Western Digital Reports Fiscal First Quarter 2021 Financial Results

SAN JOSE, Calif. - October 28, 2020

Western Digital Corp. (Nasdaq: WDC) today reported fiscal first quarter 2021 financial results.

"I am pleased with our results, as we continued to focus our execution on the massive market opportunity for data storage technology that stems from the ongoing expansion of cloud infrastructure connected to intelligent endpoints and powered by high performance networks," said David Goeckeler, Western Digital CEO. "While we are still managing through macro uncertainty, during the quarter we benefitted from strength particularly in the retail sector, driven by favorable macro and market dynamics, as well as the brand recognition of our products. Our diversified storage portfolio strategy implemented through our recently announced organizational structure will enable us to accelerate growth, improve our focus, and drive sustainable, long-term shareholder value."

Q1 2021 Financial Highlights

 

GAAP

Non-GAAP

 

Q1 2021

Q1 2020

vs. Q1 2020

Q1 2021

Q1 2020

vs. Q1 2020

Revenue ($M)

$3,992

$4,040

down 3%

$3,922

$4,040

down 3%

Gross Margin

23.0%

18.8%

up 4.2 ppt

26.3%

24.8%

up 1.5 ppt

Operating Expenses ($M)

$834

$887

down 6%

$708

$767

down 8%

Operating Income (Loss) ($M)

$70

($129)

*

$323

$235

up 37%

Net Income (Loss)

($60)

($276)

*

$196

$101

up 94%

Earnings Per Share

($0.20)

($0.93)

*

$0.65

$0.34

up 91%

*not a meaningful figure

Note: The company's fiscal first quarter of 2021 was a 13-week fiscal quarter, compared to a 14-week fiscal quarter a year ago.

Key End Market Summary


Revenue ($M)

Q1 2021

Q1 2020

vs. Q1 2020

Client Devices

$1,946

$1,616

up 20%

Data Center Devices & Solutions

$1,129

$1,532

down 26%

Client Solutions

$847

$892

down 5%

Total Revenue

$3,922

$4,040

down 3%

Note: The company's fiscal first quarter of 2021 was a 13-week fiscal quarter, compared to a 14-week fiscal quarter a year ago.

In the fiscal first quarter of 2021, Western Digital's revenue decreased 3% year-over-year to $3.9 billion. The decrease is largely attributable to the uncertainty associated with the global economic contraction and geopolitical headwinds, which resulted in shifts in customer buying patterns impacting Data Center Devices & Solutions and Client Solutions.

In Client Devices, Western Digital's industry leading client SSD solutions for notebook and desktops benefitted from the acceleration of work from home and remote learning trends. Gaming experienced significant growth as upcoming game consoles transition from hard drive-based storage solutions to flash, powering a more real-time, immersive gaming experience. In addition, mobile revenue more than doubled, driven by recent 5G phone launches and a broadening of end customers within China.

In Data Center Devices & Solutions, both Capacity Enterprise hard drive and Enterprise SSD (eSSD) demand were negatively impacted by shifts in customer ordering patterns. Important product transitions in hard drive and flash-based storage solutions also impacted demand trends as customers are still ramping up on these newer products.

In Client Solutions, Western Digital continued to recover as many brick and mortar customers reopened from COVID-19-related lock downs during the period. In addition, demand related to work from home and distance learning benefitted both hard drive and flash-based solutions.

Business Outlook for Fiscal Second Quarter of 2021

Three Months Ending
January 1, 2021

 

GAAP(1)

Non-GAAP(1)

Revenue ($B)

$3.75 - $3.95

$3.75 - $3.95

Gross margin

21% - 23%

24% - 26%

Operating expenses ($M)

$790 - $810

$680 - $700

Interest and other expense, net ($M)

$80 - $85

$70 - $75

Tax rate

N/A

21% - 25% (2)

Diluted earnings per share

N/A

$0.40 - $0.60

Diluted shares outstanding (in millions)

~ 306

~ 306

(1) Non-GAAP gross margin guidance excludes amortization of acquired intangible assets and stock-based compensation expense, totaling approximately $110 million to $130 million. The company's non-GAAP operating expenses guidance excludes amortization of acquired intangible assets; stock-based compensation expense; and employee termination, asset impairment and other charges, totaling approximately $100 million to $120 million. The company's non-GAAP interest and other expense guidance excludes approximately $10 million of convertible debt activity. In the aggregate, non-GAAP diluted earnings per share guidance excludes these items totaling $220 million to $260 million. The timing and amount of these charges excluded from non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other expense, net and non-GAAP diluted earnings per share cannot be further allocated or quantified with certainty. Additionally, the timing and amount of additional charges the company excludes from its non-GAAP tax rate and non-GAAP diluted earnings per share are dependent on the timing and determination of certain actions and cannot be reasonably predicted. Accordingly, full reconciliations of non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other expense, non-GAAP tax rate and non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (gross margin, operating expenses, interest and other expense, tax rate and diluted earnings per share, respectively) are not available without unreasonable effort.
(2) The non-GAAP tax rates provided are based on a percentage of non-GAAP pre-tax income.

Investor Communications
The investment community conference call to discuss these results and the company's business outlook for the fiscal second quarter of 2021 will be broadcast live online today at 1:30 p.m. Pacific/4:30 p.m. Eastern. The live and archived conference call/webcast and the earnings presentation can be accessed online at investor.wdc.com.

About Western Digital
Western Digital, a leader in data infrastructure, creates environments for data to thrive. The company is driving the innovation needed to help customers capture, preserve, access, analyze, and transform an ever-increasing diversity of data. Everywhere data lives, from advanced data centers to mobile sensors to personal devices, the company's industry-leading solutions deliver the possibilities of data. Western Digital data-centric solutions are comprised of the Western Digital®, G-Technology™, SanDisk® and WD® brands. Financial and investor information is available on the company's Investor Relations website at investor.wdc.com.