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NetApp topped Q1 expectations as demand strengthened across customers, geographies, industries and offerings.
NetApp won about 350 AI and data-lake modernization deals as customers shifted toward production workloads.
NTAP raised fiscal 2027 revenue guidance to $7.975B-$8.225B and non-GAAP EPS guidance to $9.73-$10.03.
NetApp, Inc. (NTAP - Free Report) used its fiscal first-quarter 2027 earnings call to emphasize broad-based demand, AI-driven infrastructure modernization and stronger confidence in its full-year trajectory. Management said that strength extended across customer sizes, geographies, industries and offerings.
The quarter also exceeded expectations. The company reported non-GAAP earnings of $2.58 per share, which beat the Zacks Consensus Estimate of $2.13. Revenues of $2.03 billion topped the consensus mark of $1.84 billion.
CEO George Kurian said that demand was stronger than anticipated across large, midsize and smaller customers, as well as the public sector. Kurian also pointed to strength across on-premises systems, cloud and Keystone.
He also said that the pattern differed from prior component-cost cycles, when customers often pull back on refresh activity. This time, spending remained broad even as pricing increased.
A BofA Securities analyst pressed management on accelerated purchases. Kurian said that only a very small portion of customers had the flexibility to pull spending forward and characterized that activity as not material to the overall business.
NetApp Links AI to Infrastructure Refresh
Kurian said that NetApp won about 350 AI and data-lake modernization deals in the quarter, with deal sizes increasing as customers moved from proofs of concept toward production workloads. Management said that the deal count rose significantly from a year earlier.
Kurian also framed AI as broader than dedicated GPU projects. He said that customers are modernizing databases and unstructured-data environments to support inference and analytics, helping drive demand across the portfolio.
That momentum showed in all-flash array revenues of $1.31 billion, up 47% year over year. Kurian said that all-flash should remain the predominant contributor to the business acceleration.
NTAP Uses Pricing to Offset Component Costs
CFO Wissam Jabre said that non-GAAP product gross margin reached 54.6%, outperforming internal expectations despite higher component costs. Better pricing and customer mix helped offset those pressures.
Jabre said that the product-margin outlook for the rest of fiscal 2027 has improved slightly from expectations 90 days earlier. Management now has greater confidence in recouping higher input costs.
A Citigroup analyst asked how quickly price increases were flowing through. Jabre said that NetApp's more agile pricing actions are taking effect sooner than the two-to-three-quarter lag seen in the past.
NetApp Keeps Cloud and Keystone Momentum
Kurian highlighted continued strength in first-party and marketplace cloud storage services. Public Cloud revenue rose 28% year over year to $206 million, or 19% excluding the extra week.
Kurian said that VMware migrations remain an important cloud use case. He also cited new AI offerings with hyperscalers and lower-cost block storage options as ways to broaden cloud opportunities.
On Keystone, a Barclays analyst questioned why services growth did not show more acceleration. Kurian said that Keystone grew in roughly the same range as prior quarters and the overall flash business, while Jabre noted the extra week provided minimal benefit.
NTAP Raises Fiscal 2027 Outlook
Jabre raised fiscal 2027 revenue guidance to $7.975 billion-$8.225 billion. The midpoint of $8.1 billion implies 17% year-over-year growth and represents a $650 million increase from the prior guidance.
Jabre also raised non-GAAP earnings guidance to $9.73-$10.03 per share and operating-margin guidance to 30.3%-31.3%. The company expects full-year non-GAAP gross margin of 68.1%-69.1%.
For the second quarter, Jabre guided to revenues of $2.025 billion-$2.175 billion and non-GAAP earnings of $2.54-$2.64 per share. Kurian said that the second quarter was roughly in line with typical seasonality after adjusting for the extra week in the first quarter.
NetApp Stays Focused on Execution and AI
Kurian closed the earnings call with a confident tone, emphasizing broad-based momentum, continued customer expansion and investment in AI and cloud capabilities. He also pointed to upcoming product innovation at NetApp Insight.
Jabre maintained that operating leverage remains central to the model. Management's posture coming out of the call centered on sustaining growth while protecting profitability in a higher-cost component environment.
The Zacks framework views Zacks Rank #1 and 2 stocks with A or B Style Scores more favorably over the near term. Still, the Zacks Rank can change as analyst earnings estimates are revised following the just-reported results.
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NetApp Q1 Earnings Call Highlights Durable AI-Led Demand
Key Takeaways
NetApp, Inc. (NTAP - Free Report) used its fiscal first-quarter 2027 earnings call to emphasize broad-based demand, AI-driven infrastructure modernization and stronger confidence in its full-year trajectory. Management said that strength extended across customer sizes, geographies, industries and offerings.
The quarter also exceeded expectations. The company reported non-GAAP earnings of $2.58 per share, which beat the Zacks Consensus Estimate of $2.13. Revenues of $2.03 billion topped the consensus mark of $1.84 billion.
NetApp, Inc. Price, Consensus and EPS Surprise
NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote
NTAP Sees Broad-Based Demand Strength
CEO George Kurian said that demand was stronger than anticipated across large, midsize and smaller customers, as well as the public sector. Kurian also pointed to strength across on-premises systems, cloud and Keystone.
He also said that the pattern differed from prior component-cost cycles, when customers often pull back on refresh activity. This time, spending remained broad even as pricing increased.
A BofA Securities analyst pressed management on accelerated purchases. Kurian said that only a very small portion of customers had the flexibility to pull spending forward and characterized that activity as not material to the overall business.
NetApp Links AI to Infrastructure Refresh
Kurian said that NetApp won about 350 AI and data-lake modernization deals in the quarter, with deal sizes increasing as customers moved from proofs of concept toward production workloads. Management said that the deal count rose significantly from a year earlier.
Kurian also framed AI as broader than dedicated GPU projects. He said that customers are modernizing databases and unstructured-data environments to support inference and analytics, helping drive demand across the portfolio.
That momentum showed in all-flash array revenues of $1.31 billion, up 47% year over year. Kurian said that all-flash should remain the predominant contributor to the business acceleration.
NTAP Uses Pricing to Offset Component Costs
CFO Wissam Jabre said that non-GAAP product gross margin reached 54.6%, outperforming internal expectations despite higher component costs. Better pricing and customer mix helped offset those pressures.
Jabre said that the product-margin outlook for the rest of fiscal 2027 has improved slightly from expectations 90 days earlier. Management now has greater confidence in recouping higher input costs.
A Citigroup analyst asked how quickly price increases were flowing through. Jabre said that NetApp's more agile pricing actions are taking effect sooner than the two-to-three-quarter lag seen in the past.
NetApp Keeps Cloud and Keystone Momentum
Kurian highlighted continued strength in first-party and marketplace cloud storage services. Public Cloud revenue rose 28% year over year to $206 million, or 19% excluding the extra week.
Kurian said that VMware migrations remain an important cloud use case. He also cited new AI offerings with hyperscalers and lower-cost block storage options as ways to broaden cloud opportunities.
On Keystone, a Barclays analyst questioned why services growth did not show more acceleration. Kurian said that Keystone grew in roughly the same range as prior quarters and the overall flash business, while Jabre noted the extra week provided minimal benefit.
NTAP Raises Fiscal 2027 Outlook
Jabre raised fiscal 2027 revenue guidance to $7.975 billion-$8.225 billion. The midpoint of $8.1 billion implies 17% year-over-year growth and represents a $650 million increase from the prior guidance.
Jabre also raised non-GAAP earnings guidance to $9.73-$10.03 per share and operating-margin guidance to 30.3%-31.3%. The company expects full-year non-GAAP gross margin of 68.1%-69.1%.
For the second quarter, Jabre guided to revenues of $2.025 billion-$2.175 billion and non-GAAP earnings of $2.54-$2.64 per share. Kurian said that the second quarter was roughly in line with typical seasonality after adjusting for the extra week in the first quarter.
NetApp Stays Focused on Execution and AI
Kurian closed the earnings call with a confident tone, emphasizing broad-based momentum, continued customer expansion and investment in AI and cloud capabilities. He also pointed to upcoming product innovation at NetApp Insight.
Jabre maintained that operating leverage remains central to the model. Management's posture coming out of the call centered on sustaining growth while protecting profitability in a higher-cost component environment.
NTAP Zacks Signals Remain Favorable
NTAP carries a Zacks Rank #2 (Buy). Its Growth Score of A, Momentum Score of A and VGM Score of B are favorable under the Zacks Style Scores framework, while the Value Score of D is the weaker signal. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks framework views Zacks Rank #1 and 2 stocks with A or B Style Scores more favorably over the near term. Still, the Zacks Rank can change as analyst earnings estimates are revised following the just-reported results.