NetApp’s first quarter results reflected solid revenue growth and operational discipline, exceeding Wall Street’s expectations for both sales and non-GAAP earnings. Management identified strong demand for all-flash storage systems and expansion in public cloud services as the main drivers of performance. CEO George Kurian noted, “We gained almost 300 basis points of all-flash market share in calendar 2024, more than any other vendor as reported by IDC.” The company also highlighted accelerating growth in its Keystone storage-as-a-service offering and pointed to momentum from customer modernization projects as a factor in meeting customer needs for AI-ready infrastructure.
Is now the time to buy NTAP? Find out in our full research report (it’s free).
NetApp (NTAP) Q1 CY2025 Highlights:
- Revenue: $1.73 billion vs analyst estimates of $1.72 billion (3.8% year-on-year growth, 0.7% beat)
- Adjusted EPS: $1.93 vs analyst estimates of $1.90 (1.8% beat)
- Adjusted EBITDA: $549 million vs analyst estimates of $542.5 million (31.7% margin, 1.2% beat)
- Revenue Guidance for Q2 CY2025 is $1.53 billion at the midpoint, below analyst estimates of $1.60 billion
- Adjusted EPS guidance for the upcoming financial year 2026 is $7.75 at the midpoint, beating analyst estimates by 0.6%
- Operating Margin: 20.1%, down from 21.9% in the same quarter last year
- Billings: $2.03 billion at quarter end, up 12% year on year
- Market Capitalization: $21.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions NetApp’s Q1 Earnings Call
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Tim Long (Barclays) sought clarity on the rationale behind cautious near-term guidance despite strong full-year expectations. CEO George Kurian linked the caution to uncertainty in select regions and the timing of large AI infrastructure deals, while CFO Wissam Jabre noted gradual margin improvement through the year.
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Samik Chatterjee (JPMorgan) asked if the recent deal slippage was ongoing and how macroeconomic caution factored into guidance. Kurian explained most delayed deals closed in the quarter, but persistent customer caution—especially in Europe—justified a prudent stance.
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Wamsi Mohan (Bank of America) inquired about the impact of tariffs and macro factors on demand and gross margins. Kurian quantified tariffs as a relatively small margin headwind and described their diverse supply chain as a mitigating factor.
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Meta Marshall (Morgan Stanley) questioned whether AI-driven cloud deals were being pulled forward or if adoption was just beginning. Kurian said AI adoption remains in early stages but is expanding, with cloud and AI use cases reinforcing each other.
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Jason Ader (William Blair) probed the potential for further cloud margin expansion and the impact of changes at VMware. Jabre expressed confidence in incremental cloud margin gains, while Kurian noted new opportunities as customers reevaluate their infrastructure providers.
Catalysts in Upcoming Quarters
In upcoming quarters, our analysts will focus on (1) the pace at which AI infrastructure projects transition from proof of concept to production deployments, (2) evidence of recovery or continued caution in key public sector and EMEA markets, and (3) further expansion of high-margin cloud services and Keystone subscription adoption. The ability to consistently close large enterprise deals and adapt to evolving industry standards will also be important markers for NetApp’s strategic progress.
NetApp currently trades at $106.99, up from $99.28 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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