Western Digital (WDC) Q1 2025 earnings summary

Executive summary

• Revenue reached $4.10 billion in Q1 FY2025, up 9% sequentially and 49% year-over-year, driven by strong cloud, enterprise SSD, and nearline HDD demand.

• Non-GAAP EPS was $1.78 and GAAP EPS was $1.35, with gross margin at 38.5% Non-GAAP and 37.9% GAAP, reflecting significant profitability improvement.

• The company is advancing the separation of its Flash and HDD businesses, having completed the soft spin phase and progressing toward completion after Q2 FY2025.

• Closed the sale of 80% equity in a Flash manufacturing subsidiary, entering a 5-year supply agreement with JCET.

• Cloud revenue surged 17% sequentially and 153% year-over-year, now representing 54% of total revenue.

Financial highlights

• Gross margin improved to 38.5% Non-GAAP and 37.9% GAAP, up over 34 percentage points year-over-year.

• Operating income was $884 million Non-GAAP and $742 million GAAP, both up significantly from prior periods.

• Operating cash flow was $34 million; free cash flow was an outflow of $14 million, impacted by tax and settlement payments.

• Cash and cash equivalents stood at $1.71 billion, with total liquidity of $3.9 billion including revolver.

• Total debt was $7.45 billion, with $1.75 billion classified as current.

Outlook and guidance

• Fiscal Q2 2025 revenue expected between $4.20 billion and $4.40 billion, with Non-GAAP gross margin of 37.0%–39.0%.

• Non-GAAP EPS guidance is $1.75–$2.05; Non-GAAP operating expenses projected at $695–$715 million.

• Management expects continued improvement in market conditions for both HDD and Flash, driven by digital transformation and AI data-cycle trends.

• The planned business separation is on track for completion after Q2 FY2025.