Western Digital : Second Quarter Fiscal 2023 Earnings Presentation

Fiscal Second Quarter 2023 Financial Results

Western Digital

January 31, 2023

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Forward Looking Statements

SAFE HARBOR

This presentation contains forward-looking statements within the meaning of federal securities laws, including statements regarding expectations for the company's business outlook and financial performance for the fiscal third quarter of 2023; product ramps and qualifications; product momentum; and capital expenditure and allocation priorities. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements.

Key risks and uncertainties include volatility in global economic conditions; future responses to and effects of the COVID-19 pandemic or other similar global health crisis; impact of business and market conditions; the outcome and impact of our ongoing strategic review, including with respect to customer and supplier relationships, regulatory and contractual restrictions, stock price volatility and the diversion of management's attention from ongoing business operations and opportunities; impact of competitive products and pricing; our development and introduction of products based on new technologies and expansion into new data storage markets; risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and our strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; our level of debt and other financial obligations; changes to our relationships with key customers; disruptions in operations from cybersecurity incidents or other system security risks; actions by competitors; risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings; and other risks and uncertainties listed in the

company's filings with the Securities and Exchange Commission (the "SEC") and available on the SEC's website at www.sec.gov, including our Form 10-K filed with

the SEC on August 25, 2022, to which your attention is directed. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements to reflect new information or events, except as required by law.

This presentation also contains preliminary financial results for the company's fiscal second quarter ended December 30, 2022. These preliminary financial results represent the most current information available to management. The company's actual results when disclosed in its Form 10-Q for the period ended December 30, 2022 may differ from these preliminary results as a result of the completion of the company's financial closing procedures; final adjustments; completion of the review by the company's independent registered accounting firm; and other developments that may arise between now and disclosure of the final results.

This presentation includes references to Non-GAAP financial measures. Reconciliations of the differences between the Non-GAAP measures provided in this presentation to the comparable GAAP financial measures are included in the appendix and in the Investor Relations section of our website. We have not fully reconciled our Non-GAAP financial measure guidance to the most directly comparable GAAP measures because material items that impact these measures are not in our control and/or cannot be reasonably predicted. Accordingly, a full reconciliation of the Non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.

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Fiscal Second Quarter Executive Summary

	Financial Results	•	Revenue of $ 3.1B	•	Operating cash flow of $ 35M
			•	Non-GAAP EPS of $ (0.42)	•	Free cash flow of $ (240)M
			•	Non-GAAP gross margin of 17.4%	•	Cash and cash equivalents of $ 1.9B
	Corporate	•	Continue to take deliberate action to position our business for long-term success. With our innovative products, broad go-
				to-market engine, an enviable retail franchise and a lower cost structure, we remain confident in our ability to deliver long-
				term shareholder value.
	Flash	•	Reduced wafer starts by 30% beginning in January.
			•	Premium WD_BLACK client SSD achieved a new record in exabyte shipments, unit shipments, and average capacity per
				drive.
			•	BiCS5 represented 70% of our flash revenue in the December quarter. BiCS6 to reach cost crossover in fiscal third
				quarter.
			•	BiCS8, the next generation 3D-NAND node, has entered productization phase.
	Hard Drive	•	Completed qualifications and commenced shipments of our latest generation 22-terabyte CMR hard drives at multiple
				Cloud and major OEM customers.
			•	Aggressively ramping 22-terabyte CMR product and expect this drive along with its SMR variants to be our growth engine
				going forward.

See Appendix for GAAP to non-GAAP Reconciliations.

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Revenue Trends by End Market

Cloud		Client

Consumer

In billions

$ 2.4 $ 2.0

$ 1.6

$ 1.2

$ 0.8

$ 0.4

$- Q2F22 Q3F22 Q4F22 Q1F23 Q2F23

Revenue

$ 1.2 billion

In billions

$ 2.4 $ 2.0

$ 1.6

$ 1.2

$ 0.8

$ 0.4

$- Q2F22 Q3F22 Q4F22 Q1F23 Q2F23

Revenue

$ 1.1 billion

In billions

$ 2.4 $ 2.0 $ 1.6 $ 1.2 $ 0.8 $ 0.4

$- Q2F22 Q3F22 Q4F22 Q1F23 Q2F23

Revenue

$ 0.8 billion

Decreased 33% QoQ	Decreased 11% QoQ	Increased 17% QoQ
Decreased 36% YoY	Decreased 41% YoY	Decreased 25% YoY

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Flash and Hard Drive Metrics

Flash Revenue and Gross Margin

Hard Drive Revenue and Gross Margin

In billions $ 2.8

$ 2.4 $ 2.0 $ 1.6 $ 1.2 $ 0.8 $ 0.4

$-

	In billions
40%	$ 2.8
35%	$ 2.4
30%	$ 2.0
25%	$ 1.6
20%	$ 1.2
15%
10%	$ 0.8
5%	$ 0.4
0%	$-

40%

35%

30%

25%

20%

15%

10%

5%

0%

Q2F22

Q3F22

Q4F22

Q1F23

Q2F23

Q2F22

Q3F22

Q4F22

Q1F23

Q2F23

Revenue

Gross Margin (%)

Revenue

Gross Margin (%)

Flash

• Bit shipments: increased 20% QoQ Q2F23 ▪ ASP/Gigabyte:

Results	▪	Blended: decreased 20% QoQ
	▪	Like-for-like: decreased 13% QoQ

Hard Drive

Q2F23	▪	Exabyte shipments: decreased 35% QoQ
Results	▪	ASP per drive: $ 99

See Appendix for Supplemental Operating Segment Results.