It has been about a month since the last earnings report for NetApp (NTAP Quick QuoteNTAP - Free Report) . Shares have added about 3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is NetApp due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for NetApp, Inc. before we dive into how investors and analysts have reacted as of late.

NetApp Q1 Earnings & Revenues Beat Estimates

NetApp reported first-quarter fiscal 2026 non-GAAP earnings of $1.55 per share, which beat the Zacks Consensus Estimate by 0.7%. The figure declined 0.6% year over year. The bottom line was within the company’s guided range of $1.48-$1.58.

Revenues of $1.56 billion increased 1% year over year. The figure was within the guidance of $1.455-$1.605 billion. The top line beat the consensus mark by 1.2%. As anticipated, first-quarter revenues were fueled by solid performance in the Americas enterprise, which offset weakness in the U.S. public sector and EMEA.

NetApp expressed confidence following a strong start to the year, highlighting the strength of its portfolio and its ability to execute effectively in a dynamic environment.

Management reiterated its outlook for fiscal 2026. It continues to expect revenues in the range of $6.625-$6.875 billion, up 3% year over year at the midpoint. Non-GAAP earnings per share are still forecasted to be between $7.60 and $7.90. Non-GAAP gross margin is still anticipated to be 71-72% and non-GAAP operating margin to be in the band of 28.8-29.8%.

Top-Line Details

NetApp reports revenues under two segments, Hybrid Cloud and Public Cloud.

The Hybrid Cloud segment includes revenues from the enterprise data center business, including product, support and professional services.

The Public Cloud segment comprises revenues from products delivered as a service and related support. The portfolio contains cloud automation and optimization services, storage and cloud infrastructure monitoring services.

Revenues from the Hybrid Cloud segment increased 1% year over year to $1.4 billion. The Public Cloud segment’s revenues improved 1% to $161 million. Excluding the divested Spot business, Public Cloud revenues grew 18% year over year in the fiscal first quarter.

We expected fiscal first-quarter revenues from the Hybrid Cloud and Public Cloud segments to be $1.34 billion and $173 million, respectively.

Within the Hybrid Cloud segment, Product revenues (46.8% of segmental revenues) decreased 2% year over year to $654 million.

Revenues from Support Contracts (46.3%) totaled $647 million, up 3% year over year. Professional and Other Services revenues (6.9%) amounted to $97 million, up 18%.

Region-wise, the Americas, Europe, the Middle East and Africa, and Asia Pacific contributed 51%, 32% and 17% to total revenues, respectively.

Direct and indirect revenues added 24% and 76%, respectively, to total revenues.

Key Metrics

In the first quarter, the company’s All-Flash Array revenues increased 6% year over year to $893 million, representing an annualized run rate of $3.6 billion. By the end of the first quarter, 45% of systems in its installed base under active support contracts were all-flash. Total billings rose 4% year over year to $1.51 billion. Deferred revenues and financed unearned services revenues totaled $4.5 billion, up 8.6%. Remaining performance obligations (“RPO”) were $4.94 billion, while the Unbilled RPO was $415 million.

Operating Details

Non-GAAP gross margin of 71.1% was down 110 basis points (bps) from the prior-year quarter’s levels.

The Hybrid segment’s gross margin was 70% compared with 72.4% in the prior year. The Public Cloud segment witnessed a gross margin of 80.1%, up from 71.1%.

Non-GAAP operating expenses were $707 million, down 1% from the year-ago quarter.

Non-GAAP operating income decreased 0.5% year over year to $401 million. Non-GAAP operating margin was 25.7%, down from the prior-year figure of 25.9%.

Balance Sheet & Cash Flow

NetApp exited the quarter ended July 25, 2025, with $3.32 billion in cash, cash equivalents and investments compared with $3.85 billion as of April 25, 2025. Long-term debt was $2.485 billion, flat sequentially.

Net cash from operations was $673 million compared with $675 million in the previous year's quarter.

Free cash flow was $620 million (free cash flow margin of 39.8%) compared with $640 million in the prior-year quarter (37%). The increase in free cash flow was primarily driven by improvements in working capital.

The company returned $404 million to its shareholders as dividend payouts and share repurchases in the fiscal first quarter. The company returned $300 million to shareholders through share repurchases and distributed $104 million in dividends.

Q2 Guidance

The company anticipates revenues to be in the range of $6.625-$6.875 billion. Adjusting for the divested Spot business in the prior-year comparison, this guidance reflects 3% growth. For the second quarter, the company expects a consolidated gross margin to be in the range of 71-72%, and an operating margin in the range of 28% to 29%. Non-GAAP EPS is projected to be between $1.84 and $1.94, with a midpoint of $1.89. 
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, NetApp has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending downward for the stock, and the magnitude of these revisions looks promising. Notably, NetApp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.