WESTERN DIGITAL CORP (WDC): Results of Operations and Financial Condition
WESTERN DIGITAL CORP (WDC) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 WD Reports Fiscal Fourth Quarter and Fiscal Year 2026 Financial Results Q4FY26 Highlights: • Revenue of $3.75 billion, up 44% year-over-year • GAAP gross margin of 54.1%; non-GAAP gross margin of 54.4% • GAAP diluted EPS of $8.21; non-GAAP diluted EPS of $3.56 • Cash
How this was made
The 30-second read
Why it matters
The key tradable items are the reported Q4FY26 financials (revenue, margins, EPS, cash flow) and the quantified Q1FY27 non-GAAP guidance ranges, which can re-anchor expectations for the next quarter.
Market read
A same-day earnings and guidance disclosure with explicit next-quarter targets typically drives immediate repricing and sets the near-term trading range.
What to watch
The release emphasizes non-GAAP metrics and includes forward-looking risk language (tariffs, supplier concentration, competitive pricing), which could matter if macro or competitive dynamics shift.
WD Reports Fiscal Fourth Quarter and Fiscal Year 2026 Financial Results
Q4FY26 revenue grew +44% year-over-year, GAAP gross margin reached 54.1%, non-GAAP operating margin reached 44.2%, and Q1FY27 revenue is expected to be up 42% to 49% year-over-year.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q4FY26 RevenueGAAP | $3,747 million | +12% | +44% |
| Q4FY26 Revenuenon-GAAP | $3,747 million | +12% | +44% |
| Q4FY26 Cost of revenueGAAP | $1,719 million | – | – |
| Q4FY26 Gross profitGAAP | $2,028 million | – | – |
| Q4FY26 Gross MarginGAAP | 54.1% | +390 bps | +1310 bps |
| Q4FY26 Gross Marginnon-GAAP | 54.4% | +390 bps | +1310 bps |
| Q4FY26 Research and developmentGAAP | $284 million | – | – |
| Q4FY26 Selling, general and administrativeGAAP | $138 million | – | – |
| Q4FY26 Business realignment charges (credits)GAAP | $43 million | – | – |
| Q4FY26 Total operating expensesGAAP | $465 million | – | – |
| Q4FY26 Operating IncomeGAAP | $1,563 million | +31% | +130% |
| Q4FY26 Operating Incomenon-GAAP | $1,655 million | +29% | +126% |
| Q4FY26 Operating MarginGAAP | 41.7% | +600 bps | +1560 bps |
| Q4FY26 Operating Marginnon-GAAP | 44.2% | +560 bps | +1610 bps |
| Q4FY26 Interest and other income (expense), netGAAP | $1,684 million | – | – |
| Q4FY26 Income before taxesGAAP | $3,247 million | – | – |
| Q4FY26 Income tax expense (benefit)GAAP | $52 million | – | – |
| Q4FY26 Net income from continuing operationsGAAP | $3,195 million | – | – |
| Q4FY26 Net incomeGAAP | $3,195 million | – | – |
| Q4FY26 Diluted Net Income Attributable to Common ShareholdersGAAP | $3,195 million | +1% | +1215% |
| Q4FY26 Diluted Net Income Attributable to Common Shareholdersnon-GAAP | $1,382 million | +32% | +130% |
| Q4FY26 Diluted Net Income Per Common ShareGAAP | $8.21 | +0% | +1125% |
| Q4FY26 Diluted Net Income Per Common Sharenon-GAAP | $3.56 | +31% | +109% |
| Q4FY26 Cash flow from operationsother | $1.39 billion | – | – |
| Q4FY26 Free cash flowother | $1.28 billion | – | – |
| FY26 RevenueGAAP | $12,919 million | – | +36% |
| FY26 Revenuenon-GAAP | $12,919 million | – | +36% |
| FY26 Cost of revenueGAAP | $6,608 million | – | – |
| FY26 Gross profitGAAP | $6,311 million | – | – |
| FY26 Gross MarginGAAP | 48.9% | – | +1010 bps |
| FY26 Gross Marginnon-GAAP | 49.1% | – | +970 bps |
| FY26 Research and developmentGAAP | $1,161 million | – | – |
| FY26 Selling, general and administrativeGAAP | $551 million | – | – |
| FY26 Litigation matterGAAP | $0 million | – | – |
| FY26 Business realignment charges (credits)GAAP | $146 million | – | – |
| FY26 Total operating expensesGAAP | $1,858 million | – | – |
| FY26 Operating IncomeGAAP | $4,453 million | – | +91% |
| FY26 Operating Incomenon-GAAP | $4,817 million | – | +107% |
| FY26 Operating MarginGAAP | 34.5% | – | +1000 bps |
| FY26 Operating Marginnon-GAAP | 37.3% | – | +1290 bps |
| FY26 Interest and other income (expense), netGAAP | $5,452 million | – | – |
| FY26 Income before taxesGAAP | $9,905 million | – | – |
| FY26 Income tax expense (benefit)GAAP | $481 million | – | – |
| FY26 Net income from continuing operationsGAAP | $9,424 million | – | – |
| FY26 Net incomeGAAP | $9,424 million | – | – |
| FY26 Diluted Net Income Attributable to Common ShareholdersGAAP | $9,298 million | – | +481% |
| FY26 Diluted Net Income Attributable to Common Shareholdersnon-GAAP | $3,883 million | – | +120% |
| FY26 Diluted Net Income Per Common ShareGAAP | $24.28 | – | +446% |
| FY26 Diluted Net Income Per Common Sharenon-GAAP | $10.22 | – | +104% |
Fiscal First Quarter of 2027 outlook
- Revenue$4.1B +/- $100M
- Gross margin55% - 56%
- Operating expenses$390M - $400M
- Tax rate~ 17%
- NoteInterest and other expense, net ~ $15M
- NoteDiluted net income per common share $4.00 +/- $0.15
- NoteDiluted weighted average shares ~ 388M
- NoteQ1FY27 revenue expected to be up 42% to 49% year-over-year
Capital returns
- WD’s Board of Directors declared a cash dividend of $0.15 per share of the company’s common stock, which will be paid on September 17, 2026 to stockholders of record as of the close of business on September 8, 2026.
What drove it
- Revenue increased +44% year-over-year in Q4FY26.
- GAAP gross margin expanded +1310 bps year-over-year and +390 bps sequentially.
- Non-GAAP operating income increased +126% year-over-year and +29% sequentially.
- Management cited broadening demand, deeper customer engagement, and disciplined execution across all end markets.
- Management cited cloud and other data-intensive workloads as expanding.
Concerns
- The company identified volatility in demand for its products, competitive products and pricing, and adverse global or regional conditions, including new or additional tariffs or trade restrictions, as risks.
- The company identified dependence on a limited number of qualified suppliers, supply chain disruptions, and changes to relationships with key customers as risks.
- The company identified debt and other financial obligations, cybersecurity incidents or other data system security risks, and international conflicts as risks.
- The filing states that the financial and operating results of Sandisk subsequent to the February 21, 2025 Separation Date are no longer consolidated into WD’s financial and operating results.
What to watch
- Q1FY27 revenue guidance of $4.1B +/- $100M and the stated expectation for revenue to be up 42% to 49% year-over-year.
- Q1FY27 non-GAAP gross margin guidance of 55% - 56%.
- Q1FY27 non-GAAP operating expenses guidance of $390M - $400M.
- Q1FY27 non-GAAP diluted net income per common share guidance of $4.00 +/- $0.15.
- Cash flow generation and the stated objective of further margin expansion and strong free cash flow generation.
Balance sheet and cash flow
- Cash and cash equivalents were $1,579 million as of July 3, 2026, compared with $2,114 million as of June 27, 2025.
- Accounts receivable, net were $2,026 million as of July 3, 2026, compared with $1,486 million as of June 27, 2025.
- Inventories were $1,511 million as of July 3, 2026, compared with $1,291 million as of June 27, 2025.
- Total current assets were $5,634 million as of July 3, 2026, compared with $5,856 million as of June 27, 2025.
- Property, plant and equipment, net was $2,476 million as of July 3, 2026, compared with $2,343 million as of June 27, 2025.
- Total assets were $13,861 million as of July 3, 2026, compared with $14,002 million as of June 27, 2025.
- Q4FY26 cash flow from operations was $1.39 billion.
- Q4FY26 free cash flow was $1.28 billion.
Analysis
WD closed FY26 with strong reported growth and margin expansion. Q4FY26 revenue was $3,747 million, up +44% year-over-year and +12% sequentially. GAAP gross margin was 54.1%, up +1310 bps year-over-year and +390 bps sequentially, while non-GAAP gross margin was 54.4%. GAAP operating income was $1,563 million and non-GAAP operating income was $1,655 million.
Profitability expanded substantially across the year. FY26 GAAP operating income was $4,453 million, up +91%, and non-GAAP operating income was $4,817 million, up +107%. FY26 GAAP gross margin was 48.9%, up +1010 bps, while the non-GAAP gross margin was 49.1%, up +970 bps. Q4 non-GAAP diluted EPS was $3.56, up +109% year-over-year and +31% sequentially.
GAAP earnings included substantial interest and other income. Q4FY26 interest and other income (expense), net was $1,684 million, and FY26 interest and other income (expense), net was $5,452 million. Q4 GAAP diluted net income attributable to common shareholders was $3,195 million and GAAP diluted EPS was $8.21. The presentation also reflects WD as a continuing-operations business following the February 21, 2025 separation of the Flash business into Sandisk.
Cash generation was strong in Q4FY26, with $1.39 billion of cash flow from operations and $1.28 billion of free cash flow. Cash and cash equivalents were $1,579 million at July 3, 2026. The board declared a $0.15 per-share cash dividend, payable September 17, 2026 to stockholders of record as of September 8, 2026.
The Q1FY27 outlook calls for $4.1B +/- $100M of non-GAAP revenue, 55% - 56% non-GAAP gross margin, and $4.00 +/- $0.15 of non-GAAP diluted EPS. Management expects Q1FY27 revenue to be up 42% to 49% year-over-year and cited continued demand from cloud and other data-intensive workloads. The principal reported items to monitor are the continuation of gross-margin expansion, operating-expense discipline within the $390M - $400M range, free-cash-flow generation, and the demand, tariff, supplier, supply-chain, competitive-pricing, customer-concentration, debt, and cybersecurity risks identified in the filing.
Management, verbatim
WD concluded fiscal year 2026 with strong performance. In our fiscal fourth quarter, revenue increased 44% year over year, gross and operating margins expanded, and earnings per share more than doubled. These results reflect our ability to scale innovation and operational excellence across our global organization, supporting our customers’ growing storage demand.
Irving Tan, CEO of WD
Fiscal 2026 was an outstanding year for WD, characterized by broadening demand, deeper customer engagement, and disciplined execution across all end markets. As the cloud and other data-intensive workloads continue to expand, we remain confident in the long-term growth trajectory of our business, further margin expansion, and strong free cash flow generation.
Kris Sennesael, CFO of WD
Not in the filing
stated, not guessed- Prior-quarter comparisons for Q4FY26 cash flow from operations and free cash flow were not provided.
- FY26 cash flow from operations and FY26 free cash flow were not provided.
- Segment revenue, segment growth, and segment-level drivers were not provided.
- Share repurchases were not provided.
- Total debt and detailed liabilities were not available in the supplied filing text, which ends during the balance-sheet liabilities section.
- GAAP guidance for Fiscal First Quarter of 2027 was not provided.
- A previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Q4FY26 prior-quarter comparisons for individual statement-of-operations line items other than the financial-highlight metrics were not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Western Digital filed an SEC 8-K with Exhibit 99.1 covering fiscal Q4 and full-year 2026 results, plus Q1FY27 business outlook and a declared cash dividend.
Ticker impact
Western Digital reported Q4FY26 revenue of $3.747B (+44% Y/Y) and guided Q1FY27 revenue up 42% to 49% Y/Y.
Likely positive near-term bias if the market views the guidance and margin expansion as durable; watch for any selloff if guidance is seen as aggressive versus expectations.
The article includes concrete quarterly results (revenue, margins, EPS) and a quantified next-quarter outlook (revenue, gross margin, non-GAAP EPS), which are direct inputs to valuation and trading decisions.
Market effects
Reinforces the storage hardware demand narrative and supports read-through for HDD/flash supply chain sentiment and pricing power.
Limited direct regional impact beyond US-listed semiconductor/storage complex sentiment.
Global data-center and cloud workload demand expectations may be marginally reinforced for the broader storage ecosystem.
Counterpoint
Strong reported growth could reflect cycle rebound or mix effects; traders may discount durability if end-market demand normalizes after the guided quarter.
Key entities
- companyWestern Digital Corporation
Nasdaq-listed storage infrastructure provider reporting fiscal Q4 and FY2026 results and issuing Q1FY27 guidance.
- executiveIrving Tan
CEO quoted on performance and outlook.
- executiveKris Sennesael
CFO quoted on Q1FY27 guidance and outlook.
