Sandisk Corporation (SNDK) FY2026 10-K and 10-Q Summary: Business, Risk Factors, MD&A

Business

From the FY2026 10-K, accession 0001628280-26-057406.

Sandisk is a global semiconductor memory company with more than 30 years in NAND flash. It describes itself as a vertically integrated solutions provider: it owns chip-level design and IP, front- and back-end manufacturing, and systems engineering and design. Products are solid-state drives, embedded products, removable cards, USB drives, and wafers and components, sold under the Sandisk brand (and, for a limited transitional period, under the Western Digital and WD brands). The company holds roughly 8,000 granted patents and roughly 3,000 pending patent applications worldwide, and employs approximately 11,100 people across 33 countries as of July 2026, 74% in Asia Pacific, 19% in the Americas, 7% in Europe, the Middle East and Africa. Principal executive offices are in Milpitas, California.

End markets

Sandisk reports one operating segment and disaggregates revenue across three end markets:

Datacenter covers public and private cloud environments and enterprise customers, served with high-performance enterprise SSDs. Edge covers OEM and channel customers across PC, mobile, gaming, automotive, physical AI, at-home entertainment and industrial. Consumer covers retail SSDs, removable cards and USB flash drives.

Revenue by geography in FY2026 was Asia $14,241M, Americas $4,275M, and EMEA $1,732M. On a ship-to basis: Hong Kong $5,126M, China $4,503M, Rest of Asia $4,612M, United States $3,714M, EMEA $1,732M, Other $561M. International sales were 82% of net revenue in FY2026, versus 80% in FY2025 and 86% in FY2024. Long-lived assets are concentrated in Malaysia ($445M of $674M total).

No single customer accounted for more than 10% of net revenue in any of FY2026, FY2025 or FY2024. The top ten customers were 44% of revenue in FY2026 (40% in FY2025, 41% in FY2024). Accounts receivable were $4.7 billion at July 3, 2026, with three customers at approximately 19%, 12% and 10% of the balance, up sharply from $1.1 billion and a single 11% customer a year earlier.

Manufacturing and the Kioxia joint ventures

All of Sandisk's flash memory wafers come from Flash Ventures, three joint ventures with Kioxia, Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd., spanning eight fabrication facilities in Japan, six in Yokkaichi and two in Kitakami. Sandisk holds a 49.9% ownership position in each entity and jointly controls their operations with Kioxia. Kioxia owns the facilities and provides wafer manufacturing services to Flash Ventures at cost; Flash Ventures accounts for roughly 80% of total manufacturing capacity in those Kioxia-owned facilities. Sandisk and Kioxia are each entitled to purchase roughly 50% of the output, at cost plus a small markup.

The economics are asymmetric in an important way: Sandisk pays variable costs for its share of wafer supply on a rolling three-month forecast (orders for up to three months are binding and cannot be cancelled), and is separately obligated to pay half of Flash Ventures' fixed costs regardless of how much output it takes. It must also fund 49.9% to 50.0% of capital investments a Flash Ventures entity elects to make where that entity's operating cash flow is insufficient. Sandisk's 49.9% share of Flash Ventures' earnings is recognized one quarter in arrears in Other income (expense), net.

On January 29, 2026 Sandisk extended two of the three ventures: the FAL Second Commitment and Extension Agreement and the FPL Second Commitment and Extension Agreement moved Flash Alliance and Flash Partners from December 31, 2029 to December 31, 2034, so that all three ventures now co-terminate on December 31, 2034. In connection with those extensions Sandisk entered an Agreement to Enhance Collaboration under which Sandisk Technologies, Inc. will pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and continued availability of supply through December 31, 2034.

Assembly and test runs through an owned facility in Penang, Malaysia (approximately 1,177,000 square feet), contract manufacturers, and SDSS, a Shanghai assembly and test venture now owned 20% by Sandisk and 80% by JCET Management Co., Ltd. following the FY2025 sale of an 80% interest. Controllers are primarily designed in-house and manufactured by third-party foundries. Sandisk also holds a 48% interest in the Unis Venture (52% owned by Unis), which markets and sells Sandisk products in China, accounted for under the equity method one quarter in arrears.

New Business Models, the strategic shift

The most consequential change to how Sandisk makes money is the shift to long-term customer agreements management calls New Business Models, or NBMs, which began in fiscal 2026 with several Datacenter and Edge customers. These commit Sandisk to deliver, and customers to purchase, a stated volume of product mostly over multi-year periods, with pricing mechanisms combining fixed and variable components. Customer obligations are backed by financial guarantees, cash deposits and other instruments. Management states NBMs "are expected to become our predominant way of doing business," intended to deliver greater revenue predictability, support production planning, and reduce exposure to industry cyclicality.

The scale as of July 3, 2026:

• Transaction price allocated to remaining performance obligations: $59.8 billion, of

which $58.7 billion is not yet billed and $1.1 billion sits in contract liabilities. Approximately 19% is expected to be recognized as revenue over the next twelve months. The remaining performance obligations are entirely NBM-related.

• Contract liabilities (customer advances) of $1,242 million, up from $25 million a year

earlier.

• Refund liabilities of $1,500 million, up from $126 million, primarily security deposits

refundable at the end of the contract term.

• $5.0 billion of collateral issued or held by third-party financial institutions,

representing the maximum potential proceeds available to Sandisk in the event of customer default or breach. None of this is recognized on the balance sheet, because Sandisk does not control the funds unless a default occurs.

Competition

Sandisk competes with vertically integrated suppliers Kioxia, Micron Technology, Samsung Electronics, SK Hynix and Yangtze Memory Technologies, plus smaller companies that assemble flash into products.

Separation from Western Digital

Sandisk was wholly owned by Western Digital Corporation until February 21, 2025. WDC's board authorized the separation on October 30, 2023 and it completed on February 21, 2025, when WDC distributed 116,035,464 shares, 80.1% of Sandisk's outstanding common stock, pro rata to WDC holders, one-third of a Sandisk share for each WDC share held as of the February 12, 2025 record date. WDC retained 28,827,787 shares, or 19.9%. Sandisk began trading on Nasdaq under "SNDK" on February 24, 2025.

WDC has been unwinding its retained stake through debt-for-equity exchanges: 21,314,768 shares (14.6%) on June 9, 2025 and a further 5,821,135 shares on February 18, 2026, in each case exchanged for WDC debt held by WDC creditors and then sold by creditor affiliates in registered offerings, for which Sandisk paid the expenses. WDC retained 1,691,884 shares after the February 2026 transaction; as of March 19, 2026 the sale restriction lapsed and Sandisk was no longer obliged to fund the offering expenses. WDC has since disposed of additional shares and has announced it expects to monetize all remaining Sandisk shares by the end of 2026.

At separation Sandisk entered a $2.0 billion seven-year Term Loan B facility and a $1.5 billion five-year revolving credit facility, drew the $2.0 billion term loan, and made a net distribution payment of $1.5 billion to WDC in exchange for assets, liabilities and certain WDC legal entities associated with the business. The separation also brought a Tax Matters Agreement, an Employee Matters Agreement, an Intellectual Property Cross-License Agreement and a Transitional Trademark License Agreement.

Risk factors

From the FY2026 10-K, accession 0001628280-26-057406, condensed to the substantive risks.

Dependence on Kioxia and Flash Ventures. Sandisk's agreements with Kioxia require that substantially all of its flash memory be obtained from Flash Ventures. That limits its ability to respond to supply and demand changes and makes results particularly sensitive to forecast error, because 50% of fixed costs are owed regardless of output taken and rolling orders are binding. Under-investment risks lost revenue and share; over-investment risks excess supply, inventory write-downs and underutilization charges. The filing quantifies the downside from recent cycles: Sandisk incurred underutilization costs of $11 million in FY2026, $75 million in FY2025 and $249 million in FY2024, plus a $24 million inventory write-down in FY2025. Sandisk cannot unilaterally direct most Flash Ventures activities; misalignment with Kioxia on technology roadmaps or capital plans, or changes in Kioxia's ownership, management or access to capital, could damage the partnership. Continued availability of lease financing for Flash Ventures is not guaranteed. Sandisk's maximum reasonably estimable loss exposure from Flash Ventures at July 3, 2026 was $2,897 million: notes receivable $577M, equity investments $102M, operating lease guarantees $923M (¥149.0 billion) and inventory and prepayments $1,295M. Separately, restrictions in the Kioxia joint venture agreements, on manufacturing flash outside Flash Ventures' facilities, on fabricating beyond Sandisk's share of capacity, and on transferring equity in the ventures, could deter, delay or prevent a third-party acquisition of Sandisk.

Industry cyclicality and price volatility. The storage market has repeatedly experienced excess capacity, liquidation of inventories, write-downs, underutilization charges and steep declines in average selling prices. Gross margins compress when ASPs fall faster than cost of revenue or when mix shifts to lower-priced products. Competitors may expand output aggressively or price below levels Sandisk can match; some competitors offer products Sandisk does not, notably DRAM.

NBM execution risk. The long-term agreements cut both ways. If Sandisk cannot deliver the committed quantities on time and to specification, a function of manufacturing capacity, yields and supply chain, it faces contractual damages, financial penalties or early termination. If a customer breaches, Sandisk may have to find alternative buyers for the volume and may be unable to resell at comparable prices, producing reduced revenue, lower margins, excess inventory, underutilization or impairment. The financial guarantees backing customer obligations "may not fully offset such lost revenue depending on the specific circumstances." And the agreements lock up supply, limiting flexibility to reallocate volume to more favorable customers or pricing opportunities.

AI-driven demand concentration and forecasting. Demand increasingly depends on NAND use in AI infrastructure. AI as a demand driver is evolving rapidly and the timing and magnitude are difficult to predict; delays in customer data center build-outs could leave Sandisk with excess inventory, underutilized capacity or other costs. The 10-K also names a technology substitution risk directly: new or alternative technologies could perform these functions more efficiently or reduce the storage required per unit of AI compute, and if adopted at scale could "rapidly reduce or eliminate" demand for Sandisk's technology in AI infrastructure.

Customer concentration and channel power. The top ten customers are 44% of revenue and three customers make up 41% of receivables. Consolidation among cloud and platform buyers gives customers leverage over price and terms.

DRAM supply. Many enterprise-grade SSDs incorporate DRAM, a commodity component that has experienced supply constraints. If Sandisk cannot obtain sufficient DRAM on commercially reasonable terms it may have to allocate flash and other resources to products requiring less or no DRAM, rather than to strategic products with higher margins or better growth, adversely affecting mix, revenue, gross margin and competitive position.

Geographic concentration of operations. Manufacturing is in large, purpose-built facilities in Japan, Malaysia and elsewhere in Asia, alongside similarly concentrated customer and supplier facilities. Sandisk maintains limited insurance and in some cases none for natural disasters and facility damage, and depends on Kioxia to obtain and maintain property and business interruption insurance for Flash Ventures.

Talent retention tied to appreciated equity awards. An unusually specific risk: the unvested value of equity awards granted to senior leaders "has appreciated materially as a result of our stock price performance in fiscal 2026." Those awards generally vest in February 2028 or September 2028, and if they remain materially appreciated at that point Sandisk could see attrition among this group when the awards vest.

Trade policy and tariffs. Pending investigations under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 may affect tariff rates on Sandisk products. The majority of products sold in the U.S. are currently exempt from tariffs; additional increases or loss of exemptions would raise cost of goods sold, and price increases passed through could depress U.S. demand.

Spin-off legacy risks. Historical financial information reflects allocations of WDC corporate overhead and is not necessarily representative of standalone results or a reliable indicator of the future. Mutual indemnification obligations with WDC may not provide the expected protection. If the distribution and related transactions fail to continue to qualify for the Intended Tax Treatment, Sandisk, WDC and WDC stockholders could face significant U.S. federal income tax liabilities, and Sandisk could be required to indemnify WDC. The Tax Matters Agreement restricts Sandisk, particularly for the two years following the spin-off, from freely issuing stock, merging, being acquired or raising additional equity capital, which could impair strategic initiatives and deter a change of control. Sandisk is still building standalone financial, administrative, governance, compliance and IT organizations, and is implementing a new ERP system, which may introduce quality, control or cybersecurity issues during the transition.

Nanya investment. The value of the Nanya stake could be impaired by adverse changes in Nanya's performance or market conditions. Conversely, increases in its value influence reported results "in a manner that is not representative of our core business." Regulatory restrictions on cross-border semiconductor investments, including potential outbound investment screening, could constrain Sandisk's ability to realize full value.

Buyback risk. The Board authorized $6.0 billion in April 2026 and a further $14.0 billion in August 2026. Repurchases may be made at prices exceeding future market prices, reduce cash available for capacity, technology and acquisitions, and create investor expectations whose disappointment could pressure the stock.

Taxation. The Malaysian tax holidays that help hold the effective rate below the U.S. statutory rate are conditional and time-limited; failure to extend them, or to satisfy the conditions attached to them, would raise Sandisk's effective tax rate.

Other named risks. Supplier concentration and sole-source components; product defects, recalls and epidemic failure clauses; cybersecurity incidents against infrastructure and against products themselves, with AI cited as amplifying both attack sophistication and inadvertent exposure; risks from Sandisk's own use of AI including IP ownership ambiguity; data privacy regulation; IP litigation exposure in a litigious industry; anti-takeover provisions including Section 203 of the DGCL; and a Delaware/federal exclusive forum provision in the certificate of incorporation.

Item 3 states there are no material legal proceedings other than ordinary routine litigation incidental to the business.

Management's discussion and analysis, fiscal 2026

From the FY2026 10-K, accession 0001628280-26-057406.

Results

Basis note: the three years are not a like-for-like series. Fiscal 2024 and the period of fiscal 2025 before the February 21, 2025 separation are carve-out results derived from Western Digital's records using overhead allocations, and fiscal 2026 was 53 weeks against 52 in each comparison year, though at 175% growth the extra week is not what moved the number.

Revenue. Net revenue rose 175%, or $12,893 million. The shape of the year matters as much as the total: quarterly revenue ran $2.31 billion, $3.03 billion, $5.95 billion and $8.97 billion across the four quarters of fiscal 2026, per the quarterly results releases (accessions 0001628280-25-050180, 0001628280-26-004121, 0001628280-26-028879 and 0001628280-26-053346). Total products sold increased by a mid-teens percentage on an exabyte basis, meaning the overwhelming majority of the increase came from price, not volume. Management's breakdown:

• Datacenter +437% (+$4,193M). Exabytes sold up almost 120%; revenue per gigabyte up

almost 150%.

• Edge +195% (+$8,033M). Exabytes up high single digits; revenue per gigabyte up almost

180%.

• Consumer +29% (+$667M). Exabytes sold down by a mid-teens percentage; revenue per

gigabyte up by a low-fifties percentage. Growth here is entirely price.

By geography, the increase primarily reflected higher revenue in Asia and the Americas from Edge and Datacenter customers respectively. Sales incentive and marketing programs recorded as reductions of gross revenue fell to 11% of gross revenue from 19% in each of FY2025 and FY2024, a further tailwind to net revenue in a tight market.

How much of that $20,248 million was recognized under the New Business Model agreements is not disclosed: neither the 10-K's revenue note nor its MD&A breaks fiscal 2026 revenue out between NBM and non-NBM contracts, and the only NBM revenue figure given is the $23 million of the prior year's $25 million contract-liability balance recognized during FY2026. What the filing does size is the forward book, $59.8 billion of remaining performance obligations at July 3, 2026, entirely NBM-related, of which approximately 19% is expected to be recognized as revenue over the next twelve months, none of which is in the fiscal 2026 numbers above. On the disclosure available, that $59.8 billion book is a claim on fiscal 2027 and beyond, and the NBMs are not management's stated explanation for the price increases that produced fiscal 2026.

Gross profit rose $12,260 million and gross margin expanded 4,100 basis points to 71.5%, attributed to higher sales and higher pricing.

Operating expenses. R&D rose $196 million: $136 million from compensation and benefits (variable compensation tied to company performance, plus headcount), $28 million more project spending, $24 million more stock-based compensation. SG&A rose $103 million: $68 million compensation and benefits, $32 million sales and marketing, $15 million outside services, partly offset by a $51 million decrease in materials from a change in practice, Sandisk now distributes fewer free samples and has begun contracting to sell qualification units to customers, moving those costs from selling expense into inventory and then cost of revenue. Business separation costs fell $42 million as the separation completed. FY2026 carried no goodwill impairment against $1.8 billion in FY2025; a $10 million loss on business divestiture compares to a $34 million pre-tax gain in FY2025 on the sale of 80% of SDSS.

Below the line. Interest and other income (expense), net swung $730 million favorable, driven by the Nanya equity securities, with no comparable prior-year activity. The $808 million "Gain (loss) on equity securities, net" line is almost entirely the $807 million unrealized mark-to-market gain on the Nanya shares disclosed in the fair-value note; the remaining $1 million comes from the other strategic equity investments that share that line. Also in the swing: $48 million more interest income, offset by a $118 million increase in other expense primarily from the settlement of certain non-operating legal matters. Interest expense of $73 million reflects the term loan that was retired mid-year.

Taxes. The effective rate was 12%, versus (11)% in FY2025 and (34)% in FY2024. The rate sits below the 21% U.S. statutory rate because of jurisdictional earnings mix, foreign-derived deduction-eligible income, credits, and Malaysian tax holidays expiring at various dates from 2028 through 2031. The One Big Beautiful Bill Act, signed July 4, 2025, reversed U.S. R&D capitalization (foreign R&D capitalization remains) and changes foreign subsidiary tax rates from fiscal 2027; Sandisk recorded a $10 million tax benefit in FY2026 relating to OBBBA's effect on the FY2025 provision. Sandisk does not expect to be subject to the 15% corporate alternative minimum tax for FY2026 but expects to be in FY2027. Pillar Two taxes are already included in FY2026 income tax expense.

Cash flow, liquidity and capital allocation

Operating cash flow of $11.7 billion against net income of $11.4 billion; changes in operating assets and liabilities consumed $212 million on the year, reflecting the sharply higher volume of business. The cash conversion cycle lengthened to 162 days from 136: DSO improved 3 days to 48 on timing of shipments and strong collections, DIO rose 43 days to 178 on inventory builds to meet demand, DPO rose 14 days to 64.

Investing outflows were $970 million of marketable equity securities purchases (Nanya), $275 million of net issuances related to Flash Ventures and $177 million of capital expenditures, against $25 million of net proceeds from the sale of a majority interest in a subsidiary. Capital expenditure remained deliberately conservative in FY2026 and FY2025; management anticipates increased capital investment in fiscal 2027 as it transitions to newer nodes.

Financing outflows were $4.5 billion of share repurchases, $1.9 billion for repayment and eventual settlement of the Term Loan Facility, and $630 million of taxes paid on vested stock awards. The repurchases were made under a $6.0 billion share repurchase program the Board approved on April 30, 2026, inside the fiscal fourth quarter, exclusive of fees and commissions and expected to be funded by operating cash flows. During FY2026 Sandisk repurchased 3 million shares for an aggregate $4.5 billion, with $1.5 billion remaining under that authorization at year end. Separately, approximately 1.0 million shares valued at $0.6 billion were withheld through net share settlement for RSU tax withholding. Sandisk pays no dividend: financing activities show no dividend line in FY2026, FY2025 or FY2024.

Cash held outside the U.S. was $2,879 million at July 3, 2026, against $692 million a year earlier, with no material unaccrued repatriation tax consequences. Cash equivalents are primarily in money market funds holding U.S. Treasury and U.S. Government agency securities.

Debt. On March 4, 2026 Sandisk settled the Term Loan Facility in full using cash on hand, recognizing the $46 million extinguishment loss from writing off unamortized issuance costs. The $1.5 billion Revolving Credit Facility was undrawn at July 3, 2026, and Sandisk was in compliance with the maximum leverage ratio covenant. The result is a year-end balance sheet with $4,762 million of cash and cash equivalents (up from $1,481 million), no debt of any kind against $1,849 million a year earlier, and total shareholders' equity of $15,736 million on total assets of $22,507 million.

Material cash requirements at July 3, 2026 totaled $11,760 million: Flash Ventures-related commitments $6,559 million (of which $2,627 million within one year), purchase obligations and other commitments $4,902 million, and operating leases $299 million. The Flash Ventures figure includes depreciation reimbursement, lease payments on owned and committed equipment, loan and equity funding commitments, R&D and building depreciation, and the payments made directly to Kioxia for manufacturing services and continued supply availability. FY2027 R&D funding committed to the Kioxia collaboration is $138 million.

Other obligations: unrecognized tax benefits of approximately $323 million (plus $16 million of accrued interest and penalties), of which roughly $259 million could result in cash payments; and a remaining $128 million tax indemnification liability to WDC under the Tax Matters Agreement.

Nanya Technology equity investment and DRAM supply arrangement. Under a Private Placement Subscription Agreement dated March 25, 2026, Sandisk agreed to purchase approximately 139 million shares of Nanya Technology Corporation common stock for an aggregate purchase price of $970 million, representing approximately 3.9% of Nanya's outstanding common stock on a fully diluted basis following the transaction. The price reflected a 15% discount to Nanya's 30-day average trading price, consistent with the Taiwan Securities and Exchange Act. The shares are subject to a statutory three-year lock-up following delivery. On April 8, 2026, inside fiscal 2026's fourth quarter, Sandisk satisfied its payment obligation and fully subscribed for 138,685,000 Nanya shares, which were received on April 28, 2026 upon completion of the share issuance procedures. (The Q3 FY2026 Form 10-Q, accession 0001628280-26-029401, states the price remitted on April 8, 2026 as $972 million, while the FY2026 10-K states the agreed aggregate purchase price as $970 million; the $970 million figure is the one that ties to the FY2026 investing-activities line above.) Concurrently with the subscription agreement, Sandisk and Nanya entered a multi-year strategic supply arrangement under which Nanya will supply Sandisk with DRAM products, with committed volumes per year subject to variable pricing determined quarterly, intended to support Sandisk's long-term DRAM sourcing strategy. The Nanya position was carried at a fair value of $1,777 million at July 3, 2026 against its $970 million cost, producing the $807 million unrealized gain recognized in FY2026 income, the bulk of the $808 million "Gain (loss) on equity securities, net" line, which also carries $1 million from other equity investments.

Recent quarters

Fiscal fourth quarter 2026 (quarter ended July 3, 2026)

From the Form 8-K dated August 5, 2026, accession 0001628280-26-053346.

Sequential revenue growth came approximately one-third from higher volumes and two-thirds from higher pricing. Q4 end markets: Datacenter $2,977M (up 103% sequentially), Edge $5,432M (up 48%), Consumer $556M (down 32% sequentially and down 5% year over year), Consumer continued to shrink in absolute terms even as the rest of the business inflected.

Management stated that since announcing five NBM agreements on the April earnings call, it has signed five more, including three with new customers and two expanding previously signed agreements. CEO David Goeckeler framed the year as having "established datacenter as a key growth pillar."

Outlook for fiscal first quarter 2027: revenue of $10.30 billion to $10.80 billion; GAAP gross margin of 83.0%–84.9% (non-GAAP 83.0%–85.0%); GAAP operating expenses of $574–614 million (non-GAAP $520–540 million); non-GAAP diluted EPS of $44.00 to $46.00. Management expects AI-driven demand to persist through calendar year 2027 and beyond.

Fiscal third quarter 2026 (quarter ended April 3, 2026)

From the Form 10-Q, accession 0001628280-26-029401.

Revenue of $5,950 million against $1,695 million a year earlier, up 251%. Gross profit of $4,662 million (78.4% margin) versus $382 million (22.5%). Operating expenses of $551 million against $2,263 million, which included the prior-year $1,830 million goodwill impairment. Operating income of $4,111 million versus a $1,881 million loss. Net income of $3,615 million versus a $1,933 million loss. For the nine months, revenue was $11,283 million versus $5,454 million and net income was $4,530 million versus a $1,618 million loss.

The quarter contained the Term Loan Facility payoff on March 4, 2026 and the March 25, 2026 Nanya subscription agreement. Management noted that AI infrastructure growth was driving demand for high-performance storage and that pricing shifts had positively affected the business, with those favorable trends expected to persist.

Subsequent events

Events after the fiscal year ended July 3, 2026, from Note 17 to the consolidated financial statements in the FY2026 10-K, accession 0001628280-26-057406.

• Share repurchase program, $14.0 billion. On August 5, 2026 Sandisk announced that its

Board of Directors had approved a $14.0 billion share repurchase program, exclusive of fees and commissions. Repurchases may be effected through open market purchases, including under a Rule 10b5-1 plan, or other methods. Sandisk expects repurchases to be funded by operating cash flows. The program may be suspended or discontinued at any time and does not obligate Sandisk to repurchase any shares. Combined with the $1.5 billion remaining under the April 2026 authorization, total remaining authorization stood at $15.5 billion.

• **Two additional New Business Model agreements with an aggregate transaction price of $31.3

billion.** Entered subsequent to the balance sheet date, these provide for customer purchase commitments for specified product volumes over multi-year periods. Consistent with Sandisk's other NBMs, customer obligations are supported by financial guarantees, including cash deposits and other financial instruments, intended to protect Sandisk if a customer fails to satisfy its contractual purchase obligations.

What matters for a value investor

Fiscal 2026 was a price cycle, not primarily a volume cycle: total exabytes shipped rose only a mid-teens percentage while revenue rose 175%, and Consumer revenue grew 29% on volumes that fell by a mid-teens percentage. Gross margin went from 30.1% to 71.5% and to 84.6% in the fourth quarter alone. The durability question is whether NBMs, at $59.8 billion of remaining performance obligations plus $31.3 billion signed after year end, convert that price spike into contracted multi-year revenue, and at what fixed-versus-variable pricing split, which the filings do not disclose. Against that, the structural constraints are unchanged: all wafer supply comes from a 49.9%-owned joint venture Sandisk does not unilaterally control, with 50% of fixed costs owed regardless of offtake, extended only to December 31, 2034, and with a $1.2 billion side payment to Kioxia through 2029 now attached to the extension. Capital returns have been aggressive and front-loaded, $4.5 billion repurchased in FY2026 with $15.5 billion authorized on top, while capital expenditure was only $177 million and management has flagged that FY2027 spending will rise for node transitions.