It has been about a month since the last earnings report for Seagate (STX). Shares have lost about 3.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Seagate due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Seagate Q2 Earnings Beat Estimates

Seagate reported second-quarter fiscal 2024 non-GAAP earnings of 12 cents per share. The Zacks Consensus Estimate was pegged at a loss of 7 cents per share. The company reported non-GAAP earnings of 16 cents in the year-ago quarter.

Management anticipated second-quarter fiscal 2024 non-GAAP loss to be 10 cents (+/- 20 cents).

Non-GAAP revenues of $1.555 billion missed the Zacks Consensus Estimate by 0.3%. The figure declined 18% on a year-over-year basis. However, revenues improved 7% sequentially. Management projected revenues to be $1.55 billion (+/- $150 million) for the fiscal second quarter.

Sequentially, the company witnessed mass capacity demand improvement owing to stronger nearline cloud demand which offset a decline in the VIA market.

Seagate noted that the launch of Mozaic 3+ hard drive platform last week, which features Heat-Assisted Magnetic Recording technology, positioned it well to capture share in the mass capacity storage solutions market.

Exabyte Shipments in Detail

In the reported quarter, Seagate shipped 95.1 exabytes of HDD storage, down 15% year over year. However, this marked an increase of 6% sequentially.

Average mass capacity increased 12% year over year and 11% sequentially to 8.2TB.

The company shipped 83.2 exabytes for the mass-capacity storage market (including nearline, video and image applications, and network-attached storage). This recorded a year-over-year plunge of 14% in exabytes shipments. However, exabyte shipments rose 5% sequentially. Average mass capacity per drive jumped sequentially to 11.9 TB from 10.3 TB.

In the nearline market, it shipped 65.1 exabytes of HDD, down 18% year over year but up 16% sequentially.

Seagate shipped 12 exabytes for the legacy market (which includes mission-critical notebooks, desktops, gaming consoles, digital video recorders or DVR and external consumer devices), down 25% year over year but up 15% sequentially. Average capacity improved by 19% year over year to 2.6 TB.

Revenues by Product Group

Total revenues of HDD (89% of revenues) tumbled 17% year over year to $1.384 billion in the reported quarter. On a sequential basis, revenues were up 7%.

Systems, SSD & Other segment’s revenues (11%) including enterprise data solutions, cloud systems and solid-state drives were $171 million, down 24% on a year-over-year basis but up 8% sequentially.

Our estimates for revenues from HDD and non-HDD segments were $1.386 billion and $159 million, respectively.