NetApp (NTAP) Q2 2026 earnings summary

Executive summary

• Q2 FY26 revenue reached $1.71 billion, up 3% year-over-year, with all-flash and public cloud segments comprising 70% of revenue and driving record gross margin, operating margin, and EPS.

• Strong demand for AI solutions, cloud storage, and all-flash offerings offset softness in the U.S. public sector and drove growth across geographies.

• Major product launches included AFX and AI Data Engine (AIDE), enhancing AI workload capabilities and data management.

• Closed approximately 200 AI infrastructure and data lake modernization deals in Q2.

• Recognized as a leader in Gartner Magic Quadrant and GigaOM industry reports.

Financial highlights

• Non-GAAP EPS was $2.05, up 10% year-over-year, with GAAP EPS at $1.51; gross margin set a Q2 record at 72.6%.

• Operating income was $530 million (non-GAAP) and $399 million (GAAP), with operating margin at 31.1% (non-GAAP) and 23.4% (GAAP).

• Hybrid Cloud revenue was $1.53 billion (gross margin 71.4%); Public Cloud revenue was $171 million (gross margin 83%).

• Deferred revenue was $4.45 billion, up 8% year-over-year; remaining performance obligations reached $4.9 billion, up 11%.

• Free cash flow was $78 million; cash and short-term investments totaled $3.0 billion.

Outlook and guidance

• Q3 FY26 revenue expected at $1.615–$1.765 billion; gross margin 72.3%–73.3%; operating margin 30.5%–31.5%; non-GAAP EPS $2.01–$2.11.

• FY26 revenue guidance: $6.625–$6.875 billion; gross margin 71.7%–72.7%; operating margin 29.5%–30.5%; non-GAAP EPS $7.75–$8.05.

• GAAP EPS guidance for FY26 is $5.82–$6.12.

• Effective tax rate for FY26 expected at 20.2%–21.2%.

• Next dividend of $0.52 per share payable January 21, 2026.