Western Digital Corporation (WDC)

Western Digital reported revenue of $4.38 billion for the fiscal first quarter ended 2 October 2026, up 55 percent from a year earlier 1. Gross profit, revenue minus the cost of making the drives, was 57.8 percent of revenue, compared with 43.5 percent a year earlier 2. The quarterly report credits improved pricing, more drives shipped and a lower cost per drive on newer generations 2.

Cloud customers, the large data-center operators, were 88 percent of revenue in the quarter 2. The company says customers are partnering with it earlier and extending the length of their commercial arrangements, which improves its view of future demand 2. Its ten largest customers made up 64 percent of net revenue, so results depend on a small group of buyers 2.

The company expects revenue of $5.1 billion in its fiscal second quarter, plus or minus $100 million 1. The board also raised the quarterly dividend by 17 percent to $0.175 per share 1. The release lists volatility in demand for its products among the risks that could change these expectations 1.

Western Digital was founded in 1970 and makes hard disk drives, devices that store data by recording magnetic information on rotating disks 3. Until February 2025 it also owned a flash memory business, Sandisk, as a wholly owned subsidiary 3.

The separation on 21 February 2025 left Western Digital as a pure maker of hard drives, which the company believes lets it focus on its own technology and growth 3. At the separation it kept 28.8 million Sandisk shares 3. In June 2025 it swapped 21.3 million of them to cut about $800 million of a bank loan 3.

Revenue grew from $6.32 billion in fiscal 2024 to $9.52 billion in fiscal 2025 and $12.92 billion in fiscal 2026 3. Operating income was a loss of $403 million in fiscal 2024 and reached $4.45 billion in fiscal 2026 3.

Fiscal 2026 net revenue rose 36 percent, which the company attributes to a 25 percent rise in exabytes sold, the capacity shipped, and an 8 percent rise in average selling price per exabyte 3. Demand came from all of its end markets 3.

Gross margin rose 10.1 percentage points in fiscal 2026 3. The company says the shift toward higher capacity drives brought both a better cost structure and improved pricing 3.

Net income from continuing operations was $9.42 billion in fiscal 2026, against $1.64 billion a year before 3. The year included a $6.50 billion mark-to-market gain, a gain from restating the shares it kept in Sandisk at current value 3.

The company then used its remaining Sandisk shares to repay debt and to take back 4.8 million of its own shares, and by 3 July 2026 it held none 3.

Hard drives for the cloud

Western Digital sells hard disk drives under the Western Digital and WD brands to three end markets: Cloud, Client and Consumer 3. Cloud is the largest, at $11.49 billion of the $12.92 billion in fiscal 2026 revenue 3. That is 89 percent of the total 3.

These are high-capacity drives for data centers run by cloud, internet and social media companies, built for a low total cost of ownership 3. In the quarter ended 2 October 2026 Cloud revenue was $3.87 billion, up from $2.51 billion a year earlier 2.

The quarterly report credits a more than 20 percent rise in exabytes shipped and about a 25 percent rise in average selling price per exabyte, helped by an improved pricing environment 2.

The multi-year product roadmap includes ePMR, OptiNAND, UltraSMR, heat-assisted magnetic recording (HAMR) and triple stage actuators 3. The company makes substantially all of the recording heads and magnetic media in its drives itself 3.

Client and consumer drives

Client drives go to PC makers and channel customers for desktops and notebooks, and Consumer sells external drives through retail and channel partners 3. Client revenue was $726 million and Consumer was $703 million in fiscal 2026 3.

In the latest quarter Client revenue rose 119 percent and Consumer revenue rose 19 percent 2. The company ties Client to about a 90 percent rise in average selling price per exabyte and Consumer to about a 70 percent rise, with consumer exabytes shipped about 30 percent lower 2.

Customers and sales

In fiscal 2026 three customers made up 16, 15 and 13 percent of revenue, and the top ten customers made up 73 percent 3. From the quarter ended 2 October 2026 the company attributes sales to the end customer behind a distributor, and it revised the prior year to match 2.

International sales were 60 percent of fiscal 2026 net revenue 3. The company sells to cloud providers, computer makers, resellers, distributors and retailers, and uses long-term agreements with certain customers 3.

Plants and people

Assembly and test is concentrated in Prachinburi and Bang Pa-In in Thailand, Penang, Johor Bahru and Kuching in Malaysia, Laguna in the Philippines, Shenzhen in China, and San Jose and Fremont in California 3. The San Jose site is owned at 1,957,000 square feet, and Prachinburi is owned at 1,568,000 square feet 3.

Irving Tan is chief executive and a director, Kris Sennesael is chief financial officer, and Brad Feller is chief accounting officer 3. The company employed about 40,000 people at the end of 2026, about 88 percent of them in Asia Pacific 3.

Rivals and problems

The annual report names Seagate Technology Holdings plc and Toshiba Electronic Devices & Storage Corporation as hard drive rivals, along with makers of NAND flash, an alternative kind of storage 3.

SPEX Technologies sued in 2016 over a patent on encryption in storage devices, and a jury awarded it $316 million in October 2024 2. The court later set damages at a nominal $1, and both sides have appealed 2.

The company believes a loss is not probable and has accrued no liability for that case 2. It says tariffs have not materially affected results through the first quarter, but it is watching trade policy 2.

The umbrella, in words

The company sells under two brands, Western Digital and WD 3. The patent case names two wholly owned subsidiaries, Western Digital Technologies, Inc. and HGST Inc. 2. The annual report incorporates its full list of subsidiaries by reference to the 2025 annual report 3.

Western Digital no longer owns any Sandisk shares, having kept 28.8 million at the separation and used them to repay debt and take back its own stock 3. This was a stake it owned, now ended as of 3 July 2026 3.

JPMorgan Chase & Co. reported beneficial ownership of 5.3 percent of the common stock in a Schedule 13G/A covering 31 March 2025 4. The annual report counts 644 holders of record on 7 August 2026 3.

For its fiscal second quarter the company expects revenue of $5.1 billion, plus or minus $100 million 1. It expects a non-GAAP gross margin of 60 percent to 61 percent and operating expenses of $400 million to $410 million 1.

The board declared a dividend of $0.175 per share, payable on 17 December 2026 to holders of record on 4 December 2026 1.

The board has authorized repurchases of up to $6.0 billion of common stock with no expiry date, and $2.26 billion was available on 2 October 2026 2.

The company expects capital expenditures to average 4 percent to 6 percent of revenue over the next five years 2. It expects spending modestly above that range for the next two years as it invests in heads and media technology and factory automation 2.

The annual report lists the move to HAMR, a recording method meant to raise drive capacity, among the technology transitions the company must carry out 3. The appeals in the SPEX case are still pending 2.