NetApp’s second quarter saw a slight uptick in revenue, but the market reacted negatively, reflecting investor concerns despite financial performance that met or exceeded Wall Street’s expectations. Management credited robust enterprise demand in the Americas for all-flash and cloud storage solutions as key drivers, offsetting weakness in the U.S. public sector and select European regions. CEO George Kurian emphasized strong customer uptake of NetApp’s unified data infrastructure, particularly for AI workloads, noting, “Organizations are turning to NetApp for data solutions that deliver competitive advantage and operational efficiencies.”
Is now the time to buy NTAP? Find out in our full research report (it’s free).
NetApp (NTAP) Q2 CY2025 Highlights:
- Revenue: $1.56 billion vs analyst estimates of $1.55 billion (1.2% year-on-year growth, 0.9% beat)
- Adjusted EPS: $1.55 vs analyst estimates of $1.54 (0.7% beat)
- Adjusted EBITDA: $452 million vs analyst estimates of $455.1 million (29% margin, 0.7% miss)
- The company reconfirmed its revenue guidance for the full year of $6.75 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $7.75 at the midpoint
- Operating Margin: 19.8%, up from 18.3% in the same quarter last year
- Billings: $1.51 billion at quarter end, up 4.3% year on year
- Market Capitalization: $23.03 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From NetApp’s Q2 Earnings Call
- Krish Sankar (TD Cowen) asked about the deceleration in all-flash revenue growth and product gross margin pressures. CFO Wissam Jabre attributed the slower growth to softness in the U.S. public sector and EMEA, and cited higher component costs as the main reason for margin compression, expecting improvement in future quarters.
- Eric Woodring (Morgan Stanley) questioned the sustainability of higher public cloud margins. Jabre explained that margin improvements are driven by hardware depreciation roll-off and higher software content, with expectations for continued gradual improvement.
- Samik Chatterjee (JPMorgan) inquired about the consistency and scale of AI infrastructure wins. CEO George Kurian described deal sizes as ranging from small proof-of-concept projects to large-scale production environments, and expects a consistent flow of AI wins through the year.
- Tim Long (Barclays) sought insight into converting the existing installed base to all-flash and the long-term vision for Keystone. Kurian highlighted high win rates in customer refresh cycles and emphasized that Keystone’s as-a-service model meets evolving customer preferences.
- Ari Terjanian (Cleveland Research) asked about the competitive environment in all-flash storage and pricing strategies. Kurian noted strong competitive positioning, particularly in challenging public sector markets, and clarified that cost increases, not pricing actions, impacted product margins.
Catalysts in Upcoming Quarters
Over the coming quarters, StockStory analysts will focus on (1) the pace of AI infrastructure wins and expansion into new enterprise use cases, (2) sustained growth and profitability in first-party and marketplace cloud storage services, and (3) margin improvement as product mix shifts toward software and services. Progress toward broader adoption of Keystone and execution in recovering public sector and EMEA markets will also be key areas to watch.
NetApp currently trades at $114.87, up from $112.15 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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