David Goeckeler
Chief Executive Officer at Western Digital
Thank you, Peter. Good afternoon, everyone, and thanks for joining the call to discuss our fourth quarter and fiscal year 2021 results.
We reported solid fourth quarter results with revenue of $4.9 billion, non-GAAP gross margin of 33% and non-GAAP earnings per share of $2.16, all above the guidance ranges we provided in April. The upside was primarily driven by record demand for our capacity enterprise hard drives. Fiscal year 2021 revenue totaled $16.9 billion, and we reported non-GAAP earnings per share of $4.55.
Last March, I joined Western Digital with a strong conviction in the digital transformation that is reshaping every industry, every company and every person's day-to-day life. At that time, we were in the early stages of the pandemic.
Today, the accelerated digital transformation that has occurred during this period has created a world that is more technology-enabled and technology-dependent than ever before. The increasing value and importance of data is undeniable, and Western Digital will continue to capitalize on this opportunity as the only provider of both flash and hard drive solutions.
Our ability to provide this diverse range of technologies enables us to drive innovation from endpoints, to the edge, to the cloud. And combined with our commitment to delivering the highest quality products is ultimately what sets us apart and allows us to deliver strong results.
As we reflect on this fiscal year, I'm very proud of what Western Digital has accomplished, particularly in light of the fact that the pandemic impacted various aspects of our company and the supply chain. As a team, we made the changes throughout the year necessary to improve our focus, sharpen execution and lay out the right strategic goals to place Western Digital in a position of greater strength.
To achieve these goals, we created separate business units for our flash and HDD technologies led by two widely respected technology leaders. As a result of this renewed focus, we accelerated our innovation road map, built momentum in our energy-assisted hard drives and continue to successfully ramp our second-generation NVMe enterprise SSDs while working hard to complete additional customer qualifications.
We were also able to successfully navigate through the pandemic, capitalize on opportunities and continue providing dependable, industry-leading products that are the cornerstones of the data economy.
We continue to believe that we have the right foundation for success, the right market-leading products, the right customer base and the unique ability to address two large and growing markets. That foundation continues to under-spend the strength of our results and is propelling the business forward today, even as we manage through some of the lingering impacts from COVID.
And while we saw incremental demand due to the emergence of Chia, our standout performance this quarter was primarily attributable to increasing demand from our cloud customers and the beginning of a recovery in enterprise demand, the breadth and quality of our product line and our many routes to market. We feel we are well positioned to capitalize on the large and growing opportunities in front of us.
With that, I'll now provide a recap of our flash and HDD businesses as it relates to our fourth quarter results. In the fourth quarter, demand for our flash products was greater than we could supply in a number of end markets. In the face of both component and NAND shortages, we continue to strategically shift bits to meet customer needs while driving growth in both revenue and gross margin.
Within Data Center Devices and Solutions, demand for NVMe enterprise SSDs came in above our expectations, achieving strong quarter-over-quarter revenue growth. We are pleased with our progress in enterprise SSDs as we completed the qualification at another cloud titan, and are ramping the product more broadly.
Within client SSD, we experienced revenue growth as demand remains strong for notebooks and Chromebooks. This remains a large, growing and important end market for Western Digital across our OEM, channel and retail routes to market.
Within gaming, demand from the latest generation of game consoles and our WD_BLACK product line was robust as gamers continue to prefer our expanding lineup of customized solutions.
Within Embedded Flash, we also experienced growth in smart home devices, VR, automotive and industrial. As the BiCS5 ramp picks up and we achieved bit crossover late this year, we expect to see increased bit growth.
To-date, BiCS5 is our most capital-efficient node in the 3D era, and the ramp across our product lines will contribute to profitable growth. We have had incredible success with BiCS4 from across cost and bit growth perspective and look forward to experience those same benefits with BiCS5, highlighting once again the successful and important partnership we have with Kioxia.
In HDD, we had our highest organic sequential revenue growth in the last decade, driven by the successful ramp of our 18 terabyte energy-assisted hard drive, growing cloud demand, a recovery in enterprise spending and, to a lesser extent, cryptocurrency driven by Chia. This impressive performance is a reflection of our data center customers' confidence in our innovation engine for capacity enterprise hard drives.
Shipments for our 18-terabyte hard drive nearly tripled sequentially, highlighting our leadership in the latest capacity point and the leading-edge energy assist technology underpinning it.
These drives are fully commercialized, and we expect the 18-terabyte hard drive to be the workhorse for the fiscal year. I'm excited to announce a record shipment of over 104 exabytes in capacity enterprise hard drives, a 49% increase sequentially. This is a significant achievement for the business as we have all of our largest customers qualified and are well into ramping our energy-assisted hard drives.
In addition, client demand for desktop and smart video has been strong throughout the quarter due to improving OEM demand. While we are actively managing supply constraints, we expect strength in OEM to continue in the fiscal first quarter.
Within retail, HDD demand was above expectations as we saw consumer interest grow for both at-home HDD storage and for smart video applications. There was also increased demand for hard drives due to proof of space cryptocurrencies such as Chia, which emerged as a new vertical market at the beginning of the quarter. We believe proof of space cryptocurrency presents a great opportunity for us in the industry, but we are closely monitoring the sustainability of demand.
Looking ahead, we strongly believe the fundamental technology shift that I referenced earlier is a sustainable trend. At the center of this innovation, our ever-increasing intelligent devices, which are fueling exponential industry-wide growth in demand, all powered by the cloud, the ability to harness the data in both the device and in the data center is critical, highlighting the importance of our full range of storage solutions.
Moreover, we believe we have the right portfolio to enable us to capture these opportunities. In particular, and as Dr. Siva Sivaram, President of Technology and Strategy, discussed in a webcast on July 15, Western Digital's unique ability to deliver both HDD and flash solutions drives meaningful synergies across the business in four key areas: market, manufacturing, technology and customer. And our new operating structure gives us the focus we need to capture our full potential.
While we remain optimistic, there are several factors we are closely monitoring. Most importantly, we are actively managing the continued impact of the pandemic. The disruptions to the supply chain have presented a challenge across the industry, and we continue to see shortages of certain components. Additionally, logistics remain a challenge as different geographies are in various stages of reopening.
This has been a major contributor to increased lead times and may pose challenges in the future. As a result of the supply disruptions, logistics challenges and increased lead times, we continue to face additional cost pressures. Despite these obstacles, we are working diligent to continue delivering to our customers, while maintaining a disciplined approach to pricing.
I'll now turn the call over to Bob to share details on our financial results.