Western Digital Corporation Q3 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Highlights

  • Revenue of $2.3B, down 5% sequentially but up 31% year-over-year.
  • Non-GAAP gross margin of 40.1%, up 1.7 percentage points sequentially.
  • Non-GAAP EPS of $1.36, aided by improved margins and tax benefits.
  • Free cash flow of $436M and operating cash flow of $508M.
  • Strong cloud segment: 87% of revenue ($2.0B), down 4% sequentially but up 38% year-over-year.
  • Client revenue: $137M (6% of revenue), down 2% sequentially and year-over-year.
  • Consumer revenue: $150M (7% of revenue), down 13% sequentially and 4% year-over-year.
  • 800,000+ units of new 11‑disk 26TB/32TB HDDs shipped in Q3; expected to exceed 1M units in Q4.
  • Long-term agreements (LTAs) with two hyperscale customers now extend through 1H 2026.
  • HDD supply-demand conditions remain tight, with strong hyperscaler demand.
  • Completed Flash business separation; Flash results now reported as discontinued operations.

Strategic & Operational Updates

  • New Chief Product Officer added: Ahmed Shihab, with deep hyperscale experience.
  • HAMR development on schedule: qualification expected in 2H 2026, volume ramp in 1H 2027.
  • Exabyte growth driven by technology uplift (SMR and areal density), reducing need for new manufacturing capacity.
  • Ultra SMR expected to remain 40–45% of nearline mix each quarter.

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Operator: Good afternoon, and thank you for standing by. Welcome to Western Digital's Third Quarter Fiscal 2025 Conference Call. Presently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator instructions] As a reminder, this call is being recorded. Now, I will turn the call over to Mr. Ambrish Srivastava, Vice-President and Investor Relations. You may begin. Ambrish Srivastava: Thank you, and good afternoon, everyone. Joining me today are Irving Tan, Chief Executive Officer; and Don Bennett, Interim Chief Financial Officer. Before we begin, please note that today's discussion will contains forward-looking statements, based on management's current assumptions and expectations, which are subject to various risks and uncertainties. These forward-looking statements include expectations for our product portfolio, our business plans and performance, ongoing market trends and our future financial results. We assume no obligations 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 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 web

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