Western Digital reported QQ3 2025 revenue of USD 2.294 billion, down 33.6% year-over-year and 46.5% quarter-over-quarter, reflecting ongoing demand softness in the broader storage market. Despite a sharp top-line decline, the company sustained a robust gross margin near 39.8% and delivered a operating income of USD 0.76 billion with an operating margin of roughly 33.1%. Net income reached USD 0.524 billion and earnings per share (diluted) USD 1.49–1.54, aided by a tax benefit that produced a negative income tax expense of USD 698 million. The combination of operating discipline, favorable product mix (including enterprise storage and SSD offerings), and efficient cash management drove meaningful cash flow generation in the quarter.
From a liquidity and capital structure standpoint, Western Digital finished the period with USD 3.478 billion in cash and cash equivalents and a total debt load of USD 7.333 billion, yielding a net debt position of USD 3.856 billion. Operating cash flow was USD 0.508 billion, capital expenditures were USD 0.129 billion, leading to free cash flow of USD 0.379 billion. The balance sheet remains solid, but leverage remains meaningful (debt-to-capitalization ~0.576; debt-to-equity ~1.356) with an interest coverage of ~8.35x. Valuation metrics show a conservative earnings multiple (P/E ~6.7) but a relatively rich free cash flow multiple (P/FCF ~37.3), underscoring a cash-generative profile that investors may weigh against cyclical revenue dynamics.
Looking forward, the quarter suggests continued near-term revenue pressure in a cyclical storage market, even as the company preserves profitability and liquidity. The key investment question centers on WD’s ability to translate sustained FCF generation into debt reduction, selective growth in enterprise/SSD offerings, and potential utilization of the balance sheet to support strategic initiatives in a high-variance storage environment. Investors should monitor HDD/SSD demand trends, data-center storage growth, competitive dynamics with Seagate, and potential relief or acceleration from pricing and mix shifts.