Western Digital moved 25% more exabytes in the twelve months ended July 3, 2026, and charged 8% more per exabyte. That combination pushed revenue to $12.9 billion, up 35.7% from the comparable year.
The operating result was even sharper: gross margin reached 48.9% from 38.8%, while operating income nearly doubled to $4.5 billion. The storage maker was not merely shipping more drives. It was keeping more of each dollar.
Management tied the improvement to volume, newer products, higher-capacity drives, and pricing.
"The increase was largely due to an increased volume of shipments, a better cost structure on our newer generation products, a mix shift towards higher capacity drives and improved pricing."
Western Digital, 10-K, Aug. 14, 2026
That is a clean explanation for the margin expansion. The revenue breakdown adds an important detail: cloud, which represented 89% of total revenue, grew 38%, with exabytes up 27% and ASPs up 8%.
"Net Revenue Net revenue increased by 36% in 2026 compared to 2025, primarily driven by a 25% increase in exabytes sold and an 8% increase in ASPs per exabyte, both of which were driven by strong demand across all of our end markets."
Western Digital, 10-K, Aug. 14, 2026
The business therefore produced $3.9 billion of operating cash flow, more than twice the prior year’s $1.7 billion. But cash conversion fell from 0.90x to 0.42x, and cash ended at $1.6 billion versus $2.1 billion a year earlier.
The balance-sheet receipts make that tension visible without resolving it. Accounts receivable rose 36.3% to $2.0 billion, slightly faster than revenue, while inventory increased 17% to $1.5 billion. Western Digital does not disclose the cause of the weaker cash conversion in the supplied filing detail.
Capital spending was nearly flat at $418 million despite the revenue increase. Capex intensity declined while free-cash-flow margin improved, even as the company’s cash balance declined. The two statements can coexist: stronger operating economics do not automatically mean more cash on hand.
The share count also moved in the opposite direction from per-share simplicity. Diluted shares rose 6.7% to 383 million, even while diluted EPS climbed to 24.28 from 5.12. Net income reached $9.4 billion, growing much faster than operating income.
At the latest close, Western Digital was worth $174.8 billion and traded at 92.5 times earnings. Its shares had risen 7.2% on Aug. 13, adding market context to a filing that contains both a large operating improvement and lower cash conversion.
A subsequent report could show whether receivables continue to grow faster than revenue and whether the cash balance begins to reflect the higher operating cash flow.
The unresolved tension is simple: Western Digital is generating much better margins, but converting less of its growth into cash.
Western Digital’s 2026 10-K reports stronger volume, pricing and margins alongside lower cash conversion.