SanDisk Corp. held its fiscal year 2026 third-quarter earnings call on April 30. Despite the stock falling over 6% in after-hours trading, CEO David Goeckeler and CFO Luis Visoso spent significant time explaining to analysts that the company is undergoing a structural transformation, not merely benefiting from a cyclical upturn. Goeckeler stated that the company has signed five multi-year cooperation agreements, with negotiations ongoing with several other customers. "We are transforming this business into a recurring revenue model," he said. Expressing strong confidence in the storage market, Goeckeler responded to an analyst's question about long-term agreements by stating, "I can hardly think of who the loser is. The customers are very happy with these agreements, and we are very happy. I think everybody's a winner." He explained that the company is not reinventing the wheel but is introducing a proven recurring revenue model from other industries into its brand. "In summary, we are at a key inflection point in this business, and we continue to execute with confidence," Goeckeler said, emphasizing that NAND remains a foundational technology powering major technological waves from PCs and mobile internet to cloud computing and now artificial intelligence.

**$42B Long-Term Contracts, $11B Guarantees: Management Proves "Not Just Verbal Promises"** The central topic of the call was SanDisk's "New Business Models" (NBMs)—multi-year supply agreements with customers—and the enforceability of these contracts. CEO Goeckeler disclosed progress upfront: the company has signed multi-year supply agreements with five customers, three in Q3 and two early in Q4, with several others in active negotiations. CFO Luis Visoso provided specifics: the three contracts signed in the quarter represent approximately $42 billion in remaining performance obligations (RPO), to be disclosed in the company's 10-Q filing. The five agreements collectively involve financial guarantees exceeding $11 billion, with $400 million in prepayments already reflected on the Q3 balance sheet; the rest are backed by financial instruments managed by third-party institutions. Visoso explained the guarantee mechanism: "If a customer fails to meet its quarterly purchase obligations, these financial commitments are immediately transferred to us as compensation." Addressing analyst skepticism about the contracts' enforceability, Goeckeler responded directly: "Some told me these agreements wouldn't happen, wouldn't be binding. I can tell you the opposite is true. Our customers are putting up billions of dollars in collateral... effective for the duration of the contract." He added that after signing, customers often discuss increasing purchase volumes within weeks, not reducing them.

**Can High Margins Be Sustained? Management Affirms, But Declines to Give Target Range** This was the most frequently pursued question during the call. SanDisk's non-GAAP gross margin reached 78.4% for the quarter, significantly exceeding prior guidance (65%-67%), raising market doubts about sustainability. Goeckeler was clear: "We believe our gross margins are sustainable." However, when pressed by an analyst for a specific target range, he stated the timing was not yet appropriate. "I don't think we're at a point to talk about that yet... We are incredibly proud of our technology... Frankly, the market has always recognized the value of our technology; it's just that value was captured by others, not the producers. Now, we are allocating that value more fairly." He also addressed market concerns about SanDisk's valuation—which implies a gross margin reversion to the 40% range—stating the company is "very, very focused on taking the cycle out of this business. The cycle is corrosive."

**Data Center Soars 233%: TLC Dominates Quarter, QLC Enters Next Quarter** The data center segment was the standout growth engine. Goeckeler reported data center revenue grew 233% quarter-over-quarter to $1.467 billion, representing about 25% of total revenue, a proportion expected to increase further. He attributed this to structural demand for high-performance NAND from AI inference architectures. "Workloads like inference optimization (e.g., KV caching) and RAG require massive amounts of high-performance, low-latency flash memory to deliver real-time response and quality of experience," he said, noting these workloads vastly expand the amount of data needing low-latency storage. Currently, data center revenue is almost entirely from TLC products. Next quarter, SanDisk will begin shipping QLC Stargate solutions, adding another layer to data center growth. Goeckeler expressed strong confidence in the product, which has completed over a year of qualification with major customers.

**Debt-Free, $6B Buyback, and Capital Expenditure Discipline** The company announced its board approved a $6 billion stock repurchase program, effective immediately with no expiration date. Visoso stated the company repaid its remaining $650 million term loan B, achieving its net cash goal. The quarter-end cash and equivalents balance was $3.735 billion. He described the capital allocation priority as a three-step process: invest in the business, achieve net cash, and return capital to shareholders—"We are now at step three." Visoso added that absolute capital expenditure would rise slightly in coming quarters but the philosophy remains unchanged, maintaining a mid-to-high teens percentage target for annual bit output growth. In other words, growth is driven by node transitions, not massive capacity expansion. Goeckeler said the company achieves this growth through BiCS node transitions, with capex as a percentage of revenue consistently declining.