Western Digital Corporation

Ladies and gentlemen, thank you for standing by, and welcome to Western Digital's first quarter of fiscal 2020 conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Mr. Peter Andrew. Please go ahead, sir.

Okay. Thank you, and good afternoon, everyone. Before we begin, let me remind everyone that today's discussion contains forward-looking statements, including product development expectations, business plans, trends in financial outlook, based upon management's current assumptions and expectations, and as such, does include risks and uncertainties. We assume no obligation to update these statements. Please refer to our most recent financial report on Form 10Q filed with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially. We will also make references to non-GAAP financial measures today. Reconciliations between the non-GAAP and comparable GAAP financial measures are included in the press release and other materials that are being posted in the investor relations section of our website. With that, I'll now turn the call over to Steve Milligan, our CEO.

Thank you, Peter, and good afternoon, everyone. Joining me today are Mike Cordano, President and Chief Operating Officer, and Bob Ulau, Chief Financial Officer. Before we discuss our results for the first quarter of fiscal 2020, I want to spend a moment talking about the other news we announced today. After a long and fulfilling career with Western Digital, spanning two decades, I have informed our board that I plan to retire as CEO. I will continue to serve as CEO until the board has identified and appointed a successor. Western Digital is a significantly different company than the one I first joined in 2002. We are more diversified, more resilient, and much better positioned to capture the opportunities of today's evolving data marketplace. Since my appointment as CEO, Western Digital has transformed from a storage component provider to a diversified enabler of data infrastructure with the broadest portfolio in the industry, offering customers a powerful combination of hard drive storage and flash memory products. We have successfully executed many key strategic initiatives, including the company's acquisition of SanDisk, the integration of Western Digital, HGST, and SanDisk, as well as the extension of Western Digital's 19-year partnership with Keoxia, we now operate a powerful platform that uniquely positions us to provide new architectures and capabilities to manage the volume, velocity, and variety of data. As we think about what comes next for our company, I believe now is the right time to for Western Digital to begin the transition to its next phase of leadership. Serving as Western Digital's CEO for the past seven years has truly been one of the highlights of my career. I want to thank our team for their support and dedication. I could not be prouder of what we have accomplished together and consider myself quite fortunate to have worked alongside such a talented team. In terms of next steps, I look forward to continuing to work closely with the team while the board conducts the search for our next CEO. Given our strong management team, we expect this transition to be seamless for our shareholders, our employees, and the customers that rely on our best-in-class service and products. Once my successor is on board, I will remain with the company in an advisory role until September 2020 to ensure a smooth transition. I will also continue to serve as a director on the Western Digital Board for a transition period after my successor is appointed. With that said, let me turn to our performance for this quarter. Fiscal 2020 is off to a good start. Revenue exceeded the guidance range we provided in July, and non-GAAP EPS was at the upper end of the range. The upside was driven primarily by the success of our capacity enterprise drives for the data center. We are executing well in the data center, utilizing the power of our portfolio. At the core of our success in this market is our industry-leading capacity enterprise hard drive solutions, in the exceptional value we provide to our data center customers for their diverse storage needs. During the quarter, we made two important announcements to further extend our product leadership. First, we introduced 16 and 18 terabyte CMR drives and a 20 terabyte SMR drive, all enabled by our energy-assisted recording technology. These drives are expected to sample this quarter. Additionally, through our continued investments in heads, media, and mechanical design, we began shipping an air-based 10-terabyte drive, providing significant benefits to our customers. I am pleased to announce we commenced the initial revenue ramp of our NVMe-based enterprise SSDs to major hyperscale and and OEM customers during the September quarter. Efforts to qualify and ramp additional customers with our next-generation products based on our 96-layer 3D flash technology are going well and should position us to further increase our participation in this important market. Western Digital's ability to offer both hard drive and flash-based solutions differentiates us from our competitors and allows us to more strategically partner with our data center customers. Outside the data center, the overall demand environment across the consumer, mobile, PC, and retail end markets is solid. Furthermore, we are seeing improving trends across our Flash product portfolio and continue to believe that the Flash industry has passed a cyclical trough. With a broad and growing product portfolio, Western Digital remains well positioned to benefit from the long-term drivers of the growth and value of data. With that, I will now ask Mike to share our business highlights.