NTAP - Earnings call transcript Q3 2025

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Operator

Good day, and welcome to the NetApp Third Quarter of Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kris Newton, Vice President, Investor Relations. Please go ahead.

Kris Newton

Hi, everyone. us. joining for Thanks are George today Mike and Berry. our me Kurian; CEO, CFO, With being will live replay call webcast This is and website netapp.com. on at be our for available

with make During future we without revenue, expectations returns fiscal limitation, the shareholder and forward-looking year respect for including, to and guidance profitability initiatives quarter statements future today's and prospects, our will and other regarding and fourth call, our XXXX outlook financial our strategies. projections growth and and

are various to may materially. to statements cause our which These and uncertainties, subject risks actual differ results

more documents the time and projections. For update information, website, Form file please on We and Form the refer including with to we disclaim time and forward-looking most obligation recent to XX-K our to statements our our from SEC XX-Q. any

the turn measures all Reconciliations website. GAAP will to unless on non-GAAP call estimates the financial over I'll of be our otherwise are George. available indicated. non-GAAP now call, During presented to

George Kurian

QX we XX% above management In yielding of of margin everyone. disciplined Welcome, operating FY the our growth Kris. delivered of expectations. year-over-year continued 'XX, Thanks, business and X% revenue

inconsistent execution pipeline a on on this, some scrutiny to sales Recognizing tighter Although workloads, performance, line higher through remain end AI in storage our QX targets positioned within satisfied customers are resulted plans. achieve we progression had were the choice with the of sight of their when services first-party data-driven bright slipping we and the as AI supplier deal level of marketplace instituted and We well and closing top the our other our for controls guidance out until in quarter. with range, line not deals have we cloud quarter. spots with of of

ago, and of a expect rate of year systems, by slip these business delivered revenue capacity block to annualized storage grew execution, X%, all-flash the an C-Series have number Already, arrays, to improve $X.X scale-out our run flash momentum. QX solid actions closed. a cloud sales and systems and impacted storage our hybrid billion, revenue array and Compared XX% We ASA storage deals all-flash execution although object growth. our all increased enhance grid will

a Storage revenue strong XX% Service another quarter as also with our year-over-year. growing offering had almost Keystone,

are primary were our position. solutions earning to storage with of ground We gaining choice market and customer's for a report, our for the XXXX recognition Gartner's efforts. named industry-leading in our a recently We Customer Voice testament strong

mid-range C complement innovation the At in We new these a introduced blistering and fiscal 'XX. Series In introduced A-Series high-performance the ASA midrange continue we ASA entry flash high-end systems pace. to deliver and arrays, capacity we QX, start of to products year product AFF, at and completing the earlier lines. introduced QX, entry-level of refresh

protection. scale customers tiering These and data costs remote branch smaller make and new by to scale a it customers storage locations, at streamlined systems point capabilities to data for through operations starting up consistent, from ONTAP, and easier deliver or with reduce integrated simplicity they to enable powered expand

for right its CXX space could spend price at and locations unified chose an certifications interface each. a their financial unify support scalable and to provide hybrid are cloud multiple its solution locations, with real-time proven for traction management across AFF edge, and of new name performance, a ASF to us across AXX a multi-cloud with products services for support U.S.-based The consistent our the AI-enabled electronics already native the protection ability that including to ability storage ransomware detection security core gaining a broad customers, competition strong the requiring manufacturer different comprehensive the point single environments firm ahead puts selected data container

large the see assets. In enterprise opportunity AI open and business expectations data structured to continue their for modernization as of XXX data and of customers with QX, our performed market AI lake solutions AI and a can infrastructure demand view seek We growth wins. unified begins our in to over AI again for ahead

geographies of size storage in AI and as These their wins as service included varied service span deploying providers number a a offerings. for foundation NetApp the

For many environments storage. with AI widespread journey organizations, data to enterprise the use lake modernizing object begins of to

object improved private quarter, In requirements including lowering rack space solutions storage storage, platform storage data foundational and with grid cooling the storage as density bank the U.S. enhanced and a costs, scalability grid and and and optimization. lake its for cloud object selected power its of we double deployments, flexibility leading retail our reducing AI

with initial and RAG. deployment year. size subsequent The calendar for in phases are the further evolution, petabytes AI production in deploying Other triple expected later models Gen inferencing this and enterprises AI to in is along X

training world's inferencing and struggled the siloed banks its of for largest tools platforms One workloads. with and scalability, data AI Gen disparate

the and of enabled and selected deal. our a as GenAI Foundation these Storage to beat win factory, data challenges, for out tiering deliver secure competition into address NetApp factory, movement AI model with and us their to the economical To they traceability and the the ability solution for checkpoints model

by our public Spot Now of with business business. sale honed to cloud. focus public We cloud turning the further NetApp the the of

products close the Mike complete Pinos financial more March. [ deal early on a will based of from to us and impact with customers benefit to these spot important Flexera. customers our of are portfolio, ] the share confident will it that expectation the select this sale customers the are assume we you other to from services, in and portfolio was right checker cloud will and As also our many partner that

such differentiated formerly and public cluster. strategy first by Insta complemented As is cloud past, in services party data we've and operational intelligent as Cloud led infrastructure discussed workload highly as services services our the marketplace insights, and known storage cloud Insights data our like by

build to products These a customers with our seamless data multi-cloud. hybrid concert enable across intelligent services in infrastructure cloud hybrid

driving over XX% revenue. over year, segment of last growth again First-party by XX% cloud revenue and NetApp, the marketplace storage QX grew services total from and excluding XX% storage cloud and public segment first-party of up public made Spot well marketplace cloud services

Amazon Google Azure our solutions In the broadening NetApp Microsoft quarter, the Cloud the and announced and the sovereignty partnership Cloud leading received for advancements opportunity. Google strength designation innovations to NetApp volumes files and NetApp ONTAP. FSX for regulated cloud highlight of ONTAP we our with addressable collaboration Ready These and hyperscalers, and volumes

workloads large-scale on into thousands customer applications. migration footprint cloud, containers, tens VMs container The executing low of high XX migrate AWS move NetApp will choose a to to of services to competitor's bank and database based terabytes and they customers FX. of is largely from As a A VMware almost for European performance storage deliver the and TCO. its data composing

management will will savings and FSX bank's reduce file cost the unified block other significant to native compared storage deliver support access to and services ability overhead. its

forward, and focus data Looking securely simply, and the them which clear and to our build to an is power enables infrastructure estate is mission multi-cloud data value infrastructure intelligent Customers sharp. entire and their our sustainably. approach our data management hybrid modern of leverage

organizations, or Our portfolio top been stronger more has aligned priorities. IT to tightly never

it approach treat and data to take QX, the customers and asset for of age and Although standards us our didn't our an to We in visionary broad-based stay to in data-driven AI. we share. enable solutions for to market true as enables customer remains our our perform the enterprise-wide that agile future preference outgrow competitive

near-term tempered We in 'XX, As us remain 'XX All QX. achieve the confident headwinds to we by to the we in and we've back considered, we close goals our actions Day. laid public Mike, Investor out track last sector a Spot resulting decrease are June get year FX execution our will to of ability on slight fiscal global will the from you by financial factors undertaken we However, our year fiscal at out believe guide. hear in to improve expectations divestiture sales our NetApp, as

for last I I successor, your this Jabre, to you the will His past that joins Mike, call, thank years. over lead. partnership March Before us Mike Wissam on [ want ] X earnings XX. the close, is acknowledge

You growth drive performance to value. profitability, and our create shareholder helped tremendous strengthening

NetApp colleague to over you ability partner build I leader quarter. foundation close our been to you've have a on it for a as you in well importantly, helped friend for confident strong am the me. More the hand respected on to as and now and to details wonderful I'll establish.

Michael Berry

Good you I placed NetApp. afternoon, proud confidence greatly everyone, and and and are accomplished very George. I value thank our will all have you you the trust partnership for relationship for the me. thank what They kind words, of we at and in to I'm want always our appreciated.

call. earnings with As sometime now, I it is be the this everyone as knows, baton business usual. some will But for handing after

results. the into jump let's So

the details financial key the into you let walk for get QX, I themes the me Before of through quarter.

numbers all noted. are discussed unless As non-GAAP otherwise reminder, a

our management and yielded revenues towards expectations in line in First, of the QX. operational our end disciplined our EPS guidance margin our operating with guidance above lower despite

QX adjusted for to Second, divestiture by we our have Spot recently Spot and and collectively Cloud fiscal checker, due of our year outlook announced NetApp. 'XX called

and stronger U.S. impact performance. EPS and revenue dollar negative The from our the QX revenue

terms by assumes execution is somewhat Our expected on track our in our back weakness. public of offset forecast that global QX sector

revenue on operating Third, laser-focused generation. cash slightly, has flow and while full guidance reduced remain year margins our free we driving

the our as remain expenses disciplined pricing Towards have and this we to we end as on action year. end, control as taken swift in well QX

over shares share by Finally, million we through and QX to X $XXX million diluted repurchases, year-over-year. and returned share dividends stockholders count reducing

Now increased quarter. billion the to $X.XX of the X% Revenue details of year-over-year.

this $XXX year-over-year Billings revenue our was up constant of quarter currency. the of revenue million of of of declined in $XXX increased was consecutive million billings million Product midpoint growth. and This around guidance, our below year-over-year. roughly FX-driven. year-over-year $XX year-over-year $X.XX was was fifth year-over-year. revenue flat revenue X% of While X% X/X billion our but Support marks X%

year-over-year. Storage grew of which mainly hyperscaler and driven revenue as offering, Public Keystone, services million increased driven a Professional year-over-year, grew by storage $XXX services. $XX XX% Service first-party revenue our marketplace by XX% XX% nearly of million cloud year-over-year,

we $X.X excluding and to XX% but a revenue healthy driven year-over-year by accelerate flat into continued our billion, QX demand constant cloud was environment. basis QX up in year-over-year a year-over-year, revenues, business, on Spot NetApp signaling grew and cloud this by X% currency. year-over-year QX storage expect deferred cloud

up around margin came SSD product is was be X% were gross at plan was RPO obligations we majority the future unbilled XX%, strategic consolidated gross Growth of We key Remaining expect margin gross in remaining Unbilled million purchases $XXX RPO performance Product XX%. QX. to a XX% in our billion. quarter-over-quarter. QX. and QX Keystone approximately growth. indicator in utilize in of $X.X to margin

year. QX profitable continues highly gross improved in of business margins margins be XX% with prior to to gross support recurring from Our cloud XX%. the XX% public

of in proud particularly the margins. X,XXX are improvement basis cloud We point gross public

make to target exit expect our progress cloud towards We on margins public of the high gross end XX%. our to XX% further and 'XX year fiscal long-term of

X% Operating guidance $XXX and of operating points, expenses expectations. operational line X% of margin million again 'XX. execution down revenues $X.XX of and guidance, but of ahead strength was QX by year-over-year with and model from our XX% with business was expense the gross with in margins highlighted disciplined our operating down -- control. offset our QX of below

a million flow and cash $XXX QX in million $XXX million to $XXX ago. free million compared was cash compared a Operating flow year $XXX to ago, was year

resulted SSD cash purchases. QX inventory in QX. strategic of collections, lower previously by and much were X% These cash outflows for year-over-year levels purchases higher lower results flow primarily for higher-than-usual inventory strategic and turns secured driven in Our

fiscal noted, end the see a and of fiscal majority previously of our in 'XX. these commensurate the ending by year to reduction inventory year utilize we As expect purchases

call, the 'XX. expect year don't to cash lower to repeat our on in year due to working we last capital factors mentioned fiscal expect that in As year-over-year related 'XX flow free be we fiscal

In the line XX%, with to increased seasonal in DSOs averages. quarter,

dividends. quarter, and we through returned the repurchases During million to share stockholders $XXX cash

have $XXX million We authorization. remaining approximately repurchase on existing our

billion the and in healthy. $X.X in short-term investments billion Our ended cash against We balance with quarter approximately remains debt. $X sheet

I guidance, guidance last November. our on want the happened I quickly from X level go set changes that Before to updated our through of in

First, the U.S. as seen, strength having we dollar a have negative is all impact reported results. the of on

less expected second half the year fiscal reported impact as to the NetApp, is in EPS. $XX to of 'XX to guidance and compared revenue million previous an $X.XX For our approximately impact

$XX Second, million spot divestiture and will be cloud we revenue transaction early is to around result March, in a largely expected plan in close to neutral QX. The in to this less EPS. in

Now guidance, turning the with full to starting year.

planned growth at and year the $X.XX FX driven for by representing approximately X% of guidance in between midpoint. spot. The is revenue full is full reduction the and year new our $X.XX Our the year-over-year divestiture billion, primarily guidance slight

gross fiscal margin 'XX expect consolidated be approximately year XX%. now We to

XX.X%. We continue year to margin be operating 'XX to to expect in fiscal

expect income interest approximately to be We net $XX million.

rate tax be to XX% a $X.XX, expect at which to in growth XX%, our of $X.XX range expect result, the XX% as the we year-over-year. EPS We to implies midpoint be $X.XX to

Turning our guidance. quarter now to fourth

between billion, at X% We expect which range year-over-year. the billion QX growth revenue and to midpoint implies $X.X $X.XX

margin consolidated XX%, and QX to expect between be We gross be approximately XX% and operating XX%. to margin

expect and be And the to XX% interest $X.XX. our to in to is range income to million of We net EPS $X.XX approximately quarter $XX XX%. tax to be be rate expected the in

their our achieve ability for digital investment In cloud their help commitment our NetApp transformation I and customers in am goals. and our company. closing, I the successfully confident to want in to ecosystem thank

aligned IT are stockholders. investments well and long-term to value priority our We committed are for sustainable to deliver

the for their an handing to during X thank Chris to and deliver shareholder be George was employees, call years It shareholders that I want my to NetApp at role. the commitment and Q&A, whole going customers, NetApp forward. I privilege Before has been in to some our team this am confident continue to value honor will and NetApp, a the and CFO for

open now I'll Chris the call to to said, Kris? that turn With over the Q&A.

Kris Newton

the Thanks, begin Mike. Operator, let's Q&A.

Operator

Wells [Operator Aaron Rakers Our today Instructions] question is from first with Fargo.

Aaron Rakers

sales prepared put I'm great curious a It's you to double-click little look around some just you you wish the of your that and in you Real mentioned working best. you've place quickly, of bit, could execution. remarks if those kind George, been comments with issues? efforts what on had kind -- in rectify

which on up the those of could maybe any those efforts? the show of And thoughts other on duration side

George Kurian

Yes.

company-specific is strong We that refreshed growth and and both have pipeline highly a growth by fueled differentiated. product drivers fully a drivers secular portfolio

of quarter, progress quarter of procurement into had or the we last we couple As the through take that order several the weeks through longer but get the close good in at X- momentum to to fulfillment. across large of to deals saw we our business, quarter, the expected X-figure began

from particularly many what in much largest the terms inspect many higher have closing closed do in is a deals that so of us to required every we in to our at level plans this Already the of what of have transaction. And ones for is detail the pushed QX quarter. seen QX, of

business of to expect And bring discipline the so we it ongoing of QX year plans. head the and implementation then through part this we 'XX becomes normal as fiscal sales course into of

Operator

The Meta next question from Morgan is Stanley. Marshall with

Meta Marshall

Great. up on question. that just of kind following Maybe

around kind any kind as commentary like it administration kind want of based execution bit maybe then So of question, kind of public just customers weren't it first clarify second kind that -- in sounds a uncertain change? had of of more versus seen sector? was more to just of I just And year little that the month we

George Kurian

QX, the European like place. In a and of Germany, are ones seen particularly degree government the no QX where markets. have in and we caution continuing there in France in

We more have as part sector U.S. sector performed QX bit public according of our U.S. in to seen plan. In guide. little caution a public QX,

You many are that customers. January month the calendar always the correct is for year of first

a so on And to take budgets get little frozen. that longer sometimes

deals the according into We are our we to sight and have progressing of good pipeline, line plan.

Operator

is question from with Hosseini Mehdi SIG. next The

Mehdi Hosseini

would into better you -- mix understand better cost? the competitive execution the competitive give in are the were And QLC terms the in that how I some increasing just later do the Yes, we see environment and to year? want spring of you understand issues. I where landscape. there But that

George Kurian

to and been the any changes competitive, see our always strong. has not landscape. portfolio It's competitive been did We

As refreshed or I my we series ASA series. prepared mentioned in the storage have both entire as AFF remarks, AMC the product the portfolio, block and

with seen Series storage have the as family good We in as grids. product traction quarter ASA C well the family the in product in

winning those and are we the I see So change fundamental that products, dynamic quarter. during to any footprints didn't new with

Operator

question Evercore Daryanani next ISI. is The from with Amit

Unknown Analyst

I This ask to your how reflects fiscal you thinking for to And gross is some it margins XX% about product benefit on think from your strategic for you guided Amit. Mike. about Irvin retirement, purchases. the SSD on wanted congratulations Liu are QX,

higher margins your once way direction us to But strategic help QX pass customers? any about can is of you there use to of the commodity to some think then beyond of some these product And gross up degree these what through purchases? costs you

George Kurian

question. Yes, great

a even take not you of as we sit and want guiding what back give I do thinking a here about talk a QX, for whole. about me gross let we're to we're talk So fiscal I'll margins though step today. view 'XX, as

all, first up back let's second So folks. of for a

out margin progression largely beginning prebuys. margins here margin throughout that product is the margins we've The a of and done declining product different our some is We've really gross materially news as always dollars, expected lot good product incremental we up we gross drive increasing of is those set of cloud now. mix at support of cloud. at the 'XX. gross used goal The with played lines, diversified particularly the in and year gross the between and NetApp has to strategic the as margin the better gross year

prebuys want that product do our it has of and underline in the to you 'XX of couple I through. 'XX. And worked things. half as in a see first can we margins those through folks, did some of

Michael Berry

the reflected what's cost higher Those P&L. in is

the really in As to those is where QX, is. from here we close today sit expensing prebuys what market we're

about then what second means that in So I will a it talk 'XX. for

hit there all first, to question, of gross which of know part no, X pieces second want is is I margin. Your your we

cost. there's and revenue There's

side, into some On did changes price QX. we implement revenue going the

a we business, cycles in but sales tailwind our impact our up longer see material as fiscal we we to expect didn't enter the 'XX. see this really fiscal do in 'XX pick Given

products specifically the for introduction continue George deliver to the NetApp. Another new better performance talked A tailwind cost better our about, introduce for and is that structure where our a customers we products X of Series that

Also that as these 'XX tailwind margins. portion of new a products in a to billings be fiscal should also become bigger our

side. So revenue that's the

Now component specifically costs. on

the the fiscal up prebuys use in to expect We majority 'XX. of

just were is the basically As the at mentioned, today. industry I same folks as

market. go we as be expect continued the 'XX, So NAND in we into to fiscal there weakness

X the year. into We've seen last to that over of first and continue half our expected the quarters, it's

we point current stays to consistent on component means is be mix because So entering super our to see expect QX based is, mix start assuming projections, fiscal these 'XX cost, then 'XX steady the What expect and that to decline. high costs of remain important.

a expect be answers hopefully, to product question. we so would margins to as And enter shifting to that We -- just of gross one cloud off give point low to QX second. a for increase to shot that 'XX margins and start I have

basis We of and increase we continue increase. particularly to we've X,XXX the proud are that expect to there, those point margins seen

divestiture XXX margin cloud with we of goodness. the addition basis about product get In points So, actually another

a that's into whole. going we're as going what to that was So Again, about people margins but helps next gross not year. worrying with guiding XX, hopefully, happen

Operator

from Vogt next question with The is David UBS.

David Vogt

closing in talk you the miss of perform the at of least the talk George, factors We'll array metrics. in quarter retirement. Can you. seemed specificity business more reasonably deciding the from the sort got Yet to right? into in pushed that on can all-flash to what pushed your was Congratulations quarter, you the well out. late terms obviously, or getting about, Maybe, deals

I maybe you got a a more bit a of earlier road? touched what get of more why little all-flash it sense of know ARR pause size the Was looks customers that the in bit it to where and maybe on it given -- around it that Was good Just Was quarter. just pretty some shifted little the price? color bit deals? a it the technology? better little for to trying type

George Kurian

were flash-based had able reasons. transactions. product all-flash been those the them that to to clients to to be There our it. they that a substantially were ready Clearly, think move yet there close communicated make that that not at right, been that some procurement if I were might would transactions primarily the different we previously had were decision we ready numbers wanted few they window to and the the where do have higher

can to took wanted it yet was they and imagine it's year Some weeks the hadn't flowed their consolidate us and of wanted In because upsize longer so new a same equipment close. calendar more procurement vehicle, transactions, of the first the this has under cases, the other few you to to departments. down so budgets to clients

saw And couple softness overall a I think In deals in pushed of those market. of because couple reasons. main are we a Europe, the fundamentally of the the

of Europe. little them more taken And took in caution cases so it a in -- it's those bit some

David Vogt

Great. That's helpful.

Operator

next is Ader question from William Jason with The Blair.

Jason Ader

I And Could our you 'XX. just second of I'm for to quarter exposure? but fiscal a give the know know you you quick we Fed $XX models question. of exposure spot. supposed U.S. sense What's for a U.S. of like your spot you sense impact need the us could what one, the so a of overall, can ask the Fed take us FY you sort out year? annualize can Can from I then said get the to we -- in if million just give

Michael Berry

Jason, it's Mike.

business first So that so question, was the on we divesting. the are that

neutral to but margins little it gross earlier gross order. we slightly Hence, my when in For a around then with getting XX by relatively EPS. consistent are bump gross and been about margins cloud said been to It little revenue all is relatively million, the has From expect gross a comment $XX months, and the margin lower. be bit trailing the about bounces relatively done, perspective, cloud consistent. a the margins

moved you -- the in up excluding both and both million. was number we to it the $XX XX% mentioned from -- George QX as-reported can As year, year this it did previous growth, and

that helps we hopefully, the So business divested. And George? that size

George Kurian

factored sector outlook. public business the our QX the U.S. incremental is think I into caution Listen,

related the have of productivity to over technology-led that direction Some near-term to is directed administration are efficiency to that parts time. some these been the undertake. We of think tied that initiatives improvement

it be stabilize, a our to they to material we important in and a U.S. business. should public NetApp once so benefit part us. sector, of And visions it's Americas

And I'll just it so leave there.

Kris Newton

And and governments, is between Fed state bounces local XX% includes plus which revenue. Jason, this around to XX% public sector, Kris. quickly, of XX%, total Really

Jason Ader

That's global public sector.

Kris Newton

That's sector. U.S. public

Unknown Analyst

U.S.

Okay.

Jason Ader

to U.S. revenue, U.S. a not revenue, total right? total

Kris Newton

Correct. Of total revenue. company

Okay. All right.

Wamsi Mohan

drive The with for is Bank well taking Mohan we filling think America. you. your It's Mike, would question next And strategic expenses question what about going fiscal cost as lower also forward? be the for from investments purchases? with Wamsi. Wamsi can do is on it sequentially And would flow, have And of should if a you And I Ruplu would you cash when SSD And any in that? criteria in you as XQ? what how for comment incremental actions? you. operating Are free that? further

Michael Berry

X were kind So in there. there think and I for words, the thank questions you

all from year-over-year. of we for team market. in go expense invest also an a new perspective and we're new in George continuing changes wonderful So flat to products about all, talked does year, first we've The rolled basically made that operating the have to the this out projects. job

a return. that at We So hey, get it look look want we every make every it to We sure at we quarter. day.

So we we the couple the scrutinizing as today are last have in of same OpEx years.

question cash second The was flow.

actions. cost Let's flow and cash then talk about

first. flow Cash So

$XXX operating we're by flow perspective, million. now, down on an year-over-year right So cash about

we've big 'XX. talked made that to about all in us to year. fiscal our payments working really we've to One capital a Sat's strategic X is driver for this be headwind [ buys, continue things ] going is on The

made that mostly The other payments QX. is in incentive piece big we

million working You together about capital $XXX year-over-year. aggregate the and impact is those

QX, should have what in headwind below well. we said tax be some last In but the to payments. it expect that's year, QX timing we and of we as from sequentially, increase do

Kris Newton

you cost Are planning actions? take to

Michael Berry

we about, at Yes. we look it prebuys. all I like talked as the think relates just was the third one -- time cost So

So at point,. this

a as NAND talked really the prebuys market, we've at did look when it. was you it about, market, no-brainer do we it As strategic a and to almost have dislocated was

because the benefited able offer At those used we've last almost X and we customers to we And up. quarters. products were our for did this great point,

Going The news see it able to dislocation forward, he'll again my those well, well. is knows so material do we wonderful industry really look at a to this have to as pre-buys. successor be

this point, any NAND continues to are we you pre-buy expecting more what, but at market know not do to change. But the

we'll wait can So that next the Wissam gets until talk he here, call. and on about

Operator

is The Fox next with question from Advisors. Steven Fox

Steven Fox

on now. with doing Just a standpoint, Michael, that, experience having these of a competitive from dynamic following up lot had prebuys just

don't Some of the your competitors about do And pricing do different comments environment? given affected some that going at competitive down. them, all them in ways. NAND Has your

all but it's guess I mean, cycle. NAND an inventory I about of some relative, the suppliers are talking the bottom of

NAND on you maybe being optimistic pricing. you're if that too see curious risk I'm So any

George Kurian

those percentage the small first a is real total of terms of comes from all, competitive of the right? I landscape, think NAND differentiator The competitive our that is the cloud. of me hybrid part really our software and to has questions, X Let cost. address a in cost customer that NetApp

with market with all suppliers mode. NAND solid-state market technology regard And our competitive the full are the in deep itself, a different of them. strong dynamic products to I closely the discussions our large durable the a our we with very listen, with and of forms in of lineup gives hybrid aligned have so think of and we a AI us NAND. technologies real that With cloud competitive software position And strength, and very,

We will make strategic about. that decisions talked about way Mike procurement the

in said. our understand many suppliers very you to years. a with these ability we very, market. And But many, dynamic market, about like It so the been for close good we have very feel dialogue we as is are

Operator

is Krish question TD next with from The Sankar Cowen.

Sreekrishnan Sankarnarayanan

then out of in in AI related enterprise storage. thanks Mike, this the focus find on Josh, also same which where And is the And cycle? just to like kind to object the along storage in we capitalizing the Is wanted help. the I to all your AI enhancements are enterprise? for grid path, on

spot the a April of clarification quarter. is Just out model in the completely

George Kurian

and the me answer then the let get get So Michael you spot. one, will first on

up enterprise clients up GPU-based where starting large with AI that opening AI are in are wins stand storage that category. see to We infrastructures. seeing compute we We high-performance several in AI combine with the of the infrastructures of had centers excellence

language We allow into it build data people seeing feed so are then model. combine out large that normalize to lakes, it multiple that from which are applications you data types a can also you and

quarters Our are AI of service infrastructure growing who expectations, business as wins are also providers in AI. building number we has a row, performed for enterprise AI our a seeing according multiple high a in to service

And kind all model, of cases. differentiation those AI all in mobility, of versioning, come security, of play use things our all into of those multi-tenancy, around data

pleased I'm with like in but we said, the is approach our our So technology innings, and early it's customers resonating.

Michael Berry

George. Thanks,

close of $X there about in with Krish, is So QX the revenue cloud of expected early date guide. the million That's March.

and difference, So about quarter be a about XX%, there of month the that's was to full we talked about that the there expected $XX is million the in. we

Operator

from is James. with Next Simon Raymond Leopold question

Simon Leopold

was understanding NAND on tariffs of of I mentioned expectations could your as pricing in. retirement about the baked a And Mike, Mike, know, talk for risk congratulations if on thinking better like the anything I'd to in you're for get you well. gross had of what wanted that I really you the and some the to see your margin context tariffs risk. commentary if you and

George Kurian

chain. we highly products has I a global is tariffs, speaking Listen, chain us that think given supply flexible the to ability have were locations, supply fulfill that and to customers very a multiple from you about

dependency to of a our We on China amount. have, know, immaterial years, course the past several you removed as through very the

So China really us. affect products any don't to applied coming tariffs from

out build have have move which of Mexico, of in to period a a but that not carried the capabilities in fairly We locations location we short time. other are do we flexibility product, to those

And so it's dynamic.

the watching are situation. We

can We imagine, have, several plans. as contingency you

standard that to QX we that typical the then industry. not to guide. tariffs just commodity in wide I'll components, of factored close uses, And if our industry approach technologies have a And saying our course, which by is affect of -- swath apply entire everybody industry will the using tariffs it into

Operator

with The Daiwa is Miscioscia Lou next Capital Markets. question from

Louis Miscioscia

your greatly you. and best I support years Mike, and throughout help the all appreciate to

you've of to you to material while a really growth. for contribute a it's times mentioned going revenue George, that couple give take to So AI

us an that. if update give on Just you

to You much minute obviously, this that AI did a in starting revenue like are mention product ago applications too seems interest some just it really the ramp. helped quarter. But

So on could out? shed X you we months our that XX guidance helpful. out, light Or be are would months with anything still

George Kurian

and is what in projects into put proof half those said 'XX to from the 'XX. projects start would the second commentary learn AI and the calendar seeing we We of in do caps production, that prior enterprise clients our be of are or that that into of movement year

business environment. the same It into technologies to the centers are case building excellence case. see the clients kind be those and AI of thing is larger facile being We to their of like certainly deploy seeing the being that we able more

about updates to And so you good broaden. we the take it but position. feel we've time, said, quarters, will our through We'll quarter through go keep the we as as

sort of our and across good wins I across feel progress. simplitized seeing There that about really are are we good geographies. And industries

Operator

with Tim from Long Barclays. is question next The

Unknown Analyst

This Elisa to in Long. I on on Tim Keystone. is was just wanting for tick Shree

about another customer to move kind You service willingness of had you growth increased of a of behavior, can Any to interest little customers' you talk quarter as sale? traditional kind can -- versus a change strong in mention. --

George Kurian

to and broad Clearly of as a reflective for range models in and broad-based We in cloud customers our enthusiasm service in a public cloud is gives same to cloud performance that are have a cloud, offer IT model taking the Keystone. either ways. strong their of as-a-service clients we transformation transform who looking as flexibility super on them landscape seeing are the

They that build on-prem public they architecture and can really hybrid that like with offerings spans our so an Keystone.

not clients going an yet be is validation, that is scale. deploying are like The second So that applications right? an are early at that AI it through application could

they a to model. kind that want for buy flexible buy don't So They full-scale case. want to of use a just infrastructure infrastructure

deploy ready, And are when it kind they capital of a they expenditure can architecture. into more

feel good. we So

part focused are on our that executing of business. We

Operator

is Loop Baruah question Ananda Capital. from next with Our

Ananda Baruah

we're next I working have be digit well the quarter XXXX, with Day, helpful. to as on at you. mid- and could going about think guys, way full growth. question would single-digit Mike, guess with miss high The at is this what you you -- you. be working that We'll target enjoyed And an of of the early fiscal there question talked the any through great Does Yes. that about impact Analyst you, a almost quarter, both 'XX time. Have average does yet? is all since really for And to

Michael Berry

kind for working with miss thank Anand, the I well. you you will as words.

at has last good quarter, talked as and happened So the gave changed in long-term still targets we QX we feel nothing that. about Investor Day about we that very

of single-digit conversion. as the as to upper margins terms growth cash well mid- the In flow the

line So feel we product about really up. good the

momentum Entering talked George have, the changes. that of the XX into all go-to-market about product that. we

And that we will that nothing call. we that, until today, So 'XX the sit would guidance here change. fiscal say next hold

Operator

with next is question Asiya Merchant from Citi. The

Asiya Merchant

Great. on you. And Mike, new with how can installed If of retirement again, along installed base. and ask I just I converting terms base net the customers. flash in we congratulations enjoyed working mean are far about the your and

to us feet. tell about the installed overall move that to of If flash base has the sight you still line perhaps can

George Kurian

reflection we base is that is Yes. it's Thank a footprints footprint modestly of our are base. of our which both scale every new the so The growing all-flash installed installed you, again Asiya. the and quarter, that penetration -- now installed our into up base fact in of

us good. of new our pace continues With all allow nature flash of are to and to vehicles So regard cloud X customers wins within that's the be that -- in of win or the and to customers new flash XX%. kind the public it's

Operator

question next with The is from Samik Chatterjee JPMorgan.

Samik Chatterjee

Mike with you. the just will you. Maybe, product good It working experience George, miss side. with working on a was

of help this Maybe sort a if about disaggregate me a a before can somewhere solution? sort update year. a talked with disaggregated solution launching of insights You've doing that you and on the on progress

maybe about how hyperscaler talked lines, would think same the side you And product just your that on on the that, and about market And the you storage you of think one address? incremental how addressable to allow solution, do software been has it whether hyperscale in a road about your sort deal, with being you those has a or the map? about do companies scale particularly, of strategic peer how think

that portfolio deals something now? right sort consider of are Or product the puts your of those of some sort you think takes about positioned in and is how you would given

George Kurian

for the the the storage. towards is use And good you storage as the of get on data performance is richest high disaggregated storage, features scalable, and most most is high-performance as We you'll in hear unstructured more course, our progress third-generation disaggregated made cases. -- of It insight we set know, which industry. disaggregated

Many [ bell. use this high-performance opens the the NAS ] NAS clients already NAV for using other are particularly large us AI to incumbent cases, other but for in market, up players our the other attack and ability a

And X to we our hyperscale our large cloud, value cloud With listen, compelling to so all about feel there. providers. offers regard good opportunity business

to which send that them. it's out high-margin the it been a us allows It's to we've business to was and clients platforms. cloud since highly point their for technology first of valuable very I'll because a and solution. market that hyperscaler them bring XXXX, the GA in both

stack the more really hyperscaler continue and cases, have. And business more momentum we we and to have going good so the drive value about feel we we're use to full that into the and in more

Operator

Terjanian the Ari question today And Research. final with Cleveland from comes

Ari Terjanian

best of here. And a luck Mike

Just dynamics of seeing and wanted on hyperconverged, business? and challenges that, with more any architectures customers and VMware to new opportunities potential that converged, and be might on we're contemplating cetera, cloud, et updates Broadcom wrap the presenting

George Kurian

clients. stay and with want overall landscape. VMware well we VMware they are the If positioned to on their our think optimize I VMware discussions in

solutions customers do offerings using to modern combination seen some with VMware VMware clients start VMware allow remarks, to good container-based of We re-platforming cloud our as in take as to clients And to talked some on-prem up. well we've have about architectures. that that. of prepared We a cloud my from

And with we Red joint have have using good with on-prem with progress again, on our others. We solutions I some of think to Microsoft cloud. then and alternatives, clients and said, we very as Hat regard

take And so where I that where going. topic time but they're of think for are headed have to choices them clarify regardless we it's good will customers a

Operator

able to more Singh squeeze with We're Param question in actually Oppenheimer. from one

Paramveer Singh

appreciate it. really I Yes.

of your has going look you again, in bit, And as of to of versus What opportunities versus, little your appreciate replacing sorry sales and view wanted really to the competitive ACD about the back Now dead to hybrid you footprint. your opportunity deal horse, understand, push-outs. that. competitors quarter the to If displacement I but were that what existing footprint? percentage as the towards the year, the a existing progress talk been replace could I'd those

George Kurian

of followed customers kind There life refresh. pattern deals and of dynamic of pushed specific cycle to NetApp our tied procurement get closure. was transaction It visibility no and that the exactly was detailed steps that buying typically various -- in any out who to related really to versus to that competitive lack correcting some that inspection the are of into takes more has and a with of right, in those, we the approved customer

there our competitors. quarter, it anything of So I regard with every Listen, are was number undertake. that transactions wouldn't comment that in of specific huge we to footprint there was whether a

them are of of refreshes Some installed footprint. our

Some of them are competitor footprint take out.

flash you, installed much, higher percentage of today. net net tell the installed base, is Because would flash our for part with preponderant new if our we logos, at a our we is XX% fact just having indication new flash. give much and many penetration business displacing be of or can we footprint I right? so you use a are Should an many, sold penetrated that years that of

Kris Newton

All right. to you. back it going final Thank I'm I to question. for appreciate George your pass comments. some

George Kurian

Thank you, Kris.

the of AI we standards supplier very well other in did choice with data-driven and While not remain or our QX, perform as to we customers positioned workloads.

are already early have on slipped that track QX. and QX out deals actions back get of in flows taking seen to several We

confident asset in [indiscernible] stronger very been and never of age ability priorities. tightly aligned We data continued or has market our the as more to portfolio organization's am customers AI. I stay treat enable to take outgrow to and the Our in competitive top an share. to to IT enterprise-wide

Operator

today's presentation. conference you concluded. Thank has The attending now for

now You disconnect. may

NetApp (NTAP) 27 Feb 252025 Q3 Earnings call transcript