Seagate Technology (STX) Prelim. Q4 Revenue Tops Views

Seagate Technology plc (NASDAQ: STX), a world leader in digital storage solutions, today announced selected preliminary financial information for its fiscal second quarter 2018, which ended on December 29, 2017. Seagate expects to report revenue of approximately $2.9 billion, and GAAP and non-GAAP gross margin of approximately 30%. The Company expects to report record exabyte shipments of approximately 88 exabytes, reflecting drive shipments of approximately 40 million and record average capacity per drive of 2.2 terabytes.

(Street sees Q2 revenue of 2.74 billion)

GAAP and Non-GAAP operating expenses for the December quarter are expected to be approximately $444 million and $390 million respectively. The Company ended the quarter with approximately $2.6 billion in cash and cash equivalents.

These preliminary results compare to the Company’s previous forecast for fiscal second quarter 2018 revenue growth of 3-5% sequentially, non-GAAP gross margin improvement sequentially and non-GAAP operating expenses down 2-3%.

The strength in the Company’s revenue and gross margin for the quarter was driven primarily by better-than-expected demand for the Company’s HDD mass-storage solutions portfolio and operational execution.

“Our revenue growth and strong portfolio profitability in the December quarter reflect solid demand for high-capacity mass-storage solutions, particularly for our cloud-based environments,” said Dave Mosley, Seagate’s chief executive officer. “Availability of our cloud and edge portfolio remains constrained with broad-based customer demand globally and we are looking forward to planning discussions with a significant number of customers at CES this week,” said Dave Mosley.

Due to industry forecasts for explosive data creation and next-generation workloads over the next decade and beyond, the storage industry anticipates an increase in global storage needs for existing and new markets. To address these needs, Seagate has developed and invested in building a robust digital storage portfolio to provide customers with solutions that fit their dynamic storage needs, including HDDs, SSDs, and hybrid solutions.

During the December quarter, Seagate entered into a previously announced long-term NAND supply agreement with Toshiba Memory Corporation that will provide continuity of NAND supply for Seagate’s current and future SSD product portfolio.

“Seagate’s broad offering of flash-based products are ready to scale and grow across multiple markets,” said Dave Mosley. “Securing additional NAND supply through a long-term agreement with Toshiba Memory Corporation fulfills our current needs for NAND and increases the potential for Seagate to deliver new and innovative flash-based solutions. Diversifying and expanding our competitive HDD mass-storage portfolio with SSD and enterprise storage solutions will enable meaningful future revenue growth and profits over the next several years while providing significant value for our storage customers,” said Dave Mosley.

Conference Call Details for Fiscal Second Quarter 2018 Financial Results

Seagate will report its fiscal second quarter 2018 financial results before the market opens on January 29, 2018. The investment community conference call to discuss these results will take place that day at 6:00 a.m. Pacific Time/9:00 a.m. Eastern Time. The live event can be accessed online at Seagate’s Investor Relations website at www.seagate.com/investors. An archived audio webcast of this event will be available shortly following the event conclusion.

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