Seagate Technology (STX) Q2 2026 earnings summary

Executive summary

• Achieved record quarterly results with revenue up 22% year-over-year to $2.83 billion, driven by strong data center demand and new high-capacity product adoption, including the ramp of HAMR-based Mozaic drives.

• Gross margin reached 42.2%, up 210 basis points sequentially and 670 basis points year-over-year, with operating margin expanding to 31.9%.

• Non-GAAP EPS was $3.11, up 19% quarter-over-quarter and exceeding guidance; net income for the quarter was $593 million.

• Free cash flow was $607 million, the highest in eight years, and $500 million in long-term debt was retired.

• Management highlighted operational execution, robust product roadmap, and strong demand environment, especially in data center markets.

Financial highlights

• Revenue for the quarter was $2.83 billion, up 22% year-over-year; gross margin was 42.2% (non-GAAP) and 41.6% (GAAP).

• Operating margin was 31.9% (non-GAAP) and 29.8% (GAAP); net income was $593 million.

• Non-GAAP EPS was $3.11; GAAP diluted EPS was $2.60.

• Cash flow from operations was $723 million; free cash flow was $607 million.

• Debt reduced to $4.5 billion; cash and cash equivalents at $1.05 billion.

Outlook and guidance

• Next quarter revenue guidance is $2.90 billion ±$100 million, with non-GAAP EPS guidance of $3.40 ±$0.20.

• Operating margin expected in the mid-30% range; operating expenses projected at ~$290 million.

• Guidance includes minimal expected impact from global tariff policies and the dilutive impact of exchangeable notes.

• Sequential improvement in both top and bottom line anticipated throughout calendar 2026.