Seagate Technology Holdings plc

Previous wording

The following is a discussion of the Company’s financial condition, changes in financial condition and results of operations for the fiscal quarters ended March 28, 2025, December 27, 2024 and March 29, 2024, referred to herein as the “March 2025 quarter”, the “December 2024 quarter” and the “March 2024 quarter”, respectively. We operate and report financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. The March 2025 quarter, December 2024 quarter and March 2024 quarter were each 13 weeks.

Current wording

The following is a discussion of the Company’s financial condition, changes in financial condition and results of operations for the fiscal quarters ended October 3, 2025, June 27, 2025 and September 27, 2024, referred to herein as the “September 2025 quarter”, the “June 2025 quarter” and the “September 2024 quarter”, respectively. We operate and report financial results on a fiscal year of 52 or 53 weeks ending on the Friday closest to June 30. The September 2025 quarter was 14 weeks, while the June 2025 quarter and September 2024 quarter were each 13 weeks.

Previous wording

During the March 2025 quarter, we shipped 144 exabytes of HDD storage capacity. We generated revenue of approxima tely$2.2 billion with a gross margin of 35.2%. Our operating cash flow was$259 million and we paid$152 million in dividends. We reduced our outstanding debt by $536 million through repayment of the 2025 Notes and partial repurchase of certain senior notes.

Current wording

During the September 2025 quarter, we shipped 182 exabytes of HDD storage capacity. We generated revenue of approximately $2.6 billion with a gross margin of 39.4% and net income of $549 million. Our operating cash flow was $532 million, we paid $153 million in dividends and we repurchased approximately 0.2 million of our ordinary shares for $29 million.

Previous wording

During the March 2025 quarter, we experienced increased demand for our high capacity nearline drives primarily from cloud customers, offset by the typical seasonal slowdown in certain of our other end markets. Temporary supply constraints impacted our ability to fully address customer demand during the quarter. These supply constraints were due to production related challenges that were resolved during the quarter. We continue to operate in a dynamic macroeconomic environment marked by rapid shifts in trade policies that began during the March 2025 quarter and increasing geopolitical tensions. These factors may impact our business and results of operations. We will continue to monitor the situation and assess plans to mitigate future risk to the business. Over the long-term we expect our hard drive storage business to benefit from further growth in data demand, including potential demand driven by the adoption of Generative AI applications.

Current wording

In the September 2025 quarter, the Data Center markets contributed 80% of total company revenue supported by ongoing demand for our high-capacity nearline drives. Demand growth was led by global cloud customers to support their data storage requirements for applications including AI inferencing and training. At the same time, we continue to operate in a dynamic macroeconomic environment marked by rapid shifts in trade policies and increasing geopolitical tensions. These factors may impact our business and results of operations. We will continue to monitor the situation and assess plans to mitigate future risk to the business. Over the long-term we expect our hard drive storage business to benefit from future growth in data demand and data value, including from the ongoing adoption of Generative AI applications.

Previous wording

Revenue for the three and nine months ended March 28, 2025 increased by $505 million and $2 billion from the three and nine months ended March 29, 2024, respectively, primarily due to an increase in mass capacity exabytes shipped as we experienced higher demand primarily for our nearline cloud products and favorable pricing actions undertaken by the Company.

Current wording

Revenue in the September 2025 quarter increased by $461 million compared to the September 2024 quarter, primarily due to an increase in Data Center exabytes shipped reflecting higher demand for nearline cloud products and favorable pricing actions undertaken by the Company.

Previous wording

Wemaintain various sales incentive programs such as channel and OEM rebates. Sales incentive programs were approximately 14%of gross revenue for the March 2025 quarter, 14% for the December 2024 quarter and 15% for the March 2024 quarter. Adjustments to revenues due to under or over accruals for sales incentive programs related to revenues reported in prior quarterly periods were less than 1% of quarterly gross revenue in all periods presented.

Current wording

We maintain various sales incentive programs such as channel and OEM rebates. Sales incentive programs were approximately 12% of gross revenue for the September 2025 quarter, 14% for the June 2025 quarter and 13% for the September 2024 quarter. Adjustments to revenues due to under or over accruals for sales incentive programs related to revenues reported in prior quarterly periods were less than 1% of quarterly gross revenue in all periods presented.

Previous wording

Gross margin for the March 2025 quarter increased by 9 percentage points compared to the March 2024 quarter, primarily driven by favorable product mix and pricing actions undertaken by the Company, and $43 million of factory underutilization charges in the March 2024 quarter that did not recur, partially offset by $10 million of restructuring costs related to an inventory write down due to a discontinued product line in the March 2025 quarter.

Current wording

Gross margin for the September 2025 quarter increased by 2 percentage points and 6 percentage points compared to the June 2025 quarter and the September 2024 quarter, respectively, primarily driven by pricing actions undertaken by the Company and favorable product mix.

Previous wording

Warranty cost related to new shipments was 0.7%, 0.7%and 0.8% of revenue for the March 2025 quarter, December 2024 quarter and March 2024 quarter, respectively.

Current wording

Warranty cost related to new shipments was 0.8%, 0.8% and 0.7% of revenue for the September 2025 quarter, June 2025 quarter and September 2024 quarter, respectively.

Previous wording

Product Development Expense. Product development expenses decreased by $4 million in the March 2025 quarter compared to the December 2024 quarter primarily due to a $2 million decrease in compensation and other employee benefits, and a $2 million decrease in facility costs.

Current wording

Product Development Expense. Product development expenses increased by $7 million in the September 2025 quarter compared to the June 2025 quarter primarily due to a $5 million increase in compensation and other employee benefits and a $2 million increase in facility costs.

Previous wording

Marketing and Administrative Expense. Marketing and administrative expenses remained flat in the March 2025 quarter compared to the December 2024 quarter.

Current wording

Marketing and Administrative Expense. Marketing and administrative expenses decreased by $10 million in the September 2025 quarter compared to the June 2025 quarter, primarily due to a $7 million decrease in outside services costs and a $5 million decrease in share-based compensation expense.

Previous wording

Restructuring and other, net for the nine months ended March 28, 2025 was $12 million, primarily related to employee related termination benefits.

Current wording

Restructuring and other, net. We recorded $13 million of restructuring charges in the September 2025 quarter, primarily related to employee related termination benefits.

Previous wording

For thethree months ended March 28, 2025, December 27, 2024, and March 29, 2024, we recorded income tax expense of $15 million, $14 million, and $33 million, respectively. For the nine months ended March 28, 2025 and March 29, 2024, we recorded income tax expense of $40 million and $85 million, respectively. For further discussion, refer to“Part I, Item 1. Financial Statements—Note 4. Income Taxes”.

Current wording

For the September 2025 quarter and September 2024 quarter, we recorded income tax expense of $65 million and $11 million, respectively. For further discussion, refer to “Part I, Item 1. Financial Statements—Note 4. Income Taxes”.

Previous wording

Our cash and cash equivalents as of March 28, 2025 decreased by $544 million from June 28, 2024 primarily as a result of $531 million repayment of the 2025 Notes and repurchase of debt, $447 million dividends paid to our shareholders and $182 million payments for capital expenditures, partially offset by net cash of $575 million provided by operating activities.

Current wording

Our cash and cash equivalents as of October 3, 2025 increased by $221 million from June 27, 2025 primarily as a result of net cash of $532 million provided by operating activities, partially offset by $153 million dividends paid to our shareholders, $105 million payments for capital expenditures and $50 million taxes paid related to net share settlement of equity awards.

Previous wording

Cash provided by operating activities for the nine months ended March 28, 2025 was $575 million and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation, and the following major working capital related movements:

Current wording

Cash provided by operating activities for the three months ended October 3, 2025 was $532 million and includes the effects of net income adjusted for non-cash items including depreciation, amortization, share-based compensation, and the following major working capital related movements:

Previous wording

•a decrease of $331 million in accounts payable, primarily due to timing of payments;

Current wording

•an increase of $84 million in accounts payable, primarily due to timing of payments; partially offset by

Previous wording

•an increase of $116 million in accrued employee compensation, primarily due to an increase in our variable compensation expense; partially offset by

Current wording

•a decrease of $140 million in accrued employee compensation, primarily due to variable compensation payments;

Previous wording

•an increase of $193 million in accounts receivable, primarily due to increased revenue.

Current wording

•an increase of $114 million in accounts receivable, primarily due to increased revenue; and

Previous wording

•an increase of $233 million in inventories, primarily due to an increase in purchased materials; and

Current wording

•an increase of $56 million in inventories, primarily due to an increase in work in progress inventory.

Previous wording

Net cash used in investing activities for the nine months ended March 28, 2025 was $146 million, primarily attributable to payments of $182 million for the purchase of property, equipment and leasehold improvements, partially offset by proceeds of $25 million from our business divestiture from the sale of System-on-Chip Operations during fiscal year 2024, as well as proceeds of $10 million from the sale of certain investments.

Current wording

Net cash used in investing activities for the three months ended October 3, 2025 was $90 million, primarily attributable to payments of $105 million for the purchase of property, equipment and leasehold improvements, partially offset by proceeds of $15 million from our business divestiture from the sale of System-on-Chip Operations during fiscal year 2024.

Previous wording

Net cash used in financing activities of $973 million for the nine months ended March 28, 2025 was primarily attributable to the following activities:

Current wording

Net cash used in financing activities of $221 million for the three months ended October 3, 2025 was primarily attributable to the following activities:

Previous wording

•$447 million in dividends paid to our shareholders; and

Current wording

•$153 million in dividends paid to our shareholders;

Previous wording

•$44 million taxes paid related to net share settlement of equity awards; partially offset by

Current wording

•$50 million taxes paid related to net share settlement of equity awards;

Previous wording

•$56 million in proceeds from the issuance of ordinary shares under employee stock plans.

Current wording

•$22 million in proceeds from the issuance of ordinary shares under employee stock plans.

Previous wording

Our primary sources of liquidity as of March 28, 2025, consist of: (1) approximately $0.8 billion in cash and cash equivalents, (2) cash we expect to generate from operations and (3) $1.3 billion available for borrowing under our senior unsecured revolving credit facility (“Revolving Credit Facility”), which is part of our New Credit Agreement (as defined below).

Current wording

Our primary sources of liquidity as of October 3, 2025, consist of: (1) approximately $1.1 billion in cash and cash equivalents, (2) cash we expect to generate from operations and (3) $1.3 billion available for borrowing under our senior unsecured revolving credit facility (“Revolving Credit Facility”), which is part of our Credit Agreement (as defined within “Part I, Item 1. Financial Statements—Note 3. Debt”).

Previous wording

As of March 28, 2025, the New Credit Agreement includes one financial covenant, net leverage ratio. We continue to evaluate our debt portfolio and structure to comply with our financial debt covenant. As of March 28, 2025, we were in compliance with all of the covenants under our debt agreements. Refer to “Part I, Item 1. Financial Statements—Note 3. Debt” for more details.

Current wording

As of October 3, 2025, the Credit Agreement includes one financial covenant, net leverage ratio of less than or equal to 6.75 to 1.00, commencing with the fiscal quarter ended June 27, 2025 and declining over time so that the maximum permitted net leverage ratio for each fiscal quarter ending after July 2, 2027 is 4.25 to 1.00. As of October 3, 2025, we were in compliance with all of the covenants under our debt agreements. Refer to “Part I, Item 1. Financial Statements—Note 3. Debt” for more details. We continue to evaluate our debt portfolio and structure to comply with our financial debt covenant.

Previous wording

Our liquidity requirements are primarily to meet our working capital, product development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness, and to fund our quarterly dividend and any future strategic investments. As of March 28, 2025, our contractual cash requirements have not changed materially outside of the normal course of business since our fiscal year ended June 28, 2024.

Current wording

Our liquidity requirements are primarily to meet our working capital, product development and capital expenditure needs, to fund scheduled payments of principal and interest on our indebtedness, quarterly dividend, share repurchase program and any future strategic investments.

Previous wording

Purchase obligations are defined as contractual obligations for the purchase of goods or services, which are enforceable and legally binding on us, and that specify all significant terms. From time to time, we enter into long-term, non-cancelable purchase commitments or make large up-front investments with certain suppliers in order to secure certain components or technologies for the production of our products or to supplement our internal manufacturing capacity for certain components. As of March 28, 2025, we had unconditional purchase obligations of approximately $1.2 billion, primarily related to purchases of inventory components with our suppliers. We expect $1.1 billion of these commitments to be paid within one year. In addition, we also had certain long-term, market share-based, non-cancellable inventory purchase commitments as of March 28, 2025.

Current wording

Purchase obligations are defined as contractual obligations for the purchase of goods or services, which are enforceable and legally binding on us, and that specify all significant terms. From time to time, we enter into long-term, non-cancelable purchase commitments or make large up-front investments with certain suppliers in order to secure certain components or technologies for the production of our products or to supplement our internal manufacturing capacity for certain components. As of October 3, 2025, we had unconditional purchase obligations of approximately $1.3 billion, primarily related to purchases of inventory components with our suppliers. We expect $1.2 billion of these commitments to be paid within one year. In addition, we also had certain long-term, market share-based, non-cancellable inventory purchase commitments as of October 3, 2025.

Previous wording

As of March 28, 2025, the future principal payment obligation on our long-term debt was $5.2 billion, which will mature in more than one year. As of March 28, 2025, future interest payments on this outstanding debt is estimated to be approximately $1.8 billion, of which $299 million is expected to be paid within one year. From time to time, we may refinance, repurchase, redeem or otherwise extinguish any of our outstanding senior notes in open market or privately negotiated purchases or otherwise, or we may repurchase or redeem outstanding senior notes pursuant to the terms of the applicable indenture. Refer to “Item 1. Financial Statements—Note 3. Debt” for more details.

Current wording

As of October 3, 2025, the future principal payment obligation on our long-term debt was $5.0 billion, which will mature in more than one year. As of October 3, 2025, future interest payments on this outstanding debt is estimated to be approximately $1.7 billion, of which $299 million is expected to be paid within one year. As of the calendar quarter ended September 30, 2025, the conditional conversion option of the 2028 Notes was triggered in accordance with the terms of the 2028 Notes indenture. Accordingly, the 2028 Notes are exchangeable through December 31, 2025. As a result, we have classified the 2028 Notes within Current liabilities in our Condensed Consolidated Balance Sheets as of October 3, 2025. From time to time, we may refinance, repurchase, redeem or otherwise extinguish any of our outstanding senior notes in open market or privately negotiated purchases or otherwise, or we may repurchase or redeem outstanding senior notes pursuant to the terms of the applicable indenture. Refer to “Item 1. Financial Statements—Note 3. Debt” for more details.

Previous wording

We accrued a settlement penalty of $300 million for fiscal year 2023, related to BIS’ allegations of violations of the U.S. EAR, which were subsequently resolved by the Settlement Agreement in April 2023. As part of the Settlement Agreement with BIS, quarterly payments of $15 million are made over the course of five years beginning October 31, 2023, of which $60 million is expected to be paid within one year and $150 million thereafter. Refer to “Item 1. Financial Statements—Note 11. Legal, Environmental and Other Contingencies” for more details.

Current wording

We accrued a settlement penalty of $300 million for fiscal year 2023, related to BIS’ allegations of violations of the U.S. EAR, which were subsequently resolved by the Settlement Agreement in April 2023. As part of the Settlement Agreement with BIS, quarterly payments of $15 million are made over the course of five years beginning October 31, 2023, of which $60 million is expected to be paid within one year and $120 million thereafter. Refer to “Item 1. Financial Statements—Note 11. Legal, Environmental and Other Contingencies” for more details.

Previous wording

On April 29, 2025, our Board of Directors declared a quarterly cash dividend of $0.72 per share, which will be payable on July 8, 2025 to shareholders of record as of the close of business on June 25, 2025. Our ability to pay dividends in the future will be subject to, among other things, general business conditions within the data storage industry, our financial results, the impact of paying dividends on our credit ratings and legal and contractual restrictions on the payment of dividends by our subsidiaries to us or by us to our ordinary shareholders, including restrictions imposed by covenants on our debt instruments.

Current wording

On October 28, 2025, our Board of Directors declared a quarterly cash dividend of $0.74 per share, which will be payable on January 9, 2026 to shareholders of record as of the close of business on December 24, 2025. Our ability to pay dividends in the future will be subject to, among other things, general business conditions within the data storage industry, our financial results, the impact of paying dividends on our credit ratings and legal and contractual restrictions on the payment of dividends by our subsidiaries to us or by us to our ordinary shareholders, including restrictions imposed by covenants on our debt instruments.

Previous wording

From time to time, at our discretion, we may repurchase any of our outstanding ordinary shares through private, open market, or broker assisted purchases, tender offers, or other means, including through the use of derivative transactions. As of March 28, 2025, $1.8 billion remained available for repurchase under our existing repurchase authorization limit. We may limit or terminate the repurchase program at any time. All repurchases are effected as redemptions in accordance with our Constitution.

Current wording

From time to time, at our discretion, we may repurchase any of our outstanding ordinary shares through private, open market, or broker assisted purchases, tender offers, or other means, including through the use of derivative transactions. During the three months ended October 3, 2025, we repurchased approximately 0.5 million of our ordinary shares including approximately 0.3 million shares withheld for statutory tax withholdings related to vesting of employee equity awards. As of October 3, 2025, $5.0 billion remained available for repurchase under our existing repurchase authorization limit. We may limit or terminate the repurchase program at any time. All repurchases are effected as redemptions in accordance with our Constitution.

Previous wording

For fiscal year 2025, we expect capital expendituresto be higher than fiscal year 2024. We require substantial amounts of cash to fund any increased working capital requirements, future capital expenditures, scheduled payments of principal and interest on our indebtedness and payments of dividends. We will continue to evaluate and manage the retirement and replacement of existing debt and associated obligations, including evaluating the issuance of new debt securities, exchanging existing debt securities for other debt securities and retiring debt pursuant to privately negotiated transactions, open market purchases, tender offers or other means or otherwise. In addition, we may selectively pursue strategic alliances, acquisitions, joint ventures and investments, which may require additional capital.

Current wording

For fiscal year 2026, we expect capital expenditures to be higher than fiscal year 2025. We require substantial amounts of cash to fund any increased working capital requirements, future capital expenditures, scheduled payments of principal and interest on our indebtedness and payments of dividends. We will continue to evaluate and manage the retirement and replacement of existing debt and associated obligations, including evaluating the issuance of new debt securities, exchanging existing debt securities for other debt securities and retiring debt pursuant to privately negotiated transactions, open market purchases, tender offers or other means or otherwise. In addition, we may selectively pursue strategic alliances, acquisitions, joint ventures and investments, which may require additional capital.

Previous wording

Other than as described in “Part I, Item 1. Financial Statements—Note 1. Basis of Presentation and Summary of Significant Accounting Policies”, there have been no other material changes in our critical accounting policies and estimates. Refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 28, 2024, as filed with the SEC on August 2, 2024, for a discussion of our critical accounting policies and estimates.

Current wording

Other than as described in “Part I, Item 1. Financial Statements—Note 1. Basis of Presentation and Summary of Significant Accounting Policies”, there have been no material changes in our critical accounting policies and estimates. Refer to “Part II, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 27, 2025, as filed with the SEC on August 1, 2025, for a discussion of our critical accounting policies and estimates.