Executive Summary
NetApp reported QQ3 2025 results that point to a healthy but mature profitability profile amid modest top-line pressure. Revenue totaled $1.641 billion, down 1.6% year over year and 1.0% quarter over quarter, with gross profit of $1.145 billion and a gross margin of 69.8%. Operating income reached $362 million, yielding an operating margin of 22.1%, while net income was $299 million and diluted EPS was $1.44 (GAAP) or $1.47 basic per share. EBITDA stood at $446 million (margin ~27.2%), underscoring a durable profitability framework even as the business absorbs ongoing investments in cloud-native data management and multi‑cloud solutions.
From a cash flow perspective, NetApp generated $385 million of operating cash flow and $338 million of free cash flow in the quarter. Free cash flow per share was $1.66, supporting a capital allocation strategy that included stock repurchases of $200 million and dividends of $106 million, while capital expenditures totaled $47 million to support product and platform enhancements. The balance sheet remains cash-rich with about $1.51 billion in cash and equivalents and a net debt position of roughly $0.74 billion, reflecting conservative leverage against a broad asset base and a diversified earnings mix.
Looking ahead, the company does not publish formal QQ4 guidance in the provided materials, but the trajectory suggests continued advancement in multi-cloud data services and intelligent data management as enterprise data gravity intensifies. The key questions for investors center on sustaining gross and operating margins amid competitive pressure, translating product breadth into revenue growth, and deploying capital efficiently to sustain free cash flow in a volatile spending environment.
Key Performance Indicators
Key Insights
Revenue performance: 1H3 2025 QQ3 revenue of $1.641 billion, YoY -1.56%, QoQ -1.03%. Gross profit $1.145 billion, gross margin 69.77% (0.698), YoY gross profit change -2.05%, QoQ -2.72%. Operating income $362 million, operating margin 22.06% (0.221), YoY -1.09%, QoQ +4.93%. Net income $299 million, net margin 18.22% (0.182), YoY +2.75%, QoQ flat. EPS (GAAP) $1.47, diluted $1.44, YoY EPS +4.26%, QoQ +0.00%. EBITDA $446 million, EBITDA margin 27.18% (0.272).
Cash flow and capital allocation: Ope...
Financial Highlights
Revenue performance: 1H3 2025 QQ3 revenue of $1.641 billion, YoY -1.56%, QoQ -1.03%. Gross profit $1.145 billion, gross margin 69.77% (0.698), YoY gross profit change -2.05%, QoQ -2.72%. Operating income $362 million, operating margin 22.06% (0.221), YoY -1.09%, QoQ +4.93%. Net income $299 million, net margin 18.22% (0.182), YoY +2.75%, QoQ flat. EPS (GAAP) $1.47, diluted $1.44, YoY EPS +4.26%, QoQ +0.00%. EBITDA $446 million, EBITDA margin 27.18% (0.272).
Cash flow and capital allocation: Operating cash flow $385 million; capex $47 million; free cash flow $338 million ($1.66 per share). Net income translated into strong operating cash generation, supporting a robust free cash flow envelope. Financing activity reflects $200 million of share repurchases and $106 million of dividends; net debt stood at approximately $0.739 billion after a combination of cash on hand and modest leverage.
Balance sheet health: Cash and cash equivalents $1.511 billion; total cash and short-term investments $2.261 billion; total assets $8.989 billion. Total debt around $2.25 billion; current liabilities $4.195 billion and current assets $3.909 billion yield a current ratio of 0.932 and quick ratio of 0.868, suggesting liquidity while indicating some short-term working capital pressures. Net debt to EBITDA remains manageable given the scale of operations, with a debt-to-capitalization of 0.693 and a debt-to-equity ratio of 2.26. Equity stands at $0.995 billion; non-current assets include $2.723 billion of goodwill.
Valuation and market metrics: Price-to-book ~25.83x; price-to-sales ~15.66x; P/E ~21.49x; dividend yield ~0.41%. Cash flow strength and a durable gross margin support a favorable long‑term valuation narrative, albeit at elevated multiples typical of enterprise storage and data-management franchises.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.64B |
-1.56% |
-1.03% |
| Gross Profit |
1.15B |
-2.05% |
-2.72% |
| Operating Income |
362.00M |
-1.09% |
4.93% |
| Net Income |
299.00M |
2.75% |
0.00% |
| EPS |
1.47 |
4.26% |
0.00% |
Key Financial Ratios
operatingProfitMargin
22.1%
operatingCashFlowPerShare
$1.89
freeCashFlowPerShare
$1.66
dividendPayoutRatio
35.5%
Management Commentary
No earnings call transcript data provided in the input. As a result, no management commentary quotes or theme-based synthesis can be drawn from the transcript for QQ3 2025. If a transcript becomes available, integrate remarks on strategic priorities (e.g., multi-cloud expansion, Astra adoption, and product cycles), operational efficiency, and market commentary into the highlights.
Forward Guidance
There is no formal forward guidance disclosed in the provided material for QQ4 2025. Based on the QQ3 2025 results, the implicit guidance suggests steady utilization of NetApp’s data-management software and hybrid/multi-cloud services to underpin stable profitability while pursuing growth in cloud-related offerings. Management commentary (when available) would help assess targets for revenue mix, cloud ARR growth, and operating expense discipline. Key factors to monitor include: trajectory of cloud-based services and software subscription revenue, customers’ multi-cloud adoption pace, competitive pricing dynamics, supply chain risk, and currency exposure given the USD reporting and UK listing (0K6F.L). Overall assessment: moderate growth potential with stable margins if cost controls persist and cloud solutions gain traction, but execution risk remains in converting data-management demand into material top-line uplift.