Western Digital Corporation Q3 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue was $3.3 billion, up 45% year-over-year (vs. 3Q25), driven by strong cloud, consumer, and client demand.
  • Gross margin reached 50.5%, up 1,040 bps year-over-year and 440 bps sequentially.
  • EPS was $2.72, up 97% year-over-year and above the high end of guidance.
  • Operating income was $1.3 billion, up 116% year-over-year, with operating margin of 38.6%.
  • Strong demand resulted in shipment of 222 exabytes, up 34% year-over-year.
  • Balance sheet strengthened via monetization of 5.8 million SanDisk shares, reducing debt by $3.1 billion; WD ended quarter with net cash of $450 million.
  • Free cash flow was $978 million (29% margin); share repurchases totaled $752 million.
  • Quarterly dividend increased 20% to $0.15/share (payable June 17, 2026).

Segment Performance

  • Cloud: $3.0 billion revenue (89% of total), up 48% year-over-year.
  • Consumer: $186 million revenue (6% of total), up 24% year-over-year.
  • Client: $179 million revenue (5% of total), up 31% year-over-year.

Technology & Market Drivers

  • Strong structural tailwinds from agentic AI, inferencing, and physical AI, all driving exponential data creation.
  • WD expects long-term storage demand growth above 25% CAGR.

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Operator: Good afternoon, and thank you for standing by. Welcome to Western Digital's Third Quarter Fiscal 2026 Conference Call. [Operator Instructions] As a reminder, this call is being recorded. Now I'll turn the call over to Mr. Ambrish Srivastava, Vice President, Investor Relations. You may begin. Ambrish Srivastava: Thank you, and good afternoon, everyone. Joining me today are Irving Tan, WD's Chief Executive Officer; and Kris Sennesael, WD's Chief Financial Officer. Before we begin, please note that today's discussion will contain forward-looking statements based on management's current assumptions and expectations, which are subject to various risks and uncertainties. These forward-looking statements include expectations for our product portfolio, our business plans and performance, ongoing market trends and our future financial results. We assume no obligation to update these statements. Please refer to our most recent annual report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. In our prepared remarks, our comments will be related to non-GAAP results on a continuing operations basis unless stated otherwise. Reconciliations between the non-GAAP and comparable GAAP financial measures are included in the press release and other materials that have been posted in the Investor Relations section of our website at investor.wdc.com. Lastly, I want to n

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