Western Digital Corporation · NASDAQ:WDC
Western Digital — Q2 2024 Earnings Presentation
24 slides from Western Digital's earnings presentation, Jan 25, 2024
Slide 1: Fiscal Second Quarter 2024 Financial Results
Fiscal Second Quarter 2024 Financial Results Western Digital January 25, 2024
Slide 2: Forward Looking Statements
2 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED 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
Slide 3: Fiscal Second Quarter Executive Summary
3 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Fiscal Second Quarter Executive Summary Financial Results1 • Revenue of $ 3.0B • Operating cash flow of $ (92)M • Non-GAAP EPS of $ (0.69) • Free cash flow of $ (176)M • Non-GAAP gross margin of 15.5% •
Slide 4: Revenue Trends by End Market
4 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Revenue Trends by End Market Cloud Client Consumer In billions In billions In billions $ 1.6 $ 1.6 $ 1.6 $ 1.2 $ 1.2 $ 1.2 $ 0.8 $ 0.8 $ 0.8 $ 0.4 $ 0.4 $ 0.4 $- $- $- Q2F23 Q3F23 Q4F23 Q1F24 Q2F24 Q2F2
Slide 5: Flash and Hard Drive Metrics
5 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Flash and Hard Drive Metrics Flash Revenue and Gross Margin Hard Drive Revenue and Gross Margin In billions In billions 30% 40% $ 2.0 $ 2.0 20% $ 1.6 $ 1.6 30% 10% $ 1.2 $ 1.2 20% 0% $ 0.8 $ 0.8 10% $ 0
Slide 6: Non-GAAP Financial Results
6 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Non-GAAP Financial Results ($ in millions, except for EPS) Q2 2023 Q1 2024 Q2 2024 QoQ YoY Revenue $ 3,107 $ 2,750 $ 3,032 up 10% down 2% Gross Margin % 17.4% 4.1% 15.5% up 11.4 ppt down 1.9 ppt Operati
Slide 7: Cash Flow Walk
7 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Cash Flow Walk In millions $ 59 $ 2,481 $ 566 $ 2,032 $ (92) $ (84) (1) (2) (3) Q1F24 Operating Cash Cash CapEx Net Debt & Other Q2F24 Cash & Cash Flow Capped Call Cash & Cash Equivalents Equivalents ▪
Slide 8: Fiscal Third Quarter Guidance
8 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Fiscal Third Quarter Guidance(1) GAAP Non-GAAP(2) Revenue ($ B) $ 3.20 - $ 3.40 $ 3.20 - $ 3.40 Gross Margin % 21.5% - 23.5% 22.0% - 24.0% Operating Expenses ($ M) $ 710 - $ 730 $ 600 - $ 620 Interest a
Slide 9: Joint Venture Operational Framework
9 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED 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 Digi
Slide 10: Capital Expenditure Framework
10 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Capital Expenditure Framework 1 2 3 Flash Cash Capital HDD CapEx Non-Fab Flash Ventures (1) Parent Loans(2) Expenditures CapEx 3 4 5 Flash Ventures Capital Flash Ventures Flash Ventures Flash Ventures
Slide 11: Gross Capital Expenditure Trends
11 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Gross Capital Expenditure Trends In billions $ 3.5 $ 3.0 $ 2.5 $ 1.0 $ 1.6 $ 2.0 $ 1.5 $ 1.9 $ 1.5 $ 1.4 $ 1.0 $ 2.0 $ 1.6 ~ $ 1.4 $ 1.2 $ 0.5 $ 0.8 $ 0.8 ~ $ - $ (0.3) $ (0.5) FY18 FY19 FY20 FY21 FY22
Slide 12: Appendix
12 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Appendix
Slide 13: Quarterly Fact Sheet
13 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Quarterly Fact Sheet In millions, except Average Selling Price (ASP), Q2F23 Q3F23 Q4F23 Q1F24 Q2F24 percentages, and working capital related metrics Revenue by End Market(1) Cloud $ 1,224 $ 1,205 $ 994
Slide 14: Quarterly Fact Sheet (continued)
14 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Quarterly Fact Sheet (continued) FOOTNOTES FORMULAS Days Sales Outstanding (DSO) = Accounts Receivable / (Revenue / # of days in quarter) Days Inventory Outstanding (DIO) = Inventories / (Cost of Reven
Slide 15: Potential Changes to Income Statement Layout & EPS
15 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Potential Changes to Income Statement Layout & EPS Convertible Preferred Stock (as of Q2F24) Convertible preferred stock liquidation preference 𝟏: $ 953M with a conversion price of $ 47.75 EPS equals…
Slide 16: Potential Changes to Income Statement Layout & EPS (cont.)
16 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Potential Changes to Income Statement Layout & EPS (cont.) Convertible Senior Notes + Capped Calls • Principal balance: $ 1,600M with a conversion price of $ 52.20 Financial reporting (diluted shares f
Slide 17: June 2023 Credit Agreement Amendments Summary
17 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED June 2023 Credit Agreement Amendments Summary1 • Modified the leverage ratio requirements applicable through Q4F25 (Figure 1). Figure 1: Credit Agreement Defined Leverage Ratio Quarter Ratio Quarter Ra
Slide 18: Debt Capital Structure
18 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Debt Capital Structure Current Cap Table Debt Maturity Profile (in billions) As of Over 85% of debt to mature All-in December in 2026 or later Rate Maturity 29, 2023 Rate1 (in millions) Convertible Deb
Slide 19: Credit Agreement Defined Leverage Ratio
19 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Credit Agreement Defined Leverage Ratio In millions; unaudited; trailing 12 months Q2F23 Q3F23 Q4F23 Q1F24 Q2F24 Net Loss $ (93) $ (690) $ (1,706) $ (2,418) $ (2,240) Income tax expense 565 371 146 92
Slide 20: GAAP to Non-GAAP Reconciliations
20 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED GAAP to Non-GAAP Reconciliations In millions; unaudited Q2F23 Q1F24 Q2F24 GAAP Gross Profit $ 528 $ 99 $ 492 Stock-based compensation expense 12 13 13 Amortization of acquired intangible assets — — 1 R
Slide 21: GAAP to Non-GAAP Reconciliations (cont'd)
21 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED GAAP to Non-GAAP Reconciliations (cont'd) In millions, except per share amounts; unaudited Q2F23 Q1F24 Q2F24 GAAP Net Loss $ (446) $ (685) $ (268) Stock-based compensation expense 86 77 72 Business sep
Slide 22: Supplemental Operating Segment Results
22 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED Supplemental Operating Segment Results In millions, except percentages; unaudited Q2F23 Q3F23 Q4F23 Q1F24 Q2F24 Net Revenue Flash $ 1,657 $ 1,307 $ 1,377 $ 1,556 $ 1,665 HDD 1,450 1,496 1,295 1,194 1,3
Slide 23: GAAP to Non-GAAP Reconciliations Footnotes
23 © 2024 WEST ERN DI G I T AL CO RPO RAT I O N O R I T S AF F I L I AT ES AL L RI G HT S RESERVED 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 g
Slide 24: Western Digital. Create What's Next
SN. Western Digital. Create What’s Next