Strong Revenue Growth
Revenue of $3.1 billion in the March quarter, up 44% year-over-year and 10% sequentially; June-quarter guidance midpoint of $3.45 billion (~41% YoY growth at midpoint).
Seagate Tech
· STX
April 28th, 2026
Summary
- Earnings Call Date:
- 2026-04-28
- Change Since:
- +71.66%
- Next Earnings Date:
- 2026-07-16
Earnings Call Sentiment
PositiveThe call presented multiple strong operational and financial wins: substantial revenue growth (44% YoY), record margins, very high free cash flow, accelerating HAMR product momentum (Mozaic 4 revenue shipments and roadmap to 50 TB), improved leverage and an investment-grade rating. Challenges highlighted were largely manageable: remaining HAMR customer qualifications, capacity constraints that prioritize cloud demand (limiting short-term ability to serve lower-capacity markets), residual debt and concentration of revenue in cloud customers. On balance, the positives (robust top-line growth, margin expansion, cash generation and clear product roadmap) outweigh the lowlights.
Company Guidance
For the June quarter Seagate guided revenue of $3.45 billion ± $100 million (midpoint implying ~41% year‑over‑year growth), non‑GAAP operating expenses of about $295 million, and non‑GAAP operating margin in the lower‑40% range; non‑GAAP EPS is expected at $5.00 ± $0.20 based on a tax rate of ~16% and a non‑GAAP diluted share count of ~231 million shares (including ~3 million from the 2028 convertible), with other income/expense expected to remain relatively flat. Management also said free cash flow should improve further through the remainder of calendar 2026, fiscal‑year capex is expected to stay in the 4%–6% of revenue range, and net leverage is expected to continue declining as debt reduction and profitability progress.
Record Profitability and Margin Expansion
Non-GAAP gross margin of 47% (up 180 basis points sequentially) and non-GAAP operating margin of 37.5% (up 560 basis points sequentially); non-GAAP EPS of $4.10, up 115% year-over-year and 32% quarter-over-quarter; June-quarter guide implies operating margin in the lower-40% range and non-GAAP EPS of $5.00 ± $0.20.
Exceptional Free Cash Flow and Cash Generation
Free cash flow of $953 million for the quarter (up 57% QoQ), representing a free cash flow margin of 31% — one of the highest levels in over a decade.
Robust Data Center Demand and Capacity Shipments
Shipped 199 exabytes in the quarter (up 39% YoY); data center accounted for 88% of exabyte shipments and 80% of revenue; data center revenue $2.5 billion, up 55% YoY and 12% sequentially.
Mozaic HAMR Product Momentum
Mozaic 4 (second-generation HAMR) began revenue shipments in late March; Mozaic 4 delivers up to 44 TB per drive (~30% more capacity vs prior generation) and is expected to represent a majority of HAMR exabyte shipments exiting calendar 2026; Mozaic 5 development targeting 50 TB with qualification shipments late calendar 2027.
Improved Balance Sheet and Capital Allocation
Retired $641 million of gross debt in the quarter (year-to-date gross debt reduction ≈ $1.1 billion); gross debt exiting quarter ≈ $3.9 billion; net leverage improved to 0.7x; Fitch upgraded Seagate to investment grade; returned ~$191 million to shareholders via dividends and buybacks in the quarter.
Build-to-Order Visibility and Customer Commitments
Nearline capacity almost fully allocated through calendar 2027 with build-to-order contracts being finalized through end of fiscal 2027; top 3 global CSPs' RPO nearly doubled to ~$1.1 trillion indicating strong future demand.
Operational Efficiency and Cost Discipline
Capital expenditures of $151 million in the quarter (~4% of revenue YTD) with FY26 capex expected in 4–6% of revenue range; OpEx disciplined at $296 million (9.5% of revenue) and expected roughly flat in dollars going forward.
Operator
Good afternoon, and welcome to the Seagate Technology Fiscal Third Quarter 2026 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Shanye Hudson, Senior Vice President of Investor Relations. Please go ahead.
Shanye Hudson
Thank you. Hello, everyone, and welcome to today's call. Joining me are Dave Mosley, Seagate's Chair and Chief Executive Officer; and Gianluca Romano, our Chief Financial Officer. We've posted our earnings press release and detailed supplemental information for our March quarter results on the Investors section of our website. During today's call, we'll refer to GAAP and non-GAAP measures. Non-GAAP figures are reconciled to GAAP figures in the earnings press release posted on our website and included in our Form 8-K. We've not reconciled certain non-GAAP outlook measures because material items that may impact these measures are out of our control and/or cannot be reasonably predicted. Therefore, a reconciliation to the corresponding GAAP measures is not available without unreasonable efforts.
Before we begin, I'd like to remind you that today's call contains forward-looking statements that reflect management's current views and assumptions based on information available to us as of today and should not be relied upon as of any subsequent date. Actual results may differ materially from those contained in or implied by these forward-looking statements as they are subject to risks and uncertainties associated with our business. To learn more about the risks, uncertainties and other factors that...
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