Sandisk (SNDK -0.64%), a leading provider of flash memory and storage solutions, released its quarterly results on August 14, 2025. The company reported GAAP revenue of $1.90 billion, surpassing its own guidance and marking an 8% increase in GAAP revenue from the prior year. Non-GAAP earnings per share came in at $0.29, also above its guidance, though down from $1.24 (non-GAAP) in Q4 FY2024. Gross margins (GAAP and non-GAAP) improved sequentially, yet remain significantly below last year due to continued pressure in the memory market. The quarter showed clear sequential progress and outperformance relative to targets, and advances in new technologies.
| Metric | Q4 2025 | Q4 2024 | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | $0.29 | $1.24 | (77%) |
| Revenue (GAAP) | $1.90 billion | $1.76 billion | 8% |
| Gross Margin | 26.2% | 36.1% | (9.9) pp |
| Operating Income (GAAP) | $18 million | $199 million | (91%) decline |
| Free Cash Flow (Non-GAAP) | $49 million | ($165 million) | NM |
Business Overview and Strategic Focus
Sandisk develops, manufactures, and markets a wide variety of storage solutions using flash memory technology. Its portfolio includes solid state drives (which are high-performance, non-volatile storage devices), embedded products for electronics, removable memory cards, USB drives, and NAND flash memory wafers. The company serves clients in the consumer, personal computer, mobile device, and enterprise markets.
Recently, the company has concentrated on innovation, specifically advancing NAND flash technologies like BiCS8 and High Bandwidth Flash (HBF). Product diversification across consumer, client, and, increasingly, cloud/enterprise segments has become a priority. Sandisk's critical success factors are product innovation, supply discipline, and cost management. Robust cash flow is also essential to the company's market position.
Quarterly Highlights: Financial and Operational Developments
During the quarter, GAAP revenue increased to $1.90 billion, up 8% year-over-year (GAAP), and 12% over the prior quarter. This growth in Q3 was notably driven by the cloud segment, which saw revenue of $197 million, up 103% year-over-year, with cloud revenue reaching $213 million in Q4, a 25% year-over-year increase in cloud revenue (GAAP) and up 8% over the previous quarter (GAAP revenue). Full-year cloud revenue (GAAP) increased from $325 million in FY2024 to $960 million in FY2025.
The client segment, focused largely on solid state drives for PCs and embedded devices, delivered $1.10 billion in sales, up 3% year over year (GAAP). The consumer segment, which includes memory cards and USB devices, contributed $585 million (GAAP) in revenue, up 12% year-over-year. However, these two segments showed only modest growth compared to the cloud business, highlighting a wide difference in demand drivers across end markets.
Gross margin (GAAP), the share of revenue left after direct costs of production, rose to 26.2%, an improvement from the previous quarter but nearly 5 percentage points below last year's level (non-GAAP). Margin compression reflects the cyclical nature of the flash memory market. GAAP operating expenses climbed 10% to $480 million. Notably, GAAP operating income fell 91% year-over-year, indicating that profits have not fully recovered along with sales volume.
Free cash flow, which measures cash generated by the business after capital spending, sharply improved to $49 million, compared to a negative result in the same quarter last year. The company held $1.48 billion in cash and equivalents (GAAP) at period end. However, inventories (GAAP) remained high at $2,079 million as of Q4, which may pose ongoing risks if demand slows. Debt also increased, reflecting a more leveraged balance sheet following organizational changes.
On the product front, Sandisk made significant strides in technology with the ramp up of BiCS8 NAND flash, a next-generation memory architecture designed for higher performance and efficiency. The launch of High Bandwidth Flash, in partnership with SK hynix, signals proactive leadership in shaping industry standards for next-generation memory. The company also introduced a 256-terabyte NVMe enterprise solid state drive, expanding its addressable market in hyperscale data centers. Partnerships, such as its collaboration with SK hynix to set new industry standards, underlined its commitment to staying at the forefront of storage innovation.
GAAP profitability remained pressured by earlier restructuring costs and a $1.8 billion goodwill impairment charge taken in Q3, which continued to impact reported income for the full year. Non-GAAP net income improved to $42 million. These adjustments are key for understanding the distinction between accounting-driven losses and underlying operating performance during a period of significant change for the company.
Looking Ahead: Guidance and Key Watch Points
For the first quarter of fiscal 2026, management expects revenue in the range of $2.10 billion to $2.20 billion. The company forecasts non-GAAP diluted earnings per share between $0.70 and $0.90. Non-GAAP gross margin is expected to expand to between 28.5% and 29.5%.
Investors should closely monitor control of operating expenses and management of the still-elevated inventory levels (GAAP inventories were $2.16 billion as of Q3) in the coming quarters. The transformation in Sandisk's business mix -- particularly the rapid growth in cloud and enterprise storage -- has the potential to drive future gains, but competition, pricing, and the cyclical nature of the flash memory market remain important risks to watch.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
