Western Digital(WDC) Huachuang Securities·2024-05-13 01:32Investment Rating - The report indicates a positive outlook for Western Digital, with a Non-GAAP revenue guidance for Q2 FY2024 set between $3.6 billion and $3.8 billion, reflecting a QoQ increase of 7% and YoY increase of 32% [18][22]. Core Insights - The storage market is recovering, with Western Digital's Q1 FY2024 performance exceeding expectations, driven by growth in cloud services and improved pricing strategies [1][2]. - The company reported a Non-GAAP revenue of $3.457 billion for Q1 FY2024, representing a 23% YoY increase and a 14% QoQ increase, surpassing market expectations [7][22]. - Non-GAAP gross margin reached 29.3%, up 18.7 percentage points YoY and 13.8 percentage points QoQ, attributed to effective pricing strategies and cost reductions [2][22]. Summary by Sections Overall Revenue Situation - In Q1 FY2024, Western Digital achieved Non-GAAP revenue of $3.457 billion, with all major end markets showing YoY growth. Cloud services revenue was $1.553 billion, accounting for 45% of total revenue, with a 45% QoQ increase and a 29% YoY increase [2][13]. - Client business revenue was $1.147 billion, representing 34% of total revenue, with a 5% QoQ increase and a 20% YoY increase [13][22]. - Consumer business revenue was $730 million, accounting for 21% of total revenue, with a 13% QoQ decrease but a 17% YoY increase [13][22]. Business Progress - Flash business revenue was approximately $1.705 billion, with a 2.4% QoQ increase and a 30.5% YoY increase, driven by an 18% increase in average selling price (ASP) [15][22]. - HDD business revenue reached approximately $1.752 billion, reflecting a 28.2% QoQ increase and a 17.1% YoY increase, with Exabyte shipments increasing by 41% QoQ [15][22]. Inventory - As of the end of Q1 FY2024, inventory turnover days were 119 days, with a stable inventory value of $3.2 billion. HDD inventory decreased while flash inventory increased [12][22]. Q2 Company Performance Guidance - For Q2 FY2024, the company expects Non-GAAP revenue to be in the range of $3.6 billion to $3.8 billion, with a gross margin guidance of 32% to 34% [18][22].