NetApp to Report Q2 Earnings: Here's What Investors Should Know

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NetApp NTAP is slated to release second-quarter fiscal 2025 earnings on Nov. 21.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The company expects non-GAAP earnings per share to be between $1.73 and $1.83 for the quarter. The Zacks Consensus Estimate is pegged at $1.79 per share, indicating an increase of 13.3% from the year-ago level.

Net revenues are anticipated in the range of $1.565-$1.715 billion. The Zacks Consensus Estimate is pegged at $1.64 billion, implying a 5.3% increase from the prior-year level.

NTAP beat estimates in three of the trailing four quarters, delivering an average earnings surprise of 8.6%. It matched the consensus estimate for the remaining quarter. 

The stock has gained 50.3% compared with the industry’s growth of 12.1% in the past year.

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Factors at Play for NTAP’s Q2 Earnings

Continued demand from customers for NetApp’s portfolio of modern all-flash arrays, especially the C-series capacity flash and ASA block-optimized flash bodes well. Momentum in the new all-flash A-series is likely to have acted as a tailwind. These enterprise storage products will allow users to boost workloads including traditional enterprise applications and Gen AI. 

The company expects the new AFF A-series, along with its C-series and ASA products to capture further share in the all-flash market. Also, Keystone’s storage-as-a-service offering has been gaining significant traction, with revenues increasing more than 60% year over year in the last reported quarter.  

Our estimate for Hybrid Cloud’s fiscal second-quarter revenues is pegged at $1,483.5 million, indicating a rise of 5.4% from the year-ago level.

NetApp, Inc. Price and EPS Surprise

NetApp, Inc. Price and EPS Surprise
NetApp, Inc. Price and EPS Surprise

NetApp, Inc. price-eps-surprise | NetApp, Inc. Quote

The company has been gaining from data-driven digital and cloud transformations involving business analytics, artificial intelligence, data security and application modernization. In the fiscal first quarter, the company won more than 50 AI and data lake modernization deals. 

Strength in first-party and hyperscaler marketplace storage services is likely to have benefited top-line expansion for Public Cloud revenues. However, the decline in subscription services’ revenues is concerning. NTAP expects headwinds from subscription services to lessen as fiscal 2025 progresses. Our estimate for Public Cloud revenues is pegged at $159 million, up 3.3% from the prior-year actual.

Strengthening go-to-market activities and various cloud collaborations remain as other major positives. Margin performance is likely to gain from a favorable product mix and operating discipline. 

However, volatile global macroeconomic conditions, cautious IT spending environment and cloud cost optimization efforts by clients remain concerning.

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