Western Digital (WDC) Q2 2026 earnings summary

Executive summary

• Revenue reached $3.02 billion in Q2 FY26, up 25% year-over-year, driven by strong demand for high-capacity HDDs and AI/cloud workloads.

• Non-GAAP EPS was $2.13, up 78% year-over-year; GAAP EPS was $4.73, up 272%.

• Cloud segment accounted for 89% of revenue, with significant growth in high-capacity drives and UltraSMR adoption.

• Completed the separation of the Flash business (Sandisk); results now reflect only continuing operations.

• Free cash flow was $653 million, with over 100% returned to shareholders via buybacks and dividends.

Financial highlights

• Gross margin was 46.1% (non-GAAP) and 45.7% (GAAP), up 770–800 bps year-over-year.

• Operating income was $1,019 million (non-GAAP), up 72% year-over-year; GAAP operating income was $908 million.

• Net income from continuing operations was $1.84 billion, up from $466 million a year ago.

• Cash and equivalents stood at $1.98 billion at quarter end.

• Free cash flow margin was 21.6%.

Outlook and guidance

• Q3 FY26 revenue expected at $3.2 billion ± $100 million, reflecting ~40% year-over-year growth.

• Gross margin guidance of 47%-48%; operating expenses projected at $380-$390 million.

• Diluted EPS expected at $2.30 ± $0.15; tax rate anticipated at 16%.

• CapEx as a percentage of revenue expected to remain within 4%-6% as HAMR ramps.

• Plans to monetize remaining Sandisk stake within one year to further reduce debt.