Seagate's Q4 Earnings & Revenues Beat, Improve Y/Y on Cloud Momentum

Core Insights - Seagate Technology Holdings plc reported strong fourth-quarter fiscal 2025 results, with non-GAAP earnings of $2.59 per share, exceeding estimates by 5.3% and reflecting structural improvements and robust cloud-driven demand [1][8] - Non-GAAP revenues reached $2.44 billion, surpassing estimates by 1.6% and showing a 30% year-over-year increase, driven by massive data growth from hyperscale cloud customers and AI workloads [2][8] Financial Performance - Non-GAAP gross margin hit a record 37.9%, up 170 basis points quarter-over-quarter and 700 basis points year-over-year, supported by high-capacity nearline products and pricing strength [13] - Non-GAAP operating income rose to $640 million from $327 million a year ago, with an operating margin increase of 890 basis points year-over-year to 26.2% [14] Revenue Breakdown - Total HDD revenues, which account for 93.3% of total revenues, increased 32% year-over-year to $2.3 billion, driven by strong nearline cloud sales [11] - Mass capacity revenues surged 40% year-over-year to $2 billion, primarily due to increased nearline cloud demand [4][8] Shipment and Capacity - Seagate shipped 162.5 exabytes of HDD storage in the reported quarter, a 42% year-over-year increase, with average capacity per drive rising to 13 TB [6] - Nearline shipments to cloud and edge data centers made up the majority of mass capacity volume, with nearline drives accounting for 91% of total mass capacity exabytes shipped [5] Technology and Growth Drivers - The ongoing implementation and expansion of HAMR technology is a key driver for Seagate's growth, enhancing areal density and supporting next-generation storage solutions [3] - The company continues to benefit from a strong product mix and ongoing pricing improvements, which support non-GAAP hard drive gross margins above the company average [13] Cash Flow and Balance Sheet - As of June 27, 2025, cash and cash equivalents were $891 million, with long-term debt decreasing to $5 billion [15] - Cash flow from operations was $508 million, with free cash flow amounting to $425 million, indicating strong performance and expectations for higher free cash flow in the second half of 2025 [16] Future Outlook - Seagate's guidance for the first quarter of fiscal 2026 anticipates revenues of $2.5 billion (+/- $150 million), indicating a 15% year-over-year improvement [18] - Non-GAAP earnings are expected to be $2.3 per share (+/- 20 cents), with operating expenses projected around $290 million [19]