8-K: NetApp Reports Record Q2 FY26 Earnings, Driven by AI and Cloud

NetApp announced strong second quarter fiscal year 2026 results with record non-GAAP EPS and operating margins, fueled by demand for AI solutions and cloud storage services.

Summary

• Net revenues for Q2 FY26 reached $1.71 billion, a 3% increase year-over-year.
• GAAP net income per share was $1.51, up 6% year-over-year, while non-GAAP net income per share hit a record $2.05, a 10% increase.
• All-flash array revenue grew 9% year-over-year to $1.0 billion, achieving an annualized net revenue run rate of $4.1 billion.
• Public Cloud revenue was $171 million, with first-party and marketplace storage services growing 32% year-over-year.
• Billings increased 4% year-over-year to $1.65 billion, marking the eighth consecutive quarter of year-over-year growth.
• Record GAAP operating profit of $399 million and record non-GAAP operating profit of $530 million were achieved.
• Record GAAP operating margin of 23.4% and non-GAAP operating margin of 31.1% were reported.
• The company returned $353 million to stockholders through share repurchases and cash dividends.
• NetApp unveiled significant innovations in data, AI, cyber resilience, and cloud, including NetApp AFX, NetApp AI Data Engine, and enhanced Ransomware Resilience capabilities.
• Strategic partnerships were strengthened with Google Cloud, Amazon FSx, Azure NetApp Files, Cisco, and Red Hat, focusing on hybrid cloud and AI integration.

Sentiment

Score: 9

Explanation: The filing presents exceptionally strong financial results with record-breaking metrics in key areas like non-GAAP EPS, operating profit, and operating margins. Significant growth in strategic segments like AI solutions, all-flash arrays, and public cloud services, coupled with extensive product innovation and strong industry recognition, indicates robust business health and future potential. The positive outlook for Q3 and full FY26 further reinforces a highly favorable sentiment.

Positives

• Net revenues increased 3% year-over-year to $1.705 billion.
• Record non-GAAP net income per share of $2.05, a 10% increase year-over-year.
• Record GAAP operating profit of $399 million and non-GAAP operating profit of $530 million.
• Record GAAP operating margin of 23.4% and non-GAAP operating margin of 31.1%.
• All-flash array revenue grew 9% year-over-year to $1.0 billion, with an annualized run rate of $4.1 billion.
• Public Cloud first-party and marketplace storage services grew 32% year-over-year.
• Billings increased 4% year-over-year to $1.646 billion, marking the eighth consecutive quarter of growth.
• Cash provided by operations increased 21% year-over-year to $127 million.
• Strong product innovation with new offerings like NetApp AFX, AI Data Engine, Keystone STaaS for Enterprise AI, and enhanced Ransomware Resilience.
• Expanded strategic partnerships with major cloud providers (Google Cloud, AWS, Azure) and technology leaders (NVIDIA, Cisco, Red Hat).
• Significant industry recognition, including being named a Leader in the 2025 Gartner Magic Quadrant for Enterprise Storage Platforms and multiple GigaOm Radar reports.

Risks

• Ability to keep pace with rapid industry, technological, and market trends and changes.
• Ability to execute the evolved cloud strategy and introduce and gain market acceptance for products and services.
• Ability to maintain customer, partner, supplier, and contract manufacturer relationships on favorable terms and conditions.
• Global political, macroeconomic, and market conditions, including inflation, fluctuating interest rates, tariffs, changes in trade policy, regulations, monetary policy shifts, recession risks, and foreign exchange volatility.
• Impact of new or ongoing geopolitical conflicts and sanctions.
• Adoption or changes to laws, regulations, standards, or policies affecting operations, products, services, the storage industry, or AI usage.
• Material cybersecurity and other security breaches.
• Impact of supply chain disruptions on business operations, financial performance, and results of operations.
• Changes and related uncertainty in U.S. government spending or policy.
• Changes in overall technology spending by customers.
• Revenue seasonality.
• Changes in laws or regulations, including those relating to privacy, data protection, and information security.
• Timing of orders and their fulfillment.
• Ability to manage gross profit margins, including managing component costs.

Future Outlook

For the third quarter of fiscal year 2026, NetApp expects net revenues between $1.615 billion and $1.765 billion, GAAP EPS in the range of $1.52 to $1.62, and non-GAAP EPS between $2.01 and $2.11. For the full fiscal year 2026, net revenues are projected to be between $6.625 billion and $6.875 billion, with GAAP EPS ranging from $5.82 to $6.12 and non-GAAP EPS from $7.75 to $8.05. The company anticipates continued strong demand for its AI solutions, cloud storage services, and all-flash offerings, positioning it to outpace market growth and capture additional market share.

Management Comments

• "Through strong execution and operational discipline, we delivered an outstanding second quarter with revenue growth driven by strong demand for our AI solutions, first-party and marketplace cloud storage services, and all-flash offerings."
• "Our close alignment with customers' key data initiatives has positioned us to capitalize on our significant competitive advantages."
• "We remain confident that our visionary approach to a data-driven future will enable us to outpace market growth and capture additional market share."

Industry Context

NetApp's strong performance, particularly in AI solutions and public cloud storage services, aligns with broader industry trends emphasizing data-driven innovation, hybrid cloud adoption, and enhanced cyber resilience. The company's focus on integrating AI capabilities into its data platform, exemplified by NetApp AFX and AI Data Engine, positions it well within the rapidly expanding AI market. Its continued growth in all-flash arrays and public cloud services reflects the ongoing enterprise shift towards high-performance, scalable, and flexible data infrastructure, crucial for modern workloads and digital transformation initiatives. Strategic partnerships with major cloud providers and technology vendors further solidify its position in a competitive landscape where integrated solutions are key.

Comparison to Industry Standards

• Recognized as a Leader in the 2025 Gartner Magic Quadrant for Enterprise Storage Platforms, reflecting strong Completeness of Vision and Ability to Execute, indicating a leading position against competitors in the enterprise storage market.
• Named a Leader and Fast Mover in the GigaOm Radar for Object Storage 2025, ranking among the top vendors for feature depth and forward-looking development, demonstrating strong competitive standing in object storage.
• Identified as a Leader and Fast Mover in the GigaOm Radar for Globally Distributed File Systems 2025, ranking jointly second in overall business value for its mature hybrid cloud data fabric capabilities, showcasing strong performance in distributed file systems.
• The partnership with Google Cloud to enhance Google Cloud NetApp Volumes with Gemini Enterprise integration for AI applications positions NetApp competitively against other cloud storage providers by offering advanced AI capabilities.
• The collaboration with Cisco to integrate Nexus switches into NetApp AFX architecture for AI-ready storage and networking provides a differentiated, high-performance solution for AI workloads compared to general-purpose storage offerings.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, record earnings, consistent dividend payments ($0.52 per share), and ongoing share repurchase program ($353 million returned to stockholders).
• Customers: Positive impact through continuous product innovation (e.g., NetApp AFX, AI Data Engine, enhanced Ransomware Resilience), expanded cloud integrations (Google Cloud, AWS, Azure), and improved performance/security features.
• Employees: Positive impact through stock-based compensation and potential for growth within a company demonstrating strong market performance and strategic vision.
• Partners: Positive impact from expanded collaborations and integrations (e.g., Cisco, Red Hat, NVIDIA), creating new opportunities and strengthening ecosystem relationships.
• Suppliers/Creditors: Stable or positive impact due to the company's strong financial health and operational discipline.

Next Steps

• Pay the next cash dividend of $0.52 per share on January 21, 2026, to stockholders of record as of January 2, 2026.
• Continue to execute on the evolved cloud strategy and introduce new products and services to gain market acceptance.
• Maintain and strengthen customer, partner, supplier, and contract manufacturer relationships.
• Manage gross profit margins, including component costs, amidst global macroeconomic conditions.
• Host a conference call to discuss these results on November 25, 2025, at 2:30 p.m. Pacific Time.

Key Dates

Recommendation

NetApp's Q2 FY26 results demonstrate exceptional performance, with record non-GAAP EPS, operating profit, and operating margins. The company is strategically positioned in high-growth areas like AI, all-flash storage, and public cloud services, showing significant year-over-year growth in these segments. Extensive product innovation, strong partnerships with industry leaders, and positive industry recognition underscore its competitive advantage. The optimistic financial outlook for Q3 and the full fiscal year 2026, combined with consistent shareholder returns through dividends and buybacks, indicates robust future potential and makes it a compelling 'strong buy' for investors.

Keywords

NetApp, NTAP, Earnings, Financial Results, Q2 FY26, AI Solutions, Cloud Storage, All-Flash Array, Data Infrastructure, Cyber Resilience, Hybrid Cloud, Public Cloud, Storage-as-a-Service, Kubernetes, Ransomware Protection, Data Management