Western Digital Corporation

Good afternoon, and thank you for standing by. Welcome to Western Digital's fourth quarter and fiscal 2024 conference call. Presently, all participants are in 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 one on your phone. As a reminder, today's call is being recorded. I'd now like to turn the conference over to Mr. Peter Andrew, Vice President, Financial Planning and Analysis and Investor Relations. You may begin.

Thank you, and good afternoon, everyone. Joining me today are David Geckler, Chief Executive Officer, and Wissam Jabre, Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements based upon management's current assumptions and expectations. and as such does include risks and uncertainties. These forward-looking statements include expectations for our product portfolio, our business plans and performance, the separation of our flash and HDD businesses, ongoing market trends, and our future financial results. We assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. 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 David for introductory remarks.

Thanks, Peter. Good afternoon, everyone, and thank you for joining the call to discuss our fourth quarter in fiscal year 2024 performance. Western Digital delivered strong results with fiscal fourth quarter revenue of $3.8 billion, non-GAAP gross margin of 36.3%, and non-GAAP earnings per share of $1.44. For the fiscal year 2024, revenue totaled $13 billion. We have maintained our strategic focus on aligning our portfolio of industry-leading products with growth opportunities across a broad range of end markets to mitigate volatility while structurally improving our through-cycle profitability for both Flash and HDD. Before we discuss our performance, I want to provide our views on where the storage market is heading and how we are well positioned to capitalize on these growth opportunities. Our diverse portfolio, coupled with the structural changes we have made to strengthen our operations, is enabling us to benefit from the broad recovery we are beginning to see across our end markets. In addition, the AI data cycle is increasing the need for storage and creating new demand drivers across both Flash and HDD. These AI systems process and analyze existing data, generate new data, and require substantial storage for training, operating in a continuous cycle of increasing data consumption, processing, and generation. As AI technologies advance, data storage systems must deliver the capacity and performance necessary to support the computational demands of large, sophisticated models while managing vast volumes of data. Given this landscape, we expect Flash to benefit from both AI training and inference, while HDD is poised to benefit at both the input and output stages of these AI models. To address the growing performance, power, and capacity requirements, we have developed our Flash and HDD product roadmaps to meet our end customer storage needs across the entire AI data cycle. we introduced the industry-leading high-performance PCIe Gen5 SSD to support AI training and inference, a high-capacity 64-terabyte SSD for optimizing the build-out of rapid AI data lakes, and the world's highest-capacity EPMR UltraSMR 32-terabyte hard drive for cost-effective and deep content storage at scale. These new offerings demonstrate our continued commitment to innovation and market leadership. As we enter fiscal year 2025, we are well positioned to capture the long-term growth opportunities in data storage and believe the AI data cycle will be a significant incremental growth driver for the storage industry. Before I dive further into business updates, I want to update you on our separation plans. I am pleased with the progress our team has made as we continue to drive to completing the work required to separate the company at the end of the calendar year. As part of the ongoing preparation for the separation, we anticipate beginning to incur separation dis-synergy costs in the second half of the calendar year. Wissam will briefly discuss the anticipated impact of these costs. I'll now turn to business updates. Starting with Flash, The growth in revenue was driven by the recovery in cloud and a shift of our client mix to gaming and mobile, partially offset by a decline in consumer. Our focus on driving higher through-cycle profitability is reflected in our results as we proactively mix bits across our end markets. Our innovative offerings remain at the forefront of the market, reinforcing our competitive position and bolstering our growth prospects. For example, our new QLC-based client SSDs, which grew 50% on a sequential exabyte basis, offer significantly better performance than our previous generation TLC products. Combining this high-performance node with our in-house controller development enable us to provide a portfolio of client SSDs that deliver unmatched performance and value. We believe these products will lead the industry's transition to QLC Flash. During our new era of NAN webinar last month, we introduced the world's highest capacity BICS-8 two terabyte QLC memory die, specifically designed to meet growing data center and AI storage needs. Built on a chip bonded to array architecture, BICS-8 reinforces Western Digital and Kiox's leadership in cost and capital efficiency. as well as superior IO performance by integrating wafer bonding in advanced 3D manufacturing to establish a groundbreaking foundation for future scalability of 3D NAND. In addition, our 64 terabyte Enterprise SSD is now being sampled with plans for volume shipment later this calendar year. Furthermore, our PCIe Gen 5 based Enterprise SSD delivers best-in-class read performance as well as power efficiency. We are seeing significant interest in this product, which is currently qualifying at a hyperscaler with ramp expected in the second half of this calendar year. We'll talk more about our flash roadmap at the upcoming flash memory summit in early August. Turning to the flash outlook. Throughout the fourth quarter, our products mix was dynamic as we proactively mixed bits between our end markets in response to the softness we are seeing in more transactional markets, such as consumer and channel. Our success in identifying the most profitable approach to allocating bids is reflected in the growth of both our revenue and gross margin. As we look into the first quarter, in addition to the mixed environment we saw in the fourth quarter, we expect the continued ramp of our new enterprise SSD offerings and seasonal strength in mobile to drive mid- to high-teens bid growth on a sequential basis. For the full fiscal year 2025, we expect enterprise SSDs to represent a double-digit percent share in our portfolio mix. The new era of NAND is driving a period of change, and we are going to remain disciplined in managing our capital spending. The layers focus races behind us. The emphasis is now shifting towards strategically timing the economic introduction of new, longer-lasting nodes. Innovation now means enhancing power efficiency, performance, and capacity within these nodes, while capital decisions increasingly prioritize opportunities for margin expansion and revenue growth. Turning to HDD, revenue growth was driven by strengthened near-line demand and improved pricing. By leveraging our SMR leadership and lean cost structure, we have surpassed our target gross margin range, underscoring our ongoing commitment to improve future profitability. The HDD business has undergone a remarkable transformation in recent quarters, marked by strategic initiatives aimed at introducing the most innovative high capacity products to market. We have increased our profitability meaningfully by restructuring our manufacturing footprint and optimizing our cost structure to drive operational efficiency, all while qualifying and ramping our SMR technology. We continue to structurally change the way we are operating our HED business. With better visibility into future demand, operational excellence, and a commitment to sustaining supply-demand balance, we are poised to continue our trajectory of bringing highly innovative products to market while increasing profitability into the future. On the technology front, we ship samples of our 32-terabyte ultra-SMR EPMR Nearline hard drives to select customers. These drives feature advanced triple-stage actuators and OptiNAND technology, which are designed for seamless qualification, integration, and deployment in hyperscale cloud and enterprise data centers while maintaining exceptional reliability. With this in mind, we are well-positioned to deliver the industry's highest capacity hard drives and the best TCO. Turning to the HGD Outlook. As we look to the fiscal first quarter, we expect further growth driven by greater demand and more favorable pricing. Our cloud customers continue to transition to SMR, and we anticipate a third major cloud vendor to begin the ramp of adopting SMR in the fiscal first quarter. Our leading products and lean cost structure have supported ongoing profitability improvements in our HD business. We remain focused on driving higher margins to reflect the significant innovation and TCO improvements we deliver to our customers. Our strategic approach to commercializing ePMR, OptiNAN, and UltraSMR technologies has proven to be the winning strategy, enabling us to surpass our gross margin target for HDDs in the midst of AI's emergence as another pivotal growth driver for the industry. Let me now turn the call over to Issam, who will discuss our fiscal fourth quarter results.