Seagate(STX) - 2026 Q1 - Quarterly Results

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]