Western Digital’s Q4 2025 Earnings Call Highlights

Western Digital Corp. ((WDC)) has held its Q4 earnings call. Read on for the main highlights of the call.

Western Digital Corp. recently held its earnings call for the fiscal fourth quarter of 2025, revealing a generally positive sentiment. The company reported strong financial performance, primarily driven by robust demand in the data center segment and significant debt reduction. The introduction of dividends and share repurchase programs further underscores Western Digital’s commitment to returning value to shareholders, despite a decline in consumer revenue and uncertainties related to tariffs. Overall, the positive aspects of the earnings call significantly overshadowed the negatives.

Strong Revenue and Profit Growth

Western Digital reported a substantial increase in revenue, achieving $2.6 billion, which marks a 30% year-over-year growth. The company also saw a 22% sequential increase in non-GAAP earnings per share, reaching $1.66. This growth highlights the company’s effective strategies and strong market positioning.

Data Center Demand and Cloud Revenue Surge

The data center segment was a significant contributor to Western Digital’s revenue, with cloud-related sales accounting for 90% of total revenue at $2.3 billion. This represents a 36% year-over-year increase, driven by heightened demand for higher capacity nearline products, showcasing the company’s strength in the cloud market.

Significant Debt Reduction

Western Digital made notable progress in strengthening its balance sheet by reducing debt by $2.6 billion. This achievement aligns with the company’s net leverage target range of 1 to 1.5x, enhancing its financial stability and flexibility.

Introduction of Dividends and Share Repurchase Program

In a move to return value to shareholders, Western Digital initiated a quarterly cash dividend program and authorized a $2 billion share repurchase program. The company has already repurchased nearly $150 million worth of shares, reflecting its confidence in its financial health and future prospects.

Growth in Next-Generation HDD Technology

Western Digital reported impressive growth in its next-generation HDD technology, with shipments of the latest ePMR drives doubling quarter-over-quarter. Over 1.7 million units were shipped, marking one of the shortest qualification and ramp cycles in the company’s history, indicating strong demand and operational efficiency.

Consumer Revenue Decline

Despite the overall positive performance, Western Digital experienced a decline in consumer revenue, which accounted for 5% of total revenue at $136 million, down 12% year-over-year. This decline highlights challenges in the consumer segment that the company may need to address.

Uncertainty in Broader Market Environment

The company acknowledged ongoing uncertainties related to tariffs, which could impact future performance. However, no immediate impact was observed, suggesting that Western Digital is currently navigating these challenges effectively.

Forward-Looking Guidance

Looking ahead, Western Digital provided optimistic guidance for the fiscal first quarter of 2026. The company anticipates revenue growth driven by continued data center demand, with expected revenue of $2.7 billion and a gross margin between 41% and 42%. Earnings per share are projected to be $1.54 plus or minus $0.15. The company remains focused on leveraging AI-driven data growth and maintaining its strategic focus on high-capacity drives to support its market position and financial targets.

In conclusion, Western Digital’s earnings call for the fiscal fourth quarter of 2025 painted a largely positive picture, with strong financial performance and strategic initiatives aimed at enhancing shareholder value. While challenges such as consumer revenue decline and market uncertainties exist, the company’s robust growth in the data center segment and debt reduction efforts position it well for future success.