NetApp ($NTAP) reports strong Q4 and record full-year FY25 results, demonstrating disciplined execution with revenue up 5% and profits growing even faster, hitting all-time highs for operating margin and EPS. Growth was significantly driven by accelerating momentum in All-Flash storage, where NetApp gained significant market share according to IDC, and robust growth in their focused Public Cloud services, particularly core cloud storage which saw 44% year-over-year growth excluding divested businesses. This performance underscores NetApp's solid competitive standing and operational efficiency in the current environment.
A major focus is NetApp's strategic positioning for Enterprise AI, which they view as a significant future growth driver. The company reported explosive 5x year-over-year growth in AI-related business in Q4, driven by approximately 150 deals focused on AI infrastructure and data modernization. NetApp is leveraging its hybrid multi-cloud approach to enable AI on "data in place," collaborating with key partners like NVIDIA, AWS, Azure, Cisco, Lenovo, and Domino Data Lab. Management highlighted AI inferencing as a potentially massive storage opportunity in FY26 and beyond, showing real demand is moving from experimentation to infrastructure build-out.
Despite strong fiscal year performance, NetApp provided a cautious outlook for Q1 FY26, citing global macro uncertainty, lingering inflation, US public sector friction, and headwinds in parts of Europe, the Middle East, and Africa related to trade policy impacting customer spending and large deal timing. However, they maintain confidence in accelerating growth later in FY26, driven by a strong pipeline of large AI and data modernization deals, sales capacity additions, and the underlying strength of their core All-Flash and cloud businesses. Financially solid, NetApp plans to return up to 100% of free cash flow to shareholders in FY26, backed by a comfortable cash position and strong cash generation.
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