Western Digital Corporation stock research
FY2024 Q1
Western Digital (WDC) Gross Margin — Quarter Ended Sep 29, 2023
For the quarter ended September 29, 2023, gross profit was positive while cost of revenue exceeded revenue, resulting in a moderate gross margin. The relationship among revenue, gross profit, cost of revenue, and gross margin shows that cost of revenue was the dominant factor in determining profitability.
Gross margin takeaway
Quarter ended Sep 29, 2023 · FY2024 Q1
For the quarter ended September 29, 2023, gross profit was positive while cost of revenue exceeded revenue, resulting in a moderate gross margin. The relationship among revenue, gross profit, cost of revenue, and gross margin shows that cost of revenue was the dominant factor in determining profitability.
- The strongest observable margin driver in the current quarter is the relative level of cost of revenue compared to revenue, which directly determines gross profit and gross margin. Changes in these components compared to prior periods are the key to understanding margin movement.
- Compared to the immediately preceding quarter, revenue was higher, cost of revenue was lower, and gross profit improved from negative to positive, leading to a higher gross margin. Compared to the same quarter one year earlier, revenue was lower while cost of revenue was similar, resulting in a lower gross profit and a lower gross margin.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
20.4%
Gross profit
$244.0M
Revenue
$1.2B
Cost of revenue
$2.7B
Quarter-over-quarter change
+8.5 pts
Year-over-year change
-5.8 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2023 | $2.8B | $286.0M | $2.5B | 10.2% |
| Jun 30, 2023 | -$3.4B | -$404.0M | -$3.0B | 11.9% |
| Sep 29, 2023 | $1.2B | $244.0M | $2.7B | 20.4% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2023
+8.5 pts
Year-over-year change
Sep 30, 2022
-5.8 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver in the current quarter is the relative level of cost of revenue compared to revenue, which directly determines gross profit and gross margin. Changes in these components compared to prior periods are the key to understanding margin movement.
Compared to the immediately preceding quarter, revenue was higher, cost of revenue was lower, and gross profit improved from negative to positive, leading to a higher gross margin. Compared to the same quarter one year earlier, revenue was lower while cost of revenue was similar, resulting in a lower gross profit and a lower gross margin.
Monitor the relationship between revenue and cost of revenue in upcoming quarters, as cost of revenue remained elevated relative to revenue in the current quarter.