Dave Mosley
Chief Executive Officer at Seagate Technology
Thank you, Shanye, and hello, everyone. Seagate delivered a strong start to the fiscal year with revenue growing nearly 50% and non-GAAP gross profit increasing over 150% compared with the prior year period. These results demonstrate our ability to drive profitable growth, which is the outcome of sustained supply discipline and the strategic cost efficiencies that we have built into our operations. Fiscal first quarter revenue came in at $2.17 billion and non-GAAP EPS was $1.58, both were above the midpoint of our guidance range benefiting from a better-than-anticipated mass capacity product mix and an improved pricing environment.
Continuing cloud demand strength coupled with improvement in the enterprise and OEM markets drove top line growth and also contributed to enhanced profitability. Company non-GAAP gross margin expanded by 240 basis points sequentially to 33.3%, the highest level in over a decade. This impressive performance was driven by our HDD business with non-GAAP gross margins now in the mid-30% range. Amid a healthy industry supply demand environment, we anticipate further margin expansion opportunities as we ramp our portfolio of high-capacity nearline drives, including our Mozaic-based HAMR products, which I'll discuss shortly.
The increasingly favorable business landscape combined with our industry-leading technology road map lends growing confidence in Seagate's future opportunities. Reflecting this confidence, we are increasing our quarterly dividend by nearly 3%. Our optimism is reinforced by our build-to-order model, which provides us with good demand visibility over the next few quarters. We see the potential for significant revenue growth for fiscal 2025 inclusive of the seasonal demand fluctuation that is typical for the March quarter. We are maintaining supply discipline and we'll address near-term exabyte demand growth by efficiently leveraging our available capacity. Beyond that, we are well positioned to support further demand growth, mainly through technology node transitions with HAMR playing a vital role as we complete qualifications and ramp shipments.
Turning to the mass capacity market trends. Cloud demand for our nearline drives remains robust and we believe customers are managing their inventory levels well. In the September quarter, revenue growth was driven by U.S. cloud providers, though we continue to see positive demand trends globally. For instance, some customers have highlighted the growing use of video content on e-commerce and social media platforms. Data indicates that video is the most effective format for engaging digital audiences. Furthermore, research suggests that longer form video content and personalization through AI technology can significantly enhance revenue generation opportunities for our customers. These trends bode well for mass capacity HDDs, which are ideally suited for storing large and diverse data intensive video content.
HDDs comprise close to 90% of bytes stored in public cloud environments and we are confident that proportion will hold for the foreseeable future. Among the enterprise and OEM customers, we observed the first meaningful uptick in nearline demand following a multi-quarter period of stability. This increase reflects an improvement in traditional server demand as well as higher storage content per unit pushing the average capacity per enterprise drive to a new record high. In the VIA markets, sales remained stable in the September quarter and slightly ahead of our expectations. We are witnessing a shift toward more cloud like storage solutions that utilize higher-capacity drives. This transition is due in part to longer data retention needs and increased video analytics.
Our HDD solutions including Mozaic camera products provide cost efficiency and scalability to our VIA customers' evolving demands. These same advantages are also crucial for generative AI applications, which is why we continue to believe Gen AI will be a driver of mass capacity storage simply by being a powerful catalyst for data creation. HDDs provide a trusted, economical and secure platform to host data that feeds into AI engines and preserves the content produced by AI powered applications. This data is ultimately fed back into the AI training models in a continuous cycle. As data center architects prepare for Gen AI to move into the widespread adoption phase, they continue to grapple with cost, scale and power challenges. Seagate's product road map is addressing each of these key challenges.
Compared with NAND-based storage alternatives, our HDD solutions offer approximately six times lower cost per terabyte and HDDs are roughly nine times more capital efficient delivering the economies of scale necessary to support the anticipated surge in data demand. And according to cloud customers, HDDs have 10 times lower embodied carbon per terabyte relative to NAND, which can translate into a much lower carbon footprint, very important given the world's growing number of data centers. That provides a good segue into our product ramp and qualification plans. We have three primary areas of focus for fiscal 2025 aimed at driving profitable growth over the long-term and we're progressing on all of them. They include ramping the company's last PMR platform, expanding Mozaic adoption and executing our Mozaic product road map that will enable Seagate to address the breadth of customers' mass capacity storage needs.
Consistent with our plans, we began to aggressively ramp our final PMR platform in the September quarter, which is currently up to 28 terabytes in capacity. We are very pleased with the pace of customer adoption. These drives have quickly catapulted to our second highest revenue product and we are continuing to both ramp volume and broaden our customer base in the December quarter. We have expanded customer qualifications on our 3 plus terabyte per disc Mozaic HAMR-based platform with a few customer quals already completed spanning the enterprise nearline, VIA and mass market segments. The qualification with our lead CSP customer is progressing well through what has been a very intensive and thorough testing process.
The learnings that we have gained are already being leveraged into future customer qualifications and product generations. To that end, HAMR qualification drives are now in the hands of multiple global cloud and enterprise customers. Our expectation for shipment and revenue ramp timing across the broader customer base still points to mid-calendar 2025. Our confidence in HAMR technology remains strong, and customer feedback has reinforced our value proposition that the Mozaic platform provides the foundational technologies required to satisfy high-capacity storage requirements at the lowest total cost of ownership. We expect to extend our technology leadership as we deliver on the next stage of our HAMR road map, the 4 plus terabyte per disc this platform. As a reminder, the step function capacity increase to 4 terabytes per disc is being achieved entirely through aerial density gains supporting our cost per terabyte reduction path with additional benefit to both customer TCO and Seagate's structurally improved margin profile.
In closing, Seagate is performing well amid an improving demand backdrop with healthy industry supply dynamics. We are at an exciting inflection point rooted in the structural changes we've made to our business and with our compelling technology road map. These factors underpin our ability to build on the last four quarters of strong sequential performance and drive future profitable growth to create long-term value for our customers and stakeholders.
Thank you. And I'll now hand it off to Gianluca.
