Western Digital reported second-quarter revenue of $3.0 billion, marking a 25% year-over-year increase driven by robust demand for nearline hard drives. Earnings per share came in at $2.13, exceeding the high end of the company’s guidance range. The firm delivered 215 exabytes of capacity, up 22% year-over-year, including 103 exabytes from shipments of more than 3.5 million units of its latest ePMR drives. Gross margin expanded to 46.1%, up 770 basis points from a year earlier and 220 basis points sequentially, reflecting a favorable mix shift toward higher-capacity products and disciplined cost management. Operating income reached just over $1 billion, producing an operating margin of 33.8%.

Management emphasized that accelerating adoption of generative AI, agentic AI and inference workloads is driving rapid data growth and fueling demand for higher-density storage. The company focused on increasing areal density by advancing its HAMR and ePMR roadmaps and promoting UltraSMR technology, which delivers a 20% capacity uplift versus conventional CMR. During the quarter, qualification of HAMR drives began with one hyperscale customer and is expected to start imminently with a second. To support this roadmap, Western Digital acquired laser-related intellectual property and talent to improve manufacturability, reliability and energy efficiency of its HAMR solutions.

Operating cash flow reached $745 million, and capital expenditures were $92 million, resulting in free cash flow of $653 million (a 21.6% free cash flow margin). The company held $2.0 billion in cash and equivalents and $3.2 billion in total liquidity, with net debt of $2.7 billion. During the quarter, $48 million was returned via dividends and $615 million via share repurchases, lifting total capital returned to $1.4 billion since the prior quarter’s program launch. For the third quarter, management guided to revenue of $3.2 billion plus or minus $100 million, gross margin between 47% and 48%, operating expenses of $380 million to $390 million, and non-GAAP diluted EPS of $2.30 plus or minus $0.15, supported by stable pricing and continued UltraSMR adoption.