Western Digital Corporation

Good afternoon and thank you for standing by. Welcome to Western Digital's first quarter fiscal 2027 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 and then one on your phones. As a reminder, this call is being recorded. Now I would like to 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, WD's Chief Executive Officer, and Kris Sennesael, WD'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, business plans and performance, ongoing market trends and future financial results. We assume no obligation to update these statements. Please refer to our most recent annual report on Form 10-K and other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. Unless stated otherwise, Today's remarks reflect non-GAAP results. Reconciliations to GAAP results are available in our press release and at investor.wdc.com. With that, I will now turn the call over to Irv.

Thanks, Ambrish. Good afternoon, everyone, and thank you for joining us today. Q1 marked a strong start to fiscal 2027, reflecting solid execution across the business and results ahead of our expectations. Revenue grew 55% year-over-year, while gross and operating margins expanded meaningfully to 58% and 49% respectively. EPS grew 161% year-over-year, and we generated $1.4 billion in free cash flow. These results reflect ongoing robust customer demand, operational discipline, and successful execution of our product and technology roadmap. Demand remains strong across our customer base and end markets. Our visibility is extending further, and with it, our conviction in the durability of demand for data storage on HDDs. We are increasingly seeing storage demand grow beyond our core cloud and hyperscale customers into enterprise environments and into newer end markets, such as NeoCloud and AI Frontier Labs, resulting in a larger and more diversified customer base. Our customers are making longer-term infrastructure investments and continue to extend their planning horizons into the next decade. As the value of data is increasing, they are investing with confidence to support their growing needs for data storage, with the vast majority of the data being stored on HDDs. We see this firsthand in our customer conversations and in broader industry research. A recent IDC survey of more than 750 companies across several countries found that organizations are storing more data, retaining it for longer periods, and increasingly putting archived data back to work. At the core of these trends is continued data growth fueled by the ongoing expansion of cloud environments and the increasing storage demands from AI. While much of the conversation around AI focuses on compute, we believe the more enduring opportunity is in data. AI is fundamentally a data system. Every workload creates more data, and that data must be stored, managed, and accessed in a scalable and economical manner. As AI adoption continues to expand across industries worldwide, data creation and storage requirements are expanding with it. Inference and agentic AI systems are generating significant volumes of logs, model outputs and system performance data that must be stored and retained. Physical AI applications such as robotics, factory automation and autonomous vehicles are further accelerating this trend with AI generated content and video workloads that are creating and retaining data at scale. Let me now turn to our industry-leading technology and innovative products. We are executing well against our technology roadmap and remain on track transitioning our customers to higher capacity drives. As we ramp production across our next-generation ePMR and HAMR platforms, we expect our exabyte shipments to continue to increase through fiscal 2027 and beyond. Volume production of our latest ePMR platform delivering up to 40 terabytes of capacity is off to a strong start. Customer adoption is progressing ahead of prior transitions and we expect this platform to represent close to 30% of our near-lying shipments by the second quarter and 50% by the third quarter of fiscal 2027. On our first generation Hammer product, we are on track to finish qualifications with two hyperscale customers in the first quarter of Calendia 2027. and are on schedule to begin volume shipments in the first half of calendar year 2027. We also expect to begin qualifications with two additional customers during the first half of calendar year 2027, further expanding customer validation and supporting broader adoption of our Hammer products. As AI workloads scale, customers not only need more capacity but also greater performance from their storage infrastructure. We are expanding the role of HDDs within cloud and AI infrastructure through innovations such as our high bandwidth drive and dual pivot technology. By combining the economics of HDDs with significantly higher levels of performance, we believe this technology can address a broader range of existing and emerging workloads. We are currently sampling our high bandwidth drives with multiple customers and the feedback has been positive. with clear use cases and value creation identified. In summary, WD is executing with momentum. We are deepening customer relationships, extending visibility, and broadening the customer base, while our product and technology roadmap delivers precisely what customers need. As data grows in volume and value across cloud, AI, and emerging workloads, we have high confidence in the durability of long-term storage demand. With that, let me turn it over to Kris.