Driven by the Generative AI Wave, Kioxia Delivers a "Historic" Quarterly Performance – All Core Financial Metrics Hit Record Highs in FY2026 Q1 (ended June 30, 2026).
Financial Results: Revenue and Profit Both Peak, with Strong Non-GAAP Earnings
In this quarter, Kioxia posted revenue of 1.7671 trillion yen (approximately $11.0 billion), surging 415.5% year-on-year and 76.2% sequentially. On profitability, Non-GAAP operating profit reached 1.3262 trillion yen (approximately $8.26 billion), jumping over 28 times year-on-year and rising 121.4% sequentially. Non-GAAP net profit amounted to 887.0 billion yen (approximately $5.52 billion), climbing nearly 47 times year-on-year and growing 116.4% sequentially.
This robust Non-GAAP profit performance excludes 200 million yen of purchase price allocation (PPA) charges, 19.4 billion yen in stock-based compensation costs, and 36.6 billion yen in provisions for litigation losses.
Business Breakdown: ASP Soars 70%; AI Data Centers Emerge as the Primary Growth Engine
Kioxia’s explosive quarterly growth was not fueled by blind shipment expansion, but by a sharp lift in average selling prices (ASP), up roughly 70% sequentially. While NAND Flash bit shipment growth rose only 1%–3% sequentially, all business segments delivered record revenues.
SSD and Storage Business: Revenue reached 1.1747 trillion yen (approximately $7.32 billion), surging 440.3% year-on-year and 95.7% sequentially. Within the segment, data center and enterprise business accounted for over 60% of revenue. Supported by robust demand for AI servers, shipment volumes hit new highs. The PC business made up slightly less than 40% of segment revenue and also achieved sequential growth thanks to higher product pricing. As of now, production capacity for the 8th-generation BiCS FLASH™ accounts for more than 50% of total capacity.
Smart Device Business: Revenue stood at 525.7 billion yen (approximately $3.27 billion), rising 565.1% year-on-year and 55.8% sequentially. Marked product price increases drove record sales revenue for this segment.
Other Businesses: Sales reached 66.7 billion yen (approximately $0.42 billion), up 2.3% sequentially and 44.1% year-on-year.
End-Market Demand Outlook: Agentic AI Drives Data Center Demand; Consumer Markets Remain Under Pressure
From a downstream demand perspective, the rapid proliferation of Agentic AI applications has become a core catalyst for storage demand expansion. Ongoing adoption of Agentic AI will also continue to lift NAND Flash demand for conventional servers.
By contrast, consumer markets including smartphones and PCs exhibit weaker growth momentum. The smartphone market sees structural divergence: shipments of low-end models are declining while high-end model volumes stay stable, leading to flat overall NAND Flash demand versus calendar year 2025. On the PC side, elevated overall material costs have dragged down system shipments, and corresponding NAND Flash demand edged lower compared with 2025.
Kioxia’s NAND Industry Supply-Demand Forecast
Calendar Year 2026: Global NAND bit demand growth is projected at high double digits (17%–19%). Kioxia’s full-year bit shipment growth is expected to align with the industry average.
Calendar Year 2027: Overall market demand is set to outpace supply, further tightening the industry’s supply-demand balance and underpinning firm pricing.
Cash Flow and Capital Expenditure: Strong Cash Generation, Maintaining Healthy Inventory Levels
Firmer product pricing and growing data center SSD sales substantially lifted Kioxia’s cash generation capacity. Operating cash flow nearly tripled sequentially to a record 866.3 billion yen (approximately $5.4 billion), versus 294.4 billion yen in the prior quarter. Inventory turnover days fell to 102 days (including strategic DRAM inventory), down one quarter-on-quarter. Excluding strategic inventory, flash memory core inventory remained within a healthy band. As demand improves further, the company will flexibly adjust output to sustain reasonable inventory levels and mitigate price downside risks.
Capital expenditures totalled 52.4 billion yen this quarter, alongside an additional 78.2 billion yen invested in Nanya Technology. Funds were mainly deployed to procure equipment for capacity expansion of the 8th and 10th generations of BiCS FLASH™. Separately, Kioxia utilised its ample cash flow to fully repay 407.5 billion yen in senior loans, further strengthening its financial position. To support sustained demand expansion and next-generation technology R&D, Kioxia targets average annual capital expenditure of 470 billion yen (approximately $2.94 billion) from fiscal 2026 to fiscal 2028, with adjustments made flexibly in response to market conditions.
Multi-Dimensional Capacity Expansion Strategy Coupled with Long-Term Contracts to Capture AI Storage Growth Opportunities
To address rising demand in the AI era, Kioxia adopts a four-pronged capacity expansion strategy: lifting productivity via AI, driving process migration through investment, actively pursuing joint ventures and partnerships, and building a multi-site manufacturing network. The Yokkaichi Plant serves as a core hub integrating cutting-edge R&D and mass production, while the Kitakami Plant mainly manufactures BiCS10 products.
During its earnings conference call, Kioxia stated it will strategically prioritise product prices and profit margins and will not pursue reckless capacity expansion. Existing fabs still have room for expansion to cover medium-term demand. The slower pace of new NAND capacity additions across the industry underpins the view of a tightening supply-demand balance in 2027.
Kioxia noted that widespread adoption of Agentic AI is fuelling robust NAND demand growth, and this growth is still in the early phase. The company remains on track to meet its target of covering 50% of sales volume via long-term agreements (LTAs) by fiscal 2028. It will not sign LTAs at the expense of steep price cuts. This approach helps secure long-term revenue visibility and deepen partnerships with high-value customer groups.
Outlook for the Next Fiscal Quarter (July–September 2026)
Kioxia expects FY2026 Q2 revenue of 2.39 trillion yen, up 35.2% sequentially; Non-GAAP operating profit of 1.90 trillion yen, rising 43.3% sequentially, with operating margin set to improve further to 79.5%; Non-GAAP net profit attributable to owners of the parent of 1.28 trillion yen, growing 44.3% sequentially, with Non-GAAP earnings per share rising 713.89 yen sequentially to 2,335.70 yen.
Stock Split and Buyback Dual Initiative to Continuously Enhance Investment Value
To boost investment appeal and broaden its investor base, Kioxia rolls out two capital return initiatives aligned with its core strategy to create shareholder value. First, a stock split: ordinary shares will be split on a 1-for-3 basis, with a record date of September 30, 2026 and an effective date of October 1, 2026. Second, a large-scale share repurchase programme running from August 3, 2026 to October 30, 2026. The programme authorises the repurchase of up to 30 million shares, representing 5.5% of issued shares excluding treasury stock, with a maximum spending cap of 800 billion yen. These measures aim to lift capital efficiency and enhance shareholder returns.
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