WDC - Earnings call transcript Q4 2022 | Western Digital Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to Western Digital's Fiscal Fourth Quarter 2022 Conference Call. Presently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. the to turn now will call Mr. over I and Andrew, Vice Relations. FP&A President, Peter Investor

begin. may You

Peter Andrew

and you, everyone. Thank morning, good

Joining me today and Wissam are David Goeckeler, Chief Officer. Chief Financial Jabre, Executive Officer;

contains remind Before recent as let performance, Please such, expectations We on report assume to demand and refer materially. and risks risks expectations, no XX-K cause everyone management's to differ forward-looking trends and statements, with market on does outlook that financial statements. business we include plans including me and, today's results financial could begin, and actual filed more most uncertainties. Form and current information for portfolio product update our uncertainties and discussion obligation based SEC that to these the the assumptions on

non-GAAP are make press measures the posted non-GAAP over remarks. are also between the financial to the introductory turn that comparable the Investor to included that, section in our will call David materials Reconciliations being references and for other website. today. GAAP With measures of I'll in now Relations and financial release We

David Goeckeler

and Good executed morning, $X.XX. revenue to of fiscal we solid in non-GAAP totaled $XX.X EPS potential Peter. billion, I'm $X.X quarter share geopolitical the progress and XXXX. light fourth revenue earnings that non-GAAP non-GAAP $X.XX $X.XX, joining and business. in the share reported XX%, earnings results. demonstrating quarter reported share and non-GAAP provided earnings April. unlocking thanks XX% revenue This earnings We revenue year Digital of fiscal the XXXX and per discuss and all in compares within delivered of grew increased in billion our of per guidance XX% our of Fiscal billion, you, $XX.X Thank of fourth the call ranges margin and Western the macro ongoing pleased well XXXX for and team to everyone, of results of dynamics. We gross we year per

ability suppliers. enterprise one several Flash, titan In at we NVMe company's adoption organization In innovation, strengthening cloud. as well Impressively, just to we've this and for addition perspective. when capacity fiscal introduction perspective, Digital leadership UltraSMR rating, executive drive disciplined relative particular, foundation. ePMR. Digital OptiNAND performance, excellence, ago. to we financial products for was In bolstered a financial to and hallmark have top qualification product the technologies nearly our May, Western and XX-terabyte development strong these XXXX enterprise of of From the a OEM and cloud we innovation year year an SSD reduced I investment-grade execution with from team, regained as as we corporate multiple of management. placing financial all In debt operational innovation from solid joined drive, Digital as an doubled attained our well years of and means an expanded Western our by technologies On over three further leveraging drive a on management announced to two the billion $X.X Western we achievements,

update Before on strategic I provide to detail jump review. quarter, into an on additional wanted I the our

under Executive to of you with range a parties. market-leading other strategic and non-disclosure We're which franchises. Flash potential and review further a alternatives, for agreement, we separating is reviewing at we interested evaluating along optimizing participating two ago, Board, Elliott our including aimed HDD for shareholders. long-term our lead, continues that options the As oversee I know, announced alternatives are The value of months Committee Management us the alongside

moving will We work this but are expeditiously, time. take

ongoing giving nature given of the the strategic about today -- questions any the answering be not confidentiality will and We review process.

future updates the provide as appropriate. will in We

our provide I'll on and Flash HDD Now businesses. updates

generation energy-assisted due technology. near-record commenced our primarily client latest demand strong quarter, demand. shipment exabytes. near-line HDD During declined of commercial fourth XXX shipments the and fiscal drives a HDD incorporating for consumer Total of sequentially OptiNAND products our drove to our of from We customers revenue cloud number

XX- our of XX% underway, our as of Western our drive. higher in XX-terabyte and highlighting shipments capacity drive Digital to of at launch drives, are May. for a hard offering packing our TCO performance-driven SMR-enabled SMR than qualifications drive terabyte XX-terabyte CMR innovation and we CMR significantly variants, customers product is our that benefits addition the into enables further This better In cloud the event noted

SMR-based the Finally, customer we technology for cloud this and track transition the ramping to drives cloud. with SMR are industry's lead a quarter on to second remain

which confident of for deliver portfolio drives variety product in We and in wide UltraSMR OptiNAND, are a our combine roadmap triple-stage multiyear at capacity volumes a points. commercial cutting-edge drives, very ePMR, to capacity enterprise of actuators

complex We the to for also of of be industry. leading provider are Building bringing the in HDD the us strongly invest largest in the into on commercialization the we of to and and committed future. the our leveraging in choice continue market technologies, technology of cultivated to decades depth alongside to innovations our portfolio driving expertise enterprise this HAMR capacity that and technologies continue positions over most the results are this world. data industry-leading other centers to breadth The business

doubling we enterprise Flash increased improving with SSD shipment more the exabyte SSD, where supply. came primarily and demonstrate strength Flash. an us, revenue XX% Gaming during of market another grew flash continue Turning client from to year-over-year. Revenue to our Growth in franchise nearly product key the for sequentially. growing growth than with is sequentially mix on quarter

recognized example our this NVMe SSD capacity We to consoles, WD_BLACK WD_BLACK both of enables directly SN-XXX our performance being to players have game games console is allows storage of play their for product quality. PSX certified drive. for and globally innovation, latest expand Sony high-speed The the a which and PSX in leading position with gaming PSX from and them the PSX and brand store

in Flash the of June quarter. the quarter, the from represented our front, revenue about BiCSX up in XX% On technology half previous

into late circuit and array year BiCSX SSDs high-performance BiCSX on under flash. preparing QLC products phones, this XXXX. many XG calendar to enables for and architecture, Based exciting We are ramp

for observations the our few experienced on and to demand strength this transformation fourth accelerated year the cloud our strength market, by XXXX. and cloud customers have generate a the offer now earnings me our cloud growth believe year to year XXXX and the demand as our ease. we about growth carry in Digital Overall, demand fiscal Western has second Outside digital We customers cloud to In last half from expectations end environment. of of expect moderated cloud, at of drive continue to XXXX. we quarter end on consistently fiscal this started we calendar believe track constraints supply are Let market been strong into since half the from call. revenue will calendar in our

As HDD Flash we fourth progressed, in market demand. year. XXXX. consumer the saw spending of generally the shipments fiscal enter weakness the second as quarter market calendar and to has to migrated PC expect impacting PC both year the calendar we In consumer client, This retail soften, end XX% decline the half approximately

broader that expect of are will we demand this to aggressively in their a second common in unit through the pre-pandemic of as inventory richer half hybrid the year. to our going believe use above flow the calendar our which going cases impact SSD rightsize of levels demand increasingly We PC business normal correction, forward market After we customers business enterprise, driving as content. conditions, reflect PCs more foundation the current fulfill seeing OEM in will continue

China. an restructure HDD by reflect dynamic. this of our from shift for in expectations to units a flash XXXX. the of months, All to unit footprint HDD final the led to recent now volume of smartphone of rate client decrease accelerated manufacturing demand market Consequently, the the these come industry In mid-single-digit onset devices declining market reduced have we to Industry To percentage phase reflect analysts primarily action the reality, PC aggressive at market to period the mobile, expect year-over-year the dynamics pandemic. calendar by client relative HDD down in smartphone in taking are this now accelerating technology. are before is

these memory XG seeing well-positioned largest supplying smartphones, are are we for we flash aggressively customers in inventories products. While our resetting their for also

Officeworks to first consumer, position return an have the with Buy be and excellent and and and fiscal In we retailers major in retailers a the our across the We expect JD.com for year. and remainder US, China Australia. great relationships we inventory brand Europe, in of impact enviable premium fiscal online developed In including globe, primarily have correction brick-and-mortar a MSH the Group and to Target particular, demand in market marketplace. franchise quarter Best the the in in

storage we product scale, relationships, As of breadth impressive a most these product strong lead result categories. consumer and trusted brand, our

our for term, upcoming COVID in While will key have our measures quality differentiators, preference and customers' and the are demand the and and near performance for impacted of Western position the loyalty consumer Digital seasons. well, holiday solutions macroeconomic which back-to-school factors

Before I the to a call leave turning you over with to takeaways. want few Wissam,

we at of creating percentage data, the intelligent small by amount which cloud the is astonishing out powered case, a devices the Day, ever-increasing the Investor First, where of world is of laid an only stored.

remains remains on and double-digit conviction revenue growth strong near intact. our Our view

has for industry. momentum opportunities call resulting the several Digital At in Wissam, With This storage over first capital the market, In fourth strength becoming enterprise a the and investments which Flash, Digital, for to growth center, technology the coupled past Western our for our storage, for the hard by Western growing HDD momentum of the for outlook us that, provide fiscal with long-standing and capacity in will of incremental revenue drives an an demand the market rapid the offer Digital more has NAND disciplined the growth, outperformance. commercializing turn world, our relationships of growth made me OEM with for are SSD hyperscale bit across expensive, entered discuss partner. led quarter Western trusted years, drove and era cloud and a Over investment leadership in industry. results and product with now customers who NVMe across growth quarter. and more innovations accelerated financial leadership enterprise fiscal combination data let

Wissam Jabre

everyone. David, good Thanks, morning, and

down As April. mentioned, per dynamic expectations, a our and results against year-over-year. guidance macro the in within X% model, fiscal we overall line earnings share such for environment. billion, in with resilience revenue the our were quarter David range the business up X% was for the $X.X Total Non-GAAP agility sequentially was provided and fourth $X.XX, quarter of reflecting

XXXX. full percentage billion, fiscal up X.X our For was non-GAAP and up XXXX, X.X operating year. in resulting expanded of $XX.X XX% year as managed increased points, XX% fiscal the we proactively from EPS $X.XX, Non-GAAP gross expenses, margin margin non-GAAP last revenue points from percentage

markets. end our to Turning

broad-based year-over-year The XX% Within increased of On client continued revenue On revenue to ago. Sequentially, XX-terabyte retail decline year-over-year. at revenue. XX% fourth HDD total XX% $X.X shipments. year sequential of up the nearline total sequentially our XX% revenue due flat. XX% at bit industry success XX% year-over-year. retail basis, cloud and fiscal sequentially the up roughly and more across Cloud, year-over-year down represented XX-terabyte the The products X% revenue sequentially energy-assisted down of Digital's XXX billion, enterprise was to The drove decline quarter, ramp Flash Consumer HDD continued represented was market Western billion, and X% exabytes. leading year-over-year. to revenue $X.X a revenue basis, HDD growth. HDD sequential represented lower and decline, and In in year-over-year increase of transition both $X.X SSD was For and doubled hard led from X% in end drives drove at decrease X% while the to the revenue Flash, and a than nearline billion, Flash. in due XX% shipments drives client a X% sequentially a

year. represents Client a nearline growth total XXXX, for revenue as enterprise exiting more Client in percentage Flash XX% just revenue decreased offset was year-over-year, full of Flash for revenue HDD. and PCs than by the HDD. client XX% For in Notebooks product the fiscal X% HDD year-over-year HDD increased mid-single-digit revenue decrease in fiscal year-over-year. by a doubled Cloud SSD led applications year increase XX%

revenue in year, HDD. retail the decreased consumer a Lastly, X% all attributed for to decline

cloud. Flash on reported XX% mix and as and sequentially now $X.X by up shipments and down towards total On our while billion, basis. Flash increased on ASPs per increased a quarter, flat shipments was a of X% basis X% up average to HDD continues revenue increased HDD the Sequentially, sequentially exabyte Turning unit $XXX to X% X% and by segment. slightly year-over-year. price Sequentially, XX% billion the price by average by $X.X year-over-year XX%. up like-for-like XX% HDD sequentially and per exabyte transition X%, total were Flash blended we revenue the to In HDD increased a decreased bit XX% fiscal fourth down shipments year-over-year. basis, year-over-year. revenue of

As be related costs expenses, to my comments results we unless to move otherwise. stated and will non-GAAP

We to was quarter continue results. Gross XX drive sequentially and to basis up points year-over-year. XX.X%, better exert XX margin financial the management fourth disciplined points for basis down

margin year-over-year. sequential basis and the and points applications XX.X%, was points margin. for both enterprise SSD sequentially XX Our Flash center gross growth a XX up year-over-year gross led On basis, in data improvement in basis

was from million, gross increase prior million we below XX down basis points $XXX to expenses of manage year-over-year. up the guidance an income Operating a XXX as and continue basis HDD margin year-over-year. expenses. decrease range $XXX quarter was X% and Our representing XX% XX.X%, prudently points Operating sequentially our were our

the million. was Earnings and XXXX the joint related managed flow impacted discretionary tax $XXX share control investments. was We million, the million on contributed cash plant our for quarter. and The cash measures in and and compared was corporate-related loaded $X.XX $X.X fiscal per a quarter. XXXX. CapEx component our fiscal made venture, in Operating outflow and XX% purchase Our Flash Operating respectively, flow the capital represented $X.X property, activity at back-end and in normal year fourth factories flash rate debt the cash quarter. scheduled was for of our to and manufacturing to year fourth capital $XXX were ramp investing in expenditures, of production quarter actively output capacity. prior cash our fiscal and joint cash was $X.XX, fourth linearity. Gross the to we for CapEx quarter revenue billion, equipment; disciplined flow the $XXX year-ago back a our billion $X.XX expectation, timing to fiscal ventures both China in free in below statement the deliveries flow of million an to $XX which by cash a We repayment. Cash, include of outflow and remain as quarter,

ended end billion the of outstanding Our equivalents. fourth quarter the $X.X cash $X.X debt billion gross with fiscal was at total and We cash the of quarter.

credit times of fourth a gross a was quarter Our of as $X.X trailing XX adjusted X.X resulting months to EBITDA defined in end our year compared billion, at the times in the ago. ratio X.X agreement leverage

Relations the reminder, Ventures. Please add-back a in the earnings agreement includes our and As both on now fiscal is credit provide first items year as comments the billion our $X.X reflected refer businesses amount I'll further XXXX. for This view fiscal depreciation details. our for well associated flow HDD statement. with several for on as Investor in Flash of website Flash to not cash presentation key the quarter

expect we right-size fiscal customer's inventory. Flash as first to quarter, sequential the the our For revenue their decline lead

overall revenue, consumer, client relatively margin and in flat. gross with modest relatively primarily HDD a decline expect by We driven

we year expenditures Total capital X% look range target total in our capital expect billion. approximately towards to be expenditures revenue. of be line the As expected cash model, fiscal to are gross with $X.X within XX% to XXXX, we of

Regarding Flash clearly CapEx, memory despite volatile about technology remain excited road what our the a we period industry. map in is

require node capital discussed an have on we capital expenditures. prior increase more will intensive is technology calls, that BiCSX As in

subsidy to commitment demonstrating receive also technology strategic path BiCS+ outlook CapEx the the JPYXX.X Japanese from XXXX the for next the NAND facility. years. Our share that several our pleased of plant will to is X approved accelerate what year to manufacturing Flash importance Fab am largest fiscal billion leapfrog reflects to the I BiCSX to our in and world's up further JV at Yokkaichi manufacturing government, been of a from has to facility leadership

continue we expenditures Given environment, the macro manage capital and actively our to supply.

client will our are these footprint. heads aggressive response manufacturing in the HDD, In partner focus order with free adjust venture dynamics. strive growth restructure our generation taking discussion macroeconomic media production in actions capital cash flow HDD to to spending our to in align demand. future We with and and demand. meet joint growth our we to We to in primarily the are investments investments, in to cloud Offsetting we capital optimize continue

non-GAAP first as For quarter, fiscal follows. our our is guidance

to expect We of be billion billion. to range revenue $X.X $X.X in the

gross expect We margin be XX.X% XX.X%. to and between

We expect operating and expenses expected other million. expenses $XX million. approximately to to be $XXX between be $XXX Interest million and are

eligible quarter became that XXXX, capitalization XX% the year to XXXX. certain fiscal is tax and in in income. then rate XX% previously year These R&D our are first an from for our changes law immediate expected for Our were This changes to the fiscal of taxable expected decrease time. result expenses of effective percentage in is tax be rate increase which tax points, over approximately to gradually requiring due for will and immediate the deduction that XX between increase

We shares between quarter, earnings per the to back in now outstanding. XXX first assuming expect call million $X.XX the diluted I'll to approximately and fully $X.XX share be David. turn over

David Goeckeler

Wissam. Thanks,

just In me then growth. right up, continue foundation summary, we we'll built that the for open up questions. Let to for we wrap have believe and long-term

and and great markets intelligent channels data discipline have that consistent TCO our remain on balance deliver drives proliferation accelerating products capitalize innovation to in our and large the engine We the and to put and rapidly the in market us value opportunity and innovation, to sheet. of growing a by creation. benefits our our in position the to storage multiple presented spending devices The established deleveraging reignited investment customers,

ongoing the the during Western next strong of performance continues for pandemic what up to to year. this together Digital. demand and our transformation and as can employees segments geopolitical industries. do economy continues year. through start fiscal we for chain that, what in aggressive deliver together the all across strong going fiscal to I an worked I are macro financial digital team the to markets our Peter, be team accomplished let's thank our the right. end excited also now to that their open secular storage work and it proud see want While and underpins ease of has softens, Q&A. impacts Despite for supply macro challenges, of for All am adjustment inventory hard with

Operator

portion Instructions] go question-and-answer Please ISI. [Operator and begin you. we call. from today's today's gentlemen, with ahead. Ladies C.J. comes first Thank Muse Evercore the now will of question And

C.J. Muse

Thank guess, morning. taking just here. good the Yeah, for to you clarify off, question. I first want

this terms consumer In the this of hyperscale last? there. say entirely you're it's consumer love client a what's think and enterprise on not will that driving that, safe think And as inventory to you the is side hear Too duration it seeing you one-quarter thoughts any changes? do on correction weakness, of as phenomenon? the to part client the long that how tell? Is early about Would your to side, and

David Goeckeler

say, demand Hi their quarter, of the for in some first, especially we C.J., Cloud are number reset to saw good correction morning. OEMs is inventory the in I their got the to significantly current unit thing a inventory China that The where we very for is taking to sharp sales. really reality it continue what is, seeing PC the in down one side Yes, inventory I But it add cloud. would digestion on pretty US the you’ve much along. right. hyperscalers would chug The

relatively definitely the seeing period it one in Is as well. in. as see sharp it's we time. a then quarter, So through short we're we go market, of the but And quarter that quarter, very think it quarter, we're right in smartphone very, we'll two the now, that is

even As developing matter a it's fact, the quarter. within of

down one forecast of had by customers of $XXX weeks take Just our over a ago, in we quarter the million. couple their biggest

So like directly -- it's getting customers, is strong all the our very message, this resetting we're and inventory. message from just

we one, expect So a one-quarter that phenomena. to be

of we that of reach and in market, quarters. consumer starting are a the those next broad operate over business, in around think I stabilization some see given consumer our will the I markets. see the to where in say larger the and space, couple channel we we'll world

in the months great Our the correction And plan. two And consumer really well to looks sell-through that for did, And are I some would to the has as rapid market and channel at business growth it's yet, the as better we're but is really if than say look of let's starting business, X you in significant say, see the it that Europe, pretty some like weeks part been starting strength. on the ago. same regions much quarter, cloud OEMs even a China. first stabilize, place, not some said, in inventory as, of of of I

C.J. Muse

side follow-up just question NAND helpful. a Very of the on And house. the

BiCSX the you're talked same tempering time, rising talking intensity cap at about sounds at next. about You and JV. But like investments what's it the at

how seeing So could changes about given the walk through thinking you the in CapEx forward you're markets? you're end

David Goeckeler

comments of few comment can efficient history -- map, capital a be surprising. a we're I that capital a BiCSX, feel more not road make the and node so it's node. And note. in as our about We I'll through off known more which capital It's that driving Wissam good very the just a most intensive coming transition. that's the again, of the Yeah, well. to going always we're was is mean, BiCSX we've intensive But node.

I our the bit Investor in best general we intensity Day, the and note, as our for capital Now road about map. will that's we in per our industry, strive really extensively something in is talked

capital ours. big per relative as that's bit, and a more remember, far focus still So additional best node, intensive position very, a of very when talking We're in we're about capital issue. the a that's as

the oversupply, CapEx. reset. not environment, current coming demand it's Wissam? looking oversupply. independent node, the But general, is situation demand a it’s driven the demand is. resetting oversupply Now macro we'll bit is. the growth environment conversations of our given obviously at is, Overall, of bit what down. supply We're about in driven the given we'll reality more question we're having our across adjustments what JV We're And in an make

Wissam Jabre

to macro develop, -- can per X% of will cash CapEx we which if If we targeting adjust the But, dynamically. C.J. as we're our model, our target revenue. is The add, to that, of Yeah. to conditions course, manage XX% I need

Operator

Thank and ahead. Aaron Please go Fargo. our question you. at comes And Rakers next today ladies gentlemen, from Wells

Aaron Rakers

Good Yeah. Thanks morning. guys.

I quarter, versus think the of I've to drive can around or So got what trying XX% you questions, more it Flash couple is expectation mean, assumption if With being implied unpack well. revenue this you bit like represents wanted the hard revenue. -- Flash bottom little thinking I a flat this you're mind, a is looks shift the of into sequentially, about are high revenue more bit XX% a your NAND I'm that as talking how that to do With baked I here? this just you're I kind guide this that And really this in guys quarter. about disk making a roughly -- pricing revenue sequential is decline versus bit in understand, expectation? shipped? pricing just

David Goeckeler

Yeah.

it's quarter, I think so our demand customers kind in demand seeing earlier, just of think the can really resetting biggest and a not inventory really the are inventory. customer, the about of and to driven just dropping their they across way their I reset all as it, said we're space, PC where situation

and them. leads to so both that So of it's volume pricing pressure pressure,

more the of have From one-quarter our the I of they through need I to, volume we work customers, through to take come and a as then this. think And where back inventory ones, confidence some as that it But that. so see it we work may they some change. other I think their longer than a this little is get we'll quarter

through -- we'll we'll as forums. we'll have information quarter quarter talking through and the appropriate in be about that the more work So we see the

As in before, quarter. I is this has mean, I said of a this out, market. I I the is mean point -- will happened some very this dynamic

difficult through customers we're it's of are So is we wrong. get inventory. we the in kind our Like environment the a confident did very And aggressively pretty but very, sense the up. got remarks, the -- more But But happy it I prepared this, very because when there. chain we guided think in dynamic think get a to my it's supply managing me their -- fashion. out expeditious bound in guide, We're I'm very don't components. getting said I we've is loosening they'll we're

our the softer in they manage components. at think I giving same that's more how Maybe going getting inventory. economy. their time, a And we're more them customers own into are confidence

So the everybody the very and hyperscalers to good year. in The point. a is still very, the US, big Flash the drive position and growth reset business impacting it's in strong and feel HDD to of your consistent the there throughout fiscal going especially portfolio get what out business, about we're

Aaron Rakers

you've last of These Okay. ability down cost drive of about And it in couple as a more. a last bit little seen but a bit quick like and Flash Flash your mix of of quarters, follow-up, to business. business these thinking looks just couple a the little quarters, appreciating that slowing the is factor, a

to structure cost BiCSX? about think we the down about you. thinking BiCSX, As of are relative how relative you BiCSX Thank

David Goeckeler

a of there's know Wissam? target below, you cost We going even above. some I fiscal think, the quarters mean our always if Yeah. as history, a the we where couple that's that right, the on there's right about but we've Hopefully, not favorable think I some to delivered at be case. year, XX%, look we've over. tick at the we hit Is been more and side, quarters -- that's But talked I XX%. downs, the

Wissam Jabre

to the contamination of And David. did Yes, fab have keep the quarter. we is Aaron, that's in one mind, in correct, fiscal things the third

haven't couple in the reduction the fiscal partly is is cadence seen -- why same last cost necessarily why so And quarters this we the of of this of XXXX.

David Goeckeler

costs it really it expect back road map XX% year-over-year drive map the I to our just see very BiCSX the can around we get last the we about we explicitly that will Aaron, going be. making to road year. delivered what in upcoming good and and feel the this number. where again are quarters, bring. fiscal drive think So around the development in and the that's the pleased you'll We We sure transition deliver explicitly nodal And we to transition we

Operator

Thank Stanley. Please you. next question Joe ahead. comes from Moore go of our And today Morgan

Joe Moore

I you but inventory could in address, versus NAND wonder I if prices didn't specific Great. Thank you. to is answer balance going to I what look you your volume hear mean, QX, I in guess this a the at control. adjustments And number of thought in QX? about willing I that know environment? keep end past, that been the in utilization to under take you have like fab Have to guys

David Goeckeler

a I'll comments. that make let the a guide down to specificity, both Yeah. we Wissam comments. but level I'll And don't few about roughly make few same. they're of

Wissam Jabre

where the roughly numbers up, Yes. among shape the That's same.

Joe Moore

inventory your balance? And

Wissam Jabre

that to as given the the the grow demand -- expect supply is mostly to -- quarter we Well, than demand a is. inventory where is bit this driven, this higher be

are discussions appropriate take However, the the we as said we prepared that. to action can limit in to if -- our extent to remarks, partners we in with JV

Operator

you. Thank

Our today comes with Stifel. next question from Ho go Patrick Please, ahead.

Patrick Ho

HDD and Dave, second that carry confidence hyperscalers' of half color you much. the positive you as the Thank your confidence on maybe little end, on on the could just it give on taking follow-up very will a sustainability if spending Maybe side, a you parts into at of least this year trends. maybe through the the What this early XXXX? of US the the gives level

David Goeckeler

is relationship on them -- very basis. a Yes, a the talk obviously, from a we very, get we close One and daily have of things. couple message

SMR. planning XX in message got continues We've around portfolio and the be and the and half a consistent we message. for get second great a to so strong And XX

qualified second transition. one of side think position out for And great big the a hyperscaler a fully our SMR. quarter puts drive on of of more UltraSMR that in getting the I us HDD got with XX% with is we a last highlights position that

very the And you'll be volume. lots to XX those at SMR. and ramp year, we of underway start So view, message they consume about very, plan the consistent to from like a second going of next adopted through year. on products new XX to it And I continues we've them half product terabytes all as said, portfolio the into be and from point got of terabyte CMR, how qualifications the fiscal see in go

Patrick Ho

helpful. where be big as the SSD shift NAND question, And maybe as BiCS+ a on from you for you moving did of Cloud my well. following endeavor That's Analyst SSD see terms more in the it biggest Great. you a will this focus is itself flash BiCSX, with your generations where up or Day to put the the follow-up market future segment type beginning shift see towards where of Do this of NAND?

David Goeckeler

mean, sequential quarter mean, of shift a I I on delivered now. our portfolio. happening XXX% we SSD No. enterprise is growth just the

enterprise work strong. we're a next couple through of that's drive share to from result. our the going that Like We've success said, very Now XX%. we very been we're has the It's SSD a to strong as broke particularly got we market and through plan that. for years, in. confident of But X% a participate the I the to great good with qualifications

going we're FY a going of lot to Now is be every the quarter But it up. will share have the be trajectory to in XX% is time the confidence, that we XXXX. not lumpy, over three-year drive span to

Operator

you. America. question Thank question one yourself Wamsi our you do Please, gentlemen, Today's we limit time. with the go ahead. of go and ask please Bank in question, ladies to next Mohan we that next from interest to before comes And of

Wamsi Mohan

Yes. Thank Good you. morning.

off base you're drive -- for quantify the growth shipping through September, maybe look help in in basically us to the correction calling we digestion well let's sequential the inventory the levels, of for Can given if think help is and below quarter? thinking quarter. completed, that that You're December what's the of be should say, when demand roughly you September that right you at any

David Goeckeler

in earlier more the of million to think Well, consensus maybe that's the was units. We XXX is in I -- going the market year think there for land around -- units. market, we million PC mean, XXX

down So, we that saw smartphone -- gives you correction demand on a now. right percentage. of a that's talked the And about think mid-single-digits I happening single-digits, we sense aggressively being unit

inventory, products they especially Wamsi, inventory up. couple ago very general, still going have the tight were the right components personally to upsides that But up, that they on a I as have -- now supply loosened think, -- confidence, just I So sharp more tight. more where we're resets of It's we're loosening their completely step-down not get quarters is this chain even as that there's think, able -- areas. through everybody very in

they're into resetting So, consumer for going world softer everybody that I resetting is a kind and environment. think of

how think you bracket that it. bit about So, I to gives little a we're thinking

Operator

today Sidney next our from go ahead. And Bank. you. comes question Thank Please Ho with Deutsche

Sidney Ho

for Thanks taking my question.

with So, the given come margins to will quarter. few will control pretty the a looking next level XXXX things at in in is coming trough Thanks. your last your back let's margins the down in say, June Flash down below was mix quarter, that than better into, the heading, pricing the out September it Obviously, quarters but in pricing of think XX%? one? your when still are you will do But make margins, control, the that that you at are be they where there obviously last but decent is your trough get

David Goeckeler

we're lot work our drive qualifications tremendous mean is lows the that's set I think and And through-cycle the Day, on way I highs. to we We talked we the about amount couple a margin, think And through-cycle the going think I think for given at to to Yes, the of about we've across want a and last -- margin. SSD. that of we in do done enterprise higher up higher this we're show years, Investor portfolio well that the managing up.

last market been in growth a just great a area year very position and gaming, the that's us over Our strong and for a half.

I put lot -- to result. places it's we better lead situation better more we lot to our lot think diversity, to supply, portfolio with a go a that's going I think into think and and a yes, So, this better a

Operator

And today you. our go Hari from Goldman Please Toshiya question Sachs. Thank with comes ahead. next

Toshiya Hari

a for and CapEx I restructuring talked Thanks utilization you the had that morning. question. HDD multipart and taking primarily plan about. around the business, Good question your rates on

talked you near Is about thinking that exactly of hard capacity next drive -- online much contemplated pertains as side, guys restructuring, In long-term? CapEx adjustments to that some what's in you're the competitor the Thank on doing outlook, again, medium doing, on hoping term. you. in you over XXXX fiscal in your your are rates, And terms what about how or the utilization business? the making the is then expand something nearest in HDD? on And could was coming I it your to

David Goeckeler

Thanks Toshiya.

let add about just So, CapEx on how more a thinking and detail a this. me little context give and, Wissam, we're little

the So, pandemic a as into went client that saw over couple talked market interesting we surge We of big demand for hard the HDD and in client been we has about years. last the drives.

general, has down now that is saw in we Just year-over-year. business XX% And turned dramatically. around for in big surge is demand a That seeing PCs. we're right what over

So than we're and the have us, happens. That's pre-pandemic faster we flash even it's transition such to transition far a in as because portfolio trajectory, now seeing down to that returning as SSD. – for a going client great good

undertaking So we've capacity been transition that's much client it for and the in right for system, really we now. that calls our reset to we're have years. playing aggressively how us But – HDD what

Wissam Jabre

Yes.

should also in areas, as client of on sold. us And we're reducing Toshiya, that, our the a goods from terms David taking footprint the bit is side. benefit couple said, on of – this of a the but expectation we're CapEx the little on basically, on So restructuring, side, cost the we're manufacturing

associated that out. manufacturing the being there's capacity, managed it's of if been have or underutilization so that And with that any part was would with associated basically

able for as transition sort from And to fourth the to that HDD the gross so of terms help should flat. we less be the it first of margin – to the quarter, said, quarter we're business or expecting in more us be

on see improvements even we the probably following in so that, based further And quarters. should

David Goeckeler

CapEx. On

Wissam Jabre

And I I a than one keep though plan within not thing keeping capacity side mind higher of – we term this, HDD is, X% – of between overcapacity out typically the of the if are building near that the at the X% the plan to are revenue. model to CapEx HDD to stay of X%, get like to the a investing able to eye simply the do did enterprise the supply-demand we we be don't or because you be that of to to to CapEx, in in maintain in on for And as and investing we to Investor we target the close typically The manufacturing target house. would maybe the term balance. supply-demand where to we situation, short our break do we XX% and Day, recall say said, Flash. business point we But –

David Goeckeler

a picture. few we more just on this Toshiya, fully paint So comments so the

In them, to client don't capacity of so have we we we at investing still just But we're have these heads this, heads to we see anymore. drives mean millions in have So what in to and ability need still about you're talked a – heads. we Media, Day. I of and Analyst media, really drives the we enterprise. produce big invest. – starting there's transition lot millions our that need to manufacturing

the the we're cost that's So system. and to out of part that get resetting,

Operator

today question comes next our Tom ahead. gentlemen, go and Ladies you. Thank from Barclays. O'Malley of Please

Tom O'Malley

I start to But the the that total business. Just any see moving Thank parts on this bottom might for when to a the from losses scenario? parts. a now. September. do, not depth and visibility pro top about see But look the taking you've a obviously, into perspective, moving of total talk on line a ton from perspective? kind morning, for there's guys thanks net at see lot guys, based you And might you you just Obviously, color making overall forma company earnings talk Hey, income recessionary you. can you question. yourselves do where I think about my good in you know, just you wanted right quarters? I about of you if which you're coming planning the know, talked recover? could there's of in

David Goeckeler

we no. off, see don't first losses, So

hit you just It's now. on look, So, it. right very dynamic

half the can we picture that maybe May business would the that Let say, year. back bit quarter didn't little happen. the it about consumer started is QX And of spread consumer now started Europe off It's really -- June, part this and that into of with say, if early and broke We're is paint consumer because weakest throughout The April seeing year. I very talking smartphones. Wissam out, the May, The starts the calendar and the usually and first then out the something see lockdowns a stayed always war to progressed and quarters. and seasonally soft. year. It for softening business – about strong when comes we went that in started is several soft. the purchasing an interesting it in PCs the quarters, April in on me in we consumers China really

about, the levels. OEMs business, business, And stabilize. we're the we At talked our reset inventory in channel see we're and consumer and starting seeing the smartphone PC the their very now aggressively as time, so, same to the

has stabilized. wants nobody inventory Q-over-Q regions, in But build the to right channel. to like starting in business, the it because we're the behind the consumer I was business stabilizing, channel it's bit in little a some signs we're to of I see sell-through look quarter, growth said, for at plan. So, first still Sell-in, stabilizing. early the seeing now. sell-through And the of If even part Europe,

depends in little gives it China think get get a has work we back said. and see markets. through and been of the of quarter. how the we've we There's China word the I inventory continue OEM to see the -- how visibility. just cloud. seen kind we side. hyperscalers been, to the not that cloud of a evolution We'll its And that see say, lot that has digestion of I that general, I how So on way kind very through And the correction on how as cap we China across then all this in in comes expect how cloud, In we see But you the off, fast it we going US consistent digestion demand some from the quarter. quiet all to of throughout this forward, bit would

through Although are the seeing OEMs are parts PC to stabilize. – smartphone are of and market we very, PC through very correction, OEMs going the start going other the sharp and

that to to want out you Wissam, quarters, know, forecast don't that? add I the anything but say about up? So, We don't really

Wissam Jabre

position. see quarters. we're points The couple stronger we a one We've financial that, is our from We lot much, Yes. with of we much over financial obviously position. starting would add forecast I the out last the are down strengthen cycle, don't couple done – mean don't the – to years a David, I this losses. of to

We quarter. also of a last set exciting products launched very

So, we have really a very strong portfolio.

additions good have We to leadership team. the

we're manage through position to so, better much And a this. in

Operator

comes today Thank you. next from question Timothy And our with Arcuri Please ahead. UBS. go

Timothy Arcuri

gross decline that want bits roughly prior bits on meant bits -- think that both well, I'm I Is lot. this equal than just still clarify, I are a a more mean, of are you're sort running to if wondering And And take that's the HDD certainly is lower NAND answered implying two-part you pricing. your case, peers. the what if trying also to the then -- And that you're related side, I on couple question Thanks Because had peer. say? and out? down question you're margin. can a is client points to of than pricing saying and a hundred unpack I that to that. you your then And is between basis you capacity the

sort can your I'm you wondering worse why Thanks. than your just of handicap if So performing NAND is business peers.

David Goeckeler

gross XXX margin about quarter But had basis gross in gap the we think of I first points. on I -- feel think I HDD, margin. good on So is all, the now

Digital we for, industry the benign our is I gross even fiscal something QX, faster about up sequentially on When that the remember, QX. things. market going the the little some as perspective, pretty number into enterprise the which of a -- are everybody thought That that striving a well. some of different versus markets, but up there Western a a we ago, -- side all of we've a drives, put would predominant have But we're cost unique then bigger the fact, HDD in and back Us through the we're And we HDD, a to able we to bigger they little HDD to of think in XXXX. market. we don't work year. given quarter, exited was half, were in from on and talked to FY calendar due bit, drive, especially back plan general, the we performance bringing One well, those in. move it a through will to innovation been move the a number been And again, they UltraSMR is what to portfolio, competitors, to as pricing position the participate in last to our the start continues that thought. and than We has be a as that's XX-terabyte has And portfolio second we get were declining years we industry. innovation, the margins we expected the margin-rich mix. some and, I part get shipping the margin we and are We're able -- markets pull become Those in of this able -- XX-terabyte expected going up let's way. part into

customers us with we as very sets position a that drive strong our think have up good innovation. I to a conversation TCO So to really continue in

dynamic even last Things changed is to Second half in the in this week part weeks. question and market. of very your was Flash. two a have Again,

are different a when of in we we're our that we heard and point customers. So everything at forecasting I from have think rolling we're

that significant very, quarter. of are customers As said, that the I very changing amounts demand within have have we

of that put business make that's the around work that. but the we is today. better, to Obviously, where a So we'll guide reality

Operator

Hosseini And Thank comes you. go Please ahead. Mehdi ladies final and today's from question gentlemen, SIG. with

Mehdi Hosseini

in. squeezing just comment. you. I to me follow Thanks David, last up for Thank the to wanted

into in go with confidence just follow-up. earlier call especially America. that remain share year year? us? North providers inventory that is volatile. the You you you a the you and there Is near-line said service And gives can American through that What then cloud next very have this North digestion later with anything I cloud you highlighted And demand comfortable in demand, that

David Goeckeler

deep conversation the our we and just them it's with think have. I relationship

points what them We visibility products, is customers, which We're, generation agreements gives into of capacity exciting. bring obviously, market-leading to which next in deep and plans their SMR. with conversations a very our also us them have CMR across these more to We're are. lot with able multi-quarter about a

So, in the in XX-terabyte can to the Nobody capacity have a again, again, XX-terabyte product SMR, then CMR is product we go industry. those unique else is, a And which industry. unique points.

being where is. so, about portfolio And feel we Those are and adopted the across good our very qualified base. customer

as the visibility the where think year. and our given to we that as confidence I the us in see TCO as the gives through we move of of half the at second customers, relationship strength we're bring equation the we well

Operator

remarks. Thank to concludes the turn this final question-and-answer back you. conference And team and any management ladies I'd for session. our gentlemen, over like the to

David Goeckeler

the you quarter. All right. on appreciate look early you throughout Thanks, everyone. time all great to a talking the for we'll with and questions, morning. to us here We spending Friday Thanks forward

Operator

concludes this thank all and today's We gentlemen, Ladies call. attending conference you. today's presentation. Thank you for

You may wonderful now disconnect day. your and have a lines,

Western Digital (WDC) 5 Aug 222022 Q4 Earnings call transcript