On July 31, 2024, Western Digital Corp (WDC, Financial) released its 8-K filing detailing its fiscal fourth quarter and fiscal year 2024 financial results. Western Digital is a leading vertically integrated supplier of data storage solutions, spanning both hard disk drives (HDD) and solid-state drives (SSD). In the HDD market, it forms a practical duopoly with Seagate and is the largest global producer of NAND flash chips for SSDs in a joint venture with competitor Kioxia.
Quarterly Performance Overview
Western Digital Corp (WDC, Financial) reported fourth-quarter revenue of $3.76 billion, up 9% sequentially and 41% year-over-year. This figure, however, fell short of the analyst estimate of $4.22 billion. The company's GAAP earnings per share (EPS) for the quarter was $0.88, while Non-GAAP EPS was $1.44, slightly exceeding the analyst estimate of $1.43.
Annual Performance and Challenges
For the fiscal year 2024, Western Digital reported revenue of $13.00 billion, a 6% increase from the previous year but below the analyst estimate of $17.85 billion. The company posted a GAAP EPS of $(1.72) and a Non-GAAP EPS of $(0.20), both reflecting significant losses compared to the previous year.
Western Digital's performance highlights the challenges it faces in a competitive and rapidly evolving market. The company cited structural changes and a broad market recovery as key factors influencing its results. However, the emergence of the AI Data Cycle presents both opportunities and challenges, as it drives fundamental shifts across end markets, increasing the need for storage and creating new demand drivers.
Financial Achievements and Metrics
Despite the challenges, Western Digital achieved several financial milestones:
| Metric | Q4 2024 | Q3 2024 | Q4 2023 |
|---|---|---|---|
| Revenue ($M) | $3,764 | $3,457 | $2,672 |
| Gross Margin | 35.9% | 29.0% | 3.4% |
| Operating Income ($M) | $507 | $273 | $(650) |
| Net Income Per Share | $0.88 | $0.34 | $(2.26) |
These metrics are crucial for assessing the company's operational efficiency and profitability. The significant improvement in gross margin and operating income indicates better cost management and operational efficiency.
Income Statement, Balance Sheet, and Cash Flow Highlights
Western Digital reported an operating cash inflow of $366 million for the quarter and ended with $1.88 billion in total cash and cash equivalents. This strong cash position provides the company with the flexibility to invest in growth opportunities and manage its debt obligations.
End Market Performance
In the fiscal fourth quarter, the company's revenue distribution was as follows:
| End Market | Q4 2024 Revenue ($M) | Q3 2024 Revenue ($M) | Q4 2023 Revenue ($M) |
|---|---|---|---|
| Cloud | $1,882 | $1,553 | $994 |
| Client | $1,204 | $1,174 | $1,035 |
| Consumer | $678 | $730 | $643 |
The Cloud segment, representing 50% of total revenue, saw a 21% sequential increase and an 89% year-over-year increase, driven by higher nearline shipments and pricing in HDD, coupled with increased bit shipments and pricing in enterprise SSDs. The Client and Consumer segments also showed growth, albeit at a slower pace.
Business Outlook for Fiscal Q1 2025
Looking ahead, Western Digital expects fiscal first-quarter 2025 revenue to be in the range of $4.00 billion to $4.20 billion, with Non-GAAP EPS projected between $1.55 and $1.85. This optimistic outlook reflects the company's confidence in leveraging its technology leadership to capitalize on growth opportunities in the AI Data Cycle.
"Our fourth quarter and fiscal year 2024 results are reflective of the diverse and innovative portfolio we have developed in alignment with our strategic roadmap. Together, with the structural changes we have made to strengthen our operations, we are benefitting from the broad recovery we are seeing across our end markets and structurally improving through-cycle profitability for both Flash and HDD," said David Goeckeler, Western Digital CEO.
For more detailed financial information, readers can access the full earnings presentation and other related documents on Western Digital's investor relations website.
Explore the complete 8-K earnings release (here) from Western Digital Corp for further details.
