Seagate Technology Holdings plc Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Results Overview

  • Seagate delivered a record-breaking December quarter (Fiscal Q2 2026), with revenue, gross margin, operating margin, and non-GAAP EPS at all-time highs.
  • Revenue was $2.83 billion, up 7% sequentially and 22% year-over-year.
  • Non-GAAP gross margin reached 42.2%, up 210 bps sequentially and up from 40.1% in the prior quarter.
  • Non-GAAP operating margin rose to 31.9%, up 290 bps sequentially.
  • Non-GAAP EPS was $3.11, up 19% quarter-over-quarter.
  • Free cash flow was $607 million, the highest in 8 years.
  • Retired $500 million in gross debt; net leverage improved to 1.1x (vs. 1.3x in prior quarter).

Business Drivers

  • Strong demand across cloud and enterprise data center markets; nearline HDD capacity remains fully allocated through calendar year 2026.
  • Long-term agreements with cloud customers provide visibility into 2027, with early views into 2028 demand growth.
  • Video applications and AI-driven workloads continue to drive massive data creation.
  • Average nearline drive capacity increased 22% year-over-year to nearly 23TB per drive; cloud customers averaged ~26TB.
  • Revenue per terabyte remained stable due to effective pricing strategies.

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Operator: Welcome to the Seagate Technology Fiscal Second 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, Investor Relations. Please go ahead. Shanye Hudson: Thank you, and hello, everyone. 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 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 on 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 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 subsequent date. Actual results may differ materially from those contained in or implied by these forward-looking statements as are subject to risks and uncertainti

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