01—Abstract
Summary
Summary of the 10-Q filed January 30, 2026. Cited figures are marked; the original filing is the authoritative source.
Seagate Technology Holdings plc reported a strong performance for the quarter ended January 2, 2026, with revenue increasing to $2.8 billiona, a significant rise from the prior year's comparable period.
This growth was driven by robust demand, particularly in data center end markets, supported by AI-driven applications and sustained investments in cloud infrastructure. The company also saw a substantial improvement in gross margin, which rose to 41.6%, up from 35% in the previous year's quarter, attributed to strategic pricing actions and a favorable product mix. The company's net income for the quarter was $593 millionb, a notable increase from $336 million in the same period last year, with diluted earnings per share reaching $2.60.
Seagate generated strong operating cash flow of $723 millionc during the quarter, which supported debt reduction efforts, including the retirement of $500 million in long-term debt, and continued dividend payments to shareholders. The balance sheet shows an increase in cash and cash equivalents to $1.05 billion. Despite the positive results, the company acknowledges ongoing macroeconomic uncertainties and geopolitical tensions that could impact future performance.
02—Key points
Key Highlights
- Revenue for the quarter ending January 2, 2026, increased to $2.825 billion, up from $2.325 billion in the prior year's comparable quarter.
- Gross margin improved significantly to 41.6% for the current quarter, up from 35% in the prior year's quarter, driven by pricing actions and a favorable product mix.
- Net income rose to $593 million, compared to $336 million in the same quarter last year, reflecting operational improvements and revenue growth.
- Diluted earnings per share stood at $2.60 for the quarter, an increase from $1.55 in the prior year's comparable quarter.
- Operating cash flow was strong at $723 million for the quarter, allowing for debt retirement and shareholder returns.
- The company retired $500 million in principal amount of long-term debt and paid $307 million in dividends to shareholders during the six-month period ending January 2, 2026.
- Cash and cash equivalents increased to $1.046 billion as of January 2, 2026, from $891 million as of June 27, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Seagate Technology Holdings plc kept $0.21.
- Revenue$2.83B100.0%
- Cost of revenue−$1.65B58.4%
- Gross profit$1.18B41.6%
- Operating costs−$333.0M11.8%
- Operating income$843.0M29.8%
- Interest, other & tax−$250.0M8.8%
- Net income$593.0M21.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed January 30, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $2.83B$2.16B | +30.8% |
| Cost of Revenue | $1.65B$1.40B | +17.8% |
| Gross Profit | $1.18B$760.00M | +54.7% |
| R&D Expenses | $187.00M$180.00M | +3.9% |
| SG&A Expenses | $143.00M$139.00M | +2.9% |
| Operating Expenses | $1.98B$1.73B | +14.6% |
| Operating Income | $843.00M$431.00M | +95.6% |
| Net Income | $593.00M$340.00M | +74.4% |
| EPS (Basic) | $2.75$1.60 | +71.9% |
| EPS (Diluted) | $2.60$1.57 | +65.6% |
| Shares Outstanding (Basic) | 216.00M212.00M | +1.9% |
| Shares Outstanding (Diluted) | 228.00M216.00M | +5.6% |
05—Questions
Frequently Asked Questions
What drove the significant increase in Seagate's revenue and profitability this quarter?
The increase in revenue to $2.825 billion was primarily driven by higher demand, especially in the data center segment, fueled by AI applications and cloud infrastructure investments. Strategic pricing actions and a favorable product mix led to a substantial improvement in gross margin to 41.6%, which, combined with revenue growth, resulted in net income of $593 million.
How is Seagate managing its debt obligations, and what is its liquidity position?
Seagate generated strong operating cash flow of $723 million this quarter. During the six months ended January 2, 2026, the company retired $500 million of long-term debt and paid $307 million in dividends. Its liquidity position is robust, with cash and cash equivalents increasing to $1.046 billion as of January 2, 2026. Additionally, the company has $1.3 billion available under its senior unsecured revolving credit facility, indicating a solid financial footing.
What are the key market segments for Seagate's products and what is the outlook?
Starting in fiscal year 2026, Seagate presents its products under two end markets: Data Center and Edge IoT. The Data Center segment, which comprises the majority of the business, includes high-capacity nearline products for mass data storage, systems for cloud and enterprise customers, and cloud-based video/image applications. The Edge IoT segment includes consumer, client-centric markets, and network-attached storage. The company sees strong demand in data center markets, particularly driven by AI, and expects its hard drive business to benefit from increasing data generation and value.
Are there any significant legal or regulatory matters that investors should be aware of?
Seagate is involved in several legal proceedings, including patent infringement cases and a securities class action lawsuit, which it is vigorously defending. Notably, the company entered into a settlement agreement with the U.S. Department of Commerce's Bureau of Industry and Security (BIS) to resolve allegations regarding sales to Huawei. Under this agreement, Seagate is making quarterly payments totaling $300 million over five years. While these matters are ongoing, the company does not expect them to have a material adverse effect on its financial position or results of operations, though they require continuous monitoring.
06—Continue