Earnings call analysis

NetApp (NTAP) Q1 FY2027 Earnings Call: Key Takeaways

NetApp reported a record first quarter for fiscal year 2027, driven by strong demand for hybrid cloud, all-flash arrays, and public cloud services. Revenue reached $2.03 billion, up 30% year-over-year, while non-GAAP earnings per share rose 66% to $2.58. Management highlighted robust momentum in AI workloads and raised its full-year outlook across revenue, margins, and earnings.

About NetApp. NetApp, Inc. is a technology company focused on providing cloud-centric and data-driven services that enable businesses worldwide to efficiently manage and share their information across on-premises infrastructure, private cloud setups, and public cloud platforms. The company's operations are divided into two key segments: Hybrid Cloud and Public Cloud.

Call date

Sep 2, 2026

Sentiment score

+45 Positive

Management tone, -100 to +100

Sentiment change

+10

vs Q4 FY2026 call

Sector

Information Technology, Technology Hardware, Storage and Peripherals

Next report

Dec 1, 2026

View calendar

Key takeaways

Revenue increased 30% year-over-year to $2.03 billion, or up 26% excluding the extra week.
Non-GAAP earnings per share rose 66% year-over-year to $2.58.
All-flash array revenue reached $1.31 billion, up 47% year-over-year.
Public cloud revenue grew 28% year-over-year to $206 million, or 19% excluding the extra week.
Gross profit grew 29% to a record $1.43 billion, with a gross margin of 70.6%.
Management raised full-year fiscal 2027 revenue guidance to a range of $7.975 billion to $8.225 billion.

Key financial results

Total revenue for the first quarter of fiscal year 2027 increased 30% year-over-year to $2.03 billion, or up 26% when adjusting for an additional week that contributed approximately $65 million.Revenue increased 30% year-over-year to $2.03 billion.
Gross profit grew 29% year-over-year to a record $1.43 billion.gross profit growing 29% to a record $1.43 billion
Non-GAAP operating margin reached 31.9%, up 6.1 percentage points year-over-year.operating margin reaching 31.9%
Non-GAAP earnings per share were $2.58, representing a 66% increase compared to Q1 of the previous year.Non-GAAP earnings per share was $2.58, up 66% year-over-year.
Cash flow from operations was $503 million and free cash flow was $401 million in the first quarter.cash flow from operations was $503 million and free cash flow was $401 million.

Business segment results

Hybrid cloud: Hybrid cloud revenue reached $1.82 billion, up 30% year-over-year and up 27% excluding the additional week.Hybrid cloud revenue of $1.82 billion was up 30% year-over-year
Product: Product revenue grew 51% year-over-year to $987 million.Product revenue of $987 million was up 51% year-over-year.
Support: Support revenue was $720 million, up 11% year-over-year and up 4% excluding an extra week contribution of about $50 million.Support revenue of $720 million was up 11% year-over-year
Professional Services: Professional Services revenue increased 15% year-over-year to $112 million, driven by growth in Keystone.Professional Services revenue of $112 million was up 15% year-over-year
Public cloud: Public cloud revenue grew to $206 million, up 28% year-over-year and up 19% adjusting for an extra week contribution of about $15 million.public cloud revenue of $206 million was up 28% year-over-year

Capital allocation

NetApp returned $302 million of capital to shareholders during the first quarter.we returned $302 million of capital to our shareholders
Share repurchases totaled $200 million during the quarter.$200 million in share repurchases
Dividend payments were $102 million, representing $0.52 per share.$102 million paid in dividends of $0.52 per share.
The company closed the quarter with $3.6 billion in cash and short-term investments and $2.5 billion in gross debt, resulting in a net cash position of $1.1 billion.closed the quarter with $3.6 billion in cash and short-term investments and $2.5 billion in gross debt outstanding, resulting in a net cash position of $1.1 billion.

Industry trends and dynamics

Management noted a structural improvement in the underlying demand environment driven by enterprise investments in artificial intelligence and modernization.a clear structural improvement in the underlying demand environment
The company observed some accelerated purchase decisions and pricing benefits alongside higher component and silicon costs.
AI adoption is driving a broad-based modernization and replatforming of enterprise data infrastructure.AI is now driving a broad-based modernization and replatforming of the data infrastructure stack

Competitive landscape

NetApp secured multiple wins by displacing legacy, flash-only, and existing competitors across various sectors.Wins like this where a customer and trust their most demanding workloads to NetApp are leading indicators of our expanding role in the market
The company won approximately 350 AI and data lake modernization deals during the first quarter.In Q1, we won approximately 350 AI and data lake modernization deals, up significantly from a year ago.

Macroeconomic environment

Management operated through a challenging component cost environment while managing supply and inventory levels.even in a challenging component cost environment

Growth opportunities and strategies

NetApp completed the acquisition of DataPelago to bolster its AI data infrastructure capabilities for in-place data processing.we acquired DataPelago, a recognized innovator in AI data infrastructure.
At the start of the second quarter, the company acquired JetStream to enhance cloud-native disaster recovery for VMware environments.At the start of Q2, we acquired JetStream, a leader in cloud native disaster recovery for VMware environments.

Financial guidance and outlook

For the second quarter of fiscal 2027, NetApp expects revenue of $2.1 billion, plus or minus $75 million.We expect revenue to be $2.1 billion, plus or minus $75 million.
Second quarter gross margin is projected to be in the range of 67% to 68%.We expect gross margin to be in the range of 67% to 68%
Second quarter operating margin is expected to be between 30.9% and 31.9%.We expect operating margin to be in the range of 30.9% to 31.9%.
Second quarter earnings per share are forecasted to range from $2.54 to $2.64.We expect earnings per share to be in the range of $2.54 and $2.64
For the full fiscal year 2027, revenue is raised to a range of $7.975 billion to $8.225 billion.We now expect fiscal year 2027 revenue to be in the range of $7.975 billion to $8.225 billion.
Full-year gross margin is anticipated to be between 68.1% and 69.1%.We expect gross margin to be in the range of 68.1% to 69.1%.
Full-year operating margin is raised to a range of 30.3% to 31.3%.We are raising operating margin to be in the range of 30.3% to 31.3%.
Full-year earnings per share are increased to a range of $9.73 to $10.03.We are raising earnings per share to be in the range of $9.73 to $10.03.

Q1 FY2027 results

Metric	Result	Change
Revenue	$2.03 billion	Up 30% year-over-year
Non-GAAP EPS	$2.58	Up 66% year-over-year
Gross margin	70.6%	Down 50 basis points year-over-year
Operating margin	31.9%	Up 6.1 percentage points year-over-year
All-flash array revenue	$1.31 billion	Up 47% year-over-year
Public cloud revenue	$206 million	Up 28% year-over-year

How management sounded

Positive (+45 on our -100 to +100 scale). Management expressed strong confidence following a record quarter and a material upward revision to full-year guidance, driven by broad-based demand and accelerated AI adoption. Management sounded more upbeat than on 62% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

Sustainability of product gross margins amidst component cost pressures.
The pace of customer adoption for AI and data lake modernization deals.
Execution of recently acquired technologies including DataPelago and JetStream.

Earlier calls

Q4 FY2026 (May 28, 2026), tone Balanced: NetApp reported record fourth quarter and fiscal year 2026 results, driven by strong public cloud, all-flash storage, and AI adoption.

Frequently asked questions

Did NetApp beat earnings in Q1 FY2027?

Yes, NetApp reported non-GAAP earnings per share of $2.58, exceeding the high end of its guidance range and growing 66% year-over-year.

What is NetApp's revenue guidance for Q2 FY2027?

NetApp expects second-quarter revenue to be $2.1 billion, plus or minus $75 million, which implies approximately 23% year-over-year growth at the midpoint.

How much did NetApp raise its full-year revenue outlook?

NetApp raised its full-year fiscal 2027 revenue guidance to a range of $7.975 billion to $8.225 billion, representing an increase of $650 million compared to prior guidance at the midpoint.

Sources and method

Dombey's summary of the NetApp Q1 FY2027 earnings call held Sep 2, 2026, written from the call itself. Every figure on this page was checked against what was said on the call, and quoted lines are management's own words; we do not add estimates or prices. The tone score is our read of management's wording, guidance and answers. Check figures against the company's SEC filings before acting. This is research, not investment advice.

Updated Nov 9, 2026. All earnings call analyses

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