Awesome. We're going to get started, guys. Welcome to day two of the flagship TMT conference here. My name is Erik Woodring. I lead the U.S. IT hardware coverage here. I am pleased to be joined by Western Digital today, Irving Tan, CEO, Kris Sennesael, CFO. Before we get into introductions and whatnot, quickly, before we begin, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures for important disclosures. If you have any questions, please reach out to your sales representative. Kris, I'll let you do the Safe Harbor agreement, and then we'll go from there.
Yeah, t hanks, Erik, for having us. Just housekeeping, today we will be making forward-looking statements based on management current assumptions and expectations, including with respect to our product portfolio, business plans, and performance. These forward-looking statements are subject to risk and uncertainties, and so please refer to our Form 10-K and other filings with the SEC for more information on the risks and uncertainties that could cause actual results to defer materially from expectations. We will also be making references to non-GAAP financials and a reconciliation to GAAP and non-GAAP results can be found on our investor relations section on our website.
Perfect. Thank you, Kris. Irving, first time, together at the TMT conference. Same with you, Kris, but obviously mainstays, for everyone here. I would love if you guys could maybe Irving just start with maybe importantly in an all-encompassing look back on the first year at the helm, you know, post-split with SanDisk. I know the year was tremendously strong, but, like, what did you learn from the last 12 months, and how are you applying that as we look forward, call it one, three, five years down the line?
Thanks for the question, Erik. I think the main thing we took away and what we've really seen is a structural change in how our customers really view the value of data and, by association, the value of storage that comes with it, right? Really driven by what we're seeing with the AI boom and also just the ongoing secular growth of the cloud as well. That's really translated into a very different dynamic that we have with them. A change in how they view hard drives as not a commodity, but a strategic element of their AI and cloud stack going forward. That also means it's a great responsibility for us 'cause we need to be able to deliver, you know, quality, scalable, reliable exabytes to our customers going forward.
That's really shaped the strategy that we've laid out for the company when we spun out SanDisk, which is really focused around the customer, really getting much closer to the customer, just not our traditional engagement with their supply chain organizations, but much deeper with their engineering and technical organizations as well. This has really helped us shape the innovation roadmap that we have going forward, which we shared most recently at our Innovation Day just last month. Beyond just the higher capacity drives that we're delivering to deliver better TCO, but also better performance capabilities and energy efficiency as well. That's really translated, you know, that deeper customer insight has translated into faster innovation, better aligned product roadmap, I would say an industry-leading product portfolio.
Obviously underneath that, a lot of focus has been just really getting the fundamentals of the business right, to be able to support where we wanna go going forward in terms of making sure we are operationally excellent across every aspect of the internal organizations. Kris has done a great job driving just the financial discipline within the company. Obviously, we're also doing a lot to reshape our human talent capabilities to better prepare the company for where we need to be going forward to be able to better take advantage of technology advancements and automation as well.
Okay.
Kris, anything you wanna add on the finance side?
Yeah, maybe. As a result of this deep customer engagement and focus on innovation and execution, we have now much better visibility in the business. What used to be a cyclical business is now a long-term secular growth business, again, with longer term visibility. That also has translated in much better and stronger financial output. If you look in terms of our gross margins, our operating margins, and our free cash flow margin. There is still more room to grow from here as we continue to execute as well. In addition to that we have now transformed the company into a strong balance sheet company with some of the monetization of our SanDisk shares and in combination with strong free cash flow. To me, this is a totally different business with much better visibility and stronger financial output.
Perfect. We'll get into all of this, but I'd love to maybe start with a question that I get very often, which is we wanna understand exactly how AI is acting as a tailwind for HDDs. What I mean by that is it's clear that leveraging more data, storing more data, is going to be a broad tailwind. What are the specific use cases for HDDs in an AI world? Can you give, you know, a few emerging examples? How do we size those opportunities? Is there a rule of thumb, you know, for us to do, you know, exabytes per megawatt, exabytes per CapEx dollar, exabytes per GPU, something like that?
Yeah.
Just would love if you could dig into that.
Yeah. I think providing a rule of thumb is always a bit of a tricky one, Erik, because it's very much use case dependent.
Okay.
Right? What we do know for a fact is that obviously, as LLMs transition more towards multimodal, being multimodal in nature, especially as you transition to video, which requires order of magnitude more storage requirements than still images or text, that's gonna be a big growth driver. For storage going forward. If you look at a AI workload value chain there, if I simplify it, there are really four pieces to it, right? There's data ingestion. That's just storing all the metadata that's being created, whether it's in the cloud or whether it's in AI. That's where I would say HDDs really come to the fore because of the superior economics and the reliability. A lot of data ingestion, the basic storage of metadata is all being done on HDDs. The next piece of the value chain is really data preparation, right?
As you prepare for model training, what do you need to do with data? Model preparation and model training, they're sort of symbiotic in nature. What do our hyperscale customers do? They take all that metadata that's stored on HDDs in order to prepare for the models that they want to run. They cache that data into SSDs to be able to deliver the velocity of data flow to feed the GPUs. Again, HDDs still play a very prominent role in that, right? Once those models are developed, they require that those models and associated data that was used to train those models are required to be stored as well. What is the primary storage media that they use? Again, it's HDDs. Then we go to the last piece of the AI sort of workload value chain, which is inference.
There's this belief that inference is purely about SSDs as well. That may be true of today because the look back in inference is relatively short in terms of time. As you go forward, as inference look backs get longer and longer and longer, you can't store that amount of data on SSDs because it's just not economically viable. The similar behavior that we see in model training, right? Again, having all that data for inference stored on hard drives, prepping that metadata into SSDs to be able to support inference workloads is what we are seeing happening going forward as well. HDDs play a role across that entire value chain. Obviously, a much stronger footprint in the ingestion and storage piece, and then it gets a bit lighter as we move towards the inference side. It plays across the entire spectrum.
Okay. I want to touch on video. This feels or it seems like a really exciting emerging opportunity. Three years ago, YouTube was doing 2 million uploads per day. Today, it's 20 million uploads per day, over 20 billion videos on the platform. It still feels like things like Google Veo or Sora are early days. Can you maybe just help us understand, you know, how important you see video, and again, kind of an extension multimodal as kind of the key driver as we look forward, as maybe the most exciting part of what's emerging from AI?
Yeah. I mean, video itself, as I mentioned, you know, requires an order of magnitude more storage, somewhere between 100 and 1,000 times more between text and still images, right? It's definitely gonna be a big driver of storage. As you mentioned, Veo and Sora is still in its infancy. We're talking about 15, 20-second clips. You've seen some of the interesting capabilities that have come out, right? If you guys have seen that, sort of, fight between, I think it was Tom Cruise and Brad Pitt as well, right? That actually you start to see AI-driven video formats getting longer and longer and, you know, there's this potential for it to be short films or even full-blown films down the road. There's definitely a big driver of growth.
We're talking a lot about the consumer aspect. I think what's sometimes forgotten is the industrial applications as well. If you take autonomous vehicles as an example, right? Literally, the video feed from every car ride of an autonomous vehicle that's plying the roads here in many parts of the U.S. and the world is getting stored both for compliance reasons, just in case the vehicle meets into an altercation, there's ability to go back and reference what's happened. Also that video is being stored to be able to create synthetic data to train models.
Mm-hmm
As well, because you don't have a real-life situation very regularly to be able to train a model if you have a power outage where the traffic lights go down, or if you have a police stop, what does the vehicle do? You're able to simulate a lot of that by using the video that you stored using AI to generate synthetic data to create these corner cases to be able to train these models, right? We think that applies to whether it's autonomous vehicles. I just came from visiting our facilities in Thailand where, you know, our latest facilities are very automated. Again, we're using a lot of these video feeds to train the tools and the robots and the machinery that we have to run a fully automated facility that flags out. These industrial applications that are also very video-rich are requiring tremendous amount of storage requirements.
Okay. That's really helpful. You know, as a follow-up on this, obviously, you know, we've heard you guys, demand is extremely strong. Can you maybe just help us give an update on visibility, where it stands today? Underlying that, you know, a question that I get is always about over-ordering in this type of environment. How do you, as you think about that elongation of visibility, also protect yourself from that risk of over-ordering and what it could do in the future?
Sure. In terms of visibility, we have one of our top five hyperscalers that has given us orders all the way through to calendar year 2028. Two of them have given us orders all the way through to calendar year 2027, and we're pretty much for our top seven, we have firm POs for all of calendar year 2026. I would say visibility is very strong. This is a big change from even just probably a year, two years ago, where our agreements typically span two quarters, right? Beyond that visibility, the commercial constructs that we have for these orders are much more robust, financially, as well. There's obviously a lot of downside protection, in terms of the financial risk that we are exposed to as well.
We also don't just use our customer demand signal as the only driver of the supply decisions that we make. We use it just as one data point, right. We also look at our own internal assessments. We run our own ML models to determine what we think that supply is. We look at our supply base, and we have a triangulation of factors that determine sort of what supply base we should be creating to support that customer demand.
Just given the tightness of the market and obviously the kind of bullishness behind your customers' views on the long-term growth of data, can you maybe just help us understand the top customers that don't have these commercial agreements beyond calendar 26? Is that a WD-driven decision? Is that a customer-driven decision? You know, why do some customers decide to give you know, three years of commercial agreements while others might not?
I would say we're in active discussions with the remainder of them.
All right.
It's those are the ones that I've highlighted that we've closed commercial contracts with them, obviously. The rest of them are in active discussions with us to be able to secure supply in the outer years as well. I didn't address one of the important points that you raised. You know, is there a concern about customer hoarding or inventory buildup? We actually do not see that at all. This is quite different from the situation that we had sort of post-COVID, where there was a big buildup of inventory-
Mm-hmm.
During the COVID period. You know, our customers undertook a lot of software enhancements to improve the utilization of their storage assets. All that's been taken into account. Already pretty much everything that we're shipping to them is getting deployed as quickly as they can as well.
Okay. Maybe last question on this topic is, again, just longer term, when you have conversations with your large CSP customers, you know, I think you've talked about a bit of a different relationship now. It's less transactional, it's more partnership based. Do you believe that this kind of demand planning and visibility is different now? Has it fundamentally changed if we look back versus kind of that 2022/202 3 era?
I think the first thing to qualify is no demand planning approach is perfect. Will there be a degree of error in it? Absolutely right. I think the big difference is, one, we are talking about a much longer term horizon. What's giving us a lot more confidence in the demand signal of our customers is also their willingness to actually sit down and show us not just their demand signal for storage, but the roadmap of applications that they are looking to launch into the future and how those applications are translating into storage requirements, specifically for hard drives. That's giving us a lot more confidence, and that reflects the fundamental change, as I mentioned at the onset of the discussion, where there's a structural change in how our customers view the value of data and storage.
Mm-hmm.
They're beginning to realize if they don't have that storage capability, they're able to monetize, their ability to compete.
Mm-hmm.
in cloud and AI is going to be severely impacted. That's a big change that we're seeing. The other change is also we've done a lot of education to help our customers understand that as the drives that we produce increase in capacity going forward, improve performance and energy consumption, the lead times for these drives are getting longer as well. There's a lot more sophistication and complexity that we're building into it. They are aware that, you know, if you take the longest item in the lead time, which is the head wafers we produce-
Mm-hmm.
It takes us roughly about nine months to produce one head wafer and another three months to convert that into a head reader, right? Even if you give us a demand signal today, you're not gonna see any change until 12 months down the road. A lot of that education has really changed their perception. Again, it goes back to what I mentioned at the very onset, this fundamental shift in terms of how they see the strategic importance of hard drives, particularly around associated with the value of data in the world of AI and cloud going forward.
Right. Erik, maybe just to add there.
Please.
Keep in mind that 90% of our revenue today is linked to cloud, right? If you go look back three or five years ago, that was probably less than 50%, and the other 50% was our consumer business and our client PC business, which is now down to 10%.
Right.
Obviously, there is more cyclicality and volatility in consumer and client than there is in our cloud business.
I want to touch on the point, Irving, that you made about cycle times, and, you know, I know this is a topic that has been well covered. No plans to add greenfield unit capacity. Just making sure that still stands today. That's still the view. I think some people maybe try to tie looking to external vendors for additional head and media capacity as something that could imply greenfield unit capacity additions from your end. Would just love if you set the record straight about-
Sure.
What you're doing with unit capacity as you look out right now?
Yeah. Thanks for the question. I get that a lot. Let me be very specific and explicit about it. We are not adding any drive unit capacity. Right? What we are doing is to see how we can debottleneck our existing investments, how we can leverage more automation to obviously improve throughput, which is just part and parcel of running a very efficient business that we're doing. That's kind of why we were in Thailand looking at what opportunities they exist.
We have said that we are going to continue to make investments into our head and media capabilities because that's a big driver of areal density capability going forward, where a lot of the investments are more targeted at how we can launch the next generations of head and media, which drives higher areal density at the end of the day. In relation to our approach to using third-party component providers in head and media, that is actually part and parcel of our what has been our ongoing innovation framework, right? Yes, we are vertically integrated as a company, but we actually do utilize third-party head and media for two purposes.
One, we are able to leverage co-innovation with them, that is beneficial for us and also challenges our internal teams to do better. We're constantly always benchmarking our internal assets versus what we can get from the market, looking at whether the combination of those assets drive higher areal density. That's something we can do on an ongoing basis. We've always had that. We also have used them to some degree in our supply chain, right? Even a portion of the drives that we use today already incorporates some of those third-party head and media, and that gives us supply chain resiliency as well and creates some degree of buffer for us, even as we drive some degree of innovation in our supply chain that takes some capacity.
Okay. last maybe question before we get into kind of pricing and innovation is, we take all this together at your Innovation Day, maybe it was three weeks ago. Or you guys talked about how that nearline outlook has changed. You now see mid-20 EB CAGR. That was kind of your bull case assumption, maybe even slightly higher than your prior bull case assumption. Just help us understand what has now... The kind of math that you've gotten to get there, the thought process around arriving there, and could we be sitting here in a year and discussing the new bull case? You know, the new outlook for nearline exabyte shipments.
I never say never. I think Kris would probably agree. We feel quite comfortable with the 25% CAGR on exabyte growth. Again, our focus is to be able to support that exabyte growth through areal density improvements, not by adding more unit capacity. I think, you know, Kris did a great job at Innovation Day really showcasing what can be done. If you take what we're delivering to the market today. Last quarter, our average nearline capacity was 23 TB. We are shipping today a 32 TB drive. If we can ship all our customers to that 32 TB drive, that's a 40% increase in exabytes into the marketplace without having to add any unit capacity.
If you fast-forward to the end, the second half of this year when we're going to introduce our 40 TB SMR drives on the ePMR recording technology, that gives a 75% capacity increase versus that 23 TB average that we're shipping today. We have that capability, right, by getting customers to adopt technology faster. We've also seen a very rapid adoption of our UltraSMR capability. You know, we are consistently over 50% of the bits that we're shipping every quarter on UltraSMR already, and we see that increasing over time. We have our top three largest customers fully on board on UltraSMR, and we have three more in the pipeline coming up as well.
Okay, great. Just Kris, I'm going to turn to you just on pricing. At the end of Innovation Day, you know, I thought maybe one of the most, one of the most surprising kind of financial updates we got was that as we look to kind of the remainder of calendar year 2026, as we think about blended price per TB, you know, that can grow mid to high single digits. That's kind of inclusive of the pricing that you've been able to set in these commercial agreements to date. After that, you mentioned stable pricing beyond calendar 2026. I'm just gonna put you on the spot a little bit and just say, you know, why can't that be better than stable?
Just given how strong demand is, where supply stands, what the potential substitute technology is doing from a pricing standpoint. just the pricing outlook beyond calendar 2026 as you see it today. Why can't that be stronger?
Yeah, just to reiterate, right? For calendar year 2026, for all four quarters, we do see mid to high single-digits year-over-year ASP per terabyte increase. Beyond that, I indicated that the pricing environment is stable, meaning that we will continue to see flat to slightly up pricing on a price per terabyte from the higher levels that we reached in calendar year 2026. Can it be better than that? Sure, right. The further out there, I'm not going to commit on further price increases. We are looking at pricing from competing products, but guess what are those prices going to be in 2027 or 2028?
Right.
Right.
Fair. Okay. Let's turn to the Innovation Day. You know, one of the questions, main questions I got after Innovation Day was just the desire to dual track ePMR and the HAMR up to at least 60 TB, right? Obviously, HAMR will go well beyond that. What are the benefits that you get from kind of selling both platforms? Just, you know, help me understand, are there added costs that we need to all think about as you ramp these two platforms simultaneously?
Okay. I think first and foremost, it's very important to qualify that we are firm believers in HAMR.
Mm-hmm.
HAMR is important for us to be able to scale capacity points to 100 TB and beyond, as we've laid out, in Innovation Day. We're in this transition period as we're moving from one very established, very reliable technology to a new one. With any technology transition, there's always a period of learning and optimization that needs to go on, whether it's yields, whether it's reliability. As I mentioned from the very onset, our customers depend on us to be a reliable, quality supplier that can deliver exabytes at scale and support them with their TCO. We take that very seriously, and that's kind of why we sort of dual track this, right?
If you look at our EPMR portfolio, we've announced the next generation of it, which we are qualifying with two of our largest hyperscale customers right now. You know, historically, we only take two quarters to qualify it, so we anticipate that we'll start to ship in volume in the second half of the year. This is at the 40 TB level, and as we laid out in Innovation Day, we can probably get by 2028 to 60 TB. It is roughly on a 12 platter platform, so that's roughly 5 TB per platter. We will also introduce HAMR at the same capacity points in parallel. This gives our customers the flexibility to transition from one technology to the other.
The other important point that we made in Innovation Day that's maybe lost sometimes is that we are making the drives interchangeable. Our customers are able to plug and play a HAMR drive from WD or ePMR drive from WD into the same rack without any software changes or operational changes on their side. The whole focus is to make the whole transition seamless, reliable, and to be able to deliver scalable exabytes to the customers to support their needs. We don't see it being a operational cost adder because the approach that we're taking is all the mechanical designs for the 40 TB and above ePMR will be the same mechanical designs that will be used in our HAMR platforms, right?
The only difference in the HAMR platforms will be the fact that we have a laser, of which we have a third-party provider, and we have our own internal capability, and the transition to glass. The mechanical design, the firmware for both will be identical as well. It's really leverageable across two platforms.
Okay. Just touching on HAMR quickly, you know, you announced at the Innovation Day another customer, another large CSP customer qualifying on HAMR. I think the timeline is still we should expect volume shipments in calendar or the first half of calendar 2027. Just provide the latest update. I just want to make sure that's the latest for all of us.
We have two CSPs, you know, two of our top five customers that have already started HAMR qualification. We're anticipating the HAMR, which we pulled forward six months earlier. We were anticipating to start qualification in the second half of 2026. We pulled that forward to the first half of 2026. In fact, we pulled it forward to the first quarter of 2026. We have two CSP customers qualifying HAMR. We have two CSP customers qualifying the 40-TB UltraSMR, ePMR platforms as well. In terms of the HAMR for HAMR, we're still targeting that to be first half of calendar 2027. We're very comfortable with the areal density improvements that we've been making on HAMR.
The focus on the qualification is really ensuring that we get the same reliability, quality, and yields that we can get from PMR. 'Cause ultimately, the approach that we've taken is, one, to de-risk the transition for our customers, give them the right reliability, give them the highest capacity points in the industry at scale to give them the best TCO, but ultimately also give us as a company the best economics. They were able to transition from one recording technology to the other and ensure that transition is, you know, margin neutral to accretive going forward.
Okay. And maybe last innovation question before we turn to Kris and some of the numbers is you announced a number of other kind of technology innovations, High-Bandwidth HDDs, dual pivot. You announced Power-Optimized HDDs. Maybe just collectively, you know, the thoughts behind all of this innovation. I know they maybe address different parts of the market, what are the intentions as you roll out these different technologies? What are they addressing that is so critical?
You know, the introduction of the High-Bandwidth HDDs really address the throughput challenges that hard drives has vis-à-vis SSDs. Dual pivot addresses the IOPS limitations that HDDs have versus SSDs. As we position HDDs more and more towards AI workloads, these are important factors that our customers have told us, and again, goes back to the whole pivot that we've made as a company to be much more customer-centric. You need to solve these issues for us, especially when you get to the 50 TB capacity level, bandwidth and IOPS becomes an issue. We've been very busy working on it. We actually have already engineering samples of a High-Bandwidth HDD in a customer. We anticipate that for High-Bandwidth HDDs, on average, about 20% of customers will take it up.
Some will much higher, some will be lower depending on the workloads that they run. Again, it's all software related, so anything we do there will be accretive to the business. It's not factored into Kris's financial model that we shared in Innovation Day.
Mm-hmm.
On power efficient drives, again, it caters to a specific segment of the market where there's this opportunity to say, "I can trade off some performance because I don't need the throughput, I don't need the IOPS, but I can save energy, which is more important to me." What we're doing is to give customers a much more granular ability to sort of segment their storage workloads by creating these capabilities that really are attuned for the AI workloads going forward.
Okay. We're obviously focused on areal density, which clearly is a cost benefit for you, cost TCO benefit your customers. You know, you've been able to kind of cost down per terabyte at a rate of around 10% per annum. Maybe Kris, this is for you, but is that how we think about cost downs annually going forward? Could those accelerate as you move into 36s and 40s and beyond? How do we think about the trajectory of cost per terabyte as you bring these new higher capacity drives to market?
Yeah, you think about it the right way. We have been executing really well on driving down the cost per terabyte. We probably have the lowest cost per terabyte in the industry, which translate, of course, in leading gross margins in the industry as well. Obviously, we're not gonna stop there. We are focused on driving down the cost in our global manufacturing footprint. We're also collaborating with our supply chain partners and taking out costs through value engineering. Then probably most importantly, as we move to higher capacity drives through areal density improvements, you will see a further improvement in the cost per terabyte.
Okay, perfect. We bring all of this together. The model obviously is extremely impressive, 50%+ gross margins, 40%+ op margins, 30% + free cash margins, kind of a target of $20 of earnings. I realize this is gonna be sound like an aggressive question, but rational oligopolies, in my mind, are extremely powerful market structures. What's the timeline as we think about that path to that $20? Is there a path beyond $20?
Yeah. The timeline was the next three to five years.
Okay.
You explain it really well. Those targets were not ceilings, right? Those targets were almost like floors. We believe once we hit those targets, we will be able to continue to operate the business at or above those targets.
Okay, perfect. Just to be very clear, and I think that's a very powerful message, which is, you know, as we think about history and maybe through cycle margins, through cycle earnings power, the kind of point that you're making is there's been a structural change in kind of demand signals. As you've been able to innovate, as you've been able to kind of refocus on operations as a standalone HDD-focused company, we believe that these are kind of the floor as we think about them as we move forward. That's kind of the message.
Yeah. I think that's fair. Again, we don't see the cycle turning anytime soon based on the strong visibility that we have from our customers. Now, is there in the future going to be some periods where the growth is gonna slow down? I think that is possible. Again, it's all about being disciplined from a pricing point of view, continue to innovate and drive down the cost per terabyte, and as a result of that, I do believe we will be able to continue to operate the business at or above those targets.
Right. Okay. Awesome. I wanna make sure we touch on capital structure because I think it's incredibly important. You monetize some of your SanDisk holdings. You've retired, I think it's $3.1 billion of debt. That's your term loan and senior unsecured debt. You're left with about, I think it's 1,000,007 SanDisk shares, and you have your $1.6 billion convert. What's the path forward for here when we think about the capital structure, either addressing the convert? What do we wanna do from a leverage standpoint? Where do we go from here?
The only thing what's left right now in terms of debt is the $1.6 billion convertible debt, which matures in 2028, but callable in November of 2026. We still have 1.7 million of SanDisk shares, which is all at about $1 billion, give or take, in value. We've indicated that we wanna continue with the monetization of the remainder of that stake, potentially through an equity for equity transaction, which basically will further reduce our share count. Once that is all done, we will evaluate the balance sheet and the cap structure.
Mm-hmm.
And see how we will operate the business going further. In the meantime, of course, we will continue to generate very strong free cash flow, and all that free cash flow is being returned back to the shareholder through a combination of our dividend program, where we still have plenty of room to grow. We are committed to our dividend program and plenty of room to grow, as well through our ongoing share repurchases. At Innovation Day, we announced a new $4 billion program that sits on top of the prior $2 billion authorization, and there's no hesitation there. We're definitely in the market today and continue to return the free cash flow back to the shareholders.
I love that. Just with the remaining time we have, you know, maybe Irving, Kris, you can tag team this question. Just what's the final message you wanna leave us with, as we end this session? Maybe things that could be undervalued or underappreciated as you think about Wall Street's perception of this story. I just want to give you the kind of final word for everyone here.
Yeah. Maybe from my perspective, very quickly, I really do feel that, as I said, there's a renaissance of structural change in terms of how storage is perceived and the value of it as a result of the value of data, right? That you see that from the visibility that we have. Second is what I think that's underappreciated is actually the innovation that we have.
Mm-hmm.
Right? There's been a lot of focus on some of the innovation in our industry. What we've shown is we can innovate on capacity, we can innovate on performance, we can innovate on power efficiency. Equally important, what you've probably seen from us over the last 12 months, it's not only about innovation, it's about this relentless focus on execution, right? We've been delivering on everything that we said that we would do since the day of the spin, and that's something that we continue to be very focused on, not just laying out an innovation roadmap, but making sure we're consistently executing towards it. I think if we do that well, we'll bring a smile to Kris's financial model, maybe have something beyond as well. Kris?
No. Thanks for hosting us, Erik.
Awesome. Thank you, guys.
Thank you very much.