WD: Fiscal 3Q26 Financial Results

Summary:

Revenue of $3.34 billion, up 45% YoY
GAAP gross margin of 50.2%; non-GAAP gross margin of 50.5%
GAAP diluted EPS of $8.20; non-GAAP diluted EPS of $2.72
Cash flow from operations of $1.12 billion; free cash flow of $978 million
Q4FY26 revenue expected to be up 36% to 44% YoY
Q4FY26 non-GAAP gross margin expected to be in the range of 51% to 52%

Western Digital Corp. reported fiscal third quarter 2026 financial results for the period ended April 3, 2026.

“WD started calendar year 2026 with great execution, driving strong sequential and YoY revenue growth in all our end markets, while expanding gross and operating margins. Gross margin exceeded 50%, reflecting our continued delivery of innovation across an expanding set of customers. Given our confidence in the durability of our business, we are also announcing a 20% increase in the quarterly cash dividend on the company’s common stock to $0.15 per share,” said Irving Tan, CEO, WD. “The demand drivers are clear: Virtually every AI workload, from training, inference, agentic AI to physical AI, creates data that is stored persistently and cost-efficiently on HDDs.”

Q3FY26 Financial Highlights

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Business Outlook for Fiscal Fourth Quarter of 2026
“Our business continues to strengthen with visibility extending as we continue to build momentum across all our end markets, driven by innovation, strong customer engagements, and disciplined execution. We have also strengthened our balance sheet while deploying our robust free cash flow to drive shareholder returns,” said Kris Sennesael, CFO, WD. “For our fiscal fourth quarter of 2026, at the mid-point of the ranges provided in the table below, we expect revenues of $3.65 billion, non-GAAP gross margin of 51.5%, with non-GAAP EPS of $3.25.”

⁽¹⁾ We provide earnings guidance only on a non-GAAP basis because certain information necessary to reconcile such guidance to GAAP is difficult to estimate or cannot be allocated or quantified with certainty and is dependent on future events outside of our control. Please refer to the section titled “Non-GAAP Guidance” under “Discussion Regarding the Use of Non-GAAP Financial Measures” in this press release for additional information regarding the non-GAAP measures, including quantification of known expected adjustment items.

Dividend
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 June 17, 2026 to stockholders of record as of the close of business on June 5, 2026.

Comments

WD delivered another strong quarter, with revenue reaching $3.34 billion, up 45% year-over-year and 11% sequentially. The result reinforces the momentum built over previous quarters and underscores the enduring role of HDD in the broader mass storage landscape. WD, Seagate, and Toshiba have all benefited from pricing pressure on competing memory and storage technologies, creating a favorable market climate that is generating exceptional financial performance across the board.

The revenue mix remains highly stable. Cloud continues to dominate at 89%, while client and consumer remain modest contributors at 5% and 6% respectively, figures that, while steady in percentage terms, translate to absolute growth in dollar value, with client at approximately $167 million and consumer at around $200 million.

On a trailing basis, the last six months generated $6.36 billion, and the last twelve months have crossed the $11.7 billion mark. With this trajectory, WD is well positioned to exceed $12.5 billion for fiscal year 2026.

From a technology standpoint, WD continues to push the envelope. Recent HDD developments include new capacity points at 40TB (CMR) and 44TB (SMR), improved power efficiency, enhanced bandwidth capabilities, and a clear roadmap toward higher platter counts, greater areal density, and a next-generation vertical laser architecture for HAMR, all pointing to a company investing heavily in defining what the hard drive looks like for the AI era.

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