NetApp's Flash Business and Keystone Storage Drive 14% Gain in Past Month

NetApp shares have gained 14.2% in the past month, outperforming the Computer Storage Devices Industry and the S&P 500 composite. The company's strength in flash business, public cloud segment, and emerging opportunities in cloud/AI bode well for NetApp. Keystone storage-as-a-service offering has been gaining traction, with revenues growing 80% YoY in Q1. NetApp's partnerships with major hyperscalers solidify its position in the cloud infrastructure space, poised for growth as enterprises migrate workloads to the cloud. The company has a strong capital deployment with $3.32 billion in cash, cash equivalents, and investments.

NetApp Inc. (NASDAQ: NTAP) reported its second quarter earnings for fiscal year 2025, showcasing a robust performance in key segments and solidifying its position in the cloud and AI infrastructure market. Despite a slight uptick in revenue, the market reacted negatively, reflecting investor concerns. However, the company's management highlighted strong enterprise demand in the Americas for all-flash and cloud storage solutions, offsetting weakness in the U.S. public sector and select European regions [1].

Key financial highlights include:
- Revenue: $1.56 billion vs. analyst estimates of $1.55 billion, a 1.2% year-on-year growth and a 0.9% beat.
- Adjusted EPS: $1.55 vs. analyst estimates of $1.54, a 0.7% beat.
- Adjusted EBITDA: $452 million vs. analyst estimates of $455.1 million, a 29% margin and a 0.7% miss.

Management reconfirmed its full-year revenue guidance of $6.75 billion at the midpoint and Adjusted EPS guidance of $7.75 at the midpoint. The company's operating margin improved to 19.8% from 18.3% in the same quarter last year.

During the earnings call, analysts posed several questions, which provided insights into NetApp's strategic direction and challenges. For instance, Krish Sankar (TD Cowen) inquired about the deceleration in all-flash revenue growth, while Eric Woodring (Morgan Stanley) questioned the sustainability of higher public cloud margins. CEO George Kurian addressed these concerns, attributing the slower growth to softness in the U.S. public sector and EMEA, and expecting improvement in future quarters [1].

NetApp's shares have gained 14.2% in the past month, outperforming the Computer Storage Devices Industry and the S&P 500 composite. The company's strength in the flash business, public cloud segment, and emerging opportunities in cloud/AI bode well for its future prospects. Keystone storage-as-a-service offering has been gaining traction, with revenues growing 80% YoY in Q1. NetApp's partnerships with major hyperscalers solidify its position in the cloud infrastructure space, poised for growth as enterprises migrate workloads to the cloud. The company has a strong capital deployment with $3.32 billion in cash, cash equivalents, and investments [2].

Analysts will focus on the pace of AI infrastructure wins, sustained growth and profitability in first-party and marketplace cloud storage services, and margin improvement as product mix shifts toward software and services in the upcoming quarters. Progress toward broader adoption of Keystone and execution in recovering public sector and EMEA markets will also be key areas to watch.

References:
[1] https://finance.yahoo.com/news/5-most-interesting-analyst-questions-053044453.html
[2] https://futurumgroup.com/insights/netapp-q1-fy-2026-earnings-show-stable-revenue-and-cloud-momentum/