WDC - Earnings call 1 2024 | Western Digital Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the Western Digital First Quarter Fiscal 2024 Earnings Call. [Operator Instructions] Please also note, today's event is being recorded.

At this time, I'd like to turn the floor over to Peter Andrews, VP of FP&A and Investor Relations. Sir, please go ahead.

T. Peter Andrew

Thank you, and good morning, everyone.

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

begin, have I today. Before we to exciting discuss items a lot of

addition conclusion of slides, strategic review. release press In and our earnings have release the also a and regarding slides the to we press

All materials posted will in section Investor Relations of our website these of shortly. be the

transaction, include such, performance, Let expectations business These a the future assumptions separated our and current based on and tax-free me remind of businesses management's portfolio, uncertainties. product everyone of performance including our the our form, businesses shareholder value plans financial and creation that and, potential businesses. for outcome the HDD today's our does as spending discussion status forward-looking and ability reductions, risks statements contains flash by market the forward-looking statements separation cost results, of our include separating expectations the of and and timing transaction, trends, of the complete to and

obligation the recent with financial that actual differ We assume Form and most to information the filings on other risks results to refer Please no cause on and materially. uncertainties XX-K for report our more SEC could statements. these to update

posted between references the financial website. to being will measures We make Investor also and our measures the today. Relations of comparable included the in non-GAAP materials press are other that Reconciliations in non-GAAP section are financial GAAP release and

call now over introductory the David will I turn that, With to remarks. for

David Goeckeler

results. to you the quarter review will discuss of first and first you, strategic Thank I Peter. turn then the morning, for joining call. thank our Good and completion our

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end sequential both has Our resulted and ability broad develop improvement to a products margin innovative and of markets businesses. range in HDD across flash differentiated across

beginning that balance laid inflect further margin flash healthy pricing and is for inventory In our groundwork levels gross flash, improvements. have on signs to sheet the

and most just our In HDD, bits drive quarters, to and growth leadership enabled industry-leading which in margin. Our density Western bit center XX% in strong well aerial categories XX-terabyte achieve to and innovative broad X worldwide. upside demonstrates client us sequential UltraSMR channels' as SSD the market as shift enviable Digital's deliver retail end runner technologies gross customers franchise go-to-market to nearline high-volume highest attractive became portfolio have data to volume the ability

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I'll now to with business turn starting the updates, flash.

quarter, in than unit Black, which the flash shipments content markets, placement client to improving to optimized bit PCs including and doubling is record perform as in an optimize environment. and led content we continued shipments and retail for increased WD increasing bit XX% per by all year-over-year. end more revenue over During continue exabyte with sequentially consumer and growth products well gaming, continued

the majority amazing we efficiency perspective. an are are the an provide products and capital from on cost position efficient capital and in to BiCSX, are shipping in era, XD capital-efficient structure most the that node both We based excellent technology a flash Today, of continues spending.

the with transition SSDs BiCSX, broad chip to calendar ramping into on track technology based client are remain of products its look QLC-based high-performance QLC. we 'XX, of we BiCSX lead a industry introduce technology to an expected unique year on After on architecture. bonded on based range BiCSX As array we to array

declined demand in cloud recovery to lower slower-than-expected Revenue due China. by nearline driven HDD. exabyte customers shipments from Turning subdued and to our

market. lead drives consumer Western Digital within and continued nearline the innovation in for demand industry However, driving has the client to was hard stable.

data reflected bring industry's ability are cloud Our drives. to successfully in SMR-based is drives centers the as deployed we into led that quickly results nearline to our into mass innovation transition market

first UltraSMR we the Investor year our for out which we SMR at total shipments the announced of goal XX% laid accounted prior. a quarter Specifically, with in our same exabyte drive, shipments nearly our half nearline Day, XX-terabyte exceeding

into are road of and we choices we We have through have the innovations are our drive in against years track of have result a map XX-terabyte and clear past strategy. These been UltraSMR combination ePMR UltraSMR-based and the we range. a executing of the of with our product on R&D proud made developments capabilities, how few a manufacturing qualification XX-terabyte and are

shipments nearline the continued drive drive margin. sequential underutilization fiscal to price in bit In to improvement improvement demand a and HDD, We the expect efforts anticipate in charges lower both we expect to underutilization In second we the higher and in revenue ahead sequential and gross ASP flash, improvement Looking in both and consumer and charges seasonal gross year and our modest through quarter. fiscal revenue end rest to market of value-based revenue sequential quarter margin and lead decline 'XX. growth. will

our we for to product to HDD come. road for against growth we As execute map, years the profitable setting stage continue are

With that, I'll Wissam. turn over it to

Wissam Jabre

and everyone. good you, morning, Thank

mentioned, Total fiscal quarter July. in exceeded quarter Non-GAAP loss X% XX% down David first As results the billion, the revenue was share provided ranges per was $X.XX. sequentially up and $X.XX for year-over-year. guidance

nearline to the revenue Sequentially, year-over-year billion, declines hard lower sequentially of Looking XX% total was shipments the XX% due first fiscal both represented decline in drive at markets year-over-year. flash due to shipments Cloud customers. down for hard The end and for primarily decrease was products. center XX% $X.X to data primarily and drive at quarter.

a $X.XX both and per of increase unit by Consumer at sequentially billion, the and represented due unit up the of increase basis, in flash XX% both at due declines revenue XX% billion, XX% bit revenue to XX% $X.X year-over-year sequential Sequentially, and sequentially and down higher shipments represented content pricing. year-over-year. shipments. was increased primarily up Clients The growth X% in was year-over-year was driven $X.X decrease year-over-year. flash. flash On to in total

was record flash a with sequentially on second revenue sequentially consecutive billion, amount and bits and a sequential shipped the in now $X.X marks the the ASPs increase. by first XX% quarter down blended In quarter year-over-year. segment. a XX% on decreased increasing This and Turning of basis XX% up X% fiscal flash of like-for-like to shipments flash XX% Sequentially, year-over-year. revenue XX% quarter, basis. We

exabyte unit HDD and HDD and sequentially per was HDD basis, decreased down $X.X shipments XX% total XX% revenue unit per XX% X% price to On and XX%. decreased billion, increased $XXX. Sequentially, a average X% decreased year-over-year exabyte average year-over-year. price shipments total

that charges. note quarter stated the Please was gross first margin was comments non-GAAP and margin Gross which higher X.X%, to Moving unless end to my results will July and expenses. these to range the total, $X at guidance margin. in the $XXX be for and charges related million otherwise. an expenses provided million point in of headwind X.X in included onetime percentage In gross other underutilization represented

charges to margin Underutilization in points gross gross gross $XXX million were charges margin. a inventory gross $X percentage was $XX XX.X%. at expected million, due X.X to than write-downs manufacturing negative percentage Flash or a HDD to combined margin. higher margin were and Underutilization reduced X resulting were point headwind was flash volumes XX.X%. million headwind

guidance share fiscal $XX which inclusive the tightly to down associated the with was per were was operating included below totaling our $XXX continue million. dividend manage loss was first equity. million charges inventory expense $XXX quarter well Operating million. XX% $XXX in which Net underutilization convertible a and $X.XX, We million, $XX to write-downs million, of our expenses, Income tax year-over-year range. loss preferred

was the cash of cash outflow for settlement included payment million the was the flow $XXX and leaseback from of Operating cash for Free received Milpitas, in of a sale first our million, free outflow cash $XXX IRS California. $XXX flow an million million. and an quarter facility of and $XXX flow

Inventory by bit quarter to million taken of XXX billion. shipments by flash shipments. million $XXX years. $XXX inventory days. lowest in $XXX by to reduce of grew due to in timing record Flash inventory declined proactive have HDD starts. the certain wafer lower-than-expected inventory $X.X XX declined inventory Days to days declined X and million, nearly and nearly Days nearly sequentially actions of the reached for driven purchases the level

flash represented inflow and and the sale fiscal Cash our purchase proceeds capital our ventures cash net property, equipment, of Milpitas $XX joint cash related the a plant to first statement, activity expenditures, which our and million. the drew the quarter, on the the include facility $X.X from end of At undrawn sale the including of equivalents $XXX leaseback In was term we the loan of total and was end billion outstanding fully million of and cash liquidity of $X.X $X.XX revolver including Gross quarter. cash debt $X billion, drought billion at billion. the facility. capacity of delayed fiscal quarter, flow

Before for the discuss I the outlook. quarter, cover fiscal business I'll second guidance

shipments be improved For led fiscal pricing by second quarter, flash. growth revenue higher we nearline HDD in expect to total and

the demand align charges production with underutilization and in We second anticipate into continue and better both to HDD. lower adjust quarter flash to supply

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

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

and flash We XX% expect XX%, be gross charges $XXX to to includes totaling which margin HDD underutilization and million million. between across $XXX

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

XXXX. fiscal expenses income second million We $XX million between million to tax $XX $XX and expect to quarter fiscal and million for year $XXX for be

We expect a preferred dividend of $XX million.

$X.XX, the assuming shares $X.XX expect to of share per approximately outstanding. million We loss XXX

I'll call David. back the to over now turn

David Goeckeler

Thanks, Wissam.

for up then and open Let up we'll me questions. wrap

storage now years evident the relative all each downturn, the were performed emerging of in cyclical how peers. past are We several business where well from changes made in a to historic

in year management around quarter first the of disciplined 'XX builds The executing improvements made fiscal and on while our innovation upon expenditure fiscal product capital 'XX road supply map. we

to We improve end upside continue in all both to HDD, monitoring closely year-over-year our our in manage sequential and markets appropriately operating flash our to and manage demand expenses are our and results. inventory tightly in

market-specific creating fiscal market value see public more an X opportunities, with leadership efficiently on positions With improved both unlocks positions development, growth new separation distinct structures. progress the execute strategic we through extend product technology the we as company operate better position, focus, to franchise forward, an of innovative and capital independent with Moving in year capitalize respective businesses. environment improving companies 'XX, each by and

Okay, Peter.

Let's open up for Q&A.

Operator

[Operator comes first from Stanley. question Moore And our today Joe Instructions] Morgan from

Joseph Moore

maybe of And is here. anything a decision little to a OpEx how the X be preliminary right terms the talk businesses. the apportioned on you Congratulations the bit what at of like debt businesses? you later in on but between mentioned amount through to apportion X early capital think you date, the the structure Can go might just of you'll anything

Wissam Jabre

little Joe, about talk it's business question. side a thanks of company. each the premature respect or the too to bit for Look, with to each details

closer As in to to targets be as we'll more et better the return with much talk separation, details get respect apportionment position leverage to we as well a structures, about and capital OpEx cetera. capital policies,

David Goeckeler

with in has we're One during this is the I happy position of last Joe, thing us this Thanks downturn, put question. year, for we've think level good through this very efficiency over David. a transaction. go to the say driven and is especially we the business into the very will

down I think is over years $XXX is OpEx down X years -- X over over the million. last

business we So some in transaction we've put where flexibility to very a efficient go this. a position got a ourselves through and like

Wissam said, as So to as closer. we say we'll have more get

Joseph Moore

Okay. could and early down strategic changes anything your terms tactically And thinking wonder down. I of pay like of the that you're or to just conversions whether I in need pay year and then that the this here how terms that about next to things in ask ability change convert the if to do more

Wissam Jabre

affect our Yes, convert. Joe, the address announcement ability does the to current not

'XX is end that's we've convert maturing Feb of to address said our before, in by calendar As the plan the year. this

Operator

from Rakers Wells Aaron from comes question Next Fargo.

Aaron Rakers

to about in to first this structure. relationship the approval the that I involved I the know that? anything about of JV. the Or capital if be thinking Appreciating in separation should Two, been context around quick. as of the real as about curious, you're past JV rights? I separation. moving rights kind question the Kioxia. Any any certain relates with that are give as it is part the not well, can at processes guess just thinking to we I'm just the the attributes dialogue going point though, there's of

David Goeckeler

and with been No. -- for so a very, the very time. Kioxia outstanding relationship has I mean is it first off, long

continue expect map But without both we absolutely. with very to a So going It transaction business and BiCSX tremendous capital-efficient road can other for approvals. any this on, provides as NAND tremendous that foundation we execute into here. our a NAND we're

Aaron Rakers

quick down drive And on was total the hard know quarter-over-quarter. curious I business. just the as in follow-up, cloud revenue then disk a again Okay. consistently I'm

perspective you how from thinking of context Have Just what how the here you're cloud? again? to from shaping you kind we you're nearline Just pull see of forward. characterize any of move of the would a recovery seeing about a demand kind started as

David Goeckeler

think this sidelines the past Aaron. we year We into they're for improving Yes. the and bottom, on been on we was that move We've had come demand the fiscal quarter and while a quarter-over-quarter us basis. And starting to give back have customers throughout a certain ordering. as see visibility

we recover here So to the going market expect forward. from

Operator

from Krish comes Our Sankar from Cowen. TD next question

Sreekrishnan Sankarnarayanan

I too. had X of them,

one, you've First BOM a in HDD then follow-up. uses be of ] and separation. Or [indiscernible], [ to about And the of to there's the line of sense. some shift separation? curious, spoken the some from R&D again, I post synergies product that It have David, on lot I'm sorry the of that? on makes the a just curious, kind no in the et how strategic harp past, change would cetera. of I'm just kind going

David Goeckeler

doesn't either the business. strategy any for change -- separation in So no there's imply

map. continue view. franchises feel them in We last a good in of forward. been X in point like will both built product our years. a very both product No go feel about we're to over So from both the what's road position X, market-leading of We change

adoption very and drive If the clear it's very center, the hard SMR in what's data next now you step business progressing cloud at big that's the well. look is of very, the in happened

Our next the just shipping the in that the and generation the XX-T drive of quarter, with as drive became well. highest we announced XX-T

be And product on and to there. to team drive of change continue Black, OptiNAND of flash So strategy with procure that side these extremely well. also in able branding portfolio brands great continue a architecture, is the and strategy. strategy, big both perform and that of from also the no the part SanDisk, the to WD the that part a will is the still -- business, shape

for think we businesses it's forward. both going a setup So great

Sreekrishnan Sankarnarayanan

then quick it. follow-up. Got a And

kind road Your extending peers map [ you terabyte. of case think your like the with technology getting how And catch spoke HAMR goes road curious ] to adopted year. map your that [ next about about to ePMR ] and CX. HAMR in XX-plus I'm up

David Goeckeler

our ago in we Look, capacity number a put ePMR. we the SMR, points that like optionality so of extend with UltraSMR, a could road OptiNAND, lot of map years

very points. capacity working well. We're So the that is industry leading strategy very, and

road We is and that expect the into strategy at be our to in well, able on to range drive HAMR It's going drives. map XX-terabyte be to fold this able development. appropriate into time. the we'll our

and now, map. the for road the we And center. we've road time generations to road will map, the go HAMR move market-leading it's our adoption It when We're it have a got But the data cloud can we leading the then into map. on at future. great growth got more of leg next of -- mature We've be a scale. many current into SMR and at we'll expect we to build appropriate

Operator

Wamsi of next comes Bank from question America. Our from Mohan

Wamsi Mohan

address little occur actions there some you transaction, dissynergies is in that when I be that? Can of business? maybe, talk a, stranded you the terms costs maybe you might typically that bit a Can preventing have separation Back guess. of all to of about the the that taken the

and road that, the to you comments competitive noted your products cost how us would about what HAMR think your you on cost sense of Can XX give own you've UltraSMR, ePMR, b, And tb. of of these lot up road how would just have you on map some options compare the that be. map, to a future scaling talk

David Goeckeler

Okay.

business set mean, strategic as us one, really a of the It been for it and better optionality through the much Wamsi, going announcement. kind about that first ourselves have as there. I out So We've this I up think execute possible. was laid give on series you actions whole yes, of

ourselves business the us So for return very OpEx the get prepared separated remarks, talked it. best products, we the on product allows the about all really side. as building I on and make our get we spend in That portfolio to units we into focused sure the on

now well. that's those We then did think flash. the I organizations thing and divided We've HDD worked around same out operations. in

and So and business then costs taken so we've them the efficient we've optimized just -- we can out everywhere can we independently also possible. have operate that most

As our sheet. I on said, we balance focused

So in also and I a good out very said earlier, position possibly organization of I taken we've the ourselves we where think OpEx as can put be We've can is for go as business. separation through the a we of this -- prepared we've as lot it.

very So driven down to number. a we've the efficient

So we companies structured execute very recovering portfolios come into out of through well with go market-leading side X end that up and and well, a the can market. separation believe gate the with we can each very they on and

good feel that. we So about

can UltraSMR, as mean, the we road -- we portfolio, OptiNAND we have very place, very all high drives produce I scale, products. the feel quickly, high we on yields map the look, ePMR, continue in of Cost very

very the So is think cost we position advantageous.

results. You see that our in

So the same the level point when yields. want where and HAMR fold to get we'll in, we to have we of comes, that

launching nearly We products. new or and XX-T just we do, we in. confidence think X something about our drive it's quarter same exabytes now a have as And of that's how of launched level that we half like

structure get very many very, we or very place of X great the put to last on So there, HAMR, very that we'll I in quickly scale, over high that a have think cost same and when drives the drive technology on kind very strong years. we we generations that X efficient, for new have position

Operator

comes from question next Bank. from Deutsche Our Ho Sydney

Sidney Ho

Understanding today. meantime? announcement in quarters, spend the could to of about specifically flow announced related that given that CapEx closed? the you the have amended limit covenants before And amount does how transaction a you the covenants the June, few are the is have the in free And that I over next you back on cash follow-up. Congrats debt thinking transaction,

Wissam Jabre

agreement. the Sidney, for amended does The thanks question. announcement the credit not current affect

flow, so And can perspective, from from cash free effectively. covenants comfortable we operate a that we're a

have We We flexibility liquidity. do have operate. ample ample to operational

current don't announcement see us any the impacting So as way. I in

Sidney Ho

down. can will Okay. is, at you the My quarter through in there if And your X Are terms be second benefits fiscal of down charges if in walk underutilization that of a assumptions increase your disk of great. both from you previously are points price sales on us It guidance, that flash what like-for-like follow-up expecting inventory? gross look you coming drive basis? hard like in increases drive margin, looks and

Wissam Jabre

aimed in had $XXX a lower $XXX underutilization did total, much million then on around QX has Okay. chime start we on cost We other million. level. bit David around In of underutilization. little the line -- guide the Maybe $XXX is to a bigger million Look, of I'll the could charges. at side our and And one in top the side. levers obviously the

one that's element. so And

out on side. and to aspect, HDD still of exclude reduction. In we're addition, on still both continue we still We obviously, flash -- the we're underutilization -- the if cost focus you the cost have side system do the taking

a see we on And up key side, obviously of if back it on the then to top from both and house the improvement gross line, the take margin. I the both that's so improve improvement the sides And revenue businesses. is lever coming to

the within a mix us well. have respect also, contributes So that's to that as do a of that And helping quite with margin. bit well gross we revenue, also

David Goeckeler

pricing price business, add an in The ramping tailwind. XX-T new ramping improving drive Wissam environment, environment And is we the quarter, drives, is improving look HDD as you right? rapidly. an of have pricing expect at for nice I business Yes. inflect which positive we us products, would continue Sidney, a also the is great flash, the what which recovery milestone gross in then said, And a a guess if -- mix. as as margin next better that XX business. have we're is to environment I a And we we well,

Operator

from Barclays. question comes O'Malley from Tom next Our

Thomas O'Malley

exabyte NAND year-over-year, sequentially for for low on on just mid-XXs. 'XX I side I supply. you're up of year a the expectations to and year your ask almost mean, base as XX% up wanted off as both starting well very your the market, demand view fiscal obviously,

slowed the bit peers for fiscal for bunch then of of your you of the that the bottom, have the those expectations comments your or a really down. saw about [ give for strong me recovery ] ordered if Some in to talked just But some you're slowing on kind as those guys. begin the guys x kind fiscal of and demand year seeing for to year. here and have -- other Can any you your shipments begin

David Goeckeler

Yes.

acceleration -- an So bit our have end low get to number of for the the did We've raised quite demand a we 'XX. here 'XX. 'XX. at mid-teens we We'll seen into

of in been of Some a I just buys that's as returning to big that, part levels. discussion see the there also some markets been But the know strategic that, has normal inventory industry. we

been more what's the So happening for of been good us, a businesses. that's and mix across

see of significantly we high below to we 'XX, For teens kind [indiscernible] demand, that. and see continue

Thomas O'Malley

of on kind then the you business, And the positions. other of inventory varied side about the Helpful. talked

see to start to benefit. divergence you think you're you When we the the see been couple market? results market in for bit. actually You talk of Seagate, should today? the with fact you'll that that up point compare that start in similar. just And at a see quarters, least And outsized going have have when relatively capacity divergence the Could flash do theoretically, going a higher results you some if just about your given last down, addressing HDD you should

David Goeckeler

in Divergence Tom? aspects, what

Thomas O'Malley

In terms revenue difference. of

David Goeckeler

business. I -- business think a more So we we're managing think profitability are I profitable for driving on HDD. and mean, we the I -- it's

think we back over the that's quarters. expect way model, back and about next the to our So get to driving which to here business several we the

Operator

Our next Raymond from question Pajjuri Srini comes from James.

Srinivas Pajjuri

the comments on additional HDD growth David, color. looking that see the year, fiscal throughout you for just some

China just broad-based of said the I'm on your anything quarter. customers was it as been kind mixed. Just big primarily seeing And how the by or to weak hyperscalers, the fairly else have can the CapEx listening comments workdowns curious that's think of recovery this geography, some think I also, driving you're driven I And and Is is. you in that you inventory by if to comment it?

about If forward. business is expectation how China what's your you could for talk -- going

David Goeckeler

think there got question. in you I your it Yes,

get have inventory participation you big as I hyperscalers of they corrections. to in end think their broad-based market the the more the by

been numbers. that's a of very, it. low very off Remember, So very, coming we're part

So we participating that expect more improvement more quarter-over-quarter throughout the people basis. the the year ones in participation consistent have on a by by it been market in and

hasn't China better expected. has not -- recovered been as but as it's it been -- we fast

than So bit little it's and like. a would still lumpy weaker we

has and seen consistent, it has market there. space, But in video pretty to results been the the good still we've little So some smart go. cloud ways a

Srinivas Pajjuri

that the be will quarter, from of takes of you curious, had And then I flow could just I cash see you IRS an for terms cash us quarter. next think if and puts payment impact tax. like Wissam. helpful. a a payment? I the the some make guess then in walk through Did $XXX I'm free flow question you during And for due the million

Wissam Jabre

Yes, sure.

on XXXX So years covers $XXX IRS respect in we This XXXX. made payment to settlement. through payment tax the million with the a QX, the

a by And leaseback at and so sale payment when this offset you of that see, at fiscal look the is of QX $XXX flow the. had million for free million. partially you It $XXX in that million that facilities Milpitas we the on we reported around cash negative why $XXX our was

the So negative all $XXX for there the in million all, were quarter. around

of the improvement of forward, continuous working the look capital we business, obviously, As is the the management. key profitability

transition inventory You've the side, for QX. seen our in on instance,

very, very and We continue on inventory HDD. both flash closely manage to

to that quarter continue So expect decline coming inventory I this next. in and gradually the to

be say we focus did CapEx CapEx XXXX. cash our for we expect fiscal lower year, for the fiscal fiscal then that 'XX, the to on continued significantly And than

So positive big free a cash we is quarterly And into on of cash basis flow and projecting as will we're of continue and on flow second flow us, is in to a year. fiscal second focus -- it. very we this important to the to look the half 'XX, half fiscal be focus, cash

Operator

Ackerman Karl from comes question next BNP Our from Paribas.

Karl Ackerman

December. anticipate be to applications? driver NAND larger then second, consumer over for bit recover NAND, indicated abate? in that to will Or and primarily the NAND you do charges underutilization shipments expect be to quarters? tied do When next will the of I And HDD guess you you enterprise that couple

David Goeckeler

one Wissam strong on about the up think charges. by slightly quarter. I that It's comment second mean, although it. be out the underutilization part bits we that's really Yes, and But I can a to December the us, I'll Look, to of way expect take break in for quarter consumer we mix. think don't

bits price slightly improving an up. and We expect to be environment

Wissam Jabre

very respect our Karl, manage supply with underutilization, we And Yes. to do dynamically.

too little do guided here. today, the this a to a next cover underutilization on the one. But And quarter, expect it's fiscal so beyond we lower bit in third quarter maybe the we continue early to quarters what we based see bit than

Operator

question from UBS. comes Actually, Vijay comes Mizuho. Timothy Rakesh next from Arcuri the next Our question from from

Timothy Arcuri

did alternatives David, that become should the considering remains to at the open you Slide they bottom available. say other Board of X,

what you little to the options of just that NAND the this reference to other talk the going Is sale that collapse JV this talk that of put the a available? asked business? So you about was on just to or Is call? Can in about outright be about about presentation. Can an a more? Hynix reference its in commented could

David Goeckeler

to open No, to it's best business position next we particular reasons go the the this work strategic so a improving the thing. always we this just retire think an in to about going of think an all efficiency are view where and to also debt talked through for from to not put that think we in any we the into to that we've now, market. we done on step business It We where other are reference value. on says should portfolio options right is to unlock company But the any I is the point

them they become that we'll at time. available, and consider

step think at business, conversations excited very available, going going the those think open. a the for that this business. will do be of step there's about we're it's want very If ended. I is you're And and part be other completed, the review time. that the have become were to in on that strategic thoroughly as consider But I we that always strategic best any clear Although options any forward. We next to

Timothy Arcuri

for Got Wissam, it. then, And you.

the at split? I So the would underutilization do does is they But charges for midpoint, $XXX how more now December? split think it of in that that of million the HDD business. how

Wissam Jabre

Yes. and underutilization The the X/X split X/X HDD. of flash is

Operator

from And Mizuho. our question from next does Vijay come Rakesh

Vijay Rakesh

what you're fiscal seeing if -- you What Seems question, let's you side, had coming do 'XX expect fiscal growth the a was went as the a you you say. to of and what this? When bit you last for hard look XX, disk little Yes. exabyte -- at calendar or already. it quick bounce forward through. look the drive years wondering like Just X if with a 'XX, for

David Goeckeler

ongoing I down. -- high So yes, get XX% in we coming to a such mid- we back to basis. an this be range a mean, off consistent will on we to high the 'XX, in -- business But expect on then growth 'XX expect exabyte

Vijay Rakesh

the NAND same the side. on And it. Got

expectation map? can see the and next give XXX How us you you spin-off, the bit NAND change for With do ], growth do if any technology the also 'XX 'XX. see coming? in big And your on [ you the road

David Goeckeler

road expect change very talked is technology very that. day-by-day on in don't work a relationship wafer bonding, strong, forward very with Yes. BiCSX is we there. JV lot We're solid, we've about we where any think, productive. about a No, talked together the happy map, step very as map. a The huge Teams we last made and very at. road The it's We've The time strong. basis. technology

than NAND produce to a of able better been the capital the rest industry. always at intensity We've

capital several less up intensity Our measures over to the last X/X years are for business. the

it and very, XX-plus expect very future. strong for far the into strong been for has JV years, be we to the So

that. we very feel good So about

Vijay Rakesh

any Got -- I next ramp, the And 'XX and to it. as guess, guess. big around generation I the bit -- as growth, next the thought starts for stage

David Goeckeler

Yes.

those gets expect numbers. maybe the below it if We NAND high the that. XXs, said, in will will but teens. to be like low in demand it XXs, I in business And about we're significantly strong, high-teens And the 'XX be thinking production creep really over

Operator

from Sur JPMorgan. from comes Harlan question next Our

Unknown Analyst

today. Congratulations on announced strategic the actions

David Goeckeler

you. Thank

Unknown Analyst

development On the flash and manufacturing brings strong side, the in scale. flash technology JV synergies manufacturing

even BICSX, the team right? on bit line move been underlying type you Excluding you and prior sustain the around CAGR mid-teens with driving guys underutilization As bonded with its believe mid-teens cost and does intensity, targets, charges, down look ahead,BiCS at that's a cost the on have rising your per to that in profile? transition, architecture the capital can

David Goeckeler

the explicit spoken do. a downs, in cost that. feel past. strengths for feel of goal one we to the team an I've good we about Yes, very team drive the technology of good I We the mean, the time. It's about to It's that. our those do this continue JV of about ability been to technology long JV and and very

Unknown Analyst

however, been very, and In And market team SSD, client then #X, market very portfolio. within In the of portfolio global strong on flash strong #X share you've share SSD has #X particularly, cloud, in enterprise very been position. sort the position. in a side, the consistently

flash doing spinning cloud portfolio? think its SSD in to improve its what enterprise out competitiveness business, you as is team the about So the and

David Goeckeler

And have. providers. SSD our cloud Well, enterprise like at unfortunately, qualified right in of significant a cloud We NVMe-based the into enterprise qualified we downturn consumption portfolio multiple we SSDs. we

So next as in going that we our starts as just and of buying now. 'XX, position through the go consuming to right those reality start that again. on to quarters a the we several we is as as market lot vendors come mean, back I -- improve there's over expect not

Operator

from Our from SIG. Hosseini question Medhi comes next

Unknown Analyst

regarding see go at you with review, of I mention made? reconcile When the highlighting want SSD.. in David, client I results just also made SSD. SSD enterprise to look should from strategic But, any I to that strength back your don't of comments a I the you're the How just retail. slides comment just and you enterprise

David Goeckeler

X the it's of very are mean, strengths I those because portfolio. strong Well, very,

lot I gem. SanDisk. I brands I think work last in profitability. mean, a SanDisk had is it's unique. It through-cycle years. a think mean, very, premier the strong already mean, franchise in is better very our very the retail brand everybody Look, We've I portfolio. over of brands industry. big building we've a they're on the knows provides I part of several done real a

the significant a around That's built of portfolio. the gaming We've Black now. brand part

We gaming. number the in bits increases XX% provider it where of preferred that. content in the about we're devices and this talked quarter, think I doubling year-over-year in

We the years. So very business. the very, it's the built a last a over been always portfolio. it's DRAM-less very of portfolio several look of strong client That's It's something several We've strength part the portfolio. key of that's SSD. client has it part been to more. a that, always driven in highlighting The like the -- been forward innovations been

on to future I the We a the lot market slide we a the that bunch qualifications in still we're portfolio picked It's talked stuff we're market We're the that that's and of We guess, whole active. SSD have enterprise at bullish could them very that on multiple we market. ramp ones. we a recovers. to of now. proud nodes, expect right put as Medhi, strongest are year. had products just those depressed last hyperscalers. forward but about migrating Those But

Unknown Analyst

that asking trajectory follow-up of or Wissam, if I'm But XXXX. cost flash in not maybe than business for by at if NAND very reaching quarters. just I decline sooner ASP look your your assume question I for Okay. couple on profitability guide a is and the midyear of just a you question just Is And cost next The decline, Great. XX% become trend, should assume a or later. -- a assumption? and current profitable supportive fair bit

Wissam Jabre

does little imply what bit early us them. -- should it on quarters, And to for NAND comment the the for it's too this quarter, terms in gross look, margin positive. outer guide Well, be a in current that of

Operator

Goldman Hari And final from Sachs. from our today Toshiya question comes

Toshiya Hari

on announcement. Congrats the

David Goeckeler

Thanks, Toshiya.

Toshiya Hari

$XX underutilization from charges based [ September declined on charges ]? sequential you NAND? a think, taking the response about December. the a to question, looks assuming million decline wafers it by side, in pitch like driving guys prior I up on in So Are you're What's NAND to

David Goeckeler

we that as get high. putting broad being doing comment that. wafer Wissam demand would very will and we're bit But not guess What up Yes. is what too just I is a I well. guess without best I say, dynamic keep we about statement with how as matched starts inventory manage can I we're what can a letting -- we Toshiya, little supply there so out

saw, great since I has So that. our here been done is level managing job a -- team at best unbelievable inventory you team I've company. mean, operations NAND as and in done the of the I the mean, Wissam's just an

markets are and So stay we'll how close we'll where very seeing and appropriately. our starts to adjust we're demand, then wafer

Wissam Jabre

dynamic. is would earlier thing in -- Yes. Dave. was I only fiscal levels an Yes, that very on question half of when David And the from The the we further do I add, to underutilization of is know there fiscal third as you this year. Toshiya, we Thanks, The the think be way to slightly underutilization, just lower said, were in second is it expect underutilization this. expecting these think of quarter.

a to on continue week-to-week business manage day-to-day, basis. the We

so depending business still conditions, this change. on And obviously, could

Toshiya Hari

the as pricing quarter. to Is the Yes, very specific Are traction? price the better drive then into you're value-based any And in of end to rises client push as through able you speak mostly some seeing where and that's driving quick December kind consumer? cloud you segment markets it hard well? on talked that's follow-up, margins you side a helpful. David, gross Can how about disk and

David Goeckeler

we good I as part as them. we response customers. And Nearly our quarter. have out And we're is is nearline have with so value-based we'll ramped to now continue first And And seeing to to that, we products, all, unique in value better think fast. of very to I said XX-terabyte value-based more the better XX. a products, bringing it's bringing our innovation UltraSMR think the conversation because customers half bring pricing think exabytes value we're do of the out proposition our we're past, first then channel, a bring out bringing in new the what to opportunity this as I I as -- pricing. to of continue

markets. looking say would I -- So we're our it of all at across it's

Thanks the quarter. discussion, to Thank Everybody, to the you as we appreciate you, throughout look right. for that. time today. progress we and we All the forward Toshiya, talking appreciate

Operator

And ladies that, with and We you gentlemen, conference for joining. thank today's we'll conclude call.

now may disconnect lines. your You

Western Digital (WDC) 30 Oct 232024 Q1 Earnings call transcript