- Record exabyte capacity shipped, up 29%
year-over-year
- Long-term NAND supply agreement with
Toshiba Memory Corporation signed to benefit portfolio expansion
and portfolio continuity
Seagate Technology plc (NASDAQ: STX), a world leader in digital
storage solutions, today announced selected preliminary financial
information for its fiscal second quarter 2018, which ended on
December 29, 2017. Seagate expects to report revenue of
approximately $2.9 billion, and GAAP and non-GAAP gross margin of
approximately 30%. The Company expects to report record exabyte
shipments of approximately 88 exabytes, reflecting drive shipments
of approximately 40 million and record average capacity per drive
of 2.2 terabytes.
GAAP and Non-GAAP operating expenses for the December quarter
are expected to be approximately $444 million and $390 million
respectively. The Company ended the quarter with approximately $2.6
billion in cash and cash equivalents.
These preliminary results compare to the Company’s previous
forecast for fiscal second quarter 2018 revenue growth of 3-5%
sequentially, non-GAAP gross margin improvement sequentially and
non-GAAP operating expenses down 2-3%.
The strength in the Company’s revenue and gross margin for the
quarter was driven primarily by better-than-expected demand for the
Company’s HDD mass-storage solutions portfolio and operational
execution.
“Our revenue growth and strong portfolio profitability in the
December quarter reflect solid demand for high-capacity
mass-storage solutions, particularly for our cloud-based
environments,” said Dave Mosley, Seagate’s chief executive officer.
“Availability of our cloud and edge portfolio remains constrained
with broad-based customer demand globally and we are looking
forward to planning discussions with a significant number of
customers at CES this week,” said Dave Mosley.
Due to industry forecasts for explosive data creation and
next-generation workloads over the next decade and beyond, the
storage industry anticipates an increase in global storage needs
for existing and new markets. To address these needs, Seagate has
developed and invested in building a robust digital storage
portfolio to provide customers with solutions that fit their
dynamic storage needs, including HDDs, SSDs, and hybrid
solutions.
During the December quarter, Seagate entered into a previously
announced long-term NAND supply agreement with Toshiba Memory
Corporation that will provide continuity of NAND supply for
Seagate’s current and future SSD product portfolio.
“Seagate’s broad offering of flash-based products are ready to
scale and grow across multiple markets,” said Dave Mosley.
“Securing additional NAND supply through a long-term agreement with
Toshiba Memory Corporation fulfills our current needs for NAND and
increases the potential for Seagate to deliver new and innovative
flash-based solutions. Diversifying and expanding our competitive
HDD mass-storage portfolio with SSD and enterprise storage
solutions will enable meaningful future revenue growth and profits
over the next several years while providing significant value for
our storage customers,” said Dave Mosley.
Conference Call Details for Fiscal Second Quarter 2018
Financial Results
Seagate will report its fiscal second quarter 2018 financial
results before the market opens on January 29, 2018. The investment
community conference call to discuss these results will take place
that day at 6:00 a.m. Pacific Time/9:00 a.m. Eastern Time. The live
event can be accessed online at Seagate’s Investor Relations
website at www.seagate.com/investors. An archived audio webcast of
this event will be available shortly following the event
conclusion.
About Seagate
To learn more about the Company’s products and services, visit
www.seagate.com and follow us on Twitter, Facebook, LinkedIn,
Spiceworks, YouTube and subscribe to our blog. The contents of our
website and social media channels are not a part of this
release.
Cautionary Note Regarding Forward-Looking Statements
Some of the statements and assumptions included in this press
release are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 or Section 21E of the
Securities Exchange Act of 1934, each as amended, including, in
particular, statements about our plans, strategies and prospects,
our ability to address any product availability constraints with
our customers, continuity of long-term NAND supply, demand for our
products, our product offerings, estimates of future revenue and
profit growth and estimates of industry growth. These statements
identify prospective information and may include words such as
“expects,” “intends,” “plans,” “anticipates,” “believes,”
“estimates,” “predicts,” “projects,” “may,” “will,” or negative of
these words, variations of these words and comparable terminology.
These forward-looking statements are based on information available
to the Company as of the date of this press release and are based
on management’s current views and assumptions. These
forward-looking statements are conditioned upon and also involve a
number of known and unknown risks, uncertainties and other factors
that could cause actual results, performance or events to differ
materially from those anticipated by these forward-looking
statements. Such risks and uncertainties include, but are not
limited to: items that may be identified during its financial
statement closing process that cause adjustments to the estimates
included in this report; the uncertainty in global economic
conditions; the impact of the variable demand and adverse pricing
environment for disk drives; the Company’s ability to successfully
qualify, manufacture and sell its disk drive products in increasing
volumes on a cost-effective basis and with acceptable quality; the
impact of competitive product announcements; the Company’s ability
to achieve projected cost savings in connection with restructuring
plans; possible excess industry supply with respect to particular
disk drive products; disruptions to its supply chain or production
capabilities; unexpected advances in competing technologies or
changes in market trends; the development and introduction of
products based on new technologies and expansion into new data
storage markets; the Company’s ability to comply with certain
covenants in its credit facilities with respect to financial ratios
and financial condition tests; currency fluctuations that may
impact the Company’s margins and international sales; cyber-attacks
or other data breaches that disrupt the Company’s operations or
result in the dissemination of proprietary or confidential
information and cause reputational harm; and fluctuations in
interest rates. Information concerning risks, uncertainties and
other factors that could cause results to differ materially from
the expectations described in this press release is contained in
the Company’s Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission on August 4, 2017, the “Risk
Factors” section of which is incorporated into this press release
by reference, and other documents filed with or furnished to the
Securities and Exchange Commission. These forward-looking
statements should not be relied upon as representing the Company’s
views as of any subsequent date and the Company undertakes no
obligation to update forward-looking statements to reflect events
or circumstances after the date they were made.
Use of non-GAAP financial information
The Company uses non-GAAP measures of gross margin and operating
expenses which are adjusted from results based on GAAP to exclude
certain expenses, gains and losses. These non-GAAP financial
measures may be provided to enhance the user’s overall
understanding of the Company’s current financial performance and
its prospects for the future. Specifically, the Company believes
non-GAAP results provide useful information to both management and
investors as these non-GAAP results exclude certain expenses, gains
and losses that it believes are not indicative of its core
operating results and because it is consistent with the financial
models and estimates published by financial analysts who follow the
Company.
These non-GAAP results are some of the primary measurements
management uses to assess the Company’s performance, allocate
resources and plan for future periods. Reported non-GAAP results
should only be considered as supplemental to results prepared in
accordance with GAAP, and not considered as a substitute for, or
superior to, GAAP results. These non-GAAP measures may differ from
the non-GAAP measures reported by other companies in its
industry.
SEAGATE TECHNOLOGY PLC PRELIMINARY ADJUSTMENTS TO
GAAP GROSS MARGIN (Unaudited)
For the Three MonthsEnded
December 29, 2017
Reconciliation of Preliminary GAAP Gross Margin Preliminary GAAP
Gross Margin 30.1 % Non-GAAP adjustments:
A 0.4 %
Preliminary non-GAAP Gross Margin 30.5 %
A
Gross margin has been adjusted on a Non-GAAP basis to exclude
amortization of intangibles associated with acquisitions, write off
of certain fixed assets and exclusion of favorable adjustments for
sales of certain discontinued products.
SEAGATE
TECHNOLOGY PLC PRELIMINARY ADJUSTMENTS TO GAAP OPERATING
EXPENSE (in millions) (Unaudited)
For the Three MonthsEnded
December 29, 2017
Reconciliation of Preliminary Operating Expense: Preliminary GAAP
Operating Expense $ 444 Non-GAAP adjustments: Product development
A (2 ) Marketing and administrative
B (1 )
Amortization of intangibles
C (18 ) Restructuring and other,
net
D (33 ) Preliminary non-GAAP Operating Expense $ 390
A
Product development expenses have been adjusted on a non-GAAP basis
to exclude the impact of write off of certain fixed assets and
other charges related to restructuring.
B
Marketing and administrative expenses have been adjusted on a
non-GAAP basis to exclude the write off of certain fixed assets
related to restructuring.
C
Amortization of intangibles primarily related to our acquisitions
has been excluded on a non-GAAP basis.
D
Restructuring and other net, has been adjusted on a non-GAAP basis
primarily related to reductions in our workforce as a result of our
ongoing focus on cost efficiencies in all areas of our business.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180108006816/en/
Seagate Technology plcHelen Farrier, 408-658-1616Corporate
Public Relations Directorhelen.farrier@seagate.com
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