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Seagate's Q3 Earnings Beat on Solid Revenue Growth, Shares Jump
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Seagate Technology Holdings plc (STX - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $1.90 per share, beating the Zacks Consensus Estimate by 7.95%. The bottom line was in the upper end of STX’s guidance of $1.70 per share (+/- 20 cents), highlighting operational discipline and effective cost management. The company reported non-GAAP earnings of 33 cents per share in the year-ago quarter. The expansion reflects the benefits of a more resilient and optimized business model, along with robust supply-demand dynamics in mass capacity storage. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Non-GAAP revenues of $2.16 billion beat the Zacks Consensus Estimate by 1.3%. Revenues came in above the midpoint of guidance, rising 31% year over year. For the fiscal third quarter, management projected revenues to be $2.1 billion (+/-$150 million). The uptick is driven by structural business improvements, favorable market conditions and focused execution on advanced technologies like HAMR. However, plagued by supply chain headwinds, revenues fell 7% sequentially.
Higher mass capacity revenues were driven by stronger nearline cloud demand. Mass capacity revenues surged 48% year over year to $1.75 billion. Its exabyte shipments now represent 90% of total HDD exabyte shipments.
Nearline cloud revenues and exabyte shipments climbed roughly 10% sequentially and almost doubled year over year amid a highly constrained supply environment. The heightened demand for mass capacity storage continues to sync with cloud investment cycles and the scale-out of AI-ready data center infrastructure.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
One of the key drivers of Seagate’s strategic roadmap is the ramp-up of its HAMR technology to meet surging cloud customer demand. Its HAMR-based Mozaic drives are the industry’s only products offering 3 terabytes per disk. Volume shipments to qualified customers are underway, and the company remains on schedule to broaden qualifications across more cloud customers, with wider shipments expected in the second half of calendar 2025.
In response to the better-than-anticipated results, STX’s shares rose 7.44% in the pre-market trading on April 30, 2025. In the past year, STX has declined 4.9% compared with the Zacks Computer-Integrated Systems industry’s fall of 8.2%.
Image Source: Zacks Investment Research
STX's Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 143.6 exabytes of HDD storage, up 45% year over year but down 5% sequentially. Our estimate was pegged at 140.8 exabytes of HDD storage. Average capacity per drive increased 44% year over year and 8% sequentially to 12.6 TB.
The company shipped 132.9 exabytes for the mass-capacity storage market (including nearline, video and image applications, and network-attached storage). This recorded a year-over-year increase of 50% in exabyte shipments but a fall of 5% sequentially. Our estimate was pegged at 134.8 exabytes of mass-capacity storage. Average mass capacity per drive increased year over year to 16.2 TB from 12.5 TB.
Seagate shipped 10.7 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), up 1% year over year and flat sequentially. Average capacity increased 34% year over year to 3.3 TB.
STX's Revenues by Product Group
Total HDD revenues (92.7% of total revenues) rose 36% year over year to $2 billion in the reported quarter. On a sequential basis, revenues were down 8%. Continued momentum in nearline cloud demand helped partially offset expected declines in most other end markets, driven by normal seasonality and supply allocation decisions.
Systems, SSD & Other segment’s revenues (7.3%), including enterprise data solutions, cloud systems and solid-state drives, were $157 million, down 11% on a year-over-year basis but up 1% sequentially.
Our estimates for revenues from HDD and non-HDD segments were $$1.99 billion and $150.2 million, respectively.
STX's Margin Details
Non-GAAP gross margin increased to 36.2% from 26.1% in the prior-year quarter, continuing its trend of year-over-year growth and improved margins. This performance drove non-GAAP earnings per share (EPS) and boosted free cash flow, reflecting a healthy supply-demand balance for mass capacity storage.
Seagate continues to benefit from a strong product mix, with more adoption of new products and ongoing pricing improvements. This supports non-GAAP hard drive gross margins above the company average.
Non-GAAP operating expenses were up 10% on a year-over-year basis to $274 million, primarily due to higher variable compensation.
Non-GAAP income from operations totaled $507 million, up from $183 million a year ago. Non-GAAP operating margin increased to 23.5% from 11.1% in the year-earlier quarter.
STX's Balance Sheet and Cash Flow
As of March 28, 2025, cash and cash equivalents were $814 million compared with $1.238 million as of Dec. 27, 2024.
As of March 28, 2025, long-term debt (including the current portion) was $5.146 billion compared with $5.679 billion as of Dec. 27, 2024.
Cash flow from operations was $259 million compared with $188 million in the previous quarter. Free cash flow amounted to $216 million compared with $128 million in the previous quarter. Management anticipates sequential improvement in free cash flow generation throughout the remainder of the fiscal year.
Seagate announced a quarterly cash dividend of 72 cents per share. The dividend will be paid out on July 8, 2025, to shareholders of record as of the close of business on June 25, 2025.
STX’s Fiscal Q4 Outlook
Management anticipates fourth-quarter fiscal 2025 revenues of $2.4 billion (+/- $150 million). The outlook reflects stability in demand and minimal expected impact from recent global tariff developments as of the report date. At the midpoint, this represents an 11% sequential increase and a 27% year-over-year improvement. It continues to experience strong demand for high-capacity nearline products from cloud customers worldwide. Combined with a gradual improvement in the VIA market, this is expected to boost revenues and profits in the June quarter.
Non-GAAP earnings are expected to be $2.4 per share (+/- 20 cents).
For the quarter, non-GAAP operating expenses are expected to be around $285 million. Management expects the non-GAAP operating margin to grow in the mid-20s percentage range of revenues.
STX’s Zacks Rank
Currently, Seagate carries a Zacks Rank #4 (Sell).
Badger Meter, Inc. (BMI - Free Report) reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.
In the past year, shares of BMI have gained 18.8%.
Cadence Design Systems (CDNS - Free Report) reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.
Shares of Cadence have gained 9.6% in the past year.
Woodward, Inc. (WWD - Free Report) reported second-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.
In the past six months, shares of WWD have gained 13.9%.
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Seagate's Q3 Earnings Beat on Solid Revenue Growth, Shares Jump
Seagate Technology Holdings plc (STX - Free Report) reported third-quarter fiscal 2025 non-GAAP earnings of $1.90 per share, beating the Zacks Consensus Estimate by 7.95%. The bottom line was in the upper end of STX’s guidance of $1.70 per share (+/- 20 cents), highlighting operational discipline and effective cost management. The company reported non-GAAP earnings of 33 cents per share in the year-ago quarter. The expansion reflects the benefits of a more resilient and optimized business model, along with robust supply-demand dynamics in mass capacity storage. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Non-GAAP revenues of $2.16 billion beat the Zacks Consensus Estimate by 1.3%. Revenues came in above the midpoint of guidance, rising 31% year over year. For the fiscal third quarter, management projected revenues to be $2.1 billion (+/-$150 million). The uptick is driven by structural business improvements, favorable market conditions and focused execution on advanced technologies like HAMR. However, plagued by supply chain headwinds, revenues fell 7% sequentially.
Higher mass capacity revenues were driven by stronger nearline cloud demand. Mass capacity revenues surged 48% year over year to $1.75 billion. Its exabyte shipments now represent 90% of total HDD exabyte shipments.
Nearline cloud revenues and exabyte shipments climbed roughly 10% sequentially and almost doubled year over year amid a highly constrained supply environment. The heightened demand for mass capacity storage continues to sync with cloud investment cycles and the scale-out of AI-ready data center infrastructure.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote
One of the key drivers of Seagate’s strategic roadmap is the ramp-up of its HAMR technology to meet surging cloud customer demand. Its HAMR-based Mozaic drives are the industry’s only products offering 3 terabytes per disk. Volume shipments to qualified customers are underway, and the company remains on schedule to broaden qualifications across more cloud customers, with wider shipments expected in the second half of calendar 2025.
In response to the better-than-anticipated results, STX’s shares rose 7.44% in the pre-market trading on April 30, 2025. In the past year, STX has declined 4.9% compared with the Zacks Computer-Integrated Systems industry’s fall of 8.2%.
Image Source: Zacks Investment Research
STX's Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 143.6 exabytes of HDD storage, up 45% year over year but down 5% sequentially. Our estimate was pegged at 140.8 exabytes of HDD storage. Average capacity per drive increased 44% year over year and 8% sequentially to 12.6 TB.
The company shipped 132.9 exabytes for the mass-capacity storage market (including nearline, video and image applications, and network-attached storage). This recorded a year-over-year increase of 50% in exabyte shipments but a fall of 5% sequentially. Our estimate was pegged at 134.8 exabytes of mass-capacity storage. Average mass capacity per drive increased year over year to 16.2 TB from 12.5 TB.
Seagate shipped 10.7 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), up 1% year over year and flat sequentially. Average capacity increased 34% year over year to 3.3 TB.
STX's Revenues by Product Group
Total HDD revenues (92.7% of total revenues) rose 36% year over year to $2 billion in the reported quarter. On a sequential basis, revenues were down 8%. Continued momentum in nearline cloud demand helped partially offset expected declines in most other end markets, driven by normal seasonality and supply allocation decisions.
Systems, SSD & Other segment’s revenues (7.3%), including enterprise data solutions, cloud systems and solid-state drives, were $157 million, down 11% on a year-over-year basis but up 1% sequentially.
Our estimates for revenues from HDD and non-HDD segments were $$1.99 billion and $150.2 million, respectively.
STX's Margin Details
Non-GAAP gross margin increased to 36.2% from 26.1% in the prior-year quarter, continuing its trend of year-over-year growth and improved margins. This performance drove non-GAAP earnings per share (EPS) and boosted free cash flow, reflecting a healthy supply-demand balance for mass capacity storage.
Seagate continues to benefit from a strong product mix, with more adoption of new products and ongoing pricing improvements. This supports non-GAAP hard drive gross margins above the company average.
Non-GAAP operating expenses were up 10% on a year-over-year basis to $274 million, primarily due to higher variable compensation.
Non-GAAP income from operations totaled $507 million, up from $183 million a year ago. Non-GAAP operating margin increased to 23.5% from 11.1% in the year-earlier quarter.
STX's Balance Sheet and Cash Flow
As of March 28, 2025, cash and cash equivalents were $814 million compared with $1.238 million as of Dec. 27, 2024.
As of March 28, 2025, long-term debt (including the current portion) was $5.146 billion compared with $5.679 billion as of Dec. 27, 2024.
Cash flow from operations was $259 million compared with $188 million in the previous quarter. Free cash flow amounted to $216 million compared with $128 million in the previous quarter. Management anticipates sequential improvement in free cash flow generation throughout the remainder of the fiscal year.
Seagate announced a quarterly cash dividend of 72 cents per share. The dividend will be paid out on July 8, 2025, to shareholders of record as of the close of business on June 25, 2025.
STX’s Fiscal Q4 Outlook
Management anticipates fourth-quarter fiscal 2025 revenues of $2.4 billion (+/- $150 million). The outlook reflects stability in demand and minimal expected impact from recent global tariff developments as of the report date. At the midpoint, this represents an 11% sequential increase and a 27% year-over-year improvement. It continues to experience strong demand for high-capacity nearline products from cloud customers worldwide. Combined with a gradual improvement in the VIA market, this is expected to boost revenues and profits in the June quarter.
Non-GAAP earnings are expected to be $2.4 per share (+/- 20 cents).
For the quarter, non-GAAP operating expenses are expected to be around $285 million. Management expects the non-GAAP operating margin to grow in the mid-20s percentage range of revenues.
STX’s Zacks Rank
Currently, Seagate carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Other Companies
Badger Meter, Inc. (BMI - Free Report) reported EPS of $1.30 for first-quarter 2025, which beat the Zacks Consensus Estimate by 20.4%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 99 cents.
In the past year, shares of BMI have gained 18.8%.
Cadence Design Systems (CDNS - Free Report) reported first-quarter 2025 non-GAAP EPS of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52.
Shares of Cadence have gained 9.6% in the past year.
Woodward, Inc. (WWD - Free Report) reported second-quarter fiscal 2025 adjusted net earnings per share (EPS) of $1.69, which increased 4.3% year over year. The figure beat the Zacks Consensus Estimate by 17.4%.
In the past six months, shares of WWD have gained 13.9%.