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Western Digital Reports Fiscal Second Quarter 2025 Financial Results

Western Digital Corp. (Nasdaq: WDC) today reported fiscal second quarter 2025 financial results. “As we finalize the separation of our businesses, we are confident that both Western Digital and Sand...

Business Wire

News Summary

  • Second quarter revenue was $4.29 billion, up 5% sequentially (QoQ). Cloud revenue increased 6% (QoQ), Client revenue decreased 3% (QoQ) and Consumer revenue increased 14% (QoQ).
  • Second quarter GAAP earnings per share (EPS) was $1.63 and Non-GAAP EPS was $1.77.
  • Expect fiscal third quarter 2025 revenue to be in the range of $3.75 billion to $3.95 billion.
  • Expect Non-GAAP EPS in the range of $0.90 to $1.20.

SAN JOSE, Calif.: Western Digital Corp. (Nasdaq: WDC) today reported fiscal second quarter 2025 financial results.

“As we finalize the separation of our businesses, we are confident that both Western Digital and Sandisk will continue driving innovation and providing compelling storage solutions to customers while delivering long-term shareholder value,” said David Goeckeler, Western Digital CEO. “We expect that our strong performance in HDD and our strategic approach to managing our Flash business within the New Era of NAND will allow each company to capture the growing demand for storage driven by the AI Data Cycle.”

Q2 2025 Financial Highlights

($ in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Q2 2025

Q1 2025

Q/Q

 

Q2 2025

Q1 2025

Q/Q

Revenue

 

$4,285

$4,095

up 5%

 

$4,285

$4,095

up 5%

Gross Margin

 

35.4%

37.9%

down 2.5 ppt

 

35.9%

38.5%

down 2.6 ppt

Operating Expenses

 

$664

$809

down 18%

 

$674

$691

down 2%

Operating Income

 

$852

$742

up 15%

 

$864

$884

down 2%

Diluted Net Income Attributable to Common Shareholders

 

$581

$481

up 21%

 

$633

$634

down 0%

Net Income Per Share

 

$1.63

$1.35

up 21%

 

$1.77

$1.78

down 1%

 

 

GAAP

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

Q2 2025

Q2 2024

Y/Y

 

Q2 2025

Q2 2024

Y/Y

Revenue

 

$4,285

$3,032

up 41%

 

$4,285

$3,032

up 41%

Gross Margin

 

35.4%

16.2%

up 19.2 ppt

 

35.9%

15.5%

up 20.4 ppt

Operating Expenses

 

$664

$702

down 5%

 

$674

$561

up 20%

Operating Income (Loss)

 

$852

$(210)

*

 

$864

$(91)

*

Diluted Net Income (Loss) Attributable to Common Shareholders

 

$581

$(301)

*

 

$633

$(243)

*

Net Income (Loss) Per Share

 

$1.63

$(0.93)

*

 

$1.77

$(0.75)

*

*

 

not a meaningful figure

The company had an operating cash inflow of $403 million and ended the quarter with $2.29 billion of total cash and cash equivalents.

Additional details can be found within the company’s earnings presentation, which is accessible online at investor.wdc.com.

End Market Summary

Revenue ($M)

Q2 2025

Q1 2025

Q/Q

Q2 2024

Y/Y

Cloud

$

2,346

$

2,208

up 6%

$

1,071

up 119%

Client

 

1,168

 

1,209

down 3%

 

1,122

up 4%

Consumer

 

771

 

678

up 14%

 

839

down 8%

Total Revenue

$

4,285

$

4,095

up 5%

$

3,032

up 41%

In the fiscal second quarter:

  • Cloud represented 55% of total revenue at $2.3 billion, up 6% sequentially and more than doubling year-over-year. On a sequential basis, the growth was due to an increase in nearline HDD shipments while Flash was down. On a year-over-year basis, both HDD and Flash revenue grew.
  • Client represented 27% of total revenue at $1.2 billion, down 3% sequentially and up 4% year-over-year. Compared to last quarter, Flash revenue declined as bit shipment growth was offset by pricing pressure, while HDD revenue was flat. Year-over-year, an increase in Flash revenue was primarily due to higher ASPs as bit shipments declined and was partially offset by lower HDD revenue.
  • Consumer represented 18% of total revenue at $0.8 billion, up 14% sequentially and down 8% year-over-year. Sequentially, both Flash and HDD bit shipments grew and drove revenue growth while pricing was a headwind. Year-over-year, the decrease was due to lower shipments in Flash and HDD and pricing in Flash.

Business Outlook for Fiscal Third Quarter of 2025

 

Three Months Ending

 

March 28, 2025

 

GAAP

 

Non-GAAP(1)

Revenue ($B)

$3.75 - $3.95

 

$3.75 - $3.95

Gross margin

31.0% - 33.0%

 

31.5% - 33.5%

Operating expenses ($M)

$790 - $810

 

$700 - $720

Interest and other expense, net ($M)

~ $100

 

~ $100

Tax rate(2)

N/A

 

14.0% - 16.0%

Diluted earnings per share

N/A

 

$0.90 - $1.20

Diluted shares outstanding (in millions)

~ 358

 

~ 358

_______________

(1) 

 

Non-GAAP gross margin guidance excludes stock-based compensation expense, amortization of acquired intangible assets and amortization of patent licenses related to a litigation matter, totaling approximately $20 million to $30 million. The company’s Non-GAAP operating expenses guidance excludes stock-based compensation expense and expenses related to business separation costs, totaling approximately $80 million to $100 million. In the aggregate, Non-GAAP diluted earnings per share guidance excludes these items totaling $100 million to $130 million. The timing and amount of these charges excluded from Non-GAAP gross margin, Non-GAAP operating expenses, and Non-GAAP diluted earnings per share cannot be further allocated or quantified with certainty. Additionally, the timing and amount of additional charges the company excludes from its Non-GAAP tax rate and Non-GAAP diluted earnings per share are dependent on the timing and determination of certain actions and cannot be reasonably predicted. Accordingly, full reconciliations of Non-GAAP gross margin, Non-GAAP operating expenses, Non-GAAP tax rate and Non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (gross margin, operating expenses, tax rate and diluted earnings per share, respectively) are not available without unreasonable effort.

 

(2)

 

Non-GAAP tax rate is determined based on a percentage of Non-GAAP pre-tax income or loss. Our estimated Non-GAAP tax rate may differ from our GAAP tax rate (i) due to differences in the tax treatment of items excluded from our Non-GAAP net income or loss; (ii) due to the fact that our GAAP income tax expense or benefit recorded in any interim period is based on an estimated forecasted GAAP tax rate for the full year, excluding loss jurisdictions; and (iii) because our GAAP taxes recorded in any interim period are dependent on the timing and determination of certain GAAP operating expenses.

 

Investor Communications

The investment community conference call to discuss these results and the company’s business outlook for the fiscal third quarter of 2025 will be broadcast live online today at 1:30 p.m. Pacific/4:30 p.m. Eastern. The live and archived conference call/webcast and the earnings presentation can be accessed online at investor.wdc.com.

About Western Digital

Western Digital is on a mission to unlock the potential of data by harnessing the possibility to use it. With Flash and HDD franchises, underpinned by advancements in storage technologies, we create breakthrough innovations and powerful data storage solutions that enable the world to actualize its aspirations. Core to our values, we recognize the urgency to combat climate change and have committed to ambitious carbon reduction goals approved by the Science Based Targets initiative. Learn more about Western Digital and the Western Digital®, Sandisk® and WD® brands at www.westerndigital.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for: the company’s business outlook and operational and financial performance for the fiscal third quarter of 2025 and beyond; the performance and characteristics of the company’s products and product portfolio; the company’s capital investment strategy; demand and market conditions for our products and growth opportunities; our expectations regarding our plan to separate our HDD and Flash business units; and the proliferation of the AI Data Cycle and its impact on the company’s industry, products and performance. These forward-looking statements are based on management’s current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The preliminary financial results for the company’s fiscal second quarter ended December 27, 2024 included in this press release represent the most current information available to management. Actual results when disclosed in the company’s Form 10-Q may differ from these preliminary results as a result of the completion of the company’s financial closing procedures; final adjustments; completion of the review by the company’s independent registered accounting firm; and other developments that may arise between now and the filing of the company’s Form 10-Q. Other key risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: volatility in global economic conditions and demand for the company’s products; operational, financial and legal challenges and difficulties inherent in implementing a separation of the company’s HDD and Flash businesses; inflation; increase in interest rates and economic recession; future responses to and effects of global health crises; the impact of business and market conditions; the outcome and impact of the company’s announced separation transaction, including with respect to customer and supplier relationships, regulatory and contractual restrictions, stock price volatility and the diversion of management’s attention from ongoing business operations and opportunities; the impact of competitive products and pricing; the company’s development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and the company’s strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; the company’s level of debt and other financial obligations; changes to the company’s relationships with key customers; compromise, damage or interruption from cybersecurity incidents or other data system security risks; actions by competitors; the company’s ability to achieve its GHG emissions reduction and other ESG goals; the impact of international conflicts; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and other risks and uncertainties listed in the company’s filings with the Securities and Exchange Commission (the “SEC”), including the company’s Annual Report on Form 10-K filed with the SEC on August 20, 2024 to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements to reflect new information or events, except as required by law.

Western Digital, the Western Digital logo, Sandisk and WD are registered trademarks or trademarks of Western Digital Corporation or its affiliates in the US and/or other countries.

WESTERN DIGITAL CORPORATION
PRELIMINARY CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited; on a US GAAP basis)

 

 

December 27,
2024

 

June 28,
2024

 

 

 

 

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

2,291

 

$

1,879

Accounts receivable, net

 

2,597

 

 

2,166

Inventories

 

3,420

 

 

3,342

Other current assets

 

1,064

 

 

673

Total current assets

 

9,372

 

 

8,060

Property, plant and equipment, net

 

2,930

 

 

3,167

Notes receivable and investments in Flash Ventures

 

861

 

 

991

Goodwill

 

9,729

 

 

10,032

Other intangible assets, net

 

77

 

 

78

Other non-current assets

 

2,487

 

 

1,860

Total assets

$

25,456

 

$

24,188

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY

Current liabilities:

 

 

 

Accounts payable

$

1,627

 

$

1,411

Accounts payable to related parties

 

369

 

 

313

Accrued expenses

 

1,576

 

 

1,480

Income taxes payable

 

468

 

 

525

Accrued compensation

 

516

 

 

608

Current portion of long-term debt

 

150

 

 

1,750

Total current liabilities

 

4,706

 

 

6,087

Long-term debt

 

7,216

 

 

5,684

Other liabilities

 

1,188

 

 

1,370

Total liabilities

 

13,110

 

 

13,141

Convertible preferred stock, aggregate liquidation preference of $265 and $257, respectively

 

229

 

 

229

Total shareholders’ equity

 

12,117

 

 

10,818

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