NetApp Q1 Earnings Call Highlights

NetApp’s fiscal 2027 first-quarter revenue rose 30% year over year to $2.03 billion, while non-GAAP EPS increased 66% to $2.58. Growth was broad-based, led by a 47% increase in All-Flash Array revenue and strong product demand.

NetApp closed approximately 350 AI and data-lake modernization deals, as customers expanded projects from proofs of concept into production. The company also strengthened its AI, cloud and VMware capabilities through acquisitions of DataPelago and JetStream.

NetApp lifted its fiscal 2027 revenue outlook to $7.975 billion-$8.225 billion and its non-GAAP EPS forecast to $9.73-$10.03, citing stronger demand while continuing to invest in AI solutions and manage expenses carefully.

NetApp NASDAQ: NTAP reported a record start to fiscal 2027, with first-quarter revenue rising 30% year over year to $2.03 billion and non-GAAP earnings per share increasing 66% to $2.58. The company said results exceeded the high end of its guidance ranges and reflected broad demand across its hybrid cloud, public cloud, all-flash and storage-as-a-service offerings.

CEO George Kurian said the quarter benefited from both stronger underlying demand for AI and data modernization projects and some accelerated customer purchases. He said the company also captured pricing benefits as component costs increased, though NetApp expects product-margin conditions to remain influenced by mix, costs and pricing through the year.

NetApp said Q1 included an additional week, which contributed approximately $65 million in revenue, primarily from support and public cloud. Excluding that benefit, revenue increased 26% year over year, according to CFO Wissam Jabre.

Hybrid cloud revenue rose 30% year over year to $1.82 billion, or 27% excluding the extra week. Product revenue increased 51% to $987 million. Support revenue grew 11% to $720 million; excluding the extra week, support revenue increased 4%. Professional services revenue rose 15% to $112 million, driven mainly by Keystone, NetApp’s storage-as-a-service offering. Public cloud revenue increased 28% to $206 million, or 19% excluding the extra week. All-Flash Array revenue climbed 47% year over year to $1.31 billion.

Non-GAAP gross margin was 70.6%, down 50 basis points from a year earlier, as product revenue represented 49% of total revenue versus 42% in the prior-year quarter. Gross profit increased 29% to $1.43 billion. Product gross margin was 54.6%, down 150 basis points sequentially, primarily because of higher component costs, partly offset by pricing.

NetApp’s operating income increased 61% year over year to $645 million, while operating margin expanded 6.1 percentage points to 31.9%. The company generated $503 million in operating cash flow and $401 million in free cash flow during the quarter. NetApp returned $302 million to shareholders, including $200 million in share repurchases and $102 million in dividends, or $0.52 per share. It ended the quarter with $3.6 billion in cash and short-term investments, $2.5 billion in gross debt and a net cash position of $1.1 billion.

Kurian said AI-related demand is extending beyond dedicated GPU environments into broader modernization of databases, unstructured data platforms and other infrastructure needed to support AI applications and inference workloads. NetApp closed approximately 350 AI and data lake modernization deals in the quarter, wi...