Seagate Profit Surges as First Quarter Revenue Beats and Guidance Rises

Seagate reported net income of $1.761 billion for its fiscal first quarter on Tuesday, as revenue rose to $4.233 billion and beat Wall Street expectations. The results cover the three months ended October 2, 2026. A year earlier, the data storage company posted revenue of $2.629 billion and net income of $549 million.

Diluted earnings were $7.59 per share on a GAAP basis, compared with $2.43 per share a year earlier. On a non-GAAP basis, earnings were $7.68 per share. Seeking Alpha said the non-GAAP figure beat consensus by $0.25 and that revenue beat expectations by $50 million.

Margins and cash

Profit grew faster than revenue. GAAP gross margin was 57.3 percent, compared with 39.4 percent a year earlier, and non-GAAP gross margin was 57.8 percent. GAAP operating margin was 48.8 percent.

Seagate generated $1.690 billion in cash flow from operations in the quarter and $1.479 billion in free cash flow. Chair and chief executive Dave Mosley called the free cash flow the highest the company has recorded in a September quarter.

"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," Mosley said.

Debt, dividend and returns to shareholders

The company used the cash to cut debt and pay shareholders. Seagate retired about $1.2 billion in principal debt in the quarter, lowering gross debt to $2.4 billion, and it returned $568 million to shareholders through dividends and share repurchases. After the quarter ended, it retired another $750 million in principal debt, bringing gross debt to $1.6 billion. Cash and cash equivalents totaled $1.3 billion at the end of the quarter, and 230 million ordinary shares were issued and outstanding.

The board declared a quarterly cash dividend of $0.76 per share, an increase of about 3 percent. The dividend is payable on January 7, 2027, to shareholders of record as of the close of business on December 23, 2026.

Guidance well above consensus

For the fiscal second quarter of 2027, Seagate guided revenue of $4.8 billion, plus or minus $100 million, and non-GAAP diluted earnings of $9.20 per share, plus or minus $0.20. Seeking Alpha put consensus for the quarter at $4.15 billion in revenue and $7.43 in earnings, so the guide sits well above what analysts had expected.

Mosley linked the outlook to demand for storage. "Data creation, retention and reuse continue to compound storage demand with long term customer demand visibility reinforcing our view of a multi-year growth phase," he said. In the release, he also pointed to the company HAMR based technology roadmap, supply discipline and value based pricing.

Shares fell after the report despite the beats. Seeking Alpha noted shares down 5.4 percent in after hours trading in its summary of the results.

Seagate management scheduled a public webcast for 2:00 p.m. Pacific time, 5:00 p.m. Eastern time, on October 27, 2026, through its investor relations website. The company describes itself as a maker of mass capacity data storage for hyperscale cloud providers, enterprises and consumers.