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 April 3, 2026, January 2, 2026 and March 28, 2025, referred to herein as the “March 2026 quarter”, the “December 2025 quarter” and the “March 2025 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 2026 quarter, December 2025 quarter and March 2025 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 2, 2026, July 3, 2026 and October 3, 2025, referred to herein as the “September 2026 quarter”, the “June 2026 quarter” and the “September 2025 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 2026 quarter and June 2026 quarter were each 13 weeks, while the September 2025 quarter was 14 weeks.

Previous wording

•Critical Accounting Policies and Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

Current wording

•Critical Accounting Estimates. Accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results.

Previous wording

During the March 2026 quarter, we shipped 199 exabytes of HDD storage capacity. We generated revenue of approximately $3.1 billion with a gross margin of 46.5% and net income of $748 million. Our operating cash flow was $1.1 billion, we retired $641 million principal amount of long-term debt, paid $161 million for the purchase of property, equipment and leasehold improvements and paid $161 million in dividends.

Current wording

During the September 2026 quarter, we shipped 220 exabytes of HDD storage capacity. We generated revenue of approximately $4.2 billion with a gross margin of 57.3% and net income of $1.8 billion. Our operating cash flow was $1.7 billion, we repurchased approximately 0.5 million of our ordinary shares for $400 million, paid $211 million for the purchase of property, equipment and leasehold improvements and paid $168 million in dividends.

Previous wording

In the March 2026 quarter, we continued to operate in a strong demand environment, particularly within the data center end markets. We experienced sustained demand growth for our high capacity nearline drives across global cloud customers, as well as increasing sales for enterprise edge deployments. Customers continue to invest in data center infrastructure to support ongoing demand from traditional workloads along with growing AI related demand. This trend reflects the ongoing adoption of AI applications which drives increased data content generation and storage needs for inferencing, training and maintaining AI model integrity. At the same time, the macroeconomic environment remains dynamic, marked by heightened geopolitical uncertainty and evolving trade policies. 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 growing demand for data and its increased value, particularly as AI applications continue to proliferate.

Current wording

At the same time, the macroeconomic environment remains dynamic, marked by heightened geopolitical uncertainty and evolving trade policies. 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. However, we believe the structural changes that we have made to the business, including executing our pricing strategy and maintaining supply discipline, together with the long-term customer engagements we have in place, provide greater visibility into future demand trends. We believe our hard drive storage business will continue to benefit from growth in data creation, retention and utilization supported by the increasing value organizations derive from their data.

Previous wording

We list in the tables below summarized information from our Condensed Consolidated Statements of Operations by dollar amounts and as a percentage of revenue:

Current wording

We list in the tables below summarized information from our Condensed Consolidated Statements of Operations and Comprehensive Income by dollar amounts and as a percentage of revenue:

Previous wording

Revenue in the March 2026 quarter increased by $287 million compared to the December 2025 quarter, primarily due to favorable pricing actions undertaken by the Company and an increase in exabytes shipped reflecting higher demand for nearline products.

Current wording

Revenue in the September 2026 quarter increased by $1.6 billion compared to the September 2025 quarter, primarily due to favorable pricing actions undertaken by the Company and an increase in nearline exabytes shipped reflecting higher demand for nearline products.

Previous wording

Gross margin for the March 2026 quarter increased by 5 percentage points compared to the December 2025 quarter primarily driven by pricing actions undertaken by the Company.

Current wording

Gross margin for the September 2026 quarter increased by 5 percentage points compared to the June 2026 quarter, primarily driven by pricing actions undertaken by the Company, partially offset by higher external component costs.

Previous wording

Product development expense. Product development expenses increased by $7 million in the March 2026 quarter compared to the December 2025 quarter, primarily due to a $3 million increase in material expenses and a $2 million increase in compensation and other employee benefits.

Current wording

Product Development Expense. Product development expenses increased by $12 million in the September 2026 quarter compared to the June 2026 quarter primarily due to a $6 million increase in compensation and other employee benefits, a $3 million increase in material expenses and a $2 million increase in facilities costs.

Previous wording

Product development expenses increased by $14 million in the March 2026 quarter compared to the March 2025 quarter, primarily due to an $8 million increase in outside services costs and a $3 million increase in facilities costs.

Current wording

Product development expenses increased by $14 million in the September 2026 quarter compared to the September 2025 quarter primarily due to an $8 million increase in compensation and other employee benefits and a $6 million increase in outside services costs.

Previous wording

Marketing and administrative expenses increased by $23 million in the nine months ended April 3, 2026 compared to the nine months ended March 28, 2025, primarily due to a $12 million increase in compensation and other employee benefits, a $4 million increase in information technology expenses and a $3 million increase in facilities costs.

Current wording

Marketing and Administrative Expense. Marketing and administrative expenses increased by $12 million in the September 2026 quarter compared to the June 2026 quarter, primarily due to a $19 million increase in compensation and other employee benefits, partially offset by a $4 million decrease in outside services costs.

Previous wording

Restructuring and other, net. We recorded $7 million of restructuring charges in the March 2026 quarter, primarily related to employee related termination benefits.

Current wording

Restructuring and other, net. We recorded restructuring charges of $4 million, $4 million and $13 million for the September 2026 quarter, the June 2026 quarter and the September 2025 quarter, respectively, primarily related to employee related termination benefits.

Previous wording

Other expense, net. Other expense, net for the March 2026 quarter primarily related to $69 million net loss from debt transactions and $68 million of interest expense partially offset by $6 million of interest income.

Current wording

Other expense, net. Other expense, net for the September 2026 quarter primarily related to $44 million net loss from debt transactions and $41 million of interest expense, partially offset by $7 million of interest income.

Previous wording

Other expense, net for the December 2025 quarter primarily related to $72 million of interest expense and $66 million net loss from debt transactions, partially offset by $7 million of interest income.

Current wording

Other expense, net for the September 2025 quarter primarily related to $80 million of interest expense and $6 million net loss from debt transactions, partially offset by $7 million of interest income.

Previous wording

For the March 2026 quarter, December 2025 quarter and March 2025 quarter, we recorded income tax expense of $116 million, $114 million and $15 million, respectively. For the nine months ended April 3, 2026 and March 28, 2025, we recorded income tax expense of $295 million and $40 million, respectively. For further discussion, refer to “Part I, Item 1. Financial Statements—Note 4. Income Taxes”.

Current wording

For the September 2026 quarter and September 2025 quarter, we recorded income tax expense of $221 million and $65 million, respectively. For further discussion, refer to “Part I, Item 1. Financial Statements—Note 4. Income Taxes”.

Previous wording

Cash provided by operating activities for the nine months ended April 3, 2026 was $2.4 billion 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 2, 2026 was $1.7 billion 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

•an increase of $346 million in accrued expenses, income taxes and warranty, primarily due to an increase in accrued legal settlements and income taxes; and

Current wording

•an increase of $272 million in accrued expenses, income taxes and warranty, primarily due to an increase in accrued income taxes; and

Previous wording

•an increase of $89 million in accounts payable, primarily due to an increase in direct materials purchased; partially offset by

Current wording

•an increase of $101 million in accounts payable, primarily due to an increase in direct materials purchased; partially offset by

Previous wording

•an increase of $238 million in accounts receivable, primarily due to increased revenue;

Current wording

•an increase of $283 million in accounts receivable, primarily due to increased revenue;

Previous wording

•an increase of $90 million in inventories, primarily related to an increase in work-in-process inventory, partially offset by a decrease in raw materials and components; and

Current wording

•an increase of $129 million in inventories, primarily due to an increase in work-in-process and finished goods inventory; and

Previous wording

•a decrease of $62 million in accrued employee compensation, primarily due to variable compensation payments.

Current wording

•a decrease of $129 million in accrued employee compensation, primarily due to variable compensation payments.

Previous wording

Net cash used in investing activities for the nine months ended April 3, 2026 was $369 million, primarily attributable to payments of $382 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.

Current wording

Net cash used in investing activities for the three months ended October 2, 2026 was $211 million due to payments for the purchase of property, equipment and leasehold improvements.

Previous wording

Net cash used in financing activities of $1.7 billion for the nine months ended April 3, 2026 was primarily attributable to the following activities:

Current wording

Net cash used in financing activities of $1.8 billion for the three months ended October 2, 2026 was primarily attributable to the following activities:

Previous wording

•$59 million in payments for repurchases of our ordinary shares; and

Current wording

•$400 million in payments for repurchases of our ordinary shares;

Previous wording

•$468 million in dividends paid to our shareholders;

Current wording

•$168 million in dividends paid to our shareholders; and

Previous wording

•$111 million taxes paid related to net share settlement of equity awards;

Current wording

•$17 million taxes paid related to net share settlement of equity awards; partially offset by

Previous wording

•$54 million in proceeds from the issuance of ordinary shares under employee stock plans.

Current wording

•$34 million in proceeds from the issuance of ordinary shares under employee stock plans.

Previous wording

Our primary sources of liquidity as of April 3, 2026, 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”).

Current wording

Our primary sources of liquidity as of October 2, 2026, consist of: (1) approximately $1.3 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

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 April 3, 2026, we had unconditional purchase obligations of approximately $1.9 billion, primarily related to purchases of inventory components with our suppliers. We expect $1.5 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 April 3, 2026.

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 2, 2026, we had unconditional purchase obligations of approximately $2.6 billion, primarily related to purchases of inventory components with our suppliers. We expect $1.9 billion of these commitments to be paid within one year. In addition, we also had certain long-term, market share-based, non-cancelable inventory purchase commitments as of October 2, 2026.

Previous wording

We incur material capital expenditures to design and manufacture our products that depend on advanced technologies and manufacturing techniques. As of April 3, 2026, we had unconditional commitments of $312 million primarily related to purchases of equipment, of which approximately $298 million is expected to be paid within one year. During fiscal year 2026, supporting volume ramp of hard drives utilizing heat-assisted magnetic recording (“HAMR”) technology, we expect capital expenditures to be higher than fiscal year 2025 and still within our target range of 4-6% of revenue.

Current wording

We incur material capital expenditures to design and manufacture our products that depend on advanced technologies and manufacturing techniques. As of October 2, 2026, we had unconditional commitments of $503 million primarily related to purchases of equipment, of which approximately $413 million is expected to be paid within one year. During fiscal year 2027, we expect capital expenditures to be within our target range of 4-6% of revenue.

Previous wording

As of April 3, 2026, the future principal payment obligation on our long-term debt was $3.9 billion, which will mature in more than one year. As of April 3, 2026, future interest payments on this outstanding debt are estimated to be approximately $1.4 billion, of which $255 million is expected to be paid within one year. As of the calendar quarter ended March 31, 2026, 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 June 30, 2026. As a result, we have classified the 2028 Notes within Current liabilities in our Condensed Consolidated Balance Sheets as of April 3, 2026. 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 2, 2026, the future principal payment obligation on our long-term debt was $2.4 billion. As of October 2, 2026, future interest payments on this outstanding debt are estimated to be approximately $905 million, of which $153 million is expected to be paid within one year. Additionally, subsequent to our Condensed Consolidated Balance Sheet date, on October 15, 2026, we redeemed $750 million principal amount of the 2032 Notes. 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

As of April 3, 2026, we accrued a total of $240 million relating to legal settlements, of which $150 million is expected to be paid within one year and $90 million thereafter. Refer to “Item 1. Financial Statements—Note 11. Legal, Environmental and Other Contingencies” for more details.

Current wording

As of October 2, 2026, we accrued a total of $210 million relating to legal settlements, of which $150 million is expected to be paid within one year and $60 million thereafter. Refer to “Item 1. Financial Statements—Note 11. Legal, Environmental and Other Contingencies” for more details.

Previous wording

On April 28, 2026, our Board of Directors declared a quarterly cash dividend of $0.74 per share, which will be payable on July 7, 2026 to shareholders of record as of the close of business on June 24, 2026. 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 27, 2026, our Board of Directors declared a quarterly cash dividend of $0.76 per share, which will be payable on January 7, 2027 to shareholders of record as of the close of business on December 23, 2026. 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. During the nine months ended April 3, 2026, we repurchased approximately 0.7 million of our ordinary shares including approximately 0.4 million shares withheld for statutory tax withholdings related to vesting of employee equity awards. As of April 3, 2026, $4.9 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 2, 2026, we repurchased approximately 0.5 million of our ordinary shares. As of October 2, 2026, $4.4 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.