Seagate Technology Reports Strong Fiscal Q1 2025 Results

Seagate Technology (NASDAQ: STX) reported impressive financial performance in its Fiscal First Quarter 2025, demonstrating significant growth in revenue and earnings per share. The company’s revenue surged to $2.17 billion, marking a 49% year-over-year growth and a 15% rise from the previous quarter. Non-GAAP EPS exceeded expectations at $1.58, driven by an improved product mix and pricing.

Seagate's gross margin reached a decade-high of 33.3%, with non-GAAP gross profit climbing 24% to $723 million. The company’s outlook remains positive, buoyed by strong demand in the cloud and enterprise markets, particularly for high-capacity nearline drives.

Key Takeaways

• Seagate's revenue hit $2.17 billion, a 49% increase year-over-year.
• Non-GAAP EPS reached $1.58, surpassing guidance.
• Gross margin peaked at 33.3%, the highest in over ten years.
• Dividend increased to $0.72 per share, up nearly 3%.
• Liquidity at quarter-end stood at $2.7 billion, with a net leverage ratio of 3.2 times.
• Revenue for December quarter projected between $2.3 billion (±$150 million).
• Non-GAAP EPS for December quarter estimated at $1.85 (±$0.20).

Company Outlook

• Continued demand growth expected, especially for high-capacity nearline drives.
• The company is ramping up its last PMR platform and anticipates broader customer qualifications for HAMR technology by mid-calendar 2025.
• Fiscal year 2025 projected to have stable demand with manageable seasonality.

Bearish Highlights

• Economic uncertainties in China present challenges for global Smart City project demand.
• Potential delays in HAMR rollout might require a return to PMR products.

Bullish Highlights

• Strong demand anticipated for mass capacity drives with future growth from HAMR technology.
• Expected to ship close to 130 exabytes of nearline data soon.
• AI-driven workloads, especially in video applications, forecasted to gradually boost demand growth.

Misses

• Free cash flow was relatively low at $27 million, though improvement is expected in the December quarter.

Q&A Highlights

• Most customer agreements are fully committed, indicating confidence in Seagate's supply chain.
• Factory utilization is over 90%, showcasing strong operational capacity.
• Prepared to manage potential delays in HAMR qualifications by pivoting to PMR products if necessary.

In conclusion, Seagate Technology's Fiscal First Quarter 2025 results are strong, highlighting confidence in its financial strategy, product mix, and technological innovation.

The company's focus on high-capacity nearline drives and the transition to HAMR technology positions it well for future growth, despite some market uncertainties. Management remains committed to delivering scalable storage solutions and maximizing shareholder value through dividends and prudent financial management.

InvestingPro Insights

Seagate Technology's strong financial performance in Fiscal First Quarter 2025 is underscored by data from InvestingPro, with a market capitalization of $22.13 billion. Recent data shows a revenue of $6.551 billion for the last twelve months as of Q4 2024, with a 17.79% quarterly revenue growth in Q4 2024, aligning with the reported 49% year-over-year revenue growth in the latest quarter.

Seagate has maintained dividend payments for 14 consecutive years, consistent with a recent 3% increase to $0.72 per share. The current dividend yield stands at 2.49%.

Additionally, Seagate trades at a low P/E ratio relative to near-term earnings growth, making it attractive for value investors in light of the positive outlook on growth for high-capacity nearline drives.

Seagate's stock has shown a strong performance with a 77.86% price total return over the past year and a 31.92% return over the last six months, which aligns with improved financial results and future outlook.

For investors seeking comprehensive analysis, InvestingPro offers further tips and insights, currently highlighting 13 additional tips for Seagate Technology, providing a deeper understanding of its financial health and market position.