Seagate Technology Holdings plc Q2 FY2025 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue of $2.33 billion, up 7% sequentially and up 50% year-over-year (YoY).
  • Non-GAAP EPS of $2.03, first time exceeding $2 in 12 quarters; up sharply from prior periods.
  • Non-GAAP gross margin expanded to 35.5%, up 220 basis points sequentially and marking the seventh consecutive quarter of expansion.
  • Non-GAAP operating income grew 22% sequentially to $538 million (4x increase YoY).
  • Strong cloud-sector demand drove nearline product revenue to nearly double YoY in the December quarter.
  • Mass Capacity revenue rose for the sixth straight quarter to $1.9 billion (up 9% sequentially).
  • Nearline exabytes shipped reached 126 exabytes, up from 114 exabytes last quarter.
  • Free cash flow improved to $150 million, up from $27 million in the prior quarter.

Key Business Drivers & Market Commentary

  • Cloud demand remains the primary driver, tied to ~50% increase in cloud CapEx during 2024.
  • GenAI expected to be a major long-term tailwind due to explosive growth in image/video data creation and model checkpoint storage needs.
  • Enterprise/edge markets gaining traction as AI inference shifts toward local data generation sites.
  • Video and Image Applications (VIA) set a record in average drive capacities, indicating deeper analytics adoption and longer retention periods.

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Operator: Good afternoon, and welcome to the Seagate Technology Fiscal Second Quarter 2025 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Shanye Hudson, Senior Vice President, Investor Relations. Please go ahead. Shanye Hudson: Thank you. Hello, 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've posted our earnings press release and detailed supplemental information for our December quarter results 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 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, reconciliation to the corresponding GAAP measures is not available without unreasonable effort. 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 subseq

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