Seagate Technology Holdings PLC

Welcome to the Seagate Technology fiscal fourth quarter and fiscal year 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Shanie Hudson, Senior Vice President, Investor Relations. Please go ahead, ma'am.

Thank you. Hello, 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 June quarter and fiscal year end results on the investor 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 and included in our Form 8K. 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, a reconciliation to the corresponding GAAP measures is not available without unreasonable effort. Before we begin, I'd like to remind you that today's call contains forward-looking statements that reflect management's current views and assumptions based on information available to us as of today and should not be relied upon as of any subsequent date. Actual results may differ materially from those contained in or implied by these forward-looking statements as they're subject to risks and uncertainties associated with our business. To learn more about the risks, uncertainties, and other factors that may affect our future business results, please refer to the press release issued today and our SEC filings, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q, as well as the supplemental information, all of which may be found on the Investors section of our website. Following our prepared remarks, we'll open the call up for questions. In order to provide all analysts with the opportunity to participate, we thank you in advance for asking one primary question and then reentering the queue. With that, I'll hand the call over to you, Dave.

Thanks, Shanie, and hello, everyone. Seagate closed out fiscal 25, delivering strong financial results for the June quarter, marked by 30% year-over-year revenue growth and record gross margins, which improved for a ninth consecutive quarter, a trend that is set to continue as hammered adoption gains momentum. We achieved non-gap earnings per share near historic highs and generated strong free cash flow. For the fiscal year, revenue increased 39%, non-GAAP gross profit dollars nearly doubled, and operating profit more than tripled, demonstrating our focus on supply-demand alignment and ongoing cost discipline. Our execution resulted in one of the most profitable fiscal years in the company's long storied history. The structural changes in our business model and strong product pipeline make Seagate well positioned to deliver improving profitability and cash generation in fiscal 26. Reflecting our confidence, we expect to resume share repurchases later this quarter, enhancing capital returns to shareholders. Operationally, in fiscal 25, we started the high volume ramp of two new nearline platforms, including the industry's first heat assisted magnetic recording hard drive, an engineering feat more than a decade in the making. These new cost-effective and energy-efficient platforms aligned well with data growth driven by traditional compute workloads and increasingly from AI-supported applications. Looking at the current end-market dynamics, we see a continuation of strong global cloud demand for our Nearline products. The visibility afforded by our build-to-order strategy indicates our Nearline exabyte production capacity is largely spoken for through the middle of next calendar year. with visibility building into the second half. We believe BTO contracts are also beneficial for our customers by providing predictable assurance of supply. With installed data center capacity expected to more than double by 2029 on a gigawatt basis, these contracts support the CSP's efforts to keep pace with end user demand. Within cloud data centers, we see an evolving diversity of workloads and applications addressed through a combination of storage media optimized across a multitude of factors, including performance, cost, floor space, and energy efficiency. The diverse solutions that emerge are shaped by how these factors are prioritized and the scale that is required. For instance, one of the world's largest cloud service providers recently developed a tiered storage solution to support an application for a widely used social media platform. Leveraging hard drives for both mass data storage in addition to a caching layer to enable fast, repeatable data access, this customer was able to realize significant cost savings and efficiency gains compared with alternative storage solutions. In today's data-driven world, the growing need for mass capacity storage extends beyond the cloud to edge data centers. There are multiple trends that underpin this view. First, As more data is created at the edge, it will be replicated and retained across multiple locations to capture actionable insights through AI models. To preserve the integrity of these models, large volumes of data are being retained longer to support checkpoints and inferencing. Additionally, today, roughly 50% of the world's data centers are concentrated in just four countries. As data sovereignty regulations evolve and proliferate around the globe, we expect a growing demand for localized data storage. In this context, mass capacity hard drives will be critical from a footprint, efficiency, and TCO perspective, ensuring data is safe, secure, and compliant. For data centers at the edge, we expect enterprise storage demand will mirror the trends we've seen in the cloud, where upfront AI infrastructure investments led to increased demand for mass data storage over time. Supporting this point of view, a leading enterprise IT infrastructure provider is introducing new tiered storage system solutions later this year for AI applications designed to optimize their end customer's TCO and data utilization requirements by integrating high capacity hard drives based on HAMR technology. While momentum for our high capacity HAMR drives builds, We also have continued to increase exabyte shipments of our PMR 24 to 28 terabyte platform to address demand. In fact, in the June quarter, we achieved record quarterly sales and volume shipments for any Nearline product with this platform. Leveraging the commonality across our PMR and Hammer platforms, we are executing the volume ramp of Mosaic 3 Plus products. We are tracking the plan with shipments expanding to additional CSPs in the September quarter. Across the board, qualifications are progressing exceedingly well, and we continue to expect the key global CSP customers to be qualified by mid-calendar 2026. Our progress in bringing hammer-based mosaic drives to market at scale strongly positions Seagate to address the significant opportunities we foresee in the cloud and at the edge. The top priority during fiscal 26 is executing our four plus terabyte per disk qualification and volume ramp. This product will support cloud workloads with capacities of up to 44 terabytes and also supports lower capacity drives, ideal for edge workloads. As planned, we recently started qualification with a global CSP on the four terabyte per disk platform and expect to begin volume ramp in the first half of calendar 2026. This timeline is consistent with our target for exabyte shipment crossover on hammer-based nearline drives in the second half of calendar 26. Ongoing investments in innovation such as granular iron platinum media and breakthrough photonics technology are critical to delivering our aerial density roadmap. We continue to make steady progress with five terabytes per disc technology aligning to our goal of introducing it into the market in early calendar 2028, a timeframe when we also expect to demonstrate double that capacity, 10 terabytes per disk, in the lab. To close, I believe this is one of the most exciting periods in Seagate's history. Recall at our Investor and Analyst Day in May, we discussed how Seagate is in the right markets with the right technology and the right execution to enhance shareholder value. Demand for mass data storage is expected to grow as our cloud and edge IoT customers continue investing in AI-driven strategic imperatives to unlock and protect data value. Amid this strong demand backdrop, we are mindful of the evolving trade policy landscape. Based on our current outlet, we expect minimal tariff-related impacts to the business. We will continue to closely track developments and stand ready to deploy mitigation strategies that minimize potential future impact to Seagate and our customers over the long term. In this dynamic environment, Our hammer-based technology roadmap makes us uniquely positioned to capture these growth opportunities in the cloud and at the edge as we push forward aerial density gains to efficiently expand exabyte output, while enabling our customers to benefit from the improving total cost of ownership. As a result, we are confident in our ability to produce compelling growth in revenue, profitability, and cash generation in fiscal 26 and beyond. I'd like to thank our global teams, supply partners, and customers for your contributions to a strong fiscal year and to Seagate's ongoing success. Let me now turn the call over to Gianluca.