Seagate's Q2 Earnings & Revenues Beat, Increase Y/Y, Stock Gains

Earnings Performance - Non-GAAP earnings of $2.03 per share, beating consensus by 7.98% and surpassing$ 2 for the first time in 12 quarters [1] - Non-GAAP revenues of $2.325 billion, up 49.5% YoY and 7.2% sequentially, beating consensus by 0.64% [2] - Non-GAAP income from operations totaled$ 538 million, up from $127 million a year ago [13] Revenue Drivers - Mass capacity revenues surged 79% YoY to$ 1.894 billion, driven by stronger nearline cloud demand [3] - Nearline revenues almost doubled YoY, growing 60% in 2024 due to strong demand from cloud service providers and enterprise customers [4] - Total HDD revenues rose 57% YoY to $2.169 billion, representing 93.3% of total revenues [11] Technological Advancements - Significant progress in HAMR technology, with Mozaic products sampling capacities up to 36 terabytes [5] - Average capacity per drive increased 41% YoY and 9% sequentially to 11.6 TB [7] Margin and Cost Management - Non-GAAP gross margin increased to 35.5% from 23.6% YoY, driven by price adjustments and cost discipline [12] - Non-GAAP operating margin increased to 23.1% from 8.2% YoY [13] Exabyte Shipments - Total HDD storage shipments of 150.8 exabytes, up 59% YoY and 10% sequentially [7] - Mass-capacity storage shipments of 140 exabytes, up 68% YoY and 9% sequentially [8] - Legacy market shipments of 10.8 exabytes, down 10% YoY but up 13% sequentially [10] Financial Position - Cash and cash equivalents of$ 1.238 million as of Dec 27, 2024, compared to $1.239 million as of Sept 27, 2024 [14] - Long-term debt of$ 5.679 billion as of Dec 27, 2024, compared to $5.676 billion as of Sept 27, 2024 [14] - Cash flow from operations of$ 221 million, up from $169 million in the previous quarter [15] Guidance and Future Outlook - Q3 fiscal 2025 revenue guidance of$ 2.1 billion (+/- $150 million), with strong cloud demand expected to offset seasonal declines [16] - Non-GAAP earnings expected to be$ 1.7 per share (+/- 20 cents) for Q3 fiscal 2025 [17] - Fiscal 2025 capex expected to be at or below the low end of the long-term target range of 4-6% of revenues [18] Market Performance - Shares rose 3.7% to close at $101.25 on Jan 21, 2025, and gained 6% in pre-market trading on Jan 22 [6] - Shares have gained 13.5% over the past year, outperforming the sub-industry's growth of 2.8% [6]