Western Digital(US:WDC)2024-04-26 00:33Financial Data and Key Metrics Changes - Western Digital reported revenue of $3.5 billion, a 40% sequential increase and a 23% year-over-year increase [17] - Non-GAAP gross margin was 29.3%, improving by 13.8 percentage points sequentially and 18.7 percentage points year-over-year [20] - Non-GAAP earnings per share was $0.63, exceeding expectations [5][17] Business Line Data and Key Metrics Changes - Flash revenue was $1.7 billion, up 2% sequentially and 30% year-over-year, driven by an 18% increase in ASP despite a 15% decrease in bit shipments [19] - HDD revenue reached $1.8 billion, up 28% sequentially and 17% year-over-year, with exabyte shipments increasing by 41% and average price per unit rising by 19% to $145 [19] - Nearline bit shipments for HDD were 108 exabytes, up 60% sequentially [18] Market Data and Key Metrics Changes - Cloud represented 45% of total revenue at $1.6 billion, up 45% sequentially and 29% year-over-year [18] - Client revenue was $1.2 billion, up 5% sequentially and 20% year-over-year [18] - Consumer revenue was $0.7 billion, down 13% sequentially but up 7% year-over-year [18] Company Strategy and Development Direction - The company is focused on separating its flash and HDD businesses, with completion expected in the second half of the calendar year [7] - Emphasis on operational efficiency and innovation to capitalize on AI-related storage demand [6][14] - The strategy includes optimizing bit shipments to high-value markets and maintaining capital discipline [14][15] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in demand for enterprise SSDs and the potential for growth driven by AI workloads [13][36] - The company anticipates flat bit shipments in the fiscal fourth quarter, with ASP increases expected to drive revenue growth [14][22] - Management highlighted the importance of maintaining a disciplined approach to capital spending and profitability improvement [24][25] Other Important Information - Operating expenses were $632 million, up 13% sequentially, primarily due to higher variable compensation [21] - Cash and cash equivalents were $1.9 billion, with total liquidity of $4.1 billion [22] - The company expects revenue guidance for the fiscal fourth quarter to be between $3.6 billion and $3.8 billion [22] Q&A Session Summary Question: HDD gross margins and future growth - Management indicated satisfaction with HDD portfolio performance and expects continued profitability driven by product quality and cost control [28] Question: NAND bit growth expectations - Management confirmed mid to high teens demand for the NAND market in calendar 2024, with a focus on optimizing supply for profitability [32] Question: Gross margin improvement offsets - Management acknowledged expected improvements in margins but noted various factors influencing the overall margin guidance [34] Question: AI demand impact on SSDs - Management discussed increasing enterprise SSD demand driven by AI, with a focus on higher capacity products [36] Question: Nearline HDD performance and sustainability - Management attributed HDD performance to product quality and technology, expressing confidence in sustaining market share [60] Question: AI's effect on HDD and SSD applications - Management clarified that AI is driving new use cases for SSDs without cannibalizing HDD applications, emphasizing growth in both segments [64]