NetApp Inc (NTAP) Q4 2024 Earnings Report

Revenue and margin dynamics across Q4 and FY24:
- Q4 2024 revenue: $1.667 billion, up 6% YoY and 4% QoQ; full-year FY24 revenue: $6.27 billion, down 1% YoY.
- Gross margin: Q4 consolidated gross margin ~71.5%; Hybrid Cloud gross margin ~72%; Product gross margin ~61% (13% points above prior guidance bias, driven by mix and C-series growth); Recurring support gross margin ~92%; Public Cloud gross margin ~68% (up 290 bps QoQ and YoY).
- Operating performance: Q4 operating margin ~28% (highest for a Q4 in NetApp history); FY24 operating margin ~27% (up 260 bps YoY), reflecting stronger gross margins more than offsetting modest top-line pressure.
- Earnings and cash flow: Q4 non-GAAP EPS guidance of $1.78 was exceeded with actual EPS around $1.80 per the call; Q4 non-GAAP diluted EPS in the data set is $1.37, with basic $1.41 indicating standard reporting ambiguities between GAAP and non-GAAP conventions in the filing. For FY24, operating cash flow reached $1.69 billion and free cash flow $1.53 billion (all-time highs).
- Free cash flow and shareholder returns: FY24 free cash flow yielded $1.53 billion with ~86% returned to shareholders (≈$1.3B combined buybacks and dividends); NetApp executed $100 million in Q4 buybacks and paid $104 million in dividends in the quarter; annual dividend increased to $0.52 per share and buyback authorization increased by $1 billion.
- Balance sheet and liquidity: Cash and cash equivalents of $1.903B, short-term investments of $1.355B, total cash and short-term investments of $3.258B; total debt $2.652B; net debt ~$0.749B; total assets $9.887B; total stockholders’ equity $1.146B; current ratio 1.176, debt ratio ~0.268, and debt/equity ~2.31, indicating solid liquidity with moderate leverage.
- FY25 guidance highlights: Revenue guidance of $6.45–$6.65B; gross margin guidance of 71–72%; operating margin guidance 27–28%; non-GAAP EPS guidance of $6.80–$7.00; tax rate 21–22%; capex around $155M; 100% of free cash flow to be returned to shareholders; annual dividend raised to $0.52; annual share count reduction anticipated by 1–2%.
- Q1 FY25 outlook: Revenue guidance of $1.455–$1.605B; gross margin ~72%; operating margin ~25%; EPS guidance $1.40–$1.50.
- Growth drivers and mix: All-flash portfolio expansion (AFF A-series, C-series, ASA) contributing to a rising annualized all-flash revenue run rate (≈$3.6B, up 17% YoY). Keystone contract value nearly $150M for FY24 and growth momentum expected to continue in FY25. Public Cloud ARR finished FY24 at $630M, with cloud revenue of $152M in Q4 (9% of total revenue), growing first-party and marketplace cloud storage migrations and multi-cloud opportunities. Management emphasized a multi-cloud, unified data storage architecture across on-premises and cloud, positioning NetApp for enterprise AI workloads and data governance needs.

Key management themes and quotes from the earnings call:
- Strategy and AI leadership: George Kurian highlighted the AI opportunity as a cornerstone of NetApp’s value proposition, stating that "AI is a top priority for organizations... Data management is essential for enterprise AI" and emphasizing NetApp’s role in enabling RAG and model inferencing across on-prem and cloud environments.
- Operational discipline and profitability: Mike Berry underscored disciplined execution, noting that the company delivered “strong P&L performance” with all-time high operating cash flow and free cash flow in FY24, and that the gross margin improvements supported profit expansion even with revenue pressures.
- Keystone and customer value: George Kurian discussed Keystone as a differentiator and a driver of growth, including a multi-year, cloud-like subscription model with guarantees on performance, availability, ransomware recovery, and sustainability. He highlighted Keystone’s FY24 value addition (nearly $150M in total contract value) and the opportunity to consolidate multi-environment storage needs for large customers.
- Innovation and partnerships: The transcript emphasizes NetApp’s collaboration on GenAI infrastructure (NVIDIA OVX, FlexPod AI reference architectures with Cisco, NetApp AIPod with NVIDIA OVX, and joint validation milestones), illustrating how NetApp is embedding storage and data services into AI compute environments and positioning for rapid AI deployment.
- Macro posture and guidance framing: George noted macro improvement versus a year ago but persistent uncertainty, and Mike reinforced that Q1 FY25 should see seasonal strength, with broader FY25 growth supported by improved cloud offerings and higher-margin product mix.

NetApp remains well-positioned to benefit from multi-cloud data management requirements and AI-driven data workloads. The company’s differentiating factors include a unified ONTAP-based operating environment, a growing all-flash portfolio, and Keystone as a scalable, high-margin subscription growth engine. FY25 guidance reflects modest revenue growth (≈4.5%), sustained high gross margins (71–72%), and a path to 27–28% operating margins with strong free cash flow generation and a clear capital-return bias. Near-term upside catalysts include accelerating A-series/C-series adoption, increased Keystone deployments in larger enterprise deals, and continued cloud storage takeouts from hyperscalers. The AI data-management wave, reinforced by partnerships with NVIDIA and Google Cloud, supports a multi-year growth runway that could outpace the current 4.5% top-line guide if AI deployments scale more rapidly than anticipated. Valuation multiples (P/E ≈ 17.9x, P/B ≈ 18.2x, P/FCF ~36x) appear reasonable given the quality of earnings, margin resilience, and cash-flow durability, though investors should monitor NAND pricing, enterprise IT budgets, and cloud-capital intensity. Catalysts to watch include NetApp’s June 11 Investor Day for long-term strategy updates and any accelerations in Keystone deployments and cloud-first-party/cloud-marketplace adoption.