Seagate(STX) - 2026 Q2 - Quarterly Results

Financial Performance - Revenue for fiscal Q2 2026 was $2.83 billion, a 21.5% increase from $2.33 billion in fiscal Q2 2025[4] - GAAP gross margin improved to 41.6% from 34.9% year-over-year, while non-GAAP gross margin increased to 42.2% from 35.5%[4] - GAAP diluted earnings per share (EPS) rose to $2.60, up from $1.55 in the same quarter last year, with non-GAAP diluted EPS at $3.11 compared to $2.03[4] - Net income for the six months ended January 2, 2026, was $1,142 million, an increase from $641 million for the same period in the previous year, representing a growth of 78.2%[23] - Non-GAAP gross profit for the six months ended January 2, 2026, was $2,245 million, compared to $1,548 million for the same period in the previous year, reflecting a 45.1% increase[27] - GAAP gross margin improved to 40.6% for the six months ended January 2, 2026, up from 34.0% in the prior year[27] - GAAP diluted net income per share for the six months ended January 2, 2026, was $5.03, up from $2.95 in the prior year, marking a 70.5% increase[29] - Non-GAAP diluted net income per share for the six months ended January 2, 2026, was $5.71, compared to $3.62 for the same period last year, representing a 57.7% increase[29] Cash Flow and Liquidity - Cash flow from operations was $723 million, and free cash flow was $607 million during the quarter[5] - Net cash provided by operating activities for the six months ended January 2, 2026, was $1,255 million, significantly higher than $316 million for the same period last year[29] - Free cash flow for the six months ended January 2, 2026, was $1,034 million, compared to $177 million for the same period in the previous year, indicating a substantial increase[29] - Cash, cash equivalents, and restricted cash at the end of the period were $1,048 million, compared to $1,240 million at the end of the previous year[23] - Seagate's balance sheet remains strong, with cash and cash equivalents totaling $1.0 billion at the end of the quarter[5] Future Outlook - For fiscal Q3 2026, the company expects revenue of approximately $2.90 billion, plus or minus $100 million, and non-GAAP diluted EPS of $3.40, plus or minus $0.20[15] - The company anticipates continued strong demand for data center storage solutions driven by AI applications and evolving market needs[2] Strategic Actions - The company declared a quarterly cash dividend of $0.74 per share, payable on April 8, 2026[8] - The company retired $500 million in Exchangeable Senior Notes due 2028 during the fiscal second quarter[5] - The company redeemed and repurchased $500 million of debt during the financing activities for the six months ended January 2, 2026[23] Operating Metrics - Non-GAAP operating margin for the six months ended January 2, 2026, was 30.5%, up from 21.8% in the prior year[27] - Adjusted EBITDA excludes certain expenses and gains that are not indicative of core operating results, including impairment and other charges related to cost-saving efforts[44] - LTM adjusted EBITDA is defined as the total of last twelve months adjusted EBITDA, used to evaluate the Company's debt portfolio[44] Tax and Accounting Adjustments - The projected non-GAAP income tax rate for fiscal year 2026 is set at 15.5%[41] - Non-GAAP income tax adjustments aim to provide consistency across interim reporting periods[41] - The Company may periodically re-evaluate its non-GAAP tax rate based on changes in tax laws[41] - Non-GAAP diluted share count adjustments are made using the if-converted method for the 2028 exchangeable notes[42] - Strategic investment gains, losses, and impairment charges are excluded to provide a clearer view of the Company's operating performance[39] - Other charges, primarily IT transformation costs, are also excluded for a supplemental view of operating performance[40] - The Company assesses its sources of liquidity and capital structure using free cash flow as a non-GAAP measure[43] - Free cash flow is defined as net cash provided by operating activities less acquisition of property, equipment, and leasehold improvements[43]