Overview
Seagate Technology
STX · NASDAQQ1 FY2027Data Storage · Hard Disk Drives (HDD)
Since the Report − 5.5%
Revenue grew 61.0% year over year, EPS beat the estimate by 3.9%; the stock fell 5.9% in its first reaction.
- RevenueQ1
- $4.23B
- ▲ 61% YoY · Beat by 2.5%
- EPSAdjusted
- $7.68
- Estimate $7.39 · Beat by 3.9%
Verdict
BUYSeagate beat estimates by 2.5% on revenue and 3.9% on earnings, and its second-quarter guidance sits 5-7% above market expectations. The stock still fell 5.9% after hours, because a narrow revenue beat was not enough for a stock that tripled in a year. The next measure to watch is whether gross margin reaches 60%.
Close on Report DayOct 27
$667.85▼ 5.9%Report-Day Move
- Market Cap(Today)
- ≈ $145 B
- 1Y Return(At Report)
- + 192%
- P/E(At Today's Price · $20.60 · Trailing 12M)
- 30.6
- Net Margin(Trailing 12M)
- 26.1%
Earnings Summary
In 30 Seconds- Revenue of $4.23B beat estimates by 2.5%, and adjusted EPS of $7.68 beat by 3.9%.
- Second-quarter guidance of $4.8B in revenue and $9.20 in EPS is 5-7% above market expectations.
- After a threefold rise in a year, the stock fell 5.9% after hours on a narrow revenue beat.
The Numbers
Adjusted Gross Margin
57.8%
+5.1 Pts QoQ · Year Ago 40.1%
Free Cash Flow
$1.48B
Sept-Quarter Record · ▲ 246% YoY
Cash Returned to Holders
$568M
Buybacks $400M · Dividends $168M
Stock Reaction
▼ 5.9%
After Hours · Price Is October 27 Close
Quarterly Revenue ($ Billion)
2.63
Q1 FY26 · $2.63 B
2.83
Q2 FY26 · $2.83 B · QoQ + 7.5%
3.11
Q3 FY26 · $3.11 B · QoQ + 10.2%
3.63
Q4 FY26 · $3.63 B · QoQ + 16.6%
4.23
Q1 FY27 · $4.23 B · QoQ + 16.6% · YoY + 61.0%
4.7–4.9
Q2 FY27E · 4.7–4.9 · QoQ + 13.4% · YoY + 69.9%
- Q1 FY26
- Q2 FY26
- Q3 FY26
- Q4 FY26
- Q1 FY27
- Q2 FY27E
Q2 FY27 Company Guidance
- Revenue4.7 – 4.9 billion4.7 billion4.9 billion
Midpoint 4.80 · Market Expectation 4.565.3% Above Estimate ▲
- Adjusted EPS9.0 – 9.4 $9.0 $9.4 $
Midpoint 9.20 · Market Expectation 8.616.9% Above Estimate ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±7.4% around the midpoint.
Company-Specific Metrics
Free Cash Flow
$1.48 B
▲ 246.4% YoYPress Release
Operating Cash Flow
$1.69 B
Press Release
Capital Expenditure
$211 M
Press Release
Share Buybacks
$400 M
Press Release
Dividends Paid
$168 M
Press Release
Metrics come only from the company's own filings; each one names the document it was taken from.
“Fiscal '27 is off to an outstanding start. Absolutely everything we can make above and beyond our plans is being spoken for. The value of data extends well beyond its original use. We continue to expect HAMR to represent roughly 50% of our nearline exabyte shipment run rate exiting calendar 2026.”
- Output Above Plan Already Sold
- Data Center 81% of Revenue
- HAMR Transition Accelerating
Summary and Review
Summary
Seagate reported revenue of $4.23 billion for the first quarter of fiscal 2027. Revenue rose 61% year over year and beat the $4.13 billion market expectation by 2.5%. It also topped the company's own $4.0-4.2 billion guidance. Adjusted earnings per share came in at $7.68 against an estimate of $7.39, a 3.9% beat. Second-quarter guidance calls for $4.8 billion in revenue and $9.20 in EPS. That is 5.3% above expectations on revenue and 6.9% on earnings. All three gates are open: revenue, earnings and guidance.
The stock closed the October 27 session at $667.85, up 3.7% before the results. After the release it fell as much as 7% in after-hours trading. At the last available print it was $628.38, 5.9% below the close. The stock had roughly tripled over the past year. It still trades near three times its 52-week low of $217.67. The market did not read this report as a demand story; it read it as an expectations test. A 2.5% revenue beat was not enough after such a run.
Score 83, verdict buy. All three gates clear the 2% threshold, with wider beats on earnings and guidance. EPS also topped the company's own $7.10-7.50 guidance. Adjusted gross margin hit a record 57.8%, expanding 17.7 points in a year. Free cash flow reached $1.48 billion, the highest ever for a September quarter. Two caveats pull the score down within its band. The revenue beat was narrow, and inventory rose 8.2% in the quarter.
Full Review
Data center is four-fifths of revenue.
According to the earnings call, data center revenue reached $3.4 billion. That is up 63% year over year. The market now makes up 81% of total revenue. Seagate shipped 220 exabytes in the quarter, 198 of them to data center customers. That market takes roughly 90% of total shipments. Data center shipments grew 24% year over year. Revenue growth was more than double volume growth, and pricing covers the gap. Seagate uses value-based pricing, and contracts are priced about a year before delivery. CEO Dave Mosley said most nearline supply is allocated under long-term agreements. He added that everything the company can make above its plans is already spoken for. Most near-term revenue is therefore secured by contract.
Margin expanded 17.7 points in a year.
Adjusted gross margin was 57.8%. It was 52.7% a quarter earlier and 40.1% a year ago. That is a 5.1-point sequential and a 17.7-point annual expansion. Adjusted operating margin rose to 50.7%, from 29.0% a year ago. Adjusted net income was $1.78 billion. GAAP net income was $1.76 billion. That is more than three times the $549 million of a year earlier. The company guides to about $300 million of operating expenses next quarter. Most of each additional revenue dollar therefore drops to profit. The brake is external component costs. Management said rising component costs partly offset internal cost declines. Inventory also rose from $1.57 billion to $1.70 billion in the quarter. The increase was 8.2%.
Cash is paying down debt and rewarding holders.
Operations generated $1.69 billion of cash. Capital expenditure was $211 million. The remaining free cash flow was $1.48 billion, up from $427 million a year ago. Seagate spent $400 million on share buybacks in the quarter. It paid $168 million in dividends. The total of $568 million equals 38% of free cash flow. About $1.2 billion of debt principal was retired, cutting gross debt to $2.4 billion. Another $750 million was repaid after quarter end. Gross debt thus fell to $1.6 billion. The company ended the quarter with $1.26 billion in cash. The quarterly dividend was raised 2.7% to $0.76 per share. Capital expenditure is expected to stay at 4-6% of revenue in fiscal 2027.
The HAMR roadmap keeps supply disciplined.
Seagate grows through capacity per platter, not through new production lines. In the release, Mosley wrote that the HAMR-based roadmap meets exabyte demand while maintaining supply discipline. On the call he said HAMR should be roughly half of nearline exabyte shipments exiting calendar 2026. That shift means selling more capacity with the same number of disks. Keeping supply tight relative to demand is a deliberate choice. That tightness is also the source of pricing power. Capacity growth does not require new factories. Capex can therefore stay at 4-6% of revenue without pressuring margins. The other side of the coin is customer concentration. Much of revenue depends on a small number of hyperscale cloud customers. If one of them shifts its spending schedule, shipment pace could change despite the contracts.
Watch one number next quarter.
In the next report, look at one line: adjusted gross margin. It was 57.8% this quarter. Above 60%, pricing power is beating cost pressure and the story holds. Below 57%, component costs have caught up with pricing. The second check is inventory. It rose 8.2% this quarter while revenue grew 16.6%. If inventory starts growing faster than revenue, watch the balance between production and demand. The third measure is the revenue beat. It was 2.5% this quarter, and the stock found it too thin. The guidance midpoint is $4.8 billion. A result above $4.9 billion would deliver the margin of beat the market wants. Read together, these three numbers show where the cycle stands.
Looking Ahead
Strengths and Risks
5 Strengths · 5 RisksStrengths
5- Revenue, earnings and next-quarter revenue guidance beat estimates by 2.5%, 3.9% and 5.3% respectively.
- Adjusted gross margin hit a record 57.8%, expanding 17.7 points in a year.
- Free cash flow of $1.48 billion was the highest ever for a September quarter.
- Gross debt fell to $1.6 billion after a post-quarter repayment.
- The quarterly dividend was raised 2.7% to $0.76 per share.
Risks
5- The revenue beat was only 2.5%, a thin margin for a stock that tripled in a year.
- Inventory rose 8.2% in the quarter to $1.70 billion.
- Rising external component costs partly offset internal cost declines.
- Much of revenue depends on a small number of hyperscale cloud customers.
- The stock fell as much as 7% after hoursVolatility is high.
What to Watch
3- December 23, 2026Record date for the $0.76 per-share dividend; payment on January 7, 2027.
- ~January 2027Q2 FY2027 earnings; guidance calls for $4.8 billion in revenue and $9.20 in EPS.
- End of calendar 2026HAMR is expected to reach roughly half of nearline exabyte shipments.
Upcoming Earnings
To Understand This