""We are experiencing strong momentum with our areal density-driven roadmap, which positions us well to offer compelling storage solutions to our customers and also supports our expectation for significant profitable revenue growth for fiscal 2025 and beyond."" - David Mosley
Seagate Technology Holdings plc reported a robust Q2 2025 performance, achieving revenue of $2.33 billion, a 7% sequential increase, and a remarkable year-over-year growth of 50%. This reflects a continued rebound in demand across key segments, particularly in the cloud market, which has been a significant driver of revenue. Non-GAAP EPS reached $2.03, the highest in 12 quarters, supported by a strong mix of high-capacity nearline drives and ongoing cost discipline. However, management disclosed that supply constraints arising from production issues may temporarily limit performance in the upcoming quarter. Despite these headwinds, Seagate's strategic focus on AI-driven data storage positions it well for future growth. In the context of an expanding cloud market, the company aims to leverage its innovative technologies, including the ramp-up of its HAMR platform, to capture further opportunities and enhance profitability moving forward.
Key Performance Indicators
Revenue
2.33B
QoQ: 7.24% | YoY:49.52%
Gross Profit
812.00M
34.92% margin
QoQ: 13.73% | YoY:124.31%
Operating Income
488.00M
QoQ: 21.09% | YoY:293.55%
Net Income
336.00M
QoQ: 10.16% | YoY:1 868.42%
EPS
1.58
QoQ: 8.97% | YoY:1 838.17%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $2.33 billion (YoY increase of 50%, QoQ growth of 7%)
**Gross Profit**: $812 million (up 13.7% QoQ, up 124.3% YoY)
**Operating Income**: $488 million (up 21.1% QoQ, up 293.6% YoY)
**Net Income**: $336 million (up 10.2% QoQ, up 1868.4% YoY)
**EPS**: $2.03, up 8.97% QoQ and 1838% YoY
Financial Highlights
### Financial Performance Metrics
- Revenue: $2.33 billion (YoY increase of 50%, QoQ growth of 7%)
- Gross Profit: $812 million (up 13.7% QoQ, up 124.3% YoY)
- Operating Income: $488 million (up 21.1% QoQ, up 293.6% YoY)
- Net Income: $336 million (up 10.2% QoQ, up 1868.4% YoY)
- EPS: $2.03, up 8.97% QoQ and 1838% YoY
- Non-GAAP Gross Margin: 35.5%, improved by 220 bps sequentially
### Balance Sheet Metrics
- Cash at End of Period: $1.24 billion
- Short-term Debt: $479 million
- Long-term Debt: $5.7 billion
- Total Assets: $7.96 billion
- Net Leverage Ratio: 2.5
- Cash Flow from Operations: $221 million (free cash flow of $289 million)
These figures indicate a solid improvement in operational efficiency and profitability, demonstrating the success of Seagate's strategic initiatives over the fiscal year.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.33B
49.52%
7.24%
Gross Profit
812.00M
124.31%
13.73%
Operating Income
488.00M
293.55%
21.09%
Net Income
336.00M
1 868.42%
10.16%
EPS
1.58
1 838.17%
8.97%
Key Financial Ratios
currentRatio
1.23
grossProfitMargin
34.9%
operatingProfitMargin
21%
netProfitMargin
14.5%
returnOnAssets
4.22%
returnOnEquity
-31.1%
debtEquityRatio
-0.44
operatingCashFlowPerShare
$1.04
freeCashFlowPerShare
$1.36
dividendPayoutRatio
44%
priceToBookRatio
-17.17
priceEarningsRatio
13.78
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Key Insights from the Earnings Call
- Demand Landscape: CEO David Mosley noted a significant uptick in demand due to strong capital investments in cloud infrastructure, emphasizing that nearline product revenue nearly doubled year-over-year.
- Technology Advances: Seagate is experiencing momentum with its Mozaic HAMR platform, ramping up production to meet demand. Mosley articulated, "[We are] in an outstanding competitive and technology position in a strengthening demand environment."
- Strategic Focus: The company's focus on AI technologies and data-rich applications is projected to drive future growth, especially with the anticipated surge in data requirements from generative AI.
- Supply Issues: Mosley acknowledged the recent production constraints impacting Q3 guidance due to supply issues, which might limit $200 million in revenue; however, he reinforced that these are temporary challenges manageable within the build-to-order framework.
- Outlook Remarks: CFO Gianluca Romano emphasized that free cash flow is set to improve through fiscal 2025 as seagate progresses on its capital discipline and maintains focus on profitability.
"We are experiencing strong momentum with our areal density-driven roadmap, which positions us well to offer compelling storage solutions to our customers and also supports our expectation for significant profitable revenue growth for fiscal 2025 and beyond."
â David Mosley
"As data value continues to increase, so too does the strategic relevance of mass capacity storage, particularly in the era of AI."
â David Mosley
Forward Guidance
Management expects that ongoing demand strength from cloud customers will partially offset seasonal declines in the legacy market and VIA (Video and Image Analytics) segments. Despite supply constraints, Q3 revenue is projected between $2.1 billion and $2.25 billion, marking an increase of 25% year-over-year. Mosley stated the importance of capturing significant opportunities in mass capacity storage as AI technologies fuel demand, articulating a firm belief in their ability to manage and satisfy customer needs while navigating current constraints. Investors should monitor the ramp-up of HAMR products as key to driving revenue growth and improving margins further in the fiscal year. There are robust expectations for adoption of nearline products, highlighting continued strength in cloud demands with significant upcoming order momentum.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
STX Focus
34.92%
21.00%
-31.10%
13.78%
NTAP
71.00%
20.80%
33.50%
20.37%
DELL
21.20%
5.36%
-29.20%
21.40%
PSTG
70.70%
3.26%
2.45%
120.88%
HPQ
23.00%
8.17%
-66.30%
11.38%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Seagate's strong financial performance for Q2 2025, characterized by robust revenue growth and improved profitability metrics, positions it favorably in a crowded market space. Moving forward, the company's ability to navigate supply constraints while capitalizing on demand for advanced storage solutions, particularly as AI and cloud technologies expand, will be crucial to its sustained growth trajectory. With the strategic focus on HAMR technology and a strong operational execution plan, investors may find this an opportune moment to consider Seagate as a viable investment in the technology sector. However, careful attention should be given to debt management and market evolution regarding storage solutions.
Key Investment Factors
Growth Potential
Seagate's advancement in high-capacity, next-generation storage solutions positions it favorably in the burgeoning data-driven environments driven by AI and cloud developments. The ramp of HAMR technology is expected to not only enhance capacity but also improve margins substantially, potentially increasing overall revenue.
Profitability Risk
Dependence on continual innovation and execution in response to technological trends poses a risk, compounded by supply chain challenges and potential fluctuations in market demand. The current reliance on HDDs also raises questions about long-term competitiveness amidst increasing shifts toward alternative storage technologies such as NAND.
Financial Position
Seagate is managing significant debt but maintaining a strong liquidity position with over $2.7 billion available. The recent debt retirement demonstrates a prudent approach to improving balance sheet health, though caution remains with margins under pressure amid supply constraints.
SWOT Analysis
Strengths
Leading position in the data storage market with a robust product portfolio, particularly in HDDs.
Innovations in areal density technology with the ramping up of the Mozaic HAMR platform.
Significant experience and established relationships with hyperscale cloud customers.
Weaknesses
High levels of long-term debt which may constrain operational flexibility.
A heavy reliance on HDDs in a market increasingly moving towards alternative storage solutions.
Opportunities
Exponential growth in data storage needs driven by AI, cloud computing, and streaming services.
Expansion into emerging markets and increasing demand for high-capacity storage solutions.
Threats
Intense competition from both traditional competitors and new entrants in the storage technology landscape.
Potential disruptions in global supply chains impacting production capabilities.