Sandisk Corporation(SNDK) - 2025 Q4 - Annual Results

Financial and Operational Highlights 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 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 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 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] Business Outlook for Fiscal First Quarter of 2026 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 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 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 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 $1.83 billion was the primary driver of the company's significant GAAP operating and net losses for fiscal year 2025[21] Fiscal Year Statement of Operations Summary ($ 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 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 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 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 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] - 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] - 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] Company and Report Information 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 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] Forward-Looking Statements 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] About Sandisk 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]