WDC - Earnings call transcript Q1 2025 | Western Digital Corporation

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Operator

Good afternoon, and thank you for standing by. Welcome to Western Digital's Fiscal First Quarter 2025 Conference Call. [Operator Instructions].

As a reminder, this call is being recorded.

the to turn will I call Mr. over Now Planning and Investor Andrew, Vice Analysis Financial President, Peter Relations. and

may You begin.

T. Peter Andrew

Thank you, and good afternoon, everyone.

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

on everyone Before begin, discussion statements and include such, let and remind risks management's we that and assumptions current uncertainties. me contains today's forward-looking as does expectations, based

our financial and Form cause the These results. could and to the the risks other separation refer performance, SEC most business plans forward-looking and with expectations. statements that uncertainties actual and obligation Please trends recent no results include financial assume market expectations our on filings We on and for HDD Flash XX-K to to our our report statements. ongoing for differ future product portfolio, information our more from these businesses, of our materially update

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

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

David Goeckeler

Western first thank fiscal Peter. discuss earnings non-GAAP afternoon, $X.XX. to joining year of $X.X our non-GAAP revenue delivered Thanks, the of Good XXXX call for you XX.X% and of and everyone, performance. billion, Digital margin quarter gross per share

markets. Flash substantially increasing storage need bolstered HDD. growth are cycle the the mix both across revenue into through innovation sequential and by AI diversified for and bits allowed profitable resulting and across data long-term industry-leading to Flash and our dedication to HDD lasting proactively These reliability and quality improvement both our Our margin portfolio have end growth the us opportunities in most markets,

headwinds Combined measures strategy significantly potential. In beyond through-cycle we our in we certain and enterprise our capital year-over-year allocation downturn Western disciplined bringing and margin during flexibility achieving continued investment sequential and with structural bit SSDs growth enhanced core highly revenue Digital's our in to markets, have margin agility target. with and compelling took Flash, the gross progress end mitigated market, and business along proactive flash the improving

achieved strength the us record capacity HDD growing while In the the Western quality highest revenue UltraSMR our and in hard which deliver quarters, ensuring adoption drives to storage the by highest of gross to cost-effective of our margin Digital our portfolio demand the in has empowers levels industry's in meet unmatched technology, drives UltraSMR scalable driven HDD, and solutions. reliability, lies performance. for XX

a wide U.S. the continue Ultra time. gross of is driver anticipate cloud ramp improvement and our shortly. to over We in solidifying SMR beyond, continued the key our margin X market leadership with to grow customers will technology X/X This adoption and of expected across

separation like an would I Now business our update to on plans. provide

We track completed the of start of the Flash are fiscal we phase. with businesses. our the quarter, soft on spin separation our At and second HDD

of quarter. stage start I'll expect spin. the we which execute set turn exceptionally make are hit working spin running, required we and the streams the significant numerous to planning critical the the fiscal soft are second stage teams the we this project with the second initiative have well to executed meticulous updates. efforts business the activities connection businesses the will and has our execute ground In been Through dedicated the work occur for once Financing soon, and massive diligently needed year. as thanks we continue to which past over the now us on to on regulatory to filings in quarter, close progress management, will anticipated separation,

demand by for fourth tailwind in the Starting Sequentially, X revenue pushing in fiscal XX% XXXX. since offset by with out recovery by SSD was quarter which highest growth enterprise continued data was purchase in cloud quarters. in quarter level our driven inventory working strong level highest applications, the revenue with Flash, cycle. sequentially, the consumer center reached grew its The weakness reaching PC refresh and ongoing and OEMs revenue down of in client fueled

the and XX-terabyte made Gen significant front, high-capacity and progress data developments center offerings. On enterprise with XX- X technology OEM with we including and SSD qualifications, hyperscaler several storage PCI our

devices addition, road our capabilities product robustly. brand now by I'll our our platform blueprint and premium we enhance SanDisk delivering continue with partnerships map, flash to to In developing on leadership outlook. expanding turn our core

the enterprise since strength end as we driver demand client Furthermore, in demand we and as OEM our new consumer year demand met we to of holiday move a to to declines gaming we ahead serve consumer revenue our doubling SSD SSD we expect fiscal while We the for markets look anticipate the to second we it and our end offering offerings fiscal expect With the PC successfully enterprise the start have the recovery stabilize ramp fiscal our of product the XXXX. high As as market. year. in anticipate quarter for through client, growth the season. for continued seasonal are seeing quarter, primary qualifications for calendar supplement XXXX. full fourth Within

significantly year of mix a enterprise fiscal now comprise overall XXXX, We at previously than shipments SSD our in over our to anticipated. on pace faster growing XX% portfolio expect

our profitability market demand capital the remaining disciplined Our enterprise overall and view high-value remains bid balance most of as committed improving to supply allocation and across markets, maintain to our a positive proactive by spending SSDs. we through flash increasing exposure end

revenue the nearline record to tailwinds. our our and In capitalize on market data of HDD. portfolio strength we the ongoing achieved center, quarter, reflecting efforts to in fiscal Turning first

our where their to growth. in improve and largest with seamlessly working operating on X address environment customers To supply agreement cycle, to sustainable a an exceeds customers supports are supply. business profitable management our proactive we We visibility for needs strategy our are demand that operations with with predictable into future quarter our aligning X- our products this,

allows profitability. This to only long-term volatility improving customers our not but better mitigate serve also us our while structurally visibility through-cycle

hard showcasing and qualifications increasing commercially products' available capabilities see UltraSMR quarters Ultra compelling with drives, our strong our In of SMR fiscal with terabyte a our and the technology, On front, the second XX marking disks. these and Developed coming adoption UltraSMR drives XX-terabyte ramp our and world's portfolio to expect time-tested customer the we our in in the first XX to we launched profitability. delivering technologies, TCO and benefits. customers CMR improving ePMR confidence we quarter, complete reliable products technology and

HDD the to Turning outlook.

continues to continued undergo portfolio. nearline data UltraSMR The particularly quarter, across center second is of our momentum a expanding to As among in drive we structural transformation. growth head into HDD anticipate the fiscal Adoption our positive customers. line we cloud business product

as to midst Our revenue our product industry emergence earnings of record cost operational balanced a potential. delivering innovative establishing AI's strong into line, well driver in industry. demand, drive pivotal approach structure thoughtful on visibility for especially product and supply-demand continue our leadership future most a commercializing excellence, dynamic, and focus maintaining to to the improved the through commitment while profitable And the efficient are our long-term positioned technologies, growth portfolio we us UltraSMR enabled another a has with to

results. call first Let turn who me will the to discuss Wissam, now over quarter our fiscal

Wissam Jabre

was margin Western share year-over-year. of and delivered Digital afternoon, revenue earnings David, and above Non-GAAP great In earnings good billion, XX% $X.X gross per quarter, fiscal the quarter guidance up range. per for the first you, and X% with Total $X.XX. everyone. the the results Thank share midpoint was sequentially

up sequentially and at bit Looking in by enterprise markets, to On revenue flat Cloud end Client billion, SSD a than X% up more sequentially XX% increases doubling center year-over-year. XX% shipments customers. sequential data year-over-year of the and were total driven HDD billion, year-over-year. $X.X represented revenue represented of at at basis, total nearline shipments and XX% higher $X.X and

bit revenue Flash softer increase partially in bit bit due Flash HDD in gaming and ASPs HDD. growth Flash decline Year-over-year, slight decrease was a both flat decline revenue shipments in an higher quarter, by flash last declined offset of mobile Year-over-year, to revenue. offset flash the lower by billion a X% OEM, a HDD while as growth in represented was was to and pricing was flat. year-over-year. Sequentially, Compared lower by offset PC and primarily Consumer revenue by offset shipments, to in down partially and HDD $X.X demand. XX% due sequentially at consumer in was driven and HDD improved shipment

$X.X last was to quarter, the revenue X% XX% from year-over-year. quarter segment. fiscal billion, Flash revenue Turning up now by In first and

data SSD enterprise for drove Continued in recovery strong demand center products.

HDD year. XX% the down nearline in on previous Sequentially, Strong decreased on a Sequentially, like-for-like XX% XX% performance sequentially Flash a increased ASPs revenue and shipments. XX% to up were XX% blended was and up exabyte basis, and quarter from the to X% HDD a compared $X.X in billion, basis. last Bit shipments led year-over-year. portfolio increase X%

On level the record to quarter exabytes, quarter shipments unit compared increased of a first XX% XXX% XXX XXXX. year-over-year at XX% of a average and price XXX% previous total Nearline HDD per increased to shipments basis, bit $XXX. the were up from exabyte and fiscal

the of income Moving the to statement. rest

and demand related XX.X%, end my as the to basis Gross mix structure, XX.X%, focus on in HDD, continued to range. cost of enterprise basis XXX mix, strong manufacturing pricing gross note, the well first improvement points margin cost resulting margin was Flash higher of XXX was and expansion, fiscal SSD better unless efficient margin for points continued sequentially. due increased gross stated at for reduction. of a will operations be non-GAAP up margin pricing up margin bits the higher sequentially, XX.X%, by comments Please improved drives and guidance results driven nearline as continued cost XXX like-for-like Gross otherwise. which reduction. basis sequentially was have points driven quarter In in

our the operate changed We structurally way we have businesses.

the demonstrate discipline Operating XX% Flash $XXX our spending. the and execution million, gross million, above income has enabled down making long-term us on with in sequentially disciplined up $XXX synergies strong continued $X focus results ranges was portfolio, cost Combined of margins both target separation this gross These Operating plans. including to driven generate and HDD. on margins while sequentially, were expenses by the million. our progress of better to product business

previously Income achieved per years the revenue flows IRS million, along rate for was settlement was an repatriation, payments a fiscal payments. cash installment up tax $XX cash for margin was free the Operating which first was was flow expense at tax Operating $XX free million. higher in was and share million, cash level. effective company's of XXX included basis X the with was flow of quarter XX.X%. and Operating tax points XX.X%, $X.XX. and $XXX million is and $XXX sequentially, Earnings highest outflow

days. and by plant with statement, at of revolver flash and capacity property, of Cash of sequentially the to Flash on billion A represented the cash debt total offset of inventory activity $X.X a related HDD ventures equivalents than billion. was equipment by in first cash cash to quarter X days end capital Cash Fiscal of $X.X first inventory inventory billion, was include declining liquidity million. more $X.X inventory. flow $X.X quarter. outstanding to expenditures, billion, billion, and which an days Gross XXX the increase fiscal were purchase joint $X.X and increased undrawn in was outflow decrease the $XX including

to turn and expect the venture previously After joint Shanghai between shipment drive Flash, the now of to ramp the quarter's increases fiscal HDD be In to revenue XX% of and on interest consumer sale I'll completed guidance. the to in quarter China demand we flow. quarter, both SSD JCET. second JCET. bit and percentage of first the the anticipate fiscal equity Semiconductor of points. Proceeds sale SanDisk mid-single-digit cash SanDisk enterprise non-GAAP We reflected products close grow forming Thereby fiscal a we in will from of second in sequential basis. Flash the a seasonality announced

be XX%. range to anticipate $X.X HDD, billion between margin we to XX% in expect is Gross of the to In revenue continued portfolio. We product the and be growth billion. $X.X nearline in momentum expected

progress operating approximately slightly $XXX million make range $XXX and to anticipated million to million, the of are million. separation expect expenses the executing other a Interest We costs of $XX to including business be to on as to million $XXX expenses synergy we to plans. $XX increase continue

XX% XX%. Tax between rate be and expected is to

We expect on shares EPS to $X.XX based approximately outstanding. million XXX $X.XX of

to our David. committed over while higher executing in shown call to we making discipline remain As our progress back driving guidance, profitability cost I'll business, business the plans. now great towards completion our separation the turn and of

David Goeckeler

Thanks, Wissam.

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

this on results to strategic a initiatives. for optimize to the are quarter term our Our execute our testament business long our and efforts

and our the and with ahead our in proliferation HDD by the data map each We cycle. are AI that road are continued confident Flash the especially businesses. opportunities excited across significant product present, both of

work our and As continue deliver business and our in completion innovative plans, towards drive separation customers. ability to we we our confident shareholder to products compelling the value to the of most are long-term

Let's begin the Q&A.

Operator

Instructions] [Operator

comes question Fitzgerald. from C.J. with first today our Cantor And Muse

Christopher Muse

first mix SSD of part question, your is important enterprise the you raised guess, I a I XX%, as which pretty of think inflection.

your and in hoping could of incremental would I with more particular, kind system. about of qualifications rack So that And business great. NVIDIA's around any was would GBXXX to quantify to the recently NVLXX way hear the to how the love dollars announced ramp If you to to think magnitude you've speak be seen. qualification there's

David Goeckeler

reference question. feel this, X about all drive the for for or those so qualified really Yes, good that that what have product. quarter we've a the That's be product talked, to Thanks good that their Gen go compute think, focused those NVIDIA for now products about and in where as in to in we I was allows are as a more conversations folks the customers PCIe portfolio market. broadly architecture we our to the us position building by

have also of a with deep one large well. product on hyperscalers that engagement as well, a We couple very --

got So to the we've point, in of confidence your the more portfolio. growth

for news And nice bits SSDs. it's don't very where the the range. when more we -- XX% now XX%, we said, it the would And fiscal around a we that. I we add to new into environment. That's of mix we that's play last to can this have as enterprise It's our portfolio you when think demand good year, all in having quarter expect conversation, thought and at were end up be the XX% it we're of

qualifications going the we the up, of last number keep demand So doubled quarter. in

the again, it's with focused we SSDs, the good. XX XX the and also with put selling cycle doing the portfolio high compute and lake capacity well well. the we terabytes. the data So traction hyperscalers that all traditional out were SSDs is are both And there, align data It's AI to then the focused for products

time. been working just on something quite So is I think for that portfolio we've some

portfolio. of we we with know, it before you the qualified As got downturn, came out better a

I think job. a we good really did

we're the downturn of did focused that. products staying the Teams a job results building stronger a those throughout building on great and seeing portfolio and of now

Christopher Muse

guess quarter visibility of negotiation kind I do X talked have and is pricing now Very to X within pricing And helpful. visibility, of the transformation And how would quick to business? a follow-up, construct, the of customer ongoing Drive perhaps beyond you around industry quarters hear love today that HDD for you X evolving. as the in

David Goeckeler

Sure.

long for in you gotten we point this said, as balance talk think very, the the industry traction. on fantastic Well, business supply-demand against let's just the better to took of time about for I get business a we think first we've coming matched the and based our where downturn, a actions have out to that that portfolio I very our time. continues

talked a it the We about lot script. in

go you Our mean of at is technology traction of that that capacity bit drive have deploy. get to implement every scale. I every with the you work XX% a to once getting good it technology, UltraSMR quite you on that very adopted drive customers additional really the

the several and the official quickly gives expect the and deploying very it next customers hyperscaler, now to third over we we to those a keep had recently, quarters. ramp qualification reason just pretty them very drives, So good get

visibility, great us those more integrated. both get So predictability is business. visibility vertically things into we're a to More the of more where allow always on business

TCO a it terabyte And customers, drives and that CMR, product participate pricing for equation it get our just down better the to delivering does And about is It's years a give us XX that that also monetize We said about in TCO. launched for we XX-terabyte we that better developed. -- I've now, drive. a product. R&D many all UltraSMR we deliver

So dynamics pricing go we and ramp 'XX. that will as we And do we to margin as to better expect the business. through that, that bring

Operator

And Morgan Moore Joe from our next of Stanley. today question comes

Joseph Moore

I the to want just towards companies. I the make understand steps sure separating

kind talked soft of to having prepared about You spin.

during file that cause -- the So you're X March you'll the later? And separate come kind what point the at of numbers some going to are report, for December goes assuming be able Is have XX quarter. sets anything the to that that And of that could to you'll quarter. well, the that, Form plan?

David Goeckeler

Yes.

me it's you different described. Let walk than little Joe, because that, through a

-- which So Digital, spin the means will we're Western stage, we're company in the we as running soft still right?

company. separated one stacks systems into There's all of systems. X basically the we've scenes, behind But the

So send us they a kinds if different into those X now, vendor to those, for ID and They of have of X orders Flash have want for different go systems. HDD different example, issues. they customers sets because for us orders to of all send

teams ship own through that of build the enterprise. those are products they manage different those as process to the products, go flow logging systems business Our to the into to

what want is full work we're confidence this the essentially to the great, systems we'll mode in scenes. doing we were do basis go Now soft we of all spin. we this actually That's a for do of ourselves those because then quarter things and quarterly do a and financial through quarter on full give to go monthly we'll the both is that spin, so Digital. what called execute behind running we're We're the Western do -- a will doing both. -- in And

now business quarter. this we So full in execute for expect form the we second the what -- is will to do

only only We Digital. it do doing we Digital. could of time. this confidence Western companies. issue the all scenes as numbers set work Western we're December to for quarter for did behind Digital will We separate as one close X guide We the But Western build that X

next, -- Sometime XX would flip say, I Form we'll make public. a to in couple we'll the the months, of

could authorities. with and on all basically with We're going in that books, the through then activities can we'll businesses financing in that that, we the we move we so once appropriate confidence Once for start we financing place -- distribution. public that actual get so final of both close to phases get get the it then done, we we the make

way that's will So it work. the

all to do. lot So we It's a of that, track. on got work cut through

happening should earnings call do You time think the about we this an quarter. around the December would for

Joseph Moore

guess the like And Great. of I from get that. resolve investors this of lot partner, questions and in our wake that the are things to event-driven I about of things a JV with more happening types do

your So just kind could happen getting -- out this just focused discretion? any of of are that you you chance maybe this state how if impediments? doesn't done, not Any from

David Goeckeler

We're this, Joe. very on focused getting -- John

you down As we a knew thing strategic path. of went do. outcome We last this it big know, was review started announced of we thorough a that and XX year, to through we the October

is results review -- or the is the We're not the we're for not time this cycle of else. the But shareholders. strategic right our to trying answer anything

ability independent but about expeditiously done to and our in in driving as plan will that's we're -- happen as when can. forward future, get I perspective, building we're to. companies, this with ready. to we we're this move And the everything to it's that what we predict can't from So all that's the to driving execute confidence

Operator

next Paribas. comes Our Karl Ackerman of question from BNP

Karl Ackerman

if I have two, I may.

SMR, Or a and that of that in is expand that about third asked coming heads you how question, have qualified disk existing reported drives. in off, as exabytes just hyperscaler the hard do XXX. statement? is you And room hard I you offering? it record your of spoke a ramp and drives First will for XX you media quarters. facilities Is your for address Dave, that and less if just capacity to TB broad much

David Goeckeler

once getting most they start general, dense think they a without deploying. general go the can in specifics customer, want -- particular drive with into I to on think there's customers any I most

XX terabyte drive So we will quickly. customers that to pretty expect move the

-- out can for I I be their some It's here. product this strategy, the Again, time. is playing technology. the really think been understand Customers is These environment drives quickly. well qualified think, very quite

up base about architecture and now move talking quickly. technology I'm the drives ePMR we we the So these have base and in can capacity

general, possible. deploy So to drive customers in densest the want

XXs of they media, question start and the -- we'll expect density through to exabytes our once we capacity satisfy our mean, we we they the going a think is get market, more capacity heads drive being first by infrastructure We say, we for as sized So increase 'XX. talk qualifications, through really deployed, unit. about for is. then don't move and units going we're number your I as innovation let's On continuing to what to and on per

in happen that way time just assembly that support move get head test capacity level right. through all the really drive. was big the capacity seeing and of And You're real to a we as got launched we've in to a and capacity. it new downturn And the media that and

sure typically more some about that or capacity the our predictable that of a to aligned -- typical visibility cycles. to what costs business and more then, so can want planning we've more volatility try not sure make we We maybe their our what visibility big that's not that real demand so to customers the talk cycles, we are we from talk make is -- get is dampen -- ingestion that get got plans control. demand. the digestion big the -- anymore, hopefully into want any we and keep and of customer key our then and focus and that can under is And Karl, And we

Operator

And today Fargo. Wells Rakers Aaron from comes with our next question

Aaron Rakers

you And X to peak density remind there in Karl's X way we my cost separately can expansion how capacity? follow-up to is the you're should going frame operating just shipping appreciate any I then of levels, this to starting technology math how prior how close first new carrying -- right, entities back your being a nearline quickly into period, now I quarter can do the kind driver. a I'd there. may as What October situation just see be company of clearly key question question you guide a the are as is into be structures? XX% well. guess you stick Or again you I'll where us to as question, will bit above factored to dissynergies. you X about couple bring December And capacity think kind your quarters? to could does like foreseeable little love much over But aerial dig -- is next is it on and constrained deeper if Karl's of a of

Wissam Jabre

start me Aaron. of let the question, the part with So first

on dissynergies. I was think your question

approximately, say, other So OpEx to X In the quarter current expenses. And operating the there is of take $XX businesses. to roughly $XX XX-XX XXX midpoint time, -- million, OpEx split announced, sorry, as had assumed the said million. let's in words, million I we There we the be the of to percent XX% roughly guide. in these million last this we operating guide, $XX synergies dissynergies first are is -- approximately includes the not -- assumed $X midpoint that of in back. in OpEx XX% between the that is Basically,

guide. this is the so And in what's

each steady anticipate equally million state in steady the hasn't divided let's changed be we what roughly this to point, $XX and would In by the state, range we of it at the say, from would at terms say, discussed last I be businesses. where the, quarter of

it So quarter. for minus million. it's that's beyond should million, $XX around how this of But we $X or quarter, plus think this

know, respect capacity, Maybe our as that David I'll I'll manufacturing and making for start of comments driving chime second really the Maybe in. along, the And to is With supply-demand business, in maintaining drive profitability. focus hard for balance all part some question, our ask on said don't business. David. your the to I we've

if place implementation build-to-order, we where we're to -- we -- and capacity footprint. our now, for from good of things capacity a stand we us the see expand that from customers know, getting we need perspective, from good add. few from think And manufacturing and we a we're the visibility don't with have David, manufacturing we our think a so as don't or I a had to capacity the you in

David Goeckeler

I you that's mean, in I quarters, closely. No, I about think Aaron. or look X I last the think pretty shipped right, it's we've X way at all the look, this the at if mean, converged least capacity units

not of a some units. less down that X than lot million goes there's in So It variability number. like and up

of an long for But industry of pretty not a units, hundreds that shipped tight that's ago, and window. that hundreds millions

that going going be start hard shows wafer, way what's thinking a year build a the about we a a think drive now? up it's is we're to capacity wafer I our to hard takes this what drive. no before in a demand we is wafer, year for to be from year It matter once a once heads a start

everything about to continue and them, about visibility, X question that's we'll get and between at have and we're is really is to thinking planned, as through point. right to the year at capacity and we going look X what what different over understand So direction. of it's that about the plus, next develop is that, quarters more in if And be we'll start the visibility and that for than now process a capacity right? conviction like think And something demand going are we talked looking We we going then how working we demand about what with our customers to them. from are what year working new is

cost our in in in -- don't to kind want better system. capacity want -- We we we before there's about that cycle look chain to to like But the business more what flow we start still adding that is of too. underutilization more predictable script, work to time going into do the understand of frame don't -- want supply I that, charges. We wants through talked dynamics back

So on thinking a about bit little that's I'm it. how just

Operator

Our UBS. from with Timothy Arcuri Instructions] today question next [Operator comes

Timothy Arcuri

They higher. talk HDD about the bookings you mean going they Can I pricing capacity. talking about see you adding not side? just on and Seagate see

is Are about And can't agreement So that why that make it need sort I to they now? certainly you cycle build would can orders be stuff Can that's shadow when I these X the shadow cycle the mean? much, times to all the what so to they'd talk in get you place this just talk what memory. orders not year it? works understand longer. they a that? hook that? But they sure quarter just often you on X how about from take-or-pay place take they here are much that of mean

David Goeckeler

Tim, say this long mean something that evolving, This business industry transacted is would wasn't that new. quarter. I is the Yes. while right? an I industry ago the every is

asking we're is. their visibility more understanding So what demand customers

particularly that that visibility thought it. this into much franchise getting about haven't way and They

they're So with each yank around -- big unnecessarily. hyperscalers, very other especially big very, big and to Nobody like the relationships, relationships. wants

I market, visibility don't all want that think have going market. but short to how supply much build don't as also our to it's don't that we possible we basically So it's the We we in as interest into used. best to the be to want have of capacity so can visibility

going visibility not it's into is their and point, how about thinking what this pay. infrastructure kind they're just a It's be. demand getting about at of their take So or to

our through to then clearly, and partners process visibility I people give with we through that can And the the how that we're have say I we we're unit know can right perspective allocate aligned that them. going that working to customers So from right And kind now. supply a ability process we us, of demand. future And produce going we're just now. would it's get mean, more to their much supply the

we're -- industry, everybody very it's this kind we think, in for involved. positive walking So changing a the and way of to

Operator

from next with And Wamsi our question of today Bank America. comes Mohan

Wamsi Mohan

Your How guidance too. tick of think in just and that? drive at through of midpoint Can course our as think should higher help the mass the platter drivers with margins fiscal launched go you just down scale 'XX? you sequentially. us through obviously a you of XXth capacity slight margins And the that gross we

David Goeckeler

Yes.

opportunity start the new will couple quarters. that Wamsi, to not higher. just drive start another introduce product. margin deployment you products, to as it's have launched got we qualification, for We So right, just so going It for we of new a it

So the basically Q-to-Q. we're see going margins HDD to business, flat in

little the to cost see you in the get a given we'll they the increase by a usually the -- expenses would just little a quarter Flash, little going XX% driven are what model up be way on have we for what some bit are flowing. cost bit a from year-over-year. next down guys We're quarter down a

work. to way I help should think understand going are that margins So you the the

Operator

from our comes JPMorgan. question And with L. today Harlan next Sur

Harlan Sur

metrics? the the And us of XX% of So view SSD on great. on can a give I mix. think their in, it you enterprise like performance? now about Is specs really right? of about September high-capacity your was accelerated bit competitiveness think for technology? your Flash it's has Looks here. looks XX%, AI clarity then set revenues, taken of quarter, June according quarter, enterprise have quality that it drivers in on better up I targeted reliability, is stepped really to controller X%, my What firmware? team to XXX-terabyte your but XX-terabyte, it here X% would color while, Flash on platforms it biggest right, there's rev, about be it been think calculations, up some Is Like I your total AI. the like compute recent clusters, on these that the the SSD, But tie any Is strong to

Wissam Jabre

Yes.

SSD part with of the in in we're as respect earlier mix, his that to Flash the comments the start first and be to mentioned of -- an me the expect a we the would we XX%. in XX% exceeded with his bit And that enterprise we've QX, With Harlan. where enterprise a basically little from business David the Let the as bit as are for a XX% total of of a between year, percent mix. mix for SSD question,

David Goeckeler

us going the lower we helps about die talked now. lot. all die that said in good the technology. it, have we've -- NAND quite of get there because you road the build of mean And something the part, front of on X-terabit higher-density built. very underlying SSDs that The forward, the We've as downturn, technology I great you got still that always And getting our on Harlan, right we right. right? focused about and we that. stayed that as controllers So a mean, during BiCS And to feel got map it's kind -- we future. competitive got enterprise not the in I well BiCSX number but is had We're density. We've the yet, I controller about we

of since about X getting last it all focused stayed we And over years here. it very it's X, got aligned. I the So

model, those think market. then and I feel investments very the we how the about a was big the drive this to what This stay some emerge. we We again, that a into we products more back focused -- products hitting of unit can we're we're right sure make good going make of, got and with we're right for to make about still deliver stay should the trajectory. sure AI deliver products -- cycle work top on the a the programs business do, the right -- -- general to we're on portfolio but at, feel to right the built, data that good at where the those all kind structured be projects the in where time it's bringing company focus manager of and highest ROI we And

Operator

Cowen. And our from TD today Krish next Sankar comes with question

Sreekrishnan Sankarnarayanan

said revenue Dave, shipment when grow, while should should up December quarter, mid-single flash digits. at I look be you bit

asking while is strong, The the that are for non-eSSD ASPs? So points good. eSSD keep I'm does mean is hearing you what reason not data it

think about how those how hard you I that's and March March? both to why in for about ASP. aspect may Flash wondering both segments seasonality And for there think if quarter extrapolate, some So do I'm drives, is given

David Goeckeler

just it The lot of big Krish, -- is a Flash I market got have has and PC soft. in just bit little again, the restocked you replenished you've market. They're There's mean, to way a and you The Yes. business got the question. your building it. there, market not think I framed those so submarkets been of inside with at point some is demand same a inventory customers consumer smartphone, this inventory.

of kind And got enterprise SSD. dynamic. very on other of side it, you've that you've So strong got then very, the

enterprise we stronger, well-understood throughout Now but topic. we those we detail, be when SSD pricing which basis, think go recover you at expect where sequential as 'XX, it is to But look in can through we expect strong. about of margins. And cost go then I we stay we basically year smartphone get more at little -- -- you that very talk on you the and that's in bit little to PC a as expect sequential markets decline you're a and blended a looking a flat bit headwind of and

we especially to through But and I on Going quarter. next -- say some it be seasonality it's a more we'll this get There the move seasonality as hit. quarter. about the about But talk March little quarter. headwinds the again, have to would quarter time you early into right seasonality some that there. got to might going March

Operator

Amit question Evercore. our And next from Daryanani comes with today

Amit Daryanani

that getting Wissam, understand. Anything CapEx of the sitting piling not deployed that that that inventory you confidence -- HDD the the helpful. customers? XXX if just XXX in of would up be front expectations the used for just up by Is And is HDD actually gives to Flash get David, do this your not guess, how you is then see this metrics for your actually to touch shipment exabyte any confidence on on and year, you really there inventory that rest on and the you be I getting would go potentially. -- this side, helpful I versus back internally as

David Goeckeler

off inventory the the of still players, deep don't big of to We very in lot we're like close downturn We're relationship. size these coming we're And very very, given cyclical the of out right? recovery coming deep, a of. the see customers, -- a Yes. from at we're

it, just think or their ordering inventory don't think excessive -- inventory So trying figure we being future is We meet to possible of best so or on we that give that the us any can to out happening. double demand what is the everybody there we can demand built is here sure they what best -- we and make is. integrity highest signal the do that

Wissam Jabre

we're -- is, respect Amit, with doing to about the for as And quarter. what talking we CapEx CapEx, last started quarter the the

quarters, our gross quarters. over I to the with less quarter, average this in last expect few CapEx more for line last the be So or the few

So there's no inflection. real

Operator

today with from question O'Malley Barclays. our Thomas comes next And

Thomas O'Malley

eSSD basis, favor just on not to a exact give just how traditional try an grows XX%, for you're I tailwind of the to that Obviously, year. saying help you nice you're ask Obviously, like-for-like describe versus but means? to just But is to the could help you benefit to the so from a pricing what that wanted going the portfolio. today the just that on business. give for that, quantify NAND side tailwind throughout XX% us away, beneficial

David Goeckeler

It's the portfolio. Yes. accretive to

Let's put starting And good point. that that's way. a it

of one the be to tends if in markets It the business. Flash that. knew probably You best better, not the price

So the to it a tailwind nice provides portfolio.

Operator

from Srinivas Raymond question Pajjuri next with comes James. our today And

Srinivas Pajjuri

Flash a looking previous X%. a I'm on to blended X% it's follow down on the like-for-like basis, just David, question. ASPs up basis. at But only your to down being

counterintuitive the is somewhat because is worse seems ASP like-for-like. but blended it So than SSD growing, your actually mix

So just about that's to I we dynamics And SSD grows, think trying guess, why forward? case. the ASP how understand as blended those going to the as should

David Goeckeler

Yes.

little So I think it's said. even you than what a different

think down on blended was like-for-like. it X% down I Like-for-like for you said X%. up was

all So it's related. mix

story more story an SSD that more into in think emerging going mix Clearly, helps. for us. I as we we and were said mobile. enterprise mixing that's attendant into But we this quarter, an

you why that And so that's dynamic see there.

Operator

our Merchant from Capital. Lupe comes apologize. today And Asiya I question next with

next comes Our with question from Baruah Loop Ananda Capital.

Ananda Baruah

our I -- to on should about until helpful. we ask was memory then? know HAMR looks technology density loosely what road I talked next HAMR. up could refresh the road map years. aerial of But few about conventional until like kind That conventional you've actually, of kind tech like would your aerial be I think how wanted -- what just yes, you up map can you is Dave, density

David Goeckeler

time is changes limit a platter platters, people to form keep explore. you we probably material given thinner more thing us to factor, doing there and XX% can introduced getting area that example is, by think a just interesting but and One go, just time, long as very advances like we the XX was that. a that's an an you build as I things in Well, XXth drive, and for think thought that in the allow get put you good it XX And better. over I of science

evolving current HAMR an through XX that platform carry our the make XX. always story. it's be expect bridge to there. But to So the ability We're see driving to And that's now. we where terabytes from drive to XX introduced to we from that clearly to portfolio

excited got generation going you a They're still there's announced we've it are it. just another so We be it new quarter. here can in now, came or trying that. deployed. So product a get to going that to to this get it They want the qualified. but announce generation not just They to I'm have to the labs. about Customers generation X here into market go. assume right after

the are runway portfolio. reliability, performance, understand drives. those They're drives that of in quality infrastructure they're a straightforward the customers really now. And on -- the -- understand qualification their drives They they So quite got process. of it's we've a those understand bit the

market, to really we technology kind have it. kind of tailwinds made of fuel these feel decisions we've AI and good about the behind So now this

portfolio just in growth business the drive continue then think I is to and positioned to extraordinarily profitability. the well to continue drive increased

Operator

today Asiya Merchant from with next our And Citigroup. question comes

Asiya Merchant

the HDD side the on as the side in March March we and well, in the quarter then quarter, So HDDs, here of quarter, both the on continued just of HDD also bit some the strength understand ASP we typically just the that side, side. in given here seasonality some the strength should on seasonality seeing terms in on December in I you're here, expect Flash shipments terms strength see

David Goeckeler

point I Yes. little make are well. as HDD on at but mean to I assumption for that from it's where see to a bad think this the that's early don't March, we a side

Operator

Steven today question comes of Fox next our from And Fox Advisors.

Steven Fox

out I on you still imagine regular on. going was more provide efficiencies And utilization bit there's the could it as debottlenecking wondering business. you helps the you on changes, think if get color heads little the platters would of the a a mix manufacturing into I and basis HDD just side. also

on if So be thumb of rule a think helpful. about? little color would know any I more don't Or that we there's maybe can just

Wissam Jabre

mean drive of is obviously of manufacturing to like the et cost in terms the way process. cetera, many I supply as our of improving would at various sort of think programs reductions, yields, parts of as it which typically we have efficiency things well manufacturing

respect don't a I annual high with course, to mean, mid- to typical there's is we the course, it single-digit basis. as to but be capacity it probably move a point know another to fair will I But and how from That -- of improvements varies, way The the probably if think percentage we cost of still well. typical, getting X of assumption. an the will be on in

like not it's a new thing. So

Operator

with from And our Rakesh next question today comes Mizuho. Vijay

Vijay Rakesh

accretive it just but next had side, you the UltraSMR I it wondering on And current fairly what on question also terabyte. you like still quick are looks year, to next a able the just to for margin the like make it Just on the a year. think we side, disk, the with on portfolio? -- wondering looks XXth Are outlay the CapEx X.X Flash cash your This low year. how CapEx

David Goeckeler

the to down. customers. is our It drives TCO I Yes. a drive delivering XX-terabyte our a of UltraSMR us perfect mean drive example

up. we their it drive will profitability TCO drive down, as So our

so anxious tailwinds just will some like that drive deployed, provide business. our to get expect And that customers profitability to very and we're we are, the

Wissam Jabre

to view Yes. of sort continuing in And profitability say focused earlier, not quantitatively, CapEx, as mentioned the be is to would of business. with providing flash what the I we're respect longer-term on the I of a terms we're

year, look our at focus very, And fiscal down, when really low. drive is CapEx was cost so you very last our CapEx, but to

there. little it to higher So a we'd be bit from expect

Operator

question with final And our today comes from Wedbush. Bryson Matt

Matthew Bryson

have thought into constraints. the talked point. well you drives, up with being as capacity your higher seen one cloud know bit about the then was wondering would you've is And I greater there. there shipments mix as of just hard little would more stable production I benefit drive was have pricing quarter-over-quarter. relatively a I What the towards a

heard the past? drive they're as One hard we constraining us than being of sign rational the orders, in a session more take any telling a test, a things the factors should industry not in I've that that is adding as Paradigm is seeing that that test

David Goeckeler

good I look, think quarter. X single record that added we've was of pricing for did -- talking second been digits It clear. our I Yes. We've We number for this of good set mean, another think something we'll we what get very on our of frame, improvement capacity pricing, before map increase, HDD, if quarter X is, we're manufacturing part margin bit certain margin of with to in And can we production again enough then customers, kind to points means satisfy times quarters. ways that strong exabyte signals a go XX.X%, for see little we industry XX we like start of at. is On last get low in in going product a just that we to growth think over a I like-for-like again, the road the where a capacity, we're but from got pretty unit about that. X quarter what question, we've units. our the the and our the time

run. it's then a see little And quarter. So get more take here for products a we'll deployed, good breather as tailwinds maybe a been We'll new that. behind

behind So like voting is our then strongly this spot spot, They're because costs of adopted really frankly, our with in business being support teams awesome downturn, technology our And spot. that just dollars quite business an architecture just And is really feel driving. much by this that's the very we're balance. in the supply-demand getting did customers. great we in it's to a get their and during job right the the and a

to forward business, good driving look several it we over the next years. forward feel and the we about So

Operator

management concludes to Thank the final turn conference the you. remarks. for team to the like back I'd question-and-answer over any That session.

David Goeckeler

right, quarter. today. and care. great All in Thanks all the we talking the everyone. for to and really Take business appreciate look joining the I to you throughout forward questions, the interest

Operator

We This concludes you today's Thank thank call. for you. conference all joining.

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

Western Digital (WDC) 24 Oct 242025 Q1 Earnings call transcript