Western Digital (WDC) Q3 2026 earnings summary

Executive summary

• Revenue reached $3.34 billion in Q3 FY26, up 45% year-over-year and 11% sequentially, driven by strong cloud and AI-driven demand, with significant margin expansion and nearly doubled non-GAAP EPS to $2.72 and GAAP EPS at $8.20.

• Completed the separation of the Flash business (Sandisk), monetized Sandisk shares to reduce debt, and focused on HDD operations, achieving a net positive cash position.

• Innovation in high-capacity drives and UltraSMR technology is driving customer adoption and supporting structural industry shifts.

• Cash flow from operations totaled $1.12 billion, with free cash flow at $978 million, supporting increased dividends and share repurchases.

• Quarterly cash dividend increased by 20% to $0.15 per share.

Financial highlights

• Q3 FY26 revenue was $3.34 billion, up 45% year-over-year; gross margin exceeded 50% (GAAP 50.2%, non-GAAP 50.5%), and non-GAAP EPS was $2.72, nearly double last year.

• Operating income (GAAP) was $1.19 billion, up 57% year-over-year; non-GAAP operating income was $1.29 billion, up 116%.

• Free cash flow for the quarter was $978 million, up 124% year-over-year.

• Net income from continuing operations was $3.21 billion, up from $772 million in Q3 FY25; GAAP diluted EPS was $8.20, up 289% year-over-year.

• Cash and cash equivalents at quarter-end were $2.05 billion.

Outlook and guidance

• Q4 FY26 revenue expected at $3.65 billion (±$100 million), reflecting 36% to 44% year-over-year growth.

• Non-GAAP gross margin guidance of 51%-52%; operating expenses expected between $385 million-$395 million.

• Non-GAAP diluted EPS expected at $3.25 (±$0.15); tax rate expected at 16%.

• Expects to monetize remaining Sandisk shares by end of 2026 to further optimize capital structure.

• Capital expenditures expected to be 4–6% of net revenue.