Seagate's Q3 2025: Navigating Contradictions in Supply Chain, Gross Margins, and Capacity Management
Earnings DecryptTuesday, May 6, 2025 7:34 pm ET
2min read
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Revenue and Profit Growth:
- Seagate Technology reported a 31% year-on-year increase in revenue for Q3 2025, with an 81% growth in non-GAAP gross profit dollars.
- The growth was driven by strong execution, healthy supply-demand fundamentals, and strategic pricing actions.
Demand Environment and Product Shipping:
- Cloud nearline revenue and exabytes grew nearly 10% sequentially, almost doubling year-over-year, despite a tight supply environment.
- This increase is attributed to strong demand, particularly from global cloud customers, aligning with the cloud CapEx investment cycle and data center infrastructure build-out.
Supply Chain and Operational Improvements:
- The company experienced temporary supply constraints in the March quarter, but has since rectified these issues, as evident by increased revenue and improved gross margin.
- These operational improvements are due to Seagate's proactive steps, including supply discipline, build-to-order strategy, and strategic pricing actions.
HAMR Technology and Product Ramp:
- Seagate's HAMR-based Mozaic drives, the industry's only 3 terabyte per disk products, are ramping volume to qualified customers.
- As qualifications conclude, an appreciable increase in HAMR product shipments is expected, supported by a blend of HAMR and PMR products over the coming quarters.
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Revenue and Profit Growth:
- Seagate Technology reported a 31% year-on-year increase in revenue for Q3 2025, with an 81% growth in non-GAAP gross profit dollars.
- The growth was driven by strong execution, healthy supply-demand fundamentals, and strategic pricing actions.
Demand Environment and Product Shipping:
- Cloud nearline revenue and exabytes grew nearly 10% sequentially, almost doubling year-over-year, despite a tight supply environment.
- This increase is attributed to strong demand, particularly from global cloud customers, aligning with the cloud CapEx investment cycle and data center infrastructure build-out.
Supply Chain and Operational Improvements:
- The company experienced temporary supply constraints in the March quarter, but has since rectified these issues, as evident by increased revenue and improved gross margin.
- These operational improvements are due to Seagate's proactive steps, including supply discipline, build-to-order strategy, and strategic pricing actions.
HAMR Technology and Product Ramp:
- Seagate's HAMR-based Mozaic drives, the industry's only 3 terabyte per disk products, are ramping volume to qualified customers.
- As qualifications conclude, an appreciable increase in HAMR product shipments is expected, supported by a blend of HAMR and PMR products over the coming quarters.
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