Seagate Technology Holdings plc STX reported fourth-quarter fiscal 2021 non-GAAP earnings of $2.00 per share, which beat the Zacks Consensus Estimate by 7.5%. The bottom line increased 66.7% from the year-ago quarter’s figure and 35.1% sequentially. Management had anticipated non-GAAP earnings per share for fiscal fourth quarter to be $1.85 per share (+/- 15 cents).
Non-GAAP revenues of $3.031 billion outpaced the Zacks Consensus Estimate by 1.6%. The figure improved 19.7% on a year-over-year basis and 10.3% sequentially. Management had anticipated fiscal fourth-quarter revenues of 2.95 billion (+/- 150 million).
Robust demand for its mass capacity storage solutions as well as recovering video and image application (VIA) market boosted top-line numbers.
In fiscal 2021, on a year-over-year basis, Seagate reported non-GAAP earnings of $5.64, which increased 13.9%. Revenues of $10.681 billion inched up 1.6% year on year.
Following the announcement, shares of Seagate are up 2.6% in the pre-market trading on Jul 21. In the past year, shares of the company have returned 72.8% against the industry’s decline of 24.6%.
Seagate Technology Holdings PLC Price
Seagate Technology Holdings PLC price | Seagate Technology Holdings PLC Quote
Exabyte Shipments in Detail
During the reported quarter, Seagate shipped 152.3 exabytes of hard disk drive (“HDD”) storage, with an average capacity of record 5.4 terabytes (TB) per drive. This marked year-over-year improvement of 30% and sequential growth of 9% in total HDD exabytes shipments.
Average mass capacity improved to 5.4 TB from 4.5 TB (up 21%) reported in the year-ago quarter and increased from 5.1 TB (up 7%) reported in the previous quarter.
The company shipped 123.3 exabytes for the mass capacity storage market (includes nearline and video and image applications as well as network-attached storage or NAS). This marked sequential growth of 11% and year-over-year improvement of 36% in exabytes shipments. Average mass capacity per drive fell sequentially to 9.4 TB from 9.6 TB.
In the nearline market, the company shipped 101.4 exabytes of HDD, up 28% year over year and 6% sequentially.
The company shipped 29.1 exabytes for the Legacy market (includes mission-critical, notebook, desktop, gaming consoles, digital video recorders or DVR and external consumer devices), which represents year-over-year increase of 10% in exabyte shipments. Average capacity increased 19% on a year-over-year basis to 1.9TB.
Revenues by Product Group
Total HDD revenues (91% of revenues) increased 18% year over year and 10% sequentially to $2.737 billion in the reported quarter. Revenues from mass capacity storage soared 29% year over year. Mass capacity contributed 69% to total HDD revenues.
Non-HDD segment revenues (9%), which include enterprise data solutions, cloud systems and SSDs, was $276 million, up 16% sequentially and 42% year over year.
Non-GAAP gross margin expanded 240 basis points (bps) on a year-over-year basis to 29.6%.
Non-GAAP operating expenses were up 11% on a year-over-year basis to $346 million.
Non-GAAP income from operations were $546 million, up 46.4% from the year-ago quarter’s figure. Non-GAAP operating margin expanded 330 bps from the prior-year quarter’s reported figure to 18.1%.
Balance Sheet and Cash Flow
As of Jul 2, 2021, cash and cash equivalents were $1.209 billion compared with $1.212 billion as of Apr 2, 2021.
As of Jul 2, 2021, long-term debt (including current portion) was $5.139 billion compared with $5.142 billion as of Apr 2, 2021.
Cash flow from operations was $478 million compared with $378 million reported in the previous quarter.
Free cash flow for the reported quarter amounted to $354 million compared with $274 million in the previous quarter.
In fiscal fourth quarter, the company repurchased 2.6 million shares worth $228 million and paid out cash dividends worth $154 million. In fiscal 2021, the company repurchased 33.6 million shares worth $2 billion and paid out cash dividends worth $649 million
Seagate’s board of directors approved a cash dividend of 67 cents per share. The dividend will be paid out on Oct 6 to shareholders of record as of the close of business on Sep 22.
Management anticipates first-quarter fiscal 2022 revenues of 3.1 billion (+/- 150 million). The Zacks Consensus Estimate for revenues is pegged at $2.97 billion.
Meanwhile, non-GAAP earnings per share for fiscal first quarter is expected to be $2.20 per share (+/- 15 cents). The Zacks Consensus Estimate for earnings is pegged at $1.93 per share.
Zacks Rank & Other Stocks to Consider
Currently, Seagate carries a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the broader technology sector worth considering are Shopify SHOP, NVIDIA NVDA and Zoom Video ZM. All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Shopify, NVIDIA and Zoom Video is currently pegged at 25%,17.6% and 15.6%, respectively.
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