Western Digital Corporation Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Revenue: $3.7B, down 17% sequentially and 26% year-over-year, but at the upper half of guidance.
  • Non-GAAP operating income: $307M, above midpoint of guidance.
  • Non-GAAP EPS: $0.20, reduced by ~$0.30 due to higher-than-expected tax rate.
  • Macro environment remains challenging with significant inventory corrections across consumer, PC, and now cloud markets.

Business Segment Performance

Cloud (49% of revenue, $1.8B)

  • Down 13% sequentially and 18% year-over-year.
  • Nearline bit shipments flat sequentially at 112 exabytes.
  • Strong SMR adoption: >25% of capacity enterprise exabytes, one quarter ahead of expectations.
  • 20TB exabyte shipments up >150% sequentially; 17TB average capacity per enterprise drive (+19% sequentially, +21% YoY).
  • 26TB UltraSMR in qualification with multiple US cloud and OEM customers.
  • Near-term: significant digestion at US cloud customers expected over the next two quarters.

Client (33% of revenue, $1.2B)

  • Down 25% sequentially, 34% YoY due to softer flash pricing and PC OEM inventory reductions.
  • Client SSD average capacity up 24% sequentially and 54% YoY due to higher default PC storage configurations.

Consumer (18% of revenue, $0.7B)

  • Down 15% sequentially and 30% YoY driven by lower flash pricing and weaker retail HDD demand.

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Operator: Good day, and welcome to the Western Digital First Quarter Fiscal 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Peter Andrew. Please go ahead. Peter Andrew: Thank you, and good morning, everyone. Joining me today are David Goeckeler, Chief Executive Officer; and Wissam Jabre, Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements, including product portfolio expectations, business plans and performance, demand and market trends, and financial outlook based on management's current assumptions and expectations, and as such, does include risks and uncertainties. We assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-K filed with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially. We will also make references to non-GAAP financial measures today. Reconciliations between the non-GAAP and comparable GAAP financial measures are included in the press release and other materials that are being posted in the Investor Relations section of our website. With that, I'll now turn the call over to David for introductory remarks. David Goeckeler: Thank you

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