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WESTERN DIGITAL CORP 8-K Report, Financial Results (Jul 31, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed July 31, 2024
Period End
July 31, 2024
Security
WDC
In the record · 2016–202610-K1110-Q328-K197

WDC filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 197 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · May ’18May ’18
  2. Leadership change8-K · Jun ’20Jun ’20
  3. Material agreement8-K · Jul ’22Jul ’22
  4. Leadership change8-K · May ’26May ’26

01—Abstract

Summary

Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.

Western Digital reported fiscal Q4 2024 (quarter ended June 28, 2024) revenue of $3.76 billiona, up 9% sequentially and 41% year over year, with GAAP gross margin expanding to 35.9% from 29.0% in the prior quarter.

Non-GAAP EPS was $1.44b and GAAP diluted EPS was $0.88. Cloud revenue grew 21% sequentially to $1.88 billion (50% of revenue) on higher nearline HDD shipments and pricing and enterprise SSD bit growth, while Client rose 3% and Consumer fell 7%. Fiscal 2024 revenue reached $13.00 billion, up 6%, and GAAP operating loss narrowed to $(26) million from $(1.29) billion, reflecting a sharp industry-wide recovery in both HDD and flash pricing and volumes.

The company guided fiscal Q1 2025 revenue to $4.00c–$4.20 billion and Non-GAAP EPS to $1.55–$1.85, with Non-GAAP gross margin of 37.0%–39.0%. Management attributed the strength to the "AI Data Cycle" and to structural operating changes. Free cash flow was $282 million in the quarter, though fiscal 2024 free cash flow remained negative at $(347) million, and cash ended the year at $1.88 billion against total debt of roughly $7.4 billion.

Investors should weigh several caveats. A July 26, 2024 jury verdict awarded $262 milliond against a subsidiary in a patent case; the company is appealing and has not yet booked the impact, and the figures here exclude it.

The company also disclosed immaterial revisions to prior-period results related to its Flash Ventures equity-method accounting, and the Form 10-K, due by August 27, 2024, may differ from these preliminary numbers. Ongoing HDD/Flash separation costs ($97 million in fiscal 2024) and the planned separation itself add execution risk.

02—Key points

Key Highlights

  1. Q4 FY2024 revenue of $3.76B, up 9% QoQ and 41% YoY; Cloud revenue up 21% QoQ to $1.88B, now 50% of total revenue.
  2. GAAP gross margin expanded to 35.9% from 29.0% QoQ (Non-GAAP 36.3%), driven by higher HDD nearline pricing and enterprise SSD volumes.
  3. Q4 GAAP diluted EPS of $0.88 and Non-GAAP EPS of $1.44, versus Non-GAAP EPS of $0.63 in Q3 FY2024.
  4. Fiscal 2024 GAAP operating loss narrowed to $(26)M from $(1,285)M; Non-GAAP operating income was $512M versus a $(594)M loss in FY2023.
  5. Q1 FY2025 guidance: revenue $4.00–$4.20B and Non-GAAP EPS $1.55–$1.85, implying continued sequential growth.
  6. Operating cash flow was $366M in Q4 and free cash flow $282M, but fiscal 2024 free cash flow was still negative at $(347)M.
  7. Risk items: a $262M patent jury verdict (not yet reflected in GAAP results), revisions to prior-period Flash Ventures accounting, and ongoing HDD/Flash separation costs.

03—Questions

Frequently Asked Questions

  1. Why did Western Digital's margins improve so sharply in the fourth quarter?

    GAAP gross margin rose to 35.9% from 29.0% sequentially, reflecting higher nearline HDD shipments and pricing, stronger enterprise SSD bit shipments, and higher flash average selling prices. Flash gross margin reached 36.5% in Q4 versus a negative result a year earlier, and HDD margin reached 36.1%.

  2. How does the $262 million patent verdict affect the company's results?

    The verdict was awarded on July 26, 2024, after the fiscal year-end, and the press release excludes its impact pending an accounting assessment. The company disagrees with the verdict and plans to appeal. It expects to finalize the accounting in the Form 10-K, and the plaintiff may also seek costs, attorney's fees, and interest. The company does not expect a change to Non-GAAP results from this matter.

  3. What does the guidance imply for the coming quarter?

    Management guided fiscal Q1 2025 revenue to $4.00–$4.20 billion, Non-GAAP gross margin to 37.0%–39.0%, and Non-GAAP EPS to $1.55–$1.85 on about 360 million diluted shares. Interest and other expense is expected near $110 million, and the Non-GAAP tax rate is 15%–17%.

  4. Is Western Digital now generating meaningful free cash flow?

    Quarterly free cash flow turned positive at $282 million in Q4 FY2024, up from $91 million in Q3 and $(219) million a year earlier. However, full-year fiscal 2024 free cash flow was still negative at $(347) million, and the company ended the year with $1.88 billion in cash against roughly $7.4 billion of total debt.

  5. Why are GAAP and Non-GAAP results so different?

    The gap mainly reflects stock-based compensation (about $295M in FY2024), business separation costs ($97M), employee termination and asset impairment charges ($139M), and amortization of acquired intangibles. Management argues these items are not indicative of core operating performance, but investors should review the GAAP figures, especially given the separation costs and litigation exposure.

04—Continue

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