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STX beat Q4 earnings and revenue estimates, with EPS of $2.59 and 30% year-over-year revenue growth.
Mass capacity revenues surged 40%, driven by nearline cloud demand and strong exabyte shipment growth.
Non-GAAP gross margin hit a record 37.9%, supported by high-capacity nearline products and pricing strength.
Seagate Technology Holdings plc ((STX - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.
Non-GAAP revenues of $2.44 billion beat the Zacks Consensus Estimate by 1.6%. Revenues came in above the midpoint of guidance, rising 30% year over year. Seagate’s performance this quarter reflects the tailwinds of massive data growth driven by hyperscale cloud customers, AI workloads and edge computing, all of which require scalable, reliable and high-density storage solutions. For fiscal 2025, STX reported revenues of $9.1 million, representing a 39% year-over-year increase.
A key driver of Seagate’s growth is the ongoing implementation and expansion of its HAMR technology, aimed at increasing areal density and supporting next-generation storage solutions. These technological advances are crucial for satisfying the growing demand for high-capacity storage in hyperscale data centers, AI training workloads and decentralized edge environments.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Higher mass capacity revenues were driven by stronger nearline cloud demand. Mass capacity revenues surged 40% year over year to $2 billion. In the June quarter, nearline drives accounted for 91% of the total mass capacity exabytes shipped.
Nearline shipments to cloud and edge data centers comprised most of the mass capacity volume. In addition to strong demand from cloud providers, nearline sales to enterprise and OEM customers saw slight quarter-over-quarter growth, and demand is expected to remain steady in the upcoming quarters.
In the reported quarter, Seagate shipped 162.5 exabytes of HDD storage, up 42% year over year and 13% sequentially. Our estimate was pegged at 161.3 exabytes of HDD storage. Average capacity per drive increased 40% year over year and 3% sequentially to 13 TB.
The company shipped 150.9 exabytes for the mass-capacity storage market (including nearline, video and image applications, and network-attached storage). This marked a year-over-year increase of 45% in exabyte shipments and 14% sequentially. Our estimate was pegged at 151.2 exabytes of mass-capacity storage. Average mass capacity per drive increased year over year to 16.5 TB from 12.6 TB.
Seagate shipped 11.5 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders, or DVR and external consumer devices), up 12% year over year and 7% sequentially. We estimated the metric to be 10.1. Average capacity increased 37% year over year to 3.4 TB.
STX's Revenues by Product Group
Total HDD revenues (93.3% of total revenues) increased 32% year over year to $2.3 billion in the reported quarter. A 14% quarter-over-quarter rise in revenue was driven by strong nearline cloud sales and seasonal gains in the VIA markets.
Systems, SSD & Other segment’s revenues (6.7%), including enterprise data solutions, cloud systems and solid-state drives, were $163 million, up 2% on a year-over-year basis and 3% sequentially.
Our estimates for revenues from HDD and non-HDD segments were $2.25 billion and $154.6 million, respectively.
STX's Margin Details
Non-GAAP gross margin reached a record 37.9%, rising by about 170 basis points (bps) quarter over quarter and roughly 700 bps year over year, driven by stronger adoption of Seagate's high-capacity nearline products and continued pricing initiatives.
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 came in at $286 million, up 4% sequentially and 11.7% year over year, aligning with its expectations.
Non-GAAP income from operations totaled $640 million, up from $327 million a year ago. Non-GAAP operating margin increased 890 bps year over year to 26.2%. Adjusted EBITDA totaled $697 million, up 73%.
STX's Balance Sheet and Cash Flow
As of June 27, 2025, cash and cash equivalents were $891 million compared with $814 million as of March 28, 2025.
As of June 27, 2025, long-term debt (including the current portion) was $5 billion compared with $5.1 billion as of March 28, 2025.
Cash flow from operations was $508 million compared with $259 million in the previous quarter. Free cash flow amounted to $425 million compared with $216 million in the last quarter. Based on its outlook, Seagate expects higher free cash flow in the second half of 2025, even with a large variable compensation payout in the September quarter, reflecting strong performance.
The company’s board has declared a quarterly cash dividend of 72 cents per share, payable on Oct. 9, 2025, to shareholders of record on Sept. 30, 2025.
STX’s Fiscal Q1 Business Outlook
Seagate’s guidance for the first quarter of fiscal 2026 remains optimistic, with a cautious tone due to evolving tax and policy environments. Management anticipates first-quarter revenues of $2.5 billion (+/- $150 million). At the midpoint, this indicates a 15% year-over-year improvement.
Non-GAAP earnings are expected to be $2.3 per share (+/- 20 cents).
For the quarter, non-GAAP operating expenses are expected to be around $290 million. It expects the non-GAAP operating margin to grow in the mid-high 20s percentage range of revenues.
International Business Machines Corporation ((IBM - Free Report) ) reported strong second-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. Quarterly total revenues increased to $16.98 billion from $15.77 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 5% year over year. IBM exceeded the consensus estimate of $16.58 billion for revenues.
Cadence Design Systems ((CDNS - Free Report) ) reported second-quarter 2025 non-GAAP earnings per share (EPS) of $1.65, which beat the Zacks Consensus Estimate by 5.1%. The bottom line increased 28.9% year over year, exceeding management’s guided range of $1.55-$1.61. Revenues of $1.275 billion beat the Zacks Consensus Estimate by 1.3% and increased 20.3% year over year. The figure beat CDNS’ guided range of $1.25-$1.27 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.
SAP SE ((SAP - Free Report) ) reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.63 per share. Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues of €9.03 billion ($10.24 billion) on a non-IFRS basis, representing a 9% year-over-year increase (up 12% at constant currency). The Zacks Consensus estimate was pegged at $10.37 billion.
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Seagate's Q4 Earnings & Revenues Beat, Improve Y/Y on Cloud Momentum
Key Takeaways
Seagate Technology Holdings plc ((STX - Free Report) ) reported fourth-quarter fiscal 2025 non-GAAP earnings of $2.59 per share, beating the Zacks Consensus Estimate by 5.3%. The bottom line was in the upper end of STX’s guidance of $2.4 per share (+/- 20 cents), reflecting the outcome of structural improvements and strong cloud-driven demand. The company reported non-GAAP earnings of $1.05 per share in the year-ago quarter.
Non-GAAP revenues of $2.44 billion beat the Zacks Consensus Estimate by 1.6%. Revenues came in above the midpoint of guidance, rising 30% year over year. Seagate’s performance this quarter reflects the tailwinds of massive data growth driven by hyperscale cloud customers, AI workloads and edge computing, all of which require scalable, reliable and high-density storage solutions. For fiscal 2025, STX reported revenues of $9.1 million, representing a 39% year-over-year increase.
A key driver of Seagate’s growth is the ongoing implementation and expansion of its HAMR technology, aimed at increasing areal density and supporting next-generation storage solutions. These technological advances are crucial for satisfying the growing demand for high-capacity storage in hyperscale data centers, AI training workloads and decentralized edge environments.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote
Higher mass capacity revenues were driven by stronger nearline cloud demand. Mass capacity revenues surged 40% year over year to $2 billion. In the June quarter, nearline drives accounted for 91% of the total mass capacity exabytes shipped.
Nearline shipments to cloud and edge data centers comprised most of the mass capacity volume. In addition to strong demand from cloud providers, nearline sales to enterprise and OEM customers saw slight quarter-over-quarter growth, and demand is expected to remain steady in the upcoming quarters.
In the past year, STX has gained 49.4% compared with the Zacks Computer-Integrated Systems industry’s rise of 23%.
Image Source: Zacks Investment Research
STX's Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 162.5 exabytes of HDD storage, up 42% year over year and 13% sequentially. Our estimate was pegged at 161.3 exabytes of HDD storage. Average capacity per drive increased 40% year over year and 3% sequentially to 13 TB.
The company shipped 150.9 exabytes for the mass-capacity storage market (including nearline, video and image applications, and network-attached storage). This marked a year-over-year increase of 45% in exabyte shipments and 14% sequentially. Our estimate was pegged at 151.2 exabytes of mass-capacity storage. Average mass capacity per drive increased year over year to 16.5 TB from 12.6 TB.
Seagate shipped 11.5 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders, or DVR and external consumer devices), up 12% year over year and 7% sequentially. We estimated the metric to be 10.1. Average capacity increased 37% year over year to 3.4 TB.
STX's Revenues by Product Group
Total HDD revenues (93.3% of total revenues) increased 32% year over year to $2.3 billion in the reported quarter. A 14% quarter-over-quarter rise in revenue was driven by strong nearline cloud sales and seasonal gains in the VIA markets.
Systems, SSD & Other segment’s revenues (6.7%), including enterprise data solutions, cloud systems and solid-state drives, were $163 million, up 2% on a year-over-year basis and 3% sequentially.
Our estimates for revenues from HDD and non-HDD segments were $2.25 billion and $154.6 million, respectively.
STX's Margin Details
Non-GAAP gross margin reached a record 37.9%, rising by about 170 basis points (bps) quarter over quarter and roughly 700 bps year over year, driven by stronger adoption of Seagate's high-capacity nearline products and continued pricing initiatives.
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 came in at $286 million, up 4% sequentially and 11.7% year over year, aligning with its expectations.
Non-GAAP income from operations totaled $640 million, up from $327 million a year ago. Non-GAAP operating margin increased 890 bps year over year to 26.2%. Adjusted EBITDA totaled $697 million, up 73%.
STX's Balance Sheet and Cash Flow
As of June 27, 2025, cash and cash equivalents were $891 million compared with $814 million as of March 28, 2025.
As of June 27, 2025, long-term debt (including the current portion) was $5 billion compared with $5.1 billion as of March 28, 2025.
Cash flow from operations was $508 million compared with $259 million in the previous quarter. Free cash flow amounted to $425 million compared with $216 million in the last quarter. Based on its outlook, Seagate expects higher free cash flow in the second half of 2025, even with a large variable compensation payout in the September quarter, reflecting strong performance.
The company’s board has declared a quarterly cash dividend of 72 cents per share, payable on Oct. 9, 2025, to shareholders of record on Sept. 30, 2025.
STX’s Fiscal Q1 Business Outlook
Seagate’s guidance for the first quarter of fiscal 2026 remains optimistic, with a cautious tone due to evolving tax and policy environments. Management anticipates first-quarter revenues of $2.5 billion (+/- $150 million). At the midpoint, this indicates a 15% year-over-year improvement.
Non-GAAP earnings are expected to be $2.3 per share (+/- 20 cents).
For the quarter, non-GAAP operating expenses are expected to be around $290 million. It expects the non-GAAP operating margin to grow in the mid-high 20s percentage range of revenues.
STX’s Zacks Rank
Currently, Seagate carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances of Other Companies
International Business Machines Corporation ((IBM - Free Report) ) reported strong second-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. Quarterly total revenues increased to $16.98 billion from $15.77 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 5% year over year. IBM exceeded the consensus estimate of $16.58 billion for revenues.
Cadence Design Systems ((CDNS - Free Report) ) reported second-quarter 2025 non-GAAP earnings per share (EPS) of $1.65, which beat the Zacks Consensus Estimate by 5.1%. The bottom line increased 28.9% year over year, exceeding management’s guided range of $1.55-$1.61. Revenues of $1.275 billion beat the Zacks Consensus Estimate by 1.3% and increased 20.3% year over year. The figure beat CDNS’ guided range of $1.25-$1.27 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.
SAP SE ((SAP - Free Report) ) reported second-quarter 2025 non-IFRS earnings of €1.50 ($1.70) per share, climbing 37% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.63 per share. Driven by robust cloud growth, disciplined cost control and expanding AI capabilities, SAP reported total revenues of €9.03 billion ($10.24 billion) on a non-IFRS basis, representing a 9% year-over-year increase (up 12% at constant currency). The Zacks Consensus estimate was pegged at $10.37 billion.