Western Digital Reports Fourth Quarter and Fiscal Year 2021 Financial Results

• Fourth quarter revenue was $4.9 billion, up 15% year-over-year (YoY). Client Devices revenue increased 13%, Data Center Devices and Solutions revenue increased 6%, and Client Solutions revenue increased 42% YoY. Fiscal year 2021 revenue was $16.9 billion, up 1% YoY.
• Fourth quarter GAAP earnings per share (EPS) was $1.97 and non-GAAP EPS was $2.16. Fiscal year 2021 GAAP EPS was $2.66 and non-GAAP EPS was $4.55.
• Generated operating cash flow of $994 million and free cash flow of $792 million in the fourth quarter. Generated operating cash flow of $1.9 billion and free cash flow of $1.1 billion in fiscal year 2021.
• Expecting fiscal first quarter 2022 revenue to be in the range of $4.90 billion to $5.10 billion with non-GAAP EPS in the range of $2.25 to $2.55.

Western Digital Corp. (WDC) Reported Fourth Quarter and Fiscal Year 2021 Financial Results.

“I am extremely proud of the outstanding execution our team exhibited as we achieved another quarter of strong revenue, gross margin and EPS results above expectations,” said David Goeckeler, Western Digital CEO. “Throughout this fiscal year, we successfully delivered both flash and hard drive innovations that are essential building blocks in the acceleration of the data economy. This innovation, combined with our broad channels to market, diverse end market exposure and improved operational efficiency, enabled us to successfully navigate through the pandemic and capitalize on strategic growth opportunities. We believe we have the right foundation for success – the right products, the right customer base, and the unique ability to address two very large and growing markets.”

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Q4 2021 Financial Highlights

	GAAP			Non-GAAP
	Q4 2021	Q3 2021	Q/Q	Q4 2021	Q3 2021	Q/Q
Revenue ($M)	$4,920	$4,137	up 19%	$4,920	$4,137	up 19%
Gross Margin	31.8%	26.4%	up 5.4 ppt	32.9%	27.7%	up 5.2 ppt
Operating Expenses ($M)	$891	$774	up 15%	$790	$732	up 8%
Operating Income ($M)	$675	$317	up 113%	$828	$412	up101%
Net Income ($M)	$622	$197	up 216%	$680	$318	up 114%
Earnings Per Share	$1.97	$0.63	up 214%	$2.16	$1.02	up 112%

 

	GAAP			Non-GAAP
	Q4 2021	Q4 2020	Y/Y	Q4 2021	Q4 2020	Y/Y
Revenue ($M)	$4,920	$4,287	up 15%	$4,920	$4,287	up 15%
Gross Margin	31.8%	25.3%	up 6.5 ppt	32.9%	28.9%	up 4.0 ppt
Operating Expenses ($M)	$891	$822	up 8%	$790	$713	up 11%
Operating Income ($M)	$675	$261	up 159%	$828	$527	up57%
Net Income ($M)	$622	$148	up 320%	$680	$369	up 84%
Earnings Per Share	$1.97	$0.49	up 302%	$2.16	$1.23	up 76%

 

Fiscal Year 2021 Financial Highlights

	GAAP			Non-GAAP
	2021	2020	Y/Y	2021	2020	Y/Y
Revenue ($M)	$16,922	$16,736	up 1%	$16,922	$16,736	up 1%
Gross Margin	26.7%	22.6%	up 4.1 ppt	28.6%	26.9%	up 1.7 ppt
Operating Expenses ($M)	$3,301	$3,446	down 4%	$2,926	$2,983	down 2%
Operating Income (Loss) ($M)	$1,220	$335	up 264%	$1,906	$1,522	up 25%
Net Income (Loss) ($M)	$821	($250)	*	$1,406	$914	up 54%
Earnings Per Share	$2.66	($0.84)	*	$4.55	$3.04	up 50%

*not a meaningful figure

Additional details can be found within the company’s earnings presentation, which is accessible online at investor.wdc.com.

Key End Market Summary

Revenue ($M)	Q4 2021	Q3 2021	Q/Q	Q4 2020	Y/Y	2021	2020	Y/Y
Client Devices	$2,166	$2,012	up 8%	$1,916	up 13%	$8,255	$7,160	up 15%
Data Center Devices & Solutions	$1,777	$1,237	up 44%	$1,684	up 6%	$4,950	$6,228	down 21%
Client Solutions	$977	$888	up 10%	$687	up 42%	$3,717	$3,348	up 11%
Total Revenue	$4,920	$4,137	up 19%	$4,287	up 15%	$16,922	$16,736	up 1%

In the fiscal fourth quarter of 2021, Western Digital’s revenue increased 19% quarter-over-quarter and 15% year-over-year to $4.9 billion. The company’s improving execution and unique ability to shift bits across broad routes to diverse markets enabled growth in revenue and gross margin and drove strong free cash flow.

Client Devices experienced broad-based strength across nearly every product category on a sequential basis. Contributing to this momentum was better than expected demand for notebook and desktop HDDs, as well as flash-based solutions. In addition, there was robust demand for gaming, smart video, automotive, and industrial applications.

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In Data Center Devices & Solutions, Western Digital achieved a record shipment of over 104 exabytes in capacity enterprise hard drives, highlighting the importance of these products to datacenter customers. The 18-terabyte energy-assisted hard drive was the leading capacity point and comprised nearly half of Western Digital’s capacity enterprise shipments. Enterprise SSD demand strengthened as the company completed a qualification at another cloud titan and is now ramping the product more broadly.

Client Solutions experienced greater than seasonal demand resulting in sequential growth for both HDD and flash-based solutions. Despite the uneven reopening of economies around the world, the company was able to drive growth in both revenue and gross margin due to the breadth of its portfolio and many routes to market.

Business Outlook for Fiscal First Quarter of 2022	Three Months Ending October 1, 2021
	GAAP(1)	Non-GAAP(1)
Revenue ($B)	$4.90 – $5.10	$4.90 – $5.10
Gross margin	32.0% – 34.0%	33.0% – 35.0%
Operating expenses ($M)	$865 – $895	$755 – $785
Interest and other expense, net ($M)	~ $80	~ $70
Tax rate	N/A	11 – 12% (2)
Diluted earnings per share	N/A	$2.25 – $2.55
Diluted shares outstanding (in millions)	~ 317	~ 317

 

(1) Non-GAAP gross margin guidance excludes amortization of acquired intangible assets and stock-based compensation expense, totaling approximately $40 million to $60 million. The company’s non-GAAP operating expenses guidance excludes amortization of acquired intangible assets; stock-based compensation expense; and employee termination, asset impairment and other charges, totaling approximately $100 million to $120 million. The company’s non-GAAP interest and other expense guidance excludes approximately $10 million of convertible debt activity. In the aggregate, non-GAAP diluted earnings per share guidance excludes these items totaling $150 million to $190 million. The timing and amount of these charges excluded from non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other expense, net and non-GAAP diluted earnings per share cannot be further allocated or quantified with certainty. Additionally, the timing and amount of additional charges the company excludes from its non-GAAP tax rate and non-GAAP diluted earnings per share are dependent on the timing and determination of certain actions and cannot be reasonably predicted. Accordingly, full reconciliations of non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other expense, non-GAAP tax rate and non-GAAP diluted earnings per share to the most directly comparable GAAP financial measures (gross margin, operating expenses, interest and other expense, tax rate and diluted earnings per share, respectively) are not available without unreasonable effort.

(2) The non-GAAP tax rate provided is based on a percentage of non-GAAP pre-tax income. Due to differences in the tax treatment of items excluded from our non-GAAP net income and because our tax rate is based on an estimated forecasted annual GAAP tax rate, our estimated non-GAAP tax rate may differ from our GAAP tax rate and from our actual tax rates.

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