Seagate Beats With $7.68 EPS and Guides Q2 Well Above Estimates, but Shares Slide After Hours
Seagate's fiscal first-quarter revenue jumped 61% to $4.23 billion with a 57.8% non-GAAP gross margin and about $1.5 billion of free cash flow. It guided the December quarter well above estimates, yet the stock fell after the close.
Seagate Technology (STX) reported fiscal first-quarter revenue of $4.23 billion on Tuesday, up 61% from a year ago, and non-GAAP earnings of $7.68 a share, both above Wall Street estimates. It guided the fiscal second quarter to $4.8 billion in revenue and $9.20 in adjusted EPS, each well ahead of estimates, but the shares fell about 6% in after-hours trading after closing the regular session higher.
The quarter in numbers
| Metric | FQ1 2027 | FQ1 2026 | Change |
|---|---|---|---|
| Revenue | $4,233M | $2,629M | +61% |
| Non-GAAP gross margin | 57.8% | 40.1% | +17.7 pts |
| Non-GAAP operating margin | 50.7% | 29.0% | +21.7 pts |
| Non-GAAP net income | $1,781M | $583M | +205% |
| Non-GAAP diluted EPS | $7.68 | $2.61 | +$5.07 |
| GAAP diluted EPS | $7.59 | $2.43 | +$5.16 |
| Operating cash flow | $1,690M | $532M | +$1,158M |
By our calculation, revenue beat the $4.14 billion estimate by about 2%, and adjusted EPS beat the $7.42 estimate by about 3.5%. Capital spending was $211 million, leaving free cash flow of about $1.5 billion, which Seagate called its highest ever. CEO Dave Mosley said the company delivered "another quarter of record profitability."
The guide
| Fiscal Q2 2027 guidance | Midpoint | Estimate | Midpoint vs. estimate* |
|---|---|---|---|
| Revenue: $4.8B, plus or minus $100M | $4.8B | $4.53B | +6.0% |
| Non-GAAP EPS: $9.20, plus or minus $0.20 | $9.20 | $8.58 | +7.2% |
*By our calculation. The revenue midpoint implies sequential growth of about 13% from the quarter just reported, and the EPS midpoint implies about 20% growth. Seagate's outlook excludes roughly $0.30 a share of estimated share-based compensation. The company said data creation, retention and reuse continue to compound storage demand, reinforcing its view of a multi-year growth phase.
Balance sheet and capital return
Seagate returned $568 million to shareholders in the quarter, $168 million in dividends and $400 million in buybacks, and declared a quarterly dividend of $0.76 a share, about 3% higher, payable Jan. 7, 2027 to holders of record on Dec. 23. It redeemed $1.26 billion of debt during the quarter and retired another $750 million after quarter end, bringing gross debt to $1.6 billion from $2.4 billion. Cash and equivalents were $1.26 billion.
Stock reaction
Seagate closed Tuesday's regular session at $667.85, up 3.67%, then traded near $625.71, down about 6.3%, after hours. The pullback follows a strong run into the report, and it came despite the beat and the guidance above estimates, which suggests expectations were already elevated.
Sources: Seagate Technology, fiscal first-quarter 2027 financial results (Oct. 27). Analyst estimates are as provided to MarketCatalyst. This is informational, not a recommendation to buy or sell.
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