Q1FY27
Filed Oct 22, 2026WD Reports Fiscal First Quarter 2027 Financial Results
Revenue grew 55% year over year to $4,381 million, GAAP gross margin reached 57.8%, and non-GAAP diluted EPS increased 161% year over year to $4.64. The company guided Q2FY27 revenue to $5.1B +/- $100M and non-GAAP gross margin to 60% - 61%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, netGAAP | $4.38B | +17% | +55% |
| Gross profitGAAP | $2.53B | – | – |
| Cost of revenueGAAP | $1.85B | – | – |
| Gross marginGAAP | 57.8% | +370 bps | +1430 bps |
| Research and developmentGAAP | $283M | – | – |
| Selling, general and administrativeGAAP | $162M | – | – |
| Business realignment chargesGAAP | $43M | – | – |
| Total operating expensesGAAP | $488M | – | – |
| Operating incomeGAAP | $2.05B | +31% | +158% |
| Operating marginGAAP | 46.7% | +500 bps | +1860 bps |
| Interest and other income (expense), netGAAP | −$8M | – | – |
| Income before taxesGAAP | $2.04B | – | – |
| Income tax expenseGAAP | $259M | – | – |
| Net incomeGAAP | $1.78B | – | – |
| Diluted net income attributable to common shareholdersGAAP | $1.78B | -44% | +54% |
| Diluted net income per common shareGAAP | $4.63 | -44% | +51% |
| Revenue, netnon-GAAP | $4.38B | +17% | +55% |
| Gross profitnon-GAAP | $2.54B | – | – |
| Gross marginnon-GAAP | 58.1% | +370 bps | +1420 bps |
| Operating expensesnon-GAAP | $391M | – | – |
| Operating incomenon-GAAP | $2.15B | +30% | +152% |
| Operating marginnon-GAAP | 49.1% | +490 bps | +1870 bps |
| Net incomenon-GAAP | $1.78B | – | – |
| Diluted net income attributable to common shareholdersnon-GAAP | $1.78B | +29% | +172% |
| Diluted net income per common sharenon-GAAP | $4.64 | +30% | +161% |
| Cash flows provided by operating activitiesother | $1.60B | – | – |
| Purchases of property, plant and equipment, netother | −$227M | – | – |
| Free cash flownon-GAAP | $1.38B | – | – |
| Cash and cash equivalentsother | $1.31B | – | – |
| Debt, currentother | $789M | – | – |
Fiscal second quarter of 2027 outlook
- Revenue$5.1B +/- $100M
- Gross margin60% - 61%
- Operating expenses$400M - $410M
- Tax rate~ 17%
- NoteInterest and other expense, net: ~ $15M
- NoteDiluted net income per common share: $5.80 +/- $0.20
- NoteDiluted weighted average shares: ~ 380M
- NoteNon-GAAP gross margin guidance excludes stock-based compensation expense, totaling approximately $15 million.
- NoteNon-GAAP operating expenses guidance excludes stock-based compensation and other expenses, totaling approximately $80 million.
- NoteNon-GAAP diluted net income per common share guidance excludes the items described above, totaling approximately $95 million.
Capital returns
- WD’s Board of Directors declared a cash dividend of $0.175 per share of the company’s common stock.
- The dividend will be paid on December 17, 2026 to stockholders of record as of the close of business on December 4, 2026.
- Repurchases of common stock were $(1,001) million for the three months ended October 2, 2026, compared with $(553) million for the three months ended October 3, 2025.
- Dividends paid to shareholders were $(56) million for the three months ended October 2, 2026, compared with $(39) million for the three months ended October 3, 2025.
- Employee stock plans, net were $(317) million for the three months ended October 2, 2026.
What drove it
- Management cited robust customer demand and disciplined execution.
- The CFO cited robust exabyte growth and improved pricing.
- The CEO cited technology transitions, deepening customer relationships, broadening the customer base to new areas of the market, and extending visibility into future demand.
- Revenue increased 55% year over year and 17% sequentially.
- Non-GAAP gross margin expanded to 58.1% from 43.9% in the prior-year period and 54.4% in Q4FY26.
- Non-GAAP operating margin expanded to 49.1% from 30.4% in the prior-year period and 44.2% in Q4FY26.
Concerns
- Revenue concentration in the company’s Cloud end market and among its top customers is identified as a key risk.
- The company identifies volatility in demand, competitive products and pricing, supplier dependence, manufacturing or supply-chain disruption, and long-term agreement risk.
- The company identifies debt and other financial obligations, cybersecurity incidents, trade policy, tariffs, inflation, interest rates, and currency exchange-rate fluctuations as risks.
- Business realignment charges were $43 million, compared with $3 million in the prior-year period.
- Inventories were $1,781 million at October 2, 2026, compared with $1,511 million at July 3, 2026.
What to watch
- Q2FY27 revenue guidance of $5.1B +/- $100M.
- Q2FY27 non-GAAP gross margin guidance of 60% - 61%.
- Q2FY27 non-GAAP operating expenses guidance of $400M - $410M.
- Q2FY27 non-GAAP diluted net income per common share guidance of $5.80 +/- $0.20.
- Execution through technology transitions and management’s stated ability to meet growing demand for storage.
- Pricing, exabyte growth, Cloud end-market demand, customer concentration, and inventory levels.
Balance sheet and cash flow
- Cash and cash equivalents were $1,314 million at October 2, 2026, compared with $1,579 million at July 3, 2026.
- Accounts receivable, net were $2,232 million at October 2, 2026, compared with $2,026 million at July 3, 2026.
- Inventories were $1,781 million at October 2, 2026, compared with $1,511 million at July 3, 2026.
- Total assets were $14,239 million at October 2, 2026, compared with $13,861 million at July 3, 2026.
- Total liabilities were $4,891 million at October 2, 2026, compared with $4,997 million at July 3, 2026.
- Total shareholders’ equity was $9,348 million at October 2, 2026, compared with $8,864 million at July 3, 2026.
- Net cash provided by operating activities was $1,604 million, compared with $672 million in the prior-year period.
- Net cash used in investing activities was $(225) million, compared with $(57) million in the prior-year period.
- Net cash used in financing activities was $(1,644) million, compared with $(678) million in the prior-year period.
- Settlement of convertible notes transactions was $(570) million.
- Proceeds from (repayments of) debt, net were $300 million, compared with $(31) million in the prior-year period.
- Cash and cash equivalents decreased by $(265) million during the three months ended October 2, 2026.
Analysis
Western Digital reported a strong fiscal first quarter. Revenue was $4,381 million, up 55% year over year and 17% from Q4FY26. The company attributed the performance to robust customer demand and disciplined execution, while the CFO identified robust exabyte growth and improved pricing as the drivers of continued momentum. No segment revenue disclosure was included in the filing.
Profitability expanded materially. GAAP gross margin was 57.8%, up 1430 basis points year over year and 370 basis points sequentially, while non-GAAP gross margin was 58.1%, up 1420 basis points year over year and 370 basis points sequentially. GAAP operating income was $2,046 million and non-GAAP operating income was $2,153 million. Non-GAAP operating margin reached 49.1%, compared with 30.4% in the prior-year period and 44.2% in Q4FY26.
GAAP diluted EPS was $4.63, up 51% year over year but down 44% sequentially from $8.21. The sequential GAAP comparison includes Q4FY26 GAAP interest and other income of $1,684 million, while Q1FY27 GAAP interest and other income (expense), net was $(8) million. Non-GAAP diluted EPS was $4.64, up 161% year over year and 30% sequentially. Cash flows provided by operating activities were $1,604 million and free cash flow was $1,377 million.
Capital allocation included $(1,001) million of common-stock repurchases, $(56) million of dividends paid, and $(570) million for settlement of convertible notes transactions. Cash and cash equivalents ended the period at $1,314 million, versus $1,579 million at July 3, 2026, while current debt was $789 million. The board declared a $0.175 per-share cash dividend, payable December 17, 2026.
For Q2FY27, WD guided to non-GAAP revenue of $5.1B +/- $100M, gross margin of 60% - 61%, operating expenses of $400M - $410M, and diluted EPS of $5.80 +/- $0.20. The outlook implies management expects the demand, pricing, and margin momentum described in the release to continue. Key disclosed risks include Cloud end-market and customer concentration, demand volatility, supply-chain disruption, competition and pricing, and debt and other financial obligations.
Management, verbatim
Fiscal 2027 is off to a strong start, with results exceeding expectations, driven by robust customer demand and disciplined execution. In our fiscal first quarter, revenue grew 55% year over year, non-GAAP gross and operating margins expanded to 58.1% and 49.1%, respectively, resulting in a 161% year-over-year increase in non-GAAP EPS. Reflecting our confidence in the business and our commitment to return capital to shareholders, we are raising our quarterly cash dividend by 17% to $0.175 per share.
Irving Tan, CEO of WD
We are executing well through our technology transitions to meet the growing demand for storage. As we deepen our customer relationships, broaden the customer base to new areas of the market, and extend our visibility into future demand, we are building an increasingly durable foundation for long-term value creation.
Irving Tan, CEO of WD
Our first quarter results demonstrate the continued momentum in our business, with robust exabyte growth and improved pricing driving another quarter of strong financial performance. Looking ahead, for our fiscal second quarter of 2027, at the midpoint of the ranges, we expect revenue of $5.1 billion, non-GAAP gross margin of 60.5%, and non-GAAP EPS of $5.80.
Kris Sennesael, CFO of WD
Not in the filing
stated, not guessed- Previous-period outlook was not provided; therefore, no comparison of reported results with prior guidance is available.
- Segment revenue, segment profitability, and segment operating metrics were not reported in the filing.
- Total debt was not reported; the balance sheet reports only debt, current of $789 million.
- GAAP guidance for fiscal second quarter of 2027 was not provided.
- A GAAP effective tax rate for the reported period was not provided.
- No year-over-year or sequential percentage changes were printed for gross profit, operating expenses, net income, cash flow from operations, free cash flow, capital expenditures, cash, or debt.
Written by an AI language model 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 checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.