Seagate Technology (STX) Q3 2026 earnings summary

Executive summary

• Revenue for the March quarter reached $3.1–$3.11 billion, up 44% year-over-year, driven by robust data center demand, Mozaic HAMR platform adoption, and favorable pricing actions.

• Record gross margin of 47% and operating margin of up to 37.5%, with free cash flow near $953 million, the highest in over a decade.

• Data center revenue reached $2.5 billion, up 55% year-over-year, accounting for 80% of total revenue, with 199 exabytes shipped, mainly to cloud customers.

• Structural growth is fueled by AI-driven data creation and retention, with agentic AI and physical AI deployments expanding storage needs.

• Significant debt reduction and shareholder returns, including $641 million in debt retired and $191 million returned via dividends and share repurchases.

Financial highlights

• Quarterly revenue was $3.1–$3.11 billion, up 10% sequentially and 44% year-over-year.

• Non-GAAP gross margin reached 47%, up 480 bps sequentially; non-GAAP operating margin expanded to 37.5%.

• Non-GAAP EPS was $4.10, up 32% quarter-over-quarter and 115% year-over-year; GAAP diluted EPS was $3.27.

• Free cash flow was $953 million, representing a 31% margin and the highest level in over a decade.

• Cash and cash equivalents at quarter-end were $1.15 billion.

Outlook and guidance

• June/Fiscal Q4 2026 revenue guidance is $3.45 billion ± $100 million, with non-GAAP EPS guidance of $5.00 ± $0.20.

• Non-GAAP operating expenses projected at $295 million; operating margin expected in the lower 40% range.

• Management expects continued sequential revenue and margin growth through fiscal 2027, driven by AI and cloud demand.

• Capital expenditures for fiscal 2026 expected to be higher than 2025, but within the 4–6% of revenue target.

• Liquidity sources are sufficient to fund operations and meet cash requirements for at least the next 12 months.