0001628280-26-029401
SEC filingRevenue surged 251% YoY to $5.95B driven by a 248% ASP increase, swinging gross margin to 78.4% and net income to $3.6B from a prior-year loss.
Sandisk Corporation delivered exceptional financial results for the third quarter of fiscal year 2026, ended April 3, 2026, compared to the same period in the prior year. Net revenue increased 251% to $5.95 billion, primarily driven by a 248% surge in average selling prices (ASP) per gigabyte, while exabytes sold remained flat. This dramatic pricing improvement reflects favorable industry conditions driven by rapid AI infrastructure growth and strong demand for high-performance NAND storage.
Gross profit skyrocketed 1,120% to $4.66 billion, with gross margin expanding by 5,600 basis points to 78.4%. The margin expansion was attributed to ASP increases significantly outpacing the movement in costs per gigabyte. Operating income swung from a loss of $1.88 billion to a profit of $4.11 billion. The prior-year period included a non-recurring $1.83 billion goodwill impairment charge, which was absent in the current quarter. Excluding this and other one-time items, operating performance still showed substantial improvement driven by the top-line growth.
Net income was $3.62 billion, a 287% increase from a net loss of $1.93 billion in the prior year. The effective tax rate for the quarter was 12%, influenced by the mix of earnings in lower-tax jurisdictions and tax holidays. The company also recognized a $46 million loss on debt extinguishment related to the early settlement of its Term Loan Facility.
All three end markets exhibited strong revenue growth, led by Datacenter. Datacenter revenue increased 645% YoY to $1.47 billion, fueled by a 186% increase in ASP and a 160% increase in exabytes sold, underscoring the intense demand from cloud service providers for AI workloads. Edge revenue grew 295% to $3.66 billion, driven entirely by a 343% increase in ASP, which offset a 10% decline in exabytes sold. Consumer revenue rose 44% to $820 million, with a 139% ASP increase partially offset by a 40% drop in unit volume.
Geographically, revenue growth was most pronounced in Asia and the Americas, driven by Edge and Datacenter customers. Sales incentive and marketing programs as a percentage of gross revenue decreased to 12% from 19% in the prior year, reflecting the stronger pricing environment.
Management provided a positive outlook, stating that the rapid growth of AI infrastructure is driving demand for high-performance storage and that favorable pricing trends are expected to persist through calendar year 2026 and beyond. The company plans to invest in high-value opportunities for both short-term and long-term benefit. However, management also noted uncertainty regarding U.S. trade policy and potential tariff impacts, which could increase costs and negatively affect margins if current exemptions are lost.
Financially, the company is in a strong liquidity position. It fully repaid its $2.0 billion Term Loan Facility in March 2026 and had no amounts drawn on its $1.5 billion Revolving Credit Facility as of quarter-end. A $6 billion share repurchase program was authorized on April 30, 2026, to be funded by operating cash flows. The company expects its cash and cash equivalents to be sufficient to meet working capital, capital expenditure, and share repurchase needs for at least the next twelve months.
Cash and cash equivalents reached $3,735 million at April 3, 2026, up sharply from $1,481 million at fiscal year-end 2025. Total assets stood at $17,075 million against liabilities of only $3,298 million, producing shareholders' equity of $13,777 million. The company fully repaid its $1.9 billion Term Loan Facility in March 2026, leaving zero long-term debt and $1.5 billion undrawn revolving capacity.
Notes disclose $7,107 million in aggregate long-term commitments as of April 3, 2026. This includes the $972 million Nanya Technology equity investment (completed April 8, 2026), Flash Ventures supply and capacity obligations, building depreciation prepayments, and lease guarantees. Remaining performance obligations totaled $41.6 billion, with approximately 15% expected to convert to revenue within twelve months.
On April 30, 2026 the Board authorized a new $6 billion share repurchase program. No dividends are disclosed. Capital expenditures for the nine-month period were $134 million. The company recognized a $46 million loss on early extinguishment of the Term Loan Facility.
The company operates as a single reportable segment. Revenue is disaggregated by end market (Datacenter $2,176 million, Edge $6,728 million, Consumer $2,379 million for the nine months) and geography (Asia 70%, Americas 19%, EMEA 12%). No segment-level operating income or margins are presented in the Notes.
Operating cash flow of $4,545M nearly matched net income of $4,530M, indicating strong cash conversion. The main non-cash adjustments were depreciation ($112M), stock-based compensation ($165M), and goodwill impairment ($0 vs $1,830M prior year). Working capital was a significant source: accounts receivable increased $1,658M (use), but contract liabilities added $486M and income taxes payable added $640M. Capex of $134M was modest at 2.9% of operating cash flow, resulting in free cash flow of $4,411M. No share repurchases or dividends were paid. Financing cash flow was negative $2,025M due to $1,900M debt repayment. The prior-year period had negative operating cash flow of $10M, making the year-over-year improvement dramatic. Anomalies include a $1,658M increase in receivables (likely from revenue growth) and a $486M increase in contract liabilities (customer prepayments). Overall, cash generation is robust and supports debt reduction.