NetApp’s third quarter results were met with a positive market reaction, reflecting management’s focus on high-margin segments and operational efficiency. CEO George Kurian pointed to the company’s unified data platform and strong momentum in all-flash arrays and public cloud services as key contributors. He also highlighted that AI-driven infrastructure deals nearly doubled year over year, and that recent product launches—such as AFX and the AI Data Engine—helped address growing customer demand for scalable, secure storage solutions. Kurian emphasized, “Customers are choosing NetApp for our unified data platform that delivers exceptional value and operational efficiencies, fueling our success in the face of the ongoing macro environment.”
Is now the time to buy NTAP? Find out in our full research report (it’s free for active Edge members).
NetApp (NTAP) Q3 CY2025 Highlights:
- Revenue: $1.71 billion vs analyst estimates of $1.69 billion (2.8% year-on-year growth, 1.1% beat)
- Adjusted EPS: $2.05 vs analyst estimates of $1.88 (8.8% beat)
- Adjusted EBITDA: $582 million vs analyst estimates of $531.1 million (34.1% margin, 9.6% beat)
- The company reconfirmed its revenue guidance for the full year of $6.75 billion at the midpoint
- Management raised its full-year Adjusted EPS guidance to $7.90 at the midpoint, a 1.9% increase
- Operating Margin: 23.4%, up from 20.8% in the same quarter last year
- Billings: $1.65 billion at quarter end, up 3.8% year on year
- Market Capitalization: $22.24 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 From NetApp’s Q3 Earnings Call
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Aaron Rakers (Wells Fargo) asked about NetApp’s ability to manage component cost volatility and supply continuity. CFO Wissam Jabre responded that the company has secured pricing for several quarters and is prepared to adjust product pricing as needed to protect margins.
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Eric Woodring (Morgan Stanley) inquired about the drivers and sustainability of higher product gross margins. Jabre explained that improved margins result from a favorable mix of all-flash and cloud products, along with disciplined pricing, but noted that long-term targets remain in the mid-to-high 50% range.
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Samik Chatterjee (JPMorgan) questioned the flat revenue guidance for the next quarter given historical seasonality. Jabre attributed this to macroeconomic uncertainty and temporary U.S. public sector headwinds, noting that these are expected to normalize over time.
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Krish Sankar (TD Cowen) asked about the size and maturity of AI-related deals and growth in first-party hyperscale services. CEO George Kurian stated that deal sizes vary widely and that much of the activity is still in the proof-of-concept stage, while Jabre reported a 32% annual growth rate in first-party cloud services.
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Jason Ader (William Blair) sought clarification on why the full-year revenue outlook was not raised despite a quarterly beat. Kurian cited caution due to ongoing public sector challenges and the desire for more visibility before adjusting annual guidance.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace of AI and cloud storage adoption and whether NetApp can sustain momentum in large-scale enterprise deals, (2) the normalization of U.S. public sector demand as government procurement activity resumes, and (3) the continued growth trajectory of Keystone and subscription-based services. Ongoing enhancements to data security and integration with hyperscaler platforms will also be critical indicators of competitive positioning.
NetApp currently trades at $112.30, in line with $111.48 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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