Seagate Technology Holdings plc Q2 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue of $2.62B, up 13% from prior quarter and above guidance midpoint.
  • Non-GAAP EPS of $1.29, up 39% sequentially and above the high end of guidance.
  • Free cash flow increased to $314M, up nearly 70% sequentially and 10% year-over-year.
  • Repurchased 18.2M shares (~7% of shares outstanding at the start of the quarter); returned a total of $1.2B to shareholders including dividends.
  • Shipped a record 129 exabytes, up 13% sequentially and 21% year-over-year.
  • Mass capacity shipments reached 97 exabytes (record high), up 12% sequentially and 15% YoY on revenue basis.
  • Gross margin rose to 26.8% (up slightly Q/Q) despite ~$28M in COVID-related logistics costs.

Market Trends & Business Performance

Cloud / Mass Capacity
  • Cloud data center demand remains strong with expected double-digit cloud CapEx growth in calendar 2021.
  • Nearline shipments grew to 71 exabytes, up 11% Q/Q and 45% YoY.
  • 16TB drives remain Seagate’s highest revenue product; demand from cloud customers expanded.
  • 18TB drive qualifications progressing strongly; volume ramp planned throughout calendar 2021.
  • First 20TB HAMR drives shipped in late November with plans for broader use as HAMR enables 20%+ areal density growth.
Enterprise / On-Prem
  • Enterprise market saw first signs of recovery since the start of the pandemic.

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Operator: Good afternoon, and welcome to the Seagate Technology Fiscal Second Quarter 2021 Financial Results Conference Call. My name is David, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. At this time, I would like to turn the call over to Shanye Hudson, Senior Vice President, Investor Relations and Treasury. Please proceed, Shanye. Shanye Hudson: Thank you. Good afternoon, everyone, and welcome to today’s call. Joining me are Dave Mosley, Seagate’s Chief Executive Officer; and Gianluca Romano, our Chief Financial Officer. We posted our earnings press release and detailed supplemental information for our December quarter on the Investors section of our website. During today’s call, we will 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 Form 8-K that was filed with the SEC. We have not reconciled certain non-GAAP outlook measures because material items that may impact these measures are out of our control or cannot be reasonably predicted. Therefore, reconciliation to the corresponding GAAP measures is not available without unreasonable effort. As a reminder, this call contains forward-looking statements, including our March quarter financial outlook and expectations about our financia

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