NetApp’s Q1 Earnings Fuel 4.54% Surge and 178th Volume Rank as Revenue Surpasses Estimates and Margins Pressured

NetApp (NTAP) closed at $116.01 on August 28, 2025, with a 4.54% intraday gain, driven by strong Q1 2026 earnings results. The stock saw a 43.39% surge in trading volume, reaching $540 million, ranking 178th in market activity. The company reported $1.56 billion in revenue, surpassing estimates, with all-flash array sales rising 6% to $893 million and public cloud revenue growing 18% excluding divested Spot operations.

Management highlighted robust demand for AI infrastructure and data lake solutions, securing 125 deals in Q1. Hybrid cloud revenue reached $1.4 billion, while deferred revenue climbed 9% to $4.53 billion. Free cash flow totaled $620 million, with $300 million allocated to share repurchases. However, gross margins dipped to 71.1%, pressured by cost increases and product mix shifts, particularly in high-performance flash segments.

Regional challenges emerged, with U.S. public sector and EMEA markets showing weakness. CFO Wissam Jabre noted macroeconomic caution and competitive pressures in the all-flash market. Public cloud gross margins improved to 80.1%, driven by software content growth, but product margins are expected to stabilize gradually in the second half of 2026.

Analysts raised price targets post-earnings, though margin concerns persist. The stock’s 17.44% gain over six months reflects confidence in cloud growth, but near-term risks include regional demand fluctuations and margin compression. The company reiterated $6.625–$6.875 billion annual revenue guidance, with non-GAAP operating margins projected at 28–29% for Q2.

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