News Summary
First quarter revenue was $2.75 billion, up 3% sequentially (QoQ). Cloud revenue decreased 12% (QoQ), Client revenue increased 11% (QoQ) and Consumer revenue increased 14% (QoQ).
First quarter GAAP earnings per share (EPS) was $(2.17) and Non-GAAP EPS was $(1.76), which includes $225 million of underutilization-related charges in Flash and HDD.
Expect fiscal second quarter 2024 revenue to be in the range of $2.85 billion to $3.05 billion.
Expect Non-GAAP EPS in the range of $(1.35) to $(1.05), which includes $110 to $130 million of underutilization-related charges in Flash and HDD.
Western Digital Corp. (Nasdaq: WDC) today reported fiscal first quarter 2024 financial results.
“Western Digital’s fiscal first quarter results exceeded our expectations as the team’s efforts to bolster business agility and develop differentiated and innovative products across a broad range of end-markets have resulted in sequential margin improvement across flash and HDD businesses,” said David Goeckeler, Western Digital CEO. “Our Consumer and Client end markets continue to perform well and we now expect our Cloud end market to grow going forward. Our improved cost structure positions Western Digital to capitalize on enhanced earnings power as market conditions continue to improve.”
Q1 2024 Financial Highlights
|
GAAP |
Non-GAAP |
||||
|
Q1 2024 |
Q4 2023 |
Q/Q |
Q1 2024 |
Q4 2023 |
Q/Q |
Revenue ($M) |
$2,750 |
$2,672 |
up 3% |
$2,750 |
$2,672 |
up 3% |
Gross Margin |
3.6% |
3.4% |
up 0.2 ppt |
4.1% |
3.9% |
up 0.2 ppt |
Operating Expenses ($M) |
$695 |
$742 |
down 6% |
$555 |
$582 |
down 5% |
Operating Loss ($M) |
$(596) |
$(650) |
* |
$(443) |
$(478) |
* |
Net Loss ($M) |
$(685) |
$(715) |
* |
$(554) |
$(621) |
* |
Earnings Per Share |
$(2.17) |
$(2.27) |
* |
$(1.76) |
$(1.98) |
* |
|
GAAP |
Non-GAAP |
||||
|
Q1 2024 |
Q1 2023 |
Y/Y |
Q1 2024 |
Q1 2023 |
Y/Y |
Revenue ($M) |
$2,750 |
$3,736 |
down 26% |
$2,750 |
$3,736 |
down 26% |
Gross Margin |
3.6% |
26.3% |
down 22.7 ppt |
4.1% |
26.7% |
down 22.6 ppt |
Operating Expenses ($M) |
$695 |
$823 |
down 16% |
$555 |
$689 |
down 19% |
Operating Income (Loss) ($M) |
$(596) |
$158 |
* |
$(443) |
$307 |
* |
Net Income (Loss) ($M) |
$(685) |
$27 |
* |
$(554) |
$64 |
* |
Earnings Per Share |
$(2.17) |
$0.08 |
* |
$(1.76) |
$0.20 |
* |
* not a meaningful figure
The company had an operating cash outflow of $626 million and ended the quarter with $2.03 billion of total cash and cash equivalents.
Additional details can be found within the company's earnings presentation, which is accessible online at investor.wdc.com.
End Market Summary
Revenue ($M) |
Q1 2024 |
Q4 2023 |
Q/Q |
Q1 2023 |
Y/Y |
Cloud |
$872 |
$994 |
down 12% |
$1,829 |
down 52% |
Client |
1,147 |
1,035 |
up 11% |
1,229 |
down 7% |
Consumer |
731 |
643 |
up 14% |
678 |
up 8% |
Total Revenue |
$2,750 |
$2,672 |
up 3% |
$3,736 |
down 26% |
In the fiscal first quarter:
Cloud represented 32% of total revenue. Sequentially, the decline was primarily due to lower nearline hard drive shipments to data center customers. The year-over-year decrease was primarily due to declines in shipments for both hard drive and flash products.
Client represented 42% of total revenue. Sequentially, the increase was due to growth in flash bit shipments. The year-over-year decrease was primarily due to declines in flash pricing.
Consumer represented 26% of total revenue. On both a sequential and year-over-year basis, the increase was driven by both higher content per unit and unit shipments in flash.
Business Outlook for Fiscal Second Quarter of 2024 |
Three Months Ending |
|
|
GAAP(1) |
Non-GAAP(1) |
Revenue ($B) |
$2.85 - $3.05 |
$2.85 - $3.05 |
Gross margin |
9.5% - 11.5% |
10.0% -12.0% |
Operating expenses ($M) |
$650 - $670 |
$560 - $580 |
Interest and other expense, net ($M) |
~$105 |
~$105 |
Income tax expense ($M)(2) |
N/A |
$20 - $30 |
Preferred dividend ($M) |
$15 |
$15 |
Diluted earnings per share |
N/A |
$(1.35) - $(1.05) |
Diluted shares outstanding (in millions) |
~ 325 |
~ 325 |
(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 $85 million to $95 million. In the aggregate, Non-GAAP diluted earnings per share guidance excludes these items totaling approximately $95 million to $110 million. 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. 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. 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 second quarter of 2024 will be broadcast live online today at 5:30 a.m. Pacific/8:30 a.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 second quarter of 2024 and beyond; end-market performance; product developments; the impact of the company's cost structure on earnings power; 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 first quarter ended September 29, 2023 included in this press release represent the most current information available to management. Actual results when disclosed in the company's Form 10-Q may differ from these preliminary results as a result of the completion of the company's financial closing procedures, final adjustments, completion of the review by the company's independent registered accounting firm; and other developments that may arise between now and the filing of the company's Form 10-Q. Other key 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 global health crises; the impact of business and market conditions; the outcome and impact of the company's 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; the impact of competitive products and pricing; the company's 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 the company's strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; the company's level of debt and other financial obligations; changes to the company's relationships with key customers; compromise, damage or interruption from cybersecurity incidents or other data system security risks; actions by competitors; the company's ability to achieve its GHG emissions reduction and other ESG goals: 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 Annual Report on Form 10-K filed with the SEC on August 22, 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.
First Quarter Fiscal 2024 Press Release with Financial Tables and Guidance Summary
First Quarter Fiscal 2024 Earnings Presentation
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