STX - Earnings call 2 2024 | Seagate Technology Holdings plc

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Operator

Welcome to the Seagate Technology Fiscal Second Quarter 2024 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Shanye Hudson, Senior Vice President, Investor Relations. Please go ahead.

Shanye Hudson

Thank you. to welcome and everyone, today's call. Hello,

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

our to Form and figures press earnings in measures. call, website included figures our Non-GAAP on in and today's During GAAP are we'll X-K. the release refer non-GAAP reconciled GAAP posted to

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

upon forward-looking on reflect relied refer affect our uncertainties and are may assumptions section statements the business. about associated those be views the results business issued our and from Investors and our press the risks, information, future filings, Before and date. subsequent the materially To forward-looking results, that factors with information not all including Form release report other on as may of differ our these or the learn current that you XX-K of as please found today to SEC begin, we on like may more contains and to our as most in well supplemental management's uncertainties annual as Form of recent and based website. I'd quarterly XX-Q report be by which to to should of risks remind statements today, us in available as Actual contained call any implied that subject today's they

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

William Mosley

going am I everyone. topics remarks X hello, key focus to and Shanye, in my on today. Thanks,

upper results, of second end the per share, with delivered revenue non-GAAP the earnings midpoint exceeding we guided range. $X.XX guidance our quarter and solid at of fiscal our First, of

And launch us in technologies, major marked week, to areal that Mozaic inflection extend with storage implementation including the our to second, leadership. innovative of Mozaic fusion density named unique we enable Seagate's platform. point HAMR last of of the intentionally collectively a our groundbreaking describe mass capacity is

areal As in enable most scale targets. is the the shared lower we capacity past, their data sustainability growing TCO advance way to storage density operators to and efficient to mass to their center

share X foundation our Mozaic I'll ramp discuss platform terabytes progress detail boasting volume the HAMR-based shortly also for disk qualification first products per and in the lays which of more and beyond. and towards product,

execution and income to These and resulted on increasing prolonged down affirm quarter-over-quarter and quarter despite the by start this adjustments September demand in me roughly a tripling Let highlighting that anticipated. performance. by improving the our drives, nearline and cloud offset uptick was operating discipline cost Strong in XX% revenue cycle. Revenue of year-over-year VIA our by sequentially levels. billion performance non-GAAP for consumer we partially demand pricing QX of the decline in expectation bottom be fiscal $X.XX sales led trends seasonal lower

broader The into build to and excellent management as strict business, discipline of move enhanced strengthening on controls, including we balance an foundation gives we've the into cost built us sheet of our a supply recovery.

cyclical We increased benchmark XX% with at XX% our ability and model, industry is minimum Additionally, profitability which enter our return XXXX below economics. calendar confidence supports us non-GAAP in at reclaim margin our peak. trajectory, our healthier to improve financial revenues to that level are execution of quarterly road map including product least prior to structurally gross expected our targeted

have and market in is market concerns, among take behavior. consuming excess also encouraged calendar see hardware more in has trends the We modestly the inventory, in with recovery stabilized improve gradual shape, calendar From server reflecting certain within a end markets. macro-related U.S. to traditional were demand December HDD Customer along standpoint, to points and growth feedback quarter. still progress growth customers the within cloud solid although stable demand demand projected expected to to started Enterprise U.S. OEM budgets year. that non-U.S. incremental to are enterprise also in IT XXXX cloud support resume, incremental the demand trends

China economic Across relatively a region. challenges given ongoing we markets, recovery project the the within of slower the pace broader

our of support markets the the markets However, the Lunar capacity believe governments across further in Year. up the our pick announced local efforts New second China year. These view some local half demand calendar which bolster sometime for support will customers region's to VIA mass to steps economy, in demand in the after

Seagate relevance the environment, and a profitability. while our new also value continued supporting to mass breadth market believe our portfolio mass I'll execution advances that platform capacity solutions and for on requirements serves execute and outline we latest how share to of product customers' product capacity deliver dynamic our the economic the the of then our Seagate. Against has leadership both technology launches to unique our customers the of and improving further workload objective our path

positive, shipping and multiple product cloud we've XX-terabyte CMR, drives illustrated the the initial numerous SMR in volumes quarter. Customer quarters. active past plans qualifications with on December several qualification articulating been customers. We has Our by underway ramp what as are XX-terabyte of reception and enterprise been track over the began our across

well, the product ship to gone are first their plan, calendar are the disk we starting is per to Volume future HAMR-based the half partner. quarter terabyte major qual platform March at to completion first this and initial the to year. working units Mozaic this according X the customer terabyte with release fully and is per we ramp launch in X-plus nearing a of qual our hyperscale with of Seagate demand disk with rapidly goal transition million request in has platform. X-plus very Our The about

engagements. the planned global calendar their we of cloud customers majority a time and hyperscalers through with balance broadening are ramp the to Based calendar our on we continue lines, complete and to qualifications during expect a expect of then U.S. couple year, We customer XXXX. of to currently

disk, advanced including at terabytes path to writing beyond. is Seagate, media by reading Starting extends in Mozaic platform terabytes that reliability capable world's culmination our platinum bit revolutionary higher that density areal decades reader the well-defined of disk laser forward This innovation sensors. The X alloy and delivers transformative of density. that a and and smallest technologies technology the pioneered superlattice X leap with per quantum plasmonic a with boasts numerous of bit development per one integrated writer of each an enables

the technologies plug-and-play capacity existing capacity our gains. integrate with and workloads. to drives fully the addresses customers able represents be groundbreaking take can additional of the breadth technology, platform drives conventional deployed Mozaic SMR of to few SMR for These is also the with While customers' mass advantage

earlier, scale are way efficient to the capacity. I density noted gains most As storage areal

Let a clear few me offer examples.

execute of we with better This attractive as value our our drives the Materials. map, and results minimal customers higher to Seagate. in for First, we road economics product a Bill can changes increasingly for deliver capacity TCO proposition

by the extremely customers. per density revenue to midrange Prototypes we we points NAS cost-effective via a second calendar of scale our used majority XX-terabyte to working offerings half are this enables disk, labs, the low our terabytes of with of areal disks for With disk, as product half XXXX. in capacity enterprise X terabytes planned in produce X per number already heads and used the drive. to a Second,

described. production just attractive to gained we margin I markets, tremendous ramp end adding to As other opportunities expand that the to we manufacturing efficiencies,

to continue product on build We and successive our innovations operational with technology each generation.

broad integrate we the road underpin enhances provides opportunities For mass which story example, supply our these control actions vertically of range we for customers. while technology of laser Collectively, costs. capacity to the to production manufacturing cost plans provides believe TCO strong reduction are a also very greater flexibility, providing lower map executing process, and a

a mass proliferates operators key storage, capacity also support compute-intensive AI particularly for generative to infrastructure While consumption, space TCO remains investments power data focused driver on in and as applications. center are

than which at hard XXXx latest consume to maximum a the context, operating watts, drive performance. GPUs For XXX roughly more AI is power-intensive up

a products Our X/X drives storing the Mozaic of at store infrastructure. We replace this, existing sustainability X magnitude can single using this decision-altering of center gains space. and drive To modernizing and potentially more power are dynamic that quantify and operators can center architecting data offer more to capacity exabytes this TCO XX-terabyte new when and believe can footprint. economical replacement path data highly cycle. the power a help a less XX-terabyte accelerate

on demand recovery, profitable down of a got to at stages gradual strong center data road focus our space. the growth market. and technology early Seagate's this past the capacity the time product heading mass right into map important product we've into right return operators to through us and cycle We challenges: and most maintaining position move cost, address recovering we power believe As

performance our that, With Gianluca financial and on now outlook. will cover details

Gianluca Romano

Thank quarter income operational you, our non-GAAP Non-GAAP non-GAAP $XXX was improving our trends X% $X.XX, revenue, X.X% margin reflecting operating points expanding improving of results billion, more quarter-over-quarter. sequentially profitability. solid quarter-over-quarter. sequentially operating high exceeding both EPS than leading Dave. up range, and to and December execution. guidance focus of tripled million, up Revenue Seagate's original to basis was demand XXX And $X.XX reflect on financial the to $X.XX end

grew our driven improvement the target drive with market. to sequentially X% mainly seasonal hard expected results and XX, billion. time. revenue continue, X% in cloud demand, these consumer shipments reach expect As an over customer we growing our trends to by to the was exabyte performance improve Within Revenue model in $X.X improvement disk along with business, financial

increased XX driven exabytes, totaled mass expected capacity prior percent as quarter. demand, in the decline sequentially the Mass nearline VIA quarter X% exabyte compared total to the revenue XX capacity is the Mass by billion, the shipments to shipments a cloud capacity September market. offsetting XX%. of XX%, strong was which Within in with market, exabytes HDD comparable $X.X mainly

Average of customers many U.S. among customers. customer reaching levels CSP more nearline were up cloud exabytes. to shipment For quarter-over-quarter demand improvement XX exabytes demand modest quarter normalized inventory from in capacity and nearline increase XX nearline improvement per drive March is that believe reflecting beyond. anticipate China and and both continue cloud We continued sequentially, products, among the

in expectations. revenue consistent was quarter, market with December our sequentially the down VIA

Legacy up seasonal the expect the product the point. prior the we representing seasonal reflect in in more quarter, through consumer with patterns higher million revenue to $XXX market. ahead, driven calendar by low from was Looking million, quarter typical demand $XXX XXXX, March VIA

in legacy market lower the the to season. post-holiday expect consumer March sequentially We following typical quarter be trends demand

million revenue business with our million improved Finally, quarter, to primarily increased SSD demand. driven $XXX for by compared $XXX non-HDD last

expanded XX.X% of the $XXX December original to gross XXX of the in roughly million Non-GAAP demand Non-GAAP $XX with Moving the compared gross income part margin the profit earlier our statement. due points in of were our quarter on $XX view rest ahead to for nearly by sequentially consistent to and ongoing well increased million, activities basis pricing cost recovery. lower amortization adjustment from costs, as savings restructuring to about previous quarter, as expectations. which million,

couple cost next some to we our However, the marginally we of for expect quarters Mozaic. to as line amortization increase production transition of

for Non-GAAP expansion reflecting and happening see $XXX latest price operating continued and every ongoing the million, still quarter million our demand totaled calendar quarter gradually in spending from along execution products down [ improve September continues in $XXX entire margin to of Accounting across portfolio. with this adjustment ], nearline we expect the we ramp expenses as to optimization. XXXX

million EBITDA expense management tax diluted share Non-GAAP non-GAAP improved expense $XXX quarter, share, based diligent on and turned higher the per million. of $X.XX benefit more count positive December adjusted in than shares income to of million. EPS XX% margins, in resulting of the net and XXX sequentially $XX of approximately With

outstanding. flow at on We sequentially map. quarter, also million dividend, of fiscal compared sheet. below $XXX $X.X with of 'XX flat sufficient $XX CapEx A expenditure were and million shareholders In billion. at and although about fiscal to returned we inventory Moving Capital to in commentary, in the first significantly had 'XX, cash our still down innovation-driven majority million. the support the product still to the with generated December the fiscal flow XXX with road exiting prior planned balance quarter capital shares $XXX through expenditures cash Consistent the just free half be we completed were to flat million expect quarterly 'XX.

billion with our including closed quarter credit available December undrawn facility. $X.X We revolving liquidity, the in

December were in of expense long-term Our $X.X of than project levels quarter. the debt beyond more debt was balance billion similar XX% obligation end $XX the March at X flat Non-GAAP at million, years. quarter, interest with quarter-over-quarter we and our expense

our to Turning outlook.

cloud legacy both range March from related to be With an million, demand decline plus better midpoint. capacity mass at expected the quarter of revenue than in offset sequentially enterprise X% in increase and markets. improvements customers $XXX incremental expect billion, We is context, VIA more or seasonal in to $X.XX minus the and the of

are operating the midpoint non-GAAP cost $XXX of We to low we million. margin range, ended for expect our including approximately December as to in the expenses $XX temporary late underutilization reduction At percentage million non-GAAP guidance, planning the of operating our double-digit of expand revenue approximately pay quarter.

We expect of and our approximately be $X.XX, expense million. EPS diluted of a share based minus to a tax plus or non-GAAP $X.XX count shares $XX XXX non-GAAP million on

for I will Dave now to call final comments. back turn the

William Mosley

satisfy of capabilities compelling with the This platform this last demand with maintaining sustainable and XXXX, significant, focus our discipline that increasing operators calendar increased advantages, plans. coincides We've into recovery launch demands center data with technology density Heading Gianluca. Thanks, areal and is both to workload have conserving Mozaic. gradual and product fortuitous. a combination while leadership TCO and space. execution in X believe while nearline the is of timing enabling their power we delivers navigated We confidence quarters our

we return financial over optimized positioned performance levels to capital our return our profitability support result, drive targeted to emerge commitments and time. a As well to

global only of resiliency to execution of and team, ongoing for let's also customers the support for suppliers, period. efforts Seagate. our the your like for is I dynamic Operator, our through I and would this open call strong like possible would Our thank thank shareholders dedication questions. up tremendous to through them their and

Operator

question today's with from [Operator comes Instructions] Wamsi first And Mohan BofA.

Wamsi Mohan

that to the you've progress Mozaic. alluded you Dave, on made

very units kind opportunity you could first half customer of would X-terabyte even What you that? of or the you HAMR characterize know your HAMR. And in broadly what That be address Given think helpful. now, base mentioned you is how looking I outlook it across the 'XX to hyperscalers. into more installed second 'XX? maybe perhaps for transition exabyte maybe to would And

William Mosley

Thanks, Yes. Wamsi.

the So on this about front half very prescriptive and we quantitative were call last of the year.

much but really customers ramp I to this pace. year, last continuing And think on well. platform, at is a next-generation platform, the balance the continuing on and we half healthy trying what be back generation the as at won't we're need of on demand to look supply all

transition I predictability. year. we terabytes gets that on, this really drive we're And we to we XXXX We'll make then are can. think exabytes we as populating the many that's metric expect I as primary into we into focused when Mozaic sure of how get get to that financial HAMR the drive mean aggressively HAMR chain. X platter and

up talked I down. the to problems, work the So yields qualified team a tough ramp knocking are get and we're them and changed and is the really I Nothing we're start, say. but we going like Problems think, trying to about. good days, XX the everybody off last in would

that. with So happy I'm pretty

Wamsi Mohan

you how from help all I charges, could some expecting noted in just margin calendar the underutilization help CMR to maybe headwinds through continue think the you you're you margin capacity HAMR time? that might differential Gianluca, over 'XX. margins ramp? us the also mass Okay. what will maybe us Could through increase -- And but think about also drives is that and think change between that how margin and commentary,

Gianluca Romano

December our first quarter Well, improvement showed question. in of all, good good profitability. Yes, a

last Operating margin pricing coming I'll several mix started. Mozaic in taken up the profitability is, in have quarters. Our and was action of of last And gross that have years. course of that was X%, from taken we also already up X margin about almost that the we X%. this recovery the the say so improvement actions Part cost of than more course, course,

continue So to this also will quarters. be future reflected in the

cost Mix will actions more course, through capacity of very to go continuing effective. mass those to continue and be are, volume

little the has we underutilization, In HAMR. December now quarter for media the more to during of it our on can in of manufacturing in ramped then quarter to quarter, bit the cost the having wafer more wafers, more of mediate shipment and but course, the and, we ramped high what terms of depending the of drive and a In the in be of terms a the test. final trend get ready And next current quarter. we the bit use course,

So little production. depending a inside bit the our on mix

So we said a underutilization higher, not bit very little bit a higher. which charges could little be is slightly higher, higher, but much

in impact to mix that to right see volume some expect quarters few of for going direction, I more So meaning see the HAMR. the high-capacity next and from drive the starting

in volume, said, more we Dave not will even the the more have of have And high will into particularly but March second calendar So part as will June. we year. be

go back quarter improving, possibly business we to improving, range to said higher compared course, target into are, much the to revenue the a prior demand With bring revenue, at XX% the we upside. targeting gross lower margin of as our of into level the in prior we and of XX%,

Operator

next Erik Stanley. question today our comes with from And Morgan Woodring

Erik Woodring

was wondering days behind pain what more on again the I and their where just you How could Dave, hyperscalers then over your dynamics again, that some been their what double-click if any actions of long or inventory like? is, you've any changes responding do the relative and behavior see the how is. you making production ago. -- to last pricing they're to look XX conversations And

William Mosley

for it it situation think was than over the do very much us dynamics year affected inventory better them months has bit X I and so. a interesting, The last Yes. the is or ago. quite much, is

consumed being by So I'll changes it's the out at into point. data going cleaned it's up And this and again. centers basically going inventory say, the

years bit. the it's a what to I -- that. with of is, accelerate little rate happier we forecast do the of into CAGR. this is And but numbers consumption going much ago. exabyte CAGR it And we're X what where isn't The get was So the think

they right the and dynamic the last negative and doesn't in into stayed the for dollars we've for seen be people data talking that bit ultimately, think the forecasting everyone's -- they years, these were run. X.X data were AI the then high a have cycles some on was back in make prioritizing In XXXX, of it critical of to back The applications that's able it the AI centers. as the XXs lot the consumed for we that to of first years And been fact our letting little all about. year, ever be which the raised handle time look get drives mid-XXs in they customers. for compute then could in compute get online were then growth, interesting a the memory X.X I sense. on for also, XXXX now. may piece for the we as the continue to do in we infrastructure higher for as that exabyte XXs up XXXX. And there's last just about. how I We're was as talked much centers replacement compute going that. they still and push data that any compute And that, a as they were They these that there's to most And end of had

cost power benefits. just So space there's and cycle overall the and replacement for

before for next factoring to people. the of conversations lot actually lot -- about -- and years This get customers, we've definitely reception. way are we're these supply it into we're volume a is plans with I a that X intending are those saying could good that our to chains build-to-order other build. getting you this economics and is talked that of having all exactly what managed and the this by We're then this think and our what we're There's

back they'll we they it they this they that a it. TCO in course, downturn back, of So so have as smart for benefits careful, And get reach been and understand want we be that plan need sure well, grow have see decimated the to the of it make fairly the well capacity higher that, to grow to by way. and because we we factories drives, so

Operator

question And today Fargo. Wells Aaron next from our Rakers comes with

Aaron Rakers

improving couple and the how increase the I here. et seen, we a terms then given structure wanted OpEx the to and I maybe with think just expenses of And trajectory income of think in operating remind just looks first guidance from coming kind about repo? share normalized ask returning, curious, and market that building you've This just free of fundamentals, you do P&L about capital cetera. sequential kind the like a maybe level us of it's of can cash OpEx pace I'm just about the quarterly looking of generation quarters. we've that how into statement, flow that in the over of again off possibility of back out appreciate

Gianluca Romano

Thanks, positive if our of OpEx in look of terms Aaron. trend has terms in very always OpEx, Well, you been control. cost control,

Just few ago, were at quarters $XXX well million. a above we

went the especially fairly low, at in we last So $XXX million. now quarter,

of As end took in on at in quarter this extraordinary we remarks, that action the because little have costs expected I bit quarter. ended prepared said of we some the last salary higher

little higher we have So bit cost. labor a of

focus level will I of stay OpEx the will a few we on quarters, good fiscal around we very number. year. usual, And next this until think control. It's very, in OpEx still next As

any in part overall know, don't a current in our OpEx, the variable have big in fiscal we is you compensation COGS and but As year, OpEx.

QX. a And million, well OpEx. then next bit between $XXX cost fiscal reasonable $XXX So the fiscal I $XXX a in way probably probably Still, QX to million think think for quarter probably level below fiscal and year, a this model it. million, is little reasonable probably is higher I

flow free positive another quarter. Free cash cash flow. We had

to expect sequentially flow next free flow. quarters. we very us and free improve profitability positive Of to Revenue course, the also increasing, cash is through increasing important few cash is for generate always therefore,

Operator

comes today And question with next our Krish from Sankar Cowen. TD

Hadi Orabi

XX customer I regarding Will the providing these HAMR the yields power with yet, be lower and will for on XX an drives, CMR place have you future. terabyte the enjoying matured terabyte customers XX-terabyte for HAMR opportunity for a and benefit Or example? to launch. lower versus price for because is in take drives. be value space per you Krish. This haven't guys. Congrats It's this are Eddy and terabytes HAMR price question more the exciting about

William Mosley

a question. good it's Well, Yes.

of costs are balance get our and that some try and course, everything, what is by our the are yields But will well. We as there space then We their power business to their incentivized. proposition. incentive provided TCO call and reductions customers

all price of So definitely guidance. things may be move the It off and to in TCO per same. customers if the slightly balance. under for but be you I lower do terabyte, just the capacities the think lower, that going to is nominally will, there's incentive a

Hadi Orabi

LMR That's went great took the juxtapose be reasons from quick XXXX, place to And XXXX, see in like to PMR trans PMR, bit if that in from to little you X% we that HAMR PMR some the X why back transition think transition as transition may from scores. to transition within this mix will LMR Do be guys the or X you a HAMR color. to XXX% slower you sense...

William Mosley

are now. times cycle bit The a longer little

kit similar generation platter last drive we've of HAMR our do. X.X parts product, is just So will I and we'll terabytes I as as continue be as drive I the I'd can. quick as the that will mean one it say it a fast. to that think we thing drives if like it don't to remarkably The as talked about possibly fast be will, you has PMR

easier. So it's relative and making to not versus deal we transitions can other, a big we're customer what get through one the

a terabyte accelerate. by to X-plus then I more think we it's get then year terabytes, platforms, the want replacement we'll time a factories costs every as is down. and to the have the you utilization want on in gain much confidence such Because Mozaic say, X-plus definitely over the product because that we there the better come that whole in you great way legacy drive to portfolio

Operator

And our Barclays. from O'Malley Thomas comes question with next

Thomas O'Malley

I appreciate it.

sounds revenue like the the largest finishing your to recognition. to you're from half. qualification with pointing just first units big now right I to in customer, So obviously It and wanted move you're qualification some understand

see majority of and cloud recognition? mentioned frame quals qualified of getting between couple Aka, others the in in the if additional from of You number a call the year, year you're you expecting revenue on could calendar revenue half of expect time large a and customers. with like this U.S. that you 'XX. a qualification Would the those similar are guys second

to wanted timing. Just the understand

William Mosley

complex. the some set Thomas. that out. on that of we shorter set, because of are set If There get It's feature are Thanks, generic they're customers a -- relatively sure qualifications. feature checked that's feature And some making that unique And will versus have in sure shipping people of normal feature we're are all That's already their the we own lot benefits. those a set, say any to transition. make right. things doing we're seeing nearline that I TCO

flow these they want well. because qualifications that through as So they're through, to benefit speed and trying to right, asking

on also our what quite long. the do limited we are and cycle as can be will times ramp to We

these So that we're together, going to things helps balance if you. all

Thomas O'Malley

on ask Yes, wanted just one that's I helpful. the to then And margin side.

at talked about least margin getting have at end. XX% low or you but gross XX% So that to target back below the still guys peak,

$X.X look ramp that you're back Or you assigned revenue growth billion, get probably XX% there growth rate. are years about gets until to $X.X margin? you $X.X to mass if of kind what gross couple you that billion kind that to we that the like of thinking that capacity the before? for billion, saying it can to over back at linear billion? the levers If be XX% you there Is for time get of takes mark, to using what industry, a years, get X.X just should before And $X.X frame the that just your to mid-XXs, revenue next get you

Gianluca Romano

Thank is you, Well, the HAMR. lever Tom. major

HAMR, So up will the ramp better the more margin. we the be

and continuous getting we say, more an a in margin. the to in improvement right terms little the on, a margin. probably order of becoming level level we our of quarter of optimistic gross are the achieve I'm certain in of I positive think would we That need revenue, timing get more now. So of we more to course, gave indication what bit is last

can do revenue. probably we of So at lower level even

on qualification As and before, working you hard are customers but more said qualifying we is of important, more customers.

assuming what continue earlier at lower level positive now So do ramp the and we said we of revenue. can also fairly you HAMR, I'm can than on our

Operator

And Karl from with our Ackerman comes BNP Paribas. question next

Karl Ackerman

improving it's trajectory, to appear Gianluca, gross it doesn't driven but by be see an price encouraging to margin yet.

could to capacity suggests digits fall follow-up, previous should of that expect year-over-year, single have occur quarters? please. mass couple terabyte low I raise per next actions our may and prices you channel price a across the Given sequentially perhaps the did whether we over address

Gianluca Romano

I would actually profitability. of coming good say, part in the you good can pricing. Well, from A is improvement see our that

you into The always the check major on average. course, a pricing. Of course, of impact the is, like-for-like to mix need

are We cost. we very doing, both happy are with what pricing on and on

in fantastic at another show gross a quarter margin. guidance, you this if This our both profitability, profitability. and margin look improvement And operating improvement imply in strong

of so will and do the improvement. And is part is are So very continue outcome far. strategy, we that part exactly a of execute we pricing that. with Mix to good another the glad

William Mosley

is demand I years X Yes. the what not say, raw ago. it Karl, was still would

a have healthy we and -- yet. that's entirely not supply so And chain

tends is trend that over to everyone capacity if go ecosystem, legacy entire on time, under think have there's the those to is same throughout on We extent raises, do seeing. I And this the be the it the But that continue incentivizing mass transitions newer price then to to actions. we're more especially strain work to and drives.

we'll it. think advantage probably take I of

enough where at has or My that where think the then we're bit. that will the we next point stabilize sense that in is we'll get I And to very not the be we online a a high X, demand has things ramp predictable. place quite can the year of enough relative to get But yet. the industry capacity

Operator

our Kevin from Cassidy And question of next today Rosenblatt comes Securities.

Kevin Cassidy

the on results. great Congratulations

how visibility? with And You an it Is implemented still a you you Can active? that that? give update is on customers. build-to-order program your giving

William Mosley

what margins make just revenue can't and time an is, and fund on much. that industry improved last the with Yes. density comment that because investment last is at areal is run the Thanks comments at, to to levels build well very in the -- my It the the is it from predictability it's factories where to my And just towards us and visibility growth transitioned exabyte we're helps demand. as the was. over and

this so demand the the last time think industry changed dramatically same fairly -- come or that why And did HDD through people was were at down. X that's has I X quarters, capacity cycle, because that these

and therefore, industry the lead about are up, underinvested as And we've capital times talked going is, in before.

to a minute either we predictability And have they at build-to-order need healthy the don't where framework or we it and last customers, that they predictability rewarding come flexibility. and our for incentivizing industry. just people with So that we're are product to for get back aren't pay and our have in this to the predictable, we

upstream supplies but I we have think stabilized stabilize then that's about we're well. as the it. as need supply And just the sure the because well be way it's numerous that as thinking supplier, making we HDD ourselves to base not that

still take going some time. So it's to

Kevin Cassidy

Okay. savings? is Great. your it controlling you Or integration chain? mentioned the cost technology. of that Is laser a supply more And vertical

William Mosley

Yes.

HAMR I coming, think a at long the been get helped time this us value have we it's market. suppliers that definitely products point, to and

right needed like technology control. that But silicon of We circuitry if also photonic given capability how second a more it's intricate own you now, this sourcing, is, feel is our will. to we

sources. continue And to so we're run going with to few a

down all balance multiple in long But example, make the sources the control X with the I capital, drive because relevant we there that get should and think platter to and for a over ability that. time, opportunity cost about and things to it's like the as very to we time of go be the it's as X-terabyte it of things Mozaic part part talking and terabyte and reason coming we're been investments platter.

well, so of clearly I been the in also that's the as industry ramp ramp, supplier there's and not noise goes some there out the think true. goes about, that Seagate

Operator

Fox from Fox LLC. comes Steven Advisors today Bryant our question with And next

Steven Fox

typical doesn't time especially seem on said, can volumes. could seems on later was the frame little putting almost out the versus kind you you margins with I Dave, of a wondering get any to that stage. gross to based just early on bit, XX% everything here from just it margins. But it, you there like from stage if zoom easy, incremental HAMR get without It

say, just through around hit up. margin? you sort comments to the volume the been It's X when there's puts you X this. could lot it can you it quarters smooth a walk takes, of some that of of just more sum the So get and Maybe say, -- becomes next versus, over crossover to where to

William Mosley

Gianluca as Yes. here. And some share can well insights

able it actually and to and all, certain it can X that which think according markets, to the terabytes quarters depending choose deploy And get first especially in markets. platter, we're prescriptive we few rate the VIA a can in example, over I deploy next perspective. we things we of more transition We margin. becomes HAMR schedule. accretive we once put other so things yields into going do hyperscaler are per think still I to and picture it time. demand on also from the ramping for then is capacity like to though, at and some more that, can mass I scrap margin our to shape Fundamentally, think We that markets, how in

be these in applications, was that not My years all demand may data investments sense pick AI to still X it people again, back is with that up will see fundamental to may need the come growth the ago. and anywhere demand the has We with see data around of close make we driver. where and

Gianluca, go ahead.

Gianluca Romano

and based demand improvement. gross No, Yes. of will in products our through drive on I good HAMR cycle the that think margin, before, said technology further combination sequential improvement very the stronger I

the a continue have even prior capacity 'XX kind the kind kind actually and will expect, is, 'XX. of we that sequential on this cycle the of we think of course, recovery view of I the the 'XX down improvement in from especially our HAMR entire And through based Now through to mass the also of entire ramp and of in it.

Steven Fox

That's helpful.

in blank, How sort hurt other Just one can as help you margins does testing back-end ramp which that is this happens? capacity? fill of

William Mosley

on where volumes of and couple so the ago, years think years were of we were even on ago legacy end I we and just from Based desktop back a have on products plenty test at capacity. we

Steven Fox

test be long longer to But is you cycle a test before... it Is cycle it though? as did a going

William Mosley

It still but is. The certainly the is. test of bigger demands this to we It capacity the plenty the have drive, cover the level. at cycle, longer

Operator

next Arcuri from UBS. question comes Timothy our with And

Unknown Analyst

Leo [ on for Tim. is This ]

for me. Just one

but helpful. going That book-to-bill some where report could where where that and you you and don't how next the book-to-bill trending think couple that's orders, over us just you relative on are Now quarters. -- some idea would has color of give revenues be of perhaps to orders that and been

William Mosley

our Thanks. get does into Yes, that plans. build-to-order

We like X, And very on plan, that's all prescriptive think I X as quarters as as long that well. stay building people before, out. what for definitely, customers we're said economics we are X, for predictable our on I

and every So it's going better better quarter.

need sorry, of below we the supply we I since something below so But supply far predictability in I there is getting supply reward supply you order run and questions everyone that think to chain how demand this? these far first do upstream or like the when on were about today, -- can so was that is launched calls earnings this, chain.

So better next the getting and we're good has and in been fairly far, the quarter visibility beyond. progress

Operator

with question our And Mizuho. next comes from Vijay Rakesh

Vijay Rakesh

disk side, exiting given the this revenues the year, run TC just XX% growth hard get exabyte hard drive you and rate do guess, disk on I asset, expect Dave the do those 'XX? calendar to recovery side you enterprise back that and to $X see, , on billion 'XX Gianluca, on the

Gianluca Romano

guide this after No, we quarter. don't

as we said, increase just revenue HAMR gave March no, and we guidance of a in volume. are ramping the good So terms And for quarter we profitability increase.

better environment. seeing are We demand

through So end give the expect of improvement the on we for quarter, calendar year. revenue don't but guidance sequential the specific we

William Mosley

demand, Yes. say to good very be ago, I we're as that CSP nearline careful demand would and we're a continuing of very couple strength but as into watching demand, being was nearly big that's it it. build years building obviously but on-prem enterprise not

we demand, this, innings in opportunity. you just one opportunity AI but was are there. whole think The may running it's interesting an be actually which raised, which that early PC see very if applications still the that High-end do point will, you workstations, I AI

Vijay Rakesh

corporate X-terabyte-plus disks XX-terabyte the your And to it. then getting gross Gianluca, margin disks sorry this versus What with see on belabor a target year? window for line, are to back where do guess? now. you on today, side, Got Dave I mentioned the that gross you drive that, HAMR see versus on I X HAMR XX to the margins you you guys especially do exiting X And XX% margins think can

Gianluca Romano

past corporation. accretive We know the margin is, the for amortized we said gross in sure, to

there of So will quarter, we more always we is you through above the see now guidance. into drive and Right March our in when It our quarter and starting I the it's our as the be, in improvement expect, HAMR already calendar in rest results. some June average. go the no now, know, see But you year.

big we And So ramp positive little as bit time high-volume to Dave to of product. ramp take our because, qualify for we need product. then are and we take new profitability customers to the production that from the on time said, start to a

Operator

Ananda from comes Baruah Loop question Capital. next our And with

Ananda Baruah

addition So whatever you opinion and is some And that's for is for wanted occurs, compute. redesign can to Really a they the that of opportunity appreciate jump it. Gianluca as GPU have center be The coming that there are guess, I any guess data incremental context. would, just like growth around drive center it. -- about I going nearline too. if conversation -- would really this hyperscalers have having in on there any are data over referring sort on? here, it lot [indiscernible]. in to And I if guess would But in on to Dave, do you data be if that substantively any I of years, thoughts

William Mosley

real is Yes. complex and I well. that the dramatically architecture to computer say changing compute very that infrastructure would will a Ananda, topic. dramatically change as it's the is support memory architectures What

and branded very being that different There's discussion large are lot or of of then stuff video on So on. are applications types a there's image There things language text AI. creation. focused there And and models. is going recognition redesign that's

development And years think that there's there's of of think that's this been types years. applications types is And do and for different going normal a and of propagating. different on just lot I I hardware. so But application are years

So are that there discussed data are being centers AI now I think compute. some largely

back I to be also to a of up time certain stored spinning lot of some and they're off be are then the data to for these think reprocessed. brought and of that a requiring applications data levels period higher

just as that's data growth well. so normal And

of gives exabyte to from our you same hearing we there's is affecting in on, So probably it many the higher not your and part in. just we're reference to premium. to and this drives But anything, a There's there's and infrastructure going prepared at If what I'm tiers enough lot redesign the be AI for cost made architectural do capacity the critical. of not that that power I transitioning going net less can capacity to the with applications to think a is that remarks, buy that there's power you the net-net extent space power.

be that's I opportunity a for may thing. an us. It good think

Ananda Baruah

So data run driven addition to XX% -- sort be as a of the catalyst, in like kind power that that of rate would Dave?

William Mosley

people of really much say. now, how are for to applications Again, and to one exploding the It's hard It AI right going bills it. power think is I become factors. that depends the in to on the pay having are limiting

really get the payoff power do above I on, be savings only mean may so a other to up cost And us and that so extent XX%. things. to in freeing actually but might help also that just go space infrastructure there the not good that savings,

Operator

The question Benchmark of Mark Company. next Miller our comes from And

Mark Miller

you mentioned ramping throughout do the wondering, the seeing on you year? you are kind that you it What And briefly. what traction I'm opportunities? Congratulations -- of AI-related how see just of launch Mozaic. from do

William Mosley

Yes, on have happen, of I'm still again, And Mark, applications really many my These that say they starting over pretty to but things, developing comments. to actually anyway. fairly on me, that sometimes go been previous POs And lot it's I'm fronts and small. looking for back are them. years cynical these I'll a AI are on

edge it's language application secondary in at is at I that people data the for bit. where this space talk over specific about, think still we models compute the When developing a say, image has So like large piece get into quite the whether point. example, recognition, infrastructure the been even or things to impact time cloud, piece

some we're then really were point, of the at still taking enabling compute grow like back these that, there and early be on innings all and So ours and will side on advantage cool will people of businesses that applications but continue efficiencies the data to that.

Mark Miller

you So XXXX, more that's think?

William Mosley

don't maybe. large know models, exactly. I say I'd language For

Operator

And ladies back like for over gentlemen, conference question-and-answer to to and session. this I'd our closing turn concludes the management any remarks.

William Mosley

by during of for speaking you near our leveraging we mass all us their technologies the over product long-term Thanks, believe ongoing Marco. we is well map, platform, capture our us focused profitability to of and capacity look stakeholders the support forward to advanced again opportunities for thanking which Seagate. today, on with Mozaic executing Thanks enhance positions like and the term in our close road Seagate for joining to once storage. quarter. I'd

Operator

attending This conference for today's Thank call. thank you all you. concludes presentation. We today's

You may now disconnect have day. a your and lines, wonderful

Seagate Technology (STX) 24 Jan 242024 Q2 Earnings call transcript