Seagate(STX) - 2025 Q3 - Quarterly Results

Fiscal Q3 2025 Financial Results Financial Highlights Seagate reported strong fiscal third-quarter 2025 results, driven by structural business model enhancements and a healthy mass capacity storage market FQ3 2025 vs FQ3 2024 Financial Performance | Metric | GAAP FQ3 2025 | GAAP FQ3 2024 | Non-GAAP FQ3 2025 | Non-GAAP FQ3 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue ($M) | $2,160 | $1,655 | $2,160 | $1,655 | | Gross Margin | 35.2% | 25.7% | 36.2% | 26.1% | | Operating Margin | 20.0% | 8.6% | 23.5% | 11.1% | | Net Income ($M) | $340 | $25 | $407 | $71 | | Diluted EPS | $1.57 | $0.12 | $1.90 | $0.33 | - The company's strong performance is attributed to structural enhancements to its business model and a healthy supply/demand environment for mass capacity storage[2] - Seagate remains focused on executing its HAMR (Heat-Assisted Magnetic Recording) product ramp to support ongoing demand from cloud customers[3] Capital Management Seagate generated substantial cash flow, reduced debt, and returned capital to shareholders through dividends in the third fiscal quarter FQ3 2025 Cash Flow and Capital Return | Metric | Amount ($M) | | :--- | :--- | | Cash flow from operations | $259 | | Free cash flow | $216 | | Capital returned to shareholders (dividends) | $152 | | Debt reduction | $536 | - The Board of Directors declared a quarterly cash dividend of $0.72 per share, payable on July 8, 2025[8] - The company ended the quarter with $814 million in cash and cash equivalents and 212 million ordinary shares issued and outstanding[5] Business Outlook (FQ4 2025) Seagate anticipates continued growth for fiscal fourth quarter 2025, with specific revenue and non-GAAP diluted EPS guidance provided Fiscal Fourth Quarter 2025 Guidance | Metric | Guidance | | :--- | :--- | | Revenue | $2.40 billion ± $150 million | | Non-GAAP diluted EPS | $2.40 ± $0.20 | - The guidance for non-GAAP diluted EPS excludes known pre-tax charges related to estimated share-based compensation expenses of $0.22 per share[9] - A reconciliation of the non-GAAP diluted EPS guidance to the corresponding GAAP measure is not available without unreasonable effort due to the unpredictability of material items[10] Financial Statements Condensed Consolidated Balance Sheets Seagate's balance sheet as of March 28, 2025, shows a decrease in total assets and a significant reduction in total liabilities Balance Sheet Summary (in millions) | Account | March 28, 2025 | June 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $814 | $1,358 | | Total Assets | $7,564 | $7,739 | | Total Liabilities | $8,393 | $9,230 | | Total Shareholders' Deficit | $(829) | $(1,491) | Condensed Consolidated Statements of Operations Seagate reported significant year-over-year improvements in revenue and net income for the third quarter ended March 28, 2025 Statement of Operations Summary - Three Months Ended (in millions) | Metric | March 28, 2025 | March 29, 2024 | | :--- | :--- | :--- | | Revenue | $2,160 | $1,655 | | Income from operations | $431 | $143 | | Net income | $340 | $25 | | Diluted EPS | $1.57 | $0.12 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased, while significant cash was used in financing activities for debt reduction and dividends Cash Flow Summary - Nine Months Ended (in millions) | Activity | March 28, 2025 | March 29, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $575 | $484 | | Net cash used in investing activities | $(146) | $(157) | | Net cash used in financing activities | $(973) | $(319) | Reconciliation of GAAP to Non-GAAP Measures Reconciliation Tables Detailed reconciliations of GAAP to non-GAAP financial results are provided, highlighting key adjustments for net income and free cash flow FQ3 2025 GAAP to Non-GAAP Net Income Reconciliation (in millions) | Description | Amount | | :--- | :--- | | GAAP Net Income | $340 | | Share-based compensation | $54 | | Restructuring and other, net | $20 | | Other adjustments (net) | $(7) | | Non-GAAP Net Income | $407 | FQ3 2025 Free Cash Flow Reconciliation (in millions) | Description | Amount | | :--- | :--- | | GAAP Net Cash Provided by Operating Activities | $259 | | Acquisition of property, equipment and leasehold improvements | $(43) | | Free Cash Flow | $216 | Explanation of Non-GAAP Adjustments Seagate explains its use of non-GAAP measures to provide a clearer view of core financial performance by excluding non-recurring or non-operational items - Non-GAAP results are used by management to assess performance, allocate resources, and plan for future periods, and are intended to supplement, not replace, GAAP results[23][24] - Key adjustments include restructuring costs, share-based compensation, acquisition-related charges, purchase order cancellation fees, and strategic investment gains/losses, which are excluded because they are not considered indicative of core operating performance[32][35][36][37][38] - Free cash flow is defined as net cash from operating activities less capital expenditures and is used to assess liquidity. EBITDA and Adjusted EBITDA are used to evaluate the company's debt portfolio and comply with financial covenants[42][43]