[News Summary & Highlights](index=1&type=section&id=News%20Summary%20%26%20Highlights) Summarizes CEO's statement, Q3 FY2025 financial highlights, dividend, and Q4 FY2025 business outlook [CEO Statement & Strategic Context](index=1&type=section&id=CEO%20Statement%20%26%20Strategic%20Context) CEO Irving Tan highlighted strong Q3 FY2025 performance, with revenue at guidance's high end and gross margin over **40%** - CEO Irving Tan stated the company performed well in Q3 FY2025, with revenue at the high end of guidance and gross margin exceeding **40%**[3](index=3&type=chunk) - Emphasized exponential data growth, HDD technology's cost-effectiveness and reliability for scaled storage, and the company's product portfolio meeting customer demands[3](index=3&type=chunk) [Fiscal Q3 2025 Key Financial Highlights](index=1&type=section&id=Fiscal%20Q3%202025%20Key%20Financial%20Highlights) Q3 FY2025 revenue was **$2.29 billion**, down **5% sequentially**, with GAAP diluted EPS at **$2.11** and Non-GAAP at **$1.36** Fiscal Q3 2025 Key Financial Data | Metric | Amount/Ratio | | :--------------------- | :---------- | | Revenue | $2.29 billion | | Revenue Sequential Change | down 5% | | GAAP EPS | $2.11 | | Non-GAAP EPS | $1.36 | - Cloud business revenue decreased **4% sequentially**, client business revenue decreased **2% sequentially**, and consumer business revenue decreased **13% sequentially**[4](index=4&type=chunk) [Dividend Program Announcement](index=1&type=section&id=Dividend%20Program%20Announcement) The Board approved a quarterly cash dividend program, declaring a **$0.10 per share** cash dividend payable June 18, 2025 - The Board authorized a quarterly cash dividend program commencing with the quarter ending June 27, 2025[3](index=3&type=chunk)[4](index=4&type=chunk) - Declared a cash dividend of **$0.10 per share** of common stock, payable on June 18, 2025, to shareholders of record as of June 4, 2025[3](index=3&type=chunk)[4](index=4&type=chunk) [Fiscal Q4 2025 Business Outlook Summary](index=1&type=section&id=Fiscal%20Q4%202025%20Business%20Outlook%20Summary) Q4 FY2025 revenue is projected around **$2.45 billion** (plus/minus **$150 million**), with Non-GAAP diluted EPS around **$1.45** (plus/minus **$0.20**) Fiscal Q4 2025 Business Outlook | Metric | Expected Range | | :--------------------- | :-------------------- | | Revenue | $2.45 billion +/- $150 million | | Non-GAAP EPS | $1.45 +/- $0.20 | [Fiscal Q3 2025 Financial Performance](index=2&type=section&id=Fiscal%20Q3%202025%20Financial%20Performance) Details Q3 FY2025 consolidated financial highlights, including GAAP and Non-GAAP metrics, and end market revenue performance [Consolidated Financial Highlights (GAAP & Non-GAAP)](index=2&type=section&id=Consolidated%20Financial%20Highlights%20(GAAP%20%26%20Non-GAAP)) Q3 FY2025 revenue was **$2,294 million**, down **5% sequentially** and up **31% year-over-year**, with GAAP gross margin **39.8%** and Non-GAAP **40.1%** Fiscal Q3 2025 Consolidated Financial Highlights | Metric | Q3 2025 (GAAP) | Q2 2025 (GAAP) | Q/Q Change | Q3 2024 (GAAP) | Y/Y Change | | :---------------------------------- | :------------- | :------------- | :------- | :------------- | :------- | | Revenue | $2,294M | $2,409M | down 5% | $1,752M | up 31% | | Gross Margin | 39.8% | 37.7% | up 2.1 ppt | 29.6% | up 10.2 ppt | | Operating Expenses | $152M | $347M | down 56% | $425M | down 64% | | Operating Income | $760M | $560M | up 36% | $94M | up 709% | | Diluted Net Income Attributable to Common Stockholders | $755M | $455M | up 66% | N/A | N/A | | Net Income Per Share | $2.11 | $1.27 | up 66% | N/A | N/A | | Metric | Q3 2025 (Non-GAAP) | Q2 2025 (Non-GAAP) | Q/Q Change | Q3 2024 (Non-GAAP) | Y/Y Change | | :---------------------------------- | :----------------- | :----------------- | :------- | :----------------- | :------- | | Revenue | $2,294M | $2,409M | down 5% | $1,752M | up 31% | | Gross Margin | 40.1% | 38.4% | up 1.7 ppt | 30.1% | up 10.0 ppt | | Operating Expenses | $324M | $335M | down 3% | $375M | down 14% | | Operating Income | $596M | $591M | up 1% | $153M | up 290% | | Diluted Net Income Attributable to Common Stockholders | $487M | $420M | up 16% | N/A | N/A | | Net Income Per Share | $1.36 | $1.18 | up 15% | N/A | N/A | - The company generated **$508 million** in operating cash flow this quarter, with total cash and cash equivalents at **$3.48 billion** at period-end[5](index=5&type=chunk) [End Market Revenue Summary](index=3&type=section&id=End%20Market%20Revenue%20Summary) Q3 FY2025 total revenue was **$2,294 million**, down **5% sequentially** and up **31% year-over-year**, with Cloud **87%**, Client **6%**, and Consumer **7%** Fiscal Q3 2025 End Market Revenue | Revenue ($M) | Q3 2025 | Q2 2025 | Q/Q | Q3 2024 | Y/Y | | :---------- | :------ | :------ | :-- | :------ | :-- | | Cloud | $2,007 | $2,096 | down 4% | $1,455 | up 38% | | Client | 137 | 140 | down 2% | 140 | down 2% | | Consumer | 150 | 173 | down 13% | 157 | down 4% | | Total Revenue | $2,294 | $2,409 | down 5% | $1,752 | up 31% | [Cloud Segment Performance](index=3&type=section&id=Cloud%20Segment%20Performance) Cloud segment revenue was **$2 billion**, **87%** of total, with a **4% sequential decrease** and **38% year-over-year increase** - Cloud business revenue was **$2 billion**, accounting for **87% of total revenue**, decreasing **4% sequentially** and increasing **38% year-over-year**[7](index=7&type=chunk) - Sequential decline primarily due to a **6% decrease** in nearline bit shipments, offset by a **5% increase** in cloud unit pricing[7](index=7&type=chunk) - Year-over-year growth driven by product portfolio strength, with revenue up **38%** and bit shipments up **32%**[7](index=7&type=chunk) [Client Segment Performance](index=3&type=section&id=Client%20Segment%20Performance) Client segment revenue was **$137 million**, **6%** of total, with a **2% sequential and year-over-year decrease** - Client business revenue was **$137 million**, accounting for **6% of total revenue**, decreasing **2% both sequentially and year-over-year**[7](index=7&type=chunk) - Revenue decline primarily attributed to reduced unit shipments[7](index=7&type=chunk) [Consumer Segment Performance](index=3&type=section&id=Consumer%20Segment%20Performance) Consumer segment revenue was **$150 million**, **7%** of total, with a **13% sequential decrease** and **4% year-over-year decrease** - Consumer business revenue was **$150 million**, accounting for **7% of total revenue**, decreasing **13% sequentially** and **4% year-over-year**[7](index=7&type=chunk) - Sequential decline primarily due to reduced unit shipments; year-over-year decline mainly due to pricing[7](index=7&type=chunk) [Fiscal Q4 2025 Business Outlook](index=4&type=section&id=Fiscal%20Q4%202025%20Business%20Outlook) Outlines performance guidance for the three months ending June 27, 2025, including Non-GAAP adjustments [Guidance for Three Months Ending June 27, 2025](index=4&type=section&id=Guidance%20for%20Three%20Months%20Ending%20June%2027,%202025) Q4 FY2025 guidance projects revenue around **$2.45 billion**, Non-GAAP gross margin **40.0% to 41.0%**, and Non-GAAP diluted EPS around **$1.45** Fiscal Q4 2025 Business Outlook | Metric | GAAP (Three Months Ending June 27, 2025) | Non-GAAP (Three Months Ending June 27, 2025) | | :-------------------------- | :----------------------- | :-------------------------- | | Revenue | $2.45B +/- $150M | $2.45B +/- $150M | | Gross Margin | 39.5% - 40.5% | 40.0% - 41.0% | | Operating Expenses ($M) | $385 - $395 | $330 - $340 | | Interest and Other Expense, Net ($M) | ~ $70 | ~ $70 | | Tax Rate | N/A | 8.0% - 10.0% | | Diluted EPS | N/A | $1.45 +/- $0.20 | | Diluted Shares Outstanding (Millions) | ~ 360 | ~ 360 | [Non-GAAP Guidance Adjustments Explanation](index=4&type=section&id=Non-GAAP%20Guidance%20Adjustments%20Explanation) Non-GAAP guidance excludes stock-based compensation and other items totaling **$60-75 million** for diluted EPS, with no full GAAP reconciliation due to unpredictable timing and amounts - Non-GAAP gross margin guidance excludes approximately **$10 million to $15 million** in stock-based compensation expense[8](index=8&type=chunk) - Non-GAAP operating expense guidance excludes approximately **$50 million to $60 million** in stock-based compensation and other expenses[8](index=8&type=chunk) - Non-GAAP diluted EPS guidance collectively excludes **$60 million to $75 million** for these items[8](index=8&type=chunk) - A full reconciliation of Non-GAAP measures to the most directly comparable GAAP financial measures cannot be provided due to the inability to reasonably predict the timing and amounts of certain adjusting items[8](index=8&type=chunk) [Corporate Information & Disclosures](index=5&type=section&id=Corporate%20Information%20%26%20Disclosures) Covers Sandisk separation basis, dividend program details, investor communications, company overview, and forward-looking statements [Basis of Presentation: Sandisk Separation](index=5&type=section&id=Basis%20of%20Presentation:%20Sandisk%20Separation) Western Digital completed the Sandisk Flash business separation on February 21, 2025; Sandisk is now independent, and its historical results are discontinued operations - Western Digital Corporation completed the separation of its Flash business unit, Sandisk Corporation, on February 21, 2025[10](index=10&type=chunk) - Sandisk is now an independent public company, and its financial and operating results post-separation are no longer consolidated into WDC's financial statements[10](index=10&type=chunk)[11](index=11&type=chunk) - Sandisk's historical results and financial position prior to the separation date are presented as discontinued operations in WDC's preliminary condensed consolidated balance sheets and statements of operations[11](index=11&type=chunk) [Dividend Program Details](index=5&type=section&id=Dividend%20Program%20Details) Future dividend amounts and timing depend on market conditions and company considerations; the program may be suspended or terminated anytime - The amount and timing of future dividends will depend on market conditions and other company considerations[12](index=12&type=chunk) - The company may suspend or terminate the dividend program at any time[12](index=12&type=chunk) [Investor Communications](index=5&type=section&id=Investor%20Communications) An investor conference call will discuss results and Q4 FY2025 outlook today, with webcast, archive, and presentation available at investor.wdc.com - An investor conference call will be held today at 5:30 AM PT/8:30 AM ET to discuss results and the business outlook[13](index=13&type=chunk) - A live webcast, archive, and earnings presentation are accessible online at investor.wdc.com[13](index=13&type=chunk) [About Western Digital](index=5&type=section&id=About%20Western%20Digital) Western Digital empowers data-dependent systems, providing high-capacity, high-quality, low TCO storage for cloud, enterprise, and consumers, while designing climate-conscious technology - Western Digital empowers data-dependent systems and people, offering high-capacity, high-quality, and low total cost of ownership storage products[14](index=14&type=chunk) - Customers include hyperscale cloud providers, enterprise data centers, content professionals, and global consumers[14](index=14&type=chunk) - The company is committed to designing storage technologies that meet data needs and contribute to a climate-conscious future[14](index=14&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements on Q4 FY2025 outlook, operations, financial performance, and dividend plans, subject to risks and uncertainties that could cause actual results to differ materially - This press release contains forward-looking statements concerning the company's business outlook, operations, financial performance, data growth, product demand, market conditions, and dividend payment plans for Q4 FY2025 and beyond[15](index=15&type=chunk)[16](index=16&type=chunk) - These statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated[15](index=15&type=chunk)[16](index=16&type=chunk) - Key risks and uncertainties include adverse global or regional conditions, fluctuating product demand, inflation, rising interest rates, economic recession, global health crisis impacts, business and market conditions, effects of HDD and Flash business separation, competitive products and pricing, new technology development and introduction, cost-saving initiatives, restructuring, M&A, supply chain disruptions, key employee retention, debt levels, changes in key customer relationships, cybersecurity incidents, dividend payment decisions, sustainability goals, international conflicts, legal and regulatory compliance risks, and other risks outlined in the company's SEC filings[16](index=16&type=chunk) [Preliminary Condensed Consolidated Financial Statements (GAAP)](index=7&type=section&id=Preliminary%20Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) Presents preliminary condensed consolidated GAAP financial statements, including balance sheets, statements of operations, earnings per share, and cash flows [Balance Sheets](index=7&type=section&id=Balance%20Sheets) As of March 28, 2025, total assets were **$16.368 billion**, down from **$24.188 billion** due to Sandisk separation, with cash increasing to **$3.477 billion** Preliminary Condensed Consolidated Balance Sheets (Unaudited) | Metric | March 28, 2025 ($M) | June 28, 2024 ($M) | | :---------------------------------- | :------------------ | :------------------ | | **Assets** | | | | Cash and Cash Equivalents | $3,477 | $1,551 | | Inventories | $1,311 | $1,387 | | Retained Interest in Sandisk | $1,412 | — | | Current Assets of Discontinued Operations | — | $3,531 | | Total Current Assets | $8,086 | $8,060 | | Property, Plant and Equipment, Net | $2,347 | $2,359 | | Goodwill | $4,319 | $4,319 | | Non-Current Assets of Discontinued Operations | — | $8,613 | | **Total Assets** | **$16,368** | **$24,188** | | **Liabilities, Convertible Preferred Stock and Stockholders' Equity** | | | | Total Current Liabilities | $5,182 | $6,087 | | Long-Term Debt | $4,907 | $5,684 | | Non-Current Liabilities of Discontinued Operations | — | $368 | | **Total Liabilities** | **$10,962** | **$13,141** | | Convertible Preferred Stock | $229 | $229 | | **Total Stockholders' Equity** | **$5,177** | **$10,818** | | **Total Liabilities, Convertible Preferred Stock and Stockholders' Equity** | **$16,368** | **$24,188** | - Total assets decreased from **$24.188 billion** on June 28, 2024, to **$16.368 billion** on March 28, 2025, primarily impacted by the Sandisk separation[19](index=19&type=chunk) - Cash and cash equivalents increased from **$1.551 billion** to **$3.477 billion**[19](index=19&type=chunk) [Statements of Operations](index=8&type=section&id=Statements%20of%20Operations) Q3 FY2025 revenue was **$2,294 million**, gross profit **$912 million**, operating income **$760 million**, and net income **$520 million** (continuing operations **$772 million**, discontinued loss **$252 million**) Preliminary Condensed Consolidated Statements of Operations (Unaudited) | Metric | March 28, 2025 (Three Months) ($M) | March 29, 2024 (Three Months) ($M) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Revenue, Net | $2,294 | $1,752 | | Cost of Sales | $1,382 | $1,233 | | Gross Profit | $912 | $519 | | Total Operating Expenses | $152 | $425 | | Operating Income (Loss) | $760 | $94 | | Interest and Other Expense, Net | $(686) | $(106) | | Income (Loss) Before Income Taxes | $74 | $(12) | | Income Tax Benefit | $(698) | $(4) | | Net Income (Loss) from Continuing Operations | $772 | $(8) | | Net Income (Loss) from Discontinued Operations, Net of Tax | $(252) | $143 | | **Net Income (Loss)** | **$520** | **$135** | - Net income from continuing operations was **$772 million**, while net loss from discontinued operations was **$252 million**[20](index=20&type=chunk) [Earnings (Loss) Per Common Share](index=9&type=section&id=Earnings%20(Loss)%20Per%20Common%20Share) Q3 FY2025 GAAP diluted EPS from continuing operations was **$2.11**, diluted loss from discontinued operations **$0.69**, totaling **$1.42** diluted EPS Preliminary Earnings (Loss) Per Common Share (Unaudited) | Metric | March 28, 2025 (Three Months) | March 29, 2024 (Three Months) | | :------------------------------------------------ | :---------------------- | :---------------------- | | Net Income Attributable to Common Stockholders from Continuing Operations - Diluted ($M) | $755 | $(22) | | Net Income (Loss) from Discontinued Operations, Net of Tax ($M) | $(248) | $135 | | Net Income (Loss) Attributable to Common Stockholders - Diluted ($M) | $507 | $113 | | Diluted Weighted-Average Shares Outstanding (Millions) | 358 | 335 | | Earnings Per Common Share from Continuing Operations - Diluted | $2.11 | $(0.07) | | Earnings (Loss) Per Common Share from Discontinued Operations - Diluted | $(0.69) | $0.41 | | **Earnings (Loss) Per Common Share - Diluted** | **$1.42** | **$0.34** | - GAAP diluted EPS from continuing operations was **$2.11**, and diluted loss per share from discontinued operations was **$0.69**[22](index=22&type=chunk) [Statements of Cash Flows](index=10&type=section&id=Statements%20of%20Cash%20Flows) Q3 FY2025 operating activities generated **$508 million**, investing **$142 million**, and financing **$533 million**, with period-end cash at **$3.477 billion**, an increase of **$1.186 billion** Preliminary Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | March 28, 2025 (Three Months) ($M) | March 29, 2024 (Three Months) ($M) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Net Cash Provided by (Used in) Operating Activities | $508 | $58 | | Net Cash Provided by Investing Activities | $142 | $7 | | Net Cash Provided by (Used in) Financing Activities | $533 | $(645) | | Effect of Exchange Rate Changes | $3 | $(7) | | Net Increase (Decrease) in Cash and Cash Equivalents | $1,186 | $(587) | | Cash and Cash Equivalents at Beginning of Period | $2,291 | $2,481 | | **Cash and Cash Equivalents at End of Period** | **$3,477** | **$1,894** | - Net cash provided by operating activities was **$508 million**, by investing activities **$142 million**, and by financing activities **$533 million**[23](index=23&type=chunk) - Cash and cash equivalents at period-end totaled **$3.477 billion**, an increase of **$1.186 billion** from the beginning of the period[23](index=23&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) Provides GAAP to Non-GAAP reconciliations for gross profit, operating expenses, operating income, net income, diluted EPS, and free cash flow, with adjustment explanations [Non-GAAP Gross Profit and Operating Expenses Reconciliation](index=11&type=section&id=Non-GAAP%20Gross%20Profit%20and%20Operating%20Expenses%20Reconciliation) Q3 FY2025 GAAP gross profit was **$912 million** (Non-GAAP **$920 million**), and GAAP operating expenses **$152 million** (Non-GAAP **$324 million**), after adjustments Non-GAAP Gross Profit Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :-------------------------- | :-------------------------- | | GAAP Gross Profit | $912 | | Stock-based Compensation Expense | $7 | | Litigation Matter | — | | Other | $1 | | **Non-GAAP Gross Profit** | **$920** | Non-GAAP Operating Expenses Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :-------------------------- | :-------------------------- | | GAAP Operating Expenses | $152 | | Stock-based Compensation Expense | $(28) | | Litigation Matter | $201 | | Employee Termination, Asset Impairment and Other | — | | Strategic Review | — | | Other | $(1) | | **Non-GAAP Operating Expenses** | **$324** | [Non-GAAP Operating Income, Interest & Other, and Income Tax Reconciliation](index=11&type=section&id=Non-GAAP%20Operating%20Income,%20Interest%20%26%20Other,%20and%20Income%20Tax%20Reconciliation) Q3 FY2025 GAAP operating income was **$760 million** (Non-GAAP **$596 million**), interest and other **-$686 million** (Non-GAAP **-$84 million**), and income tax benefit **-$698 million** (Non-GAAP expense **$12 million**) Non-GAAP Operating Income Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :-------------------------- | :-------------------------- | | GAAP Operating Income (Loss) | $760 | | Gross Profit Adjustments | $8 | | Operating Expense Adjustments | $(172) | | **Non-GAAP Operating Income** | **$596** | Non-GAAP Interest and Other Expense Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :-------------------------- | :-------------------------- | | GAAP Interest and Other Expense, Net | $(686) | | Unrealized Loss on Retained Interest in Sandisk | $606 | | Litigation Matter | $(6) | | Other | $2 | | **Non-GAAP Interest and Other Expense, Net** | **$(84)** | Non-GAAP Income Tax Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :-------------------------- | :-------------------------- | | GAAP Income Tax Benefit | $(698) | | Income Tax Adjustments | $710 | | **Non-GAAP Income Tax Expense** | **$12** | [Non-GAAP Net Income and Diluted EPS Reconciliation](index=12&type=section&id=Non-GAAP%20Net%20Income%20and%20Diluted%20EPS%20Reconciliation) Q3 FY2025 GAAP net income was **$772 million**, adjusted to **$500 million** Non-GAAP, resulting in Non-GAAP diluted EPS of **$1.36** versus GAAP diluted EPS of **$2.11** Non-GAAP Net Income Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :------------------------------------------ | :-------------------------- | | GAAP Net Income | $772 | | Stock-based Compensation Expense | $35 | | Litigation Matter | $(207) | | Employee Termination, Asset Impairment and Other | — | | Unrealized Loss on Retained Interest in Sandisk | $606 | | Other | $4 | | Income Tax Adjustments | $(710) | | **Non-GAAP Net Income** | **$500** | | Less: Amount Allocated to Preferred Stockholders | $13 | | **Non-GAAP Diluted Net Income Attributable to Common Stockholders** | **$487** | Diluted Earnings Per Common Share Reconciliation | Metric | March 28, 2025 (Three Months) | | :-------------------------- | :-------------------------- | | GAAP Diluted EPS | $2.11 | | **Non-GAAP Diluted EPS** | **$1.36** | [Non-GAAP Free Cash Flow Reconciliation](index=12&type=section&id=Non-GAAP%20Free%20Cash%20Flow%20Reconciliation) Q3 FY2025 operating cash flow was **$508 million**, resulting in **$436 million** free cash flow after deducting **$128 million** for capital expenditures and **$56 million** for Flash Ventures Non-GAAP Free Cash Flow Reconciliation | Metric | March 28, 2025 (Three Months) ($M) | | :------------------------------------------ | :-------------------------- | | Net Cash Provided by (Used in) Operating Activities | $508 | | Net Additions to Property, Plant and Equipment | $(128) | | Flash Ventures Related Activities, Net | $56 | | **Free Cash Flow** | **$436** | [Notes to Non-GAAP Reconciliations](index=13&type=section&id=Notes%20to%20Non-GAAP%20Reconciliations) Non-GAAP measures supplement GAAP by excluding non-core expenses, gains, and losses, offering insights into profitability and comparisons, including stock-based compensation, litigation, asset impairment, strategic review, Sandisk retained interest losses, and tax adjustments - Non-GAAP measures provide investors with useful information for evaluating the company's profitability and period-over-period comparisons by excluding certain expenses, gains, and losses not representative of core operating performance[27](index=27&type=chunk) - These measures are among the primary indicators management uses to evaluate company performance and plan for future periods but should not be considered a substitute for, or superior to, GAAP results[27](index=27&type=chunk) [Stock-based Compensation Expense](index=13&type=section&id=Stock-based%20Compensation%20Expense) Excluding stock-based compensation aids in understanding underlying business performance and comparability with peers - Excluding stock-based compensation expense helps management and investors understand and evaluate the company's underlying business performance and comparability with peers[28](index=28&type=chunk) [Litigation Matter](index=14&type=section&id=Litigation%20Matter) Excluding patent litigation expenses and reversals, as they do not reflect operating results or underlying business performance - Excluding expenses and reversals related to patent litigation matters, as these do not reflect the company's operating results or underlying business performance[29](index=29&type=chunk) [Employee Termination, Asset Impairment and Other](index=14&type=section&id=Employee%20Termination,%20Asset%20Impairment%20and%20Other) Excluding expenses or credits from employee terminations, asset impairments, sales, or prior period reversals due to inconsistent amounts and frequency - Excluding expenses or credits from employee terminations, asset impairments, gains on asset sales, or reversals of prior period expenses, as their amounts and frequency are inconsistent and do not represent the underlying business performance[30](index=30&type=chunk) [Strategic Review](index=14&type=section&id=Strategic%20Review) Excluding strategic review expenses for HDD and Flash business separation, as they do not reflect operating results or underlying business performance - Excluding strategic review expenses related to the separation of the HDD and Flash business units, as they do not reflect the company's operating results or underlying business performance[31](index=31&type=chunk) [Unrealized Loss on Retained Interest in Sandisk](index=14&type=section&id=Unrealized%20Loss%20on%20Retained%20Interest%20in%20Sandisk) Excluding unrealized losses from Sandisk retained interest fair value adjustments, as they do not reflect operating results or underlying business performance - Excluding unrealized losses arising from fair value adjustments of the retained interest in Sandisk, as these do not reflect the company's operating results or underlying business performance[32](index=32&type=chunk) [Other Adjustments](index=14&type=section&id=Other%20Adjustments) Excluding expenses or gains from non-core asset sales/impairments or other non-ongoing items due to inconsistent amounts and frequency - Excluding expenses or gains from the sale or impairment of non-core business investments or other assets, or other expenses or benefits not part of ongoing operations, due to their inconsistent amounts and frequency[33](index=33&type=chunk) [Income Tax Adjustments](index=15&type=section&id=Income%20Tax%20Adjustments) Income tax adjustments include Non-GAAP vs GAAP tax rate differences, Flash business separation restructuring, and remeasurement of unrecognized tax benefits - Income tax adjustments include differences between the projected Non-GAAP tax rate and the GAAP tax rate, as well as internal restructuring related to the Flash business separation and the remeasurement of certain unrecognized tax benefits[34](index=34&type=chunk) - These adjustments are excluded as they do not represent the underlying performance of the company's continuing operations[34](index=34&type=chunk) [Free Cash Flow Definition](index=15&type=section&id=Free%20Cash%20Flow%20Definition) Free cash flow is operating cash flow less net property, plant, and equipment additions and Flash Ventures related activities - Free cash flow is defined as cash flow provided by (used in) operating activities less net additions to property, plant, and equipment and Flash Ventures related activities[35](index=35&type=chunk) - Free cash flow is considered a useful indicator of cash available for strategic opportunities such as investing in the business, strategic acquisitions, debt repayment, and strengthening the balance sheet[35](index=35&type=chunk) [Contacts](index=16&type=section&id=Contacts) Provides contact information for Western Digital's investor relations and media relations teams [Investor and Media Contacts](index=16&type=section&id=Investor%20and%20Media%20Contacts) Provides contact information for Western Digital's investor relations and media relations, including names, phone numbers, and email addresses - Investor Contact: Ambrish Srivastava, Phone: 408.717.9765, Email: investor@wdc.com, ambrish.srivastava@wdc.com[36](index=36&type=chunk) - Media Contact: Media Relations, Phone: 408.801.0021, Email: WD.Mediainquiries@wdc.com[36](index=36&type=chunk)

Core Viewpoint - Western Digital Corporation is set to release its third-quarter earnings results, with expectations of improved earnings per share but a decline in revenue compared to the previous year [1]. Financial Performance - Analysts predict Western Digital will report earnings of $1.11 per share for the third quarter, an increase from 63 cents per share in the same period last year [1]. - The company is projected to report quarterly revenue of $2.48 billion, down from $3.46 billion a year earlier [1]. Business Developments - On February 24, Western Digital announced the completion of the planned separation of its flash business, Sandisk [2]. Stock Performance - Western Digital shares experienced a decline of 0.7%, closing at $40.62 [3]. Analyst Ratings - Rosenblatt analyst Kevin Cassidy maintained a Buy rating but reduced the price target from $76 to $50 [8]. - Morgan Stanley analyst Joseph Moore kept an Overweight rating while cutting the price target from $93 to $46 [8]. - Benchmark analyst Mark Miller upgraded the stock from Hold to Buy with a price target of $55 [8]. - Mizuho analyst Vijay Rakesh maintained an Outperform rating and lowered the price target from $82 to $68 [8]. - UBS analyst Timothy Arcuri maintained a Neutral rating and reduced the price target from $74 to $50 [8].

Core Viewpoint - Rosenblatt analyst Kevin Cassidy has relaunched coverage on Western Digital (WDC) with a Buy rating and lowered the price target from $76 to $50, reflecting a valuation based on expected profitable growth in the HDD market [1] Group 1: Market Dynamics - HDDs are expected to remain the dominant storage media, accounting for over 80% of cloud storage, with exabyte shipments projected to grow at a 23% CAGR from 2024 to 2028 [2] - AI-driven storage demand is accelerating, contributing an estimated 8% growth to the HDD market by 2028, with Nearline HDD growth forecasted at 14% CAGR when including AI [2][3] Group 2: Financial Performance - Western Digital anticipates fiscal 2025 revenue for HDDs to be approximately $2.2 billion to $2.3 billion, with a sequential gross margin expansion of 50 basis points [5] - The company expects to generate $600 million from the SanDisk spin-off and aims for adjusted gross margins of 38% or higher and operating margins of 24% or higher in the long term [6] Group 3: Strategic Focus - Western Digital is shifting its focus to cloud storage, projected to contribute 88% of revenue by fiscal 2025, with Nearline HDDs being the primary revenue driver [3][4] - The company is transitioning to higher-capacity HDDs (40TB+) with EAMR and HAMR technologies to maintain cost-competitive leadership in the AI-driven era [8][10] Group 4: Cost Competitiveness - HDDs maintain a six times cost advantage over enterprise SSDs and a 3.6 times TCO advantage, with plans to transition to HAMR technology by 2027 [4][9] - HDD manufacturing has a capital intensity of just 5%, significantly lower than NAND's 44%, and has lower emissions intensity per TB [9] Group 5: Shareholder Returns - Western Digital is initiating a dividend in the fourth quarter of fiscal 2025 and is committed to returning 100% of excess cash to shareholders after achieving a net leverage target of 1.0 to 1.5 times EBITDA [7]

Western Digital Corporation (WDC) is set to report fiscal third-quarter 2025 results on April 30, before the closing bell. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) The Zacks Consensus Estimate for earnings is pegged at $1.17 per share, which moved up 13.6% in the past 60 days. WDC reported a loss per share of 63 cents in the prior-year quarter.The consensus estimate for revenues is currently pegged at $2.24 billion, indicating a fall of 35.2% from the prior-year quarter’s fi ...

Summary of Conference Call Notes Industry Overview - **Industry Focus**: North America Hardware & Storage and Electronic Components & Equipment [1] - **Key Insight**: Significant impacts from recent tariff announcements affecting hardware due to reliance on Asian manufacturing hubs [2] Core Points and Arguments - **Hardware Impacts**: - Limited domestic manufacturing exposure leads to reliance on Asian hubs now facing tariffs [2] - PC OEMs expected to absorb tariffs through price hikes; relocation of manufacturing is not economically viable in the near to medium term [2] - Increased reliance on Mexico as a partial offset due to paused tariffs on USMCA-compliant goods [2] - Anticipated lower demand due to recessionary pressures on the US economy [2] - Servers and networking sectors are better positioned compared to consumer devices due to lower price elasticity [2] - Enterprises may extend the use of existing storage assets due to software contributions in storage sales [2] - **Component Impacts**: - Limited direct impact on component manufacturers as they primarily ship to assemblers/ODMs/OEMs [3] - HDD manufacturers with significant operations in Thailand may face challenges [3] - Companies like Corning, Amphenol, and TE Connectivity have diversified end markets, reducing direct supply chain impact [3] - **Overall Impact Assessment**: - Companies with high consumer device exposure, lower gross margins, and significant US revenue reliance are likely to be most negatively affected [4] Additional Important Information - **Companies Mentioned**: - Amphenol Corp, CDW Corp, Corning Incorporated, Cricut Inc, Dell Technologies, HP Inc, Logitech International, NetApp Inc., Pure Storage, Seagate Technology Holdings PLC, TE Connectivity Ltd., Western Digital [9] - **Analyst Contact Information**: - Asiya Merchant, CFA and Michael Cadiz provided their contact details for further inquiries [5] - **Research Context**: - The report is part of Citi Research, which may have conflicts of interest due to business relationships with covered companies [5][12][13][14] Figures and Data - **Figure 1**: Illustrates tariff impacts across coverage [6] - **Figure 2**: Depicts end market spending year-over-year [8] This summary encapsulates the key insights and implications from the conference call, focusing on the hardware and components sectors in light of recent tariff developments.

Core Viewpoint - The NAND Flash market is experiencing a downward price trend due to inventory reduction by consumer electronics manufacturers, with a projected revenue decline of up to 20% in Q1 2025, but a recovery is expected in the second half of the year as production cuts take effect and prices stabilize [3][4]. Group 1: Market Overview - In Q4 2024, NAND Flash average selling prices decreased by 4%, and overall shipments fell by 2%, leading to total industry revenue of $16.52 billion, a 6.2% quarter-over-quarter decline [3]. - The NAND Flash industry is anticipated to see a revenue drop of up to 20% in Q1 2025 due to reduced order volumes and contract prices, despite suppliers actively cutting production [3][4]. Group 2: Company Performance - Samsung, the leading supplier, reported a 9.7% revenue decline to $5.6 billion in Q4 2024, primarily due to weak demand in consumer electronics. The company plans to focus on enterprise SSD development and adjust production plans accordingly [3]. - SK Group, including SK hynix and Solidigm, experienced a 6.6% revenue decrease to $3.39 billion in Q4 2024, as overall market orders were revised downwards. The company aims to adjust capacity dynamically to maximize profits [4]. - Kioxia's revenue in Q4 2024 was $2.66 billion, only a 0.2% decline, supported by increased enterprise SSD shipments that offset weak demand in smartphones and PCs [5]. - Micron's NAND Flash revenue fell by 9.3% to $2.28 billion in Q4 2024, despite strong enterprise SSD performance. The company plans to reduce capital investment in NAND Flash and focus on high-capacity products in 2025 [5]. - Western Digital/SanDisk maintained revenue at $1.88 billion in Q4 2024, benefiting from better-than-expected shipments in consumer electronics, with expectations for gradual revenue growth starting in Q2 2025 due to the resurgence of AI PC demand [5].

Financial Performance - Revenue for the second quarter of fiscal 2025 reached $4,285 million, a 41% increase from $3,032 million in the same period last year[174]. - Gross profit for the first half of fiscal 2025 was $3,067 million, representing a 419% increase compared to $591 million in the prior year[176]. - The company reported a net income of $594 million for the second quarter, a significant turnaround from a net loss of $287 million in the same quarter last year, marking a 307% improvement[174]. - Operating income for the first half of fiscal 2025 was $1,594 million, compared to an operating loss of $806 million in the same period last year, reflecting a 298% increase[176]. - Consolidated net revenue for the three months ended December 27, 2024, was $4,285 million, a 41.3% increase from $3,032 million in the prior year[1][2]. - The Obligor Group reported net sales of $2.905 billion for the six months ended December 27, 2024, with a gross profit of $1.141 billion[234]. - The Obligor Group's net income for the six months ended December 27, 2024, was $52 million, a significant improvement compared to a net loss of $1.211 billion for the year ended June 28, 2024[234]. Revenue Breakdown - HDD revenue increased by 76% for the three months ended December 27, 2024, driven by a 93% increase in exabytes sold, despite an 8% decline in average selling prices per gigabyte[3][4]. - Flash revenue rose by 13% for the three months ended December 27, 2024, reflecting a 14% increase in average selling prices per gigabyte[5][6]. - Cloud revenue surged by 119% for the three months ended December 27, 2024, with a 114% increase in exabytes sold[7][8]. - Consolidated gross profit increased by $1.02 billion for the three months ended December 27, 2024, primarily due to higher product shipments and improved pricing[9][10]. - Gross margin for HDD improved by approximately 14 percentage points year over year for the three months ended December 27, 2024[11]. Expenses and Cost Management - Research and development expenses increased to $1,021 million for the first half of fiscal 2025, up 17% from $875 million in the prior year[176]. - R&D expenses increased by $58 million for the three months ended December 27, 2024, driven by higher variable compensation and increased headcount[12]. - SG&A expenses rose by $40 million for the three months ended December 27, 2024, primarily due to increased compensation and legal fees[13]. - The company experienced a supply-demand imbalance in the first half of 2024, leading to reduced shipments and pricing pressures, prompting cost-reduction measures[167]. - The company anticipates a modest reduction in annual operating expenses and capital expenditures due to a new five-year Supply Agreement with SDSS, committing to a minimum of $550 million annually[171]. Business Strategy and Separation - The company plans to separate its HDD and Flash business units, with an expected distribution of 80.1% of Sandisk Corporation shares to common stockholders on or about February 21, 2025[166]. - The company plans to enter into an amendment with lenders to facilitate the separation of its HDD and Flash business units, which may adjust certain commitments under existing loan agreements[231]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $437 million for the six months ended December 27, 2024, a significant improvement from a net cash used of $(718) million in the same period in 2023[206]. - Capital expenditures were reduced to approximately $825 million in 2024 from approximately $2.22 billion in 2023, reflecting a disciplined approach to capital investments[209]. - The company expects cash capital expenditures in 2025 to be higher than in 2024 but remain below 2023 expenditures[209]. - Net cash provided by investing activities for the six months ended December 27, 2024, included $191 million in net proceeds from the sale of a majority interest in a subsidiary[216]. - During the six months ended December 27, 2024, net cash used in financing activities was primarily due to $225 million for repayment of amounts borrowed under the revolving credit facility[217]. Debt and Financial Obligations - As of December 27, 2024, the total long-term debt, including current portion, was $7.413 billion, with interest on debt amounting to $848 million[221]. - The company had commitments related to Flash Ventures totaling $4.442 billion, with $1.318 billion due in the remaining six months of 2025[221]. - The company issued $1.60 billion of convertible senior notes in November 2023, maturing on November 15, 2028, with an annual interest rate of 3.00%[228]. - The company had $2.25 billion available for borrowing under its revolving credit facility maturing in January 2027[230]. - The company is in compliance with financial leverage ratio covenants as of December 27, 2024[230]. Tax and Regulatory Matters - Income tax expense for the three months ended December 27, 2024, was $147 million, resulting in an effective tax rate of 20%, compared to an effective tax rate of (11)% for the same period in 2023[202]. - The effective tax rate for the six months ended December 29, 2023, was impacted by a net decrease of $30 million to the liability for unrecognized tax benefits[203]. - The company expects to realize tax savings of approximately $166 million from reductions in mandatory deemed repatriation tax obligations and interest deductions in future years[224]. - As of December 27, 2024, the estimated mandatory deemed repatriation tax obligation was $331 million, expected to be paid within the next twelve months[238]. Market and Risk Management - The company expects long-term market improvements driven by digital transformation and artificial intelligence data-cycle advancements[168]. - There have been no material changes to the company's market risk during the six months ended December 27, 2024[247]. - The company uses foreign exchange contracts to hedge against fluctuations in foreign currency for operating expenses and product costs[240]. - A hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S. dollar would result in a foreign exchange fair value loss of $239 million[248]. - The outstanding balance on the company's variable rate debt was $2.5 billion as of December 27, 2024, and a one percent increase in the variable interest rate would increase annual interest expense by $25 million[249]. Accounting and Compliance - The financial statements are prepared in accordance with U.S. GAAP, requiring judgments and estimates that may materially impact reported amounts[244]. - There have been no material changes in critical accounting policies and estimates from those disclosed in the previous Annual Report[245]. - The company maintains director and officer insurance to cover certain liabilities arising from indemnification agreements[241]. - The company has not incurred material costs from indemnification obligations historically[242].

Fiscal Second Quarter 2025 Financial Results Western Digital January 29, 2025 © 2025 Western Digital Corporation or its affiliates All rights reserved 2 Disclaimers Forward-Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for: the company's business outlook and financial performance for the fiscal third quarter of 2025 and beyond; product qualifications, momentum and adoption; the strength and ...

Exhibit 99.1 Western Digital Reports Fiscal Second Quarter 2025 Financial Results News Summary ($ in millions, except per share amounts) | | GAAP | | | | Non-GAAP | | | --- | --- | --- | --- | --- | --- | --- | | | Q2 2025 | Q1 2025 | Q/Q | Q2 2025 | Q1 2025 | Q/Q | | Revenue | $4,285 | $4,095 | up 5% | $4,285 | $4,095 | up 5% | | Gross Margin | 35.4% | 37.9% | down 2.5 ppt | 35.9% | 38.5% | down 2.6 ppt | | Operating Expenses | $664 | $809 | down 18% | $674 | $691 | down 2% | | Operating Income | $852 | $7 ...

Revenue Performance - Revenue for the first quarter of fiscal 2025 was $4,095 million, a 49% increase from $2,750 million in the same period last year[163]. - HDD revenue increased by 85% year-over-year, driven by a 107% increase in exabytes sold, primarily from higher shipments of high-capacity enterprise drives[168]. - Flash revenue rose by 21% year-over-year, reflecting a 39% increase in average selling prices per gigabyte, despite a 12% decrease in exabytes sold[170]. - Cloud revenue surged by 153% year-over-year, with a 140% increase in exabytes sold, driven by higher shipments of high-capacity enterprise HDD products[171]. - Client revenue increased by 5% for the three months ended September 27, 2024, driven by a 33% increase in average selling prices per gigabyte, despite a 20% decrease in exabytes sold[172]. - Consumer revenue declined by 7% for the three months ended September 27, 2024, due to a 15% decrease in exabytes sold, partially offset by a 10% increase in average selling prices per gigabyte[173]. - The Obligor Group reported net sales of $1.722 billion for the three months ended September 27, 2024, with a gross profit of $660 million[221]. Profitability - Gross profit for the first quarter was $1,551 million, compared to $99 million in the same period last year, resulting in a gross margin of 37.9%[163]. - Consolidated gross profit increased by $1.45 billion for the three months ended September 27, 2024, with gross margin increasing by 34 percentage points year over year[177]. - HDD gross margin increased by 15 percentage points year over year, while Flash gross margin increased by 49 percentage points year over year[178][179]. - Operating income for the first quarter was $742 million, a significant improvement from an operating loss of $596 million in the prior year[163]. Expenses - Research and development expenses increased to $519 million, up 20% from $431 million in the same quarter last year[163]. - Research and development (R&D) expense increased by $88 million for the three months ended September 27, 2024, driven by higher variable compensation and increased headcount[180]. - Selling, general and administrative (SG&A) expense increased by $35 million for the three months ended September 27, 2024, primarily due to higher compensation and legal fees[181]. Strategic Initiatives - The company announced a strategic plan to separate its HDD and Flash business units into two independent public companies, with the soft-spin phase beginning in Q2 of fiscal 2025[154]. - A majority interest sale of 80% in a Flash manufacturing subsidiary was completed, with a 5-year supply agreement worth a minimum of $550 million[158]. - The company expects a modest reduction in annual operating expenses and capital expenditures related to the transition to a contract manufacturing model[159]. Cash Flow and Financial Position - Net cash provided by operating activities was $34 million for the three months ended September 27, 2024, compared to a net cash used of $626 million in the prior year[192]. - The cash conversion cycle improved to 107 days for the three months ended September 27, 2024, compared to 114 days in the prior year[200]. - Net cash used in investing activities for Q3 2024 was $96 million in capital expenditures, offset by $47 million from Flash Ventures[202]. - Net cash used in financing activities for Q3 2024 included $188 million for debt repayment and $64 million for taxes on stock awards, partially offset by $150 million from the revolving credit facility[203]. - As of September 27, 2024, the total known material cash requirements amounted to $15.321 billion, including $7.450 billion in long-term debt[206]. - The company had $2.20 billion available for borrowing under its revolving credit facility as of September 27, 2024[216]. Tax and Liabilities - The liability for unrecognized tax benefits as of September 27, 2024, was $692 million, with $597 million potentially resulting in cash payments[208]. - The company expects to realize tax savings of approximately $162 million from settlements related to tax obligations for the years 2008 through 2015[210]. - The company made payments of $130 million for interest related to tax settlements during Q3 2024, resulting in a remaining liability of $10 million for the years 2008 through 2015[209]. - The estimated mandatory deemed repatriation tax obligation for 2026 is $331 million, payable by September 27, 2024[226]. Foreign Exchange and Risk Management - As of September 27, 2024, a hypothetical 10% adverse movement in foreign currency exchange rates relative to the U.S. dollar would result in a foreign exchange fair value loss of $294 million[235]. - The outstanding balance on variable rate debt as of September 27, 2024, is $2.6 billion, with a one percent increase in the variable interest rate expected to increase annual interest expense by $26 million[236]. - The company uses foreign exchange contracts to hedge against currency fluctuations affecting operating expenses and product costs[227]. - The company performed sensitivity analyses indicating that foreign currency derivative contracts are used to offset underlying exposures[235]. - There have been no material changes to market risk during the three months ended September 27, 2024[234]. Accounting Policies - The company has adopted a policy to capitalize and amortize R&D expenses since the beginning of 2023, which may lead to higher cash tax payments in future profitable periods[226]. - There have been no material changes in critical accounting policies and estimates from those disclosed in the Annual Report for the year ended June 28, 2024[232]. Insurance and Indemnification - The company maintains director and officer insurance to cover certain liabilities arising from indemnification obligations[228]. - The company has not incurred material costs from indemnification agreements historically, despite the inability to determine maximum potential amounts under these agreements[229].