NetApp delivered a solid Q2 FY2025, underscored by a durable margin profile and continued strength across core storage platforms. Revenue rose 6% year over year to $1.658 billion, supported by a 19% year-over-year spike in all-flash storage revenue and robust growth in first-party and marketplace cloud storage services. The company achieved a record Q2 operating margin (approximately 29%) and non-GAAP EPS of $1.87, with GAAP net income of $299 million. Management highlighted sustained momentum in AI-related data infrastructure, with well over 100 AI and data-lake modernization wins in the quarter, and reiterated that enterprise AI is still in the early stages with the majority of activity anticipated in the second half of calendar year 2025 and beyond.
NetApp’s Hybrid Cloud segment continued to post solid results, with all-flash revenue up 19% YoY and the All-Flash Array (AFA) run rate hitting an all-time high of $3.8 billion. Public Cloud revenue increased 9% YoY to $168 million, led by first-party and marketplace storage services, which grew roughly 43% YoY. Keystone (Storage-as-a-Service) remained a key growth engine, growing about 55% YoY, with unbilled RPO at $330 million QoQ and remaining RPO at $4.4 billion. The company reaffirmed its long-term target of mid-to-upper single-digit revenue growth and double-digit EPS growth through FY2027, and raised FY2025 revenue guidance to $6.54–$6.74 billion with EPS of $7.20–$7.40 (midpoint implying ~13% YoY growth).
Management signaled continued discipline on capital allocation, returning cash to shareholders (over $400 million in Q2 via dividends and buybacks) and maintaining a healthy balance sheet (~$2.2 billion in cash and short-term investments with roughly $2.0 billion of debt). Near-term headwinds include higher SSD-related inventory levels from strategic purchases in 2024–2025, with expectations that SSD cash outlays will ease in the second half of FY2025, supporting a higher cash flow in H2 relative to H1. Investors should monitor macro rhythm, NAND pricing dynamics, and the cadence of AI-related deployments as key factors shaping the back half of FY2025 and into FY2026.