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Call sheet · Q1'26

Seagate Technology Holdings (STX)

Q1'26 earnings call · held October 29, 2025 · compared with the Q4'25 call · management-credibility review
6/12
Disclosure score
2 high, 4 medium, 3 low flags
Financial quality
Bottom line
The Street sees record 40% gross margins and celebrates, but Seagate just admitted they're actually losing unit capacity as HAMR transitions eat into production, with Mosley stating 'we actually lose a little bit of capacity because the process content is a little higher.' The 'sold out through 2026' isn't strength; it's a supply crisis they're spinning as demand validation. Most telling: free cash flow went nowhere despite 19% operating profit growth, and they stopped disclosing DSO after it spiked, classic signs of revenue quality problems. When asked directly about receivables, management deflected to '6-month planning cycles.' My view changes if December shows FCF growing faster than operating income and they resume DSO disclosure with improvement.

The 30-second version

  • The sleeper: HAMR yields aren't scaling as planned, creating a hidden capacity crunch through 2026
  • Record 40.1% gross margins mask a dangerous reality: they can't add capacity
  • The DSO spike nobody's talking about signals collection issues or channel stuffing

What changed this quarter

MetricQ4'25Q1'26Change
Revenue$2.44B (+30% YoY)$2.63B (+21% YoY)YoY growth decelerated 900 bps
Non-GAAP EPS$2.59$2.61Flat despite revenue growth
Non-GAAP Gross Margin37.9%40.1%+220 bps to record high
Non-GAAP Operating Margin26.2%29%+280 bps expansion
Data Center Revenue~$1.85B (75% of total)$2.1B (80% of total)+13% sequential, mix shift accelerating
Edge IoT Revenue$500M$515M+3% sequential, weakening
Exabyte Shipments163 EB182 EB+12% sequential growth slowing
Data Center Exabytes137 EB159 EB+16% sequential acceleration
Free Cash Flow$425M$427MFlat despite higher income
Operating Cash FlowNot disclosedNot disclosedStill hiding CFFO metric

Accountability tracked

7 new promises made5 narrative shifts flagged7 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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