Seagate Technology (STX) Q1 2025 earnings summary

Executive summary

• Revenue for the September quarter was $2.17 billion, up 15% sequentially and 49% year over year, driven by strong cloud, enterprise, and OEM demand, and favorable product mix and pricing.

• Non-GAAP EPS was $1.58, at the high end of guidance, with GAAP net income of $305 million, a turnaround from prior year losses.

• Gross margin reached 33.3%, the highest in over a decade, benefiting from improved pricing and product mix.

• The company is ramping high-capacity PMR and Mozaic HAMR platforms, with customer qualifications progressing and broader shipments expected by mid-2025.

• Quarterly cash dividend increased by 3% to $0.72 per share, reflecting confidence in future opportunities.

Financial highlights

• Non-GAAP gross margin expanded by 240 basis points sequentially to 33.3%; non-GAAP operating margin was 20.4%.

• Non-GAAP net income reached $337 million; adjusted EBITDA was $498 million.

• Free cash flow was $27 million; cash flow from operations was $95 million; CapEx was $68 million.

• Cash and cash equivalents at quarter end were $1.2 billion; debt stood at $5.2 billion.

• Mass capacity HDD revenue grew 21% QoQ and 70% YoY, now 87% of HDD revenue.

Outlook and guidance

• December quarter (Q2 FY25) revenue expected at $2.3 billion ±$150 million, with non-GAAP EPS guidance of $1.85 ±$0.20.

• Non-GAAP operating margin projected in the low 20% range; operating expenses expected at ~$285 million.

• Mass capacity revenue and profitability expected to further improve, driven by cloud and enterprise demand and ongoing pricing actions.

• Capital expenditures for fiscal 2025 are expected to be higher than fiscal 2024.