Western Digital Corporation Q2 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue of $3.1 billion, at the high end of prior guidance. This is down 17% sequentially and 36% year-over-year.
  • Non-GAAP operating loss of $119 million and non-GAAP loss per share of $0.42, driven largely by severe pricing pressure in Flash and underutilization across both businesses.
  • Gross margin of 17.4%, down 9.3 percentage points sequentially and 16.2 points year-over-year.
  • Operating cash flow of $35 million and free cash outflow of $240 million.
  • Inventory days rose to 133 days (from 102 a year ago), due mainly to Flash.

Segment Performance

  • Cloud revenue: $1.2 billion (39% of total), down 33% sequentially and 36% year-over-year due to nearline HDD inventory digestion. Nearline shipments fell to 61 exabytes.
  • Client revenue: $1.1 billion (35% of total), down 11% sequentially and 41% year-over-year, impacted by Flash pricing pressure and weaker commercial PC SSD demand.
  • Consumer revenue: $0.8 billion (26% of total), up 17% sequentially from holiday seasonality but down 25% year-over-year.

HDD Business Update

  • HDD revenue: $1.5 billion, down 28% sequentially and 34% year-over-year.
  • HDD exabytes shipped declined 35% sequentially and 33% year-over-year.

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Operator: Good afternoon, and thank you for standing by. Welcome to the Western Digital Fiscal Second Quarter 2023 Conference Call. Presently, all participants are in a listen-only mode. [Operator Instructions]. And as a reminder, this call is being recorded. Now I will turn the call over to Mr. Peter Andrew. You may begin. Peter Andrew: Thank you, and good afternoon, 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 expectations for our product portfolio, cost reductions, business plans and performance, demand and market trends and financial results 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 will now turn the call over to David for introductory remarks. David Goeckeler: Thank you, Peter. Good afternoon, and thank you for j

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