Western Digital Reports Fiscal Second Quarter 2023 Financial Results

News Summary

  • Second quarter revenue was $3.11 billion, at the high end of the guidance range.

  • Second quarter GAAP earnings per share (EPS) was $(1.40) and Non-GAAP EPS was $(0.42), which includes $100 million of underutilization related charges in HDD.

  • Second quarter GAAP operating loss was $321 million and Non-GAAP operating loss was $119 million.

  • Expect fiscal third quarter 2023 revenue to be in the range of $2.60 billion to $2.80 billion.

  • Expect Non-GAAP EPS in the range of $(1.70) to $(1.40) which includes underutilization charges in flash and HDD totaling $250 million, with flash driven by a 30% reduction in wafer starts beginning in January.

 

SAN JOSE, Calif. - January 31, 2023

Western Digital Corp. (Nasdaq: WDC) today reported fiscal second quarter 2023 financial results.

"The Western Digital team delivered revenue at the high end of our guidance range, despite a challenging flash price environment and continued cloud inventory digestion," said David Goeckeler, Western Digital CEO. "We continue to take action to reset the business in response to the post-pandemic environment by optimizing our cost structure and strengthening our liquidity. These actions, including strategically reducing our capital expenditures across both flash and HDD and our operating expenses, as well as amending our financial covenants and securing recent financings, will give us the financial flexibility and optionality to weather this cycle, while also positioning us to continue executing our product roadmap and furthering our technical leadership over the long term."

Q2 2023 Financial Highlights

 

GAAP

Non-GAAP

 

Q2 2023

Q1 2023

Q/Q

Q2 2023

Q1 2023

Q/Q

Revenue ($M)

$3,107

$3,736

down 17%

$3,107

$3,736

down 17%

Gross Margin

17.0%

26.3%

down 9.3 ppt

17.4%

26.7%

down 9.3 ppt

Operating Expenses ($M)

$849

$823

up 3%

$659

$689

down 4%

Operating Income (Loss) ($M)

$(321)

$158

*

$(119)

$307

*

Net Income (Loss) ($M)

$(446)

$27

*

$(135)

$64

*

Earnings Per Share

$(1.40)

$0.08

*

$(0.42)

$0.20

*

* not a meaningful figure

 

GAAP

Non-GAAP

 

Q2 2023

Q2 2022

Y/Y

Q2 2023

Q2 2022

Y/Y

Revenue ($M)

$3,107

$4,833

down 36%

$3,107

$4,833

down 36%

Gross Margin

17.0%

32.8%

down 15.8 ppt

17.4%

33.6%

down 16.2 ppt

Operating Expenses ($M)

$849

$856

down 1%

$659

$741

down 11%

Operating Income (Loss) ($M)

$(321)

$727

*

$(119)

$882

*

Net Income (Loss) ($M)

$(446)

$564

*

$(135)

$724

*

Earnings Per Share

$(1.40)

$1.79

*

$(0.42)

$2.30

*

* not a meaningful figure

The company generated $35 million in cash flow from operations and ended the quarter with $1.87 billion of total cash and cash equivalents.

Additional details can be found within the company's earnings presentation, which is accessible online at investor.wdc.com.

End Market Summary


Revenue ($M)

Q2 2023

Q1 2023

Q/Q

Q2 2022

Y/Y

Cloud

$1,224

$1,829

down 33%

$1,920

down 36%

Client

1,089

1,229

down 11%

1,854

down 41%

Consumer

794

678

up 17%

1,059

down 25%

Total Revenue

$3,107

$3,736

down 17%

$4,833

down 36%

In the fiscal second quarter:

  • Cloud represented 39% of total revenue. Sequentially, declines in both capacity enterprise drives sold to Cloud customers and smart video customers were partly offset by an increase in flash shipments. The year-over-year decline was primarily due to inventory digestion in hard drives.

  • Client represented 35% of total revenue. Sequentially, the decline was driven by pricing pressure across our flash products, which was partly offset by an increase in hard drive shipments. The year-over-year decline was also due to pricing pressure in flash as well as lower client SSD shipments for PC applications.

  • Consumer represented 26% of revenue. Sequentially, the increase was driven by a seasonal uptick in both retail hard drives and flash. The year-over-year decline was driven by lower retail hard drive shipments and pricing pressure in flash.