Western Digital Corporation

Strong Q3 results with clear margin expansion (all above guidance) - Revenue $3.3B, +45% YoY; EPS $2.72, nearly double (+97% YoY). - Delivered 222 exabytes, +34% YoY; including 4.1M+ drives and 118 exabytes of latest-gen ePMR (capacity points up to 32TB). - Gross margin 50.5% (+1,040 bps YoY, +440 bps sequential)—first time breaking into the 50%+ range. - Operating income $1.3B (+116% YoY), operating margin 38.6% (+1,260 bps YoY). - Cloud is the engine: 89% of revenue ($3.0B), +48% YoY (driven by higher-capacity nearline and improved pricing). Client +31% YoY, Consumer +24% YoY.

Q4 forecast: continued growth + further gross margin improvement - Revenue expected $3.65B ± $100M (midpoint +40% YoY). - Gross margin 51%–52% (implying continued incremental improvement). - Operating expenses $385M–$395M; interest/other ~$10M; tax rate ~16%. - EPS $3.25 ± $0.15 (non-GAAP, 385M diluted share count). - Investor “good signal”: management cited strong incremental margins (referenced as ~+70% to +75% YoY/QoQ ranges) and expected persistence into Q4.

Capital return & balance sheet strengthening (dividend raise + buybacks) - Monetized 5.8M SanDisk shares, reducing debt by $3.1B; only $1.6B convertible debt remains. - Ending net cash position around +$450M (cash/cash equivalents $2.0B). - Q3 free cash flow $978M; FCF margin 29%; operating cash flow $1.1B. - Shareholder returns: - Dividend payments $43M. - Share repurchases $752M (repurchased 2.9M shares). - Board approved +20% dividend to $0.15/share, payable June 17, 2026 (record date June 5). - Policy: returning “excess” free cash flow via dividend + buybacks; not changing capital return framework.