Note: The QQ1 2025 results are presented with limited accompanying transcript data. The analysis below relies on the reported P&L, cash flow, and balance sheet metrics, together with the available year-over-year and quarter-over-quarter comparisons. No formal management guidance or verbatim earnings-call quotes were provided in the data set.
Western Digital reported a robust quarter with revenue of $4.095 billion, delivering a gross margin of approximately 37.9% and a net income of $493 million (EPS $1.40, diluted $1.35). The year-over-year improvement in revenue, gross profit, operating income, and net income reflects favorable product mix and ongoing demand for data-storage solutions in enterprise and cloud environments. However, profitability is tempered by working-capital intensity and cash-flow dynamics, as operating cash flow was modest at $34 million and free cash flow was negative by $62 million due to a sizable negative swing in working capital.
From a balance-sheet perspective, the company sits on solid absolute liquidity ($1.705 billion cash) but carries meaningful leverage: total debt of $7.40 billion and net debt of about $5.70 billion, with an EBIT/interest coverage around 7.5x. The balance sheet also shows a heavy goodwill balance (~$9.81 billion) and large intangible assets, which warrants attention for impairment risk if demand environments deteriorate. The current ratio (~1.47x) and quick ratio (~0.91x) indicate reasonable short-term liquidity but less cushion versus asset-light peers, highlighting the need for continued working-capital discipline.
Looking ahead, the quarters’ results point to continued resilience in data-storage demand, particularly in data-center storage and enterprise SSD/HDD segments. The valuation metrics (e.g., P/E around 9x and P/S around 4.4x) suggest the stock trades at a modest multiple of earnings with room to absorb near-term working-capital fluctuations if cash conversion improves. Investors should monitor working capital dynamics, capex discipline, and the cadence of data-center and cloud-storage customer spend as key near-term drivers of cash generation and profitability.