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Seagate's fiscal Q1 EPS jumped year over year to $7.68, beating estimates and guidance.
Data center revenue surged 63% to $3.4 billion, while HDD exabyte shipments rose 21% to 220.
Seagate expects Q2 revenue of $4.8 billion and EPS of $9.20, with further margin expansion ahead.
Seagate Technology Holdings plc (STX - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings of $7.68 per share, beating the Zacks Consensus Estimate of $7.44 and exceeding the high end of management’s guidance of $7.30 per share (+/- 20 cents). The bottom line also expanded a massive 194% year over year, driven by robust Data Center demand, favorable pricing and solid operational execution.
Non-GAAP revenues of $4.2 billion surpassed the Zacks Consensus Estimate by 3%. Revenues were above the midpoint of guidance, increasing 61% year over year. The uptrend highlights rising storage demand, disciplined pricing and advances in HAMR technology. STX expects strong sequential revenue growth and gross margin expansion throughout fiscal 2027, cushioned by robust demand visibility extending beyond 2030 and an areal density-driven technology roadmap designed to capitalize on this growth.
Its technology roadmap is projected to support mid-20% annualized nearline exabyte supply growth. Most nearline exabyte supply is secured under long-term agreements through 2028, with some cloud customer contracts extending to 2030.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
STX expects HAMR to account for roughly 50% of nearline exabyte shipments by the end of 2026, with Mozaic 4 representing about half of HAMR shipments. Mozaic 4, offering up to 44TB, is ramping with two leading CSPs, while additional qualifications across global CSPs and enterprise OEMs are expected in the coming months. Furthermore, development of Mozaic 5, featuring capacities above 50TB, remains on track, with customer qualification shipments expected to begin in late 2027. Seagate also demonstrated 8TB per disk in the lab, reinforcing the potential of HAMR and its areal-density roadmap to drive future capacity growth.
STX's Revenues by End Market
The data center accounted for 81% of total revenue, at $3.4 billion, representing an 18% sequential increase and 63% year-over-year growth. Global cloud customers drove a lion’s share of data center revenue and exabyte demand, a trend expected to persist as Mozaic 4 production ramps.
Enterprise OEM demand also strengthened, with revenue from these markets posting double-digit sequential and year-over-year growth for the sixth consecutive quarter, driven by rising demand for scalable, high-capacity storage amid growing AI inference and agent-based workloads.
The edge IoT business generated $784 million in revenue, accounting for 19% of total revenue, up 13% sequentially and 52% year over year.
STX's Exabyte Shipments in Detail
Robust data center demand continues to fuel STX’s performance, with total HDD exabyte shipments rising 21% year over year to 220 in the September quarter, of which data center accounted for 90%.
Data center shipments rose 24% year over year to 198 exabytes. The company is preparing Mozaic 4 products for customer qualification and expects a surge in capacity shipments in the December quarter.
STX's Margin Details
Non-GAAP gross profit rose 28% sequentially to $2.4 billion, more than doubling year over year.
Non-GAAP gross margin expanded to 57.8% from 52.7%, driven by favorable pricing and a richer product mix as Mozaic 4 ramps, offsetting higher component costs. The company expects further quarterly margin expansion through the rest of fiscal 2027, supported by its value-based pricing strategy and product mix.
Non-GAAP operating expenses totaled $300 million, up 3.1%.
Non-GAAP operating profit increased 33% sequentially to $2.1 billion, at a margin of 50.7%, reflecting strong demand and disciplined cost management.
STX's Balance Sheet and Cash Flow
As of Oct. 2, 2026, cash and cash equivalents were $1.3 billion compared with $1.7 billion as of July 3.
As of Oct. 2, 2026, long-term debt (including the current portion) was $2.4 billion compared with $3.6 billion as of July 3.
Cash flow from operations in the fiscal first quarter was $1.7 billion compared with $532 million in the previous-year quarter. Free cash flow increased 32% sequentially and 246% year over year to $1.5 billion. Seagate expects further cash flow growth throughout fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending.
STX has strengthened its balance sheet and is prioritizing shareholder returns. The company returned $568 million through dividends and share repurchases in the September quarter, nearly double the June-quarter amount. It also raised its quarterly dividend by 3% to 76 cents per share, citing confidence in sustained cash generation. With $4.4 billion remaining under its buyback authorization, it expects to significantly increase share repurchases starting in calendar 2027.
STX’s Fiscal Q2 Guidance Signals Continued Momentum
STX expects another quarter of strong sequential growth, driven by sustained demand, higher exabyte shipments and continued execution of its value-based pricing strategy. Management anticipates fiscal second-quarter revenues of $4.8 billion (+/- $100 million). At the midpoint, this indicates a 7% year-over-year improvement.
Non-GAAP earnings are expected to be $9.2 per share (+/- 20 cents).
It expects non-GAAP operating expenses to remain steady at around $300 million, while operating margin is projected to expand toward the mid-50% range based on the midpoint of revenue guidance.
Management expects other income and expenses to decline from $38 million in the September quarter to about $25 million in December, reflecting lower interest costs following its October debt reduction.
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings of $4.64 per share, which surpassed the Zacks Consensus Estimate of $4.09. The bottom line increased 161% year over year and 30% sequentially, exceeding the high end of management’s guidance of $4 (+/- 15 cents). The company reported quarterly revenue of $4.38 billion, up 55% year over year and 17% sequentially on the back of robust customer demand and favorable pricing trends. The figure beat the consensus mark of $4.16 billion.
International Business Machines Corporation (IBM - Free Report) reported strong third-quarter 2026 results, with adjusted earnings rising 11% year over year to $2.95 per share. The figure beat the Zacks Consensus Estimate of $2.88 by 2.4%. Revenues increased 4.7% to $17.10 billion, surpassing the consensus mark of $16.87 billion by 1.4%. Software revenues increased 8.2% year over year to $7.80 billion, up 8.7% at constant currency. Hybrid Cloud revenues grew 11%, supported by Red Hat, while Data jumped 20% at constant currency, benefiting from Confluent's performance.
Cadence Design Systems, Inc. (CDNS - Free Report) delivered strong third-quarter 2026 results, driven by robust demand for AI-oriented design solutions and hardware-assisted verification products. Non-GAAP earnings per share of $2.11 beat the Zacks Consensus Estimate by 3.4% and increased 9.3% year over year. Revenues of $1.633 billion surpassed the consensus mark by 1.4% and increased 22% year over year. The figure exceeded management’s guided range of $1.60-$1.63 billion.
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STX Q1 Earnings & Revenues Beat, Record Cash Flow Boosts Profitability
Key Takeaways
Seagate Technology Holdings plc (STX - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings of $7.68 per share, beating the Zacks Consensus Estimate of $7.44 and exceeding the high end of management’s guidance of $7.30 per share (+/- 20 cents). The bottom line also expanded a massive 194% year over year, driven by robust Data Center demand, favorable pricing and solid operational execution.
Non-GAAP revenues of $4.2 billion surpassed the Zacks Consensus Estimate by 3%. Revenues were above the midpoint of guidance, increasing 61% year over year. The uptrend highlights rising storage demand, disciplined pricing and advances in HAMR technology. STX expects strong sequential revenue growth and gross margin expansion throughout fiscal 2027, cushioned by robust demand visibility extending beyond 2030 and an areal density-driven technology roadmap designed to capitalize on this growth.
Its technology roadmap is projected to support mid-20% annualized nearline exabyte supply growth. Most nearline exabyte supply is secured under long-term agreements through 2028, with some cloud customer contracts extending to 2030.
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote
STX expects HAMR to account for roughly 50% of nearline exabyte shipments by the end of 2026, with Mozaic 4 representing about half of HAMR shipments. Mozaic 4, offering up to 44TB, is ramping with two leading CSPs, while additional qualifications across global CSPs and enterprise OEMs are expected in the coming months. Furthermore, development of Mozaic 5, featuring capacities above 50TB, remains on track, with customer qualification shipments expected to begin in late 2027. Seagate also demonstrated 8TB per disk in the lab, reinforcing the potential of HAMR and its areal-density roadmap to drive future capacity growth.
STX's Revenues by End Market
The data center accounted for 81% of total revenue, at $3.4 billion, representing an 18% sequential increase and 63% year-over-year growth. Global cloud customers drove a lion’s share of data center revenue and exabyte demand, a trend expected to persist as Mozaic 4 production ramps.
Enterprise OEM demand also strengthened, with revenue from these markets posting double-digit sequential and year-over-year growth for the sixth consecutive quarter, driven by rising demand for scalable, high-capacity storage amid growing AI inference and agent-based workloads.
The edge IoT business generated $784 million in revenue, accounting for 19% of total revenue, up 13% sequentially and 52% year over year.
STX's Exabyte Shipments in Detail
Robust data center demand continues to fuel STX’s performance, with total HDD exabyte shipments rising 21% year over year to 220 in the September quarter, of which data center accounted for 90%.
Data center shipments rose 24% year over year to 198 exabytes. The company is preparing Mozaic 4 products for customer qualification and expects a surge in capacity shipments in the December quarter.
STX's Margin Details
Non-GAAP gross profit rose 28% sequentially to $2.4 billion, more than doubling year over year.
Non-GAAP gross margin expanded to 57.8% from 52.7%, driven by favorable pricing and a richer product mix as Mozaic 4 ramps, offsetting higher component costs. The company expects further quarterly margin expansion through the rest of fiscal 2027, supported by its value-based pricing strategy and product mix.
Non-GAAP operating expenses totaled $300 million, up 3.1%.
Non-GAAP operating profit increased 33% sequentially to $2.1 billion, at a margin of 50.7%, reflecting strong demand and disciplined cost management.
STX's Balance Sheet and Cash Flow
As of Oct. 2, 2026, cash and cash equivalents were $1.3 billion compared with $1.7 billion as of July 3.
As of Oct. 2, 2026, long-term debt (including the current portion) was $2.4 billion compared with $3.6 billion as of July 3.
Cash flow from operations in the fiscal first quarter was $1.7 billion compared with $532 million in the previous-year quarter. Free cash flow increased 32% sequentially and 246% year over year to $1.5 billion. Seagate expects further cash flow growth throughout fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending.
STX has strengthened its balance sheet and is prioritizing shareholder returns. The company returned $568 million through dividends and share repurchases in the September quarter, nearly double the June-quarter amount. It also raised its quarterly dividend by 3% to 76 cents per share, citing confidence in sustained cash generation. With $4.4 billion remaining under its buyback authorization, it expects to significantly increase share repurchases starting in calendar 2027.
STX’s Fiscal Q2 Guidance Signals Continued Momentum
STX expects another quarter of strong sequential growth, driven by sustained demand, higher exabyte shipments and continued execution of its value-based pricing strategy. Management anticipates fiscal second-quarter revenues of $4.8 billion (+/- $100 million). At the midpoint, this indicates a 7% year-over-year improvement.
Non-GAAP earnings are expected to be $9.2 per share (+/- 20 cents).
It expects non-GAAP operating expenses to remain steady at around $300 million, while operating margin is projected to expand toward the mid-50% range based on the midpoint of revenue guidance.
Management expects other income and expenses to decline from $38 million in the September quarter to about $25 million in December, reflecting lower interest costs following its October debt reduction.
STX’s Zacks Rank
Currently, Seagate has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performances
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2027 non-GAAP earnings of $4.64 per share, which surpassed the Zacks Consensus Estimate of $4.09. The bottom line increased 161% year over year and 30% sequentially, exceeding the high end of management’s guidance of $4 (+/- 15 cents). The company reported quarterly revenue of $4.38 billion, up 55% year over year and 17% sequentially on the back of robust customer demand and favorable pricing trends. The figure beat the consensus mark of $4.16 billion.
International Business Machines Corporation (IBM - Free Report) reported strong third-quarter 2026 results, with adjusted earnings rising 11% year over year to $2.95 per share. The figure beat the Zacks Consensus Estimate of $2.88 by 2.4%. Revenues increased 4.7% to $17.10 billion, surpassing the consensus mark of $16.87 billion by 1.4%. Software revenues increased 8.2% year over year to $7.80 billion, up 8.7% at constant currency. Hybrid Cloud revenues grew 11%, supported by Red Hat, while Data jumped 20% at constant currency, benefiting from Confluent's performance.
Cadence Design Systems, Inc. (CDNS - Free Report) delivered strong third-quarter 2026 results, driven by robust demand for AI-oriented design solutions and hardware-assisted verification products. Non-GAAP earnings per share of $2.11 beat the Zacks Consensus Estimate by 3.4% and increased 9.3% year over year. Revenues of $1.633 billion surpassed the consensus mark by 1.4% and increased 22% year over year. The figure exceeded management’s guided range of $1.60-$1.63 billion.