STX - Earnings call transcript Q3 2021 | Seagate Technology Holdings plc

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Operator

Good afternoon, and welcome to the Seagate Technology Fiscal Third Quarter 2021 Financial Results Conference Call. My name is Gabriel, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session.

As a reminder, the conference is being recorded for replay purposes. would Senior turn and Vice I to call Treasury. time, Hudson, Shanye President, this like the to over At Investor Relations Please proceed, Shanye.

Shanye Hudson

afternoon, to Good and call. you. Thank everyone, today’s welcome

Gianluca Seagate’s our website. posted press of quarter release information Executive Mosley, on Officer. supplemental earnings Dave detailed our are Chief Financial me Officer; Joining our and for Romano, and the our We section Chief March Investors

earnings we with GAAP that measures. call, today’s the release Non-GAAP figures will to are reconciled was GAAP our non-GAAP During on refer and figures X-K in website the press posted Form to and SEC. filed

have corresponding measures measures because are GAAP available without measures We Therefore, cannot material these our non-GAAP of predicted. impact and/or is control not may reconciled not effort. out be unreasonable certain the items to outlook reasonably that reconciliation

from effects the filed ramp reminder, management’s of of with the the website. conditions. and based today, trends, should may are other and a and outlook Investors us factors economic not are demand, subsequent SEC, statements SEC vary of most about As forward-looking the including from any statements, Information assumptions be call our product results forward-looking statements X-K our These general relied resulting results on risks, pandemic on uncertainties planned Form our that differ upon date. materially quarter introductions, to as information XX-Q contained worldwide future statements. in industry with this Actual and our section performance, posted these views financial as of June to cause information concerning COVID-XX from supplemental available market our today’s the could and production, and market recent our Form XX-K filed growth growth today financial which and to opportunities, expectations possible current contains conditions the ability

Dave. prepared questions. turn call for you, our I will open remarks, the following over always, now will to As we the call

Dave Mosley

everyone, We end and March operating Welcome, today. achieved high range. range, Shanye. above our dimensions. delivered year-over-year. you, an joining executing of recently into revenue margin us target We non-GAAP grew increased Seagate and thanks the EPS Thanks multiple non-GAAP for and we quarter, guidance quarter-over-quarter across the outstanding well expanded

continue outstanding, enhancing We for repurchases. will Gianluca Seagate’s share year-to-date, combined share our more confidence in to forward details quarter have financials commitments of and on our dividends the also shortly. we drive demonstrates the that $XXX returning value the prospects. the XX% our statement during common repurchased of shares shareholders, on business million our approximately through March long-term Fiscal

double For the well-positioned capacity remainder highest we mass the underscore and more unfolding a cloud center Seagate more revenue the of of $XX my value year, XXXX is trends our see from that in our than billion. remarks, the recovery to ever and ongoing mass $X.X markets enterprise I’ll seeing dynamics HDD demand demand are than business support trends to customers. in technology of XXX perspective, sentiments TAM These by how strong capacity secular exabytes, drove the markets, to focus for data a more unlock and on for outlook billion. and our record product this roughly Strong the we

the last The for demand CIO increased application businesses discussed we budget in quarter, recovery as and support the IT well hardware. and a believe their digital expectations the capacity mission-critical are increased drives high enterprise for in our expansion anticipated helping total scale traditional by We improving through to investments, double-digit the transformation as and AI customers roadmap in focus technology the drive support demand that applications. in on-prem are slated see highlight quarter, infrastructure component quarter than data demand of year, through While acceleration Video businesses trends market these best begin providers. I growing Seagate’s public markets coming in planned around markets, several that strong offset our the nearlines of the analytics. are demand that the this scale. in investing and to sequential in strong These surveys of are sustaining March behind currently We cited products needs. formed as infrastructure continuation and anticipate storage beyond more record multiyear to mass were analytics market the and extends healthy enterprise growth new well in June quarter calendar delivering cloud vital revenue These we Recent the worldwide, are smart leading as infrastructure safety. months. strategic reliable and exabyte city VIA last broad factors drive a video agreements and helping capacity declines number by In year. and XXXX a customer on image partnerships and cloud at post-pandemic delivering global calendar we seasonal investments adoption innovative ecosystem. growth experience collaborations with the seeing of driving force realize the and nearline focused for the both is world’s projects nearline

is that applications to event, As in These and areas exabyte product manufacturing nature to data is retail, drive edge our as by our customer to and all at support healthcare valuable leverage and insights. competitiveness growth points engagement. analyst I capacity a at from strong trends, continue these we video image projections. growing Seagate discussed revenue VIA list density aerial the such driven well-positioned recent longer-term there market benefit lead applications of as sensors

big Today, and storage legacy address to reflects mass in into future. the our now capacity the XX% services built revenue revenue capacity at Average broader a this a a demand X of strong slowdown. a streamlined storage better-than-anticipated and increased current is per and March capacity pipeline Seagate the higher quickly to XX-terabyte of and we started portfolio, forming product growth capacity aggressively period’s typical volume, seasonal We’ve stable to to and sequential high are that growth shift demand the looking With of have suggests sequentially ideally year. pass the technology to the in market led relatively solutions the future demand growth strong foundation majority us mass nearline demand quarter, well roadmap, markets, capacity outlook, drives. vast the demand through growing make data desktop servicing and for milestone XX-terabyte Seagate’s suited drives. terabyte mark, and PC calendar despite sales ramp least drive industry for at that mission-critical higher enterprise Finally,

dual HAMR capabilities to only that a gaining are leading are believe capacities to roadmaps. and been customer feedback production and product expand volume in the HAMR offer which XX-terabyte the additional has Today of HAMR We’re with approach, to and applications highlight flexibility later have We’ve for also meet I to versions drives our industry-leading actuator factoring customers begun and platform performance terabytes with XX would plan proven me address multiple XX-terabyte of rapidly TCO year. drives MACH.X technology. our requirements heavy to to as testing technology their data ramp MACH.X drives the traction common into needs, high that through customers is such HAMR. with drive technology. streaming. MACH.X recently content our certain innovation customer traffic, valuable shipments brings beyond. hyperscale that with we the in our achieve we We not to environments, of And calendar offers

begin way also focused in and are meet second a of shipping customers that do their in end, so We to to the drives lower drives their the on a calendar Seagate. solutions that for TCO half delivering that of To versions roadmaps year. XX-terabyte plan few and we value

with storage-as-a-service increasingly Lyve strategically to a platform. launched located movement delivered and new to edge on considered in data, recent colocate edge services. Lyve Data important cloud to it key a Lyve our an collaboration at the Cloud, Data between and cloud object-based In Transfer This the of we demand edge. We data Transfer, of quarter, seamlessly introduced by IDC, applications works cloud. survey metro respondents the Lyve components solution conducted enabling adjacent with majority or Equinix

have year. our of We end up the are on four are Cloud progressing calendar plans track to Lyve by build-out the sites and

We are certified software with been vendors. have support ecosystem leading each backup the now of and getting an

for We’re services, about products reach potential estimated Seagate by for $XX which opportunity the market growing very XXXX. future and to billion Lyve and open excited a about large

the However, in I do are want to reiterate early that we innings. still

We’re capabilities Seagate being the deliberate platform out in long-term how we for success. to and build position

now X.X that customers shipped make distributed In shipping data evolving drives. to hit in a zettabytes and to we’re the best billion to to sure took itself X listening disk capacity, as are decades the Seagate needs, their sphere. designing of we HDD achieve. has growing milestone the particularly evolves over closely serve four our a quarter, enterprise cumulative March We services

quarter, our position And I’ll of hand on great exploding the future outstanding at live in For results. details the an our amazing perspective, financial think our to to to March now That Seagate’s in global zettabytes we over commentary for in drive XXX-exabyte would we rate sphere in call next an stakeholders. data ship today. five value I the Gianluca the cover is about years. we X shipped

Gianluca Romano

XX% achieved shipments and of year-on-year. disk and Nearline consistent drives capacity shipment Dave. CAGR the compared of high $X.X with to midpoint. revenue well X% image Seagate which up long-term shipment forecast the data mass operating non-GAAP Nearly capacity drive into capacity revenue total continued by X% led to XX% our up long-term contributed XX.X%, nearline, record and calendar above delivered cloud. our capacity represented our record expanded higher of high we March approximately demand for XX%. were margin with was Strong Mass non-GAAP nearline record you, our as demonstrated We terabytes, XXX quarter include much outlook, we shipments. from HDD with continue were the sequentially trends $X.XX as increased markets, strong driven billion, seasonality. through exabytes, as and X% application XX% for enterprise to recently well and performance. margin about NAS of and driven total products. up our should which billion, up for guidance range record hard sharply Thank OEM strength due March year shipment XX increased Based Demand demand in capacity customers, sequentially, expected the VIA capacity points healthy up strong in nearline XX% and current capacity about the market of our quarter. of prior recovery terabytes exabyte growth sequentially year, mass revenue. or revenue. quarter are our of Mass capacity out XX% XXXX, exabytes of sequentially demand gross to XX% shipped by by XX% XX% our target basis XXX XX the Average and March quarter increased and from period. X% increased the Nearline exceptionally Ongoing XX the on of the total products to We December sequentially from quarter, DIA XX.X%, shipments sequentially exabytes, drives supported March revenue prior execute XX growth in a saw exabytes year-on-year. March quarter-over-quarter, of as up exabyte capacity in drives. declined XX% compared up to spite in the mass [ph] our capacity playing record. Revenue we our

demand period X% anticipated basis, million, lower XX% of stronger sequential city slower [ph] shipped improve as decline HDD The legacy total our critical in offset our consumer with desktop into legacy on projects and the for the revenue. market, We June revenue drives. of anticipated down the calendar demand Improving year. some stronger and of up in PC of sequentially held already half seeing of that demand market well X% for VIA the a the We smart sales partially drives mission mix Dave of XX March for consumer shape. made support the mentioned exabytes drives. $XXX the offsetting and down quarter year-over-year. second are than outlook quarter seasonally XX% take market This up We in into

ramp revenue year-on-year for Looking next our support business Revenue increased pace to stable critical relatively ahead revenue revenue. demand to to was by business, non-HDD we few consumer customer quarter March driven quarter. we wins our moderate, from drives. XX% $XXX The X% or of the as strong sequentially to quarters, expect our of December the the system growth mission and began decline million from in

increased In in quarter. quarter the momentum million gross the included of We non-HDD expect to $XXX cost. quarter, growth our COVID-related million profits continue non-GAAP June $XXX million to the business $XX with and December in March in compared

We mainly level COVID-related driven calendar charges. cost planning freight by of are this to throughout higher similar currently incur year,

X% To-date, the our margin at COVID-related Our mass carries our resulting XX% gross mix, the low-end at XX% non-GAAP about favorable including of target expanded sequential margin from recent offsetting these range of is our capacity our driven gross of quarter-over-quarter event. which was growth impact margin XX.X%, profile. by gross costs. non-HDD HDD lower outlined already we analyst margin that business to

on XX% revenue up $XX increased million, with $XXX in continued X by We strong our track gross reduction higher support drives, down to the ‘XX, demonstrating in disk cost sequentially. expenses operational the focus of end supporting increase optimized by higher R&D supply last our the compensation, same of demand. terabyte make of Comparing mass $XX and a material higher are expenses management. with which leverage for long-term operating The product quarter expense revenue variable million, at capacity total contribution year, and fiscal Company slightly products, the up Non-GAAP development. than disciplined a level, gradual supported on at revenue to today, COVID-related range was with be margin performance ongoing low-end cost OpEx to million reflects by aligning came new from less associated and new shift

on-site we expect the activities as June travel. bit to Looking we resume gradually higher and expenses normal ahead, in quarter a be operating business

recently and EPS was of margin XX.X% non-GAAP non-GAAP XX% for our our count of The $X.XX, was XX% of our approximately expectation mainly approximately XX long-term sequentially expenditures revenue share basis March our to which on operating EPS quarter, repurchase million Capital $XXX operating range. the revenue. was points fiscal to with our Based of diluted year. of for of revenue, line guided revenue up and inside million target resulting increased in between of to income high-end non-GAAP midpoint XX% were $XXX long-term higher X% activities was by quarter guidance share relative outperformance revenue the up million and exceeded and range X% X% in and XXX our of inside sequentially driven enhanced shares, $X.XX the Our for while leverage, CapEx by represented operational range the March the and $X.XX. be

on demand manufacturing billion, strong efficiency align to with and through mass had capacity focus We platform capital We better will relatively outlook. simplification demand continue discipline at inventory improvements. to supply flat our $X.X consistent product with

December XXX generated dynamics shares $XXX X our the The $XXX $XXX period. to generation quarter exiting to quarter, March inventory customer these to we market and March the retire logistics. in market future million investment compared broader component million believe well-publicized inventory ordinary we’re million actions ago potential the free by in the in with XX.X In level quarter well million used we risks monitor shortages, Given as days. Seagate supply us $XXX the the managed fund confidence demand, continue chain long-term enable strategy flow share, protect We Days cash million conditions. and as support underscores the to current outstanding to million to business shares against higher reduced outstanding. and and and in days state to ability. year in sequentially cash million dividend We the of future quarter XX towards $XXX carry continuing strategic of

billion share an Board increase As authorization. a repurchase to of during the existing reminder, our authorized $X quarter, the

our remaining reserves. availability authorization, quarter, we As a of to subject of $X.X the the billion in distributable had end of

to XXXX. event, XXX% to we in than cash expect free flow communicated return more at we our fiscal of analyst As shareholders recent

balance cash operation was We mix. and liquidity and including than this are liquidity billion, maintaining $X.X equivalents will our $X while a business These billion, were credit revolving support our do strong sheet to and facility. more profile. total Cash levels adequate approximately and

Looking June ahead for quarter. to the outlook our

to demand million, increasing market. minus with supported continued of range enterprise data $X.XX We the VIA and strength along from million, center expect revenue plus from in or $XXX customers be cloud by

We outlined And operating non-GAAP target range to EPS we XX% fiscal new be the our the expect margin of commitment year. to In XX% non-GAAP event. expect we also a to be objectives XXXX continue to lower end meet to range revenue. analyst the we of in long-term for goal our to aligns on final long-term at of our of a or goals of call have comments. deliver the demonstrating turn $X.XX, midpoint guidance the quarter set our at the start $X.XX, to of remain billion, flat fourth fiscal clear Dave I now of path at at $XX.X back and while X% midpoint. minus revenue on representing ‘XX to plus the growth financial sequential the we and achieve track year-on-year set, At range, would will be fiscal the closing,

Dave Mosley

Thanks, we Gianluca. great quarter. had In summary, a

growing demand markets spending are and is enterprise in mass recovery. showing strong Our capacity

technology our our annual seasonal the towards customer We year. and of capacity and with expect least supports mass as more seeing growth currently roadmaps, a revenue product the calendar on mass at through XX% stable shift in offerings. executing engagement We’re revenue less outlook year positive the XXXX, markets capacity newest

the making Cloud build particularly from steps our early and out reaction platform, Lyve to We’re excited deliberate also Lyve customers. by are

confidence our Day, the of by the shareholders. this illustrated for citizenship Company. active this global to fitting wins is recognition report annual of is we week. it In to XXth our of All return outlook Earth our published And confidence that our that capital positive highlight

our recent about per we world’s energy nearly the precious a X% reduced to XX% the business water to are integrity, on decisions our support striving We for by around swimming and by I equivalent basis. Consistent XXXX efforts, trust our happy of With accordance and by their take Seagate. science-based well in of reduce commitment Gianluca period, by and X,XXX that, continue resources. sized people, planet, XXXX, we to exabyte customers, sustainable our recycled in I’d as their will to plans In now to are questions. suppliers to consumption longstanding and of with our value footprint our with core and build closing, Olympic chains like increased XX% XX% employees by to conserve most the as and are executing we balance Prior proud reporting production our targets. our ongoing pools. and products We for thank extraordinary recycling your profitability. supply And shareholders carbon

Operator

you. ahead. Thank go first Mohan [Operator of Instructions] Bank will The come of question Wamsi Please America. from

Wamsi Mohan

when long-term first around Yes. you it end you the would you’re low of capacity, the Could across us that you some to utilization shared around achieve out that can factors room have margins and you congrats you what range. I where strong level -- components, terms faster, cause in gross Thank of getting the see a appreciate are most both to cause to maybe would results. follow-up. with maybe improve? about where or get color to helpful. the Maybe color main help and little on you think some rates and And the I mass that a be

Dave Mosley

Gianluca a quickly. couple Hi Wamsi. it I’ll through real But, of details. I’ll just go break down let

said internal common concepts. We’ve better, We like to to bit beyond. control well. go lot little terabytes we a the we transitions and of transition XX platform, that our as the XX costs the going we’re through even obviously As the have for the to control ability a

by pretty gross manufacturing want have the even customers obviously transitions, is very to margin. get part the to our if it. So, relative Probably that to products, does are most it’s help logistics worldwide. we -- go – expensive margins still immediately, And impacted transactions that is important

now. So, see months. right that’s next other some headwind abating the the that We over of that we have do that six

Gianluca Romano

by improvement in just are in satisfied basis all, jump say, Well, first [indiscernible]. I fairly points. big We would one XX improved of we It a with is quarter. fairly

further are expecting We improvement.

XX% to have segment today mix, and business is also we from quarter. that because target is that the need that grown discussed important has us near our of of just the capacity We XX% of communicated hard at as we few disk As very the mass already to in that range, normal drive last Analyst at quarters is Day, are it now. of in XX% that for example, hard fairly you we in for We segment. the look materially disk the know, in part course

part that contributor of it flow. cash lower a a the free As percentage. you has is business to good very But, our know, margin

So, our important of part very business. it’s

Dave the future, mass capacity. big the As big second is to said, one as continued is COVID; the for element element transition

a parts quarter more in mass in than of We June part nearline good the and in expect is surveillance. strong the a fairly recovery capacity other segment. That seasonal

was expect to to -- quarter, as strong. gross it fiscal but the quarter-after-quarter you we between but than in are we increase guided we sequentially. go down we course increase improvement has potentially We extrapolate And capacity June. but I’m better gross optimistic supply we It continuous in And the that order margin is in for in So, aligned need know, guidance. a that say, coming better a you what through alignment And then, can slight would and now, I QX. recover of the and fairly is way do on… CapEx provide demand to March, to demand. our margin can gross building

Wamsi Mohan

OEM, the PC, of the on-prem to year? interesting see is a that also color. an legacy say an the through No. if for the I back I moving a called second have And there in about offices, folks Thank half you. actually When and higher exabytes stronger the increasing the holding you and really cycle you the going demand mean, stabilized through PC to if demand, cycle with of that That’s the and think half desktop exabytes legacy of replacement PC great. out up. even sustainability frankly, grow year, and you meaningfully into the potentially you’re second course right opportunity year. that, it’s could, I mission-critical of on the the this desktop in Would appreciate

Dave Mosley

as I in but erosion, would you the happened, lot strong erosion’s mostly to haul, it’s But Wamsi, we say possible. said, continued obviously, long over segments, already big of Yes. point. demand these expect a your the

of are systems certainly replacement that rates mission PC still critical the out lot a there, and exists. business so, And

I the think, that much the after be pandemic, is the some they’re happens more in to drive of that stable. kind places And that that needs actually world, recovery possible. extent stuff may for certain may a the temporary on in of equipment. There run

Wamsi Mohan

Thank you so much.

Operator

next Stanley. of go Your Katy question Huberty ahead. from comes Morgan Please

Katy Huberty

of A couple questions.

at I speaking? think, this you mass Dave, XX-terabyte you year. just mass and capacity talking expect capacity the broadly you’ve and through when for were was Was XX-terabyte business that calendar sequential that for mentioned nearline growth or that about more least

Dave Mosley

Right.

the of above. All

Katy Huberty

Okay.

great All in about And what business segment we that for the this think drivers of the were of the rate calendar above. and then, should how the of growth quarter, material ‘XX? upside non-HDD

Dave Mosley

Yes.

then, things mass well And use the for revenue and is controllers for as demand. consumer consumer quite like and strong is and And capacity. -- there capacity to doing incremental business that, in the that example, themselves chassis and some from high in think SSD is largely the mass there full we which demand the that. boxes But, that drives. is I capacity that boxes extent from the revenue there for of there mass is business there is the well systems that

as is lot brand product there our moving of a well. think, I

seasonal are drivers those little there, big the think it’s your I point. to So, bit and a

Gianluca Romano

Goodwin relative we And time is the to will June quarter. [ph] last an discussed And important add vaccine, now customer. of also it during

June a the good also in So, expect we result quarter.

Katy Huberty

about think and some some for has I supply last lastly, that are improved just I the then, potential dynamics asked evidence quarter There And Okay. an channels been prices environment. increasing. demand pricing you more in

next talking characterize over having little of expect are of pay pricing the drive. for you you How what quarters? also more the that March bit saw couple about quarter, to both in environment, a would you the but the Some hyperscalers

Dave Mosley

know, I think, times. cycle as you long we have

scale so, And have of we planning customers. big cycles with therefore, long most the

the on And through front things component of so, are shortages. think, kinds predictable. going certain fairly Everyone’s I that

supply, things affect think may demand, sit end the I doesn’t what -- and like and on get really it that it based but that. everybody our can may actually together actually affect

So, I benign about that the think There are on doing environment relatively with people that are world mass the from are capacity perspective. what going out it’s trends storage. a interesting in

think coming see vectors Again, sharing up lot that watching. are And happens. dynamic file are we’re of as innovation driving demand there, and of you’ll mass types new and think as that of of we’re professionals you I off, that a well. IPFS interesting there’s out applications distribution creative exist for see are things it love lot platforms carefully. demand. an that these really one that some just taking through And channels, especially the as with a if of It’s with to well. vibrancy. a strong is fairly recovery the these watching look I it’s capacity kind of lot demand The guys just But

those you in that’s particular. something think, probably at if you I see So, channels look

Katy Huberty

you. Thank great. Okay,

Operator

question come Aaron Wells Please of next will your Rakers Fargo. go And from ahead.

Aaron Rakers

the drivers of the Can that you or outlook change the kind has in has growth I for XX% been sure least didn’t you over What’s just see -- secondly, of changed? of correct? you remarks, And three First question. of it is understand Thanks XXXX. hear that I Dave, help taking want to believe Yes. to all, months that make of your I calendar year-over-year at at expect incorrectly. how the last and your that the But, commented end prepared course how changed? appreciate us so? or

Dave Mosley

XXXX, at disruption. looking there obviously, back demand supply So, was and

came So timeframe lot were the factories, down shutting of was restrain. when people July demand in demand. the realities disrupted, about pulling first, of to supply And then, there was a

XXXX. that So in that we lived -- so through

I that XXXX, is of kind people concerns there components still supply think about some have everywhere.

And exactly predictable so, insulated question. that, in. and perspective, some have there From capacity we is pulling relatively are of to relationships mass my pretty things from people Katy’s

year capacity, contributing it’s capacity. not as this an that did enterprise XX% we at well, will more And the that’s having XXXX. as as look in of markets like get on-prem So, coming mass is of be the where things as we back. and And impact and cloud VIA the profound we largely some

Gianluca Romano

XX% to said the we stable two be we expect revenue more also and quarter. at-least We throughout that said Yes. maybe things,

don’t is So, And expect relative model you that we when think your quarters seasonality. I off. important

Aaron Rakers

And mass think question. quick you’ve follow-up a I trajectory, just for capacity. XX% second Yes. margin gross then, That’s got, helpful. as coming of now from revenue real On your

business that about now that high longer mass even talked long-term guidance, that you’ve think XX% do model target above of that capacity trend had to you about running of low margin or How the up model. the Do high term? at at XX%, end end actually you gross that range You outlined? think that the long-term can

Dave Mosley

yes. put, Simply

down have the of XX like capacity terabytes. you to manufacturing too. platform then But, are accelerate some maybe why and well. We’ve chance platform refresh, think on our as long the of and we cost the that. right as tooth. XX one I take So, little And get to pointed that commonality points, designs us, -- like kind want in each factory we That’s leverage getting and the the the our what get to of then get direction new out and things well, we a based in those comes XX-terabyte terabytes as a of helps in and -- there. said legacy all other And opportunities and was there’s in

that helps you. I So, hope

Operator

Ackerman next Please of question Your come Karl Cowen. go will from ahead.

Karl Ackerman

reports days, afternoon. Good an are some hard mining. like used hikes this recent for Dave, price in you’ve referenced earlier drives as question. retail the there applications, been I being significant aftermarket new in Yes. guess, of have crypto In

was a control While times discuss factory the your over retail less pricing in market from customer your lead you how base? maybe have the across could you and perspective, I demand hoping impacting utilization channel

Dave Mosley

the important we in I the are channels Yes. the would and capacity enough customers -- mean, for channel. channels I us. to budget that say always varied

watching the we different referring Like well. And so, do channels that the to sure that we’re capacity see it. we to. sourcing the always budget that trends causing uptick demand are make we’re We you’re in enough said,

What in vibrant it prolonged it’s love know we are prolonged will little how would say Some that really how trends. is be. a I to that. interesting that this is, early And

we’re think quarter. in this even I So, early

going world even So, out is channel manufacturing be. that people hard affecting, I that things capacity came a also the have. exactly think, the we’ll think or to we getting immediately we problem, that what look factory, and it’s is how at these in problem out around our the that channel if it’s lead at the if it So, really question we your how of location a about it. distribution Even reaction to getting to because of world know you might to times, service back the look have I developing it the lag will figure dynamics, all demand’s be right? today, to if on

Karl Ackerman

appreciated reported. that’s If years. few of I last I the But, may, you it And Xx wrong. the you your over in last topic believe currency, maintain still be along has crypto since stake Ripple, could I

you. guess, still a monetize I ways there? A, Thank to maintain So, you secondarily, then And stake stake today? that there are do

Dave Mosley

quite But talk time. watching I segments part. Yes. are, we latter we’ve about We vibrant do the like stake. some yes, that maintain been These for won’t a said,

We the a all data of lot data storage that a are about amount it’s particular. of flow, people and recent have trends, -- because it’s of about case in fair in the

what technologies developing. things and external kind are that of that might make, make and watch investments, investments these we’re determine how not only So, internally but we in we we also

So, we’re maintaining a stake.

Karl Ackerman

you. Thank

Operator

Your O’Malley next from of Barclays. ahead. comes Thomas go question Please

Thomas O’Malley

thanks for to is Hey, guys. my and really VIA related market. question. Mine the taking results Nice

down you And least On revenue. break like guys you earnings was at that the with the call, exabytes, environment in think, mid-teens XX% which of you Dave, saw range. out, like terms I down last described it in

down do so June in violently hard why March, given back hard the and how more -- reasons in So, back of could it off through snap see the why it it June? you And March? you just, in are walk quarter, some saw should you come that in fell what

Dave Mosley

Gianluca spending -- and typically answer I’ll say a part out. government Yes. typically this it’s well. this is and as tied let This But, build seasonal I’ll of is to market

quarters at world my four because now. been comment in of And Now, in I ago, that then, think the a places has go nobody’s edge disrupted you various back markets the obviously, think right time really on-prem if I generally depressed, lot was the anyway. were

aren’t people on-prem. just making So,

the cyclicality year has there think to I So, degree high of been this a point.

I applications. think, what city only of also the we’re smart not were seeing right -- in early in year, investment replenishment but now is, supply chains cycle disturbed and that

maybe seems and but because a hadn’t a of seasonal making investments healthcare while, maybe, relatively data of buildings and some for because of be to they maybe that now. or been reopening, it right And earlier

Gianluca Romano

the capacity seasonal. only that probably segment, the one is mass Inside Yes. VIA is

were So, a We it quarter, that decline. have into March was not knew we going the to expected.

As is will quarter for stronger continue and for a increase a the to I and said year. in stronger much we quarter be the to have September December year And the June before, quarter December.

Dave Mosley

too. point other one sorry, And

thesis central is edge utilized. data Our being the that at extreme the is not properly

of later. are of matter there times are lot starting fact, store little a questions and bit and next people or how decisions for this on AI data answer we that a do necessarily a to in maybe make week who day As longer process but And, data. a a later minute gets I about the with think then value-based Maybe deleted. not the it the

we that so, be happens, as some of seasonality over And to muted time. this expect more

Thomas O’Malley

Obviously, about helpful. follow-up but really share, really exabytes. don’t nearline. was guys just talk And my at That’s Great. then, look let’s you around

it way over the nearline in But, couple success about what March, position of there. mean, the having answer you just of with percentage can of kind other dive You you what kind quarters? you’re of I led are to talk you’re you have XX you A percent could If What market. kind forecasting to I at ask drives? the of the with was than share is, markets look customers that plus better dialogues for that share however higher where seeing share? you are to that you of And this want. maintaining wanted now, right next you where

Dave Mosley

mean, Yes. because point, out as That’s about I the go it to to think don’t I your great. customers. share, really we

We you need that’s about need six since not working the you in what times think six on dialogues And long, products so in but lead I have do quite months? have -- good well. what the we weeks, are

kind I that. still co-planning We of But, them. of in think on flexibility we’re for that’s that appreciate respect. served And Our have them. both customers us well very

competitive it the factories predictable was the dialogue of the is. and our for full, I that little if having gets do weren’t That’s Seagate But ready The little know have may speculatively said. in become a a little than be. very drive ready few good a a their will. holding be the just I we’ve again more last why end what ball were keeping stable change. customers quarters And thought, may for to element last things happening our too, building a share, it way don’t -- bit to not we customers quarters we there’s we’re visibility a ramp, in into think -- -- either that while at general there I it’s So, really a that up going great the XX, in bouncing harder and ramp how be sometimes dynamic, or than demand of I environment back too. summer. pocket. used mid are been pulled just that’s on you and growing

serving well. So, us just I think, that’s

of speculatively building in to at a move building --having not hunch, the era anymore. trying last and a the then We’re minute bunch

Operator

from Please come Ananda ahead. Loop. will of question go Baruah Next

Ananda Baruah

Thanks it. on Hey. appreciate solid question. the execution. results for and taking Congrats I good guys

just of we there’s if to two said to the through really could. I pricing a ago. opportunity just if I that pricing, translation. I follow-up. improve things mean XX Those understand they’re pricing days fairly go if to specifically. quick Just get are I anything then, trying you things, back for nearline I that there year, of are an there that does on wanted lost kind your quick if And what relative the you are to -- And clarifications. thoughts to sort maybe Dave, as going see thought ones benign. guess, have really -- It’s and in

Dave Mosley

be again, mean, predictable to broader ago, to locked they fairly to extent giving days I supply. across do XX need. capacity, And Yes. more procurement relative the I about that’s been customers manufacturer on not has think the changed much world, concerned front. say, that tend we’ve with our our would in that I in what people

we’ve thought we long-term made we quarter. some prepared to to way it. than about last are establish that And ago. the about days think remarks So, the some of That’s been had the discussions XX being more even mature of the able the in this agreements I reference in

Ananda Baruah

XXXX, it was financial I their an to or mean, Got And margin? useful to more LTAs, at extreme about this sense think us impact. instruct that for which But case. all increasingly to was like on it. Is an and of structural about think useful it your material use is the it sense in sort is of kind our it

Dave Mosley

then. those back much I was days. perspective, lot think, in a From imbalanced than more profound more that back my demand supply and is

that say that than we’re good, disrupted Christmas. the they what and right feeling last the probably still are disrupted driver, end of XXXX demand around doing starts it’s people back kind As year for about need would that’s capacity mass you discussions supply our and the now, with hitting if that realistically healthy think the -- wafer fact, And lead was I flexibility the we’re difference exactly really hitting mean, reverb, the environment. testers biggest what of need. driving that and is of I a products. different the matter on well, the as times very

Ananda Baruah

from I helpful it. Got me. That’s lot. Thanks it context. appreciate. a That’s

Operator

will SIG. go Please question next come from Mehdi ahead. Hosseini Your of

Mehdi Hosseini

I Two Did taking that for Thanks believe you that follow-ups. Yes. right? growth to hear I correct? of XX%. exabyte Is question. my guided nearline that

Dave Mosley

is, been been what It’s That’s bit of couple the we’ve that growth to us. a think the That’s XX%. But right, That’s last for long-term little saying, XX%. XX% Mehdi. from for we that’s years right. rate stronger

Mehdi Hosseini

of that June would I that quarter, that it of for And to the you’re take the of second imply to in bit the assumption half back conservative on a And little get next acceleration me side. year the seems if year to into calendar because maybe XX%? the sort I the the more the just -- half said

Dave Mosley

to grow. to mass I that think is capacity we do to think going continue

about they’re little investments. talked around decisions how this on Cloud making bit. service to we’ve exactly have providers a world make think tough I the

do what so, when that’s all And earlier seasonality capacity about those We mass necessarily into that’s expect, investments Gianluca made talking he year, not of and the capacity the grow related. continue in the back was to that a are of they about. comment

Gianluca Romano

Yes.

improvement I and and an think, in calendar the year. market enterprise VIA to volume revenue important. the also sequential that’s a and cloud need that in is we in increasing general but surveillance OEM, strong through consider in We see

Mehdi Hosseini

And sequential just to be clear, you’re referencing growth? year-over-year growth or

Gianluca Romano

remarks, the in year-over-year. XX% Well, we said

Of course, the surveillance comment is sequential.

year-over-year. of you’re the or year looking compared comparing to just second half the calendar at you’re the half If first

Mehdi Hosseini

enable lower CapEx, And it your just have is And you been as your to especially the me products. are extend that that have to you XX out. commentary market share this quickly to really to HAMR pushed going from may XX-terabyte context of seems basically follow-up to different several a to in Especially, XX? going

alternative should have we about that you think technology. it? Is how So, now

Dave Mosley

different to really want, it’s what important market portfolio fits share, I remember will, is firmware are more applications different capacity cloud, all. that And performance what how require customers don’t -- There about I about loads. that that we and load-outs, -- think are can is tolerate you technology we have, of might think not that size it. types many one performance guess, mass as if service the that different levels I

very are colder some much are storage Some right. nearline, and

are those XX%. So, active very

in the going from I are we’re tight platform. of flavors -- pretty common I And It’s think locked perspective, same customers. multiple with think technology. there my to be the So,

I And confidence. two. got one or we’ve why that’s mean think That multiple flavors. doesn’t So,

Operator

Please And your next question Ho comes of ahead. from Patrick Stifel. go

Patrick Ho

about used of low or some give co-existing to the terabytes they from capacity that little growing that capacity are few XX your terabytes demand the or over whether through potential hear commentary Maybe Can from just of Seagate haven’t you’re Dave, points XX a customers off, color, good first getting new points? you last it’s customers this year. qualitative rest the

Dave Mosley

are were broad think generally X that up mass on I markets edge, way doing translation, terabyte previous In the from, have I points, using the would but to general, X said would it data the is fairly that like Maybe we those in And No. are before. if XX back, are were wherever world are XXs longer. transitioning capacity, be or much XXs some representation. I or also the do or stuck they back people are leading from days, outs I other using who there there not I were characterize moving capacity drive customers think much that people of more came lower center around some build aggressively. customers

So, the leverage from get of my to because platform quite bit continuing perspective, XX like a already we it. I’ve said, terabyte we’re is out cost broad And adoption. very

Patrick Ho

for Gianluca. follow-up as question my maybe And Great.

that. You of a also more color good gave of demand, some and Are leverage, What’s the where with pieces color driving leverage? the and in on what’s you Can give adding increasing little really gross margin there? OpEx you moving driving the terms that? the

Gianluca Romano

Yes.

per around The ago $XXX bit a quarters and normal year-on-year due compensation to have was was OpEx be it quarter. R&D We of that higher. our we said a sequentially was couple bit $XX material basically about increase spending. trend million variable lower. So, Sequentially, little higher a in set to million

that the are lot revenues So, have couple very quarters. we a of we next of and expectations, aligned to will probably think the well

Patrick Ho

Great. Thank you.

Operator

question will Cross of ahead. Research. Please from next Your go come Cross Shannon

Shannon Cross

about channel. the if are you a issues talked model. retail I have of I’m current could and how them impacting you your sort But, into you. follow-up. how Earlier, the to the business channel of incorporated supply into you. shipping segments wondering And challenges you speak of Thank other Thank

Dave Mosley

Shannon. sorry -- Again Yes.

So, not us. supply so much part for on the

issues. supply short-term, hear customers that we think problems from having the getting kit. everybody’s I Although, kinds the final they’re long-term same watching of But,

They that already us as or that they’re And does win for secured to need may that so, that hit usually it them. -- revenue maybe customer makes what it differently.

very to having we’re flexible. so, be And

Shannon Cross

take from to perspective? see out long-term a way just opposed pushing out it as it Do demand your right you basically into

Dave Mosley

Yes.

point, to that how just there. exactly else think it can the mean, served. It’s quickly then, think I get customers, I And won’t. exactly is I your be somebody they service, demand some obviously,

have. is those a there So, dynamics of we lot

Shannon Cross

little then, But, you I had Right. from a are interest, my customers. can realize positive the feedback if the and maybe question, was it’s segments wondering, some most I And on you’ve what and Thanks. hearing give you’re mentioned new. more you which color on cloud. second Lyve seeing

Dave Mosley

Sure.

I think in ingress or - very made use you the about a and That’s is you I hard Cloud think retail. to Lyve it cloud, comments way external could an the almost storage it’s temporarily. about about you as egress fees. simple. pad. There’s no the an It’s like or scratch think There it, external if drive

You use it permanently if want. you

they’re to are locations are think, long-term. temporary exactly -- there always customers certain very data their find I who aggregating want going or they data landing out to to out spot put before where

customers a bigger. or are us -- development even of these kinds feedbacks continued so, lot tens And not interesting for of and of the thing, terabytes of are giving we’re people that is this the

Shannon Cross

Great. you. Thank

Operator

come Ho Your ahead. will next Please of Deutsche from go Sidney Bank. question

Sidney Ho

I two. have

be sequential is QX, keep we there the will talk that about consistent If are calendar is, all guys imply on based up XX%, my as QX. the least least the you go thought basis numbers math growth for below right, should Dave have calendar to revenue calendar calendar on on some XX% QX here? know average consider first slightly but the have seeing. at The would things I -- you’re XX% going would you I could at question for and a revenue maybe recoveries that the ‘XX.

Gianluca Romano

Yes.

we Of don’t individual course, quarter. guide the

fairly that going -- least calendar to How then, at for quarter pay. that, are year. very year. to we driving you following has to And in XX% the I said than XX% for more it’s -- to will calendar calculate least the at easy strong which much think, we we XX%, discuss have be

-- more details months more I So, two get on please guess quarters. wait and for

Dave Mosley

that seasonality, is a say things will, expect we to that we -- trying full That’s say what would and muted But I true. are I relatively if as are think look we you Sidney, forward. definitely

Sidney Ho

back one point That’s to extendable the multiple sense that second half. I the same at -- XX thing capacity cost November. of from only is talked the And in having helpful. you I that would of Can get should never follow-up other say drives -- think there about certain to drives. XX capacity you’ve customers. increase may type relates question terabytes started Does My things we multiple seen about capacity shipping the HAMR qualified you not the at would products done? your that point, products TMR you as technology are think know the least the that it at offer Okay. or to a make terabytes.

Dave Mosley

Yes. It’s different interesting. performance of customers want who There are different types levels.

We turn don’t have really to the know I option, medium. to that we But we think this I SMR, medium extent well. reference earlier. another already made option, talked term, like to that that that about. That’s platform family to one

bases of solutions. we customer complex lots this there’s for different platform. provide those have more it So Yes. that But of kind us? Is

qualifications and And worried that. can very platforms that confident multiple we feel so common different not like in go anything And we’re directions about really that. or

Sidney Ho

you. Thank Okay.

Operator

We have question Fox final Advisors. from Please Fox for Steven ahead. one time of go

Steven Fox

Two for kind Hi. clarifications. of squeezing Thanks in. me Good afternoon.

really not trying or video you’re cases that all, off, of you safety components, maybe were it’s other the or when? Dave, that sort you But changing, still building And chain talk delta actually in the secondly, is of imply seeing increasing, understand you, I Thanks. First buy decreasing, these I mainly then, side, the see not your sure surveillance you the terms about some needs? that ahead use to of supply recovery, given understood on also versus take how on I’m edge the actual of can now, as staying stock. do same if

Dave Mosley

day, I’ll long XX we internally, quarter. days our a latter for the times every -- lead Yes. question got do factories components have we take the We first.

we that have for that anymore. whatever stock we’re on for this think surveillance extent perspective we make sure that smart the not want we it’s not common enough contingencies From -- all the what that do other we and saying, they exactly my products for this platform very to So, I market city just applications have. is are know building, just, we’re the we

cases building of many develop. some applications are different have see use lot -- we there the of they of that types types more of starting that are So, being are to security them edge even now. a demanded features And are

kinds the same of just used kind put not security other of we’re being they’re So, There’s features in. all to.

And actually driving last facility, And solution as if buying think the that’s therefore, facility relatively. a market capacities we then, on the for said features, we’re this demand so was people of I you’re pull in year, think for well, calculating a were so, for this in seeing investing a disruptive edge. one those why this year front, I perspective from earlier was so. or kind that’s supply-demand of sorry us what Steven, higher But,

Operator

the turn remarks. to the the back presenters time have. we I’ll all That’s some over now closing call for

Dave Mosley

for about you excited term, suppliers, in employees Seagate. our thank customers, once longer and support and opportunities and we massive ahead, the tremendous like growth by Thanks data. of Gabriel. both execute their all And ongoing joining our continues to again of Seagate thanks foresee partners importantly today. remains near-term of well us business to for driven I’d to the

Operator

call. does This you joining. Thank today’s for conclude conference

You may now disconnect.

Seagate Technology (STX) 23 Apr 212021 Q3 Earnings call transcript