A maker of data storage hardware and software, NetApp builds the systems that keep files safe for companies across on-premises, hybrid, and public cloud environments, including all-flash AFF systems and cloud services for AWS, Azure, and Google Cloud. Founded in 1992 as Network Appliance, Inc. by three engineers, the company's very first product was an NFS server nicknamed "The Toaster" for its simple, dedicated purpose—and the name was later shortened to NetApp, which also became its stock ticker.
Product revenue growth stalled at 4% in Q4 as component cost inflation compressed Hybrid Cloud margins for a fourth straight quarter, capping a year of 5% revenue growth.
The recovery in product faded as the year progressed, ending with 4% growth in Q4 after a 13% increase a year earlier. Revenue rose 5% to $6.93 billion and reached $6.35, but Hybrid Cloud product margins fell for a fourth consecutive quarter as memory and component costs rose, and the company raised prices in Q4 to respond. NetApp enters fiscal 2027 with its core hardware margins under pressure and a question over whether price increases can offset sustained component inflation.
Key takeaways
Product growth decelerated across the year — from 13% in Q1 to 9% in Q2, 1% in Q3, and an implied 4% in Q4 — as the comparison against the prior year's recovery got harder and higher component costs began to weigh on demand for all-flash systems.
Hybrid Cloud product fell for a fourth consecutive quarter due to higher memory and component costs, though the rate of compression moderated from the six-point declines seen in the second half of fiscal 2025 to roughly one point in the second half of fiscal 2026.
Section summaries
Business
NetApp is a global intelligent data infrastructure company operating through Hybrid Cloud and Public Cloud segments, offering software, hardware, and as-a-service solutions for on-premises, hybrid, and multi-cloud environments.
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The Hybrid Cloud provides unified data storage hardware and ONTAP software for on-premises and hybrid environments, including all-flash AFF, ASA, and AFX systems, hybrid-flash FAS, and StorageGRID.
Public Cloud rose 3% to $688 million, a deceleration from 9% growth in fiscal 2025, as the prior-year sale of the Spot by NetApp business weighed on the comparison; Public Cloud improved eight points from cost optimization and lower .
widened 4.2 points to 26.8% for the year, as operating expenses fell to 46% of from 50%, with R&D spending down 2% and sales and marketing flat.
The company returned $1.36 billion to shareholders through $950 million in stock repurchases and $413 million in dividends, while repaying $750 million in maturing Senior Notes and ending the year with $2.07 billion in cash and equivalents.
Two major customers accounted for 43% of net revenues, and the company raised prices in Q4 to offset rising component costs, noting that supply constraints may persist and challenge near-term demand fulfillment.
What changed
The prior year flagged product growth in Q1 FY2026 against a 13% comparison: product revenue fell 2% in Q1, marking the start of a renewed contraction before growth returned at 3% in Q2 and 4% in Q3.
The prior year asked whether Hybrid Cloud product compression would continue into FY2026: it did, with margins falling for a fourth straight quarter, though the rate of decline moderated to roughly one point from the six-point drops seen in the second half of fiscal 2025.
The prior year questioned whether the $1.15 billion pace could be sustained without further debt issuance: repurchases slowed to $950 million in fiscal 2026, and the company repaid $750 million in debt without issuing new notes, ending the year with cash down 24% to $2.07 billion.
The prior year asked whether Public Cloud growth would sustain its re-acceleration to 9%: it decelerated to 3% in fiscal 2026, partly due to the Spot divestiture, and the company stopped disclosing quarterly Public Cloud revenue after Q2 FY2025.
What to watch
Product growth rate in Q1 FY2027, to see whether the deceleration to 4% in Q4 FY2026 continues against a comparison that was a 2% decline a year ago, when the recovery first stalled.
Hybrid Cloud product trajectory, to gauge whether the price increases implemented in Q4 FY2026 offset the component cost inflation that has now compressed margins for four consecutive quarters.
Public Cloud growth rate, which was not disclosed for the third straight quarter, to see whether the 's trajectory is disclosed in the 10-K and whether the deceleration to 3% annual growth stabilizes.
The operational impact of the ERP system go-live, which has already disrupted order processing and invoicing, to see whether these disruptions affect Q1 FY2027 recognition or internal controls over financial reporting.
The Public Cloud delivers cloud-native storage services natively integrated with AWS, Microsoft Azure, and Google Cloud, such as Azure NetApp Files, Amazon FSx for NetApp ONTAP, and Google Cloud NetApp Volumes.
NetApp's strategy focuses on modernizing data infrastructure, enabling resilient and secure operations, optimizing cloud strategies, and accelerating AI adoption with products like the AI Data Engine and partnerships with NVIDIA.
The company employs a multichannel distribution strategy, with the majority of fiscal 2026 net revenues coming through indirect channels, and two major customers accounted for 43% of net revenues.
Research and development expenses were $991 million in fiscal 2026, focused on software innovation for hybrid-cloud solutions, cyber resilience, and AI-ready infrastructure.
NetApp had approximately 11,700 employees worldwide as of April 24, 2026, and outsources manufacturing to third parties in multiple global locations.
NetApp faces material risks from AI-driven demand shifts, supply chain cost inflation, evolving trade tariffs, and complex global regulatory compliance.
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The rapid emergence of generative AI is reshaping storage demand patterns, and failure to adapt products or go-to-market strategies could materially harm NetApp's competitive position and .
Supply chain constraints and inflationary pressure, particularly for memory and other components beginning in the second half of fiscal 2026, have adversely affected .
Evolving U.S. trade policy, including potential new tariffs and trade restrictions, creates significant uncertainty and could materially impact business and financial results, especially given reliance on non-U.S. sourcing and manufacturing.
NetApp is subject to a complex and intensifying global regulatory landscape, including new AI laws (e.g., the EU AI Act), privacy regulations (GDPR, U.S. state laws), and operational resilience rules (DORA), increasing compliance costs and risks.
The transition to consumption-based and cloud models is shifting timing and may reduce short-term demand for traditional on-premises products, potentially harming revenues and profitability.
A significant portion of revenues depends on large, recurring purchases from a limited number of customers and distributors without long-term commitments, exposing NetApp to material loss if key relationships weaken or orders are reduced.
Our corporate headquarters are located in San Jose, California. We own and lease office facilities and research and development facilities throughout the United States and internationally, primarily in Asia, Europe and North America. We do not consider any of our facilities to b…
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Our corporate headquarters are located in San Jose, California. We own and lease office facilities and research and development facilities throughout the United States and internationally, primarily in Asia, Europe and North America. We do not consider any of our facilities to be material for disclosure purposes.
For a discussion of legal proceedings, see Note 16 – Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.
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For a discussion of legal proceedings, see Note 16 – Commitments and Contingencies of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.
NetApp FY2026 revenue rose 5% to $6.9B with gross margin of 71%, driven by all-flash array sales and services growth, while component cost inflation pressured product margins.
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Total net revenues increased 5% to $6,925 million, with product revenues up 5% and services revenues up 6%, aided by a 2-point favorable foreign currency impact.
Hybrid Cloud all-flash revenues grew to 67% of net revenues, reflecting strong customer demand, while product gross margins fell 2 points due to higher memory and component costs.
Public Cloud services rose 3% to $688 million, but growth slowed due to the prior-year sale of the Spot by NetApp business; Public Cloud gross margins improved 8 points from cost optimization.
as a percentage of net revenues expanded 4 points to 24%, as operating expenses declined to 46% of revenues, with R&D spending down 2% and sales and marketing flat.
Cash provided by operating activities was $2,067 million; the company repaid $750 million in maturing Senior Notes, repurchased $950 million in stock, and paid $413 million in dividends.
The company raised prices in Q4 FY2026 to offset rising component costs and expects to continue adjusting pricing, while noting supply constraints may persist and challenge near-term demand fulfillment.
NetApp's FY2026 net income rose 8% to $1.28B on 5% revenue growth, driven by its Hybrid Cloud segment.
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Total net revenues grew 5% to $6.93B, with Product up 5% to $3.19B and Services revenue up 6% to $3.73B.
Hybrid Cloud increased 6% to $6.24B, led by a 11% jump in All-flash revenues to $4.18B.
Public Cloud rose 3% to $688M, while its cost of revenues fell 32% to $113M, boosting segment .
Net cash provided by operating activities was $2.07B, and the company returned $1.36B to shareholders via $950M in stock repurchases and $413M in dividends.
Total stood at $5.7B, with 45% expected to be recognized as within 12 months.
The company repaid $750M in maturing Senior Notes and held $2.49B in with no current portion outstanding.