Western Digital Corp at Citi TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : All right. Well, thank you for joining us again. We'll get into all the nitty gritties and financials and technology road maps. But just a high-level question first, one for Irving, one for Kris. So Irving, you've been the CEO now for about nine months. Sort of what are some of the top strategic priorities maybe as you were preparing to take this job and how would you rank yourself relative to those priorities that you laid out?

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : The same for you, Kris. What brought you to WD? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 1:30PM, WDC.OQ - Western Digital Corp at Citi TMT Conference

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Yes, good segue. Third quarter was very strong for you guys. I think you had revenues up 30%, much more on the bottom line. So as you sit here in calendar third quarter, Irving like there was lots of like puts and takes at the start of the year. There were tariffs, there was demand -- or thoughts of demand evaporation. So how -- as you sit here in calendar 3Q, how is -- as you think back, how has demand evolved for these end markets that you're in, particularly for cloud, which is now like 90% of that.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : And then just on the flip side, I mean, we're talking about strong growth. But what are some of the -- if you think about it, obviously, you're also into risk mitigation. Like what could be the flip side of that strong growth that you're seeing, the puts and takes to that end demand outlook. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 1:30PM, WDC.OQ - Western Digital Corp at Citi TMT Conference

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. And then tariffs, we still don't have a decision, I guess, on Section 232. It was expected in the summer. So I did have a question around that. But just any thoughts on if these were to come down where the focus would be? You have to manufacture in the US to, I guess, not be as impacted by tariffs. Just some high-level thoughts on how you guys are thinking about the impact.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. And then just -- you talked a lot about demand visibility, which is fantastic. Just to help investors, there's always a lot of nervousness around those agreements. Like what gives you the confidence that these agreements will come to fruition, and it's not just them putting these numbers out there and just -- it's actually real demand that will actually come to fruition.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. And then when you think about the AI, like you talked about the kicker relative to the base cloud growth. Like help investors understand what are those workloads that are driving the increased demand and the strategic use of HDDs here where and above the cloud growth that --

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Which is a good point because when I was at the Future Memory Summit in August, so I did see a lot of that cost efficient, maybe high-capacity SSD storage exactly like you talked about, the steered storage model. Just -- and I think Meta was one of them who started experimenting with this, and I'm sure there's other hyperscalers there as well. But when you think about the HDDs being sort of tight, as you talked about it, like you don't have excess capacity, you're trying to just make mostly do this with density road maps? Like how are you thinking about the impact to HDD EV demand, given these SSDs are starting to make some inroads into the data lakes into these high storage capacities? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 1:30PM, WDC.OQ - Western Digital Corp at Citi TMT Conference

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. We'll switch to margins and a little bit to talk to Kris. But just cloud, it's obviously the big hyperscalers, but you also do sell to enterprise OEMs that also have data centers and whether they offer it in a cloud way to their end customers or they sell it on-prem? Just help us understand what are you seeing on demand from these enterprise OEMs.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. Kris, over to you because I'm sure Irving is always asking for more dollars, but just help us understand. I mean, you have this tight balance to run between adding on incremental capacity to perhaps meet the needs of these hyperscalers, which are growing. At the same time, you want to be careful about that situation? Like are you kind of thinking about that tight balance that you have to run?

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. And is there any -- I do get this question from investors. Is there any mothballed capacity that you could turn on, like things that were turned off during the downturn that could possibly be brought back on? And if that were to be the case, how long does it take to turn on that capacity?

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : And I think people underestimate the amount of time that it takes on that front. So I do get people were surprised by it. A little bit maybe shifting back to the technology road maps. You talked about -- you did bring about the 11 disk solution. There's another one more generation of ePMR, and you obviously have the UltraSMR on top of that as well. So how do you think about your position with your key customers? I mean, are they looking at HAMR, which is going to be next and shifting their priorities here? Just help us understand how the cloud customers make decisions.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. And how does that algorithm that you talked about factor into margins, like incremental margins specifically as you continue this transition towards higher density, whether it's ePMR and eventually to HAMR, like help us understand how the incremental margins could look like.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Right. And on the UltraSMR, I've asked some investors who are maybe newer to the WDC story have asked about, is there anything that's needed on your customers' point -- at your customers' end to enable the use of UltraSMR?

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Broader adoption. Okay. Great. And then you're also getting more efficient on OpEx. Maybe you can just touch a little bit on OpEx as well, Kris.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. I'm going to open it up to the audience. I have a few more questions, but if there is any burning questions in the audience, please raise your hand so we can bring the mic to you. Anyone. Going once, twice, all right. Along with great margins and great earnings comes great cash flow, great free cash flow. So I can see Kris' eyes getting all super excited. So tell us about you started a buyback, debt paydown, I think meaningful buybacks expected. Like just help us understand like how does that free cash flow then flow into how we should be thinking about the buyback strategy here?

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Okay. And then just there were some discussions last earnings about the dilution from -- on the shares. Just help us maybe level set for investors how we should think about the dilution on the share level? And how is that offset with buybacks?

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Sideways. Okay. That's great. Almost up on time, but if I can quickly ask you about what do you think investors are not yet fully appreciating about WD shares? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 1:30PM, WDC.OQ - Western Digital Corp at Citi TMT Conference

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : Great. Any parting words from you, Kris? We're just happy to be here.

Question: Asiya Merchant - Citibank Cameroon SA - Analyst : All right. Well, that about wraps it up. Thank you to Western Dig here, and good luck with the rest of your meetings. Thank you.