EPS of $2.39 increased by 654.6% from previous year
Gross margin of 31.8%
Net income of 513.00M
""We are seeing strong nearline cloud demand growth from customers globally. Fourth quarter nearline cloud revenue more than doubled from the year ago period and we expect growth to continue in fiscal 2025."" - Dave Mosley
Seagate Technology Holdings plc delivered a robust performance in its fourth quarter of fiscal 2024, characterized by a remarkable 18% year-over-year growth in revenue, reaching $1.89 billion. The surge was fueled predominantly by a significant uptick in demand from cloud service providers, which has been a key growth driver in the technology sector. Non-GAAP earnings per share (EPS) soared to $1.05, significantly outpacing market expectations, reflecting strong operational execution and an improved pricing environment for its hard disk drive (HDD) products.
In addition to revenue growth, Seagate demonstrated effective cost controls, achieving a non-GAAP gross margin of 30.9%, up from previous quarters. Management expressed confidence in sustaining this positive momentum into FY 2025, particularly as they continue to ramp up their high-capacity products and solidify their position in the mass capacity storage market. However, challenges remain regarding competition and the need for ongoing technological advancements to meet market demand.
Key Performance Indicators
Revenue
1.89B
QoQ: 14.02% | YoY:17.79%
Gross Profit
600.00M
31.80% margin
QoQ: 40.19% | YoY:97.37%
Operating Income
311.00M
QoQ: 101.95% | YoY:1 096.15%
Net Income
513.00M
QoQ: 1 952.00% | YoY:657.61%
EPS
2.44
QoQ: 1 933.33% | YoY:654.55%
Revenue Trend
Margin Analysis
Key Insights
Q4 2024 revenue of $1.89 billion, an 18% increase YoY and a 14% increase QoQ.
Cloud-driven nearline revenue doubled YoY, highlighting a recovery in demand after a period of decline.
Gross profit reached $583 million, with a gross margin of 30.9%, up 480 basis points sequentially due to favorable pricing and improved operational efficiencies.
Non-GAAP operating income increased by 79% QoQ, reflecting strong revenue growth and efficient cost management.
Net income surged to $513 million, a notable YoY increase of 657.6%.
Financial Highlights
Revenue Performance:
- Q4 2024 revenue of $1.89 billion, an 18% increase YoY and a 14% increase QoQ.
- Cloud-driven nearline revenue doubled YoY, highlighting a recovery in demand after a period of decline.
Profitability:
- Gross profit reached $583 million, with a gross margin of 30.9%, up 480 basis points sequentially due to favorable pricing and improved operational efficiencies.
- Non-GAAP operating income increased by 79% QoQ, reflecting strong revenue growth and efficient cost management.
- Net income surged to $513 million, a notable YoY increase of 657.6%.
Balance Sheet Health:
- Cash and cash equivalents totaled $1.4 billion, indicating robust liquidity.
- Net debt decreased to approximately $4.4 billion, reflecting a 11% reduction from the previous quarter.
- The debt-to-equity ratio highlights a highly leveraged position, yet management has committed to reducing debt to around $5 billion over time.
Cash Flow:
- Free cash flow generated was $380 million, supported by operational cash flow of $434 million, demonstrating healthy cash generation capabilities.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.89B
17.79%
14.02%
Gross Profit
600.00M
97.37%
40.19%
Operating Income
311.00M
1 096.15%
101.95%
Net Income
513.00M
657.61%
1 952.00%
EPS
2.44
654.55%
1 933.33%
Key Financial Ratios
currentRatio
1.08
grossProfitMargin
31.8%
operatingProfitMargin
16.5%
netProfitMargin
27.2%
returnOnAssets
6.63%
returnOnEquity
-34.4%
debtEquityRatio
-4.07
operatingCashFlowPerShare
$2.07
freeCashFlowPerShare
$1.81
dividendPayoutRatio
28.7%
priceToBookRatio
-14.55
priceEarningsRatio
10.57
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Market Trends and Demand Growth:
- CEO Dave Mosley emphasized, "Seagate in fiscal 2024 on a high note, reflecting strong operational execution and favorable supply-demand dynamics."
- Ongoing investments in product transitions, particularly with new 28 terabyte PMR and HAMR technology, are critical as they prepare to meet rising demands in cloud storage.
Technological Advancements:
- Management stated, "We're confident in the HAMR technology, which provides our customers with cost-efficient, scalable storage."
- Continuous investment in R&D to enhance HDD capacity and efficiency underlines Seagate's commitment to maintaining its competitive edge.
"We are seeing strong nearline cloud demand growth from customers globally. Fourth quarter nearline cloud revenue more than doubled from the year ago period and we expect growth to continue in fiscal 2025."
â Dave Mosley
"As we enter the new fiscal year with operating and financial momentum in an improving demand environment, executing our mass capacity product roadmap is a top priority."
â Gianluca Romano
Forward Guidance
Looking ahead, Seagate projects continued revenue growth driven by a favorable demand environment in the cloud storage market. For Q1 FY 2025, revenue is expected in the range of $2.1 billion, representing an 11% increase sequentially and a 44% increase YoY. Management expects to achieve a non-GAAP EPS of approximately $1.40, further supported by strong operational efficiency and margin recovery from improved pricing strategies. Key factors to monitor include the execution of their new product lines and the pace of demand recovery, particularly in the enterprise segment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
STX Focus
31.80%
16.50%
-34.40%
10.57%
NTAP
70.10%
22.00%
25.40%
17.93%
DELL
23.80%
7.80%
-48.30%
13.26%
PSTG
72.00%
9.40%
5.15%
50.85%
HPQ
21.40%
7.05%
-68.50%
9.60%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Seagate's financial trajectory indicates a favorable outlook for investors, particularly given their strong recovery in cloud demand and operational efficiencies. With expected revenue growth and solid earnings momentum, compounded by strategic advancements in HDD technology, the company appears well-positioned in the market. Potential risks related to competition and macroeconomic fluctuations should be cautiously considered, but the company's proactive management approach in optimizing cash flow and reducing debt enhances long-term viability.
Key Investment Factors
Growth Potential
Seagate is well-positioned to leverage the growing demand for mass storage solutions, particularly from cloud service providers, which have resumed investments in HDD technology amid AI deployment strategies.
Profitability Risk
The company faces risks from market competition, particularly from rivals like Western Digital and new entrants in the cloud storage space, as well as potential demand fluctuations related to macroeconomic factors.
Financial Position
Seagate's leverage remains high, but improvements in cash flow and ongoing debt reduction strategies will enhance its financial stability. The current liquidity position supports operational and strategic flexibility.
SWOT Analysis
Strengths
Strong market position in HDD technology with a focus on mass capacity storage solutions.
Diverse customer base including major cloud service providers, enhancing demand predictability.
Healthy liquidity position with sufficient cash reserves to support operations.
Weaknesses
High leverage due to significant debt, which could pose risks in a changing market landscape.
Dependency on HDD technology in a rapidly evolving technology sector that may shift towards SSDs.
Opportunities
Growing demand for data storage solutions driven by AI and increasing cloud adoption.
Possible expansions into new markets or product lines that utilize Seagate's existing technology.
Threats
Intense competition from rivals like Western Digital and others in the cloud storage space.
Potential disruptions in supply chains and changes in technological preferences that could impact HDD demand.