Western Digital (WDC) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue reached $3.8 billion, up 9% sequentially and 41% year-over-year, with non-GAAP EPS of $1.44 and gross margin of 36.3%.

• FY2024 revenue totaled $13.0 billion, with non-GAAP gross margin at 22.8% and operating margin at 3.9%.

• Strategic focus on aligning Flash and HDD portfolios to growth markets, especially AI, cloud, and enterprise storage, driving improved profitability.

• Progress continues toward separating Flash and HDD businesses by year-end, with related dis-synergy costs beginning in H2 of the calendar year; board approval pending.

• Management highlights the AI Data Cycle as a transformational industry driver and expects to leverage technology leadership for future growth.

Financial highlights

• Q4 cloud revenue was $1.9 billion (50% of total), up 21% sequentially and 89% year-over-year, driven by nearline HDD and enterprise SSD.

• Client revenue was $1.2 billion (32% of total), up 3% sequentially and 16% year-over-year; consumer revenue was $0.7 billion (18% of total), down 7% sequentially but up 5% year-over-year.

• Flash revenue in Q4 was $1.8 billion, up 3% sequentially and 28% year-over-year; HDD revenue was $2.0 billion, up 14% sequentially and 55% year-over-year.

• Q4 operating income was $666 million; operating cash flow was $366 million, and free cash flow was $282 million.

• Q4 non-GAAP diluted EPS increased to $1.44 from $0.63 in Q3 2024 and $(1.99) in Q4 2023.

Outlook and guidance

• Q1 FY25 revenue expected between $4.0–$4.2 billion, with non-GAAP gross margin of 37–39% and EPS of $1.55–$1.85.

• Both Flash and HDD revenue and gross margin anticipated to improve sequentially.

• Operating expenses projected at $695–$715 million, including $15–$25 million in separation synergy costs.

• Enterprise SSDs expected to represent a double-digit percentage of FY2025 portfolio mix.

• Non-GAAP tax rate projected at 15–17%.