Seagate Technology Holdings PLC Ordinary Shares (Ireland)
STX · Nasdaq
Dec 2026
Next quarter
Expected to report Jan 26, 2027 — estimated from last year’s reporting date.
Consensus is $8.97 EPS for Dec 2026 across 4 estimates, ranging $8.95 to $9.03.
STX Sep 2026
- 2.37%
- +4.51%
- $7.17
- $7.34
- —
- $4.23B
Reported results
- $4.23B
- $2.06B
- $1.76B
- $7.59
Highlights
- Record quarter: Revenue reached $4.233 billion, up 61% year over year and 17% sequentially; GAAP diluted EPS was $7.59 and non-GAAP diluted EPS was a record $7.68.
- EPS expectations: The supplied consensus comparison lists EPS of $7.17 and reported EPS of $7.34, a 2.37% beat. The release separately reports GAAP EPS of $7.59 and non-GAAP EPS of $7.68.
- Margin expansion: Non-GAAP gross margin rose to 57.8% from 52.7% sequentially and 40.1% a year earlier; non-GAAP operating margin reached 50.7%, up from 29.0% a year earlier.
- Data-center demand: Data-center revenue grew 63% year over year to $3.4 billion, or 81% of sales. Seagate shipped a record 198 exabytes of nearline capacity, up 24% year over year.
- HAMR transition: Mozaic 4, with capacity up to 44 terabytes, is ramping with two leading cloud providers. Seagate expects HAMR to represent about half of nearline exabyte shipments exiting calendar 2026.
- Cash and debt: Operating cash flow was $1.69 billion and free cash flow was a record $1.479 billion. Seagate retired about $1.2 billion of debt during the quarter and another $750 million afterward.
- Shareholder returns: Seagate returned $568 million through dividends and repurchases, including $400 million of buybacks, and raised its quarterly dividend about 3% to $0.76 per share.
- December outlook: Seagate guided to revenue of $4.8 billion, plus or minus $100 million, and non-GAAP EPS of $9.20, plus or minus $0.20; it expects operating margin between 50% and 55%.
Analysis
Seagate’s fiscal first quarter 2027 was a record profitability and cash-generation quarter, supported by accelerating storage demand and pricing. Revenue of $4.233 billion rose 61% year over year and 17% sequentially; the call said results exceeded the high end of the company’s prior guidance. The supplied consensus comparison puts EPS at $7.34 versus $7.17 expected, a 2.37% beat, while Seagate’s release reports GAAP diluted EPS of $7.59 and non-GAAP EPS of $7.68. Against the year-ago quarter, revenue increased from $2.629 billion, GAAP operating income from $694 million to $2.064 billion, and net income from $549 million to $1.761 billion. The reported-quarter file lists Q4 FY2026 revenue of $3.11 billion and diluted EPS of $3.27; management described current-quarter revenue as up 17% sequentially and non-GAAP EPS as up 35% sequentially.
The defining drivers were data-center strength, expanding margins, and the HAMR product transition. Data-center revenue rose 63% year over year to $3.4 billion, while gross-margin gains reflected value-based pricing and improving mix, partly offset by higher external-component costs. Free cash flow reached $1.479 billion, enabling substantial debt reduction and increased shareholder returns. For the December quarter, Seagate expects $4.8 billion in revenue and $9.20 in non-GAAP EPS at the midpoint, with further margin expansion.
Data-center demand
- Nearline shipments: Seagate shipped 198 exabytes of data-center capacity, up 24% year over year and a record. Total company shipments were 220 exabytes, up 21%.
- Revenue mix: Data-center revenue was $3.4 billion, up 63% year over year and 18% sequentially, representing 81% of total revenue. Data center accounted for 90% of shipped capacity.
- Other markets: Edge IoT revenue was $784 million, up 52% year over year and 13% sequentially. Enterprise OEM data-center revenue grew for a sixth consecutive quarter, with double-digit growth both sequentially and year over year.
- Demand visibility: The vast majority of nearline supply is allocated under long-term agreements through calendar 2028, with some customer agreements extending through 2030. Build-to-order contracts set configurations and pricing for nearline shipments through calendar 2027; Seagate expects to begin finalizing 2028 configuration and pricing terms over the next few quarters.
Margins and earnings
- Gross margin: Non-GAAP gross margin was 57.8%, up 510 basis points sequentially and 1,770 basis points year over year. Non-GAAP gross profit was $2.447 billion, more than double the $1.054 billion a year earlier.
- Operating leverage: Non-GAAP operating margin reached 50.7%, up 610 basis points sequentially and from 29.0% a year earlier. Non-GAAP operating expenses were $300 million, about 7% of revenue.
- Earnings: Non-GAAP operating income was $2.147 billion and non-GAAP net income was $1.781 billion. Non-GAAP EPS of $7.68 rose 35% sequentially and 194% year over year; GAAP EPS was $7.59.
- Pricing and costs: Management attributed margin improvement to favorable pricing and a better product mix as Mozaic 4 ramps. Higher externally sourced component costs partly offset internal cost reductions; Seagate said pricing on new contracts is incorporating those increases.
HAMR product transition
- Mozaic 4 ramp: The 4-terabyte-per-disk platform offers drives up to 44 terabytes and is ramping with two leading cloud providers. Seagate expects a meaningful step-up in capacity shipments in the December quarter as additional customer qualifications proceed.
- Roadmap: HAMR is expected to account for roughly 50% of nearline exabyte shipments exiting calendar 2026, with Mozaic 4 representing about half of HAMR shipments. The third-generation Mozaic 5, capable of more than 50 terabytes, remains on track for qualification shipments toward the end of calendar 2027.
- Capacity growth: Management expects nearline exabyte supply to grow at a mid-20% compound rate, primarily through areal-density gains rather than materially higher drive-unit output. Fiscal 2027 capital spending is expected to remain 4%–6% of revenue.
- Execution context: September exabyte growth was relatively flat sequentially after a step-up in June, but management characterized this as planned product staging—not yield or customer-readiness issues—and expects shipments to step up again in December.
Cash and capital returns
- Cash generation: Operating cash flow was $1.690 billion, capital expenditures were $211 million, and free cash flow was $1.479 billion, more than triple the $427 million generated a year earlier and up 32% sequentially.
- Debt reduction: Seagate retired approximately $1.2 billion of principal debt during the quarter, ending with gross debt of about $2.4 billion and net leverage of 0.2x. A further $750 million was retired after quarter-end, reducing principal debt to about $1.6 billion; management expects to be net-cash positive exiting calendar 2026.
- Shareholder returns: The company returned $568 million during the quarter through $400 million of share repurchases and $168 million of dividends. It ended with $4.4 billion remaining on its repurchase authorization and expects to step up buybacks starting in calendar 2027.
- Dividend: The board raised the quarterly dividend to $0.76 per share, approximately 3% higher. The quarter’s declared dividend was $0.74 per share.
December quarter outlook
- Revenue and EPS: Seagate guided to revenue of $4.8 billion, plus or minus $100 million, and non-GAAP diluted EPS of $9.20, plus or minus $0.20. Revenue at the midpoint would be 7% above the year-ago quarter.
- Margins: Non-GAAP operating expenses are expected to remain around $300 million. At the revenue midpoint, management expects operating margin between 50% and 55%, with continued gross-margin expansion.
- Shipment growth: The outlook assumes continued demand momentum, a significant increase in exabyte shipments, and ongoing execution of value-based pricing. Management expects nearline capacity shipments to step up as Mozaic 4 qualifications and the ramp progress.
