Seagate's fiscal 2026 revenue rose 34% to $12.2B on 40% more nearline exabytes shipped to cloud data centers, and firm pricing lifted gross margin to 45.6% (52.3% in Q4) and more than doubled net income to $3.18B.
Revenue
$12.2B
+34.1% YoY
Net income
$3.2B
+116.7% YoY
Diluted EPS
$13.90
+105.3% YoY
Operating margin
33.6%
Seagate's FY2026: revenue up 34%, profit more than doubled, and most of the gain came from pricing, not volume alone
Seagate's fiscal year 2026 ended July 3, 2026. The company's fiscal year ends on the Friday closest to June 30, so this year had 53 weeks against 52 in fiscal 2025. That extra week adds roughly 2% more selling days, which flatters the year-over-year comparisons slightly. Revenue rose 34% to $12.2 billion. Net income more than doubled to $3.18 billion ($13.90 per diluted share), and gross margin widened by 10.4 percentage points to 45.6%.
In its MD&A (management's own discussion of the results), Seagate gives two drivers for the revenue gain: "an increase in nearline exabytes shipped reflecting higher demand for nearline products and favorable pricing actions undertaken by the Company." Nearline drives are the high-capacity hard drives that cloud data centers buy in bulk to store large volumes of data that must stay accessible, as opposed to drives in PCs or consumer devices. An exabyte (EB) is one billion gigabytes, or one million terabytes. Hard-drive makers use it to measure the total storage capacity they shipped.
Key metrics
Metric
FY2026 (53 wks)
FY2025 (52 wks)
YoY Change
Revenue
$12,195M
$9,097M
+34.1%
Gross margin (GAAP)
45.6%
35.2%
+10.4 pts
Operating margin (GAAP)
33.6%
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Free cash flow is cash from operations minus spending on equipment and facilities: $3,674M − $569M in FY2026 and $1,083M − $265M in FY2025, from the cash-flow statement. Non-GAAP EPS is Seagate's own adjusted figure. It excludes share-based compensation, the legal settlement and losses on debt transactions, among other items.
What drove the year
Volume came almost entirely from data centers. Nearline exabytes rose 40% to 695 EB, while non-nearline shipments (PC, consumer and other edge drives) slipped 4% to 94 EB. Data Center rose to 80% of revenue from 75%. Applied to total revenue, that is roughly $9.8 billion against $6.8 billion a year earlier, about 43% growth. Seagate says customers "continue to invest in data center infrastructure to serve both traditional data intensive workloads along with growing AI related applications," and that AI adoption "increases the volume of data being generated, retained and reused." One customer, not named in the filing, accounted for about 14% of revenue, up from 10% in FY2025. That shows how concentrated the demand is among a few large cloud buyers.
Pricing showed up in margins, not in revenue per terabyte. Revenue grew 34% while total exabytes grew 33%. Revenue per terabyte shipped was therefore almost unchanged: about $15.46 against $15.29, derived by dividing total revenue by exabytes and ignoring the small non-HDD revenue. Normally the price per terabyte falls every year because each new drive holds more data, so holding it flat while moving to higher-capacity drives is itself a sign of price increases. The effect is clear in costs. Cost of revenue rose only 13% ($5,897M to $6,637M) on 33% more capacity shipped, so each extra dollar of revenue added about 76 cents of gross profit (gross profit up $2,358M on revenue up $3,098M). The 10-K explains the 11-point gross-margin gain as "primarily driven by pricing actions undertaken by the Company and product mix shift to higher capacity products." It also credits "executing our pricing strategy and maintaining supply discipline," meaning Seagate did not add production capacity faster than demand grew.
Operating costs barely moved. Total operating expenses rose 11.8% to $1,464M. That includes a $105M one-time legal settlement charge tied to a litigation matter. Without it, operating expenses rose 3.7% (product development +$31M, marketing and administrative +$16M). This small cost growth against much higher revenue is why the operating margin rose more than the gross margin.
The tax bill reduced profit growth. Pre-tax income rose 144% to $3,690M, but net income rose "only" 117% because the effective tax rate jumped to 13.7% from 2.9%. The 10-K attributes this to "Pillar Two global minimum tax" (an OECD-backed 15% minimum corporate tax that Seagate's major jurisdictions implemented starting fiscal 2026). This partly offsets the tax incentives Seagate receives in Singapore and Thailand. It is a lasting change, not a one-off, so FY2027 earnings will face a higher tax rate than the FY2025 comparison did.
One-off items below operating income. Other expense of $404M included $284M of interest expense and a $151M net loss from debt transactions, booked in a year when Seagate retired $1.4B of debt through exchanges of its 2028 exchangeable notes and repurchases of senior notes. The $354M gap between GAAP net income ($3,184M) and Seagate's non-GAAP net income ($3,538M) is made up mainly of this debt loss, the legal settlement and share-based compensation.
The fourth quarter
The year ended strongest in its final quarter. According to the earnings release (Exhibit 99.1 to the July 28 8-K), fiscal Q4 revenue was $3,629M, up 48.5% from $2,444M. GAAP gross margin was 52.3% against 37.4%, GAAP operating margin was 43.0% against 23.2%, and net income was $1,294M against $488M ($5.58 against $2.24 per diluted share). Q4 alone produced about 41% of the full year's net income. So the full-year margins understate the company's profitability as it exited the year.
Balance sheet and cash
Operating cash flow was $3.7B (from $1.1B) and free cash flow a record $3.1B.
Debt was cut by $1.4B, to $3.6B of principal. After year-end, Seagate redeemed another $1B of senior notes on July 15, 2026, and called the remaining $185M of 2028 notes for redemption on September 8, 2026.
Cash was $1.7B at year-end, against $891M a year earlier.
Seagate paid $634M in dividends and bought back $176M of shares. The quarterly dividend is $0.74 per share, and $4.8B remains under the buyback authorization.
$225M is accrued for legal settlements, $150M of it due within a year.
Capital spending more than doubled to $569M (4.7% of revenue). For fiscal 2027, Seagate expects capex to be "higher than fiscal year 2026 and still within our target range of 4-6% of revenue," to support the "volume ramp of hard drives utilizing HAMR technology."
HAMR (heat-assisted magnetic recording) uses a tiny laser to briefly heat a spot on the disk as data is written. This lets the bits be packed more densely, so a single drive holds more terabytes. Seagate sells HAMR drives under its "Mozaic" platform name.
Takeaway: Seagate grew revenue about as fast as it grew capacity shipped (34% against 33%), but its costs rose only 13%. In a market where the price per terabyte normally falls every year, Seagate held it roughly flat while shifting to higher-capacity drives. That shows up almost entirely in margins: gross margin rose from 35% to 46% for the year and hit 52% in Q4. The key question for the next year is whether that pricing discipline holds, more than whether demand does.
Outlook
Management guidance for fiscal Q1 2027 (quarter ending October 2, 2026):
Revenue of $4.1B ± $100M, about 13% above the $3.63B of fiscal Q4 2026.
Non-GAAP diluted EPS of $7.30 ± $0.20, against $5.71 in Q4. The figure excludes about $0.26 per share of share-based compensation.
Seagate expects "minimal" impact from tariffs or the Middle East conflict.
CEO Dave Mosley said the company "see[s] the momentum continuing in 2027." The 10-K adds that long-term customer agreements "provide greater visibility into future demand trends."
Our view. The guidance implies another step up in margins. EPS is guided up about 28% sequentially on revenue about 13% higher, which is consistent with pricing staying firm and the higher-capacity HAMR drives becoming a larger share of the mix. We see three risks:
Concentration. One customer was 14% of revenue and data centers were 80%. A pause in cloud capital spending would hit Seagate quickly, and its margins have far more room to fall now than they did at 35% gross margin.
Execution on HAMR. The 10-K's risk factors note that if the HAMR transition requires "development, qualification or production cycles that are longer than anticipated," Seagate could lose sales and share. Capex is rising specifically to fund this ramp.
Tax and cycle. Pillar Two permanently raises the tax rate from the low-single-digit levels of FY2025. Hard drives have also historically been a cyclical business, so a tight-supply year like this one tends to invite more capacity from competitors over time.
For now the data point that matters is that Seagate shipped 40% more nearline capacity without its costs rising in step, and used the resulting cash to cut debt by $1.4B in the year (plus $1B more in July).
Source: Seagate Technology Holdings plc Form 10-K for the fiscal year ended July 3, 2026 (filed August 4, 2026). Quarterly figures and guidance are from the fiscal Q4 2026 earnings release, Exhibit 99.1 to Form 8-K filed July 28, 2026.