NetApp shares decline 7% after mixed Q1 earnings report

NetApp's Q1 earnings per share of $1.55, excluding special items, and revenue of $1.56 billion slightly exceeded analyst expectations. However, the company's shares fell 7% before the US market opened due to mixed results. NetApp's performance outlook largely aligned with analyst estimates.

NetApp Inc. (NTAP) reported its first quarter fiscal year 2026 earnings on August 27, 2025, with net revenues of $1.56 billion, slightly exceeding analyst expectations of $1.54610 billion. However, the company's earnings per share (EPS) of $1.15 fell short of the estimated $1.19, leading to a 7% drop in shares before the US market opened. The company's performance largely aligned with analyst estimates.

NetApp's Hybrid Cloud segment generated $1.398 billion, while the Public Cloud segment contributed $161 million, both reflecting a 1% growth year-over-year. Despite these gains, the company's net income decreased by 6% to $233 million, and its EPS dropped by 2% to $1.15, missing analyst expectations.

The company highlighted several financial milestones, including a record first-quarter cash flow from operations of $673 million and a record free cash flow of $620 million. NetApp also returned $404 million to shareholders through share repurchases and dividends, reflecting its commitment to shareholder value.

George Kurian, Chief Executive Officer of NetApp, commented on the company's performance, stating, "We delivered a solid start to fiscal year 2026 as organizations are increasingly choosing NetApp to build future-proof AI-ready data infrastructure."

Analysts noted that while NetApp's revenue growth was modest, its performance in the all-flash storage market and expanding public cloud services demonstrated resilience and growth potential. However, the decline in net income and EPS indicates potential challenges in maintaining profitability amidst competitive pressures and market dynamics.

NetApp provided Q2 revenue guidance of $1.69 billion (±$75M), signaling 2% year-over-year growth at the midpoint. For fiscal 2026, the company expects total revenue between $6.625B and $6.875B, with diluted EPS guidance of $7.60–$7.90. Q2 diluted EPS is projected at $1.84–$1.94.

References:
[1] https://www.gurufocus.com/news/3082995/netapp-inc-ntap-q1-fy2026-earnings-revenue-surpasses-estimates-at-156-billion-eps-misses-at-115
[2] https://www.ainvest.com/news/netapp-2026-q1-earnings-slight-revenue-growth-earnings-decline-2508/
[3] https://futurumgroup.com/insights/netapp-q1-fy-2026-earnings-show-stable-revenue-and-cloud-momentum/