Seagate Technology Holdings plc Q4 FY2025 earnings call

• Dave Mosley noted Seagate closed fiscal '25 with strong financial results, 30% yoy revenue growth, and record gross margins improving for nine consecutive quarters. HAMR adoption is gaining momentum. They started the high-volume ramp of two new nearline platforms, including the industry's first HAMR hard drive. Nearline exabyte production capacity is spoken for through mid-next year. Edge data centers are growing due to data creation and sovereignty regulations. Mozaic 3+ products are ramping, with qualification progress for key global CSP customers by mid-2026. Ongoing innovation in media and photonics is critical to their road map.
• Gianluca Romano discussed June quarter revenue of $2.44 billion, non-GAAP gross margin of 37.9%, fiscal 2025 revenue growth to $9.1 billion, non-GAAP operating profit of $2.1 billion, and September quarter outlook with revenue guidance of $2.5 billion ±$150M, non-GAAP operating expenses ~$290M, and plans to resume share repurchases.

In the June quarter, revenue was $2.44 billion, up 13% sequentially and 30% year-over-year. For fiscal 2025, revenue grew nearly 40% to $9.1 billion. Hard drive revenue reached $2.3 billion, up 14% sequentially, with volume shipments increasing to 163 exabytes. Mass capacity revenue topped $2 billion, up 15% sequentially and 40% year-on-year, with nearline representing 91% of mass capacity exabytes in the June quarter, shipping 137 exabytes, up 14% sequentially and 52% year-on-year.

• September quarter revenue expected in the range of $2.5 billion, plus or minus $150 million, midpoint 15% yoy growth. Non-GAAP operating expenses expected ~$290M. Non-GAAP operating margin expected mid-to-high 20s, EPS ~$2.30 ±$0.20. Fiscal 2026 CapEx to be 4% to 6% of revenue. Plan to resume share repurchases in current quarter.

• Evolving trade policy landscape could impact the business, but current outlook sees minimal tariff-related impacts. Risks associated with forward-looking statements and actual results differing from expectations.

Q: Erik Woodring asked about implied gross margin guidance for the September quarter.

A: Gianluca Romano responded that the estimate was low, and they are guiding to significant gross margin and operating margin expansion.

Q: Asiya Merchant inquired about AI inference edge demand.

A: William Mosley said in the cloud, video properties drive demand, and at the edge, various applications like video, factories, hospitals create data sets driving growth.

Q: Jim Schneider asked about HAMR revenue contribution and September quarter impact.

A: William Mosley said HAMR is growing steadily, and Gianluca Romano added they are ramping HAMR, with three major cloud customers qualified and expecting Q1 ramp increase positively impacting gross margin.

Q: Wamsi Mohan asked about revenue guidance linearity and HAMR capacity ramp.

A: William Mosley and Gianluca Romano responded that demand is strong, some volume dedicated to qualification, but moving towards improved revenue and profitability with global minimum tax impact on EPS.

Q: Thomas O'Malley asked about HAMR customer adoption and mass capacity ramp.

A: William Mosley said other customers are ramping HAMR, and 4+ terabyte per platter allows significant growth above previous mass capacity levels.

Q: Amit Daryanani asked about LTAs pricing assumptions and HAMR cost advantage.

A: William Mosley and Gianluca Romano said there's a TCO benefit with new products, and like-for-like pricing continues with mix going to higher capacity drives.

Q: Aaron Rakers asked about free cash flow and share repurchase.

A: William Mosley and Gianluca Romano said CapEx range 4%-6% of revenue, free cash flow improving, and plan to restart share repurchases with strong free cash flow generation.

Q: Ananda Baruah asked about AI video drivers.

A: William Mosley discussed video properties, unstructured data processing, and video generation from AI applications as drivers.

Q: C.J. Muse asked about revenue growth and HAMR ramp capacity.

A: William Mosley and Gianluca Romano said quarter-over-quarter supply was dictated earlier, focus on product transition for exabyte growth, and fiscal '26 guidance of low to mid-teens top line growth with HAMR ramp contributing.

Q: Krish Sankar asked about incremental gross margin guidance.

A: Gianluca Romano said their plan is to achieve $2.6 billion revenue and 40% gross margin, trending well, and incremental gross margin aligns with their ongoing plan.

Q: Timothy Arcuri asked about capacity visibility and December guidance.

A: William Mosley and Gianluca Romano said demand is strong, visibility into exabytes, and December expected to have higher revenue and profitability.

Q: Steven Fox asked about seasonality and receivables.

A: William Mosley said seasonality is diminishing, and Gianluca Romano said no unusual factors driving receivables higher, with free cash flow strong.

Q: Tristan Gerra asked about NAND cannibalism and HAMR density.

A: William Mosley said the interface between NAND and HDD is not changing much, and HAMR maintains a gap with NAND in terms of density and cost for mass storage applications.

Q: Vijay Rakesh asked about gross margin attribution for September quarter and HAMR customer ramp.

A: Gianluca Romano said factors like HAMR volume, pricing strategy, and cost per terabyte decline contribute to gross margin, and HAMR customer qualifications are progressing well with major customers expected to be qualified by early '26.

Q: Mark Miller asked about global minimum tax impact on GAAP tax rate.

A: Gianluca Romano said the global minimum tax impacts both GAAP and non-GAAP tax rates similarly.