Sandisk Q2 Revenue Jumps 61% to $3.03B, Extends Kioxia JV with $1.165B Deal
Sandisk reported Q2 revenue of $3.025B, up 61% YoY and 31% sequentially, beating guidance of $2.55-2.65B, and non-GAAP EPS of $6.20 topped its $3.00-3.40 outlook as gross margin expanded to 51.1%. The company extended its Kioxia JV to 2034 with a $1.165B commitment and guided Q3 revenue of $4.4-4.8B.
1. Q2 Results Exceed Guidance on Strengthened Pricing and Cost Controls
Sandisk reported fiscal second-quarter revenue of $3.025 billion, representing a 31% sequential increase and a 61% year-over-year gain, surpassing its guidance range of $2.55 billion to $2.65 billion. Non-GAAP earnings per share reached $6.20, well above the prior quarter’s $1.22 and above the company’s forecast of $3.00 to $3.40. Non-GAAP gross margin expanded to 51.1%, up from 29.9% in Q1 and ahead of the 41%–43% target, driven by higher ASPs and unit cost reductions. Operating expenses were $413 million, below the $450 million–$475 million guidance, reflecting a one-time benefit of approximately $35 million from revised product-introduction accounting.
2. AI Workloads Fuel Structural Demand and Supply Tightness
Management characterized the NAND market as undergoing a "structural evolution" propelled by AI deployments in data centers. With demand outstripping available capacity, Sandisk prioritized allocations to strategic customers and shifted toward longer planning horizons. The company reaffirmed its mid- to high-teens bit growth target through the BiCS8 transition, noting that any significant increase in capital expenditure would require multi-year commitments at sustainable pricing levels.
3. Strategic Move to Multi-Year Agreements
During the call, executives detailed efforts to transition from quarterly, transactional pricing to multi-year commercial agreements featuring firm supply and pricing commitments. Sandisk has already signed and closed one such agreement, including a prepayment component, and indicated that additional contracts are in negotiation. This shift aims to enhance supply visibility for customers and secure higher-value, longer-term revenue streams.
4. Robust End-Market Performance and Q3 Outlook
Sequential demand was strong across edge, consumer and data-center segments. Edge revenue grew 21% to $1.678 billion, driven by replacement cycles and richer device configurations. Consumer sales rose 39% to $907 million, supported by premium product mix and new form factors such as the SanDisk Extreme Fit USB-C drive. Data-center revenue climbed 64% to $440 million as enterprise SSD deployments accelerated. The company ended Q2 with a net cash position of $936 million and generated $843 million of adjusted free cash flow. For Q3, Sandisk guided revenue of $4.4 billion to $4.8 billion, non-GAAP gross margin of 65% to 67% and non-GAAP EPS of $12.00 to $14.00, assuming 157 million diluted shares.