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Seagate (STX) Q2 Earnings & Revenues Beat Estimates, Shares Up

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Seagate Technology Holdings plc STX reported second-quarter fiscal 2022 non-GAAP earnings of $2.41 per share, beating the Zacks Consensus Estimate by 2.1%. The bottom line increased 87% from the year-ago quarter’s figure and 3% sequentially.

Management had anticipated non-GAAP earnings per share (EPS) for the fiscal second quarter to be $2.35 per share (+/- 15 cents).

Non-GAAP revenues of $3.116 billion outpaced the Zacks Consensus Estimate by 0.3%. The figure improved 19% on a year-over-year basis but was unchanged sequentially. Management had anticipated fiscal second-quarter revenues of 3.1 billion (+/- 150 million).

Robust demand for its mass capacity storage solutions, especially nearline products from cloud data center customers, boosted the top line.

Seagate noted that pandemic-induced supply chain disruptions and other pressures would continue to dent operating margins at least in the near term. Nevertheless, the company expects industry-wide structural changes and the company’s own disciplined execution to cushion operating margin in the long haul.

The company raised the long-term outlook for non-GAAP operating margin between 18% and 22% of revenues. Earlier, the company had projected non-GAAP operating margin between 15% and 20% of revenues. For the fiscal third quarter, Seagate stated that it expects non-GAAP operating margin to be at the lower end of its new long-term range of 18-22% of revenues.

Seagate Technology Holdings PLC Price, Consensus and EPS Surprise

Seagate Technology Holdings PLC Price, Consensus and EPS Surprise
Seagate Technology Holdings PLC Price, Consensus and EPS Surprise

Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote

Following the announcement, shares of Seagate are up 7.8% in the pre-market trading on Jan 27. In the past year, shares of the company have returned 44.5% against the industry’s decline of 58.8%.

Exabyte Shipments in Detail

During the reported quarter, Seagate shipped 163.2 exabytes of hard disk drive (“HDD”) storage, with an average capacity of record 6.1 terabytes (TB) per drive. This marked a year-over-year improvement of 26% and sequential growth of 3% in total HDD exabytes shipments.

Average mass capacity improved to 6.1 TB from 4.3 TB (up 41%) reported in the year-ago quarter and increased from 5.7 TB (up 8%) reported in the previous quarter.

The company shipped 137.1 exabytes for the mass capacity storage market (includes nearline and video and image applications as well as network-attached storage or NAS). This marked sequential growth of 4% and year-over-year improvement of 41% in exabytes shipments. Average mass capacity per drive improved sequentially to 10 TB from 9.6 TB.

In the nearline market, the company shipped 111 exabytes of HDD, up 56% year over year and 4% sequentially.

The company shipped 26.1 exabytes for the Legacy market (includes mission-critical, notebook, desktop, gaming consoles, digital video recorders or DVR and external consumer devices), down 18% in exabyte shipments. Average capacity rose to 2.0 TB from 1.8TB reported in the prior-year quarter.