Seagate Technology Holdings plc Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarterly Performance Overview

  • Revenue: 1.86 billion dollars, slightly above the low end of guidance but down 4 percent from the prior quarter’s total HDD revenue of 1.6 billion dollars.
  • Non-GAAP loss per share: 0.28 dollars, compared with a loss of 0.16 dollars in the previous quarter.
  • Free cash flow: 174 million dollars, a slight improvement quarter-over-quarter.
  • Non-GAAP gross margin: 18.7 percent, down from 21.4 percent in the December quarter, primarily due to underutilization charges of 75 million dollars and unfavorable mix.

Market Dynamics and Trends

  • Cloud and nearline storage demand slowed sharply late in the quarter due to extended customer inventory digestion and constrained IT budgets. Seagate now expects demand recovery later in calendar 2023 rather than mid-year.
  • China recovery has been slower than expected despite reopening tailwinds; customer sentiment is improving but has not yet translated into purchase orders.
  • Enterprise on‑prem markets are stabilizing but still seeing cautious customer spending.
  • VIA (Video & Image Applications) market expected to gradually recover in the second half of calendar 2023 as delayed projects restart.

Operational Updates

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Operator: Welcome to the Seagate Technologies Fiscal Third Quarter 2023 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Shanye Hudson of 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 posted our earnings press release and detailed supplemental information for our fiscal third quarter 2023 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 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 vary materially from today's statements. Information concerning our risks,

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