Western Digital(WDC) - 2026 Q1 - Quarterly Results

Financial Performance - Revenue for Q1FY26 was $2.82 billion, representing a 27% increase year over year[5] - GAAP diluted EPS for Q1FY26 was $3.07, up 358% compared to Q1FY25[6] - Non-GAAP diluted EPS for Q1FY26 was $1.78, reflecting a 137% increase year over year[6] - Gross margin improved to 43.5%, up 710 basis points from Q1FY25[6] - Operating income for Q1FY26 was $792 million, a 137% increase year over year[6] - Net income for the three months ended October 3, 2025, was $1,182 million, a significant increase from $493 million in the same period last year, representing a growth of 139%[26] - GAAP gross profit for the quarter was $1,227 million, up from $806 million year-over-year, resulting in a GAAP gross margin of 43.5% compared to 36.4% in the previous year[29] - Non-GAAP net income from continuing operations was $673 million, compared to $268 million in the same quarter last year, reflecting a year-over-year increase of 150%[31] Cash Flow and Capital Management - Free cash flow for Q1FY26 was $599 million, indicating strong operational performance[5] - Cash flows provided by operating activities were $672 million, a substantial increase from $34 million in the same period last year[31] - The company reported a free cash flow of $599 million for the quarter, compared to a negative free cash flow of $14 million in the same quarter last year[31] - The company considers free cash flow a useful indicator for investing in business, making acquisitions, returning capital to investors, and strengthening the balance sheet[42] - The company repurchased $553 million of common stock during the quarter, indicating a strong commitment to returning value to shareholders[26] Guidance and Future Expectations - The company expects Q2FY26 revenue to be approximately $2.9 billion, a 20% increase year over year at the mid-point[7] - Non-GAAP gross margin guidance excludes stock-based compensation expense totaling approximately $10 million[46] - Non-GAAP operating expenses guidance excludes stock-based compensation and other expenses, totaling approximately $40 million to $50 million[46] - Non-GAAP diluted net income per common share guidance excludes items totaling $50 million to $60 million[46] - Non-GAAP diluted net income per common share guidance is based on non-GAAP diluted weighted average shares, including the benefit of 4 million shares from capped call transactions[46] - Non-GAAP tax rate guidance is based on a percentage of non-GAAP pre-tax income or loss, which may differ from GAAP tax rate due to various tax effects[46] - Forward-looking estimates of non-GAAP measures may differ materially from actual results and should not be relied upon as statements of fact[45] - Adjustments to non-GAAP guidance may include unanticipated changes in GAAP effective tax rate and other unanticipated items not reflective of ongoing operations[45] Balance Sheet Highlights - Total current assets increased to $6.275 billion, up from $5.856 billion in the previous quarter[24] - Total liabilities decreased to $8.242 billion from $8.462 billion in the previous quarter[24] - The company’s cash and cash equivalents at the end of the period were $2,048 million, up from $1,705 million at the end of the same period last year[26] Cost Management - The company’s total operating expenses for the quarter were $435 million, down from $472 million in the same period last year, indicating improved cost management[29]