2533150d4a5348ca69f741ecc24a6c047b1ec096c577e5c70dcf834efcca5e53

Flash

Cloud

Client

Consumer

Client Devices

Data Center Devices & Solutions

Client Solutions

- Enterprise SSDs

Total Revenue

e8b48a0063a8f6dbb115962b2cdd9f19418644de1ebc8118b1242978025c1201

Western Digital Corporation (WDC) is a leading developer, manufacturer, and provider of data storage devices and solutions, utilizing both hard disk drives (HDD) and NAND flash technologies. The company serves three primary end markets: Cloud, Client, and Consumer, offering products tailored for public or private cloud environments, original equipment manufacturers, and retail consumers **[0000106040-24-000022_wdc-20240329.htm:7]** **[0000106040-24-000014_wdc-20231229.htm:7]** **[0000106040-24-000031_wdc-20240628.htm:85]** **[0000106040-24-000031_wdc-20240628.htm:5]**. WDC operates under two main reportable segments, Flash and HDD, which significantly contribute to its overall financial performance **[0000106040-24-000031_wdc-20240628.htm:97]** **[0000106040-24-000026_a4ex991-pressreleaseq424.htm:7]**. The company's revenue is geographically diversified, with major contributions from the United States, China, and other regions **[0000106040-24-000031_wdc-20240628.htm:98]** **[0000106040-24-000022_wdc-20240329.htm:10]**.

1. **Flash** - Develops and provides NAND flash-based storage solutions for various applications, including personal computers, mobile devices, gaming, and automotive industries.
2. **HDD** - Manufactures and supplies hard disk drive storage solutions, catering to enterprise customers and cloud environments, as well as OEMs and channel customers.

80f986050e51893b8e7f934858f4253e0f95e422f0dd233c414a233405309481

| Geographical Segment | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Asia** (USD million) | **1,837**  **[0000106040-24-000040_wdc-20240927.htm:9]**  | **3,037**  **[0000106040-24-000031_wdc-20240628.htm:97]**  | **1,740**  **[0000106040-24-000022_wdc-20240329.htm:10]** **[0000106040-24-000022_wdc-20240329.htm:37]**  | **1,699**  **[0000106040-24-000014_wdc-20231229.htm:10]**  | **1,551**  **[0000106040-23-000034_wdc-20230929.htm:28]**  | N/A | **1,353**  **[0000106040-23-000017_wdc-20230331.htm:10]**  | **1,494**  **[0000106040-23-000010_wdc-20221230.htm:33]**  |
| **Americas** (USD million) | **1,690**  **[0000106040-24-000040_wdc-20240927.htm:9]**  | **3,585**  **[0000106040-24-000031_wdc-20240628.htm:97]**  | **1,154**  **[0000106040-24-000022_wdc-20240329.htm:10]** **[0000106040-24-000022_wdc-20240329.htm:37]**  | **804**  **[0000106040-24-000014_wdc-20231229.htm:10]**  | **662**  **[0000106040-23-000034_wdc-20230929.htm:28]**  | N/A | **935**  **[0000106040-23-000017_wdc-20230331.htm:10]**  | **1,090**  **[0000106040-23-000010_wdc-20221230.htm:33]**  |
| **Europe, Middle East, and Africa** (USD million) | **568**  **[0000106040-24-000040_wdc-20240927.htm:9]**  | **2,130**  **[0000106040-24-000031_wdc-20240628.htm:97]**  | **563**  **[0000106040-24-000022_wdc-20240329.htm:10]** **[0000106040-24-000022_wdc-20240329.htm:37]**  | **529**  **[0000106040-24-000014_wdc-20231229.htm:10]**  | **537**  **[0000106040-23-000034_wdc-20230929.htm:28]**  | N/A | **515**  **[0000106040-23-000017_wdc-20230331.htm:10]**  | **523**  **[0000106040-23-000010_wdc-20221230.htm:33]**  |
| **Other** (USD million) | N/A | **386**  **[0000106040-24-000031_wdc-20240628.htm:97]**  | N/A | N/A | N/A | N/A | N/A | N/A |

7148a4a16d150f460070bb48a5f0c3ac96f4a476ecd58bf279b0f2f7cf97916b

Exabytes Sold for HDD (percentage)

Average Selling Price per Gigabyte for HDD (percentage)

Exabytes Sold for Flash (percentage)

Average Selling Price per Gigabyte for Flash (percentage)

Exabytes Sold for Cloud (percentage)

Average Selling Price per Gigabyte for Cloud (percentage)

Exabytes Sold for Client (percentage)

Average Selling Price per Gigabyte for Client (percentage)

Exabytes Sold for Consumer (percentage)

Average Selling Price per Gigabyte for Consumer (percentage)

954a69553e41cca73676768e29b1c322861f03ed95f8e1ffccea445f819eabef

Cloud Q2 2024

27d585539a9936f144d3ed7064edc9d84788f1731717a40c0e63f258cfa1e8a2

| Metric [USD Billion] | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Flash Revenue        | **1.884**  **[0000106040-24-000040_wdc-20240927.htm:30]**  | **1.8**  **[WDC_3395343_4]**  | **1.7**  **[WDC_3380793_4]**  | **1.665**  **[0000106040-24-000003_ex991-pressreleaseq224.htm:5]**  | **1.556**  **[0000106040-23-000034_wdc-20230929.htm:28]**  | **1.377**  **[0000106040-23-000020_ex991-pressreleaseq423.htm:6]**  | **1.307**  **[0000106040-23-000017_wdc-20230331.htm:35]**  | **1.657**  **[0000106040-23-000010_wdc-20221230.htm:9]**  |
| HDD Revenue          | **2.211**  **[0000106040-24-000040_wdc-20240927.htm:30]**  | **2.0**  **[WDC_3395343_4]**  | **1.8**  **[WDC_3380793_4]**  | **1.367**  **[0000106040-24-000003_ex991-pressreleaseq224.htm:5]**  | **1.194**  **[0000106040-23-000034_wdc-20230929.htm:28]**  | **1.295**  **[0000106040-23-000020_ex991-pressreleaseq423.htm:6]**  | **1.496**  **[0000106040-23-000017_wdc-20230331.htm:35]**  | **1.450**  **[0000106040-23-000010_wdc-20221230.htm:9]**  |
| Total Revenue        | **4.095**  **[0000106040-24-000040_wdc-20240927.htm:30]**  | **3.8**  **[WDC_3395343_4]**  | **3.46**  **[0000106040-24-000020_a4ex991-pressreleaseq324.htm:0]**  | **3.032**  **[0000106040-24-000003_ex991-pressreleaseq224.htm:5]**  | **2.75**  **[0000106040-23-000034_wdc-20230929.htm:28]**  | **2.672**  **[0000106040-23-000020_ex991-pressreleaseq423.htm:6]**  | **2.803**  **[0000106040-23-000017_wdc-20230331.htm:35]**  | **3.107**  **[0000106040-23-000010_wdc-20221230.htm:9]**  |

dd1d020608a191160949baab44f5f7e55dd99e4bf312898fdb1faa3d0d64b281

1. Given the increasing demand for HDD capacity, especially from cloud and AI applications, how is Western Digital addressing potential capacity constraints, and what specific measures are you taking to expand your manufacturing capacity for heads and media to meet future demand?  **[WDC_3403683_13]** **[WDC_3403683_11]** **[WDC_3403683_24]** 

2. With the shift towards longer-term agreements in your HDD business, how are you managing the risks of customers placing shadow orders or overbooking, and are there plans to implement take-or-pay agreements to ensure demand visibility and mitigate supply-demand imbalances?  **[WDC_3403683_13]** **[WDC_3403683_24]** 

3. As you progress with the separation of your Flash and HDD businesses, can you elaborate on the operational challenges and financial implications, including the anticipated increase in operating expenses due to synergy costs, and how this separation will enhance shareholder value in the long term?  **[WDC_3403683_6]** **[WDC_3403683_5]** **[WDC_3403683_1]** 

4. Despite achieving record HDD gross margins and the highest revenue levels in 11 quarters, HDD pricing remained relatively stable quarter-over-quarter; can you explain the factors influencing pricing dynamics and how sustainable is the current margin improvement amidst potential market volatility and competition?  **[WDC_3403683_3]** **[WDC_3403683_1]** **[WDC_3403683_24]** 

5. In your Flash business, you've highlighted ongoing weakness in consumer and client segments due to PC OEMs pushing out refresh cycles; what strategies are you implementing to mitigate these headwinds and drive growth in these challenged end markets?  **[WDC_3403683_1]** 

dd70e1e05814d360d01491f26737f7c28dfd56ebe980b59d87f79a6e60ec77da

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: Q2 2025
- **Guidance**:
  - **Revenue**: $4.2 billion to $4.4 billion  **[WDC_3403683_5]** .
  - **Gross Margin**: 37% to 39%  **[WDC_3403683_5]** .
  - **Operating Expenses**: $695 million to $715 million, including synergy costs of $25 million to $35 million  **[WDC_3403683_5]** .
  - **Interest and Other Expenses**: Approximately $110 million  **[WDC_3403683_5]** .
  - **Tax Rate**: 15% to 17%  **[WDC_3403683_5]** .
  - **Earnings Per Share (EPS)**: $1.75 to $2.05 based on approximately 357 million shares outstanding  **[WDC_3403683_5]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: Q1 2025
- **Guidance**:
  - **Revenue**: $4 billion to $4.2 billion  **[WDC_3395343_5]** .
  - **Gross Margin**: 37% to 39%  **[WDC_3395343_5]** .
  - **Operating Expenses**: $695 million to $715 million, including dis-synergy costs of $15 million to $25 million  **[WDC_3395343_5]** .
  - **Interest and Expenses**: Approximately $110 million  **[WDC_3395343_5]** .
  - **Tax Rate**: 15% to 17%  **[WDC_3395343_5]** .
  - **Earnings Per Share (EPS)**: $1.55 to $1.85 based on approximately 360 million shares outstanding  **[WDC_3395343_5]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024
- **Guidance**:
  - **Revenue**: $3.6 billion to $3.8 billion  **[WDC_3380793_5]** .
  - **Gross Margin**: 32% to 34%  **[WDC_3380793_5]** .
  - **Operating Expenses**: $670 million to $690 million  **[WDC_3380793_5]** .
  - **Interest and Other Expenses**: Approximately $105 million  **[WDC_3380793_5]** .
  - **Income Tax Expense**: $30 million to $40 million for the fiscal fourth quarter and $130 million to $140 million for fiscal year 2024  **[WDC_3380793_5]** .
  - **Earnings Per Share (EPS)**: $1.05, plus or minus $0.15, based on approximately 342 million shares outstanding  **[WDC_3380793_5]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024
- **Guidance**:
  - **Revenue**: $3.2 billion to $3.4 billion  **[WDC_3370834_5]** .
  - **Gross Margin**: 22% to 24%, including HDD underutilization charges of $30 million to $40 million  **[WDC_3370834_5]** .
  - **Operating Expenses**: $600 million to $620 million, with the increase driven by the reinstatement of certain incentive compensation programs  **[WDC_3370834_5]** .
  - **Interest and Other Expenses**: Approximately $95 million  **[WDC_3370834_5]** .
  - **Income Tax Expenses**: $20 million to $30 million for the fiscal third quarter and $80 million to $120 million for fiscal year 2024  **[WDC_3370834_5]** .
  - **Preferred Dividend**: $15 million  **[WDC_3370834_5]** .
  - **Earnings Per Share (EPS)**: $0.05, plus or minus $0.15, based on approximately 330 million shares outstanding  **[WDC_3370834_5]** .

cee0fb5186d72eff9c119d0f70163c90ba8089c87145ea5991ba324625c00d44

Asia

- China

- Hong Kong

- Rest of Asia

Americas

- United States

Europe, Middle East and Africa

Other

961c4e49c129fc184b55fbf89b80451846c2e0ef01f4ae74febebbd76436e206

### Quarterly guidance for Q2 2025:
- **Revenue**: $4.2 billion to $4.4 billion  **[WDC_3403683_5]**  (no change from prior guidance $4.2 billion to $4.4 billion   )  
- **Gross Margin**: 37% to 39%  **[WDC_3403683_5]**  (no change from 37% to 39%   )  
- **Operating Expenses**: $695 million to $715 million  **[WDC_3403683_5]**  (no change from $695 million to $715 million   )  
- **Interest and Other Expenses**: $110 million  **[WDC_3403683_5]**  (no change from $110 million   )  
- **Tax Rate**: 15% to 17%  **[WDC_3403683_5]**  (no change from 15% to 17%   )  
- **EPS**: $1.75 to $2.05  **[WDC_3403683_5]**  (no change from $1.75 to $2.05   )  

2cab971ac34f26cd6aed17b52008e2deb03534e53d7eceb6e7be343ee00ef9f1

- Seagate Technology Holdings plc - Competitor in the HDD market  **[0000106040-24-000031_wdc-20240628.htm:9]** .
- Toshiba Electronic Devices & Storage Corporation - Competitor in the HDD market  **[0000106040-24-000031_wdc-20240628.htm:9]** .
- Kioxia - Competitor in the Flash market and strategic partner in Flash Ventures  **[0000106040-24-000031_wdc-20240628.htm:9]** .
- Micron Technology, Inc. - Competitor in the Flash market  **[0000106040-24-000031_wdc-20240628.htm:9]** .
- Samsung Electronics Co., Ltd. - Competitor in the Flash market  **[0000106040-24-000031_wdc-20240628.htm:9]** .
- SK Hynix, Inc. - Competitor in the Flash market  **[0000106040-24-000031_wdc-20240628.htm:9]** .
- Yangtze Memory Technologies Co., Ltd. - Competitor in the Flash market  **[0000106040-24-000031_wdc-20240628.htm:9]** .

f745d3a36856ad1e5ca98ebb9e8a41672f545cee53bb2097211c0fa38737d8d3

| Name                  | Position                                           | Start Date     | Short Bio                                                                                                                                                                                                 |
|-----------------------|----------------------------------------------------|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| David V. Goeckeler    | Chief Executive Officer                            | March 2020     | David V. Goeckeler has over 30 years of experience in the technology industry. Before joining Western Digital, he held various senior management positions at Cisco Systems, Inc.  **[0001308179-24-000755_wdc4316471-def14a.htm:43]** **[0001308179-23-001017_wdc4186171-def14a.htm:12]** .                                                      |
| Wissam G. Jabre       | Executive Vice President and Chief Financial Officer| February 2022  | Wissam G. Jabre was previously the senior vice president and chief financial officer of Dialog Semiconductor, PLC, and held finance roles at Advanced Micro Devices, Inc., Freescale Semiconductor, Inc., and others  **[0001308179-24-000755_wdc4316471-def14a.htm:43]** **[0001308179-23-001017_wdc4186171-def14a.htm:38]** .                     |
| Robert W. Soderbery   | Executive Vice President and General Manager, Flash Business | September 2020 | Robert W. Soderbery was the president and board member of UpLift, Inc., and held senior leadership roles at Cisco Systems and Symantec Corporation. He also serves on the board of directors of Rockwell Automation, Inc.  **[0001308179-24-000755_wdc4316471-def14a.htm:43]** **[0001308179-23-001017_wdc4186171-def14a.htm:38]** . |

b6cf6db70f2266d49159a1e6fc069491f1d099afd246de3af5f332b201fb35e8

Adjustments for Non-Cash Items (USD, millions)

Stock-Based Compensation (USD, millions)

Changes in Working Capital (USD, millions)

Capital Expenditures (CapEx) (USD, millions)

Proceeds from / Repayments of Debt (USD, millions)

Share Repurchases (USD, millions)

Dividend Payments (USD, millions)

Net Change in Cash (USD, millions)

75d9797a6c2a596731de550e966b309cdff29406bfdacd989f301cf6918001be

- Total Revenue: $4,285 million, **+41%** YoY (vs. $3,032 million in Q2 2024)  **[0000106040-25-000008_wdc-20241227.htm:36]** **[0000106040-24-000014_wdc-20231229.htm:33]** **[0000106040-24-000014_wdc-20231229.htm:9]**   
- HDD Segment: $2,409 million, **+76%** YoY (vs. $1,367 million)  **[0000106040-25-000008_wdc-20241227.htm:36]** **[0000106040-24-000014_wdc-20231229.htm:33]** **[0000106040-24-000014_wdc-20231229.htm:9]**   
- Flash Segment: $1,876 million, +13% YoY (vs. $1,665 million)  **[0000106040-25-000008_wdc-20241227.htm:36]** **[0000106040-24-000014_wdc-20231229.htm:33]** **[0000106040-24-000014_wdc-20231229.htm:9]**   
- Cloud Solutions: $2,346 million, **+119%** YoY (vs. $1,071 million)  **[0000106040-25-000008_wdc-20241227.htm:36]** **[0000106040-24-000014_wdc-20231229.htm:10]**   
- Consumer Segment: $771 million, -8% YoY (vs. $839 million)  **[0000106040-25-000008_wdc-20241227.htm:36]** **[0000106040-24-000014_wdc-20231229.htm:10]**   
- Operating Income: $852 million vs. -$21 million in Q2 2024  **[0000106040-25-000005_a4ex991-pressreleaseq225.htm:4]** **[0000106040-24-000014_wdc-20231229.htm:32]** **[0000106040-24-000014_wdc-20231229.htm:4]**   
- Net Income: $594 million vs. -$287 million in Q2 2024  **[0000106040-25-000005_a4ex991-pressreleaseq225.htm:4]** **[0000106040-24-000014_wdc-20231229.htm:32]** **[0000106040-24-000014_wdc-20231229.htm:4]**   

59000d9f4386405fe9a05d78be988a8fc7671f96266bc7601040962feb48cdc1

| Name      | Start Date | End Date | Reason for Change |
|-----------|------------|----------|-------------------|
| KPMG LLP  | 1970  **[0000106040-24-000031_wdc-20240628.htm:80]**    | Present  | Current auditor   |

80621cca54d4413508d2c5abb8f5c96aea48a6488714c2914b835c8b81a72a1a

e824f5b0e445824c2db1fe325c15720b2b0ff7aff4b53675a1b9c4d974c6942c

17a9e8c6d5ff514fe8810b959db036e33bd5d0378442d458ef35723afe0b1662

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

e6b8587e5cf67e36213ca2a3571b9798a358cfaf719f49edd1080a7c22eb499f

- **Western Digital is seeing strong demand in the enterprise SSD segment and is tracking its targets, expecting continued strong demand throughout the year.**  **[WDC_3413569_17]**
- **The company is launching new high-capacity HDDs, including 32-terabyte SMR and 24-terabyte CMR drives, which have generated strong customer excitement and are expected to drive growth in the HDD business throughout 2025.**  **[WDC_3413569_21]**
- **Despite a mid-cycle pause, Western Digital expects NAND demand to recover as it moves through 2025 and into 2026, with PC and smartphone units increasing and data center demand remaining strong. The company is proactively adjusting supply to support pricing and improve margins.**  **[WDC_3413569_10]** **[WDC_3413569_14]**

d09b6852f75e71ad80033574a67dc8fcaa059a5c0c2a4af152a5e2bf4037a19b

- Western Digital anticipates a **sequential decline in HDD revenue for the fiscal third quarter**, attributed to lower volume and supply-demand tightness, potentially signaling slowing demand or supply constraints in their HDD business.  **[WDC_3413569_9]**
- The company is experiencing **pricing headwinds in its NAND business due to market oversupply**, leading to expectations of **Flash revenue declining sequentially by mid-teens percentage** and gross margin decreasing in the fiscal third quarter. This includes **underutilization charges of $20 million to $30 million** as they manage supply.  **[WDC_3413569_10]** **[WDC_3413569_24]**
- **Increased underutilization charges are expected to continue into the June quarter**, which could negatively impact profitability. Additionally, there is a **risk of inventory write-downs depending on future pricing trends**, as the company's inventory valuation is sensitive to market pricing.  **[WDC_3413569_12]**

23aaef6fb2106c2e0c0e5f962281740510ab30b0fbc493ee620cb24a5e5373e0

1. **HDD Supply-Demand Balance**  
   **Q:** Is the sequential decline in HDD revenue due to seasonality, and how is supply-demand affecting pricing and margins?  
   **A:** Demand for HDDs continues to exceed supply, and although revenue may be slightly down next quarter due to timing and supply chain management, the business remains robust with increasing profitability. We expect pricing to remain stable to slightly up for Q3, and our new **32-terabyte drives** will enhance capacity offerings, supporting future growth.  **[WDC_3413569_9]** **[WDC_3413569_13]** 

2. **NAND Business Spin-Off**  
   **Q:** Are there regulatory issues affecting the NAND spin-off, and is it on track?  
   **A:** We are confident the spin-off of our NAND business is on track, with key dates approaching. The **record date** for distribution is imminent, and the distribution is expected on or about **February 21**, after which **SanDisk shares** will trade actively. No major regulatory hurdles are anticipated.  **[WDC_3413569_10]** 

3. **NAND Gross Margins and Underutilization**  
   **Q:** How are underutilization charges impacting NAND gross margins, and what are the cost trends?  
   **A:** NAND gross margins are impacted by underutilization charges of around **$20 million to $30 million** this quarter. We're seeing cost increases in Q3, with costs up **low single digits** after prior cost declines. We're also facing ASP headwinds, though we expect these to **moderate** next quarter. Bits are down **mid-single digits**, affecting gross margins.  **[WDC_3413569_11]** 

4. **NAND Demand Recovery Expectations**  
   **Q:** What are your assumptions about NAND demand recovery in PCs and smartphones?  
   **A:** We expect **PC and smartphone units** to be up by the end of **'25**, with **mid-teens demand growth** for the calendar year. The market is slightly undersupplied to that demand. Some anticipated demand has been pushed out, but we're optimistic and adjusting supply to support pricing as we move through '25.  **[WDC_3413569_14]** 

5. **Capital Expenditure Plans in NAND**  
   **Q:** How are you approaching capital expenditures in the NAND business given current market conditions?  
   **A:** We remain disciplined in deploying capital and see **no change** in our CapEx approach. While we plan to ramp the next node eventually, we're focusing on managing supply-demand balance and supporting pricing. More details will be shared at our upcoming **Investor Day**.  **[WDC_3413569_19]** 

6. **Exabyte Shipment Capacity and Constraints**  
   **Q:** What is your maximum exabyte shipment capacity in HDDs given current supply constraints?  
   **A:** We're focused on ensuring the right supply-demand balance and maintaining discipline in capital expenditure. While we won't specify a capacity limit, we acknowledge operating in a **tight supply chain** and continue to manage operations to meet customer demand without overextending capacity.  **[WDC_3413569_20]** 

7. **Flash in Hyperscale Storage**  
   **Q:** How do you view the role of flash storage in hyperscale environments traditionally dominated by HDDs?  
   **A:** Both flash and HDDs have essential roles in hyperscale markets, driven by use cases. While flash is growing faster and is used for applications like **AI model training**, HDDs remain crucial for bulk data storage due to cost advantages. We see stable demand for both technologies, with AI and data growth driving storage needs, benefiting both flash and HDDs.  **[WDC_3413569_25]** 

4bfc570596b2d3997119bf0c226f9b51b0cd80fc38468c7ede2da1e0b06fd7dc

Western Digital’s Q2 sees robust enterprise SSD demand and strong excitement for 32TB HDDs, boosting 2025 outlook. However, Q3 HDD revenue is set to decline, and Flash faces a mid-teens drop plus $20–30M in underutilization charges. Supply tightness remains a risk.

c4bf056b879c7c07d1c387bbd4a6fadbb7476b1e6b2a640ea6896d9f2a946084

c5e7c1e9a561ccdc75bf1bc23b977b84a5dbade0874b52b1a387e8a27c8379ca

332430e600a4525c1819796af1573dd9e5349fd8b9d2a5d675233a0e68007d14

7ad83c64086e1369e2a2250d2da388f4b12abbe154c275a56b713818ec8910d1

| Year | Amount Due (in millions) | Debt Type               | Interest Rate | % of Total Debt |
|----------|------------------------------|-----------------------------|-------------------|---------------------|
| 2025     | $150  **[0000106040-25-000008_wdc-20241227.htm:16]** **[0000106040-25-000008_wdc-20241227.htm:4]**               | Current portion of long-term debt | N/A               | 2.0% = (150 / 7,413) * 100 **[0000106040-25-000008_wdc-20241227.htm:16]** |
| 2026     | $2,300 **[0000106040-25-000008_wdc-20241227.htm:16]**               | 4.75% Senior unsecured notes | 4.75% **[0000106040-25-000008_wdc-20241227.htm:16]**     | 31.0% = (2,300 / 7,413) * 100 **[0000106040-25-000008_wdc-20241227.htm:16]** |
| 2027     | $2,513 **[0000106040-25-000008_wdc-20241227.htm:16]**               | Variable Term Loan A-2       | 6.107% **[0000106040-25-000008_wdc-20241227.htm:16]**    | 33.9% = (2,513 / 7,413) * 100 **[0000106040-25-000008_wdc-20241227.htm:16]** |
| 2028     | $1,600 **[0000106040-25-000008_wdc-20241227.htm:16]**               | 3.00% Convertible notes      | 3.00% **[0000106040-25-000008_wdc-20241227.htm:16]**     | 21.6% = (1,600 / 7,413) * 100 **[0000106040-25-000008_wdc-20241227.htm:16]** |
| 2029     | $500 **[0000106040-25-000008_wdc-20241227.htm:16]**                 | 2.85% Senior notes           | 2.85% **[0000106040-25-000008_wdc-20241227.htm:16]**     | 6.7% = (500 / 7,413) * 100 **[0000106040-25-000008_wdc-20241227.htm:16]** |
| 2032     | $500 **[0000106040-25-000008_wdc-20241227.htm:16]**                 | 3.10% Senior notes           | 3.10% **[0000106040-25-000008_wdc-20241227.htm:16]**     | 6.7% = (500 / 7,413) * 100 **[0000106040-25-000008_wdc-20241227.htm:16]** |

0a532bcc6ee331e71c2cba89be58982367c720c283de5676f16b41ab116b15b7

1. **HDD Gross Margins Outlook**  
   **Q:** How will HDD gross margins progress in coming quarters?  
   **A:** Management is very happy with the HDD business, noting that gross margins have surpassed targets and are expected to go higher. They've optimized manufacturing and costs, and strong products like the **UltraSMR drives** are delivering leading capacity points. With a **52-week lead time** established with customers, they have better visibility and alignment with demand, which should help maintain supply-demand balance and drive margins higher.  **[WDC_3395343_7]** 

2. **NAND Pricing and Demand**  
   **Q:** Why is NAND pricing strong despite weaker volumes?  
   **A:** The NAND market is dynamic, with good pricing increases in negotiated markets like **enterprise SSDs**, where they saw strong sequential growth. In more transactional markets, such as consumer, demand is weak and pricing is more volatile. Despite this, management expects **demand to outstrip supply** through the second half of the year and into next calendar year, driven by strong demand in enterprise SSDs and an improving PC market.  **[WDC_3395343_8]** 

3. **HDD Market Share Sustainability**  
   **Q:** Is increased HDD market share sustainable amid competitor transitions?  
   **A:** Management attributes their above **50% HDD market share** not to competitor transitions but to offering great products that deliver the highest **TCO** for customers. Their roadmap is well-received, and they are delivering leading capacity drives at scale, like the new **32-terabyte drive** (**13% more capacity** than their previous **28TB drive**). Products like **UltraSMR** provide significant capacity benefits, with a third hyperscaler adopting the technology in the second half of the year. They plan to continue innovating to maintain this advantage.  **[WDC_3395343_12]** **[WDC_3395343_13]** **[WDC_3395343_14]** 

4. **CapEx Plans and Utilization**  
   **Q:** What are the CapEx plans and current fab utilization rates?  
   **A:** The NAND fabs are running at **full utilization** with no underutilization costs. For the current quarter, cash **CapEx is expected to be around 2% of revenue**, consistent with the previous quarter. Management's focus remains on profitability, and future investments will reflect that priority.  **[WDC_3395343_16]** 

5. **Dis-Synergy Costs Post-Separation**  
   **Q:** What are the expected dis-synergy costs post-separation?  
   **A:** The dis-synergy costs of **$35 million to $45 million**, mostly in operating expenses, are expected to represent the steady state for the combined business going forward until the separation and beyond. There are minimal dis-synergy costs in COGS.  **[WDC_3395343_10]** **[WDC_3395343_16]** 

6. **Risk of Customer Overordering**  
   **Q:** How are you guarding against customers overordering HDDs?  
   **A:** Management is closely monitoring customer orders, given their strong relationships with large customers. They believe customers are being rational, understanding that providing visibility enables better manufacturing planning without leading to oversupply. They have information on ordering patterns and remain vigilant to prevent potential overordering as they implement **52-week lead times**.  **[WDC_3395343_17]** 

7. **Enterprise SSD Product Momentum**  
   **Q:** How is the enterprise SSD product portfolio performing?  
   **A:** The company is seeing strong interest in their enterprise SSD products, particularly their **PCI Gen 5 compute product** designed for AI training infrastructures, and their **64-terabyte drive** for high-performance data lakes. These products are being qualified at hyperscalers and are in addition to existing products that are gaining momentum after the downturn, indicating a growing share of SSDs in their portfolio.  **[WDC_3395343_11]** 

8. **Mix Dynamics and NAND ASPs**  
   **Q:** What is the expectation for NAND ASPs in the September quarter?  
   **A:** Due to a significant mix dynamic, with weakness in consumer offset by strength in enterprise SSDs and mobile, management expects NAND ASPs to be **slightly up in the low single-digit percentage range** in the September quarter.  **[WDC_3395343_10]** **[WDC_3395343_15]** 

9. **Industry Structure and Cost Declines**  
   **Q:** How does the industry structure affect cost declines in Flash and HDD?  
   **A:** In HDD, cost per terabyte is decreasing in the **high single digits annually** due to technological improvements and optimized manufacturing. In NAND, costs are declining by about **15% this year** through technological innovation. Management emphasizes the importance of continuing to drive down costs to maintain profitability in a favorable pricing environment.  **[WDC_3395343_18]** 

5e1e0cfc21a44ae1a2e1a01dbac75300bd6435a15ad54efcbbbafdeec5bfd7b9

- **Declining flash bit shipments**: Western Digital expects flash volume to decrease further, with bits down in "low double digits" for the March quarter, which could negatively impact revenue growth despite higher prices.  **[WDC_3370834_7]** **[WDC_3370834_9]**
- **Negative free cash flow persists**: The company continues to experience cash flow challenges, reporting a cash outflow during the quarter and not expecting to turn free cash flow positive until the second half of fiscal year 2024.  **[WDC_3370834_22]**
- **Uncertainty in China's demand sustainability**: There are concerns about the sustainability of the doubled demand from China, given that the Chinese economy hasn't been robust, which may affect future revenues.  **[WDC_3370834_10]**

9b1f90c26bd41621d5fb293f482815e3483c9c42fc2f5bd4a3309a7bf87c479c

- **Constrained Gross Margin Expansion**: Despite favorable pricing in both Flash and HDD segments, the company only expects a **4-point gross margin improvement**, raising concerns about cost pressures or execution issues.  **[WDC_3380793_9]**
- **Flash Business Below Target Margins**: The Flash segment is still significantly below its target gross margins of **35% to 37%**, indicating challenges in improving profitability and a long way to go to reach through-cycle margins.  **[WDC_3380793_26]**
- **Reliance on Significant HDD Margin Improvement**: Meeting the company's cost guidance for the year requires a **significant step-up in HDD gross margins**, which may be challenging to achieve, creating uncertainty about the company's ability to meet financial targets.  **[WDC_3380793_24]**

e3d0b1f0055527049a46a14b449c2c8d9831cd283d97dec98dea2f844cc59e67

- **Record HDD gross margins** of 38.1%, adding over 15 percentage points in the last four quarters, driven by strong adoption of technology and products like new 11-platter drives.  **[WDC_3403683_24]** **[WDC_3403683_20]**
- **Rapid growth in enterprise SSD business**, with mix expected to exceed 15% of overall portfolio shipments in fiscal year 2025, significantly faster than previously anticipated, fueled by progress in qualifications with hyperscalers and OEMs.  **[WDC_3403683_7]**
- **Improved supply-demand management and customer relationships**, working with customers on a 2- to 6-quarter agreement cycle, providing better visibility into future demand and supporting sustainable profitable growth.  **[WDC_3403683_13]**

c17297736f6180d200eaa7960905453dcc66039498c34a796ddeeef6c380fca4

- **Risk of Demand Overestimation Due to Lack of Take-or-Pay Agreements**: Western Digital is not securing take-or-pay agreements with customers, which may lead to risks of customers placing shadow orders without commitment. This could result in overestimating demand and possible overproduction, impacting financial performance.  **[WDC_3403683_13]**
- **Limited Capacity Expansion May Constrain Growth**: The company is cautious about expanding manufacturing capacity without strong customer signals over the next 4 to 6 quarters. This limited capacity expansion could hinder its ability to meet future demand and capitalize on growth opportunities.  **[WDC_3403683_24]** **[WDC_3403683_13]** **[WDC_3403683_11]**
- **Uncertainty in Flash CapEx and Investment Strategy**: Western Digital did not provide clear guidance on Flash capital expenditures for the next fiscal year, mentioning that CapEx was very low last fiscal year and expects it to be higher, but without quantitative details. This lack of clarity may raise concerns about their investment strategy in Flash memory.  **[WDC_3403683_23]**

9e0415962aef25af773c548e46bd4de425d759bf87b2329e6f33589fde62a197

- **Exceptional HDD Business Performance with Significant Growth and Margin Expansion:** Western Digital's HDD business experienced the **largest sequential exabyte growth in a very long time**, driven by their **industry-leading SMR product portfolio**. They expect this growth trajectory to continue, focusing on bringing great products to market that deliver the highest capacity and best TCO for customers.  **[WDC_3380793_19]** **[WDC_3380793_13]** **[WDC_3380793_7]**
- **Favorable Supply-Demand Dynamics Supporting Higher Margins in HDD:** With a **favorable supply-demand balance and tightness in the market**, Western Digital is benefiting from better pricing and increased customer visibility, leading to **margin expansion in their HDD business**. They are optimistic about continuing to drive profitability higher.  **[WDC_3380793_7]**
- **Strategic Focus on Flash Business Profitability and AI Growth Opportunities:** Western Digital is optimizing **bit placement to prioritize higher-margin products** in their Flash business and is well-positioned to capitalize on **increasing demand for enterprise SSDs driven by AI workloads**, supporting future growth and margin expansion.  **[WDC_3380793_26]** **[WDC_3380793_21]**

f742022c61e4c72231fd948e2641862640ade3c3d45593b9ad1bb75deffd9955

- **Western Digital has introduced a new 32-terabyte hard drive**, which is **13% more capacity than the next biggest drive on the market**, demonstrating their continued innovation and ability to deliver better TCO to customers.  **[WDC_3395343_13]**
- **Margins in both HDD and NAND businesses are going up**, driven by strong product portfolios and strategic focus on innovation, with **HDD gross margin reaching the highest in 5 years**. The company expects these improved margins to be **durable** and continue into the future.  **[WDC_3395343_15]** **[WDC_3395343_14]**
- The **AI Data Cycle is driving significant demand** for storage, and Western Digital is well-positioned to capitalize on this growth, with **demand expected to outstrip supply through the second half of the year and throughout next year**. The company sees sustained demand in both HDD and NAND businesses, supported by their strong product offerings and strategic customer relationships.  **[WDC_3395343_15]** **[WDC_3395343_8]**

5104b9c8a2d82f5ecca055ff6d39a954e9edf48e7917dc2cd869fccb833cf9d9

- **Risk of declining HDD gross margins due to increased competition**: Analysts are concerned that Western Digital's current strong HDD performance may not be sustainable if competitors introduce advanced technologies like HAMR, which could normalize market share and reduce gross margins.  **[WDC_3395343_13]** ,  **[WDC_3395343_14]**
- **Weakness in NAND demand, particularly in consumer markets**: The company acknowledges weaker volume in NAND, especially in consumer sectors, leading to demand headwinds and less aggressive pricing, which could negatively impact revenues and margins.  **[WDC_3395343_8]**
- **Potential overcapacity risk due to reliance on extended lead times**: Western Digital's request for 52-week lead times from customers may lead to overordering, increasing the risk of overcapacity and margin pressure if demand softens or customers adjust their orders.  **[WDC_3395343_7]** ,  **[WDC_3395343_9]**

b68f711540c365829d2f5037b7981980ee086e629064c611c1edad45c265750a

- Western Digital **expects to turn free cash flow positive in the second half of fiscal year 2024**, reflecting improving financial performance.  **[WDC_3370834_22]**
- The company anticipates the **NAND market to be undersupplied for quite some time**, supporting **higher pricing and profitability** in their Flash business.  **[WDC_3370834_14]**
- Western Digital is **well-positioned to benefit from the growth in demand driven by generative AI**, especially in **edge devices**, due to their strong portfolio in **consumer, client SSD, gaming, and PC OEM markets**.  **[WDC_3370834_23]**

711be85a3b73a2ef7b0634cb3a249b812cd661571fd1f7f43daecd2d77b905a3

1. **Company Separation Timing and Commitment**  
   **Q:** When will the company separation occur? Any impediments?  
   **A:** Management plans to complete the company separation around the time of the December quarter earnings call. They are currently in a soft spin phase, operating separate systems behind the scenes to build confidence for a full spin. The Form 10 will be made public in the next couple of months to begin financing activities. Despite challenges, they are committed to executing the separation expeditiously, believing it is the right decision for shareholders.  **[WDC_3403683_9]** **[WDC_3403683_10]** 

2. **HDD Capacity Constraints and Expansion Plans**  
   **Q:** Do you foresee HDD capacity constraints? How quickly can you add capacity?  
   **A:** Management believes they have adequate manufacturing capacity to meet demand, focusing on profitability and maintaining supply-demand balance. They do not see the need to expand capacity unless they receive strong signals from customers over the next 4 to 6 quarters. The strategy is to increase exabytes shipped through innovation and higher density per unit, rather than increasing units produced.  **[WDC_3403683_11]** **[WDC_3403683_12]** 

3. **Enterprise SSD Growth and NVIDIA Qualification**  
   **Q:** Can you discuss enterprise SSD growth and NVIDIA qualification?  
   **A:** The enterprise SSD mix is expected to be **15% to 20%** of total Flash revenue, up from around **10%** previously. Their compute-focused PCIe Gen 5 product was qualified by NVIDIA in their reference architecture, enhancing confidence in portfolio growth and aligning with the AI data cycle. The number of qualifications doubled in the last quarter.  **[WDC_3403683_7]** 

4. **UltraSMR Technology Adoption by Hyperscalers**  
   **Q:** How is UltraSMR technology adoption progressing?  
   **A:** The third hyperscaler has officially qualified UltraSMR technology, and management expects a rapid ramp over the next several quarters. Customers prefer deploying the densest drives possible, like the new **32-terabyte UltraSMR drive**, which can be qualified quickly due to familiar technology. This adoption increases visibility and predictability in the business.  **[WDC_3403683_8]** **[WDC_3403683_11]** 

5. **Margin Improvement and Pricing Dynamics in HDD Business**  
   **Q:** What are the margin and pricing trends in the HDD business?  
   **A:** HDD margins improved to **38.1%**, adding over **15 points** in the last four quarters. The launch of new high-capacity drives is expected to enhance pricing and margins. A slight like-for-like pricing increase was observed, driven by delivering better products that reduce customers' TCO.  **[WDC_3403683_8]** **[WDC_3403683_12]** 

6. **Impact of Dissynergies on Operating Expenses**  
   **Q:** What dissynergies are expected due to the company split?  
   **A:** The December quarter operating expenses include approximately **$30 million** in dissynergies, split equally between the two businesses. At steady state, dissynergies are anticipated to be around **$40 million**, again divided equally. These costs are included in the guidance, with the $705 million midpoint of OpEx accounting for them.  **[WDC_3403683_12]** 

dd41036a836076b56c0d1a1d35f4a24580134f94b266e62ce5ff4954bd56e1bd

1. **NAND Pricing Sustainability**  
   **Q:** Is NAND pricing sustainability expected into the back half?  
   **A:** We see NAND undersupplied for quite some time, and although pricing is improving, we have a long way to go before reaching profitability levels where investment will come back. We need clear visibility into through-cycle profitability before adding capacity. We expect pricing increases into the next quarter but are managing supply and demand carefully, with bits down sequentially **[WDC_3370834_14]**.

2. **Gross Margin Outlook**  
   **Q:** When will Flash and HDD gross margins reach 30%?  
   **A:** In HDD, we're very close to a **30%** gross margin, reflecting continuous improvement, and we should achieve it soon **[WDC_3370834_8]**. In Flash, by optimizing the product mix to drive ASP up and delivering mid-teens percentage cost reductions for the fiscal year, we anticipate reaching **30%** in the next few quarters as pricing continues to improve **[WDC_3370834_8]**.

3. **HAMR Technology Transition**  
   **Q:** How are customers reacting to competitors' HAMR shipments?  
   **A:** Customers seek capacity at the right TCO and reliability, not specific technologies. Our ePMR and UltraSMR technologies provide high capacity and the best TCO at scale. HAMR doesn't make economic sense until we reach **4 terabytes per platter** due to added costs. We'll transition to HAMR when it's economically viable, and customers are very happy with our roadmap **[WDC_3370834_12]**.

4. **Impact of Generative AI on NAND Demand**  
   **Q:** When will NAND demand from Gen AI at the edge increase?  
   **A:** We're starting to see increased NAND requirements in future product specs, particularly as we enter PC refresh cycles. While it's early, we're optimistic that over the next couple of years, as generative AI architectures are deployed and adopted, NAND demand at the edge will inflect higher **[WDC_3370834_17]**.

5. **Free Cash Flow Positive Timing**  
   **Q:** When do you expect to be free cash flow positive?  
   **A:** Turning free cash flow positive is a top priority. We expect to achieve it in the **second half of fiscal '24**, either this quarter or the next. We don't anticipate needing to draw on our revolver at this point **[WDC_3370834_22]**.

6. **Enterprise SSD Recovery**  
   **Q:** How do you envision enterprise SSD market recovery?  
   **A:** Enterprise SSD is an emerging part of our portfolio. We qualified at cloud titans before the downturn, but enterprise SSD has been the most depressed part of the NAND market. As demand returns, we'll mix into it based on pricing versus other options for our bits. It's currently trailing the recovery in enterprise HDDs **[WDC_3370834_20]**.

7. **China Demand Surge**  
   **Q:** Why did China demand double this quarter?  
   **A:** The increase wasn't due to the smart video market but was driven by China's hyperscalers coming back and showing better demand **[WDC_3370834_10]**.

8. **NAND ASPs Below Peers**  
   **Q:** Why were your NAND ASPs below peers in December?  
   **A:** Price changes depend on starting points; we began from a better gross margin position than others. Mix variations based on product destinations and quarter dynamics also affect ASPs. Despite this, our profitability leads the industry **[WDC_3370834_11]**.

9. **Underutilization Impact**  
   **Q:** How does underutilization affect achieving 30% HDD margins?  
   **A:** Adjusting for underutilization charges, we're almost at a **30%** HDD gross margin. We expect another quarter of underutilization, but we've taken significant cost out of our structure, allowing us to reach **30%** margins at lower revenue levels than before **[WDC_3370834_13]**.

10. **OpEx Expectations**  
    **Q:** How will OpEx trend into June quarter and beyond?  
    **A:** For the June quarter, OpEx will be more or less in line. As profitability improves, expect a gradual increase, but we remain focused on not increasing OpEx faster than revenue growth. We're still **over 20% lower** than at the beginning of the downturn **[WDC_3370834_9]**.

2d7faf2324968b529874e0b573bd88b7c812489a793e3eafa33dff632345a19a

1. **Gross Margin Outlook**  
   **Q:** What's driving gross margin improvements?  
   **A:** We anticipate margin improvements in both **NAND and HDD** due to better pricing and cost discipline. In flash, we're expecting further pricing improvements, and in HDD, we're focusing on technology, cost control, and **supply-demand balance**, which all contribute to gross margin expansion.  **[WDC_3380793_9]** 

2. **AI Demand Impact**  
   **Q:** How is AI affecting demand?  
   **A:** AI is boosting demand in both businesses. For SSDs, customers are requesting higher capacity drives of **30 and 60 terabytes** for AI training, which we're qualifying now. We've also introduced a new high-performance **PCIe Gen 5 SSD based on BiCS6**, receiving positive feedback. In HDDs, AI increases data storage needs, especially for big data lakes that are stored on HDDs, supporting both training and increased data generation.  **[WDC_3380793_10]** **[WDC_3380793_13]** **[WDC_3380793_18]** 

3. **HDD Market Share and Sustainability**  
   **Q:** Can you sustain HDD market share gains?  
   **A:** Yes, our HDD performance is driven by our great products like **ePMR, OptiNAND, and UltraSMR**, which offer the best TCO and resonate with customers. Nearly **50% of exabytes** shipped this quarter were SMR. We plan to continue delivering products that meet market needs to drive sustained profitability.  **[WDC_3380793_11]** **[WDC_3380793_13]** 

4. **Flash Bit Growth Outlook**  
   **Q:** How will flash bit growth ramp up?  
   **A:** We expect flat bit growth in calendar Q2 but anticipate a pickup in the second half of the year as we optimize our supply for profitability and meet increasing demand, particularly in enterprise SSDs. We're balancing supply to align with mid- to high-teens market demand growth while maintaining pricing discipline.  **[WDC_3380793_8]** **[WDC_3380793_11]** 

5. **Technology Roadmaps (BiCS6/BiCS8, HAMR)**  
   **Q:** What's the status of BiCS8 and HAMR technologies?  
   **A:** We're confident in **BiCS8**, a major advancement in NAND architecture, and will productize it when market conditions support investment, maintaining mid-teens percentage year-on-year cost downs. We're selectively using **BiCS6** in products where it makes sense. For HAMR, we've been developing it for some time and plan to introduce it at **40 terabytes**, aligning with market readiness and economics.  **[WDC_3380793_12]** **[WDC_3380793_14]** **[WDC_3380793_22]** 

6. **OpEx Increase and Investments**  
   **Q:** Why is OpEx increasing?  
   **A:** The increase is driven about **50%** by variable compensation due to an improved financial outlook and **50%** by project-specific R&D investments with direct revenue correlation. We expect OpEx to remain in this range for the next couple of quarters.  **[WDC_3380793_15]** 

7. **Flash Margins and Cost Reductions**  
   **Q:** How will flash margins evolve if prices plateau?  
   **A:** Our target gross margin for flash remains **35% to 37%** through the cycle. We'll achieve this by focusing on our product mix, bit placement, and ongoing mid-teens percentage cost reductions, even if prices stay flat.  **[WDC_3380793_16]** 

8. **HDD Exabyte Shipment Growth**  
   **Q:** What's the outlook for HDD exabyte growth?  
   **A:** We're targeting around **25%** growth, consistent with historical trends. AI could be a tailwind, potentially increasing the growth rate, but it's too early to quantify its full impact.  **[WDC_3380793_16]** 

9. **Cash Flow Outlook**  
   **Q:** How will cash flow track going forward?  
   **A:** We returned to **free cash flow positive** in Q3. As revenue and business recover, we remain focused on profitability and cash flow generation, which should continue to improve from here.  **[WDC_3380793_17]** 

10. **Supply Chain Support**  
    **Q:** Are you supporting the supply chain like competitors?  
    **A:** Yes, we stay very close to our suppliers and have supported them throughout the downturn, ensuring stable operations as the market improves.  **[WDC_3380793_17]** 

11. **Partnerships with Hyperscalers**  
    **Q:** How critical are hyperscaler partnerships?  
    **A:** We maintain close relationships with hyperscalers, customizing products to their needs, especially in enterprise SSDs, to ensure we're aligned with market demands and architectural requirements.  **[WDC_3380793_19]** 

12. **Manufacturing Footprint**  
    **Q:** Is U.S. SSD manufacturing critical for AI?  
    **A:** Our NAND is manufactured in **Japan**, and we're confident in our global manufacturing footprint to serve the entire market effectively. We've not encountered any impairments in our ability to meet demand due to our manufacturing locations.  **[WDC_3380793_19]** 

1891135d7bf3d0e10c7cd8e7c64f7280fecf5148e7495377582765c614a4f25d

Western Digital Corp (WDC)

Financials