Western Digital Q4 Earnings Beat on Solid Top-Line Growth, Shares Jump

Core Insights - Western Digital Corporation (WDC) reported strong financial performance in Q4 fiscal 2025, with non-GAAP earnings of $1.66 per share, exceeding estimates by 12.2% and up from $1.44 in the prior year [1] - The company’s quarterly revenues reached $2.61 billion, a 30% increase year over year, driven by demand for high-capacity storage solutions [2] - For fiscal 2025, revenues surged 51% year over year to $9.5 billion, with significant growth in shipments of high-capacity drives [3] Financial Performance - WDC's Q4 revenues from the Cloud end market, which constitutes 90% of total revenues, increased by 36% year over year to $2.6 billion [5] - Non-GAAP gross margin improved to 41.3%, up 610 basis points year over year, attributed to a shift towards higher-capacity drives and effective cost control [6] - Non-GAAP operating income rose 147% year over year to $732 million, while operating expenses decreased by 16% to $345 million [9] Market Dynamics - The demand for high-capacity storage is being driven by cloud computing and generative AI, which require extensive and cost-effective storage solutions [2] - WDC shipped 190 exabytes of storage in Q4, marking a 32% increase year over year, with nearline drives and 26TB CMR and 32TB UltraSMR products seeing significant demand [3][8] Strategic Developments - On February 21, 2025, WDC split its HDD and Flash businesses into two separate public companies, with the new SanDisk focusing on Flash and AI growth [4] - The company repurchased $149 million in stock during the quarter and authorized up to $2 billion in buybacks, reflecting strong cash flow [11] Future Outlook - For Q1 fiscal 2026, WDC anticipates non-GAAP revenues of $2.7 billion, a 22% year-over-year increase, and non-GAAP earnings of $1.54 per share [12][13]