NetApp (NTAP) Q2 2025 earnings summary

Executive summary

• Achieved Q2 FY25 revenue growth of 6% year-over-year to $1.66 billion, driven by a 19% increase in all-flash arrays and robust cloud storage services, with billings up 9%.

• Record Q2 operating margin (non-GAAP 29%) and EPS ($1.87 non-GAAP, $1.42 GAAP), reflecting disciplined execution and innovation across flash, cloud, and AI segments.

• Strategic focus on hybrid multi-cloud, AI, and data-driven solutions led to broad-based customer wins and market share gains.

• Recognized as a leader in Gartner Magic Quadrant for Primary Storage Platforms for the 12th consecutive year.

• Expanded AI and cloud partnerships, including Google Cloud, NVIDIA, and AWS, and launched new all-flash and hybrid flash storage systems.

Financial highlights

• Q2 FY25 revenue: $1.66 billion, up 6% year-over-year; billings: $1.59 billion, up 9%.

• Product revenue grew 9% year-over-year to $768 million; public cloud revenue rose 9% to $168 million.

• Consolidated gross margin: 72% (non-GAAP); GAAP gross margin: 71%.

• Operating margin: 29% (non-GAAP), 21% (GAAP); EPS: $1.87 (non-GAAP), $1.42 (GAAP); net income: $299 million (GAAP).

• Returned $406 million to shareholders via dividends and buybacks; repaid $400 million in debt; cash and investments totaled $2.2 billion.

Outlook and guidance

• FY25 revenue guidance raised to $6.54–$6.74 billion; non-GAAP EPS expected at $7.20–$7.40; GAAP EPS $5.48–$5.68.

• Q3 FY25 revenue expected between $1.61–$1.76 billion; non-GAAP EPS $1.85–$1.95; GAAP EPS $1.41–$1.51.

• Cloud revenues projected to return to double-digit growth in Q3; public cloud gross margins targeted at 75–80% long-term.

• Free cash flow for FY25 expected to be slightly lower year-over-year due to SSD payment timing; next dividend of $0.52 per share payable January 2025.

• Effective tax rate for FY25 expected at 20%–21%.