Western Digital : Second Quarter Fiscal 2022 Earnings Presentation

Fiscal Second Quarter 2022 Financial Results

Western Digital

January 27, 2022

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 for the fiscal third quarter of 2022; and capital 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.

Material risks and uncertainties include future responses to and effects of the COVID-19 pandemic; volatility in global economic conditions; impact of business and market conditions; 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 substantial level of debt and other financial obligations; changes to our relationships with key customers; disruptions in operations from cyberattacks 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 27, 2021, 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 second quarter ended December 31, 2021. 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 quarter ended December 31, 2021 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.

Executive Summary

	Financial Results	•	Revenue of $4.8B	•	Operating cash flow of $666M
		•	Non-GAAP diluted net earnings per share of $2.30	•	Free cash flow of $407M
		•	Non-GAAP gross margin of 33.6%	•	Cash and cash equivalents of $2.5B
	Corporate	•	Received an investment grade corporate rating from Fitch in December 2021.
		•	Reduced total debt by $2.4 billion in the last 18 months.
	Flash	•	Revenue growth was driven by seasonal strength in mobile and consumer. Within mobile, shipments of our
			BiCS5 products into leading 5G smartphones increased over 60% sequentially and 50% year-over-year, led by
			strong content growth.
		•	Enterprise SSD products are qualified at three cloud titans and two major storage OEMs.
		•	Client SSD revenue declined sequentially due to supply chain disruptions at some of our PC customers and
			pricing pressure in the more transactional markets.
	Hard Drives	•	Supply chain disruptions impacted cloud hard drive deployments at certain customers, which led to a
			sequential decline in exabyte shipments.
		•	Healthy overall demand for capacity enterprise drives, along with Western Digital's leadership position at the
			18 terabyte capacity point, drove a >50% year-over-year increase in exabyte shipments.
		•	Commenced shipments of 20 terabyte hard drives based on OptiNAND technology.

For reconciliations of GAAP to non-GAAP financial measures, see the Appendix.

Revenue Trends by End Market

	Cloud				Client				Consumer
In billions					In billions					In billions
$ 2.4					$ 2.4					$ 2.4
$ 2.0					$ 2.0					$ 2.0
$ 1.6					$ 1.6					$ 1.6
$ 1.2					$ 1.2					$ 1.2
$ 0.8					$ 0.8					$ 0.8
$ 0.4					$ 0.4					$ 0.4
$-					$-					$-
Q2F21	Q3F21	Q4F21	Q1F22	Q2F22	Q2F21	Q3F21	Q4F21	Q1F22	Q2F22	Q2F21	Q3F21	Q4F21	Q1F22	Q2F22

Revenue	Revenue	Revenue
$1.9 billion	$1.9 billion	$1.1 billion

Decreased 14% QoQ	Flat QoQ	Increased 9% QoQ
Increased 89% YoY	Decreased 1% YoY	Flat YoY

Flash and Hard Drive Metrics

	Flash Revenue and Gross Margin
In billions
$ 2.8													40%
$ 2.4
														35%
$ 2.0															30%
$ 1.6															25%
															20%
$ 1.2															15%
$ 0.8															10%
$ 0.4															5%
$-																0%
	Q2F21	Q3F21	Q4F21	Q1F22	Q2F22
				Revenue			Non-GAAP GM %

Flash

Q2F22	▪	Bit shipments: increased 13% QoQ
▪	ASP/Gigabyte:
Results		▪	Blended: declined 6% QoQ
		▪	Like-for-like: declined 3% QoQ

		Hard Drive Revenue and Gross Margin
In billions
$ 2.8		40%
$ 2.4
									35%
$ 2.0										30%
$ 1.6										25%
										20%
$ 1.2										15%
$ 0.8										10%
$ 0.4										5%
$-											0%

Q2F21	Q3F21	Q4F21	Q1F22	Q2F22
				Revenue			Non-GAAP GM %
Hard Drive
Q2F22	▪	Exabyte shipments: decreased 14% QoQ
Results	▪	ASP per drive: $97
	▪ COVID impact: $60 million

For reconciling information related to our operating segment results, see the Appendix.