SanDisk Corporation
10/30/2026 | Press release | Distributed by Public on 10/30/2026 14:42
Quarterly Report for Quarter Ending October 2, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. You should read this information in conjunction with the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q and the audited Consolidated Financial Statements and notes thereto for the fiscal year ended July 3, 2026, included in our Annual Report on Form 10-K. See also "Forward-Looking Statements" immediately prior to Part I, Item 1 in this Quarterly Report on Form 10-Q.
Unless otherwise indicated or the context requires, references herein to specific years and quarters are to our fiscal years and fiscal quarters. As used herein, the terms "we," "us," "our," and the "Company" refer to Sandisk Corporation and its subsidiaries.
Our Business
Sandisk is a leading global semiconductor memory company with more than 30 years of innovation in NAND flash technology. We are a vertically integrated solutions provider with ownership of chip-level design and IP, front and back-end manufacturing, as well as systems engineering and design. With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for artificial intelligence ("AI") workloads in datacenters, edge devices, and consumer applications. Our technologies enable everyone from students, gamers, and home offices to the largest enterprises and public clouds to produce, analyze, and store data. Our solutions include a broad range of solid-state drives, embedded products, removable cards, universal serial bus drives and wafers and components. Our broad portfolio of technology and products addresses multiple end markets of "Datacenter", "Edge", and "Consumer."
Datacenter represents a large and growing end market comprised primarily of products for public or private cloud environments and enterprise customers. Through the Edge end market, we provide our original equipment manufacturers ("OEMs") and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, physical AI, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalize on the strength of our product brand recognition and vast presence around the world.
The Company's fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, we report a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal year 2026, which ended on July 3, 2026 was comprised of 53 weeks, with the first fiscal quarter consisting of 14 weeks. Fiscal year 2027 will be comprised of 52 weeks and will end on July 2, 2027, with each fiscal quarter consisting of 13 weeks. Unless otherwise indicated or the context requires, references herein to specific years and quarters are to fiscal years and fiscal quarters, and references to financial information are on a condensed consolidated basis.
The Separation
On October 30, 2023, Western Digital Corporation ("WDC") announced that its board of directors (the "WDC Board of Directors") authorized WDC management to pursue a plan to separate the Company into an independent public company (the "separation" or the "spin-off"). The separation received final approval by the WDC Board of Directors and was completed on February 21, 2025. Prior to February 21, 2025, the Company was wholly owned by WDC.
On February 21, 2025, WDC executed the spin-off of the Company through WDC's pro rata distribution of 116,035,464, or 80.1%, of the Company's outstanding shares of common stock to holders of WDC's common stock. Following the distribution, the Company became an independent publicly listed company, and on February 24, 2025, the Company began trading under the stock symbol "SNDK" on Nasdaq. Each WDC stockholder received one-third (1/3) of one share of the Company's common stock for each share of WDC's common stock held by such WDC stockholder as of February 12, 2025, the record date of the distribution, and WDC retained ownership of 19.9%, of the outstanding shares of the Company's common stock. As of July 3, 2026, WDC has sold or exchanged all of such shares of the Company's common stock.
Financing Activities
As discussed in Part I, Item 1, Note 8, Debt of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, on February 21, 2025, the Company entered into a loan agreement comprised of a seven-year Term Loan B facility in an aggregate principal amount of $2.0 billion (the "Term Loan Facility") and a five-year revolving credit facility (the "Revolving Credit Facility") in an aggregate principal amount of $1.5 billion, including up to $150 million for letters of credit.
On February 21, 2025, the Company borrowed $2.0 billion under its Term Loan Facility. The Company used a portion of the proceeds of the borrowing to make a net distribution payment of $1.5 billion to WDC, with the remainder to be used for general corporate purposes of the Company. The proceeds of the Revolving Credit Facility may be used by the Company for working capital and general corporate purposes.
On March 4, 2026, the Company settled in full the remaining outstanding principal amounts of the Term Loan Facility, plus accrued interest, using cash on hand. In connection with the early settlement of the Term Loan Facility, the Company recognized a loss on debt extinguishment resulting from the write-off of the remaining unamortized issuance costs.
On September 9, 2026, the Company entered into Amendment No. 1 ("Amendment No. 1") to its Revolving Credit Facility, originally dated February 21, 2025. Amendment No. 1 modifies certain interest rate provisions and extends the maturity date from February 21, 2030 to September 9, 2031.
Borrowings under the Revolving Credit Facility, for U.S. dollar borrowings, will bear interest, at the Company's option, at (x) the Adjusted Term Secured Overnight Financing Rate ("SOFR") or Adjusted Daily Simple SOFR (as defined in the Loan Agreement), plus an interest rate margin of 1.375% per annum (subject to step-ups and step-downs based on the Company's Net Leverage Ratio (as defined in the Loan Agreement) or the corporate family ratings of the Company), or (y) a base rate plus an interest rate margin of 0.375% per annum (subject to step-ups and step-downs based on the Company's Net Leverage Ratio (as defined in the Loan Agreement) or the corporate family ratings of the Company). The Company will pay a commitment fee of 0.175% per annum (subject to step-ups and step-downs based on the Company's Net Leverage Ratio (as defined in the Loan Agreement) or the corporate family ratings of the Company) on undrawn revolving commitments under the Revolving Credit Facility. The Revolving Credit Facility will also provide for borrowings in Euros, Yen and additional currencies agreed to by the lenders under the Revolving Credit Facility. At the maturity of the Revolving Credit Facility the commitments thereunder shall be terminated and will not have any amortization.
As of October 2, 2026, there were no amounts outstanding under the Revolving Credit Facility.
Operational Update
In the first quarter, we continued to observe that the rapid growth of AI infrastructure is driving demand for high-performance storage products, and AI adoption is driving the need for NAND storage to support these workloads, leading to increased revenues when compared to prior periods. The current environment and market demand have led to pricing and product mix shifts, including strategic decisions about how we allocate products to customers across the end markets we serve. These shifts have positively impacted our business, and we expect these favorable pricing trends and product mix shifts to have a positive impact on our revenue and cash flows from operations. We expect AI-driven demand to persist through calendar year 2027 and beyond. Accordingly, we expect to invest in, and allocate resources to, high-value opportunities for both the short-term and long-term benefit of our customers and us.
Commencing in the second half of fiscal year 2026, we entered into long-term agreements, which we also refer to as New Business Models, or "NBMs," with several Datacenter and Edge customers. These agreements generally commit us to deliver, and our customers to purchase, a stated volume of products, mostly over multi-year periods. The agreements include pricing mechanisms consisting of fixed and variable components and are supported by financial guarantees that are intended to provide additional protection in the event a customer does not satisfy their contractual purchase obligations. As NBMs are expected to become our predominant way of doing business, we believe that this business model will contribute to greater predictability of revenue, support production planning, and enhance supply assurance for our customers. While these agreements do not eliminate the risks associated with customer demand, market conditions, or operational execution, we believe they reduce certain elements of industry cyclicality and support our long-term strategic and financial objectives.
There are pending and ongoing investigations initiated by the United States under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 that may impact tariff rates for our products. Currently, the majority of our products sold in the U.S. are exempt from tariffs, but additional tariff increases, or the loss of applicable exemptions, would increase the cost of goods sold for our products sold in the U.S., which could negatively impact our margins and financial performance. Increases in the price of our products in response to increased costs may adversely impact demand for those products in the U.S., which could also negatively impact our performance and financial results. Future trade policies and regulations in the U.S. and other countries, the terms of any trade arrangements that may be negotiated between the U.S. and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance.
We will continue to actively monitor developments impacting our business and may take additional responsive actions that we determine to be in the best interest of our business and stakeholders.
Basis of Presentation
On February 21, 2025, the Company became a standalone publicly traded company, and its financial statements are now presented on a condensed consolidated basis. Prior to the separation, the Company's historical condensed consolidated financial information was derived from WDC's condensed consolidated financial statements and accounting records and prepared as if the Company existed on a standalone basis. The financial statements for all periods presented, including the historical results of the Company prior to February 21, 2025, are now referred to as "Condensed Consolidated Financial Statements" and have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and the policies and practices that are generally accepted in the industry in which it operates.
The following discussion reflects the Company's financial condition and results of operations as set forth in the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Results of Operations
Overview
The following table sets forth, for the periods presented, selected summary information from our Condensed Consolidated Statements of Operations by U.S. dollars and percentage of net revenue(1):
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| October 2, 2026 | October 3, 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||
| Revenue, net | $ | 11,031 | 100.0 | % | $ | 2,308 | 100.0 | % | $ | 8,723 | 378 | % | |||||||||||||||||||||||
| Cost of revenue | 1,653 | 15.0 | 1,621 | 70.2 | 32 | 2 | |||||||||||||||||||||||||||||
| Gross profit | 9,378 | 85.0 | 687 | 29.8 | 8,691 | 1265 | |||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Research and development | 384 | 3.5 | 316 | 13.7 | 68 | 22 | |||||||||||||||||||||||||||||
| Selling, general and administrative | 214 | 1.9 | 179 | 7.8 | 35 | 20 | |||||||||||||||||||||||||||||
| Business separation costs | - | - | 9 | 0.4 | (9) | (100) | |||||||||||||||||||||||||||||
| Employee termination and other | - | - | (3) | (0.1) | 3 | (100) | |||||||||||||||||||||||||||||
| Loss on business divestiture | - | - | 10 | 0.4 | (10) | (100) | |||||||||||||||||||||||||||||
| Total operating expenses | 598 | 5.4 | 511 | 22.2 | 87 | 17 | |||||||||||||||||||||||||||||
| Operating income | 8,780 | 79.6 | 176 | 7.6 | 8,604 | 4889 | |||||||||||||||||||||||||||||
| Interest and other income (expense), net: | |||||||||||||||||||||||||||||||||||
| Gain on equity securities, net | 513 | 4.7 | - | - | 513 | 100 | |||||||||||||||||||||||||||||
| Interest income | 51 | 0.5 | 16 | 0.7 | 35 | 219 | |||||||||||||||||||||||||||||
| Interest expense | (2) | - | (40) | (1.7) | 38 | (95) | |||||||||||||||||||||||||||||
| Other income (expense), net | (23) | (0.2) | (28) | (1.2) | 5 | (18) | |||||||||||||||||||||||||||||
| Total interest and other income (expense), net | 539 | 4.9 | (52) | (2.2) | 591 | (1137) | |||||||||||||||||||||||||||||
| Income before taxes | 9,319 | 84.5 | 124 | 5.4 | 9,195 | 7415 | |||||||||||||||||||||||||||||
| Income tax expense | 1,218 | 11.0 | 12 | 0.5 | 1,206 | 10050 | |||||||||||||||||||||||||||||
| Net income | $ | 8,101 | 73.5 | $ | 112 | 4.9 | $ | 7,989 | 7133 | ||||||||||||||||||||||||||
(1) Percentage may not total due to rounding.
The following table sets forth, for the periods presented, summary information regarding our disaggregated revenue:
| Three Months Ended | |||||||||||
|
October 2, 2026 |
October 3, 2025 |
||||||||||
| (in millions) | |||||||||||
| Revenue by end market: | |||||||||||
| Datacenter | $ | 4,802 | $ | 269 | |||||||
| Edge | 5,832 | 1,387 | |||||||||
| Consumer | 397 | 652 | |||||||||
| Total revenue | $ | 11,031 | $ | 2,308 | |||||||
| Revenue by geography: | |||||||||||
| Asia | $ | 7,216 | $ | 1,515 | |||||||
| Americas | 3,257 | 406 | |||||||||
| Europe, Middle East and Africa | 558 | 387 | |||||||||
| Total revenue | $ | 11,031 | $ | 2,308 | |||||||
Net Revenue
Net revenue increased 378%, or $8.7 billion, in the three months ended October 2, 2026 compared to the three months ended October 3, 2025, primarily due to a 1,685% increase in Datacenter revenue and a 320% increase in Edge revenue, which was partially offset by a 39% decrease in Consumer revenue. Total products sold increased by almost 10% on an exabyte basis.
Datacenter revenue increased by 1,685%, or $4.5 billion, in the three months ended October 2, 2026 compared to the three months ended October 3, 2025, primarily due to higher sales and higher pricing. Total products sold increased by almost 330% on an exabyte basis. Revenue per gigabyte increased by almost 320%.
Edge revenue increased 320%, or $4.4 billion, in the three months ended October 2, 2026 compared to the three months ended October 3, 2025, primarily due to higher pricing. Revenue per gigabyte increased by more than 450%, which was partially offset by a 20% decrease in products sold on an exabyte basis.
Consumer revenue decreased 39%, or $255 million in the three months ended October 2, 2026 compared to the three months ended October 3, 2025, primarily due to lower sales. Total products sold decreased by more than 70% on an exabyte basis, partially offset by an increase of more than 110% in revenue per gigabyte.
The changes in net revenue by geography in the three months ended October 2, 2026 from the comparable period in the prior year primarily reflected higher revenue in the Asia and Americas regions from Edge and Datacenter customers, which were offset by lower revenue across all regions from Consumer customers.
Consistent with standard industry practice, we offer sales incentive and marketing programs that provide customers with price protection and other incentives or reimbursements that are recorded as a reduction to gross revenue. For the three months ended October 2, 2026 and October 3, 2025, these programs represented 9% and 16%, respectively, of gross revenues. The amounts attributed to our sales incentive and marketing programs generally vary according to several factors, including industry conditions, list pricing strategies, seasonal demand, competitor actions, channel mix and overall availability of products. Changes in future customer demand and market conditions may require us to adjust our incentive programs as a percentage of gross revenue.
Gross Profit and Gross Margin
Gross profit increased by $8.7 billion for the three months ended October 2, 2026 from the comparable period in the prior year, primarily due to a higher revenue per gigabyte and an increase in exabytes sold.
Gross margin increased by approximately 5,500 basis points for the three months ended October 2, 2026 from the comparable period in the prior year, primarily due to a higher revenue per gigabyte and an increase in exabytes sold.
Operating Expenses
Research and development ("R&D") expenses increased $68 million in the three months ended October 2, 2026 from the comparable period in the prior year, primarily due to a $37 million increase in compensation and benefits due to variable compensation associated with company performance and increase in taxes relating to long-term incentives, a $15 million increase in software and operating system services related to internal-use software, and a $11 million increase in stock-based compensation.
Selling, general and administrative expenses increased $35 million in the three months ended October 2, 2026 from the comparable period in the prior year, primarily due to a $25 million increase in stock-based compensation, an $18 million increase in compensation and benefits, mainly due to an increase in taxes relating to long-term incentives and variable compensation associated with company performance, and a $9 million increase in customer marketing engagements, offset by a $20 million decrease in materials due to a change in business practice for the launch of new products whereby the Company is distributing fewer free samples and has started entering into contracts to sell certain qualification units to customers. The costs of qualification units are recorded in inventory until sold to customers and recognized as cost of revenue. The change contributed to a decrease in materials and production costs classified as selling expenses when compared to the prior year period.
Employee termination and other charges decreased $3 million in the three months ended October 2, 2026 from the comparable period in the prior year as there were no restructuring actions taken in the current period.
Business separation costs
Business separation costs decreased $9 million in the three months ended October 2, 2026 from the comparable period in the prior year due as there were no post-separation-related activities in the current period.
Loss on business divestiture
Loss on business divestiture decreased $10 million in the three months ended October 2, 2026 from the comparable period in the prior year because the prior-year period included a $10 million loss resulting from Amendment No. 1 to the Amended and Restated Equity Purchase Agreement with JCET Management Co., Ltd., related to our prior sale of SDSS.
Interest and Other Income (Expense), net
Interest and other income (expense), net increased $591 million in the three months ended October 2, 2026 from the comparable period in the prior year. The increase was primarily due to a gain on equity securities, net of $513 million from the Company's investment in Nanya Technology Corporation ("Nanya") for which there was no activity in the comparable year.
Income Tax Expense
H.R. 1, more widely known as the One Big Beautiful Bill Act ("OBBBA"), was signed into law on July 4, 2025. It reversed the requirement for capitalization of U.S. research and development expenditures that came into law under the Tax Cuts and Jobs Act of 2017, but the mandatory requirement of capitalization of foreign research and development expenditures remains. The tax rates for income earned by our foreign subsidiaries are also changed under H.R. 1, which applies to our fiscal years 2027 and onward. Depending on our operating results, these changes can materially impact our effective tax rate and operating cash flows.
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, which contained significant changes to laws related to tax, climate, energy, and health care. The tax measures include, among other things, a corporate alternative minimum tax ("CAMT") of 15% on corporations with three-year average annual adjusted financial statement income ("AFSI") exceeding $1.0 billion. The Company assesses the impact of CAMT and recognizes it as a component of its income tax provision.
On December 20, 2021, the Organisation for Economic Co-operation and Development G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two ("Pillar Two"). Pillar Two is currently effective in most of the jurisdictions in which we operate. Accordingly, these taxes are included in the Company's Income tax expense for the three months ended October 2, 2026.
The following table presents the Company's Income tax expense and the effective tax rate:
| Three Months Ended | |||||||||||
| October 2, 2026 | October 3, 2025 | ||||||||||
| (in millions) | |||||||||||
| Income before taxes | $ | 9,319 | $ | 124 | |||||||
| Income tax expense | 1,218 | 12 | |||||||||
| Effective tax rate | 13 | % | 10 | % | |||||||
The relative mix of earnings and losses by jurisdiction, foreign-driven deduction eligible income, credits and tax holidays in Malaysia that will expire at various dates during years 2028 through 2031 resulted in decreases to the effective tax rate below the U.S. statutory rate for the three months ended October 2, 2026.
For additional information regarding income tax expense, see Part I, Item 1, Note 14, Income Tax Expense of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Financial condition, liquidity and capital resources
The following table summarizes our Condensed Consolidated Statements of Cash Flows for the periods ended October 2, 2026 and October 3, 2025:
| Three Months Ended | |||||||||||
| October 2, 2026 | October 3, 2025 | ||||||||||
| (in millions) | |||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 6,363 | $ | 488 | |||||||
| Investing activities | (238) | (15) | |||||||||
| Financing activities | (5,755) | (515) | |||||||||
| Effect of exchange rate changes on cash | 4 | 3 | |||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 374 | $ | (39) | |||||||
For fiscal year 2026, we increased our capital investments as we transitioned to newer nodes to meet the demand and technology needs of our product portfolio. For fiscal year 2027, we anticipate increased capital investments as we transition to newer nodes to meet the demand and technology needs of our product portfolio.
We believe our cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs, as well as to fund any repurchases of our shares under the Repurchase Programs (as defined under Share Repurchase Authorization below). We believe we can also access the various capital markets to further supplement our liquidity position if necessary. Our ability to sustain our working capital position is subject to a number of risks that we discuss in Part I, Item 1A., Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended July 3, 2026.
A total of $2.1 billion and $626 million of our cash and cash equivalents were held outside of the U.S. as of October 2, 2026 and October 3, 2025, respectively. There are no material tax consequences that were not previously accrued for the repatriation of this cash. Our cash equivalents are primarily invested in money market funds that invest in U.S. Treasury securities and U.S. Government agency securities.
Operating Activities
Net cash provided by operating activities primarily consists of net income, adjusted for non-cash charges, plus or minus changes in operating assets and liabilities. Net cash used as a result of changes in operating assets and liabilities was $1.3 billion in the three months ended October 2, 2026, as compared to $250 million net cash provided in the three months ended October 3, 2025, reflecting an increase in the volume of our business, as discussed above.
Changes in our operating assets and liabilities are largely affected by our working capital requirements, which are dependent on the volume of our business and the effective management of our cash conversion cycle as well as timing of payments for taxes. Our cash conversion cycle measures how quickly we can convert our products into cash through sales. The cash conversion cycles were as follows (in days):
| Three Months Ended | |||||||||||
| October 2, 2026 | October 3, 2025 | ||||||||||
| Days sales outstanding | 54 | 51 | |||||||||
| Days in inventory | 166 | 115 | |||||||||
| Days payable outstanding | (71) | (53) | |||||||||
| Cash conversion cycle | 149 | 113 | |||||||||
Changes in days sales outstanding, or DSO, are generally due to the timing of shipments. Changes in days in inventory, or DIO, are generally related to the timing of inventory builds. Changes in days payables outstanding, or DPO, are generally related to production volume and the timing of purchases during the period. From time to time, we modify the timing of payments to our vendors. We make modifications primarily to manage our vendor relationships and to manage our cash flows, including our cash balances. Generally, we make payment term modifications through negotiations with our vendors or by granting to, or receiving from, our vendors' payment term accommodations.
For the three months ended October 2, 2026, DSO increased 3 days primarily due to higher revenue during the period and continued strong receivables collections. During the three months ended October 2, 2026, DIO increased 51 days over the three months ended October 3, 2025, primarily due to inventory builds to meet demand. DPO increased 18 days over the comparable period in the prior year, primarily due to routine variations in the timing of purchases and payments during the period.
Investing Activities
Net cash used in investing activities in the three months ended October 2, 2026 primarily consisted of $148 million in net issuances from activity related to Flash Ventures, $70 million purchases of short-term investments, and $54 million in capital expenditures, partially offset by $34 million in net proceeds from our sale of a majority interest in one of our subsidiaries. Net cash used in investing activities in the three months ended October 3, 2025 primarily consisted of $50 million in capital expenditures, partially offset by $25 million in net proceeds from our sale of a majority interest in one of our subsidiaries and $10 million in net proceeds from activity related to Flash Ventures.
Financing Activities
Net cash used in financing activities in the three months ended October 2, 2026 primarily consisted of $5 billion in repurchases of the Company's common stock pursuant to the Repurchase Programs (as defined under Share Repurchase Authorization below) and $755 million of taxes paid on vested stock awards. Net cash used in financing activities in the three months ended October 3, 2025 primarily consisted of Term Loan Facility repayments totaling $500 million and $15 million of taxes paid on vested stock awards.
Off-Balance Sheet Arrangements
Other than the Flash Ventures, SDSS and Nanya-related commitments incurred in the normal course of business and certain indemnification provisions (see Short-and-Long-term Liquidity-Purchase Obligations and Other Commitments below), we do not have any other material off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any other obligations arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries that are not included in the Condensed Consolidated Financial Statements. Additionally, with the exception of Flash Ventures, the SDSS Venture, and the Unis Venture, we do not have an interest in, or relationships with, any variable interest entities. For additional information regarding our off-balance sheet arrangements, see Part I, Item 1, Note 10, Related Parties and Related Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Short-and-Long-term Liquidity
Material Cash Requirements as of October 2, 2026
The following is a summary of our known material cash requirements, including those for capital expenditures, as of October 2, 2026. In addition, see the discussions further below related to unrecognized tax benefits, foreign exchange contracts and indemnifications to address other material cash requirements discussed below that are not included in the table:
| Total | Remaining nine months of 2027 | 2-3 Years (2028 - 2029) | 4-5 Years (2030 - 2031) | More than 5 Years (Beyond 2031) | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
|
Flash Ventures related commitments (1)
|
$ | 7,141 | $ | 2,481 | $ | 2,975 | $ | 1,504 | $ | 181 | |||||||||||||||||||
|
Purchase obligations and other commitments(2)
|
5,628 | 1,191 | 3,721 | 716 | - | ||||||||||||||||||||||||
| Operating leases | 297 | 28 | 57 | 46 | 166 | ||||||||||||||||||||||||
| Total | $ | 13,066 | $ | 3,700 | $ | 6,753 | $ | 2,266 | $ | 347 | |||||||||||||||||||
(1) Includes Flash Ventures depreciation reimbursement and lease payments on owned and committed equipment, funding commitments for loans and equity investments and payments for other committed expenses, including research and development and building depreciation and payments made directly to Kioxia in consideration for the manufacturing services and continued availability of supply. Funding commitments assume no additional operating lease guarantees. Additional operating lease guarantees can reduce funding commitments.
(2) Includes commitments for the purchase of transferable tax credits intended to offset tax liabilities as part of the Company's tax planning strategy.
Debt
In connection with the separation, on February 21, 2025, the Company entered into a loan agreement comprised of a $1.5 billion revolving credit facility, which was undrawn at the separation date, and a $2.0 billion term loan facility (the "Term Loan Facility") due in 2032. The Company used a portion of the proceeds received from the Term Loan Facility, as well as cash on hand, to make a net distribution payment of $1.5 billion to WDC in exchange for assets, liabilities and certain legal entities of WDC associated with the Company.
On March 4, 2026, the Company settled in full the remaining outstanding principal amounts of the Term Loan Facility, plus accrued interest, using cash on hand. In connection with the early settlement of the Term Loan Facility, the Company recognized a loss on debt extinguishment resulting from the write-off of the remaining unamortized issuance costs.
On September 9, 2026, the Company entered into Amendment No. 1 ("Amendment No. 1") to its Revolving Credit Facility, originally dated February 21, 2025. Amendment No. 1 modifies certain interest rate provisions and extends the maturity date. Additional information regarding our indebtedness, including information about availability under our revolving credit facility and the principal repayment terms, interest rates, covenants, collateral and other key terms of our outstanding indebtedness, is included in Part I, Item 1, Note 8, Debt of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
As of October 2, 2026, the Company was in compliance with the loan agreement financial covenant that prohibits the Company from exceeding a maximum Leverage Ratio.
Flash Ventures
From time to time, Flash Ventures sells to, and leases back from, a consortium of financial institutions a portion of its tools and has entered into equipment lease agreements, of which we guarantee half of all of the outstanding obligations under each lease agreement. The lease agreements are subject to customary covenants and cancellation events that relate to Flash Ventures and each of the guarantors. The occurrence of a cancellation event could result in an acceleration of the lease obligations and a call on our guarantees. As of October 2, 2026, we were in compliance with all covenants under these Japanese lease facilities. See Part I, Item 1, Note 10, Related Parties and Related Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding Flash Ventures.
Purchase Obligations and Other Commitments
In the normal course of business, we enter into purchase orders with suppliers for the purchase of components used to manufacture our products. These purchase orders generally cover forecasted component supplies needed for production during the next quarter, are recorded as a liability upon receipt of the components, and generally may be changed or canceled at any time prior to shipment of the components. We also enter into long-term agreements with suppliers that contain fixed future commitments, which are contingent upon certain conditions such as performance, quality and technology of the vendor's components. These arrangements are included under "Purchase obligations and other commitments" in the table above.
Unrecognized Tax Benefits
As of October 2, 2026, our liability for unrecognized tax benefits (excluding accrued interest and penalties) was approximately $350 million. Accrued interest and penalties included in the Company's liability related to unrecognized tax benefits as of October 2, 2026 and July 3, 2026 was $17 million and $16 million, respectively. Of these amounts, approximately $333 million could result in potential cash payments.
Foreign Exchange Contracts
We purchase foreign exchange contracts to hedge the impact of foreign currency fluctuations on certain underlying assets, liabilities and commitments for operating expenses and product costs denominated in foreign currencies. See Part I, Item 3, Quantitative and Qualitative Disclosures About Market Risk included in this Quarterly Report on Form 10-Q for additional information.
Indemnifications
Concurrent with the separation, the Company and WDC entered into a Tax Matters Agreement under which the Company and WDC agreed to indemnify each other for certain tax positions. As a result of this agreement, the Company recorded a tax indemnification liability of $112 million on February 21, 2025. The remaining tax indemnification liability of $132 million is classified as Other liabilities in the Condensed Consolidated Balance Sheets as of October 2, 2026.
In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of agreements, products or services to be provided by us, environmental compliance, or intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain of our officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers in certain circumstances.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements.
Long-Term Agreements
In connection with entering into long-term agreements with certain customers, we received customer advances that increased our available cash and cash equivalents. We record these customer payments as contract liabilities in advance of performance under the contract. As of October 2, 2026, our contract liabilities were $1.5 billion, which primarily relates to the remaining performance obligations under these long-term agreements. See Part I, Item 1, Note 4, Revenue of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding our contract liabilities.
Share Repurchase Authorization
On April 30, 2026, we announced that our Board of Directors had approved a $6.0 billion (exclusive of fees and commissions) share repurchase program. On August 5, 2026, we announced that our Board of Directors had approved an additional $14.0 billion share repurchase program (exclusive of fees and commissions), collectively known as the "Repurchase Programs". The acquisition of shares under the Repurchase Programs may be effected from time to time through open market purchases (including under a plan adopted pursuant to Rule 10b5-1 promulgated under the Securities Exchange Act of 1934) or other methods of acquiring shares, in each case on such terms and at such times as shall be permitted by applicable securities laws and determined by our management. The amount and timing of share repurchases will depend on market conditions and other relevant factors. We expect shares repurchased under the Repurchase Programs to be funded by operating cash flows. We may suspend or discontinue the Repurchase Programs at any time. The approval of the Repurchase Programs does not obligate us to repurchase any common shares. During the three months ended October 2, 2026, we repurchased approximately 3 million shares of our common stock for an aggregate purchase price of $5.0 billion, and $10.5 billion remained available for future repurchases under the Repurchase Programs as of October 2, 2026.
Recent Accounting Pronouncements
For a description of recently issued and adopted accounting pronouncements, including the respective dates of adoption and expected effects on our results of operations and financial condition, see Part I, Item 1, Note 2, Recent Accounting Pronouncements of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States and the policies and practices that are generally accepted in the industry in which we operate. The preparation of these Condensed Consolidated Financial Statements requires the use of judgments and estimates that affect the reported amounts of revenues, expenses, assets, and liabilities. We have adopted accounting policies and practices that are generally accepted in the industry in which we operate. If these estimates differ significantly from actual results, the impact to the Condensed Consolidated Financial Statements may be material.
There have been no material changes in our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission for the year ended July 3, 2026.
SanDisk Corporation published this content on October 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 30, 2026 at 20:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]