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Emoji mehSeagate: Fiscal 3Q24 Financial Results

Sales down 11% Y/Y and up 6% Q/Q, good outlook for 4Q24


(in $ million) 3Q23 3Q24 9 mo. 23 9 mo. 24
Revenue 1,860 1,655 5,782 4,664
Growth   -11%   -19%
Net income (loss) (433) 25 (437) (178)

Seagate Technology Holdings plc reported financial results for its fiscal third quarter ended March 29, 2024.

Seagate’s March quarter revenue grew 6% and non-GAAP EPS more than doubled over the December quarter as we benefit from improving cloud demand, our strong operating discipline and price execution. This combination sets the foundation for a return to target margin performance as the markets recover,” said Dave Mosley, CEO. “This constructive demand backdrop is well-timed as we prepare to ramp our Mozaic products, anchored by industry-leading HAMR technology. HAMR-based products offer compelling economic value for our customers and position Seagate to drive further financial performance gains, as well as capitalize on favorable long-term demand for mass capacity storage.”

During 3FQ24, the company generated $188 million in cash flow from operations, $128 million in free cash flow, and returned $147 million of capital to shareholders through its quarterly dividend. As of the end of the quarter, cash and cash equivalents totaled $795 million, and there were 210 million ordinary shares issued and outstanding.

Quarterly Cash Dividend
The board declared a quarterly cash dividend of $0.70 per share, which will be payable on July 5, 2024 to shareholders of record as of the close of business on June 20, 2024. 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.

Business Outlook for 4FQ24:

  • Revenue of $1.85 billion, plus or minus $150 million
  • Non-GAAP diluted EPS of $0.70, plus or minus $0.20
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Seagate delivered solid financial performance in the March quarter with sequential improvement across every key financial metric. Revenue was $1.66 billion, up 6% Q/Q. Non-GAAP operating income was up 44% Q/Q to $183 million, leading to a non-GAAP operating margin of 11% of revenue, expanding nearly 300 basis points Q/Q, and non-GAAP EPS was $0.33, increasing $0.21 Q/Q and above the midpoint of guidance range, reflecting the improving demand trends and continued cost discipline.

Within HDD business, exabyte shipments grew 4% sequentially to 99EB, while revenue increased 7% to $1.5 billion. Revenue performance was mainly driven by the expected improvement in the nearline cloud market, as well as favorable pricing actions.

Within the mass capacity market, revenue outpaced exabyte growth, increasing 11% Q/Q to $1.2 billion with nearline cloud demand more than offsetting the slight decline in the VIA market. Mass capacity shipment totaled 89EB compared with 83EB in the December quarter.

Mass capacity shipment as a percentage of total HDD exabyte was 89%, reflecting the continued long-term secular growth for mass capacity demand.

For nearline products, shipment of 72EB were up Q/Q from 65EB. Inventory among most CSP customers has decreased and the company anticipates continued nearline demand improvement in the June quarter and beyond. In the VIA market, the March quarter will prove to be a low point of the calendar year with demand returning to more typical seasonal patterns moving forward.

Legacy product revenue was $297 million, down from $324 million in 2FQ24, primarily driven by lower seasonal demand in the consumer market.

Finally, revenue for non-HDD business was $178 million, essentially flat Q/Q.

The firm expects both the legacy and non-HDD market to remain at a similar level in the June quarter.

99EB HDD capacity shipped +4% Q/Q, 8.7TB average capacity per drove +6% Q/Q

In 3FQ24, Seagate grew revenue 6%, expanded non-GAAP gross profit 18%, and more than doubled non-GAAP earnings per share compared with 2FQ24.

Nearline cloud demand trends are increasingly positive across both USA and China customers, and the firm also saw a sequential improvement in the enterprise OEM markets in 3FQ24.

The 24 and 28TB PMR drives are in qualification at most of global cloud and enterprise customers. The company has already completed qualification with one major enterprise customer, some global tier-2 customers, and with its enterprise systems business. It currently expect to begin shipping significant volumes in 1FH05. Relative to HAMR technology, it continues to progress toward completing its first large CSP customer qualification, though it experienced a temporary slowdown in recent weeks.

It determined a mechanical component unrelated to the HAMR recording subsystem and some of drives was not performing as expected. It identified and implemented the solution with support from customers. Verification tests are underway and these tests should be completed in the June quarter. Every other aspect of the qualification process has gone as expected.

HDDs from 1FQ19 to 3FQ24

Fiscal period HDD ASP Exabytes shipped
Average GB/drive
$82 114.0 4,400
$81 129.2 4,300
3Q21 $91 139.6 5,100
4Q21 $97 152.3 5,400
$103 159.1 5,700
$106 163.2 6,100
NA 154.2 6,700
NA 154.6  7,800
$104 118.2 7,500
$108  112.5 7,300
3Q23 $111 118.7 8,200
 $97 91.2 6,400
$108  90 7,500
3Q24 $130 99.1 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
2FQ23 1,887 -49% (33)
3FQ23 1,860 -34% (433)
4FQ23 1,602 -39% (92)
7,384 -37% (529)
 1,484  -29% (184)
2FQ24 1,555
-18% (19)
3FQ24 1,655 -11% 25
 4FQ24 (estim.) 1,850 ±150 +6% +25% NA
FY24 (estim.) 6,394 - 6,694 -13% -9% NA

Earnings call transcript