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Non-GAAP earnings of $1.05 per share beat the Zacks Consensus Estimate by 40%. The company reported a non-GAAP loss of 18 cents per share in the year-ago quarter. It also exceeded management’s guidance of 70 cents (+/- 20 cents).
Non-GAAP revenues of $1.887 billion beat the Zacks Consensus Estimate by 1.5%. The figure increased 18% on a year-over-year basis and 14% sequentially. Management projected revenues of $1.85 billion (+/- $150 million) for the fiscal fourth quarter.
Fiscal fourth-quarter revenues were primarily driven by the increasing mass capacity demand, with nearline cloud demand picking up pace.
Strengthening the global cloud demand environment drove mass capacity revenues, which surged 46% year over year to $1.437 billion. Sequentially, mass capacity revenues were up 22%. We expected mass capacity revenues to be $1.377 billion for the fiscal fourth quarter.
Nearline cloud revenues more than doubled year over year, owing to higher traditional cloud computing workloads and new AI deployments. STX expects this momentum to continue in fiscal 2025.
In the reported quarter, Seagate shipped 114.2 exabytes of HDD storage, up 25% year over year and 15% sequentially. Our estimate was pegged at 110.6 exabytes.
Mass capacity exabyte shipments now represent more than 90% of total exabyte shipments. The company shipped 103.9 exabytes for the mass-capacity storage market (including nearline, video and image applications and network-attached storage). This recorded a year-over-year increase of 38% in exabyte shipments and 17% sequentially. Our estimate was pegged at 100 exabytes.
Average mass capacity per drive slightly increased sequentially to 12.6 TB from 12.5 TB.
In the nearline market, it shipped 84.3 exabytes of HDD, up 54% year over year and 18% sequentially.
Mozaic Platform to Further Drive Revenues
The improving metrics signify that things are probably looking brighter for STX after a period of lackluster performance. Seagate’s launch of the Mozaic 3+ hard drive platform, which features Heat-Assisted Magnetic Recording technology, is also expected to aid in capturing a greater share of the mass capacity storage solutions market.
STX added that it shipped a small volume of Mozaic 3+ for revenues to non-cloud customers in the fiscal fourth quarter. It anticipates completing the qualification with the lead CSP customer and starting multiple qualifications with U.S. and China cloud customers in the current quarter. It anticipates a larger volume ramp from mid-calendar 2025.
Upbeat Guidance
Management anticipates first-quarter fiscal 2025 revenues to be $2.10 billion (+/- $150 million). STX expects incremental improvements in mass capacity demand, owing to strengthening demand from global cloud customers and modest improvement in the nearline enterprise market. The increase in mass capacity revenues is likely to offset lower revenues from legacy markets.
For VIA, management anticipates sales to fluctuate in the second half of calendar 2024. Though smart cities are the biggest end-market opportunity, the near-term budget visibility remains blurry amid existing macroeconomic uncertainty.
Gross margin is expected to benefit from a higher mix of mass capacity revenues and ongoing pricing actions. At the midpoint of the revenue guidance, management expects the non-GAAP operating margin to grow in the high-teens percentage range of revenues. The non-GAAP operating expenses are expected to be $270 million.
Non-GAAP earnings for first-quarter fiscal 2025 are expected to be $1.40 per share (+/- 20 cents).
STX expects fiscal 2025 capex to be at or below the low end of its long-term target range of 4-6% of revenues.
Upward Estimate Revision
The Zacks Consensus Estimate for earnings has been moving northward since the earnings announcement, reflecting analysts’ optimism.
The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has increased 10.3% in the past seven days to $6.44. The consensus estimate for current-quarter earnings has moved up 17.5% to $1.21 per share.
Zacks Rank & Stock Price
Moreover, at present, the stock carries a Zacks Rank #1 (Strong Buy). Apart from a favorable rank, STX has a VGM Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and a VGM of A or B offer solid investment opportunities.
The stock is down 8.5% from its 52-week high level of $113.56, making it relatively affordable for investors. In the past year, its shares have risen 67.3% compared with the subindustry’s growth of 38.3%.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, which moved north 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Shares of BMI have risen 24% in the past year.
In the last reported quarter, BMI reported earnings of $1.12 per share for the second quarter of 2024. The figure beat the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s level of 76 cents. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.86%. The uptick can be attributed to healthy customer demand for its smart water solutions, smooth operational execution and accretive customer backlog conversion.
The Zacks Consensus Estimate for Onto Innovation’s 2024 EPS is pegged at $5.05, unchanged in the past 30 days. ONTO’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the remaining one, with the average surprise being 2.6%. Shares of ONTO have surged 61.3% in the past year.
The Zacks Consensus Estimate for Generac’s 2024 EPS is pegged at $6.16. GNRC’s earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing in the remaining quarters, with the average surprise being 5.8%. The long-term earnings growth rate is 12%.
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Seagate (STX) Q4 Earnings Top Estimates on Upbeat Demand Trends
Seagate Technology Holdings plc (STX - Free Report) recently reported better-than-expected fourth-quarter fiscal 2024 results.
Non-GAAP earnings of $1.05 per share beat the Zacks Consensus Estimate by 40%. The company reported a non-GAAP loss of 18 cents per share in the year-ago quarter. It also exceeded management’s guidance of 70 cents (+/- 20 cents).
Non-GAAP revenues of $1.887 billion beat the Zacks Consensus Estimate by 1.5%. The figure increased 18% on a year-over-year basis and 14% sequentially. Management projected revenues of $1.85 billion (+/- $150 million) for the fiscal fourth quarter.
(Read more: Seagate's Q4 Earnings Beat Estimates, Revenues Up Y/Y)
Strengthening Cloud Demand
Fiscal fourth-quarter revenues were primarily driven by the increasing mass capacity demand, with nearline cloud demand picking up pace.
Strengthening the global cloud demand environment drove mass capacity revenues, which surged 46% year over year to $1.437 billion. Sequentially, mass capacity revenues were up 22%. We expected mass capacity revenues to be $1.377 billion for the fiscal fourth quarter.
Nearline cloud revenues more than doubled year over year, owing to higher traditional cloud computing workloads and new AI deployments. STX expects this momentum to continue in fiscal 2025.
In the reported quarter, Seagate shipped 114.2 exabytes of HDD storage, up 25% year over year and 15% sequentially. Our estimate was pegged at 110.6 exabytes.
Mass capacity exabyte shipments now represent more than 90% of total exabyte shipments. The company shipped 103.9 exabytes for the mass-capacity storage market (including nearline, video and image applications and network-attached storage). This recorded a year-over-year increase of 38% in exabyte shipments and 17% sequentially. Our estimate was pegged at 100 exabytes.
Average mass capacity per drive slightly increased sequentially to 12.6 TB from 12.5 TB.
In the nearline market, it shipped 84.3 exabytes of HDD, up 54% year over year and 18% sequentially.
Mozaic Platform to Further Drive Revenues
The improving metrics signify that things are probably looking brighter for STX after a period of lackluster performance. Seagate’s launch of the Mozaic 3+ hard drive platform, which features Heat-Assisted Magnetic Recording technology, is also expected to aid in capturing a greater share of the mass capacity storage solutions market.
STX added that it shipped a small volume of Mozaic 3+ for revenues to non-cloud customers in the fiscal fourth quarter. It anticipates completing the qualification with the lead CSP customer and starting multiple qualifications with U.S. and China cloud customers in the current quarter. It anticipates a larger volume ramp from mid-calendar 2025.
Upbeat Guidance
Management anticipates first-quarter fiscal 2025 revenues to be $2.10 billion (+/- $150 million). STX expects incremental improvements in mass capacity demand, owing to strengthening demand from global cloud customers and modest improvement in the nearline enterprise market. The increase in mass capacity revenues is likely to offset lower revenues from legacy markets.
For VIA, management anticipates sales to fluctuate in the second half of calendar 2024. Though smart cities are the biggest end-market opportunity, the near-term budget visibility remains blurry amid existing macroeconomic uncertainty.
Gross margin is expected to benefit from a higher mix of mass capacity revenues and ongoing pricing actions. At the midpoint of the revenue guidance, management expects the non-GAAP operating margin to grow in the high-teens percentage range of revenues. The non-GAAP operating expenses are expected to be $270 million.
Non-GAAP earnings for first-quarter fiscal 2025 are expected to be $1.40 per share (+/- 20 cents).
STX expects fiscal 2025 capex to be at or below the low end of its long-term target range of 4-6% of revenues.
Upward Estimate Revision
The Zacks Consensus Estimate for earnings has been moving northward since the earnings announcement, reflecting analysts’ optimism.
The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has increased 10.3% in the past seven days to $6.44. The consensus estimate for current-quarter earnings has moved up 17.5% to $1.21 per share.
Zacks Rank & Stock Price
Moreover, at present, the stock carries a Zacks Rank #1 (Strong Buy). Apart from a favorable rank, STX has a VGM Score of B. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 (Buy) and a VGM of A or B offer solid investment opportunities.
The stock is down 8.5% from its 52-week high level of $113.56, making it relatively affordable for investors. In the past year, its shares have risen 67.3% compared with the subindustry’s growth of 38.3%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Badger Meter (BMI - Free Report) , Generac Holdings (GNRC - Free Report) and Onto Innovation (ONTO - Free Report) . Badger Meter sports a Zacks Rank #1, while GNRC and ONTO carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, which moved north 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Shares of BMI have risen 24% in the past year.
In the last reported quarter, BMI reported earnings of $1.12 per share for the second quarter of 2024. The figure beat the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s level of 76 cents. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.86%. The uptick can be attributed to healthy customer demand for its smart water solutions, smooth operational execution and accretive customer backlog conversion.
The Zacks Consensus Estimate for Onto Innovation’s 2024 EPS is pegged at $5.05, unchanged in the past 30 days. ONTO’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the remaining one, with the average surprise being 2.6%. Shares of ONTO have surged 61.3% in the past year.
The Zacks Consensus Estimate for Generac’s 2024 EPS is pegged at $6.16. GNRC’s earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing in the remaining
quarters, with the average surprise being 5.8%. The long-term earnings growth rate is 12%.