Seagate shares fall 8% after hours despite Q1 profit beat

Seagate Technology Holdings plc (STX) topped fiscal first-quarter profit estimates, but its shares fell 6.0% in after-hours trading as of 5:15 p.m. ET, from a regular-session close of $668.61.

The company said in a filing on Oct. 27 that non-GAAP diluted earnings were $7.68 per share, against the $7.49 per share consensus estimate compiled by Finnhub. Revenue was $4.23 billion, above the $4.18 billion estimate.

Seagate makes mass-capacity data storage products for hyperscale cloud providers, enterprises and consumers. Its results were reported in a press release attached to the 8-K.

Here's how the company did:

• Non-GAAP diluted EPS: $7.68 vs. $7.49 expected, according to Finnhub
• GAAP diluted EPS: $7.59 vs. $2.43 a year earlier
• Revenue: $4.23 billion vs. $2.63 billion a year earlier, against a $4.18 billion estimate
• Non-GAAP net income: $1.78 billion vs. $583 million a year earlier
• GAAP net income: $1.76 billion vs. $549 million a year earlier

Revenue has risen in each of the last three quarters, from $2.63 billion to $3.63 billion, according to its SEC filings.

Second-quarter guidance

The company forecast fiscal second-quarter revenue of $4.8 billion, plus or minus $100 million, and non-GAAP diluted EPS of $9.20 per share, plus or minus 20 cents.

The EPS forecast excludes estimated share-based compensation expenses of 30 cents per share, up from 26 cents per share in its July 28 release.

The company has not reconciled that EPS forecast to GAAP results. It said items such as net gains or losses from debt transactions and strategic investment results cannot be reasonably predicted.

Chair and chief executive officer Dave Mosley said, "Seagate delivered another quarter of record profitability and our highest ever free cash flow in the September quarter, demonstrating the earnings power of our business amid a strengthening demand environment."

Cash and debt

The company generated $1.7 billion in cash flow from operations and $1.5 billion in free cash flow during the quarter.

It retired about $1.2 billion of principal debt, lowering gross debt to $2.4 billion. Cash and cash equivalents totaled $1.3 billion at quarter end.

After the quarter ended, Seagate retired another $750 million of principal debt, bringing gross debt to $1.6 billion.

Dividend and shareholder returns

The board declared a quarterly cash dividend of 76 cents per share, payable Jan. 7, 2027, to shareholders of record at the close of business on Dec. 23, 2026. The company said it increased the quarterly dividend by about 3%.

During the quarter, the company returned $568 million to shareholders through dividends and share repurchases.

Management will hold a webcast on Oct. 27 at 2:00 p.m. PT, or 5:00 p.m. ET, on its investor relations website.