Analysis: NetApp posted record revenue this quarter, helped by all-flash array sales and public cloud storage demand.
In the fourth fiscal 2025 quarter ended April 25, NetApp reported record revenues of $1.73 billion, up 4 percent on the year. There was a $340 million profit (GAAP net income), 16.8 percent more than a year ago. Its full fy2025 revenues were its highest-ever, at $6.57 billion, 5 percent more than fy2024 revenues, with a profit of $1.2 billion, 20.7 percent up on the year.
Within these low single-digit revenue rises there were some outliers. The all-flash array annual run rate rose to an all-time high of $4.1 billion, up 14 percent. This was faster growth than Pure, which registered a 12.2 percent rise to $778.5 million in its latest results. There was a record (GAAP) operating margin of 20 percent for the full year, record full year billings of $6.78 billion and record first-party and marketplace Public Cloud services revenue of $416 million in the year, up 43 percent annually.
CEO George Kurian stated: “Fiscal Year 2025 marked many revenue and profitability records, driven by significant market share gains in all-flash storage and accelerating growth in our first party and marketplace storage services. …We are starting fiscal year 2026 following a year of market share gains, armed with the strongest portfolio in the company’s history and a differentiated value proposition that addresses customers’ top priorities. Looking ahead, I am confident our continued innovation and market expansion will drive sustainable long-term growth.”
Fy2025 revenues of $6.57 billion beat fy2014’s and fy2013’s $6.33 billion. It’s taken NetApp 11 years to match and beat these high points.
Wissam Jabre has been hired as NetApp’s new CFO, coming from being Western Digital’s CFO before the splitting off of Sandisk. Prior NetApp CFO Mike Berry retired but then joined MongoDB as its CFO.
Quarterly financial summary
- Gross margin: 69.5 percent, up 0.2 percent year-over-year
- Operating cash flow: $675 million vs year-ago $613 million
- Free cash flow: $640 million vs $567 million last year
- Cash, cash equivalents, and investments: $3.85 billion vs prior quarter’s $1.52 billion
- EPS: $1.65 v $1.37 a year ago
- Share repurchases and dividends: $355 million vs prior quarters $306 million
NetApp’s two major business segments are hybrid cloud, with $1.57 billion in revenues for the quarter, up 3.2 percent, and public cloud at $164 million, up 7.9 percent.
NetApp said it increased market share, gaining almost 300 basis points in the all-flash market and almost 1-point in the block storage market in calendar 2024.
Looking ahead Kurian said in the earnings call: “I believe that we’ve now reached an inflection point where the growth of all-flash systems and public cloud services, reinforced by the ongoing development of the AI market, will drive sustained top-line growth. …Looking ahead, we expect these growth drivers, along with our laser focus, prioritized investments, and robust execution, to deliver more company records in fiscal year 2026 and beyond.”
+Comment
A look at NetApp’s revenue history shows that, in the recent past, it has only been able to sustain growth for about two years before declining:
Can it break this pattern moving forward?
It reduced its workforce in April, indicating somewhat starightened trading circumstances. Kurian commented: “The global macro-economic outlook faces mixed signals with a general slowdown in growth, lingering inflation concerns, and a significantly higher level of uncertainty. Looking ahead, we expect some increased spending caution, as well as on-going friction in U.S. Public Sector and EMEA. We are incorporating an appropriate layer of caution in our outlook due to these factors.”
The revenue outlook for the first fy2026 quarter reflects this caution, being $1.53 billion +/- $75 million; an 0.7 percent decrease Y/Y at the mid-point.
Full fy2026 revenues are being guided to $6.75 billion +/-$125 million, and a 2.73 percent on the fy2025 number at the mid-point. It is a rise though, with Kurian saying: “We are currently negotiating sizable AI and data infrastructure modernization deals with multiple large enterprises, which we expect to close later in the year. This gives us confidence in our full-year outlook.”
William Blair analyst Jason Ader thought it was a solid fourth quarter but said the guidance was disappointing. He said: “Management noted that the guidance factors in 1) the impact from the divestiture of the Spot by NetApp business, which contributed roughly $95 million in annual sales; and 2) greater spending caution due to continued macroeconomic uncertainty, including slower growth signals, inflation concerns, tariff risk (albeit modest impact), and ongoing demand friction in the US federal sector (approximately 10 percent of sales) and EMEA region (particularly in the European manufacturing vertical).”
