Micron's 55-cent gap: reading an earnings release line by line
Micron reported $32.87 a share under GAAP and $33.42 adjusted. Its own reconciliation shows where the $697 million went. A worked guide.
- What happened
- On September 30, 2026, Micron Technology furnished its results for the fiscal quarter ended September 3, 2026 as exhibit 99.1 to a Form 8-K. It reported revenue of $54,229 million, GAAP net income of $37,701 million and GAAP diluted earnings per share of $32.87; its non-GAAP figure was $33.42.
- Why
- SEC Regulation G requires any non-GAAP measure to be shown next to the closest GAAP measure with a quantitative reconciliation, so the release itself contains everything needed to rebuild the adjusted number from the reported one.
- The numbers that matter
- $32.87GAAP diluted EPS, quarter ended Sep 3, 2026$33.42Non-GAAP diluted EPS, same quarter$697 millionNet adjustments from GAAP to non-GAAP net income1,147 millionGAAP diluted shares, against 1,131 million a year earlier
- Why it matters
- Anyone who owns a fund holding the company, or the shares directly, is reading per-share figures built on choices the company makes. The reconciliation table shows those choices in dollars.
- What happens nextas we saw it on 7 Oct 2026
- Micron's guidance covers its fiscal first quarter of 2027. The quarterly dividend of $0.15 a share declared on September 30, 2026 is payable on October 29, 2026 to holders of record on October 14, 2026.
Two lines account for $864 million of the $895 million of pre-tax add-backs; an estimated $198 million tax effect brings the net adjustment to $697 million.
| Patent license charges | 500 |
|---|---|
| Stock-based compensation | 364 |
| Other | 22 |
| Loss on debt prepayments | 9 |
Of the $697 million that separates Micron Technology's adjusted profit from its reported profit for the quarter ended September 3, 2026, $500 million sits on one line labelled “patent license charges”. That line is the largest single reason the company's adjusted earnings per share were $33.42 rather than the $32.87 calculated under generally accepted accounting principles (GAAP). It is also the line a reader is least able to judge from the release alone.
This piece walks through that release the way a careful reader would: headline figures, the reconciliation, the share count, cash flow and guidance. It complements our guide to the annual report. The release arrives first and is shorter; the 10-K arrives later and has the notes.
What the document is
Micron's Form 8-K dated September 30, 2026 reports Item 2.02, Results of Operations and Financial Condition, and attaches the earnings release as exhibit 99.1. Item 2.02 requires a company that publicly releases results for a completed quarter to include the text of that release as an exhibit. Form 8-K's General Instruction B.2 says information furnished under Item 2.02 “shall not be deemed to be ‘filed’ for purposes of Section 18 of the Exchange Act” unless the company says otherwise.
The practical meaning is that the release is the company's first account of the quarter, written by the company and published alongside its conference call. It is not the annual report and it carries a forward-looking statements warning that its outlook is “subject to a number of risks and uncertainties that could cause actual results to differ materially.”
Start with the three GAAP numbers
$54,229m ÷ $11,315m = 4.793, an increase of 379.3%. Against the quarter ended May 28, 2026 ($41,456m): $54,229m ÷ $41,456m = 1.308, an increase of 30.8%. GAAP net income was 69.5% of revenue ($37,701m ÷ $54,229m).
The prior quarter ended on May 28, 2026 and this one on September 3, 2026: 98 days, or 14 weeks. A 13-week quarter has 91 days. Fiscal 2026 ran from August 29, 2025 to September 3, 2026, 371 days, or 53 weeks. We found no mention of the quarter's length in the release, which matters when comparing it with a 13-week period.
Read the GAAP lines before anything else. They are the figures prepared under the accounting rules every listed US company follows, which is what makes them comparable across companies and years.
The reconciliation, added up
Most releases then present a second set of figures, called non-GAAP or adjusted. Regulation G does not forbid them. It requires the company to show “the most directly comparable” GAAP measure and a reconciliation that “shall be quantitative for historical non-GAAP measures.” Micron's table for net income reads as follows.
| Line | Quarter ended Sep 3, 2026 | Quarter ended Aug 28, 2025 |
|---|---|---|
| GAAP net income | 37,701 | 3,201 |
| Stock-based compensation | 364 | 262 |
| Patent license charges | 500 | 0 |
| Loss on debt prepayments | 9 | 9 |
| Other | 22 | 39 |
| Estimated tax effects of above and other tax adjustments | (198) | (42) |
| Non-GAAP net income | 38,398 | 3,469 |
364 + 500 + 9 + 22 = $895m of pre-tax add-backs. Less the $198m tax effect gives $697m. Check: $38,398m − $37,701m = $697m. The year-earlier column also ties: 262 + 9 + 39 − 42 = 268, and $3,469m − $3,201m = $268m.
Micron divides GAAP net income by 1,147 million diluted shares and non-GAAP net income by 1,149 million, a 2 million “adjustment for stock-based compensation” shown in its table. $38,398m ÷ 1,147m would give $33.48; ÷ 1,149m gives the published $33.42. The 55-cent gap between $32.87 and $33.42 is mostly the $697 million, partly offset by the larger divisor.
Two questions are worth asking of every add-back. Is it a real cost? And does it recur? Stock-based compensation is paid every quarter, in shares rather than cash, and it appears in both columns of the table. Removing it raises profit per share, but the shares it creates still appear in the diluted count.
The $500 million of patent license charges is 55.9% of the pre-tax add-backs ($500m ÷ $895m). We did not find a description of the charge in the release. The release's own list of what management typically excludes names stock-based compensation, gains and losses from settlements, gains and losses from debt prepayments, and restructuring and impairments. A reader who wants to know what the charge is, and whether similar charges could return, has to wait for the annual report's notes.
The share count and the buyback
GAAP weighted-average diluted shares were 1,147 million in the quarter ended September 3, 2026, against 1,131 million in the quarter ended August 28, 2025. The cash flow statement for fiscal 2026 shows “repurchases of common stock – repurchase program” of $650 million and dividends paid of $610 million.
Shares rose 16m ÷ 1,131m = 1.4%. Had the diluted count stayed at 1,131 million, GAAP EPS would have been $37,701m ÷ 1,131m = $33.33 rather than $32.87. Basic shares were 1,130 million; the 17 million difference between basic and diluted is the company's estimate of shares that options, awards and similar instruments would add.
A buyback only shrinks the count if it retires more shares than the company issues. That is why the per-share line and the share line have to be read together; our buybacks piece sets out the same arithmetic across the index.
Cash flow, on the company's definition
Free cash flow has no GAAP definition, so each company sets its own. Micron calls its version “adjusted free cash flow” and builds it from four lines of the cash flow statement.
Net cash from operating activities $43,973m, minus expenditures for property, plant and equipment $11,110m, plus proceeds from sales of property, plant and equipment $9m, plus proceeds from government incentives $327m = $33,199m, the figure the release reports. Without the government incentives the same sum is $32,872m.
The definition is the lesson. Government incentives are counted as offsetting capital spending, so the release's “investments in capital expenditures, net” of $10.77 billion is $11,110m less $327m and $9m. Another company could define free cash flow differently, and the two figures would not be comparable.
Guidance: what it is and what it is not
| Line | GAAP outlook | Non-GAAP outlook |
|---|---|---|
| Revenue | $61.5 billion ± $1.5 billion | $61.5 billion ± $1.5 billion |
| Gross margin | Approximately 85.95% | Approximately 86.25% |
| Operating expenses | Approximately $2.31 billion | Approximately $2.06 billion |
| Diluted earnings per share | $37.84 ± $1.00 | $38.15 ± $1.00 |
The revenue range runs from $60.0 billion to $63.0 billion. The release says the guidance “does not incorporate the impact of any potential business combinations, divestitures, additional restructuring activities, balance sheet valuation adjustments, strategic investments, financing transactions, and other significant transactions.” The non-GAAP guidance is reconciled too: stock-based compensation of $174m, $166m and $87m, less $65m of tax effects, totals $362m, which over about 1.15 billion shares is $0.31, the gap between $37.84 and $38.15.
Guidance is the company's own expectation on the day of the release. It is not a commitment and it is not the market's view. Two details are easy to miss. The midpoint is 13.4% above the revenue just reported ($61.5bn ÷ $54.229bn), but the comparison quarter had 98 days. And the per-share range assumes a share count; if the count moves, the EPS does too.
What it means for your money
A release is a set of figures that can be checked against each other in a few minutes. The reconciliation should add up to the stated gap. The diluted share count should be compared with the year before. Free cash flow should be rebuilt from the company's own lines, using its own definition. Guidance should be read with its range, its share assumption and its exclusions.
None of this says whether a share is cheap or dear. It says which numbers are the company's choices and which are the accounting's. For a fund holder the same habit applies to every company in the fund: adjusted earnings are a view of the business that the business has chosen to present.
Sources
- Micron Technology, Inc. Form 8-K, filed September 30, 2026 (Item 2.02; exhibit 99.1 Earnings Release), accession 0000723125-26-000018, filing indexUS Securities and Exchange Commission, EDGAR · Oct 4, 2026 · Primary source
- Micron Technology, Inc. Reports Record Fiscal Fourth-Quarter and Full-Year 2026 Results (September 30, 2026)Micron Technology, Inc. investor relations · Oct 4, 2026 · Primary source
- Form 8-K, Current Report: General Instructions and Item 2.02US Securities and Exchange Commission · Oct 4, 2026 · Primary source
- 17 CFR Part 244, Regulation G, § 244.100 General rules regarding disclosure of non-GAAP financial measureseCFR, US National Archives · Oct 4, 2026 · Primary source
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