Overview

The financial report provides an overview of the financial performance and condition of the company for the fiscal years 2025, 2024, and 2023. The company became a standalone publicly traded entity on February 21, 2025 after separating from its parent company, Western Digital Corporation (WDC).

Revenue and Profit Trends

In fiscal year 2025, the company’s net revenue increased 10% to $7.355 billion compared to the prior year. This was primarily driven by a 6% increase in exabytes sold due to stronger demand in the Cloud end market and a 4% increase in average selling prices. Cloud revenue increased 195% year-over-year, while Client revenue increased 1% and Consumer revenue was flat.

Gross profit increased $1.14 billion in 2025 compared to 2024, primarily due to improved pricing, favorable product mix, and a decrease in manufacturing underutilization charges. Gross margin increased from 16.1% in 2024 to 30.1% in 2025, with about 10% driven by higher revenue and 4% from the decrease in underutilization charges.

However, the company recorded a $1.8 billion goodwill impairment charge in 2025 due to the difference between the carrying value of the reporting unit and its fair value. This resulted in a net loss of $1.641 billion for the year, compared to a net loss of $672 million in 2024.

Strengths and Weaknesses

A key strength of the company is its diversified product portfolio that addresses multiple end markets, including Cloud, Client, and Consumer. The strong performance in the Cloud segment, driven by increased enterprise SSD shipments, demonstrates the company’s ability to capitalize on growing demand in this market.

However, the company faces challenges from trade policies and tariffs, which could increase the cost of goods sold and negatively impact margins. Additionally, the goodwill impairment charge highlights the risk of asset impairments, which can significantly affect profitability.

The company’s conservative capital expenditure strategy in 2025 and 2024 may have helped preserve cash, but it could also limit the company’s ability to invest in new technologies and stay competitive in the long run. The planned increase in capital investments for fiscal year 2026 suggests the company is preparing to address this.

Outlook and Future Prospects

The company believes its cash and cash equivalents will be sufficient to meet its working capital needs for the next twelve months and the foreseeable future. However, the company’s ability to sustain its working capital position is subject to various risks, including changes in trade policies, supply chain disruptions, and technological advancements.

The company anticipates that digital transformation, including the AI data-cycle, will drive improved market conditions in the long term for its data storage products. However, the company will need to continue investing in research and development to maintain its competitive edge and address evolving customer needs.

The recent changes in tax laws, such as the reversal of the requirement for capitalization of U.S. research and development expenditures and the potential impact of the Pillar Two global minimum tax, could also affect the company’s future tax obligations and cash flows.

Overall, the company’s financial performance in 2025 showed signs of improvement, with increased revenue and profitability. However, the significant goodwill impairment charge and the ongoing challenges from trade policies and technological changes highlight the need for the company to remain agile and adaptable to navigate the dynamic market environment.

Table 1: Summary of Financial Performance

Table 2: Disaggregated Revenue by End Market and Geography