STX - Earnings call transcript Q4 2021 | Seagate Technology Holdings plc

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Operator

Good morning and welcome to the Seagate Technology’s fourth quarter and fiscal year 2021 financial results conference call. My name is Tabitha and I’ll 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, this conference is being recorded for replay purposes only. 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 Investors posted press section on quarter release information website. Executive Mosley, and Officer. supplemental earnings Dave detailed of our are Chief Financial our me Officer, Joining the and for Romano, and fiscal our We’ve XXXX Chief June year

be to certain measures. call, figures corresponding efforts. may we to Non-GAAP Form outlook our will earnings are filed figures our release not in GAAP items measures non-GAAP reasonably not the because was with material a cannot is press website unreasonable reconciled of non-GAAP reconciliation to today’s predicted, the During and impact our GAAP reconciled GAAP are available therefore the X-K refer on that SEC. and these in posted items that without out We’ve and/or measures control included

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

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

Dave Mosley

and the than Seagate delivering to Shanye, the June the expectations. June fiscal revenue share, markets topped capacity faster across global EPS financial team, XXXX per warm revenue we for upwardly In today. you $X of and welcome first non-GAAP which broad-based note, and at quarter and strong early $X.XX delivered year our reflect the incredible on guidance mass years results performance billion demand joining exceeded everyone that toward end anticipated progress us range in revised in outstanding time end of execution by targets. the These a fiscal topmost led Thank ended long-term the together six a to that mark we was which quarter, June. provided our

our of be XX.X% favorable has non-GAAP Additionally, pricing inside we to to XX% expect The which gross accelerated expanded ahead term frame XX% conditions. and time target range supporting firmer equilibrium, achieve strength is better of and mix to supply-demand the schedule. to margin long demand

call economies and of a quarters. We are we in world time to are time begin exceptional optimism vaccinations six hosting of in in progress for reporting as from the parts these at reopen; results Dublin the first today’s fact,

throughout in level reality and many is the remained business parts pandemic the have Seagate that clear this we entering a manage is crisis. is in recovery recovery for incredibly the well it we fact While underway period difficult helped strong the position, at in we of period, vigilant the that executed the serve. macro a remains this that markets world very by to through continuing a

profits including $X.X expectations. shares dividends XX.X% in shareholders, faster we grew returned and more margin and XX% business, our and for year, repurchases, retiring share the in the year-over-year billion growth, operating revenue substantial XXXX. ’XX, than outstanding capital We our in fiscal of showing we to fiscal the achieved leverage year X% For sales generated than nearly a of exceeding of amount operating

attractive drives, which In changing has streamline making being areal in down. are slowed now addition multiple to technology meet extended evidenced better the financial HDD as maintaining deliver road high gains first by volume leveraged our customer map, to support to requirements to We’ve actuator Seagate performance our while HAMR density to dual not and leadership, results, We us innovation to first strong product commercialize engine able recording company shipping our the cost an profile. customers. demand our technology

platform execute of our plans demand. mass RAM terabyte to strength XX common meet to customer the leveraged our also capacity We

We in expect drives of second half calendar to begin PMR shipping the XX this year. terabyte

expanded of would emerge made ago when the we business statement stronger metro remain our that launch that from the I A offerings very and and edge-to-cloud edge ever. build-out service on year-end. the live with Lyve of four posed by with than year were platforms track Seagate product the the our calendar pandemic acute, Finally, crisis by cloud locations challenges

that ever. With and the on our innovations that has claim and financial performance delivered is team just Seagate that believe highlighted, I that I’ve stronger than

to are more and our value shareholders. continuing on for customers unlocking We focus

Seagate’s security high For designed [indiscernible] a of software at results petabyte with self-healing data example, solution technologies, storage scale, intelligent centers. Corvault edge a introduced and macro for data reliability family which to and in last Corvault month cost-efficient storage private high cloud we storage combines our deal density internally systems. our system

step to repair customers drives. and Cloud users, We take unlock Many promise and drive scale predict models learning that Google before a occur. maintain of AI Together, recently they We customer amount costs end one to win-win. are These with potential to we hyper directly help large working failures value. our to further. and storage lower clear data intelligence intervention reduce their of developed to the to operational of with machine problems already teamed their models fleets employ also human prevent necessary

block starting those to as that Filecoin area other block power Chia cryptocurrency used significant considered transactions, an environment, or an weeks. validate in with current energy-intensive that to interest. chains has market Storage such interest significant by storage to the chains applications, have for environmentally alternative computational Let’s turn is friendly garnered now decentralized utilize which center recent

June meaningful a incremental repurposed we a the primarily HDD to Chia demand initial build-out at demand quarter, net increasingly percentage exabyte supply which served channel. industry By saw tighten our in environment. shipments dynamics the demand the robust increase new in most represented HDDs. both the to of HDD the is in Chia quarter, mid-single of total digit into This and space, due part distribution an During during of new estimation, comprised demand

space potential applications are excited we in in the with decentralized innovations outlook storage. by growth future remains the this unclear, associated While file

demand. mass the strong capacity June to Seagate, the For mass in our XX% of demand HDD Seagate’s traditional quarter, for of represented HDD growth broad-based market Nearline primary driver close the revenue, into for current by remains In third supported sales of cloud the customers. will growth months data that consecutive last the XX enterprise and quarter Cloud indicators continue. has suggest drives that and and demand trend both center and healthy steady remained capacity

accelerating adoption enterprise which same and to scale expect in employees markets. even At for transformation, pandemic COVID While reinvigorating accelerating supporting ongoing hyper the workplace, to time, the played it’s digital the curve clear infrastructure that a big recedes. investments as digital continue return to the industry recovery are leaders is role businesses on-prem the preparing in IT

anticipated the to market foresee in We demand due the year. of also tighter We second half through conditions. stronger VIA relatively in supply experienced during than currently quarter recovery stable calendar the part the

financial recovery of the capacity demand fiscal or which long percentage for combined our is combined I’ll our term mass well ahead, single call the above macro underpin model and performance generation. over forecast set now and with Seagate in signs continued to flow portfolio hand to data Looking to strong These in high represent broad for XXXX, with Gianluca product cash opportunities more for secular results. financial significant grow revenue factors financial the the range. digit range cover our stage

Gianluca Romano

XX% end Thank of non-GAAP market and capacity XX% was total a hit shipments XX% XXX XX% demand channel. range and for $X.XX mass drive of NAS XX% quarter, growth sequentially quarter, capacity operating year-over-year. and the exabytes mass delivering demand to and top XX% More margin year-over-year. Nearline, exabytes momentum the the and June XX% supported per products. bottom target XX% consecutive Mass capacity was shipped EPS distribution quarter accelerating exabytes, our year-on-year. in sequentially strong Ongoing our and by sequentially well Revenue the in very June in executed you VIA into and and market, Dave. was capacity up mass third hard than line Seagate XX% $X.XX record that product fueled XX% term up billion, XXX which the X% of XX.X%, were upper capacity record of year-over-year. in a shipments up share, up to sequentially includes disk of totaling revenue, Non-GAAP expanded long extremely

we We a agility capacity up block $X.X and VIA period. continuing incremental consumed Overall, exabytes, demand our capacity Further enterprise over are product and terabyte than in data our top quarter increase airline channels VIA meet discussed levels our a supply, to got of including to to rapid which drive healthy timing. support invested operational up market XX in and uptick last represents improving our cloud demand. market are capacity of efficiencies drove demand high record demand comparable cloud size reflecting and strong capacity quarter. chains XX% sequentially leverage in Mass our majority [indiscernible] to each demand our on HDD XXX Stronger future and distribution quarter, shipments from volume. Sales in customers underway Nearline revenue of with customer now layered the high revenue. drive shipping expected and customers’ year of We prior and recovery in year-on-year that storage-centric XX% TAM increased attribute sequential for our XX% compared led strongly product OEM XX% mid to of Nearline sequentially in to our sharp grew total to up quarters. from to revenue OEM as the customers billion, the high manufacturing in in X% the while [indiscernible] record close of mass the Nearline sales of the center

end roughly drives. year remained with up offset for quarter expected consumer of our at demand Looking stable June in our over and we in drives the the period. into demand ahead, product both of well million partially the legacy of with flat and compared quarter exabytes. $XXX Ongoing The quarter market the $XXX the for PC anticipated revenue critical than shipments relatively better decline calendar relatively sales prior million half year. the second prior expect quarter Exabyte XX mission

of couple in next for We expect demand and revenue year-over-year [indiscernible]. consumer both moderate drives the which decline stable would critical quarters, result relatively mission over more

turning sequentially increased record $XXX our million. non-HDD to a revenue year-over-year to Finally, business, XX% and XX%

and costs business, costs the We quarter. million during plan March continue unabated out. to profit with the simple targeted in will year-to-date, private in in and vast drive calling or fiscal In these to stop in persist which starting when $XXX to had the are million system and we million enterprise attributed charges, which QX of around the state if momentum gross prior costs June the solutions uncertainty year $XXX for non-GAAP XXXX; these million $XX the however, scalable Calendar petabyte them expect to cloud $XXX period. through quarter, to fiscal given our COVID-related abate, quarter compared majority customers. increased we of offers We

transition expanded Our range now product in to capacity end better million, expenses X% are supply came XX.X%, XX% already Non-GAAP in be that has inside associated X% performance. XX% costs. quarter, to the with demand gross resulting gross XXX sequentially, operating COVID-related the by to at low taken and range basis of our strong we the the margin than expect up HDD compensation $XXX place. the reflecting September reflecting higher at in Total and mass slightly alignment including variable target of margin from total non-GAAP company more margins and points non-GAAP headwind to

share guidance expenses for next quarters. highest $XXX over sequentially year-over-year $XXX on expense the expect capex basis the margin and with the year, to and opex XXX count expansion and improve XX% up our sequentially long sequentially and exiting combination points and operating income declining level revenue, for with XX% share, level in The of We target diluted approximately sales of supply-demand up resulted in the manufacturing XX% down year-over-year. X% were same of for XX.X%, EPS Inventory XXX to million, the balance. per million million our was efforts the are which Non-GAAP represents and to term non-GAAP efficiencies, solidly in $XXX XX% the year non-GAAP revenue. XXXX, approximately and tightly XX% managing XXX in third for since million fiscal our margin days. under at fiscal $X.XX discipline with maintain term by points shares, days inside to quarter the billion, we range of of few operating was consecutive X.X% Based June was quarter higher fiscal of the outstanding ’XX. range. expenditures strong quarter Capital inventory just long June Through reduced better line about XX basis $X.X

COVID-related and recent mitigate the up quarter job restrictions year. flow of free Asia we over with chain to increased and our done closely partners both which monitor. quarter manage over suppliers including continue levels we [indiscernible] in disruption, to and million, cash working teams the inventory to supply $XXX quarter, In June year Our outstanding XX% have an

Our current program repurchases. fiscal $XXX a business focus capital to ordinary million the and balance and billion $X.X XXXX Cash through sheet and maintaining Based and dividends in shares expect maintain million while and return our we cash We a repurchase on capital strong share robust to dividend profile. X.X liquidity shares a authorization. quarter to and more equivalents return used shares, XX fiscal million on XXXX optimizing and remained credit operation support and in total million adequate provides returned generation exiting revolving at remaining our of was than We liquidity profitability needs. fund our relatively billion stable year flexibility our approximately shareholders. the $X in and are $XXX to to the with including business and These to billion, cash XXX $X.X $X.X our quarterly approximately million levels outstanding total retired outlook, facility. during invest billion

customer and we enter we the product to and our execute our environment fiscal when value team driving requirements continue As road Seagate. technology XXXX, strong map to for on remain and deliver

our revenue $XXX to or billion expect $X.X range September the for to in ahead Looking the plus we million. of outlook minus be quarter,

operating EPS growth of non-GAAP and we and or the non-GAAP of and to We focus range than profit continue plus share in upper be faster XX% at in per $X.XX of sequential revenue expect the strength we margin outstanding results grow end at expect achieve portfolio. XX% XX% resulting the minus operating supported summary, long product our our term midpoint. $X.XX, the our non-GAAP to of sales, In range to representing of by unwavering technology execution on of operational to

for call with and fiscal demonstrating Dave bottom well already enter growth. financial are line back to and performance now top ’XX targets We consistent positioned turn the for final I comments. our

Dave Mosley

moving We for focus with at a enhance Seagate our Gianluca. capital all strongest experience, well, relentless of profits to performance momentum and flow maintaining total and drive our revenue Thanks We’ve stakeholders. that is continue delivering year we faster to grow our leverage executing value demonstrated deploying free to forward. turn fiscal business capped model customer operating generation. and financial or the than commitments, in strong on ’XX performance cash positive expect above in

appreciably current consistently to outlook, growth the program the as employ on flexibility flow Our future we robust flow and a ability well. provides in Based generate cash XXXX. to grow to free shareholder free return cash fund expect fiscal

driving have and we’ve capacity times emerged industry Seagate’s the our a technology future. pivoted for our been key deliver history, to mass XX-year evolving success have Over to address and leader. storage employees Seagate landscape; solutions recently factories Our many has example, to transitioned and crucial current to our

product with are as data support addressing re-scale demands the focused the employees business. respond challenge keep To and Lyve to and with mass changes, investing next we on Now, platform. are our needed the pace these future changing growth our we to to of Seagate re-deploy

Discovery hundreds with strong Tools opex a knowledge capacity analytics. the talent allows hardware than to as skills, mentor global and efficiency. This while deploy of of networking and earlier launched broad Discovery Career Seagate future expertise for as and we’ve formidable already deep better a has and Seagate of chain Seagate year, chip called of data well decades and has employees. ecosystem customer manufacturing such Career understand helping redeployment connections supply resources management us software its Seagate architectures maintain as experience, establish and bench and mass which design diverse to to to relationships anyone. support our tool example, enabling For helped are this our needs opportunities

firm people and put growth that We a on for on us are will confident focus continued footing success. this

As I our want to ongoing chain our whose and both mass Seagate’s leadership in data employees those thank we supply enabled close, in solutions. efforts

their now are and thanks trust for your Our of Gianluca customers happy Seagate. and questions. support take our and deserving of equally shareholders are ongoing I to

Operator

line [Operator open. from instructions] comes Ackerman Company. is Karl line Our Cowen with your first Karl, & question of the

Leni

can reach node, hear in received Leni yet have something you XX terabyte feedback Hi, drive? what XX Nearline fit that previously I’m indicated reach step should it HAMR. [ph] Nearline function My we first of the could crossover Karl for terabyte My is sort When okay? is a have asking ’XX? a XX Is until this current cost two critical you is had terabyte for question, fiscal from not on Ackerman. occur shipments? effective HAMR expect me that question--this I you first qualifying [indiscernible] because to you questions. your

Dave Mosley

said be we terabytes point. XX point would your to HAMR, I don’t ever Yes, that thanks a for crossover Leni. think

There’s of customers and so HAMR. schedules SMR, lot coming are targeted terabyte qualification a number flavors have a each. different they PMR, different different We for them, of XX different to platforms - of

XX media manufacturing qualification with PMR referenced so the in getting the so capacity we’re version the ramping we’re terabyte high aggressively back fairly aggressive and for qualifications, half volume XX on, with because giving customers, in that below, remarks confident optimistic and points prepared heads I’m as for - We’re and the for terabytes is very through already samples, well them and that the and that the in year. about of XX we the very

Leni

thank Great, you.

currency to of Just thinking ’XX for drives may. are capex, demand the and center for Department has disk I yet capex of in by next demands On capacity meet quarters. how fulfillment hoping clearly mid Jedi capacity appears your the address one centers, Chia’s the if led data quarters. Defense next and data you heads may more to fiscal relative demand over outlook shortage the to about contract the incremental [indiscernible] adding I’m for and high outlook follow-up, you of the of few capacity a supply outlook? view your the

Dave Mosley

within million as out, ability mix--to to factory, part, the say the lead I’d we per for example, we XXX have quarter heads the the well change we Yes, have fit. head is see which over time longest going so mix

Some of common the efficient, other. very just inside from we saw demand especially made really we with easy of are it’s our platform, that down, to the one change fairly been to changes trimmed the the portfolio, ability have

our We more by nodes, the to new the always online more hit technology we’ll that’s time, are tools just continue and watch within capacity putting to bringing on envelope this. all capex so

nimble with markets and speak, transitions, as continue watch I in areal technology well. something? to and do the exabyte so grow continue more want density with to Gianluca, supply you exabytes add we’ll think more to we be can to

Gianluca Romano

are in closer discussed and getting last supply the quarter. every we few need realign and closer demand, to and we Yes, about quarters the

of as alignment fiscal target at think and this also capex, will will overall demand. supply revenue, we ’XX, add looking keeping fiscal have but we between X% will capacity and so be within we For we the X% same ’XX

Operator

question next line comes Morgan Your Huberty with the from of Katy Stanley.

Katy Huberty

you. thank Yes,

as consumer, board, reduction rate revenue As through stable sort $X.X year you you drive just second half that of segments you assumes will a VIA, Then so critical, year, the the the guidance there lower full first trends revenue a about walked run various growth - and have guide, yet versus revenue follow-up. move across will can from be about mission through the Nearline, the like? maybe half looks what billion the you I September talk what talked

Dave Mosley

our may chasing muted think obviously, I through we normally Thanks quarters so we be In Katy. than sets seasonality more they of front what high demand variability going us half, Yes, know, least be think accustomed. all significantly now, growth relationships have that’s significantly is pretty their at there, as and it’s so all product stronger. would chasing still we’re muted the in the these revenue of right so give the we’re are what good we said, three do will back and for the a be it. We up there a with some I there across this now half profile do--you we now strong little is year. characterize sense customers single and to digits demand year-over-year, but up, still seasonality away,

Gianluca Romano

have market will of at increase we at think of quarter, so a Right like think as think have we part some be be I couple very and calendar some for last year-over-year. in ’XX. mass capacity, quarters and as have example. Last of strong will legacy then it seasonality for year, different, XX%, we XX% very least now, we for [indiscernible], the another said our second strong, node least seen plans Yes, could the we usual we but

Dave Mosley

we stretch we’re need could running media think, of question, year is so high that as earlier back or the the to if markets I the running--to some heads the there, of XXs I half think up make were more or of thing other volume cloud to the well. whatever, the in above our already in the XXs, take we’re plan, we

Katy Huberty

for digit price said, firmed hold, growth? you change whether environment, pricing can full What than the year in high those up that will then prices you and expected. faster has single Okay, assuming what you for guidance as and determine are

Dave Mosley

not even and the at strong it’s exabytes the demand really for this points. supply about families terabyte products. for There’s some the X of demand VIA so strong in it’s balance demand portfolio, capacity the whole highest there’s of end demand, high desktop the market, just strong the Across quarter,

get think They’re attack to predictability the need supply disrupted course it kit that customers. market balance these what’s all a to predictability we’re in it the firming and everybody that’s year. giving quantify chain, I trying the trying things of is they to us - for time these I’ll have, all complete opportunities so the they let of fiscal Gianluca up. really through

Gianluca Romano

Yes, especially fairly for [indiscernible] have base discussing little bit, alignment fairly now expected it capacity. want good. a to before, in and demand right the time still but environment, it’s say We were being the mass between for give I’ll legacy we to all a general, it [indiscernible]. The depends we strong from supply is pricing but as decline

Katy Huberty

on Congrats quarter. you. the Thank

Gianluca Romano

Thank you.

Operator

next from line Ho Sidney of question Your comes the with Deutsche Bank.

Sidney Ho

for Thanks on the drives. thanks. Nearline question taking is first Great, my My questions.

time? quarters, know the we’ll have maybe past strong as it’s quarters enterprise - you to digestion see is how have this XX% in at past I cloud has the your shipments do a think and I slightly that well. much inventory two been customers, up in mentioned is also cloud soon, but two crypto built especially Nearline’s as you strong inventory the channel Are how an exabyte concerned Given factor or guys, or at sense asked you space in differently, a

Dave Mosley

bit at and in - if by there bit channels imagination. growth see looked out inventory much a too there’s the quarter. did think we the enterprise little It’s relatively you stretch don’t quite quarter they’re the any lower I of different inventory, a Sidney. enterprise thanks over Yes,

As of years That’s with our what said we’re for what think This for far we’ve as the and we’re that, having lead couple and different distributed. because we’ve long, lot the builds healthy a demand we’ve at got - I seen couple time pulling so as what in before. well been it’s we’ve it’s demand, of confidence, with right build talking happy last worldwide. about is conversations we’ve the next the customers the these levels, fairly cloud so is goes, now wanted fairly fairly these outlook the of is always customers really quarters, great worldwide plan

Sidney Ho

the are in question gross to target if components curious margin should product you term for gross follow-up you the whatnot, the the on September long this unpack the Is of the how within to side, yield improvement a quarter? mix, Maybe pricing, be uplift? XX% margin have--if margin to we guidance, Great. talked gross it XX% Thanks. range you playing had those quarter. I’m key September about margin and out think what some and beyond of factors about

Dave Mosley

chime let and Gianluca I’ll in thanks, Yes, too. here

would so planned biggest next of cost things that to I things swaps There’s as thing factories, The faster. thing. staged financially. came us up the fits factories what said, and full. for all forecast, of couple that’s of first is well, a the quarter quarters media are of The heads very mid I of those are a say being the course, kind cost more were started to that next as Inventories have in moving going from we’ve actually you talked optimize quarters there we’re that Like that we when down, well, as the lot into had of few our of some maybe and on. so we the about, we’ve that during everywhere, XXs demand swaps the we were into well, demand balance than drives like family probably actually the reflect better supply had and

bit, the There still we’ve We affecting obviously so various from those the sectors are that prices have capacity mixing still headwinds logistics worldwide all that that are complement positives. actually us and launched, are are freight overhang, there, the that’s in freight, of Nearline headwind. still well an drive happening lower world as is shortages this not--it’s in so around there’s a it’s a because is still little

Gianluca Romano

in and levels. quarter would I this higher Yes, are major the one a say we we is that guiding is of FQX FQX, very is had good environment already improving. reason pricing

on mass to reason In second to more QX, capacity expect is more continue XX% the already and shifting fiscal the mass that is the that to we of The increase. was mix capacity. and revenue

The of will so on see disk, throughout other our our to gross and with improvement will continue reason is ’XX margin. stay us fourth that terabytes increase year bring on are that that and two drive, will cost fiscal major based to optimized drives you through the quarter the

Sidney Ho

you. Thank

Operator

line question with of next comes America. Wamsi from Your Bank the Mohan of

Wamsi Mohan

contributed Dave, demand looks incremental it you. single said thank Seagate, sequential the of I exabytes. maybe in mid Chia exabyte map Chia digit up quarter industry, June percent you HDD so the the for like if Yes, XX% from to of

demand continue how this follow-up. favorable? Then have comfortable pricing to enough flatten supply-demand a be will see I out, you tight keep are that If to you

Dave Mosley

drives Wamsi. It’s forecast NAS in thanks of that the because and what’s the really the that’s hard of maybe we’ve exabyte space referenced. space small yet and of a I big, amount even so seen not developing. numbers, on Chia, say purchased itself fairly it’s are to with drives growth because a overall did because of revenue, just probably We single their entire or been Seagate’s they fair on refurbished transparent going that or that mid very growth date, perspective, to there’s to Chia Yes, you but exactly of quarters in relatively think have digits, said so like as we two the it’s contribution ago, one don’t

react react as plan little into are we’ll for last to have about how now it. it channel forecasting and We more innovative, we is who to capacity that’s see demand not I that think and how applications relationships exabytes the to also to watch. breadth the new right quarter. grow in what customer because but it to and have to still very much. business going takeaway and I - we to in impactful our that’s just don’t really in love I customers very that’s our something not away, take grow last a IDFS if just watch. across wait was continues drive We’ll more fast, that’s and build, would not think we’re with But our those it’s of the because us we in it’s that respect that from happens. talked we’re much our it bit, our that forecasting The and we’re very in will really trying is guide and Chia Chia quarter, looking the so space to big applications it forward Mass portfolio. a it of

Wamsi Mohan

Okay, you year? helpful. your to Then next gross as you added happen of term the of course go follow-up, you’ve to a fall long for for margins that’s range. What quarter range need the as would that through within out

Dave Mosley

we’ve the on. about and supply-demand kind of I maybe think would that that working be all disruption some cost picture been to overall

is supply allowed the that. the hit disrupted, us. lines pivoted pandemic climb back exabyte What’s the our to is the prone. that’s really we that, XXs the thing back quarters, then If everything When we model transitioning you chain and for us decided so the investments was demand to on make some to go quarters, eight that else, we on for platform for mass and we and XXs when of six the capacity capacity did into hurt put that

know don’t thesis, resilient I think growth always--everybody the we’d curve we’re over in this or going this fairly these to level, by exabyte at be backseat We would you But big, a that, so we’re U-turn. I’d going characterize bullish - years, taking on very a up and our careful, it. the is way so higher grow still that’s without next environments, the exabyte lot this and the few is that forecast it’s time thing the but still watch way item. still we a think be more

Wamsi Mohan

thank much. so Okay, you

Operator

with of comes Your question Barclays. line next O’Malley Thomas from the

Thomas O’Malley

be very what you’re strong, I guys, said you quarter and half the taking on I believe for up to of that wanted the question, That Katy’s that’s weakening, year seasonality a would XX% think seeing down about the year-over-year you the year. you the into just follow imply thanks year-over-year. Gianluca, talking my clarify that December. or calendar comment? December XX% can about talk earlier second Can question. you mentioned would Hey I for

Gianluca Romano

at probably last years so a [indiscernible] few I is the said I I fairly least implying it December XX%, would would say that June think with case the Yes, into the March the in was it’s decrease more seasonality be is quarters, in and don’t the as close. the in capacity expected into visibility continuing this exception than of of think the when future because less fiscal June go quarter. bit calendar us ’XX. more muted really maybe year, there’s is seasonality to in mass in the the mix a We we general, improve, but and be little will for March the

Thomas O’Malley

any lead, that market? you year, like you’re is see leadership share, position, talk here. how a guys perspective, remainder follow-up Thank do like don’t about really going you for know you. you’re and you Can in I think talk but nice competitive My of about in feel to the you’re clearly a that that position that leadership helpful. That’s from maintaining you around the to change that Nearline.

Dave Mosley

Thanks manage that we’ve market actually--well, share, for quite we for been some Tom. talking We about time. don’t

with get people - swap happy and plan, XXs, actually they that’s very they why out to platform, to very probably this on for beyond really biggest to factories for and upside, the come a we so in to their obviously going the to us it we’ve done going well. We’re in done units be well, that’s want want reason of get something XXs can XXs more going when as allowed and few flexible,

available. had I the think in we capacity back on that leadership XXs, just total

happy about far last you we’re in so customers. As in that. - plan I’m XX We portfolio. now this want like with way me really fairly we’re business like advance. we executing an because starting the concerned, tell tell really the the need, predictable we customers that way talked anything this, do units be We or I’m you so plan, now right for talking is, you better and the now. it out that’s for if December, the to we’re them what driving quarter, not think, with as market Again, we’re planning share can I resonating That that

for make well, investments are these managing coming. they that have are I how massive the us know to need customers and--because to be as me think that’s predictable which is that our as well, product’s they so

Thomas O’Malley

you. Thank

Operator

from question Fox next comes Fox the with LLC. Steven Advisors of Your line

Steven Fox

Thanks, good morning.

to What would to maybe engage the Then supply-demand balance, add comments, you be those Just you with follow-up. up with that can forward? talk now differently a of basically get those I customers? have capacity incrementals Dave, on about going how follow you some last

Dave Mosley

really, to a before tell the different buying it’s you want having discussion, of I’ll you same, kind to we’re more if because Yes, or drive. XXs same ramp if now still you XXs XXs, and of it’s the think were just about it, you

go XXX able lead and quarter, The our we’ll way, I last volumes. There’s to media to of I said some or not our over-capacity time, We’re is two changing, in a there’s that. per to no heads for just the in your three there’s think, right, are where the well issue swaps. quarter over the of we anymore, swaps if into back think go I million so to that’s business throughput high yields confident so those don’t be weeks of hit point, in market. the in what’s put point ability and heads to take legacy much do out still, but

for financial bigger tool just--we see a and swing, inside the can the think. that it investment, I our then to I invest demand, we one need up think demand even a the--stay don’t can we goes do We if get the we in model, capex of at that we than massive maybe we’ll our time. into do with

Steven Fox

it it expect more for on like validation, terms the at the or ’XX Thanks. secondly in any sounds it. non-HDD getting platform, just Is business? thinking Then you of your technology of changing proceeding helpful. That’s least some Lyve like you’re

Dave Mosley

growing. being like edge, grow, to move the clearly move in talked really Lyve cloud so, instances, final able with spots customer multiple they that is Lyve No, so it they I by the service we’ve those have. there. all about on Relative are the There find market who prepared provider our talked encouraged the and struggling fairly non-HDD as destination cloud, think with so the portfolio to business, or the into that service the to resting that out we breadth are provider of we--I’m engagements people with don’t we that business but about such have did can lot remarks, temporary we’re in the happy cloud the how data some a its it’s

really the to this with have share grow, We with I’m hope everyone. at really market pleased some well future then in and see I I will that to what it and so learn point

Steven Fox

Great, thanks much. so

Operator

Ananda Your next question line the comes from Loop of Capital. Baruah with

Ananda Baruah

this personality describe to afternoon a guess guys. Thanks good of of point, or taking you questions. as Dave, hyper cycle your around the for follow-up. guys, have quick the this and would well? the it I I you thoughts length at what’s morning good scale Hey, how Then

Dave Mosley

the it’s It’s earlier. and think was we’ve back still cloud, applications I were much signal people. It that workloads that growth grow for contemplated that that’s stress with not better kind sure six a to even pandemic, to I the it end and the much, and It’s to bigger, will mass of cycle, different think putting is certainly fairly if making Thanks steady networking on Ananda. thesis going into I transformation end was bigger, of matter some storage that come on it’s more so capacity will, way a so been this learning than the use the that our and come of even to of can were it and very the capacity. about on months digital excess would out your point. say not It’s the It capacity heavier interesting will was was run market. they too or seen then really going just was it front because about the it cycle, you adding all compute was much designed during a tremendous

we the from very excited so we’re making the focus will as data a The everyone and usually from performance all the cloud it’s end back your here, numbers making think grow. about that on the matter is have grow a the front satisfying end our of investment clean and by then can of those and dollars you come. really that big time I clearly sure to portfolio as sure we on perspective, going applications,

Ananda Baruah

think we get the quarters? the it a about as about off think it come Is into brakes you that appropriate way do to March-June the bit. Typically would little time? us this want to How

Dave Mosley

PC would anymore if that seasonality - see let the exactly But point, cloud then the I world, we’ll recovery more you a Yes, because business right, or steady. there we’re more than to start business your the the in more lot pulled mean, now right? a be in, said legacy we not be around normal, we’ve cycle will the know muted to that is next

Ananda Baruah

quick Then sort just balance, capacity the right helpful. Got real are it, jump in to of traditional in well, free terms but [indiscernible]? to are Gianluca, you guys in here full What’s of the on now? capacity way right vernacular are, that’s where full supply-demand feel saying you capacity, think and guys supply-demand, as you about like

Dave Mosley

still - much July, painful still more thanks we’re but last But do do year was in certainly we exabytes. more. and more I can no, would We Yes, not can of than full say we were, course. full,

upsides do, we swaps, many moving and be, one from these were need in to this market make another. to have lot quarter I the challenged think predictable we a because we actually to more markets and materials we of to it more the operationally we were last saw

order to haul, more we could achieve long the now, term be to predictability, exabytes even in right it’d the have do long think, but Over exabytes. I more

thinking it We’re everyone about it. about and that’s we’re we’re the way telling excited

Gianluca Romano

are have growing, our a last can so are Yes, so before, increase exabytes, some of another capex, planning still as exabytes FQX, year. through quarter some XXX still expect you so add discussed this the and we available. we some still shipped we record guidance, we means on capacity, we in capacity to Based capacity in

Dave Mosley

to that ramp obviously footprint we’ll that, like media more And head have, so. than the things exabytes out XXs XXs we existing get and and as we

Ananda Baruah

a guys. great. Thanks helpful, That’s lot, that’s

Operator

Hosseini next Your question from line of SIG. comes the Mehdi with

Dave Mosley

Mehdi, can hear you us?

Operator

is open. line Mehdi, your

Tyler

Mehdi. for on Tyler it’s Hey,

Our answered, you. thank question was

Dave Mosley

Tyler. Thanks

Operator

the Cassidy from Kevin of comes question line next with Rosenblatt The Securities.

Kevin Cassidy

question. my taking for Thanks

of agreements us Just an giving? can are are or you term around expanded customers give agreements? you your what long discussions visibility with long customers, your idea Maybe adding your more your being term are

Dave Mosley

and now. got our wants nine to certainly out and that, things Yes, six really I discussion because everybody but go the think amount how to factories around months good--I things months do, like going to lot is going of parts bring and this We of are run, the a certain business, a are right tight that think to make online, have we’ve want entire quite so helping predictability going invest for it’s and supply a industry behaving continuing, are they’re It’s Kevin. so together, in right people the bit plan sure they’re think well kit to to full quite those us if to chains, chains supply I perspective now.

Kevin Cassidy

a to comparison scale as performing? hyper stronger, just just or maybe relative how it enterprise, of Maybe great. Okay, scale, back hyper to is coming is enterprise

Dave Mosley

I we debate know, You would a a and - that say lot, it’s toss-up. XX/XX always it’s of kind been

hadn’t it ago, want months nine so knock XX/XX in say to continuing they the coming to split still they not as Right and the cloud on ahead that clearly are people enough six now. then those said in realizing that the Sometimes prepared right they’re there’s we now, as of the remarks, there’s and the back I investments make investments. or one off made would other. both in growth growth prem, they’re perhaps races it’s

Kevin Cassidy

Thank you.

Operator

Your the Rakers next from of Fargo. Aaron Wells line question comes with

Aaron Rakers

shift XX% capacity fiscal of XX% that Yes, still expectations thanks of for think the quarter Nearline all, in a taking going still ’XX the grow curious, annual to you I’m kind range? questions. that pointed to first as question on your well. Congratulations to just is - do your underpinning

Dave Mosley

we do. Aaron, Yes

the now. if we’ll was are going cloud as months, XX% it good we nine six is but--and course, was we we Just get it, the now, wildcard a XX%, more think months that. question, but build is for year from bit a so capacity little years of upside, anyways last for We’ve think, Kevin’s model right XX% answered little on less, parts, I The see. got actually and a two wait ago and I to

question model XX% are it the because then this pulled if number XXs in to - next cycle good pretty a [indiscernible]. we Those little is this actually I and asked bit, think year. have coming. fast XXs was Ananda a would grow

Gianluca Romano

We would But the now for be growth is two next entire you to difficult. had long exactly on quarters, the we very that model as still the a debate the give year think CAGR so XX% term, valid. [indiscernible] for

Dave Mosley

and guess all it’s parts, the the can we media so flexible. is heads point, And same be I

Aaron Rakers

around to investments. curious and Right, as the talk Gianluca, follow-up XX% question about the confidence right. and to margin now Then that, is, how when XX% about you’re talk we you gross operating expense thinking I’m model about

target about at that of at above-XX% would but about and that long end to that above opex margin, model? next that similar talked drive the through couple of quarters, remaining that operating an let levels cap off high you margin reinvest start thinking or drop and term should we start you’d these You

Gianluca Romano

we level we the For FQX, through can ’XX. fiscal level opex, the that of maintain the think

We are $XXX so do [indiscernible] little between can higher million, variable $XXX we we good, more million The if level, a But this more, also think [indiscernible] maybe compensation. per a can comparing bit are now prior very is expenses. bit it to performance quarter, we year, we have it. keep little I

Dave Mosley

have end range, growing are But I if we number make. of to markets now, we at well top look at to then look investments that investments of so have because Aaron, we think the different we’d a we’d the what right outstrip, were

of know, million, of is we the more $XXX lot first of the $XXX this right, inside - could we if actually redeploy people grew investment little the that’s--you top tolerate the north we range. of thing would a in that, million, said script, of flexibility a we have and I still end so think bit we inside do

Gianluca Romano

this margin, operating you mentioning right increasing in already margin good Operating very terms were and margin. is of model gross XX% now, and the of opex will a revenue you result when before, see you so level

Aaron Rakers

Right, thank much. you very

Dave Mosley

Thank you.

Operator

from of line comes the Patrick Stifel. Ho question with next Your

Patrick Ho

terabyte give much, Thank when XX maybe the Dave, you more the ramp expect shipping ramp? little terabyte terms just of XX drive, very you XX, first off, you’re exabytes from from XX to quarter. the your see the and you a nice of in color congrats on can to of where crossover

Dave Mosley

but at heads we’ve customers in looked that some XXs, very, that are some and for I some But don’t on media terabytes very heads it’s few think those it’s From the we soon, us answer. talked the family, spend have PMR very are asking Then product will that think far already for it take think pretty same XX about, But way, of perspective, I I the to actually so quarters. it’s my of the don’t asking soon. and are going as customers so so we’re heads I the I and an XX XXs we formally may it’s north XXs, in platform disks think same significantly pipeline media next and do on soon. well.

Patrick Ho

we’ve iterations helpful. terms Maybe as now that’s a Gianluca, Dave, obviously you, rollout product the yourself, from in that or Lyve Great, seen several the follow-up platform, of of family. for

introductions? see we’ll maintaining Lyve of product is the, a you As where done, guess, that at it or in future that relates part are spending to to opex, continuing help R&D current lot in Is opex of I terms levels? invest of

Gianluca Romano

of and part business. Lyve. Yes, opex We it’s a of in the part before, big investing we more discussed is guidance are our think future this we

as from positive discussed are that the possible business, level of stay we I opex that around that invest; outcomes We on we so very we said, before. will but will

Patrick Ho

Great, thank you.

Operator

line of will Cross Research. Shannon of come question from the Cross last Your

Shannon Cross

I’m have just drives? of benefit follow-up, you. about you very access about to we It you’ve I materiality much. customers dual recently, actuator we in like Then it looks as look wondering, thank how terms talk and certain was the the just can Thank think wondering you other I a expanded forward. and of should ASP

Dave Mosley

product. so Thanks you more right a the it’s volume but anymore, product it’s that factories. trades that the you applications have already. people a it the Remember, that at people things is to problems go like very the a few XX they want out and to need in we nicely, problems single now, XX be actuator volume dual may can’t and need and happen. drive quarters. large fundamentally It our to get to more all It’s least, for power solve have make XX that, specific XX terabytes, we are becoming It’s with to and if world actuator, the the by growing not Shannon. to making actuator, that terabyte have the dual actually, a over small volume the in or one all actuator interface cloud all customers quite about We’ll growing to terabytes, time you talking behind believe

getting platform the same learning development know, We’re dual continuing the on that the quite the we technology. parallel high The drives launch excited - have you in about the points that have capacity fact drive, on as we capacity we actuator. new

Shannon Cross

seeing Thank Okay, refresh time? just now needing end sure point that wondering, script, are I’m I’m from back months you. to clarification Then during the a and desktops, think at coming if in I customers thanks. old high includes the to gaming that this perhaps but desktops in strength office you XX you - are mentioned benefit and not

Dave Mosley

we that’s over five will that and are can terabytes, gaming crypto channel the like There capacity desktop terabytes, terabyte it’s and one per going happening, more It’s Yes, are from wouldn’t cost things two why but I that. for continue. they looking find, four that. so like distribution would average I that’s in There lowest around just up. expect channels drive of people and terabytes and say trend like certainly It’s applications last things to who the were things quarter say that consumer anymore. is happening mixing is the PC it’s I absolutely reasons

Shannon Cross

Okay, great. Thanks the clarification. for

Dave Mosley

Thanks Shannon.

Operator

closing management over remarks. At call back for this time, to I’ll turn the

Dave Mosley

secular financial targets, data Okay, joining growth us consistent for Thanks by support term with our of to ongoing appreciation for I’ll performance, for thanks and our and strong our delivering customers, for opportunities long road employees my our your our product mass Seagate. suppliers, results Tabitha. Seagate’s shareholders executing again demonstrating today. close and term capture technology expressing map long infrastructure.

Operator

concludes gentlemen, conference Ladies call. and you. that Thank the

disconnect. You now may

Seagate Technology (STX) 21 Jul 212021 Q4 Earnings call transcript