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Jun 27, 2025
Western Digital Q4 2025 Earnings Report
Western Digital reported its fiscal fourth quarter and fiscal year 2025 financial results, achieving revenue and gross margin above guidance while delivering strong free cash flow.
Key Takeaways
Western Digital concluded its fiscal year 2025 with a strong fourth quarter, marked by a 30% year-over-year revenue increase to $2.61 billion and significant improvements in both GAAP and non-GAAP gross margins. The company also generated substantial free cash flow and reduced debt, reflecting a solid operational performance.
Revenue for Q4 FY25 reached $2.61 billion, representing a 30% increase compared to the same period last year.
GAAP diluted EPS was $0.67, while non-GAAP diluted EPS stood at $1.66, demonstrating strong profitability.
The company generated $675 million in free cash flow during the quarter, highlighting robust cash generation.
Western Digital reduced its debt by $2.6 billion and initiated a cash dividend, signaling confidence in its financial health and future prospects.
Forward Guidance
For the fiscal first quarter of 2026, Western Digital anticipates continued strong momentum, particularly in its Cloud business, projecting revenue growth and stable gross margins.
Positive Outlook
- Q1 FY26 revenue expected to be $2.7 billion, indicating a 22% year-over-year increase at the mid-point.
- Non-GAAP gross margin is projected to be strong at 41.5% for Q1 FY26.
- Non-GAAP EPS is expected to be $1.54 for Q1 FY26.
- Continued strong momentum in the Cloud business, identified as the largest addressable market.
- The company expects to benefit from existing capped call transactions, offsetting the dilutive impact of convertible notes.
Challenges Ahead
- Guidance for non-GAAP measures is provided without full reconciliation to GAAP due to estimation difficulties.
- Unanticipated changes in GAAP effective tax rate could impact actual results.
- Potential for unanticipated one-time charges related to business realignment.
Historical Earnings Impact
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