Leading data storage manufacturer Western Digital (NASDAQ: WDC) reported Q1 CY2025 results exceeding the market’s revenue expectations , but sales fell by 33.6% year on year to $2.29 billion. On top of that, next quarter’s revenue guidance ($2.45 billion at the midpoint) was surprisingly good and 5.2% above what analysts were expecting. Its non-GAAP profit of $1.36 per share was 22.7% above analysts’ consensus estimates.

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Western Digital (WDC) Q1 CY2025 Highlights:

“Western Digital executed well in its fiscal third quarter achieving revenue at the high end of our guidance range and gross margin over 40%,” said Irving Tan, CEO of Western Digital.

Company Overview

Founded in 1970 by a Motorola employee, Western Digital (NASDAQ: WDC) is a leading producer of hard disk drives, SSDs and flash memory.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Western Digital’s demand was weak and its revenue declined by 7.9% per year. This was below our standards and is a sign of poor business quality. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Western Digital’s recent performance shows its demand remained suppressed as its revenue has declined by 13.2% annually over the last two years.

This quarter, Western Digital’s revenue fell by 33.6% year on year to $2.29 billion but beat Wall Street’s estimates by 1.9%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 34.9% year-on-year decline in sales next quarter.