Western Digital Q3 Earnings & Revenues Beat, Up Y/Y on Cloud Momentum

Western Digital Corporation WDC reported third-quarter fiscal 2025 non-GAAP earnings of $1.36 per share, which surpassed the Zacks Consensus Estimate of $1.17. The company reported earnings of 63 cents per share in the prior-year quarter. Management anticipated fiscal third-quarter non-GAAP earnings per share to be between 90 cents per share and $1.20. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues of $2.29 billion surged 31% year over year, beating the Zacks Consensus Estimate of $2.24 billion. The upside resulted from increasing demand momentum across Cloud end markets.  On a sequential basis, revenues decreased 5%. For third-quarter fiscal 2025, the company expected non-GAAP revenues in the range of $3.75-$3.95 billion.

On Feb. 21, 2025, Western Digital completed the separation of its HDD and Flash businesses into two independent, publicly traded companies, each with a specific focus on its respective market. With a deep understanding of memory and storage technology, the new SanDisk is ready to meet market demands. It is well-equipped to take advantage of AI opportunities while maximizing the value of its products for both consumers and businesses.

Despite geopolitical tensions and changing trade dynamics, data continues to grow rapidly. For large-scale storage, HDDs remain the most reliable and cost-effective option. With a broad range of storage solutions, WDC is well-placed to support growing data needs.

Western Digital Corporation Price, Consensus and EPS Surprise

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

In response to the results, shares of WDC jumped 6.35% in the pre-market trading on April 30. In the past year, shares have declined 40.6% compared with the Zacks Computer-Storage Devices industry’s fall of 39.5%.

Quarter in Detail

Revenues from the Cloud end market (87% of total revenues) climbed 38% year over year to $2 billion, fueled by strong year-over-year growth in both revenues (+38%) and bit shipments (+32%), highlighting the demand for scalable and cost-effective storage. The cloud segment fell 4% sequentially, primarily due to a 6% drop in nearline bit shipments, though this was partly offset by a 5% increase in Cloud pricing per unit.

Revenues from the Client end market (6%) were down 2% year over year and sequentially to $137 million due to lower unit shipments.

Revenues from the Consumer end market (7%) were down 4% year over year to $150 million and decreased 13% on a sequential basis due to lower unit shipments and pricing erosion.

Margins

Non-GAAP gross margin was 40.1% compared with 30.1% in the year-ago quarter. The upside was backed by growing customer adoption of its higher capacity drives.

Non-GAAP operating expenses decreased 14% year over year to $324 million. 

Non-GAAP operating income totaled $596 million, up 290% year over year.

Balance Sheet & Cash Flow

As of March 28, 2025, cash and cash equivalents were $3.477 billion compared with $2.291 billion as of Dec. 27, 2024.

The long-term debt (including the current portion) was $7.333 billion as of March 28.

Western Digital generated $508 million in cash from operations compared with $58 million in the prior-year quarter.

Free cash flow amounted to $436 million in the quarter under review, up 379% year over year.

Fiscal Q4 Outlook

The company expects non-GAAP revenues of $2.45 billion (+/- $150 million). The Zacks Consensus Estimate is currently pegged at $2.38 billion.

Management projects non-GAAP earnings of $1.45 (+/- 20 cents). The Zacks Consensus Estimate is currently pegged at $1.34.

WDC expects non-GAAP gross margin in the range of 40-41%. Non-GAAP operating expenses are expected to be between $330 million and $340 million.

WDC’s Zacks Rank

Currently, Western Digital carries a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Recent Performance of Other Companies

Badger Meter, Inc. BMI reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.

In the past year, shares of BMI have gained 18.8%.

Cadence Design Systems CDNS reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.

Shares of Cadence have gained 9.6% in the past year.

Woodward, Inc. WWD reported second-quarter fiscal 2025 adjusted net EPS of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.

In the past six months, shares of WWD have gained 13.9%.

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This article originally published on Zacks Investment Research (zacks.com).

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