VALUATION HIGHLIGHTS

1. Services constitute 52% of the Trefis price estimate for NetApp's stock.
2. Product constitutes 42% of the Trefis price estimate for NetApp's stock.

WHAT HAS CHANGED?

1. Latest Earnings - Q4 FY'25

NetApp Inc. reported its fourth-quarter earnings for fiscal year 2025, surpassing analyst expectations with earnings per share (EPS) of $1.93 against a forecast of $1.89. Revenue reached $1.73 billion, slightly above the anticipated $1.72 billion. The company's revenue increased by 4% year-over-year, driven by notable growth in its AI business, which expanded fivefold, and its All Flash Array annualized revenue run rate increased by 14%.

Note: NetApp's FY'25 ended on April 25, 2025.

2. Guidance

NetApp guided Q1 FY 2026 revenue to $1.45-$1.61 billion (in line with consensus) and non-GAAP EPS to $1.48-$1.58 (below consensus estimate of $1.65).

Full-year revenue is projected at $6.63-$6.88 billion, implying 3% YoY growth at midpoint. FY 2026 non-GAAP EPS is forecast at $7.60-$7.90. The company acknowledged macro caution in the U.S. public sector and EMEA, compounded by tariff-related demand delays, but expressed confidence in full-year execution driven by a strong AI deal pipeline and improving product margins.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of NetApp's value that present opportunities for upside or downside to the current Trefis price estimate of NetApp:

Storage Infrastructure

• Products Revenue: We currently forecast NetApp's Products revenue to grow at a CAGR of 3.5% through the end of the Trefis forecast period. However, there could be a 20% upside to the Trefis price estimate if NetApp's product revenue can grow at 9% instead, led by higher demand for next-generation storage solutions.
• Netapp's Gross Margin: We currently forecast that the company's gross margin will see modest growth to around 70% in the coming years. There could be a 15% upside to the Trefis price estimate if the gross margins improved to 75% by the end of our forecast period.

For additional details, select a driver above or select a division from the interactive Trefis split for NetApp at the top of the page.

BUSINESS SUMMARY

NetApp, Inc. is a global cloud-led, data-centric software company that provides organizations the ability to manage and share their data across on-premises, private and public clouds. They provide a full range of enterprise-class software, systems, and services solutions that customers use to modernize their infrastructures, build next-generation data centers, and harness the power of hybrid clouds.

SOURCES OF VALUE

NetApp Gaining Share in Storage Infrastructure Market

Over the years, NetApp has witnessed an increase in its share of the storage infrastructure solutions market. Demand for NetApp's all-flash and hybrid systems, which are a combination of hardware and software, has risen strongly over the past couple of years. In addition, NetApp provides hardware and software support to its clients and customer education and training services, essentially covering an exhaustive group of cloud services.

KEY TRENDS

Demand for Cloud Storage Surging

The trend over the past few years has been away from hardware portable storage devices to cloud storage, and this has benefited NetApp. This trend is expected to continue as more and more enterprises switch to the cloud, pushing demand for NetApp's cloud solutions infrastructure products even higher.

Transition To Flash

There has been a sharp decline in NAND pricing over the last few quarters, and several companies are transitioning to flash-based storage devices. NetApp is benefiting from the trend with an increasing mix of flash-based storage device sales.