Western Digital Corporation

Good afternoon, and thank you for standing by. Welcome to Western Digital's fourth quarter fiscal 2025 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 then one on your phone. As a reminder, this call is being recorded. Now, I will turn the call over to Mr. Ambrish Srivastava. Vice President, Investor Relations. You may begin.

Thank you and good afternoon, everyone. Joining me today are Irving Tan, Western Digital's Chief Executive Officer, and Chris Senesal, Western Digital's Chief Financial Officer. Before we begin, please note that today's discussion will contain forward-looking statements based on management's current assumptions and expectations. which are subject to various risks and uncertainties. These forward-looking statements include expectations for our product portfolio, our business plans and performance, ongoing market trends, and our future financial results. We assume no obligation to update these statements. Please refer to our most recent annual 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. In our prepared remarks, our comments will be related to non-GAAP results on a continuing operations basis, unless stated otherwise. 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 at investor.wdc.com. Lastly, I want to note that when we refer to we, us, are, or similar terms, we are referring only to Western Digital as a company and not speaking on behalf of the industry. With that, I will now turn the call over to Irving for introductory remarks. Irving?

Thanks, Ambresh. Good afternoon, everyone, and thank you for joining us today. Let me first begin by welcoming and introducing Chris Semesal, our new Chief Financial Officer. Chris brings extensive experience and a strong track record as a public company CFO. His leadership will be instrumental as we sharpen our focus on operational execution, accelerate our capital return program, and continue to create value for our shareholders. We are excited to have Chris on board. Let me now walk you through our business update. AI is ushering in a new era of data growth. by fundamentally transforming how data is created, collected, processed, and stored, and more importantly, valued. Looking beyond large language models, which have been a key driver of storage needs, the emergence of agentic AI at scale in multiple industries is creating an increasing need to store unstructured data. Agents customized with domain-specific knowledge will create a significant amount of distinct use cases and generate data at an unprecedented pace. To cite a few examples, applications leveraging agentic AI range from business tools like enterprise chatbots and code development assistance, all the way to agents assisting in engineering design and development. Within our own engineering organization, we are already realizing tangible benefits of agentic AI to help accelerate our product development cycles. These trends are still in their early stages, but are expanding rapidly across industries globally. As data becomes more valuable and central to AI-driven innovation, the need to store and retain it at scale grows in parallel. And no storage technology matches the cost efficiency and reliability of HDDs, which remain the foundation of the world's data infrastructure, delivering unmatched value for mass storage in an AI-driven future. Against this backdrop, demand for our products continues to strengthen. We remain disciplined in managing capacity and are addressing long-term market demand through high quality, reliable, and larger capacity products. Shipments of our latest generation e-PMR drives with capacity up to 26 terabyte CMR and 32 terabyte Ultra-SMR more than doubled quarter over quarter, exceeding 1.7 million units in the June quarter. This marks one of the shortest qualification and RAM cycles in our history. The reliability, scalability, and TCO value of our ePMR and UltraSMR technologies that delivers the fastest time to value for our customers is core to our continued success in the data center market. We aim to extend ePMR's strong track record of high yield, reliability, and a scalable performance into our next generation of hammer drives. The feedback from tests at two of our hyperscale customers continues to be encouraging. I am pleased to note that we are ahead of our internal milestones with steady progress in aerial density improvement and continue to focus on increasing long-term reliability and manufacturing yields of our hammer products. Next, we will transition from testing to qualification stage with these customers, staying well on track for a ramp in the first half of calendar year 2027. Meanwhile, our next generation of ePMR drives will complete qualification In the first half of Calendia 2026, these drives will continue to deliver strong TCO along with the hallmark reliability and predictability, paving the way for a smooth and economically sound transition to Hammer. In addition, the rapid rise of AI is also accelerating our platforms business. Our platforms technology enables us to deliver dense systems that extract the full performance and capacity of our drives. This business is building traction with infrastructure providers and is well positioned to support the growing number of native AI companies that don't have their own storage infrastructure teams. Let me now turn to our quarterly results and capital allocation updates. For the fiscal fourth quarter, Western Digital delivered revenue of $2.6 billion, non-GAAP gross margin of 41.3%, and non-GAAP earnings per share of $1.66. Free cash flow for the quarter was $675 million. During the June quarter, we lowered our debt by $2.6 billion via a combination of using cash on hand and a debt-for-equity exchange of a portion of our stake incentives. As a result, we have strengthened our balance sheet and achieved a net leverage target range of 1 to 1.5x, we communicated at our investor day in February in less than two quarters. Keeping with our commitment to returning cash to shareholders, we initiated a quarterly cash dividend program, and the board authorized a $2 billion share repurchase program. In our fiscal fourth quarter, we repurchased nearly $150 million worth of shares. Looking ahead, while the broader environment continues to be marked with uncertainty related to tariffs, We are seeing strong demand for our products driven by AI and related tailwinds in our business. Our visibility into our customers' plans continue to improve, and we currently have firm POs or LTAs with all of our top five hyperscale customers covering our entire fiscal year 2026. This close collaboration with our customers enables us to plan more effectively and address their growing needs for storage. For the fiscal first quarter of 2026, we expect continued revenue growth driven by data center demand and improved profitability led by adoption of our high-capacity drives. Let me now turn the call over to Chris, who will discuss our fiscal fourth quarter results and Q1 fiscal year 26 guidance in more detail.