Statements in these posted remarks that relate to future results and events, and other forward-looking statements in these remarks, are based on Western Digital Corporation's current expectations. Risks and uncertainties may cause actual results to differ materially from those currently expected. These potential risks and uncertainties include:
- volatility in global economic conditions;
- business conditions and growth in the storage ecosystem;
- pricing trends and fluctuations in average selling prices;
- the availability and cost of commodity materials and specialized product components;
- actions by competitors;
- unexpected advances in competing technologies;
- our development and introduction of products based on new technologies and expansion into new data storage markets; and
- other factors listed in our periodic SEC filings and on this website in Risk Factors.
Robert Blair - Investor Relations
I want to mention that we will be making forward-looking statements in our comments and in response to your questions concerning, among others: our position and opportunities in the growth of data and the storage ecosystem; the growth areas in storage; our management of short term market dynamics; our focus on long term value creation; our approach to capital allocation; exabyte shipments; macro-economic conditions; optimization of our infrastructure; the impact of the hold separate restriction of MOFCOM; our ability to meet any unexpected increase in demand for our products; and demand outlook and our financial performance, including our financial results expectations, for the June quarter. 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, including those listed in our quarterly report on Form 10-Q filed with the SEC on January 10, 2015. We undertake no obligation to update our forward-looking statements to reflect new information or events.
In addition, references will be made during this call to non-GAAP financial measures. Reconciliations of the differences between the historical non-GAAP measures we provide during this call to the comparable GAAP financial measures are included in the quarterly fact sheet posted in the Investor Relations section of our website. The non-GAAP forward-looking guidance we provide during this call excludes amortization of intangibles related to the acquisitions of HGST, sTec, VeloBit, Virident and Amplidata. Because we currently cannot fully quantify future amounts for these excluded items, we are unable to provide guidance for, or a reconciliation to, the most directly comparable GAAP financial measures. The impact of these excluded items may cause the estimated non-GAAP financial measures to differ materially from the comparable GAAP financial measures.
We ask that participants limit their comments to a single question and one follow-up question. I also want to note that copies of remarks from today's call will be available on the Investor section of Western Digital's website immediately following the conclusion of this call.
Steve Milligan - President & Chief Executive Officer
Good afternoon and thank you for joining us. After my opening remarks, Olivier Leonetti will provide additional commentary on our March quarter performance and our outlook for the June quarter.
For the third fiscal quarter, we reported revenues of $3.5 billion, non-GAAP gross margins of 30.1 percent, and diluted earnings per share of $1.87. I am satisfied with our execution and results in light of the PC demand challenges that were largely driven by weak macro-economic conditions.
We delivered a solidly profitable quarter with continued strong cash generation, improved average selling price and healthy gross margins. Overall, our storage shipments for the March quarter were 61 exabytes, up 14 percent year-over-year.
We continue to carefully balance the management of short term market dynamics with a strong focus on long term value creation. This is reflected in our balanced approach to capital allocation. Fiscal year to date, we returned $1.1 billion dollars to our shareholders in share repurchases and dividends, while continuing to invest in high growth market opportunities.
We continue to make strong progress on several strategic growth initiatives.
- Our enterprise SSD business was accretive for the quarter and grew revenues by 67 percent year-over-year to $224 million.
- We also launched our new Ultrastar NVMe solutions in the enterprise space, addressing the industry transition to standards-based PCIe solutions.
- We surpassed one million helium hard drive deployments and are now ramping our new 8TB PMR helium-sealed drives.
- We shipped our first Active Archive system, a new category of high value added archival storage product addressing a market of approximately $15 billion dollars.
- We completed the acquisition of Amplidata, a key building block of our vertical innovation strategy for Active Archive systems.
- We expanded our line of purpose-built drives for the fast growing surveillance video recording space, and
- We launched four new models of high performance NAS systems for the SMB space.
These initiatives provide revenue expansion opportunities for our company as we leverage our capabilities and resources in the rapidly changing storage ecosystem.
Turning to our outlook, we continue to see growth in exabyte shipments during calendar 2015 and beyond. However, we anticipate that global macro-economic headwinds will persist in the short term further impacting PC sales. Given this, we are cautious with regards to our near term outlook. We believe this is prudent in the current environment and consistent with our focus on long term value creation.
That being said, we are fully prepared to meet any upside in demand that may occur as we progress through the June quarter. We are optimistic that the demand environment will improve in the second half of the year.
We will continue to optimize our infrastructure and related investments to the current demand profile. That being said, our ability to respond to changing market dynamics is affected by the MOFCOM hold separate restriction. This is one of the central arguments that I continue to make in our regular interactions with MOFCOM. Lifting the hold separate restriction would be beneficial to consumers and our customers by promoting innovation and enhancing the competitive environment.
Olivier will now provide a summary of our March quarter performance and outlook for the June quarter.
Olivier Leonetti - Executive VP Finance & Chief Financial Officer
Thank you, Steve.
Our revenue for the March quarter was $3.5 billion dollars.
We shipped a total of 54.5 million hard drives at an average selling price of $61 dollars.
Our non-GAAP gross margin was 30.1 percent and operating expenses totaled $591 million dollars.
Tax expense for the March quarter was $28 million dollars, or 7 percent of pre-tax income.
On a non GAAP basis, net income was $441 million dollars, or one dollar and eighty seven cents per share.
Turning to the balance sheet:
In the March quarter we generated $684 million dollars in cash from operations and our free cash flow totaled $534 million dollars.
Our CAPEX totaled $150 million dollars or 4 percent of revenue.
We repurchased 2.2 million shares for $240 million dollars.
We also declared a dividend in the amount of 50 cents per share.
We closed Q3 with total cash and cash equivalents of $4.8 billion dollars, of which approximately $880 million dollars was held in the U.S.
I will now provide our guidance for the June quarter.
- Revenue to be in the range of $3.3 billion dollars to $3.4 billion dollars.
- Excluding the amortization of intangibles,
- Gross margin percentage to be around the mid point of our business model of 27 percent to 32 percent
- Operating expenses of approximately $590 million dollars
- Accordingly, we estimate non-GAAP earnings per share of between one dollar fifty cents and one dollar sixty cents for the June quarter.
Operator, we are now ready to open the call for questions.
Thank you again for joining us today. In closing, I want to thank all of our employees and suppliers for their commitment and outstanding execution and our customers for their continued business. Thanks so much.