Western Digital Sees Growth of Up to 72%, Revenue of $5.1 Billion in Second Quarter
Key Facts
Western Digital expects revenue in its fiscal second quarter of 2027 to rise between 66% and 72% year on year, to $5.1 billion at the midpoint of its guidance range, according to its first-quarter earnings release issued on October 22. The results cover the period ended October 2, 2026. The revenue guidance represents a range of $5.1 billion, plus or minus $100 million, and is not a guaranteed figure. The company also provided estimates for an adjusted gross margin of between 60% and 61% and adjusted diluted earnings per share of $5.80, plus or minus $0.20. The guidance puts expected growth in the next quarter at the forefront of the company's announcement, following strong revenue in the quarter that just ended.
First-quarter revenue was $4.381 billion, up 55% from $2.818 billion in the same quarter of the previous fiscal year and 17% from $3.747 billion in the prior quarter. GAAP gross margin rose to 57.8% from 43.5% a year earlier, an increase of 14.3 percentage points. GAAP operating margin was 46.7%, compared with 28.1% in the year-earlier period. These accounting measures reflect margin expansion alongside sales growth. GAAP diluted earnings per share were $4.64, up 161% from $1.78 a year earlier.
Chief Executive Irving Tan said revenue grew 55% year on year, while adjusted gross and operating margins were 58.1% and 49.1%, respectively, and adjusted earnings per share rose 161%. He added that results exceeded expectations, supported by customer demand and disciplined execution, and that the company was carrying out its technology transitions to meet rising demand for storage. Tan's reported adjusted operating margin of 49.1% differs from the GAAP operating margin of 46.7%, as they are different accounting measures. Chief Financial Officer Kris Sennesael said exabyte growth and improved pricing supported continued momentum and financial performance. He added that the midpoint of second-quarter guidance equates to revenue of $5.1 billion, an adjusted gross margin of 60.5% and adjusted earnings per share of $5.80.
The company generated $1.60 billion in operating cash flow in the first quarter, while free cash flow was $1.38 billion. The board declared a quarterly cash dividend of $0.175 per share, an increase of 17%. The dividend is scheduled to be paid on December 17, 2026, to shareholders of record on December 4. The dividend decision gives shareholders a specific date alongside the revenue and margin results and the outlook for the next quarter. In the market, the company's stock fell from a close of $378.51 on October 21 to $354.19 on October 22, a daily decline of about 6.4%, according to EL7 data.
The company said its second-quarter guidance is based on management's current expectations and that actual results could differ materially because of risks and uncertainties. These include revenue concentration in the cloud market and among major customers, demand volatility, and reliance on a limited number of qualified suppliers. It also warned of supply chain disruptions and competitive and pricing pressure. The company links these risks to the possibility that actual results may diverge from its projections, while the announced growth range remains an estimate for the coming period. The next financial milestone is the second quarter of fiscal 2027, for which the company expects revenue of $5.1 billion at the midpoint of its range, an adjusted gross margin of 60.5% and adjusted earnings per share of $5.80.