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    NTAP
    Earnings call· Apr 2026(Q4 FY26)

    NetApp Q4 FY26 earnings call NTAP

    May 28, 2026 Source

    Executive summary

    NetApp Q4 FY26 — Record Results Driven by AI and Cloud Demand

    NetApp delivered record Q4 and FY26 results, driven by strong demand for its hybrid cloud and AI solutions. The company is capitalizing on accelerating enterprise AI adoption and cloud growth, with its differentiated data infrastructure platform resonating with customers. Management is confident in continued momentum, reflected in an accelerated FY27 outlook, while actively managing component cost pressures and investing in strategic growth areas.

    Highlights

    5

    • Record revenue in Q4 and FY26, with FY26 revenue of $6.93 billion, up 5% year-over-year.

    • Record Q4 non-GAAP EPS of $2.43, up 26% year-over-year, and FY26 EPS of $8.13, up 12% year-over-year.

    • Record Q4 operating margin of 32%, up 340 basis points year-over-year, and FY26 operating margin of 30.2%.

    • Record Q4 free cash flow of $900 million, up over 40% year-over-year, and FY26 free cash flow of $1.87 billion, up close to 40% year-over-year.

    • Public Cloud revenue grew 18% year-over-year (ex-Spot) in FY26 to $688 million, with first-party and marketplace services up 30%.

    Concerns

    3

    • Rising memory and component costs are impacting product gross margin, requiring price adjustments.

    • Hybrid Cloud gross margin was down 60 basis points sequentially in Q4 due to higher product revenue.

    • Inventory turns decreased sequentially to 12 in Q4 FY26.

    Guidance & targets

    13
    CategoryTargetConfidence
    Fiscal Year 2027 Revenue
    $7.325 billion to $7.575 billion
    high materiality
    High
    Fiscal Year 2027 Gross Margin
    68.5% to 69.5%
    medium materiality
    High
    Fiscal Year 2027 Operating Margin
    29.1% to 30.1%
    high materiality
    High
    Fiscal Year 2027 Effective Tax Rate
    20% to 21%
    low materiality
    High
    Fiscal Year 2027 EPS
    $8.70 to $9.00
    high materiality
    High
    Fiscal Year 2027 Capital Return
    Up to 100% of free cash flow
    high materiality
    High
    Fiscal Year 2027 Share Count Reduction
    Low-single-digit percentage points
    medium materiality
    High
    Q1 Fiscal Year 2027 Revenue
    $1.75 billion to $1.9 billion
    high materiality
    High
    Q1 Fiscal Year 2027 Gross Margin
    69.1% to 70.1%
    medium materiality
    High
    Q1 Fiscal Year 2027 Operating Margin
    28.4% to 29.4%
    medium materiality
    High
    Q1 Fiscal Year 2027 EPS
    $2.05 and $2.15
    high materiality
    High
    Q1 Fiscal Year 2027 Extra Week Revenue Contribution
    Approximately $65 million
    low materiality
    High
    Q1 Fiscal Year 2027 Extra Week Operating Expenses
    $21 million
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Hybrid Cloud
    Revenue growth driven by execution of multiyear agreement with Google Cloud. Gross margin down 60 basis points sequentially due to higher product revenue. Product gross margin benefited from Google Cloud Enterprise agreement offsetting higher component costs. Support revenue partly driven by a onetime item. Professional Services gross margin improved 80 basis points sequentially.
    Product Revenue: $966 millionProduct Revenue Growth YoY: 14%Product Gross Margin: 56.1%Support Revenue: $688 millionSupport Revenue Growth YoY: 10%Support Gross Margin: 93%Professional Services Revenue: $112 millionProfessional Services Revenue Growth YoY: 14%Professional Services Gross Margin: 32.1%
    		$1.77 billion13%—69%
    Public Cloud
    Revenue growth driven by strong demand for first-party and marketplace storage services. Gross margin up 60 basis points sequentially and over 6 percentage points year-over-year, operating above the high-end of the long-term target range (80%-85%).
    Revenue Growth YoY (ex-Spot): 18%
    		$182 million11%—85.7%

    Operational metrics

    23
    Public Cloud Revenue
    $688 million18% YoY growth (ex-Spot)
    FY26

    Normalized for the divestiture of the Spot by NetApp business in March 2025.

    First-Party and Marketplace Cloud Services Growth
    30%YoY growth
    FY26

    Driving Public Cloud revenue growth.

    All-Flash Revenue
    $4.2 billion11% YoY growth
    FY26

    Propelled by robust Q4 performance.

    All-Flash Revenue
    $1.2 billion18% YoY growth
    Q4 FY26

    Strong Q4 performance.

    Keystone Revenue Growth
    Approximately 65%From FY25
    FY26

    Reflects broader shift towards consumption-based IT models.

    AI and Data Preparation Wins
    500
    Q4 FY26

    On-prem wins, mix of enterprise and neo cloud. Roughly 50% for data preparation, 25% for training/fine-tuning LLMs, 25% for inferencing.

    AI and Data Preparation Wins
    1,100vs. ~400 in prior fiscal year
    FY26

    Total for the full fiscal year.

    Revenue
    $6.93 billion5% YoY growth
    FY26

    Exceeded the high end of guidance range.

    Gross Margin
    71.3%Up 20 bps YoY
    FY26

    Non-GAAP.

    Operating Margin
    30.2%Up 190 bps YoY
    FY26

    Non-GAAP. All-time record.

    Operating Expenses Growth
    1%YoY growth
    FY26

    Non-GAAP.

    EPS
    $8.1312% YoY growth
    FY26

    Non-GAAP. More than double the rate of revenue growth.

    Capital Returned to Shareholders
    $1.36 billion
    FY26

    Through share repurchases and cash dividends.

    Cash and Short-Term Investments
    $3.58 billion
    End FY26

    Balance sheet remains very healthy.

    Gross Debt Outstanding
    $2.49 billion
    End FY26

    Balance sheet remains very healthy.

    Net Cash Position
    $1.1 billion
    End FY26

    Balance sheet remains very healthy.

    Inventory Turns
    12Decreased sequentially
    Q4 FY26

    Inventories expanded both year-over-year and quarter-over-quarter.

    Diluted Share Count
    199 millionDecreased 3% YoY
    Q4 FY26

    Year-over-year decrease of 7 million shares.

    Share Repurchase Authorization Remaining
    $500 million
    End FY26

    From current authorization.

    Share Repurchase Authorization Increase
    $1 billion
    Announced Q4 FY26

    Increase to existing authorization.

    Share Repurchases
    $200 million
    Q4 FY26

    Part of capital returned to shareholders.

    Dividends Paid
    $103 million
    Q4 FY26

    Part of capital returned to shareholders.

    Installed Base All-Flash Conversion
    48%Up 1%
    Q4 FY26

    Percentage of installed base converted to all-flash.

    Industry KPIs

    8
    MetricValueDetails
    Capital return FCF$1.36 billionUSD
    Gross margin drivers70.5%%
    Services peripheral attachApproximately 65%%
    Long term supply agreements—
    Component supply constraints—
    Installed base refresh runway48%%
    Ai server orders revenue backlog—
    Revenue mix by end market segment—

    Orderbook & backlog

    3
    Deferred Revenue$4.85 billionEnd FY26

    7% YoY (6% YoY in constant currency)

    Remaining Performance Obligations (RPO)$5.65 billionEnd FY26

    14% YoY

    Unbilled Remaining Performance Obligations (Unbilled RPO)$807 millionEnd FY26

    88% YoY

    Key indicator of future Keystone storage-as-a-service revenue growth. Outperformance driven by increase in Support performance obligations associated with Google agreement as well as Keystone unbilled RPO.

    Product announcements

    2
    ProductTypeDetails
    AFX and AI Data Enginelaunch
    All-Flash Arrays and Converged AI Solutionsupdate

    Deals & partnerships

    3
    Google CloudExpanded PartnershipMultiyear agreement

    Expanded partnership for Google Distributed Cloud, enabling government agencies and regulated enterprises to leverage advanced AI capabilities with NetApp's secure-by-design data infrastructure platform. NetApp was chosen to be a large chunk of the data infrastructure within the Google Distributed Cloud architecture.

    Leading Neo Cloud ProviderCustomer Contract

    A leading neo cloud turned to NetApp for intelligent all-flash storage infrastructure, eliminating complexity and powering orchestration at cloud scale. This win allows NetApp to begin expanding into other workloads.

    World Wide TechnologyPartnership

    NetApp AFX all-flash storage is featured at World Wide Technology's live AI Proving Ground, allowing customers to test architectures, validate performance, and quickly move from experimentation to deployment. This collaboration highlights the large opportunity ahead for operationalizing AI.

    Risks & headwinds

    2
    Rising memory and component costsOngoing

    Impacting product gross margin

    Mitigation: Working closely with supply chain partners and adjusting pricing to balance growth and margins. Goal is to protect profitability of the business.

    Potential for accelerated purchasing or pull-forward demandNear-term (FY27)

    Minimal impact on Q4 FY26 P&L, but acknowledged as a dynamic.

    Mitigation: Management believes demand is broad-based and has factored in the risks of pull-ins and dynamics into the fiscal year outlook. Goal is to meet customer demand, balance cost and availability of supply, and maintain lead times.

    Q&A highlights

    6

    Can you elaborate on the demand strength, particularly for all-flash, its linearity, and the impact of price changes on demand, especially looking into FY27?

    Momentum is very strong, driven by IT spending for AI. Q4 results were tied to expected big deals, with minimal pull-forward impact on the P&L. The company sees a strong FY27 outlook, powered by confidence in its position and growing evidence of enterprise AI adoption.

    “Our Q4 results were tied to the big deals we told you to expect when we guided the fiscal year. And we see really strong outlook for this coming year powered by our confidence in our position and what we see as growing evidence that enterprise AI is happening in front of our eyes.”

    asked by David Vogt (UBS) · answered by George Kurian

    2 min read5 chapters

    Detailed Narrative

    01

    Enterprise AI Adoption and Hybrid Cloud Leadership

    NetApp is positioned at the forefront of enterprise AI adoption, leveraging its hybrid cloud data infrastructure platform. The company's ability to activate large volumes of unstructured data across hybrid and multi-cloud environments, enabling zero-copy data activation, is a key competitive advantage. This approach eliminates costly data migration and transforms fragmented infrastructure into a secure platform for real-time AI and automation, resonating strongly with customers and the industry.

    02

    Strategic Partnerships and Ecosystem Expansion

    NetApp has fueled nearly 50 partner AI factories and labs, including World Wide Technology's AI Proving Ground, showcasing its AFX all-flash storage. Expanded partnerships, such as with Google Cloud for Google Distributed Cloud, enable government agencies and regulated enterprises to leverage advanced AI capabilities with secure data infrastructure. This collaboration broadens NetApp's reach into sovereign and secure environments, reinforcing its position as a trusted collaborator in the evolving cloud ecosystem.

    03

    Strong Performance Across Key Growth Vectors

    Record revenue in Q4 and FY26 was driven by Public Cloud, all-flash, and Keystone off📎erings. Public Cloud revenue grew 18% year-over-year (ex-Spot) in FY26 to $688 million, with first-party and marketplace services up 30%. All-flash revenue increased 11% year-over-year in FY26 to $4.2 billion, with Q4 up 18%. Keystone storage-as-a-service revenue grew approximately 65% from FY25, reflecting a broader market shift towards consumption-based IT models and meeting customer demand for cloud-like experiences on-premises.

    04

    AI as a Growth Engine and Innovation

    AI was a clear growth engine, with 1,100 AI and data preparation wins in FY26, including 500 in Q4 alone, significantly up from 400 in the prior fiscal year. NetApp furthered its AI innovation by launching next-generation solutions like AFX and AI Data Engine, which are seeing strong early momentum and positive customer feedback. These offerings help organizations simplify AI infrastructure, eliminate silos, and accelerate data pipelines, reinforcing NetApp's role as the data infrastructure platform for AI.

    05

    Financial Discipline and Shareholder Returns

    The company achieved record operating income and free cash flow in FY26, with operating margin reaching 30.2% and free cash flow generation of $1.87 billion, up close to 40% year-over-year. This strong cash generation enables investment in innovation and significant capital returns, with $1.36 billion returned to shareholders in FY26 through share repurchases and cash dividends. NetApp plans to return up to 100% of FY27 free cash flow to shareholders, demonstrating disciplined capital allocation.

    AI-generated summary of the company’s earnings call. Not investment advice.