NetApp (NTAP) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue grew 8% year-over-year to $1.54 billion, with record operating margins and EPS, driven by strong execution in hybrid cloud, public cloud, and all-flash segments.

• All-flash array annualized revenue run rate increased 21% year-over-year to $3.4 billion; cloud storage services revenue rose ~40% year-over-year.

• Returned $507 million to shareholders via dividends and buybacks; ended Q1 with $3 billion in cash and short-term investments.

• Announced CFO Mike Berry's retirement at fiscal year-end and initiated a restructuring plan reducing workforce by 2% with $17 million in charges.

• Introduced new all-flash arrays, AI/GenAI solutions, and received Microsoft Partner of the Year award for Azure migration.

Financial highlights

• Q1 revenue was $1.54 billion, up 8% year-over-year; billings grew 12% to $1.45 billion.

• Product revenue grew 13% to $669 million; services revenue increased 4% to $872 million.

• Gross margin improved to 71.3% (GAAP) and 72.2% (non-GAAP); operating margin reached 26% (non-GAAP); EPS was $1.56 (non-GAAP).

• Operating cash flow was $341 million; free cash flow was $300 million, representing 19.5% of revenue.

• Deferred revenue was $4.2 billion; remaining performance obligation at $4.5 billion.

Outlook and guidance

• FY25 revenue guidance raised to $6.48–$6.68 billion; non-GAAP EPS expected at $7.00–$7.20; non-GAAP operating margin at 27–28%.

• Q2 FY25 revenue expected at $1.565–$1.715 billion; non-GAAP EPS $1.73–$1.83.

• FY25 consolidated gross margin guidance: GAAP 70–71%, non-GAAP 71–72%.

• Next dividend of $0.52 per share payable October 2024.