Seagate Technology ((STX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Seagate Technology’s recent earnings call exuded a positive sentiment, underscoring a robust performance for fiscal 2025. The company celebrated significant revenue growth and advancements in HAMR technology, despite facing challenges such as the global minimum tax and production capacity allocation for new product qualifications. The outlook remains optimistic, with anticipated sustained demand in cloud and edge markets.
Strong Financial Performance
Seagate concluded fiscal 2025 on a high note, reporting a 30% year-over-year revenue growth for the June quarter and achieving record gross margins for the ninth consecutive quarter. The fiscal year saw a 39% revenue increase, with non-GAAP gross profit nearly doubling and operating profit more than tripling, highlighting the company’s strong financial health.
HAMR Technology Progress
The company marked a significant milestone with the high-volume ramp of two new nearline platforms, including the industry’s first heat-assisted magnetic recording (HAMR) hard drive. This technological advancement is poised to support Seagate’s growth, with multiple cloud service providers qualifying the technology.
Cloud Demand and Nearline Product Success
Seagate experienced strong global cloud demand, with nearline exabyte production capacity largely spoken for through the next calendar year. The company achieved record quarterly sales and volume shipments for its nearline products, underscoring its success in this segment.
Positive Outlook for Fiscal 2026
Looking ahead, Seagate expects to resume share repurchases, reflecting confidence in its improving profitability and cash generation. The company is well-positioned to capture growth opportunities in the cloud and at the edge with its HAMR-based technology.
Global Minimum Tax Impact
Starting in fiscal 2026, Seagate will be subject to a global minimum tax rate in the mid-teens, which is anticipated to impact non-GAAP EPS. This new tax regulation presents a challenge that the company is preparing to navigate.
Continued Qualification and Transition Challenges
Seagate faces the challenge of allocating production capacity for customer qualifications of new HAMR products, which may limit short-term exabyte output. However, the company remains committed to overcoming these hurdles.
Potential Tariff-Related Impacts
While mindful of the evolving trade policy landscapes, Seagate expects minimal impacts based on the current outlook, indicating a proactive approach to managing potential tariff-related challenges.
Forward-Looking Guidance
Seagate’s forward-looking guidance paints a promising picture, with expectations of further revenue growth, profitability, and cash generation in fiscal 2026. The company plans to resume share repurchases later in the quarter and aims to qualify key global cloud service provider customers by mid-calendar 2026. Additionally, Seagate intends to increase its mass capacity shipments while maintaining capital discipline with targeted capital expenditures within 4% to 6% of revenue for fiscal 2026.
In summary, Seagate Technology’s earnings call highlighted a strong fiscal 2025 performance, driven by significant revenue growth and technological advancements. Despite facing challenges such as the global minimum tax and production capacity allocation, the company’s outlook remains positive, with anticipated continued demand in cloud and edge markets. Seagate’s strategic focus on HAMR technology and cloud demand positions it well for future growth.