Seagate Technology (STX) 26 Jul 232023 Q4 Earnings call transcript

Good day, and welcome to the Seagate Technology’s Fourth Quarter and Fiscal Year 2023 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Shanye Hudson, Senior Vice President, Investor Relations. ahead. go Please

afternoon, Good welcome today’s to Thank everyone, call. you. and

press Dave Joining Officer. Executive earnings year supplemental XXXX Mosley, section and Officer; the our June are for We and our information and our results Financial Chief fiscal Chief website. Seagate’s me quarter detailed our Gianluca posted Investors on release of Romano,

on included certain in During measures are reconciled predicted. not unreasonable efforts. figures control our non-GAAP today’s and/or measures. not corresponding the press that a with non-GAAP earnings items reconciled our Non-GAAP was measures call, available and we’ll without the and reasonably refer be the our release X-K outlook is Therefore, that Form these may measures SEC. impact posted GAAP in cannot of reconciliation to figures website GAAP material filed to out are to because GAAP We’ve

and differ associated as Investors section as the recent found the today’s may information, reflect based be may filings, our results, SEC more Before refer you should Actual which our annual to risks, remind we they’re To forward-looking that that Form today results release website. all our uncertainties forward-looking business in from today of to available the and our not be assumptions report contains on by those about XX-Q subsequent I’d as views and contained report subject Form future and please business. may the learn supplemental and that like well as begin, quarterly most on on us XX-K and as other risks on date. current of upon affect of of or factors issued call statements press our to information statements to any with implied relied materially these uncertainties management’s including

for the our As open always, we’ll remarks, questions. following call prepared

I’ll opening for remarks. now over call the hand to Dave

today’s holding operating profitability. on non-GAAP returning share appreciate tough financial on environment, you our call. to revenue while our everyone. X.X% Seagate to business us at being quarter Thank delivered here These non-GAAP to with and We margin hello, focus and per $X.XX. leverage billion, fourth demonstrate results Amid you, loss Shanye, narrow a $X.X of

proud free the to and positive $XXX achieving $XXX year, million and we amid fiscal Importantly, cash the fiscal Seagate’s in past our market for business the has fiscal have in XXXX. This and tested continue our of we execution. flow, solid end generate I’m our perseverance shaped year that addition by resilience quarter backdrop financial for million and have been team’s reinforcing to execution performance. macro seen operational financial conditions

debt of monetizing of our by a approximately result XX% with our largely actions, volume million more peak on taking cost our than with drive annualized out basis. better track We flexibility were and production non-manufacturing structure HAMR early calendar nearly qualification dynamics delivering compared in XXXX. ramp $XXX proactive $XXX XX-plus accomplishments We’ve to And begin the we’ve on of terabyte product assets. as milestones facility enhanced while lowered made these million sheet balance As profitability recover. supply/demand by markets by reduced and enhance an funded volume on all development in to order output

environment. end-to-end Consistent managing is market we on demand with our at of expect record near-term what our business throughout continue XXXX we ahead, taking fiscal measures are December. to weighing flagged to weather macro control, Looking within we the conditions through that the track additional have least

qualification future carefully And capacity areas and we adjusting pricing, to second, demand believe align the will healthy our of certain supply help a are which production we manufacturing approach plans. a our business long customers for to industry managing output are build-to-order the over with customer ensure we chain through our term. First, for

products It time lead times bring ability reramp crucial is mass and resources online. that capacity it associated support our will for we Therefore, balance production take with to capacity back to production.

customers We some to near-term efforts as factors, improves. perspectives demand our expect in our manage will the business efficiently in capacity on I’ll China. these starting supply now share for demand enable mass particular Seagate in with markets,

and improved expected, enterprise VIA increased cloud of As in customers. sales lows, China demand in and the sequentially March the OEM quarter off driven by regional markets certain

While in direction, sales well levels. historical are the these right pointing are trends still below

of eased recovery were China pace in Since been last December, the strict uneven. has economic COVID protocols the

we China sales calendar remain into now, year. balance the forecasting the are For for of to relatively stable

begin economic demand. improvement authorities VIA cloud-related see reaccelerate benefit positioned Seagate’s catalyze anticipated end on new Chinese expected e-commerce, to to economic stimulus We in spur the ad growth. and encouraged and Based are projects. revenue are is to products market to inject nearline smart more these improvements input, from to city customer drive

nearline response storage to demand China, under optimize These continue to helping mass have efforts slowed uncertainties. from U.S. enterprise of are remained deployments. both defer and among cloud customers budgets tighter in most on-prem of existing pace macroeconomic Outside our the absorption near-term in has cloud, inventory soft. operate trends to workloads, enterprise OEM the Ongoing customers CIOs customers. of

and reduced our have significantly large We order in cloud to several financial to accelerate absorption customers protect shipments inventory returns.

for of will take levels quarters to another it project normalize. We inventory couple

AI focused demand on spending priorities for of the recovery could timing the believe compute-intensive affected build-out by also infrastructure. We accelerating be

AI the some long-term about growth as ever While been megatrend ML and us as for has This time, around drivers makes generative next quickly Seagate. megatrend. the excited as have emerged quite AI for

future from a AI we for believe mass In addition far data to catalyst creation, of storage. capacity workloads demand migration to the be cloud, underpinning for ongoing gen is expected the to over, which is

models gen steps The architectures, AI trained yield enterprise-specific require convert development, that of that of to of investment seeing necessary and into ramp building AI training compute value-enhancing you’re seeing models. data stages stage first today. earliest and of cases today’s we’re significant AI the development In in next efforts investment use leverage These will applications.

see will we long-term storage and out, a beneficiary. As cost-effective HDD phase this as plays be critical mass

already the XX of and video AI-generated day. are animations top evidenced growing images underway use from images well for examples selling each creators of voice content in is generating create from simply videos We by Development adoption mass storage. The to well bodes commands. text, data-intensive services of four seeing high-definition as is which million capacity

For context, today, YouTube thousands videos be daily uploaded a larger than single image. are to and nearly four file million can sizes of their times

fields, that predictive including advances lead we in and Additionally, believe science many will care. health AI to

used of detection, disease for insight medical patient-specific prevent example, AI can For Gen to and develop analyze treatments. predictive AI collection to provide early be by large created many images, progressions

an in harmony of these beneficiary remain DRAM AI working flash memories and bear. will bring trends storage data to enabler capacity both applications and with Mass to

remain HDDs capacity house While flash to feed will media to compute for the being engines, predictive storage cost-efficient enormous most analytics. used high-performance continue and volumes of the mass will generated data

is well our data-intensive low [ph] magnetic gap from roughly cost-efficient is not conviction pricing technology the we including leading due on in are HDD still HDDs close our to as bit next times part Even NAND basis, comparable in environment, to decade. XX than project and solutions recording across such large us platform, innovations flash disc technology leveraging today’s five very unsustainably road This AI applications. of map. positioning increasing do in that more mature HAMR a meet per to level demand, Seagate

our qualify focused is Seagate helping climate, business current customers execution and drive capacities. on product the and development next-generation Given

We fronts. are executing well on both

range. will continue and TCO last our drive extend are PMR disk completion Development through to product nearing drive what density may conventional deliver our aerial into We efforts mid- to and PMR hard capacities the terabyte advancements XX on products. upper be

our mentioned terabyte is XX-plus qualifications intact initial well. are and fully progressing launch As earlier, customer plan product

We volume are on ramp XXXX. in early track to begin calendar

for capacity OEM qualifications customers, workloads. drives targeting including with number testing We also lower enterprise VIA broader are preparing of a and

fiscal development While with progress made I always year is have work there am do, to XXXX. product the teams the during pleased

ability Cost-effective strong improving megatrends leverage. opportunities is capacity and is to business road execute I underpinned Overall, Seagate ahead consistently a by At on level deliver and same We tremendous data. technology conditions. enabler the the at existing by control. by adjust financial high through critical remain within managing in and demonstrated Seagate has near-term am brought to every poised and storage about factor with emerging maps diligent our time, quickly mass excited the long-term a

I’ll stop Gianluca. over and to hand there it

Thank maintain disciplined current to our Amidst industry output production the results that Dave. down ability control strong you, demonstrate cycle, measures. cost we and delivered

billion, offset cloud improvement billion, exabytes. to the of with midpoint range. For line of shipment the revenue XX% nearline an with softer June $X.XX than guided billion, sequentially declined to quarter, share, declined commentary partially we revenue reported of revenue VIA our reflecting Mass XX% in per recent the our business. capacity of sequentially disk by $X in non-GAAP the demand $X.X market, XX better slightly loss drive hard Total and $X.X in public

Shipment exabytes, quarter. Mass compared mass as nearline XX% exabyte cloud March to XX business totaled XX% of with capacity March exabytes HDD roughly capacity slowdown the the led down quarter of shipments compared into XX%. was a total the markets to expected The in percentage our exabytes in XXX sequentially. shipments XX

consume we outlined demand a Specific anticipate a CSPs from quarter. drop we up was Dave inventory was As demand couple to VIA it improve. the earlier, to and in sequentially the that revenue will market, what March quarters for more to believe take

the year, environment of below in We although calendar half run the stable before demand VIA downturn. expect a relatively the second rate still the

market, for were reflecting and Within markets the quarter. up sequentially, mission-critical $XXX consumer revenue slightly was products. quarter-over-quarter, higher down a June demand legacy The X% million, client for typical

$XXX XX% million. Finally, revenue decreased to for non-HDD sequentially business

uncertainties As anticipated, economic system impacted business. current light enterprise IT behavior of our in spending

We in September revenue customers timing expect purchase in to decline our this quarter. a a headwind of the result in and system couple the large for meaningful

revenue HAMR-based as system during first our June CORVAULT shipped we quarter. for the Importantly, planned

XXXX. CORVAULT availability end We broader of calendar systems of these the by expect

down Non-GAAP points Non-GAAP by increased Moving million, to favorable time June to approaching gross sequentially, $XXX less performance. profit lead sequentially, expanded basis mix we XX offset XX%. approximately quarter as $XX decreased Underutilization reflecting partially build the underutilization costs. to temporarily revenue in our the margin a operational long XX% and quarter production components. million was cost lower gross June in lower

current on the outlook that higher Dave Based underutilization the costs in expect we business quarter. outlined, September

improvements expect pricing However, XXXX. markets year-over-year We we disciplined $XX decline our year-over-year million we in $XX down are fully calendar cost cost million, our realized to-date, actions and $XXX as margin of reduced to half implement modestly well as structure during million management. second the expenses improvement and variable reflects compensation gross adjustments to certain The sequentially. cost lower operating structure non-GAAP as increase

April, June We recent of cost efforts expect to announced increase and three restructuring savings reflecting the full quarter, the from an leaseback September the in in sales nearly similar quarter nonmanufacturing to related non-GAAP be offsetting realization OpEx of to sites.

approximately as of revolving Moving on sheet billion, billion, flow. We of balance million cash including will Inventory lowered agreement own quarter-over-quarter facilities our and previously the billion level our June the disclosed $XX focus on was quarters. the $X.X quarter which $X.XX by was continue to liquidity down we credit $X.X reducing amendment. in in ended coming $XXX to with credit inventory the at and million

down the Fiscal CapEx road million target innovation-driven X% CapEx supply build-to-order or we demand a $XX supporting in product was totaled June expenditure Capital shifting loading, to our still factory lower XXXX maintain quarter, on and million revenue. We $XXX map. balancing in X% as fiscal our roughly focus to sequentially. of year XXXX year

the million efficiency fiscal solid million operational Free $XXX the and year, quarter generation in was execution for for flow and capital working $XXX reflecting management. cash

outstanding. quarter to be no the quarter payments $XXX as share the April. dividend and flow exited lower the in quarter. announced quarterly the cash the free we with restructuring in September charges incur There with of XXX cash million a the used We for expect associated were shares majority during repurchases million We

$XXX primarily balance exiting Our debt down XXXX billion was million notes $X.X the the reflecting quarter retirement. quarter-over-quarter,

leaseback noted reduction of the facilities earlier. mostly was through debt funded and sales three This the

we raised prepay and and $XXX the new user March in billion million. loans proceeds existing notes $XXX $X XXXX to retire of term of million Additionally, notes

of now coming total these XX% fiscal due over two As we debt the actions, a less have than of years. next result

well months $XX was terms. of our of quarter debt full million increase million totaled the just reflecting expense in Adjusted $XXX times is a lightly expected the for in to September described. EBITDA debt quarter, Interest X.X resulting agreement ratio leverage actions that and a quarter June XX amended credit the for last net below I restructuring the

offset September declines our the drive in legacy hard outlook, markets. to to mass improvements business, we incremental expect the According capacity quarter for in

For is to part our non-HDD earlier. revenue sequentially during among decrease system a demand customers for expected to the system couple timing as business noted large of

plus to of minus revenue or $X.XX in expect quarter be billion With September vetted a context, range $XXX we million.

offset includes million. As non-GAAP higher operating mid-single in digit non-GAAP range which a to the per guidance, today $X.XX partially under-utilization the low revenue mid-point expect we be of we we discussed plus proactive in And range, $X.XX. measure the to our range the $XX expect share margin or cost in of loss of a minus by

call turn the comments. will now to back for I Dave final

I’m we fiscal proud of agility to have year. faced past perseverance XXXX, to we proactively this market environment are the we Gianluca. Thanks, Entering continue and leaner. as the respond over

is healthier sheet roadmap balance Our our is and product stronger.

of these leverage opportunities capacity ability factors capture enhance to attractive to and All conditions, company long-term market for financial position near-term our the storage. weather mass deliver

call their questions. employees, Thanks and I to for thank As we support. let’s once up for suppliers, and the like remarks, conclude our our us would again prepared joining customers, for shareholders open

first comes Sankar Instructions] begin We will Please [Operator TD The with session. go Cowen. today question ahead. Krish the now from question-and-answer

Krish understand I’m know like nearline you is revenue $X.X guide invest business. that December, I see current to this into or of you guys your to guys, maybe at December down? you would be September case flat Cowen. for a the wondering next Hey do TD Like if Thank we there slightly from to Eddy curious them thoughts risk you. continue exabyte quarter I’m on shipments. remain per dividend especially from or year, in is growing more want the sequentially but case in for in asking billion

Eddy. Thanks, Yes.

December. So we aren’t guiding for

one overbuilding of we’re reasons natural point an there through we there’s think will be very the the that’s the cloud and example. on service providers, to I so indication flow this but at being some – cautious, of hold line some at expect for

slowly start back here. it So trending from we to up expect

be don’t hockey because pushing but I for We’ve inventory. think back mainly just that, stick we of on dividend, own to been mean should slowly we all this go big And got up want – to bunch relative – expect a rebound. continue we’re this right now, it do we’re planning I fine. stakeholders to all always in to the wrong person plan, I before. I all our we’ve be it on a of focus plans a be that that because expect the of for our and not our right execute we And now. we to be laser could

Thank it. Got you.

ahead. with question of comes The next Bank Mohan from Wamsi go America. Please

a also will lower customers standpoint? so exactly much. purported competitive flush Yes. and do and you order for What Thank kind production wondering, secondarily, your your out What what work? that little customers markets? in doing made. I comments strategy from this this the follow specifically you if you you CapEx these from output was certain Dave, to two you and capacity? you pricing so times a specifically bill One the through of require you that, then bit How could of much. points marks. adjusting mass to that And are bill you Is markets. and made expect would in reduced lead this through your order in are on Thank

in Wamsi. different Thanks, number is it here. complicated, a Yes, of play there’s because markets

for example, channel the we client server. So of some distribution have classic or a markets consumer

we You to just flow On mass raise drives, do relatively things quickly, prices increases through generally into don’t speaking, products. that price through easier have capacity some and of move places but transitions system. the very it’s the

this sure we’ll get for is need say to So We make that. economics. we paid that the changing

largely. end through benefit the through But to customer to we economics change product next that have to as product TCO still So the there’s a drive generation, go the transition.

can keep everybody pay and back healthy. our suppliers we and So go

that properly. downturn make supply at is profound the demand differently. that very entire is in to said, been exactly There’s accept a treated differently what we you very And we’re and pushing direction sure the But behaving have this this different chain are things such markets point.

of driving course cost the on production, on the that side, is under-utilization. Yes, Wamsi, and

need do higher on of wafer, bit little wafer the little but side and a quarter, I in say level had June will would that the the media, more no right on now. we to production Now, we bit production on the mainly

from in $XX million, could the about general but through June little charges change quarter bit estimated utilization a million going $XX a little of that million, bit. quarter, $XX up almost So declined the probably in September. to it’s course that We

Thank you so much.

The with next question from comes Arcuri Timothy go UBS. ahead. Please

lot. raising soft a examples of a market I XX%. share. and of XX% a little pricing you obviously such bit Thanks It’s also on versus heard question counterintuitive had market. think about to you sort prices it and We’ve a how

then reacting like So kind the also, look questions. willing are customers sand as to are you’re out? share get And to how to level? in of to on you I going a are where, there that? lost guess lose two One, Is to share you if lose Thanks. share share? that Or susceptible raise reset pricing willing you line to you wouldn’t draw you more pricing a

Yes. Tim. Thanks,

I weak you environment. the industry are think there’s, also right. generally whole yes, It’s a underwater. But So, demand speaking, is

I make you of protect the obviously the we entire supply can different it’s How across – the base as ourselves, products There’s So is different being about responses. talked imagine to we earlier. accepted? monopoly – in we markets different sure obviously. have protect market different we mean, the And

They will come Some do people and believe back. are worried short supply about will that be term. longer supply demand

products with much people lead the I that with. And are so long very now, capacity times something especially that it’s right there – long, and are mass think on tune in

good so And forcing it’s discussions.

that. want one get of the I make time various procurement in business. time need and deals possibly And big of sure we to That’s we take to our in as this from out the we overbuild, whatever see sure, that to hold And accordingly we I happens defend adjust much mean, forward, why we reasons as for can. are people decisions play I we products. other they’ll There’s we’ll don’t make reasons them. and continue to make want to that tactical front to as that think

then, product through the out TCO and hold get chains that or the I us better or overbuild can have go optimism and the to that’s problem capacity extend price. the transitions, dilute the is the And supply by of higher to proposition, on. dilute so for overbuilding actually we problem what continuing components by lowering any onto. then a think provide to we we points, get And didn’t

Erik comes go question Stanley. from with Woodring next Please The Morgan ahead.

for Awesome guys. Thanks taking question. my

I you if to Dave, made Now, you by in just being the ask wanted your AI prepared demand remarks comment of timing recovery flesh investments. could the delayed a out about

Just be you we calendar market sequential demand shift shouldn’t of dots Just you in some context that’d in growth telling us you much. Are talking until very XXXX? great. help these about weighing you Thank on capacity connect if December. the of conditions through expect us could

Erik. new great are that that and kind instead of later. one the new be it’s the coming I are I the And are something capacity think Thanks, data priorities applied put new that consistent data was I technologies most new being earlier in read through cloud, in that the power growth, there some of biased conversations – capacity of there’s mass the I my all of center mass comments that build know being already mentioned Yes, slight would the through way stores, think come technologies and way how about was well, already have – in capabilities it applications. most and the it’ll out, being we infrastructure, capacity results on things center in that those of but as – compute in fairly of were already that infrastructure

stuff and as providers high doing cloud well. So that’s on-prem that’s for priority and AI service a people

Right net but feeds bow AI interesting right? Predicting applications There’ll tough, being there’s space We those engines a that think engines, and every going point. data to big to up the behind some data actually you going think to lot Behind And that. And AI will, if every actually that now as a it of for has that’s to the be to we day. think and that’s at show I day, follows every meaningful. capacity watch. do is that battle mass running day, there’s engines that’s be to AI positive. feed really get think competition infrastructure the a be going it data we an those be wave

comes from Thomas next go ahead. Barclays. O’Malley question The with Please

you mid why for my that mid-XXs deck, where to the talk Thanks PMR your is your were Thank you. extend about TB you and original you capacities. plan was the questions. the taking platform In you into upper that decision? mentioned and XX made guys to into Could where that now extending

quickly mid-XXs, no into there’s and We it Yes. high-XXs, We can can about And is said the electronics Tom, believe identical product talking been HAMR. we is the think in takes real here. year. change. very that talk the let that I have the product highly variants, we with We’ve me get about leveraged. it, get that to mid-XXs. about almost – it for It’s a SMR now, I’ll us highly, mechanics but the in it PMR

the changes happen. almost So out to the couple swap a product, other it’s HAMR that component and discs for have heads and same you

of lot We called been disc remarks. from for planned it a we’re has leverage in the platform get a prepared a to That platform that. long So time. XX going long,

can So PMR in to same we customer of parts. I very, solution we of or bag have mid-XXs the the HAMR lot of similar variants that go anywhere the confidence there or stay can with a parts very to bag wants

customers it, who I and that is do the out XX, have I’ll products but a will in that I’m to of it all simply into try say not market. now product for frankly quarters do erode things. I competitive quarters confuse market, three don’t very out we people the need I think that that products of it. well space product, for need it of two in had the Right need these into maybe And they come. we would all market. force proposition going because this value kinds is, HAMR there’s out if XX, I capacity poisons by the or very, for I a confusion that what people say it amalgamating the those that way the the think it? XX, kind to is issue variants think that about there’s the point lot are different when All people when

business So we’ve now. we got run to way the the right are

Yes.

when is go add mid Let we just the me of the the for to in that say the course, we clarity, mid-XXs SMR are CMR that to you version, drive, if of version high-XXs. in

Aaron comes The Fargo. question next from go Wells Rakers with Please ahead.

Aaron, sorry, you. hear can’t we

per price looks how increases dollar by trend thinking higher? of of guess Yes, kind up mass Thanks some of to it I forward, the to kind on for look thinking basis Or the you’re we the based wanted be guiding just terabyte that guys, move question. that your Appreciating margin all, guess about gross imposed capacity forward. as explicitly, discussion, look not I that math but was XX% capacity the I sequentially. I considerations we be already ASP upon? continues as like in unpack about should if of pricing shift have at that. sorry we you that of of terms we much about the on first should

capacity, get production be And peak look about kind out should just levels in take that total XX% would back beyond. gross but the there’s a And that? that, level the margin this at that know shift of trying capacity variables, capacity level? not in you some do of quarter, looking of we think take XX% then current lot prior just reduction we but also, and for a XX% with shipment you to to which when in I’m a think I

Gianluca give Thanks, answer. Aaron. it I’ll to to

I of right from I changed quarter-over-quarter what think now, tactics it’s think extrapolate and dangerous in going look what’s there. I to say at the as on

a draw to we’re the at is product on different pricing take straight of to I the for We’ve long product a stabilize, mean, your through, happen up there’s way to lines, unpack good that a deal whether that can still suppliers going – line. end want we or go think like things transitions there, around sure a that not to depending but point. haul. going not whether points, needs quarter to the or stay or what’s over said certain capacity about not the lot You different to of a I’m

manufacturing Relative talked to our about capacity, we XX%.

course, that’s factory have, every our it is link. single the Of as only weakest not across perfect as across perfect good chain. we’re nor And supply we

are We make to sure still weakest links well those for. have cared

largely that. haven’t that’s online the supply have it’s that so taken our a lot would of in enough hampered severely you in – people have that chain peak also driving And for unfortunately, mean, will, the dramatically been it’s to if capacity, but because we what’s ability The go the put invested we’d people down. capacity people just to is I back not bring back. and capital,

want you do to So something, add Gianluca?

is price in of you per terabyte particular about Aaron, That asking were mix. the a the Yes, result QX. also in

higher that per capacity have an usually but terabyte, price reduction So lowest our And is of the have also a has lowest the in cost That, we terabyte. course, increase cloud. we VIA. in per

higher per terabyte. So per mid-capacity and drives bit with, again, little higher price terabyte a cost

So when the that mix there high. is volume not impacting, is of very is a course,

the different those difference can exabyte terabyte. price in cost a segments per Just swing few and

Thank you.

the ago. Aaron, we the were probably year a where capacity, than I would of of terms not more peak In take XX%,

a adjustments. that said, as to eventually will they a We lot employees. restructuring, of of of have rebuild capacity time need we And lot terms done also in

back taken model actions margin because across order capacity back in the to need the we’ve our don’t full to We business. many get Yes. to into cost get so

we’ve aggressive our very very, footprint knowing been change. I had that, to on that think

the be of comes think a I to margin better much some scale we’ll perspective demand from as able back.

Thank you.

Muse question ISI. Evercore next from with Please go C.J. comes ahead. The

as Hi, Kurt demand. moving taking concern data C.J. HDD demand HDD time What to flash SSD into on is Swartz the delve for implications more workloads for Thank there accelerates? creation this uplift you. is for an paradigm? to And AI AI perceived within regarding data any both is generative line Thank for from and Open you my question. center storage

to data combination. things your the this not very, well. data Yes, you’re I that or this right in don’t the manage know make people multiple the very how like data that are tiers you thanks. time. own centers at if geographies they And Instead, gets that right for across way think of would example, place PC, that making make decisions and sure or right building

probably are need and and we lot tank touch that’s want you There that very video-intensive of discussions are going so HDD a whole to see transactional else are some then believe AI a to certain And be normal nothing be tier in that can sequestered lot don’t today. that and very and it. that a that data gen there’s

win-win compute. up, for lit I a to for and think as long-term. are memory it. And So, win think it’s it’s I’m new applications some I excited of storage these Obviously, see really

tools competitive provider whole data the I forward. of coming. was infrastructure you some a there’s It part We go service it as haven’t look But I and a host will of that seen traditional say to new that cloud all AI. critical unless become capabilities be space. think And a start very that back tiering at mean, yet. will along we do

The with Please BNP. ahead. next Ackerman from question go Karl comes

two Yes, questions. you. Yes. have thank I

capacity to drive the about form we of second, this that think area And missed have perspective? you. here? capacity are why from do then should how mass Thank average and for quarter? unit from I normal guess, First, mass believe a replacement should your cycle whether but did where unit I growth business continue returns And may whether elongate this, that capacity some shrink the in per you or of to we

Karl. thanks, Yes,

not the the So overbuilding, – we capacity the into to trying high drives some are especially are out of providers. service cloud push

We’re actually goes waiting down. inventory until the

you long-term capacity And why like I don’t and pointed either. metrics so a look I I on to think this may the reference some think of just why, that’s per drive trend that’s that’s down. earlier, weird, made diving out

that’s I of back go think course to going up.

mix. is of capacity average Yes. because The down

quarter, is June cloud of the to the the as So higher much business. cloud less capacity and course we to before, in shipped more I in VIA, said and

the Karl, sorry, second I’m part your of question? was what

that. about And unit do you mass replacement are about believe here? from sorry think should about It’s the capacity Yes, we where how cycle? growth we

Okay.

appears it the unit quarter shipments capacity your in because XXXX. asked I peaked of mass first

been it’s are about same decline. five a period. over quarters of same consecutive down the At So two thirds time, that in units

we perhaps be think discuss helpful? just would the units here could And and exabyte Thanks. it’s I if corollary between relevant growth, so

hundreds are cloud in millions drives, sorry, hundreds the centers if data you around There Good. world. of of of, will,

eights, fours, drives to aging if shipments down, more it’s are over shipments for And go though ones features them of point. even are because unit exabytes features and points, lower capacity can lot that actually terabytes, are go unit your level But system some power-wise going whatever. aging efficient the XX it’s all still newer off a efficient, say time on. its to up the more And much down are other put of

the balance. will where our prioritization to shipments in how are digestion again, tough of things it go largely right these unit all are customers inventory turn, That down fast down to about of And back about. this that comes been their it’s we’ve their that I because go questions back? ago it it quarters talking now. do will peak So for It five believe six of These was spend. or and will

months the the are sets, versus cloud six other And months latest positive providers ago, indications yet. there’s if And all to feature very numbers were service to that think GenAI these trend. at peak where But questions cloud not think I about are the and about in we’re announcing numbers. nine latest I they a

perspective it’ll unit’s think it does. a from back come strongly when fairly do I So

from The Baird. Gerra with go next Please ahead. comes Tristan question

of couple A afternoon. good Hi, questions.

first from percentage and second one per a that’s year The also of medium that in your Thank is per then curve, term a China is of And you you production demand about could cost should if the percentage as see the expect decline talk question bit a we the production percentage revenue? basis? on that about the from about you. coming and true China

of portfolio. I it’s discussion. down as – of was can to even relatively portfolio, about I that – a can numbers the think, our same quite part it the the question bit, our Gianluca relative first China peak take cost then it of but the when and the – answer relative is China was

China consumer that our things these So, I overly and wouldn’t revenue analyze other CSPs versus affected spending versus downturn. all have

we also number remarks. months a the carefully as sections well going those go said forward. next it’s the across of consistent we for prepared don’t looking demand like fairly we’re we in to think really business think I But the it’s because portfolio. our entire managing back in come And in we’re one upswings as six every

I of don’t means in as lot have another The product have to road can then in we Dave new no PMR said, one from those capacity, will quarter. What from cost the guide coming would a terabyte. us of And new so higher have year. cycle terabyte. lot to we just a factories, reducing a course product lower do per in continuing HAMR out that level it And cost all products we our couple vary that the full general, soon, a so depends is down map. a say help of will your utilization per you in cost are In the quarters, quarter per we terabyte

lower so points the to I products the terabyte capacity And that well, our cost new take points cost Right. terabyte ability I forward. on like continue to density helps as our highest to chances there, arena per and we as capacity yields the scrap per think and immensely. have have aerial on, these in out going it work

much. very you Thank Great.

with Please ahead. comes from question go Hosseini Mehdi next Susquehanna. The

A my taking for question. Thanks of couple Yes. follow-ups.

especially about around lower side your increase missed how would I scaling, XXX, Given before think on OpEx should you need revenue the OpEx materially? to to

line I PMR development mean I Mehdi, done and we’re been that can transition and on and so with on lot pretty much product we’ve think the where we product hold the experimentation forth. the we enough scale. right get on through far product a can and – the Yes. HAMR we so are of now phases, the all

there. we think question. build need so don’t until I I get appreciate revenue and we quite OpEx scale the a of efficient back we’ll grow So very bit to

would for in cash then should September flow Gianluca, December? be And down in that and then free assume Sure. up I

flow no, the through all general, prepared for our the bit would we to in during we executed Well, said and a generated free quarters. remarks, I lower charges little in in have be June September July. pay of cash restructuring end good because have that we

Right.

every But positive. expect to quarter we we also said be

a and in sequential December September in down rebounding basis? then sequentially, just on Negative,

better yes, Better, point. Yes.

On have to the don’t right I – compensation maybe, just OpEx numbers. I want now clarify, we variable our in

comes the have a we So just could much. bit, bit back of little future business a not stronger, the increase in if little

Got it. guys. Thank you

Mark Please next Miller Company. comes from with ahead. The Benchmark go question The

if, plan? Is the Or than originally wondering PMR I I’m a this that always your was thought just it change? like further would going in is sounds it be.

It was always plan. in the Yes.

think, squeeze take hard it’s things harder to right? XX, top been of to technology XX media the on up. the HAMR. PMR. also drive on to and taking I of heads It’s curve, harder bringing the would way. we’ve was have worked kind end we focused So us really Mark, the towards great on that sure we’ve there of We us that XX, and that getting believe make And

get So density building as time the confidence into goes get actually on can more only XXs changing the as we’re much much new leveraging aerial components as of we and and the on. that that critical area S-curve us then us possibly that to

to in there’s And in we’ve So talked drives about distant world, future. not the I’m going capabilities terabyte lab. the too of the these XX be convinced things

to ready We’re X go per disk. terabytes

every positive more incrementally teams So time.

teams good. The are that’s progress. So making

technology almost allowing advance up to specific you any XX there push terabytes? that’s now Is that to

HAMR? beyond mean you Sorry,

terms any anything the terabytes, No, in high-XXs and mean I taking the breakthroughs advancements? or new to the of technology in PMR up

new are to write, write applicable That’s terabyte will. working is with drives as readers that you designs always right about – the terabyte that. [ph] It’s you well. There’s to implying the and PMR only know XX we’re write not go XX if Well, technology. the technology, because

kinds versus are there’s worked. a many of different not variants other it’s CMR, high that mid-XXs Technology But There’s technology HAMR being being and So has different are PMR. for vectors things worked. XXs customers. SMR SMR, just been is

little I careful points. to picking bit with So think you be capacity have a individual

the SMR way, on by it. top of well And can HAMR as use

So their how same when people because there get be of kind the centers. of capacity HAMR into points are choosing data spread we in deploy might that of XXs, to

you. Thank

with The last question Vijay from today comes go Rakesh ahead. Mizuho. Please

questions. two quick a just Hi, Yes.

XXXX? ramping be mix exabyte look look obviously at what well, way as XXXX looking any or at calendar you would HAMR, even calendar the when of Just you at

strong. bit exabytes times delicate those start – we we’ll answer so balance I that capacity is drives, we strong, still a start many be But allowing the now, as big how Yes. between we’re and then we if and quite HAMR that many lead make the do to associated is the do growth this to the drives do box, think parts how returns be to with the strong be enough, getting, will per very us a that. able to exabyte now going demand in jump theoretically, economic have with to

lot that still we a going we’re call demand, to first components is order answer of this the that So have. driver with

because transition confidence. HAMR into that we We’re product very much leaning on much the have

if is good qualification up growth. they such market customer’s because that going and the the hoping is good what lines we’re box think that interest I somebody high proposition customer into like means a stuff TCO demand earlier, as all And That’s asked all well for. see exabyte well.

center I And in that compares it. prior many inventory And Got center gauge the how of data side, or... inventory weeks to how still there? on is kind then how the data way of guess, terabyte to – much any inventory

in. exact also telling we’re but an I not that it’s only Right. that’s any customers our are we going It’s have us, down, evidence are not putting would what science. say us, not telling people

Seagate down. the is inventory definitely, going So

we this into originally of going I our managing of. long, quarters industry. would the as down are We project and are downturn rest forever think but didn’t getting cognizant it’s And think that be going the before We speak that don’t very that be going fixed it’s to something that to it’s indications owned even this I’m upturn. We’re the last take to think that’s going of for – overnight. this inventory don’t But another either. couple can’t all healthier well; but things I

just north here. the the turn think until We of I again year. said basically not will it end calendar

a Got it. Thanks lot.

the like to session. closing our to remarks. question-and-answer for management I concludes This back turn conference any would over

[ph]. Betsy Thanks,

today, heard you As over environment Seagate business to term. tough is to this take near actions proactive the navigate continuing

trends and for as we like and the data emerging excited long-term ever about by existing are like about capacity opportunities it’s mass However, today. talked brought by that we for AI, remain storage, underpinned

close our road Our address our us both enhance Seagate’s stakeholders and I’ll performance. well all financial and Thanks technology ongoing to for for leading support. thanking of for today. for us value future by demand map customers really positions their joining

you presentation. for now The conference attending concluded. today’s has Thank

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