Western Digital Expands $4B Buyback as Q2 Revenue Climbs 25%
Western Digital expanded its share repurchase authorization by $4 billion while generating $3.02 billion in Q2 revenue, 25% year-on-year growth, and free cash flow of $653 million. Gross margin rose to 46.1% on higher-capacity nearline drives, and the company shipped 215 exabytes with over 3.5 million ePMR drives, returning 100% of FCF.
1. Buyback Expansion
Western Digital authorized an additional $4 billion share repurchase, adding to the $484 million remaining under its existing program. Management funded the move with $653 million in free cash flow, returning over 100% of FCF through $615 million in buybacks and $48 million in dividends.
2. Q2 Financial Performance
In fiscal Q2, revenue rose 7% sequentially to $3.02 billion and jumped 25% year-over-year, while non-GAAP EPS of $2.13 exceeded estimates by $0.18. Gross margin expanded by 770 basis points to 46.1%, driving non-GAAP operating income of $1.02 billion, up 72% year-over-year.
3. Technology Roadmap and Shipments
Western Digital shipped a total of 215 exabytes, a 22% year-over-year increase, including over 3.5 million latest-generation ePMR drives supporting up to 32TB capacities. The company is accelerating its HAMR and UltraSMR roadmaps in partnership with hyperscale customers to meet rising AI-driven data storage demand.
4. Risks and Outlook
Storage remains a cyclical market with potential pricing and demand volatility, and Western Digital carries $4.7 billion in long-term debt. The long-term payoff of the buyback hinges on sustaining AI-driven growth while balancing capital allocation for innovation and market share expansion.