EPS of $1.41 increased by 264.8% from previous year
Gross margin of 32.9%
Net income of 305.00M
""Our optimism is reinforced by our build-to-order model, which provides us with good demand visibility over the next few quarters." - Dave Mosley" - Dave Mosley
Seagate Technology Holdings plc reported impressive financial results for the first quarter of fiscal year 2025, driven by robust revenue growth across mass capacity storage products and significant margin improvements. Revenues reached $2.17 billion, marking a remarkable 49% increase year-over-year and a 15% rise sequentially. Seagate's non-GAAP gross profit surged to $723 million, translating to a gross margin of 33.3%, the highest level in over a decade. Management praised the favorable supply-demand dynamics in the HDD market, the strong demand from cloud customers, and the positive trends in enterprise sales, which collectively contributed to enhanced profitability. The company also reaffirmed its commitment to ongoing dividend increases, showcasing confidence in its future growth prospects based on technological advancements and disciplined supply management.
Key Performance Indicators
Revenue
2.17B
QoQ: 14.89% | YoY:49.11%
Gross Profit
714.00M
32.93% margin
QoQ: 19.00% | YoY:379.19%
Operating Income
403.00M
QoQ: 29.58% | YoY:412.40%
Net Income
305.00M
QoQ: -40.55% | YoY:265.76%
EPS
1.45
QoQ: -40.57% | YoY:264.77%
Revenue Trend
Margin Analysis
Key Insights
**Revenue:** $2.17 billion, a 49% increase YoY and a 15% increase QoQ.
**Gross Profit:** $723 million, with a gross margin of 33.3%, up from 31.9% in the previous quarter, marking a 240 basis point expansion.
**Operating Income:** $403 million with an operating margin of 18.6%.
**Net Income:** $305 million, reflecting a YoY increase of 266% despite a QoQ decrease due to seasonal factors.
**EPS (Diluted):** $1.41, a significant increase from Q1 2024.
Financial Highlights
Revenue and Profitability
- Revenue: $2.17 billion, a 49% increase YoY and a 15% increase QoQ.
- Gross Profit: $723 million, with a gross margin of 33.3%, up from 31.9% in the previous quarter, marking a 240 basis point expansion.
- Operating Income: $403 million with an operating margin of 18.6%.
- Net Income: $305 million, reflecting a YoY increase of 266% despite a QoQ decrease due to seasonal factors.
- EPS (Diluted): $1.41, a significant increase from Q1 2024.
Liquidity and Cash Flow
- Free Cash Flow: $27 million, reflecting a normalization in working capital to accommodate rising demand.
- Cash at End of Period: $1.24 billion.
- Debt: $5.7 billion with a net leverage ratio of 3.2x, indicating a manageable debt level within industry norms.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.17B
49.11%
14.89%
Gross Profit
714.00M
379.19%
19.00%
Operating Income
403.00M
412.40%
29.58%
Net Income
305.00M
265.76%
-40.55%
EPS
1.45
264.77%
-40.57%
Key Financial Ratios
currentRatio
1.14
grossProfitMargin
32.9%
operatingProfitMargin
18.6%
netProfitMargin
14.1%
returnOnAssets
3.83%
returnOnEquity
-23.5%
debtEquityRatio
-4.37
operatingCashFlowPerShare
$0.45
freeCashFlowPerShare
$0.13
dividendPayoutRatio
48.2%
priceToBookRatio
-17.65
priceEarningsRatio
18.81
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management Commentary on Growth: "Seagate delivered a strong start to the fiscal year with revenue growing nearly 50%... our ability to drive profitable growth is the outcome of sustained supply discipline and the strategic cost efficiencies that we have built into our operations." - Dave Mosley, CEO Market Demand Insights: "Continuing cloud demand strength coupled with improvement in the enterprise and OEM markets, drove top line growth... mass capacity shipments now represent a record 93% of total HDD exabyte." - Gianluca Romano, CFO Investment and Dividend Strategy: "Reflecting this confidence, we are increasing our quarterly dividend by nearly 3%... we see the potential for significant revenue growth for fiscal 2025." - Dave Mosley, CEO Technological Advancements: "We anticipate further margin expansion opportunities as we ramp our portfolio of high capacity nearline drives, including our Mozaic-based HAMR products... HDD solutions offer approximately 6 times lower cost per terabyte compared to NAND based alternatives." - Dave Mosley, CEO
"Our optimism is reinforced by our build-to-order model, which provides us with good demand visibility over the next few quarters." - Dave Mosley
â Dave Mosley
"Our confidence in HAMR technology remains strong and customer feedback has reinforced our value proposition that the Mozaic platform provides the foundational technologies required to satisfy high capacity storage requirements at the lowest total cost of ownership." - Dave Mosley
â Dave Mosley
Forward Guidance
Management has provided a positive outlook for Q2 2025, projecting revenues in the range of $2.3 billion, plus or minus $150 million, which represents a 6% sequential increase and 48% year-over-year growth. Non-GAAP EPS is expected to reach $1.85, highlighting the anticipated continued demand for mass capacity drives amid strengthening trends in the cloud and enterprise markets. The growth is expected to be underpinned by Seagate's disciplined approach to supply management and strategic investments in high-capacity products.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
STX Focus
32.93%
18.60%
-23.50%
18.81%
NTAP
71.30%
18.30%
26.70%
26.20%
DELL
21.60%
4.46%
-34.00%
23.07%
PSTG
71.50%
-3.73%
-2.55%
-124.28%
HPQ
21.00%
6.26%
-52.70%
13.63%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given Seagate's strong financial performance, consistent growth trends, and solid management strategy focused on technological advancements, investors may view the company favorably. The upside potential from expanding high capacity products and ongoing demand from cloud services suggest a positive trajectory for revenue and profitability in the near to medium term. However, investors should remain cautious of external economic factors and the inherent cyclicality of the HDD market that could impact performance.
Key Investment Factors
Growth Potential
Seagate's robust growth is driven by rising demand for nearline cloud storage solutions and mass capacity drives, with management expressing confidence in continued profitability as technology advances, such as HAMR, enhance capacity at lower costs.
Profitability Risk
Risks involve the cyclical nature of the HDD market, inventory management amid fluctuating demand, and potential supply chain constraints in scaling up HAMR production. Economic uncertainties in key markets, particularly China, may also affect future performance.
Financial Position
Despite a substantial debt load of $5.7 billion, Seagate maintains a healthy liquidity position with a net leverage ratio of 3.2x. The company continues to generate positive free cash flow, reinforcing its ability to meet its financial obligations and return value to shareholders.
SWOT Analysis
Strengths
Strong revenue growth in mass capacity storage products
Improved gross margins and profitability
Strong liquidity position and consistent cash flow generation
Innovative technology leadership with robust product roadmap, including HAMR and Mozaic products
Weaknesses
High debt levels compared to equity, with negative retained earnings
Dependence on cyclical HDD market and cloud demand fluctuations