Seagate retires last convertible debt ahead of schedule
The data-storage company extinguished $185.8 million of 3.50% exchangeable notes due 2028.
The data-storage equipment supplier Seagate Technology Holdings (STX) retired its final tranche of convertible debt, eliminating $185.8 million of 3.50% Exchangeable Senior Notes due 2028 three months before maturity. The move caps a year-long campaign to simplify the balance sheet and reduce refinancing risk.
Seagate had methodically exchanged and redeemed the notes over four consecutive quarters, shrinking the outstanding principal from $1.0 billion in November 2025 to zero by September 2026. In the most recent quarter, the company exchanged $185.9 million of the notes, a smaller transaction than the $600 million retired in February 2026 and the $500 million in November 2025. The earlier exchanges had already removed $2.81 billion of higher-coupon senior notes, including 98.4% of its 8.250% notes due 2029 and 97.4% of its 9.625% notes due 2032.
Revenue for the quarter reached $2.15 billion, down 3% year-over-year, while non-GAAP earnings totaled $0.89 a share, a 12% decline from the same period a year earlier. Gross margin narrowed to 28.3% from 29.7% in the prior quarter, reflecting lower factory utilization and elevated inventory reserves.
Mass-storage shipments rose 7% sequentially, driven by stronger demand for nearline drives in hyperscale data centers. The company said average capacity per drive climbed 18% year-over-year to 24 terabytes, offsetting unit-price declines. Cloud customers accounted for 54% of total revenue, up from 51% in the prior quarter.
Seagate did not provide formal guidance for the current quarter. Management said it expects gross margin to stabilize in the high-20% range as utilization rates recover and inventory reserves normalize.
The company also declared a quarterly dividend of $0.70 a share, payable on October 2, 2026, to shareholders of record on September 18.