NetApp, Inc.

What they do

NetApp sells storage hardware and data management software built on its ONTAP platform, spanning all-flash and hybrid-flash arrays plus cloud-native services. It reports two segments: Hybrid Cloud, which covers on-premises storage and related software, and Public Cloud, which covers cloud services delivered with AWS, Microsoft Azure, and Google Cloud. It also sells data protection, ransomware protection, and AI-oriented infrastructure such as the NetApp AI Data Engine.

Revenue drivers

• Hybrid Cloud — The dominant segment at $1.819B of Q1 FY27 revenue, up 30% year-over-year, covering on-premises all-flash and hybrid-flash storage and ONTAP software.
• All-flash arrays — Record Q1 FY27 all-flash array net revenue of $1.3B, up 47% year-over-year, the fastest-growing product line inside the portfolio.
• Public Cloud — Record Q1 FY27 revenue of $206M, up 28% year-over-year, from cloud data services delivered natively with AWS, Microsoft Azure, and Google Cloud.
• Billings — Q1 FY27 billings of $2.057B, up 36% year-over-year, indicating the value of orders booked in the period ahead of revenue recognition.

Recent performance

For Q1 FY27 (quarter ended July 31, 2026), NetApp reported record net revenues of $2.025B, up 30% year-over-year from $1.559B. GAAP net income was $375M and GAAP EPS was $1.88, up 63%; non-GAAP net income was $515M and non-GAAP EPS was $2.58. GAAP operating margin was 23.9% and non-GAAP operating margin was 31.9%. Net cash provided by operating activities fell 25% to $503M and free cash flow fell 35% to $401M. Full-year FY26 revenue was $6.92B with net income of $1.28B and diluted EPS of $6.35.

Strategy

NetApp frames its strategy around four areas: modernizing data infrastructure, enabling resilient and secure operations, optimizing cloud strategies, and accelerating AI adoption. It emphasizes native first-party integration with AWS, Microsoft Azure, and Google Cloud as a differentiator, and cites partnerships with NVIDIA, Cisco, and Microsoft for AI and integrated solutions. During Q1 FY27 it acquired DataPelago, Inc., an AI data infrastructure company, to help customers deploy AI at scale. It continues R&D investment aimed at AI-ready infrastructure and ransomware protection.

Risks

• Competitive storage and cloud market — NetApp competes in storage and cloud data services against larger hardware vendors and hyperscaler-native offerings, which could pressure pricing and share.
• Customer concentration in cloud partnerships — Public Cloud revenue depends on native integrations with AWS, Microsoft Azure, and Google Cloud, so changes in those relationships could affect that segment.
• AI execution risk — The AI strategy relies on AI-ready infrastructure such as the NetApp AI Data Engine and the recent DataPelago acquisition delivering expected customer adoption.
• Cash flow variability — Q1 FY27 operating cash flow fell 25% to $503M and free cash flow fell 35% to $401M year-over-year, showing period-to-period variability in cash generation.

Outlook

For Q2 FY27, management guides net revenues of $2.025B to $2.175B, GAAP gross margins of 66.0%-67.0%, non-GAAP gross margins of 67.0%-68.0%, GAAP operating margins of 24.9%-25.9%, and non-GAAP operating margins of 30.9%-31.9%. GAAP EPS is guided to $1.97-$2.07 and non-GAAP EPS to $2.54-$2.6x. The earnings release states the company significantly raised its fiscal year 2027 revenue and EPS guidance.