The latest earnings call for SNDK (NASDAQ:SNDK) saw mixed reactions from investors, with some expressing surprise at the company’s strong contracted shipments and financial guarantees for next year, while others were disappointed by the revenue miss and lower guidance. During the Q&A session, investors raised several concerns, including the team’s explanation of the weaker revenue guide, the impact of GM on NBMs, and the potential for smartphone/PC stabilization next year. Despite these challenges, the CEO remained optimistic about the company’s growth prospects, stating that the business has “reached cruising speed” after five consecutive quarters of ascension.

To begin with, investors were surprised by SNDK’s strong contracted shipments for next year, with 50%+ of bits already committed and $93.9b in minimum contracted NBMs, including $16.5b financial guarantees. This positive news was tempered by the revenue miss and lower guidance, which some investors attributed to mix issues, particularly in the weak consumer market and Edge-driven June quarter. The team clarified that the lower gross margin guide is due to prudent cost assumptions and mix, rather than any NBM drag.

Investors also expressed skepticism about the 80% gross margin on NBMs with some upside as prices rise, questioning whether it’s enough to drive significant growth. The CEO confirmed that all guides related to contracted shipments, including RPO and total lifetime contract ratios, are presented at floor pricing, which is important but doesn’t make the job easier. Moreover, the impact of DRAM as an input cost on GM was highlighted as a potential challenge.

On the positive side, the team is holding back bits for NBM fulfillment and sees datacenter allocation through next year. Additionally, there’s an analyst day coming up in a week, where more disclosure on CMX, Storage-next, and other areas of the business may be forthcoming, making it tougher to short the stock. The CEO also described the company’s growth as having “reached cruising speed” after five consecutive quarters of ascension, suggesting that investors should be thinking about measures of success beyond just revenue and gross margin.

Overall, while there were mixed views on SNDK’s earnings call, the company’s strong contracted shipments and financial guarantees for next year provide a positive outlook, while the team’s explanation of the weaker revenue guide and the potential challenges in the smartphone/PC market may warrant further scrutiny.