NetApp — 2026Q3 earnings
reported 2026-09-02
EPS $2.58 vs $2.12 est — beat
next session +2.6% (close 2026-09-02 → 2026-09-03)
Source
Press release ↗Summary
NetApp's first quarter of fiscal 2027 set records. Net revenues were $2.03 billion, up 30% year over year, and non-GAAP EPS was $2.58. All-flash array revenue grew 47% to $1.3 billion, Public Cloud revenue grew 28% to $206 million, and billings grew 36%. The company significantly raised its fiscal 2027 guidance. On the call, management explained part of the growth. The quarter had an extra week worth about $65 million of revenue; without it, revenue grew 26%. Management also cited some accelerated purchases and pricing benefits. The CEO said the accelerated buying was not a material part of the business and described a structural improvement in demand. The new full-year revenue midpoint is $8.1 billion, $650 million above the prior guidance. Product gross margin fell to 54.6%, mainly because of higher component costs.
Earnings call
Earnings call webcast ↗Review
From the report
NetApp's fiscal 2027 first quarter set records for revenue and non-GAAP EPS, with record all-flash array and Public Cloud revenue, and the company significantly raised its full-year revenue and EPS guidance.
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Net revenues reached a record $2.03 billion, up 30% year over year. GAAP EPS was $1.88 and non-GAAP EPS a record $2.58, and the company significantly raised fiscal 2027 revenue and EPS guidance. show quote
“Delivers record quarterly net revenues of $2.03 billion, an increase of 30% year-over-year; First quarter GAAP earnings per share of $1.88; record non-GAAP earnings per share of $2.58; Significantly raised fiscal year 2027 revenue and earnings per share guidance”
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All-flash array net revenue was a record $1.3 billion, up 47% year over year. show quote
“Record all-flash array net revenue of $1.3 billion for the first quarter of fiscal year 2027, an increase of 47% year-over-year”
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Public Cloud net revenue was a record $206 million, up 28% year over year. show quote
“Record Public Cloud net revenue of $206 million for the first quarter of fiscal year 2027, an increase of 28% year-over-year”
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Billings were $2.06 billion, up 36% year over year. show quote
“Billings of $2.06 billion for the first quarter of fiscal year 2027, an increase of 36% year-over-year”
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Operating margin was 23.9% on a GAAP basis and 31.9% on a non-GAAP basis. show quote
“First quarter GAAP operating margin of 23.9%; first quarter non-GAAP operating margin of 31.9%”
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Full-year net revenue guidance is now $7.975 billion to $8.225 billion. show quote
“Net revenues are expected to be in the range of: $7.975 billion - $8.225 billion”
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During the quarter, NetApp acquired DataPelago, an AI data infrastructure company. show quote
“Acquired DataPelago, Inc., an AI data infrastructure company, to help customers simplify and accelerate AI deployment at scale”
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The CEO said NetApp beat its guidance on every metric and had its strongest first quarter ever. show quote
“NetApp delivered a record-setting start to the year, exceeding guidance on every metric and achieving our strongest first quarter ever”
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From the call
Management attributed the quarter to stronger underlying demand, plus an extra week, some accelerated purchases and higher prices. It said the accelerated buying was not material, and it raised the full-year outlook even as rising component costs weighed on product gross margin.
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The quarter included an extra week that added about $65 million of revenue. Excluding it, revenue grew 26% year over year. show quote
“Revenue was up 26% year over year, excluding the effect of the extra week, which contributed approximately $65 million to revenue, primarily in support and public cloud.”
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The CEO acknowledged some accelerated purchases and pricing benefits but said underlying demand had clearly improved in a structural way. show quote
“While we're seeing some accelerated purchase decisions and pricing benefits, we are also seeing a clear structural improvement in the underlying demand environment.”
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Asked how large the accelerated purchases were, the CEO said they appeared in Q1 but not in Q4 and were not a material part of the business. show quote
“we did not see it in Q4. But we saw it in Q1 and we felt like it was appropriate for us to acknowledge it. But it is not a material part of the overall business.”
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Product gross margin fell 150 basis points from the prior quarter to 54.6%, mainly because of higher component costs, partly offset by better pricing. show quote
“Product gross margin was 54.6%, down 150 basis points sequentially, mainly driven by higher component costs and partially offset by better pricing.”
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The new fiscal 2027 revenue midpoint of $8.1 billion implies 17% growth and is $650 million above the prior guidance. show quote
“We now expect fiscal year 2027 revenue to be in the range of $7.975 billion to $8.225 billion. At the $8.1 billion midpoint, this represents 17% year-over-year growth and an increase of $650 million compared to our prior guidance.”
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NetApp won about 350 AI and data-lake modernization deals in the quarter, significantly more than a year earlier. show quote
“In Q1, we won approximately 350 AI and data lake modernization deals, up significantly from a year ago.”
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Management said price increases now take effect sooner than in the past, when they took about two to three quarters to show up. show quote
“the impact of price increases should materialize sooner than in the past. In the past, for instance, it would take probably two to three quarters to start seeing it, but now we're seeing it much earlier.”
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The CEO said hybrid flash is growing again in NetApp's mix and should contribute much more. show quote
“we have started to see again the resurgence of hybrid flash in our portfolio, and we anticipate a much stronger contribution from hybrid flash.”
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as of 2026-10-06