Financial Data and Key Metrics Changes - The company reported revenue of $2.3 billion for Q1 FY 2026, representing a sequential increase of 21% and a year-over-year increase of 23% [4][12] - Non-GAAP earnings per share (EPS) were $1.22, up from $0.29 in the prior quarter, exceeding guidance of $0.70-$0.90 [15][22] - Non-GAAP gross margin for Q1 was 29.9%, up 350 basis points sequentially, compared to guidance of 28.5%-29.5% [15][12] - Adjusted free cash flow generated was $448 million, with a free cash flow margin of 19.4% [16][17] Business Line Data and Key Metrics Changes - Data Center Business revenue increased by 26% sequentially, reaching $269 million [14][7] - Edge revenue was $1,387 million, up 26% sequentially, driven by a PC refresh cycle and smartphone demand [14][8] - Consumer revenue was $652 million, up 11% quarter-over-quarter, supported by strong partnerships and product launches [14][10] Market Data and Key Metrics Changes - The company anticipates ongoing demand for NAND products to exceed supply through the end of calendar year 2026 and beyond [4][18] - Investments in data centers and AI infrastructure are expected to surpass $1 trillion by 2030, driving demand for high-capacity SSDs [6][10] - The average smartphone capacity per device is expected to grow in the high-single digits in calendar years 2025 and 2026 [8][10] Company Strategy and Development Direction - The company is focused on growing revenue, expanding margins, and generating sustainable free cash flow to create shareholder value [4][22] - Strategic allocation decisions are being made to maximize long-term value creation, with an emphasis on advancing the Technology Roadmap and strengthening customer partnerships [5][6] - The company aims to maintain a net cash position and continue investing in the business while returning cash to shareholders [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to create significant and sustainable value for customers and shareholders amidst robust demand [22][10] - The company is optimistic about the growth opportunities in the Data Center Business, with ongoing qualifications and strategic engagements with key hyperscale customers [22][7] - Management noted that the demand for products is expected to exceed supply beyond 2026, indicating a strong market outlook [18][19] Other Important Information - The company incurred $61 million in startup costs and $11 million in underutilization charges during the quarter [15][16] - The company plans to align its end market nomenclature to match industry standards, referring to data center, edge, and consumer segments [12][13] Q&A Session Summary Question: Are you seeing similar trends in NAND as in the HD world regarding customer engagement? - Management noted that customers are seeking long-term commitments and visibility into supply, indicating a shift from quarter-by-quarter deals to multi-quarter agreements [25][26] Question: How do you view the supply situation over the next couple of years? - Management indicated that the market is expected to remain undersupplied through 2026, with a focus on long-term demand trends [35][36] Question: What is the update on enterprise SSD qualifications and market share ambitions? - Management expressed satisfaction with the progress in enterprise SSD qualifications and anticipates increasing sales in this segment throughout FY 2026 [37][38] Question: How do you assess the enterprise SSD market opportunity relative to hard disk drives? - Management believes that both technologies will grow, with enterprise SSDs expected to grow faster due to increasing data storage needs [44][45] Question: Can you clarify the guidance for the upcoming quarter? - Management expects revenue growth to be driven primarily by pricing, with low-single-digit bid growth anticipated [92][93]

Financial Data and Key Metrics Changes - The company reported revenue of $2.3 billion for the first quarter, representing a sequential increase of 21% and a year-over-year increase of 23% [4][12] - Non-GAAP earnings per share (EPS) were $1.22, up from $0.29 in the prior quarter, exceeding guidance of $0.70-$0.90 [4][15] - Adjusted free cash flow generated was $448 million, with a free cash flow margin of 19.4% [4][17] - Non-GAAP gross margin for the first quarter was 29.9%, up 350 basis points sequentially, compared to guidance of 28.5%-29.5% [12][15] Business Line Data and Key Metrics Changes - Data center revenue increased by 26% sequentially to $269 million, driven by strong demand from hyperscale and OEM customers [12][14] - Edge revenue reached $1.387 billion, up 26% sequentially, supported by a PC refresh cycle and smartphone launches [12][14] - Consumer revenue was $652 million, up 11% quarter-over-quarter, with strong sales from partnerships in the gaming sector [12][14] Market Data and Key Metrics Changes - The data center market is expected to become the largest segment in NAND by 2026, with demand growth projected at mid-40% [38][46] - The company anticipates ongoing supply constraints, with demand expected to exceed supply through the end of 2026 and beyond [17][54] - The average smartphone capacity per device is expected to grow in the high single digits in 2025 and 2026, while PC unit shipments are projected to grow in low single digits [8][95] Company Strategy and Development Direction - The company is focused on growing revenue, expanding margins, and generating sustainable free cash flow to create shareholder value [4][19] - Strategic allocation decisions are being made to maximize long-term value creation, particularly in data centers and AI infrastructure [5][6] - The company is transitioning from a mobile-centric approach to a more diversified strategy that includes significant growth in the data center business [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to create significant and sustainable value for customers and shareholders, driven by strong execution and robust demand [10][22] - The company is optimistic about the long-term demand for NAND products, particularly in data centers, as customers seek higher performance solutions [9][45] - Management noted that the current market dynamics are favorable, with customers proactively seeking long-term commitments for supply [25][26] Other Important Information - The company achieved a net cash position of $91 million, six months ahead of target, driven by strong cash generation [4][16] - Capital expenditures for the quarter totaled $387 million, representing 16.8% of revenue, with plans to continue investing in the business [17][19] - The company is aligning its end market nomenclature to better match industry standards, referring to data center, edge, and consumer segments [12][13] Q&A Session Summary Question: Are you seeing similar trends in NAND as in the HD world regarding customer engagement and allocation? - Management noted that customers are seeking multi-quarter deals for certainty of supply, indicating a shift from short-term to longer-term agreements [25][26] Question: What is the outlook for bit shipment growth in 2025 and 2026? - Management expressed optimism about maintaining market share and growing the data center business through innovation and product qualifications [29][30] Question: How do you view the supply situation over the next couple of years? - Management indicated that the market is expected to remain undersupplied through 2026, with a focus on increasing productivity without adding wafer capacity [35][36] Question: What is the update on enterprise SSD qualifications and market share ambitions? - Management reported strong progress in enterprise SSD qualifications and expects sequential growth throughout FY2026, with increasing sales in this segment [37][38] Question: How does the enterprise SSD market opportunity compare to hard disk drives? - Management believes both technologies will grow, with enterprise SSDs expected to grow faster due to rising data demands driven by AI [44][46] Question: Can you clarify the guidance for the next quarter regarding pricing and bit growth? - Management expects revenue growth to be primarily driven by pricing, with low single-digit bid growth anticipated [92][93] Question: What is the status of the Ultra QLC 256 Terabyte product? - Management confirmed that the 128T product is under qualification and expected to ramp in mid-2026, with multiple customers involved [77][78]

Financial Data and Key Metrics Changes - SanDisk reported revenue of $2.3 billion for Q1 2026, representing a sequential increase of 21% and a year-over-year increase of 23% [3][11] - Non-GAAP earnings per share (EPS) for the quarter were $1.22, up from $0.29 in the prior quarter, exceeding guidance of $0.70-$0.90 [3][13] - Non-GAAP gross margin was 29.9%, up 350 basis points quarter-over-quarter, compared to guidance of 28.5-29.5% [11][13] - Adjusted free cash flow generated was $448 million, representing a free cash flow margin of 19.4% [15] Business Line Data and Key Metrics Changes - Data center revenue increased by 26% sequentially to $269 million, driven by strong demand from hyperscale and OEM customers [5][12] - Edge revenue reached $1,387 million, up 26% sequentially, supported by a PC refresh cycle and Windows 11 adoption [6][12] - Consumer revenue was $652 million, up 11% quarter-over-quarter, with strong sales from co-branded products like the Nintendo Switch 2 microSD Express card [9][12] Market Data and Key Metrics Changes - The data center market is expected to become the largest segment in NAND by 2026, with significant growth driven by AI and cloud demand [41][42] - Average smartphone capacity per device is projected to grow in the high single digits in 2025 and 2026, while PC unit shipments are expected to grow in low single digits [6][80] - Supply growth in the NAND market is anticipated to be around 17% in 2026, while constrained demand is expected to be mid-teens [49] Company Strategy and Development Direction - SanDisk is focused on growing revenue, expanding margins, and generating sustainable free cash flow, with a strong emphasis on technology advancement and customer partnerships [3][4] - The company is investing in data centers and AI infrastructure, with expectations of over $1 trillion in investments by 2030, creating a strong demand for high-capacity NAND products [4] - The BICS8 technology is expected to account for a majority of bit production by the end of fiscal year 2026, enhancing the company's position in data centers and edge markets [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued demand exceeding supply through the end of calendar year 2026 and beyond, with products currently on allocation across all end markets [16][17] - The company anticipates revenue for Q2 2026 to be between $2.55 billion and $2.65 billion, driven by double-digit price increases and mid-single digit bid growth [16][17] - Management highlighted the importance of long-term customer engagements and proactive demand visibility as a positive development in the current market [25][26] Other Important Information - SanDisk achieved a net cash position of $91 million, six months ahead of the target shared during the investor day in February [3][14] - The company plans to continue investing in the business while returning cash to shareholders, maintaining a disciplined capital allocation strategy [18][19] Q&A Session Summary Question: Are you seeing similar trends in NAND as in the HD world regarding customer engagement and allocation? - Management noted a shift towards multi-quarter deals with customers seeking certainty of supply, indicating a welcome development in the market [24][25] Question: What is the outlook for supply and capacity additions in the coming years? - Management indicated that the market is expected to remain undersupplied through 2026, with no immediate plans for additional capital investments [33][34] Question: How is the enterprise SSD market evolving relative to hard disk drives? - Management believes both technologies will grow, with enterprise SSDs expected to grow faster due to increasing data demands driven by AI [40][41] Question: Can you provide clarity on the portion of contracts that are shorter-term versus longer-term? - Currently, there are very few volume and price commitments beyond a quarter, but discussions for longer-term agreements are ongoing with strategic customers [52][53] Question: What is the expected growth in data center revenues and how much is driven by AI? - Management stated that the majority of data center revenue growth is AI-driven, with expectations for significant growth in the coming years [88]