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NetApp's Q2 Earnings & Revenues Surpass Estimates, Stock Up
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Key Takeaways
NetApp's Q2 earnings and revenues rose year over year and topped guidance.
Growth was fueled by stronger AI demand, cloud storage uptake and all-flash gains.
NTAP raised EPS and margin forecasts while keeping revenue targets.
NetApp, Inc. (NTAP - Free Report) reported second-quarter fiscal 2026 non-GAAP earnings of $2.05 per share, which beat the Zacks Consensus Estimate by 8.5%. The figure increased 9.6% year over year. The bottom line exceeded the company’s guided range of $1.84-$1.94.
Revenues of $1.71 billion increased 3% year over year. The figure was within the guidance of $1.615-$1.765 billion. The top line beat the consensus mark by 1.1%. Management highlighted that the company’s revenue growth was propelled by accelerating demand for its AI offerings, cloud storage services across first-party and marketplace channels, and its all-flash solutions.
Management updated 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 forecasted to be between $7.75 and $8.05 compared with the prior view of $7.60-$7.90. Non-GAAP gross margin is anticipated to be 71.7-72.7% and non-GAAP operating margin to be in the band of 29.5-30.5%. Earlier, the company projected Non-GAAP gross margin to be 71-72% and non-GAAP operating margin to be in the band of 28.8-29.8%.
Following the announcement, NTAP’s shares are up 6% in the pre-market trading session today. In the past six months, shares have risen 8.6% compared with the Computer Storage Devices industry’s growth of 76.7%.
Image Source: Zacks Investment Research
NTAP’s Top-Line Details
NTAP 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 3% year over year to $1.5 billion. The Public Cloud segment’s revenues improved 2% to $171 million.
We expected fiscal second-quarter revenues from the Hybrid Cloud and Public Cloud segments to be $1.51 billion and $178.7 million, respectively.
Within the Hybrid Cloud segment, Product revenues (51.4% of segmental revenues) increased 2.6% year over year to $788 million.
Revenues from Support Contracts (42.1%) totaled $647 million, up 1.9% year over year. Professional and Other Services revenues (6.5%) amounted to $99 million, up 13.8%.
Region-wise, the Americas, Europe, the Middle East and Africa, and Asia Pacific contributed 51%, 33% and 16% to total revenues, respectively.
Direct and indirect revenues added 23% and 77%, respectively, to total revenues.
Key Metrics of NTAP
In the second quarter, the company’s All-Flash Array revenues increased 9% year over year to $1 billion, representing an annualized run rate of $4.1 billion. Total billings rose 4% year over year to $1.65 billion. Deferred revenues and financed unearned services revenues totaled $4.5 billion, up 8.4%. Remaining performance obligations (RPO) were $4.9 billion.
NTAP’s Operating Details
Non-GAAP gross margin of 72.6% was up 60 basis points (bps) from the prior-year quarter’s levels.
The Hybrid segment’s gross margin was 71.4% compared with 71.8% in the prior year. The Public Cloud segment witnessed a gross margin of 83%, up from 73.8%. Non-GAAP operating expenses were $707 million, down 1.7% from the year-ago quarter.
Non-GAAP operating income increased 11.6% year over year to $530 million. Non-GAAP operating margin was 31.1%, up from 28.6%.
NTAP’s Balance Sheet & Cash Flow
NetApp exited the quarter ended Oct. 24, 2025, with $3 billion in cash, cash equivalents and investments compared with $3.32 billion as of July 25, 2025. Long-term debt was $2.486 billion, flat sequentially.
Net cash from operations was $127 million compared with $105 million in the previous-year quarter.
Free cash flow was $78 million (free cash flow margin of 4.6%) compared with $60 million in the prior-year quarter (3.6%).
The company returned $353 million to its shareholders as dividend payouts and share repurchases in the fiscal second quarter.
NTAP also announced a dividend of 52 cents per share payable on Jan. 21, 2026, to its shareholders of record as of the close of business on Jan. 2.
NTAP’s Q3 Guidance
The company anticipates revenues to be in the range of $1.615 -$1.765 billion. The Zacks Consensus Estimate is pegged at $1.69 billion.
For the third quarter, the company expects Non-GAAP gross margin to be in the range of 72.3-73.3%, and Non-GAAP operating margin in the band of 30.5% to 31.5%.
Non-GAAP EPS is projected to be between $2.01 and $2.11. The Zacks Consensus Estimate is pegged at $1.89 per share.
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2026 non-GAAP earnings of $1.78 per share, which surpassed the Zacks Consensus Estimate by 12%. The company reported earnings of 75 cents per share in the prior-year quarter.
Quarterly revenues of $2.82 billion surged 27% year over year, surpassing the Zacks Consensus Estimate of $2.72 billion. Western Digital’s continued focus on innovation and operational discipline positions the company well to capitalize on new growth opportunities as the AI revolution drives massive increases in data creation and storage demand.
Teradata (TDC - Free Report) reported third-quarter 2025 non-GAAP earnings of 72 cents per share, which beat the Zacks Consensus Estimate by 35.85%. The bottom line increased 4.3% year over year.
Revenues of $416 million beat the Zacks Consensus Estimate by 2.54%. The figure declined 5.5% year over year on a reported basis and 6% on a constant-currency (cc) basis.
Super Micro Computer (SMCI - Free Report) came out with first-quarter fiscal 2026 earnings of 35 cents per share, which beat the Zacks Consensus Estimate by 25%. The bottom line declined 52% year over year.
Super Micro Computer posted revenues of $5.02 billion for the first quarter of fiscal 2026, which missed the Zacks Consensus Estimate by 0.56%. The top line declined 15.5% year over year.
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NetApp's Q2 Earnings & Revenues Surpass Estimates, Stock Up
Key Takeaways
NetApp, Inc. (NTAP - Free Report) reported second-quarter fiscal 2026 non-GAAP earnings of $2.05 per share, which beat the Zacks Consensus Estimate by 8.5%. The figure increased 9.6% year over year. The bottom line exceeded the company’s guided range of $1.84-$1.94.
Revenues of $1.71 billion increased 3% year over year. The figure was within the guidance of $1.615-$1.765 billion. The top line beat the consensus mark by 1.1%. Management highlighted that the company’s revenue growth was propelled by accelerating demand for its AI offerings, cloud storage services across first-party and marketplace channels, and its all-flash solutions.
Management updated 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 forecasted to be between $7.75 and $8.05 compared with the prior view of $7.60-$7.90. Non-GAAP gross margin is anticipated to be 71.7-72.7% and non-GAAP operating margin to be in the band of 29.5-30.5%. Earlier, the company projected Non-GAAP gross margin to be 71-72% and non-GAAP operating margin to be in the band of 28.8-29.8%.
Following the announcement, NTAP’s shares are up 6% in the pre-market trading session today. In the past six months, shares have risen 8.6% compared with the Computer Storage Devices industry’s growth of 76.7%.
Image Source: Zacks Investment Research
NTAP’s Top-Line Details
NTAP 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 3% year over year to $1.5 billion. The Public Cloud segment’s revenues improved 2% to $171 million.
We expected fiscal second-quarter revenues from the Hybrid Cloud and Public Cloud segments to be $1.51 billion and $178.7 million, respectively.
Within the Hybrid Cloud segment, Product revenues (51.4% of segmental revenues) increased 2.6% year over year to $788 million.
NetApp, Inc. Price, Consensus and EPS Surprise
NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote
Revenues from Support Contracts (42.1%) totaled $647 million, up 1.9% year over year. Professional and Other Services revenues (6.5%) amounted to $99 million, up 13.8%.
Region-wise, the Americas, Europe, the Middle East and Africa, and Asia Pacific contributed 51%, 33% and 16% to total revenues, respectively.
Direct and indirect revenues added 23% and 77%, respectively, to total revenues.
Key Metrics of NTAP
In the second quarter, the company’s All-Flash Array revenues increased 9% year over year to $1 billion, representing an annualized run rate of $4.1 billion. Total billings rose 4% year over year to $1.65 billion. Deferred revenues and financed unearned services revenues totaled $4.5 billion, up 8.4%. Remaining performance obligations (RPO) were $4.9 billion.
NTAP’s Operating Details
Non-GAAP gross margin of 72.6% was up 60 basis points (bps) from the prior-year quarter’s levels.
The Hybrid segment’s gross margin was 71.4% compared with 71.8% in the prior year. The Public Cloud segment witnessed a gross margin of 83%, up from 73.8%.
Non-GAAP operating expenses were $707 million, down 1.7% from the year-ago quarter.
Non-GAAP operating income increased 11.6% year over year to $530 million. Non-GAAP operating margin was 31.1%, up from 28.6%.
NTAP’s Balance Sheet & Cash Flow
NetApp exited the quarter ended Oct. 24, 2025, with $3 billion in cash, cash equivalents and investments compared with $3.32 billion as of July 25, 2025. Long-term debt was $2.486 billion, flat sequentially.
Net cash from operations was $127 million compared with $105 million in the previous-year quarter.
Free cash flow was $78 million (free cash flow margin of 4.6%) compared with $60 million in the prior-year quarter (3.6%).
The company returned $353 million to its shareholders as dividend payouts and share repurchases in the fiscal second quarter.
NTAP also announced a dividend of 52 cents per share payable on Jan. 21, 2026, to its shareholders of record as of the close of business on Jan. 2.
NTAP’s Q3 Guidance
The company anticipates revenues to be in the range of $1.615 -$1.765 billion. The Zacks Consensus Estimate is pegged at $1.69 billion.
For the third quarter, the company expects Non-GAAP gross margin to be in the range of 72.3-73.3%, and Non-GAAP operating margin in the band of 30.5% to 31.5%.
Non-GAAP EPS is projected to be between $2.01 and $2.11. The Zacks Consensus Estimate is pegged at $1.89 per share.
NTAP’s Zacks Rank
NetApp currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Other Companies
Western Digital Corporation (WDC - Free Report) reported first-quarter fiscal 2026 non-GAAP earnings of $1.78 per share, which surpassed the Zacks Consensus Estimate by 12%. The company reported earnings of 75 cents per share in the prior-year quarter.
Quarterly revenues of $2.82 billion surged 27% year over year, surpassing the Zacks Consensus Estimate of $2.72 billion. Western Digital’s continued focus on innovation and operational discipline positions the company well to capitalize on new growth opportunities as the AI revolution drives massive increases in data creation and storage demand.
Teradata (TDC - Free Report) reported third-quarter 2025 non-GAAP earnings of 72 cents per share, which beat the Zacks Consensus Estimate by 35.85%. The bottom line increased 4.3% year over year.
Revenues of $416 million beat the Zacks Consensus Estimate by 2.54%. The figure declined 5.5% year over year on a reported basis and 6% on a constant-currency (cc) basis.
Super Micro Computer (SMCI - Free Report) came out with first-quarter fiscal 2026 earnings of 35 cents per share, which beat the Zacks Consensus Estimate by 25%. The bottom line declined 52% year over year.
Super Micro Computer posted revenues of $5.02 billion for the first quarter of fiscal 2026, which missed the Zacks Consensus Estimate by 0.56%. The top line declined 15.5% year over year.