Revenue rose 55.5% and gross margin widened 14.3 points to 57.8% from a year earlier 8-K. Management guides Q2 revenue to $5.1B plus or minus $100M, up 66% to 72% year over year, with non-GAAP EPS of $5.80 plus or minus $0.20 8-K.
Western Digital Corporation · Fiscal Q1 2027 (quarter ended 2 Oct 2026) · Reported 22 Oct 2026 · US
Key figures
Million USD | Q1 2027 | Q1 2026 | Change |
|---|---|---|---|
Revenue | 4,381.00 | 2,818.00 | +55.5 % |
Gross profit | 2,534.00 | 1,227.00 | +106.5 % |
Operating income | 2,046.00 | 792.00 | +158.3 % |
Net income | 1,779.00 | 1,182.00 | +50.5 % |
Diluted EPS | 4.63 USD/share | 3.07 USD/share | +50.8 % |
Operating cash flow | 1,604.00 | 672.00 | +138.7 % |
Gross margin | 57.8 % | 43.5 % | +14.3 pp |
Operating margin | 46.7 % | 28.1 % | +18.6 pp |
Net margin | 40.6 % | 41.9 % | -1.3 pp |
Figures in USD, as reported. Margins are computed from the reported lines.
Margin expansion, not volume alone, drove the profit jump
Revenue rose 55.5% to $4.38 billion in the first quarter of fiscal 2027, but operating income rose 158.3% to $2.05 billion 8-K. Gross margin was 57.8% against 43.5% a year earlier, and operating margin was 46.7% against 28.1% 8-K. The CFO credited "robust exabyte growth and improved pricing" 8-K.
The report does not split the gain between volume and price, so how much of the margin step is repeatable pricing is unresolved. On the company-defined non-GAAP basis, gross margin was 58.1% and operating margin 49.1% 8-K.
Net income grew far less than operating income against a higher year-earlier base
Net income rose 50.5% to $1.78 billion despite a 158.3% increase in operating income. The difference largely reflects a $611 million non-cash gain on Western Digital's retained Sandisk investment recorded in the prior-year quarter8-K. Net interest and other income shifted from a positive $545 million to an $8 million expense, while income tax expense increased from $155 million to $259 million. Excluding company-defined adjustments, diluted EPS rose 161% to $4.64, providing a clearer view of underlying earnings growth.
The report does not give the lines between operating income and net income, so the size of those year-earlier items is unknown. Company-defined non-GAAP EPS of $4.64 was up 161% from $1.78 a year earlier 8-K. That is a better gauge of earnings growth than the 51% GAAP change, which compares against the higher year-earlier GAAP base 8-K.
Cash conversion improved, and the dividend was raised
Operating cash flow increased 139% to $1.60 billion, while free cash flow rose 130% to $1.38 billion. Cash conversion improved to 90% of GAAP net income from 57% a year earlier, although the comparison is affected by the prior-year $611 million non-cash Sandisk gain8-K8-K. Working capital remained a cash outflow, including $269 million from inventories and $206 million from receivables. Western Digital also repurchased approximately $1.00 billion of shares during the quarter and raised its quarterly dividend by 17% to $0.175 per share.
The board raised the quarterly dividend 17% to $0.175 per share, payable December 17, 2026 8-K.
What to watch next
Q2 guidance: revenue of $5.1B plus or minus $100M, non-GAAP gross margin of 60% to 61%, operating expenses of $400M to $410M, and non-GAAP EPS of $5.80 plus or minus $0.20 on 380M shares 8-K.
Whether pricing keeps lifting margins: management names improved pricing as a driver, and the guide implies gross margin above this quarter's 58.1% non-GAAP level 8-K.
Customer concentration: the company lists concentration of revenue in the Cloud end market and among its top customers as a key risk 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.