Key Takeaways
NetApp's fiscal year 2025 (ended April 25, 2025) delivered the strongest results in the company's post-data-fabric strategic repositioning, with total revenue of approximately $6.55B growing approximately 6% from $6.23B in FY2024, and all-flash storage product revenue growing approximately 15-18% as cloud and AI workload demand accelerated NetApp's premium AFF (All Flash FAS) and ASA (All-SAN Array) platforms. Non-GAAP EPS reached approximately $7.50-7.80, growing approximately 10-12% from FY2024's approximately $6.80, driven by both revenue growth and disciplined operating expense management that expanded non-GAAP operating margins to approximately 26-27%. The cloud storage services segment — NetApp's hyper-scaler partnerships with AWS (FSx for NetApp ONTAP), Azure (Azure NetApp Files), and Google Cloud (NetApp Volumes) — reached approximately $600-650M in annual recurring revenue and grew approximately 25-30%, demonstrating that NetApp's ONTAP storage operating system has successfully embedded itself in public cloud infrastructure as a first-party service. The FY2026 thesis centers on whether the combination of cloud storage ARR growth and AI-driven all-flash product demand creates a durable double-digit revenue growth trajectory for NetApp, or whether the cloud ARR business plateaus and on-premises all-flash demand cycles with enterprise IT spending.
NetApp was founded in 1992 by David Hitz, James Lau, and Michael Malcolm in Sunnyvale, California, building the first network-attached storage (NAS) appliances for the nascent Unix workstation market. The company grew into the second-largest enterprise storage vendor (behind EMC/Dell) through the 1990s-2000s, competing primarily on the ONTAP operating system — a proprietary storage OS known for its data management capabilities, snapshot technology, and multi-protocol support (NFS, CIFS, iSCSI) that made it the preferred storage platform for enterprise file workloads. The strategic challenge of the 2010s was the disruption from all-flash storage (Pure Storage, Dell EMC's All-Flash Arrays) and public cloud object storage (AWS S3, Azure Blob) eating into NetApp's traditional spinning-disk NAS market. CEO George Kurian, who took over in 2015, executed the pivotal strategic shift: rather than competing against public cloud, NetApp partnered with hyperscalers to offer ONTAP as a first-party cloud storage service, creating the Hybrid Cloud Storage category that the company now defines. This positioned ONTAP as infrastructure that runs equally well on-premises and in public cloud — a genuinely differentiated position versus pure-play all-flash vendors or pure public cloud storage services.
The ONTAP partnership strategy — where AWS, Azure, and Google Cloud resell and support NetApp ONTAP-based cloud storage as their own branded services — is unusual in enterprise technology: major cloud providers rarely give a third-party OS this level of first-party integration and co-marketing. The economics are attractive for all parties: cloud providers earn infrastructure margin and enhance their enterprise storage offerings with ONTAP's data management capabilities; NetApp earns recurring software royalties and retains strategic relevance as enterprises run workloads across on-premises and cloud environments.
Business Structure
NetApp reports revenue in two categories.
Hybrid Cloud (Products and Services) (~$5.9B revenue, ~90% of total in FY2025): All-flash storage hardware (AFF C-Series, AFF A-Series, ASA block storage arrays), hybrid flash systems, and associated support/maintenance contracts. This segment is driven by enterprise refresh cycles, new workload deployments (database modernization, AI training data management, analytics), and the ongoing replacement of spinning-disk NAS with all-flash. AI-related storage (managing training datasets, model checkpoints, and inference serving data) has become an incremental growth driver.
Public Cloud (~$650M revenue, ~10%): Cloud storage services revenue from the ONTAP-based partnerships (AWS FSx for NetApp ONTAP, Azure NetApp Files, Google Cloud NetApp Volumes) plus NetApp's cloud management software (Cloud Insights, BlueXP data services). ARR for cloud services reached approximately $600-650M in FY2025, growing approximately 25-30% annually. The cloud segment carries lower gross margins than hardware (approximately 70% versus 55-60% for products) but provides recurring, predictable revenue that improves earnings quality.
Key Core Metrics Performance
Revenue and All-Flash Growth (FY2021–FY2025)
All-flash storage products are NetApp's growth engine, driven by price per TB declining to parity with or below spinning disk on a total-cost-of-ownership basis.
| Fiscal Year | Total Revenue | All-Flash Revenue | Cloud ARR | YoY Revenue |
|---|---|---|---|---|
| FY2021 (ended Apr 2021) | $5.74B | ~$2.5B | ~$320M | +0.9% |
| FY2022 (ended Apr 2022) | $6.32B | ~$2.9B | ~$415M | +10.1% |
| FY2023 (ended Apr 2023) | $6.36B | ~$3.1B | ~$490M | +0.6% |
| FY2024 (ended Apr 2024) | $6.23B | ~$3.3B | ~$510M | -2.0% |
| FY2025 (ended Apr 2025) | ~$6.55B | ~$3.8B | ~$635M | ~+5.2% |
The FY2022-FY2024 revenue stagnation reflected enterprise IT spending caution and post-pandemic normalization. FY2025's recovery to approximately 5% growth was driven by cloud ARR expansion and AI-related all-flash storage demand.
Non-GAAP Operating Margin (FY2021–FY2025)
NetApp has sustained non-GAAP operating margins above 25% through careful expense management, making it one of the most profitable enterprise storage companies.
| Fiscal Year | Revenue | Non-GAAP Op. Income | Non-GAAP Op. Margin |
|---|---|---|---|
| FY2021 | $5.74B | $1.38B | 24.0% |
| FY2022 | $6.32B | $1.56B | 24.7% |
| FY2023 | $6.36B | $1.73B | 27.2% |
| FY2024 | $6.23B | $1.68B | 27.0% |
| FY2025 | ~$6.55B | ~$1.74B | ~26.6% |
Margin sustainability above 26% reflects the high gross margin of software and cloud services (approximately 70%+) mixing favorably with the hardware gross margin of approximately 55-60%. Opex discipline — modest headcount growth against revenue expansion — has kept margins in the 26-27% range.
Non-GAAP EPS and Capital Return (FY2021–FY2025)
| Fiscal Year | Non-GAAP EPS | Shares Repurchased | Dividend |
|---|---|---|---|
| FY2021 | $4.47 | ~$0.5B | ~$0.25B |
| FY2022 | $5.53 | ~$1.0B | ~$0.28B |
| FY2023 | $6.40 | ~$1.0B | ~$0.30B |
| FY2024 | $6.81 | ~$0.9B | ~$0.32B |
| FY2025 | ~$7.65 | ~$0.9B | ~$0.35B |
Share repurchases have consistently reduced the diluted share count from approximately 240M in FY2021 to approximately 195M in FY2025, adding approximately 3-4 percentage points to annual EPS growth from share count reduction alone.
Cloud ARR Bridge (FY2022–FY2025)
Cloud ARR is the most valuable and fastest-growing component of NetApp's revenue, commanding a premium software valuation multiple.
| Fiscal Year | Cloud ARR | YoY Growth |
|---|---|---|
| FY2022 | ~$415M | +30% |
| FY2023 | ~$490M | +18% |
| FY2024 | ~$510M | +4% |
| FY2025 | ~$635M | ~+25% |
The FY2024 cloud ARR deceleration to 4% reflected slower Azure NetApp Files adoption and a one-time inventory digestion at AWS; the FY2025 re-acceleration to ~25% was driven by Google Cloud NetApp Volumes' commercial launch and renewed Azure ANF growth as enterprises adopted more hybrid workloads.
Market Evaluation
NetApp trades at approximately 18-22x forward non-GAAP earnings, a mid-tier multiple that reflects a constructive but not premium view of the hybrid cloud storage opportunity. The bull case is structural: ONTAP is embedded in thousands of enterprise environments and is the only storage OS available natively on all three major public clouds, creating a hybrid infrastructure moat that competitors (Pure Storage, Dell EMC) cannot easily replicate. Cloud ARR growing at 25%+ with software margins shifts the revenue mix toward high-multiple recurring software, and if cloud ARR reaches $1.5B+ by FY2028, it could warrant reclassifying NetApp as a cloud software company rather than a hardware storage vendor — triggering a multiple re-rating. The bear case is commoditization: AWS S3, Azure Blob, and Google Cloud Storage are structurally cheaper for new workloads, and as enterprises migrate legacy NAS workloads to object storage, the addressable market for ONTAP-based storage shrinks over time. Dell EMC's PowerStore and Pure Storage's FlashArray also compete aggressively in the all-flash product segment, limiting market share gains.
ONTAP Cloud Partnerships and AI Storage Demand
NetApp's cloud storage partnerships represent a structural competitive position built over the past eight years. The AWS FSx for NetApp ONTAP service, launched in 2021, allows enterprises to run ONTAP natively within AWS without managing their own hardware; Azure NetApp Files provides equivalent functionality within Microsoft Azure; and Google Cloud NetApp Volumes (launched in commercial GA in 2023) extends the model to GCP. These are not simple OEM or reseller arrangements — each major cloud provider has made multi-year commitments to co-develop, market, and support the service as a first-party offering, embedding ONTAP's data management capabilities directly into their enterprise storage portfolios.
The AI storage opportunity for NetApp is distinct from Pure Storage's primary positioning: while Pure's FlashBlade competes for AI training cluster storage (high-throughput, parallel file access for training jobs), NetApp competes for AI data pipeline storage — the preprocessing, feature engineering, and inference serving data management that surrounds training clusters. Enterprise AI use cases typically involve hundreds of terabytes of training data that must be managed, versioned, and made accessible across on-premises environments and multiple clouds — exactly the hybrid data management use case where ONTAP's multi-cloud presence is differentiating. NetApp has disclosed that AI-related storage queries on its cloud platforms and on-premises systems grew significantly in FY2025, and the company is positioning ONTAP's ransomware protection, immutable snapshot, and data tiering capabilities as essential for AI model governance and compliance requirements.