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]

Seagate Technology Holdings PLC (NASDAQ:STX) is 16.5% higher to trade at $260, after the computer hardware company reported adjusted fiscal first-quarter earnings of $2.61 on $2.63 billion in revenue, both of which topped analyst estimates. The company also hiked its Q2 forecast, citing a profitable cycle and tight supply chain. Seven analysts have hiked their price targets in response, including Mizuho and Wedbush to $290.The report has sector peers Western Digital (WDC) and SanDisk (SNDK) both confidently ...

Core Insights - Seagate Technology Holdings PLC reported better-than-expected first-quarter earnings, with earnings per share (EPS) of $2.61, surpassing the analyst estimate of $2.37, and quarterly revenue of $2.62 billion, exceeding the Street estimate of $2.54 billion [1][2] Financial Performance - The company experienced a revenue growth of 21% year-over-year in the September quarter, with non-GAAP EPS exceeding the high end of the guided range [2] - For the second quarter, Seagate projects adjusted EPS between $2.55 and $2.95, compared to the previous estimate of $2.62, and revenue is expected to be in the range of $2.6 billion to $2.8 billion, against the prior estimate of $2.65 billion [2] Stock Market Reaction - Following the earnings announcement, Seagate shares rose by 13.5%, trading at $253.00 [3] - Analysts have adjusted their price targets for Seagate, with Rosenblatt maintaining a Buy rating and raising the target from $250 to $270, while Barclays maintained an Equal-Weight rating and increased the target from $200 to $240 [5]

Core Insights - Seagate Technology (NASDAQ: STX) reported Q1 earnings that significantly exceeded expectations, indicating strong demand for high-capacity storage solutions linked to AI infrastructure development [1] Financial Performance - The company delivered a commanding earnings beat, showcasing robust financial health and operational efficiency [1] Market Demand - The results signal a growing demand for high-capacity storage, particularly in relation to the ongoing buildout of AI infrastructure [1]

Core Insights - Seagate reported quarterly earnings of $2.61 per share, exceeding the Zacks Consensus Estimate of $2.36 per share, and showing a significant increase from $1.58 per share a year ago, resulting in an earnings surprise of +10.59% [1] - The company achieved revenues of $2.63 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.93% and up from $2.17 billion year-over-year [2] - Seagate's stock has increased by approximately 166.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 16.9% [3] Earnings Outlook - The future performance of Seagate's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - Current consensus EPS estimate for the upcoming quarter is $2.53 on revenues of $2.59 billion, while for the current fiscal year, the estimate is $10.55 on revenues of $10.34 billion [7] Industry Context - The Computer - Integrated Systems industry, to which Seagate belongs, is currently ranked in the top 7% of over 250 Zacks industries, indicating a favorable outlook for stocks within this sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked using tools like the Zacks Rank [5][6]

Financial Data and Key Metrics Changes - Seagate reported revenue of $2.63 billion, representing an 8% sequential increase and a 21% year-over-year growth [15][23] - Non-GAAP gross margins reached a record 40.1%, up 220 basis points sequentially [15][19] - Non-GAAP operating margin expanded to 29%, a level last seen in fiscal 2012, with non-GAAP EPS of $2.61, exceeding guidance [6][15] Business Line Data and Key Metrics Changes - Data center revenue accounted for 80% of total revenue at $2.1 billion, up 13% sequentially and 34% year-over-year [16][18] - The company shipped 182 exabytes (EB) in the September quarter, a 32% increase year-over-year, with the majority delivered to global data center customers [15][16] - Edge IoT revenue made up the remaining 20% at $515 million, with expectations for seasonal improvement in the December quarter [18] Market Data and Key Metrics Changes - Demand from global cloud service providers (CSPs) continued to grow, with cloud exabyte demand increasing for the ninth consecutive quarter [17][18] - The average nearline drive capacity increased by 26% over the past year, contributing to exabyte volume growth [17] - The company noted a significant increase in unstructured data generation, particularly from video content, driving demand for hard drives [8][9] Company Strategy and Development Direction - Seagate is focused on executing its HAMR (Heat-Assisted Magnetic Recording) technology roadmap to meet growing exabyte needs [7][13] - The company aims to transition customers to higher-capacity drives, leveraging advancements in areal density as a competitive advantage [11][12] - Seagate is committed to returning at least 75% of free cash flow to shareholders over time, with a recent 3% increase in quarterly dividends [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of cash flow generation and the ongoing demand environment for high-capacity hard drives [6][15] - The company anticipates continued strong demand from global cloud data centers, projecting December quarter revenue in the range of $2.7 billion ±$100 million [23] - Management highlighted the transformative impact of AI on hard drive demand, particularly in relation to data storage needs [7][8] Other Important Information - Seagate's cash and cash equivalents increased by 25% sequentially to $2.4 billion, with a net leverage ratio of 1.5x [22] - The company shipped over 1 million Mosaic drives in the September quarter, with expectations to achieve 50% exabyte crossover on nearline HAMR drives in the second half of calendar 2026 [10][11] Q&A Session Summary Question: Plans to add capacity and supply chain bottlenecks - Management indicated that capacity will be added through product transitions rather than increasing unit capacity, focusing on exabyte capacity instead [28][29] Question: Update on HAMR rollout and customer adoption - Management confirmed that five global CSPs are now qualified on HAMR, contributing to revenue and profitability growth [33][34] Question: Expectations for incremental margins - Management acknowledged that current incremental margins are higher than previously projected, but variability is expected due to customer negotiations and product transitions [39][40] Question: Cost reduction expectations - Management stated that cost improvements are anticipated as higher capacity drives are transitioned, with ongoing focus on maintaining a balance between supply and demand [42][44] Question: Visibility of inference demand and seasonality - Management expressed confidence in the growth of inference demand driven by video content, with expectations for lower seasonal impacts due to the predominance of data center revenue [50][52] Question: Pricing strategy in a constrained environment - Management noted that pricing strategies have remained consistent, with slight increases during contract renegotiations, while transitioning customers to higher capacity products [56][58] Question: Managing supply and demand balance - Management emphasized the importance of predictable long-term plans from customers, which aids in managing supply chain challenges [102][103]

Financial Data and Key Metrics Changes - Seagate reported revenue of $2.63 billion for the September quarter, representing an 8% sequential increase and a 21% year-over-year growth [15][16] - Non-GAAP gross margin reached a record 40.1%, up 220 basis points sequentially, while non-GAAP operating margin expanded by 280 basis points to 29% [15][16] - Non-GAAP EPS was $2.61, exceeding the high end of the guidance range [15][20] Business Line Data and Key Metrics Changes - Data center revenue accounted for 80% of total revenue at $2.1 billion, up 13% sequentially and 34% year-over-year [16][17] - The company shipped 182 exabytes in the September quarter, a 32% increase year-over-year, with the majority delivered to global data center customers [15][16] - Edge IoT revenue made up the remaining 20% of revenue at $515 million, with expectations for seasonal improvement in the December quarter [18] Market Data and Key Metrics Changes - Demand from global cloud service providers (CSPs) continued to grow, with cloud exabyte demand increasing for the ninth consecutive quarter [17][18] - The average nearline drive capacity increased by 26% over the past year, contributing to exabyte volume growth [17] - The company noted a significant increase in unstructured data generation, particularly from video content, driving demand for hard drives [8][9] Company Strategy and Development Direction - Seagate is focused on executing its HAMR-based product roadmap to support growing exabyte needs and transitioning customers to higher-capacity drives [7][10] - The company aims to leverage its manufacturing expertise and advancements in technology to achieve 10 terabytes per disk [12] - Seagate is committed to returning at least 75% of free cash flow to shareholders over time, with a quarterly dividend increase of approximately 3% [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of cash flow generation and the ongoing demand environment for high-capacity hard drives [6][13] - The company anticipates continued strong demand from global cloud data centers, projecting December quarter revenue in the range of $2.7 billion, representing a 16% year-over-year improvement [23] - Management highlighted the transformative impact of AI on hard drive demand, with expectations for ongoing growth in data storage needs [7][8] Other Important Information - Seagate's cash and cash equivalents increased by 25% sequentially to $2.4 billion, with a net leverage ratio of 1.5 times based on adjusted EBITDA [22] - The company shipped over 1 million Mosaic drives in the September quarter, with plans to qualify additional global CSPs for higher-capacity products [10][11] Q&A Session Summary Question: Plans to add capacity and supply chain bottlenecks - Management indicated that capacity will be added through product transitions rather than increasing unit capacity, focusing on exabyte capacity instead [28][29] Question: Update on HAMR rollout and customer adoption - Management confirmed that five major cloud customers are now qualified on HAMR, contributing to revenue and profitability growth [33] Question: Sustainability of incremental margins - Management acknowledged that while current margins are higher due to product mix, variability exists from quarter to quarter based on customer negotiations and market conditions [39][40] Question: Cost reduction expectations for calendar 2026 - Management noted that improvements in cost per terabyte are expected from the transition to higher capacity drives, with ongoing qualification of 40-terabyte drives [44] Question: Visibility of inference demand and seasonality - Management expressed confidence in the growth of inference demand driven by video content generation, with expectations for lower seasonal impacts on data center revenue [50][52] Question: Pricing strategy in a constrained environment - Management stated that pricing strategy remains consistent, with slight increases for higher capacity products while maintaining competitive pricing for existing products [56][58] Question: Managing supply between consumer and cloud markets - Management clarified that while some supply is being shifted from edge IoT to cloud, overall demand remains strong, and no significant cannibalization is expected [62][63]

Financial Data and Key Metrics Changes - Seagate reported revenue of $2.63 billion for the September quarter, representing an 8% sequential increase and a 21% year-over-year growth [13] - Non-GAAP gross margins reached a record 40.1%, up 220 basis points sequentially [13] - Non-GAAP operating margin expanded by 280 basis points to 29% sequentially, with non-GAAP EPS at $2.61, exceeding the high end of guidance [5][13] - Free cash flow generation was flat quarter-over-quarter at $427 million, with a projected increase in the December quarter [19] Business Line Data and Key Metrics Changes - Data center revenue accounted for 80% of total revenue at $2.1 billion, up 13% sequentially and 34% year-over-year [15] - The company shipped 182 exabytes in the September quarter, a 32% increase year-over-year, with the majority delivered to global data center customers [14] - Edge IoT revenue made up the remaining 20% of revenue at $515 million, with expectations for seasonal improvement in the December quarter [17] Market Data and Key Metrics Changes - Demand from global cloud service providers (CSPs) continued to grow, with cloud exabyte demand increasing for the ninth consecutive quarter [16] - The average nearline drive capacity increased by 26% over the past year, contributing to exabyte volume growth [16] - The company noted a significant increase in unstructured data generation, particularly from video content, driving demand for hard drives [7][8] Company Strategy and Development Direction - Seagate is focused on executing its HAMR-based product roadmap to support growing exabyte needs and transitioning customers to higher-capacity drives [6][11] - The company aims to leverage its manufacturing expertise and advancements in technology to achieve a competitive advantage in aerial density [10] - Seagate is committed to returning at least 75% of free cash flow to shareholders over time, with a recent increase in quarterly dividends by approximately 3% [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of cash flow generation and the ongoing demand environment for high-capacity hard drives [5][11] - The company anticipates continued strong demand from global cloud data centers, projecting December quarter revenue in the range of $2.7 billion, representing a 16% year-over-year improvement [22] - Management highlighted the transformative impact of AI on hard drive demand, particularly in relation to data storage needs [6][7] Other Important Information - Seagate's cash and cash equivalents increased by 25% sequentially to $2.4 billion, with a net leverage ratio of 1.5 times based on adjusted EBITDA [20] - The company shipped over 1 million Mosaic drives in the September quarter, with plans to qualify additional global CSPs for higher-capacity products [9][10] Q&A Session Summary Question: Plans to add capacity and supply chain bottlenecks - Management indicated that capacity addition is through product transitions rather than unit capacity increases, focusing on exabyte capacity [27][28] Question: Adoption of HAMR technology - Management noted that customer engagement on long-term agreements is driven by visibility into higher capacity points, with ongoing qualification of customers on HAMR drives [30] Question: Sustainability of incremental margins - Management acknowledged that while current margins are higher due to product mix, variability exists from quarter to quarter based on customer negotiations and product transitions [34] Question: Cost reduction expectations - Management stated that improvements in cost per terabyte are expected from the transition to higher capacity drives, with ongoing qualification of 40-terabyte drives [40] Question: Visibility of inference demand - Management expressed confidence in the growth of inference demand driven by video content generation, with expectations for lower seasonality impact on data center revenue [45][47] Question: Pricing strategy in a constrained environment - Management confirmed that pricing strategy remains consistent, with slight increases for higher capacity products while maintaining profitability [52] Question: Managing supply for cloud versus consumer markets - Management indicated that while there is some seasonality in edge IoT markets, demand for cloud remains strong, and supply is being prioritized accordingly [58][60] Question: Future exabyte demand and supply - Management expects significant increases in exabyte supply as the company transitions to higher capacity products, with ongoing collaboration with major hyperscalers [82]

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses non-GAAP measures of gross profit, gross margin, operating expenses, income from operations, operating margin, net income, diluted EPS, free cash flow, EBITDA, adjusted EBITDA and the last twelve months (LTM) adjusted EBITDA, which are adjusted from results based on GAAP to exclude certain benefits, expenses, gains and losses. A full discussion of these adju ...

Core Viewpoint - Seagate Technology Holdings PLC reported strong first-quarter earnings, surpassing analyst expectations on both earnings per share and revenue, indicating robust performance and customer demand for its products [1][2][3]. Financial Performance - Quarterly earnings per share (EPS) were $2.61, exceeding the analyst estimate of $2.37 by 9.99% [1]. - Revenue for the quarter was $2.62 billion, beating the Street estimate of $2.54 billion [2]. - The company generated $532 million in cash flow from operations and $427 million in free cash flow during the first quarter [2]. Year-over-Year Growth - Seagate experienced a revenue growth of 21% year-over-year, reflecting strong execution and demand for high-capacity storage products [3]. Future Outlook - For the second quarter, Seagate projects adjusted EPS between $2.55 and $2.95, compared to the current estimate of $2.62, and revenue is expected to be in the range of $2.6 billion to $2.8 billion, against an estimate of $2.65 billion [3]. Stock Performance - Following the earnings report, Seagate's stock rose by 4.07%, reaching $232.07 in extended trading [4].