Western Digital Corporation Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Western Digital reported fiscal Q3 2023 revenue of $2.8 billion, down 10% sequentially and 36% year-over-year.
  • Non-GAAP gross margin: 11% (near high-end of guidance; down from 17.4% in Q2 and down significantly from 31.7% YoY).
  • Non-GAAP loss per share: $1.37.
  • Management emphasized resilience amid an industry-wide downturn, citing stabilization in demand across several segments.
  • Strategic review remains ongoing; no update provided.

Business Segment Performance

HDD

  • Revenue: $1.5B, up 3% sequentially but down 30% YoY.
  • Gross margin: 24.3%, up 3.6pts sequentially, despite ongoing underutilization charges (approx. $40M).
  • Nearline bit shipments: 79 exabytes, +31% QoQ, though still down YoY.
  • 22TB CMR became highest-volume product among 20TB+ HDDs.
  • 26TB UltraSMR qualification expected to complete in fiscal Q4.
  • Management expects sequential HDD revenue decline in Q4 due to cloud inventory digestion.

Flash

  • Revenue: $1.3B, down 21% sequentially and 42% YoY.
  • Gross margin: -5%, hit by ASP declines and underutilization charges of ~$160M.
  • Flash ASPs: down 10% blended QoQ; like-for-like ASPs down 12%.
  • Bit shipments: -14% QoQ, -1% YoY.
  • Inventory write-downs: $53M due to pricing falling below cost.

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Operator: Good afternoon, and thank you for standing by. Welcome to the Western Digital’s Fiscal Third Quarter 2023 Conference Call. Presently, all participants are in listen-only mode. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Mr. Peter Andrew, Vice President, Financial Planning & Analysis of Investor Relations. 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 and other filings 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 introduc

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