Sandisk (NASDAQ:SNDK) reported fiscal fourth-quarter results that beat expectations but saw shares fall more than 7% in premarket trading Friday after issuing softer-than-anticipated gross margin guidance.

For the quarter ended June 27, the flash storage company posted adjusted diluted earnings of $0.29 per share on revenue of $1.90 billion, beating analyst forecasts of $0.03 and $1.83 billion, respectively. Gross margin was 26.4%, matching estimates and rising 370 basis points sequentially.

For the first quarter, Sandisk guided for non-GAAP earnings between $0.70 and $0.90 per share, compared with the $0.79 consensus, and revenue between $2.10 billion and $2.20 billion, above the $1.98 billion forecast. September-quarter gross margin is expected at 29%, below the 30.2% consensus but up 260 basis points sequentially, with underutilization and startup costs partially offset by pricing gains.

The NAND market is projected to remain in undersupply through 2026, while 256TB NVMe eSSDs are now in sampling, and the first HBF controllers are on track to begin sampling in 2027.