Sandisk reported fiscal first quarter 2027 revenue of $11.03 billion on Thursday, up 23% from the June quarter and 378% from a year ago, against guidance of $10.3 billion to $10.8 billion and consensus near $10.7 billion. Non-GAAP gross margin was 85.1%, non-GAAP operating margin 80.4% and non-GAAP EPS $49.51 against roughly $47 expected. All of that was priced before the print. The number that wasn’t sits on the balance sheet. Accounts receivable rose $1.877 billion in the quarter, to $6.585 billion. Revenue rose $2.066 billion. Ninety-one cents of every incremental sales dollar was still owed to the company on October 2.
Year over year, Sandisk’s revenue rose 378% to $11.03 billion from $2.31 billion. Datacenter revenue went from $269 million to $4.80 billion, almost 18 times, and edge revenue rose 320%.
Days sales outstanding moved from about 48 to about 54 across two quarters of identical 13-week length. At $121 million of revenue a day, six and a half extra days is roughly $790 million of cash the company has earned and not yet collected. The reason is in the end-market table. Datacenter revenue rose 61% to $4.80 billion and supplied 88% of the sequential gain, taking its share of revenue from 33% to 44% in a single quarter. Edge grew 7% to $5.83 billion. Consumer fell 29% to $397 million, now 3.6% of revenue at a company that built its name on memory cards. Datacenter buyers are a short list of hyperscalers and server OEMs, and they buy on terms that retail channels and handset makers don’t get. Shift the mix toward them and the collection cycle lengthens mechanically. There is no credit problem here. The counterparties carry the best balance sheets in the market.
What the receivables line does show is where buyer leverage went. At an 85% gross margin the customer has lost the argument on price, and management expects like-for-like pricing to keep rising modestly through fiscal 2027. A buyer who can’t push the price down pushes the payment date out. That cost lands in the cash flow statement, where the income statement never sees it. Operating cash flow fell to $6.36 billion from $7.13 billion while GAAP net income rose 17%. Strip the NBM prepayments out of both quarters and operating cash flow still grew only 14%. Adjusted free cash flow of $5.70 billion was up 13% against non-GAAP net income up 24%, and its margin slipped to 51.6% from 56.2%. Conversion of adjusted earnings into adjusted free cash went from about 82% to 75% in one quarter.
The same balance sheet holds the other side of the trade, and that is where the moat shows. Non-current contract liabilities, cash customers have paid for product Sandisk will deliver more than a year out, rose to $752 million from $393 million. Total contract liabilities reached $1.53 billion. The new business model agreements carry floor prices and cover about half of fiscal 2027 bits, and money arriving against the out years says the coverage is extending. Hyperscalers are paying slower for NAND they already have and paying earlier for NAND they can’t yet get. That combination only exists in a supplier’s market. Under it sits the Kioxia joint venture. Net PP&E was $705 million against a revenue run rate above $44 billion. Purchases of property and equipment were $54 million in the quarter, and gross capex including the Flash Ventures share was $378 million, or 3.4% of revenue. Competitors who own their fabs fund their capacity alone. Sandisk funds a share of a shared one, so very little of each price increase leaks into cost. Cost of revenue was $1.65 billion, up 2% from a year ago on 4.8 times the revenue.
Memory demand is still insatiable. Customers are prepaying for NAND they won’t receive for more than a year, and management guides both volume and price higher again for December.
Capital return ran slightly ahead of the cash. Sandisk repurchased about 3.2 million shares for $5.0 billion, an average near $1,560, and paid another $755 million in taxes on vested employee awards, a net share settlement that works as a second buyback. Together that is $5.76 billion, a little more than adjusted free cash flow. Shares outstanding fell to 144 million from 146 million, and six million shares have been retired over two quarters, about 4% of the count. The quarter’s purchases sit roughly 15% under water at Thursday’s close. Stock-based compensation is set to rise. The December quarter’s GAAP opex guide of $677 million to $745 million against $540 million to $560 million non-GAAP implies $137 million to $185 million of SBC in opex, up from $85 million. The eight-for-one split announced with the results, with trading on a split-adjusted basis from November 20, is framed around employee access through the purchase plan. GAAP EPS of $52.60 landed above the non-GAAP figure because of a $513 million mark-to-market gain on equity securities, which the adjusted number excludes.
The December guide is $12.2 billion to $12.6 billion, with non-GAAP gross margin of 84.5% to 85.5% and EPS of $55 to $57 on about 151 million diluted shares. Management expects both volume and price to contribute. The midpoint is 12.4% sequential growth, roughly half the September pace. Measured against the test set in the Sandisk Q1 preview on Tuesday, the guide clears the margin bar and misses the growth bar. Gross margin holds above 84% while revenue grows 12%, short of 15%. That puts the quarter inside the base case. It does not put it above.
The stock closed Thursday at $1,330.05, down 5.3% in a session when AI names sold off after Alphabet’s results, and traded on both sides of that close after hours. It is down about 21% over the past month and 43% below the June record of $2,354.39, for a market cap near $192 billion, still several times its 52-week low. Annualise the December EPS midpoint and the shares trade at 5.9 times run-rate earnings. Twenty-five analysts average $2,144, in a range from $1,000 to $3,600. Cantor cut to $2,200 from $2,900 on Monday. After the split, $1,330 becomes roughly $166 a share, which changes the number on the screen and nothing else.
The base case is $1,300 to $1,650, roughly six to seven and a half times run-rate earnings, with a December quarter at or above the top of guidance and receivables growth falling back toward revenue growth as the datacenter mix settles. The bull case is $2,000 to $2,350, a retest of the record, and it needs fiscal 2028 NBM coverage raised above two thirds together with a March quarter guide that reaccelerates. The bear case is cohort derating. If NAND contract price increases flatten into the low single digits, the market puts SNDK back with Kioxia, Micron and the Korean producers on a peak-earnings multiple, and $950 to $1,100 becomes the range however clean Sandisk’s own quarter looks.
One line decides how the next quarter reads. If accounts receivable again grows faster than revenue in the December quarter, the buyer has found a lever the floor prices don’t cover.