Seagate (STX) Reports Record Margins, Stock Falls 7.98%

by MarketNewsData

Stock fell 7.98% after hours to $140.50 despite earnings beat and record margins

Key Financials (Non-GAAP)

Q4 FY25

  • Revenue: $2.44B (+30% YoY)
  • EPS: $2.59 (+147% YoY)
  • Operating Margin: 26.2% (+8.9 pts YoY)
  • Gross Margin: 37.9% (+7.0 pts YoY)
  • Free Cash Flow: $425M (+12% YoY)

Full Year FY25

  • Revenue: $9.10B (+39% YoY)
  • EPS: $8.10 (+528% YoY)
  • Operating Margin: 23.4% (+13.1 pts YoY)
  • Gross Margin: 35.8% (+10.3 pts YoY)
  • Free Cash Flow: $818M (+23% YoY)

Operational Highlights

  • HDD Revenue: $2.28B (+14% QoQ, +32% YoY), driven by global cloud and VIA market demand.
  • Mass Capacity Revenue: $2.01B (+15% QoQ, +40% YoY); nearline shipments rose 52% YoY to 137 exabytes.
  • Average Capacity/Drive: 13TB (+3% QoQ, +40% YoY).
  • Mozaic HAMR Drives:
    • Mozaic 3+: Expanding shipments across cloud service providers (CSPs).
    • Mozaic 4+: 44TB capacity in qualification with a global CSP, volume ramp expected in 2H FY26.

Outlook – Fiscal Q1 2026

  • Revenue: $2.50B ± $150M
  • Non-GAAP EPS: $2.30 ± $0.20
  • Operating Margin: Mid-to-high 20% range

Capital Return & Balance Sheet

  • Dividend: Declared $0.72/share (payable Oct 9, 2025).
  • Cash: $891M
  • Total Debt: $5.0B (down $684M YoY)
  • LTM Adjusted EBITDA: $2.35B
  • Leverage Ratio: 1.8x (improved from 4.2x a year ago)

Stock Reaction and Context

Despite strong top- and bottom-line growth, record margins, and strong guidance, $STX shares dropped 7.98% after hours. This may reflect high expectations priced into the stock, which recently rallied ~90% YTD into the print.

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