Core Insights - Seagate reported quarterly earnings of $2.61 per share, exceeding the Zacks Consensus Estimate of $2.36 per share, and showing a significant increase from $1.58 per share a year ago, resulting in an earnings surprise of +10.59% [1] - The company achieved revenues of $2.63 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.93% and up from $2.17 billion year-over-year [2] - Seagate's stock has increased by approximately 166.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 16.9% [3] Earnings Outlook - The future performance of Seagate's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - Current consensus EPS estimate for the upcoming quarter is $2.53 on revenues of $2.59 billion, while for the current fiscal year, the estimate is $10.55 on revenues of $10.34 billion [7] Industry Context - The Computer - Integrated Systems industry, to which Seagate belongs, is currently ranked in the top 7% of over 250 Zacks industries, indicating a favorable outlook for stocks within this sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Seagate reported revenue of $2.63 billion, representing an 8% sequential increase and a 21% year-over-year growth [15][23] - Non-GAAP gross margins reached a record 40.1%, up 220 basis points sequentially [15][19] - Non-GAAP operating margin expanded to 29%, a level last seen in fiscal 2012, with non-GAAP EPS of $2.61, exceeding guidance [6][15] Business Line Data and Key Metrics Changes - Data center revenue accounted for 80% of total revenue at $2.1 billion, up 13% sequentially and 34% year-over-year [16][18] - The company shipped 182 exabytes (EB) in the September quarter, a 32% increase year-over-year, with the majority delivered to global data center customers [15][16] - Edge IoT revenue made up the remaining 20% at $515 million, with expectations for seasonal improvement in the December quarter [18] Market Data and Key Metrics Changes - Demand from global cloud service providers (CSPs) continued to grow, with cloud exabyte demand increasing for the ninth consecutive quarter [17][18] - The average nearline drive capacity increased by 26% over the past year, contributing to exabyte volume growth [17] - The company noted a significant increase in unstructured data generation, particularly from video content, driving demand for hard drives [8][9] Company Strategy and Development Direction - Seagate is focused on executing its HAMR (Heat-Assisted Magnetic Recording) technology roadmap to meet growing exabyte needs [7][13] - The company aims to transition customers to higher-capacity drives, leveraging advancements in areal density as a competitive advantage [11][12] - Seagate is committed to returning at least 75% of free cash flow to shareholders over time, with a recent 3% increase in quarterly dividends [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of cash flow generation and the ongoing demand environment for high-capacity hard drives [6][15] - The company anticipates continued strong demand from global cloud data centers, projecting December quarter revenue in the range of $2.7 billion ±$100 million [23] - Management highlighted the transformative impact of AI on hard drive demand, particularly in relation to data storage needs [7][8] Other Important Information - Seagate's cash and cash equivalents increased by 25% sequentially to $2.4 billion, with a net leverage ratio of 1.5x [22] - The company shipped over 1 million Mosaic drives in the September quarter, with expectations to achieve 50% exabyte crossover on nearline HAMR drives in the second half of calendar 2026 [10][11] Q&A Session Summary Question: Plans to add capacity and supply chain bottlenecks - Management indicated that capacity will be added through product transitions rather than increasing unit capacity, focusing on exabyte capacity instead [28][29] Question: Update on HAMR rollout and customer adoption - Management confirmed that five global CSPs are now qualified on HAMR, contributing to revenue and profitability growth [33][34] Question: Expectations for incremental margins - Management acknowledged that current incremental margins are higher than previously projected, but variability is expected due to customer negotiations and product transitions [39][40] Question: Cost reduction expectations - Management stated that cost improvements are anticipated as higher capacity drives are transitioned, with ongoing focus on maintaining a balance between supply and demand [42][44] Question: Visibility of inference demand and seasonality - Management expressed confidence in the growth of inference demand driven by video content, with expectations for lower seasonal impacts due to the predominance of data center revenue [50][52] Question: Pricing strategy in a constrained environment - Management noted that pricing strategies have remained consistent, with slight increases during contract renegotiations, while transitioning customers to higher capacity products [56][58] Question: Managing supply and demand balance - Management emphasized the importance of predictable long-term plans from customers, which aids in managing supply chain challenges [102][103]

Financial Data and Key Metrics Changes - Seagate reported revenue of $2.63 billion for the September quarter, representing an 8% sequential increase and a 21% year-over-year growth [15][16] - Non-GAAP gross margin reached a record 40.1%, up 220 basis points sequentially, while non-GAAP operating margin expanded by 280 basis points to 29% [15][16] - Non-GAAP EPS was $2.61, exceeding the high end of the guidance range [15][20] Business Line Data and Key Metrics Changes - Data center revenue accounted for 80% of total revenue at $2.1 billion, up 13% sequentially and 34% year-over-year [16][17] - The company shipped 182 exabytes in the September quarter, a 32% increase year-over-year, with the majority delivered to global data center customers [15][16] - Edge IoT revenue made up the remaining 20% of revenue at $515 million, with expectations for seasonal improvement in the December quarter [18] Market Data and Key Metrics Changes - Demand from global cloud service providers (CSPs) continued to grow, with cloud exabyte demand increasing for the ninth consecutive quarter [17][18] - The average nearline drive capacity increased by 26% over the past year, contributing to exabyte volume growth [17] - The company noted a significant increase in unstructured data generation, particularly from video content, driving demand for hard drives [8][9] Company Strategy and Development Direction - Seagate is focused on executing its HAMR-based product roadmap to support growing exabyte needs and transitioning customers to higher-capacity drives [7][10] - The company aims to leverage its manufacturing expertise and advancements in technology to achieve 10 terabytes per disk [12] - Seagate is committed to returning at least 75% of free cash flow to shareholders over time, with a quarterly dividend increase of approximately 3% [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of cash flow generation and the ongoing demand environment for high-capacity hard drives [6][13] - The company anticipates continued strong demand from global cloud data centers, projecting December quarter revenue in the range of $2.7 billion, representing a 16% year-over-year improvement [23] - Management highlighted the transformative impact of AI on hard drive demand, with expectations for ongoing growth in data storage needs [7][8] Other Important Information - Seagate's cash and cash equivalents increased by 25% sequentially to $2.4 billion, with a net leverage ratio of 1.5 times based on adjusted EBITDA [22] - The company shipped over 1 million Mosaic drives in the September quarter, with plans to qualify additional global CSPs for higher-capacity products [10][11] Q&A Session Summary Question: Plans to add capacity and supply chain bottlenecks - Management indicated that capacity will be added through product transitions rather than increasing unit capacity, focusing on exabyte capacity instead [28][29] Question: Update on HAMR rollout and customer adoption - Management confirmed that five major cloud customers are now qualified on HAMR, contributing to revenue and profitability growth [33] Question: Sustainability of incremental margins - Management acknowledged that while current margins are higher due to product mix, variability exists from quarter to quarter based on customer negotiations and market conditions [39][40] Question: Cost reduction expectations for calendar 2026 - Management noted that improvements in cost per terabyte are expected from the transition to higher capacity drives, with ongoing qualification of 40-terabyte drives [44] Question: Visibility of inference demand and seasonality - Management expressed confidence in the growth of inference demand driven by video content generation, with expectations for lower seasonal impacts on data center revenue [50][52] Question: Pricing strategy in a constrained environment - Management stated that pricing strategy remains consistent, with slight increases for higher capacity products while maintaining competitive pricing for existing products [56][58] Question: Managing supply between consumer and cloud markets - Management clarified that while some supply is being shifted from edge IoT to cloud, overall demand remains strong, and no significant cannibalization is expected [62][63]

Financial Data and Key Metrics Changes - Seagate reported revenue of $2.63 billion for the September quarter, representing an 8% sequential increase and a 21% year-over-year growth [13] - Non-GAAP gross margins reached a record 40.1%, up 220 basis points sequentially [13] - Non-GAAP operating margin expanded by 280 basis points to 29% sequentially, with non-GAAP EPS at $2.61, exceeding the high end of guidance [5][13] - Free cash flow generation was flat quarter-over-quarter at $427 million, with a projected increase in the December quarter [19] Business Line Data and Key Metrics Changes - Data center revenue accounted for 80% of total revenue at $2.1 billion, up 13% sequentially and 34% year-over-year [15] - The company shipped 182 exabytes in the September quarter, a 32% increase year-over-year, with the majority delivered to global data center customers [14] - Edge IoT revenue made up the remaining 20% of revenue at $515 million, with expectations for seasonal improvement in the December quarter [17] Market Data and Key Metrics Changes - Demand from global cloud service providers (CSPs) continued to grow, with cloud exabyte demand increasing for the ninth consecutive quarter [16] - The average nearline drive capacity increased by 26% over the past year, contributing to exabyte volume growth [16] - The company noted a significant increase in unstructured data generation, particularly from video content, driving demand for hard drives [7][8] Company Strategy and Development Direction - Seagate is focused on executing its HAMR-based product roadmap to support growing exabyte needs and transitioning customers to higher-capacity drives [6][11] - The company aims to leverage its manufacturing expertise and advancements in technology to achieve a competitive advantage in aerial density [10] - Seagate is committed to returning at least 75% of free cash flow to shareholders over time, with a recent increase in quarterly dividends by approximately 3% [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of cash flow generation and the ongoing demand environment for high-capacity hard drives [5][11] - The company anticipates continued strong demand from global cloud data centers, projecting December quarter revenue in the range of $2.7 billion, representing a 16% year-over-year improvement [22] - Management highlighted the transformative impact of AI on hard drive demand, particularly in relation to data storage needs [6][7] Other Important Information - Seagate's cash and cash equivalents increased by 25% sequentially to $2.4 billion, with a net leverage ratio of 1.5 times based on adjusted EBITDA [20] - The company shipped over 1 million Mosaic drives in the September quarter, with plans to qualify additional global CSPs for higher-capacity products [9][10] Q&A Session Summary Question: Plans to add capacity and supply chain bottlenecks - Management indicated that capacity addition is through product transitions rather than unit capacity increases, focusing on exabyte capacity [27][28] Question: Adoption of HAMR technology - Management noted that customer engagement on long-term agreements is driven by visibility into higher capacity points, with ongoing qualification of customers on HAMR drives [30] Question: Sustainability of incremental margins - Management acknowledged that while current margins are higher due to product mix, variability exists from quarter to quarter based on customer negotiations and product transitions [34] Question: Cost reduction expectations - Management stated that improvements in cost per terabyte are expected from the transition to higher capacity drives, with ongoing qualification of 40-terabyte drives [40] Question: Visibility of inference demand - Management expressed confidence in the growth of inference demand driven by video content generation, with expectations for lower seasonality impact on data center revenue [45][47] Question: Pricing strategy in a constrained environment - Management confirmed that pricing strategy remains consistent, with slight increases for higher capacity products while maintaining profitability [52] Question: Managing supply for cloud versus consumer markets - Management indicated that while there is some seasonality in edge IoT markets, demand for cloud remains strong, and supply is being prioritized accordingly [58][60] Question: Future exabyte demand and supply - Management expects significant increases in exabyte supply as the company transitions to higher capacity products, with ongoing collaboration with major hyperscalers [82]

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses non-GAAP measures of gross profit, gross margin, operating expenses, income from operations, operating margin, net income, diluted EPS, free cash flow, EBITDA, adjusted EBITDA and the last twelve months (LTM) adjusted EBITDA, which are adjusted from results based on GAAP to exclude certain benefits, expenses, gains and losses. A full discussion of these adju ...

Core Viewpoint - Seagate Technology Holdings PLC reported strong first-quarter earnings, surpassing analyst expectations on both earnings per share and revenue, indicating robust performance and customer demand for its products [1][2][3]. Financial Performance - Quarterly earnings per share (EPS) were $2.61, exceeding the analyst estimate of $2.37 by 9.99% [1]. - Revenue for the quarter was $2.62 billion, beating the Street estimate of $2.54 billion [2]. - The company generated $532 million in cash flow from operations and $427 million in free cash flow during the first quarter [2]. Year-over-Year Growth - Seagate experienced a revenue growth of 21% year-over-year, reflecting strong execution and demand for high-capacity storage products [3]. Future Outlook - For the second quarter, Seagate projects adjusted EPS between $2.55 and $2.95, compared to the current estimate of $2.62, and revenue is expected to be in the range of $2.6 billion to $2.8 billion, against an estimate of $2.65 billion [3]. Stock Performance - Following the earnings report, Seagate's stock rose by 4.07%, reaching $232.07 in extended trading [4].

Core Viewpoint - Seagate Technology has forecasted second-quarter revenue and profit that exceed analysts' expectations, driven by strong demand for its storage devices as cloud providers increase their hardware investments [1] Group 1: Financial Performance - The company anticipates higher revenue and profit for the second quarter, indicating a positive outlook for its financial performance [1] Group 2: Market Demand - The forecast is based on robust demand for storage devices, particularly as cloud providers are expanding their investments in hardware [1]

Financial Performance - Revenue for fiscal Q1 2026 was $2.63 billion, representing a 21% year-over-year increase from $2.17 billion in fiscal Q1 2025[2][4] - Net income for the quarter was $549 million, compared to $305 million in the same quarter last year, reflecting a 80% increase[4][21] - Diluted earnings per share (EPS) were $2.43 on a GAAP basis and $2.61 on a non-GAAP basis, up from $1.41 and $1.58 respectively in fiscal Q1 2025[4][7] - GAAP gross profit increased to $1,037 million, up 45.3% from $714 million year-over-year, with a GAAP gross margin of 39.4% compared to 32.9%[26] - Non-GAAP net income for the same period was $583 million, representing a 73% increase from $337 million in the prior year[28] - Non-GAAP operating margin improved to 29.0%, up from 20.4% in the same quarter last year[26] - The company reported a GAAP income from operations of $694 million, a 72.3% increase from $403 million year-over-year[26] Cash Flow and Shareholder Returns - Cash flow from operations was $532 million, with free cash flow amounting to $427 million[5][7] - The company returned $182 million to shareholders through dividends and share repurchases, increasing the quarterly cash dividend by approximately 3% to $0.74 per share[7][8] - Free cash flow for the three months ended October 3, 2025, was $427 million, significantly up from $27 million in the same period last year[28] - The company paid $153 million in dividends to shareholders, compared to $147 million in the previous year[22] Guidance and Outlook - The guidance for fiscal Q2 2026 includes expected revenue of approximately $2.70 billion, plus or minus $100 million, and non-GAAP diluted EPS of $2.75, plus or minus $0.20[15] - Seagate's business outlook reflects sustained demand strength, particularly driven by new AI applications and existing use cases like social media video platforms[3] Operational Metrics - GAAP gross margin reached 39.4%, while non-GAAP gross margin was 40.1%, both at record levels[7] - Total operating expenses increased to $343 million, up from $311 million in the same period last year[26] - The company incurred $105 million in capital expenditures for property and equipment, up from $68 million in the same period last year[22] Balance Sheet - The company maintains a healthy balance sheet with cash and cash equivalents totaling $1.1 billion as of the end of the quarter[5][19] - Cash, cash equivalents, and restricted cash at the end of the period totaled $1,114 million, compared to $1,241 million at the end of the previous year[22] Product Development - Seagate is ramping shipments of its Mozaic HAMR products, which are now qualified with five of the world's largest cloud customers, addressing performance and durability needs[3] Tax and Financial Definitions - The projected non-GAAP income tax rate for fiscal year 2026 is set at 15.5%[40] - Non-GAAP diluted net income per share calculations exclude certain dilutive shares to mitigate potential dilution from the 2028 exchangeable senior notes[41] - Free cash flow is defined as net cash from operating activities minus property, equipment, and leasehold improvements acquisitions, used to assess liquidity and capital structure[42] - Adjusted EBITDA excludes non-core operating expenses and is used to evaluate the company's debt portfolio and compliance with financial covenants[43]

Group 1 - Financial giants have shown a bearish sentiment towards Seagate Technology Hldgs, with 44% of traders exhibiting bearish tendencies and only 37% being bullish [1] - A total of 45 unusual trades were identified, with 16 puts valued at $915,391 and 29 calls valued at $1,766,752 [1] - Analysts have set an average price target of $271.0 for Seagate Technology Hldgs, with individual targets ranging from $235 to $330 from various analysts [10][11] Group 2 - The projected price range targeted by large investors (whales) for Seagate Technology Hldgs over the last three months is between $140.0 and $325.0 [2] - The analysis of volume and open interest indicates significant liquidity and interest in the options for Seagate Technology Hldgs within the specified strike price range [3] Group 3 - Seagate Technology Hldgs is a leading supplier of hard disk drives, forming a practical duopoly with Western Digital in the data storage market [9] - The current trading volume for Seagate Technology Hldgs is 3,732,427, with the stock price down by 2.75% to $223.99 [13]

Group 1 - Seagate Technology Holdings plc (NASDAQ:STX) has seen its shares increase by 184% over the past six months, raising questions about whether its market valuation is too high [2] - The company's stock performance is attributed to the AI data center bull market, indicating a strong demand for storage devices as PC makers face supply constraints [2][3] - Intel's CFO highlighted CPU market supply constraints, suggesting that companies like Seagate will benefit as demand for storage devices rises [2][3] Group 2 - While Seagate is recognized as a potential investment, there is a belief that other AI stocks may offer higher returns with less risk [4] - The article suggests that there are extremely cheap AI stocks that could benefit from current market conditions, including tariffs and onshoring [4]