Western Digital(WDC) Huachuang Securities·2024-11-01 10:23Investment Rating - The report provides a positive outlook for Western Digital Corporation (WDC), indicating strong performance and growth potential, particularly driven by AI demand and innovative product offerings [3][7][32]. Core Insights - Western Digital achieved Non-GAAP revenue of $4.095 billion in FY25Q1, representing a year-over-year increase of 49% and a quarter-over-quarter increase of 9%. The Non-GAAP gross margin was 38.5%, up 34.4 percentage points year-over-year [3][7][9]. - The company is focusing on sustainable and reliable operations, capital investments, and leveraging its diverse product portfolio to target attractive end markets, particularly in flash storage and HDDs [3][7][26]. - The eSSD segment is identified as a key growth driver, with significant advancements in UltraSMR technology enhancing HDD capacity and reliability [3][7][27]. Summary by Sections Overall Performance - In FY25Q1, Western Digital reported Non-GAAP revenue of $4.095 billion, with a Non-GAAP gross margin of 38.5% and a Non-GAAP net profit of $493 million, compared to a loss of $685 million in the same period last year [3][7][9]. Inventory - The inventory turnover days decreased to 121 days, with inventory value rising to $3.384 billion, reflecting a 1.26% increase quarter-over-quarter [10][37]. Revenue by End Market - Cloud revenue reached $2.208 billion, up 17% quarter-over-quarter and 153% year-over-year, accounting for 54% of total revenue [11][15]. - Client revenue was $1.209 billion, flat quarter-over-quarter and up 5% year-over-year, representing 29% of total revenue [12][15]. - Consumer revenue was $678 million, flat quarter-over-quarter and down 7% year-over-year, making up 17% of total revenue [14][15]. Revenue by Product - Flash products generated approximately $1.884 billion in revenue, up 6.98% quarter-over-quarter and 21.08% year-over-year, accounting for 46% of total revenue [16][19]. - HDD products generated approximately $2.211 billion in revenue, up 10.38% quarter-over-quarter and 85.18% year-over-year, representing 54% of total revenue [19][21]. Business Progress - The company has made significant progress in the flash segment, with strong demand for enterprise SSD applications driven by the recovery in the data center market [22][27]. - In the HDD segment, record revenue was achieved, supported by product portfolio advantages and improved market conditions [23][27]. FY25Q2 Guidance - For FY25Q2, Western Digital expects revenue between $4.2 billion and $4.4 billion, with a Non-GAAP gross margin of 37%-39% and Non-GAAP EPS of $1.75 to $2.05 [24][38].