01—Abstract
Summary
Summary of the 10-Q filed October 31, 2025. Cited figures are marked; the original filing is the authoritative source.
Seagate Technology Holdings plc (STX) reported strong financial results for the quarter ending October 3, 2025.
Revenue increased significantly year-over-year, driven by robust demand in Data Center markets, particularly from global cloud customers leveraging high-capacity nearline drives for AI applications. Net income and earnings per share saw substantial growth compared to the prior year's quarter. The company demonstrated improved operational efficiency, reflected in a higher gross margin.
Seagate continues to focus on managing its debt obligations and executing its capital allocation strategies, including dividends and share repurchases. The company also highlighted its strategic shift in market segmentation to better reflect AI-driven demand, now categorizing its business into Data Center and Edge IoT markets.
02—Key points
Key Highlights
- Revenue for the quarter increased to $2.63 billion, a significant jump from $2.17 billion in the prior year's quarter, driven by strong demand in Data Center markets.
- Net income more than doubled year-over-year, reaching $549 million, with diluted EPS rising to $2.43 from $1.41.
- Gross margin improved to 39.4% from 33% in the prior year's quarter, attributed to pricing actions and a favorable product mix.
- Operating cash flow was strong at $532 million, demonstrating effective cash generation from operations.
- The company has reclassified its reporting segments to 'Data Center' and 'Edge IoT' to better reflect AI-driven demand, with Data Center now comprising 80% of revenue.
- Seagate paid $153 million in dividends to shareholders and repurchased shares for $29 million during the quarter.
- The company's total assets grew to $8.44 billion, with a notable increase in cash and cash equivalents to $1.11 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Seagate Technology Holdings plc kept $0.21.
- Revenue$2.63B100.0%
- Cost of revenue−$1.59B60.6%
- Gross profit$1.04B39.4%
- Operating costs−$343.0M13.0%
- Operating income$694.0M26.4%
- Interest, other & tax−$145.0M5.5%
- Net income$549.0M20.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed October 31, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $2.63B$2.33B | +13.1% |
| Cost of Revenue | $1.59B$1.51B | +5.2% |
| Gross Profit | $1.04B$812.00M | +27.7% |
| R&D Expenses | $186.00M$184.00M | +1.1% |
| SG&A Expenses | $144.00M$139.00M | +3.6% |
| Operating Expenses | $1.94B$1.84B | +5.3% |
| Operating Income | $694.00M$488.00M | +42.2% |
| Net Income | $549.00M$336.00M | +63.4% |
| EPS (Basic) | $2.58$1.58 | +63.3% |
| EPS (Diluted) | $2.43$1.55 | +56.8% |
| Shares Outstanding (Basic) | 213.00M212.00M | +0.5% |
| Shares Outstanding (Diluted) | 226.00M217.00M | +4.1% |
05—Questions
Frequently Asked Questions
What were the key drivers of Seagate's revenue growth in this quarter?
Revenue growth was primarily driven by increased demand in the Data Center markets, specifically for high-capacity nearline drives. This demand is supported by global cloud customers expanding their data storage for AI-related applications like inferencing and training.
How did Seagate's profitability change compared to the previous year?
Profitability significantly improved. Gross margin increased to 39.4% from 33% in the year-ago quarter, due to pricing strategies and a more favorable product mix. Net income grew substantially, reaching $549 million compared to $305 million in the prior year's quarter.
What is the company's outlook on AI and its impact on the business?
Seagate expects its hard drive storage business to benefit from future growth in data demand, particularly from the ongoing adoption of Generative AI applications. The company has also updated its market segmentation to better reflect this trend, with 'Data Center' and 'Edge IoT' now being its primary reporting segments.
How is Seagate managing its debt and liquidity?
Seagate has a $1.3 billion senior unsecured revolving credit facility available and reported strong operating cash flow of $532 million. While the company has significant long-term debt obligations, it is compliant with its debt covenants. It continues to manage its debt portfolio and capital allocation, including paying dividends and repurchasing shares.
06—Continue