NetApp, Inc. Q1 FY2026 earnings call

• Delivered solid start to fiscal year 2026 with revenue of $1.56 billion, above guidance midpoint. Robust performance in The Americas enterprise offset declines in US public sector and EMEA.
• Strong demand for all-flash offerings, first-party and marketplace cloud storage services, and AI solutions. All-flash array revenue grew 5% Y/Y to $893 million, annualized run rate $3.6 billion. 45% of installed base systems under active support are all-flash.
• Secured wins highlighting intelligent data infrastructure platform, e.g., a leading global bank chose NetApp for managing sensitive data in a hybrid cloud data lake.
• Enhanced first-party cloud storage services, with public cloud services revenue up 1% Y/Y. Closed ~125 AI infrastructure and data lake modernization deals in Q1. Expanded AI ecosystem with Intel and NVIDIA collaborations.

In Q1, NetApp's all-flash array revenue grew 5% year-over-year to $893 million, with an annualized run rate of $3.6 billion. 45% of systems in the installed base under active support contracts are all-flash. Hybrid cloud revenue for Q1 was $1.4 billion, up 1% year-over-year, driven by support revenue of $647 million growing 3% and professional services revenue of $97 million growing 18%. Product revenue was $654 million, down 2% year-over-year. Public cloud revenue was $161 million, up 1% year-over-year. Deferred revenue ended Q1 at $4.53 billion, up 9% year-over-year.

• Q2 guidance: revenue $1.69 billion ±$75M, midpoint 2% Y/Y growth; consolidated gross margin 71% ±0.5%; operating margin 28%-29%; diluted EPS $1.84-$1.94.
• Full-year 2026: total revenue $6.625B-$6.875B, midpoint 3% Y/Y growth; diluted EPS $7.60-$7.90.

Q: All-flash revenue growth has decelerated. Is it pricing, demand, or something else?

A: Wissam Jabre said dynamics were anticipated, with softness in US public sector offset by Americas, and product gross margin affected by cost dynamics and mix. Anticipates product margin to improve for the rest of the year.

Q: Does the availability of 128-terabyte QLC-based NAND impact search solutions for AI?

A: George Kurian stated NetApp has a broad range of NAND technologies and uses the right configuration for different use cases, not gated by QLC-based NAND.

Q: Thoughts on seasonality into January quarter?

A: George Kurian said they're focused on executing quarter by quarter, confident in the outlook but noting ongoing external uncertainty.