Seagate Technology (STX) Q2 2025 earnings summary

Executive summary

• Revenue grew 7% sequentially and 50% year-over-year in Q2 FY2025, reaching $2.33 billion, driven by strong demand for high-capacity nearline and cloud markets, and favorable pricing actions.

• Non-GAAP gross margin expanded for the seventh consecutive quarter to 35.5%, with GAAP gross margin at 34.9%.

• Non-GAAP EPS reached $2.03, GAAP EPS was $1.55, and net income was $336 million, reflecting improved operational efficiency.

• Free cash flow improved to $150 million, with $148 million returned to shareholders via dividends.

• Advanced HAMR-based Mozaic platform ramped to cloud customers, with sampling of 36TB drives and initial CSP deployments.

Financial highlights

• Q2 FY2025 revenue: $2.33 billion, up 7% sequentially and 50% year-over-year; non-GAAP gross margin: 35.5%; GAAP gross margin: 34.9%.

• Non-GAAP operating income: $538 million; non-GAAP operating margin: 23.1%; GAAP operating margin: 21%.

• Non-GAAP net income: $433 million; GAAP net income: $336 million.

• Free cash flow: $150 million; cash and cash equivalents: $1.24 billion.

• Mass capacity HDD revenue up 9% sequentially and 79% year-over-year; nearline revenue nearly doubled year-over-year.

Outlook and guidance

• Q3 FY2025 revenue guidance: $2.10 billion ± $150 million, with non-GAAP EPS guidance of $1.70 ± $0.20.

• Non-GAAP operating margin expected to remain in the low 20% range; operating expenses forecast at ~$290 million.

• Free cash flow generation expected to improve sequentially through fiscal 2025.

• Majority of HAMR ramp expected in the second half of calendar 2025.

• Quarterly cash dividend of $0.72 per share declared, payable April 2, 2025.