The latest earnings report released by Micron shows an outstanding overall performance. Based on the disclosed figures, both the company’s revenue and its earnings-per-share guidance have surpassed market expectations, although the forward guidance for gross margin has a slight shortcoming. Worth noting is that the official side has successfully signed a greater number of SCA long-term agreements, including two existing ones that have been extended directly through 2031.
In a detailed review of the Q4 FY26 financial performance, revenue was very strong in the quarter, reaching $54.23B. It not only easily beat the market’s estimated $51.07B, but also delivered a year-over-year growth rate as high as 379%. On the profit side, Adj. EPS came in at $33.42, beating expectations of $31.61. Adj. Gross Margin was 87.0%, also higher than what the market had hoped for at 86.1%.
Looking ahead to the next quarter, Q1 FY27, management provided a revenue guidance range of $61.5B plus or minus $1.5B—well above the $57.02B expected by the market. Meanwhile, the predicted range for Adj. EPS falls between $38.15 plus or minus $1.00, also above the $35.40 expected. However, the Adj. Gross Margin guidance for this quarter is roughly 86.25%, slightly below the market consensus of 86.4%. This is the small blemish mentioned earlier.
Regarding progress on the long-term contract orders, the company said it has successfully signed 26 SCA agreements to date. Based on current estimates, through 2030 these SCAs are expected to account for more than 35% of the company’s total operating revenue. Because many customers urgently want stable supply coverage provided by SCA even after 2030, the company has not only newly signed SCAs with terms extending through 2031, but has also extended two existing agreements by one year each, with both rolling over to 2031.
As for the issue many people are concerned about—what could be causing the decline in gross margin expectations—we would really like management to disclose the real underlying reasons. As long as this metric drop is not caused by a decline in the average selling price (ASP) of storage products, investors can remain confident and continue to hold. In my personal view, the most likely cause is a rise in early costs driven by new capacity expansion and ramp-up of new process technologies. As for the final truth, we still need to wait patiently to hear management’s detailed explanation during the earnings call.
In a detailed review of the Q4 FY26 financial performance, revenue was very strong in the quarter, reaching $54.23B. It not only easily beat the market’s estimated $51.07B, but also delivered a year-over-year growth rate as high as 379%. On the profit side, Adj. EPS came in at $33.42, beating expectations of $31.61. Adj. Gross Margin was 87.0%, also higher than what the market had hoped for at 86.1%.
Looking ahead to the next quarter, Q1 FY27, management provided a revenue guidance range of $61.5B plus or minus $1.5B—well above the $57.02B expected by the market. Meanwhile, the predicted range for Adj. EPS falls between $38.15 plus or minus $1.00, also above the $35.40 expected. However, the Adj. Gross Margin guidance for this quarter is roughly 86.25%, slightly below the market consensus of 86.4%. This is the small blemish mentioned earlier.
Regarding progress on the long-term contract orders, the company said it has successfully signed 26 SCA agreements to date. Based on current estimates, through 2030 these SCAs are expected to account for more than 35% of the company’s total operating revenue. Because many customers urgently want stable supply coverage provided by SCA even after 2030, the company has not only newly signed SCAs with terms extending through 2031, but has also extended two existing agreements by one year each, with both rolling over to 2031.
As for the issue many people are concerned about—what could be causing the decline in gross margin expectations—we would really like management to disclose the real underlying reasons. As long as this metric drop is not caused by a decline in the average selling price (ASP) of storage products, investors can remain confident and continue to hold. In my personal view, the most likely cause is a rise in early costs driven by new capacity expansion and ramp-up of new process technologies. As for the final truth, we still need to wait patiently to hear management’s detailed explanation during the earnings call.