||||||||||||||||||
| Interest income | 40 | 0.4 | 11 | 0.2 | 29 | 264 | |||||||||||||||||||||||||||||
| Interest expense | (71) | (0.6) | (22) | (0.4) | (49) | 223 | |||||||||||||||||||||||||||||
| Other income (expense), net | (153) | (1.4) | (55) | (1.0) | (98) | 178 | |||||||||||||||||||||||||||||
| Total interest and other income (expense), net | (184) | (1.6) | (66) | (1.2) | (118) | 179 | |||||||||||||||||||||||||||||
| Income (loss) before taxes | 5,168 | 45.9 | (1,461) | (26.8) | 6,629 | (454) | |||||||||||||||||||||||||||||
| Income tax expense | 638 | 5.7 | 157 | 2.9 | 481 | 306 | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 4,530 | 40.2 | $ | (1,618) | (29.7) | 6,148 | (380) | |||||||||||||||||||||||||||
(1) Percentage may not total due to rounding.
The following table sets forth, for the periods presented, summary information regarding our disaggregated revenue:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| April 3, 2026 | March 28, 2025 | April 3, 2026 | March 28, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Revenue by end market: | |||||||||||||||||||||||
| Datacenter | $ | 1,467 | $ | 197 | $ | 2,176 | $ | 747 | |||||||||||||||
| Edge | 3,663 | 927 | 6,728 | 3,024 | |||||||||||||||||||
| Consumer | 820 | 571 | 2,379 | 1,683 | |||||||||||||||||||
| Total revenue | $ | 5,950 | $ | 1,695 | $ | 11,283 | $ | 5,454 | |||||||||||||||
| Revenue by geography: | |||||||||||||||||||||||
| Asia | $ | 4,272 | $ | 1,038 | $ | 7,850 | $ | 3,274 | |||||||||||||||
| Americas | 1,209 | 375 | 2,128 | 1,207 | |||||||||||||||||||
| Europe, Middle East and Africa | 469 | 282 | 1,305 | 973 | |||||||||||||||||||
| Total revenue | $ | 5,950 | $ | 1,695 | $ | 11,283 | $ | 5,454 | |||||||||||||||
40
Net Revenue
Net revenue increased 251% in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 248% increase in average selling prices (“ASP”) per gigabyte. The exabytes sold remained flat from the comparable period in the prior year.
Net revenue increased 107% in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 76% increase in ASP per gigabyte and an 18% increase in exabytes sold due to stronger demand for our data storage products.
Datacenter revenue increased 645% in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 186% increase in ASP per gigabyte and a 160% increase in exabytes sold.
Datacenter revenue increased 191% in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 79% increase in exabytes sold and a 63% increase in ASP per gigabyte.
Edge revenue increased 295% in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 343% increase in ASP per gigabyte, partially offset by a 10% decrease in exabytes sold.
Edge revenue increased 123% in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 99% increase in ASP per gigabyte and a 12% increase in exabytes sold.
Consumer revenue increased 44% in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 139% increase in ASP per gigabyte, partially offset by a 40% decrease in exabytes sold.
Consumer revenue increased 41% in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a 39% increase in ASP per gigabyte and a 2% increase in exabytes sold.
The changes in net revenue by geography in the three and nine months ended April 3, 2026 from the comparable period in the prior year primarily reflected higher revenue in the Asia and Americas regions from Edge and Datacenter customers.
Consistent with standard industry practice, we offer sales incentive and marketing programs that provide customers with price protection and other incentives or reimbursements that are recorded as a reduction to gross revenue. For the three months ended April 3, 2026 and March 28, 2025, these programs represented 12% and 19%, respectively, of gross revenues. For the nine months ended April 3, 2026 and March 28, 2025, these programs represented 13% and 19%, respectively, of gross revenues. The amounts attributed to our sales incentive and marketing programs generally vary according to several factors, including industry conditions, list pricing strategies, seasonal demand, competitor actions, channel mix and overall availability of products. Changes in future customer demand and market conditions may require us to adjust our incentive programs as a percentage of gross revenue.
Gross Profit and Gross Margin
Gross profit increased by $4,280 million and $5,176 million, respectively, for the three and nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a higher ASP and an increase in exabytes sold.
Gross margin increased by 5,600 basis points and 3,000 basis points, respectively, for the three and nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a higher ASP and an increase in exabytes sold.
The higher ASP was primarily driven by favorable pricing conditions in the industry. As a result, for the three and nine months ended April 3, 2026, the increase in ASP has outpaced the movement in costs per gigabyte.
41
Operating Expenses
Research and development (“R&D”) expenses increased $52 million in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due to a $42 million increase in compensation and benefits due to variable compensation associated with company performance and increased headcount and a $5 million increase in stock-based compensation.
R&D expenses increased $133 million in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to an $88 million increase in compensation and benefits due to variable compensation associated with company performance and increased headcount, a $19 million increase in spending for R&D projects as we continue to invest in innovation and a $15 million increase in stock-based compensation.
Selling, general and administrative expenses increased $22 million in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due to a $15 million increase in compensation and benefits, mainly due to variable compensation associated with company performance and increased headcount, and a $6 million increase in customer marketing engagements, offset by a $5 million decrease in materials due to a change in business practice for the launch of new products whereby the Company is distributing fewer free samples and has started entering into contracts to sell certain qualification units to customers. The costs of qualification units are recorded in inventory until sold to customers and recognized as cost of revenue. The change contributed to a decrease in materials and production costs classified as selling expenses when compared to the prior year period, partially offset by a $4 million increase in stock-based compensation.
Selling, general and administrative expenses increased $68 million in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to a $43 million increase in compensation and benefits and employee-related costs mainly due to variable compensation associated with company performance and an increase in headcount, offset by a $35 million decrease in materials due to a change in business practice for the launch of new products whereby the Company is distributing fewer free samples and has started entering into contracts to sell certain qualification units to customers. The costs of qualification units are recorded in inventory until sold to customers and recognized as cost of revenue. The change contributed to a decrease in materials and production costs classified as selling expenses when compared to the prior year period, partially offset by a $22 million increase in customer marketing engagements, a $16 million increase in stock-based compensation and a $9 million increase in outside service costs supporting operations.
Employee termination and other charges decreased $7 million in the nine months ended April 3, 2026 from the comparable period in the prior year as there were no restructuring actions taken in the current period.
Goodwill impairment
Goodwill impairment decreased $1.8 billion in the three and nine months ended April 3, 2026 from the comparable period in the prior year. In the three and nine months ended March 28, 2025, we recorded an impairment charge resulting from the difference between the carrying value of our reporting unit and its fair value in the prior year. No such impairment charge was incurred during the current year.
Loss on debt extinguishment
Loss on debt extinguishment increased $46 million in the three and nine months ended April 3, 2026 from the comparable period in the prior year due to the write-off of the remaining unamortized issuance costs in connection with the early settlement of the Company’s Term Loan Facility.
Business separation costs
Business separation costs decreased $2 million in the three months ended April 3, 2026 from the comparable period in the prior year due to post-separation-related costs decreasing.
Business separation costs decreased $25 million in the nine months ended April 3, 2026 from the comparable period in the prior year due to post-separation-related costs decreasing.
(Gain) loss on business divestiture
(Gain) loss on business divestiture decreased $44 million in the nine months ended April 3, 2026 from the comparable period in the prior year as a result of the closing of the sale of SDSS on September 28, 2024 and an amendment to the Amended and Restated Equity Purchase Agreement with JCET, related to our prior sale of SDSS, in the current period that resulted in a loss. On September 25, 2025, SanDisk China and JCET entered into an Amendment No. 1 to the Amended and Restated Equity Purchase Agreement that included a $10 million provision for working capital support, resulting in a reduction of the September 28, 2025 installment payment from JCET. The Company recognized the adjustment as a loss on business divestiture for the nine months ended April 3, 2026, as discussed in Part I, Item 1, Note 10, Related Parties and Related Commitments and Contingencies—Flash Ventures of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
42
Interest and Other Income (Expense), net
Interest and other income (expense), net decreased $16 million in the three months ended April 3, 2026 from the comparable period in the prior year, primarily due a decrease in interest expense from our Term Loan Facility, and the impairment of an investment, partially offset by an increase in interest income related to cash and investment accounts.
Interest and other income (expense), net increased $118 million in the nine months ended April 3, 2026 from the comparable period in the prior year, primarily due to the settlement of certain non-operating legal matters, an increase in interest expense from our Term Loan Facility, and the impairment of an investment, partially offset by an increase in interest income related to cash and investment accounts and a gain on sale of investment.
Income Tax Expense
H.R. 1, more widely known as the One Big Beautiful Bill Act (“OBBBA”), was signed into law on July 4, 2025. It reversed the requirement for capitalization of U.S. research and development expenditures that came into law under the Tax Cuts and Jobs Act of 2017, but the mandatory requirement of capitalization of foreign research and development expenditures remains. The tax rates for income earned by our foreign subsidiaries will also be changed under H.R. 1, which applies to our fiscal years 2027 and onward. Depending on our operating results, these changes can materially impact our effective tax rate and operating cash flows. During the nine months ended April 3, 2026, we recorded a $10 million tax benefit in relation to the OBBBA’s impact on the Company’s 2025 tax provision.
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, which contained significant changes to laws related to tax, climate, energy, and health care. The tax measures include, among other things, a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income (“AFSI”) exceeding $1.0 billion. We do not expect to be subject to the CAMT of 15% for fiscal year 2026 as our average annual AFSI did not exceed $1.0 billion for the preceding three-year period.
On December 20, 2021, the Organisation for Economic Co-operation and Development G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two (“Pillar Two”). Pillar Two is currently effective in most of the jurisdictions in which we operate. Accordingly, these taxes are included in the Company’s Income tax expense for the three and nine months ended April 3, 2026.
The following table presents the Company’s Income tax expense and the effective tax rate:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| April 3, 2026 | March 28, 2025 | April 3, 2026 | March 28, 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Income (loss) before taxes | $ | 4,107 | $ | (1,901) | $ | 5,168 | $ | (1,461) | |||||||||||||||
| Income tax expense | 492 | 32 | 638 | 157 | |||||||||||||||||||
| Effective tax rate | 12 | % | (2) | % | 12 | % | (11) | % | |||||||||||||||
The relative mix of earnings and losses by jurisdiction, credits and tax holidays in Malaysia that will expire at various dates during years 2028 through 2031 resulted in decreases to the effective tax rate below the U.S. statutory rate for the three and nine months ended April 3, 2026.
For additional information regarding income tax expense, see Part I, Item 1, Note 14, Income Tax Expense of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
43
Financial condition, liquidity and capital resources
The following table summarizes our Condensed Consolidated Statements of Cash Flows for the periods ended April 3, 2026 and March 28, 2025:
| Nine Months Ended | |||||||||||
| April 3, 2026 | March 28, 2025 | ||||||||||
| (in millions) | |||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 4,545 | $ | (10) | |||||||
| Investing activities | (263) | 573 | |||||||||
| Financing activities | (2,025) | 620 | |||||||||
| Effect of exchange rate changes on cash | (3) | (4) | |||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-03 | Shek Bernard | Chief Legal Officer & Secty | Sell | -600 | $1,736.00 | -$1,041,600 |
| 2026-06-01 | Ilkbahar Alper | EVP, Chief Technology Officer | Sell | -2,000 ×3 | $1,756.58 | -$3,513,153 |
| 2026-05-12 | Pokorny Michael | VP, Chief Accounting Officer | Sell | -2,446 | $1,426.18 | -$3,488,436 |
| 2026-05-08 | Sayiner Necip | Director | Sell | -579 | $1,503.11 | -$870,301 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-14 10-Q expected by 2026-10-19 (in 121 days)
- ~2027-01-06 10-Q expected by 2027-01-11 (in 205 days)
- ~2027-04-07 10-Q expected by 2027-04-12 (in 296 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-15 8-K Other Events; Financial Statements and Exhibits
- 2026-05-01 10-Q Quarterly Report
- 2026-04-30 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-03-25 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
- 2026-01-30 10-Q Quarterly Report
- 2026-01-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-02 8-K Officer/Director Change
- 2025-11-07 10-Q Quarterly Report
- 2025-11-06 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-21 10-K Annual Report
- 2025-08-14 8-K Earnings Release; Financial Statements and Exhibits
- 2025-06-04 S-1/A Registration Statement (Amended)
- 2025-05-30 S-1/A Registration Statement (Amended)
- 2025-05-12 10-Q Quarterly Report
- 2025-05-07 8-K Earnings Release; Financial Statements and Exhibits