Seagate Technology Holdings plc Q2 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Highlights (Compared to Prior Year and Sequential Trends)

  • Revenue reached $3.12 billion, up 19% year-over-year and the highest in six years.
  • Non-GAAP EPS was $2.41, up 87% year-over-year and the highest in nearly a decade.
  • Free cash flow increased to $426 million, up 36% year-over-year and 12% sequentially.
  • HDD capacity shipments reached a record 163 exabytes, up 26% year-over-year and 3% sequentially.
  • Mass capacity revenue hit $2 billion, up 25% year-over-year and 1% sequentially.
  • Non-HDD revenue (mostly SSD) rose 48% year-over-year to $294 million.
  • Non-GAAP gross margin was 30.7%, up nearly 400 basis points compared to last year.
  • Non-GAAP operating margin reached 19.9%, near the top of the long-term target range.

Business Environment & Strategic Updates

  • Cloud demand continues to drive strong growth, including record cloud customer revenue and increased pull for 18TB and upcoming 20TB drives.
  • 20TB drive ramp expected to surpass the historical 16TB ramp, with strong TCO benefits for customers.
  • Common platform architecture enables efficient production across 16–20TB families and supports cost-optimized drives down to 2TB.
  • Non-HDD component shortages disrupted some enterprise/OEM shipments but are expected to ease over coming quarters.

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Operator: Good afternoon, and welcome to the Seagate Technology Fiscal Second Quarter 2022 Financial Results Conference Call. My name is Brent, and I will be your coordinator for today. [Operator Instructions] 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 fiscal 2022 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 that was filed with the SEC. 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 including our March quarter financial outlook and expectations about our financial performance, market demand, i

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