Western Digital raises dividend 17% after first-quarter revenue grows 55%
Key Facts
Adjusted diluted earnings per share came in at $4.64, compared with estimates of $4.08, while revenue reached $4.38 billion against an estimated $4.14 billion. Revenue grew 55% year over year, according to Investing.com. The company said the dividend increase reflected its confidence and commitment to returning capital to shareholders. The announcement came as the company reported a surge in revenue and cash flow, while markets awaited its forecast for the next quarter.
The company linked the decision to its confidence and commitment to returning capital to shareholders, and did not explicitly attribute it to any specific cash flow. In the first quarter, revenue rose 55% to $4.38 billion, topping analysts’ estimate of $4.14 billion. Adjusted earnings per share also beat expectations, at $4.64 against $4.08.
The company’s results above expectations extended to its guidance for the second quarter of fiscal 2027. It forecast revenue of $5.0 billion to $5.2 billion, while analysts’ estimate was $4.57 billion. The midpoint of the revenue range, $5.1 billion, is about 12% above that estimate. The company also set the midpoint of its adjusted earnings-per-share forecast at $5.80, compared with analysts’ consensus of $4.82. These figures indicate that management expects revenue and earnings to accelerate next quarter, after first-quarter results topped estimates.
On pricing, the blended average selling price per terabyte of storage rose 28% in the first quarter. The company also pointed to higher input costs and said it remained on track to reduce cost per terabyte by about 10% annually in the near term. Capital spending remains part of the outlook for the next phase: management expects it to average 4% to 6% of revenue over the next five years. It also said the percentage would be slightly higher over the next two years. These projections put pricing, costs and capacity investment among the issues the market is tracking as demand for storage grows.
The stock did not hold its initial gains after the results were announced. It jumped about 4% in extended trading after results were released on October 22, 2026, then reversed those gains after the call and fell more than 1% in premarket trading on Friday, October 23. The company’s shares closed at $343.67 on October 23, after closing at $354.19 the previous day, according to EL7 data. The move came despite first-quarter results and second-quarter guidance exceeding analysts’ estimates. The decline left the stock volatile in the wake of the announcement.
The trajectory of pricing and storage capacity sold raised questions for Evercore ISI analysts. They said investors would find it difficult to assess how sustainable the recent price increases are. They added that the path of increases in storage capacity delivered to customers would also remain in question. This comes as the average selling price per terabyte has risen while the company faces mounting input costs. These factors put continued pricing improvement and cost reductions at the center of the market’s focus on the company’s performance.