Financial Data and Key Metrics Changes - Seagate reported a 31% year-on-year increase in revenue, reaching $2.16 billion, and an 81% growth in non-GAAP gross profit dollars [6][15] - Non-GAAP gross margin expanded by 70 basis points sequentially to 36.2%, and non-GAAP operating margin increased to 23.5% of revenue [15][18] - Non-GAAP EPS was $1.90, at the top end of the guidance range, with free cash flow generation increasing to $216 million compared to $150 million in the prior period [20][21] Business Line Data and Key Metrics Changes - Alt drive revenue was $2 billion, down 8% sequentially, while mass capacity revenue declined by $145 million to $1.7 billion, representing a 48% increase year-on-year [16] - Nearline represented roughly 90% of mass capacity volume, with shipments of 120 exabytes, down 5% sequentially but up 55% year-on-year [17] - Sales of legacy products totaled $254 million, down 8% sequentially, while revenue from other businesses remained flat at $157 million [17] Market Data and Key Metrics Changes - Cloud nearline revenue and exabytes were up nearly 10% sequentially, almost doubling year-over-year amid a tight supply environment [10] - Demand for mass capacity storage is aligned with the cloud CapEx investment cycle and ongoing data center infrastructure build-out to support AI transformations [10][11] - Nearline exabyte demand looks strong through calendar 2025, with visibility of demand extending into the first half of calendar 2026 [12] Company Strategy and Development Direction - Seagate is focusing on managing controllable factors while executing its aerial density-driven technology roadmap, which enhances customer value [9] - The company is ramping up shipments of high-capacity drives and expects significant increases in HAMR product shipments in the coming quarters [13][14] - Seagate's transformation towards a profit and cash generation-focused business model is expected to capitalize on the growing demand for mass capacity storage [25] Management's Comments on Operating Environment and Future Outlook - Management expects minimal impact from trade policy changes on fourth-quarter financial performance and is monitoring the situation closely [8] - The company anticipates continued robust demand for high-capacity nearline products, with revenue forecasted to be in the range of $2.4 billion for June [23] - Management remains optimistic about the long-term growth prospects driven by increasing data generation and the value of data [25] Other Important Information - Seagate's debt balance was $5.1 billion at the end of March, with a net leverage ratio of 2.1 times, and plans to continue reducing debt [22] - The company returned $152 million to shareholders through dividends and maintained ample liquidity of $2.1 billion [21] Q&A Session Summary Question: Can you help us understand how and where you got some of the upside in the quarter with the supply shortage? - Management indicated that the predictability built through the build-to-order process allowed them to guide the same revenue expectations a month ago, despite previous operational issues being resolved [29][30] Question: Where are you with HAMR qualifications and how much did it contribute to the March results? - Management confirmed that HAMR is growing well, with significant contributions expected as qualifications progress [34][36] Question: How has your visibility improved regarding new demand from neo clouds? - Management noted that build-to-order agreements provide better visibility into demand, and customers are making data center investments due to the importance of data infrastructure [40][41] Question: Why are margins not seeing more upside in June despite expected increases in nearline? - Management explained that while nearline and cloud demand is expected to be higher, pricing dynamics and contract negotiations will influence margin outcomes [43][45] Question: How do you see the impact of tariffs on your financial model? - Management stated that passing through tariff-related costs would be a last resort, and they are focused on maintaining margins through value-added negotiations [50][51] Question: What is the expected contribution of HAMR to your bits as you progress through calendar 2025? - Management expressed confidence in the increasing presence of HAMR drives as qualifications complete, contributing significantly to future growth [73] Question: How do you see the impact of emerging AI inference storage on your long-term TAM? - Management highlighted the potential for increased storage demand driven by AI applications, emphasizing the importance of data infrastructure [64][66]

Financial Data and Key Metrics Changes - Seagate reported a 31% year-on-year increase in revenue, reaching $2.16 billion, and an 81% growth in non-GAAP gross profit dollars [5][13] - Non-GAAP gross margin expanded by 70 basis points sequentially to 36.2%, and non-GAAP operating margin increased to 23.5% of revenue [13][16] - Non-GAAP EPS was $1.90, at the top end of the guidance range, with free cash flow generation increasing to $216 million compared to $150 million in the prior period [18][19] Business Line Data and Key Metrics Changes - Nearline revenue represented approximately 90% of mass capacity volume, with shipments of 120 exabytes, down 5% sequentially but up 55% year-on-year [15] - Mass capacity revenue declined sequentially by $145 million to $1.7 billion, but represented a 48% increase year-on-year [14] - Legacy product sales totaled $254 million, down 8% sequentially, reflecting expected seasonal trends [15] Market Data and Key Metrics Changes - Cloud nearline revenue and exabytes were up nearly 10% sequentially, almost doubling year-over-year amid a tight supply environment [8] - Demand for mass capacity storage aligns with the cloud CapEx investment cycle and ongoing data center infrastructure build-out to support AI transformations [8][10] - Nearline exabyte demand looks strong through calendar 2025, with visibility of demand extending into the first half of calendar 2026 [10] Company Strategy and Development Direction - The company is focused on managing controllable factors while executing its aerial density-driven technology roadmap [7] - Seagate's HAMR-based Mosaic drives are positioned as the industry's only three terabyte per disk products, with ramping volume to qualified customers [7][12] - The company aims to transform its business model to prioritize profits and cash generation, capitalizing on the growth in data generation and value [23] Management's Comments on Operating Environment and Future Outlook - Management expects minimal impact from trade policy changes on fourth-quarter financial performance and is monitoring the situation closely [6][20] - The company anticipates robust demand for high-capacity nearline products across the global cloud customer base, driving revenue and profits higher in the upcoming quarter [20] - Management expressed confidence in the long-term growth potential driven by increasing data generation and the need for mass capacity storage [23] Other Important Information - The company returned $152 million to shareholders through dividends and maintained liquidity of $2.1 billion at the end of March [19] - Seagate's debt balance was $5.1 billion, with a net leverage ratio of 2.1 times, and plans for further reduction in the coming quarters [19] Q&A Session Summary Question: How did Seagate manage upside in the quarter despite supply constraints? - Management indicated that the predictability built through the build-to-order process allowed them to guide revenue effectively, despite previous operational issues being resolved [29][30] Question: What is the status of HAMR qualifications and its contribution to results? - Management confirmed that HAMR is growing well, with several qualifications in progress, and that it contributed positively to the quarter's results [34][37] Question: How has visibility improved regarding customer demand? - Management noted that build-to-order models provide predictability, and there is a sense of urgency from customers for data center investments [41][42] Question: What is the impact of tariffs on financial models? - Management stated that passing through tariff-related costs would be a last resort, and they are focused on maintaining margins to reinvest in technology [50][52] Question: What is the outlook for revenue growth and gross margin in the back half of the year? - Management expressed confidence in sequential revenue growth and gross margin expansion, with strong demand visibility extending into early 2026 [55][58] Question: How does the company view the impact of emerging AI workloads on storage demand? - Management highlighted that AI workloads are expected to drive significant storage demand, particularly for video applications and large datasets [64][65]