Slides
Page 1
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . February 3, 2026 Innovation Day © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED .
Page 2
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Welcome Ambrish Srivastava Innovation Day
Page 3
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Disclaimers FORWARD-LOOKING STATEMENTS 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 2026 and beyond; the company’s strategy and financial model; the company’s product development plans, including the performance, value, capabilities, availability and market position of the company’s products; industry, technology, and storage trends, including the impact of artificial intelligence; the company’s market position, demand trends, and growth opportunities for the company’s products; and the company’s capital allocation plans. 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 that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: adverse global or regional conditions, including new or additional tariffs or trade restrictions; the company’s dependence on a limited number of qualified suppliers; volatility in demand for the company’s products; the impact of business and market conditions, including inflation, increases in interest rates and an economic recession; the outcome and impact of the company’s completed separation of its HDD and Flash businesses; the impact of competitive products and pricing; the company’s 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 the company’s strategic relationships; difficulties or delays in manufacturing or other supply chain disruptions; hiring and retention of key employees; the company’s level of debt and other financial obligations; changes to the company’s relationships with key customers; compromise, damage or interruption from cybersecurity incidents or other data system security risks; actions by competitors; any decisions to reduce or discontinue paying cash dividends or repurchasing shares of the company’s common stock; the company’s ability to achieve its greenhouse gas emissions reduction and other sustainability goals; the impact of international conflicts; 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”), including the company’s Annual Report on Form 10-K filed with the SEC on August 14, 2025 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. NON-GAAP MEASURES 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 for historical periods. Reconciliations for Q3 FY 2026 (based on the company's guidance), Q4 FY2026 (based on consensus estimates), and the long-term financial model are not available because certain information necessary to reconcile such guidance and consensus estimates to GAAP is difficult to estimate or cannot be allocated or quantified with certainty and is dependent on future events outside of our control. Accordingly, a full reconciliation of the non-GAAP financial measures for these future periods to the corresponding GAAP measures is not available without unreasonable effort. The company presents consensus estimates for illustrative purposes only, as the company has not prepared projections for Q4 FY2026. The company has not independently verified these estimates and makes no representation as to the reliability or accuracy of these third-party projections, which may be calculated differently from how the company calculates such measures and, accordingly, may not reflect all adjustments or other expenses or gains that may be required by generally accepted accounting principles or are otherwise relevant to the company’s presentation of the measure on a non-GAAP basis. Actual results may differ materially from estimates presented. See "Forward-Looking Statements" for additional information. DISCONTINUED OPERATIONS The financial and operating results of Sandisk Corporation (“Sandisk”) subsequent to February 21, 2025 (the “Separation Date”) are no longer consolidated into Western Digital Corporation’s (“WD”) financial and operating results, and the historical results and financial position of Sandisk for all periods prior to the Separation Date have been reflected as discontinued operations in the accompanying financial information. 3
Page 4
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Agenda Welcome Ambrish Srivastava Realizing the AI Opportunity Continuous Innovation & Focused Execution Irving Tan Reimagining the HDD for the AI-Driven Data Economy Ahmed Shihab Long-Term Value Creation Kris Sennesael Closing Remarks Irving Tan Q&A Lunch & Demos © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 4
Page 5
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Realizing the AI Opportunity Continuous Innovation & Focused Execution Irving Tan Innovation Day
Page 6
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . A Year Focused on Execution Against Our Strategy OPERATIONAL EXCELLENCE ENHANCED CUSTOMER FOCUS PRODUCT & TECHNOLOGY LEADERSHIP HIGH -PERFORMANCE TEAMS INNOVATION & GROWTH RIGOROUS FINANCIAL DISCIPLINE 6
Page 7
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . And Our Efforts Have Been Recognized Western Digital’s Nasdaq-100 Entry Caps Its AI-Driven Comeback December 16, 2025 7
Page 8
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . The AI / Cloud Data Storage Opportunity Is Accelerating 1. Leading consulting firm is projected to grow at 25 % + CAGR through 2030 1 AI / Cloud Storage storage market © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 8
Page 9
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . HDDs Are the Foundation of AI / Cloud Data Storage Source: IDC, Worldwide Global StorageSphere Forecast, 2025–2029 80% of storage within the cloud is based on HDDs © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 9
Page 10
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . What Our Customers Want & Need ScaleReliability & Quality Cost Efficiency Capacity Performance & Power No Disruption 10
Page 11
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Ease of technology adoption Innovations to address performance & power Smooth transitions with HAMR & ePMR Delivering for Our Customers Highest capacity, scalable, quality HDDs 11
Page 12
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Faster Customer Adoption Backup / Disaster Recovery Offline Archive Deep Archive Enterprise / Consumer / Client Rack Scale Flash HDD Aerospace Defense & Aviation Automotive Quantum AI System Performance Neo Cloud Hyperscale WD's Core Capabilities & Rich IP Science Engineering Product Market 12
Page 13
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Going Forward We will continue accelerating innovation & focused execution © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 13
Page 14
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Reimagining the HDD for the AI-Driven Data Economy Ahmed Shihab Innovation Day
Page 15
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . AI Workload & Data Storage Mapping WORKLOADS STORAGE SOFTWARE USERS MEDIA Data Ingestion Data Preparation Training Inference DOC STORAGE TIER Capacity Performance Capacity Performance Performance Capacity Object Store / Parallel File System COOL HDD WARM HDD WARM HDD WARM / HOT HDD & SSD DRIVE TYPE 15
Page 16
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . End-to-End Innovation to Meet Exponential Data Growth WHAT CUSTOMERS NEED WHAT WE ARE DELIVERING Invent around corners Build together with customers Cost Efficiency Capacity Performance & Power Reliability & Quality Scale No Disruption Qualify products early 16
Page 17
“ Storage, more than anything else, is something that has very little tolerance for not working . So, the teams that build storage tend to be really conservative, and there’s this tension between going fast and being careful . We’re always working on that tension trying to deliver with velocity while maintaining the level of quality you expect from our services . – Andy Warfield Vice President, AWS re:Invent 2025 © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 17
Page 18
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Reinventing the HDD & Putting It into Customer Hands CAPACITY DRIVES ePMR 40TB 60TB 2026 2027 2028 2029 2030 2031 2032Calendar Year Platforms PLATFORMS JBOD: SSD + HDD Intelligent Platform: SSD + HDD + Software Defined Abstraction POWER-OPTIMIZED DRIVES Power-Optimized HIGH-PERFORMANCE DRIVES Dual Pivot Technology High Bandwidth Drive Technology HAMR 44TB 100TB60TB40TB 18
Page 19
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . HAMR in customer qualification Capacity Drives
Page 20
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . HAMR Performance Customers Expect Customers experience with ePMR interchangeable performance 20
Page 21
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . The Unique Anatomy of WD’s HAMR Drive per Platter 4TB per Drive 44TB Same architecture, increased areal density 21
Page 22
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Road to 100TB+ Laser Innovations to Deliver Increased Areal Density & Platters 14 PLATTERS WD LASER TECHNOLOGY EDGE -EMITTING LASER AREAL DENSITY Up to 10TB 22
Page 23
One qualification across multiple capacity points Systems Integration Test Lab Faster Customer Qualification & Smooth Scaling on All WD Drives © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 23
Page 24
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . HAMR Delivering Customer Flexibility & Scale on the Road to 100TB+ CAPACITY DRIVES ePMR 40TB 60TB HAMR 44TB 100TB40TB 2026 2027 2028 2029 2030 2031 2032Calendar Year 60TB 24
Page 25
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . ePMR The workhorse of the modern data center Capacity Drives
Page 26
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . HDD in the world Highest Capacity 40TB ePMR UltraSMR 26
Page 27
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Highest Capacity ePMR Drives with Proven Performance Customers Trust 40TB UltraSMR ePMR , , & Proven technology rapid qualification high yield 27
Page 28
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Extending ePMR Capacity to 60TB AREAL DENSITY Revolutionizing media recipes and firmware algorithms to increase bits per square inch POWER EFFICIENCY Leveraging HAMR-derived learnings to scale density without raising power consumption 14 PLATTERS Optimizing mechanical designs to accommodate increased disk count 28
Page 29
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . ePMR A Smooth Bridge to HAMR, on Customer Terms CAPACITY DRIVES ePMR 40TB 60TB HAMR 44TB 100TB40TB 2026 2027 2028 2029 2030 2031 2032Calendar Year 60TB 29
Page 30
Delivering throughput advances while preserving HDD economics Performance Drives © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED .
Page 31
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 2x Bandwidth already demonstrated High Bandwidth Drive Technology 8x Bandwidth planned by 2030 31
Page 32
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Dual Pivot Technology Doubles the number of transactions per second 32
Page 33
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Performance Drives Combining Our New Technologies to Maintain 6–10x Cost Advantages vs. QLC as Capacities Grow HIGH-PERFORMANCE DRIVES Dual Pivot Technology High Bandwidth Drive Technology 2026 2027 2028 2029 2030 2031 2032Calendar Year 33
Page 34
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Power- Optimized Drives © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Filling the gap between warm & cold storage tiers 34
Page 35
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Power-Optimized Drives Filling the Gap between Warm & Cold Storage Trade 5–10% performance Start customer qualification in 2027 Reduce power by up to 20% Gain 10% higher capacity 35
Page 36
Platform Technology Hyperscale economics, without hyper-scale 36
Page 37
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . One Intelligent Platform AFTER Intelligent Software Auto-magically cataloging, capacity, features Faster adoption. No rewrites. Automatic feature enablement Single Open API Flash HDD An Intelligent Platform to Reduce Complexity & Speed Up Adoption Complexity for Customers BEFORE Customer rewrite cataloging software to adopt innovations Flash HDD Custom cataloging system Custom cataloging system 37
Page 38
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Meeting Customers Where They Are & Where They Are Going CAPACITY DRIVES ePMR 40TB 60TB 2026 2027 2028 2029 2030 2031 2032Calendar Year Platforms PLATFORMS JBOD: SSD + HDD Intelligent Platform: SSD + HDD + Software Defined Abstraction POWER-OPTIMIZED DRIVES Power-Optimized HIGH-PERFORMANCE DRIVES Dual Pivot Technology High Bandwidth Drive Technology HAMR 44TB 100TB60TB40TB 38
Page 39
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . The Reinvented HDD for AI Intelligent platforms expand WD customer reach Double bandwidth up to 8x Seamless growth to 100TB+ per drive by 2029 Power optimization for cooler data Delivering , , , & higher capacity drives enhanced performance more exabytesoptimized TCO 39
Page 40
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Innovation Day Long-Term Value Creation Kris Sennesael
Page 41
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . A Structurally Different WD Cloud / AI-driven demand, longer visibility GROWTH Differentiated solutions, expanding margins INNOVATION Strong balance sheet, durable Free Cash Flow (FCF) STRENGTH AI & Cloud + Innovation = Long-Term Value Creation 41
Page 42
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Profitable Growth at Scale Demand Tailwinds + Innovative Products = Profitable Growth 1. Non-GAAP financial measures. See the Appendix for important information, including a reconciliation of non -GAAP to GAAP measures. 2. FY26E consists of actual results for the first and second quarters, the company's guidance for the third quarter, and consensus estimates for the fourth quarter of fiscal year 2026 from Factset. $2 $4 5% 24% 34% Operating Profit Operating Margin OPERATING PROFIT 1 ($ Billions) $2 $4 $6 29% 39% 47% Gross Profit Gross Margin GROSS PROFIT 1 ($ Billions) FY24 FY25 FY26E 2 REVENUE ($ Billions) $6 $10 $12 REVENUE ($ Billions) 40%CAGR FY24 FY25 FY26E 2 FY24 FY25 FY26E 2 42
Page 43
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Cash generation powers growth & shareholder value Strong Cash Flow. Superior Returns. FREE CASH FLOW 1 ($ Millions) $193 $592 $663 29% 99% 102% Q4FY25 Q1FY26 Q2FY26 Capital Return Capital Return as % of FCF CAPITAL RETURNS ($ Millions) $675 $599 $653 26% 21% 22% Q4FY25 Q1FY26 Q2FY26 FCF FCF Margin 1. Non-GAAP financial measure. See the Appendix for important information, including a reconciliation of non -GAAP to GAAP measures. 43
Page 44
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . February 2025 February 2026 Mid-teens Mid-20s Nearline EB Growth Pricing Mid-high single-digit decline Stable Product Mix Gradual ramp of new products Rapid ramp at higher TB capacity points AI Accelerates Growth 44
Page 45
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Technology Unlocks Profitable Capacity +40% +75% +100% Average Nearline Drive Capacity 32TB 40TB 44TB23TB 45
Page 46
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Technology Unlocks Profitable Capacity Higher capacity drives fuel EB growth, revenue, & margins +40% +75% +100% 100TB+ Average Nearline Drive Capac ity 32 TB 40TB 44T B23 TB 46
Page 47
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Long-Term Financial Model 1 Next 3 – 5 Years Disciplined Execution + Technology Leadership = Durable Growth 1. Non-GAAP financial measures, except for Revenue. See the Appendix for important information, including a reconciliation of non -GAAP to GAAP measures. 2. From CY25 baseline Revenue Growth CAGR >20% • Nearline EB mid -20s CAGR 2 • Stable pricing Gross Margin >50% • Mix shift towards higher capacity HDD • Product cost improvements Operating Margin >40% • Operating leverage Free Cash Flow Margin >30% • Strong working capital management • CapEx of 4–6% to revenue EPS >$20 • Financial model leverage • Share repurchases 47
Page 48
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Capital Allocation Committed to returning capital to shareholders Grow dividend Repurchase shares RETURN CASH Invest in innovation Capital-efficient growth REINVEST IN BUSINESS Sandisk equity for debt exchange REDUCE DEBT 48
Page 49
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . INNOVATION Highest Return on Capital HAMR • Drive long-term areal density roadmap • Deliver exabyte growth ePMR • Trusted, reliable, scalable products • Capital & cost efficient New Growth Vectors • Differentiated solutions • Anticipating customer needs REINVEST IN BUSINESS © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 49
Page 50
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . BALANCE SHEET Stronger & Resilient REDUCE DEBT $5.1 $2.7 Pre-Separation Q2FY25 Q2FY26 NET DEBT ($ Billions) Sandisk equity for debt exchange © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Note: Chart not drawn to scale. 50
Page 51
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . SHAREHOLDER VALUE Committed to Returning Capital RETURN CASH SHARE REPURCHASES • Repurchased 14M shares since May 2025 • Utilized $1.5B of current $2B authorization • New $4B repurchase authorization DIVIDENDS • Grow dividend per share © 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . 51
Page 52
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Strong balance sheet, durable free cash flow STRENGTH Cloud / AI-driven demand, longer visibility Differentiated solutions, expanding margins GROWTH INNOVATION Positioned for Durable Growth Cloud & AI + Innovation = Long-Term Value Creation 1. Non-GAAP financial measures. See "Disclaimers" for additional information. Revenue / Gross Margin / Operating Margin / Free Cash Flow Margin Expansion >$20 of EPS 1 STRONG FINANCIAL EXECUTION 52
Page 53
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Why WD, Why Now Deep Customer Engagements Cloud Centric with AI Acceleration Technology & Product Leadership Global Manufacturing Footprint World-Class Team Focused on Execution Strong Financial Model & Capital Returns AI & Cloud + Innovation = Long-Term Value Creation 53
Page 54
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED .
Page 55
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . Innovation Day Appendix
Page 56
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . GAAP to Non-GAAP Reconciliations FY24 FY25 1H-FY26 Revenue, net $6,317 $9,520 $5,835 GAAP Gross Profit $1,773 $3,692 $2,607 Stock-based compensation expense 36 34 17 Litigation matter — 19 — Other 2 4 4 Non-GAAP Gross Profit $1,811 $3,749 $2,628 GAAP Gross Margin1 28.1 % 38.8 % 44.7 % Non-GAAP Gross Margin1 28.7 % 39.4 % 45.0% GAAP Operating Income $(403) $2,334 $1,700 Stock-based compensation expense 202 167 106 Litigation matter 291 (179) — Business realignment charges 209 (6) 56 Strategic review 38 — — Other 6 10 16 Non-GAAP Operating Income $343 $2,326 $1,875 GAAP Operating Margin1 (6.4)% 24.5 % 29.1 % Non-GAAP Operating Margin1 5.4 % 24.4 % 32.1 % Q4FY25 Q1FY26 Q2FY26 Cash Flows Cash flows provided by operating activites $746 $672 $745 Purchases of property, plant, and equipment, net (71) (73) (92) Free Cash Flow $675 $599 $653 ($ Millions, unaudited) 1. GAAP and non-GAAP gross margin, as well as GAAP and non -GAAP operating margin, are calculated by dividing GAAP and non -GAAP gross profit, as well as GAAP and non-GAAP operating income, respectively, by Revenue, net. 56
Page 57
© 20 26 W ESTE RN DIGITAL C ORPOR ATION OR ITS A F FIL IA TES. AL L R IGH TS RES ERV ED . GAAP to Non-GAAP Reconciliations FOOTNOTES This presentation contains the following financial measures that are not in accordance with U.S. generally accepted accounting principles (“GAAP”): non-GAAP gross profit, non-GAAP gross margin; non-GAAP operating income; non-GAAP operating margin; and free cash flow (“non-GAAP measures”). These non-GAAP measures are not alternatives for measures prepared in accordance with GAAP and may be different from similarly titled non-GAAP measures used by other companies. The company believes the presentation of these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors for measuring the company’s performance and comparing it against prior periods. Specifically, the company believes these non-GAAP measures provide useful information to both management and investors as they exclude certain expenses, gains and losses that the company believes are not indicative of its core operating results or because they are consistent with the financial models and estimates published by many analysts who follow the company and its peers. As discussed further below, these non-GAAP measures exclude, as applicable, stock-based compensation expense; charges related to a litigation matter; business realignment charges; and other adjustments. The company believes these measures, along with the related reconciliations to the GAAP measures, provide additional detail and comparability for assessing the company's results. These non-GAAP measures are some of the primary indicators management uses for assessing the company's performance and planning and forecasting future periods. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. As described above, the company excludes the following items from its non-GAAP measures: Stock-based compensationexpense. . Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, the subjective assumptions involved in those determinations, and the volatility in valuations that can be driven by market conditions outside the company’s control, the company believes excluding stock-based compensation expense enhances the ability of management and investors to understand and assess the underlying performance of its business over time and compare it against the company’s peers, a majority of whom also exclude stock-based compensation expense from their non-GAAP results. Litigation matter. The company had recognized expenses related to a previous judgment in a patent litigation matter, which consisted of an award of damages, prejudgment interest, and estimated plaintiff legal costs. The company had also recognized post-judgment interest in interest and other expense, net as well as expenses in its cost of revenue related to the amortization of patent licenses that the company has capitalized related to this litigation matter. The company has since entered into a settlement agreement with the plaintiff, which resulted in the reversal of a portion of these charges in fiscal 2025. The company believes these charges and reversals do not reflect the company’s operating results and that they are not indicative of the underlying performance of its business. For further information regarding the litigation matter, see Note 17 to the notes to consolidated financial statements included in the company’s Annual Report on Form 10-K, filed with the SEC on August 14, 2025, as well as Note 14 to the notes to consolidated financial statements included in the company’s Quarterly Report on Form 10-Q for the quarter ended January 2, 2026, when filed. Businessrealignmentcharges. From time to time, in order to realign the company’s operations with anticipated market demand or to achieve cost synergies from the integration of acquisitions, the company may incur charges in connection with actions to terminate employees, impair assets or otherwise restructure its operations. These charges are inconsistent in amount and frequency, and the company believes they are not indicative of the underlying performance of its business. Strategic view. The company incurred expenses associated with its review of strategic alternatives that resulted in the planned separation of its HDD and Flash business units to create two independent, public companies. The company believes these charges do not reflect the company’s operating results and that they are not indicative of the underlying performance of its business. Other adjustments. From time to time, the company records costs, charges, and benefits that the company believes are not a part of the ongoing operation of its business. The resulting expense or benefit is inconsistent in amount and frequency. Free cash flow. Free cash flow is defined as cash flows provided by operating activities less purchases of property, plant and equipment. The company considers free cash flow generated in any period to be a useful indicator of cash that is available for strategic opportunities including, among others, investing in the company’s business, making strategic acquisitions, returning capital to investors, repaying debt and strengthening the balance sheet. 57