Western Digital boosts outlook as margins expand
The data storage company projected first-quarter revenue to grow as much as 49% year-over-year.
Western Digital (WDC), the data storage manufacturer, reported fourth-quarter revenue of $3.75 billion. The result represented a 44% increase year-over-year and a 12% rise from the third quarter.
The company saw a significant expansion in profitability during the period. Non-GAAP gross margin rose to 54.4%, an increase of 390 basis points from the 50.5% reported in the prior quarter and a 1,310 basis point increase from the 41.3% recorded in the same period last year.
Operating efficiency followed a similar trajectory. Non-GAAP operating margin reached 44.2%, up 560 basis points sequentially from 38.6% and up 1,610 basis points from the 28.1% reported in the fourth quarter of fiscal 2024.
These margin gains drove a sharp increase in earnings. Non-GAAP diluted EPS was $3.56, a 31% increase from the $2.72 reported in the third quarter and a 109% increase from the $1.70 reported a year ago. Free cash flow also rose to $1.28 billion from $978 million in the previous quarter.
For the full fiscal 2025 year, revenue grew 36% year-over-year to $12.92 billion. The company's non-GAAP operating margin for the full year increased 1,290 basis points to 37.3%, compared to 24.4% in fiscal 2024.
Western Digital provided guidance for the first quarter of fiscal 2026 that suggests continued growth. Revenue is projected to increase between 42% and 49% year-over-year, with a midpoint estimate of $4.1 billion. Non-GAAP gross margin is guided at 55% to 56%, while non-GAAP EPS is projected at $4.00, plus or minus $0.15.
The company completed the separation of its Flash business unit into a separate entity, SanDisk Corporation, on February 21, 2025. Results following that date are no longer consolidated into Western Digital's financial reports.