Sandisk Just Guided to Turning Half Its Revenue Into Free Cash Flow Through 2030

Memory shaper Sandisk (NASDAQ: SNDK) held its capitalist time connected Thursday, and absorption utilized it to reply the question hanging implicit the banal each year: What does this concern look similar erstwhile the roar is nary longer a surprise?

The company's caller fiscal exemplary for fiscal 2028 done 2030 calls for gross maturation successful the mid-to-high teens, non-GAAP (adjusted) gross margins adjacent 80%, operating margins adjacent 75%, and adjusted escaped currency travel of astir 50% of revenue.

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Investors liked the answer. Shares jumped astir 14% connected Thursday and commercialized adjacent $1,528 arsenic of this writing. Even so, the banal would request to ascent much than 50% to revisit its 52-week precocious of $2,354.39.

A institution converting fractional its gross into escaped currency would fertile among the astir profitable ample businesses successful the world. Whether investors tin spot the targets is different matter.

Peak economics arsenic the program

The targets onshore otherwise erstwhile you acceptable them beside what Sandisk conscionable reported. A twelvemonth ago, this concern ran a 26.2% gross borderline and astir broke even. In the fiscal 4th quarter, gross reached $8.97 billion, up 372% twelvemonth implicit year, and gross borderline deed 84.6%.

Fiscal 2026 arsenic a full (the fiscal twelvemonth ended July 3, 2026) captured the shift. Revenue climbed 175% twelvemonth implicit twelvemonth to $20.25 billion, and nett income totaled $11.43 billion, oregon $73.76 per share. Adjusted escaped currency travel was $8.7 cardinal -- astir 43% of revenue, and a fig that already strips retired astir $2.5 cardinal of lawsuit prepayments.

And absorption expects much successful the adjacent term. Its guidance puts fiscal first-quarter gross betwixt $10.3 cardinal and $10.8 billion, with non-GAAP net per stock successful a $44-to-$46 range. The fiscal 4th fourth came successful astatine $39.25 connected the aforesaid measure.

To me, the caller exemplary is little a forecast of alteration than a committedness that the highest holds. Gross margins adjacent 80% beryllium conscionable beneath the fiscal 4th quarter's level. Operating expenses enactment astir 5% of revenue. And currency conversion really improves, from fiscal 2026's 43% to astir 50%.

Management besides said it expects to instrumentality 100% of excess currency to shareholders aft investing successful the business, connected apical of the $15.5 cardinal buyback authorization already successful place.

Half the bits are already committed

Whether immoderate of this holds comes down to pricing, and pricing is wherever Sandisk's reply got specific. The institution has signed 8 customers to New Business Model agreements, oregon NBMs -- multiyear proviso deals with committed volumes and structured pricing. Those deals screen astir fractional of Sandisk's expected bits successful fiscal 2027 and astir two-thirds successful fiscal 2028.