Western Digital Corporation

Good afternoon, and thank you for standing by. Welcome to Western Digital's second quarter of fiscal 2020 conference call. Presently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you would like to ask a question, you may press star 1 on your phone. As a reminder, this call is being recorded. Now we will turn the call over to Mr. Peter Andrew. You may begin.

Okay, thank you, and good afternoon, everyone. Joining me today are Steve Milligan, Chief Executive Officer, Mike Cordano, President and Chief Operating Officer, and Bob Ulau, Chief Financial Officer. 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 on 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 10-Q 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 websites. With that, I'll now turn the call over to Steve.

Thank you, Peter, and good afternoon. Western Digital delivered solid results in the second quarter as revenue came in at the midpoint of the guidance range and non-GAAP EPS was at the upper end of the range. Our performance reflects strong execution in our product roadmap, success in increasing our hard drive gross margin, and an improving flash environment. Notably, these results reinforce our prior comments that the June quarter marked the bottom of this flash cycle. We extended our capacity enterprise product leadership as we started sampling 18 and 16 terabyte CMR and 20 terabyte SMR drives in December. These drives feature our energy assisted magnetic recording technology providing unrivaled aerial density and TCO benefits. We expect to commence revenue shipments of the CMR drives in the March quarter and ramp shipments through the rest of calendar 2020. Our 14 terabyte platform is performing well, and customer interest in our air-based 10 terabyte drive is quite high. The strength of our capacity enterprise product portfolio will continue to allow us to maintain our leading market share position. We achieved our goal of high single-digit enterprise SSD market share and secured additional NVMe design wins, including at another major hyperscale customer, positioning us for continued revenue growth and share gains. We made an important announcement this afternoon of our next generation 3D NAND technology, FIX5, with 112 layers of vertical storage. FIX5 joins a full portfolio of 3D NAND technologies as our highest density and most advanced 3D NAND today, delivering exceptional performance and reliability. Our team executed well in the quarter, increasing our hard drive non-GAAP gross margins to approximately 31 percent from 28.5 percent in the prior quarter. We now expect an accelerated recovery in our flash gross margins in the first half of calendar 2020, with continued improvement through the end of the year. I will now ask Mike to share our business highlights.