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Western Digital (WDC) Q4 Earnings Beat, Revenues Fall Y/Y
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Western Digital Corporation (WDC - Free Report) reported fiscal fourth-quarter 2023 non-GAAP loss of $1.98 per share, narrower than the Zacks Consensus Estimate of a loss of $2. The company had reported earnings per share (EPS) of $1.78 in the prior-year quarter.
The performance was affected by a challenging macro environment and underutilization charges, which weighed on the margins.
Revenues of $2.672 billion beat the Zacks Consensus Estimate by 6.3%. However, the top line decreased 41% year over year owing to weak performance across all segments. On a sequential basis, revenues declined 5%.
Western Digital Corporation Price, Consensus and EPS Surprise
At the beginning of first-quarter fiscal 2022, Western Digital started reporting revenues under three refined end markets — Cloud (includes products for public or private cloud), Client (includes products sold directly to OEMs or through distribution) and Consumer (includes retail and other end-user products).
Revenues from the Cloud end market (37% of total revenues) fell 53% year over year to $994 million owing to lower shipments of both hard drive and flash products. On a sequential basis, cloud revenues were down 18%.
Revenues from the Client end market (39% of total revenues) were down 37% year over year to $1,035 million. The downtick was caused by lower flash pricing on a year-over-year basis, coupled with reduced client SSD and hard drive shipments for PC applications. Client revenues increased 6% sequentially.
Revenues from the Consumer end market (24% of total revenues) were down 19% year over year to $643 million. Revenues increased 3% on a sequential basis. Sequential performance benefited from higher retail SSD shipments.
Considering revenues by product group, Flash revenues (51.5% of total revenues) declined 42.6% from the year-ago quarter’s figure to $1.377 billion. Sequentially, flash revenues rose 5.4%.
Hard disk drive (HDD) revenues (48.5% of total revenues) decreased 40% year over year to $1.295 billion. Revenues were down 13.4% quarter over quarter.
Key Metrics
The company shipped 11.8 million HDDs at an average selling price (ASP) of $99. The reported shipments declined 28.5% from the prior-year quarter’s levels.
On a quarter-over-quarter basis, HDD Exabytes sales were down 18%. Flash exabytes sales were up 15%. Total exabytes sales (excluding non-memory products) were down 13% sequentially.
ASP/Gigabytes (excluding licensing, royalties, and non-memory products) were down 6% sequentially.
Margins
Non-GAAP gross margin was 3.9% compared with 32.3% reported in the year-ago quarter.
HDD’s gross margin contracted 750 bps year over year to 20.7%. Flash gross margin was a negative 11.9% against 35.9% reported in the prior-year quarter. Non-GAAP operating expenses moved down 23% from the year-ago quarter’s level to $582 million.
Non-GAAP operating loss totaled $478 million against the non-GAAP operating income of $702 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $2.02 billion compared with $2.22 billion reported as of Mar 31.
The long-term debt (including the current portion) was $5.857 billion as of Jun 30.
Western Digital used $68 million in cash from operations against $296 million of cash generated from operations in the previous-year quarter.
Free cash outflow amounted to $219 million in the quarter under review compared with the free cash outflow of $97 million reported in the prior-year quarter.
Fiscal Q1 Guidance
For first-quarter fiscal 2024, the company expects non-GAAP revenues in the range of $2.55-$2.75 billion. The Zacks Consensus Estimate is currently pegged at $2.51 billion.
Management projects a non-GAAP loss per share between $1.80 and $2.10. The Zacks Consensus Estimate is currently pegged at a loss of $2 per share.
WDC expects non-GAAP gross margin in the range of 2.5-4.5%. Non-GAAP operating expenses are expected to be between $570 million and $590 million.
Zacks Rank & Stocks to Consider
Currently, Western Digital carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
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Western Digital (WDC) Q4 Earnings Beat, Revenues Fall Y/Y
Western Digital Corporation (WDC - Free Report) reported fiscal fourth-quarter 2023 non-GAAP loss of $1.98 per share, narrower than the Zacks Consensus Estimate of a loss of $2. The company had reported earnings per share (EPS) of $1.78 in the prior-year quarter.
The performance was affected by a challenging macro environment and underutilization charges, which weighed on the margins.
Revenues of $2.672 billion beat the Zacks Consensus Estimate by 6.3%. However, the top line decreased 41% year over year owing to weak performance across all segments. On a sequential basis, revenues declined 5%.
Western Digital Corporation Price, Consensus and EPS Surprise
Western Digital Corporation price-consensus-eps-surprise-chart | Western Digital Corporation Quote
Quarter in Detail
At the beginning of first-quarter fiscal 2022, Western Digital started reporting revenues under three refined end markets — Cloud (includes products for public or private cloud), Client (includes products sold directly to OEMs or through distribution) and Consumer (includes retail and other end-user products).
Revenues from the Cloud end market (37% of total revenues) fell 53% year over year to $994 million owing to lower shipments of both hard drive and flash products. On a sequential basis, cloud revenues were down 18%.
Revenues from the Client end market (39% of total revenues) were down 37% year over year to $1,035 million. The downtick was caused by lower flash pricing on a year-over-year basis, coupled with reduced client SSD and hard drive shipments for PC applications. Client revenues increased 6% sequentially.
Revenues from the Consumer end market (24% of total revenues) were down 19% year over year to $643 million. Revenues increased 3% on a sequential basis. Sequential performance benefited from higher retail SSD shipments.
Considering revenues by product group, Flash revenues (51.5% of total revenues) declined 42.6% from the year-ago quarter’s figure to $1.377 billion. Sequentially, flash revenues rose 5.4%.
Hard disk drive (HDD) revenues (48.5% of total revenues) decreased 40% year over year to $1.295 billion. Revenues were down 13.4% quarter over quarter.
Key Metrics
The company shipped 11.8 million HDDs at an average selling price (ASP) of $99. The reported shipments declined 28.5% from the prior-year quarter’s levels.
On a quarter-over-quarter basis, HDD Exabytes sales were down 18%. Flash exabytes sales were up 15%. Total exabytes sales (excluding non-memory products) were down 13% sequentially.
ASP/Gigabytes (excluding licensing, royalties, and non-memory products) were down 6% sequentially.
Margins
Non-GAAP gross margin was 3.9% compared with 32.3% reported in the year-ago quarter.
HDD’s gross margin contracted 750 bps year over year to 20.7%. Flash gross margin was a negative 11.9% against 35.9% reported in the prior-year quarter.
Non-GAAP operating expenses moved down 23% from the year-ago quarter’s level to $582 million.
Non-GAAP operating loss totaled $478 million against the non-GAAP operating income of $702 million in the prior-year quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2023, cash and cash equivalents were $2.02 billion compared with $2.22 billion reported as of Mar 31.
The long-term debt (including the current portion) was $5.857 billion as of Jun 30.
Western Digital used $68 million in cash from operations against $296 million of cash generated from operations in the previous-year quarter.
Free cash outflow amounted to $219 million in the quarter under review compared with the free cash outflow of $97 million reported in the prior-year quarter.
Fiscal Q1 Guidance
For first-quarter fiscal 2024, the company expects non-GAAP revenues in the range of $2.55-$2.75 billion. The Zacks Consensus Estimate is currently pegged at $2.51 billion.
Management projects a non-GAAP loss per share between $1.80 and $2.10. The Zacks Consensus Estimate is currently pegged at a loss of $2 per share.
WDC expects non-GAAP gross margin in the range of 2.5-4.5%. Non-GAAP operating expenses are expected to be between $570 million and $590 million.
Zacks Rank & Stocks to Consider
Currently, Western Digital carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . InterDigital and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), while Woodward currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.