NetApp Inc (NTA.DE) Q1 2025 Earnings Report

NetApp posted Q1 2025 results with revenue of $1.541 billion and a robust gross margin of approximately 71.3%, delivering an operating income of $282 million and net income of $248 million (EPS $1.20). While profitability remained solid, the quarter showed year-over-year and sequential top-line softness: revenue declined 4.1% year over year and 7.6% from the prior quarter, with corresponding declines in gross profit (-4.6% YoY) and net income (-20.8% YoY). The company generated meaningful operating cash flow ($341 million) and free cash flow ($300 million), ending the period with a strong liquidity position and a net debt of roughly $1.0 billion. NetApp repurchased $400 million of shares and paid $107 million in dividends, while capital expenditure was modest at $41 million, underscoring a disciplined capital allocation approach. Strategically, NetApp continues to emphasize cloud- and data-centric solutions across Hybrid Cloud and Public Cloud segments, leveraging its software portfolio (ONTAP, SnapCenter, Astra, Cloud Volumes, and Cloud Insights) to monetize data management in multi-cloud environments. Although there is no forward guidance provided in the materials, the earnings mix suggests a balance between software- and hardware-led revenue. Valuation remains premium by traditional metrics (P/E around 26x, P/B ~28x, P/S ~16.9x), which implies that investors are pricing in continued cloud-adjacent growth and robust FCF generation. Monitoring the trajectory of software-defined revenue, cloud services adoption, and margin discipline will be key to the stock’s near- to medium-term upside.