Seagate's (STX) Q2 Earnings Beat Estimates, Revenues Miss

Core Viewpoint - Seagate Technology Holdings plc reported better-than-expected non-GAAP earnings for Q2 fiscal 2024, despite a decline in revenues year-over-year, indicating a mixed performance with some signs of recovery in demand [1][9]. Financial Performance - Non-GAAP earnings for Q2 fiscal 2024 were 12 cents per share, surpassing the Zacks Consensus Estimate of a loss of 7 cents per share, but down from 16 cents in the same quarter last year [1]. - Non-GAAP revenues were $1.555 billion, missing the Zacks Consensus Estimate by 0.3% and declining 18% year-over-year, although they improved 7% sequentially [1]. - Management projected revenues for Q2 fiscal 2024 to be around $1.55 billion (+/- $150 million) [1]. Exabyte Shipments - Seagate shipped 95.1 exabytes of HDD storage in the reported quarter, down 15% year-over-year but up 6% sequentially [3]. - Average mass capacity increased to 8.2 TB, reflecting a 12% year-over-year and 11% sequential increase [3]. - In the mass-capacity storage market, 83.2 exabytes were shipped, down 14% year-over-year but up 5% sequentially [3]. Revenue Breakdown - HDD revenues, which account for 89% of total revenues, fell 17% year-over-year to $1.384 billion, but increased 7% sequentially [5]. - The Systems, SSD & Other segment, contributing 11% of revenues, reported $171 million, down 24% year-over-year but up 8% sequentially [6]. Margin and Expenses - Non-GAAP gross margin improved to 23.6% from 21.4% in the prior-year quarter [7]. - Non-GAAP operating expenses decreased by 18% year-over-year to $240 million, while non-GAAP income from operations rose to $127 million from $109 million a year ago [7]. Balance Sheet and Cash Flow - As of December 29, 2023, cash and cash equivalents were $787 million, slightly down from $795 million as of September 29, 2023 [8]. - Long-term debt remained stable at $5.669 billion [8]. - Cash flow from operations was $169 million, down from $251 million in the previous quarter, with free cash flow at $99 million compared to $172 million [8]. Future Outlook - Management anticipates Q3 fiscal 2024 revenues to be around $1.65 billion (+/- $150 million) and expects a non-GAAP loss of 25 cents per share [9]. - Incremental improvements in mass capacity demand from cloud and enterprise clients are expected to offset seasonal declines in other markets [9].