Western Digital Corporation Q2 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Key Financial Results

  • Total revenue: $3.0B (up 10% QoQ, down 2% YoY).
  • Non-GAAP gross margin: 15.5% (up 11.4 pts QoQ; down 1.9 pts YoY).
  • Non-GAAP loss per share: $0.69.
  • Operating cash flow: -$92M; Free cash flow: -$176M.
  • Cash and equivalents: $2.5B; Total liquidity: $4.7B.
  • Gross debt: $8.5B after issuing $1.6B in convertible notes and paying down $300M of term loan.

Business Segment Performance

  • Cloud revenue: $1.1B (35% of total); up 23% QoQ but down 13% YoY. First YoY HDD cloud growth in six quarters.
  • Client revenue: $1.1B (37%); down 2% QoQ, up 3% YoY.
  • Consumer revenue: $0.8B (28%); up 15% QoQ, up 6% YoY.

Flash Business Highlights

  • Flash revenue: $1.7B (+7% QoQ; slight YoY increase).
  • Flash blended ASPs +10% QoQ; like‑for‑like +7%.
  • Bit shipments down 2% QoQ following a record prior quarter; up 21% YoY.
  • Flash gross margin 7.9% (up 18.2 pts QoQ; down 6.6 pts YoY); underutilization headwind of $107M (6.4 pts).
  • Inventory at a four‑year low following two quarters of large reductions.
  • Company expects Flash to remain undersupplied for an extended period; CapEx to remain at historic lows.
  • Primary 2024 Flash revenue driver expected: ASP increases, not bit shipment growth.

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Operator: Good afternoon, and thank you for standing by. Welcome to Western Digital's Second Quarter Fiscal 2024 Analyst Call. Presently, all participants are in listen-only mode. We will open the lines up for questions shortly. [Operator Instructions] Now, I will turn the call over to Mr. Peter Andrew, VP of FP&A and IR. You may begin. Peter Andrew: Well, 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 based on management's current assumptions and expectations. And as such, does include risks and uncertainties. These forward-looking statements include expectations for our product portfolio, business plans and performance, market trends and dynamics, and financial results. We assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. 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. D

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