Summary of SanDisk (SNDK) FY Conference Call - May 13, 2025 Company Overview - **Company**: SanDisk (SNDK) - **Event**: FY Conference Call - **Date**: May 13, 2025 Key Points Industry and Market Position - SanDisk is positioned as a leader in the NAND market, having successfully established itself as a standalone company post-separation [3][4] - The NAND market is projected to grow to $100 billion by the end of the decade, with a built-in growth driver leading to a potential 50% increase in Total Addressable Market (TAM) over the next several years [6][7] Financial Performance - SanDisk reported strong first-quarter results, aligning with previous guidance [5] - The enterprise SSD segment saw over 100% growth last year, driven by AI and new use cases [11][12] - Year-over-year revenue in the enterprise SSD segment is expected to triple from fiscal year 2024 to 2025 [14] Demand Drivers - Long-term demand for NAND is expected to grow in the low to mid-teens percentage range, supported by unit growth in PCs and smartphones, as well as increased CapEx spending in data centers [18][20] - The company anticipates a supply-demand imbalance, with demand exceeding supply in the near term [22] Supply Chain and Pricing Strategy - The market is currently underutilized by approximately 15%, and the company is focused on balancing supply and demand to avoid low pricing environments [22][26] - SanDisk is adopting a proactive approach to manage supply, adjusting production based on market conditions to maintain healthy pricing [27][28] Technological Innovation - SanDisk is committed to innovation, with a strong technology roadmap that includes advancements in NAND production and the introduction of new products [8][46] - The Bix8 node technology is expected to account for nearly 10% of bids and is anticipated to grow through FY 2026 [46] Joint Venture and R&D - The joint venture with Kioxia is highlighted as a key driver of success, providing scale and accumulated expertise in NAND production [62][63] - The focus on R&D efficiency has led to a capital efficiency that is reportedly a third more efficient than the industry average [65] Financial Goals and Capital Allocation - SanDisk aims for a long-term gross margin target of 35%, with ongoing efforts to improve profitability through better supply-demand management [71][72] - The company is shifting its focus from merely expanding TAM to ensuring sustained profitability and effective capital allocation [74][76] Market Outlook - The management expresses optimism about the future, citing significant growth opportunities and the ability to respond quickly to market dynamics [84] Additional Insights - The impact of tariffs on SanDisk's business is currently minimal, affecting only a small percentage of products shipped to the U.S. [32][33] - The company is focused on maintaining agility in operations to adapt to market changes effectively [36] This summary encapsulates the key insights and strategic directions discussed during the SanDisk FY Conference Call, highlighting the company's strong market position, growth prospects, and commitment to innovation and profitability.

Financial Performance - Net revenue decreased by 1% to $1,695 million for the three months ended March 28, 2025, compared to $1,705 million in the prior year, primarily due to an 11% decrease in average selling prices per gigabyte[197]. - Net revenue increased by 11% to $5,454 million for the nine months ended March 28, 2025, compared to $4,903 million in the prior year, driven by a 12% increase in average selling prices per gigabyte[198]. - Cloud revenue surged by 103% to $197 million for the three months ended March 28, 2025, and increased by 382% to $747 million for the nine months ended March 28, 2025, primarily due to a 75% increase in exabytes sold[199]. - Client revenue decreased by 10% to $927 million for the three months ended March 28, 2025, but increased by 1% to $3,024 million for the nine months ended March 28, 2025, primarily due to a 17% increase in average selling prices per gigabyte[200]. - Gross profit decreased by $81 million to $382 million for the three months ended March 28, 2025, primarily due to lower revenue and increased start-up costs[204]. - Gross profit increased by $1,278 million to $1,714 million for the nine months ended March 28, 2025, primarily due to improved pricing and a favorable product mix[205]. Expenses and Charges - The Company incurred charges of $24 million for unabsorbed manufacturing overhead costs in the third quarter of fiscal year 2025[189]. - Research and development expenses increased by $8 million to $285 million for the three months ended March 28, 2025, reflecting continued investment in innovation[208]. - Selling, general and administrative expenses increased by $32 million to $139 million for the three months ended March 28, 2025, primarily due to higher compensation and benefits[210]. - Total operating expenses increased by $1,865 million to $2,263 million for the three months ended March 28, 2025, reflecting a substantial rise in costs associated with the business separation[196]. - Employee termination and other charges increased by $49 million in the nine months ended March 28, 2025, compared to the prior year, primarily due to a $60 million gain on the sale-leaseback of a facility in the prior period[213]. Goodwill Impairment - The Company recorded a goodwill impairment charge of $1.8 billion for the three months ended March 28, 2025[184]. - Goodwill impairment of $1,830 million was recorded for the three and nine months ended March 28, 2025, significantly impacting operating income[196]. - Goodwill impairment rose by $1.8 billion in the three and nine months ended March 28, 2025, due to an impairment charge from the difference between the carrying value and fair value of the reporting unit[214]. - The company uses qualitative factors to assess goodwill impairment and may require a quantitative assessment if impairment is likely[246]. - The company identified potential impairment indicators related to macroeconomic conditions and the trading price of its common stock[248]. Financing Activities - The Company entered into a seven-year Term Loan B facility of $2 billion and a five-year revolving credit facility of $1.5 billion on February 21, 2025[186]. - The company entered into a loan agreement on February 21, 2025, consisting of a $1.5 billion revolving credit facility and a $2 billion term loan facility due in 2032[233]. - The Company received net proceeds of $191 million from a sale-leaseback transaction, with $134 million allocated to it[183]. - Gain on business divestiture increased by $34 million in the nine months ended March 28, 2025, due to a pre-tax gain on the sale of SDSS[216]. - Interest and other expense, net increased by $33 million in the nine months ended March 28, 2025, primarily due to a $26 million increase in foreign exchange losses and a $15 million increase in interest expense from the Term Loan Facility[218]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $(10) million for the nine months ended March 28, 2025, compared to $(179) million for the same period in the prior year[223]. - Net cash provided by investing activities was $573 million for the nine months ended March 28, 2025, compared to $213 million for the same period in the prior year[223]. - Net cash provided by financing activities was $620 million for the nine months ended March 28, 2025, compared to $51 million for the same period in the prior year[223]. - The company expects cash capital expenditures in fiscal 2025 to be higher than in fiscal 2024 but remain below fiscal 2023 expenditures[223]. Corporate Developments - The Company became an independent publicly traded company on February 21, 2025, trading under the stock symbol "SNDK" on Nasdaq[180]. - The company recorded a tax indemnification liability of $112 million on February 21, 2025, which was reduced to $110 million as of March 28, 2025[239]. - The remaining tax indemnification liability of $110 million is classified as Other liabilities in the Condensed Consolidated Balance Sheets as of March 28, 2025[239]. - As of March 28, 2025, the liability for unrecognized tax benefits was approximately $127 million, with accrued interest and penalties totaling $4 million[237]. - The company maintains director and officer insurance to cover certain liabilities arising from indemnification obligations[240]. - The company has not incurred material costs from indemnification agreements historically[241]. - The company’s financial statements are prepared using judgments and estimates that can materially affect reported amounts[243]. - The company’s impairment calculations involve significant estimates and assumptions, including revenue forecasts and a weighted average cost of capital[251].

Sandisk (SNDK) Q3 2025 Earnings Call May 07, 2025 04:30 PM ET Company Participants Ivan Donaldson - VP - IRDavid Goeckeler - Chairman & CEOLuis Visoso - EVP & CFOJoseph Moore - Managing DirectorKarl Ackerman - Managing Director - Equity ResearchVijay Rakesh - Managing DirectorSteven Fox - Founder & CEO Conference Call Participants CJ Muse - AnalystAaron Rakers - Managing Director & Technology AnalystNam Hyung Kim - Senior Analyst Operator Hi there. Good day and welcome to the SanDisk Technologies Third Quar ...

Financial Data and Key Metrics Changes - Revenue for the third quarter was $1.7 billion, down 10% sequentially and down 1% year over year [7][15] - Non-GAAP EPS was a loss of $0.30 per share, at the high end of the guidance range [18] - Cash and cash equivalents increased from $1.3 billion to $1.5 billion [18] Business Line Data and Key Metrics Changes - Client revenue was $927 million, down 10% sequentially [16] - Consumer revenue was $571 million, down 5% quarter over quarter [16] - Cloud revenue was $197 million, down 21% sequentially [16] - ASPs were down high single digits, reflecting continued oversupply in the market [8] Market Data and Key Metrics Changes - Analysts estimate cloud CapEx from major hyperscale providers grew over 50% to approximately $240 billion in calendar year 2024, expected to reach approximately $330 billion in 2025, a 40% increase [13] - Bit allocation to enterprise SSD applications increased to 12% this quarter, up from 8% in the same quarter of the prior year [13] Company Strategy and Development Direction - The company aims to create value for customers and shareholders while reaffirming leadership in the NAND market [5] - Focus on capital discipline and driving higher returns on invested capital [6] - Plans to reduce wafer production to align supply with demand and enable sustainable pricing [8] Management's Comments on Operating Environment and Future Outlook - Management sees an undersupplied market through the end of next year, with expectations for pricing to start increasing [26][27] - Positive signs include strengthening transactional markets and encouraging customer engagements [20] - The company expects revenue for the fourth quarter to be between $1.750 billion and $1.850 billion, assuming bit shipments to be flat and ASP to be up mid to high single digits [19] Other Important Information - The company recorded a noncash impairment charge of $1.83 billion, reducing the goodwill balance to $5 billion [18] - The company is beginning to move away from providing explicit guidance on cost per bit due to industry cost reductions from technology migrations [22] Q&A Session Summary Question: Can you discuss supply and demand dynamics? - Management sees an undersupplied market through the end of next year, with expectations for pricing to start increasing [26][27] Question: How is the enterprise SSD market performing? - Demand has been consistent, with expectations for a tripling of enterprise SSD revenue from FY 2024 to FY 2025 [34] Question: What are the expectations for gross margins? - Headwinds include underutilization charges and fab startup costs, but higher ASPs are expected to help gross margins overall [38] Question: How is the company managing capacity and bit growth? - The company is carefully managing capacity to avoid oversupply while ramping up higher layer count and more density per wafer [41] Question: What is the outlook for NAND bit shipments? - The company expects NAND bit volume to grow low double digits this calendar year, with good visibility across various markets [56][58] Question: How does the yen exchange rate impact costs? - The front end is exposed to the yen, but not all costs are yen-denominated, which should be considered in modeling [81]

Fiscal Third Quarter 2025 Financial Results Quarter ended March 28, 2025 Wednesday, May 7, 2025 Disclaimers Forward-Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws, including, but not limited to, statements regarding expectations for: Sandisk Corporation's (the "Company") business outlook and operational and financial performance for the fiscal third quarter of 2025 and beyond; demand and market conditions for our products; growth opport ...

Financial Performance - Third quarter revenue was $1.70 billion, down 10% sequentially and down 1% year-over-year[4] - Third quarter GAAP loss was $1.93 billion, including a $1.83 billion goodwill impairment charge, resulting in a loss per share of $13.33[4] - Non-GAAP loss per share for the third quarter was $0.30[4] - The company expects fourth quarter revenue to be in the range of $1.75 billion to $1.85 billion[4] - Revenue for the three months ended March 28, 2025, was $1,695 million, a slight decrease of 0.6% compared to $1,705 million for the same period in 2024[20] - The net loss for the three months ended March 28, 2025, was $1,933 million, compared to a net income of $27 million for the same period in 2024[20] - GAAP net loss for the three months ended March 28, 2025, was $(1.933) billion, compared to a net income of $0.104 billion for the same period in 2024[27] - Non-GAAP net loss for the three months ended March 28, 2025, was $(0.043) billion, while the same period in 2024 reported a net income of $0.178 billion[27] Operating Expenses - Operating expenses increased to $2.26 billion, up 451% sequentially[5] - Operating expenses for the three months ended March 28, 2025, totaled $2,263 million, compared to $398 million for the same period in 2024, primarily due to a goodwill impairment of $1,830 million[20] - Research and development expenses for the three months ended March 28, 2025, were $285 million, slightly up from $277 million in the same period of 2024[20] - The company incurred business separation costs of $0.009 billion for the three months ended March 28, 2025, compared to $0.021 billion in the same period of 2024[27] - Stock-based compensation expense for the three months ended March 28, 2025, was $0.044 billion, slightly down from $0.048 billion in the same period of 2024[27] Cash Flow and Assets - Cash flows from operating activities for the three months ended March 28, 2025, provided $26 million, compared to a cash outflow of $12 million for the same period in 2024[22] - The company reported a net cash increase of $703 million for the three months ended March 28, 2025, compared to a decrease of $48 million in the same period of 2024[23] - The total cash and cash equivalents at the end of the period were $1,507 million, up from $377 million at the end of the same period in 2024[23] - Free cash flow for the three months ended March 28, 2025, was $(0.018) billion, compared to $0.047 billion for the same period in 2024[27] - Adjusted free cash flow for the three months ended March 28, 2025, was $0.220 billion, up from $0.091 billion in the same period last year[27] - Cash flow provided by operating activities for the three months ended March 28, 2025, was $0.026 billion, a decrease from $0.095 billion in the same period of 2024[27] Goodwill Impairment - The company incurred a goodwill impairment of $1,830 million for the nine months ended March 28, 2025, with no such impairment recorded in the same period of 2024[20] - The company recognized a goodwill impairment charge of $1.830 billion for the three and nine months ended March 28, 2025, due to a quantitative impairment analysis[29] Guidance and Future Plans - The company plans to implement price increases and manage supply to match demand[3] - Non-GAAP earnings per share guidance for the fourth quarter is expected to be in the range of ($0.10) to $0.15[8] - Gross margin for the third quarter was 22.5%, down 9.8 percentage points from the previous quarter[5] - Cloud revenue decreased by 21% quarter-over-quarter to $197 million, but increased by 103% year-over-year[6] - The company completed a strategic review, incurring associated expenses, which are not indicative of its ongoing business performance[34]

Financial Performance - The Company reported net revenue of $1,876 million for the three months ended December 27, 2024, representing a 13% increase from $1,665 million in the prior year[174]. - Cost of revenue decreased by 16% to $1,270 million, down from $1,504 million, resulting in a gross profit of $606 million, a significant increase of 276% compared to $161 million in the previous year[174]. - Operating income improved to $195 million, compared to a loss of $245 million in the same period last year, marking a turnaround of $440 million[174]. - The Company incurred a net income of $104 million, a substantial recovery from a net loss of $301 million in the prior year, reflecting a 135% improvement[174]. - Net revenue increased 18% to $3,759 million for the six months ended December 27, 2024, compared to $3,198 million for the same period in the prior year[177]. - Gross profit increased by $1,359 million for the six months ended December 27, 2024, resulting in a gross profit margin increase of 36%[183][184]. - Cloud revenue surged 848% in the six months ended December 27, 2024, driven by a 571% increase in exabytes sold[178]. - Client revenue rose 7% in the six months ended December 27, 2024, primarily due to a 37% increase in average selling prices per gigabyte[179]. - Consumer revenue decreased 5% in the six months ended December 27, 2024, attributed to an 8% decrease in exabytes sold[180]. Expenses and Cash Flow - Total operating expenses increased by $141 million to $846 million for the six months ended December 27, 2024[182]. - Interest and other expense, net increased by $24 million for the six months ended December 27, 2024, primarily due to increased foreign exchange losses[189]. - Income tax expense for the six months ended December 27, 2024, was $125 million, with an effective tax rate of 28%[193]. - Research and development expenses increased by $76 million for the six months ended December 27, 2024, reflecting continued investment in innovation[185]. - Selling, general and administrative expenses rose by $41 million for the six months ended December 27, 2024, primarily due to increased compensation and benefits[186]. - For the six months ended December 27, 2024, net cash provided by operating activities was $(36) million, compared to $(167) million for the same period in 2023[196]. - Net cash provided by investing activities was $169 million for the six months ended December 27, 2024, compared to $113 million for the same period in 2023[196]. - Net cash provided by financing activities was $344 million for the six months ended December 27, 2024, compared to $186 million for the same period in 2023[196]. Operational Metrics - The cash conversion cycle increased to 151 days for the three months ended December 27, 2024, compared to 96 days for the same period in 2023[200]. - Days sales outstanding (DSO) increased by 7 days to 44 days for the three months ended December 27, 2024, compared to 37 days for the same period in 2023[202]. - Days in inventory (DIO) increased by 58 days to 156 days for the three months ended December 27, 2024, compared to 98 days for the same period in 2023[202]. Future Outlook and Commitments - The Company expects to incur charges for unabsorbed manufacturing overhead costs due to reduced utilization of manufacturing capacity in fiscal 2025[169]. - The Company anticipates that digital transformation, including the artificial intelligence data-cycle, will drive improved market conditions for data storage products in the long term[169]. - The company expects cash capital expenditures in 2025 to be higher than in 2024 but remain below 2023 expenditures[196]. - Total known material cash requirements as of December 27, 2024, amounted to $7,660 million, with $4,442 million related to Flash Ventures commitments[206]. - As of December 27, 2024, the liability for unrecognized tax benefits was approximately $60 million, with potential cash payments of approximately $66 million[210]. Corporate Developments - The Company entered into a five-year supply agreement with SDSS with a minimum annual commitment of $550 million following the sale of 80% of its equity interest in SDSS[161]. - A sale-leaseback transaction in September 2023 generated net proceeds of $191 million, with $134 million allocated to the Company, and an annual lease expense of $16 million for the first year[162]. - The Company completed a spin-off from WDC, distributing 80.1% of its outstanding shares to WDC stockholders, and began trading independently under the symbol "SNDK" on February 24, 2025[159]. - The Company has drawn no amounts under its $1.5 billion Revolving Credit Facility as of March 7, 2025[167]. - A total of $692 million of cash and cash equivalents were held outside of the U.S. as of December 27, 2024[198].