Western Digital(WDC)2025-05-02 20:34Revenue Growth - Net revenue for the three months ended March 28, 2025, increased by 31% to $2,294 million, driven by a 4% increase in units sold and a 23% increase in pricing [162]. - For the nine months ended March 28, 2025, net revenue rose by 60% to $6,915 million, attributed to an 18% increase in units sold and a 35% increase in average selling price per unit [164]. - Cloud revenue for the three months ended March 28, 2025, increased by 38% to $2,007 million, reflecting a 14% increase in units sold and an 18% increase in average selling price per unit [165]. Income and Profitability - Operating income for the three months ended March 28, 2025, was $760 million, a significant increase of 709% compared to the prior year [162]. - The company reported a net income from continuing operations of $772 million for the three months ended March 28, 2025, compared to a net loss of $8 million in the same period last year [162]. - Gross profit increased by $393 million for the three months ended March 28, 2025, primarily due to higher product shipments and improved pricing [171]. - Gross margin increased by 10 percentage points year over year for the three months ended March 28, 2025, mainly due to improved pricing [171]. - Operating income for the nine months ended March 28, 2025, was $435 million, a turnaround from an operating loss of $927 million for the year ended June 28, 2024 [212]. - Net income for the nine months ended March 28, 2025, was $138 million, compared to a net loss of $1,211 million for the year ended June 28, 2024 [212]. Expenses and Cost Management - Total operating expenses for the three months ended March 28, 2025, decreased by 64% to $152 million, primarily due to a reduction in selling, general, and administrative expenses [162]. - Selling, general and administrative (SG&A) expense decreased by $68 million for the three months ended March 28, 2025, primarily due to a decrease in compensation and benefits [174]. - Research and development (R&D) expense increased by $49 million for the nine months ended March 28, 2025, primarily driven by higher variable compensation and increased headcount [173]. Cash Flow and Liquidity - Net cash provided by operating activities was $945 million for the nine months ended March 28, 2025, compared to a net cash used of $660 million for the same period in the prior year [185]. - Cash and cash equivalents increased by $1.598 billion for the nine months ended March 28, 2025 [185]. - Net cash provided by investing activities for the nine months ended March 28, 2025, was $401 million from the sale of a majority interest in a subsidiary, offset by $336 million in capital expenditures [195]. - Net cash provided by financing activities for the nine months ended March 28, 2025, included $2.15 billion from drawing on credit facilities, partially offset by $1.37 billion transferred to Sandisk [196]. Business Separation and Future Outlook - The company completed the separation of its HDD and Flash business units on February 21, 2025, creating two independent public companies [156]. - The company anticipates that digital transformation, including the artificial intelligence data-cycle, will drive improved market conditions in the long term [159]. - The company expects to monetize its 19.9% stake in Sandisk within one year from the separation date [156]. Inventory and Receivables Management - For the three months ended March 28, 2025, Days Sales Outstanding (DSO) increased by 7 days to 58 days, primarily due to lower trade accounts receivable factoring and timing of shipments [194]. - Days in Inventory (DIO) decreased by 24 days to 86 days, reflecting higher consumption of inventory driven by increased sales [194]. - Days Payable Outstanding (DPO) increased by 10 days to (85) days, attributed to more favorable payment terms and timing of purchases [194]. Tax and Regulatory Matters - The liability for unrecognized tax benefits as of March 28, 2025, was $561 million, with potential cash payments of approximately $476 million [200]. - The estimated mandatory deemed repatriation tax obligation as of March 28, 2025, was $331 million, expected to be paid within the next twelve months [214]. Capital Structure and Dividends - A quarterly cash dividend program was authorized, with a declared dividend of $0.10 per share to be paid on June 18, 2025 [204]. - The company issued $1.60 billion in convertible senior notes in November 2023, maturing on November 15, 2028, with an annual interest rate of 3.00% [206]. - As of March 28, 2025, the company had $1.25 billion available for borrowing under its revolving credit facility maturing in January 2027 [208]. Asset Management - As of March 28, 2025, current assets increased to $5,313 million from $2,149 million on June 28, 2024, while non-current assets rose to $4,677 million from $2,208 million [212]. - Intercompany revenue for the nine months ended March 28, 2025, was $1,128 million, down from $1,416 million for the year ended June 28, 2024 [212]. Accounting Policies - There have been no material changes in critical accounting policies and estimates from those disclosed in the 2024 Annual Report [221]. - The company has begun capitalizing and amortizing R&D expenses since 2023, which may lead to higher cash tax payments in future profitable periods [215]. - The company utilizes foreign exchange contracts to hedge against currency fluctuations affecting operating expenses and product costs [216].