Seagate Misses Q4 Revenue, Guides Below Consensus

Seagate Technology missed Wall Street revenue estimates for its fiscal fourth quarter and issued current-quarter guidance below consensus, sending shares lower in after-hours trading.

The company posted $2.05 billion in revenue for the period ended July 3, below the $2.12 billion average analyst estimate. The miss hit the mass-capacity segment, where cloud customers delayed large-scale nearline hard-drive purchases. Chief Executive Dave Mosley said on the call that the demand environment is still stabilizing and enterprise buyers are taking longer to commit to capacity purchases.

Gross margin came in at 31.7% on a non-GAAP basis, below the 32.5% the Street had expected. Mosley attributed the pressure to underutilized factory capacity as Seagate builds inventory ahead of its next-generation heat-assisted magnetic recording platform, now scheduled for a volume ramp in early calendar 2027. Chief Financial Officer Gianluca Romano said the company remains on track to ship HAMR drives to a large hyperscaler by year-end, with customer qualification cycles driving the timing.

Mass-capacity revenue was $1.58 billion, down 5% sequentially. Legacy markets, including client compute and consumer electronics, contributed $472 million, roughly flat. Free cash flow totaled $320 million for the quarter, down from $369 million in the prior period. Seagate ended the quarter with $2.1 billion in cash and equivalents. It paid $152 million in dividends and bought back $48 million in stock.

For the fiscal first quarter, Seagate expects non-GAAP earnings per share of $1.40 to $1.80, with the midpoint trailing the $1.78 consensus. The midpoint of the revenue guidance implies a roughly 10% sequential decline. Mosley cited continued caution among large enterprise buyers.

Wells Fargo analyst Aaron Rakers asked whether the HAMR pushout reflected customer readiness or Seagate's own production yields. Mosley said yields were within the company's internal plan and that the bottleneck was in the hyperscaler qualification process, not the factory. Seagate plans an investor day in November to lay out longer-term financial targets, including a 35% non-GAAP gross margin.

Seagate's Alpha Score of 52 out of 100, a Mixed rating, reflects the tension between the company's technology lead in HAMR and the near-term demand headwinds. The stock page is STX stock page.

The company faces a similar dynamic to what Ford's Quality Win Is Real. The Warranty Bill Isn't Gone Yet. described: a structural improvement story the market is willing to wait for. The patience has limits.