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Seagate Technology Holdings plc (STX) reported first-quarter fiscal 2026 non-GAAP earnings of $2.61 per share, beating the Zacks Consensus Estimate by 10.6% and exceeding the high end of management’s guidance of $2.3 per share (+/- 20 cents). The company continues to advance its technology roadmap to meet the growing demand for higher-capacity products.
Non-GAAP revenues of $2.63 billion exceeded the Zacks Consensus Estimate by 3.9%. Revenues were above the guidance midpoint, increasing 21% year over year. The rising demand for high-capacity hard drives contributed to this growth. Global cloud service providers primarily fueled demand, with notable sequential revenue increases from enterprise customers.
With strong demand visibility, STX is ramping up shipments of its Mozaic HAMR products, now qualified by five major cloud providers. These high-performance, durable and cost-effective drives support existing workloads, such as social media and video platforms, as well as new AI-driven applications. As AI drives data creation and consumption, Seagate is well-positioned for sustained profitable growth. STX shipped more than 1 million Mozaic drives during the September quarter.
Management also announced a nearly 3% hike in its quarterly dividend to 74 cents. The dividend will be paid out on Jan. 9, 2026, to its shareholders on record as of the close of business on Dec. 24, 2025.
Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote
Seagate’s shares are up 7% in the pre-market trading today. In the past year, STX has gained 123.5% compared with the Zacks Computer-Integrated Systems industry’s rise of 71.7%.
It now reports revenues across two key markets- Data Center, encompassing nearline products and systems sold to cloud, enterprise and VIA customers, and Edge IoT, covering consumer and client-focused segments, including network-attached storage.
The data center segment accounted for 80% of total revenue, at $2.1 billion, representing a 13% sequential increase and 34% year-over-year growth. Demand from global cloud customers continues to rise, with notable improvement in the enterprise OEM market. These positive trends are expected to continue, with cloud growth outpacing enterprise demand.
High-capacity nearline production remains mostly committed under build-to-order contracts through 2026. Robust data center growth offset lower sequential sales in the Edge IoT segment, which accounted for 20% of revenue at $515 million, down 11% quarter over quarter and 12% year over year. STX expects seasonal improvement in Edge IoT revenue in the December quarter, driven by VIA, edge and consumer products.
In the reported quarter, Seagate shipped 182 exabytes of HDD storage, up 32% year over year and 12% sequentially. A major chunk of the shipment was delivered to global data center customers. Our estimate was pegged at 172.3 exabytes of HDD storage.
The company shipped 159 exabytes to data center customers, up 17% sequentially and 39% year over year. Cloud exabyte demand rose for the ninth consecutive quarter, with nearly 80% of nearline volume comprising drives of 24TB or higher as customers transition to higher capacities.
Non-GAAP gross margin reached a record 40.1%, rising by about 220 basis points (bps) quarter over quarter and roughly 680 bps year over year, driven by stronger adoption of Seagate's high-capacity nearline products and continued pricing initiatives.
Non-GAAP operating expenses came in at $291 million, up 2% sequentially and 3.5% year over year, aligning with its expectations.
Non-GAAP income from operations totaled $763 million, up from $442 million a year ago, driven by solid sales and effective financial leverage.
Non-GAAP operating margin increased 860 bps year over year to 29%. Adjusted EBITDA totaled $831 million.
As of Oct. 3, 2025, cash and cash equivalents were $1.1 billion compared with $891 million as of June 27, 2025.
As of Oct. 3, 2025, long-term debt (including the current portion) was $4.9 billion compared with $5 billion as of June 27, 2025.
Cash flow from operations was $532 million compared with $508 million in the previous quarter. Free cash flow amounted to $427 million, the same as in the last quarter. STX anticipates stronger free cash flow generation in the December quarter.
The company returned capital to shareholders through dividends of $153 million and the repurchase of 153,000 shares for $29 million at an average price of $187 per share. It is dedicated to returning a minimum of 75% of its free cash flow to shareholders over the long term.
Management expects demand to remain solid, led by global cloud data centers. It projects higher revenue and margin expansion as customers adopt its next-generation storage solutions. For the fiscal second quarter, STX expects revenues of $2.7 billion (+/- $100 million). At the midpoint, this indicates a 16% year-over-year improvement.
Non-GAAP earnings are expected to be $2.75 per share (+/- 20 cents).
For the quarter, non-GAAP operating expenses are expected to be around $290 million.
At the midpoint of revenue guidance, non-GAAP operating margin is projected to increase to approximately 30%.
Currently, Seagate sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
International Business Machines Corporation (IBM) reported strong third-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. Excluding non-recurring items, non-GAAP net income from continuing operations was $2.65 per share compared with $2.30 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 21 cents. Quarterly total revenues increased to $16.33 billion from $14.97 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 7% year over year. The top line exceeded the consensus estimate of $16.1 billion.
Cadence Design Systems (CDNS) reported third-quarter 2025 non-GAAP earnings per share (EPS) of $1.93, which beat the Zacks Consensus Estimate by 7.8%. The bottom line increased 17.7% year over year, exceeding management’s guided range of $1.75-$1.81. Revenues of $1.339 billion beat the Zacks Consensus Estimate by 0.9% and increased 10.2% year over year. The figure also beat the management’s guided range of $1.305-$1.335 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.
Synopsys (SNPS) delivered lower-than-expected third-quarter fiscal 2025 results. The company reported non-GAAP earnings of $3.39 per share for the fiscal third quarter, missing the Zacks Consensus Estimate of $3.84 and the guided range of $3.82-$3.87. The bottom line decreased 1.2% on a year-over-year basis. Synopsys’ fiscal third-quarter revenues jumped 14% year over year to $1.74 billion, but missed the Zacks Consensus Estimate of $1.768 billion. The top line was primarily driven by an increase in revenues of Time-Based Product and Upfront Product businesses.
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This article originally published on Zacks Investment Research (zacks.com).
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Seagate Stock Rallies On After Earnings. AI Has Industry 'Desperate For Storage.'
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