The Zhitong Finance App learned that Kioxia released results for the second quarter of fiscal year 2026 (July-September): revenue of 2.4800 trillion yen, up 40.3% from month to month; IFRS operating profit of 1.9947 trillion yen, up 57.1% from month to month, higher than market expectations of 1.95 trillion yen; net profit to mother of 1.3557 trillion yen, up 61.0% month on month, slightly lower than expected 1.37 trillion yen. Based on the quarterly average exchange rate of 161 yen/dollar, revenue was approximately US$15.4 billion.
The company said the revenue growth was mainly due to a sharp rise in the average selling price (ASP) of products driven by demand for generative AI data centers and an increase in bit shipments. By application, the SSD and storage business revenue was 1.6160 trillion yen, up 441.3 billion yen from the previous month, and the smart device business was 788.9 billion yen, up 263.2 billion yen from the previous quarter; the operating profit margin for the quarter was about 80%.
The real difference lies in the guide. Kioxia expects revenue of 2.50 trillion yen, operating profit of 1.9950 trillion yen, and net profit of 1.3600 trillion yen for the third quarter (October-December), up only 0.8%, 0.0%, and 0.3% from the previous quarter, which is basically the same as in the second quarter, while market expectations are 2.90 trillion, 2.35 trillion, and 1.62 trillion yen, respectively — guidance is 14% to 16% lower than expected. Due to negative effects such as exchange rates, the company assumed that the exchange rate for the third quarter was 157 yen to 157 yen, an increase of 4 yen from 161 yen in the second quarter. At the same time, data center demand is expected to remain strong. The company did not disclose the progress of long-term supply agreements (LTAs) with hyperscale customers and the visibility of enterprise-grade SSD orders in the financial statements, and these two points were the focus of investors' attention during the briefing.
In terms of shareholder returns, the company announced its first dividend since listing: an interim dividend of 90 yen per share, to be paid on September 30 and December 8 on the share registration date. In the first half of the year, an additional 803 billion yen was used to repurchase shares and 5231 billion yen to repay long-term loans early. The equity ratio increased to 49.8% from 37.9% at the end of March.
As the market worried about whether large technology companies could continue to invest in artificial intelligence research and development, global chipmakers experienced a wave of brutal sell-offs, and Kioxia's stock was affected as a result. Furthermore, given the market advantage of South Korea's rivals and the growing threat from China, Kioxia is also facing intense competition.
As of Thursday, the company's Tokyo-listed stock fell 60% from its June high, making it the worst performing major global storage and storage stock in the Citic CLSA portfolio during the same period.