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Seagate Technology Holdings plc Q3 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue of $2.8 billion, up 3% year-over-year and in line with prior guidance.
  • Non-GAAP EPS of $1.81, up 22% compared to Q3 FY21.
  • Non-GAAP operating margin of 16.8%, up 140 basis points year-over-year.
  • Free cash flow of $363 million, up 32% year-over-year.
  • HDD shipments reached 154 exabytes, up 10% year-over-year.

Business Segment Highlights

  • Nearline HDD revenue reached a fifth consecutive quarterly record; 24% year-over-year growth.
  • Mass capacity revenue of $1.9 billion, up 18% year-over-year but down 6% sequentially.
  • Legacy markets declined 26% year-over-year due to ongoing PC market contraction and customer inventory adjustments.
  • Non-HDD revenue (systems and SSD) flat year-over-year but down 19% sequentially due to component shortages.

Market Dynamics and Demand Trends

  • Cloud demand remains strong, with more than half of cloud revenue covered under long-term agreements.
  • Supply chain disruptions continue globally, including non-HDD component shortages and COVID lockdowns in China.
  • Seagate halted shipments to Russia and Belarus, typically 1–2% of quarterly revenue.
  • Video and Image Applications (VIA) market demand decreased sharply due to China lockdowns but expected to rebound in the second half of the calendar year.

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Operator: Welcome to the Seagate Technology Fiscal Third Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Shanye Hudson, Senior Vice President of Investor Relations and Treasury. Please go ahead. Shanye Hudson: Thank you. Good afternoon everyone and welcome to today's call. Joining me are Dave Mosley, Seagate's Chief Executive Officer; and Gianluca Romano, our Chief Financial Officer. We posted our earnings press release and detailed supplemental information for our March quarter fiscal 2022 on the Investors section of our website. During today's call, we'll refer to GAAP and non-GAAP measures. Non-GAAP figures are reconciled to GAAP figures in the earnings press release posted on our website and included in our Form 8-K that was filed with the SEC. We've not reconciled certain non-GAAP outlook measures because material items that may impact these measures are out of our control and/or cannot be reasonably predicted. Therefore, a reconciliation of the corresponding GAAP measures is not available without unreasonable effort. Before we begin, I'd like to remind you that today's call contains forward-looking statements that reflect management's current views and assumptions based on information available to us as of today and should not be relied

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