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Why Is Seagate (STX) Up 13.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Seagate (STX - Free Report) . Shares have added about 13.4% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Seagate due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Seagate Technology Holdings PLC before we dive into how investors and analysts have reacted as of late.
Seagate's Q4 Earnings Beat Estimates
Seagate 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 its 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, it 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.
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.
Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 162.5 exabytes of HDD storage, up 42% year over year and 13% sequentially. 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. 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. Average capacity increased 37% year over year to 3.4 TB.
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.
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%.
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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, Seagate has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Seagate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Seagate (STX) Up 13.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Seagate (STX - Free Report) . Shares have added about 13.4% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Seagate due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for Seagate Technology Holdings PLC before we dive into how investors and analysts have reacted as of late.
Seagate's Q4 Earnings Beat Estimates
Seagate 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 its 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, it 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.
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.
Exabyte Shipments in Detail
In the reported quarter, Seagate shipped 162.5 exabytes of HDD storage, up 42% year over year and 13% sequentially. 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. 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. Average capacity increased 37% year over year to 3.4 TB.
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.
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%.
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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
VGM Scores
Currently, Seagate has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Seagate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.