Seagate: Fiscal 4Q24 Financial Results

(in $ million)	4Q23	4Q24	12 mo. 23	12 mo. 24
Revenue	1,602	1,887	7,384	6,551
*Growth*		18%		*-11%*
Net income (loss)	(37)	222	40	272

4FQ24 Highlights

Revenue of $1.89 billion
GAAP diluted earnings per share (EPS) of $2.39; non-GAAP diluted EPS of $1.05
Cash flow from operations of $434 million and free cash flow of $380 million
Declared cash dividend of $0.70 per share

FY24 Highlights

Revenue of $6.55 billion
GAAP diluted EPS of $1.58; non-GAAP diluted EPS of $1.29
Cash flow from operations of $918 million and free cash flow of $664 million
Returned $585 million to shareholders through dividends

Seagate Technology Holdings plc reported financial results for its fiscal fourth quarter and fiscal year ended June 28, 2024.

“Seagate delivered robust financial performance for the June quarter amid an improving cloud demand environment, capping off a fiscal year of strong execution vs. our financial goals. 4FQ24 revenue grew 18% Y/Y, non-GAAP gross margin expanded to nearly 31%, and non-GAAP EPS exceeded the high end of our guidance range,” said Dave Mosley, CEO. “In FY25, we are remaining focused on driving profitability and maintaining supply discipline while continuing to execute our mass capacity product roadmap, anchored by our HAMR technology. Our data storage solutions offer our cloud and enterprise customers with cost, power and space advantages that support their investments in critical AI and other data-driven initiatives.”

During the 4FQ24, the company generated $434 million in cash flow from operations, $380 million in free cash flow and returned $147 million of capital to shareholders through its quarterly dividend. Additionally, it sold the SoC Operations for $600 million during the 4FQ24, which included cash proceeds of $560 million. The remaining $40 million is expected to be received by the end of FY26. Of the $560 million cash proceeds, $326 million was recorded as an investing inflow and $226 million, net of transaction costs, was recorded in both cash flow from operations and in free cash flow. For FY24, the company generated $918 million in cash flow from operations, $664 million in free cash flow, and paid cash dividends of $585 million. As of the end of FY24, cash and cash equivalents totalled approximately $1.4 billion, and there were approximately 210 million ordinary shares issued and outstanding. Additionally, during FY24, the company issued $1.5 billion of convertible notes to primarily retire its term loans in the fiscal first quarter.

Quarterly Cash Dividend
The board of directors declared a quarterly cash dividend of $0.70 per share, which will be payable on October 7, 2024 to shareholders of record as of the close of business on September 23, 2024. The payment of any future quarterly dividends will be at the discretion of the board and will be dependent upon Seagate’s financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by the board.

The company is providing the following guidance for its 1FQ25:

Revenue of $2.10 billion, ± $150 million
Non-GAAP diluted EPS of $1.40, ± $0.20

Guidance regarding non-GAAP diluted EPS excludes known pre-tax charges related to estimated share-based compensation expenses of $0.16 per share.

Comments

On 4FQ24, revenue was $1.89 billion, up 14% Q/Q, and 18% Y/Y.

Within HDD business, exabyte shipments grew 15% sequentially to 114EB, while revenue increased 17% to $1.7 billion. Growing demand for mass capacity product more than offset a sequential decline in the legacy and non-HDD businesses. Within the mass capacity market, revenue increased 22% sequentially to $1.4 billion, driven by strengthening global nearline cloud demand, along with an improvement in the VIA market.

Mass capacity shipments totalled 104EB, compared with 89EB in 3FQ24, up 17% Q/Q. Mass capacity shipments now represent more than 90% of total HDD exabytes, reflecting the continued long-term secular growth for cost-efficient scalable storage.

In 4FQ24 nearline shipment totaled 84EB, up Q/Q from 72EB. The expert demand will continue to improve from global CSPs as well as nearline enterprise customers into the back half of calendar 2024.

In 1FQ25, the company expect to complete the HAMR-based Mozaic 3+ product qualification with lead CSP partner. It has also started to ramp 28TB PMR, SMR product platform drives in high volume. In 4FQ24, it shipped a small volume of HAMR-based Mozaic drives for revenue to non-cloud customers. It is proceeding to launch new HAMR qualifications with the expectation to have multiple U.S. and China cloud customers, calls underway this quarter. It estimates these qualifications will take around 3 quarters on average to complete, which points to a broader volume ramp toward mid-calendar 2025. It is leveraging all of its learnings and pushing the pace of development on its next generation of HAMR drives, the Mozaic 4+.

In the enterprise OEM markets, it observed a gradual improvement in demand for the 2nd consecutive quarter and continue to project stronger growth in the 2nd-half of the calendar year, driven by both modest improvement in traditional server unit demand and increased exabyte content.

Sales of VIA products came in better than expected in 4FQ24, while customer inventory remains at healthy levels. The firm expect VIA sales will likely fluctuate a bit in the 2nd-half of the calendar year off of this higher base.

Legacy product revenue was $290 million, while revenue for non-HDD business was $160 million, both down slightly on a sequential basis and lower-than-expected at the beginning of the quarter.

HDDs from 1FQ19 to 4FQ24

Fiscal period

HDD ASP

Exabytes shipped

Average GB/drive

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

7,500

2Q24

$119

95.1

3Q24

$130

99.1

4Q24

$141

114

FY ending in June
* in $million

Period

Revenue*

Y/Y growth

Net income*

FY18

11,184

772

FY19

10,390

-7%

2,012

FY20

10,509

1,004

FY21

10,681

1,314

FY22

11,661

1,649

FY23

7,384

-37%

(529)

1FQ24

1,484

-29%

(184)

2FQ24

1,555

-18%

(19)

3FQ24

1,655

-11%

4FQ24

1,887

18%

513

FY24

6,551

-11%

335

1FQ25 (estim.)

2,100, ± $150 million

31% - 52%