Data storage manufacturer Seagate (NASDAQ: STX) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 21.3% year on year to $2.63 billion. Guidance for next quarter’s revenue was better than expected at $2.7 billion at the midpoint, 1.8% above analysts’ estimates. Its non-GAAP profit of $2.61 per share was 8.8% above analysts’ consensus estimates.
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Seagate Technology (STX) Q3 CY2025 Highlights:
- Revenue: $2.63 billion vs analyst estimates of $2.55 billion (21.3% year-on-year growth, 3% beat)
- Adjusted EPS: $2.61 vs analyst estimates of $2.40 (8.8% beat)
- Adjusted EBITDA: $831 million vs analyst estimates of $755.1 million (31.6% margin, 10.1% beat)
- Revenue Guidance for Q4 CY2025 is $2.7 billion at the midpoint, above analyst estimates of $2.65 billion
- Adjusted EPS guidance for Q4 CY2025 is $2.75 at the midpoint, above analyst estimates of $2.67
- Operating Margin: 26.4%, up from 18.6% in the same quarter last year
- Free Cash Flow Margin: 16.2%, up from 1.2% in the same quarter last year
- Inventory Days Outstanding: 86, in line with the previous quarter
- Market Capitalization: $48.98 billion
Company Overview
The developer of the original 5.25inch hard disk drive, Seagate (NASDAQ: STX) is a leading producer of data storage solutions, including hard drives and Solid State Drives (SSDs) used in PCs and data centers.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Seagate Technology struggled to consistently generate demand over the last five years as its sales dropped at a 1.4% annual rate. This was below our standards and is a tough starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore's Law) could make yesterday's hit product obsolete today. Seagate Technology’s annualized revenue growth of 18.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
This quarter, Seagate Technology reported robust year-on-year revenue growth of 21.3%, and its $2.63 billion of revenue topped Wall Street estimates by 3%. Beyond the beat, this marks 6 straight quarters of growth, showing that the current upcycle has had a good run - a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 16.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 15.2% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is healthy and implies the market is baking in success for its products and services.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Seagate Technology’s DIO came in at 86, which is 10 days above its five-year average, suggesting that the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from Seagate Technology’s Q3 Results
It was good to see Seagate Technology beat analysts’ EPS expectations this quarter. We were also excited its adjusted operating income outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 5.4% to $234.75 immediately after reporting.
Seagate Technology had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
