Seagate Technology (STX) 23 Apr 242024 Q3 Earnings call transcript

Welcome to the Seagate Technology Fiscal Third Quarter 2024 Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Shanye Hudson, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Hello, everyone, and welcome to today's call.

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

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

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

for all opportunity call you, remarks, to asking Dave. we'll queue. I'll one questions. and with reentering the question advance thank the open over now to the our analysts for then call you order up in hand to we prepared primary Following the In participate, provide

XX% an in share financial expanded March and than In Seagate compared earnings improving and revenue more the is hello, profit results you, prior delivering quarter, everyone. Shanye, non-GAAP we gross quarter. demand doubled Thank X%, solid the grew environment. with non-GAAP per

function our downturn performance heading and we saw profile improvement are demand Our recovery. into actions strengthen trends and the to both implemented customers, enterprise markets cloud OEM the the of end also positive a market sequential financial we throughout the increasingly March and demand U.S. both improving is quarter. across in the a China in decisive Nearline

generating growth favorable the execution pricing resulting in reflects key quarter-on-quarter revenue quarter maintaining On is piece on outpacing the growth. on profitability, healthy broader emphasis includes also expense to just introducing taking focus for controls exabyte value tight with mix, expansion of new the a in an our our customers balance, well one initiatives as which technologies margin strategy the as maintaining side, and our supply-demand hold enhance cash. Pricing

near-term dynamics, the cloud market lead recovery. the at Looking end demand continues to

rest inventory correction Nearline also demand demand growth across customer expect complete For through second their on cloud cloud believe consecutive is double-digit continue strong improvement our to realized improving. of the mostly and customers, currently with names. quarter, we the long-running end We global from revenue Based both customer is growth a sales interactions, healthy calendar U.S. we XXXX. to cloud and

calendar Historically, correlated has incremental half enterprise in increase quarter. and of enterprise OEM demand Nearline is in which well calendar growth, second the modestly observed demand XXXX. March improvement in projected stabilized to traditional server with the the Within XXXX, markets, we

products. demand quarter, through the OEM enterprise seasonally opportunity and improve for end expect we trend largest remain as the resumes. In server result, we higher Smart calendar VIA market the revenue cities a to to expect year. in lower VIA was markets, the growth March As revenue

fastest-growing form data utility One actionable that on such to new However, energy at Analysts an XX% AI to energy data magnitude edge, and where the VIA sectors demand for pace data this applications centers to insights smart the economic shaped and the continue case management, by and estimated in resides. use improvement to the and HDD from applications use aims analytics recovery among will drive worldwide. Within China, efficiency emerge of of conservation. imaging other in that placed VIA use be region. markets,

Recent stimulus monitor to of show signs growth, to aimed including and government's infrastructure continue We digital plans economic progress. efforts spend. spur transformation economic at the indicators

will take programs the support to revenue of throughout trends benefits these calendar take market growth year. we it time these However, steady constructive for hold. Overall, the believe

is deliver plans our mass These afford that predictability enhanced that Our the Seagate greater with place ability and growth now by supply value majority of meets is customers visibility their capacity demand capacity planning better in find our customers. that to in large build-to-order needs. and the while initiative timing for assurance of volume

map. Today, as road execute we driving are product Importantly, and and high-capacity our the plans outlook X unfolding for technology is qualification product on HDD improving for we families. ramp simultaneously overall demand

of about through at customers. commonality as enables This such customer share capital cloud X efficiencies The across enterprise components product together customer terabytes terabytes job industry-leading is last XX% investments as test customers are our families product the disc. as the our qualifications. These HAMR-based our technologies Seagate and at doing for processes. our want rare Mozaic industry, procurement, manufacturing, drives to supporting global in qualifications. per advance processes PMR products first delivering assembly areas up same well to This a XX, product as to we drive, and Our XX-terabyte acknowledge various teams who and and per PMR qualification product and and work XX most our phenomenal in I leverage on are X-plus

expected. the in with demand as customers are meet begin from Every qualification, in a we in as already implemented to customer expected. With and tests tests customers' subsystem We mechanical quarter. to aspect and and unrelated underway we the slowdown recording ship first was business. XXXX. Relative global expect We other now qualification be performing the the in this large our these with Mozaic HAMR-based full some of few remainder with component June our expect of significant some first thousand have volumes not shift customer, qualified enterprise support June completed one timing, HAMR the drives half We qualification products. of Enterprise technology, CSP of our to our quarter experienced currently the has determined other Systems to major the shipping to progress though temporary completed continue Tier customer. Verification the should and our drives we HAMR fiscal solution exabyte hundred already X in identified gone through process a We weeks. towards and rapidly completing recent

qualification space that power sustainability noncloud laid map consumption with customer HAMR with weeks and customers required Mozaic out our reaffirms of drives Customer ago. We've the the that floor lead of ramp gradually number qualified at in on the As reflected products. TCO top benefits, path XX customers a technology, our a a we remain terabyte completion basis. year, including and the a least to with hyperscale in feedback offers lower strong few we per second on first terabyte successful broadening customer calendar of clear less focused and in products a Mozaic HAMR road half interest further on is

density rather scaling gains capacity adding than and through drive heads aerial are We disks.

terabytes maintain to X% product expect to we our of changes and revenue. between material on execute incur roadmaps our and we beyond, capital intensity minimal As XX of of and bill to costs low X%

Seagate achieving storage. path the result, we machine AI also position current HAMR long-term for our production on believe and a margin mass as capitalizing drive provides As target megatrends learning, to well which cost-efficient continue for range performance scales and demand like beyond

in GenAI on is past, compute-intensive the required language of phase the models. As large initial focused develop building to the we've out and train infrastructure discussed

leverage the with takes transform As will Customers phase, value-enhancing generate development expect phase to applications to this demand to shifts trained increase models these enterprises as to content. hold. deployment data data-rich AI and HD begin

strong can performance gains. next in and subsequently larger volume discipline financial several of and driving and term more be margin the our summarize, AI-generated HDDs more our for This most that, and ranges the those demand of expected text. use imagery and cost-effective house marketplace. With the increase now as cover product X,XXXx capacity trends, HDD products which to the up favorable means outlook. technology foundation remain performance proliferate in also combination HAMR-based further the for mass operating the bode returning combination shift than well trends and over exceed Gianluca reinforces long data. To content ranges years, confidence and long-term leadership towards time demand the financial to target is These provide over Over will potentially videos, our to as to

with XX pricing X% our and to quarter, million, March mainly basis disk and exabyte, shipments increased our expected the continued Nearline in income quarter-over-quarter. to driven revenue billion, the to metric. key non-GAAP favorable Non-GAAP increasing trends performance nearly of financial solid the hard grew cost above was well $X.XX in improvement the delivered improvement market X% while of sequentially demand quarter-over-quarter. cloud expanding midpoint EPS sequentially was Seagate revenue, $XXX was reflecting to the Dave. Revenue performance billion. $X.XX, as points range, balance Revenue every margin as you, up X% $X.XX was And Thank XXX $X.X across XX% discipline. Within XX% drive improving operating sequentially of exabyte by non-GAAP up sequential business, our operating leading financial actions.

the sequentially capacity shipments exabytes exabyte mass secular compared for decline demand capacity XX%, totaled quarter. reflecting more a capacity demand. exabyte mass long-term with growth, shipments outpaced of Nearline the the Mass continued market, than with XX% exabyte to XX offsetting HDD revenue increasing VIA. Mass slight percentage growth cloud the in XX December total in capacity was the billion, as Within $X.X

calendar revenue in quarter, low in XX forward. $XXX has more and For June consumer primarily million prove and most seasonal market, patterns beyond. In from the year quarter-over-quarter VIA believe demand exabytes among demand typical up the driven we CSP XX seasonal point inventory We Nearline by March lower was continued million, Nearline product customers shipment quarter that anticipate $XXX products, moving returning of the exabytes. believe the quarter the the be the to down improvement from demand to prior will with in of were decreased Legacy market.

quarter-over-quarter. was $XXX Finally, revenue for non-HDD our flat essentially million, business

market non-HDD similar and We legacy the remain expect in to the at quarter. level June both a

the on million. quarter. increased March statement. gross Non-GAAP to points $XXX Moving of rest compared consecutive quarter Non-GAAP basis fourth expanded the previous a for quarter improved million XX.X% XXX in $XX and to margin sequentially the profit approximately gross income to the by to

offset margin gross than for $XX Non-GAAP Continued underutilization the mix which cost, company mass million. gross business margin. overall pricing towards about much headwinds margin from products HDD favorable faster shift adjustment capacity and expanded were

to but continues ongoing believe income certain EBITDA decrease Adjusted slightly and and calendar R&D share and a timing to minimum calendar better approximately in of return totaled build these $X.XX and abate costs share underutilization with up XX% execution net efforts. tax the half year up on to our in tripling second spending expect quarter-over-quarter, product of the as continued than operating million. EPS guidance, quarter $XX the nearly in the in of expenses quarter-over-quarter, Looking [indiscernible] and was the to We Non-GAAP expense the was diluted the market. our demand Nearline support to the reflecting improves $XXX June margin March along support improve expense we incremental X% sequentially XXX ahead, cost million, control current the shares million quarter based of in benchmark non-GAAP overall $XXX $XX resulting factors, million, of million. in XX% year. Non-GAAP count volume per

the capital completed expenditures were as generation the of In cash sheet. of to in first cash million. XX free majority flow were and down to flow we the $XXX $XX half the Moving March Capital fiscal on 'XX. sequentially balance increased quarter, to million expenditures

supply engineering million new of in balance on chain $X.X to We development, expect We June for use including to through in liquidity, assets, low closed with time. in of exiting million ASIC credit our million sheet or shareholders the build a Seagate reflected The our acquired XXX portion over proceeds the ramp revolver 'XX cash outstanding. expect our X% revenue. returned facilities. Today, at our with to well intake dividend, to be billion target the net of begin IP, March quarter $XXX cash. related fiscal quarterly the pay quarter the to the announced long-term of shares we below Broadcom quarter CapEx be including we as our will We products down as $XXX X% end undrawn and debt and has that as support to range available

to annualized impact revenue. Inventory our million to increased There the approximately ramp along initial expect no of our billion with the last expected and material PMR-based to we as Mozaic-based $XX continued OpEx is in starting $X.X savings recovery, XXXX. demand capacity concurrent we support Additionally, fiscal product realize to stage ramp. mass of product

at Our $XX billion beyond interest with our we debt in balance quarter, the June were million. and $X.X more million $XX And obligation than of maturing March Interest million project be expense debt years. long-term end was the of XX% expense between $XX quarter. to X

Turning to our outlook.

range in revenue minus in billion, market. expected an improvement ongoing modest the as of as well increase and context, by a better June our of revenue expect demand enterprise our year-on-year to million, mass VIA be to Legacy and the Nearline We $XXX at remain expected and led cloud $X.XX XX% midpoint. market, capacity sequentially. continued With improvement relatively XX% non-HD for products or in are quarter plus both flat is sequentially Nearline

We operating of $XXX non-GAAP low range, are the costs million. teens underutilization of $XX midpoint operating into approximately expenses guidance, planning we non-GAAP improve our percentage expect of to the million. margin revenue At including approximately

our a $XX a and XXX We minus approximately be non-GAAP shares, tax of or million. EPS share expense of on to count based $X.XX, plus expect $X.XX million non-GAAP diluted

expense strong expansion outlook. management as supply contributing that results in are you seeing discipline our the year-over-year Our profitability and and to

turn generation back call return to supporting balance free now to Our final will position commitments. I and well sheet cash Dave capital the healthy our comments. for us flow continue

calendar supply Thanks, is execution us and XXXX. sets Seagate an throughout operational year environment, grow Gianluca. which to well amid strong revenue and improving discipline demonstrating expand demand up further margins

anchored technology offers industry-leading Seagate. compelling portfolio, customers product by for Our for economics HAMR our and

the proliferate time. product products, long-term compelling financial and storage. cost-effective to TCO leverage we capacity strategy most drive our over capitalize these As on customers position confident Seagate demand new believe We expect for that platform product supports space. This further I'm to the proposition we including offers power mass conserving we've TCO circularity our Annual focus center and week, our ESG that goals, delivers outlining the on our Mozaic sustainability made for program. Report own progress advantages operators towards data increasing their Seagate published XXth and well

collaborating planet's these drives recovered and this market. are and conserve X we We limited resources. customers extend from Since launching life drives our own million in operations the back and program with nearly the products' recovering have XXXX, to into cycles shipped

I of team customers to thank global open ongoing their and and Finally, ready up questions. members to for we're for want support shareholders work and dedication the our suppliers, for hard Seagate. Gary, recognize your our call

[Operator from Woodring Erik first Morgan Instructions] today with question is Stanley. Our

into I'll -- X-part make combine question. I'll this a

points, HAMR your just comments clarification remarks. Really want Dave, appreciate So on I get X may. on the in a to I if prepared

of large impact on CSPs super in about 'XX. going goal remaining you you've customer? And the that final CSP Does the process and that I you're you be clarification testing have Or your then just a the helpful. that it issue such phase now me. these have at would onboarding delays that's was end this points kind through is, First on replaced Just component HAMR, by for all? testing the of with second, giving the have calendar past started you lead do timing the proceeded And mechanical believe call X talked you an any those hiccup with customers? further to won't any year and then of

appreciate Thanks, question. Yes. Erik. the I

and other So parallel. have to the running we sources we other mechanical do those question, had component sources, relative in in

it up because the that able and all beds test that. back right the test then the and I'll were quickly way, the those beds we quite repopulate material, get we to with schedule and segregate material recovered say So of

big move So we're this in on that's we confidence we And obviously, can why not here. had I expressing but we're suppliers. these happy start picture script issue, the shipping that program, the units. Relative your from volume think we that happen the did you about kinds quarter high the when from to of integrate and completing qualification this to things the of all

always we exactly but also quarter are do In involved, we as use are quarter are want didn't terabytes as other to possibly isn't the either ramp can we where you impact foresee. that interactions your -- reevaluating get and second point to of per should term, see long question, and qualifications slow fast the not well. only we terabytes at going we HAMR this to you it all, down but X Sometimes and as -- X per

So still very front. optimistic on that

ISI. The Daryanani next Amit from question Evercore with is

to a on I guide, June in I in focus about bit the a past, potentially but guess, steeper. your this at think the want part. talked Dave, nature, more is the the you've recovery In March suggest cloud gradual looking perhaps recovery certainly I just more it bit would numbers being

get close you the capacity related the the So you when more cloud I and what capacity talk to talk And that I'm you when how do total you cloud of that, potentially side? shipped the on down recovery pace hoping to capacity this add durability the think is -- What demand decision the think a to to have right triggers to XXX about quarter. now? customers, you road? exabytes -- these sense of available to of And

last And Yes. and some need had It's next predictability we we last supply at earnest months supply X days in in least remarkable Thanks, because ago, I going X.X actually some the with relative a had, proceeded. What's different XX out years, X how Amit. that build-to-order is took, And think, so journey, -- low all order demand the the us of demand trigger this that off-line. been hey, coming quite we the happy people back. in think, to really to the for the the we is business. that in years the the that, I we're over -- industry started that's to we're telling builds, was

when fairly being then optimistic about so last outstripped see exabyte And exabyte we're we it. growth than growth growth more even quarter see and we by the the revenue now

We are have to fully you if yet. your we factory will, not still that's still capacity utilization costs. full other have utilized we And not also though, point, charges,

financial really the to speculation. think. The quite is made, we're want to don't I been we're yet. based happy or so improvements stick predictability, for and want the long-term have we us on. plan, product We're We with So that main to but overbuild going build point there on health not

And continue so drive this. to we'll

Yes.

me Let underutilization add fiscal prepared do we not on year 'XX. in charges the in the We said charges. the expect remarks, underutilization

have So additional not an fairly we will cost. soon,

next with The from Aaron is Fargo. Rakers question Wells

environment, favorably do could really for company's And Gianluca, guiding you you're we the I'm again, you about this basis to Yes. much to for How was at of looking think about the I looks recovery margin. margin gross I that adjust like the in driver up company. we like underutilization to journey? expansion think pricing the from turn the at getting quarter continued price curious dollar this characterize highlighted what that know, ability And the the it how a But XX is gross maybe costs. seeing you are more you guidance. underutilization, you pricing at if about underutilization points, just model me especially up the and your of it ex mass think Where would midpoint in per sequentially. the terabyte, kind results, as guess at X% you're looks capacity, I'm

we some that. and last our I continuing had in would improving do are Yes, Aaron. in the pricing, Well, we success several quarters, say, to

pricing. the increase this are course, you of quarter coming for margin of that from in part is, June So gross estimating

for we mass were grow. in mix we will quarter, capacity. the As you are have the you other the business the March the very know, we Then calendar when of year, of that through parts go -- high rest

we be trending in And up. had is mix always direction. in but March, So course, pricing the is going good the as not as our will of cost, right maybe

happy is have products. course, the today. overall, pricing we action with where are Of and very ramp the a mix we of But new

calendar we see through further year. So improvement the

from question next America. The with is Wamsi Bank of Mohan

you customer? just at qualification. if should Any the think both then in that dynamics deal OpEx CSP gross the customer? this the product if go X down we about your your David, will and to dynamics qualification for a also differences announced, meaningful should I go is we could should Gianluca, these trajectory? And Broadcom what also the CSP you And this go I the the expect your impact itself margins And back difference between between to of share and -- or could, on there with and to this color can non-CSP down So how because OpEx expect? margins? slightly we gross non-CSP

software the there's first your The versus cloud no on non-cloud, which cloud whether different. transitions qualification going qualification usually or not Thanks, service significant complicates types be architectural Wamsi. difference cloud depending the question, provider you're about. that non-cloud, it's it's in can other hardware. at for That features customers, different There To especially through the some might much and of time. talking be

get the to we drive. So make large, But same it's sure that by and right. have we

question. was think I your that

Right. Yes.

of where fiscal on about financial So major 'XX. Broadcom, expect for the decline $XX in difference OpEx with be transaction a million impact the we will the for

have very good We partners. a collaboration our with

other expect any So basically from change we don't operations.

due mainly of transfer [indiscernible] in OpEx assets those and to partners. people So our it's to

Krish next with Cowen. from The is question TD Sankar

might year I be DRAM that half of curious about follow-up how few a as had the a more of exceeding you much do second Kind this term, k-units become Dave, of a now, couple kind margin a HAMR I'm as you the your about is, mentioned say, XX%? question ship? from unit the HAMR to think of units in over for margin think how you longer can range mentioned think can mainstream, gross do you this years question. Dave And gross just curious or you XXXX, ship HAMR the a of how you or shipment exiting many X-part hundred Gianluca, quarter. to

Yes. Thanks.

out months ship us now and it of because right then aggressively time, And higher position the the We go value allows to lagging and to better think think higher ago, through points. HAMR components largely it transition of and these provides demand get we to is we're our well. will customers, capacity demand. continue as which an over I cost supply now mean say, because supply interesting ahead chain, in platforms saves against I X was ultimately,

Some of the that's lead times just on product.

is going do this way but So balancing today's these to to think, still get through all things that I important, business we're very more very aggressively drive the into in market, we our the transition. as believe margin And well. is

specific go -- prior some aggressively. I customers we -- seeking so to kind view So so our focused we but qualify plans driving, helping any won't products that about that to and already can and as that factories, -- a optimistic I we versus just make, clear, drive we actually very which good getting of into that. turnover thing because turn actually we actually it's very very we that's to may transitions going numbers the continue product all our are now, as because I'm demand now us -- are But we're customers that's have were right qualified are

know, And On be calendar of ramp at said the higher is we a part year. before, there expect the trajectory, gross margin this to only as you or HAMR. of we during XX%

higher. in to the be expect So higher or for of we even range high we the of sure, HAMR, part when move volume

the But, a We into our yes, even range in that without can the point discussed be past. in of HAMR, XX% time. point at -- target the will is to XX% we we that see

The Fox Advisors. next question Fox with Steven from is

channel of on type to and then have to provide you And the side, your have VIA wondering on a for, cloud it sort seasonal partners that inventory build-to-order color I demand things next out. even months. recovering help basis. me you on in if to about the any to more of with mean, say, was talking I are going XX legacy you need Dave, plans there's can experience like order XX, sounds customers accelerating

Do how you're we're are to we how you that? the that over if should Thanks. with few going What next be you going So is to different? balancing out all be looking consider quarters doing business? think

back Yes. chain I create really amount was inertia just can think one a because we've so stops that of it we when downturn, supply Steven, just think I to problems through. key been goes had, the the sheer the through what good question this demand of it's living quickly. lessons

so make market we diligent. And soft. exabytes. we control control volume is have into we're we can the don't to be volume especially make need think I we the the revenues more exabyte a shipments, stuff what market, And the of part underrunning lot were I can't shipments for and And to builds. the push sure trying overbuild sure not when mean is

that days then and that will ones which which go we is trend say, in is come want more predictability financial the and "Okay, XX for well. it's about, encouraged we customers. again, And with But we're us as to we're back objective build themselves conversations reward the who here. that Now we'll to really a point, also a little for, bit having those best last your back predictability nice stronger we actually outcome the the give with to exactly can customers overarching

So having or X that. next into those is negotiations good us over with the what's giving coming happy and I'm visibility quarters, pretty X

with is question next Arcuri from UBS Timothy The Securities.

key going ask was that unit XX of to the I year, half million mostly wanted be the about drives. to had you first HAMR it for guided this

have drives it make some beyond you HAMR. like sounds to other XXX,XXX One, going questions. rework of I to XXX,XXX, But the had stuff you're So HAMR up, with X probably kind WIP. of

be like seem a it did but initially. dilutive going that So negative, be would HAMR was to

net And So -- June is then a gross that positive sorry, ahead. gave go for because all you kind us this quarter of margin?

your Tim. finish No, go question, ahead you and

Yes.

us the just since half Thanks. was X us back in of going So you be what units think year that you for I you to I'm curious million gave HAMR? if number, give unit the of indication ask, will can some

completion we we the for of the qualification other is and There's sources this. particular the timing material amount total Yes. is One remember, X of the have then other component. said aspects of the of the

my there width of when to get So qualifications still depend the the in yet, have that products material one forecasting the of can from segregated, for from the we And the Yes, timing all parts take into going that mind the of But and to because we customers back -- of that. the some half on We're think is are issue rest I don't do? these qualification out. But that really rework there's perspective, to of common a entire demand of is keep segregate or how many scrap are will lot specifics there. not we're width time once year with of I the think moving, the get another. that but we right?

homes to. XX have Mozaic we we if materials want up products XX, So to -- can family It's for other from the it be other pivoted -- as well. the family

of have So think I a lot flexibility there. we

never bit part HAMR in said clarification that we never first to to dilutive was a part sure, gross HAMR that gross margin. the a margin course, gross gross second not our more for We just margin, said ramp on was dilutive we And the team the improve said but the HAMR little it the has, ramp, margin. of overall of of cost, will,

BNP The Paribas. is Karl from next Ackerman question with

If deployments XX both cannibalistic ramp SMR. you XX SMR HAMR, ramp terabyte discuss terabyte great. a see get impact would of terabyte XX, to be of demand the of which might that wanted I'm and understanding the perhaps your whether of be just somewhat to that as the you HAMR? XX I better curious could early simultaneous of

have requirements different they use Karl. and Thanks, how the different Different drive. sets, customers feature Yes.

sell don't environment demand working concerned, the that's us predictability to the for that's I qualifications value remarks, on other. news one-to-one I'm react have swap. even And think We're what against are have so people willing the improving, as a or And and we we why so time. good of think mean a the as And far people But the I communicative commonality with prepared X same we're with want to as staying we more at as going customers. I different lot fairly I our in qualifications them a we're we of very on, there's well. and they should as build. lot quickly family more whether one is the can said

next Ananda question from with Loop The Baruah Capital. is

I supply-demand step-up will one And those past to then similar tightness, having margin. gross guess you margin. Do so ratios. some on you've the pricing changed then all? pretty just same margin here cycle can point the just where preclude get been when And the to that there's this Dave, wondering Or the past, type In you've just demand ramp had at at increases? anything there quarter or if in scale dynamics of pronounced there price of a revenue giving? you dynamic is gross quick. in And typically from sort in any metrics given Gianluca, about to updated ones metrics, been the still dynamics? one hold does kind of sneak real gross the that

to part. Thanks, Ananda. I'll that's to way But for say push customers our think guess level going very to product ourselves. margin and to we the I'd value aggressively answer what continue is to a continue I add at best that through we're high transitions Gianluca because let his

because they're full they're margin sign. filling is completely yet, seeing the and Some They're not that filling but uplift up. of right that's we're good up, factories the now obviously a of being

Yes.

but the On especially a cycle in is trajectory, every the on the margin, general, different. business bit gross

cloud a we from see good business. of today recovery the part saying are We the

Of it's the not increasing business same all way. the course, at

the to need same start positive no, we But, now. said are We that bit to improving margin segments for cost. So little a target upside. having see can better during year. of I be quarter-over-quarter gross range still recovery a the every in say earlier, see before and better to a we little we calendar bit very kind we strong wait quarter, have we would this other pricing,

revenue of So to target lower level reality. a that achieve for at is the sure opportunity us range even for

with The question next from is Hosseini Mehdi SIG.

for couple gone impression of was most for of the your A you have components, follow-ups me. Yes. that on in-source. I

gains -- switching cycle And it is most that is exabyte What follow-up how external forward you the updated exabyte your looking one you're and for what overall So made with vendors HAMR Dave. momentum? these as growth rely on has vendors?

Yes. Thanks, Mehdi.

that something very For our mechanical make it's part is the again, in we we largely is its outside, are all a source from components, common not that critical this ourselves, in-sourced, and something piece but we families. product

So just take you And -- for know the second that clarification. you Gianluca, to want part?

actually sources, produce the there source most Those of components component, have particular to other. just one suppliers. get And many There externally, are switch the we external the are course, from that components. we from can thinking a multiple critical are other media, as internally. we many that components but was we about I that on so we components

it's The exabyte because then on that the never Mehdi, And like of out time in growth, question think negative, real. we come history that, negative the know I that's something and first seen that. the industry had good we've of not we a Yes. was

down answer actually of And these go also that predictability expansion. about now things reestablish So our we ability our has or we we're what but to even may start XX%, to early we're something we bit because expensive. products, demand see we by think damaged I cycle, been still I to industry late. Maybe get fairly so like more that to exabyte financial a provide point new more back of make going near industry sure key the drive which want expanding. with we we're in more right the whether this The is, exabytes expect discussion seeing. And do to It's into little term, encouraged XX%. XX% this

we and a sense I tightly. that sure the sure to now it's we financial stuff in too, can it back, right grow not that doing very away way make makes is have we're to control that's only we we giving make only do think we're that very measured. supply And as way way the the any

from The Fitzgerald. C.J. is next Muse with Cantor question

elsewhere, talked But elsewhere track. delay your to on your bit, qualifications do a the about expect thoughts. what gross in positively your planned around Would qualification that thoughts of could X-month just a and impact you, being think kind guess, pricing I know I I how half. And on love the you margin in would out mix? have? if utilization things maybe back push do impact

Yes. have as process, discussion as than comes, ago. demand We comes -- this them back, to is I can much which And and is, going new with and we do a okay, to the basically understand qualified, we're and flexibility say, build, we hurry more now Thanks, did, demand people build-to-order more we've said, up the is say, they've one C.J. told what interesting we then thing have want X or year in a economics which product months you qualify.

a we're And I ROIC in options of up. operating and been focused back finally so I there. our have turning double-digits profit we've on finally free flow. we operating think lot profit, back is on mean, cash And

on So all build reinforcing think predictability and of business of I it. working, the to to running keep stay just the order things we're this is long-term strategy for this going

Hari with is Goldman from Sachs. Toshiya Next question

opine I great. broader your but ability AI. ability based your visibility having to what's and to your driving your can remarks, I conversations industry's that, prepared and curious, that your what I little it's know nascent, to ACD is with don't business? perfect be then into talked extent I'm AI. have in realize hoping if on the comment you would on impact AI demand. compete bit Dave, related But And was Flash that, with on customers, on you customer a you could about you

think space It consideration competitive. more read-write shipping like disk some and on vis-a-vis a have bit But today. that be when you're take to recent you I competitive seem capability based you're of might very investors conversations, is hard consumption. what drive, little that cost concerns the into things power

So pine to going curious you're on that. if

Thanks, Toshiya.

So yes, we marketing know lot have a it's applications. big I enterprise they customers providers, do so even much because that cloud for of types question, think is I there's that people of OEM different it. confusing a the many AI and service around have,

And spaces to some those application continue grow. of

all that cold applications providers storage, now AI creativity general we this them, ago. new have for capabilities and Some is the of cloud are on. And the are are are about excited by. orders video or compute that really that storage, which it, those encouraged so we that service given on by say big in dramatically call are application people transformed applications, X in definitely, say are applications so right and seeing very on being now example, applications, it. wasn't that colder from purchase And what coming, space, there would true months actually But I I'm data that I'll

kind we're for there's our to I for where of mass of a lot think to think to we to going for need keep us. Relative go, ability opportunity there capacity, sure. pivot I driving

then a very usually We about on say very but don't have And performance this bit Flash. are don't much working say, I'm in little to I I our to bad going tiers. on Flash, opine much,

a I technology. it's great think

applications. I be enable to to layers their think critical Flash going to in their it's execute for

idea applications the think in don't data things that is those that I the capacity architects of right. in nothing into even Flash, conflict makes mass I get Some don't And I that's mass this it when like of may it space, are think they stay think have way But hard to think with going economically, sense. think don't being capacity. with do workloads offer. I very, and centers. drives to that's on you -- very power competitive about

into we the our perspective, been and good, rough just late, exploding pretty of patch my and like from downturn through saw. So benefit supply to can't tolerate it watch a it we thing dramatic is space sure got all hardware time. should good is lot we've application over providers make new another of a we because that a We've

So we've careful. got to be very

The next with question is O'Malley Barclays. from Thomas

largest understand the customer your in just want with ramp to I HAMR.

replacing are subcomponent. talked that this same time. at multiple getting Is -- and that saying the qualified you you're You about are subcomponent vendors

but then back So qualify product, that step gives to terms several drugs several a if only customer that guess, these of ship months? that qualify I is within this at a able a you what what you in traditionally weeks, the you'll be quarter? look not the that confidence with effect having is takes

Yes.

So that said already Tom, multiple sources for we there's this.

we the way. merry we already that beds were those then segregate We've other well. push that ones affected their on the so running And parts test repopulated are and

confidence. have we why that's So

Okay.

future, not you Or on will the that use supplier rely the others? just anymore? just would more in overly So you

like wouldn't a no. tough go no, I issues, with with it say everybody. we'll Everybody and go them. got that. They have work work I we'll Yes. No, mean challenge.

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

Gary. Thanks,

during positioned through is is ramping ongoing our to a I'm on big Seagate As HAMR-based keen stakeholders in well improved and serving forward cost-effective quarter. the balance, a HAMR our our their for confident and product to position recovering in well deal, close long-term look drive focus and strategy. products. Thanks for CMR, SMR I latest by capitalize which our discipline, which environment you today, heard operating supply-demand demand financial performance mass get demand in well joining storage. I support. ongoing us capacity for you thanking on as technology, speaking Seagate with today, we to and just

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

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