WESTERN DIGITAL CORP SEC 10-K Report

Western Digital Corp, a leading provider of data storage solutions, has released its 2025 Form 10-K report, showcasing a year of significant financial growth, strategic business separations, and forward-looking initiatives. The report highlights the company's robust performance in the HDD market, strategic separation of its Flash business, and proactive measures to manage capital and mitigate risks.

Financial Highlights

• Revenue, net: $9,520 million, increased by 51% in 2025 compared to 2024, primarily driven by a 29% increase in average selling price per unit and a 15% increase in units sold.
• Gross profit: $3,692 million, increased by $1.92 billion in 2025 compared to 2024, largely due to higher revenues, cost reductions, and a more favorable product mix.
• Operating income: $2,334 million, reflecting a significant improvement from an operating loss of $403 million in 2024, driven by increased gross profit and reduced operating expenses.
• Net income (loss) from continuing operations: $1,643 million, a substantial turnaround from a net loss of $765 million in 2024, attributed to improved operating performance and tax benefits.
• Net income (loss) per common share - Basic: $5.31, compared to a loss of $2.61 in 2024, reflecting the overall improvement in net income.
• Net income (loss) per common share - Diluted: $5.12, compared to a loss of $2.61 in 2024, indicating enhanced profitability and shareholder value.

Business Highlights

• Separation of Business Units: On February 21, 2025, Western Digital completed the separation of its HDD and Flash business units, creating two independent public companies. Western Digital now focuses on its HDD business, while Sandisk Corporation holds the Flash business. This separation is expected to enhance each unit's ability to innovate, capitalize on growth opportunities, and operate more efficiently.
• Revenue Segments: The company's revenue is divided into three main segments: Cloud, Client, and Consumer. The Cloud segment, which includes products for public or private cloud environments and enterprise customers, saw significant growth. The Client segment provides high-performance HDD solutions for OEMs and channel customers, while the Consumer segment offers HDD external storage products.
• Geographical Performance: In 2025, the Americas accounted for the largest portion of revenue, followed by Asia and Europe, the Middle East, and Africa. The company experienced growth across all regions, with the Americas showing the most substantial increase.
• Sales Units: The company shipped 696 exabytes in 2025, a significant increase from 443 exabytes in 2024. This growth was primarily driven by higher shipments of high-capacity enterprise products.
• New Product Launches: Western Digital continues to innovate with a multi-year product roadmap for high-capacity HDDs, including technologies like ePMR, OptiNAND, UltraSMR, and triple stage actuators, positioning the company to capitalize on growing storage market opportunities.
• Future Outlook: Western Digital anticipates that digital transformation, including the AI data-cycle, will drive improved market conditions in the long term. The company is focused on maintaining its leadership in the HDD market and leveraging its broad product portfolio to meet the evolving needs of its customers.

Strategic Initiatives

• Separation of Business Units: The company completed the separation of its HDD and Flash business units, creating two independent public companies. Western Digital now focuses on the HDD business, while Sandisk Corporation holds the Flash business. This strategic move aims to enhance each unit's ability to innovate, capitalize on growth opportunities, and optimize capital structures.
• Capital Management: In fiscal 2025, the company reduced its debt by $2.78 billion through various actions, including the redemption of $1.80 billion of senior unsecured notes and the settlement of $800 million of Term Loan A-3 through an exchange of Sandisk shares. The company also initiated a quarterly cash dividend program, paying $0.10 per share, and authorized a $2.0 billion share repurchase program, repurchasing 2.8 million shares for $149 million. The company expects to fund share repurchases primarily through operating cash flows.
• Future Outlook: The company plans to monetize its remaining stake in Sandisk within one year from the separation date. It also anticipates capital expenditures for fiscal year 2026 to be between 4% to 6% of net revenue, focusing on sustaining its working capital position. The company believes its cash and cash equivalents, along with its revolving credit facility, will be sufficient to meet its financial needs for the foreseeable future. Additionally, the company is exploring opportunities to access debt and equity capital markets to further supplement its liquidity position if necessary.

Challenges and Risks

• Technological and Market Risks: Western Digital faces significant challenges due to its reliance on HDD technology amidst rapid technological advancements and the growing demand for alternative storage solutions like flash memory. The separation of its Flash business into an independent company, Sandisk, may lead to operational inefficiencies and increased vulnerability to market changes.
• Operational Risks: Adverse global or regional conditions could harm business operations, such as geopolitical tensions, trade wars, and changes in tariffs. The company is heavily dependent on international markets, which exposes it to risks like political instability, exchange rate fluctuations, and compliance with foreign regulations. Supply chain disruptions due to reliance on a limited number of suppliers and potential natural disasters pose significant risks.
• Cybersecurity Threats: Cybersecurity threats, including sophisticated AI-driven attacks, are increasing, potentially compromising technology infrastructure and products.
• Strategic Risks: The separation of Sandisk introduces strategic risks, including potential business disruption and increased revenue concentration in the Cloud end market.
• Market Risks: Western Digital is exposed to market risks such as fluctuations in currency exchange rates, which could negatively impact operating results. The company’s financial performance is also vulnerable to changes in creditworthiness of customers and potential credit losses, especially in emerging markets. The level of debt and associated financial covenants may restrict operational flexibility and increase vulnerability to economic downturns.

SEC Filing: WESTERN DIGITAL CORP [ WDC ] - 10-K - Aug. 13, 2025