01—Abstract
Summary
Summary of the 10-K filed August 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Seagate Technology Holdings plc reported a decrease in revenue for fiscal year 2024, primarily attributed to lower broad-based market demand, although this was partially offset by favorable pricing actions and an ongoing recovery in the global cloud market.
The company saw an improvement in gross margin, driven by these pricing strategies and a favorable product mix. Seagate has also strategically divested its System-on-Chip (SoC) operations to Broadcom for $600 milliona, recognizing a significant gain from this transaction. The company's financial position remains solid, with robust operating cash flow and a significant amount of cash and cash equivalents, supported by its revolving credit facility.
Looking ahead, Seagate anticipates continued demand recovery, especially with the deployment of AI applications, but remains mindful of the dynamic macroeconomic environment. The company continues to focus on operational efficiency and cost discipline. Key strategic initiatives include continued investment in product development, particularly in high-capacity HDDs utilizing HAMR technology, and managing supply chain complexities.
Despite revenue challenges, the company's efforts in pricing and cost management have led to improved profitability metrics. Investors should note the company's ongoing focus on core HDD mass capacity storage, while also developing its systems and Lyve platform revenues.
The company has also taken steps to improve supply predictability by requiring longer-term demand forecasts and commitments from key OEM customers. While risks related to competition, technological changes, and economic volatility persist, Seagate's strategic divestitures and focus on its core strengths position it to navigate the evolving data storage landscape.
02—Key points
Key Highlights
- Revenue decreased by 11% to $6.55 billion in fiscal year 2024, impacted by lower broad-based market demand, though offset by favorable pricing actions.
- Gross margin improved to 23% in fiscal year 2024 from 18% in fiscal year 2023, driven by pricing and product mix improvements.
- Seagate divested its SoC operations to Broadcom for $600 million, resulting in a pre-tax net gain of $313 million.
- Operating cash flow was $918 million in fiscal year 2024.
- The company shipped 398 exabytes of HDD storage capacity in fiscal year 2024.
- Seagate maintained compliance with its debt covenants and has $1.36 billion in cash and cash equivalents as of June 28, 2024.
- The company sees early signs of an industry-wide demand recovery and AI application deployment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Seagate Technology Holdings plc kept $0.05.
- Revenue$6.55B100.0%
- Cost of revenue−$5.01B76.6%
- Gross profit$1.54B23.4%
- Operating costs−$1.08B16.5%
- Operating income$452.0M6.9%
- Interest, other & tax−$117.0M1.8%
- Net income$335.0M5.1%
Where FY2024 revenue went
$6.55B- Cost of revenue: $5.01B, 77% of revenue
- Net income: $335.0M, 5.1% of revenue
- R&D: $654.0M, 10.0% of revenue
- SG&A: $460.0M, 7.0% of revenue
- Interest, other & tax: $117.0M, 1.8% of revenue
Kept 5.1% as net incomeNet income $335.0M · 5.1%Interest, other & tax $117.0M · 1.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed August 2, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $6.55B$7.38B | −11.3% |
| Cost of Revenue | $5.01B$6.03B | −16.9% |
| Gross Profit | $1.54B$1.35B | +13.7% |
| R&D Expenses | $654.00M$797.00M | −17.9% |
| SG&A Expenses | $460.00M$491.00M | −6.3% |
| Operating Expenses | $6.10B$7.73B | −21.1% |
| Operating Income | $452.00M-$342.00M | +232.2% |
| Interest Expense | $332.00M$313.00M | +6.1% |
| Net Income | $335.00M-$529.00M | +163.3% |
| EPS (Basic) | $1.60$-2.56 | +162.5% |
| EPS (Diluted) | $1.58$-2.56 | +161.7% |
| Shares Outstanding (Basic) | 209.00M207.00M | +1.0% |
| Shares Outstanding (Diluted) | 212.00M207.00M | +2.4% |
05—Questions
Frequently Asked Questions
What was Seagate's financial performance in fiscal year 2024?
In fiscal year 2024, Seagate reported revenue of $6.55 billion, an 11% decrease compared to the prior year, primarily due to lower market demand. However, gross margin improved to 23% from 18% in fiscal year 2023, driven by effective pricing strategies and a favorable product mix. The company generated $918 million in operating cash flow.
What are the key strategic initiatives for Seagate moving forward?
Seagate is focusing on strengthening its core mass capacity storage business, particularly with its HAMR technology (Mozaic 3+). The company is also investing in its systems and Lyve edge-to-cloud platform. Strategic efforts include improving supply chain predictability through customer commitments and managing costs and operational efficiency in a dynamic macroeconomic environment.
What impact did the divestiture of SoC operations have on Seagate?
Seagate divested its System-on-Chip (SoC) operations to Broadcom for $600 million. This transaction resulted in a pre-tax net gain of $313 million and allowed Seagate to restructure certain pre-existing purchase agreements. This divestiture allows Seagate to further concentrate on its core data storage business.
What are the main risks facing Seagate?
Key risks for Seagate include intense competition, rapid technological changes, potential commoditization of products, dependence on key customers, inaccuracies in demand forecasting leading to inventory issues, and sensitivity to macroeconomic conditions. The company also faces risks related to supply chain disruptions and managing its global operations.
06—Continue