Seagate Technology (STX) Q1 2025 earnings summary

Executive summary

• Revenue rose to $2.17 billion in fiscal Q1 2025, up 49% year-over-year and 15% sequentially, driven by strong mass capacity and nearline cloud demand, improved pricing, and favorable product mix.

• Non-GAAP gross margin reached 33.3%, the highest in over a decade, with non-GAAP EPS at $1.58 and GAAP EPS at $1.41, both significantly improved from prior year losses.

• Mass capacity revenue grew for the fifth consecutive quarter, with robust shipments and strong customer adoption of new PMR and HAMR products.

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

• Cloud and enterprise/OEM markets fueled top-line growth and profitability, with build-to-order model providing strong demand visibility.

Financial highlights

• Q1FY25 revenue was $2.17 billion, up 49% year-over-year and 15% sequentially; non-GAAP gross margin 33.3%; non-GAAP operating margin 20.4%.

• Non-GAAP net income was $337 million; GAAP net income was $305 million; adjusted EBITDA reached $498 million.

• Free cash flow was $27 million, with operating cash flow at $95 million; capital expenditures were $68 million.

• Cash and cash equivalents stood at $1.2 billion at quarter end; total liquidity was $2.7 billion including credit facility.

• Mass capacity HDD revenue grew 21% sequentially and 70% year-over-year, now 87% of HDD revenue.

Outlook and guidance

• Fiscal Q2 2025 revenue guidance is $2.30 billion ±$150 million, with non-GAAP EPS expected at $1.85 ±$0.20 and operating margin in the low 20% range.

• Mass capacity revenue and profitability expected to further expand, driven by cloud and enterprise demand and new product ramps.

• Capital expenditures for fiscal 2025 expected at the low end of 4%-6% of revenue, higher than fiscal 2024.

• Board declared a quarterly cash dividend of $0.72 per share, payable in January 2025.