Western Digital Reports Fiscal Third Quarter 2024 Financial Results

News Summary

  • Third quarter revenue was $3.46 billion, up 14% sequentially (QoQ). Cloud revenue increased 45% (QoQ), Client revenue increased 5% (QoQ) and Consumer revenue decreased (13)% (QoQ).

  • Third quarter GAAP earnings per share (EPS) was $0.34 and Non-GAAP EPS was $0.63, which includes underutilization-related charges in HDD.

  • Expect fiscal fourth quarter 2024 revenue to be in the range of $3.60 billion to $3.80 billion.

  • Expect Non-GAAP EPS in the range of $0.90 to $1.20.

 

SAN JOSE, Calif. - April 25, 2024

Western Digital Corp. (Nasdaq: WDC) today reported fiscal third quarter 2024 financial results.

"As evidenced by our excellent third quarter results, Western Digital continues improving through-cycle profitability and dampening business cycles by leveraging our strategy of developing a diversified portfolio of industry-leading products across a broad range of end markets," said David Goeckeler, Western Digital CEO. "We are in the early innings of unlocking the full potential of this company, and as industry supply and demand dynamics continue to improve, we will remain disciplined around our capital spending and focused on driving innovation and efficiency across our businesses. We are confident in our strategy and the actions we have taken to-date, which successfully position us to capitalize on the promising growth prospects that lie ahead."

Q3 2024 Financial Highlights

 

GAAP

Non-GAAP

 

Q3 2024

Q2 2024

Q/Q

Q3 2024

Q2 2024

Q/Q

Revenue ($M)

$3,457

$3,032

up 14%

$3,457

$3,032

up 14%

Gross Margin

29.0%

16.2%

up 12.8 ppt

29.3%

15.5%

up 13.8 ppt

Operating Expenses ($M)

$728

$702

up 4%

$632

$561

up 13%

Operating Income (Loss) ($M)

$273

$(210)

*

$380

$(91)

*

Diluted Net Income (Loss) Attributable to
Common Shareholders ($M)

$113

$(301)

*

$210

$(243)

*

Net Income (Loss) Per Share

$0.34

$(0.93)

*

$0.63

$(0.75)

*

* not a meaningful figure

 

GAAP

Non-GAAP

 

Q3 2024

Q3 2023

Y/Y

Q3 2024

Q3 2023

Y/Y

Revenue ($M)

$3,457

$2,803

up 23%

$3,457

$2,803

up 23%

Gross Margin

29.0%

10.2%

up 18.8 ppt

29.3%

10.6%

up 18.7 ppt

Operating Expenses ($M)

$728

$758

down 4%

$632

$602

up 5%

Operating Income (Loss) ($M)

$273

$(472)

*

$380

$(304)

*

Diluted Net Income (Loss) Attributable to
Common Shareholders ($M)

$113

$(580)

*

$210

$(435)

*

Net Income (Loss) Per Share

$0.34

$(1.82)

*

$0.63

$(1.36)

*

* not a meaningful figure

The company had an operating cash inflow of $58 million and ended the quarter with $1.89 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)

Q3 2024

Q2 2024

Q/Q

Q3 2023

Y/Y

Cloud

$1,553

$1,071

up 45%

$1,205

up 29%

Client

1,174

1,122

up 5%

975

up 20%

Consumer

730

839

down 13%

623

up 17%

Total Revenue

$3,457

$3,032

up 14%

$2,803

up 23%

In the fiscal third quarter:

  • Cloud represented 45% of total revenue. The growth was primarily attributed to higher nearline shipments and improved nearline per unit pricing with flash revenue up both sequentially and year-over-year.

  • Client represented 34% of total revenue. Sequentially, the increase in flash ASP more than offset a decline in flash bit shipments while HDD revenue decreased. The year-over-year increase was driven by growth in both flash and HDD ASPs and flash bit shipments.

  • Consumer represented 21% of total revenue. Sequentially, both flash and HDD were down at approximately similar rates and in line with seasonality. The year-over-year increase was driven by growth in flash bit shipments and ASP.

Business Outlook for Fiscal Fourth Quarter of 2024

Three Months Ending
June 28, 2024

 

GAAP(1)

Non-GAAP(1)

Revenue ($B)

$3.60 - $3.80

$3.60 - $3.80

Gross margin

31.5% - 33.5%

32.0% - 34.0%

Operating expenses ($M)

$770 - $800

$670 - $690

Interest and other expense, net ($M)

~$105

~$105

Income tax expense ($M)(2)

N/A

$30 - $40

Diluted earnings per share

N/A

$0.90 - $1.20

Diluted shares outstanding (in millions)

~ 342

~ 342

(1) Non-GAAP gross margin guidance excludes amortization of acquired intangible assets and 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 business separation costs, totaling approximately $100 million to $110 million. In the aggregate, Non-GAAP diluted earnings per share guidance excludes these items totaling approximately $110 million to $125 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. 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) 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.

Revisions to Prior Period Financial Results
As previously reported, in connection with the preparation of its condensed consolidated financial statements as of and for the three and six months ended December 29, 2023, the company identified certain errors related to the company's reporting and recording of its interests in its equity method investments in Flash Ventures. These errors related to unadjusted differences between Flash Ventures' application of Japane