Revenue

– (Quarterly: Q4 2025 vs Q1 2026)

$2.45B ± $150M (for Q4 2025) " "

$2.70B ± $100M (for Q1 2026) "

raised

Gross Margin

– (Quarterly: Q4 2025 vs Q1 2026)

40%–41% (for Q4 2025) " "

41%–42% (for Q1 2026) "

raised

Operating Expenses

Q1 2026

Qualitative outlook mentioning improvements (for Q4 2025) "

$370M–$380M (for Q1 2026) "

no prior guidance

Tax Rate

Q1 2026

N/A (prior guidance was provided as “Tax Rate for FY '26” " )

16%–19% (for Q1 2026) "

no prior guidance

Interest and Other Expenses

Q1 2026

N/A

Approximately $50M (for Q1 2026) "

no prior guidance

EPS

Q1 2026

N/A

$1.54 ± $0.15 (for Q1 2026) "

no prior guidance

Tax Rate (FY '26)

FY '26

16%–18% (for FY '26) "

N/A

no current guidance

Robust Order and Demand Visibility

In earlier periods (Q1–Q3 2025), Western Digital emphasized securing LTAs and using build-to-order models to gain 2‑ to 6‑quarter demand visibility with hyperscale customers. " " "

In Q4 2025, the company expanded LTAs to cover the entire fiscal year 2026—with two customers’ deals extending into mid‑2027—and shifted to a 52‑week lead time program, further enhancing near‑term demand clarity. " " "

Increased clarity and extended visibility through longer-term agreements.

High-Capacity Drive Adoption and Technology Transition

Q1–Q3 2025 discussions focused on the adoption of UltraSMR technology, qualification of 11‑disc/11‑platter high‑capacity drives, and progress on HAMR transition, with rapid qualification cycles and growing customer acceptance. " " "

In Q4 2025, shipments of the latest 26TB CMR and 32TB Ultra SMR drives more than doubled quarter‑over‑quarter; the roadmap also highlighted progression toward HAMR qualification (planned for 2026–2027), reinforcing the company’s commitment to advanced technology transitions. " " "

Accelerated adoption and robust technology transition driving future growth and margin improvements.

Financial Discipline and Capital Allocation

Across Q1–Q3 2025, the focus was on maintaining cost discipline, generating free cash flow, reducing debt, and, in some calls, signaling a commitment to returning cash to shareholders even as the flash business separation was underway. " " "

In Q4 2025, Western Digital reported strong free cash flow generation ($675 million), significant debt reduction, and introduced share repurchase and dividend initiatives to strengthen the balance sheet, marking a more assertive capital allocation strategy. " " "

Enhanced emphasis on financial strength and capital returns through robust cash flow and disciplined balance sheet management.

Pricing Pressure and Margin Sensitivity

Q1 2025 highlighted mix‑driven ASP challenges and margin pressure from NAND headwinds; Q2 discussed NAND pricing headwinds and underutilization charges; Q3 reported recovering ASPs and improved gross margins thanks to manufacturing efficiencies and a rising share of high‑capacity (UltraSMR) drives. " " " " " "

In Q4 2025, the pricing environment was described as stable with a mix shift toward higher‑capacity drives supporting improved gross margins (41.3%) and further margin enhancements expected, reflecting effective cost control and product mix adjustments. " " "

A shift from mixed pricing challenges to stable pricing and enhanced margins driven by a favorable product mix.

Supply-Demand and Production Variability Risks

Earlier calls (Q1–Q3 2025) discussed strategies to balance supply and demand through LTAs, improved production yields, build‑to‑order models, and proactive inventory management even amid capacity constraints and seasonal fluctuations. " " " " "

In Q4 2025, emphasis was placed on robust production yields for high‑capacity drives and the continued reliance on long‑term agreements and high‑yield production processes that mitigate overproduction risks, confirming a well‐managed supply-demand balance. " " "

Improved production control and supply-demand balance through strengthened long‑term customer agreements and optimized capacity management.

Customer Concentration Risk

In Q1 and Q2 2025, while dependence on data center and hyperscale customers was acknowledged (with data center revenue making up a significant portion), there were no explicit warnings; Q3 discussions focused on strong demand from hyperscale customers without highlighting concentration risks. " " "

In Q4 2025, Western Digital explicitly acknowledged the heavy reliance on data center and hyperscale customers (90% of revenue) and noted that shifts in these customers’ capital expenditure could materially affect the business. " "

Heightened awareness of concentration risk as reliance on a few hyperscale customers becomes a more prominent consideration.

Geopolitical and Tariff Uncertainty

Q1 and Q2 2025 did not mention geopolitical or tariff issues; however, Q3 discussions raised emerging concerns about potential tariff effects and demand uncertainty in non‑core segments. " " "

In Q4 2025, the company acknowledged prior concerns but noted that reciprocal tariffs had been pushed back and no significant negative impact had materialized, with any potential softness in enterprise demand offset by strength in the cloud segment. "

Emerging concerns in earlier periods have stabilized in the current period, with minimal observed impact on demand.

Management and Organizational Transition Risks

Throughout Q1–Q3 2025, Western Digital discussed the flash business separation, early phases of leadership and CFO transitions (with an ongoing CFO search and a soft spin of the flash unit), and outlined plans for maintaining operational stability during the transition. " " " " " "

In Q4 2025, the appointment of a new CFO was announced along with reaffirmation of the company’s strategic focus as a standalone HDD business, while progress on the flash separation continued to be a background theme, signaling smoother organizational transition. " " "

Transition risks are being progressively managed with clearer leadership appointments and ongoing execution of the flash separation.