01—Abstract
Summary
Summary of the 10-K filed August 20, 2024. Cited figures are marked; the original filing is the authoritative source.
Western Digital Corporation (WDC) has filed its Annual Report on Form 10-K for the fiscal year ended June 27, 2024.
The company, a leader in data storage solutions, is actively pursuing a strategic separation of its Hard Disk Drive (HDD) and Flash business units into two independent public companies, with the goal of completing this separation by the end of calendar year 2024. This move is intended to unlock greater value and specialized growth opportunities for each distinct business. Financially, WDC reported a net loss for the year, a reversal from the prior year's profit, primarily impacted by challenging market conditions early in the fiscal year that led to reduced demand, lower pricing, and supply-demand imbalances.
Despite these headwinds, the company saw revenue growth in both its Flash and HDD segments in the latter half of fiscal 2024 due to improving market dynamics, including increased exabytes sold and recovering Average Selling Prices (ASPs). The company is managing its liquidity effectively and has sufficient resources for its operational needs.
02—Key points
Key Highlights
- Western Digital is progressing with its plan to separate its HDD and Flash business units into two independent companies by the end of calendar year 2024.
- The company experienced a net loss for the fiscal year, contrasting with profitability in the prior year, driven by macroeconomic factors and resulting supply-demand imbalances.
- Revenue for the fiscal year showed growth, particularly in the latter half, with improvements in both Flash and HDD segments driven by increased exabyte shipments and stabilizing Average Selling Prices (ASPs).
- Flash revenue increased by 10% year-over-year, while HDD revenue remained relatively flat, reflecting different market dynamics for each segment.
- The company is actively managing operating expenses and has implemented cost-saving measures, including headcount reductions and asset impairments related to capacity adjustments.
- Significant progress has been made in resolving tax matters with the IRS, with a remaining liability expected to be settled within the next twelve months.
- WDC has secured new financing, including $1.6 billion in convertible senior notes, to manage its capital structure and debt obligations.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2024, Western Digital Corp lost $0.13.
- Revenue$6.32B100.0%
- Cost of revenue−$4.54B71.9%
- Gross profit$1.77B28.1%
- Operating costs−$2.18B34.4%
- Operating income−$403.0M6.4%
- Interest, other & tax−$395.0M6.3%
- Net income−$798.0M12.6%
04—Financials
Financial Highlights
Figures from 10-KFY2024filed August 20, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $6.32B$6.25B | +1.0% |
| Cost of Revenue | $4.54B$4.86B | −6.6% |
| Gross Profit | $1.77B$1.39B | +27.5% |
| SG&A Expenses | $726.00M$807.00M | −10.0% |
| Operating Expenses | $2.18B$1.94B | +12.2% |
| Operating Income | -$403.00M-$548.00M | +26.5% |
| Net Income | -$798.00M-$1.68B | +52.6% |
| EPS (Basic) | $-2.61$-5.37 | +51.4% |
| EPS (Diluted) | $-2.61$-5.37 | +51.4% |
| Shares Outstanding (Basic) | 326.00M318.00M | +2.5% |
| Shares Outstanding (Diluted) | 326.00M318.00M | +2.5% |
05—Questions
Frequently Asked Questions
What is the primary strategic initiative Western Digital is undertaking?
Western Digital announced a plan to separate its Hard Disk Drive (HDD) and Flash business units into two distinct, independent public companies. This strategic move is expected to be completed by the end of calendar year 2024 and aims to enhance focus, accelerate growth, and optimize operations for each business segment.
How did Western Digital perform financially in the reported fiscal year?
The company reported a net loss for the fiscal year ended June 27, 2024. This was largely due to challenging macroeconomic conditions earlier in the year that led to reduced demand and pricing pressures. However, the company noted an improvement in revenue and market conditions in the latter half of the year.
What is the status of the company's joint venture with Kioxia, and what are the associated risks?
Western Digital's flash memory supply is substantially sourced from its joint ventures with Kioxia (Flash Ventures). While this partnership provides access to leading-edge technology, it also presents risks, including a dependence on Kioxia for wafer supply and potential misalignment of strategic priorities. The company has significant commitments and potential liabilities related to these ventures, including lease obligations and capital investment funding.
What are the key financial trends highlighted in the report?
Key financial trends include a year-over-year increase in revenue, primarily driven by higher exabyte shipments and a recovery in ASPs, particularly in the Flash segment. The company's gross margin improved significantly compared to the prior year, benefiting from improved pricing and cost efficiencies. Operating expenses were managed, with decreases in R&D and SG&A expenses partly due to restructuring and asset amortization reductions.
06—Continue