Sep 2, 2026 earnings call — Record quarter and raised guidance
NetApp raised fiscal year 2027 revenue guidance to $7.975 billion to $8.225 billion.
Revenue $2.0B (est $1.8B) · EPS $2.58 (est $2.12) · Next-quarter revenue outlook $2.1B
Key quotes
"As organizations move to operationalize AI, the challenge is not just compute but data readiness."
"Given our strong start and the success we're seeing across our business, we are materially raising our outlook for the year."
"All-flash array revenue reached $1.31 billion in Q1, up 47% year-over-year."
Analyst Q&A 13
demand drivers and pricing effects
Q (Joseph Cardoso · JPMorgan): Analyst asked George to explain what is driving accelerating purchases, pricing benefits, and structural improvement. He also asked what gives confidence that the demand is durable, especially looking into the second half of the fiscal year.
A: Management said the quarter started exceptionally, with broad-based strength across all customer types, geographies, and product areas. They saw some large customers accelerate purchases for certain workloads, while other lower-priority buys were moderated, and commodity cost increases led them to raise prices and capture higher product gross margin.
"The demand profile was broad-based and we saw strength across every customer type, by size, medium, small public sector." — George Kurian (CEO)
AI vs modernization and gross margin
Q (Mehdi Hosseini · Susquehanna Financial Group): Analyst asked how much customer investment is AI-specific versus general modernization and asked why Q2 guidance implies a possible product gross margin decline.
A: George said they saw super strong growth across their product portfolio, including all-flash arrays, Keystone and cloud storage, and that AI-specific build-outs exist alongside broad modernization that AI is driving. Wissam said Q1 product gross margin outperformed expectations and that the outlook for product margin for the rest of the year is slightly better than the prior guidance given 90 days ago.
"We have seen super strong growth in our product portfolio as well as offerings like our all-flash array, Keystone and our cloud storage." — George Kurian (CEO)
durability of growth and deceleration reasons
Q (Amit Daryanani · Evercore): Analyst asked why revenue growth decelerates in the second half of the fiscal year guide and whether that back-half rate is a reasonable long-term growth proxy. He also asked what metrics show a structural shift versus prebuying.
A: Management said they are one quarter into the fiscal year and have raised full-year guidance materially to reflect strong performance. They cited outperformance across product lines, customer segments and routes to market as the basis for confidence in durable demand and the raised outlook.
"I think, first of all, we are 1 quarter into our fiscal year and our approach has been to provide guidance that we feel confident about." — George Kurian (CEO)
AI revenue only and gross profit approach
Q (Sreekrishnan Sankarnarayanan · TD Cowen): Analyst asked for quantification of AI-driven deals versus overall revenue and also asked whether product gross profit is driven more by mix or price capture and where inventory dollars are spent.
A: George said it is hard to quantify what percentage of revenue is AI-driven; 350 deals were AI stack-specific but AI is also causing broad modernization across data infrastructure. Wissam said they focus on total gross profit dollars and manage total gross margin, with gross profit dollars growing as the top line grows, and they expect stronger hybrid flash contribution as well.
"350 were AI stack-specific use cases, but the overall performance of the business reflects the influence of AI to modernize the entire data infrastructure." — George Kurian (CEO)
pricing timing and demand response
Q (Michael Cadiz · Citi): Analyst asked how much of expected pricing benefits have been realized and whether demand elasticity has changed as prices rise.
A: George said customers budget in dollars and are prioritizing data infrastructure spending; higher prices lead customers to prioritize some use cases while deferring lower-priority ones, and some shift from flash to hybrid for lower-value workloads. Wissam said they are more agile now and pricing impacts show up sooner than in the past, which previously took "probably 2 to 3 quarters" to start appearing.
"In the past, for instance, it would take probably 2 to 3 quarters to start seeing it." — Wissam Jabre (CFO)
seasonality and margin drivers
Q (Erik Woodring · Morgan Stanley): Analyst pressed on seasonality and why guidance is conservative, and asked whether the better product margin capture is driven by pricing rather than cost changes.
A: Wissam said that seasonality, adjusted for the extra week in Q1, looks roughly balanced between halves and that their product margin outlook is built from everything they know — pricing, mix and cost — when forming the projections. George reiterated they are one quarter in, have raised guidance, and feel confident about the business.
"As we look at -- as we form our outlook and we look and we project the business, we put everything that we know in our numbers." — Wissam Jabre (CFO)
acquisitions focus and OpEx drivers
Q (Paramveer Singh · Oppenheimer): Analyst asked where technology gaps remain and when to buy vs build, and why OpEx is expected to rise as a percent of revenue in the back half and where that spend will go.
A: George said recent tuck-in acquisitions are focused on AI and cloud: DataPelago accelerates AI-driven analytics and inferencing adjacent to storage, and JetStream strengthens VMware migration to cloud. Wissam said the OpEx increase is driven by slightly higher variable compensation accruals and continued investment in AI solutions, while overall OpEx growth remains well below revenue growth.
"With regard to DataPelago it is really about AI-driven analytics and the inferencing where we can accelerate the application processing adjacent to storage providing customers a better inferencing solution top to bottom." — George Kurian (CEO)
all-flash vs hybrid contribution
Q (Wamsi Mohan · BofA): Analyst asked whether the upside to the guide is driven more by all-flash or hybrid flash and how large accelerated purchases were and whether they pulled demand forward.
A: George said all-flash performed exceptionally strongly in Q1 and remains the predominant part of the acceleration, while hybrid flash contribution is also strengthening; he noted all-flash was up 47% year-on-year. He added that accelerated purchases came from a very small percentage of large customers and are not widespread or a material part of the business.
"Listen, I think that if you look at the overall business, all-flash performed exceptionally strongly in Q1, right?" — George Kurian (CEO)
new customer wins and products used
Q (Steven Fox · Fox Advisors): Analyst asked what products and approaches are winning new customers and whether any verticals stand out.
A: George said they saw strong new customer acquisition and workload expansion, and that they lead with cloud-based solutions and purpose-built block-optimized offerings for corporate and mid-market customers and a unified platform for enterprises. He said new customer counts, new customer dollars, and expansion in existing customers were all ahead of internal forecast.
"With new customers, we typically attack from 2 different vectors." — George Kurian (CEO)
AFX platform momentum
Q (Katherine Murphy · Goldman Sachs): Analyst asked about traction on the AFX platform, including public sector wins and contribution to the full-year outlook.
A: George said AFX is built for very high-end performance and scale; transactions are fewer but large and focused on AI GPU-as-a-service. He reported good progress, citing neoclouds and a government agency building a private AI cloud and that the solution is being certified across many customers.
"AFX is built for the very high end of the performance and scale environment." — George Kurian (CEO)
public cloud growth and Keystone trends
Q (Timothy Long · Barclays): Analyst asked if public cloud growth could accelerate and why Keystone professional services didn't grow more given as-a-service demand.
A: George said public cloud stayed in the high teens while cloud storage performed at a much higher level, and they are bringing more AI solutions with hyperscalers and lower-cost block storage options in multiple clouds. He said Keystone grew roughly in the same ballpark as prior quarters and their flash business; Wissam added Keystone got minimal benefit from the extra week.
"I will just say our Keystone business grew roughly in the same ballpark as prior quarters and in the same ballpark as our overall flash business." — George Kurian (CEO)
inventory build and supply visibility
Q (W. Chiu · Raymond James): Analyst noted inventory nearly doubled and asked if that was to secure NAND and if inventory is earmarked to orders and gives better visibility into the year.
A: Wissam said most of the inventory build was strategic purchases to manage supply and ensure they can ship to customers given strong demand, and he described that as a positive. He also said that inventory buildup typically gives better supply and cost visibility.
"But on the first part of the question, most of the inventory build out in that way, some strategic purchases and basically us managing inventory to be able to ship to our customers based on the strength of demand." — Wissam Jabre (CFO)
seasonality and back-half demand patterns
Q (David Vogt · UBS): Analyst asked whether seasonality changed across industry verticals and how to think about seasonality into the back half, given some pull-in in the quarter.
A: George said the Q2 outlook, adjusted for the extra week in Q1, is roughly in line with typical seasonality and that first and second half are within spitting distance of typical patterns. He said their broad book of business means one customer's movement won't materially affect the whole business, except for typical U.S. public sector seasonality.
"Listen, I think our Q2 outlook, if you adjust for the extra week in Q1 is roughly in line with typical seasonality." — George Kurian (CEO)