Seagate: Fiscal 2Q24 Financial Results
Revenue up 7% Q/Q and down 18% Y/Y, diminishing yearly for 7th straight quarter
This is a Press Release edited by StorageNewsletter.com on January 25, 2024 at 2:02 pm| (in $ million) | 2Q23 | 2Q24 | 6 mo. 23 | 6 mo. 24 |
| Revenue | 1,887 | 1,555 | 3,022 | 3,009 |
| Growth | -18% | -0% | ||
| Net income (loss) | (33) | (19) | (4) | (203) |
Seagate Technology Holdings plc reported financial results for its fiscal second quarter ended December 29, 2023.
“Seagate delivered strong financial results in the December quarter, marked by 7% sequential revenue growth and non-GAAP EPS returning to profitability and exceeding the high end of our guidance range,” said Dave Mosley, CEO. “Results were led by improving cloud nearline demand as early signs of market recovery emerge.”
“Seagate has consistently balanced financial discipline with execution on our areal density-leading product roadmap. Last week’s launch of our Mozaic platform delivers a combination of technology advances, including HAMR, that collectively address data center operators’ most important challenges: cost, power and space. Volume ramp for our first Mozaic product is underway, positioning Seagate to capture attractive Mass Capacity storage opportunities,” he concluded.
During 2FQ24 the company generated $169 million in cash flow from operations, $99 million in free cash flow, and returned $146 million of capital to shareholders through its quarterly dividend. As of the end of the quarter, cash and cash equivalents totaled $787 million, and there were 210 million ordinary shares issued and outstanding.
Quarterly Cash Dividend
The board of directors declared a quarterly cash dividend of $0.70 per share, which will be payable on April 4, 2024 to shareholders of record as of the close of business on March 21, 2024. The payment of any future quarterly dividends will be at the discretion of the board and will be dependent upon company’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the Board.
Business Outlook
The business outlook for the 3FQ24 is based on our current assumptions and expectations; actual results may differ materially as a result of, among other things, the important factors discussed in the Cautionary Note Regarding Forward-Looking Statements section of this release.
The company is providing the following guidance for its 3FQ24:
• Revenue of $1.65 billion, ±$150 million
• Non-GAAP diluted EPS of $0.25, ±$0.20
Guidance regarding non-GAAP diluted EPS excludes known pre-tax charges related to estimated share-based compensation expenses of $0.15 per share.
Comments
Guidance last quarter for 2FQ24 for revenue was between $1,400 million and $1,700 million, being at the end $1,555 million.
This revenue was led by sequentially improving cloud nearline demand and a seasonal uptick in consumer drives, offset partially by the decline in VIA sales.
From a demand standpoint, gradual recovery within the U.S. cloud market has started to take shape, reflecting solid progress in consuming excess inventory, along with more stable end market behavior. Enterprise OEM demand trends have also stabilized within the U.S. markets. Customer feedback still points to macro-related concerns, although IT hardware budgets are projected to modestly improve in calendar 2024 and traditional server growth is expected to resume, trends that support incremental HDD demand growth in the calendar year.
The company is also encouraged to see incremental demand among certain non-U.S. cloud and enterprise customers in the December quarter. Across the broader China markets, it projects a relatively slower pace of recovery given the ongoing economic challenges within the region. However, some local governments announced further steps to support the region's economy which customers believe will bolster local demand across mass capacity markets in China in 2H24.
Seagate demand to the 3TB+ per disk platform: volume ramp is starting in the March quarter according to plan with a goal to ship about 1 million units in 1H24.
Within HDD business, exabyte shipments grew 6% sequentially to 95, with revenue growing 7% to $1.4 billion. Revenue performance was mainly driven by an expected improvement in cloud customer demand, along with seasonal improvement in the consumer market. Within the mass capacity market, revenue increased 4% sequentially to $1.1 billion, driven mainly by strong nearline cloud demand, offsetting the expected decline in the VIA market. Mass capacity shipments totaled 83EB compared with 79EB in the September quarter.
Mass capacity shipments as a percent of total HDD exabyte was 87% which is comparable to the prior quarter 88%. For nearline products, shipment of 65EB were up Q/Q from 56EB. Average capacity per nearline drive continue to increase sequentially, reflecting modest demand improvement among both U.S. cloud customer and China cloud customers. The company believes that inventory among many CSP customers is reaching more normalized levels and anticipate continued nearline demand improvement in the March quarter and beyond.
VIA market revenue was down sequentially in the December quarter, as expected. Looking ahead, the manufacturer expects VIA to reflect more typical seasonal patterns through calendar 2024, with the March quarter representing the low point. Legacy product revenue was $324 million, up from $278 million in the prior quarter, driven by higher seasonal demand in the consumer market. It expects the legacy market to be sequentially lower in the March quarter following typical consumer demand trends post-holiday season.
Finally, revenue for our non-HDD business increased to $171 million compared with $159 million last quarter, primarily driven by improved SSD demand.
HDDs from 1FQ19 to 2FQ24
| Fiscal period | HDD ASP | Exabytes shipped |
Average GB/drive |
| 1Q21 |
$82 | 114.0 | 4,400 |
| 2Q21 |
$81 | 129.2 | 4,300 |
| 3Q21 | $91 | 139.6 | 5,100 |
| 4Q21 | $97 | 152.3 | 5,400 |
| 1Q22 |
$103 | 159.1 | 5,700 |
| 2Q22 |
$106 | 163.2 | 6,100 |
| 3Q22 |
NA | 154.2 | 6,700 |
| 4Q22 |
NA | 154.6 | 7,800 |
| 1Q23 |
$104 | 118.2 | 7,500 |
| 2Q23 |
$108 | 112.5 | 7,300 |
| 3Q23 | $111 | 118.7 | 8,200 |
| 4Q23 |
$97 | 91.2 | 6,400 |
| 1Q24 |
$108 | 90 | 7,500 |
| 2Q24 |
$119 |
95.1 |
NA |
FY ending in June
* in $million
| Period | Revenue* | Y/Y growth | Net income* |
| FY18 | 11,184 | 4% | 772 |
| FY19 | 10,390 | -7% | 2,012 |
| FY20 | 10,509 | 1% | 1,004 |
| FY21 | 10,681 | 2% | 1,314 |
| FY22 | 11,661 | 9% | 1,649 |
| 1FQ23 |
2,035 |
-35% |
29 |
| 2FQ23 | 1,887 | -49% | (33) |
| 3FQ23 | 1,860 | -34% | (433) |
| 4FQ23 | 1,602 | -39% | (92) |
| FY23 |
7,384 | -37% | (529) |
| 1FQ24 |
1,484 | -29% | (184) |
| 2FQ24 | 1,555 |
-18% | (19) |
| 3FQ24 (estim.) | 1.650 ±$150 | -19% -3% | NA |
Subscribe to our free daily newsletter
