Seagate Technology Reports Q1 Revenue Decline but Expects Improvement in Q2

Seagate reports strong Q1 2024 results, with revenue decline but improved profitability. Optimistic outlook for Q2, but inventory levels raise concerns about demand.

Nimrah Khatoon
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Seagate Technology Reports Q1 Revenue Decline but Expects Improvement in Q2

Seagate Technology Reports Q1 Revenue Decline but Expects Improvement in Q2

Seagate Technology, a prominent data storage company, reported its financial results for the first quarter of calendar year 2024. The company's revenue for Q1 CY2024 was $1.66 billion, representing an 11% decline compared to the same quarter last year. Despite the year-over-year decrease, Seagate managed to achieve a non-GAAP profit of $0.33 per share, a significant improvement from the loss of $0.28 per share in Q1 CY2023.

In a statement, Seagate's CEO attributed the company's performance to several factors, including improving cloud demand, strong operating discipline, and effective price execution. These elements helped Seagate navigate the challenging market conditions and deliver results that exceeded analysts' expectations. The company's gross margin and earnings per share (EPS) surpassed Wall Street's estimates for the quarter.

Looking ahead to the second quarter, Seagate provided an optimistic outlook. The company expects its Q2 revenue to be around $1.85 billion, which is 1.5% above analysts' estimates. This projection suggests that Seagate anticipates a recovery in demand and continued strength in its operations.

Why this matters: Seagate's financial results and guidance provide insights into the health of the data storage industry and the broader technology sector. The company's ability to improve its profitability and exceed expectations despite a revenue decline highlights its resilience and adaptability in a dynamic market.

However, there are some concerns regarding Seagate's inventory levels. The company's Days Inventory Outstanding (DIO) increased to 88 days, which is 23 days higher than its five-year average. This rise in inventory levels suggests potential weakness in demand and could impact Seagate's future financial performance if not managed effectively.

Overall, Seagate's Q1 CY2024 results were seen as strong by analysts, with the company demonstrating its ability to navigate challenges and deliver solid gross margins and EPS. As Seagate moves into the second quarter, investors and industry observers will closely monitor its revenue growth, inventory management, and overall market demand to assess the company's ongoing performance and the broader trends in the data storage sector.

Key Takeaways

  • Seagate's Q1 CY2024 revenue declined 11% YoY to $1.66B, but non-GAAP EPS improved.
  • Seagate's CEO cited improving cloud demand, strong operations, and effective pricing for performance.
  • Seagate expects Q2 revenue of $1.85B, 1.5% above analysts' estimates, signaling demand recovery.
  • Seagate's inventory levels rose, suggesting potential demand weakness that could impact future results.
  • Analysts view Seagate's Q1 results as strong, with solid gross margins and EPS despite revenue decline.