Seagate Technology Holdings PLC

Good afternoon and welcome to the Seagate Technology Fiscal Third Quarter 2021 Financial Results Conference Call. My name is Gabriel and I will be your coordinator for today. At this time, all participants are in listen-only mode. Following the prepared remarks, there will be a question and answer session. As a reminder, the conference is being recorded for replay purposes. At this time, I would like to turn the call over to Cheney Hudson, Senior Vice President, Investor Relations and Treasury. Please proceed, Cheney.

Thank you. Good afternoon, everyone, and welcome to today's call. Joining me are Dave Mosley, Seagate's Chief Executive Officer, and Gianluca Romano, our Chief Financial Officer. We've posted our earnings press release and detailed supplemental information for our March quarter on the Investors section of our website. During today's call, we'll refer to GAAP and non-GAAP measures. Non-GAAP figures are reconciled to GAAP figures in the earnings press release posted on our website in Form 8K that was filed with the SEC. We've not reconciled certain non-GAAP outlook measures because material items that may impact these measures are out of our control and or cannot be reasonably predicted. Therefore, reconciliation to the corresponding GAAP measures is not available without unreasonable effort. As a reminder, this call contains forward-looking statements, including our June quarter financial outlook and expectations about our financial performance, market demand, industry growth trends, planned product introductions, ability to ramp production, future growth opportunities, possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic and general market conditions. These statements are based on management's current views and assumptions and information available to us as of today and should not be relied upon as of any subsequent date. Actual results may vary materially from today's statements. Information concerning our risks, uncertainties, and other factors that could cause results to differ from these forward-looking statements are contained in our most recent Form 10-K and 10-Q filed with the SEC, our Form 8-K filed with the SEC today, and the supplemental information posted on the investor section of our website. As always, following our prepared remarks, we will open the call for questions. I'll now turn the call over to you, Dave.

Thank you, Shani. Welcome, everyone, and thanks for joining us today. Seagate delivered an outstanding March quarter, executing well across multiple dimensions. We grew revenue quarter over quarter and year over year. We expanded non-GAAP operating margin into the recently increased target range, and we achieved non-GAAP EPS above the high end of our guidance range. We also continued to drive forward on our commitment of enhancing value for our shareholders, returning a combined $912 million during the March quarter through dividends and share repurchases. Fiscal year to date, we have repurchased approximately 12% of our common shares outstanding, a statement that demonstrates our confidence in Seagate's long-term business prospects. Gianluca will share more details on the financials shortly. For the remainder of my remarks, I'll focus on the business trends that we see unfolding this year and how Seagate is well positioned from a product and technology perspective to unlock more value for our customers. Strong cloud data center demand and ongoing recovery in the enterprise markets drove our highest ever HDD shipments of 140 exabytes and record mass capacity revenue of more than $1.6 billion. These trends underscore the strong secular demand dynamics we are seeing in the mass capacity markets and support our outlook for the TAM to more than double by 2026 to roughly $26 billion. Cloud customers are helping drive this market expansion by investing in scale and infrastructure to support the acceleration and digital transformation in businesses worldwide, as well as growing demand for AI and data analytics. Seagate's high-capacity nearline drives are a vital component of these infrastructure investments, and we believe that our strong technology roadmap and focus around delivering the best total customer experience is helping drive broad adoption by the global cloud ecosystem. These factors were a driving force behind a number of new strategic partnerships and agreements formed last quarter with several of the world's leading cloud providers. These multi-year collaborations are focused on delivering innovative and reliable mass capacity storage at exabyte scale. In the enterprise markets, we are seeing a continuation of the recovery trends that we discussed last quarter, as businesses increase investments in traditional on-prem IT hardware. Recent CIO surveys highlight increased 2021 budget growth expectations to support their post-pandemic application and infrastructure needs. We realize strong double digit sequential revenue growth for both our enterprise near line and mission critical products in the March quarter and currently anticipate healthy demand through the calendar year. The record demand that I cited in the near line markets more than offset anticipated seasonal declines for video and image applications. We see via market demand improving in the June quarter and sustaining through the calendar year as planned smart city projects are slated to begin in the coming months. Video analytics extends well beyond public safety. As I discussed in our recent analyst event, there's a growing list of edge applications that leverage video image sensors in areas such as retail, manufacturing, and healthcare to derive valuable data insights. These applications support our longer term exabyte and revenue growth projections. Seagate is well positioned to benefit from these trends as we continue to lead the driven by product aerial density competitiveness and strong customer engagement. Finally, looking quickly at the legacy markets, higher enterprise mission critical sales and relatively stable desktop PC demand led to better than anticipated revenue in the March quarter, despite this period's typical seasonal slowdown. With a broader industry shift to mass capacity storage forming the foundation of our future revenue growth outlook, we have built a strong technology roadmap, streamlined product portfolio, and are growing a pipeline of solutions and services that make us ideally suited to address big data demand now and well into the future. Average capacity per drive increased 17% sequentially to top the five terabyte mark, a milestone that reflects the growth in mass capacity storage and demand for Seagate's high capacity nearline drives. Today, Seagate is servicing the vast majority of market demand for 16 terabyte and higher capacity drives. We've started to aggressively ramp 18 terabyte volume and current demand suggests strong sequential growth through at least the calendar year. We are also rapidly gaining traction with our industry-leading Mach 2 dual actuator technology. Mach 2 has been proven to address TCO and performance requirements for certain applications with heavy data traffic, such as content streaming. We've recently begun the high-volume ramp of Mach 2 drives with a leading hyperscale customer and plan to expand shipments to additional customers later in the calendar year. And that brings me to Hammer. We believe Hammer is the technology to achieve drive capacities of 30 terabytes and beyond. Today, customers are testing 20 terabyte hammer drives in their production environments, which offers valuable feedback that we are factoring into our product roadmaps. I would highlight that through our innovation capabilities and our common platform approach, we have the flexibility to offer multiple versions of 20 terabyte drives to meet customer needs, not only with hammer technology. We are focused on delivering solutions to customers that meet their roadmaps and lower their TCO and do so in a way that also drives value for Seagate. To that end, we plan to begin shipping a few versions of 20 terabyte drives in the second half of the calendar year. This quarter, we introduced new key components of our live edge to cloud platform. We launched live data transfer, enabling data movement on demand between the edge and the cloud. Live data transfer works seamlessly with live cloud, an object-based storage-as-a-service solution delivered in collaboration with Equinix and strategically located at the metro edge. In a recent survey conducted by IDC, a majority of respondents considered it increasingly important to co-locate data adjacent to applications or cloud services. We are progressing our build-out plans and are on track to have four live cloud sites up by the end of the calendar year. We are gaining ecosystem support and have now been certified with each of the leading backup software vendors. We are very excited about the future potential for live products and services, which open a large and growing market opportunity for Seagate estimated to reach about $50 billion by 2025. However, I do want to reiterate that we are still in the early innings. We're being deliberate in how we build out the platform and capabilities to position Seagate for long-term success. We are listening closely to customers to make sure we're designing and evolving our services to best serve their needs, particularly as the distributed enterprise itself evolves in the growing data sphere. In the March quarter, we hit a milestone that took four decades to achieve. Seagate has now shipped a cumulative three zettabytes of HDD capacity, shipping over 3.3 billion disk drives. For perspective, at the 140 exabyte rate we shipped in the March quarter, we would ship our next three zettabytes in about five years. That is an amazing commentary on the exploding global data sphere we live in today. And I think Seagate's in an outstanding position to drive great future value for our stakeholders. I'll now hand the call over to John Luca to cover details of our financial results.