Seagate Technology’s fiscal year 2025 calendar ended with the company reporting revenue growth of 15% to $2.17 billion on a sequential basis and 49% year-on-year. This dynamics was largely due to the growing demand for hard drives in the cloud and corporate segments of the market. The earnings forecast for the second fiscal quarter exceeded investors’ expectations.
Image source: Seagate Technology
Concentration on the production of high-capacity hard drives for server systems allows Seagate to increase profit margins, last quarter it reached its highest value in a decade at 33.3%. The operating profit margin increased sequentially by three percentage points to 20.4%. Seagate’s earnings per share reached $1.54, which is at the high end of the range mentioned earlier in the forecast. Net income rose 52% sequentially to $337 million, compared with the company ending the quarter at a loss a year ago.
In the high-capacity hard drive segment, Seagate’s revenue has been growing for five consecutive quarters, which accounts for 93% of the company’s capacity shipments. In the cloud segment, Seagate’s second-largest products in terms of revenue were 24 TB (CMR) and 28 TB (SMR) drives, accounting for more than 20% of revenue in the cloud segment. In capacity terms, Seagate nearly doubled its storage shipments for the cloud sector over the year.
The company’s average hard drive capacity increased year-on-year by 43% to 10.6 TB. In the segment of high-capacity drives, it increased over the year by 38% to 14.3 TB, but in the segment of classic products it increased symbolically by one percent to 2.4 TB.
For the current quarter, Seagate expects to generate between $2.15 billion and $2.45 billion in revenue and maintain operating profit margins above 20%. Specific earnings per share should be between $1.65 and $2.05. These figures turned out to be slightly higher than investors’ expectations, and the actual amount of revenue for the last quarter exceeded forecasts, albeit slightly. And yet, after the close of trading, the company’s shares fell in price by more than 4.6%.