Analyst(s): Camberley Bates, Krista Case
Publication Date: Mar 3, 2025
NetApp reported revenues of $1.64 billion, a 2% year-over-year increase. Highlights include the company’s all-flash array annualized net revenue run rate growing 10% year-to-year to $3.8 billion, AI data lake momentum, and marketplace cloud storage services revenue growing more than 40% year-over-year.
What is Covered in this Article:
- NetApp’s Q3 FY 2025 financial results
- Total revenues of $1.64 billion grew 2% year-over-year
- Areas to watch AI, VMware, and Alternative Acquisition strategies
- All Flash strong growth
- Full-year guidance take
The News: In its fiscal third quarter of 2025, NetApp reported revenues of $1.64 billion, a 2% year-over-year increase. Adjusted earnings per share met projections at $1.91. Highlights include the company’s all-flash array annualized net revenue run rate growing 10% year-to-year to $3.8 billion,60% year-to-year growth to Keystone, its storage-as-a-service offering, and first-party and marketplace cloud storage services revenue growing more than 40% year-to-year.
NetApp Revenue Grows 2%, Driven by Key All-Flash and Storage-as-a-Service Offerings
Analyst Take: Bright spots during NetApp’s fiscal 3Q25 include the company’s all-flash array annualized net revenue run rate growing 10% year-to-year to $3.8 billion. Additionally, first-party and marketplace cloud storage services revenue grew more than 40% year-to-year, driving total Public Cloud segment revenue up 15% during the time period.
Additionally, NetApp executives noted the company’s AI business performing ahead of expectations, with more than 100 AI infrastructure and data lake modernization wins. This included a number of service providers building AI-as-a-Service offerings on top of NetApp storage – which contributed to Keystone storage-as-a-service revenue growth of 60% during the quarter, in turn driving professional services revenue up 14% year-to-year to $88 million.
CEO George Kurian noted “inconsistent” sales execution during the quarter that NetApp has already made strides in addressing. The inconsistency was noted to be deals that shifted to the following quarter.
Market Areas to Watch: AI, VMware, and Alternative Acquisition Strategies
Three areas to note that are having an impact on transactions and deal structures are AI, VMware decisions, and the use of alternative financing. With AI, as noted by NetApp, the impact on data infrastructure and the enterprise is in the early stages. Kurian discussed the early stages of proof of concepts and customers learning from these projects, then expecting AI to have an impact 2H of 2025 and into 2026. This aligns with what Futurum is seeing in the market.
The second is decisions on VMware licensing. While this is happening, the impact of longer-term VMware licenses put in place before the acquisition and the depreciation schedule of the hardware for the environments delays some of the decisions. Still, NetApp noted clients are reviewing options, including on-premises alternatives and joint NetApp solutions with Microsoft and RedHat.
The last area to watch is Keystone-type transactions. These are in the form of managed storage-as-a-service and storage-as-a-service sold as self-managed capacity-on-demand – both of which are alternatives to traditional on-premises CAPEX purchases. In observing the market, the adoption of managed storage-as-a-service seems to weigh into capacity-on-demand-type transactions, especially in environments that have unknown capacity requirements, such as AI.
All Flash Strong Growth
As expected, NetApp’s all flash offering continued its growth at a 10% clip, even as its hybrid (SSD+HDD) offerings grew by 1%. The company has been highlighting several areas, one being the growth of the QLC systems, which are strong contenders for HDD replacements. Even so, it is important to note the hybrid offerings as highly competitive especially when the SSD capacity is used as a performance layer. The second note is the uptick in NetApp’s ASA offering – which is strictly a SAN array. From a sales effort perspective, this brings a focus to compete directly for block storage deals – which, depending on the size of the company, might be a separate IT team making the decisions. Then finally, NetApp’s ability to manage public cloud storage services, primary core data center storage environments, and edge storage deployments with a single data management platform. This integration simplifies operations, including data security and cyber-resiliency issues.
Full-year Guidance Take
Mike Berry, CFO, noted that NetApp’s full-year revenue will be between $6.49 and $6.64B. This is down slightly from previous guidance, though still marking a 5% increase year-over-year. The slight downgrade is credited to the impact of the US dollar’s strength and NetApp’s planned divestiture of Spot, a cloud FinOps offering.
As Futurum has previously noted, we are in favor of the divestiture, as it frees up engineering and go-to-market resources to focus on the upcoming demands with AI. NetApp has announced a major development in the data pipeline software stack, which is needed to support a strong data management environment.
See NetApp’s complete press release for more.
Disclosure: The Futurum Group 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 The Futurum Group as a whole.
Other insights from The Futurum Group:
NetApp’s Q2 FY2025: Innovation Drives Growth in Data Infrastructure
NetApp Q1 FY25 Financial Results Showcase Strong Growth in Cloud and Flash Storage Segments
Author Information
Camberley brings over 25 years of executive experience leading sales and marketing teams at Fortune 500 firms. Before joining The Futurum Group, she led the Evaluator Group, an information technology analyst firm as Managing Director.
Her career has spanned all elements of sales and marketing including a 360-degree view of addressing challenges and delivering solutions was achieved from crossing the boundary of sales and channel engagement with large enterprise vendors and her own 100-person IT services firm.
Camberley has provided Global 250 startups with go-to-market strategies, creating a new market category “MAID” as Vice President of Marketing at COPAN and led a worldwide marketing team including channels as a VP at VERITAS. At GE Access, a $2B distribution company, she served as VP of a new division and succeeded in growing the company from $14 to $500 million and built a successful 100-person IT services firm. Camberley began her career at IBM in sales and management.
She holds a Bachelor of Science in International Business from California State University – Long Beach and executive certificates from Wellesley and Wharton School of Business.
With a focus on data security, protection, and management, Krista has a particular focus on how these strategies play out in multi-cloud environments. She brings approximately 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.
Prior to joining The Futurum Group, Krista led the data protection practice for Evaluator Group and the data center practice of analyst firm Technology Business Research. She also created articles, product analyses, and blogs on all things storage and data protection and management for analyst firm Storage Switzerland and led market intelligence initiatives for media company TechTarget.
