Adjusted earnings per share (EPS) for the third fiscal quarter was $23.41, surpassing analysts' expectations of $14.51. Revenue for the fourth fiscal quarter is projected to range between $7.75 billion and $8.25 billion, higher than the analysts' forecast of $6.65 billion. Adjusted EPS for the fourth fiscal quarter is expected to be between $30 and $33, above analysts' estimates of $24.60. Sandisk's U.S.-listed shares fell 8% in after-hours trading.
$SanDisk (SNDK.US)$ Explosive third-quarter earnings, but still plunged after-hours.
After the US stock market closed on April 30, SanDisk delivered a third-quarter earnings report that far exceeded market expectations. On top of a 97% quarter-over-quarter increase in the third quarter, the company still expects the median of fourth-quarter revenue to grow by approximately 35% quarter-over-quarter.
The specific financial data is as follows:
Revenue reached $5.95 billion, nearly double that of the previous quarter and significantly higher than the analysts' expectation of $4.72 billion.
Adjusted earnings per share (EPS) was $23.41, significantly surpassing the market expectation of $14.51.
The company forecasts that fourth-quarter revenue will reach between $7.75 billion and $8.25 billion, with a median of approximately $8 billion, which is notably higher than the market expectation of $6.65 billion.
The adjusted EPS is expected to be between $30 and $33, also higher than the analysts' forecast of $24.6.
The core driver of this performance surge is the strong demand for NAND flash memory and storage solutions from AI data centers.
The company disclosed that data center business revenue increased by 233% quarter-over-quarter and surged 645% year-over-year in the third quarter, becoming the fastest-growing segment in its business portfolio. Management also noted that the company is shifting its product mix toward 'the highest-value end markets,' particularly data centers.
However, the market reaction was not cooperative. Despite both earnings and guidance surpassing expectations, SanDisk's US shares plummeted over 8% in after-hours trading.
The underlying contradiction lies in the fact that while the company's fundamentals are indeed in a strong upward phase of the AI storage cycle, its stock price has surged over 3300% in the past 12 months and approximately 360% year-to-date, with a significant portion of optimistic expectations already priced into the stock.
Explosive demand from data centers drives revenue to nearly double quarter-over-quarter
In the third fiscal quarter, Sandisk’s revenue grew by 97% sequentially from $3.025 billion in the previous quarter and increased by 251% year-over-year from $1.695 billion in the same period last year.
The core driver of growth came from the data center business, which generated $1.467 billion in revenue this quarter, representing a sequential increase of 233% and a staggering year-over-year surge of 645%.
Revenue from the Edge Computing (Edge) segment reached $3.663 billion, growing 118% sequentially and 295% year-over-year. Meanwhile, Consumer business revenue amounted to $820 million, showing a modest sequential decline of 10%, but still achieving a 44% year-over-year increase.
In terms of profitability, GAAP gross margin for this quarter reached 78.4%, a substantial increase of 27.5 percentage points from 50.9% in the previous quarter and a remarkable rise of 55.9 percentage points compared to 22.5% in the same period last year.
Operating profit (GAAP) soared from $1.065 billion in the previous quarter to $4.111 billion this quarter, marking a sequential growth of 286%.
Guidance for the fourth fiscal quarter revised upwards again
While the third fiscal quarter results were already impressive, the guidance for the fourth fiscal quarter further indicates that demand has yet to peak. Sandisk forecasts for the fourth fiscal quarter:
Revenue between $7.75 billion and $8.25 billion; Non-GAAP gross margin ranging from 79.0% to 81.0%.
Non-GAAP operating expenses are projected to range from 480 million to 500 million US dollars, while the Non-GAAP adjusted EPS is expected to be between 30.00 and 33.00 US dollars.
At the midpoint, the company anticipates revenue for the fourth fiscal quarter to reach approximately 8 billion US dollars, representing a further increase of about 34.5% compared to 5.95 billion US dollars in the third fiscal quarter. The midpoint of the adjusted EPS is estimated at approximately 31.5 US dollars, reflecting a growth of around 35% from 23.41 US dollars in the third fiscal quarter.
The market had previously forecasted revenue of approximately 6.65 billion US dollars and an adjusted EPS of about 24.6 US dollars for the fourth fiscal quarter. The midpoint of the company’s guidance exceeds market expectations by approximately 20% and 28%, respectively.
More critically, the gross margin guidance has been raised further to a range of 79% to 81%, indicating that the company expects the ultra-high profitability level achieved in the third fiscal quarter not only to be sustained but potentially to improve even further.
New Business Model: Multi-Year Customer Agreements Enhance Revenue Visibility
SanDisk's management maintains that there are no signs of slowing in the massive data storage demand driven by AI. In the earnings statement, SanDisk CEO David Goeckeler characterized this quarter as a "fundamental turning point" for the company.
He noted that the company is deliberately shifting its business structure toward high-value end markets such as data centers, while advancing a new business model centered on multi-year customer agreements, which are underpinned by clear financial commitments.
The company disclosed that, as of the end of the third fiscal quarter, it had signed three agreements under the new business model, with two additional contracts signed after the start of the fourth fiscal quarter.
Goeckeler stated that this transformation will drive a "structural improvement" in profitability, with stronger sustainability.
He also highlighted that the company currently has zero debt on its balance sheet, robust cash generation capabilities, and has recently received board authorization to initiate a stock repurchase program, establishing a solid foundation for creating long-term value for shareholders.
The stock price surged over 3300%, but concerns about high valuation remain unresolved.
SanDisk was spun off and listed independently from$Western Digital (WDC.US)$in February 2025, with an initial market value of approximately $5 billion.
Since then, driven by the explosive demand for artificial intelligence data storage, the stock has become one of the most dazzling stars in the market.
Since its listing, the stock price has surged more than 3,300%, and its market capitalization has increased by over $150 billion, ranking at the top of$S&P 500 Index (.SPX.US)$the list of largest gains over the past 12 months, with a year-to-date increase of approximately 360%.
However, despite both earnings and guidance significantly surpassing expectations, the stock price still faced sell-offs, indicating investor concerns about whether such high valuations can be sustained. The constraints of the law of large numbers imply that the growth base required to maintain the current momentum will become increasingly substantial.
Editor/Rocky