NetApp (NASDAQ:NTAP) Posts Earnings Results, Beats Estimates By $0.46 EPS

NetApp (NASDAQ:NTAP) released its quarterly earnings data on Wednesday. The data storage provider reported $2.58 EPS for the quarter, topping analysts’ consensus estimates of $2.12 by $0.46, FiscalAI reports. NetApp had a net margin of 18.43% and a return on equity of 117.23%. The company had revenue of $2.02 billion during the quarter, compared to the consensus estimate of $1.84 billion. During the same period last year, the firm earned $1.15 EPS. The firm’s revenue for the quarter was up 29.9% compared to the same quarter last year. NetApp updated its FY 2027 guidance to 9.730-10.030 EPS and its Q2 2027 guidance to 2.540-2.640 EPS.

Here are the key takeaways from NetApp’s conference call:

• NetApp reported a record Q1, with revenue up 30% year over year to $2.03 billion, operating margin of 31.9%, and non-GAAP EPS up 66% to $2.58. Strong operating leverage converted broad-based demand into significant earnings growth.
• The company materially raised its fiscal 2027 outlook, now forecasting revenue of $7.975 billion-$8.225 billion and EPS of $9.73-$10.03; the midpoint implies 17% revenue growth and 22% EPS growth. Management cited durable demand across AI, modernization, cloud, customer segments, geographies, and product lines.
• AI and cloud momentum remained key growth drivers: all-flash array revenue rose 47% to $1.31 billion, public cloud revenue increased 28% to $206 million, and NetApp won approximately 350 AI and data-lake modernization deals. Management said deal sizes are expanding as customers move from AI proofs of concept to production workloads.
• Higher component costs and a greater product mix are pressuring profitability, with Q1 product gross margin falling sequentially to 54.6% and Q2 total gross margin guided down to 67%-68%. Inventory also increased sharply as NetApp secured supply, while management acknowledged that some Q1 demand reflected accelerated purchases and pricing benefits.
• NetApp acquired DataPelago to enhance in-place AI data processing and JetStream to strengthen cloud-native disaster recovery for VMware migrations. The acquisitions expand the platform’s AI and cloud capabilities, but their near-term financial contribution was not quantified.

NetApp Stock Down 1.3%

NASDAQ NTAP opened at $180.77 on Thursday. The stock’s 50 day simple moving average is $177.45 and its 200 day simple moving average is $139.96. NetApp has a one year low of $93.69 and a one year high of $209.06. The firm has a market cap of $35.47 billion, a PE ratio of 28.42, a price-to-earnings-growth ratio of 2.49 and a beta of 1.44. The company has a debt-to-equity ratio of 1.84, a current ratio of 1.44 and a quick ratio of 1.39.

NetApp Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Wednesday, October 28th. Investors of record on Friday, October 9th will be given a dividend of $0.52 per share. The ex-dividend date is Friday, October 9th. This represents a $2.08 dividend on an annualized basis and a yield of 1.2%. NetApp’s dividend payout ratio is 32.70%.

Wall Street Analysts Forecast Growth

A number of research analysts have commented on the stock. Susquehanna raised their price target on shares of NetApp from $110.00 to $185.00 and gave the stock a “neutral” rating in a research note on Friday, May 29th. Evercore set a $210.00 price objective on NetApp in a research note on Monday, August 24th. UBS Group restated a “neutral” rating and set a $160.00 target price on shares of NetApp in a research report on Friday, May 29th. Wall Street Zen cut NetApp from a “strong-buy” rating to a “buy” rating in a research report on Wednesday, July 29th. Finally, Argus lifted their price objective on NetApp from $130.00 to $200.00 and gave the company a “buy” rating in a report on Monday, June 1st. Five equities research analysts have rated the stock with a Buy rating and ten have given a Hold rating to the stock. According to MarketBeat.com, the stock currently has an average rating of “Hold” and a consensus target price of $184.08.

Key Stories Impacting NetApp

Here are the key news stories impacting NetApp this week:

• Positive Sentiment: NetApp reported record fiscal Q1 revenue of approximately $2.03 billion, up nearly 30% year over year, while non-GAAP EPS of $2.58 exceeded the roughly $2.12 analyst consensus. All-flash array revenue increased 47% to $1.31 billion, supported by AI and hybrid-cloud demand. NetApp Stock Tanks Despite Strong Q1 Earnings Print
• Positive Sentiment: The company raised its fiscal 2027 outlook to approximately $8.0 billion-$8.2 billion in revenue and $9.73-$10.03 in non-GAAP EPS, well above consensus expectations. It also issued Q2 EPS guidance of $2.54-$2.64, ahead of estimates. NetApp Raises Guidance
• Positive Sentiment: NetApp announced new ONTAP capabilities validated for VMware Cloud Foundation 9.1 and disclosed the acquisition of AI data-infrastructure company DataPelago, potentially strengthening its position in AI workloads and private cloud. NetApp VMware Cloud Foundation Announcement
• Neutral Sentiment: NetApp maintained its quarterly dividend at $0.52 per share, payable October 28 to shareholders of record October 9, implying an annualized yield of about 1.2%.
• Negative Sentiment: Investors reacted negatively to management’s warning that second-quarter gross margin will decline. Non-GAAP gross margin was 70.6% in Q1, while product margins came under sequential pressure from higher component costs and a less favorable product mix. NetApp Warns Gross Margin Will Fall
• Negative Sentiment: Free cash flow fell to approximately $401 million, while operating cash flow was $503 million and inventory increased. The weaker cash conversion raised concerns about execution and valuation after a substantial prior run-up, prompting profit-taking despite the earnings and guidance beats. NetApp Free Cash Flow Decline

Insiders Place Their Bets

In other NetApp news, EVP Elizabeth M. O’callahan sold 1,000 shares of the business’s stock in a transaction on Monday, August 10th. The stock was sold at an average price of $193.82, for a total value of $193,820.00. Following the transaction, the executive vice president owned 30,297 shares of the company’s stock, valued at approximately $5,872,164.54. The trade was a 3.20% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, President Cesar Cernuda sold 49,464 shares of the firm’s stock in a transaction on Tuesday, June 23rd. The shares were sold at an average price of $154.82, for a total value of $7,658,016.48. Following the completion of the sale, the president owned 46,806 shares of the company’s stock, valued at approximately $7,246,504.92. This trade represents a 51.38% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. In the last three months, insiders sold 55,072 shares of company stock worth $8,719,520. Insiders own 0.36% of the company’s stock.

Hedge Funds Weigh In On NetApp

A number of institutional investors have recently modified their holdings of NTAP. Sivia Capital Partners LLC bought a new stake in shares of NetApp during the second quarter worth $315,000. B. Riley Wealth Advisors Inc. bought a new position in NetApp in the second quarter valued at about $203,000. Litman Gregory Wealth Management LLC acquired a new stake in NetApp in the fourth quarter worth about $194,000. Ancora Advisors LLC raised its holdings in NetApp by 1,759.3% during the 3rd quarter. Ancora Advisors LLC now owns 1,004 shares of the data storage provider’s stock worth $119,000 after purchasing an additional 950 shares during the last quarter. Finally, Transamerica Financial Advisors LLC raised its holdings in NetApp by 16.8% during the 4th quarter. Transamerica Financial Advisors LLC now owns 833 shares of the data storage provider’s stock worth $89,000 after purchasing an additional 120 shares during the last quarter. 92.17% of the stock is owned by institutional investors.

NetApp Company Profile

NetApp, Inc (NASDAQ: NTAP) is a data management and storage company that delivers hybrid cloud data services for applications and data. Founded in 1992 as Network Appliance and rebranded as NetApp in 2008, the company is headquartered in Sunnyvale, California. NetApp’s offering focuses on enabling organizations to store, manage, protect and move data across on-premises environments and major public clouds.

The company’s product portfolio centers on the ONTAP data management software and a range of storage systems and services built around it.