Western Digital Corp (WDC) Q1 2025 Earnings Call Highlights: Record Revenue and Strategic ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $4.1 billion, up 9% sequentially and 49% year over year.

  • Non-GAAP Gross Margin: 38.5%, increased 220 basis points sequentially.

  • Non-GAAP Earnings Per Share: $1.78.

  • Cloud Revenue: $2.2 billion, representing 54% of total revenue, up 17% sequentially.

  • Client Revenue: $1.2 billion, representing 29% of total revenue, flat sequentially.

  • Consumer Revenue: $0.7 billion, representing 17% of total revenue, flat sequentially.

  • Flash Revenue: $1.9 billion, up 7% sequentially.

  • HDD Revenue: $2.2 billion, up 10% sequentially.

  • Operating Expenses: $691 million, down sequentially.

  • Operating Income: $884 million, up 33% sequentially.

  • Operating Margin: 21.6%, up 390 basis points sequentially.

  • Operating Cash Flow: $34 million.

  • Free Cash Flow: Outflow of $14 million.

  • Gross Debt Outstanding: $7.5 billion.

  • Cash and Cash Equivalents: $1.7 billion.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Western Digital Corp (NASDAQ:WDC) reported a revenue of $4.1 billion, marking a 9% sequential increase and a 49% year-over-year growth.

  • The company achieved a non-GAAP gross margin of 38.5% and non-GAAP earnings per share of $1.78, both above the midpoint of the guidance range.

  • Record HDD gross margin and highest revenue levels in 11 quarters were driven by the adoption of Ultra SMR technology.

  • Enterprise SSD revenue grew 76% sequentially, reaching the highest levels since fiscal Q4 2022, indicating strong demand in the data center market.

  • The separation of flash and HDD businesses is on track, with the soft spin phase completed, setting the stage for future growth and operational efficiency.

Negative Points

  • Ongoing weakness in consumer and client markets, particularly with PC OEMs, as they work down inventory and delay refresh cycles.

  • Flash gross margin is expected to face a slight sequential decline due to a temporary cost increase.

  • The company anticipates potential seasonality headwinds in the March quarter for both flash and HDD segments.

  • Despite strong enterprise SSD growth, the overall flash market faces challenges with mixed demand dynamics across different submarkets.

  • Operating cash flow was only $34 million, with free cash flow showing an outflow of $14 million, impacted by significant tax and settlement payments.

Q & A Highlights

Q: Can you discuss the significance of the enterprise SSD mix reaching 15% and the impact of the NVIDIA qualification? A: David Goeckeler, CEO, explained that the enterprise SSD mix reaching 15% is a significant milestone, driven by strong demand and qualifications, including with NVIDIA's GB200 NVL72 rack-system. This qualification positions Western Digital well in the market, particularly with hyperscalers, and is expected to drive growth, with the enterprise SSD mix potentially reaching 15-20% of total bit shipments in fiscal year 2025.

Recommended Stories