10-K 0001628280-26-057139 (2026-08-14) vs 10-K 0000106040-25-000038 (2025-08-14)
| Section | Compared text | Words now | Changed |
|---|
| Risk Factors | Item 1A | 12,693 |
23.0% |
| MD&A | Item 7 | 6,137 |
42.8% |
| Legal Proceedings | Item 3, via Note 16 – Legal Proceedings | 559 |
25.2% |
| Accounting Policies | Item 8, Note 1 – Organization and Basis of Presentation | 4,334 |
4.3% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
MD&A 337 words changed in this paragraph; it is 36% similar to last year's version.
On In the previous fiscal year, on February 21, 2025 (the “Separation Date”), 2025, we completed the separation of our HDD and Flash business units (the “Separation”) Separation to create two independent public companies, with Western Digital focusing on WD continuing our existing HDD business and Sandisk Corporation (“Sandisk”), Sandisk, formerly a wholly-owned subsidiary of the Company, holding operating the Flash business. We believe the Separation has better positions each business unit to positioned us as a pure-play HDD company that can execute innovative technology and product development, capitalize on unique growth opportunities, extend respective our leadership positions, position, operate more efficiently with distinct capital structures, efficiently, and pursue capital allocation strategies that to maximize long-term shareholder value. The Separation was effected through a pro rata distribution of 80.1% of the outstanding shares of Sandisk common stock to holders of the Company’s common stock as of February 12, 2025, the record date for the distribution. The Company did not issue fractional shares of Sandisk common stock in connection with the distribution. Sandisk is now an independent public company, and Sandisk common stock commenced trading “regular way” under the symbol “SNDK” on the Nasdaq Stock Market LLC (“Nasdaq”) on February 24, 2025, which was the next trading day following the distribution date. The Company continues to trade on Nasdaq under the symbol “WDC” following the Separation. Following the Separation, the Company no longer consolidates Sandisk within the Company’s financial results. As part of the Separation, the Company we initially retained 28.8 million shares of Sandisk common stock, or a 19.9% stake. During the quarter ended stock. In June 27, 2025, the Company disposed of we used 21.3 million shares of Sandisk common stock, along with $4 million in cash, stock in a tax-free exchange for to reduce approximately $800 million in principal amount of the Company’s our term loan A-3. The Company expects A-3 (the “Term Loan A-3”). In February 2026, we executed a series of transactions pursuant to monetize its which we used 5.8 million shares of Sandisk common stock to further reduce our debt and fully redeem our previously outstanding 4.75% senior unsecured notes due 2026, 2.85% senior notes due 2029, 3.10% senior notes due 2032 and Term Loan A-3 through a tax-free exchange. In the fourth quarter of 2026, we completed two separate equity-for-equity exchanges, which used our remaining stake in 1.7 million shares of Sandisk within one year from the Separation Date. common stock to acquire 4.8 million shares of our common stock, thereby reducing our share count. As of July 3, 2026, we no longer held shares of Sandisk common stock.
Source: Item 7, 10-K 0001628280-26-057139 vs Item 7, 10-K 0000106040-25-000038
Risk Factors 187 words changed in this paragraph; it is 67% similar to last year's version.
We are subject to laws, rules and regulations relating to the collection, use, security and privacy of data, including data that relates to or identifies an individual person. We are also subject to the terms of our privacy policies and obligations to third parties related to privacy, data protection and security. In many cases, these requirements apply not only to third-party transactions, but also to transfers of information between our information systems and our subsidiaries, and among us, our subsidiaries and other parties with which we have commercial relations. Our possession and use of data, including personal data and employee data in conducting our business, subjects us to legal and regulatory obligations that require us to notify vendors, customers or employees or other parties with which we have commercial relations of a data security breach and to respond to regulatory inquiries and to enforcement proceedings. Managing these notifications, especially in large volumes, can lead to significant expenses, even with cybersecurity insurance coverage. Laws and regulations relating to the collection, use, security and privacy of data change over time and new laws and regulations become effective from time to time. We are subject to notice and privacy statement requirements, as well as obligations to respond to data subject requests. Global privacy and data protection legislation, enforcement and policy activity in this area are rapidly expanding and evolving, including with respect to the use of AI, and may be inconsistent from jurisdiction to jurisdiction. We may also be subject to restrictions on cross-border data transfers and requirements for localized storage of data that could increase our compliance costs and risks and affect the ability of our global operations to coordinate activities and respond to customers and individuals. Our use of AI technology may create new privacy and security risks, especially where personal data is involved. The use of AI may raise ethical concerns, lead to flawed outcomes, or present other privacy and security risks that could make it more difficult to adopt or implement effectively. Compliance requirements or even our inadvertent failure to comply with applicable laws may cause us to incur substantial costs, subject us to proceedings by governmental entities or others, and cause us to incur penalties or other significant legal liability or lead us to change our business practices.
Source: Item 1A, 10-K 0001628280-26-057139 vs Item 1A, 10-K 0000106040-25-000038
Legal Proceedings 84 words changed in this paragraph; it is 57% similar to last year's version.
In August 2022, MRT filed an action against the Company, alleging infringement of certain patents related to HDD media. Following a jury trial and judgment in favor of the plaintiff, in the fourth quarter of fiscal year 2024, the Company recognized an aggregate liability for this matter of $384 million with $291 million recognized as an Operating expense under Litigation matter for the year ended June 28, 2024 and $93 million recognized as Other non-current assets for the patent licenses, to be amortized over their remaining lives. In April 2025, the Company reached a global settlement of $130 million for all pending matters with MRT. As a result of the settlement, the Company reversed $201 million of previously recorded charges in Operating expense under Litigation matter and $6 million of post-judgment interest previously recorded in Other income (expense), net.
Source: Item 3, via Note 16 – Legal Proceedings, 10-K 0001628280-26-057139 vs Item 3, via Note 17 – Legal Proceedings, 10-K 0000106040-25-000038
Accounting Policies 51 words changed in this paragraph; it is 80% similar to last year's version.
The Company manufactures, markets, and sells data storage devices and solutions in the United States (“U.S.”) and in foreign countries globally through its sales personnel, dealers, distributors, retailers, and subsidiaries. Its broad extensive portfolio of technology and products addresses the following key end markets: Cloud, Client, “Cloud,” “Client,” and Consumer. “Consumer.” Cloud is comprised primarily of products for public or private cloud environments and enterprise customers. Through the Client end market, the Company provides its OEM original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance HDD solutions across desktop and notebooks. The Consumer end market provides a broad wide range of retail and other end-user products, which capitalize on the strength of the Company’s product brand recognition and vast presence around the world. The Company also generates immaterial license and royalty revenue from its extensive intellectual property portfolio, which is included in each of these three end market categories.
Source: Item 8, Note 1 – Organization and Basis of Presentation, 10-K 0001628280-26-057139 vs Item 8, Note 1 – Organization and Basis of Presentation, 10-K 0000106040-25-000038
Every change, by type
Sentences and paragraphs of WDC's Risk Factors and MD&A, 10-K 2026-08-14 against 10-K 2025-08-14.
Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
Additionally, new technologies could impact demand for our products in unforeseen or unexpected ways. For example, if a shift away from Cloud and toward on-premises hardware diminishes the need for large-scale data center infrastructure, demand
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
Long-term agreements expose us to certain execution, financial, and market risks, which could be significant.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
We have entered into long-term agreements with certain customers that commit us to deliver and our customers to purchase substantial volumes of products over multi-quarter or multi-year periods. These agreements also generally commit us to sell agreed volumes to these customers at predetermined or formula-based prices for the duration of the contract terms. As a result, we may be obligated to continue selling products to these customers even when demand from other customers, prevailing market prices, or other sales opportunities would be more favorable to us, and we may be unable to take full advantage of periods of rising prices, increased demand, or supply shortages. If market prices for our products increase above the prices set under these agreements, or if higher-margin or otherwise more attractive alternatives become available, our commitments under these agreements could prevent us from realizing the benefit of those conditions, which could result in significant opportunity costs and could have a material adverse effect on our results of operations and financial condition.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
Our ability to fulfill our obligations under these agreements depends on a number of factors, including our manufacturing capacity, production yields, supply chain performance, and the availability of raw materials and other critical inputs. There can be no assurance that we will be able to perform these contractual obligations throughout the contract terms without disruption or shortfall. If we are unable to deliver products in the quantities, at the times, or meeting the specifications required under these agreements, we may be subject to pricing or volume reductions, contractual damages, other financial losses, or early termination. Any failure to perform could harm our customer relationships, damage our reputation, and have a material adverse effect on our results of operations and financial condition.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
If a customer were to breach its purchase obligations, including by failing to meet its purchase commitments, or if a customer were to terminate the agreement due to our material breach of supply commitments, we may need to find alternative customers for any affected product volumes. Depending on market conditions at the time, we may be unable to resell those products at comparable prices, or at all, which could result in reduced revenue, lower margins, excess inventory, or manufacturing underutilization or asset impairment charges, and could have a material adverse effect on our business, results of operations, and financial condition.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
Each agreement provides for certain remedies designed to protect us if the customer fails to perform its purchase obligations. In such event, these contractual remedies are expected to offset at least some portion of revenue that may be lost due to the customer’s failure to perform, but they may not fully offset such lost revenue depending on the reason for such nonperformance, our ability to recover in any action and other factors. Any enforcement of these contractual remedies by us could be costly and time-consuming and could adversely affect our customer relationships. If we are unable or unsuccessful in enforcing or if we choose not to enforce any contractual remedy in the event of a customer’s failure to perform its purchase obligations, we may experience consequences that could have a material adverse effect on our business and results of operations.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
In addition, armed conflicts and heightened geopolitical tensions can result in sanctions, export controls, tariffs and other trade restrictions, limit or restrict our ability to access certain markets and disrupt critical logistics networks, including air and ocean freight routes. For example, the escalation of the conflict involving Iran and heightened tensions in the Middle East could cause disruption to critical logistics and supply routes, which could affect the availability and cost of materials used in our business. Additionally, China has imposed export restrictions on rare earth minerals and related materials critical to semiconductor and hard drive manufacturing. These developments have increased, and could further increase, costs for, or limit the availability of, energy, rare earth minerals, materials, components and transportation, constrain manufacturing capacity and may require us to redesign products or reconfigure aspects of our global supply chain. Geopolitical instability may also elevate cybersecurity risks, including state-sponsored attacks, which could disrupt our operations or those of our suppliers, customers or partners, and further adversely affect demand for our products.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
requirements (including encryption and other technology), trade wars, tariffs and complex customs regulations; difficulties in managing international operations, including appropriate internal controls; and fluctuations in financial markets and interruptions to supply chains from public health crises.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
We may be adversely affected by the risks, challenges, and evolving regulatory landscape associated with the use of AI in our operations, product development, and business practices.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
We are increasingly leveraging AI technologies, including generative AI applications and tools, to support and enhance our various operational processes. While AI may promote efficiency and offer analytical advantages, it is complex and rapidly-changing, and its implementation carries inherent risks. Implementation of AI technologies can be costly and time-consuming, and the effectiveness or potential benefits of such technologies may vary depending on use case, integration, and oversight. The incorporation of AI algorithms or training methodologies into our operations or decision-making processes may result in flawed, irrelevant, insufficient, inaccurate, biased or non-compliant outputs, potentially impacting our strategic choices, operational effectiveness, and regulatory compliance. These inaccuracies can arise from limitations in training data, algorithmic design, or unintended consequences of machine learning models. Actual or perceived deficiencies, failures or misuse in our implementation or use of AI could result in competitive disadvantages, operational inefficiencies, regulatory action, legal liability, brand or reputational harm, and negative financial results.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedRisk Factors
In addition, the use of AI in the development of our products could potentially lead to ambiguities in intellectual property ownership, infringement or misappropriation risks, which could impact our competitive position and expose us to litigation, monetary penalties, or operational disruptions. The unauthorized or unapproved use of generative AI tools by our employees, contractors, or other third parties, as well as overreliance on AI automation or agentic AI without appropriate human oversight, may lead to the inadvertent disclosure of confidential, proprietary, or personal information, flawed or unauthorized actions, or other adverse consequences, including disruptions to business operations, exposing us to data security, privacy, legal, regulatory, and reputational risks.
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AddedRisk Factors
Misuse of such tools can also result in violations of applicable laws and regulations, including data protection and intellectual property laws. Governments worldwide are adopting or proposing AI-specific regulations, including the European Union’s Artificial Intelligence Act, as well as various proposed frameworks in the U.S., China, and other jurisdictions. These regulations may impose requirements on the development, deployment, and use of AI systems in our products or operations, require jurisdiction-specific product configurations, increase compliance costs, or limit our ability to leverage AI technologies. The evolving and potentially divergent nature of these regulations creates uncertainty and could adversely affect our business. Public and governmental perceptions regarding the use and impact of AI may evolve over time and could give rise to new regulatory requirements, legal liability, or reputational harm. If we enable or offer products that support AI solutions that draw
Read it in 10-K 2026-08-14 at sec.gov ↗
RemovedRisk Factors
adversarial attacks, which could result in unauthorized access to or leakage of sensitive information. Geopolitical tensions or conflicts may also create heightened risk of cybersecurity incidents.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
We are subject to risks related to the separation of Sandisk, our former Flash business, into an independent public company.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
On February 21, 2025, we completed our planned spin-off of our Flash business unit from our remaining HDD business (which we refer to as the Separation), as a result of which Sandisk became an independent public company. There can be no assurance that the anticipated benefits of the Separation will be realized, or that the costs or dis-synergies of the Separation (including costs of related restructuring transactions) will not exceed the anticipated amounts, in each case in the monetary or other amounts or within the timeframes that were anticipated. The Separation has and may continue to impose challenges on us and our business, such as potential business disruption; the diversion of management time on matters relating to the Separation; the impact on our ability to retain talent; and potential impacts on our relationships with our customers, suppliers, employees,
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
and other counterparties. In addition, following the Separation, we are a smaller and less diversified company, which could make us more vulnerable to changing market conditions.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
In connection with the Separation, we and Sandisk entered into various agreements to effect the Separation and provide for the temporary framework of the relationship between us and Sandisk following the Separation, including, among others, a separation and distribution agreement, a tax matters agreement, and a transition services agreement. Performance under these agreements or other related conditions outside of our control could materially affect our operations and future financial results.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
We retained an equity interest in Sandisk in connection with the Separation, of which we divested a portion in June 2025 in a debt-for-equity exchange. As of June 27, 2025, we retain approximately 7 million shares of common stock in Sandisk. We cannot predict the trading price of shares of Sandisk’s common stock and the market value of the Sandisk shares is subject to market volatility and other factors outside of our control. We expect to monetize our remaining stake in Sandisk within one year from the Separation Date, but there can be no assurance regarding the timing of, or timeframe over which, such divestiture or divestitures may occur, or the amount of proceeds received by us in connection with any such divestitures.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
We also face significant competition in the distribution channel (in which our distribution customers sell to small computer manufacturers, dealers, systems integrators and other resellers, as well as to Cloud customers in some cases) as a result of limited product qualification programs and a significant focus on price and availability of product. If we fail to respond to changes in demand in the distribution market, our business could suffer. Additionally, if the distribution market weakens as a result of technology transitions or a significant change in consumer buying preference, or if we experience significant price declines due to demand changes in the distribution channel, our operating results would be negatively impacted. Negative changes in the creditworthiness or the ability to access credit, or the bankruptcy or shutdown of any of our significant retail or distribution partners would harm our revenue and our ability to collect outstanding receivable balances.
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RemovedRisk Factors
Our control over the operations of our business ventures may be limited, and our interests could diverge from our strategic partners’ interests regarding ongoing and future activities.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
Our strategic relationships are subject to additional risks that could harm our business, including, but not limited to, the following: failure by our strategic partners to comply with applicable laws or employ effective internal controls; difficulties and
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedRisk Factors
Our ability to meet our debt service obligations, comply with our debt covenants and deleverage depends on our cash flows and financial performance, which are affected by financial, business, economic and other factors. The rate at which we will be able to or choose to deleverage is uncertain. Failure to meet our debt service obligations or comply with our debt covenants could result in an event of default under the applicable indebtedness. We may be unable to cure, or obtain a waiver of, an event of default or otherwise amend our debt agreements to prevent an event of default thereunder on terms acceptable to us or at all. In that event, the debt holders could accelerate the related debt, which may result in the cross-acceleration or cross-default of other debt, leases or other obligations. We also utilize convertible debt in our capital structure. The $1.6 billion principal amount of our convertible notes will be convertible at the option of the holder beginning on August 15, 2028 and, prior to that date, may be convertible in any given calendar quarter depending on the trading price of our common stock during the prior calendar quarter. During the calendar quarter ended June 30, 2025, the sale price conditional conversion feature of the convertible notes was triggered and, as a result, the holders of the convertible notes have the right to convert the notes during the next succeeding calendar quarter. As such, these convertible notes were classified as current debt as of June 28, 2025. In the event that holders of our convertible debt exercise conversion rights, we will be required to settle the principal amount of any converted notes in cash. If we do not have sufficient funds available to repay indebtedness when due, whether at maturity, by acceleration or upon conversion, we may be required to sell important strategic assets; refinance our existing debt; incur additional debt or issue common stock or other equity securities, which we may not be able to do on terms acceptable to us, in amounts sufficient to meet our needs or at all. Our inability to service our debt obligations or refinance our debt could harm our business. Further, if we are unable to repay, refinance or restructure our secured indebtedness, the holder of such debt could proceed against the collateral securing the indebtedness. Refinancing our indebtedness may also require us to expense previous debt issuance costs or to incur new debt issuance costs.
Read it in 10-K 2025-08-14 at sec.gov ↗
RewordedRisk Factors
We are also subject to These risks that could harm our business associated with our global manufacturing operations, global sales efforts and our utilization of contract manufacturers, including: include: the need to obtain governmental approvals and compliance with evolving foreign regulations; the need to comply with regulations on international business, including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010, the anti-bribery laws of other countries and rules regarding conflict minerals; the effects of political and economic instability; exchange, currency and tax controls and reallocations; the ongoing development and applicability of global and local tax systems; weaker protection of IP rights; policies and financial incentives by governments in China, the United States, U.S., and countries in Europe and Asia designed to reduce dependence on foreign manufacturing capabilities; trade restrictions, such as export controls, export bans, import restrictions, embargoes, sanctions, license and certification requirements (including encryption and other technology), trade wars, tariffs and complex customs regulations; difficulties in managing international operations, including appropriate internal controls; and fluctuations in financial markets and interruptions to supply chains from public health crises.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
We utilize Our past debt financing levels have at times been substantial, and we may in our capital structure and may the future incur additional debt, including under our revolving credit facility, facility maturing in January 2027 (the “Revolving Credit Facility”), subject to customary conditions in our loan agreements.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
Our revenue growth is significantly dependent on the growth of international markets, and we may face challenges in international are subject to risks that could harm our business associated with our global manufacturing operations, global sales markets. efforts and our utilization of contract manufacturers.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
Cybersecurity Types of cybersecurity incidents can be caused by include but are not limited to ransomware, network or computer denial-of-service attacks, worms unauthorized access to and other malicious software programs theft of confidential data, or other attacks, including the covert introduction of malware to computers and networks, and the use of techniques or processes that change frequently, may be disguised or difficult to detect, or are designed to remain dormant until a triggering event, and may continue undetected for an extended period of time.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
We participate in a highly competitive Our industry that is subject to variations in average selling prices (“ASPs”) demand, pricing and demand, technological change and lengthy product qualifications, all of competitive factors, which can negatively impact our business.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
In the United States, the Tax Cuts and Jobs Act of 2017 (“TCJA”), the Inflation Reduction Act of 2022 (“IRA”), and U.S., the One Big Beautiful Bill Act of 2025 (“OBBBA”) each include (OBBBA) includes broad tax reform provisions.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
Some Further, some of our competitors offer products that we do not offer, which may allow them to win sales from us, and some of our customers may be developing storage solutions internally, which may reduce their demand for our products. us.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
We may incur additional expenses if our warranty provisions do not reflect the actual cost of resolving issues related to defects in our products, whether as a result of a product recall, epidemic products or if the failure or otherwise. rate is higher than we expected.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
This has caused, and may in the future cause, If our forecasts to exceed actual market demand, resulting in there could be periods of product oversupply, excess inventory, underutilization of manufacturing capacity and price decreases, which has impacted and could further impact our sales, ASPs and gross margin or require us to incur inventory write-downs or charges for unabsorbed manufacturing overhead, thereby negatively affecting our operating results and our financial condition.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
If demand declines for any reason, and/or we fail to respond to changes in demand demand, in the Cloud and hyperscale data center markets, or other key customers, our business could suffer.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
We have made and expect to continue to make acquisitions and divestitures (such divestitures, such as the recent Separation) separation of our former flash-based products (“Flash”) business in 2025 (the “Separation”), and engage in cost saving measures.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedRisk Factors
Additionally, new technologies could impact demand for our products in unforeseen or unexpected ways and Moreover, new products could substitute for our current products and make them obsolete, each of which would harm our business.
Read it in 10-K 2026-08-14 at sec.gov ↗
Quiet changesRisk Factors
We conduct our operations primarily at large, high-volume, purpose-built facilities in California and throughout Asia.
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Quiet changesRisk Factors
Our level Substantial levels of debt could have significant consequences, including limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes; requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes; and imposing financial and other restrictive covenants on our operations.
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Quiet changesRisk Factors
We may from time to time seek to refinance our substantial indebtedness by issuing additional shares of common stock or other securities that are convertible into common stock or grant the holder the right to purchase common stock, each of which may dilute our existing stockholders, reduce the value of our common stock, or both.
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AddedMD&A
The increasing long-term demand for data storage in the cloud is benefiting our HDD business. The adoption of AI and workloads driven by hybrid data are propelling growth in data storage as well. This creates an accelerated demand for higher-capacity drives, which have greater manufacturing complexity and longer production lead times. In response, customers are partnering with us earlier to support their future growth requirements and are extending the duration of their commercial arrangements, which improves our long-term visibility of demand.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedMD&A
In February 2026, we converted all remaining outstanding shares of our Preferred Shares, in accordance with their terms, into 7 million shares of our common stock.
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AddedMD&A
In June 2026, we fully settled the conversion obligation on $32 million in aggregate principal amount of our 2028 Convertible Notes that were tendered in March 2026 (the “Tendered Notes”). We used $32 million of cash to settle the principal amount of the Tendered Notes, as required by the indenture, and elected to use an additional $328 million of cash to settle the conversion premium instead of settling the premium with 0.8 million shares of our common stock.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedMD&A
Also in June 2026, we entered into separate, privately negotiated exchange agreements with certain holders of $858 million in aggregate principal of our 2028 Convertible Notes. Pursuant to these agreements, we fully settled the obligation for $860 million in cash (which reflected principal amount and a small inducement cost) and 21.3 million shares of our common stock.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedMD&A
During the year ended July 3, 2026, our repurchases under our Share Repurchase Program and our election to settle the conversion premium on the Tendered Notes in cash, instead of shares of common stock, aggregated $2.92 billion, which resulted in an effective impact to our outstanding shares of common stock of approximately 15.5 million shares.
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AddedMD&A
(1) Net revenue is attributed to geographic regions based on the ship-to location of the customer.
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AddedMD&A
Client revenue, representing 6% of total net revenue, increased by 31% in 2026 compared to 2025, driven by a 3% increase in exabytes sold and a 26% increase in ASPs per exabyte. The increase in exabytes sold and ASPs per exabyte were driven by dynamics largely consistent with our other end markets.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedMD&A
Consumer revenue, representing 5% of total net revenue, increased by 13% in 2026 compared to 2025, driven by a 1% increase in exabytes sold and a 12% increase in ASPs per exabyte. The increase in exabytes sold and ASPs per exabyte were driven by dynamics largely consistent with our other end markets.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedMD&A
Gross profit increased by $2.62 billion in 2026 compared to 2025. The increase was largely due to an increased volume of shipments, a better cost structure on our newer generation products, a mix shift towards higher capacity drives and improved pricing. Gross margin increased 10.1 percentage points in 2026 compared to 2025. The shift toward higher capacity drives has benefited gross margin through both a better cost structure and improved pricing.
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AddedMD&A
Selling, general and administrative expense decreased by $17 million or 3% in 2026 compared to 2025, as 2025 included higher costs associated with the final planning and execution of the Separation, including transitional personnel costs and higher outside service fees.
Read it in 10-K 2026-08-14 at sec.gov ↗
AddedMD&A
Over the next five years, we expect our capital expenditures to average between 4% to 6% of our net revenue.
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AddedMD&A
As described in Part II, Item 8, Note 7, Debt, of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, as of July 3, 2026, $710 million in aggregate principal amount of our 2028 Convertible Notes remained outstanding. The holders of the notes have had and continue to have the right to convert the notes through the calendar quarter ending September 30, 2026 based on the sale price conditional conversion feature in their terms. As of July 3, 2026, $343 million in aggregate principal amount of these notes had been tendered for conversion and we believe the remaining $367 million principal amount will likely be tendered in the next few months. We expect the settlement of these notes will require the use of an aggregate $710 million of cash to settle the principal amount with substantially all of any premium being settled in shares under the original terms of the notes.
Read it in 10-K 2026-08-14 at sec.gov ↗
RemovedMD&A
The United States has recently announced changes to its trade policy, including increasing tariffs on imports, in some cases significantly. Several of these recent tariff actions have been followed by announcements of limited exemptions and temporary pauses. These actions have caused substantial uncertainty and have also resulted in retaliatory measures on U.S. goods. Our business and results of operations were not materially impacted in fiscal 2025 as a result of the recent tariff actions. We are actively monitoring developments and plan to leverage tariff exemptions where possible and will take other actions as appropriate to offset any resulting increase in the cost of importing our products or the costs for materials or components in our products, including optimizing our supply chain, sourcing from alternative suppliers, or passing the costs to our customers through tariff surcharges, or increased prices. There can be no assurance that we will be able to successfully offset or mitigate any resulting increase in our costs. In addition, the impact of the tariff actions on our customers, retaliatory measures by other countries in response to U.S. trade policy and any resulting decline in consumer confidence, significant inflation and diminished expectations for the economy could reduce demand for our products and adversely affect our business, financial condition and results of operations. For additional information, please see Part I, Item 1A, Risk Factors, included in this Annual Report on Form 10-K.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
In fiscal 2025, we saw an improvement in the supply and demand dynamic relative to the prior year, and we anticipate that digital transformation, including the AI data-cycle, will drive improved market conditions in the long term. However, macroeconomic factors such as tariffs, inflation, changes in interest rates, and recession concerns can affect demand for our products. As an example, in fiscal 2024, we and our industry experienced a supply-demand imbalance, which led to reduced shipments, negatively impacted pricing, and resulted in business realignment charges and charges for unabsorbed manufacturing overhead costs due to the underutilization of facilities as we temporarily scaled back production and took other actions to align our operations to the market at the time.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
We will continue to actively monitor developments impacting our business and may take future responsive actions that we determine to be in the best interest of our business and stakeholders.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
In February 2025, in connection with the Separation, we amended the loan agreement governing our revolving credit facility maturing in January 2027 (the “2027 Revolving Credit Facility”) and Term Loan Facility (as defined below), dated as of January 7, 2022 (as amended, the “Loan Agreement”) to, among other changes, permit the Separation, provide for the issuance of a new $2.51 billion Term Loan A-3 maturing in January 2027 (the “Term Loan A-3”) in a noncash exchange to replace our previously existing Term Loan A-2 (the “Term Loan A-2” and, together with the Term Loan A-3, the “Term Loan Facility”); facilitate a subsequent exchange of a portion of the Term Loan A-3 for shares of Sandisk retained by us at the Separation; and reduce the aggregate commitments under the 2027 Revolving Credit Facility from $2.25 billion to $1.25 billion.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
In April 2025, we redeemed, at our election, $1.80 billion aggregate principal amount of our 4.75% senior unsecured notes due 2026 (the “2026 Notes”) at par plus accrued interest.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
In June 2025, we settled $800 million principal amount of our Term Loan A-3 through an exchange of 21.3 million shares of Sandisk common stock held by us and $4 million in cash paid by us.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
These actions, along with scheduled principal payments made on our term loans, reduced the principal amount of our debt by $2.78 billion during fiscal 2025.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
Net revenue increased by 51% in 2025 compared to 2024, primarily driven by a 29% increase in average selling price per unit as a result of a shift in product mix to higher capacity drives. The increase was also driven by a 15% increase in units sold as a result of higher shipments of our high-capacity enterprise products stemming from data center expansions.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
Client revenue decreased by 4% in 2025 compared to 2024, primarily driven by a 16% decrease in units sold, reflecting lower demand in the market, partially offset by a 14% increase in average selling price per unit as a result of a shift in product mix to higher capacity drives.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
Consumer revenue decreased by 9% in 2025 compared to 2024, primarily driven by a 14% decrease in units sold, reflecting lower demand in the market, partially offset by a 5% increase in average selling price per unit as a result of a shift in product mix to higher capacity drives.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
Net revenue increased by 1% in 2024 compared to 2023, primarily driven by a 25% increase in average selling price per unit as a result of a shift in product mix to higher capacity drives, partially offset by a 13% decrease in units sold reflecting lower demand in the market. The increase was offset by approximately 7 percentage points due to a decline in data storage systems revenues resulting from weakness in the market.
Read it in 10-K 2025-08-14 at sec.gov ↗
RemovedMD&A
Cloud revenue increased by 6% in 2024 compared to 2023, primarily driven by a 1% increase in units sold and a 16% increase in average selling price per unit. The changes in units sold and average selling price per unit were primarily due to customers moving to higher capacity drives. The increase was offset by approximately 9 percentage points due to a decline in data storage systems revenues resulting from weakness in the market.
Read it in 10-K 2025-08-14 at sec.gov ↗
RewordedMD&A
Net cash used for changes in operating assets and liabilities was $1.03 billion $658 million for 2025, 2026, as compared to $307 million $1.03 billion of net cash used for such changes for 2024, which largely reflects an increase in net operating assets and liabilities resulting from the increase in the volume of our business as well as the timing and amount of tax payments. 2025.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
In addition to our outstanding debt, as As of June 27, 2025, July 3, 2026, we had $1.25 billion $900 million remaining available for borrowing capacity under our revolving credit facility maturing in January 2027 (the “2027 Revolving Credit Facility”), this facility, subject to customary conditions under the Loan Agreement. loan agreement.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
On May 9, 2025, During our previous fiscal year, our Board of Directors authorized a share repurchase program Share Repurchase Program for the repurchase of up to $2.0 billion of our common stock, and in February 2026, our Board of Directors authorized the repurchase of up to an additional $4.0 billion of our common stock.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
These uses were partially offset by $2.00 $1.95 billion of proceeds from drawing a bridge loan and a drawdown on the Sandisk credit facilities in connection with the Separation, $150 million from the 2027 our Revolving Credit Facility, and $77 along with $64 million of proceeds from issuances the issuance of shares stock under our employee stock plans.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
As described in “Key Developments – Capital Allocation Actions” above, we undertook several financing actions during 2025, including the amendment of our Credit Facility in connection with the Separation and the exchange of 2026, to settle a substantial portion of our retained interest in Sandisk shares to reduce a portion of our TLA-3 loan balance. debt.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
On In the previous fiscal year, on February 21, 2025 (the “Separation Date”), 2025, we completed the separation of our HDD and Flash business units (the “Separation”) Separation to create two independent public companies, with Western Digital focusing on WD continuing our existing HDD business and Sandisk Corporation (“Sandisk”), Sandisk, formerly a wholly-owned subsidiary of the Company, holding operating the Flash business.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
During the quarter ended In June 27, 2025, the Company disposed of we used 21.3 million shares of Sandisk common stock, along with $4 million in cash, stock in a tax-free exchange for to reduce approximately $800 million in principal amount of the Company’s our term loan A-3. A-3 (the “Term Loan A-3”).
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
Cloud revenue revenue, representing 89% of total net revenue, increased by 65% 38% in 2025 2026 compared to 2024, primarily 2025, driven by a 36% 27% increase in units exabytes sold and a 20% an 8% increase in average selling price ASPs per unit. exabyte.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
A discussion of our cash flows results of operations for 2023, 2024, including a comparison of such cash flows results of operations to 2024, 2025, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources, Operations, included in our Annual Report on Form 10-K for the year ended June 28, 2024 27, 2025 filed with the SEC on August 20, 2024. 14, 2025.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
Federal statutory rate of 21% are the relative mix of earnings and losses by jurisdiction, the deduction for foreign derived intangible income, Foreign-Derived Deduction Eligible Income (“FDDEI”) tax credits, and tax holidays the gain on the retained interest in Malaysia, Sandisk being tax-free due to the Philippines and Thailand. Separation.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
We believe the Separation has better positions each business unit to positioned us as a pure-play HDD company that can execute innovative technology and product development, capitalize on unique growth opportunities, extend respective our leadership positions, position, operate more efficiently with distinct capital structures, efficiently, and pursue capital allocation strategies that to maximize long-term shareholder value.
Read it in 10-K 2026-08-14 at sec.gov ↗
RewordedMD&A
July 3, June 27, June 28, 2026 2025 2024 (in millions) Current assets $ 2,360 $ 2,992 $ 2,149 Non-current assets 4,415 4,553 2,208 Net intercompany receivables from (payables to) payables to non-guarantor subsidiaries (1,543) 2,473 516 1,543 Current liabilities 2,204 3,800 3,758 Non-current liabilities 449 2,873 6,626
Read it in 10-K 2026-08-14 at sec.gov ↗
