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FISCAL FIRST QUARTER 2027 FINANCIAL RESUL TS OCTOBER 29, 2026 | QUARTER ENDED 10.02.26
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Disclaimers 00.02 FORWARD-LOOKING STATEMENTS NON-GAAP MEASURES This presentation contains forward-looking statements within the meaning of U.S. federal securities laws, including statements regarding expectations for: Sandisk Corporation’s (the “Company’s”) business outlook and operational and financial performance for the fiscal second quarter of 2027 and beyond; the benefits of the Company’s product and technology leadership, customer partnerships, and financial management strategy; trends and demand in the NAND, flash memory and AI-related storage markets; the Company’s New Business Model arrangements; the Company’s technology roadmap and product introductions; capital expenditures and capital allocation; and the timing of the stock split. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The financial results for the Company’s fiscal first quarter ended October 2, 2026 included in this presentation represent the most current information available to management. Actual results when disclosed in the Company’s Form 10-Q may differ from these results as a result of the completion of the Company’s financial closing procedures; final adjustments; completion of the review by the Company’s independent registered accounting firm; and other developments that may arise between now and the filing of the Company’s Form 10-Q. Other key risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: adverse changes in global or regional economic conditions, including the impact of evolving trade policies, tariff regimes, and trade wars, and the effects of global health crises; volatility in demand for the Company’s products; pricing trends and fluctuations in average selling prices; inflation; changes in interest rates and a potential economic recession; the impact of business and market conditions; the impact of competitive products and pricing; the Company’s development and introduction of products based on new technologies and management of technology transitions; risks associated with strategic initiatives, including restructurings, acquisitions, divestitures, cost saving measures and joint ventures; risks related to product defects; difficulties or delays in product ramps, manufacturing or other supply chain disruptions; our reliance on strategic relationships with key partners, including Kioxia Corporation; risks related to our long-term agreements, or New Business Models ("NBMs"); fluctuation of our operating results, including due to changes in demand, industry cycle and timing of customer deployments, and our ability to accurately forecast demand; the attraction, retention and development of skilled management and technical talent; risks associated with the use of artificial intelligence in our business operations; risks related to the Company's financial guarantees and other financial obligations; risks related to the Company's share repurchase program; changes to the Company’s relationships with key customers or consolidation among our customer base; compromise, damage or interruption from cybersecurity incidents or other data system security risks; our reliance on intellectual property; fluctuations in currency exchange rates; actions by competitors; risks associated with compliance with changing legal and regulatory requirements; and other risks and uncertainties listed in the Company’s filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K, as such filings may be amended, supplemented or superseded from time to time by other reports the Company files with the SEC, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the Company undertakes no obligation to update or revise these forward- looking statements to reflect new information or events, except as required by law. This presentation includes references to Non-GAAP financial measures. Reconciliations of the differences between the Non-GAAP measures provided in this presentation and the most directly comparable GAAP financial measures are included in the appendix and in our Earnings Release for the fiscal first quarter of 2027, which is available on the Investor Relations section of our website. We have not fully reconciled our Non-GAAP financial measures guidance to the most directly comparable GAAP measures because material items that impact these measures are not in our control and/or cannot be reasonably predicted. Accordingly, a full reconciliation of the Non-GAAP financial measures guidance to the corresponding GAAP measures is not available without unreasonable effort.
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Overview 00.03 • We began fiscal 2027 with another strong quarter , creating value for customers and shareholders and delivering results above guidance • Q1 delivered $11.0 billion of revenue, 85.1% non-GAAP gross margin, and $49.51 non-GAAP EPS, with $5.7 billion of adjusted free cash flow and $5 billion returned through repurchases • Our confidence in the long-term trajectory of the business is grounded in three enduring strengths: technology leadership, deep customer partnerships, and disciplined financial management • Reinforced by a structural, AI-driven increase in NAND demand and NBM customer signals extending beyond fiscal 2030 • The Board of Directors approved an 8-for-1 stock split; additional shares expected to be distributed November 19 with split-adjusted trading to begin November 20
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED AI Inference: Expanding NAND’s Role 00.04 01 The need for scalable memory and storage is expanding as inference workloads grow, making NAND increasingly integral to AI infrastructure 02 Each generated token must reference the context that precedes it, creating a growing KV cache that serves as the model’s working memory 03 Longer prompts, more complex reasoning, multimodal inputs, and persistent user context materially increase storage requirements 04 HBM and DRAM support the highest-performance tier; flash provides the capacity to retain broader context efficiently and avoid costly re-computation 05 TLC serves latency-sensitive KV cache and active datasets; QLC adds density for data lakes, vector databases that power AI search, and retrieval repositories 06 Systems utilizing SSD delivered ~3X the token throughput while using ~75% less energy than volatile-memory-only systems 07 We expect KV cache to be ~one-third of the AI datacenter flash market by decade-end, with the AI datacenter opportunity approaching the size of today’s NAND industry
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Technology and Product Leadership 00.05 • BiCS 8 is the backbone of our current production portfolio and the industry benchmark for performance and density across TLC and QLC • BiCS 8 introduced our CMOS directly Bonded to Array (CBA) architecture, establishing the framework for future generations • BiCS 9 pairs the proven BiCS 8 cell array with next-generation CMOS, significantly increasing interface performance • BiCS 10 brings a 1Tb TLC die for performance workloads and a 2Tb QLC die with industry-leading density and 2x the read/write bandwidth of BiCS 8 • HBF reached a milestone in FQ1 with tape-out of our first HBF memory die; samples of our first HBF-based products remain on track for next calendar year
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Fiscal Q1 2027 Financial Highlights (1) 00.06 ~$11.0B Revenue 85.1% Non-GAAP Gross Margin $5.7B Adjusted Free Cash Flow (2) $49.51 Non-GAAP Diluted Net Income per Share +23% QoQ +378% YoY Approximately 60% of the sequential revenue increase came from volume growth and 40% from higher pricing. 1. Non-GAAP Diluted Net Income per Share, Non-GAAP Gross Margin and Adjusted Free Cash Flow are Non -GAAP measures. See Appendix for GAAP to Non-GAAP Reconciliations. 2. Excludes the $465 million impact of NBM prepayments and deposits. See Appendix for full reconciliation to Cash flow from oper ating activities.
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Fiscal Q1 2027 Financial Performance by End-market 00.07 30% 51% 78% 85% 85% 0% 20% 40% 60% 80% 100% $(1,000) $1,000 $3,000 $5,000 $7,000 $9,000 $11,000 FQ1'26 FQ2'26 FQ3'26 FQ4'26 FQ1'27 Datacenter Edge Consumer Non-GAAP Gross Margin % Datacenter ConsumerEdge In millions Revenue $4.8 billion Increased 61% QoQ Increased 1,682% YoY Revenue $5.8 billion Increased 7% QoQ Increased 320% YoY Revenue $397 million Decreased 29% QoQ Decreased 39% YoY
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED • Our portfolio addresses the full range of AI infrastructure requirements, from performance-intensive enterprise SSDs to high-capacity platforms • We estimate Datacenter has grown from ~20% of industry bits early in the decade to roughly half of industry bits today • Q1’FY27 revenue of $4.8 billion, up 61% sequentially, outpacing estimated market growth for the quarter • Strong customer partnerships, including three U.S. hyperscalers, underpin our continued expansion • We allocated more supply in FQ1 to address growing demand from this end market 00.0800.08 End-markets: Datacenter Sources: Sandisk Internal Market Model
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED • Edge is a large and strategically important market, spanning smartphones, PCs, automotive, tablets, and an expanding range of physical AI applications • Automotive is becoming an increasingly important growth vector in our Edge business and a meaningful long-term growth opportunity • Deepening engagements with leading customers reinforce our confidence that Automotive can become one of our largest markets within Edge over time • Q1’FY27 revenue of $5.8 billion, up 7% sequentially • Revenue reflected resilience in premium and mainstream markets, partially offset by contraction at the lower end • Within Edge, we saw strong growth in FQ1 with automotive and IoT customers 00.09 End-markets: Edge 00.0900.09
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED • Our Consumer business remains a differentiated strategic asset • Combines direct brand engagement with hundreds of millions of end users and broad shelf presence across the world’s leading channel partners • Provides a durable foundation for our business • Q1’FY27 revenue of $397 million, down 29% sequentially as the market adjusts to higher pricing • Its direct connection to the market informs product development and provides early insight into shifts in end-user demand 00.010 End-markets: Consumer 00.01000.01000.010
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED00.011 8 Customers signed across Datacenter and Edge $93.9B Minimum contracted NBM revenue at floor pricing $88.9B RPO at quarter-end $16.5B Financial guarantees: cash deposits and instruments ~1/2 of bits committed under NBMs in FY2027 ~2/3 of bits committed under NBMs in FY2028 4+ yrs weighted average duration, up to 5 years • Closed two new NBMs in Q1; both previously announced on our Q4 earnings call as the deals closed before then • In active conversations with existing NBM customers evaluating extensions and with new customers evaluating new NBMs • NBMs continue to evolve customer relationships into long-term partnerships grounded in innovation, collaboration, and shared commitment • Customer signals extend beyond fiscal year 2030 through our NBM partnerships; recent engagements with leading AI companies indicate further demand upside • We will remain patient and disciplined in selecting the right long-term partners New Business Models (“NBMs”) 00.01100.01100.011
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED00.012 Share Repurchase Progression 00.01200.01200.012 Q4 FY26 Q1 FY27 $4.5B deployed in share repurchases ~2.8M shares repurchased 157M diluted shares outstanding $5.0B deployed in share repurchases ~3.2M shares repurchased 154M diluted shares outstanding TWO-QUARTER TOT AL $9.5B returned through repurchases 6.0M shares repurchased ~4% of shares outstanding Disciplined capital allocation priorities: invest in the business and maintain a strong balance sheet, while returning 100% of excess cash to shareholders $10.5B remaining authorization
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED • Our confidence in the long-term health of the market is reinforced by the structural growth of AI infrastructure and the expanding role of NAND across inference workloads • We expect a strong market in calendar year 2027 • Datacenter is expected to again be the engine of growth, representing over 55% of the market in 2027 • Datacenter bit demand is expected to grow about 40% YoY in calendar year 2027, enabled by higher AI-driven capital spending, after more than doubling in 2026 00.013 Market Outlook 00.01300.01300.013 NBM pipeline exceeds our supply through the end of the decade
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Non-GAAP Financial Results(1) ($ in millions, except for Diluted Net Income per Share) 00.014 Q1'26 Q4'26 Q1'27 QoQ YoY Revenue $2,308 $8,965 $11,031 up 23% up 378% Gross Margin % 29.9% 84.6% 85.1% up 0.5 ppt up 55.2 ppt Operating Expenses $446 $484 $513 up 6% up 15% Operating Income $245 $7,104 $8,871 up 25% * Interest and Other Income (Expense), net $(42) $8 $29 up 263% up 169% Diluted Net Income per Share $1.22 $39.25 $49.51 up 26% * Operating Cash Flow $488 $7,126 $6,363 down 11% * Adjusted Free Cash Flow(2) $448 $5,035 $5,696 up 13% * 1. See Appendix for GAAP to Non -GAAP Reconciliations. 2. Excludes $1,938 million and $465 million of NBM prepayments and deposits in FQ4 -26 and FQ1-27, respectively. There were no NBM p repayments and deposits in FQ1 -26. See Appendix for full reconciliation to Cash flow from operating activities. *Not a meaningful figure
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Gross and Cash Capital Expenditure Trends and Plan 00.015 Quarter Ended October 2, 2026 Revenue, net $11,031 Sandisk share of JV Gross CapEx $324 Funding mechanisms: External funding ($44) Sandisk wafer purchases (tool depreciation) ($132) CapEx funding ($176) Sandisk share of JV Cash CapEx (front-end) $148 Purchases of PP&E (backend and offices) $54 TotalSandisk Cash CapEx $202 % of revenue, net 1.8% TotalSandisk Gross CapEx $378 % of revenue, net 3.4% • JV Gross CapEx fluctuates based primarily on node transitions and aligning supply with demand • JV Gross CapEx is typically funded through a mix of external (e.g., subsidies, leasing, vendor terms) and internal sources (e.g., tool depreciation in COGS) • Sandisk’s share of JV Cash CapEx and PP&E purchases comprise total Cash CapEx, net • The majority of the fiscal 2027 CapEx is to support BiCS8 technology investments
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED Fiscal Second Quarter Guidance GAAP Non-GAAP(1) Revenue ($M) $12,200 - $12,600 $12,200 - $12,600 Gross Margin 84.4% - 85.4% 84.5% - 85.5% Operating Expenses ($M) $677 - $745 $540 - $560 Tax Expense ($M)(2) N/A 14.3% Diluted Net Income per Share N/A $55.00 - $57.00 Diluted Shares Outstanding (in millions) ~ 151 ~ 151 1. Non-GAAP gross margin guidance excludes stock -based compensation expense, totaling approximately $9 million to $12 million. The Company’s Non-GAAP operating expenses guidance excludes stock -based compensation expense, totaling approximately $137 million to $185 million. Non -GAAP diluted net income per share guidance excludes these items totaling $146 million to $197 milli on. The timing and amount of charges excluded from Non -GAAP gross margin, Non-GAAP operating expenses, and Non -GAAP diluted net income per share cannot be further allocated or quantified with certainty. Additionally, the timing and amount of certain other adjustments included in the Company's Non -GAAP diluted net income per share guidance are dependent on the timing and determination of certain actions or events and cannot be reasonably predicted. Accordingly, full reconciliations of Non -GAAP gross margin, Non-GAAP operating expenses, and Non -GAAP diluted net income per share to the most directly comparable GAAP financial measures (gross margin, operating expenses, and diluted net income per share, respectively) are not available witho ut unreasonable effort. 2. Non-GAAP tax expense is determined based on a Non -GAAP pre-tax income or loss. Our estimated Non -GAAP tax expense may differ fro m our GAAP tax expense (i) due to differences in the tax treatment of items excluded from our Non -GAAP net income or loss; (ii) due to the fact that our GAAP income tax expense or benefit recorded in any interim period is based on an estimated fore casted GAAP tax expense for the full year, excluding loss jurisdictions; and (iii) because our GAAP taxes recorded in any interi m period are dependent on the timing and determination of certain GAAP operating expenses. 00.016 Fiscal Second Quarter Guidance 00.01600.01600.016
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED APPENDIX 00.017
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED00.018 Joint Venture Operational Framework Co-develops flash (including process technology and memory design) with Kioxia and contributes IP for Flash Ventures’ use Owns and leases equipment for flash wafer production and R&D line Co-develops flash (including process technology and memory design) with Sandisk and contributes IP for Flash Ventures’ use Performs integral manufacturing and R&D functions at Flash Ventures’ manufacturing sites Purchases wafers from Kioxia at cost under foundry agreements Performs integral manufacturing and R&D functions at Flash Ventures’ manufacturing sites Purchases Flash Ventures’ wafers at cost plus a small markup Sells wafers to Sandisk and Kioxia at cost plus a small markup Purchases Flash Ventures’ wafers at cost plus a small markup Pays Flash Ventures’ expenses (including equipment depreciation and lease expense) Charges expenses to Sandisk and Kioxia (including equipment depreciation and lease expense) Pays Flash Ventures’ expenses (including equipment depreciation and lease expense) Funds Flash Ventures’ equipment purchases (via loans, equity and lease guarantees) in excess of Flash Ventures’ operating cash flow Borrows from Sandisk and Kioxia for a portion of their equipment purchases Funds Flash Ventures’ equipment purchases (via loans, equity, and lease guarantees) in excess of Flash Ventures’ operating cash flow Repays loans for equipment purchases using excess operating cash flow Owns and operates cleanrooms Provides wafer manufacturing services to Flash Ventures at cost Flash Ventures 49.9% Owned by Sandisk 50.1% Owned by Kioxia Joint Venture Operational Framework 00.018
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED In millions; unaudited Q1'26 Q2'26 Q3'26 Q4'26 Q1'27 Revenue 2,308 3,025 5,950 8,965 11,031 GAAP Gross Profit $687 $1,541 $4,662 $7,582 $9,378 Stock-based compensation expense 4 5 4 6 6 Non-GAAP Gross Profit $691 $1,546 $4,666 $7,588 $9,384 GAAP Gross Margin (1) 29.8% 50.9% 78.4% 84.6% 85.0% Non-GAAP Gross Margin (1) 29.9% 51.1% 78.4% 84.6% 85.1% In millions; unaudited Q1'26 Q4'26 Q1'27 GAAP operating expenses $511 $545 $598 Stock-based compensation expense (49) (61) (85) Business separation costs (9) — — Employee termination and other 3 — — Loss on business divestiture (10) — — Non-GAAP operating expenses $446 $484 $513 GAAP to Non-GAAP ReconciliationsGAAP to Non-GAAP Reconciliations 00.01900.019 1. GAAP and Non-GAAP gross margins are calculated by dividing GAAP and Non -GAAP gross profit, respectively, by Revenue, net.
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED In millions; unaudited Q1'26 Q4'26 Q1'27 GAAP Operating Income $176 $7,037 $8,780 Gross profit adjustments 4 6 6 Operating expense adjustments 65 61 85 Non-GAAP Operating Income $245 $7,104 $8,871 GAAP Operating Margin (1) 7.6% 78.5% 79.6% Non-GAAP Operating Margin (1) 10.6% 79.2% 80.4% GAAP Interest and Other Income (Expense), Net $(52) $812 $539 Gain on equity securities, net — (804) (513) Other, net 10 — 3 Non-GAAP Interest and Other Income (Expense), Net $(42) $8 $29 GAAP Income Tax Expense $12 $946 $1,218 Income tax adjustments 10 4 58 Non-GAAP Income Tax Expense $22 $950 $1,276 00.020 GAAP to Non-GAAP Reconciliations (cont’d)GAAP to Non-GAAP Reconciliations (cont’d) 00.02000.020 1. GAAP and Non-GAAP operating margins are calculated by dividing GAAP and Non -GAAP operating income, respectively, by Revenue, net .
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED In millions, except per share amount; unaudited Q1'26 Q4'26 Q1'27 GAAP net income $112 $6,903 $8,101 Stock-based compensation expense 53 67 91 Business separation costs 9 — — Employee termination and other (3) — — Loss on business divestiture 10 — — Gain on equity securities, net — (804) (513) Other, net 10 — 3 Income tax adjustments (10) (4) (58) Non-GAAP net income $181 $6,162 $7,624 Diluted Net Income per Share GAAP $0.75 $43.97 $52.60 Non-GAAP $1.22 $39.25 $49.51 Diluted Weighted Average Shares Outstanding 149 157 154 00.021 GAAP to Non-GAAP Reconciliations (cont’d) 00.02100.021
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED In millions; unaudited Q1'26 Q4'26 Q1'27 Cash Flows Cash flow provided by operating activities 488 7,126 6,363 Purchases of property, plant and equipment, net (50) (43) (54) Free Cash Flow $438 $7,083 $6,309 Activity related to Flash Ventures, net 10 (110) (148) Impact of NBM prepayments and deposits — (1,938) (465) Adjusted Free Cash Flow $448 $5,035 $5,696 Operating Cash Flow Margin (1) 21.1% 79.5% 57.7% Adjusted Free Cash Flow Margin (1) 19.4% 56.2% 51.6% 00.022 GAAP to Non-GAAP Reconciliations (cont’d)GAAP to Non-GAAP Reconciliations (cont’d) 00.02200.02200.022 1. Operating cash flow margin and Adjusted free cash flow margin are calculated by dividing Cash flow from operating activities and Adjusted free cash flow, respectively, by Revenue, net.
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations (cont'd) 00.023 GAAP to Non-GAAP Reconciliations (cont’d) 00.02300.02300.023 FOOTNOTES To supplement the consolidated financial statements presented in accordance with GAAP, the table above sets forth Non-GAAP gross profit; Non-GAAP gross margin; Non-GAAP operating expenses; Non-GAAP operating income; Non-GAAP operating margin; Non-GAAP interest and other income (expense), net; Non-GAAP income tax expense; Non-GAAP net income; Non-GAAP diluted net income per share; Non-GAAP diluted weighted average shares outstanding; Free cash flow; Adjusted free cash flow; Operating cash flow margin; and Adjusted free cash flow margin (collectively, the “Non-GAAP measures”). These Non-GAAP measures are not in accordance with, or alternatives for measures prepared in accordance with GAAP and may be different from similarly titled Non-GAAP measures used by other companies. The Company believes the presentation of these Non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors for measuring the Company’s earnings performance and comparing it against prior periods. Specifically, the Company believes these Non-GAAP measures provide useful information to both management and investors as they exclude certain expenses, gains, and losses that the Company believes are not indicative of its core operating results or because they are consistent with the financial models and estimates published by many analysts who follow the Company and its peers. As discussed further below, these Non-GAAP measures exclude, as applicable, stock-based compensation expense, business separation costs, employee termination and other, loss on business divestiture, gain on equity securities, net, other adjustments, and income tax adjustments. The Company believes these measures, along with the related reconciliations to the most directly comparable GAAP measures, provide additional detail and comparability for assessing the Company’s results. These Non-GAAP measures are some of the primary indicators management uses for assessing the Company’s performance and planning and forecasting future periods. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. As described above, the Company excludes the following items from its Non-GAAP measures: Stock-based compensation expense. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, the subjective assumptions involved in those determinations and the volatility in valuations that can be driven by market conditions outside the Company’s control, the Company believes excluding stock-based compensation expense enhances the ability of management and investors to understand and assess the underlying performance of the business over time and compare it against the Company’s peers, a majority of whom also exclude stock-based compensation expense from their Non-GAAP results. Business separation costs. On October 30, 2023, Western Digital Corporation (“WDC”) announced that its board of directors (the “WDC Board of Directors”) authorized management to pursue a plan to separate the Company into an independent public company. The separation received final approval by the WDC Board of Directors and was completed on February 21, 2025. Prior to February 21, 2025, the Company was wholly owned by WDC. As a result of the plan, the Company incurred separation and transition costs through the completion of the separation of the companies. The separation and transition costs are recorded within Business separation costs in the Consolidated Statements of Operations. The Company believes these charges do not reflect the Company’s operating results and that they are not indicative of the underlying results of its business.
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©2026 SANDISK CORPORATION OR ITS AFFILIATES ALL RIGHTS RESERVED GAAP to Non-GAAP Reconciliations (cont'd) 00.024 GAAP to Non-GAAP Reconciliations (cont’d) 00.02400.02400.024 Employee termination and other. From time to time, in order to realign the Company’s operations with anticipated market demand, the Company may terminate employees and/or restructure its operations. From time to time, the Company may also incur charges from the impairment of long-lived assets. In addition, the Company may record credits related to gains upon sale of property due to restructuring or reversals of charges recorded in prior periods as well as from taking actions to reduce the amount of capital invested in facilities, including the sale-leaseback of facilities. These charges or credits are inconsistent in amount and frequency, and the Company believes they are not indicative of the underlying performance of its business. Loss on business divestiture. In connection with the Company’s strategic decision to outsource the manufacturing of certain components and assemblies, on September 28, 2024, the Company completed the sale of 80% of its equity interest in one of its manufacturing subsidiaries. On September 25, 2025, the Company entered into an Amendment No. 1 to the Amended and Restated Equity Purchase Agreement that included a $10 million provision for working capital support. The Company recognized the adjustment as a Loss on business divestiture during the first fiscal quarter of 2026. The overall transaction resulted in a discrete gain, which the Company believes is not indicative of the underlying performance of its ongoing business operations. Gain on equity securities, net. Gain on equity securities, net consists of ongoing mark-to-market adjustments on the Company’s investments in marketable equity securities, the gains from the sale of equity investments and related impairment charges. These charges do not reflect the Company’s operating results, and the Company believes these charges are not indicative of the underlying performance of its business. Other adjustments. From time to time, the Company incurs charges or gains that the Company believes are not a part of the ongoing operation of its business. The resulting expense or benefit is inconsistent in amount and frequency. Income tax adjustments. Income tax adjustments include the difference between income taxes based on a forecasted annual Non-GAAP tax rate and a forecasted annual GAAP tax rate as a result of the timing of certain Non-GAAP pre-tax adjustments. The income tax adjustments also include the re-measurement of certain unrecognized tax benefits primarily related to tax positions taken in prior quarters, including interest. These adjustments are excluded because the Company believes that they are not indicative of the underlying performance of its ongoing business. Additionally, Free cash flow is defined as Cash Flow from operating activities less purchases of property, plant and equipment, net. Adjusted free cash flow is defined as Free cash flow plus the activity related to Flash Ventures, net less the impact of cash prepayments under New Business Model (“NBM”) agreements (the “NBM Prepayments”) and deposits received and returned under NBM agreements (the “NBM Deposits” and together with the NBM Prepayments, the “NBM Payments”). The Company is adjusting cash flow for the NBM Payments because the Company believes that these cash flows are not indicative of the core underlying cash flows of the Company’s business. The Company considers Free cash flow and Adjusted free cash flow generated in any period to be useful indicators of cash that is available for strategic opportunities, including, among others, investing in the Company’s business, making strategic acquisitions and strengthening the balance sheet.