Financial Data and Key Metrics Changes - Seagate reported December quarter revenue of $2.83 billion, representing a 7% sequential increase and a 22% year-over-year increase [14] - Non-GAAP gross margin improved to 42.2%, up 210 basis points sequentially, while non-GAAP operating margin expanded by 290 basis points to 31.9% [14][17] - Non-GAAP EPS was $3.11, reflecting a 19% increase quarter-over-quarter [14] Business Line Data and Key Metrics Changes - The data center market accounted for 87% of shipment volume, with 165 exabytes shipped, up 4% sequentially and 31% year-over-year [15] - Average cloud nearline drive capacities increased to nearly 26 terabytes in the December quarter, indicating a shift towards higher capacity drives [16] - The edge IoT market contributed $601 million, supported by seasonal improvements in consumer products [16] Market Data and Key Metrics Changes - Demand for high-capacity nearline drives in global cloud data centers continued to grow, with sustained demand trends expected to persist [6][7] - Video applications are driving significant demand for hard drives, with platforms like YouTube seeing a surge in uploads [8] - The strategic value of data is increasing, particularly with the rise of AI applications that require large volumes of historic data [9] Company Strategy and Development Direction - Seagate's HAMR technology is positioned as a long-term enabler of mass capacity storage, with expectations to deliver 10 TB per disk early in the next decade [5][12] - The company aims to maintain supply discipline while meeting demand growth through advancements in areal density without increasing unit production volume [7] - Seagate is focused on expanding profitability through a higher capacity product mix, supported by strong demand from AI applications [12][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment, particularly among global cloud customers, and expects data center demand to offset typical seasonal declines [20][21] - The company anticipates revenue for the March quarter to be in the range of $2.9 billion ±$100 million, representing a 34% year-over-year improvement [21] - Management highlighted the importance of maintaining pricing discipline and the potential for flat to slightly increasing pricing in the future [26][71] Other Important Information - Seagate generated over $600 million in free cash flow, the highest level in eight years, and retired $500 million in gross debt [14][20] - The company expects capital expenditures for fiscal year 2026 to remain within the target range of 4%-6% of revenue [19][102] - Cash and cash equivalents totaled just over $1 billion, with ample liquidity of $2.3 billion [20] Q&A Session Summary Question: Can you provide more detail on gross margins going forward? - Management indicated that pricing will be dictated by demand, with potential for flat to slightly up pricing as capacity increases [26] Question: Can you help bridge the drivers between mix and price? - Management noted that demand remains strong, and discussions with customers are focused on future planning [32] Question: What is the expected exabyte growth for this calendar year? - Management did not provide specific guidance for calendar 2026 but indicated a mid-20% exabyte growth CAGR is expected [58] Question: How is the transition to HAMR technology progressing? - The transition is on track, with six out of eight top cloud service providers qualified for HAMR technology [46] Question: What portion of your LTAs has fixed pricing agreements? - Management confirmed that volume and pricing for 2026 are well defined, with discussions for 2027 beginning soon [95]