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- **Revenue Growth**: Q1 FY2026 revenue up 21% QoQ, driven by data center (26% growth) and consumer (11% growth) segments.
- **BICS8 Dominance**: 15% of Q1 bits shipped on BICS8, expected to dominate production by end of FY2026, enabling 128T SSDs for hyperscale AI workloads.
- **Free Cash Flow**: $448 million in Q1, with 19.4% free cash flow margin, and net cash position achieved six months ahead of schedule.
- **HBF Innovation**: Memory and controller in 2026-2027, targeting AI inference applications with SK Hynix ecosystem partnerships.
- **Q2 Guidance**: Revenue $2.55-$2.65 billion, non-GAAP EPS $3.00-$3.40, and gross margin 41-43% reflecting pricing and cost tailwinds.

**【CEO Summary Section】**
- SanDisk reported Q1 FY2026 revenue of $2.3 billion, up 21% sequentially and 23% year-over-year, driven by strong demand across data center, edge, and consumer markets.
- BICS8 technology, accounting for 15% of total bits shipped, is expected to dominate production by end of FY2026, enabling high-capacity, power-efficient SSDs for AI and data center applications.
- Data center revenue grew 26% sequentially, with five hyperscale customers in active qualification for Stargate SSDs, and consumer business saw 11% sequential growth, including 900,000 units sold of Nintendo Switch 2 microSD cards.
- The company achieved a net cash position six months ahead of schedule, with $448 million in adjusted free cash flow.

**【CFO Financial Commentary】**
- GAAP net income was $420 million, with non-GAAP EPS of $1.22, exceeding expectations. Non-GAAP gross margin improved 350 basis points to 29.9%, excluding $72 million in one-time costs.
- Q2 guidance: Revenue $2.55-$2.65 billion (up 11%-15%), non-GAAP EPS $3.00-$3.40, and free cash flow margin of 19.4%.
- Capital allocation priorities include Big Sage transition, data center expansion, and HBF innovation, with FY2026 CapEx aligned to mid-teens exabyte growth.

**【Q&A Key Highlights】**
- **Customer Engagement**: Hyperscale customers seeking multi-quarter supply commitments, with demand visibility extending to 2027. Strategic allocation prioritizes data center and edge customers.
- **Supply Dynamics**: fabs running at 100% utilization, with demand exceeding supply through 2026. BICS8 ramping to 15% of production by end of FY2026.
- **HBF Technology**: Memory and controller expected in 2026-2027, targeting AI inference applications in edge and data center. Customer engagements focus on use cases for high-bandwidth flash.
- **Market Share**: Data center revenue growth outpacing market, with BICS8 adoption driving exabyte share gains. Consumer business maintains attractive margins through cycles.
- **Pricing & Margins**: Q2 pricing up double digits, with gross margin guidance of 41-43% reflecting cost tailwinds and higher pricing.

Sandisk Corporation (SNDK) Q1 2026 Earnings Call Transcript

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