Western Digital Q4 Earnings Beat on Solid Top-Line Growth, Shares Jump

Western Digital Corporation (WDC) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate by 12.2%. The company reported earnings of $1.44 per share in the prior-year quarter. Management anticipated fiscal fourth-quarter non-GAAP earnings per share to be $1.45 (+/- 20 cents).

Quarterly revenues of $2.61 billion surged 30% year over year, surpassing the Zacks Consensus Estimate of $2.45 billion. The growth reflects rising demand for high-capacity storage driven by cloud computing and generative AI, both of which require massive and cost-effective storage backbones that HDDs still provide. On a sequential basis, revenues increased 14%. For the fiscal fourth quarter, the company forecasted non-GAAP revenues of $2.45 billion (+/- $150 million).

For fiscal 2025, revenues skyrocketed 51% year over year to $9.5 billion. During the quarter, WDC shipped 190 exabytes of storage to customers, up 32% year over year, fueled by strong demand for nearline drives and growing volumes of its 26TB CMR and 32TB UltraSMR products. Also, shipments of its 26TB CMR and 32TB UltraSMR drives more than doubled from the previous quarter, topping 1.7 million units in June. This was one of the fastest ramps in its history.

Western Digital Corporation Price, Consensus and EPS Surprise

Western Digital Corporation price-consensus-eps-surprise-chart | Western Digital Corporation Quote

On Feb. 21, 2025, Western Digital split its HDD and Flash businesses into two separate public companies. The new SanDisk now focuses on Flash and is well-positioned to serve market needs and tap into AI growth.

Western Digital delivered performance that not only beat internal expectations but also boosted investor confidence. Shares of WDC jumped 8% in pre-market trading today. In the past year, shares have gained 18.1% against the Zacks Computer-Storage Devices industry’s fall of 4%.

Quarter in Detail

Revenues from the Cloud end market (90% of total revenues) climbed 36% year over year to $2.6 billion, driven by strong demand for higher-capacity nearline products.

Revenues from the Client end market (5%) were up 2% year over year to $140 million.

Revenues from the Consumer end market (5%) were down 12% year over year to $136 million.

Margins

WDC reported a non-GAAP gross margin of 41.3%, up 610 basis points year over year and above its guidance (40-41%). The increase was driven by a shift to higher-capacity drives and strong cost control across manufacturing and the supply chain.

Non-GAAP operating expenses decreased 16% year over year to $345 million, but were slightly above guidance ($330-$340 million), mainly due to higher variable compensation from better-than-expected performance.

Non-GAAP operating income totaled $732 million, up 147% year over year.

Balance Sheet & Cash Flow

As of June 27, 2025, cash and cash equivalents were $2.1 billion compared with $3.47 billion reported as of March 28, 2025.

The long-term debt (including the current portion) was $4.7 billion as of June 27, 2025, compared with $7.3 billion as of March 28.

Western Digital generated $746 million in cash from operations compared with $366 million in the prior-year quarter. Free cash flow amounted to $675 million in the quarter under review, up 139%.

With strong cash flow, a solid balance sheet and confidence in its business outlook, WDC’s board approved up to $2 billion in share buybacks. In the quarter, the company repurchased about 2.8 million shares for $149 million.

Fiscal Q1 2026 Outlook

Strong business momentum, particularly in cloud storage, is driving expectations for another solid quarter. At the mid-point of its guidance, Western Digital anticipates non-GAAP revenues of $2.7 billion (+/- $100 million), up 22% year over year. The Zacks Consensus Estimate is currently pegged at $2.55 billion.

Management projects non-GAAP earnings of $1.54 (+/- 15 cents). The Zacks Consensus Estimate is currently pegged at $1.40.

WDC expects non-GAAP gross margin in the range of 41-42%. Non-GAAP operating expenses are expected to be between $370 million and $380 million.

WDC’s Zacks Rank

Currently, Western Digital sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Recent Performance of Other Companies

Seagate Technology Holdings plc (STX) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.

Non-GAAP revenues of $2.44 billion beat the Zacks Consensus Estimate by 1.6%. Revenues came in above the midpoint of guidance, rising 30% year over year.

Cadence Design Systems (CDNS) reported second-quarter 2025 non-GAAP earnings per share (EPS) of $1.65, which beat the Zacks Consensus Estimate by 5.1%. The bottom line increased 28.9% year over year, exceeding management’s guided range of $1.55-$1.61. Revenues of $1.275 billion beat the Zacks Consensus Estimate by 1.3% and increased 20.3% year over year. The figure beat CDNS’ guided range of $1.25-$1.27 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.

SAP SE (SAP) reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.63 per share. Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues of €9.03 billion ($10.24 billion) on a non-IFRS basis, representing a 9% year-over-year increase (up 12% at constant currency). The Zacks Consensus estimate was pegged at $10.37 billion.

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