STX - Earnings call transcript Q2 2025 | Seagate Technology Holdings plc

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Operator

Good afternoon, and welcome to the Seagate Technology Fiscal Second Quarter 2025 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

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

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

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

begin, be I'd and current management's call us as and remind that any you results of information to risks relied to implied our to views statements statements subject forward-looking are as like available contained may that and by today. contains uncertainties these date. associated or not Before today's reflect those from of assumptions business. on based and we with in upon materially forward-looking differ subsequent Actual should

as the Investors all website. report and the Form our information, most risks, XX-K the learn quarterly as Form supplemental more our factors refer impact that may future and recent To about business well the on which on found release uncertainties SEC of issued annual including may our filings, other press our report to please of section on be results, today and XX-Q

With In we primary I'll all with open now Dave. the in for thank we'll over the then queue. prepared opportunity call hand that, one questions. our remarks, call provide participate, you, the analysts and the asking up to you advance reentering to question to Following order for

William Mosley

the December and driving sequential quarter. on XXXX in Shanye, revenue a closed Seagate hello, X% you, strong note, growth Thank everyone. out calendar

non-GAAP and first more share than XXX profitability. our Our points for by the in gross time quarters, on basis per underscoring earnings $X focus non-GAAP XX expanded margin exceeded continued

demand Our to most performance an a we revenue significant customers in nearline for of on broad-based led nearline by This demand all close was cloud markets growth XX% and global supported from the serve the across product almost December the with to year. nearly growth increased cloud entire year-on-year sector. in doubling the calendar basis revenue quarter

our momentum growth which customers strong XXXX with experiencing are our well road compelling us to and We also density-driven expectation positions supports offer to significant aerial and for profitable map, storage solutions beyond. revenue fiscal our for

initial advance today, related our with to to capacities achieved of road customer. terabytes. quarter. to continue Mosaic to We platform completed ramp have sampling the to Mosaic started we HAMR-based milestones map up key products We several also announced in and December and HAMR-based our XX product qualification Earlier of our CSP drives

last month, March for in the disclosed QX led Overall, is supply will environment. briefly production in which technology and discussing provide demand competitive quarter. has environment, Prior fiscal to address an our issue that constraints the I'll a position Gianluca end details the Seagate strengthening on outlook. market outstanding we to

March impact build-to-order this meet that major are to to issue revenue expect been commitments resolved, we able has the limited quarter. confirm and be can I we our customers, the However, to to

capacity turning the to markets. Now mass

in by levels demand well gen as investments as while applications. our demand The a nearline services, CapEx customers surge driver. I growing demand manage AI with product well in to in are emerging calendar to XXXX. growing infrastructure support e-commerce their advertising We continue cloud believe earlier capital continuing customers traditional with inventory that for investments hyperscale in primary expected and the aligns making made XX% remains XXXX, to increase Cloud nearly referenced their

applications we true of HDDs, is to volume Gen which stored to Gen the These creators imagery created through and will drive on AI data be from of And XXXX. prolific models, data-rich content be substantial XXXX This storage data. XXX expect particularly growth. a by video expand of that is future AI given times will projected mass capacity nearly

Today, snapshots for AAI both by HDDs by continuous central sets storage AI role is AI play form a that data backbone in the sets, being processed the not these and in refinement. data serving housing lakes for future model or GPUs. data massive mass the required models, are data as model of storing trustworthy when data of checkpoints actively crucial retained training ensuring sets available These repositories

markets of A the only X,XXX edge edge fall underscores enhancing decision-makers data These of retention of applicable in the insights the not leaders over where recent the importance critical umbrella. checkpoints and quality this The AI cloud, are generated. AI enterprise business survey but data majority under outcomes. the is and of also for vast

replicate edge more and locally to as at enterprises of the expect AI closer the data store moves inferencing and generation. computing We source data to

at market opportunity-rich the edge. another is VIA

storage the now, periods. analytics reflective capacities trends. about mass within a beneficiary a quarter, smart retention form which VIA increasing and well average markets, Overall, for such adoption insights emerging believe an For both longer record, applications help December spoken increased set VIA we've data use actionable as cities data of the enabler video capacity some data as remains from of the time analytics drive smart we of and factories. of these for as AI In products

map. density-driven growth through is position aerial resulting product a great Seagate in the to address road demand our

a As maintaining approach we've capacity. production we our are in shared planning the disciplined in past,

exabyte head new transitions and technology unit to rather support leverage capacity. media than will adding growth. We

road proposition deliver capital-efficient a expand Mozaic-based long-term over for satisfy our profitability provides company. term the Seagate map, to at Looking and growing highly TCO a our our to with exabyte customers value for the strong long demand, technology means

this our both PMR XX-terabyte qualified product our momentum revenue customers. are volume XXXX. higher, platform exabyte customer XX, cloud terabytes capacity Currently, and calendar to delivers ramping platform to customer progressing second across starting mass at of additional become ramp Mosaic our These and capacities leading half are which CSP hyperscale next while XX base. our Today, and each shipments. At of of qualifications will ramp our has lead end multiple There in for markets. across on qualifications the customers no we phase our Mosaic HAMR we the volume is technology top terms rapidly have the continued in on gaining platform the are of set foundation

at mass capacity that cost-efficient at Mozaic for conference map storage recent a confident feedback advantages. provides are competitive underpins to customers, from a strong highlighted their with and adopting technology that our received camera will the We many advantage consumption. AWS on road cloud highest we've Reinvent and architects drives Data those the and build space sustainable scale flash workloads. center technologies floor both drive reduce as their their to breadth disk memory hard capacity storage hard of such architecture allows power compute-oriented support storage disk to conserve adopt costs, system lower continue NAND to and Consistent

embodied the high over due over NAND. preferred drives bulk storage is They capacity. data while and throughput, needed at footprint the not per manufacturing terabyte in several capital Cloud. future changing possess in latency in We solution the the dynamics HDDs cost storage smaller fiscal suited tasks, low improvements highly and these customers of is up, scale profitability NAND Xx of do revenue least see offer XXXX. carbon for to deliver significantly foreseeable efficient. hard Seagate HDDs a to further lower Wrapping is provide that hold remain position in storage disk advantages best for that

out technology the on discipline now. data of it's turn over road with to map and environment, setup Looking Gianluca tailwind AI's steadfast in massive our leading attractive supply favorable requirements. Luca for a demand a further, storage an I'll Seagate, it focus

Gianluca Romano

were non-GAAP margin results you, ongoing and drive, We adoption from capacity reflecting non-GAAP our $X.XX to sequentially. XXX fourfold of and strong XX% a our Dave. in September non-GAAP operating revenue was year-over-year cost of XX.X% in delivered exabytes, Within business, discipline. And $XXX XX% at range, revenue We income in $X.XX growth high million, strong revenue operating Seagate's shipments guidance with up billion December increase up with a Thank and our XXX to drive nearline high $X.X quarter increased X% the sequentially EPS increased on adjustment to end of disk billion, our translating of price of hard highlighted along by X% exabytes December revenue. operating income the non-GAAP basis. of volume quarter quarter.

sequentially VIA and capacity strength exabyte revenue OEM consecutive anticipated markets $X.X for enterprise from adopting nearline quarter, customers quarter. sixth VIA are shipments exabytes, billion exabyte consistent XXX are nearline quarter, Mass in including in and we customer. this solution uplift seasonal customers nearline demand, Markability the last and reflecting X% and the had with nearline increased grew to both revenue within and overall along improvement continued our reporting. that totaled exabyte we towards cloud respectively. Starting shift highlighted Many shipped the more VIA cloud-like with drives,

Seagate's change reporting exabytes to up accurately periods the prior in reflect were our this the industry in nearline total XXX this are drives with believe change utilizing quarter, period. With presented, and with more we Consequently, all standards. from XXX reporting exabytes customers aligns new December shipments

marked XX per as among terabytes well continued reflects for strong particularly XX in storage performance enterprise trend higher average second a Our as customers the by record quarter, for extending server high unit. our and consecutive improvement demand capacity drive the for PMR cloud products, content

X% Sales million, the of market. demand our $XXX up totaled in supported higher products legacy by sequentially, consumer seasonal

improved our last offset drives, million, lower other was slightly for business, and revenue demand. systems, by SSD revenue from as partially SSD system was $XXX down Finally, which include quarter refurbished

capacity the million. gross mix revenue sequentially drives, efficiencies. and the growth of increase rest capacity statement. to December ongoing new Non-GAAP This price increased the XX% increasing in of quarter cost products, $XXX to on mass high adjustment Moving reflects of income profit continued

by significantly million. corporate improvement. than in a plans business of expanded Non-GAAP $XXX Non-GAAP operating $XXX million $XXX million resulting income in Adjusted Non-GAAP gross company share approximately margin and EPS the shares. of up flat to gross our diluted level, with basis March was and share margin non-GAAP EBITDA December $X.XX million, at stable consistent sequential at and quarter-over-quarter. on remained quarter the in quarter margin consecutive totaled gross be relatively Our seventh increased the Other are expected average. HDD $XX per sequentially expenses million, the our net points expense to of to XXX marking for count increased income resulting based to XXX non-GAAP higher X% XX% XX.X% the quarter.

the flow on and sheet. Moving cash balance to

We cash $XX the compared million to $XXX million continue increased the flow to generation, which focus free quarter on with prior in in driving December period.

flow generation for million. the rest cash free year. the were fiscal expect quarter the to improve Capital to expenditures sequentially continue We through of $XX

For the fiscal discipline low to our X% 'XX, to we the of CapEx shareholders range of $XXX expect at continue long-term target will and be X% maintain million revenue. to returned of through We capital to end the including $X.X increased facility. the to quarterly billion in billion quarter undrawn the closed to liquidity, dividend new revolving available $X.X products. primarily credit and high-capacity support ramp with December of slightly Inventory

billion the was intent quarter. Our reduce of January. notes mature Consistent $XXX of early $X.X at to debt approximately with retired our as debt, December they million end in we balance

the we We ratio of in fiscal with to expect net X.Xx coming obligation XXXX. quarters. and result, the until leverage December further a have see a late As reduction no quarter debt exited

quarter March Turning our now to outlook.

We to demand in-quarter We legacy markets, meet we volume decline commitments, strength our respond to along constraints be VIA will expect and the opportunities in limited. the expect that seasonal ability partially cloud have build-to-order discussed. supply with still to to ongoing but our from customers already upside offset

is in $XXX With revenue in our better as midpoint, plus be or the of minus supply year-over-year guidance revenue improvement. March expected which million quarter these embedded $X.X approximately is million XX% a billion, impact from range reflects of more $XXX context, to Consequently, constraints. than

margin latest in performance. sequential including generation quarter, offers our demand for nearline in the limitation ongoing potential gross products, improvement Despite Mozaic, March for the supply

in non-GAAP to revenue we our range midpoint million the the remain operating to expenses of and at expect of We be non-GAAP operating in $XXX expect range. XX% the guidance, margin

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

our summary, enhancing optimizing and growth. underscores performance profitability, cash Seagate's continued quarter December driving focus In financial generation on strong

opportunities year Seagate this supply ahead, fiscal enhanced diligent significant healthy As we and focus capturing on the revenue environment, will in remain we beyond. and demand to further we which profitability improvement believe a deliver in supporting and positions

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

William Mosley

Thanks, Gianluca.

product Against proposition As short, technology data the exciting with inflection Seagate era strategic to demand to significant at point leadership AI. volume effectively increase, in address deliver to our address storage. ramping are the a an the density company. with strong road this particularly too for so customers. Mosaic is mass for mass does to our customer platform and provides both The executing the world's the exabyte Mosaic backdrop, to to customers and to for of camera crossed Seagate way storage, paves of the value a technology now value continues solution scale. responding relevance data. map a capacity compelling Seagate we store aerial growing capital-efficient platform our sustain offer This advantages for In We've economic demand and

as global team. extend as our for recognize their my them let's only suppliers, the Seagate's for customers now questions. are to the ongoing Operator, I These up through open achievements thanks and hard support. shareholders work call well of possible

Operator

Instructions]. [Operator

from first Stanley. Woodring Our with question is Erik Morgan

Erik Woodring

just if comments happens start, maybe of expect transitory, And pushed of to past $XXX What Dave, to demand fact in positive there? March when I the that quarters, just the be the you timing of future? issues but quarter? you to growth exactly and to ahead that of help I of here, sequential it million Can quarter the call we're kind supply quarters it magnitude you light ourselves know seen think historically. June in back? we've getting incremental pushed to shortfall your about do how would get that understand June? and multiple March us in Does get look Does

William Mosley

Erik. Thanks, Yes.

couple the we've downturn. especially with you years, last in tried As know, the to really predictable hard get of

And to temporary of limited that This issue valued with so as that we only. come it, quarter we're out dealing predictability. we've this really

especially as through we the further, the of out that transitions some look in are predictability. I we think confidence further coming, and product have

those to going I us margin demand grow well. think going and so through is in exabytes confident transitions well, And as product to that, grow. allows to grow, as continue to are profile continue which get to our We're we'll

is very So temporary do I this think issue. a

Operator

of Wamsi question next Bank from with America. The is Mohan

Wamsi Mohan

transitory I just wanted $XXX the nature clarify to of this the comment about million.

from June That's So you for we it could and think that sequentially be if was the a that. transitory, baseline just billion, should is true then if March up should $X.X that? clarification, clarify

cycle my is X around then Can a And period and of and exabyte quarters cycles fact in really turn X.X seen are cycle cause the the maybe, perhaps of been to main that have see and the that view strong that a Dave, you've nearline you there's XXXX. share your we shipment pause. really anything to in question could where capacity mass you increases. Historically, X-year these on

William Mosley

exabyte Yes, really a low. years, of the still the the Wamsi, this few And has shipments we're I then early start the in overbuild at think pretty the calling was probably substantial. cycle pandemic last because been

that that very had That a build-to-order giving continue said, that those discipline the the entire before. compared predictability, to with they the centers they're capacity. doing, more for, built of uplift data wholesale population, old doing The the centers replace of build-outs refreshes to ones and is build to seen predictability good people it's profound we previous gear. we cycle certainty their have order ask us that these data need So they're that

getting happy the more about predictable I supply and industry think chain that. whole quite and is I'm

going hard issue gives like confidence have that this asked to Relative or out. we're build-to-order question, or this quarter, kind a one Erik's really it's quarter beyond a that for we year, not that's a predictable through that relative tell this push in visibility year. a even or a year in is So us effect that to is really whether to same pull-in calendar say, behavior you doing this of hard. That's

building customers, I'm be confident that, have we our them. that and that financial in to product and for we're to in we the able confident expectations transitions these that's But execute going also have, I'm value

you how think something? about I Gianluca, that's So add want it. do to

Gianluca Romano

to quarter, part short on the March question been could is of answer impact yes, the we higher. to the the have the Related

short have demand. there. for term, is don't the volume the demand Now to the we Unfortunately, satisfy

achieve could said, see further improvement higher we have, a as of calendar the course, revenue. they we of level So year. But to

our So it is not going to results. overall impact

Operator

Krish with is question next The from Sankar Cowen. TD

Sreekrishnan Sankarnarayanan

numbers. is of rest Gianluca, it when both I quarter optimistic to for on look obviously be nearline at accretive guidance, your the your gross or about seems said you and March to margin the HAMR seem Dave year. is like give And you take. And XX%, going pretty

the the assume 'XX gross through So quarter-over-quarter calendar of in margin baseline is of grows, fair half as rest improve the March? near line XX% to the it should

Gianluca Romano

Yes, margin. the that sequentially, of drives, quarter. our course, is of quarters to more year help more of continue quarter capacity especially we after to into calendar can part moving we improve improve HAMR Cost mix, price much our started now part volume. stable, see high second like increase us, course, strategy good us margin And to efficiency give the trend opportunity gross when terms consistent ramp in always gross ago there the of is will opportunity higher X and in the

now, to continue our improve. profitability confident So will are very no, right that we

Operator

The Daryanani next is with Amit from question Evercore.

Amit Daryanani

a hear industry. that about does capacity. Dave, little I when hoping HDD bit the I guess, fear was could always mean What adding you companies this about really talk just there's for you

just you sort net exabyte capacity done? level? do be you think back about, could once just to part? new what are on these trying get that are can you total additions touch really Can capacity baseline talk you And adding Seagate's So of some to

are despite revenues down in the that somewhat maybe to expected then March along capacity I'm coming go theme, your and surprised addition. up margins that gross And despite

going about I sequentially in margins headwinds or talk gross quarter that's to March offsetting what's just what's So think what expand? enabling well are

William Mosley

it's Amit. up, all quarters those things generations. production quarters have back some blown new the a older lot ago, this and were buffers And when answer If Because if Thanks, X -- question or picked of we issue of we largely. had think lower, it you your -- demand's -- helps, demand is product then issue But mix. on product the through we generations. were about was product this generations, X to had really those when on

compelling mix proposition we So that's customers. we capacity as a to our for and that value believe higher higher points,

that and We predictable as what's believe in. economics also building giving and we're that's ourselves for structure them for the well, margin

Operator

The is with from question next UBS. Arcuri Timothy

Timothy Arcuri

just understand I I about June wanted I'm to because $XXX ask what million is. again this into the message sure not effect

Dave, think, will said I the that remarks, be to in limited the impact you quarter. completely the March

So that the to like back, that. million it you you entire not you June, you're think really sounds get seem but willing $XXX like clarify

meant you you the can is exactly in what So by of March? entirety impact clarify being the felt

William Mosley

Tim. -- this a is demand Yes. supply Remember, is thanks, a issue. not This issue,

So demand we going what's recovering Gianluca, quickly have ability from quarters We're started only in conference quarter. our But December to as it's the do to not want a we all the from can. that we quarter, hit as and next communicating you started supply. something? compression. to next can add commitments again, -- issue It's the this there, exactly customers on. maintain after we We communicating our the this perspective, we're build-to-order the

Gianluca Romano

we of did December, Basically, necessary because we time the produce put enough equipment certain a that we didn't back in as that in not were period start to materials. explained material

to in So supply have that don't of could demand the have quarter. that been March level necessary match we

not start. back. to million we that coming were not is So able $XXX It's not material,

right will of and And is then we of But June to opportunity with probably away. go the that the missed we the supply the level one that in course, in match demand. that going is back quarter, June so March March

William Mosley

late of as wafer you that discussed have another why still This lead ourselves. for had flowing we is these summer, build-to-order in And problem we manifesting -- and times we that started customers we which reason it then system. but in is long late for equipment, in through December, -- November. this predictability it's realized And the and we the the and itself need some our yet see

We're can, recover as going best steep ramp. know as we of and the we -- very to but try that backdrop so guess, much a I to our

it, that's impact goes not it's So It's through that don't fixed quarter away. we flow is the It's wanted a that that steep. as problem the an just, very we to these of then a and like hole on, there now. this at ramp parts we're level

we're we and can back and convinced quarter next get So demand beyond. satisfy that

Operator

The Citi. Asiya with is from next question Merchant

Asiya Merchant

Great.

if you as target margin very margin, executing about gross and these range lot this on think even a at drives. upside forward, ramps confident shed You well go the some to your here especially light as sound capacity Maybe given for higher mix shifting above what to more can you Seagate you're about HAMR your you're do you appropriate point?

William Mosley

Yes.

for I demand on buy largely picture we think picture. we'll we're this. with can centers negotiations these capacities building to go you think and it good to value that we going long we a what all and and run know because they're it. build time, data agree a portfolio think will the against in negotiations they People if anyway, and have be for say, higher for higher strengthening, see can the We is the those drives more proposition And we predictable a so we and out these to the that build-to-order depends new we those. have demand extent and great

in served the base that's well, were so from I we X situation supply or year us And ago. the really served recover helping well, our a think industry really

Gianluca Romano

we and is including said are target Yes. gave HAMR. not to, range this we target, you And that clearly that referring a

were from in X not in HAMR or expecting now. will profitability, a So we course, higher we quarters future, X just and already of ramp

we old say, what focus at maybe gross will I the We discussing were that would the Day in But will range would more future discuss I Analyst that our be past. on in model. margin our not next

William Mosley

the X I'd to driving levels gross margins of to operating the even fund margins about revenue keep to have road right a at terabytes, to perspective, the us now, margins, my terabytes compelling at proposition and to that so CapEx, to want end so that continue And order value customers, we we're in those they as for provide things well. the and things from map forth. is fund we X have that on such One say R&D our

to for be going combination drive margin to the we're the continue map to user the value So need right end road of revenue to and able propositions.

I think of everyone's we're kind that pandemic were financial the impact predictable. lot of to understood that of as understand to a in those painful, even I allows more and more though through come and a supply the in us lot so be people went but -- starting the these demand undulations we think and it out

Operator

with Steven Advisors. question is next from Fox Fox The

Steven Fox

Dave, faster, longer-term from how changes slower, ramp impact as to mix more one new you this the But hits through of what move I'm I the mentioned transitioning wondering you towards terabytes, the just guy about as go or cloud market? to Like just customer of [ having broad? technology third. going you the XX and Does how -- was you HAMR, become think like we and technology. second a ramps initial ] versus

William Mosley

don't of productization the see exactly then those great first it We than shorten experiments. I'd should ran in out productization. we first expected, We future we cycle. and And it. so results up say any tougher was into our the problems the some problems of had right ramp labs in even against

XX but all go now, as aggressively shipping we And that drives drive have happened, but right the based strain XX other as told transitions. subsystems, just recording up we already the terabytes we've announcement to subsystems we to is what to we confidence, on of we the other not that's that's going all terabytes we're terabytes -- way. subsystem, from great, those see by and XX all -- drives people still terabytes, the already on to the as through can The XX should why

industry that's what aerial perspective, this my is for onward upward, So gets from and density. paid

bring world, that's to And in we're what so value we drive. the continuing and

Operator

Thomas from is question next Barclays. The with O'Malley

Thomas O'Malley

to get picture want business. your mix for of just I better a

moving think in exabytes I like that talk you are to towards HAMR.

guys how think today you've calendar unit that exiting enough could had you out you the had forecast, over terms in the you year? But much and mix about is adjusted impact 'XX maybe as year we margins about in of Obviously, term. maybe of originally near into how gross a HAMR talked your to look business the talk You much time.

So maybe if you us, helpful. really that could would be for that size

William Mosley

Thanks, about the platforms. did talk of Tom. We XX, XX the success

So fast ramp, with parts HAMR. volume. very common lot that's very, at of growing a a in There's very high that

where is the inject we ramp So in to on what and some and back HAMR through we people qualifications year, in very And different. quite year, transitions as margin -- can well, pushing are the Last we qualifications they and quickly getting as business. through ramping. they hard This response of as the we're the focused doing could these demand picture different. just that, were is

coming. we the parts still So is accretive drive bit and they customers it, But we and a be we're make cautious bit still more HAMR careful. more with Remember, little going work are we'll we be that just to still a and on little want have margins, exactly to what to need. sure

I such our end think proposition as we get is and higher value hard. compelling a to very good they're pulling points customers, capacity for

curve. some that all the we to we the I be going are an even fact learnings. Productization-wise, already those there's to maybe at have questions, earlier So of on acceleration that based the do think

those there doesn't to compelling person learn value know lessons other is the and So have this same proposition about. that people

Operator

with Rakers Fargo. question Wells from is The next Aaron

Aaron Rakers

gross your in make or is stick probably minus guess I to plus the bit. try if hard be to about with think margin and a the I'd is Gianluca, non-HDD your range. XX% I'm that gross what narrative adjustments I drive gross margin here going margin, disk little for left some

gross guess, X I drive would initially even disk And et Just forward your a have as in only on the that cetera, HAMR margin just what could is progress, is your question there are. say pricing you margin gross you're to it the hey, is thinking, today that front anything margin? as from to continues look accretive curious et hard HAMR you structurally cetera? structurally gross that ramping keeps and we of thoughts

William Mosley

Aaron, where would pretty history you Yes, I'm that right really are thanks. I now. our we and know well. happy -- say

we're the these good and future, looking we're capacity business for out signing that's into higher business through as up points So transitions.

what confidence. allows that's build me So to

you think think job depends goes on even, highs. industry But informed Is of the on. a I done cases, in some good a demand back we'll a that time we've really I ultimately all-time into comes. getting margin maximum? that or there And theoretical lot the keep to that picture the structure on as

The frankly. some still more I is back output. not still back, do and mean, revenue output we could the is not

we that's still -- very So to defend that in on but we've take to rebuild. care and do well, quarters. to the We have we going way issues what to had supply have predictable a it going few next want and of as some chain for be

And execute model continue to traditionary of kind happy hard quite just period with future progress. as we we're can in we're as rebuild. versus So to that to the

Gianluca Romano

coming the in as we part revenue HAMR. March the margin of of Aaron, the is where quarter is improving from you increased confidence even have lower, volume the gross know in And

higher to margins improve So lot in increase the capacity always to HAMR has helped capacity a moving the per mix unit. general, drives will us and

the improved good a to contributor gross man. it's So

Operator

with from BNP question is Paribas. next The Karl Ackerman

Karl Ackerman

quarter, these sustainability months used constraints? more customers which since visibility Or was production conventional capacity X the and or nearline the the question, today, address production capacity cycle, last specifically of were clarification as hyperscale you've drives drives? tools experienced these As we your for for are you I And think giving well? about HAMR think nearline does my longer

William Mosley

the Yes, HAMR question affected drives, first, Thanks, not the non-HAMR Karl. capacity production issue the second drives.

was XX, Think of the old it actually programs, the of So way. affected. ramp the product XX. that in even qualified it some but it's back this being We've non-HAMR

a little into So the bit future. stepping out more

capacity Gianluca also we're and transition we well. I just -- going think points talking extra get as points aggressively HAMR capacity to more then lower can like actually the that we the points, more and is capacity because was Higher about. refresh it drive

helps capacity the portfolio, So build point. that's not margin what just highest the to into entire

Karl Ackerman

hyperscale the about I was talked since those customers you Yes. receiving constraints. capacity visibility today you're hoping from

William Mosley

Yes.

as models protecting with we us have commitments the up this we coming good that build-to-order the quarter, visibility. have get through we the we're said that constraint have. Maybe So given build-to-order that we issue all we're supply

then QX. So So we're that right? is QX next almost on year -- QX I account-by-account-by-account year. is about an basis, is issue QX talking next QX, irrelevant is QX think them, almost it's for particular

and issue is in So that they're BTO temporary that model. helping with this us visibility irrelevant

Operator

Rakesh with Vijay next is The Mizuho. from question

Vijay Rakesh

just of like the HAMR. 'XX? XX% at David, to half you looking say, quarter let's XX% XXX by get XXX shipments to that to exabyte the look or When expect mix your exabyte you at Gianluca, calendar, like do nearline, HAMR first

William Mosley

make really it expect customers it expect not very different number. because a we're to certainly The ramp But specific But a than see. hard, that year value the hard -- we they are not a we out going we to very to pulling Well, it say of We're space in to going of to right? were specific proposition yes. very ramp ago, We're number. a hard. say

confident it accretive So but now, that quarters it be for some We've has that said to is. we're as well.

volumes So hard yes, and drive to we're it soon. very drive going the

Gianluca Romano

Vijay. Yes,

quarter. We will have improvement every

as to between qualification 'XX. Of year expect qualifications course, customers. with we that different calendar multiple will we And the December of mid said, have and last follow the

would from our improvement few ramp we So that expect be calendar business part in in of another still second for just majority our the now. to the the and quarters performance a happen 'XX, and of

Vijay Rakesh

Got do of capacity ramp half? in more capacity Or do you the the and how need then expect you ramp as terms -- available the that? HAMR, of add you to see capacity, with you back do it. in And HAMR

William Mosley

No. all products Most to of the that or HAMR the convertible tools our non-HAMR product. we're using the almost for are tools

would we So driving we've not are in need virtue no unit remarks, quite The we and head bring adds said added We this of density. time. by planned there's aerial really media get we the on. some capacity. that the to add for capacity transition tools prepared And that we

go us a Hopefully, XX-terabyte and to go their for plan instead gives more exabyte picture, a we'll can drive, a capacity benefits that power, someday, and our drive, proposition and we is more us to ship shipping ship of and XX-terabyte margin I'll you working. -- So more you their that to more customers hey, for say, increase them, relative drive. TCO value for power XX-terabyte

Operator

is from next question The C.J. Muse Cantor with Fitzgerald.

Christopher Muse

guess, question, clarification. a I first

question, June video imagery the in done if partial focus meta any $XXX And of On increasing Or curious really are million Generative part that about business? overall what your might you your AI. prepared you main talked quarter? you terms like at business think driver incremental for remarks, about demand of curious -- big looks my on that March, in work and it sized of as you've It in part away? that for how to if then sizing is traded mean. the and the expecting I'm all but completely the today, you've is

William Mosley

Yes.

earlier, a $XXX the I CJ. little million, So we this think bit answered

made. way the So orders build commitments I are or to those being the is think all it about

on So if there It's hole, that. not this as I far it, participating quarter. we'll the to was hole. it's remember, mean, stuff quarter into a in are order, really of an get that accounts transact impact. a next does or it's major supply it But demand not build as top

strong. So video smart what's imaging, fairly edge, factories. at cities, the talk we is still talking about on smart usually and about demand When going we're the

ranging in huge and video videos are and the hour-long -- things, at the created they're But growing major in cloud. use getting cloud. is are well edge the of of in more applications being themselves actually tail it the that's the the as are documentaries. making the number, growing properties video there some -- mean, data I some The as finally to of in long length, media on that

And then be on people the create more video, coming that tools AI inventive creation are to that. with allows

the think out are professionals creating that I content. there So creative

first coming a very this creating are we And in is as demand resurgence saw trends in of beneficial models. for lot servicing started who us. are that of movers those cloud. yes, the all some the those So back demand were Video people those

Operator

Next question Capital. Baruah from with Ananda Loop is

Ananda Baruah

Yes.

you like sort guys. just So of HAMR This maybe from of maybe is -- to I'd question. both transition hear

Gianluca, have are I -- might -- we But communicating you the HAMR this. HAMR point accretive? are are that margin missed what I the guess, margins So at

now? I of just thinking Dave, of margins of And the in margins, richness might more you for a to like guess comment I guess, going given right then, rolling was tech with ask was volume about question, given the HAMR out that you the selective how legacy pacing to also about into but think you I made HAMR with And them driving market be I energy. some the the

sort really just -- guess the I are So those questions.. of

Gianluca Romano

margin a yes. HAMR high-capacity drive of gross generating level other course, means is and higher that Ananda, No, drives. than, of

said before, can And this much number technology. through up expect more a later really but to have visible need of it drives, ramp as more we like would call product we profitability can and today, ramp more certain higher calendar when be volume. from during I this the the will to we As we high-capacity very before But in year a go volume all quantity. we good

William Mosley

when our considerately then helps, ago Right. were this you if margins year gross lower. a go And back

is HAMR saying were we the accretive to gross margin. course, Of

like on products platform, gross margins legacy XX, the some SMR the about, BMR of higher XX PR are you of talked the Now platforms. some considerably

still paid that proposition top you not we such about, only will, the value provides line do that a talking compelling more drive accretive. is can And the we HAMR we're transitions through which these actually you of points if capacity, increase can therefore, uplift lower and and it, start platform we also, get refresh to margin get that inside but the fewer with we drives, can lower way. fewer components some for capacity

transition, that helps. the still So if we're HAMR driving

Ananda Baruah

I got it. No, that's great.

much going accretive you as you -- as all can to as So as it's and can, it's and and be HAMR you're quickly the... going to ship

William Mosley

And done of just the make and Yes. to want the specifics based the time. we'll right have at get customers on decision the then qualifications we the what

Operator

The next question follow-up Wamsi a Bank from of Mohan with America. is

Wamsi Mohan

half HAMR. terabyte Originally, color The quick a million more same earlier that guess, much X shipping year. was your HAMR HAMR orders question in than significantly year? leading of And magnitude first announced, of CSP higher with that this that on the the XX units? you underway, the I drives the that say drives? could share should in be this now that ramp second you expectation the qualified it that being you is Clearly, on you of any of sampling last half would with

William Mosley

Yes. Thanks, Wamsi.

of yes, latched let one. one just talked product. ramp the XX being say not specifically to on we've to got sample pretty are And way, about than the then And the that one on course. ramp, We'll comment shipping So just it's that units being to relative of the size much We're more customer, customers full more broad-based. person, XX, any me we factories now right well really with it high.

when qualification of will those with what measured We want. it in on customers do HAMR some exactly product is way that based complete, supplant product. the We'll a

Some have systems their always get to of to in you mind, have ready. them, they keep

transitions that I'll product. of the management They'll some that versus software do of some their going -- these of say, on Some fleet the they're of silicon next-generation capability through is transition features.

as of a So HAMR. and it's as HAMR lot ramping then not easy shipping there's more just -- us

drive cycles. to those and go going But qualification think to accretive. we're we have can We areas it's because we so ongoing, through that's as

Operator

Cowen. question next The from a is Krish follow-up TD Sankar with

Sreekrishnan Sankarnarayanan

the question. XXX December, You that do September, comparison a is how Gianluca, in is in because did quick exabyte to nearline surveillance? traditional went XXX Of your you started on to nearline a shipped much definition. but

figure much how just traditionally I'm trying to nearline? So to surveillance out versus XXX, is

Gianluca Romano

X, general, in about exabytes. quarters different X In

Shanye Hudson

over last history for will prior the the year X the have supplemental period. quarters so like-for-like our show you that And

Operator

like back would I session. any turn question-and-answer conference our over concludes closing remarks. the to for management to This

William Mosley

which our our and and or call. I forward everyone. New Happy Thanks, ongoing a efforts still quarter's to the Take recovery helping of is Really quarter suppliers this Year. next Happy everyone Lunar talking everyone wish all employees Year. the appreciate looking New care. and to

Operator

has conference attending today's for now concluded. The you Thank presentation.

disconnect. now You may

Seagate Technology (STX) 21 Jan 252025 Q2 Earnings call transcript