WD Reports Fiscal First Quarter 2027 Financial Results
— Western Digital Corporation (Nasdaq: WDC) today reported fiscal first quarter 2027 financial results for the period ended October 2, 2026.
“Fiscal 2027 is off to a strong start, with results exceeding expectations, driven by robust customer demand and disciplined execution. In our fiscal first quarter, revenue grew 55% year over year, non-GAAP gross and operating margins expanded to 58.1% and 49.1%, respectively, resulting in a 161% year-over-year increase in non-GAAP EPS. Reflecting our confidence in the business and our commitment to return capital to shareholders, we are raising our quarterly cash dividend by 17% to $0.175 per share,” said Irving Tan, CEO of WD. “We are executing well through our technology transitions to meet the growing demand for storage. As we deepen our customer relationships, broaden the customer base to new areas of the market, and extend our visibility into future demand, we are building an increasingly durable foundation for long-term value creation.” 1 Western Digital Reports Fiscal First Quarter 2027 Financial Results
2 Western Digital Reports Fiscal First Quarter 2027 Financial Results Business Outlook for Fiscal Second Quarter of 2027
“Our first quarter results demonstrate the continued momentum in our business, with robust exabyte growth and improved pricing driving another quarter of strong financial performance,” said Kris Sennesael, CFO of WD. “Looking ahead, for our fiscal second quarter of 2027, at the midpoint of the ranges, we expect revenue of $5.1 billion, non-GAAP gross margin of 60.5%, and non-GAAP EPS of $5.80.”
Non-GAAP(1) Revenue $5.1B +/- $100M Gross margin 60% - 61% Operating expenses $400M - $410M Interest and other expense, net ~ $15M Tax rate ~ 17% Diluted net income per common share $5.80 +/- $0.20 Diluted weighted average shares ~ 380M
(1) We provide earnings guidance only on a non-GAAP basis because certain information necessary to reconcile such guidance to GAAP is difficult to estimate or cannot be allocated or quantified with certainty and is dependent on future events outside of our control. Please refer to the section titled “Non- GAAP Guidance” under “Discussion Regarding the Use of Non-GAAP Financial Measures” in this press release for additional information regarding the non- GAAP measures, including quantification of known expected adjustment items.
WD’s Board of Directors declared a cash dividend of $0.175 per share of the company’s common stock, which will be paid on December 17, 2026 to stockholders of record as of the close of business on December 4, 2026.
WD will host a conference call to discuss its fiscal first quarter 2027 results and business outlook for the fiscal second quarter of 2027 today at 1:30 p.m. Pacific / 4:30 p.m. Eastern. The live and archived conference call and the earnings presentation can be accessed online at investor.wdc.com .
WD, also known as Western Digital, builds the storage infrastructure that powers certainty in the AI-driven data economy. At the forefront of innovation, WD partners with the world’s leading hyperscalers, cloud service providers, and enterprises to enable reliable storage solutions that are proven and trusted at scale. Driven by a culture of innovation and execution, WD helps customers store, protect, and use the world’s data with confidence. Follow WD on LinkedIn and learn more at www.wd.com. 3 Western Digital Reports Fiscal First Quarter 2027 Financial Results
This press release contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for: the company’s business outlook, operational and financial performance for the fiscal second quarter of 2027 and beyond, demand and market conditions for the company’s products as well as growth opportunities. 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. Key risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: concentration of revenue in the company’s Cloud end market and among the company’s top customers; the company’s development and introduction of products based on new technologies and expansion into new data storage markets; the company’s dependence on a limited number of qualified suppliers; difficulties or delays in manufacturing or other supply chain disruptions; the impact of long-term agreements; product defects; hiring and retention of key employees; risks associated with strategic initiatives, restructurings, acquisitions, divestitures, mergers and the company’s strategic relationships; adverse global or regional conditions, including changes in U.S. trade policy, new or additional tariffs or trade restrictions, inflation, increases in interest rates and an economic recession; volatility in demand for the company’s products; the competitive environment, including actions by the company’s competitors and the impact of competitive products and pricing; risks associated with the company’s use of artificial intelligence; compromise, damage or interruption from cybersecurity incidents or other data or system security risks; the company’s debt and other financial obligations; changes in tax laws or unanticipated tax liabilities; any decisions to reduce or discontinue paying cash dividends or repurchasing shares of the company’s common stock; fluctuations in currency exchange rates in connection with the company’s international operations; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; risks associated with the company’s goals relating to sustainability matters, including the company’s ability to meet its greenhouse gas emissions reduction and other sustainability goals; the company’s reliance on intellectual property and other proprietary information; 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 14, 2026 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, and WD are registered trademarks or trademarks of Western Digital Corporation or its affiliates in the US and/or other countries. 4
October 2, October 3, Three Months Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── Revenue, net $ 4,381 $ 2,818 Cost of revenue 1,847 1,591 Gross profit 2,534 1,227 Operating expenses: Research and development 283 294 Selling, general and 162 138 administrative Business realignment 43 3 charges Total operating expenses 488 435 Operating income 2,046 792 Interest and other income -8 545 (expense), net Income before taxes 2,038 1,337 Income tax expense 259 155 Net income 1,779 1,182 Dividends and income attributable to — -30 participating securities(1) Basic net income attributable to common 1,779 1,152 shareholders Re-allocation of participating securities considered — 2 potentially dilutive Diluted net income attributable to $ 1,779 $ 1,154 common shareholders Weighted average shares: Basic 366 345 Diluted 384 376 Net income per common share: Basic $ 4.86 $ 3.34 Diluted $ 4.63 $ 3.07
(1) Participating securities in the prior year period consisted of preferred stock prior to its conversion in February 2026, because it participated on a pro rata basis in any dividends declared on shares of common stock. 5
October 2, July 3, 2026 2026 ───────────────────────────────────────────────────────────────────── ASSETS Current assets: Cash and cash equivalents $ 1,314 $ 1,579 Accounts receivable, net 2,232 2,026 Inventories 1,781 1,511 Other current assets 541 518 Total current assets 5,868 5,634 Property, plant and equipment, net 2,586 2,476 Goodwill 4,321 4,321 Other non-current assets 1,464 1,430 Total assets $ 14,239 $ 13,861 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,855 $ 1,774 Accrued expenses 675 690 Accrued compensation 469 551 Income taxes payable 304 173 Debt, current 789 1,052 Total current liabilities 4,092 4,240 Other liabilities 799 757 Total liabilities 4,891 4,997 Total shareholders’ equity 9,348 8,864 Total liabilities and shareholders’ $ 14,239 $ 13,861 equity
October 2, October 3, Three Months Ended 2026 2025 ────────────────────────────────────────────────────────────────────────────── Cash flows from operating activities Net income $ 1,779 $ 1,182 Adjustments to reconcile net income to net cash provided by operations: Depreciation and 104 88 amortization Stock-based compensation 79 53 Deferred income taxes -30 55 Gain on retained interest — -611 in Sandisk Other non-cash operating 3 4 activities, net Changes in: Accounts receivable, net -206 131 Inventories -269 -101 Accounts payable 52 248 Other assets and 92 -377 liabilities, net Net cash provided by operating 1,604 672 activities Cash flows from investing activities Purchases of property, plant and -227 -73 equipment, net Strategic investments and 2 16 other, net Net cash used in -225 -57 investing activities Cash flows from financing activities Employee stock plans, net -317 -55 Repurchases of common -1,001 -553 stock Dividends paid to -56 -39 shareholders Settlement of convertible notes -570 — transactions Proceeds from (repayments 300 -31 of) debt, net Net cash used in -1,644 -678 financing activities Effect of exchange rate — -3 changes on cash Net decrease in cash and cash -265 -66 equivalents Cash and cash equivalents, beginning of 1,579 2,114 period Cash and cash equivalents, end of $ 1,314 $ 2,048 period
Three Months October 2, July 3, October 3, Ended 2026 2026 2025 ────────────────────────────────────────────────────────────────────────────── GAAP net $ 1,779 $ 3,195 $ 1,182 income Amount allocated to — — -28 preferred shareholders GAAP diluted net income attributable $ 1,779 $ 3,195 $ 1,154 to common shareholders GAAP net $ 1,779 $ 3,195 $ 1,182 income Gross profit 10 9 10 adjustments Operating expense 97 83 54 adjustments Interest and other income -2 -1,694 -589 (expense) adjustments Income tax -105 -211 16 adjustments Non-GAAP net 1,779 1,382 673 income Amount allocated to — — -18 preferred shareholders Non-GAAP diluted net income $ 1,779 $ 1,382 $ 655 attributable to common shareholders Diluted weighted average shares: GAAP 384 389 376 Benefit of shares related -1 -1 -7 to capped call transactions Non-GAAP 383 388 369 Diluted net income per common share: GAAP $ 4.63 $ 8.21 $ 3.07 Non-GAAP $ 4.64 $ 3.56 $ 1.78 Cash flows Cash flows provided by $ 1,604 $ 1,389 $ 672 operating activities Purchases of property, -227 -108 -73 plant and equipment, net Free cash flow $ 1,377 $ 1,281 $ 599
To supplement the condensed consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release sets forth certain financial measures that are not calculated in accordance with GAAP (“non-GAAP measures”). These non-GAAP measures, which are detailed in the reconciliation tables above, are not alternatives for measures prepared in accordance with GAAP and may be different from similarly titled non- GAAP measures used by other companies. The company believes the presentation of these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors for measuring the company’s earnings performance and comparing it against prior periods. Specifically, the company believes these non-GAAP measures provide useful information to both management and investors as they exclude certain expenses, gains and losses that the company believes are not indicative of its core operating results or because they are consistent with the financial models and estimates published by many analysts who follow the company and its peers. As discussed further below, these non-GAAP measures exclude, as applicable, stock-based compensation expense; business realignment charges; gain on retained interest in Sandisk; costs in connection with debt and equity transactions; income tax adjustments; and other adjustments. The company believes these measures, along with the related reconciliations to the GAAP measures, provide additional detail and comparability for assessing the company’s results. These non-GAAP measures are some of the primary indicators management uses for assessing the company’s performance and planning and forecasting future periods. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.
As described above, the company excludes the following items from its non-GAAP measures:
Stock-based compensation expense. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, the subjective assumptions involved in those determinations, and the volatility in valuations that can be driven by market conditions outside the company’s control, the company believes excluding stock-based compensation expense enhances the ability of management and investors to understand and assess the underlying performance of its business over time and compare it against the company’s peers, a majority of whom also exclude stock-based compensation expense from their non-GAAP results.
Business realignment charges. From time to time, in order to realign the company’s operations with anticipated business needs or to achieve cost synergies from the integration of acquisitions, the company may incur charges in connection with actions to terminate employees, impair assets or otherwise restructure its operations and may recognize credits related to charges previously incurred. These charges or credits are inconsistent in amount and frequency, and the company believes they are not indicative of the underlying performance of its business.
Gain on retained interest in Sandisk. The company retained an ownership interest in Sandisk at the time of the separation of its flash business and has recognized gains on the mark-to-market adjustment of such interest. The company believes these adjustments do not reflect the company’s operating results and are not indicative of the underlying performance of its business.
Costs in connection with debt and equity transactions. In connection with the company’s actions to monetize its retained interest in Sandisk and reduce its debt, it completed a number of transactions, including a debt-for-equity exchange, equity-for-equity exchanges, and the private settlement of a portion of the company’s convertible note obligations. In connection with these transactions, the company recognized costs primarily related to discounts given to the counterparties of the transaction. The company believes these costs do not reflect the company’s operating results and are not indicative of the underlying performance of its business.
Income tax adjustments. Income tax adjustments represent the difference between income taxes based on a forecasted annual GAAP tax rate and a forecasted annual non-GAAP tax rate, which have been adjusted to account for the tax effects of items excluded from non-GAAP pre-tax income as well as the tax effects of non- recurring and period-specific tax items. These adjustments are excluded because the company believes that they are not indicative of the underlying performance of its ongoing business. 10 Other adjustments. From time to time, the company records costs, charges, and benefits that the company believes are not a part of the ongoing operation of its business. The resulting expense or benefit is inconsistent in amount and frequency.
As described above, the company also presents the following non-GAAP financial measures:
Non-GAAP diluted weighted average shares. The company calculates non-GAAP diluted net income per common share based on non-GAAP diluted weighted average shares. Management uses non-GAAP diluted weighted average shares to evaluate — in addition to the potential dilution due to the outstanding restricted stock units and the dilution from the 2028 convertible notes that are included in GAAP diluted weighted average shares — the benefit expected to be provided by existing capped call transactions entered into in connection with the 2028 convertible notes to offset the dilutive impact of the convertible notes, up to their capped limit. In periods where the quarterly average stock price per share exceeds the conversion price of the 2028 convertible notes, non-GAAP diluted weighted average shares includes the anti-dilutive impact of the company’s capped call transactions, up to the then-applicable capped call price per share.
Free cash flow. Free cash flow is defined as cash flows provided by operating activities less purchases of property, plant and equipment, net. The company considers free cash flow generated in any period to be a key indicator of the underlying health of the business. Non-GAAP Guidance This press release contains forward-looking estimates of certain non-GAAP financial measures for the fiscal second quarter of 2027 (“Q2FY27”). We provide these non-GAAP measures to investors on a prospective basis because certain information necessary to reconcile such guidance to GAAP is difficult to predict and estimate or cannot be allocated or quantified with certainty and is often dependent on future events that may be uncertain or outside of our control. Accordingly, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are not available without unreasonable effort.
The known adjustments to our non-GAAP guidance for Q2FY27 and details on how our non-GAAP tax rate guidance is determined are provided below:
• Non-GAAP gross margin guidance excludes stock-based compensation expense, totaling approximately $15 million.
• Non-GAAP operating expenses guidance excludes stock-based compensation and other expenses, totaling approximately $80 million.
• Non-GAAP diluted net income per common share guidance excludes the items described above, totaling approximately $95 million.
• Non-GAAP tax rate guidance 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 due to: (i) the tax effects of items excluded from our non-GAAP pre-tax income or loss; (ii) the tax effects of non-recurring and period-specific items; and (iii) our accrual of GAAP income taxes and non-GAAP income taxes, which are calculated in each interim period using our best estimates of income taxes for the full year.
• Non-GAAP diluted weighted average shares guidance reflects no material benefit expected to be provided by existing capped call transactions entered into in connection with our convertible senior notes due 2028.
In addition to the adjustments to our forward-looking non-GAAP financial measures described above, reconciliations to comparable forward-looking GAAP financial measures may include additional adjustments that are not available without unreasonable effort. These additional adjustments may include unanticipated changes in our GAAP effective tax rate, unanticipated charges related to business realignment, unanticipated litigation matters, and other unanticipated gains, losses, and impairments, and other unanticipated items not reflective of ongoing operations. Our forward-looking estimates of non-GAAP measures of our financial performance may differ materially from our actual results and should not be relied upon as statements of fact. 11 ___________________
Investor Contact: Media Contact: Ambrish Srivastava Media Relations 408.717.9765 408.801.0021 ambrish.srivastava@wdc.com WD.Mediainquiries@wdc.com investor@wdc.com
Full text with the tables
Exhibit 99.1
WD Reports Fiscal First Quarter 2027 Financial Results
Q1FY27 Highlights:
• Revenue of $4.38 billion, up 55% year-over-year
• GAAP gross margin of 57.8%; non-GAAP gross margin of 58.1%
• GAAP diluted EPS of $4.63; non-GAAP diluted EPS of $4.64
• Cash flow from operations of $1.60 billion; free cash flow of $1.38 billion
• Q2FY27 revenue expected to be up 66% to 72% year-over-year
SAN JOSE, Calif.
—
October 22, 2026
— Western Digital Corporation (Nasdaq: WDC) today reported fiscal first quarter
2027 financial results for the period ended October 2, 2026.
“Fiscal 2027 is off to a strong start, with results exceeding expectations,
driven by robust customer demand and disciplined execution. In our fiscal first
quarter, revenue grew 55% year over year, non-GAAP gross and operating margins
expanded to 58.1% and 49.1%, respectively, resulting in a 161% year-over-year
increase in non-GAAP EPS. Reflecting our confidence in the business and our
commitment to return capital to shareholders, we are raising our quarterly cash
dividend by 17% to $0.175 per share,” said Irving Tan, CEO of WD. “We are
executing well through our technology transitions to meet the growing demand for
storage. As we deepen our customer relationships, broaden the customer base to
new areas of the market, and extend our visibility into future demand, we are
building an increasingly durable foundation for long-term value creation.”
1
Western Digital Reports Fiscal First Quarter 2027 Financial Results
Q1FY27 Financial Highlights
($ in millions,
except per share
amounts)
GAAP
Q1FY27 Q4FY26 Q1FY26 Q/Q Y/Y
Revenue $4,381 $3,747 $2,818 +17% +55%
Gross Margin 57.8% 54.1% 43.5% +370 bps +1430 bps
Operating Income $2,046 $1,563 $792 +31% +158%
Operating Margin 46.7% 41.7% 28.1% +500 bps +1860 bps
Diluted Net Income
Attributable to $1,779 $3,195 $1,154 -44% +54%
Common Shareholders
Diluted Net Income $4.63 $8.21 $3.07 -44% +51%
Per Common Share
Non-GAAP
Q1FY27 Q4FY26 Q1FY26 Q/Q Y/Y
Revenue $4,381 $3,747 $2,818 +17% +55%
Gross Margin 58.1% 54.4% 43.9% +370 bps +1420 bps
Operating Income $2,153 $1,655 $856 +30% +152%
Operating Margin 49.1% 44.2% 30.4% +490 bps +1870 bps
Diluted Net Income
Attributable to $1,779 $1,382 $655 +29% +172%
Common Shareholders
Diluted Net Income $4.64 $3.56 $1.78 +30% +161%
Per Common Share
2
Western Digital Reports Fiscal First Quarter 2027 Financial Results
Business Outlook for Fiscal Second Quarter of 2027
“Our first quarter results demonstrate the continued momentum in our business,
with robust exabyte growth and improved pricing driving another quarter of
strong financial performance,” said Kris Sennesael, CFO of WD. “Looking ahead,
for our fiscal second quarter of 2027, at the midpoint of the ranges, we expect
revenue of $5.1 billion, non-GAAP gross margin of 60.5%, and non-GAAP EPS of
$5.80.”
Non-GAAP(1)
Revenue $5.1B +/- $100M
Gross margin 60% - 61%
Operating expenses $400M - $410M
Interest and other expense, net ~ $15M
Tax rate ~ 17%
Diluted net income per common share $5.80 +/- $0.20
Diluted weighted average shares ~ 380M
(1) We provide earnings guidance only on a non-GAAP basis because certain
information necessary to reconcile such guidance to GAAP is difficult to
estimate or cannot be allocated or quantified with certainty and is dependent on
future events outside of our control. Please refer to the section titled “Non-
GAAP Guidance” under “Discussion Regarding the Use of Non-GAAP Financial
Measures” in this press release for additional information regarding the non-
GAAP measures, including quantification of known expected adjustment items.
Dividend
WD’s Board of Directors declared a cash dividend of $0.175 per share of the
company’s common stock, which will be paid on December 17, 2026 to stockholders
of record as of the close of business on December 4, 2026.
WD’s Fiscal First Quarter 2027 Conference Call
WD will host a conference call to discuss its fiscal first quarter 2027 results
and business outlook for the fiscal second quarter of 2027 today at 1:30 p.m.
Pacific / 4:30 p.m. Eastern. The live and archived conference call and the
earnings presentation can be accessed online at investor.wdc.com .
About WD
WD, also known as Western Digital, builds the storage infrastructure that powers
certainty in the AI-driven data economy. At the forefront of innovation, WD
partners with the world’s leading hyperscalers, cloud service providers, and
enterprises to enable reliable storage solutions that are proven and trusted at
scale. Driven by a culture of innovation and execution, WD helps customers
store, protect, and use the world’s data with confidence. Follow WD on LinkedIn
and learn more at www.wd.com.
3
Western Digital Reports Fiscal First Quarter 2027 Financial Results
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, operational and financial performance for the fiscal
second quarter of 2027 and beyond, demand and market conditions for the
company’s products as well as growth opportunities. 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. Key risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include: concentration of
revenue in the company’s Cloud end market and among the company’s top customers;
the company’s development and introduction of products based on new technologies
and expansion into new data storage markets; the company’s dependence on a
limited number of qualified suppliers; difficulties or delays in manufacturing
or other supply chain disruptions; the impact of long-term agreements; product
defects; hiring and retention of key employees; risks associated with strategic
initiatives, restructurings, acquisitions, divestitures, mergers and the
company’s strategic relationships; adverse global or regional conditions,
including changes in U.S. trade policy, new or additional tariffs or trade
restrictions, inflation, increases in interest rates and an economic recession;
volatility in demand for the company’s products; the competitive environment,
including actions by the company’s competitors and the impact of competitive
products and pricing; risks associated with the company’s use of artificial
intelligence; compromise, damage or interruption from cybersecurity incidents or
other data or system security risks; the company’s debt and other financial
obligations; changes in tax laws or unanticipated tax liabilities; any decisions
to reduce or discontinue paying cash dividends or repurchasing shares of the
company’s common stock; fluctuations in currency exchange rates in connection
with the company’s international operations; risks associated with compliance
with changing legal and regulatory requirements and the outcome of legal
proceedings; risks associated with the company’s goals relating to
sustainability matters, including the company’s ability to meet its greenhouse
gas emissions reduction and other sustainability goals; the company’s reliance
on intellectual property and other proprietary information; 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 14, 2026 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, and WD are registered trademarks or
trademarks of Western Digital Corporation or its affiliates in the US and/or
other countries.
4
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts; unaudited)
October 2, October 3,
Three Months Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Revenue, net $ 4,381 $ 2,818
Cost of revenue 1,847 1,591
Gross profit 2,534 1,227
Operating expenses:
Research and development 283 294
Selling, general and 162 138
administrative
Business realignment 43 3
charges
Total operating expenses 488 435
Operating income 2,046 792
Interest and other income -8 545
(expense), net
Income before taxes 2,038 1,337
Income tax expense 259 155
Net income 1,779 1,182
Dividends and income
attributable to — -30
participating
securities(1)
Basic net income
attributable to common 1,779 1,152
shareholders
Re-allocation of
participating
securities considered — 2
potentially
dilutive
Diluted net income
attributable to $ 1,779 $ 1,154
common shareholders
Weighted average shares:
Basic 366 345
Diluted 384 376
Net income per common
share:
Basic $ 4.86 $ 3.34
Diluted $ 4.63 $ 3.07
(1) Participating securities in the prior year period consisted of preferred
stock prior to its conversion in February 2026, because it participated on a pro
rata basis in any dividends declared on shares of common stock.
5
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions; unaudited)
October 2, July 3,
2026 2026
─────────────────────────────────────────────────────────────────────
ASSETS
Current assets:
Cash and cash equivalents $ 1,314 $ 1,579
Accounts receivable, net 2,232 2,026
Inventories 1,781 1,511
Other current assets 541 518
Total current assets 5,868 5,634
Property, plant and equipment, net 2,586 2,476
Goodwill 4,321 4,321
Other non-current assets 1,464 1,430
Total assets $ 14,239 $ 13,861
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,855 $ 1,774
Accrued expenses 675 690
Accrued compensation 469 551
Income taxes payable 304 173
Debt, current 789 1,052
Total current liabilities 4,092 4,240
Other liabilities 799 757
Total liabilities 4,891 4,997
Total shareholders’ equity 9,348 8,864
Total liabilities and shareholders’ $ 14,239 $ 13,861
equity
6
WESTERN DIGITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions; unaudited)
October 2, October 3,
Three Months Ended 2026 2025
──────────────────────────────────────────────────────────────────────────────
Cash flows from operating
activities
Net income $ 1,779 $ 1,182
Adjustments to reconcile
net income to
net cash provided by
operations:
Depreciation and 104 88
amortization
Stock-based compensation 79 53
Deferred income taxes -30 55
Gain on retained interest — -611
in Sandisk
Other non-cash operating 3 4
activities, net
Changes in:
Accounts receivable, net -206 131
Inventories -269 -101
Accounts payable 52 248
Other assets and 92 -377
liabilities, net
Net cash provided by
operating 1,604 672
activities
Cash flows from investing
activities
Purchases of property,
plant and -227 -73
equipment, net
Strategic investments and 2 16
other, net
Net cash used in -225 -57
investing activities
Cash flows from financing
activities
Employee stock plans, net -317 -55
Repurchases of common -1,001 -553
stock
Dividends paid to -56 -39
shareholders
Settlement of convertible
notes -570 —
transactions
Proceeds from (repayments 300 -31
of) debt, net
Net cash used in -1,644 -678
financing activities
Effect of exchange rate — -3
changes on cash
Net decrease in cash and
cash -265 -66
equivalents
Cash and cash
equivalents, beginning of 1,579 2,114
period
Cash and cash
equivalents, end of $ 1,314 $ 2,048
period
7
WESTERN DIGITAL CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except percentages; unaudited)
Three
Months October 2, July 3, October 3,
Ended 2026 2026 2025
──────────────────────────────────────────────────────────────────────────────
GAAP
gross $ 2,534 $ 2,028 $ 1,227
profit
Stock-ba…
compensa… 9 7 9
expense
Other 1 2 1
Non-GAAP
gross $ 2,544 $ 2,037 $ 1,237
profit
GAAP
gross 57.8 % 54.1 % 43.5 %
margin
Non-GAAP
gross 58.1 % 54.4 % 43.9 %
margin
GAAP
operating $ 488 $ 465 $ 435
expenses
Stock-ba…
compensa… -70 -38 -44
expense
Business
realignm… -27 -42 -3
charges
Other — -3 -7
Non-GAAP
operating $ 391 $ 382 $ 381
expenses
GAAP
operating $ 2,046 $ 1,563 $ 792
income
Gross
profit 10 9 10
adjustme…
Operating
expense 97 83 54
adjustme…
Non-GAAP
operating $ 2,153 $ 1,655 $ 856
income
GAAP
operating 46.7 % 41.7 % 28.1 %
margin
Non-GAAP
operating 49.1 % 44.2 % 30.4 %
margin
GAAP
interest
and other $ -8 $ 1,684 $ 545
income
(expense…
net
Gain on
retained
interest — -2,050 -611
in
Sandisk
Costs in
connecti…
with debt 2 362 —
and
equity
transact…
Other -4 -6 22
Non-GAAP
interest
and other $ -10 $ -10 $ -44
income
(expense…
net
GAAP
income $ 259 $ 52 $ 155
tax
expense
Income
tax 105 211 -16
adjustme…
Non-GAAP
income $ 364 $ 263 $ 139
tax
expense
8
WESTERN DIGITAL CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts; unaudited)
Three Months October 2, July 3, October 3,
Ended 2026 2026 2025
──────────────────────────────────────────────────────────────────────────────
GAAP net $ 1,779 $ 3,195 $ 1,182
income
Amount
allocated to — — -28
preferred
shareholders
GAAP diluted
net income
attributable $ 1,779 $ 3,195 $ 1,154
to
common
shareholders
GAAP net $ 1,779 $ 3,195 $ 1,182
income
Gross profit 10 9 10
adjustments
Operating
expense 97 83 54
adjustments
Interest and
other income -2 -1,694 -589
(expense)
adjustments
Income tax -105 -211 16
adjustments
Non-GAAP net 1,779 1,382 673
income
Amount
allocated to — — -18
preferred
shareholders
Non-GAAP
diluted net
income $ 1,779 $ 1,382 $ 655
attributable
to common
shareholders
Diluted
weighted
average
shares:
GAAP 384 389 376
Benefit of
shares related -1 -1 -7
to capped call
transactions
Non-GAAP 383 388 369
Diluted net
income per
common share:
GAAP $ 4.63 $ 8.21 $ 3.07
Non-GAAP $ 4.64 $ 3.56 $ 1.78
Cash flows
Cash flows
provided by $ 1,604 $ 1,389 $ 672
operating
activities
Purchases of
property, -227 -108 -73
plant and
equipment, net
Free cash flow $ 1,377 $ 1,281 $ 599
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Discussion Regarding the Use of Non-GAAP Financial Measures
To supplement the condensed consolidated financial statements presented in
accordance with U.S. generally accepted accounting principles (“GAAP”), this
press release sets forth certain financial measures that are not calculated in
accordance with GAAP (“non-GAAP measures”). These non-GAAP measures, which are
detailed in the reconciliation tables above, are not alternatives for measures
prepared in accordance with GAAP and may be different from similarly titled non-
GAAP measures used by other companies. The company believes the presentation of
these non-GAAP measures, when shown in conjunction with the corresponding GAAP
measures, provides useful information to investors for measuring the company’s
earnings performance and comparing it against prior periods. Specifically, the
company believes these non-GAAP measures provide useful information to both
management and investors as they exclude certain expenses, gains and losses that
the company believes are not indicative of its core operating results or because
they are consistent with the financial models and estimates published by many
analysts who follow the company and its peers. As discussed further below, these
non-GAAP measures exclude, as applicable, stock-based compensation expense;
business realignment charges; gain on retained interest in Sandisk; costs in
connection with debt and equity transactions; income tax adjustments; and other
adjustments. The company believes these measures, along with the related
reconciliations to the GAAP measures, provide additional detail and
comparability for assessing the company’s results. These non-GAAP measures are
some of the primary indicators management uses for assessing the company’s
performance and planning and forecasting future periods. These measures should
be considered in addition to results prepared in accordance with GAAP, but
should not be considered a substitute for, or superior to, GAAP results.
As described above, the company excludes the following items from its non-GAAP
measures:
Stock-based compensation expense. Because of the variety of equity awards used
by companies, the varying methodologies for determining stock-based compensation
expense, the subjective assumptions involved in those determinations, and the
volatility in valuations that can be driven by market conditions outside the
company’s control, the company believes excluding stock-based compensation
expense enhances the ability of management and investors to understand and
assess the underlying performance of its business over time and compare it
against the company’s peers, a majority of whom also exclude stock-based
compensation expense from their non-GAAP results.
Business realignment charges. From time to time, in order to realign the
company’s operations with anticipated business needs or to achieve cost
synergies from the integration of acquisitions, the company may incur charges in
connection with actions to terminate employees, impair assets or otherwise
restructure its operations and may recognize credits related to charges
previously incurred. These charges or credits are inconsistent in amount and
frequency, and the company believes they are not indicative of the underlying
performance of its business.
Gain on retained interest in Sandisk. The company retained an ownership interest
in Sandisk at the time of the separation of its flash business and has
recognized gains on the mark-to-market adjustment of such interest. The company
believes these adjustments do not reflect the company’s operating results and
are not indicative of the underlying performance of its business.
Costs in connection with debt and equity transactions. In connection with the
company’s actions to monetize its retained interest in Sandisk and reduce its
debt, it completed a number of transactions, including a debt-for-equity
exchange, equity-for-equity exchanges, and the private settlement of a portion
of the company’s convertible note obligations. In connection with these
transactions, the company recognized costs primarily related to discounts given
to the counterparties of the transaction. The company believes these costs do
not reflect the company’s operating results and are not indicative of the
underlying performance of its business.
Income tax adjustments. Income tax adjustments represent the difference between
income taxes based on a forecasted annual GAAP tax rate and a forecasted annual
non-GAAP tax rate, which have been adjusted to account for the tax effects of
items excluded from non-GAAP pre-tax income as well as the tax effects of non-
recurring and period-specific tax items. These adjustments are excluded because
the company believes that they are not indicative of the underlying performance
of its ongoing business.
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Other adjustments. From time to time, the company records costs, charges, and
benefits that the company believes are not a part of the ongoing operation of
its business. The resulting expense or benefit is inconsistent in amount and
frequency.
As described above, the company also presents the following non-GAAP financial
measures:
Non-GAAP diluted weighted average shares. The company calculates non-GAAP
diluted net income per common share based on non-GAAP diluted weighted average
shares. Management uses non-GAAP diluted weighted average shares to evaluate —
in addition to the potential dilution due to the outstanding restricted stock
units and the dilution from the 2028 convertible notes that are included in GAAP
diluted weighted average shares — the benefit expected to be provided by
existing capped call transactions entered into in connection with the 2028
convertible notes to offset the dilutive impact of the convertible notes, up to
their capped limit. In periods where the quarterly average stock price per share
exceeds the conversion price of the 2028 convertible notes, non-GAAP diluted
weighted average shares includes the anti-dilutive impact of the company’s
capped call transactions, up to the then-applicable capped call price per share.
Free cash flow. Free cash flow is defined as cash flows provided by operating
activities less purchases of property, plant and equipment, net. The company
considers free cash flow generated in any period to be a key indicator of the
underlying health of the business.
Non-GAAP Guidance
This press release contains forward-looking estimates of certain non-GAAP
financial measures for the fiscal second quarter of 2027 (“Q2FY27”). We provide
these non-GAAP measures to investors on a prospective basis because certain
information necessary to reconcile such guidance to GAAP is difficult to predict
and estimate or cannot be allocated or quantified with certainty and is often
dependent on future events that may be uncertain or outside of our control.
Accordingly, reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are not available without
unreasonable effort.
The known adjustments to our non-GAAP guidance for Q2FY27 and details on how our
non-GAAP tax rate guidance is determined are provided below:
• Non-GAAP gross margin guidance excludes stock-based compensation expense,
totaling approximately $15 million.
• Non-GAAP operating expenses guidance excludes stock-based compensation and
other expenses, totaling approximately $80 million.
• Non-GAAP diluted net income per common share guidance excludes the items
described above, totaling approximately $95 million.
• Non-GAAP tax rate guidance 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 due to: (i) the tax effects of items excluded from our non-GAAP pre-tax
income or loss; (ii) the tax effects of non-recurring and period-specific items;
and (iii) our accrual of GAAP income taxes and non-GAAP income taxes, which are
calculated in each interim period using our best estimates of income taxes for
the full year.
• Non-GAAP diluted weighted average shares guidance reflects no material benefit
expected to be provided by existing capped call transactions entered into in
connection with our convertible senior notes due 2028.
In addition to the adjustments to our forward-looking non-GAAP financial
measures described above, reconciliations to comparable forward-looking GAAP
financial measures may include additional adjustments that are not available
without unreasonable effort. These additional adjustments may include
unanticipated changes in our GAAP effective tax rate, unanticipated charges
related to business realignment, unanticipated litigation matters, and other
unanticipated gains, losses, and impairments, and other unanticipated items not
reflective of ongoing operations. Our forward-looking estimates of non-GAAP
measures of our financial performance may differ materially from our actual
results and should not be relied upon as statements of fact.
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___________________
Contacts:
Western Digital Corporation
Investor Contact: Media Contact:
Ambrish Srivastava Media Relations
408.717.9765 408.801.0021
ambrish.srivastava@wdc.com WD.Mediainquiries@wdc.com
investor@wdc.com
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