What drove the strong revenue and margin improvement this quarter?

Management attributed the results to robust customer demand for high-capacity storage, driven by social media video platforms and new AI applications. Higher volumes and a richer product mix helped push GAAP gross margin to a record 39.4%, up from 32.9%. Management also pointed to ramping shipments of its HAMR-based Mozaic products, which are qualified with five of the largest cloud customers.

What is the outlook for the next quarter and does it reflect any one-time items?

For fiscal Q2 2026, Seagate guided to revenue of $2.70 billion (±$100 million) and non-GAAP diluted EPS of $2.75 (±$0.20). Guidance includes the estimated impact of the Pillar Two global minimum tax, the net dilutive effect of the 2028 exchangeable notes, and minimal expected tariff impact. Non-GAAP EPS excludes about $0.24 per share of share-based compensation. The company did not provide a GAAP EPS reconciliation because items such as debt-transaction gains or losses and investment impairments cannot be reasonably predicted.

Is the dividend secure, and how much cash is returned to shareholders?

The board declared a $0.74 quarterly dividend, roughly 3% above the prior level, payable January 9, 2026 to holders of record on December 24, 2025. The company paid $153 million in dividends and repurchased $29 million of shares in the quarter. Future dividends remain at the board's discretion and depend on financial position, results, cash flow, and capital requirements. Free cash flow of $427 million covered the quarter's total shareholder returns of $182 million.

Why did current liabilities jump, and does this signal a liquidity concern?

Current liabilities rose to $4.12 billion from $2.65 billion, mainly because $1.50 billion of long-term debt was reclassified to current portion. Total debt was roughly unchanged at about $5.0 billion. With cash of $1.11 billion and strong operating cash flow, the company appears able to service near-term obligations, but investors should watch how management addresses the maturity through repayment, refinancing, or cash generation.

What are the main risks highlighted in the filing?

The release flags uncertainty from tariffs, trade restrictions, and evolving global trade policy. It also notes the need to make timely quarterly payments under the settlement agreement with the U.S. Department of Commerce's Bureau of Industry and Security, a $15 million quarterly penalty payment shown in operating cash flow. Other risks include demand variability in cloud and AI markets, the execution of HAMR product ramps, and the dilutive effect of convertible notes. Investors should also note that the 8-K furnishes these results under Items 2.02 and 7.01 and that the company's non-GAAP measures are supplemental to GAAP.

STX 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed October 28, 2025. Cited figures are marked; the original filing is the authoritative source.

Seagate reported fiscal first quarter 2026 (ended October 3, 2025) results that beat its own guidance, with revenue of $2.63 billion^a, up about 21% year-over-year from $2.17 billion.

GAAP gross margin of 39.4% and non-GAAP gross margin of 40.1% were both record levels, and GAAP diluted EPS rose to $2.43^b from $1.41 a year earlier. Non-GAAP diluted EPS was $2.61, which management said exceeded the high end of its guided range. Operating cash flow was $532 million and free cash flow was $427 million, versus $27 million in the prior-year quarter.

The company returned $182 million^c to shareholders through dividends ($153 million) and buybacks ($29 million). The company guided fiscal second quarter 2026 revenue to $2.70 billion (plus or minus $100 million) and non-GAAP diluted EPS to $2.75 (plus or minus $0.20). The guidance excludes estimated share-based compensation of about $0.24 per share and reflects the Pillar Two global minimum tax, the net dilutive effect of the 2028 exchangeable notes, and minimal expected impact from announced tariff policies.

Management attributed demand strength to high-capacity storage for cloud and AI workloads and highlighted that its HAMR-based Mozaic products are now qualified with five of the world's largest cloud customers. The board raised the quarterly dividend about 3% to $0.74^d per share, payable January 9, 2026.

Balance sheet metrics improved, with the shareholders' deficit narrowing to $(63) million from $(453) million and cash rising to $1.11 billion. Investors should note that roughly $1.5 billion of debt moved into current liabilities, which pushed current liabilities to $4.12 billion and left working capital slightly negative, so near-term refinancing or repayment capacity is a key focus.

02—Key points

Key Highlights

Revenue grew about 21% year-over-year to $2.63 billion, with GAAP operating margin expanding to 26.4% from 18.6% and non-GAAP operating margin to 29.0% from 20.4%.
GAAP diluted EPS of $2.43 (vs. $1.41 a year ago) and non-GAAP diluted EPS of $2.61 (vs. $1.58), with management saying non-GAAP EPS exceeded the high end of its guided range.
Free cash flow of $427 million versus $27 million in the prior-year quarter, supported by $532 million of operating cash flow.
Fiscal Q2 2026 guidance calls for revenue of $2.70 billion (±$100 million) and non-GAAP diluted EPS of $2.75 (±$0.20), excluding about $0.24 per share of share-based compensation.
Quarterly dividend increased about 3% to $0.74 per share (from $0.72 declared a year earlier); $153 million paid in the quarter.
Current portion of long-term debt rose to $1.50 billion from zero, lifting current liabilities to $4.12 billion and making working capital slightly negative at about $(85) million.
Shareholders' deficit narrowed to $(63) million from $(453) million, and cash and equivalents increased to $1.11 billion from $891 million.

03—Questions

Frequently Asked Questions

What drove the strong revenue and margin improvement this quarter?
Management attributed the results to robust customer demand for high-capacity storage, driven by social media video platforms and new AI applications. Higher volumes and a richer product mix helped push GAAP gross margin to a record 39.4%, up from 32.9%. Management also pointed to ramping shipments of its HAMR-based Mozaic products, which are qualified with five of the largest cloud customers.
What is the outlook for the next quarter and does it reflect any one-time items?
For fiscal Q2 2026, Seagate guided to revenue of $2.70 billion (±$100 million) and non-GAAP diluted EPS of $2.75 (±$0.20). Guidance includes the estimated impact of the Pillar Two global minimum tax, the net dilutive effect of the 2028 exchangeable notes, and minimal expected tariff impact. Non-GAAP EPS excludes about $0.24 per share of share-based compensation. The company did not provide a GAAP EPS reconciliation because items such as debt-transaction gains or losses and investment impairments cannot be reasonably predicted.
Is the dividend secure, and how much cash is returned to shareholders?
The board declared a $0.74 quarterly dividend, roughly 3% above the prior level, payable January 9, 2026 to holders of record on December 24, 2025. The company paid $153 million in dividends and repurchased $29 million of shares in the quarter. Future dividends remain at the board's discretion and depend on financial position, results, cash flow, and capital requirements. Free cash flow of $427 million covered the quarter's total shareholder returns of $182 million.
Why did current liabilities jump, and does this signal a liquidity concern?
Current liabilities rose to $4.12 billion from $2.65 billion, mainly because $1.50 billion of long-term debt was reclassified to current portion. Total debt was roughly unchanged at about $5.0 billion. With cash of $1.11 billion and strong operating cash flow, the company appears able to service near-term obligations, but investors should watch how management addresses the maturity through repayment, refinancing, or cash generation.
What are the main risks highlighted in the filing?
The release flags uncertainty from tariffs, trade restrictions, and evolving global trade policy. It also notes the need to make timely quarterly payments under the settlement agreement with the U.S. Department of Commerce's Bureau of Industry and Security, a $15 million quarterly penalty payment shown in operating cash flow. Other risks include demand variability in cloud and AI markets, the execution of HAMR product ramps, and the dilutive effect of convertible notes. Investors should also note that the 8-K furnishes these results under Items 2.02 and 7.01 and that the company's non-GAAP measures are supplemental to GAAP.

04—Continue

← View all 8-K filings