Seagate Technology (STX) 23 Jul 242024 Q4 Earnings call transcript

[Audio Gap] Seagate technology Fourth Quarter and Fiscal Year 2024 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Shanye Hudson, Investor Relations. Please go ahead.

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

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

not measures. Form website in measures certain During press the may reconciled today's non-GAAP release call, X-K. and reconciled because are posted that be our to refer predicted. figures we'll our reasonably included are control earnings our in to We've and on measures items outlook GAAP Non-GAAP GAAP of non-GAAP cannot out figures and/or material these impact

GAAP Therefore, available is not effort. a the without reconciliation corresponding measures to unreasonable

today's and that management's as date. of relied call contains Before of based I'd assumptions today be subsequent we to begin, forward-looking current and reflect that like us views upon information any you to available on not as should statements remind

information, of including Investors issued of in implied contained learn the more today supplemental the Form please Actual results to and release our which that To affect with business. press may risks, recent on our our or to our SEC subject may they uncertainties results, website. differ forward-looking found those future may associated risks section about annual refer and materially report all and in well on as the are business statements as and as by factors other uncertainties filings, quarterly most be XX-K from on the report our Form XX-Q these

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

nearly the level XX% year-on-year, Shanye, to Fourth top on strengthening and supported execution high company far increased you, supply-demand the results, of quarter achieved demand. reflecting our XX% range. more of We dynamics. gross favorable EPS at Seagate are ongoing ended by XXXX non-GAAP high led global discipline that of margins a the target cloud hello, fiscal strong our at revenue and These everyone. $X.XX, guidance margin above long-term Thank that note, operational by supported exceeding expense end non-GAAP HDD along end level, were range. of with gross and

increase performance, all At generation start to sheet. fiscal year, highlighted three. priorities, on the and our we Reflecting the we profitability, delivered X cash year full of our financial strengthen balance drive namely on

or our Our part due we resources. the results in predictability in to to build-to-order cash were and supply-demand greater optimize put BTO place strategy provide that

For healthy non-GAAP flow operating fiscal cash levels. fiscal 'XX, every year, expanded the liquidity free by of XX%, quarter and sequentially profit maintained we grew

momentum the year product enter is we capacity priority. As financial and with a an new operating map road improving executing in demand environment, fiscal mass top our

well our also align market Nearline I'll XX details advancements quarter, In momentarily, qualification further with complete our PMR the share product product drives demand product SMR two These our product around current trends. expect September we to the I'll volume. first, high in the lead the X+ ramp terabyte HAMR-based We've CSP partner. -- Mozaic platform to started with review but strengthening briefly execution environment.

Nearline highlighted ago the from cloud growth are fiscal continue and I from we XXXX. globally. growth to year more cloud we customers As moment demand doubled a in Nearline strong period, than seeing ago, expect revenue quarter Fourth

investments deferred as computing both from cloud rebound drivers traditional attribute well the follows by new deployments. We increase to towards prioritize of HDD infrastructure. a compute-intensive an cloud AI-related as as spending demand providers demand We believe workloads they underlying storage this period

involves This of developing, on continuing growth. providers models support are and infrastructure, AI that content-driven service generative deploying to they focused out applications. to AI hardware increasingly large entire future expanding the training stack cloud both and language build While monetizing

project related HDD relatively these server adoption scalable future. believe to maintaining engines in in content. by second AI unit to of driven still storage that in integrity curve. AI data of the By While second solutions, are AI quarter OEM the for phases projected pull-through preserving continue well valuable the ideal role stronger [ demand a the and offering increased AI we markets, both small, enterprise as calendar play gradual is demand the half demand and for ] the enabling we of exabyte training a HDDs crucial generate sets in in In year, both traditional improvement improvement as cost-efficient, content the of to consecutive will are the observed growth modest

started for solutions incremental to either specific they private in to for due in enterprises demand clouds part storage also higher-density We've putting on-prem in as future AI see storage applications. place, or capacity prepare

VIA June remains we came the better products in Finally, than while healthy markets. turning our of customer quarter, VIA in expected levels. the to inventory at Sales

the expect for We this is projects sales year, half in fluctuate but near-term strong, these remain higher smart global the of visibility the city in uncertainty. calendar mixed of Global for bit base. budget second likely will markets VIA current projects off many a demand macro amid indications

the the has relevance end for opportunities are to exabyte maintaining calendar Seagate with current customers. strong growth we working our and focus year. and to for In while on lend this environment, Nearline underscore to discipline. Nearline intended demand extended has customers address visibility recovery the better tighter overall predictability product conditions. is are demand of supply obtain pointing mass our Overall, times ] and assurance Based capacity than provide needs their which faster storage. trends is greater These a our for transitions our [ our market Demand profitability demand strategy, to our through BTO for trends supply and solidly anticipated, outlook, growth supply drives been product on through high supply long-term which Exabyte lead of capacity the end committed

quarter, gain planned drives, product is customers the VIA cloud, continues several performance and to shipment and capacities exabyte ramp yield, last drives. production which the numerous and supporting products coming volume to qualification while existing up and with the to demonstrated quality data new high-capacity customers' our are PMR momentum. of months, Transitioning complete date, spanning offer terabytes volume disk expand we These with enable our noted new of demand these and already needs. in enterprise TCO profitably capacity XX two executing head also to our more Customer to markets capacity and higher of acceptance underway. As solid ramp growing have Seagate now qualified to

to have shipping September our this experience controls quarter, underway HAMR validating to complete HAMR-based and a Consistent will confidence proceeding the we for Based expectation product lead firmware complete improved new drives take toward begin this to built of with and technology China qualifications quarter. shipped volume average X June public these customer estimate platform, on mid-calendar we is for qualification ramp in on with workloads. revenue recent small quarters on the and our their expect around the cloud specific progressing with volume qualifications revenue a We XXXX. process in U.S. CSP the drives and In quarter. our units the plan, commentary, Mozaic customers. broader which optimized are and drives customers later to Testing to on new points multiple we these to to calls them is non-cloud launch

all HAMR of of We drives, X+. the development are pushing next generation leveraging and The our Mozaic of learnings pace on our

advantages than VIA to aerial for disks. compared deliver capacity heads center capacity the they operators that as more the with platform, benefits offer enabling Seagate [ ability the power we're This cloud as XX% rather namely AI offers proposition minimal to adding illustrates drive the X+ and central our gains with and value Mozaic are This drives HAMR particularly valuable through density of the technology's shipping and of infrastructure. ] materials. as is well today scale significant data changes expand cost customers to Mozaic capability that to space

installed offers our and power terabyte. the loaded about X+ drives storage Mozaic of example, the relative Xx our one data XX% average less capacity For center in per each base, to capacity Nearline drives slot of consumes with

exabyte centers represent These for data savings scale. at tremendous opportunities

hearing CSPs, extracting data are application a deployment. already crucial from role the HDDs customers from value in play that of AI directly, We stages including in early

adoption. engines an customers capacity storage. its stages AI acceleration in creation lead to Gen expect early Gen mature, still will that of for demand content that AI is in As We mass significant recognize

and there and with the John feedback the new storage customer early be with OEM the customers Luca. adoption combined take this a I'll both hold. edge exciting engagements mass these our at beneficiary capacity applications over view call cloud Nearline the that reinforces our in However, stop will as of to cloud and pass

quarter year-over-year basis, growth. Seagate double-digit end Dave. and Thank performance, underscored with exceeding the range. on you, June high our strong guidance profitability by financial delivered sequential both of a a revenue

end XX% exabyte discipline. XX% exabytes cost disk revenue guidance drive the and up $X.X was increased of XXX our the sequentially sequentially was reflecting ongoing Within exabyte XXX quarter-over-quarter billion. XX% shipments EPS demand $XXX million. range, our price to operating high to up quarter, XX% Non-GAAP margin was to income revenue, revenue improving of leading our grew For continued $X.XX, operating adjustment business, exceeding XX% basis and of non-GAAP year-over-year. the hard while XX% $X.XX trends, billion, And June expanding points non-GAAP quarter-over-quarter. to

legacy Growing businesses. demand decline mass than the non-HDD offset more for a our sequential in and capacity products

cloud market. mass totaled quarter, Mass in billion, increased $X.X compared strengthening with the March exabyte global XX Nearline exabytes the the with along XX% capacity Within in to sequentially sequentially. up revenue improvement driven an XX% shipments VIA capacity XXX market, by demand,

reflecting well is In XX% totaled up will to exabytes. address storage. secular Mass product June shipments global from with as [indiscernible] growing well long-term The expert the HDD back XX XX of XXXX. Nearline cost-efficient of Nearline the into as scalable more continue the as quarter-over-quarter demand. total enterprise represent demand shipments now quarter, portfolio exabyte capacity continued half improve CSPs growth customers positioned for than from to calendar Nearline exabytes,

product for VIA year we which in the our outlook order better of a our was quarter, revenue VIA for forecasted changed. not demand function calendar than has more mentioned, timing the Dave June is had As at

and lower $XXX revenue down non-HDD product revenue a for than was the the expected sequential beginning on business was basis legacy million, while quarter. $XXX at both Finally, of slightly our million,

the rest Moving the statement. on to income of

quarter $XXX million. gross revenue the increase profit XX% gross December sequentially the $XXX by levels increased in a represents quarter. similar in compared with Non-GAAP to profit XXXX million This June in

gross margin which was quarter-over-quarter, of a faster margin margin long-term is the achieved expanded originally our non-GAAP level, Overall, we basis XX.X% at than range. we points anticipated. inside gross Importantly, which well XXX non-GAAP company by had

corporate the than noted, for Margin margin. drive business Dave were higher As disk hard notably

is in outperformance by quarter. ongoing products costs Our favorable and roughly previous $XX million mass capacity shift the adjustments, cost price toward $XX supported to Under continued compared efficiencies. utilization mix decreased million to

amortization expect the be going forward. demand reflecting improving will environment. costs minimal We

Non-GAAP totaled in sequentially in share non-GAAP share continued the ] quarter-over-quarter, quarter EPS million, XXX operating strongly expenses X% was million of $XXX resulting of income and Non-GAAP with roughly based in our XX% line million. increased $XXX to per million, net count [ improve $XXX on approximately Adjusted EBITDA diluted up June to shares. plans. up to $X.XX

to $XXX in recorded from net $XXX and proceeds a cash totaled the the SoC June billion, costs of majority purchase which assets our announced flow In we long-term cash proceeds and of million sheet. sales cash From Moving to SoC in and our perspective, transaction balance cash related are the including April. $X.X of agreement. accounting of quarter, on operational the representing an the million, equivalents flow.

inflow. expenditures The remaining proceeds are were million. down $XX cash quarter XX% the invested Capital for to reflected in

CapEx low the For to X% million, XXXX, of below our fiscal just spending revenue. which target is end of $XXX was X% the

and earlier, we to was divestiture. will discipline currently the expect from the CapEx $XXX Looking out be SoC million, at Free flow $XXX of fiscal 'XX, cash million the low to capital end target noted generation range. including maintain

dividend, free in this returned we our a use quarter end $X.X credit portion of be plan With we slightly undrawn support reminder, including June expect $XXX these the a quarterly breakeven. million billion quarter cash at supply XXX the September to to chain. equivalents June outstanding. cash million flow revolving As of through shareholders the XX% liquidity, in the to mind, above With and quarter to or proceeds the shares billion debt decreased $X.X quarter. to net available exiting closed We the in facility. at $X.X billion, our with cash with We of

cash and quarter the were from expenses $XX million, balance expenses. interest income from improved Other income prior and relatively $XX reflecting million interest down higher in flat

now outlook. Turning our to

quarter sales higher capacity September more mass the expect trend offset markets. We revenue than the legacy into lower and to in

cloud well see in the as from We a market. customers global growth demand nearline improvement continue to modest as enterprise

capacity margin from minus gross revenue a ongoing benefit of range or at With mix a is richer We in increase plus XX% expect revenue context, year-on-year actions. to September the sequentially $X.X expected of an to better of and pricing quarter mass XX% million, $XXX midpoint. and be billion,

expenses which expect to We costs are $XXX guidance, operating compensation be high range. million teens with plan. margin non-GAAP of operating non-GAAP reinstating approximately the of At in revenue midpoint the for planning percentage associated our our includes we variable

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

profitability. now call focus our Our results for strong to on back and final Dave will I comments. the supply reflect turn discipline

our 'XX, product profitability enterprise Two through which I'm our unwavering fiscal enter improving Luca. growth we and Jon, supporting will generation. we Nearline demand, on exiting team's Thanks, as performance imperatives, focus improving pleased on fiscal driving key exabyte cash financial strong cloud 'XX and reflects amid focus transitions. with

results HAMR to cost-efficient working the two several through data X+ scalable We technology, believe we customers their needs address are we critical today. global storage drives. us unprecedented the helped provides holds that will with our where high-capacity including which the sorts an new in to closely quarters data our for with that achieve and announced We prove confident products, the HAMR thank We that perseverance customers remain in over their Mozaic era have value. last creativity teams want

for Our differentiated structural well demand come. performance environment favorable position to technology improvements coupled with a years and us road map

and wish suppliers questions. your our to for for placing to Luca trust and ready now open also call I Seagate. We John in our are shareholders your support for and the thank customers

is first [Operator from Instructions] Our question Mohan Bank with Wamsi today of America.

asking is 'XX. that we more would think Nearline you coming capacity committed Or through the calender capacity? John how it for add think low Dave, incremental CapEx end end when And other of 'XX market do with for balance? you we square take supply-demand would the that from mentioned about long it How And to that how happen? should of Luca? way, you in maybe fiscal do comments

to like to good news careful seeing the come was has, you'll Thanks, with adding recall, still capacity. more back of are the it Wamsi. of bunch we it's the we very capacity the levels people Yes, let demand a being but that of It's offline, a it and back go. took years extent that XX% if something not couple ago. And we

And doing capabilities pretty the get but that ago. away so had still we've of we trying we're is lot supply now far we're a been What back, people from right the years hiring predictable. to

and supply calendar it year. that why have, booked, the through So the making that's getting end the have sure that with we we the confidence we're of do

transitions, and so committed product drive then get helps helps we exabyte call the have. to industry for new have rebuild that the technology We trying making qualifications which book, the that can sure margins are can as well, demand us with products that that share we're obviously people that suppliers access we the then And to us to with and as the well. and which answer

priority just more right adding So not our capacity. predictability is now, that

underutilization In of step the in few through Luca. your gross gone gone changes on you've margin some John for right, charges gross have as higher these quarters, material improvement, you've one quick really away your margin could seeing last I function If revenues. Okay. guide as been these of the

get of and -- on where [indiscernible]. I'm quarter-on-quarter those the few should year? that? about next And the that of or margin is improvement we much because seems it thinking over volumes think we is beyond the qualification are should this into more sort quarters? of won't it think is Or that we gross leverage you be wondering, that ramp margins as How and this sort HAMR gross As around and September about

quarter, was the satisfied mean Thank of were all, I Well, trend little you, our higher we we quarter say, would first than June expecting. margin. are bit gross with this I what in Wamsi. a even the very

faster actions and going a internal bit went in we our on reduction on. cost. So little is the the pricing This both

in to be quarter. estimate will quarter. We much happen how always this It's the difficult again expect for September perfectly the full the to impact

As you know, volume is going up.

of the the improvement expect then, So pricing of charges course, decline because what We company a 'XX. some in on And we will even utilization action. And was still different to be fiscal September. impacting more now in expect really cost is the bit than this the supply-demand balance the past. don't through

reflected and going is trend continuing right the the guidance everything So and in in is our is direction.

from with Group. Next Merchant question Asiya Citi is

talked of OEM storage The And visibility about the much about your how there? that do how quarters is as customers, you enterprise from guy improving feel enterprise progress? demand sustainability the demand

Thanks, visibility sharp been today, year. good Asiya. on-prem say would we CSPs but in the is over the as from fairly well I have the downturn what as enterprise a not it's last that as

So back, as year. some probably of see maybe the 'XX not FY that talking later to customers, coming they early, in the into but

qualified we're what that's And right can exabytes. new get again, we to now. the answer So there products with it so trying targeting

data AI various on-prem storage as going are over lot grow the think mass talking sure edge. the a feed to the all at because people time, cool engines We need making you applications, of well and will the pointing is check about, snapshotting and just applications that read-AI reasons, data that with for on-prem of

there's think in what now. it's right CSPs we're seeing So there, definitely we opportunity lagging but

with The Erik next Morgan question from Stanley. is Woodring

from obviously on and an want I that to the update comments ramp provide I understanding on HAMR to I for the is to XX, some quarter why? helpful provided XX highest will X your are HAMR and conviction you major for customer timing, [indiscernible] -- the assurance in market cloud really in were Great. Dave, guess being have much conviction Those how qualify September do you just if timing. that first

comments short, thousands shop. we're yes, Erik, the convicted and looking pretty our remarks, in our prepared drives from in the in Well, have of course, running of we're at data, we

under well of of prove customer to we're see that performance. that workloads. had as fact move got. beds the have to we We test a we running the when long-term the the We supplier of at And But mindful how fixes, they're volume. course in have sites some we've issues they're see, and during responding the we summer this high we variety the

So we're things. very optimistic about these through getting

Our really can't as upped drives X, data has a just last industry in the center. of performance. have game, that X little time for We the its in that It takes a they week. kind prove years fix to X, to

We it actually have prove to ourselves.

bar but that's pretty is bar soon, the why we'll get it. we're optimistic So high, the over about and really

Krish from is Sankar question Cowen. TD with Next

I And the Is like target John calender there? long-term FY you're Dave, have looks Luca, for margin characterization? two-part you committed you questions. a margin your for gross it spoke like gross for industry? Any then September on you any points. since One is or to on or view fair It quarter 'XX to XXX XX exabytes exabytes probably have already And kind margin. about update basis for gross year. this do of 'XX up

Yes.

are in gross going In we terms as direction. before, said right margin, the I of

the gross quarters. by in margin improved or our lot X have a last We X

improvements and through see and as also, 'XX. trend, to revenue in we So see pleased past, we And the coming both the with in continue current we quarter. calendar are improve profitability the further we this discussed then

are So fairly optimistic. we

now, to zero. need on and in we and bring right volume we utilization to forecast. is always enough check balance, to it have Of our And charges supply course, need demand to

the we going in terms we not strong said in particularly of direction, of range are giving have for the gross top what we in the and business as part a So and the But of in model are script, a especially is new is now. right margin. his range already current Dave as hardest

We cloud that in the Chris, don't some exabyte a into question will will, improve to your to too yet, 'XX. evidence to much enterprise calendar to that think there then, on-prem but about just me, strengthen CEO is continues talk demand well question, And going as relative this in want I calendar for is 'XX.

committed through Our exabytes calendar fairly are 'XX.

customers driving 'XX have we So starting hard FY introductions mix is so why exabyte talked to that up. more VIA we're scale, needing we about. new supply limited and for that's the fill product And

The from Amit next question is Daryanani Evercore. with

well, as calendar see slightly trajectory Can it I in you is even digits, pricing better both a year-over-year just mass guess. your the that. I basis, pricing, have up you year guess end how the maybe I than through mid-single looks on side, out capacity just through pricing especially like about talk of do year? two the fiscal this on pan

would to bids getting on HAMR a share talk you've sort mid-XXXX, people, just this fear the then that And as incremental about when as pick seen, for side. sense I ramp, in investors, wait more Western happening you volumes Dave, love pricing always these up customers Seagate. pushout will the get there's with HAMR the of

So share you the these about -- talk what qualifications And gives doing as you over these you as that what customers happen? next go are way to doesn't from HAMR few comfort share a perhaps away qualifications market happen the broadly can just for quarters?

demand. products to and going asking Well, exactly go we're to XX think customers to way and have XX just fill the all I to their terabytes terabytes from exabyte they we're XX we want what

of have as can we're lot we a So And making be. we sure we're as options. possibly predictable

what build So many, we're many market exactly order. to with And what's going going to communicate go We're on. said share is we to an the going times customers is outcome.

now. share. our tight fairly times supply market right products the and long how It's lead the about do not we on more factories, run predictably I'm So really worried is

which in get uptick, that I And were to better But the said I'll dilutive demand John started it the some this dynamics, you answer on, dynamics we've if see that thought X see of of really taken what to months sure year. need we deals, obviously, before would increasingly And look taking need we're back what here say our half pricing tighter discussion, when ago customers is in not the priority. -- supply they and they a we we let Making exactly as does back Luca some transition second. is better we the dilutive, now we and deals this our so into industry.

where here And is by continued goes from dictated the it really demand.

are how the year big is So about. that people applications next these talking demand new all with

Yes.

On down they've increase quarters course, based the on build-to-order pricing that we part And pricing pricing, in are have already increased to already a cycle. of of discussed. coming out our the long included demand we ago. our from a fairly started few is the

the already terms part some volume So already discussed pricing the for different be of of and and upside segments. segments, part that next another the in will during is is certain several include in quarters. quarter a that, in

through end that is Now good to starting improve, an the the is further I we'll cloud. some is the with us OEM image the show especially very strong, for of think Enterprise demand year, also in improvement. application, calendar

improving. that business in legacy The course, is Of industry also not currently more the of healthy. ecosystem the part is Obviously the there side becoming more growing. is is

also course, also pricing And the So the going is couple that we of we in the improvement can discussed direction see margin. gross in trend quarters. the it's part last have where of in

next with The Fargo. Aaron question from is Rakers Wells

the margin into bit drivers. gross Kind a digging little of

SMRs how I is about Just to on how play isolate through from deck, business not terabyte margin? competitors margin? curious slide lot the SMR? qualification. going gross your your changed today And nearline a benefit your out that XX a much think know that trying does you of highlighted in SMR. of I gross the talks of SMR I'm lot, And if much One trajectory that ramp of could just

kind or And charges, X there flow-through you more underutilization excluding margin, in I'm seen the looking drivers quarter or same gross margin like then over the so? see relative to it looks gross incremental model guiding less flat on if you any curious Is what me why the I you're of last sequentially. wouldn't guess of the you've to this quarters margin

the out Yes. we better say would what I than expecting. quarter came June were

So gross bit improvement of in June margin we a little quarter. anticipated the very current for Again, we quarter. have positive are the

in better terms agreed the a how than guidance have of with depends see on and what are pricing, we we of have but bit come out also already course, can we the in through the quarter customers, We come will included the quarter. expect what out little what will then negotiations

We are declining. on side. Cost the is cost happy

So step of will this is helping us. year. be And part the calendar the second another during it

in David, if, question? answer don't know you terms to of SMR, So that I want

Yes.

function So on the a at would a of it. all is want total customers what of percentage we've as SMR, I SMR just look, customer say, is and qualified that really the SMR a pulling in given quarter.

of there's to need a that SMR. important CMR customer relative customers so want -- who variance the base, people hurt There's and they options cases. for margins, flavors relevant. different or whatever complexity we of flavors in have margins? individual of different we lot needs, in some work if want the there's to ship customer the to. but we'll It to to with we that's SMR, And happen does it help not margins the And helps of SMR where some points in customers, we capacity have different go It's very

UBS. with is Next from Timothy question Arcuri

September. the in in XXX going your exabytes XXX said to max exabytes you ship you shipment I more think you're , is capacity that about past, just shipped exabyte

you do do and think intent don't strategically, about you kind to where, But bump hiring capacity a capacity. going against grow said that know, max to so the in point you much you're kind that roll at you been we're you've going But get of raising very of future, So you're folks number you Dave, I up not-too-distant stuff. prices. that the how of to back sort price? slow really and expansion

you Or modest expand do How in solve have about more you capacity. price that a you do think balance? to what back of and of think just terms into trajectory about increase you basically

Thanks for the question, Tim.

given cautious very what So just to we've going be been through. we're

scars not entire recover. back, it's but and the fairly industry, on not chain I entire fresh the ancient our our guess only right? us needs to So history, So are supply

can booking [ work, look of capacity confidence, maybe I top use through which as will and that have, are we as out can ] people along, out we operations XXX more higher that tough do that. grow by we'll more of at that, than think exabytes the with people, back further start to slightly probably transitions. or some getting we existing product to we as things add further some inside

the so of reasons hard through product we're to why transition. one get that's And doing the

So see answer the new then we we demand transitions that been demand it to don't And go the answer way how And during it to CapEx first. with going above can already. continues much all you know, that's product higher the pandemic. have Historically, CapEx sometimes the as actually the through have we're HDDs has even pandemic before for significantly that. we'll and necessarily in

are So at a the continues these with to through time. that demand, deal have new go we've a online with especially we'll of and been applications to wild chain coming the supply perspective from some north, that ride

yet. think early do that it's I too to

not very a the the X% to number to is the -- of of -- XX% It think is that bear? probably like just half are can back the of going we're customer is bear hearing those the year. sort price bear kind -- numbers there that it I and to customer there high increases? I mean, for seems the can you bearing Dave, is mean, do some So number customer these

proposition capacity more the about go and their if those to would huge. I everything as for is points center, value into X to is instead drives running Well, get to years going power way X we and data they're efficiency be to it higher higher think Right, that else.

see benefit they yes, so through And transition. well, as that the product driving TCO .

finally, determine Tim, Yes. the supply-demand reality dynamics the [indiscernible]. price, that's at will a

quarters business of now. fairly demand the will this continue in part of is number hopefully, So at certain strong, in a And for least the right future.

with from Paribas. is Karl next The question BNP Ackerman

here. from mass the for you I think hoping about us well exit capacity. demand just could outlook look on as was think about to or follow up rather help I capacity

that should calendar improve OEM You the Nearline XXXX. projected enterprise stronger half indicated with of gradually second in and growth

or is mid-calendar cloud from quarter in until a exabytes, with than the HAMR then, September the will what ramp anticipate cycle typical any longer which a is. given that of growth fact should bit to quarter However, now fifth you in moderation XXXX, we of are expected be anticipating demand

Yes. Carl, on plunge We as of you than demand. before know, pandemic, of the the this the seen much front before. even we've anything didn't negative growth end ever see right, nearline ever more was middle exabyte significant

okay? normal -- very we stretch any to else going demand -- But to very you from going something weak be I been like to think through, we've cautious. don't started of a because I it's we're by say do And have back we're to to of imagination. we're spot. want the So said, to what

quarters, we I will we, have and course, customers have, qualification HAMR in would we we the we other demand But will ramp EMEA. in will we many said few other ramp answer the in more say in volume. of can And we that between and to now now use of we significant a -- have right few increase when have the next now. products in script, qualify then that course,

I'm that is forward value issues and away. happy learning that are to Carl. going mean valuable on very of all or be exabytes need. mean terabytes high all that we're way. BTO us we the us middle take to that I products else. Right, seen the gives The that aggressive at visibility too process and volume we've would the are really away give of the industry issues, next X I far not the propositions anything process X-terabyte moving think that don't I year the I aligned for

just and making to drive as let's we're introductions it these going be I wouldn't aggressive in learnings of course, those can future you margin as help as the aggressively ramps but go. the industry. qualifications, busy trade summer all to We've had a So as future reconstitute work, far and in

Mizuho. with Rakesh The next from is Vijay question

on XX% on just are now? when you do you get year? levels Just like to a what does quick it your And can the how look by you utilization XX%, the question -- give exiting at if underutilization, us wonder -- I color a

impact the of the is for 'XX. the but significant I talking underutilization sure, not any to about fiscal got you're question, be going if I'm not So year level

will that So help per our terabyte. cost

the gross and of we increase the that is factor Our on X margin cost expect. in general

are industry chain it the utilization there helps the offline. high, in Right? If but supply and the been pulled is generally various factories that have

some the new the of is or factories -- existing even the question factories the the sorry, of is though So utilization factories we're the back factory might be do -- old bringing dealing. of we one than online bring online, those high questions back

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

exabyte start 'XX. underutilization margins. locked question that pushing calendar gross of fixed And de on Curious all helpful. do year, in, minimis to then, second lower the how ASPs Nearline in about that, committed of as for dilutive? gross be talked much the you of how have HAMR bigger should And that be is I versus at higher? half now to you into about picture we of those guess, accretive margins You September, very And thinking calendar pricing? mix as trickle in in driving revenues that volumes, part December or expect

the you see we mentioned on as quarter if as a ago go up. was as demand before, to that booked, started of I CJ, some as stuff much the bookings, will,

So volume we're the towards supply we back in the year. can fairly of the and confident the that actually half price

Yes.

margin, the rest the and So I the pricing eventual help BTO, of fiscal negotiate in will course, to through would that year. our be what said the of will the say, an we pricing all gross quarter you

will assuming able the volume and to our gross that still in of Now hopefully to also demand few growing next significant is ship quarters, expect. grow. course, help we as margin And HAMR also

question a as gross issues so TCO HAMR also HAMR with before. cost significant That's for you the it. it's will or we whether we talked exactly drive accretive There's dilutive very about the CJ, course, and not that not It's quickly, that. think capacity about asked I way to about proposition better a of margins. And unlocks points, new platforms.

what So drive for efficient, the more efficiency, the transition. get I think and become lower much what we drives can do we exactly we're product especially higher over that's capacity more is as driving capacity drives, higher and component time

is from Mehdi question SIG. Next with Hosseini

want the I back go just long-term the Dave, to to strategy. details. all appreciate

pricing tough of You year. benefiting great from market guys else with ramping the and job resizing and have a and of company next done to everything and environment very adjusting CapEx and diligent now HAMR middle is

drivers you your sheet. we for thoughts When longer there that earning is the power you're the better sheet next about the that $XX about year we a especially see what interest balance anything in And it expense. go not strengthen through this growth power company? million recapitalizing the up about could quarter think you so of think or balance where environment and What thoughts cycle, to can do your are earning longer-term longer-term as are so the you spending in an that term, in

Mehdi. Thanks, Yes.

have we been that then but go cycle demand the we So planning. to questions. operationally year these persistent. on ultimately comes down our do do tough What focused through and A point, we're are again, earlier very to going to don't can't our kind a all supply has some We the that very, up so is financial been I it back can't. drive now to demand and questions we're higher we've want last since addressing thanks demand lot on to it's that. of is thing I is doing accolades. that your through, just same what mean mean, to these the and of the start year

early to speculate where when think is. I going been if ultimately what from address to the And is comes. we're even we've higher, Depending going debt. we're debt what the have what still We're to demand on recovering the address then that is, address we'll on just to So But demand have through. is. the it to it that it's too

Yes, balance cycle partially of level addressed in already of the down enter high debt. sheet. debt. the billion into We $X.X the terms of We've with

are We at now $X.X million.

fairly that Our if want level. the We we discussion business few billion. bring down we we want is, even it to even liquidity on to than quarters in we at the open prior possibly And $X see do what much this the was debt the quarters, ago. based say were more a or where around better in is then

is with The next Fox Fox question Advisors. from Steven

where prior I can to more this this given I et hope guess we're you're node you think product opening with help are in guess shipping think we price? of if that go X I that I incredibly through you struggling talking quarters over or out Anything over the again. sort up how months XX next more question understand because environment don't as go modeling tight in versus you mind on and terms capacity in the idea assume back do in per transitions, you're do head I that the us X new But about X these do transitions. we you an X, exabytes capacity getting you're where about of I quarters all technology, transition platter, cetera.

sounds It Or matching like is do pricing adding already. steady. you're demand that we and assume you're back people

together So quantifiable that I'm of some manner. put in to kind all trying just

mix that that's it's math for if the comes, product right? we the because of exactly the that to right? is once of strength you answer pandemic drives, that we're drive coming Thanks, before have question, or some one back. a call transitions, saw the difficult various was lot understand customers through starts which all differently these the is need much And There's may you mid-range is that today capacity. efficient, more demand that our we highest we if get It capacity a capacity if midrange Steve. mid-capacity the really what of So

mix. So a lot upon it exact depend of the will

our any mix see thinking are is continue as to I as just do that right can wait add now drive develops. utilized we not how think we and capacity all, at is where and be

with Ananda Barua from is question Next Capital. Loop

for prepared that how in [indiscernible] [indiscernible]. starts it have on-premise are view yet or much what Appreciate I guess starting spirit about on any it. guess view of it inferencing. talked kind AI to visibility chunky up? any in Dave, the and in remarks just to going show to -- kind "get guys? starting you see driven orders? Xs you drabs? -- context And when Is by AI, customers see to Gen And back gifts Are like legitimate I just you also, starting just kind do of Tier any of like demand then the is you

a That's pretty question. rich

me Ananda. this Let try

about few we Remember, So the being cloud talked early a years I in innings. ago, think

I think still maybe demand as as innings cloud, for the cloud we're is to innings. that early migrate of matter. -- far workloads, what to seeing middle traditional most maybe continuing right now

very innings. the As as I Gen in think we're early far AI,

big consumption that really So all can the we see taking video yet at I And coming. creation, have But up. point. some of they exactly will the are applications with to think storage, I the applications see of come video video efficiency data new to these edge your

in More to that importantly, need you with and need decision I we think And to I going think order make able you're trust mean edge snapshotting a at a decision lot that's by applications the will them. right the cloud. I data. a in of the engine, prove to if that the was that, to the biggest decision snapshot opportunity AI of having see be

especially some it's early. and how do data targeted we're specifically really have orders have for at very that but applications fast going innings. we not still AI, excited very about, we're the are that early We -- excited purchase about really in quite they're so still are grow seen And the of some but big it, to these

next is with Tristan from Baird. question The Gerra

it HAMR been hyperscale you're said market potentially qualified but how I some the on move time? that is how customers, focus over into help The customers. And incremental with U.S. cloud has on that? now does CSP the think Chinese -- you Is

we specifically. say anything Tristan. non-cloud Yes, customers. didn't Sorry, We said

We Chinese. said even We didn't didn't know.

Yes.

different is faults like have with we're that. of about way think those of that kinds the certain customers this of and I kind And less and this. qualifications customer things customers different very there's architectures I also of on more think the and are kinds communicative tolerant

volume It's were some the begun. has we have. X we So ago these that volume of ramp of because as aggressive months issues as not

supplier well down. we factories, But more we're slowed and interactions to that as more learn and we'll shipments learn units about these people to ship those build of going -- our from continue as these us other to really in some volume

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

that was could a update you do? Sorry causing had calls, to process just if that chose issue, you a you I then had but was the subcomponent but an used opportunity I this, you the us firmware. with update I that firmware single the think update between previously bouncing missed mentioned with on you supplier to that

that does would to completed this you firmware, from steps So do what incremental point? guess, take anything need And And be the the have you super out into do That helpful. have requalification. I to to push with complete QX? the qualification

I No, new doing so details various There's changes I various high for segments confidence framework firmware we always think We're and in have we're features earlier. the mean the that. in on. updates over The about test and architectural running. going on. are SMR for talked up And firmware, think always market customers, this beds we the for qualification. we

I about we're fairly think So that. confident

from Miller the Next Company. Mark Benchmark question is with

of introduction year ramp wondering chips? with what see of do a your middle Just of chips of AI PCs into next of you that, terms the say, in thoughts percent AI Where the PCs. as in about

new is This some perspective, to my topic applications. ecosystem as From a for interesting very well, get it's time the Mark. PC

call I'll about And video very applications so what that I'm applications. of some excited it. those I hope are editing

mean, PC where small PC? it the the is then it question medium forever? as so data creating happy want to the is I'm are long Is in closet cloud? to And business. with next that the the applications right store on it you data Is Is is in data I -- the time, and long a as for those the in it up it.

I'm some faster. Some it's is the little sharing and Pc very to wrong. think space. mean, be seen slow, not people bit be a of that adoption I are but think still to I We've rich, in the as of hope are but coming. hope may I the with be I AI, applications I the going going applications creative the

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

the our We our is on call. the execution our financial well the all deliver map, you've both strong road aerial to fundamentals, your Thanks, keeping and shareholders, demand and how and and to Hopefully, to seen our progress. density our you everyone operational improving address our for across continuing markets. positioned participation focus growth posted is forward your Seagate we the advancing enthusiasm questions to value on look and of today. Seagate environment and on By customers positioned to end Gary, appreciate

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

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