Slide 1: Fiscal Second Quarter 2023 Financial Results
Fiscal Second Quarter 2023 Financial Results Western Digital January 31, 2023
Slide 2: Forward Looking Statements
2 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Forward Looking Statements SAFE HARBOR This presentation contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for the company’s bus
Slide 3: Fiscal Second Quarter Executive Summary
3 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Fiscal Second Quarter Executive Summary Financial Results • Revenue of $ 3.1B • Operating cash flow of $ 35M • Non-GAAP EPS of $ (0.42) • Free cash flow of $ (240)M • Non-GAAP gross margin of 17.4% • Cash
Slide 4: Revenue Trends by End Market
4 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Revenue Trends by End Market Cloud Client Consumer In billions In billions In billions $ 2.4 $ 2.4 $ 2.4 $ 2.0 $ 2.0 $ 2.0 $ 1.6 $ 1.6 $ 1.6 $ 1.2 $ 1.2 $ 1.2 $ 0.8 $ 0.8 $ 0.8 $ 0.4 $ 0.4 $ 0.4 $- $- $- Q
Slide 5: Flash and Hard Drive Metrics
5 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Flash and Hard Drive Metrics Flash Revenue and Gross Margin Hard Drive Revenue and Gross Margin In billions In billions $ 2.8 40% $ 2.8 40% $ 2.4 35% $ 2.4 35% 30% 30% $ 2.0 $ 2.0 25% 25% $ 1.6 $ 1.6 20% 2
Slide 6: Non-GAAP Financial Results
6 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Non-GAAP Financial Results ($ in millions, except for EPS) Q2 2022 Q1 2023 Q2 2023 QoQ YoY Revenue $ 4,833 $ 3,736 $ 3,107 down 17% down 36% Gross Margin % 33.6% 26.7% 17.4% down 9.3 ppt down 16.2 ppt Oper
Slide 7: Cash Flow Walk
7 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Cash Flow Walk In millions $ 2,049 $ 35 $ 1,871 $ (275) $ 62 (1) (2) Q1F23 Operating Cash Cash CapEx Other Q2F23 Cash & Cash Flow Cash & Cash Equivalents Equivalents ▪ Strong liquidity position of $ 4.12 b
Slide 8: Fiscal Third Quarter Guidance
8 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Fiscal Third Quarter Guidance(1) GAAP Non-GAAP(2) Revenue ($ B) $ 2.60 - $ 2.80 $ 2.60 - $ 2.80 Gross Margin % 8.4% - 10.5% 9.0% - 11.0% Operating Expenses ($ M) $ 710 - $ 730 $ 600 - $ 620 Interest and Ot
Slide 9: Joint Venture Operational Framework
9 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Joint Venture Operational Framework For more information on Flash Ventures, please visit investor.wdc.com for a recently published Flash Ventures presentation. Flash Ventures 49.9% Owned by Western Digital
Slide 10: Capital Expenditure Framework
10 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Capital Expenditure Framework 1 2 3 Flash Cash Capital HDD CapEx Non-Fab Flash Ventures Expenditures(1) CapEx Parent Loans(2) 3 4 5 Flash Ventures Capital Flash Ventures Flash Ventures Flash Ventures Leas
Slide 11: Gross Capital Expenditure Trends
11 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Gross Capital Expenditure Trends In billions $ 3.5 $ 3.0 $ 2.5 $ 1.6 $ 2.0 $ 1.0 $ 1.5 $ 1.9 $ 1.4 $ 1.5 ~ $ 1.0 $ 2.0 $ 1.6 ~ $ 1.4 $ 1.2 $ 0.5 $ 0.8 ~ $ 0.9 $ 0.0 -$ 0.3 -$ 0.5 (1) FY18 FY19 FY20 FY21 F
Slide 12: Capital Allocation Framework
12 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Capital Allocation Framework Highest Priority Reinvestment in the Strategically reinvest to drive innovation Company Reduce Leverage Target 1.0x – 3.25x Debt-to-EBITDA Shareholder Return Dividend Share Co
Slide 13: Appendix
13 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Appendix
Slide 14: Quarterly Fact Sheet
14 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Quarterly Fact Sheet In millions, except Average Selling Price (ASP), Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 percentages, and working capital related metrics Revenue by End Market(1) Cloud $ 1,920 $ 1,774 $ 2,098
Slide 15: Quarterly Fact Sheet (continued)
15 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Quarterly Fact Sheet (continued) FOOTNOTES FORMULAS Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / # of days in quarter) Days Inventory Outstanding (DIO) = Inventories / (Cost of Revenue
Slide 16: Debt Capital Structure
16 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Debt Capital Structure Current Cap Table Debt Maturity Profile (in billions) As of All-in December Over 80% of debt to mature Rate Maturity 30, 2022 in 2026 or later Rate1 (in millions) Convertible Debt D
Slide 17: Credit Agreement Defined Leverage Ratio
17 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Net Income (Loss) $ 1,993 $ 1,821 $ 1,500 $ 917 $ (93) Income tax expense 202 387 623 586 5
Slide 18: GAAP to Non-GAAP Reconciliations
18 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D GAAP to Non-GAAP Reconciliations In millions; unaudited Q2F22 Q4F22 Q1F23 Q2F23 GAAP Gross Profit $ 1,583 $ 1,445 $ 981 $ 528 Stock-based compensation expense 14 12 14 12 Amortization of acquired intangib
Slide 19: GAAP to Non-GAAP Reconciliations (cont'd)
19 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D GAAP to Non-GAAP Reconciliations(cont'd) In millions, except per share amounts; unaudited Q2F22 Q1F23 Q2F23 GAAP Net Income (loss) $ 564 $ 27 $ (446) Stock-based compensation expense 87 86 86 Amortization
Slide 20: Supplemental Operating Segment Results
20 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D Supplemental Operating Segment Results In millions, except percentages; unaudited Q2F22 Q3F22 Q4F22 Q1F23 Q2F23 Net Revenue Flash $ 2,620 $ 2,243 $ 2,400 $ 1,722 $ 1,657 HDD 2,213 2,138 2,128 2,014 1,450
Slide 21: GAAP to Non-GAAP Reconciliations
21 © 2023 W EST ERN DIG IT AL CO RPO R AT IO N O R IT S AFFILI AT E S ALL RIG HT S RESE R V E D GAAP to Non-GAAP Reconciliations FOOTNOTES This presentation contains the following financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”): Non-GAAP gros
Slide 22: Western Digital. Create What's Next
SN. Western Digital. Create What’s Next