Name: Western Digital Corp. (NASDAQ:WDC) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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Western Digital Corp., consolidated income statement

US$ in millions

12 months ended:	Jun 30, 2023	Jul 1, 2022	Jul 2, 2021	Jul 3, 2020	Jun 28, 2019	Jun 29, 2018
Revenue, net	12,318)	18,793)	16,922)	16,736)	16,569)	20,647)
Cost of revenue	(10,431)	(12,919)	(12,401)	(12,955)	(12,817)	(12,942)
Gross profit	1,887)	5,874)	4,521)	3,781)	3,752)	7,705)
Research and development	(2,009)	(2,323)	(2,243)	(2,261)	(2,182)	(2,400)
Selling, general and administrative	(970)	(1,117)	(1,105)	(1,153)	(1,317)	(1,473)
Employee termination, asset impairment, and other charges	(193)	(43)	47)	(32)	(166)	(215)
Operating expenses	(3,172)	(3,483)	(3,301)	(3,446)	(3,665)	(4,088)
Operating income (loss)	(1,285)	2,391)	1,220)	335)	87)	3,617)
Interest income	24)	6)	7)	28)	57)	60)
Interest expense	(312)	(304)	(326)	(413)	(469)	(676)
Other income (expense), net	13)	30)	26)	4)	38)	(916)
Interest and other income (expense), net	(275)	(268)	(293)	(381)	(374)	(1,532)
Income (loss) before taxes	(1,560)	2,123)	927)	(46)	(287)	2,085)
Income tax expense	(146)	(623)	(106)	(204)	(467)	(1,410)
Net income (loss)	(1,706)	1,500)	821)	(250)	(754)	675)
Cumulative dividends allocated to preferred shareholders	(24)	—)	—)	—)	—)	—)
Net income (loss) attributable to common shareholders	(1,730)	1,500)	821)	(250)	(754)	675)

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).

The financial performance over the six-year period is characterized by significant volatility in revenue and profitability, culminating in a substantial contraction in the most recent fiscal year. Revenue peaked in 2018 at 20,647 million US$, followed by a period of instability and a temporary recovery in 2022, before dropping to its lowest point of 12,318 million US$ in 2023.

Revenue and Gross Profitability: A volatile trend is evident in top-line performance. Following a sharp decline between 2018 and 2019, revenue remained relatively stagnant until a peak in 2022. However, the 2023 fiscal year saw a precipitous decline in both revenue and gross profit. Gross profit fell from 5,874 million US$ in 2022 to 1,887 million US$ in 2023, indicating a significant compression of gross margins and an inability to scale the cost of revenue downward in proportion to the falling sales.
Operating Expense Management: Operating expenses remained relatively stable compared to the volatility of revenue. Research and development costs hovered between 2,009 million US$ and 2,400 million US$ throughout the period, while selling, general, and administrative expenses showed a gradual downward trend, decreasing from 1,473 million US$ in 2018 to 970 million US$ in 2023. This suggests a high fixed-cost structure that exacerbates losses during periods of revenue decline.
Operating Income and Net Earnings: Operating income experienced extreme fluctuations, moving from a high of 3,617 million US$ in 2018 to an operating loss of 1,285 million US$ in 2023. Net income followed a similar trajectory, with positive results in 2018, 2021, and 2022, contrasted by losses in 2019, 2020, and 2023. The net loss in 2023 reached 1,706 million US$, the most severe deficit in the analyzed period.
Interest and Non-Operating Items: Interest expenses decreased from a peak of 676 million US$ in 2018 to a more stable range between 304 million US$ and 469 million US$ in subsequent years. While other income and expenses remained relatively low after 2018, the overall interest and other income (expense), net, consistently remained negative, adding further pressure to the pre-tax income.

The overall financial trajectory indicates a high sensitivity to market conditions, where the inability to maintain stable revenue levels, coupled with a rigid operating expense base, has led to substantial instability in net earnings and a significant deficit in the most recent reporting year.

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