Chief Executive Officer at Seagate Technology
Thank you, Shanye and hello to everyone joining us on today's call. Seagate ended calendar year 2021 on a high note delivering another solid performance in the December quarter highlighted by revenue of $3.12 billion, our best in over six years and non-GAAP EPS of $2.41, representing the highest level in nearly a decade. This performance is all the more impressive in light of the supply chain disruptions and inflationary pressures we are experiencing today and further demonstrates the consistent execution, operational agility, and sharp focus on expense discipline that we have displayed throughout the year. To that point in calendar year 2021, we achieved revenue of nearly $12 billion, up 18% compared with the prior calendar year, we expanded non-GAAP EPS by more than 75% and we grew free cashflow by nearly 40%. Truly an outstanding year of growth that shows we are capitalizing on the secular tailwinds driving long-term mass capacity storage demand.
As we shared many times before, driving profitability and free cash flow generation remained two of Seagate's top priority and underpin our focus on enhancing value for our customers and shareholders. Since the onset of the pandemic, we have consistently executed our product roadmap and made investments to deliver cost efficient, higher capacity drives that offer business value for our customers while also enhancing Seagate's financial profile.
We extended our proven common platform drive family from 16 to 18 and now to 20 terabytes and beyond. We also address cloud customers' performance needs through our industry leading dual-actuator technology. We've made these advancements while notably returning more than $4 billion to our shareholders through our quarterly dividend and share repurchase programs. Our execution and product momentum positions Seagate to deliver a third consecutive calendar year of topline growth. We currently expect calendar year '22 revenue to increase 3% to 6% with further growth beyond consistent with our long-term model range.
Let me spend a few minutes discussing the current business environment. In the December quarter we again generated record mass capacity revenue with growth led by demand from cloud customers. We achieved our highest ever cloud customer revenue supported by sales of our 18 terabyte nearline products, which significantly increased quarter-over-quarter consistent with our plans. HDDs are critical enabling technology for the growing data sphere. As we shared a year ago at our analyst event and our results demonstrate, HDDs have a well-established place in the data center ecosystem. And we do not expect that to change over the next decade or longer. For the past couple of years Seagate has been a beneficiary of increasing cloud data center investments to support remote work, remote education and the digital transformation trends that continue to take place. Analyst forecast another year of strong double digit cloud capex growth in calendar '22. Several powerful themes emerged from this year's CES Conference that support our longer term demand outlook and underscore a clear business need to capture, access and analyze massive and growing volumes of data.
New use cases highlight how data-intensive applications such as AI, autonomous vehicles or smart cities can improve business or social value and drive demand for mass capacity storage, both in the cloud and at the edge. We have previously shared how emerging use cases at the edge are driving meaningful opportunities within the VIA markets. These applications utilize high definition, video and AI analytics to capture and extract data value. In the December quarter, sales of our VIA products remained healthy and we expect the March quarter to be seasonally slower, consistent with historical trends. Longer term, we continue to forecast exabyte growth in the mid-teens, supported by expanding opportunities at the edge.
Moving to our other markets, sequential growth from the cloud in the December quarter was somewhat counterbalanced by lower revenue in the enterprise, OEM and legacy PC markets, that we attribute primarily to the COVID-related supply challenges that dominated broader industry headlines. As we indicated last quarter, non-HDD component shortages are disrupting some of our enterprise and OEM customer shipment plans, which impact both mass capacity near line and legacy mission critical drives. We are mindful that these supply pressures and other COVID-related measures could further away on the typical March quarter seasonality that we anticipate in the VIA end legacy markets. However, customers are managing through the tight supply environment and expect conditions to ease over the next couple of quarters. Seasonality and temporary constraints aside, the long-term mass capacity demand trends remain strong.
In this environment, we remain focused on exercising capital discipline to align supply with demand and continue to engage with customers on their longer term demand requirements to ensure that our production capacity plans align with their future ramp timelines. With lead times for high capacity HDDs of six months or longer, an increasing portion of our near line drive revenue is under long-term agreements with momentum to expand even further.
We are executing our innovative mass capacity roadmap and cost reduction plans to offer a compelling value proposition for our customers that is also financially attractive for Seagate. We are ramping 20-terabyte drives, extending our common platform to a third generation. For a couple of quarters now, cloud data center customers have shown very strong pull for these drives. The TCO value proposition for transitioning to higher capacity drives is compelling. Consider first that a move from 18 to 20 terabytes represents an 11% boost in storage capacity and then layer on the savings realized across the data center build-out. At the system level, customers require less networking gear and other ancillary parts to support the same storage capacity. On both fronts, these gains translate to meaningful cost efficiencies, which may be further enhanced given the part shortages and inflationary pressures in today's market. All indications point to a very steep production ramp for our 20-terabyte products with the potential of surpassing the record setting ramp we saw for our 16-terabyte drives.
As a result, we are using the seasonal slowdown in the March quarter to stays our factory operation to support strong 20-terabyte demand as the year unfolds. Our common platform approach helps to facilitate this process by enabling us to quickly transition and ramp new products into the market. Our 20-terabyte drives highly leveraged the head and media technology that power our 18-terabyte product family, making the production process well understood and hasten time to yield. This strategy also provides manufacturing flexibility and improves our overall cost efficiencies across the breadth of our common platform family, which currently spans 16 through 20 terabyte capacities for CMR products. With some customers stretching to 22 terabytes using SMR feature sets.
We are driving additional manufacturing and cost benefits by incorporating the same media and head technology to produce cost optimized drives spanning capacities down to two terabyte drives. In addition to improving manufacturing flexibility, these cost optimized drives can require fewer heads and disks, which offset some of the near term inflationary component pressures. In the December quarter, the revenue contribution from products using higher aerial density drives increased to nearly 40% of total HDD revenue.
Wrapping up, we entered the March quarter amid a challenging supply environment, however, I remain optimistic for conditions to gradually improve. Importantly, our strong product portfolio and operational execution put Seagate an excellent position to deliver on our long-term revenue growth model and generate strong free cash flow in 2022 and beyond, underpinned by growing demand for mass capacity storage beyond 20 terabytes.
I'll now hand the call over to Gianluca to cover the financial results.