Revenue rose 372% to $8.97 billion at an 84.6% gross margin, the September-quarter revenue guide landed below consensus, and the shares fell across three sessions.
Sandisk beat the published earnings consensus by close to $5 a share and the stock fell for three sessions running. Fiscal fourth-quarter revenue was $8,965 million, up 372% from a year earlier and 51% sequentially. Non-GAAP diluted earnings were $39.25 a share against consensus figures clustered near $34.50. The shares had already dropped 5.4% on 5 August, before the release crossed. They fell roughly 8% after hours. They declined again on 6 August to close at $1,258.58. In the next session they traded at $1,235.85. The debate concerns what Sandisk is trading peak-cycle pricing for.
Two-thirds of the growth came from price
The company states the split itself. Roughly one-third of sequential revenue growth came from higher volumes and two-thirds from higher pricing. Chief Financial Officer Luis Visoso repeated the same figures on the call.
One line in the income statement carries the whole pricing story. Cost of revenue fell to $1,383 million from $1,403 million a year earlier while revenue rose 372%. Gross margin reached 84.6%, up 58.4 points year over year and 6.2 points sequentially. That is an extraordinary level for a NAND manufacturer and it is the direct footprint of the shortage.
Full-year figures follow the same shape. Fiscal 2026 revenue was $20,248 million, up 175%, at a 71.5% gross margin against 30.1%. Non-GAAP diluted earnings for the year were $70.88 against $2.99. The prior-year GAAP loss of $11.32 a share included a $1,830 million goodwill charge. That charge came after the split from Western Digital. The non-GAAP comparison is the cleaner one.
The contracts carry a lower margin than the quarter
Sandisk has now signed ten New Business Model agreements, five in April and five since, including three with new customers. Visoso described them as five-year arrangements with year-over-year volume growth. Financial guarantees under them total $16.5 billion, backed by cash deposits and financial instruments. Chief Executive David Goeckeler said more than half of fiscal 2027 supply is already committed, stepping up to roughly two-thirds in fiscal 2028.
The margin arithmetic inside those contracts is the part worth attention. Visoso said gross margin on the new deals runs around 80%. He said the 83% to 85% guide for the September quarter reflects careful assumptions on part costs and mix. It does not reflect any drop in contract profits. Sandisk delivered 84.6% in the quarter just reported. Goeckeler called a gross margin in the mid-80s a fair return. As contracted volume rises from half of supply toward two-thirds, a larger share of the business sits at the lower figure.
The structure is already visible on the balance sheet. Contract liabilities reached $849 million current and $393 million non-current, from $25 million and nothing a year earlier. Refund liabilities rose to $1,500 million from $126 million. The cash-flow statement shows a negative $1,938 million effect on adjusted free cash flow from contract prepayments and deposits. These are commitments over several years. They are not booked revenue and not accounting backlog.
Goeckeler framed the reason in terms the company had not used before. Demand five and ten years out is hard to judge when supply is sold quarter by quarter. Getting it wrong carries a high cost. The agreements move that conversation to a multi-year footing.
The September guide sets earnings above this quarter
Sandisk guided September-quarter revenue to $10.30 billion to $10.80 billion. The midpoint sits about 5.5% below a consensus figure reported near $11.16 billion. One outlet tied the share-price decline specifically to that gap.
The rest of the outlook moves the other way. The earnings guide of $44.00 to $46.00 a share sits above the $39.25 just delivered. The gross-margin guide of 83% to 85% brackets the record 84.6%. Even the revenue midpoint implies another sequential increase of roughly 15% to 20%. The miss is confined to the revenue line, and profitability guidance is flat to higher.
Consensus itself needs care here. Published estimates ranged from $34.37 to $34.96 a share across four sources. The provider figure for Sandisk has sat below the actual result for six straight quarters. A precise beat percentage measures that gap as much as it measures the company.
Edge added more dollars than Datacenter
Datacenter revenue reached $2,977 million, up 103% sequentially and 437% for the year. Goeckeler said datacenter made up roughly 12% of bits a year ago and 38% of the mix at year end. The company began revenue shipments of its QLC-based Stargate platform in the quarter.
Edge is the larger business and added more money. Edge revenue was $5,432 million, up 48% sequentially and 60.6% of company revenue. In dollars it contributed $1,769 million of sequential growth against Datacenter's $1,510 million. Both facts hold, and coverage that credits datacenter with driving the quarter is describing the growth rate rather than the dollars.
Consumer went the other way, falling 32% sequentially to $556 million and down 5% year over year. Goeckeler said the company expects PC and smartphone unit shipments to fall by the mid-teens this calendar year. Rising storage per device offsets part of that.
What the cash and the buyback are doing
Operating cash flow was $7,126 million in the quarter, against $94 million a year earlier. Free cash flow was $7,083 million and adjusted free cash flow $5,035 million, the difference being the contract prepayments and Flash Ventures activity.
The composition of that cash matters. Refund liabilities supplied $1,360 million, contract liabilities $731 million and income taxes payable $730 million, against $1,982 million absorbed by receivables and $460 million by inventories. Accounts receivable ended at $4,708 million, from $1,068 million. That is growth of 341% against revenue growth of 372%. Receivables are keeping pace with a fast-rising top line, and the line is worth tracking.
Capital return was aggressive. Sandisk bought back $4,524 million of stock in the quarter, close to 90% of adjusted free cash flow. The board added another $14 billion, leaving $15.5 billion available. The company repaid $1,900 million during the year and ended with no long-term debt and $4,762 million of cash. No dividend was announced.
One reporting detail inverts the usual pattern. GAAP earnings of $43.97 a share exceed the non-GAAP $39.25. An $804 million gain on equity holdings sits inside GAAP. The adjusted figure leaves it out. Marketable equity securities went from nothing to $1,777 million during the year, following a $970 million purchase in the quarter. The release does not identify the holding. Consensus is compiled on the non-GAAP basis, so the $43.97 is not the comparison.
The burden of proof has moved. Sandisk no longer has to prove that AI demand reaches flash, and it has locked a large share of future volume into multi-year agreements. Two things are unproven. Contract business at roughly 80% gross margin has to hold the earnings power the market priced at the highs. Spot pricing has to hold while half the supply is already sold forward. The September quarter is the first period in which the contract mix and the cycle move at the same time. The results reported here are preliminary and subject to audit, and the annual report is not yet filed. The company holds an investor day on 13 August.