Q1 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $4.4 billion | up 55% year-over-year |
| EPS | $4.64 | up 161% year-over-year |
| Gross Margin | 58.1% | up 1,420 basis points year-over-year |
| Operating Income | $2.2 billion | up 152% year-over-year |
| Exabytes Shipped | 248 | up 22% year-over-year |
Guidance and outlook
- Q2 FY2027 revenue is expected to be $5.1 billion, plus/minus $100 million.
- Q2 FY2027 gross margin is expected to be in the range of 60% to 61%.
- Q2 FY2027 operating expenses are anticipated to be $400 million to $410 million.
- Q2 FY2027 diluted earnings per share is expected to be $5.80, plus/minus $0.20.
How management sounded
Positive (+7 on our -10 to +10 scale). Management expressed strong conviction in the durability of demand and their technology roadmap, supported by significant margin expansion and raised guidance, despite acknowledging some near-term input cost pressures. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
HAMR Technology
Asked: What are the remaining milestones for HAMR and what determines the scaling speed?
Answer: Management is confident in finishing qualifications with two hyperscalers in Q1 and starting with two more in the first half of calendar 2027, with volume shipments beginning in the first half of 2027.
Cost per Terabyte
Asked: Why was cost per terabyte down only 4% to 5% in the December quarter?
Answer: Management noted input cost increases for DRAM and NAND but expects to reduce cost per terabyte by approximately 10% year-over-year in the long run through value engineering.
Competitive Capacity
Asked: How do you view the risk of competitors adding incremental unit capacity?
Answer: Management emphasized their strategy of increasing aerial density through internal head and media technology rather than adding unit capacity, which they believe provides better total cost of ownership.
Pricing Sustainability
Asked: Is the current pricing acceleration sustainable?
Answer: Management noted that while they expect some slowing, they see room for further average selling price per terabyte increases over the next three to four quarters due to strong demand and product transitions.
What to watch before the next call
- The ramp of HAMR technology and the transition to higher-capacity drives.
- The sustainability of pricing trends and average selling price per terabyte growth.
- Capital expenditure levels, which are expected to be modestly above the 4% to 6% of revenue range over the next two years.
