NetApp — First Quarter Fiscal Year 2027 Earnings Summary

Financial Performance

• Net revenues reached a record $2.025 billion, a 30% increase year-over-year from $1.559 billion.
• GAAP earnings per share (EPS) were $1.88, up 63% from $1.15 in the prior year period; GAAP net income was $375 million, up 61% from $233 million.
• Non-GAAP EPS was a record $2.58, up 66% from $1.55; non-GAAP net income was $515 million, up 64% from $314 million.
• GAAP operating margin was 23.9%; non-GAAP operating margin was 31.9%.
• GAAP gross profit was $1.419 billion (70.1% margin); non-GAAP gross profit was $1.429 billion (70.6% margin).
• Net cash provided by operating activities was $503 million, a 25% decrease from $673 million.
• Free cash flow was $401 million, a 35% decrease from $620 million.
• Billings were $2.057 billion, a 36% increase year-over-year from $1.511 billion.
• Total deferred revenue was $4.846 billion.
• Total debt was $2.488 billion ($550 million current portion, $1.938 billion long-term).

Guidance and Future Outlook

• Significantly raised full fiscal year 2027 net revenue guidance to a range of $7.975 billion to $8.225 billion.
• Raised full fiscal year 2027 non-GAAP EPS guidance to a range of $9.73 to $10.03.
• Second quarter fiscal 2027 net revenue guidance is $2.025 billion to $2.175 billion.
• Second quarter fiscal 2027 non-GAAP EPS guidance is $2.54 to $2.64.
• Full fiscal year 2027 non-GAAP operating margin guidance is 30.3% to 31.3%.
• Full fiscal year 2027 non-GAAP gross margin guidance is 68.1% to 69.1%.

Business Segments and Product Lines

• Hybrid Cloud segment revenues were $1.819 billion, up 30% year-over-year.
• Public Cloud segment revenues were $206 million, up 28% year-over-year.
• Record all-flash array net revenue was $1.3 billion, up 47% year-over-year.
• Released StorageGRID 12.1 to support AI and modern workloads with a federated global namespace.
• Announced NetApp Trident software 26.06 capabilities for Kubernetes, including smarter volume placement and non-disruptive iSCSI rebalancing.
• Introduced Instaclustr for Model Context Protocol (MCP) Gateway to connect managed data infrastructure to AI applications.
• Achieved general availability of Azure NetApp Files support for large files up to 64 TiB and the Object REST API.
• Announced general availability of Azure NetApp Files migration assistant.

Market and Competitive Landscape

• CEO George Kurian stated the company exceeded guidance on every metric, driven by customer trust and success in winning new organizations for AI and hybrid multi-cloud initiatives.
• NetApp was named a Leader in the Forrester Wave: Object Storage Solutions, Q2 2026.
• NetApp's AI Data Engine was named a finalist in CRN's 2026 Tech Innovator Awards.
• NetApp was ranked 60 out of 500 in The Wall Street Journal's 2026 Best Companies For The Future list.
• NetApp was named to Time Magazine's Best Companies of 2026 list (271 out of 1,000) and Newsweek's Greatest Workplaces in America, California, and Tech for 2026.

Risks and Challenges

• Forward-looking statements note risks including rapid industry and technological trends, ability to execute cloud strategy, and market acceptance of new products.
• Potential impacts from global political, macroeconomic, and market conditions, including inflation, interest rates, tariffs, and trade policy changes.
• Risks related to geopolitical conflicts, sanctions, cybersecurity breaches, and supply chain disruptions.
• Risks associated with changes in customer technology spending, revenue seasonality, and foreign exchange volatility.
• Challenges in maintaining gross profit margins due to component costs.

Management Commentary and Tone

• CEO George Kurian described the quarter as a "record-setting start to the year" and the "strongest first quarter ever."
• Management highlighted momentum reflecting trust of existing customers and success in winning new ones for AI and hybrid multi-cloud initiatives.
• The tone emphasized continued innovation, strategic investments, and enabling customers to address critical needs.

Other Key Points

• Acquired DataPelago, Inc., an AI data infrastructure company, to accelerate AI deployment at scale.
• Announced a collaboration with Cisco to offer new solutions for secure, scalable AI and expanded defense-in-depth strategies with a Splunk SOAR playbook.
• Deepened global alliance with CGI to power block storage solutions within its shared services platform.
• Completed a joint proof of concept with SK Telecom using NetApp AFX systems with Petasus AI Cloud.
• Signed a strategic partnership with Okestro to develop integrated enterprise AI and disaster recovery infrastructure.
• Announced a strategic partnership with Tata Consultancy Services to help organizations discover, classify, and govern data.
• Appointed Alvaro Celis as Chief Partner and Ecosystem Officer.
• Declared a cash dividend of $0.52 per share, payable on October 28, 2026, to stockholders of record as of October 9, 2026.
• Repurchased $200 million of common stock during the quarter.