Sandisk's stock falls as the company's forecast doesn't live up to high expectations

By Britney Nguyen

The midpoint of the company's revenue forecast was below what analysts had been modeling

Sandisk's stock was falling on Wednesday afternoon after its earnings report.

Shares of Sandisk were set to extend their declines after the memory-chip maker's guidance for the September quarter missed Wall Street's high expectations.

Sandisk (SNDK) set its September-quarter revenue guidance between $10.3 billion and $10.8 billion, which at the midpoint was below the FactSet analyst consensus for $10.8 billion. The company's outlook for adjusted earnings per share was between $44 and $46, while consensus expectations called for $44.72.

Sandisk's stock was down about 5.3% in after-hours trading Wednesday, after having closed down 5.4% in the regular session.

For the June quarter, Sandisk reported revenue of $8.97 billion, up 51% sequentially and ahead of the $8.48 billion that analysts tracked by FactSet had been looking for. Adjusted earnings of $39.25 per share also topped estimates for $34.96.

Sandisk CEO David Goeckeler said in a statement that the company had established its data-center business "as a key growth pillar" and had deepened partnerships with customers in the fiscal year that just ended. "Our technology and products are well positioned to create value for our customers and generate growing and durable free cash flow," he said.

The company's data-center business saw revenue of $2.97 billion for the quarter, above estimates for $2.74 billion, and up 103% from a year ago. Edge revenue of $5.43 billion also beat expectations for $4.46 billion. Sandisk's consumer segment recorded $556 million in revenue, far below the consensus for $874 million, and down 32% from the previous year.

Sandisk reported an adjusted gross margin of 84.6% for the quarter, which was up 58.2 percentage points from a year before. But adjusted gross margin could contract slightly in the September quarter, however, as the company's guidance calls for between 83% and 85%.

Goeckeler said on the company's earnings call that it wants "a fair return for our product," and that its mid-80% gross margin guidance shows just that. Overall, Sandisk has multiple focuses, he said, including durability.

"We want to increase visibility and durability of the franchise - we want to get this kind of boom and bust out of it," he said, referring to the historical cyclicality of the memory industry.

Ahead of the report, Wedbush analyst Matt Bryson said he was expecting a significant beat from Sandisk given strong demand in its end markets and the company's "willingness to lead the industry in raising price to optimize" its gross margin.

Looking forward, Bryson said in a note that he sees Sandisk's earnings momentum continuing through fiscal 2027 and 2028, as new chip capacity will be limited before the latter part of next year. Additionally, Sandisk's new multiyear customer agreements, which it introduced in April, offer more stability in pricing, he said.

In the March quarter, Sandisk signed five initial new business model agreements. In the most recent quarter, Goeckeler said the company signed three more agreements with new customers, as well as two expanding on existing agreements.

Altogether, the eight agreements have a minimum expected revenue of $93.3 billion at floor pricing, the company said.

Goeckeler said on the company's March-quarter earnings call that the agreements are "backed by firm financial commitments" and would improve the company's earnings.

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-Britney Nguyen

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08-05-26 1826ET