Seagate Technology Holdings plc Q3 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue of $1.66 billion, up 6% quarter-over-quarter (QoQ) and reflecting strengthening demand trends.
  • Non-GAAP gross profit increased 18% QoQ; non-GAAP gross margin reached 26.1%, up ~250 basis points QoQ.
  • Non-GAAP EPS was $0.33, more than doubling from the prior quarter’s $0.12.
  • Free cash flow improved to $128 million, up from $41 million in the prior quarter.
  • Strong demand recovery led by cloud customers, with double-digit growth for the second consecutive quarter.

Business Performance Highlights

  • HDD exabyte shipments: 99 exabytes, up 4% QoQ.
  • HDD revenue: $1.5 billion, up 7% QoQ.
  • Mass capacity revenue: $1.2 billion, up 11% QoQ; exabyte shipments grew to 89 exabytes from 83 exabytes.
  • Nearline shipments rose to 72 exabytes from 65 exabytes QoQ.
  • Legacy product revenue declined seasonally to $297 million from $324 million.
  • Non-HDD business revenue flat at $178 million.

Market & Demand Trends

  • Cloud market continues to accelerate, with inventory normalization largely complete and demand broad-based across US and global cloud service providers.
  • Enterprise OEM demand improving, tied to expected modest server growth in 2024.

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Operator: Welcome to the Seagate Technology Fiscal Third Quarter 2024 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 the detailed supplemental information for our March 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, a 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 subsequent date. Actual r

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