01—Abstract
Summary
Summary of the 10-K filed August 22, 2023. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation (WDC) reported a significant year-over-year revenue decline of 34%a for fiscal year 2023, ending June 30, 2023.
This downturn was primarily driven by macroeconomic pressures leading to softened demand and supply-demand imbalances, particularly impacting average selling prices in the Flash segment. The company also incurred a net loss of $1.7 billionb for the year, a stark contrast to the profit recorded in the previous fiscal year. Despite the challenging operating environment, WDC continues to advance its product roadmap with new high-capacity hard disk drives and updated flash memory technology.
02—Key points
Key Highlights
- Net revenue decreased by 34% year-over-year to $12.3 billion, primarily due to macroeconomic headwinds and reduced average selling prices in the Flash segment.
- The company reported a net loss of $1.7 billion for fiscal year 2023, compared to a net income of $1.5 billion in fiscal year 2022.
- Flash revenue saw a 38% decline, largely driven by falling average selling prices per gigabyte across all end markets.
- HDD revenue decreased by 31%, attributed to a 26% drop in exabytes sold and lower average selling prices.
- The company experienced a significant drop in gross margin to 15.3% from 31.3% in the prior year, impacted by lower revenues and manufacturing underutilization charges.
- WDC is actively reviewing strategic alternatives, including the potential separation of its Flash and HDD business units, to optimize long-term stockholder value.
- Despite operational challenges, the company has introduced new high-capacity drives and advanced flash memory technology, signaling ongoing product development.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2023, Western Digital Corp lost $0.27.
- Revenue$6.25B100.0%
- Cost of revenue−$4.86B77.8%
- Gross profit$1.39B22.2%
- Operating costs−$1.94B31.0%
- Operating income−$548.0M8.8%
- Interest, other & tax−$1.14B18.2%
- Net income−$1.68B26.9%
04—Financials
Financial Highlights
Figures from 10-KFY2023filed August 22, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $6.25B$18.79B | −66.7% |
| Cost of Revenue | $4.86B$12.92B | −62.4% |
| Gross Profit | $1.39B$5.87B | −76.3% |
| SG&A Expenses | $807.00M$1.12B | −27.8% |
| Operating Expenses | $1.94B$3.48B | −44.3% |
| Operating Income | -$548.00M$2.39B | −122.9% |
| Interest Expense | $312.00M$304.00M | +2.6% |
| Net Income | -$1.68B$1.55B | −208.9% |
| EPS (Basic) | $-5.37$4.96 | −208.3% |
| EPS (Diluted) | $-5.37$4.89 | −209.8% |
| Shares Outstanding (Basic) | 318.00M312.00M | +1.9% |
| Shares Outstanding (Diluted) | 318.00M316.00M | +0.6% |
05—Questions
Frequently Asked Questions
What was the primary driver for Western Digital's significant revenue decline in fiscal year 2023?
The primary driver for the 34% year-over-year revenue decline was a combination of macroeconomic factors, including inflation and recession concerns, which softened demand for WDC's products. This led to a supply-demand imbalance, particularly in the Flash segment, resulting in lower average selling prices per gigabyte.
How did the company's profitability change in fiscal year 2023 compared to fiscal year 2022?
Profitability significantly decreased. WDC reported a net loss of $1.7 billion for fiscal year 2023, a substantial reversal from the $1.5 billion net income reported in fiscal year 2022. This was accompanied by a sharp decline in consolidated gross margin from 31.3% to 15.3%, impacted by lower revenues and increased operating costs related to manufacturing underutilization and other charges.
What is the status of Western Digital's strategic review, including the potential separation of its business units?
Western Digital announced in June 2022 that it is reviewing potential strategic alternatives to optimize long-term stockholder value. This review includes evaluating options for separating its Flash and HDD business units. The company stated it is actively working with financial advisors and legal counsel on this process as of the filing date of this report.
What impact did the network security incident have on the company's financial results?
Western Digital experienced a network security incident in March 2023 that resulted in some disruptions to business operations, including manufacturing, sales, and fulfillment. However, the company stated that the incident and its response efforts did not have a material impact on its financial results for fiscal year 2023. Investigation, recovery, and remediation expenses were also deemed not material to the consolidated financial statements.
06—Continue