Seagate's Q1 Earnings & Sales Top, Product Uptake & Pricing Lift Margins

Core Insights - Seagate Technology Holdings plc reported first-quarter fiscal 2026 non-GAAP earnings of $2.61 per share, exceeding the Zacks Consensus Estimate by 10.6% and surpassing management's guidance of $2.3 per share [1] - Non-GAAP revenues reached $2.63 billion, exceeding the Zacks Consensus Estimate by 3.9% and increasing 21% year over year, driven by rising demand for high-capacity hard drives, particularly from global cloud service providers [2] Financial Performance - The data center segment accounted for 80% of total revenue, amounting to $2.1 billion, reflecting a 13% sequential increase and 34% year-over-year growth, with strong demand from global cloud customers [6] - Non-GAAP gross margin reached a record 40.1%, increasing by approximately 220 basis points quarter over quarter and 680 basis points year over year, attributed to the adoption of high-capacity nearline products [12] - Non-GAAP income from operations totaled $763 million, up from $442 million a year ago, with an operating margin increase of 860 basis points year over year to 29% [13] Product and Market Developments - Seagate ramped up shipments of its Mozaic HAMR products, now qualified by five major cloud providers, with over 1 million units shipped during the September quarter [3] - The company shipped 182 exabytes of HDD storage in the reported quarter, a 32% year-over-year increase, with 159 exabytes delivered to data center customers, marking a 39% year-over-year growth [10][11] Shareholder Returns and Future Outlook - Management announced a nearly 3% increase in its quarterly dividend to 74 cents, with shares up 7% in pre-market trading [4] - For the fiscal second quarter, Seagate expects revenues of $2.7 billion (+/- $100 million), indicating a 16% year-over-year improvement, and non-GAAP earnings are projected at $2.75 per share (+/- 20 cents) [17]