Western Digital (WDC) Tops Q1 EPS by 11c, Revenues Beat; Offers 2Q EPS Outlook Below Consensus, Provides 2Q Revenue Guidance

Western Digital (NASDAQ: WDC) reported Q1 EPS of $0.65, $0.11 better than the analyst estimate of $0.54. Revenue for the quarter came in at $3.9 billion versus the consensus estimate of $3.83 billion.

News Summary

• First quarter revenue was $3.9 billion, down 3% year-over-year (YoY). Client Devices increased 20%, Data Center Devices and Solutions revenue declined 26%, and Client Solutions declined 5% YoY.
• First quarter GAAP earnings per share (EPS) was ($0.20) and non-GAAP EPS was $0.65. Both GAAP and non-GAAP EPS include $28 million in costs related to COVID-19 in the first quarter.
• Generated operating cash flow of $363 million and free cash flow of $196 million in the first quarter.
• Expecting fiscal second quarter 2021 revenue to be in the range of $3.75 billion to $3.95 billion with non-GAAP EPS in the range of $0.40 to $0.60. Non-GAAP EPS outlook includes costs related to COVID-19.

“I am pleased with our results, as we continued to focus our execution on the massive market opportunity for data storage technology that stems from the ongoing expansion of cloud infrastructure connected to intelligent endpoints and powered by high performance networks,” said David Goeckeler, Western Digital CEO. “While we are still managing through macro uncertainty, during the quarter we benefitted from strength particularly in the retail sector, driven by favorable macro and market dynamics, as well as the brand recognition of our products. Our diversified storage portfolio strategy implemented through our recently announced organizational structure will enable us to accelerate growth, improve our focus, and drive sustainable, long-term shareholder value.”

In the fiscal first quarter of 2021, Western Digital’s revenue decreased 3% year-over-year to $3.9 billion. The decrease is largely attributable to the uncertainty associated with the global economic contraction and geopolitical headwinds, which resulted in shifts in customer buying patterns impacting Data Center Devices & Solutions and Client Solutions.

In Client Devices, Western Digital’s industry leading client SSD solutions for notebook and desktops benefitted from the acceleration of work from home and remote learning trends. Gaming experienced significant growth as upcoming game consoles transition from hard drive-based storage solutions to flash, powering a more real-time, immersive gaming experience. In addition, mobile revenue more than doubled, driven by recent 5G phone launches and a broadening of end customers within China.

In Data Center Devices & Solutions, both Capacity Enterprise hard drive and Enterprise SSD (eSSD) demand were negatively impacted by shifts in customer ordering patterns. Important product transitions in hard drive and flash-based storage solutions also impacted demand trends as customers are still ramping up on these newer products.

In Client Solutions, Western Digital continued to recover as many brick and mortar customers reopened from COVID-19-related lock downs during the period. In addition, demand related to work from home and distance learning benefitted both hard drive and flash-based solutions.

GUIDANCE:

Western Digital sees Q2 2021 EPS of $0.40-$0.60, versus the consensus of $0.64. Western Digital sees Q2 2021 revenue of $3.75-3.95 billion, versus the consensus of $3.86 billion.

For earnings history and earnings-related data on Western Digital (WDC) click here.

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