NetApp's Q3 2025: Dissecting Contradictions in Sales Execution, Financial Outlook, and Product Strategy

These are the key contradictions discussed in NetApp's latest 2025 Q3 earnings call, specifically including: Sales Execution and Competitive Dynamics, Financial Projections, and Product Strategy:



Revenue Performance:
- NetApp reported revenue growth of 2% year-over-year for Q3 FY 2025.
- The growth was driven by strong performance in AI and cloud storage services, despite challenges in closing large transactions due to execution issues and cautiousness in certain regions.

Hybrid Cloud and AI Business Expansion:
- Hybrid cloud revenue saw a 1% increase, while the all-flash array business reached an annualized revenue run rate of $3.8 billion, growing 10%.
- The company's AI business performed ahead of expectations, with over 100 AI infrastructure and data lake modernization wins, contributed by strong demand for AI solutions and data lake optimization.

Public Cloud and Strategic Partnerships:
- Public cloud revenue increased by 15%, driven by strong growth in first-party and marketplace storage services, which accounted for over 70% of Q3 revenue.
- The sale of the Spot by NetApp business to Flexera and strategic partnerships with hyperscalers like Amazon FSx and Microsoft Azure NetApp Files further bolstered cloud segment growth.

Operating Margin and Cost Management:
- NetApp maintained an operating margin 30% above expectations, despite being below revenue guidance, assisted by operational discipline and expense control.
- The company adjusted its outlook due to the Spot divestiture, currency impacts, and global public sector слабость, resulting in a slight reduction in full-year guidance.

Product Innovation and Strategic SSD Purchases:
- New products like entry-level and midrange ASA systems were introduced to support hybrid cloud environments, enhancing data mobility and reducing costs.
- Strategic SSD purchases made in 2024 and 2025 have helped maintain competitive margins; however, current market conditions suggest no further pre-buys are planned.