Sandisk Corporation

Good day and welcome to the SanDisk Technologies third quarter fiscal 2025 earnings conference call. On the call today, we have David Geckler, CEO, Luis Fisoso, CFO, and Ivan Donaldson, Investor Relations VP. All participants will be in listen-only mode, and should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over. Please go ahead.

Thank you very much for joining us today. Before we begin, please note that today's discussion will contain forward-looking statements based on management's current assumptions and expectations. which are subject to various risks and uncertainties. These forward-looking statements include expectations for our technology and product portfolio, our business plans and performance, market trends and opportunities, and our future financial results. We assume no obligation to update these statements please refer to our most recent financial report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. We will also make references to non-GAAP financial measures today. Reconciliations between the non-GAAP and comparable GAAP financial measures are included in written materials posted in the Investor Relations section of our website.

Good afternoon and welcome to Sandisk's third quarter earnings call. To start this call, I want to thank the SanDisk team for enabling a smooth transition to a standalone company and for delivering a strong quarter. As discussed during our analyst day, our goal at SanDisk is to create value for our customers and shareholders, and in doing so, reaffirm our leadership in the NAN market. We are leveraging our strengths in innovation, scale, agility, and resilience, and remain disciplined in managing the business to build sustainable, profitable, and long-term growth. The strategy is working as intended, even amid ongoing macroeconomic uncertainty. We believe that we are well positioned to capture the significant opportunity in front of us. We estimate that the NAND industry is poised for robust long-term growth with demand expected to approach $100 billion by the end of the decade. We expect growth to be driven by the exponential expansion of data, fueled in part by the deployment of artificial intelligence in cloud and edge applications, as well as refresh cycles in PCs and mobile devices. In data center, we continue to see strong capital investments in the emergence of new AI-driven workloads. which are fueling use cases for enterprise SSDs and expanding NAND's addressable market. In parallel, we have made structural changes to how we operate, increasing our focus on capital discipline and making a concentrated effort to drive higher returns on invested capital. Moving on to the third quarter results. We are pleased with our performance as we delivered revenue in EPS at the high end of our guidance ranges. For the quarter, we generated $1.7 billion in revenue, down 10% sequentially and down 1% year over year. Non-GAAP EPS was a loss of 30 cents per share, while cash and cash equivalents increased from $1.3 billion to $1.5 billion. Luis will dive deeper into our third quarter results in a few minutes. The key indicator I want to call out is pricing. For the quarter, ASPs were down high signal digits, reflecting continued oversupply in the market. This was higher than our mid-single-digit decline expectation that we shared at our analyst day. To address this, we are extending our FAB underutilization actions until supply and demand are balanced and we see a sustainable recovery in pricing. At the beginning of the fourth quarter, we announced and began implementing price increases for our customers. These price increases align with the expectation that we outlined during our analyst day, where we detailed our plan to reduce wafer production to align supply with demand and enable a sustainable level of pricing. Let's now move to technology and key business highlights. We continue to lead with innovation across all our markets, and nowhere is that more evident than with the successful ramp of BICS 8, our latest generation of NAND technology. We expect BICS-8 to be integrated across a broad range of product lines and represent 10% of our BITS shipments in the fourth quarter. Our TLC products are being qualified by customers for high performance mobile and compute applications, while our two terabit QLC die is in qualification with top cloud service providers for use in 128 terabyte and 256 terabyte capacity SSDs. These advancements are enabling better performance and improved energy efficiency. In client, we see three structural drivers of PC replacement. This includes the Windows 10 end-of-life, a post-pandemic PC refresh, and the emergence of AI-enabled PCs. As we begin mass production of our Bix8 client SSDs, we completed qualifications with several key global PC OEMs, with more expected this quarter. We are also extending our leadership in automotive innovation, highlighted by our nomination as a Ford Supplier of the Year. We ship the industry's first UFS 4.1 samples for autonomous driving, where performance, reliability, and power efficiency are critical. Development is underway with key partners, and early samples are being used in the next generation EV platforms in autonomous robotics. We expect to complete qualification in the coming months, paving the way for broader adoption in the next generation automotive compute platforms including advanced driver assistance systems and robotics, beginning in the second half of calendar year 2026. In gaming, our latest SSD product has been exceptionally well received, winning multiple Editor's Choice Awards from top PC and gaming publications globally. This quarter, we will also begin shipping our first PCIe Gen 5 and Gen 6 Bix 8-enabled client SSDs, delivering power efficiency and performance for AI and gaming systems. In consumer, we continue to lead the market with innovative products that define performance and reliability. We recently introduced several products, including our latest portable SSD and a new USB dual drive, each reinforcing our leadership in high performance storage. In cards, the launch of our professional-grade memory card fills a critical gap in our portfolio and strengthens our position in the ever-growing content creation segment. Another key achievement for our consumer business is the launch of our next-generation microSD Express card, featuring a co-branded 256-gigabyte card developed in partnership with Nintendo for the highly-anticipated Switch 2. This officially licensed product has been in development through close collaboration with Nintendo to ensure it delivers the next level speed and performance the new console requires. I am proud of the recognition our consumer products continue to receive, including the Red Dot Design Award across all consumer storage categories. and the Best of Show Honor for our high-performance storage solution for our latest portable SSB at the NAB TV Tech 2025. These distinctions reflect the strength of our innovation engine and the exceptional work of our engineering and industrial design teams. In Data Center, we continue to see capital investments in the rapid growth of AI-driven workloads, which are expanding the use cases for enterprise SSDs and broadening NAND's addressable market. Analysts estimate cloud capex from the major hyperscale providers grew over 50% to approximately $240 billion in calendar year 2024, and that momentum is expected to continue into 2025, reaching approximately $330 billion, a 40% increase Given this opportunity, we continue to increase our bit allocation to enterprise SSD applications, representing 12% of our bits this quarter, up from 8% in the same quarter of the prior year. And we expect to continue to make progress as we qualify our Bix 8 products with cloud customers leveraging QLC and Gen 5 and Gen 6 PCIe solutions. In summary, we continue to innovate to meet and exceed customer needs, reinforcing our performance and power efficiency advantage in the NAND market. At the China Flash Memory Summit, customers highlighted our leadership position, setting our best-in-class performance-to-power profile. We were honored with the Product Innovation Award, a strong validation of our system-level execution and continued investment in innovation. Years of focused R&D have positioned us at the forefront of the market, and we are proud to be driving the next wave of advancement in flash memory. With that, I'll turn the call over to Luis to dive deeper into our financial performance and guidance. Luis?