Western Digital Reports 49% Revenue Growth, Turnaround in Operating Income and Net Income in Q3 2024

Western Digital Corporation reported significant financial improvements for the three months ended September 27, 2024, compared to the same period in the previous year. Revenue surged to $4,095 million, a 49% increase from $2,750 million in the prior year. This growth was driven primarily by a 153% increase in Cloud revenue, which reached $2,208 million, and an 85% increase in HDD revenue, attributed to higher shipments of high-capacity enterprise drives.

The company achieved an operating income of $742 million, a substantial turnaround from an operating loss of $596 million in the same quarter of 2023. Similarly, income before taxes improved to $628 million from a loss of $682 million, while net income rose to $493 million, compared to a net loss of $685 million in the prior year. Net income attributable to common shareholders was $481 million, reversing a loss of $700 million from the previous year. Basic and diluted net income per share were reported at $1.40 and $1.35, respectively, compared to losses of $2.17 per share in the prior year.

Consolidated gross profit also saw a remarkable increase, reaching $1,551 million, up from $99 million a year earlier, with gross margins improving significantly across both HDD and Flash segments. HDD gross margin rose to 38.1% from 22.9%, while Flash gross margin improved to 38.9% from a negative 10.3%.

On the balance sheet, total current assets increased to $8,942 million from $8,060 million, and total assets rose to $24,771 million from $24,188 million. Total shareholders’ equity increased to $11,643 million, up from $10,818 million, with retained earnings also rising to $7,268 million from $6,775 million.

Strategically, Western Digital announced plans to separate its HDD and Flash business units into two independent public companies, with the separation process expected to begin in the second quarter of fiscal 2025. This decision follows a period of reduced demand and supply chain challenges, prompting the company to implement cost management measures, including layoffs and restructuring charges in the previous fiscal year.

Additionally, the company completed the sale of an 80% equity interest in a Flash manufacturing subsidiary to JCET Management Co., Ltd., with the transaction closing on September 28, 2024. This move is anticipated to lead to a modest reduction in annual operating expenses and capital expenditures related to Flash products.

Overall, Western Digital's financial performance reflects a strong recovery and strategic repositioning within the data storage market, driven by increased demand in key segments and improved operational efficiencies.