Western Digital (WDC) Q4 2025 earnings summary

Executive summary

• Q4 FY25 revenue reached $2.61 billion, up 30% year-over-year, with non-GAAP EPS of $1.66, both above guidance.

• Cloud segment accounted for 90% of revenue, reflecting strong demand for high-capacity nearline drives.

• Shipped over 1.7 million units of latest generation ePMR and Ultra SMR drives, exceeding internal milestones.

• Initiated a $0.10/share quarterly dividend and authorized a $2 billion share repurchase program, repurchasing $149 million in Q4.

• Debt was reduced by $2.6 billion, achieving a net leverage ratio of 1x-1.5x.

Financial highlights

• Q4FY25 gross margin was 41.3% (non-GAAP), up 610 bps year-over-year; operating income was $732 million (28.1% margin).

• Free cash flow was $675 million in Q4FY25, up 139% year-over-year.

• Operating expenses were $345 million (non-GAAP), slightly above guidance due to higher variable compensation.

• Interest and other expenses dropped to $52 million, reflecting debt repayment.

• Delivered 190 exabytes, up 32% year-over-year, with strong nearline shipments.

Outlook and guidance

• Q1 FY26 revenue expected at $2.7 billion ± $100 million, up ~22% year-over-year.

• Gross margin guidance of 41%-42%; operating expenses to rise to $370-$380 million due to a 14-week quarter.

• EPS projected at $1.54 ± $0.15; tax rate expected between 16%-19%.

• A $0.10/share dividend will be paid on September 18, 2025.

• Strong visibility into customer demand with firm POs and LTAs covering all top five hyperscale customers for FY26.