Summary of Sandisk's Conference Call Company Overview - **Company**: Sandisk - **Industry**: NAND Flash Memory Key Points and Arguments Market Dynamics - Sandisk is optimistic about the NAND market, indicating a shift towards an undersupplied market after a prolonged period of weak dynamics [6][11][15] - The company expects supply-demand dynamics to improve, with a forecast of double-digit growth in the data center market, which has seen significant growth in the past year [12][15] - The company anticipates that the undersupply situation will persist into 2026, driven by improved demand across key markets such as PCs, smartphones, and data centers [11][15] Financial Performance - Sandisk has successfully met its expectations set during the investor day, with strong cash flow generation and a reduction in net debt [8][9] - The company aims to achieve net cash flow positive status soon, indicating a healthy financial outlook [8][9] - Gross margin guidance is set at 35% through the cycle, with expectations for margin expansion in the coming quarters due to ASP increases and cost benefits [48] Product Development - Sandisk is transitioning to BICS 8 technology, expecting to ramp up its portfolio from single-digit percentages to 40-50% by the end of the fiscal year [9][39] - The company is developing High Bandwidth Flash (HBF) technology aimed at enhancing AI inference capabilities, with plans to have NAND available by late 2026 and systems ready by early 2027 [24][27] - The enterprise SSD market is a focus area, with 13% of bits shipped in the previous fiscal year being in enterprise SSDs, and new products are undergoing qualifications [31][32] Competitive Landscape - Sandisk acknowledges the need for careful management of supply and demand, emphasizing that the traditional strategies of releasing new nodes to drive costs down are no longer viable [13][14] - The company is focused on maintaining a balance between supply and demand to ensure financial stability in the NAND industry [14] Joint Ventures and Collaborations - The joint venture with Kioxia is highlighted as a successful partnership, allowing for significant R&D investment and capital efficiency [44][45] - The collaboration has resulted in a strong market position, enabling Sandisk to innovate effectively in NAND technology [46] Future Outlook - Sandisk is confident in its ability to grow in line with the mid-teens CAGR demand growth in the NAND market [18] - The company is focused on innovation and R&D, with a commitment to maintaining a high percentage of OPEX allocated to these areas while driving efficiencies in SG&A [49][50] - The management believes that the market is fundamentally changing, which will lead to improved economics for the company in the future [54][55] Additional Important Insights - The company is cautious about extrapolating price increases across the board, indicating that pricing strategies will be based on market dynamics [17] - Sandisk is committed to reducing its debt while continuing to invest in business growth and returning cash to investors [52] This summary encapsulates the key insights from Sandisk's conference call, highlighting the company's strategic direction, market outlook, and financial health.

Sandisk (NASDAQ: SNDK ) recently reported its fiscal 2025 results, which showed a great improvement overall. The market has been rewarding the company's performance with appreciation in shares, which I think is deserved, given the potential of capitalizing on enterprise spending overMSc in Finance. Long-term horizon investor mostly with 5-10 year horizon. I like to keep investing simple. I believe a portfolio should consist of a mix of growth, value, and dividend-paying stocks but usually end up looking for ...

MILPITAS, Calif.--(BUSINESS WIRE)--Sandisk Corporation (NASDAQ: SNDK) announced today that management will participate at the Goldman Sachs Communacopia + Technology Conference 2025 on Wednesday, 10 September, 2025 at 3:05 p.m. PT. The management presentation will be available as a live webcast, accessible through Sandisk's Investor Relations website at investor.sandisk.com. An archived replay will be accessible through the website after the conclusion of the presentation. About Sandisk Sandisk. ...

Investment Rating - The report maintains a constructive outlook on shares of Amphenol Corp (APH), Dell Technologies (DELL), Corning Inc (GLW), Hewlett Packard Enterprise (HPE), and the memory/disk drive sector including Seagate Technology (STX), Western Digital Corp (WDC), and SanDisk Corp (SNDK) [4]. Core Insights - The upcoming Citi's 33rd annual Global Technology Conference will feature over 240 technology companies, focusing on updates regarding customer and enterprise demand dynamics, as well as supply chain conditions [1]. - Key investor questions include the impact of Generative AI on infrastructure spending, enterprise spending intentions, consumer spending trends, margin impacts from rising component costs, and capital allocation strategies [2][3]. Company Summaries - **Amphenol Corp (APH)**: Current price at $109.36 with a market cap of $133.52 billion. The target price is set at $125.00 with an expected share price return of 14.3% [7]. - **CDW Corp (CDW)**: Current price at $167.00 with a market cap of $21.89 billion. The target price is $200.00 with an expected share price return of 19.8% [7]. - **Corning Inc (GLW)**: Current price at $65.77 with a market cap of $56.34 billion. The target price is $72.00 with an expected share price return of 9.5% [7]. - **Dell Technologies (DELL)**: Current price at $130.84 with a market cap of $88.50 billion. The target price is $160.00 with an expected share price return of 22.3% [7]. - **Hewlett Packard Enterprise (HPE)**: Current price at $22.45 with a market cap of $29.46 billion. The target price is $25.00 with an expected share price return of 11.4% [7]. - **SanDisk Corp (SNDK)**: Current price at $46.37 with a market cap of $6.76 billion. The target price is $57.00 with an expected share price return of 22.9% [7]. - **Seagate Technology (STX)**: Current price at $159.19 with a market cap of $33.86 billion. The target price is $167.00 with an expected share price return of 4.9% [7]. - **Western Digital Corp (WDC)**: Current price at $76.97 with a market cap of $26.70 billion. The target price is $88.00 with an expected share price return of 14.3% [7].

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Sandisk Corporation, a leading NAND flash technology provider, separated from Western Digital Corporation on February 21, 2025, becoming a standalone public company serving Cloud, Client, and Consumer markets - Sandisk Corporation separated from Western Digital Corporation (WDC) on February 21, 2025, becoming a standalone publicly traded company under the symbol "SNDK" on Nasdaq[18](index=18&type=chunk) - The company is a leading developer, manufacturer, and provider of data storage devices and solutions based on NAND flash technology, serving Cloud, Client, and Consumer end markets[19](index=19&type=chunk) - Sandisk holds approximately **7,900 granted patents** and **3,200 pending patent applications** worldwide, emphasizing innovation and operational excellence[20](index=20&type=chunk)[34](index=34&type=chunk) - The business strategy focuses on innovation and cost leadership, a broad product portfolio, and operational excellence to create long-term value[30](index=30&type=chunk)[31](index=31&type=chunk) - Substantially all flash-based memory is obtained from joint ventures with Kioxia (Flash Ventures) in Japan, providing leading-edge, high-quality, and low-cost flash memory wafers[40](index=40&type=chunk)[41](index=41&type=chunk) - International sales represented **80%**, **86%**, and **81%** of net revenue for 2025, 2024, and 2023, respectively, indicating significant global market presence[51](index=51&type=chunk) - As of June 2025, the global team includes approximately **11,000 employees** across 33 countries, with **73% in Asia Pacific**, **19% in the Americas**, and **8% in EMEA**[56](index=56&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Sandisk faces a range of significant risks, including operational challenges, intense competition, substantial debt, currency fluctuations, and risks related to its spin-off from WDC - Adverse global or regional conditions, including trade policies and geopolitical tensions, could harm business by impacting demand, increasing costs, and reducing profitability[75](index=75&type=chunk)[78](index=78&type=chunk) - Dependence on a limited number of qualified suppliers for critical components and services, including Flash Ventures, poses risks of supply chain disruptions, increased costs, and inability to meet demand[80](index=80&type=chunk)[81](index=81&type=chunk) - The increasing use of AI technologies elevates cybersecurity risks, as threat actors can leverage AI to automate and scale attacks, generate sophisticated phishing content, and exploit vulnerabilities more efficiently[95](index=95&type=chunk) - The industry is highly competitive, characterized by declining average selling prices, volatile demand, rapid technological change, and industry consolidation, which can negatively impact Sandisk's market share and profitability[104](index=104&type=chunk)[105](index=105&type=chunk) - Substantial debt incurred post-separation may limit liquidity, restrict operations, and increase vulnerability to adverse economic conditions, with potential for increased interest expense due to variable rates[124](index=124&type=chunk)[126](index=126&type=chunk) - Fluctuations in currency exchange rates, particularly a strengthening U.S. dollar, can negatively affect revenue, cost of revenue, margins, and operating costs, as a significant portion of production costs are foreign-currency denominated[129](index=129&type=chunk)[130](index=130&type=chunk) - The spin-off from WDC may not achieve all expected benefits, could result in ongoing material costs and expenses, and historical financial information may not be representative of future standalone performance[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) - Provisions in joint venture agreements with Kioxia, such as restrictions on manufacturing flash memory outside Flash Ventures, may deter or delay third-party acquisitions of Sandisk, potentially decreasing common stock market price[188](index=188&type=chunk)[190](index=190&type=chunk) [Item 1B. Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This section indicates that there are no unresolved staff comments applicable to the company [Item 1C. Cybersecurity](index=37&type=section&id=Item%201C.%20Cybersecurity) Sandisk has a robust cybersecurity program, guided by frameworks like NIST-CSF, to manage and mitigate risks to its technology infrastructure and products - Sandisk's cybersecurity strategy is dynamic and adaptive, influenced by frameworks like NIST-CSF, and includes endpoint protection, network security, vulnerability management, and third-party risk management[194](index=194&type=chunk) - A dedicated **24x7 Security Operations Center** handles security incidents, determining severity, initiating notification protocols, and beginning triage based on a pre-established incident severity matrix[195](index=195&type=chunk) - The Board of Directors, through its Audit Committee, oversees cybersecurity risk management, receiving regular reports from the Chief Information Security Officer[202](index=202&type=chunk)[203](index=203&type=chunk) - As of the report date, known cybersecurity incidents have not materially affected Sandisk's business strategy, results of operations, or financial condition[199](index=199&type=chunk) [Item 2. Properties](index=39&type=section&id=Item%202.%20Properties) Sandisk's principal executive offices are in Milpitas, California, with significant manufacturing, R&D, marketing, and administrative facilities globally - Principal executive offices are located at 951 Sandisk Drive, Milpitas, California[205](index=205&type=chunk) Principal Facilities by Location (Owned or Leased) | Location | Buildings Owned or Leased | Approximate Square Footage | Description | |:---|:---|:---|:---| | **United States** |||| | California (Irvine) | Leased | 105,000 | Flash R&D, marketing and sales, and administrative | | California (Milpitas) | Leased | 578,000 | Flash R&D, marketing and sales, and administrative | | Colorado (Longmont) | Leased | 31,000 | Flash R&D | | Minnesota (Rochester) | Leased | 45,000 | Flash product development | | **Asia** |||| | Japan (Fujisawa) | Owned | 23,000 | Flash R&D, Sales | | Malaysia (Penang) | Owned | 1,177,000 | Flash R&D, manufacturing of media | | China (Shanghai) | Leased | 5,000 | Flash assembly and testing | | **Middle East** |||| | Israel (Kfar Saba) | Owned | 204,000 | Flash R&D | - Substantially all flash-based memory wafers are manufactured by Flash Ventures in leased facilities in Yokkaichi and Kitakami, Japan[206](index=206&type=chunk) [Item 3. Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) Sandisk is not currently involved in any material legal proceedings beyond routine litigation incidental to its business - There are no material legal proceedings, other than ordinary routine litigation incidental to the company, to which Sandisk or its subsidiaries are a party[207](index=207&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to Sandisk Corporation PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Sandisk's common stock began trading on the Nasdaq Global Select Market under the symbol "SDNK" on February 24, 2025, with no current intention to pay cash dividends - Sandisk's common stock is listed on the Nasdaq Global Select Market under the symbol "SDNK" and began trading on February 24, 2025[4](index=4&type=chunk)[210](index=210&type=chunk)[222](index=222&type=chunk) - As of August 13, 2025, there were approximately **685 holders of record** for the common stock[210](index=210&type=chunk) - The company does not currently intend to pay cash dividends, opting to retain funds for business operations and to strengthen its financial position[211](index=211&type=chunk) Cumulative Total Return to Stockholders (February 12, 2025 - June 27, 2025) | | February 12, 2025 | June 27, 2025 | |:---|:---|:---| | Sandisk Corporation | $100.00 | $130.97 | | S&P 500 Index | $100.00 | $101.49 | | PHLX Semiconductor Sector (SOX) Index | $100.00 | $108.01 | [Item 6. [Reserved]](index=44&type=section&id=Item%206.%20%5BReserved%5D) This section is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Sandisk completed its spin-off from WDC on February 21, 2025, becoming an independent public company focused on NAND flash technology solutions for Cloud, Client, and Consumer markets [Overview](index=45&type=section&id=Overview) Sandisk completed its spin-off from WDC in February 2025, becoming an independent NAND flash technology provider, and recorded a $1.8 billion goodwill impairment charge - Sandisk completed its spin-off from Western Digital Corporation (WDC) on February 21, 2025, distributing **80.1%** of its common stock to WDC stockholders[221](index=221&type=chunk)[222](index=222&type=chunk) - The company is a leading developer, manufacturer, and provider of NAND flash technology solutions for AI workloads in datacenters, edge devices, and consumers, addressing Cloud, Client, and Consumer end markets[224](index=224&type=chunk) - In September 2023, WDC completed a sale and leaseback of its Milpitas, California facility, with **$134 million** of net proceeds allocated to Sandisk[226](index=226&type=chunk) - SanDisk China Limited sold **80%** of its equity interest in SanDisk Semiconductor (Shanghai) Co. Ltd. (SDSS) to JCET Management Co., Ltd. on September 28, 2024, forming the SDSS Venture[227](index=227&type=chunk) - A goodwill impairment charge of **$1.8 billion** was recorded during the third quarter of fiscal year 2025 due to the carrying value of the reporting unit exceeding its fair value[229](index=229&type=chunk) - On February 21, 2025, Sandisk entered into a **$2.0 billion Term Loan Facility** and a **$1.5 billion Revolving Credit Facility**, using a portion of the Term Loan proceeds for a **$1.5 billion net distribution payment** to WDC[232](index=232&type=chunk)[233](index=233&type=chunk) - Fiscal year 2025 saw an improvement in supply and demand dynamics, leading to improved revenues and gross margin, though **$75 million** in charges were incurred for manufacturing underutilization[234](index=234&type=chunk) [Basis of Presentation](index=47&type=section&id=Basis%20of%20Presentation) Post-separation, Sandisk's financial statements are consolidated under U.S. GAAP, with historical data derived from WDC's consolidated statements - Post-separation (February 21, 2025), Sandisk's financial statements are presented on a consolidated basis in accordance with U.S. GAAP[237](index=237&type=chunk) - Prior to separation, historical financial statements were derived from WDC's consolidated statements, with certain corporate overhead and shared costs allocated to Sandisk based on direct usage or other reasonable methods[239](index=239&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Net revenue increased 10% in 2025, driven by higher exabytes sold and improved pricing, leading to a significant rise in gross profit Selected Summary Information from Consolidated Statements of Operations (2023-2025) | Metric | 2025 (in millions) | 2025 (%) | 2024 (in millions) | 2024 (%) | 2023 (in millions) | 2023 (%) | |:---|:---|:---|:---|:---|:---|:---| | Revenue, net | $7,355 | 100.0% | $6,663 | 100.0% | $6,086 | 100.0% | | Cost of revenue | 5,143 | 69.9 | 5,591 | 83.9 | 5,656 | 92.9 | | Gross profit | 2,212 | 30.1 | 1,072 | 16.1 | 430 | 7.1 | | Research and development | 1,132 | 15.4 | 1,061 | 15.9 | 1,167 | 19.2 | | Selling, general and administrative | 573 | 7.8 | 455 | 6.8 | 558 | 9.2 | | Goodwill impairment | 1,830 | 24.9 | — | — | 671 | 11.0 | | Total operating expenses | 3,589 | 48.8 | 1,540 | 23.1 | 2,465 | 40.5 | | Operating income (loss) | (1,377) | (18.7) | (468) | (7.0) | (2,035) | (33.4) | | Net income (loss) | $(1,641) | (22.3)% | $(672) | (10.0)% | $(2,143) | (35.2)% | Disaggregated Revenue by End Market (2023-2025) | Revenue by end market | 2025 (in millions) | 2024 (in millions) | 2023 (in millions) | |:---|:---|:---|:---|\ | Cloud | $960 | $325 | $500 | | Client | 4,127 | 4,069 | 3,637 | | Consumer | 2,268 | 2,269 | 1,949 | | Total revenue | $7,355 | $6,663 | $6,086 | Disaggregated Revenue by Geography (2023-2025) | Revenue by geography | 2025 (in millions) | 2024 (in millions) | 2023 (in millions) | |:---|:---|:---|:---|\ | Asia | $4,457 | $4,510 | $3,890 | | Americas | 1,618 | 1,095 | 1,266 | | Europe, Middle East and Africa | 1,280 | 1,058 | 930 | | Total revenue | $7,355 | $6,663 | $6,086 | - Net revenue increased **10% ($692 million)** in 2025 compared to 2024, driven by a **6% increase in exabytes sold** and a **4% increase in average selling prices (ASP) per gigabyte**[242](index=242&type=chunk) - Cloud revenue surged **195% ($635 million)** in 2025, primarily due to a **153% increase in exabytes sold** and a **17% increase in ASP per gigabyte**[243](index=243&type=chunk) - Gross profit increased by **$1,140 million** in 2025 compared to 2024, and gross profit margin increased by **14%**, primarily due to improved pricing, favorable product mix, and decreased manufacturing underutilization charges[246](index=246&type=chunk)[247](index=247&type=chunk) - Research and development (R&D) expenses increased by **$71 million** in 2025, mainly due to higher compensation and benefits, increased R&D project spending, and material purchases[248](index=248&type=chunk) - Selling, general and administrative expenses increased by **$118 million** in 2025, driven by higher variable compensation, increased materials, and legal service fees[249](index=249&type=chunk) - Interest and other expense, net, increased by **$67 million** in 2025, primarily due to a **$56 million increase in interest expense** from the Loan Agreement and a **$37 million increase in equity method investment losses**[254](index=254&type=chunk) Income Tax Expense and Effective Tax Rate (2023-2025) | Metric | 2025 (in millions) | 2024 (in millions) | 2023 (in millions) | |:---|:---|:---|:---|\ | Income (loss) before taxes | $(1,479) | $(503) | $(2,002) | | Income tax expense | $162 | $169 | $141 | | Effective tax rate | (11)% | (34)% | (7)% | [Financial condition, liquidity and capital resources](index=51&type=section&id=Financial%20condition%2C%20liquidity%20and%20capital%20resources) Sandisk's liquidity is supported by cash and credit facilities, with anticipated capital investments and significant commitments related to Flash Ventures Consolidated Statements of Cash Flows Summary (2023-2025) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | 2023 (in millions) | |:---|:---|:---|:---|\ | Operating activities | $84 | $(309) | $(713) | | Investing activities | $556 | $210 | $(189) | | Financing activities | $518 | $136 | $860 | | Net increase (decrease) in cash and cash equivalents | $1,153 | $36 | $(43) | - Sandisk anticipates increased capital investments in fiscal year 2026 to transition to newer technology nodes and meet product portfolio demand[260](index=260&type=chunk) - Net cash provided by operating activities was **$84 million** in 2025, a significant improvement from negative cash flows in 2024 and 2023[260](index=260&type=chunk)[263](index=263&type=chunk) Cash Conversion Cycle (Days) (2023-2025) | Metric | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Days sales outstanding (DSO) | 51 | 48 | 35 | | Days in inventory (DIO) | 135 | 158 | 134 | | Days payable outstanding (DPO) | (50) | (54) | (37) | | Cash conversion cycle | 136 | 152 | 132 | - Net cash provided by investing activities was **$556 million** in 2025, primarily from the sale of a majority interest in a subsidiary (**$401 million**) and Flash Ventures activities (**$358 million**), partially offset by capital expenditures[266](index=266&type=chunk) - Net cash provided by financing activities was **$518 million** in 2025, including **$1,970 million** from the Term Loan Facility, partially offset by a **$1,887 million transfer to WDC**[267](index=267&type=chunk) Material Cash Requirements as of June 27, 2025 (in millions) | Category | Total | 1 year (2026) | 2-3 Years (2027-2028) | 4-5 Years (2029-2030) | More than 5 Years (Beyond 2030) | |:---|:---|:---|:---|:---|:---|\ | Long-term debt, including current portion | $1,900 | $20 | $40 | $40 | $1,800 | | Interest on debt | 905 | 143 | 276 | 267 | 219 | | Flash Ventures related commitments | 4,539 | 2,226 | 1,583 | 667 | 63 | | Operating leases | 331 | 41 | 63 | 44 | 183 | | Purchase obligations and other commitments | 2,633 | 250 | 1,153 | 1,140 | 90 | | **Total** | **$10,308** | **$2,680** | **$3,115** | **$2,158** | **$2,355** | - As of June 27, 2025, Sandisk was in compliance with the Loan Agreement's financial covenant requiring a maximum Leverage Ratio[273](index=273&type=chunk) - The company guarantees half of all outstanding obligations under Flash Ventures' equipment lease agreements, with a maximum estimable loss exposure of **$3,384 million** as of June 27, 2025[274](index=274&type=chunk)[476](index=476&type=chunk) - A tax indemnification liability of **$110 million** was recorded as of June 27, 2025, related to the Tax Matters Agreement with WDC[278](index=278&type=chunk)[427](index=427&type=chunk) [Recent Accounting Pronouncements](index=54&type=section&id=Recent%20Accounting%20Pronouncements) Sandisk adopted ASU 2023-07 retrospectively in Q4 2025 and will implement ASU 2023-09 and ASU 2024-03 in future fiscal years - Sandisk adopted ASU 2023-07, "Segment Reporting," retrospectively in Q4 fiscal 2025, expanding segment expense disclosures[390](index=390&type=chunk) - ASU 2023-09, "Income Taxes," requiring enhanced income tax disclosures, will be effective for Sandisk's fiscal year ending July 3, 2026[281](index=281&type=chunk)[391](index=391&type=chunk) - ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures," requiring more detailed expense information, will be effective for fiscal years beginning after December 15, 2026[282](index=282&type=chunk)[392](index=392&type=chunk) [Critical Accounting Estimates](index=54&type=section&id=Critical%20Accounting%20Estimates) Key estimates include revenue recognition, inventory valuation, and goodwill impairment, all requiring significant judgment and impacting financial results - Revenue recognition involves significant judgment in assessing variable consideration (e.g., price protection, sales incentives) using the expected value method, with potential for material differences between estimates and actuals[284](index=284&type=chunk)[285](index=285&type=chunk) - Inventory valuation at the lower of cost or net realizable value requires significant judgment in estimating average selling prices, future demand, and assessing for excess or obsolescence, which can materially impact gross margin[286](index=286&type=chunk)[287](index=287&type=chunk) - Goodwill impairment testing involves significant judgment in evaluating macroeconomic conditions, determining fair value of reporting units, and using estimates like revenue forecasts and discount rates, with a **$1.8 billion impairment charge** recognized in fiscal 2025[289](index=289&type=chunk)[290](index=290&type=chunk)[292](index=292&type=chunk)[294](index=294&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Sandisk is exposed to market risks primarily from foreign currency fluctuations and interest rate changes, which it manages through hedging and monitoring variable rate debt - Sandisk uses short-term foreign exchange contracts to hedge foreign currency risk, primarily for operating expenses and product costs denominated in foreign currencies[295](index=295&type=chunk) - A hypothetical **10% adverse movement** in foreign currency exchange rates relative to the U.S. dollar would result in an **$85 million foreign exchange fair value loss** as of June 27, 2025[296](index=296&type=chunk) - Total net realized and unrealized transaction and foreign exchange contract currency losses were **$29 million** in 2025, compared to **$4 million** in 2024 and **$5 million** in 2023[297](index=297&type=chunk) - As of June 27, 2025, Sandisk had approximately **$1.9 billion in variable rate debt** (Term Loan Facility), and a **one percent increase** in the variable interest rate would increase annual interest expense by **$19 million**[299](index=299&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Sandisk Corporation's audited consolidated financial statements for the fiscal years ended June 27, 2025, June 28, 2024, and June 30, 2023, along with detailed notes [Report of Independent Registered Public Accounting Firm](index=58&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on Sandisk's financial statements, highlighting variable consideration for sales to resellers as a critical audit matter - KPMG LLP, the independent registered public accounting firm, issued an unqualified opinion on Sandisk's consolidated financial statements for the three-year period ended June 27, 2025[303](index=303&type=chunk) - The assessment of variable consideration for sales to resellers was identified as a critical audit matter due to the high degree of subjective auditor judgment required for evaluating assumptions related to historical pricing and channel inventory levels[307](index=307&type=chunk)[308](index=308&type=chunk) [Consolidated Financial Statements](index=60&type=section&id=Consolidated%20Financial%20Statements) This section presents Sandisk's audited consolidated balance sheets, statements of operations, comprehensive loss, cash flows, and shareholders' equity Consolidated Balance Sheets (June 27, 2025 vs. June 28, 2024) | ASSETS (in millions) | June 27, 2025 | June 28, 2024 | |:---|:---|:---|\ | Cash and cash equivalents | $1,481 | $328 | | Accounts receivable, net | 1,068 | 935 | | Inventories | 2,079 | 1,955 | | Total current assets | 5,086 | 3,548 | | Property, plant and equipment, net | 619 | 791 | | Goodwill | 4,999 | 7,207 | | Total assets | $12,985 | $13,506 | | **LIABILITIES AND SHAREHOLDERS' EQUITY (in millions)** | | | | Accounts payable | $366 | $357 | | Accounts payable to related parties | 400 | 313 | | Current portion of long-term debt | 20 | — | | Total current liabilities | 1,427 | 2,123 | | Long-term debt | 1,829 | — | | Total liabilities | 3,769 | 2,424 | | Total shareholders' equity | 9,216 | 11,082 | | Total liabilities and shareholders' equity | $12,985 | $13,506 | Consolidated Statements of Operations (Three Years Ended June 27, 2025) | (in millions, except per share amounts) | June 27, 2025 | June 28, 2024 | June 30, 2023 | |:---|:---|:---|:---|\ | Revenue, net | $7,355 | $6,663 | $6,086 | | Gross profit | 2,212 | 1,072 | 430 | | Operating loss | (1,377) | (468) | (2,035) | | Net loss | $(1,641) | $(672) | $(2,143) | | Net loss per common share: Basic and diluted | $(11.32) | $(4.63) | $(14.78) | | Weighted average shares outstanding: Basic and diluted | 145 | 145 | 145 | Consolidated Statements of Comprehensive Loss (Three Years Ended June 27, 2025) | (in millions) | June 27, 2025 | June 28, 2024 | June 30, 2023 | |:---|:---|:---|:---|\ | Net loss | $(1,641) | $(672) | $(2,143) | | Other comprehensive income (loss), net of tax | 213 | (109) | 64 | | Total comprehensive loss | $(1,428) | $(781) | $(2,079) | Consolidated Statements of Cash Flows (Three Years Ended June 27, 2025) | (in millions) | June 27, 2025 | June 28, 2024 | June 30, 2023 | |:---|:---|:---|:---|\ | Net cash provided by (used in) operating activities | $84 | $(309) | $(713) | | Net cash provided by (used in) investing activities | 556 | 210 | (189) | | Net cash provided by financing activities | 518 | 136 | 860 | | Net increase (decrease) in cash and cash equivalents | 1,153 | 36 | (43) | | Cash and cash equivalents, end of year | $1,481 | $328 | $292 | Consolidated Statements of Shareholders' Equity (Three Years Ended June 27, 2025) | (in millions) | Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Net Investment from Western Digital Corporation | Total | |:---|:---|:---|:---|:---|:---|:---|\ | Balance at July 01, 2022 | $0 | $0 | $0 | $(407) | $13,384 | $12,977 | | Balance at June 30, 2023 | $0 | $0 | $0 | $(343) | $11,782 | $11,439 | | Balance at June 28, 2024 | $0 | $0 | $0 | $(452) | $11,534 | $11,082 | | Balance at June 27, 2025 | $1 | $11,248 | $(1,784) | $(249) | $0 | $9,216 | [Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies](index=66&type=section&id=Note%201.%20Organization%2C%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Sandisk Corporation became an independent public company on February 21, 2025, following a spin-off from WDC, and operates as a single reportable segment - Sandisk Corporation became an independent public company on February 21, 2025, following a spin-off from WDC, with its common stock trading on Nasdaq under "SNDK"[325](index=325&type=chunk) - WDC distributed **80.1%** of Sandisk's outstanding common stock to its stockholders, retaining **19.9%** initially, which was further reduced to **5.3%** by June 6, 2025[326](index=326&type=chunk) - In connection with the separation, Sandisk entered into a **$1.5 billion revolving credit facility** (undrawn) and a **$2.0 billion term loan facility**, using proceeds for a **$1.5 billion net distribution** to WDC[328](index=328&type=chunk) - Prior to separation, Sandisk's financial statements were derived from WDC's consolidated statements, with allocated corporate expenses, and are now presented on a consolidated basis in accordance with U.S. GAAP[331](index=331&type=chunk)[334](index=334&type=chunk)[339](index=339&type=chunk) - The company operates as a single reportable operating segment, with the CEO as the Chief Operating Decision Maker (CODM) evaluating performance based on consolidated net income (loss)[345](index=345&type=chunk)[346](index=346&type=chunk) - Revenue is recognized when control over a product or service is transferred to the customer, adjusted for variable consideration like sales incentives and price protection, estimated using the expected value method[364](index=364&type=chunk)[368](index=368&type=chunk) - Goodwill is tested for impairment annually or more frequently if indicators exist, using qualitative and quantitative assessments, with a **$1.8 billion impairment** recorded in 2025[361](index=361&type=chunk)[363](index=363&type=chunk) - Stock-based compensation expense is recognized on a straight-line basis over the service period, with RSU and PSU awards adjusted post-separation to maintain economic value[382](index=382&type=chunk) - Sandisk uses foreign exchange contracts to hedge currency risk, with changes in fair value for designated cash flow hedges deferred in Other comprehensive income (loss) and recognized in earnings when the underlying cash flow is realized[385](index=385&type=chunk)[386](index=386&type=chunk) [Note 2. Recent Accounting Pronouncements](index=74&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) Sandisk adopted ASU 2023-07 retrospectively in Q4 2025 and will implement ASU 2023-09 and ASU 2024-03 in future fiscal years - Sandisk adopted ASU 2023-07, "Segment Reporting," retrospectively in the fourth quarter of fiscal 2025, expanding disclosures on significant segment expenses[390](index=390&type=chunk) - ASU 2023-09, "Income Taxes," requiring enhanced income tax disclosures, will be effective for Sandisk's fiscal year ending July 3, 2026[391](index=391&type=chunk) - ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures," requiring more detailed expense information, will be effective for fiscal years beginning after December 15, 2026[392](index=392&type=chunk) [Note 3. Geographic Information and Concentrations of Risk](index=74&type=section&id=Note%203.%20Geographic%20Information%20and%20Concentrations%20of%20Risk) This note details disaggregated revenue by end market and geographic region, highlighting supplier concentration risk with Flash Ventures Disaggregated Revenue by End Market (2023-2025) | Revenue by end market | 2025 (in millions) | 2024 (in millions) | 2023 (in millions) | |:---|:---|:---|:---|\ | Cloud | $960 | $325 | $500 | | Client | 4,127 | 4,069 | 3,637 | | Consumer | 2,268 | 2,269 | 1,949 | | Total revenue | $7,355 | $6,663 | $6,086 | Net Revenue by Geographic Region (2023-2025) | Geographic Region | 2025 (in millions) | 2024 (in millions) | 2023 (in millions) | |:---|:---|:---|:---|\ | United States | $1,447 | $933 | $1,133 | | China | 2,040 | 2,549 | 2,302 | | Hong Kong | 1,301 | 1,044 | 690 | | Europe, Middle East and Africa | 1,280 | 1,058 | 930 | | Rest of Asia | 1,116 | 917 | 898 | | Other | 171 | 162 | 133 | | Total revenue | $7,355 | $6,663 | $6,086 | Long-lived Assets by Geographic Area (2025 vs. 2024) | Geographic Area | 2025 (in millions) | 2024 (in millions) | |:---|:---|:---|\ | United States | $93 | $77 | | China | 14 | 249 | | Malaysia | 398 | 388 | | Rest of Asia | 67 | 4 | | Europe, Middle East and Africa | 47 | 73 | | Total Long-lived assets | $619 | $791 | - For 2025 and 2024, no single customer accounted for more than **10% of net revenue**; in 2023, one customer accounted for **15%** The top 10 customers accounted for **40%**, **41%**, and **47%** of net revenue in 2025, 2024, and 2023, respectively[398](index=398&type=chunk) - Substantially all flash memory wafers are supplied by Flash Ventures, and controller wafers are from third-party sources, creating supplier concentration risk[402](index=402&type=chunk) [Note 4. Revenues](index=76&type=section&id=Note%204.%20Revenues) Sandisk applies practical expedients for revenue recognition, not disclosing transaction prices for short-term performance obligations or sales-based royalties - Sandisk applies practical expedients, not disclosing transaction price for remaining performance obligations with expected durations of one year or less, or for variable consideration from sales-based/usage-based royalties[404](index=404&type=chunk) - Contract assets were immaterial for all periods presented, and contract liabilities, primarily for professional service, support, and maintenance contracts, were also immaterial[405](index=405&type=chunk) - Sales commissions are expensed as incurred if the amortization period is one year or less or the amount is immaterial, charged to Selling, general and administrative expenses[406](index=406&type=chunk) [Note 5. Supplemental Financial Statement Data](index=76&type=section&id=Note%205.%20Supplemental%20Financial%20Statement%20Data) This note provides details on goodwill activity, inventories, property, plant and equipment, warranty accruals, and accumulated other comprehensive loss Goodwill Activity (2025) | (in millions) | Amount | |:---|:---|\ | Balance at June 28, 2024 | $7,207 | | Divestiture | (382) | | Impairment charges | (1,830) | | Foreign currency translation adjustment | 4 | | Balance at June 27, 2025 | $4,999 | - A **$1.8 billion goodwill impairment charge** was recognized in the third quarter of fiscal 2025 due to the carrying value of the reporting unit exceeding its estimated fair value, following the separation and related market indicators[411](index=411&type=chunk)[416](index=416&type=chunk) - No write-down of long-lived assets was recognized as of June 27, 2025, as estimated undiscounted net cash flows exceeded net carrying value[412](index=412&type=chunk) - No trade accounts receivable were sold by WDC or Sandisk in 2025; **$339 million** and **$370 million** were sold in 2024 and 2023, respectively[420](index=420&type=chunk) Inventories (2025 vs. 2024) | Inventories (in millions) | 2025 | 2024 | |:---|:---|:---|\ | Raw materials and component parts | $1,517 | $1,398 | | Work-in-process | 262 | 237 | | Finished goods | 300 | 320 | | Total inventories | $2,079 | $1,955 | Property, Plant and Equipment, net (2025 vs. 2024) | Property, plant and equipment (in millions) | 2025 | 2024 | |:---|:---|:---|\ | Property, plant and equipment, gross | $2,125 | $2,994 | | Accumulated depreciation | (1,506) | (2,203) | | Property, plant and equipment, net | $619 | $791 | - All finite-lived intangible assets were fully amortized as of June 27, 2025, with **$133 million** in amortization charges recognized in 2023[424](index=424&type=chunk) Product Warranty Accrual Activity (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Warranty accrual, beginning of period | $48 | $42 | $52 | | Charges to operations | 27 | 28 | 30 | | Utilization | (35) | (34) | (26) | | Changes in estimate related to pre-existing warranties | 4 | 12 | (14) | | Warranty accrual, end of period | $44 | $48 | $42 | Other Liabilities (2025 vs. 2024) | Other liabilities (in millions) | 2025 | 2024 | |:---|:---|:---|\ | Non-current lease liability | $193 | $171 | | Non-current net tax payable | 131 | 56 | | Tax indemnification liability | 110 | — | | Other non-current liabilities | 62 | 59 | | Total other liabilities | $496 | $286 | Accumulated Other Comprehensive Loss (AOCL) (2023-2025) | (in millions) | Foreign Currency Translation Adjustment | Unrealized (Losses) on Derivative Contracts | Total Accumulated Comprehensive Loss | |:---|:---|:---|:---|\ | Balance at June 30, 2023 | $(165) | $(178) | $(343) | | Balance at June 28, 2024 | $(208) | $(244) | $(452) | | Balance at June 27, 2025 | $(202) | $(47) | $(249) | [Note 6. Fair Value Measurements and Investments](index=80&type=section&id=Note%206.%20Fair%20Value%20Measurements%20and%20Investments) This note details financial instruments measured at fair value, including cash equivalents and foreign exchange contracts, and the fair value of debt Financial Instruments Measured at Fair Value (June 27, 2025) | (in millions) | Level 1 | Level 2 | Level 3 | Total | |:---|:---|:---|:---|:---|\ | **Assets:** ||||| | Cash equivalents - Money market funds | $751 | — | — | $751 | | Foreign exchange contracts | — | 17 | — | 17 | | **Total assets at fair value** | **$751** | **$17** | **$—** | **$768** | | **Liabilities:** ||||| | Foreign exchange contracts | — | 22 | — | 22 | | **Total liabilities at fair value** | **$—** | **$22** | **$—** | **$22** | Financial Instruments Measured at Fair Value (June 28, 2024) | (in millions) | Level 1 | Level 2 | Level 3 | Total | |:---|:---|:---|:---|:---|\ | **Assets:** ||||| | Cash equivalents - Money market funds | $28 | — | — | $28 | | Foreign exchange contracts | — | 7 | — | 7 | | **Total assets at fair value** | **$28** | **$7** | **$—** | **$35** | | **Liabilities:** ||||| | Foreign exchange contracts | — | 179 | — | 179 | | **Total liabilities at fair value** | **$—** | **$179** | **$—** | **$179** | - The fair value of debt not recorded at fair value on a recurring basis was estimated at **$1.9 billion** as of June 27, 2025, based on observable market prices in less active markets[437](index=437&type=chunk) [Note 7. Derivative Instruments and Hedging Activities](index=81&type=section&id=Note%207.%20Derivative%20Instruments%20and%20Hedging%20Activities) Sandisk uses short-term foreign exchange forward contracts, primarily as cash flow hedges, to manage currency risk - As of June 27, 2025, Sandisk had outstanding foreign exchange forward contracts with an aggregate notional amount of **$2.5 billion**, primarily designated as cash flow hedges or non-designated hedges, with maturity dates generally not exceeding 12 months[385](index=385&type=chunk)[438](index=438&type=chunk) - Total net realized and unrealized transaction and foreign exchange contract currency losses were **$29 million** in 2025, **$4 million** in 2024, and **$5 million** in 2023[439](index=439&type=chunk) [Note 8. Debt](index=81&type=section&id=Note%208.%20Debt) Sandisk's debt primarily consists of a $1.9 billion variable interest rate Term Loan Facility, with a $1.5 billion Revolving Credit Facility remaining undrawn Debt Composition (2025 vs. 2024) | (in millions) | June 27, 2025 | June 28, 2024 | |:---|:---|:---|\ | Variable interest rate Term Loan Facility maturing 2032 | $1,900 | $— | | $1.5B Revolving Credit Facility maturing 2030 | — | — | | Total Debt | 1,900 | — | | Unamortized Issuance Costs | 51 | — | | Subtotal | 1,849 | — | | Less: current portion of long-term debt | 20 | — | | Long term debt | $1,829 | $— | - On February 21, 2025, Sandisk borrowed **$2.0 billion** under its Term Loan Facility, using a portion to make a **$1.5 billion net distribution payment** to WDC[445](index=445&type=chunk) - The Term Loan Facility bears interest at a variable rate (Adjusted Term SOFR Rate + **3.00%** or base rate + **2.00%**), with an annualized interest rate of **7%** as of June 27, 2025[448](index=448&type=chunk)[450](index=450&type=chunk) - The Revolving Credit Facility, with an aggregate principal amount of **$1.5 billion**, remains undrawn as of June 27, 2025, with **$1.5 billion available capacity**[441](index=441&type=chunk)[453](index=453&type=chunk) Maturity of Debt as of June 27, 2025 (in millions) | Fiscal year | Contractual Maturity | |:---|:---|\ | 2026 | $20 | | 2027 | 20 | | 2028 | 20 | | 2029 | 20 | | 2030 | 20 | | 2031 and thereafter | 1,800 | | Total debt maturities | $1,900 | [Note 9. Segment Reporting](index=83&type=section&id=Note%209.%20Segment%20Reporting) Sandisk manages and reports its business operations as a single reportable operating segment, with the CEO as the Chief Operating Decision Maker - Sandisk manages and reports its business operations under a single reportable operating segment, with the Chief Executive Officer as the CODM[345](index=345&type=chunk)[346](index=346&type=chunk) Segment Reporting Summary (Three Years Ended June 27, 2025) | (in millions) | June 27, 2025 | June 28, 2024 | June 30, 2023 | |:---|:---|:---|:---|\ | Revenue | $7,355 | $6,663 | $6,086 | | Costs of revenue (1) | (5,127) | (5,607) | (5,637) | | Operating expenses (1) | (1,539) | (1,365) | (1,425) | | Stock-based compensation expenses | (182) | (149) | (165) | | Goodwill impairment | (1,830) | — | (671) | | Business separation costs | (67) | (64) | — | | Net loss | $(1,641) | $(672) | $(2,143) | [Note 10. Related Parties and Related Commitments and Contingencies](index=84&type=section&id=Note%2010.%20Related%20Parties%20and%20Related%20Commitments%20and%20Contingencies) Sandisk procures substantially all flash memory from Flash Ventures, in which it holds a 49.9% ownership interest, and has related guarantees - Sandisk procures substantially all flash-based memory wafers from Flash Ventures, joint ventures with Kioxia, in which Sandisk holds a **49.9% ownership interest**[460](index=460&type=chunk) - Flash Ventures operates seven manufacturing facilities in Japan (Yokkaichi and Kitakami), with an eighth facility expected to begin operations in calendar year 2025[41](index=41&type=chunk) - Sandisk accounts for its Flash Ventures ownership under the equity method and is not deemed the primary beneficiary[470](index=470&type=chunk) Notes Receivable and Equity Investments in Flash Ventures (2025 vs. 2024) | (in millions) | June 27, 2025 | June 28, 2024 | |:---|:---|:---|\ | Notes receivable, Flash Partners | $7 | $1 | | Notes receivable, Flash Alliance | 36 | 5 | | Notes receivable, Flash Forward | 316 | 485 | | Investment in Flash Partners | 55 | 148 | | Investment in Flash Alliance | 115 | 219 | | Investment in Flash Forward | 125 | 143 | | Total notes receivable and investments in Flash Ventures | $654 | $1,001 | - Sandisk incurred **$75 million** and **$249 million** in 2025 and 2024, respectively, for manufacturing underutilization charges related to Flash Ventures due to reduced capacity utilization[479](index=479&type=chunk) Sandisk's Portion of Flash Ventures' Lease Guarantee Obligations (June 27, 2025) | Annual Installments (in millions) | Payment of Principal Amortization | Purchase Option Exercise Price at Final Lease Terms | Guarantee Amount | |:---|:---|:---|:---|\ | 2026 | $507 | $124 | $631 | | 2027 | 259 | 106 | 365 | | 2028 | 124 | 102 | 226 | | 2029 | 48 | 55 | 103 | | 2030 | 16 | 63 | 79 | | Total guarantee obligations | $954 | $450 | $1,404 | - On September 28, 2024, Sandisk China sold **80%** of its equity interest in SDSS, resulting in a pre-tax gain of **$34 million** and a retained **20% equity method investment** valued at **$161 million** as of June 27, 2025[485](index=485&type=chunk)[487](index=487&type=chunk)[488](index=488&type=chunk) - On January 24, 2025, WDC transferred its entire equity interest in the Unis Venture (**48% owned by Sandisk**) to Sandisk, which markets and sells Sandisk's products in China[491](index=491&type=chunk) Allocation of Corporate Expenses from WDC (2023-2025) | (in millions) | June 27, 2025 | June 28, 2024 | June 30, 2023 | |:---|:---|:---|:---|\ | Research and development | $189 | $723 | $750 | | Selling general, and administrative | 158 | 418 | 452 | | Business separation costs | 50 | (40) | 61 | | Employee termination and other charges | 5 | 64 | — | | Total allocation of Corporate Expenses | $402 | $1,165 | $1,263 | [Note 11. Leases and Other Commitments](index=90&type=section&id=Note%2011.%20Leases%20and%20Other%20Commitments) This note details operating lease assets and liabilities, weighted average lease terms, and long-term purchase commitments Operating Lease Assets and Liabilities (2025 vs. 2024) | (in millions) | June 27, 2025 | June 28, 2024 | |:---|:---|:---|\ | Operating lease right-of-use assets | $214 | $179 | | Current portion of long-term operating lease liabilities | 26 | 11 | | Long-term operating lease liabilities | 193 | 171 | | Total operating lease liabilities | $219 | $182 | - The weighted average remaining lease term for operating leases was **11.00 years** in 2025 (**13.7 years** in 2024), with a weighted average discount rate of **7.3%** (**7.5%** in 2024)[511](index=511&type=chunk) Minimum Lease Payments by Fiscal Year (as of June 27, 2025) | Fiscal year (in millions) | Lease Amounts | |:---|:---|\ | 2026 | $41 | | 2027 | 35 | | 2028 | 28 | | 2029 | 24 | | 2030 | 20 | | Thereafter | 183 | | Total future minimum lease payments | $331 | - In September 2023, a sale-leaseback of the Milpitas, California facility resulted in a **$60 million gain** for Sandisk[512](index=512&type=chunk) Long-term Purchase Commitments (as of June 27, 2025) | Fiscal year (in millions) | Long-term commitments | |:---|:---|\ | 2026 | $250 | | 2027 | 583 | | 2028 | 570 | | 2029 | 570 | | 2030 | 570 | | Thereafter | 90 | | Total | $2,633 | [Note 12. Shareholders' Equity](index=92&type=section&id=Note%2012.%20Shareholders%27%20Equity) Post-separation, WDC stock awards were adjusted, and Sandisk adopted new long-term incentive and employee stock purchase plans - Post-separation, WDC stock awards held by Sandisk employees were adjusted into Sandisk or a combination of Sandisk and WDC awards, resulting in approximately **$41 million of incremental stock-based compensation expense** over the remaining service period[517](index=517&type=chunk) - Sandisk adopted the 2025 Long-Term Incentive Plan, authorizing **23.8 million shares** for awards, and the 2025 Employee Stock Purchase Plan (ESPP), authorizing **4.3 million shares**[518](index=518&type=chunk)[521](index=521&type=chunk)[522](index=522&type=chunk) Stock-based Compensation Expense by Type (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | RSUs and PSUs | $171 | $133 | $148 | | ESPP | 11 | 16 | 17 | | Total | $182 | $149 | $165 | Stock-based Compensation Expense by Financial Statement Line (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Cost of revenue | $16 | $20 | $19 | | Research and development | 81 | 71 | 88 | | Selling general, and administrative | 85 | 58 | 58 | | Subtotal | $182 | $149 | $165 | | Tax benefit | (22) | (21) | (22) | | Total | $160 | $128 | $143 | Unamortized Compensation Cost (as of June 27, 2025) | | Unamortized Compensation Costs (in millions) | Weighted average service period (years) | |:---|:---|:---|\ | RSUs and PSUs | $315 | 2.27 | | ESPP | 16 | 1.81 | | Total unamortized compensation cost | $331 | | RSU and PSU Award Activity (Year Ended June 27, 2025) | (in millions) | Number of Shares | Weighted Average Grant Date Fair Value | |:---|:---|:---|\ | RSUs and PSUs outstanding at June 28, 2024 | — | $— | | Awards converted from Western Digital Corporation Plans | 6.4 | 35.32 | | Granted | 1.5 | 50.47 | | Vested | (1.1) | 34.07 | | Canceled/forfeited | (0.2) | 36.14 | | RSUs and PSUs outstanding at June 27, 2025 | 6.6 | $38.98 | [Note 13. Net Income (loss) per Common Share](index=94&type=section&id=Note%2013.%20Net%20Income%20%28loss%29%20per%20Common%20Share) Basic and diluted EPS calculations for all periods assume 145 million common shares were outstanding historically - On the separation date, Sandisk issued **145 million shares of common stock**, which are used for basic and diluted EPS calculations for all periods presented, assuming they were outstanding historically[531](index=531&type=chunk) Computation of Basic and Diluted Net Income (Loss) Per Common Share (2023-2025) | (in millions, except per share amounts) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Net income (loss) | $(1,641) | $(672) | $(2,143) | | Weighted average shares outstanding: Basic and diluted | 145 | 145 | 145 | | Net loss per common share: Basic and diluted | $(11.32) | $(4.63) | $(14.78) | | Dilutive weighted-average shares | 2 | — | — | - Potentially dilutive securities were excluded from diluted EPS calculations for periods with net losses as their effect would have been anti-dilutive[534](index=534&type=chunk) [Note 14. Income Tax Expense](index=95&type=section&id=Note%2014.%20Income%20Tax%20Expense) This note details domestic and foreign components of income before taxes, income tax expense, and the reconciliation of the effective tax rate Domestic and Foreign Components of Income (Loss) Before Taxes (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Foreign | $(1,348) | $(543) | $(2,253) | | Domestic | (131) | 40 | 251 | | Income (loss) before taxes | $(1,479) | $(503) | $(2,002) | Components of Income Tax Expense (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Current: Foreign | $165 | $158 | $138 | | Current: U.S. - Federal | 7 | 20 | 76 | | Current: U.S. - State | 2 | 7 | 8 | | Deferred: Foreign | (13) | 7 | (15) | | Deferred: U.S. - Federal | 1 | (19) | (65) | | Deferred: U.S. - State | — | (4) | (1) | | Income tax expense | $162 | $169 | $141 | - H.R.1 (One Big Beautiful Bill Act), signed July 4, 2025, reversed U.S. R&D capitalization but retained foreign R&D capitalization, and will change tax rates for foreign subsidiaries, impacting fiscal year 2026[538](index=538&type=chunk) - Sandisk does not expect to be subject to the **15% Corporate Alternative Minimum Tax (CAMT)** for 2025[539](index=539&type=chunk) - Pillar Two global minimum tax rules, effective in some non-U.S. jurisdictions in 2025, are not expected to result in material taxes for Sandisk in 2025 due to transitional safe harbors, but may increase in 2026[540](index=540&type=chunk) Income Tax Expense and Effective Tax Rate (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Income (loss) before taxes | $(1,479) | $(503) | $(2,002) | | Income tax expense | $162 | $169 | $141 | | Effective tax rate | (11)% | (34)% | (7)% | Deferred Tax Assets and Liabilities (2025 vs. 2024) | (in millions) | June 27, 2025 | June 28, 2024 | |:---|:---|:---|\ | Total deferred tax assets | $204 | $207 | | Total deferred tax liabilities | (102) | (99) | | Valuation allowances | (61) | (27) | | Deferred tax assets, net | $41 | $81 | Reconciliation of U.S. Federal Statutory Rate to Effective Tax Rate (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | U.S. federal statutory rate | 21% | 21% | 21% | | Tax rate differential on international incomes | (1) | (42) | (29) | | Tax effect of goodwill impairment | (26) | — | (7) | | Effective income tax rate | (11)% | (34)% | (7)% | - Tax holidays in Malaysia, expiring between 2028 and 2031, increased net earnings by **$82 million ($0.56 per share)** in 2025[548](index=548&type=chunk) - As of June 27, 2025, Sandisk had **$38 million in state tax credit carryforwards** (no expiration) and **$2.1 billion in NOL carryforwards** (expiring from 2028 onwards, mostly in Malaysia)[549](index=549&type=chunk)[550](index=550&type=chunk) Unrecognized Tax Benefits Reconciliation (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Unrecognized tax benefit, beginning balance | $47 | $25 | $17 | | Gross increases related to prior year tax positions | 6 | 10 | 1 | | Gross increases related to current year tax positions | 17 | 15 | 10 | | Gross decrease related to prior year tax positions | (1) | (3) | (3) | | Gross increase related to transfer from Western Digital Corporation | 78 | — | — | | Gross decrease related to settlement | (7) | — | — | | Unrecognized tax benefit, ending balance | $140 | $47 | $25 | [Note 15. Employee Termination and Other Charges](index=99&type=section&id=Note%2015.%20Employee%20Termination%20and%20Other%20Charges) This note details net charges related to business realignment, including employee termination benefits and other charges Net Charges Related to Business Realignment (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Employee termination benefits | $18 | $15 | $68 | | Other charges (gains): Asset impairments and other charges (gains) | — | 5 | 1 | | Other charges (gains): Contract termination and other | 3 | — | — | | Other charges (gains): Gain on sale-leaseback of facility | — | (60) | — | | Total employee termination and other charges | $21 | $(40) | $69 | Employee Termination Benefits Accrual Activity (2024-2025) | (in millions) | Employee Termination Benefits | |:---|:---|\ | Accrual balance at June 30, 2023 | $3 | | Charges | 15 | | Cash payments | (18) | | Accrual balance at June 28, 2024 | — | | Charges | 18 | | Cash payments | (3) | | Accrual balance at June 27, 2025 | $15 | [Note 16. Legal Proceedings](index=100&type=section&id=Note%2016.%20Legal%20Proceedings) Sandisk is subject to routine legal proceedings, but management believes any financial impact would not be material - Sandisk is subject to routine legal proceedings and claims in the normal course of business, but management believes any resulting monetary liability or financial impact would not be material[560](index=560&type=chunk) [Note 17. Summarized Financial Information](index=100&type=section&id=Note%2017.%20Summarized%20Financial%20Information) This note presents combined summarized financial information for non-consolidated joint ventures, including Flash Ventures - Summarized financial information is presented for non-consolidated joint ventures, including Flash Ventures (all periods), SDSS (from September 28, 2024), and Unis Venture (from January 24, 2025)[561](index=561&type=chunk)[562](index=562&type=chunk) Combined Summarized Financial Information for Joint Ventures (2025 vs. 2024) | (in millions) | 2025 | 2024 | |:---|:---|:---|\ | Current assets | $1,423 | $777 | | Non-current assets | 6,185 | 5,783 | | Total Assets | $7,608 | $6,560 | | Current Liabilities | $2,797 | $2,225 | | Non-current Liabilities | 3,701 | 3,312 | | Total Liabilities | $6,498 | $5,537 | | Total net equity of investees | $1,110 | $1,023 | Combined Summarized Financial Performance for Joint Ventures (2023-2025) | (in millions) | 2025 | 2024 | 2023 | |:---|:---|:---|:---|\ | Net sales | $2,315 | $2,252 | $2,788 | | Gross profit (loss) | $(101) | $(51) | $138 | | Net income (loss) | $(63) | $(9) | $89 | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=102&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section states that there are no changes in or disagreements with accountants on accounting and financial disclosure applicable to the company [Item 9A. Controls and Procedures](index=102&type=section&id=Item%209A.%20Controls%20and%20Procedures) Sandisk's management evaluated the effectiveness of its disclosure controls and procedures as effective, with no management assessment or attestation report on internal control over financial reporting due to a transition period - Sandisk's disclosure controls and procedures were evaluated as effective by management, including the CEO and CFO, as of the end of the reporting period[567](index=567&type=chunk) - Due to SEC rules for newly public companies, this 10-K does not include management's assessment or an independent auditor's attestation report on internal control over financial reporting[568](index=568&type=chunk)[569](index=569&type=chunk) [Item 9B. Other Information](index=102&type=section&id=Item%209B.%20Other%20Information) This section indicates that there is no other information to report, specifically mentioning no insider trading arrangements - No insider trading arrangements are reported[570](index=570&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=102&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This section states that disclosures regarding foreign jurisdictions that prevent inspections are not applicable to Sandisk Corporation PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=103&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance, including the Code of Business Ethics, is incorporated by reference from Sandisk's definitive proxy statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[573](index=573&type=chunk) - Sandisk has adopted a Code of Business Ethics applicable to all directors, employees, and officers, available on its website[573](index=573&type=chunk) [Item 11. Executive Compensation](index=103&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from Sandisk's definitive proxy statement for the 2025 Annual Meeting of Stockholders - Executive compensation information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[574](index=574&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=103&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management, as well as related stockholder matters, is incorporated by reference from Sandisk's definitive proxy statement - Security ownership information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[575](index=575&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=103&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from Sandisk's definitive proxy statement for the 2025 Annual Meeting of Stockholders - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[576](index=576&type=chunk) [Item 14. Principal Accountant Fees and Services](index=103&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from Sandisk's definitive proxy statement for the 2025 Annual Meeting of Stockholders - Principal accountant fees and services information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[577](index=577&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=104&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed as part of the Annual Report on Form 10-K, including key agreements related to the spin-off from WDC - Financial statements included in Part II, Item 8 are filed as part of this Annual Report on Form 10-K[582](index=582&type=chunk) - All financial statement schedules are omitted due to immateriality, inapplicability, or presentation within the consolidated financial statements or notes[579](index=579&type=chunk) - Key exhibits include the Separation and Distribution Agreement, Tax Matters Agreement, Loan Agreement, and various Flash Ventures and compensation plan agreements[581](index=581&type=chunk) [Item 16. Form 10-K Summary](index=106&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section indicates that there is no Form 10-K Summary provided

Core Viewpoint - SanDisk's shares are trading lower despite positive fourth-quarter financial results, primarily due to analyst concerns over weaker third-quarter margin forecasts [1][2]. Financial Performance - SanDisk reported second-quarter revenue of $1.90 billion, exceeding Goldman Sachs' forecast of $1.84 billion and the Street's estimate of $1.80 billion [3]. - The company guided third-quarter revenue to $2.15 billion at the midpoint, surpassing Goldman Sachs' $2.09 billion and the Street's $2 billion [4]. Margin Guidance - Gross margins for the second quarter were reported at 26.4%, aligning with Goldman Sachs' expectations but above consensus [3]. - For the third quarter, SanDisk projected a gross margin of 29%, which is below Goldman Sachs' estimate of 29.6% and significantly under the Street's 31.2% [4]. Earnings Per Share (EPS) - Adjusted EPS for the second quarter was 29 cents, beating Goldman Sachs' estimate of 12 cents and the Street's 5 cents [4]. - EPS guidance for the third quarter is set between 70 cents to 90 cents, with a midpoint of 80 cents, which falls short of Goldman Sachs' estimate of $1.16 and the Street's 95 cents [4]. Analyst Outlook - Analysts from Wells Fargo, Cantor Fitzgerald, and Goldman Sachs have raised their price targets for SanDisk, with Goldman Sachs maintaining a Buy rating and a target of $55 [2]. - Despite the positive revenue outlook, analysts express concerns over the company's gross margin guidance, attributing it to ongoing fab startup costs and underutilization charges [5]. Market Conditions - The NAND market is expected to be about 5% undersupplied by late 2025, which could lead to significant margin expansion for SanDisk if competitors maintain disciplined supply behavior [5][6]. - SanDisk's stock was down 3.73% at $44.94 at the time of publication, indicating market reaction to the mixed financial outlook [6].

Financial Data and Key Metrics Changes - Revenue for the fourth quarter was $1.9 billion, up 12% quarter over quarter and 8% year over year, exceeding guidance [5][17] - Non-GAAP earnings per share for the quarter were $0.29, above the guidance range of a loss of $0.10 to a profit of $0.15 [19] - Non-GAAP gross margin for the fourth quarter was 26.4%, up 370 basis points from the prior quarter [18] Business Line Data and Key Metrics Changes - Cloud revenue for the fourth quarter was $213 million, up 8% sequentially and 25% year over year [18] - Client revenue was $1.1 billion, up 19% sequentially and 3% year over year [18] - Consumer revenue was $585 million, up 2% quarter over quarter and 12% year over year [18] Market Data and Key Metrics Changes - Data center represented over 12% of total bits shipped in the fourth quarter, indicating significant growth in this market [9] - Hyperscale capital expenditure in the U.S. is estimated to grow 47% year over year to $368 billion, with rising investments in Asia and Europe [11] Company Strategy and Development Direction - The company is transitioning to BIX-eight as its prominent node, which is expected to drive significant financial improvement and expanding margins [7][8] - The strategy focuses on the adoption of QLC-based SSDs and PCIe Gen five and six solutions to meet the demands of AI and data-intensive workloads [11][12] - Continued innovation in flash-based storage is emphasized, with a commitment to product development and strategic partnerships in the gaming sector [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal year 2026, anticipating a favorable supply-demand dynamic and continued demand exceeding supply [6][27] - The company plans to manage supply in line with demand, adjusting wafer starts and underutilizing fabs when necessary [22] - Management highlighted the importance of navigating tariffs and maintaining a competitive edge in the global market [60] Other Important Information - The company reduced inventory days from 150 to 135, reflecting improved demand-supply alignment [20] - A significant focus on high bandwidth flash memory technology was noted, with expectations for product samples by 2027 [15][16] Q&A Session Summary Question: Can you provide more depth on gross margins? - Management indicated that underutilization costs are decreasing, with startup costs impacting gross margins significantly [30] Question: What is the strategy behind the high bandwidth flash partnership? - The partnership aims to standardize technology for broader applicability across various markets, including AI workloads [34][36] Question: How do you view the growth in client demand in the second half of the year? - Management sees consistent demand from customers, with normalized inventory levels and an undersupplied market [58] Question: What is the outlook for the data center side? - The company aims to increase its market share in the data center segment, with ongoing qualifications and product launches [66] Question: How is the company navigating competitive dynamics in China? - The company views China as an attractive market and is confident in its ability to compete effectively [82] Question: What are the expectations for startup costs moving forward? - Management expects startup costs to decrease significantly in the upcoming quarters, with minimal impacts anticipated [46][71]

Financial Data and Key Metrics Changes - Revenue for Q4 FY2025 was $1.9 billion, up 12% quarter-over-quarter and 8% year-over-year, exceeding guidance [4][16] - Non-GAAP earnings per share for the quarter were $0.29, above the guidance range of a loss of $0.10 to a profit of $0.15 [18] - For FY2025, total revenue was $7.355 billion, an increase of 10% from FY2024 [17] Business Line Data and Key Metrics Changes - Cloud revenue for Q4 was $213 million, up 8% sequentially and 25% year-over-year [17] - Client revenue reached $1.103 billion, up 19% sequentially and 3% year-over-year [17] - Consumer revenue was $585 million, up 2% quarter-over-quarter and 12% year-over-year [17] Market Data and Key Metrics Changes - Data center represented over 12% of total bits shipped in Q4, indicating significant growth in this market segment [7] - Hyperscale capital expenditure in the U.S. is expected to grow 47% year-over-year to $368 billion, with rising investments in Asia and Europe [10] Company Strategy and Development Direction - The transition to BIX-eight is a pivotal moment for the company, with expectations of significant financial improvement and expanding margins as macro headwinds subside [6][25] - The company is focusing on high-capacity Ultra QLC platforms to meet the demands of AI-driven workloads and data lakes [8][10] - Strategic partnerships with industry leaders like SK Hynix aim to standardize high bandwidth flash memory technology [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for FY2026, anticipating continued demand exceeding supply and a favorable market environment [5][25] - The company plans to manage supply in line with demand, adjusting wafer starts and underutilizing fabs as necessary [21] - Management highlighted the importance of innovation and disciplined capacity management to drive long-term value creation [25] Other Important Information - The company reduced inventory days from 150 to 135, reflecting improved demand-supply dynamics [5][19] - Non-GAAP gross margin for Q4 was 26.4%, with expectations for further improvement in the upcoming quarters [17][18] Q&A Session Summary Question: Can you provide more depth on gross margins? - Management noted that underutilization costs are decreasing, with startup costs impacting gross margins significantly [29] Question: What is the strategy behind the high bandwidth flash partnership? - The partnership aims to optimize AI architecture and establish industry standards for flash technology [32][36] Question: How do you view the growth in client demand for the second half of the year? - Management sees consistent demand from customers and believes inventory levels have normalized [56] Question: What is the outlook for the data center SSD business? - The company aims to increase its market share in the data center segment, with ongoing qualifications and product launches [62] Question: How is the company navigating the competitive dynamics in China? - The company views China as an attractive market and maintains strong partnerships there [81][83] Question: What are the expectations for startup costs in the upcoming quarters? - Management expects startup costs to decrease significantly in the next two quarters, improving gross margins [44][69]

Financial Performance - Revenue reached $1.901 billion, up 12% QoQ and 8% YoY[6, 15] - Non-GAAP gross margin was 26.4%, a 3.7 percentage point increase QoQ but a 10 percentage point decrease YoY[6, 15] - Non-GAAP EPS was $0.29, a 197% increase QoQ but a 77% decrease YoY[6, 15] - Adjusted free cash flow was $77 million, down 65% QoQ but up 158% YoY[6, 15] Business Segment Performance - Cloud revenue was $213 million, up 8% QoQ[13] - Client revenue was $1.103 billion, up 19% QoQ[13] - Consumer revenue was $585 million, up 2% QoQ[13] Strategic Highlights - Datacenter represented over 12% of total bits shipped, indicating growth in AI-driven workloads and hyperscale demand[9] - Hyperscaler CapEx growing 47% year-over-year to $368 billion, alongside rising investments in Asia and Europe[9] - The company announced a 256 TB NVMe enterprise SSD, powered by the industry leading UltraQLC platform[9] Guidance - The company expects revenue of $2.10 - $2.20 billion for the next quarter[19] - The company expects Non-GAAP gross margin of 28.5% - 29.5% for the next quarter[19] - The company expects Non-GAAP diluted earnings per share of $0.70 - $0.90 for the next quarter[19] Capital Expenditure - Total Sandisk Gross CapEx was $890 million, representing 12.1% of net revenue[17]

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Sandisk reported strong Q4 2025 results, with revenue of **$1.90 billion**, up 12% sequentially and exceeding guidance, achieving a Non-GAAP EPS of **$0.29** but recording a GAAP net loss of **$23 million** [Q4 2025 Financial Highlights](index=2&type=section&id=Q4%202025%20Financial%20Highlights) In Q4 2025, revenue reached **$1.90 billion**, an increase of 12% quarter-over-quarter and 8% year-over-year, with a GAAP net loss of **$23 million** and Non-GAAP net income of **$42 million** Q4 2025 Key Financial Metrics (GAAP vs. Non-GAAP) | Metric | Q4 2025 GAAP | Q3 2025 GAAP | Q/Q Change | Q4 2025 Non-GAAP | Q3 2025 Non-GAAP | Q/Q Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,901M | $1,695M | +12% | $1,901M | $1,695M | +12% | | **Gross Margin** | 26.2% | 22.5% | +3.7 ppt | 26.4% | 22.7% | +3.7 ppt | | **Operating Income (Loss)** | $18M | $(1,881)M | +101% | $100M | $2M | +4900% | | **Net Income (Loss)** | $(23)M | $(1,933)M | +99% | $42M | $(43)M | +198% | | **Diluted EPS** | $(0.16) | $(13.33) | +99% | $0.29 | $(0.30) | +197% | [Fiscal Year 2025 Financial Highlights](index=2&type=section&id=Fiscal%20Year%202025%20Financial%20Highlights) For the full fiscal year 2025, revenue grew 10% to **$7.36 billion**, reporting a GAAP net loss of **$1.64 billion** due to a goodwill impairment, contrasted by a Non-GAAP net income of **$440 million** Fiscal Year 2025 vs. 2024 Financial Performance | Metric | 2025 GAAP | 2024 GAAP | Y/Y Change | 2025 Non-GAAP | 2024 Non-GAAP | Y/Y Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $7,355M | $6,663M | +10% | $7,355M | $6,663M | +10% | | **Gross Margin** | 30.1% | 16.1% | +14.0 ppt | 30.3% | 15.8% | +14.5 ppt | | **Operating Income (Loss)** | $(1,377)M | $(468)M | -194% | $689M | $(309)M | +323% | | **Net Income (Loss)** | $(1,641)M | $(672)M | -144% | $440M | $(502)M | +188% | | **Diluted EPS** | $(11.32) | $(4.63) | -144% | $2.99 | $(3.46) | +186% | [End Market Performance](index=2&type=section&id=End%20Market%20Performance) In Q4 2025, all end markets experienced sequential revenue growth, with the Client segment remaining the largest at **$1.10 billion**, and the Cloud segment showing robust year-over-year growth of 195% for the full fiscal year End Market Revenue ($M) | End Market | Q4 2025 | Q3 2025 | Q/Q Change | Q4 2024 | Y/Y Change | FY 2025 | FY 2024 | Y/Y Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Cloud** | $213 | $197 | +8% | $170 | +25% | $960 | $325 | +195% | | **Client** | $1,103 | $927 | +19% | $1,067 | +3% | $4,127 | $4,069 | +1% | | **Consumer** | $585 | $571 | +2% | $523 | +12% | $2,268 | $2,269 | 0% | - CEO David Goeckeler emphasized strong execution, the performance benefits of BiCS8 technology, and the development of High Bandwidth Flash (HBF) for AI inference solutions, positioning the company for sustainable growth amid improving industry fundamentals[3](index=3&type=chunk) [Business Outlook for Fiscal First Quarter of 2026](index=3&type=section&id=Business%20Outlook%20for%20Fiscal%20First%20Quarter%20of%202026) Sandisk anticipates continued strong performance into the first quarter of fiscal 2026, projecting revenue between **$2.10 billion** and **$2.20 billion**, with Non-GAAP diluted earnings per share forecasted between **$0.70** and **$0.90** Q1 2026 Guidance | Metric | GAAP | Non-GAAP | | :--- | :--- | :--- | | **Revenue ($B)** | $2.10 - $2.20 | $2.10 - $2.20 | | **Gross Margin** | 28.3% - 29.2% | 28.5% - 29.5% | | **Operating Expenses ($M)** | $475 - $490 | $415 - $430 | | **Diluted EPS** | N/A | $0.70 - $0.90 | [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail Sandisk's financial position and performance, showing total assets of **$13.0 billion** and a GAAP net loss of **$1.64 billion** for FY2025, with positive net cash from operations of **$84 million** [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 27, 2025, Sandisk's balance sheet shows strong liquidity with cash and cash equivalents at **$1.48 billion**, despite a decrease in total assets to **$12.99 billion** primarily due to a **$1.83 billion** reduction in goodwill Selected Balance Sheet Items ($ in millions) | Account | June 27, 2025 | June 28, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1,481 | $328 | | **Total current assets** | $5,086 | $3,548 | | **Goodwill** | $4,999 | $7,207 | | **Total assets** | $12,985 | $13,506 | | **Long-term debt** | $1,829 | $0 | | **Total liabilities** | $3,769 | $2,424 | | **Total shareholders' equity** | $9,216 | $11,082 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For fiscal year 2025, Sandisk's revenue increased 10% to **$7.36 billion**, but a **$1.83 billion** goodwill impairment charge led to a GAAP operating loss of **$1.38 billion** and a net loss of **$1.64 billion** - A goodwill impairment charge of **$1.83 billion** was the primary driver of the company's significant GAAP operating and net losses for fiscal year 2025[21](index=21&type=chunk) Fiscal Year Statement of Operations Summary ($ in millions) | Account | Year Ended June 27, 2025 | Year Ended June 28, 2024 | | :--- | :--- | :--- | | **Revenue, net** | $7,355 | $6,663 | | **Gross profit** | $2,212 | $1,072 | | **Total operating expenses** | $3,589 | $1,540 | | **Operating income (loss)** | $(1,377) | $(468) | | **Net income (loss)** | $(1,641) | $(672) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For fiscal year 2025, Sandisk generated **$84 million** in cash from operating activities, with net cash from investing activities at **$556 million** and financing activities providing **$518 million**, resulting in a **$1.15 billion** increase in cash to **$1.48 billion** Fiscal Year Cash Flow Summary ($ in millions) | Cash Flow Activity | Year Ended June 27, 2025 | Year Ended June 28, 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $84 | $(309) | | **Net cash from investing activities** | $556 | $210 | | **Net cash from financing activities** | $518 | $136 | | **Net increase in cash** | $1,153 | $36 | | **Cash and cash equivalents, end of period** | $1,481 | $328 | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section details adjustments to reconcile GAAP results to Non-GAAP measures, converting a GAAP net loss of **$1.64 billion** into a Non-GAAP net income of **$440 million** for fiscal year 2025, primarily by excluding a **$1.83 billion** goodwill impairment [Reconciliation Tables](index=10&type=section&id=Reconciliation%20Tables) The tables provide a clear bridge from GAAP to Non-GAAP metrics, showing how adjustments like stock-based compensation and business separation costs transformed a Q4 2025 GAAP net loss of **$23 million** into a Non-GAAP net income of **$42 million** FY 2025 GAAP to Non-GAAP Net Income Reconciliation ($ in millions) | Description | Amount | | :--- | :--- | | **GAAP net loss** | **$(1,641)** | | Goodwill impairment | $1,830 | | Stock-based compensation expense | $182 | | Business separation costs | $67 | | Employee termination and other | $21 | | Gain on business divestiture | $(34) | | Other adjustments | $(7) | | Income tax adjustments | $22 | | **Non-GAAP net income** | **$440** | [Explanation of Non-GAAP Adjustments](index=12&type=section&id=Explanation%20of%20Non-GAAP%20Adjustments) Sandisk justifies its Non-GAAP adjustments by excluding items not indicative of core operating results, with the largest being a **$1.8 billion** goodwill impairment triggered by stock price performance post-separation from WDC - A **$1.8 billion** goodwill impairment charge was recognized in Q3 2025 after a quantitative analysis was triggered by the company's stock price and market capitalization following its separation from WDC[30](index=30&type=chunk) - Business separation costs were incurred as Sandisk became an independent public company after separating from Western Digital Corporation on February 21, 2025; these costs are excluded as they are not considered part of ongoing operations[33](index=33&type=chunk) - The company defines Adjusted Free Cash Flow as cash flow from operations less net purchases of property, plant and equipment, plus net activity related to its Flash Ventures joint venture[40](index=40&type=chunk) [Company and Report Information](index=4&type=section&id=Company%20and%20Report%20Information) This section provides important context, noting Sandisk completed its separation from Western Digital Corporation on February 21, 2025, and now operates as a standalone public company, with a standard forward-looking statements disclaimer [Basis of Presentation](index=4&type=section&id=Basis%20of%20Presentation) The financial statements are presented on a consolidated basis following Sandisk's separation from Western Digital Corporation (WDC) on February 21, 2025, with prior periods prepared on a carve-out basis from WDC's consolidated statements - Sandisk Corporation completed its separation from Western Digital Corporation and became a standalone publicly traded company on February 21, 2025[11](index=11&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains a legal disclaimer regarding forward-looking statements, highlighting numerous risks and uncertainties that could cause actual results to differ materially, such as global economic conditions, demand volatility, and reliance on strategic partners - Key risks that could affect future results include adverse economic conditions, demand volatility, pricing trends, supply chain disruptions, and reliance on strategic partners like Kioxia Corporation[16](index=16&type=chunk) [About Sandisk](index=4&type=section&id=About%20Sandisk) Sandisk is a leading developer and manufacturer of data storage devices and solutions based on NAND flash technology, with a portfolio serving AI workloads in datacenters, edge devices, and consumer products - Sandisk's business is focused on developing and providing NAND flash technology-based data storage solutions for AI workloads, datacenters, edge devices, and consumers[14](index=14&type=chunk)