01—Abstract
Summary
Summary of the 8-K filed April 28, 2026. Cited figures are marked; the original filing is the authoritative source.
Seagate reported fiscal third quarter 2026 results (quarter ended April 3, 2026) that substantially beat its own guidance.
Revenue rose 44% year over year to $3.11 billiona, and GAAP gross margin expanded to 46.5% from 35.2%. GAAP diluted EPS was $3.27 versus $1.57 a year earlier, while non-GAAP diluted EPS was $4.10 versus $1.90. Management described the quarter as achieving record margin performance and cited AI-driven data creation as a driver of structural storage demand.
Operating cash flow was $1.1 billionb and free cash flow was $953 million, and the company retired about $641 million of debt and returned $191 million to shareholders. The quarter was not free of one-time items. A $105 million legal settlement, which the company excludes from non-GAAP results, reduced GAAP operating income, and net loss from debt transactions was $69 million.
Balance sheet deleveraging continued: long-term debt fell to $3.47 billionc from $5.0 billion at fiscal year-end 2025, and shareholders' equity turned positive at $1.095 billion from a deficit of $453 million. The filing also notes a settlement obligation with the U.S. Department of Commerce's Bureau of Industry and Security requiring timely quarterly payments, which investors should monitor. For the fiscal fourth quarter 2026, Seagate guided to revenue of $3.45 billion (plus or minus $100 million) and non-GAAP diluted EPS of $5.00 (plus or minus $0.20), which implies continued sequential growth.
The board declared a quarterly dividend of $0.74d per share, payable July 7, 2026, unchanged in dollar terms from the prior quarter's $0.74 and up from $0.72 a year earlier. Guidance excludes about $0.23 per share of share-based compensation and does not reconcile to GAAP EPS because of potential debt-transaction and investment items that cannot yet be predicted.
02—Key points
Key Highlights
- Revenue of $3.11 billion, up about 44% year over year from $2.16 billion, with GAAP gross margin of 46.5% (vs. 35.2%) and non-GAAP gross margin of 47.0% (vs. 36.2%).
- GAAP diluted EPS of $3.27 vs. $1.57 a year ago; non-GAAP diluted EPS of $4.10 vs. $1.90, with results exceeding the high end of prior guidance.
- Free cash flow of $953 million in the quarter ($1.99 billion year to date) and operating cash flow of $1.1 billion.
- Debt reduction continued: $641 million retired in the quarter, and long-term debt fell to $3.47 billion from $5.0 billion at June 27, 2025.
- A $105 million legal settlement charge reduced GAAP operating income; it is excluded from non-GAAP results, and $69 million in debt-transaction losses further affected GAAP net income.
- Fiscal Q4 2026 guidance: revenue of $3.45 billion (±$100M) and non-GAAP diluted EPS of $5.00 (±$0.20), excluding about $0.23 per share of share-based compensation.
- Quarterly dividend of $0.74 per share declared, payable July 7, 2026 to holders of record as of June 24, 2026.
03—Questions
Frequently Asked Questions
How did Seagate perform relative to the prior year and to its own guidance?
Revenue grew about 44% to $3.11 billion and non-GAAP diluted EPS more than doubled to $4.10. Management said results exceeded the high end of both its revenue and EPS guidance for the quarter.
What drove the margin improvement?
Gross margin expanded roughly 11 percentage points on a GAAP basis to 46.5%, and GAAP operating margin rose to 32.1% from 20.0%. The filing attributes the performance to strong demand for mass-capacity storage and the company's areal density-driven product strategy, though it does not quantify each driver.
Is the balance sheet getting stronger?
Yes. Long-term debt fell to $3.47 billion from $5.0 billion at fiscal year-end 2025, shareholders' equity moved to a positive $1.095 billion from a deficit of $453 million, and cash rose to $1.15 billion. Interest expense also declined year over year.
What should investors watch in the fiscal Q4 outlook?
Guidance implies revenue of $3.45 billion and non-GAAP EPS of $5.00 at the midpoints. Investors should note that the outlook excludes share-based compensation (about $0.23 per share) and does not reconcile to GAAP EPS, because debt-transaction results, investment gains or losses, and tax items cannot be predicted. The company also states that tariff and Middle East conflict impacts are minimal as of the release date.
Are there any one-time charges or ongoing obligations to be aware of?
A $105 million legal settlement was recorded this quarter and is excluded from non-GAAP results. The filing also references a settlement agreement with the U.S. Department of Commerce's Bureau of Industry and Security that requires timely quarterly payments, a continuing obligation whose effect on future cash flow investors should monitor.
04—Continue