Seagate: Fiscal 1Q24 Financial Results
Lowest quarterly revenue since years
This is a Press Release edited by StorageNewsletter.com on October 27, 2023 at 2:03 pm| (in $ million) | 1Q23 | 1Q24 | Growth |
| Revenue |
2,035 | 1,454 | -29% |
| Net income (loss) | 29 | (184) |
1FQ24 highlights
• Revenue of $1.45 billion
• GAAP (loss) per share of $(0.88); non-GAAP (loss) per share of $(0.22)
• Cash flow from operations of $127 million and free cash flow of $57 million
• Declared cash dividend of $0.70 per share
• Strong execution on mass capacity product roadmap extending areal density leadership
Seagate Technology Holdings plc reported financial results for its fiscal first quarter ended September 29, 2023.
“Seagate’s 1FQ24 results were in line with our revised expectations. During a longer-than-typical downcycle we have prioritized financial discipline, positive free cash flow generation and execution on our HAMR product roadmap, which will extend our industry leadership in areal density and improve the TCO for our customers,” said Dave Mosley, CEO. “With indications that demand fundamentals in certain markets are starting to improve, including a modest uptick in U.S. cloud, Seagate is well positioned to enhance profitability and capture attractive long-term opportunities for mass capacity storage.”
During 1FQ24 the company generated $127 million in cash flow from operations, $57 million in free cash flow, and returned $145 million of capital to shareholders through its quarterly dividend. Additionally, it issued $1.5 billion convertible notes due 2028 bearing an interest rate of 3.5% with the proceeds primarily used to retire the outstanding balance on its remaining term loans. As of the end of 1FQ24, cash and cash equivalents totaled $795 million, and there were 209 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 January 9, 2024 to shareholders of record as of the close of business on December 21, 2023. The payment of any future quarterly dividends will be at the discretion of the board and will be dependent upon firm’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 2FQ24:
• Revenue of $1.55 billion, plus or minus $150 million
• Non-GAAP (loss) per share of $(0.10), plus or minus $0.20
Guidance regarding non-GAAP (loss) per share excludes known pre-tax charges related to estimated share-based compensation expenses of $0.14 per share.
Comments
At the end of the former quarter, Seagate has warned, expecting even a worst 1FQ24 compared to 4FQ23 with sales of $1,550±150 million or between -16% and -31%. Final figure is $1,454 million, at the bottom of the range, -29% Q/Q or -27% Y/Y, with net loss near doubling quarterly.
This is firm's lowest quarterly revenue since years.
Consistent with its recent public commentary, the company experienced softer than anticipated demand in the legacy markets, while the ongoing cloud inventory correction and weak economic trends in China continued to restrain near-term demand for HDDs. Looking ahead, it expects the pace of economic recovery in China to be uneven. However, it is encouraged by the positive progress of U.S. cloud inventory consumption.
Within the mass capacity markets, the manufacturer saw a modest uptick in demand for its high-capacity nearline products among U.S. cloud customers. It projects incremental revenue growth from U.S. cloud customers again in 2FQ24, and is encouraged by constructive customer dialogue regarding its transition to a build-to-order model, making it more confident on demand fundamentals entering calendar 2024.
Markets
- Mass Capacity demand improved slightly Q/Q, led by VIA strength
- Nearline revenue influenced by ongoing cloud inventory digestion and cautious enterprise spending
- VIA market improved sequentially; however uneven pattern of recovery expected as the uncertain business environment in China persists
- Legacy sequentially lower demand in each of the 3 markets served – mission critical, client and consumer
- Non-HDD: Cautious IT spending trends remain aheadwind for the enterprise systems market
Revenue breaks down between:
- HDDs: $1,295 million, down 6% Q/Q and 27% Y/Y
- Systems, SSD and others: only $159 million down 27% Q/Q and 40% Y/Y
The company shipped 90EB of HDD capacity, -2% Q/Q. 7.5TB average capacity per drive was up +17% quarterly.
Outlook
The firm expects mass capacity sales to move slightly higher in 2FQ24. Supported by incremental demand for its nearline products from both cloud and enterprise customers, offsetting softer sequential VIA demand. Within the legacy business, it is projecting higher seasonal demand, mainly from the consumer market, while non-HDD revenue is expected to be essentially flat.
Same guidance for 2FQ24 as announced in 4FQ23 for revenue: between $1,400 million and $1,700 million.
HDDs from 1FQ19 to 1FQ24
| 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 |
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 |
| 1FQ22 | 3,115 | 35% | 526 |
| 2FQ22 | 3,116 | 19% | 501 |
| 3FQ22 | 2,802 | 3% | 346 |
| 4FQ22 | 2,628 | -13% | 276 |
| 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 (estim.) | 1,550±150 |
-6% - +15% | NA |
Subscribe to our free daily newsletter
