Seagate Conference Call Highlights

Seagate Technology PLC STX reported its third quarter earnings on Monday. Shares of the company are down 2 percent.

Below are some key highlights from its conference call.

Segments:

• Seagate demonstrated strong financial performance in the September quarter, achieving revenues of $3.8 billion and on a non-GAAP basis.
• Gross margin of 28.1%, net income of $453 million, and diluted earnings per share of $1.34.
• We had another strong cash flow quarter generating $602 million in operating cash flow and $430 million in free cash flow.
• Our results this quarter reflect revenue upside of 7% from our original guidance in July driven by higher-than-expected demand for our PC, gaming, and cloud storage products.
• With most of the unit upside coming from the lower end of the market, we saw some pressure on our gross margin but this was good business overall.
• We gained profitable share as a result and remain in our long-term model range of 27 points to 32 points of gross margin.
• Seagate shipped nearly 60 exabytes of storage in the quarter, up approximately 22% sequentially and also year-over-year.
• For the first time in Seagate's history, average gigabytes per drive for the quarter exceeded 1 terabyte.
• Our Cloud Systems and Solutions business exceeded our internal revenue plan again this quarter, and we are pleased with the momentum with both existing and new customers.
• We're already seeing strong demand for the new Nytro PCIe product platform with customers, and we believe we will continue to gain traction in this high-growth market.
• We also repurchased approximately $110 million of our debt in the September quarter.
• The strength of our core business and its ability to generate cash has enabled us to pursue growth adjacencies in cloud systems and solutions as well as investing in our flash technology platform.
• Industry estimates are for the market demand to be approximately 145 million units in the December quarter.
• Seagate's product portfolio is well positioned competitively in this demand environment, and we expect to achieve revenue of approximately $3.7 billion in the December quarter.