10-QPeriod: Q3 FY2025

WESTERN DIGITAL CORP Quarterly Report for Q3 Ended Mar 28, 2025

Filed May 2, 2025For Securities:WDC

Summary

Western Digital Corporation (WDC) has reported a significant turnaround in its financial performance for the nine months ending March 28, 2025, compared to the prior year, largely driven by the successful separation of its Flash business and a strong rebound in its core HDD operations. Revenue for the nine months surged by 60% to $6.915 billion, with net income from continuing operations reaching $1.391 billion, a dramatic improvement from a net loss of $519 million in the prior year period. This recovery is attributed to a substantial increase in units sold and a significant rise in average selling prices, particularly in the Cloud segment, which saw 80% revenue growth. The separation of the Flash business, completed in February 2025, has positioned Western Digital to focus exclusively on its HDD segment. While the balance sheet reflects the impact of this separation, with total assets significantly lower than the prior year primarily due to the divestiture of the Flash operations, the company has strengthened its cash position and improved its operational efficiency. Key financial metrics such as gross profit and gross margin have seen substantial improvement, underscoring the recovery in the HDD market and the company's effective management of pricing and product mix.

Financial Highlights

52 data points
Beta

Revenue

$2.29B

39.8% Gross Margin

Net Income

$520.00M

22.7% Net Margin

EPS (Diluted)

$1.42

Total Assets

$16.37B

Cash & Equivalents

$3.48B

Free Cash Flow

$379.00M

Financial Statements
Beta
Revenue$2.29B
Cost of Revenue$1.38B
Gross Profit$912.00M
SG&A Expenses$108.00M
Operating Expenses$152.00M
Operating Income$760.00M
Net Income$520.00M
EPS (Basic)$1.46
EPS (Diluted)$1.42
Shares Outstanding (Basic)348.00M
Shares Outstanding (Diluted)358.00M

Key Highlights

  • 1Revenue increased by 60% to $6.915 billion for the nine months ended March 28, 2025, compared to $4.313 billion in the prior year, driven by higher units sold and increased average selling prices.
  • 2Net income from continuing operations was $1.391 billion for the nine months ended March 28, 2025, a significant improvement from a net loss of $519 million in the same period last year.
  • 3The company successfully completed the separation of its Flash business unit, now operating as Sandisk Corporation, allowing Western Digital to focus solely on its HDD segment.
  • 4Gross profit more than doubled to $2.625 billion for the nine months ended March 28, 2025, with gross margin improving by approximately 13 percentage points.
  • 5Cloud revenue experienced robust growth, up 80% for the nine months ended March 28, 2025, indicating strong demand from data center expansions.
  • 6Total assets decreased significantly to $16.368 billion from $24.188 billion, reflecting the impact of the Flash business separation.
  • 7Western Digital declared its first quarterly cash dividend of $0.10 per share, signaling a return to shareholder returns.

Frequently Asked Questions

The substantial improvement in revenue and profitability is primarily driven by the separation of the Flash business, which has allowed Western Digital to focus on its core HDD operations. This, coupled with an improved supply-demand dynamic in the HDD market, led to higher unit shipments and significantly increased average selling prices, particularly in the Cloud segment.

The separation has led to a decrease in total assets, as the Flash business's assets are no longer consolidated. However, it has allowed Western Digital to concentrate on its HDD segment and improve operational efficiency. The company also retains a 19.9% stake in Sandisk, which it expects to monetize within a year.

The company anticipates long-term growth driven by digital transformation, including the AI data cycle. The focus on the HDD segment, improved market conditions, and a strengthened balance sheet with positive cash flow from operations position the company for continued recovery and potential growth. The initiation of a quarterly dividend also signals management's confidence in future performance.

Western Digital recently settled a significant intellectual property litigation matter with MR Technologies, GmbH for $130 million, reversing previously recorded charges. However, the SPEX Technologies, Inc. patent infringement case, where a jury awarded $316 million plus prejudgment interest, is still being contested by the company, and it believes the judgment will be reversed or vacated. While currently not accrued as a liability, this remains a potential risk.