Analyst(s): Krista Case
Publication Date: August 29, 2025
NetApp’s first quarter results reflect market share gains in all-flash, record operating cash flow, and momentum across cloud services. The company remains well-placed to benefit from growing enterprise demand for AI-driven data infrastructure.
What is Covered in this Article:
- NetApp’s Q1 FY 2026 financial results
- All-flash market share leadership and customer wins
- Expanding Public Cloud services and margin uplift
- Keystone growth and recurring revenue momentum
- Rising AI infrastructure adoption and ecosystem expansion
- FY 2026 guidance and outlook for sustained growth
The News: NetApp Inc. (NASDAQ: NTAP) reported its Q1 FY 2026 results with net revenue of $1.56 billion, up 1% year-over-year (YoY) and broadly in line with consensus estimates of $1.55 billion. Hybrid Cloud revenue was $1.40 billion (+1% YoY), while Public Cloud revenue reached $161 million (+1% YoY). Product revenue declined 2% YoY to $654 million, offset by support revenue of $647 million (+3% YoY). Non-GAAP gross margin stood at 71.1%, compared with 72.2% in Q1 FY 2025. Non-GAAP operating income was $401 million (Q1 FY 2025: $399 million), representing a margin of 25.7% (Q1 FY 2025: 25.9%). Net income was $314 million (-5% YoY), with non-GAAP diluted earnings per share (EPS) of $1.55 versus $1.56 a year ago.
“We’ve taken the number one position in the all-flash market by helping customers modernize with cutting-edge data infrastructure and industry-leading cyber resilience for storage,” said George Kurian, CEO of NetApp. “Our highly differentiated cloud services enable hybrid and multi-cloud transformations, and we are well-positioned and growing in the emerging area of enterprise AI.”
NetApp Q1 FY 2026 Earnings Show Stable Revenue and Cloud Momentum
Analyst Take: NetApp opened FY 2026 on stable footing, balancing macro caution with clear momentum in all-flash, cloud services, and AI infrastructure. The company’s ability to convert competitive wins into market share gains, expand cloud profitability, and deliver record cash generation underpins its resilience in a complex environment. With management reiterating its full-year outlook and raising Public Cloud gross margin targets, NetApp is positioning itself as both a leader in data infrastructure and a critical player in enterprise AI adoption.
All-Flash Leadership Strengthens Despite Softness
NetApp reinforced its #1 position in the all-flash array market, with revenue rising 6% YoY to an annualized run rate of $3.6 billion. Customer wins across industries, including aerospace and financial services, demonstrate the breadth of its all-flash appeal. Management acknowledged that mix shifts toward capacity flash and US public sector softness tempered near-term growth, but high-performance flash continued to outpace capacity flash YoY. Importantly, 45% of NetApp’s installed base systems under active support are now all-flash, signaling a long runway for refresh-driven expansion. Competitive displacements highlight NetApp’s advantage in security, resilience, and cost efficiency, reinforcing its edge as enterprises modernize critical workloads.
Expanding Public Cloud Momentum
First-party and marketplace Public Cloud services revenue grew 33% YoY, underscoring NetApp’s differentiated integration with hyperscalers. The business reached an 80.1% gross margin in Q1, up sharply from 71% a year ago, prompting management to raise its long-term target to 80–85%. Case studies from energy and technology customers illustrate how ONTAP’s feature-rich cloud services are winning enterprise-critical workloads, including AI and database environments. Deferred revenue rose 9% YoY to $4.53 billion, with unbilled RPO up 40%, reflecting Keystone traction and future cloud consumption. This mix shift toward software and recurring models supports expanding profitability while broadening NetApp’s customer reach.
AI Infrastructure and Ecosystem Expansion
AI wins more than doubled YoY, with ~125 deals in Q1 across data lakes, training, and inference workloads. Notable deployments included an automaker using NetApp to manage data for autonomous driving and a sovereign cloud provider adopting its AI-as-a-service platform. Partnerships with NVIDIA and Microsoft, including validated RAG architectures and integration with NVIDIA AI Data Platform, highlight NetApp’s role in enabling secure, governed, and scalable AI pipelines. New launches such as AIPod Mini and the Model Context Protocol Server target departmental AI and enterprise data unification, reducing complexity for GenAI adoption. With AI moving from pilots to production, NetApp’s intelligent data infrastructure positions it as a pivotal enabler of enterprise-scale deployments.
Guidance and Final Thoughts
Management guided Q2 FY 2026 revenue to $1.62–1.77 billion (in line with consensus), implying 2–3% YoY growth ex-Spot, with EPS expected at $1.84–1.94 (at par with consensus). Full-year guidance was reiterated, with revenue projected at $6.63–6.88 billion and EPS at $7.60–7.90. While the US public sector and EMEA softness remain headwinds, strong Americas enterprise demand, cloud momentum, and AI-driven infrastructure wins provide confidence in mid-single-digit growth in the back half. Public Cloud gross margin expansion, recurring revenue leverage, and record cash generation further strengthen NetApp’s profile. The company enters FY 2026 with operational discipline, a leadership position in all-flash, and accelerating AI traction, setting the stage for sustained growth and shareholder returns.
See the complete press release on NetApp’s Q1 FY 2026 earnings on the NetApp website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Krista Case brings over 15 years of experience providing research and advisory services and creating thought leadership content. Her vantage point spans technology and vendor portfolio developments; customer buying behavior trends; and vendor ecosystems, go-to-market positioning, and business models. Her work has appeared in major publications including eWeek, TechTarget and The Register.
