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

Western Digital Corporation (WDC) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate by 12.2%. The company reported earnings of $1.44 per share in the prior-year quarter. Management anticipated fiscal fourth-quarter non-GAAP earnings per share to be $1.45 (+/- 20 cents).Quarterly revenues of $2.61 billion surged 30% year over year, surpassing the Zacks Consensus Estimate of $2.45 billion. The growth reflects rising demand for high-capacity storage driven by cloud computing and generative AI, both of which require massive and cost-effective storage backbones that HDDs still provide. On a sequential basis, revenues increased 14%. For the fiscal fourth quarter, the company forecasted non-GAAP revenues of $2.45 billion (+/- $150 million).For fiscal 2025, revenues skyrocketed 51% year over year to $9.5 billion. During the quarter, WDC shipped 190 exabytes of storage to customers, up 32% year over year, fueled by strong demand for nearline drives and growing volumes of its 26TB CMR and 32TB UltraSMR products. Also, shipments of its 26TB CMR and 32TB UltraSMR drives more than doubled from the previous quarter, topping 1.7 million units in June. This was one of the fastest ramps in its history.Western Digital Corporation Price, Consensus and EPS Surprise Western Digital Corporation price-consensus-eps-surprise-chart | Western Digital Corporation QuoteOn Feb. 21, 2025, Western Digital split its HDD and Flash businesses into two separate public companies. The new SanDisk now focuses on Flash and is well-positioned to serve market needs and tap into AI growth.Western Digital delivered performance that not only beat internal expectations but also boosted investor confidence. Shares of WDC jumped 8% in pre-market trading today. In the past year, shares have gained 18.1% against the Zacks Computer-Storage Devices industry’s fall of 4%.Image Source: Zacks Investment ResearchQuarter in DetailRevenues from the Cloud end market (90% of total revenues) climbed 36% year over year to $2.6 billion, driven by strong demand for higher-capacity nearline products.Revenues from the Client end market (5%) were up 2% year over year to $140 million.Revenues from the Consumer end market (5%) were down 12% year over year to $136 million.MarginsWDC reported a non-GAAP gross margin of 41.3%, up 610 basis points year over year and above its guidance (40-41%). The increase was driven by a shift to higher-capacity drives and strong cost control across manufacturing and the supply chain.Non-GAAP operating expenses decreased 16% year over year to $345 million, but were slightly above guidance ($330-$340 million), mainly due to higher variable compensation from better-than-expected performance.Non-GAAP operating income totaled $732 million, up 147% year over year.Balance Sheet & Cash FlowAs of June 27, 2025, cash and cash equivalents were $2.1 billion compared with $3.47 billion reported as of March 28, 2025.The long-term debt (including the current portion) was $4.7 billion as of June 27, 2025, compared with $7.3 billion as of March 28.Western Digital generated $746 million in cash from operations compared with $366 million in the prior-year quarter. Free cash flow amounted to $675 million in the quarter under review, up 139%.With strong cash flow, a solid balance sheet and confidence in its business outlook, WDC’s board approved up to $2 billion in share buybacks. In the quarter, the company repurchased about 2.8 million shares for $149 million.Fiscal Q1 2026 OutlookStrong business momentum, particularly in cloud storage, is driving expectations for another solid quarter. At the mid-point of its guidance, Western Digital anticipates non-GAAP revenues of $2.7 billion (+/- $100 million), up 22% year over year. The Zacks Consensus Estimate is currently pegged at $2.55 billion.Management projects non-GAAP earnings of $1.54 (+/- 15 cents). The Zacks Consensus Estimate is currently pegged at $1.40.WDC expects non-GAAP gross margin in the range of 41-42%. Non-GAAP operating expenses are expected to be between $370 million and $380 million.WDC’s Zacks RankCurrently, Western Digital sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks hereRecent Performance of Other CompaniesSeagate Technology Holdings plc (STX) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.Non-GAAP revenues of $2.44 billion beat the Zacks Consensus Estimate by 1.6%. Revenues came in above the midpoint of guidance, rising 30% year over year. Cadence Design Systems (CDNS) reported second-quarter 2025 non-GAAP earnings per share (EPS) of $1.65, which beat the Zacks Consensus Estimate by 5.1%. The bottom line increased 28.9% year over year, exceeding management’s guided range of $1.55-$1.61. Revenues of $1.275 billion beat the Zacks Consensus Estimate by 1.3% and increased 20.3% year over year. The figure beat CDNS’ guided range of $1.25-$1.27 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.SAP SE (SAP) reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.63 per share. Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues of €9.03 billion ($10.24 billion) on a non-IFRS basis, representing a 9% year-over-year increase (up 12% at constant currency). The Zacks Consensus estimate was pegged at $10.37 billion.One Big Gain, Every Trading DayTo help you take full advantage of this market, you’re invited to access every stock recommendation in all our private portfolios - for just $1.Zacks private portfolio services that closed 256 double and triple-digit winners in 2024 alone. That’s about one big gain every day the market was open. Of course, not all our picks are winners, but members have seen recent gains as high as +627% +1,340%, and +1,708%.Imagine how much you could profit with a steady stream of real-time picks from all our services that cover a number of strategies to suit a variety of investing and trading styles.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC): Free Stock Analysis Report Seagate Technology Holdings PLC (STX): Free Stock Analysis Report SAP SE (SAP): Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks