Executive Summary
Note: The QQ1 2025 results are presented with limited accompanying transcript data. The analysis below relies on the reported P&L, cash flow, and balance sheet metrics, together with the available year-over-year and quarter-over-quarter comparisons. No formal management guidance or verbatim earnings-call quotes were provided in the data set.
Western Digital reported a robust quarter with revenue of $4.095 billion, delivering a gross margin of approximately 37.9% and a net income of $493 million (EPS $1.40, diluted $1.35). The year-over-year improvement in revenue, gross profit, operating income, and net income reflects favorable product mix and ongoing demand for data-storage solutions in enterprise and cloud environments. However, profitability is tempered by working-capital intensity and cash-flow dynamics, as operating cash flow was modest at $34 million and free cash flow was negative by $62 million due to a sizable negative swing in working capital.
From a balance-sheet perspective, the company sits on solid absolute liquidity ($1.705 billion cash) but carries meaningful leverage: total debt of $7.40 billion and net debt of about $5.70 billion, with an EBIT/interest coverage around 7.5x. The balance sheet also shows a heavy goodwill balance (~$9.81 billion) and large intangible assets, which warrants attention for impairment risk if demand environments deteriorate. The current ratio (~1.47x) and quick ratio (~0.91x) indicate reasonable short-term liquidity but less cushion versus asset-light peers, highlighting the need for continued working-capital discipline.
Looking ahead, the quarters’ results point to continued resilience in data-storage demand, particularly in data-center storage and enterprise SSD/HDD segments. The valuation metrics (e.g., P/E around 9x and P/S around 4.4x) suggest the stock trades at a modest multiple of earnings with room to absorb near-term working-capital fluctuations if cash conversion improves. Investors should monitor working capital dynamics, capex discipline, and the cadence of data-center and cloud-storage customer spend as key near-term drivers of cash generation and profitability.
Key Performance Indicators
QoQ: 14.63% | YoY:215.24%
QoQ: 243.52% | YoY:453.33%
QoQ: 1 164.10% | YoY:271.78%
QoQ: 52.17% | YoY:260.92%
Key Insights
Revenue: $4.095B; YoY +35.1%; QoQ +8.8%
Gross Profit: $1.551B; YoY +215.2%; QoQ +14.6%; Gross Margin ~37.88%
Operating Income: $742M; YoY +453.3%; QoQ +243.5%; Operating Margin ~18.12%
Net Income: $493M; YoY +271.8%; QoQ +1,164.1%; Net Margin ~12.04%
EPS (GAAP): $1.40; Diluted EPS: $1.35; YoY EPS +260.9%; QoQ +52.2%
EBITDA: $862M; EBITDA Margin ~21.05%
Interest Expense: $99M; Depreciation & Amortization: $135M
Income Tax Expense: $135M; Effective Tax Rate ~21.5%
...
Financial Highlights
Revenue: $4.095B; YoY +35.1%; QoQ +8.8%
Gross Profit: $1.551B; YoY +215.2%; QoQ +14.6%; Gross Margin ~37.88%
Operating Income: $742M; YoY +453.3%; QoQ +243.5%; Operating Margin ~18.12%
Net Income: $493M; YoY +271.8%; QoQ +1,164.1%; Net Margin ~12.04%
EPS (GAAP): $1.40; Diluted EPS: $1.35; YoY EPS +260.9%; QoQ +52.2%
EBITDA: $862M; EBITDA Margin ~21.05%
Interest Expense: $99M; Depreciation & Amortization: $135M
Income Tax Expense: $135M; Effective Tax Rate ~21.5%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.10B |
35.06% |
8.79% |
| Gross Profit |
1.55B |
215.24% |
14.63% |
| Operating Income |
742.00M |
453.33% |
243.52% |
| Net Income |
493.00M |
271.78% |
1 164.10% |
| EPS |
1.40 |
260.92% |
52.17% |
Key Financial Ratios
operatingProfitMargin
18.1%
operatingCashFlowPerShare
$0.1
freeCashFlowPerShare
$-0.18
Management Commentary
Note: Earnings-call transcript data not provided. The following themes reflect the likely focus areas given the reported results:
- Strategy and mix: Emphasis on data-center storage solutions and enterprise SSD/HDD platforms to capture growing cloud and AI/data analytics workloads.
- Operational execution: Margin expansion driven by favorable product mix and cost discipline, with EBITDA and operating income growth outpacing revenue gains in the period.
- Cash flow dynamics: Modest operating cash flow despite solid net income, driven by working-capital movements; management likely aims to improve cash conversion through receivables and inventory management and supplier terms.
- Market conditions: Continued secular demand for data storage, with competition and cycle-sensitive pricing in HDD/SSD segments shaping near-term profitability.
Forward Guidance
No formal forward guidance was provided in the data set. Based on reported results and the industry backdrop, key factors likely to influence the trajectory include:
- Data-center capex and cloud storage demand, which support durable storage demand and potential for higher-margin enterprise solutions.
- NAND and HDD price cycles, which affect mix, pricing, and gross margins.
- Working capital normalization: The quarter showed a sizable working-capital drag (change in working capital of -$753 million), which can be volatile and affect quarterly cash flow.
- Debt management and deleveraging potential, given net debt of ~$5.70 billion and interest-coverage around 7.5x.
- FX and macro conditions that can influence cost of goods and international sales.
Management commentary (if provided) would likely reiterate a focus on data-center growth, efficiency improvements, and selective capital allocation to high-return storage solutions. Investors should monitor quarterly changes in receivables, inventory, and payables, as well as capex intensity and data-center customer spend.