Seagate Technology ((STX)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Seagate Technology’s recent earnings call showcased a strong performance, underscored by record revenue growth and significant advancements in HAMR technology. The sentiment expressed was largely positive, reflecting confidence in the company’s financial health and strategic direction. Despite some concerns about supply constraints and potential seasonal effects, the overall outlook remains optimistic.
Record Revenue Growth
Seagate reported a remarkable 21% increase in revenue year-over-year, reaching $2.63 billion. This growth was also reflected sequentially with an 8% increase, highlighting the company’s robust market position and effective strategies.
New Company Record in Non-GAAP Gross Margin
The company achieved a new milestone in its non-GAAP gross margin, setting a record at 40.1%. This represents an increase of 220 basis points sequentially, showcasing Seagate’s operational efficiency and cost management.
Strong Data Center Segment Performance
The data center segment was a significant contributor to Seagate’s success, accounting for 80% of total revenue with $2.1 billion. This segment saw a 13% sequential increase and a 34% year-on-year growth, driven by high demand from global cloud service providers.
HAMR Technology Milestones
Seagate made notable progress in its HAMR technology, qualifying five global CSPs on its Mozaic 3+ terabyte per disk products. The company shipped over 1 million Mozaic drives in the September quarter, marking a significant technological achievement.
Dividend Increase
In a move to reward shareholders, Seagate announced a 3% increase in its quarterly dividend, reflecting the company’s strong financial position and commitment to returning value to investors.
Positive Financial Outlook
Seagate’s non-GAAP EPS exceeded expectations at $2.61, with projections for the next quarter set to increase to $2.75. This positive outlook underscores the company’s confidence in its ongoing financial performance.
Supply Constraints
Despite strong demand, Seagate faces supply limitations that restrict its ability to significantly increase unit capacity quickly. This challenge highlights the need for strategic supply chain management.
Potential Seasonal Weakness
There is some uncertainty regarding typical March quarter seasonality. However, strong data center demand may help mitigate potential weaknesses, providing a buffer against seasonal fluctuations.
Forward-Looking Guidance
Looking ahead, Seagate’s CEO, Dave Mosley, provided robust guidance, forecasting December quarter revenue between $2.6 billion to $2.8 billion. The non-GAAP EPS is projected at $2.75, with a margin of $0.20. The company aims for a 50% exabyte crossover for nearline HAMR drives by the latter half of 2026, reflecting its strategic focus on technological advancement and market leadership.
In conclusion, Seagate Technology’s earnings call painted a picture of a company in a strong position, with record financial metrics and strategic advancements in technology. While there are challenges related to supply constraints and potential seasonal effects, the overall sentiment remains positive, with a clear path forward for continued growth and innovation.