Key Highlights

  • Revenue was $4.233 billion, up 61% from $2.629 billion a year earlier.
  • Non-GAAP diluted EPS was $7.68, up from $2.61, and GAAP EPS was $7.59.
  • Non-GAAP gross margin reached 57.8%, against 40.1%, with a non-GAAP operating margin of 50.7%.
  • Free cash flow was $1.48 billion, and gross debt fell to about $2.4 billion.
  • Next-quarter revenue is guided to $4.8 billion, plus or minus $100 million, with non-GAAP EPS of $9.20, plus or minus $0.20.

Seagate Earnings: Why Did Fiscal First-Quarter Revenue Jump 61%?

Seagate Technology (NASDAQ:STX) reported fiscal first-quarter 2027 results after the close on Tuesday, October 27, for the quarter ended October 2. Revenue was $4.233 billion, up 61% from $2.629 billion. Non-GAAP diluted EPS was $7.68, against $2.61 a year earlier, and GAAP EPS was $7.59, against $2.43.

The non-GAAP figure compares with analyst estimates of $7.43 as screened, a 3.36% surprise. Seagate makes hard disk drives and related data storage products. The chief executive called it another quarter of record profitability and the highest free cash flow in the company's history.

Management credited a strengthening demand environment, long-term customer visibility, its HAMR-based technology roadmap, value-based pricing and a stronger balance sheet, and described the outlook as a multi-year growth phase.

Seagate Margins: How Did Gross Margin Climb From 40.1% to 57.8%?

Non-GAAP gross margin was 57.8%, against 40.1%, and GAAP gross margin was 57.3%, against 39.4%. Non-GAAP operating expenses were $300 million, up from $291 million, so almost all of the extra gross profit reached operating income.

Non-GAAP operating margin was 50.7%, against 29.0%, and GAAP operating margin was 48.8%, against 26.4%. GAAP net income was $1.761 billion, against $549 million, and non-GAAP net income was $1.781 billion, against $583 million.

Diluted weighted shares were 232 million, against 226 million, and ordinary shares outstanding at quarter-end were 230 million.

Seagate Cash Flow: What Did Debt Reduction and a Higher Dividend Use?

Cash flow from operations was $1.69 billion and free cash flow was $1.48 billion. Capital expenditure was $211 million, up from $105 million. Inventory rose to $1.700 billion from $1.571 billion at July 3, and cash and equivalents were $1.258 billion, down from $1.704 billion.

Seagate retired about $1.2 billion of debt principal in the quarter, taking gross debt to about $2.4 billion, and retired another $750 million after quarter-end, bringing it to about $1.6 billion. Shareholders' equity rose to $3.453 billion from $2.167 billion.

Returns to shareholders were $568 million, made up of $168 million of dividends and $400 million of buybacks. The quarterly dividend was raised about 3% to $0.76 per share, payable on January 7, 2027, to holders of record on December 23, 2026.

Seagate Guidance: Can Revenue Reach $4.8 Billion Next Quarter?

For the fiscal second quarter, Seagate guided revenue to $4.8 billion, plus or minus $100 million, and non-GAAP diluted EPS to $9.20, plus or minus $0.20. The midpoint implies about 13% sequential revenue growth, as calculated from the quarter just reported. Share-based compensation of about $0.30 per share is excluded from the EPS figure, and a non-GAAP tax rate of 15.5% is projected for fiscal 2027.

The company did not give a gross margin or operating expense range in the release, so the margin path will be a focus once the next report arrives. Investors may also watch whether inventory and capital expenditure keep rising alongside revenue.

Next to watch are the January 7 dividend payment and the fiscal second-quarter report, which will show whether the $4.8 billion midpoint is met.