Data center revenue jumps 61% from the previous quarter, making up 43.5% of total sales
Operating cash flow dips sequentially, but adjusted free cash flow rises when accounting for customer prepayments
U.S. NAND flash memory maker SanDisk has launched a massive shareholder return program, fueled by soaring demand for storage solutions in artificial intelligence (AI) infrastructure. Led by its robust data center business, the company generated over $6.3 billion in cash from operations during the quarter while allocating $5 billion to share repurchases.
According to SanDisk's financial results for the first quarter of fiscal 2027 released on October 29 (local time), revenue for the quarter ending October 2 reached $11.031 billion, marking a 378% increase year-on-year and a 23% rise from the previous quarter.
The growth was anchored by the data center segment. Revenue from this division surged 61% quarter-on-quarter to $4.802 billion. Based on company disclosures, the data center business's share of total sales climbed from 33.2% in the prior quarter to 43.5%. Approximately 88% of the total revenue increase during the same period originated from the data center segment.
In its quarterly report, the company stated that expanding AI investments drove demand for high-performance products. It explained that the year-on-year revenue growth in the data center division was driven by both rising average selling prices and increased shipment volumes.
SanDisk also highlighted the strategic allocation of supply volumes among key customers and markets as a critical management decision. To this end, the company has entered into long-term purchase agreements with select data center and edge customers. SanDisk believes these contracts enhance revenue predictability and supply stability for clients, though it noted that risks associated with customer demand and market conditions still remain.
The stellar financial performance translated into robust cash inflows. Operating cash flow for the quarter reached $6.363 billion, significantly higher than the $488 million recorded in the same period last year. Even after spending $5 billion on share buybacks, cash and cash equivalents at the end of the quarter stood at $5.136 billion, up $374 million from the end of the previous quarter.
However, cash flow contracted on a sequential basis. Operating cash flow decreased by approximately 10.7%, and free cash flow—calculated after subtracting capital expenditures—declined from $7.083 billion to $6.309 billion. This was largely driven by a reduction in cash inflows from customer prepayments and deposits linked to long-term contracts, which dropped from $1.938 billion in the prior quarter to $465 million in the current quarter.
The company's proprietary adjusted free cash flow, which reflects cash transactions related to manufacturing joint ventures and excludes the impact of customer prepayments and deposits, rose about 13.1% quarter-on-quarter to $5.696 billion. This is a non-GAAP metric independently calculated by the company.
Looking ahead, SanDisk guided next-quarter revenue to be between $12.2 billion and $12.6 billion—roughly $1.2 billion to $1.6 billion higher than this quarter's figures. A key watchpoint for future earnings will be whether the company can maintain its data center-driven growth alongside its robust cash generation and shareholder return capacity.
