Seagate’s fourth quarter results were received positively by the market, reflecting strong execution in both technology and operations. Management attributed the quarter’s performance to sustained demand from global cloud data center customers and the ongoing shift to high-capacity nearline drives. CEO Dave Mosley emphasized, “We expanded non-GAAP gross margin above 42%, supported by the execution of our pricing strategy, along with an improving mix of our high capacity drives as HAMR shipments ramp.” Growth in exabyte shipments and improved product mix were central to Seagate’s margin expansion and revenue gains.
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Seagate (STX) Q4 CY2025 Highlights:
- Revenue: $2.83 billion vs analyst estimates of $2.75 billion (21.5% year-on-year growth, 2.6% beat)
- Adjusted EPS: $3.11 vs analyst estimates of $2.84 (9.6% beat)
- Adjusted EBITDA: $969 million vs analyst estimates of $893.5 million (34.3% margin, 8.4% beat)
- Revenue Guidance for Q1 CY2026 is $2.9 billion at the midpoint, above analyst estimates of $2.79 billion
- Adjusted EPS guidance for Q1 CY2026 is $3.40 at the midpoint, above analyst estimates of $3.01
- Operating Margin: 29.8%, up from 21% in the same quarter last year
- Inventory Days Outstanding: 83, down from 86 in the previous quarter
- Market Capitalization: $94.41 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Seagate’s Q4 Earnings Call
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C.J. Muse (Cantor Fitzgerald) asked about incremental gross margin expectations given strong demand and pricing. CEO Dave Mosley noted, “Flat to slightly up [pricing] is certainly possible,” while CFO Gianluca Romano emphasized ongoing cost and mix optimization.
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Wamsi Mohan (Bank of America) inquired about the relative contribution of product mix versus price to margin gains. Management described persistent demand and customer planning driving favorable product transitions, with Romano stating sequential improvements are expected to continue.
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Erik Woodring (Morgan Stanley) questioned exabyte supply growth and the pace of HAMR transition. Mosley explained manufacturing is running tightly, leading to a prescriptive but profitable ramp of 4TB-per-platter drives.
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Karl Ackerman (BNP Paribas) sought details on long-term agreements (LTAs) and future pricing. Mosley said 2026 volume is largely locked in, and future agreements will reflect the value of new products and demand conditions.
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Amit Daryanani (Evercore) queried the drivers behind gross margin improvement in the upcoming quarter. Romano attributed gains to the ramp of HAMR products and continued focus on pricing and mix, confirming that the systems business is not a major factor.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will watch (1) the pace of HAMR drive adoption and qualification with additional global cloud customers, (2) execution on cost reductions and gross margin expansion as Seagate transitions to higher capacity products, and (3) the renewal and pricing terms of long-term agreements as supply-demand dynamics evolve. Sustained data center demand and successful new product ramps will be important markers of Seagate’s execution.
Seagate currently trades at $436.05, up from $371.76 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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