Western Digital Corp. (Nasdaq: WDC) today reported fiscal fourth quarter and fiscal year 2023 financial results.
"Throughout the fiscal fourth quarter and fiscal year, Western Digital continued to optimize our operations and successfully execute our innovative product roadmap, priming ourselves for greater profitability when demand rebounds across hard drives and flash. As a result of these efforts, we delivered revenue above our expectation and delivered a range of industry-leading products to our customers," said David Goeckeler, Western Digital CEO.
"We are encouraged by several indicators signaling improving Flash market dynamics. Our two largest end markets, Client and Consumer, are returning to growth, inventories are normalizing, content per unit is increasing and price declines have been moderating. Western Digital is well-positioned to capitalize on improving market conditions and capture long-term growth opportunities in data storage, spanning from client to edge to cloud," continued David Goeckeler.
Q4 2023 Financial Highlights
|
GAAP
|
Non-GAAP
|
|
Q4 2023
|
Q3 2023
|
Q/Q
|
Q4 2023
|
Q3 2023
|
Q/Q
|
Revenue ($M)
|
$2,672
|
$2,803
|
down 5%
|
$2,672
|
$2,803
|
down 5%
|
Gross Margin
|
3.4%
|
10.2%
|
down 6.8 ppt
|
3.9%
|
10.6%
|
down 6.7 ppt
|
Operating Expenses ($M)
|
$742
|
$758
|
down 2%
|
$582
|
$602
|
down 3%
|
Operating Loss ($M)
|
$(650)
|
$(472)
|
*
|
$(478)
|
$(304)
|
*
|
Net Loss ($M)
|
$(715)
|
$(572)
|
*
|
$(621)
|
$(427)
|
*
|
Earnings (Loss) Per Share
|
$(2.27)
|
$(1.82)
|
*
|
$(1.98)
|
$(1.37)
|
*
|
*not a meaningful figure
|
GAAP
|
Non-GAAP
|
|
Q4 2023
|
Q4 2022
|
Y/Y
|
Q4 2023
|
Q4 2022
|
Y/Y
|
Revenue ($M)
|
$2.672
|
$4,528
|
down 41%
|
$2,672
|
$4,528
|
down 41%
|
Gross Margin
|
3.4%
|
31.9%
|
down 28.5 ppt
|
3.9%
|
32.3%
|
down 28.4 ppt
|
Operating Expenses ($M)
|
$742
|
$883
|
down 16%
|
$582
|
$760
|
down 23%
|
Operating Income (Loss) ($M)
|
$(650)
|
$562
|
*
|
$(478)
|
$702
|
*
|
Net Income (Loss) ($M)
|
$(715)
|
$301
|
*
|
$(621)
|
$567
|
*
|
Earnings (Loss) Per Share
|
$(2.27)
|
$0.95
|
*
|
$(1.98)
|
$1.78
|
*
|
*not a meaningful figure
The company had an operating cash outflow of $68 million and ended the quarter with $2.02 billion of total cash and cash equivalents.
Fiscal Year 2023 Financial Highlights
|
GAAP
|
Non-GAAP
|
|
2023
|
2022
|
Y/Y
|
2023
|
2022
|
Y/Y
|
Revenue ($M)
|
$12,318
|
$18,793
|
down 34%
|
$12,318
|
$18,793
|
down 34%
|
Gross Margin
|
15.3%
|
31.3%
|
down 16.0 ppt
|
15.7%
|
32.9%
|
down 17.2 ppt
|
Operating Expenses ($M)
|
$3,172
|
$3,483
|
down 9%
|
$2,532
|
$3,002
|
down 16%
|
Operating Income (Loss) ($M)
|
$(1,285)
|
$2,391
|
*
|
$(594)
|
$3,186
|
*
|
Net Income (Loss) ($M)
|
$(1,706)
|
$1,500
|
*
|
$(1,119)
|
$2,599
|
*
|
Earnings (Loss) Per Share
|
$(5.44)
|
$4.75
|
*
|
$(3.59)
|
$8.22
|
*
|
*not a meaningful figure
Additional details can be found within the company's earnings presentation, which is accessible online at investor.wdc.com.
Key End Market Summary
Revenue ($M) |
Q4 2023
|
Q3 2023
|
Q/Q
|
Q4 2022
|
Y/Y
|
2023
|
2022
|
Y/Y
|
Cloud
|
$994
|
$1,205
|
down 18%
|
$2,098
|
down 53%
|
$5,252
|
$8,017
|
down 34%
|
Client
|
$1,035
|
$975
|
up 6%
|
$1,637
|
down 37%
|
$4,328
|
$7,076
|
down 39%
|
Consumer
|
$643
|
$623
|
up 3%
|
$793
|
down 19%
|
$2,738
|
$3,700
|
down 26%
|
Total Revenue
|
$2,672
|
$2,803
|
down 5%
|
$4,528
|
down 41%
|
$12,318
|
$18,793
|
down 34%
|
In the fiscal fourth quarter:
Cloud represented 37% of total revenue. Sequentially, the decline was primarily due to a decrease in capacity enterprise drive shipments. The year-over-year decrease was primarily due to declines in both hard drive and flash product shipments.
Client represented 39% of total revenue. Sequentially, the increase was driven by growth in bit shipments for gaming consoles. The year-over-year decrease was due to declines in flash pricing, and lower client SSD and hard drive unit shipments for PC applications.
Consumer represented 24% of total revenue. Sequentially, the increase was primarily due to higher retail SSD shipments. The year-over-year decrease was driven by price declines in Flash and lower retail hard drive shipments.
In the fiscal year 2023:
Cloud represented 43% of total revenue. The year-over-year decrease was primarily due to reduced shipments of capacity enterprise hard drives and enterprise SSDs.
Client represented 35% of total revenue. The year-over-year decrease was primarily due to declines in flash pricing, as well as lower client SSD and hard drive unit shipments for PC applications.
- Consumer represented 22% of total revenue. Revenue decreased year-over-year, as growth in retail SSD bit shipments was more than offset by broad-based flash price decline and lower consumer hard drive shipments.
Business Outlook for Fiscal First Quarter of 2024
|
Three Months Ending
September 29, 2023
|
|
GAAP(1)
|
Non-GAAP(1)
|
Revenue ($B)
|
$2.55 - $2.75
|
$2.55 - $2.75
|
Gross margin
|
1.9% - 4.0%
|
2.5% - 4.5%
|
Operating expenses ($M)
|
$665 - $685
|
$570 - $590
|
Interest and other expense, net ($M)
|
~ $90
|
~ $90
|
Income tax expense ($M)(2)
|
N/A
|
30% - 40%
|
Diluted earnings per share
|
N/A
|
$(2.10) - $(1.80)
|
Diluted shares outstanding (in millions)
|
~ 323
|
~ 323
|
(1) Non-GAAP gross margin guidance excludes stock-based compensation expense of approximately $10 million to $15 million. The company's Non-GAAP operating expenses guidance excludes stock-based compensation expense, and expenses related to strategic review, totaling approximately $90 million to $100 million. In the aggregate, Non-GAAP diluted earnings per share guidance excludes these items totaling approximately $100 million to $115 million. The timing and amount of these charges excluded from Non-GAAP gross margin, Non-GAAP operating expenses, 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 income tax expense 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 income tax expense and Non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (GAAP gross profit, GAAP operating expenses, income tax expense and diluted earnings per share, respectively) are not available without unreasonable effort.
(2) The Non-GAAP income tax expense is determined based on a percentage of Non-GAAP pre-tax income or loss. Our estimated Non-GAAP tax dollars may differ from our GAAP tax dollars (i) due to differences in the tax treatment of items excluded from our Non-GAAP net income or loss; (ii) the fact that our GAAP income tax expense or benefit recorded in any interim period is based on an estimated forecasted GAAP tax rate for the full year, excluding loss jurisdictions; and (iii) because our GAAP taxes recorded in any interim period are dependent on the timing and determination of certain GAAP operating expenses.
Investor Communications
The investment community conference call to discuss these results and the company's business outlook for the fiscal first quarter of 2024 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 is on a mission to unlock the potential of data by harnessing the possibility to use it. With Flash and HDD franchises, underpinned by advancements in storage technologies, we create breakthrough innovations and powerful data storage solutions that enable the world to actualize its aspirations. Core to our values, we recognize the urgency to combat climate change and have committed to ambitious carbon reduction goals approved by the Science Based Targets initiative. Learn more about Western Digital and the Western Digital®, SanDisk® and WD® brands at www.westerndigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for the company's business outlook and financial performance for the fiscal first quarter of 2024; future market dynamics and demand trends; product developments and mix; the position of the company and its products in the industry; and overall market conditions. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The preliminary financial results for the company's fiscal fourth quarter and year ended June 30, 2023 included in this press release represent the most current information available to management. The company's actual results when disclosed in its Form 10-K may differ from these preliminary results as a result of the completion of the company's financial closing procedures, including completion of the annual assessment of impairment of goodwill; completion of the audit by the company's independent registered accounting firm; and other developments that may arise between now and the filing of its Form 10-K. Other risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: volatility in global economic conditions; future responses to and effects of the COVID-19 pandemic or other similar global health crises; impact of business and market conditions; the outcome and impact of our ongoing strategic review, including with respect to customer and supplier relationships, regulatory and contractual restrictions, stock price volatility and the diversion of management's attention from ongoing business operations and opportunities; impact of competitive products and pricing; our development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and our strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; our level of debt and other financial obligations; changes to our relationships with key customers; compromise, damage or interruption from cybersecurity incidents or other data system security risks; actions by competitors; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and other risks and uncertainties listed in the company's filings with the Securities and Exchange Commission (the "SEC"), including the company's Form 10-K filed with the SEC on August 25, 2022 and Form 10-Q filed with the SEC on May 10, 2023, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements to reflect new information or events, except as required by law.
Fourth Quarter Fiscal 2023 Press Release with Financial Tables and Guidance Summary
Fourth Quarter Fiscal 2023 Earnings Presentation
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Western Digital, the Western Digital logo, SanDisk and WD are registered trademarks or trademarks of Western Digital Corporation or its affiliates in the US and/or other countries.
