Executive Summary
NetApp reported a modest top-line dip in QQ1 2025, with revenue of $1.541 billion, representing a year-over-year decline of 3.93% and a sequential decrease of 7.56%. The balance sheet and cash flow profile remained solid, underpinned by a resilient margin framework and robust cash generation. Gross margins stood at approximately 71.3% (gross profit of $1.098 billion), while operating income reached $282 million, delivering an operating margin of about 18.3%. Net income was $248 million, yielding a net margin near 16.1% and earnings per share (EPS) of $1.20 (diluted $1.17). The company generated $341 million of operating cash flow and about $300 million in free cash flow, after capital expenditures of roughly $41 million. NetApp continued to deploy capital toward shareholder returns, with $400 million of share repurchases and $107 million in dividends in the quarter, partially funded from ongoing operating cash flow and available liquidity.
Strategically, NetApp remains focused on its Hybrid Cloud and cloud-centric data management stack (ONTAP, Astra, Cloud Volumes, and related SaaS offerings), aiming to monetize the growing demand for data management across private, public, and multi-cloud environments. While profitability remains strong, the QoQ and YoY revenue pressures suggest the hardware cycle and broader IT demand normalization are impacting near-term top-line growth. The quarterly performance underscores NetApp’s ability to sustain high gross margins and meaningful cash generation even as it continues investing in software-centric growth levers and cloud-enabled services.
Looking ahead, investors should monitor (1) the rate of software and cloud services mix shift, (2) enterprise storage demand in a potentially cautious macro backdrop, and (3) competitive dynamics and pricing in the data-management and cloud-storage segments. NetApp’s liquidity position and free cash flow generation continue to support a balanced capital allocation approach, including disciplined buybacks and a modest dividend, while the company advances its data-centric product strategy.
Key Performance Indicators
QoQ: -22.95% | YoY:-25.79%
QoQ: -14.78% | YoY:-20.77%
QoQ: -14.89% | YoY:-21.05%
Key Insights
Revenue: $1.541B (YoY -3.93%, QoQ -7.56%)
Gross Profit: $1.098B (YoY -4.02%, QoQ -6.63%)
Operating Income: $0.282B (YoY -25.79%, QoQ -22.95%)
Net Income: $0.248B (YoY -20.77%, QoQ -14.78%)
EPS: $1.20 (Diluted $1.17) | Shares Weighted Average: 206M (outstanding) / 212M diluted
EBITDA: $0.378B | EBITDA Margin: ~24.5%
Gross Margin: ~71.25% | Operating Margin: ~18.3% | Net Margin: ~16.1%
Cash Flow: Operating Cash Flow $0.341B; Free Cash Flow $0.300B
Liquidity: Cash and cash equivalents $1.652B; Shor...
Financial Highlights
Revenue: $1.541B (YoY -3.93%, QoQ -7.56%)
Gross Profit: $1.098B (YoY -4.02%, QoQ -6.63%)
Operating Income: $0.282B (YoY -25.79%, QoQ -22.95%)
Net Income: $0.248B (YoY -20.77%, QoQ -14.78%)
EPS: $1.20 (Diluted $1.17) | Shares Weighted Average: 206M (outstanding) / 212M diluted
EBITDA: $0.378B | EBITDA Margin: ~24.5%
Gross Margin: ~71.25% | Operating Margin: ~18.3% | Net Margin: ~16.1%
Cash Flow: Operating Cash Flow $0.341B; Free Cash Flow $0.300B
Liquidity: Cash and cash equivalents $1.652B; Short-term investments $1.365B; Total cash & ST investments $3.017B
Debt: Total debt $2.648B; Net debt $0.996B
Capital Allocation: Common stock repurchased $0.400B; Dividends paid $0.107B; Common stock issued $0.055B
Balance Sheet: Total assets $9.311B; Total liabilities $8.382B; Total equity $0.929B
CurrentRatios: Current 0.958; Quick 0.910; Cash ratio 0.366
Valuation (informational): P/E ~26.2; P/B ~27.97; P/S ~16.86; Dividend Yield ~0.41%
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.54B |
-3.93% |
-7.56% |
| Gross Profit |
1.10B |
-4.02% |
-6.63% |
| Operating Income |
282.00M |
-25.79% |
-22.95% |
| Net Income |
248.00M |
-20.77% |
-14.78% |
| EPS |
1.20 |
-21.05% |
-14.89% |
Key Financial Ratios
operatingProfitMargin
18.3%
operatingCashFlowPerShare
$1.66
freeCashFlowPerShare
$1.46
dividendPayoutRatio
43.1%
Management Commentary
No earnings call transcript highlights available in the provided data.
Forward Guidance
No formal forward-looking guidance was provided in the supplied QQ1 2025 data. Based on management’s strategic posture and industry dynamics, an implicit path suggests continued emphasis on expanding software and cloud-based data management offerings (Astra, Cloud Volumes, ONTAP across Azure/AWS/Google), with a goal of sustaining healthy gross margins while gradually expanding the mix of recurring software and cloud services. Potential targets include modest revenue growth in the medium term driven by software and services, continued margin retention in the mid-teens to low-20s in operating income, and steady free cash flow generation. Investors should monitor: (a) progression of software/cloud services mix, (b) enterprise IT budgets and hyperscaler cloud demand, (c) competitive pricing dynamics in storage hardware versus software-defined solutions, and (d) capital allocation cadence including buybacks, dividends, and potential M&A or partnerships.