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Seagate Technology Holdings plc (STX)·Q4 2025 Earnings Summary

Executive Summary

  • Seagate delivered a strong Q4 FY2025: revenue $2.44B, non-GAAP EPS $2.59, and record non-GAAP gross margin 37.9%; both revenue and EPS were modest beats versus consensus, helped by cloud-led nearline demand and favorable mix including PMR 24–28TB and ramping HAMR .
  • Guidance for Q1 FY2026 points to continued expansion: revenue $2.50B ±$150M and non-GAAP EPS $2.30 ±$0.20, inclusive of Pillar Two global minimum tax effects and expected dilution from 2028 exchangeable notes; management expects mid-to-wide 20s operating margins and ~16% tax rate .
  • Operational highlights: mass capacity shipments reached 151EB; nearline shipments were 137EB (91% of mass capacity EB); adjusted EBITDA rose to $697M; free cash flow was $425M; debt reduced to ~$5.0B and quarterly dividend held at $0.72 per share .
  • Narrative catalysts: HAMR Mozaic qualifications progressing (three major CSPs qualified), shipments expanding in September quarter; 4TB-per-disk platform qualification started with volume ramp expected in 1H CY2026; visibility “largely spoken for” through mid-2026 via build-to-order contracts .

What Went Well and What Went Wrong

What Went Well

  • Record profitability: non-GAAP gross margin 37.9% (+170bps q/q) and non-GAAP operating margin 26.2% (+270bps q/q); CFO: “record gross margin levels” and EPS at high end of guidance .
  • Cloud demand and product mix: mass capacity revenue >$2.0B (+15% q/q; +40% y/y) with nearline shipments 137EB (+14% q/q; +52% y/y); CEO: “strong global cloud demand... record quarterly sales” for 24/28TB PMR; HAMR ramp accretive to margins .
  • Strategy execution: build-to-order visibility “spoken for through mid next calendar year” and qualifications “progressing exceedingly well”; intent to resume share repurchases reflects confidence .

What Went Wrong

  • Receivables/DSO: accounts receivable rose substantially y/y (from $429M to $959M) and q/q from $622M, but management cited no factoring this quarter (free cash flow strong) and no unusual business drivers .
  • Capacity allocation: some supply dedicated to HAMR customer qualifications, modestly constraining sellable volume despite strong demand; demand remains above supply .
  • Tax/dilution headwind ahead: Pillar Two global minimum tax impacts both GAAP and non-GAAP (mid-teens tax rate); expected dilution from convertible notes and equity comp (VWAP >~$108 triggers dilution) .

Financial Results

Sequential Trend (Q2 → Q3 → Q4 FY2025)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$2.325 $2.160 $2.444
GAAP Diluted EPS ($)$1.55 $1.57 $2.24
Non-GAAP Diluted EPS ($)$2.03 $1.90 $2.59
Non-GAAP Gross Margin (%)35.5% 36.2% 37.9%
Non-GAAP Operating Margin (%)23.1% 23.5% 26.2%
Adjusted EBITDA ($USD Millions)$591 $563 $697
Cash from Operations ($USD Millions)$221 $259 $508
Free Cash Flow ($USD Millions)$150 $216 $425

Year-over-Year (Q4 FY2024 vs Q4 FY2025)

MetricQ4 2024Q4 2025
Revenue ($USD Billions)$1.887 $2.444
GAAP Diluted EPS ($)$2.39 $2.24
Non-GAAP Diluted EPS ($)$1.05 $2.59
Non-GAAP Gross Margin (%)30.9% 37.9%
Non-GAAP Operating Margin (%)17.3% 26.2%

Q4 FY2025 Actual vs Consensus (S&P Global)

MetricConsensus Q4 2025*Actual Q4 2025
Revenue ($USD Billions)$2.4237*$2.444
Non-GAAP Diluted EPS ($)$2.443*$2.59
# of EPS Estimates20*—
# of Revenue Estimates18*—

Values retrieved from S&P Global.

End-Market and Shipment KPIs (Q4 FY2025)

KPIQ4 2025
Hard Drive Revenue ($USD Billions)$2.3
Mass Capacity Revenue ($USD Billions)>$2.0
Legacy Market Revenue ($USD Millions)$270
Other Product Revenue ($USD Millions)$163
Total Exabyte Shipments (EB)163
Mass Capacity Shipments (EB)151
Nearline Shipments (EB)137
Adjusted EBITDA ($USD Millions)$697
Free Cash Flow ($USD Millions)$425
Dividend Declared ($/share)$0.72
Gross Debt (Quarter/Year End, $USD Billions)~$5.0

Non-GAAP adjustments (selected): share-based compensation added back ($0.27 per share in Q4), restructuring and other (~$16M), purchase order cancellation fees (–$5M); see full reconciliation tables .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)Q4 2025$2.40 ± $0.15 Actual: $2.44 Beat vs midpoint
Non-GAAP EPS ($)Q4 2025$2.40 ± $0.20 Actual: $2.59 Beat vs midpoint
Revenue ($USD Billions)Q1 2026N/A$2.50 ± $0.15 New
Non-GAAP EPS ($)Q1 2026N/A$2.30 ± $0.20 New
Non-GAAP OpEx ($USD Millions)Q1 2026N/A~$290 (14-week quarter) New
Non-GAAP Operating Margin (%)Q1 2026N/AMid-to-wide 20s New
Tax Rate (Non-GAAP)Q1 2026N/A~16% (Pillar Two) New
Diluted Share Count (Non-GAAP)Q1 2026N/A221M; dilution if VWAP >$108 New
Dividend ($/share)Q4 2025—$0.72 (payable Oct 9, 2025) Maintained

Guidance EPS excludes estimated share-based comp of $0.23 per share and cannot be reconciled to GAAP without unreasonable effort .

Earnings Call Themes & Trends

TopicQ2 2025 (Prev-2)Q3 2025 (Prev-1)Q4 2025 (Current)Trend
AI/technology initiativesBegan HAMR Mozaic ramp to lead cloud; sampling up to 36TB HAMR ramp with first hyperscale; broader quals in 2H CY2025; strong PMR 24–28TB 3 CSPs qualified on Mozaic; HAMR ramp accretive; 4TB-per-disk qual started; crossover in 2H CY2026 Accelerating
Supply chain/operationsDebt reduction; strong liquidity Temporary PMR supply constraints (resolved); build-to-order stability Capacity devoted to HAMR qualifications; demand > supply; no unusual DSO drivers Improving; disciplined
Tariffs/macro—Minimal expected impact to Q4; mitigation strategies Minimal expected impact as of Q4; continue to monitor Managed
Product performanceDecade-high GM; non-GAAP EPS expansion Non-GAAP GM +70bps; mass capacity up y/y; cloud-led Record GM; mass capacity shipments 151EB; nearline 137EB Strengthening
Tax/regulatory—Pillar Two in FY2026 (mid-teens rate) Pillar Two mid-teens tax; GAAP/non-GAAP both impacted Headwind in FY2026
R&D execution/roadmap—HAMR scaling; PMR mix richer; area density-driven strategy 4TB-per-disk platform towards 44TB; 5TB-per-disk targeted early CY2028; photonics and media innovations On plan
Capital returnsDividend maintained Debt cut >$500M; buyback later after deleveraging Resume buybacks in current quarter; $0.72 dividend; net leverage ~1.8x Increasing

Management Commentary

  • CEO: “30% year-over-year revenue growth and record gross margins… HAMR adoption gains momentum… resume share repurchases later this quarter” .
  • “Nearline exabyte production capacity is largely spoken for through the middle of next calendar year… visibility building into the second half” .
  • “Top priority during fiscal 2026 is executing our 4+ terabyte per disk qualification and volume ramp… capacities up to 44TB” .
  • CFO: “Non-GAAP EPS was $2.59… mass capacity revenue topped $2B… nearline shipments 137EB… free cash flow nearly doubled to $425M” .

Q&A Highlights

  • Margin trajectory: Management pushed back on low modeled margin expansion; expects revenue, gross, and operating margin up sequentially, path to 40% GM intact .
  • HAMR ramp and customers: 3 major CSPs qualified; Q1 expected “another step higher” in HAMR volume/revenue; HAMR accretive to GM .
  • Guidance clarifications: Q1 OpEx ~$290M (14 weeks), tax ~16%, non-GAAP shares 221M; dilution if VWAP >$108; buybacks to partially offset .
  • Receivables/DSO: No factoring in Q4 (strong FCF), nothing unusual driving receivables higher .
  • Pricing: Like-for-like pricing continues to “slightly increase” with new build-to-order contracts; mix shifting to higher capacity drives .

Estimates Context

  • Q4 FY2025: Actual revenue $2.444B beat consensus $2.4237B*; non-GAAP EPS $2.59 beat $2.443*; estimate counts EPS (20*), revenue (18*). Values retrieved from S&P Global.
  • Q1 FY2026: Company guidance revenue $2.50B ±$0.15B and non-GAAP EPS $2.30 ±$0.20 vs consensus revenue $2.5509B* and EPS $2.3999*; adjusted EBITDA consensus $755.1M* (actual later). Values retrieved from S&P Global .

Key Takeaways for Investors

  • Mix-led margin expansion should persist as PMR 24–28TB remains strong and HAMR ramps; management reiterated trajectory to 40% gross margin in “a few quarters” with mid-to-wide 20s operating margins near term .
  • Build-to-order visibility materially de-risks nearline demand through mid-2026; narrative favors continued sequential revenue/profit growth into December quarter .
  • Pillar Two tax and convertible dilution temper EPS optics; expect offsets via buybacks and stronger operating leverage as HAMR ramps .
  • Free cash flow inflecting (Q4 $425M); deleveraging ongoing (~$5.0B gross debt) supports capital returns (dividend $0.72/share; buybacks resuming) .
  • Trading setup: modest beats, confident guidance, and HAMR milestones are positive catalysts; monitor qual-to-volume conversion pace and any tariff or tax implementation surprises .

Appendix: Source Documents

  • Q4 FY2025 press release and tables .
  • Form 8-K (Item 2.02 and Exhibit 99.1) .
  • Q4 FY2025 earnings call transcript (prepared remarks and Q&A) .
  • Prior quarters: Q3 FY2025 press release and tables ; Q3 call ; Q2 FY2025 press release .
  • Other relevant PR: Dave Mosley appointed Board Chair .