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The AI assault on enterprise and hyperscaler spending has driven Kioxia’s NAND revenues to previously unseen levels as it beat its outlook guidance on all metrics.
Revenues in Kioxia’s first fiscal 2026 quarter, ended June 30, were a record ¥1.77 trillion ($11 billion) up 415.5 percent Y/Y, beating its ¥1.75 trillion outlook, with a record ¥842.2 billion ($5.3 billion) profit. This is 4,509 percent higher than a year ago. This quarter's profit surpassed the previous year's full-year total in just three months. Kioxia reported ¥1,539.9 EPS ($9.62) vs the year-ago ¥33.90 ($0.23). Koxia said the revenue increase “was primarily due to a significant increase in average selling prices (ASPs) resulting from strong demand from data center customers focusing on generative AI, as well as an increase in bit shipment and the positive effect of exchange rates.”
It said Agentic AI applications are emerging as a primary growth catalyst , while traditional server NAND demand is also benefiting from the growing adoption of agentic AI applications. But smartphone NAND demand was flat with units down for low-priced models and flat for the higher-priced ones as higher memory costs took their toll. PC NAND demand was down due to higher memory costs dampening PC sales.
SSD and storage revenue was ¥1,174.7 billion ($7.3 billion), a 440.3 percent increase Y/Y, and approximately doubling Q/Q, as higher ASPs contributed to record revenue growth, and Smart Device revenue was ¥525.7 billion ($3.3 billion), up 565.4 percent Y/Y as prices increased. Both segments reached record highs.
There were record cash flow highs as well. Operating cash flow was ¥866.3 billion ($5.5 billion)) up 1,318 percent Y/Y. Free cash flow was ¥872.2 billion ($5.5 billion), a 3,130 percent increase Y/Y. Cash and cash equivalents at the end of the quarter were ¥791 billion ($4.9 billion), a 68 percent Q/Q rise, and it achieved a ¥186.7 billion ($1.2 billion) net cash position, driven by record-high core free cash flow .
Happy days indeed compared to its deeply indebted ones when the Bain consortium bought Toshiba’s memory business to form Kioxia in June 2018. An 8-year bet is now paying off big time.
The Nikkei reckoned Bain has gained ¥2.5 trillion ($17 billion) from selling Kioxia shares, the largest-ever private equity return in Japan. Kioxia became Japan’s most valuable company in market capitalization terms in June.
In fact Kioxia is planning a 1:3 stock split on September 30, to make its shares more affordable and expand its investor base. It’s also starting a 30 million shares buyback scheme to improve shareholder returns, involving ¥800 billion ($5 billion) and running from August 3 to October 30 this year. KIoxia said the decision to implement a share buyback was based on its view that it is an effective measure to improve capital efficiency in light of the recent share price decline, compared to dividend payments.
The outlook for the next quarter is ¥2.39 trillion ($14.9 billion), an increase of 433 percent Y/Y, as demand from data centers is expected to remain strong. By application, volumes for data center and enterprise are expected to continue growing. Smart device volumes are also expected to increase, supported by seasonal demand. NAND demand is expected to exceed supply in 2027 and Kioxia reckons AI-driven NAND demand growth is still in its early stages. It’s discussions around AI processing at the edge are accelerating, which could increase NAND demand in consumer devices.
Kioxia is expanding NAND manufacturing capacity at its Yokkaichi and Kitakami plants, which are involved in its joint venture with Sandisk. It’s also on track toward 50 percent LTA (long-term agreements) volume coverage for CY28 with key customers, providing long-term revenue visibility and ensuring deep engagement with high-value customer segments. Some customers are even looking for extended (>3 years) term LTAs to lock in supply and provide predictable pricing.