---
title: "Kioxia Q1 Operating Profit at 1.27 Trillion Yen Misses Estimates, Gross Profit Margin 78%, Plans to Lock in 50% of Capacity via Long-Term Agreements by 2028 | Financial News"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/294476843.md"
description: "Kioxia's Q1 operating profit was 1.27 trillion yen, below the market consensus estimate of 1.37 trillion yen; net profit was 842.17 billion yen, also missing the estimated 973.81 billion yen. The gross profit margin was 78%, falling short of the market expectation of 78.3%. Regarding long-term contracts, Kioxia stated it is steadily advancing its efforts, aiming to increase the coverage of long-term agreements to 50% of its annual shipments by 2028"
datetime: "2026-07-31T06:32:05.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/294476843.md)
  - [en](https://longbridge.com/en/news/294476843.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/294476843.md)
---

# Kioxia Q1 Operating Profit at 1.27 Trillion Yen Misses Estimates, Gross Profit Margin 78%, Plans to Lock in 50% of Capacity via Long-Term Agreements by 2028 | Financial News

Kioxia Holdings' first-quarter results missed market expectations, and coupled with disappointing forward guidance, sparked investor concerns about whether the AI-driven flash memory price rally is slowing down. The company announced a 3-for-1 stock split and a share buyback plan of up to 800 billion yen to stabilize market sentiment.

**The company's operating profit for the first quarter ended June 2026 was 1.27 trillion yen, below the market consensus estimate of 1.37 trillion yen; net profit was 842.17 billion yen, also missing the estimated 973.81 billion yen.** Kioxia's first-quarter gross profit margin was 78%, falling short of the market expectation of 78.3%.

Of greater concern, Kioxia's guidance for the second fiscal quarter also disappointed the market — **operating profit is expected to be 1.89 trillion yen, below Bloomberg's consensus estimate of 1.95 trillion yen;** net sales are projected at 2.39 trillion yen, also lower than the expected 2.46 trillion yen. The company expects total operating profit for the period from April to September to be 3.16 trillion yen.

Regarding long-term contracts, Kioxia stated it is steadily advancing its efforts, **aiming to increase the coverage of long-term agreements (LTA) to 50% of its annual shipments by 2028 to improve long-term sales visibility and strengthen relationships with strategically important customers.** On the same day as the earnings release, Kioxia's board of directors approved a 3-for-1 stock split, effective October 1, 2026, and announced a share buyback plan of up to 800 billion yen (approximately $50 billion). Following the announcement, perpetual futures contracts linked to Kioxia's stock fell about 7% on the Hyperliquid blockchain platform, showing a significant discount compared to the closing price of the underlying stock. Kioxia's stock had previously hit the daily upper limit on the Tokyo Stock Exchange on Friday, closing up 18% at 46,500 yen.

## Significant Improvement in Q1 Performance, Yet Still Below Expectations

Kioxia's revenue for the first fiscal quarter of fiscal year 2026 (April to June 2026) reached 1.7671 trillion yen, more than quadrupling from 342.8 billion yen in the same period last year, and representing a substantial increase from the previous quarter's 1.0029 trillion yen. The growth was primarily driven by strong demand from data center customers fueled by generative AI, which significantly pushed up the average selling price of NAND flash memory. Increased shipment volumes and the depreciation of the yen also contributed.

In terms of product mix, revenue from SSDs and storage products was 1.1747 trillion yen, and revenue from smart devices was 525.7 billion yen, both achieving significant quarter-on-quarter growth.

In terms of operating profit, the company recorded 1.2700 trillion yen during the reporting period, an increase of 673.2 billion yen from the previous quarter, but about 100 billion yen below analysts' estimates. The company explained that part of the profit growth was offset by provisions for litigation losses (36.6 billion yen) and increased stock-based compensation costs. Net profit attributable to parent company shareholders was 842.2 billion yen, with basic earnings per share of 1,539.91 yen.

Non-GAAP operating profit (excluding the aforementioned non-recurring items) was 1.3262 trillion yen, and Non-GAAP net profit attributable to parent company shareholders was 887.0 billion yen.

Regarding long-term contracts, Kioxia stated it is steadily advancing its efforts, **aiming to increase the coverage of long-term agreements (LTA) to 50% of its annual shipments by 2028 to improve long-term sales visibility and strengthen relationships with strategically important customers.** The company also expects that the growth rate of NAND market bit shipments in calendar year 2026 will be in the high double-digit percentage range, and the production share of its eighth-generation BiCS FLASH products has risen to over 50%.

## Forward Guidance Suggests Potential Slowdown in Growth

For the current second fiscal quarter (July to September 2026), Kioxia forecasts revenue of 2.39 trillion yen, operating profit of 1.89 trillion yen, and Non-GAAP operating profit of 1.90 trillion yen, all representing quarter-on-quarter growth from the previous quarter. The company stated that data center demand is expected to remain strong.

However, the implied growth rate from this forecast has led some investors to question the sustained intensity of AI computing power investments. Bloomberg noted that this earnings guidance was disappointing, seen as a signal that the historic rise in flash memory prices driven by AI may be moderating.

Kioxia pointed out that due to the high volatility of the semiconductor and storage industries in the short term, the company does not provide full-year operating plans or progress reports, offering only single-quarter forward-looking forecasts.

## Capacity Strategy and Competitive Landscape Pose Medium-Term Pressure

Kioxia stated that its capacity expansion plan is only slightly faster than the overall industry growth rate to avoid market oversupply. This conservative strategy, while helping to maintain price stability, also carries the risk of losing market share.

According to Bloomberg, Samsung Electronics and SK Hynix are expected to launch next-generation NAND chips next year, with their current capital expenditure focus still mainly on DRAM expansion. Once these two South Korean giants shift funds toward NAND, Kioxia will face greater challenges in catching up in terms of production scale.

Akira Minamikawa, an analyst at Omdia, stated that Kioxia needs to make more efforts to attract U.S. hyperscale data center customers who have closer ties with South Korean suppliers. These data center operators typically offer multi-year supply contracts, which help chip suppliers gain clearer visibility into demand.

## Stock Split and Buyback Demonstrate Management Confidence

Facing significant stock price volatility, Kioxia simultaneously announced several capital management measures to expand its shareholder base and reduce market fluctuations.

The company's board of directors approved on July 31 a 3-for-1 stock split effective October 1 (with a record date of September 30, 2026), and simultaneously announced a share buyback plan for up to 30 million shares, with a cap of 800 billion yen. The buyback period is from August 3 to October 30, 2026.

Kioxia's stock price has experienced significant fluctuations this year. The company briefly surpassed Toyota Motor and SoftBank Group to become Japan's most valuable listed company by market capitalization; however, its stock price then plummeted within a month, wiping out about two-thirds of its previous gains, reflecting market concerns about the sustainability of AI spending and Kioxia's earnings outlook. As of the end of the first fiscal quarter, the company's total assets reached 4.73 trillion yen, and its equity ratio rose to 50.8%, an increase of more than 12 percentage points from the end of the previous fiscal year.

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