NetApp, Inc.

NetApp, Inc. operates at the intersection of major industry megatrends—rapid data growth, multi-cloud adoption, and the rise of AI—which are creating unprecedented challenges and opportunities for organizations as they seek to securely manage and leverage growing data estates. The company is well positioned to enable Intelligent Data Infrastructure for its customers and help them realize the full promise of artificial intelligence by providing solutions that connect, protect, and activate data across every data environment—on-premises, in the cloud, and at the edge. NetApp's first-party native integration with all major hyperscalers—Amazon Web Services, Microsoft Azure, and Google Cloud—combined with decades of data management leadership, uniquely enables customers to harness these shifts for competitive advantage.

NetApp's sustained success is built on several enduring competitive strengths that set it apart in the market, including deep cloud integration, proven data management leadership with ONTAP, comprehensive security and resilience, strong ecosystem partnerships with technology leaders such as NVIDIA, Cisco, and Microsoft, customer-centric innovation, and operational excellence and financial discipline. The company competes in the storage, data management, and AI data pipeline markets, including on-premises infrastructure, hybrid cloud environments, and public cloud services, against a wide range of vendors that provide data storage systems, data management software, and related services. Competition is intense and includes factors such as product functionality, performance, reliability, security, ease of use, integration capabilities, pricing and total cost of ownership, delivery models, and quality of customer support and services.

NetApp generates revenue through a multichannel distribution strategy, selling products, solutions, and services through a direct sales force and an ecosystem of partners, including leading cloud providers. The company's diversified customer base spans industry segments and vertical markets such as energy, financial services, government, technology, internet, life sciences, healthcare services, manufacturing, media, entertainment, animation, video postproduction, and telecommunications. During fiscal 2026, sales through indirect channels represented the majority of net revenues, and sales to two major customers accounted for 43% of net revenues in fiscal 2026.

NetApp's operations are organized into two segments: Hybrid Cloud and Public Cloud. Hybrid Cloud provides a unified data storage portfolio of storage management and infrastructure solutions that helps customers modernize their data centers, including software, hardware, and related support, along with professional and other services. The Hybrid Cloud portfolio includes NetApp ONTAP data management software, which is the foundational technology underpinning NetApp's critical storage solutions, and includes various data management and protection features including autonomous ransomware detection, built-in data transport features, and storage efficiency capabilities. Storage infrastructure offerings include the AFF A-Series and C-Series scale-out unified storage, ASA A-Series and C-Series modern block-optimized all-flash arrays, AFX disaggregated scale-out storage built for the AI-powered enterprise, FAS high-capacity hybrid flash storage, E/EF series for dedicated high-bandwidth applications, and StorageGRID high-performance scalable object storage.

Public Cloud offers a portfolio of products delivered primarily as-a-service, including related support, encompassing cloud storage, data services, and operational services. Fully managed cloud storage offerings are available natively on Microsoft Azure as Azure NetApp Files, on AWS as Amazon FSx for NetApp ONTAP, and on Google Cloud as Google Cloud NetApp Volumes, with all cloud storage services based on the same ONTAP data management software that underpins on-premises ONTAP storage infrastructure offerings. The NetApp Console serves as a unified control plane enabling customers to manage their entire data landscape through a single web-based SaaS-delivered control point, and operational services include NetApp Data Infrastructure Insights for infrastructure monitoring and Instaclustr for fully managed open-source databases, pipelines, and workflow applications delivered as a service.

During fiscal 2026, NetApp executed a restructuring plan and recognized expenses totaling $21 million consisting primarily of employee severance-related costs related to current year and prior year plans. The company also raised its pricing in the fourth quarter of fiscal 2026 in line with market trends to address inflationary pressures and supply chain constraints that began in the second half of fiscal 2026, resulting in increased costs for memory and other components. On June 23, 2025, upon maturity, NetApp repaid the 1.875% Senior Notes due June 2025 for an aggregate amount of $757 million, comprised of principal and unpaid interest.

Net revenues increased 5% in fiscal 2026 compared to fiscal 2025, reaching $6,925 million ¹ from $6,572 million ² in the prior year, due to increases in both product revenues and services revenues. Gross margin increased less than one percentage point to 71% ³ from 70% ⁴ in fiscal 2025, while income from operations as a percentage of net revenues increased by four percentage points to 24% ⁵ from 20% ⁶. Net income was $1,276 million ⁷ compared to $1,186 million ⁸ in fiscal 2025, and diluted net income per share was $6.35 ⁹ versus $5.67 ¹⁰ in the prior year. Net cash provided by operating activities was $2,067 million ¹¹ compared to $1,506 million ¹² in fiscal 2025.

The filing contains forward-looking statements regarding future financial and operating results, strategy, beliefs and objectives for future operations, research and development, expectations regarding future product releases, growth and performance, and expected timing of and benefits from product introductions, developments, and enhancements, but NetApp's strategy is anchored in four key focus areas: modernizing data infrastructure, enabling resilient and secure operations, optimizing cloud strategies, and accelerating AI adoption. The company is well positioned to help enterprises overcome challenges related to AI and realize the full promise of AI through its Intelligent Data Infrastructure solutions, including the NetApp AI Data Engine and validated reference architectures with partners like NVIDIA, which help organizations streamline data pipelines, accelerate model training, and derive actionable insights from their data. NetApp's AI-ready infrastructure solutions, including the NetApp AI Data Engine and validated reference architectures with partners like NVIDIA, help organizations streamline data pipelines, accelerate model training, and derive actionable insights from their data.

NetApp is uniquely positioned as the only enterprise data infrastructure provider natively integrated with all major public cloud providers, enabling customers to manage, protect, and move data seamlessly across on-premises and cloud environments. The company delivers flexible consumption models, predictable costs, and the agility to scale workloads as business needs evolve, including subscription-based Storage-as-a-Service offerings such as NetApp Keystone. The company continues to invest in innovation, expanding its portfolio to include advanced AI-ready infrastructure, Storage-as-a-Service, and robust cyber resilience solutions, with partnerships with leading technology companies and a global ecosystem of channel partners further extending reach and solution capabilities.

NetApp's gross margins are influenced by a variety of factors including macroeconomic volatility, competitive pricing, customer price sensitivity, component and product design costs, inflation, foreign exchange currency fluctuations, and the volume and relative mix of revenues from product sales, software support, hardware support, and other services offerings. The company experienced inflationary pressure and supply chain constraints beginning in the second half of fiscal 2026, resulting in increased costs for memory and other components which affected gross margins, and management expects costs will remain elevated or continue to increase in the near term. In response to rising component costs, NetApp raised its pricing in the fourth quarter of fiscal 2026, which management expects to support product gross margins in early fiscal 2027, and expects to continue adjusting pricing as necessary to align with any significant changes in component costs.

NetApp has outsourced manufacturing operations to third parties located in Fremont, California; San Jose, California; Laredo, Texas; Guadalajara, Mexico; Helmond, The Netherlands; Tiszaujvaros, Hungary; Taoyuan, Taiwan; and Singapore, relying on a limited number of suppliers for materials and several key subcontractors for production of certain subassemblies and finished systems. The company continues to implement certain new business information systems, including implementing the final phase of a new enterprise resource planning system in the third quarter of fiscal 2026 to enhance and standardize processes, improve oversight, and better serve customers. As of April 24, 2026, NetApp had approximately 11,700 employees worldwide, and the company has periodically reduced its workforce, including restructuring plans announced in fiscal 2024, fiscal 2025, and fiscal 2026.

Total research and development expenses were $991 million ¹³ in fiscal 2026, compared to $1,012 million ¹⁴ in fiscal 2025 and $1,029 million ¹⁵ in fiscal 2024. During fiscal 2026, NetApp paid $198 million ¹⁶ for purchases of property and equipment, and used $950 million ¹⁷ for the repurchase of 9.0 million shares of common stock at an average price of $105.89 per share. The company declared aggregate cash dividends of $2.08 per share ¹⁸ in fiscal 2026, for which it paid a total of $413 million ¹⁹, and on May 21, 2026, declared a cash dividend of $0.52 per share ²⁰ of common stock payable on July 29, 2026. As of April 24, 2026, the remaining authorized amount for stock repurchases under the program was $0.5 billion ²¹, and on May 21, 2026, the Board of Directors authorized the repurchase of an additional $1.0 billion ²² of common stock.

NetApp faces structural headwinds from global economic and geopolitical conditions that may adversely affect its industry, business operations, and financial performance, including rising inflation, slower growth, economic downturns or recessions, changes in fiscal and monetary policies, higher interest and tax rates, economic uncertainty, political instability, ongoing international and regional conflicts, warfare, extreme weather events and effects from climate change, natural disasters and pandemics, supply chain interruptions and shortages, changes in laws and regulations, reduced consumer confidence and spending, international trade protection measures and disputes, and rapid technological changes. The company also faces risks from technological trends in its market, including the rapid emergence of generative artificial intelligence reshaping demand patterns for storage and data management infrastructure in ways that are still evolving, and the transition to consumption-based business models that may adversely affect revenues and profitability in other areas of the business.

NetApp faces execution risks from its reliance on a limited number of suppliers for critical product components, including some single-source suppliers, which has subjected the company to price rigidity, periodic supply constraints, and challenges in producing products with required quality and quantities. The company also faces risks from its dependence on indirect channel partners and strategic business partners, including public cloud providers, as most sales are made and/or fulfilled indirectly through channel partners, making it particularly difficult to predict future revenue. Additionally, the company faces risks from the U.S. government as an important customer, with revenues from U.S. public sector markets representing 10% ²³ of net revenues in fiscal 2026, down from 11% ²⁴ in both fiscal 2025 and fiscal 2024.

NetApp faces material risks from global economic and geopolitical conditions that could adversely affect its business, including rising inflation, slower growth, economic downturns, higher interest rates, international trade protection measures such as tariffs and sanctions, and ongoing conflicts in the Middle East which have already disrupted the company's ability to fulfill customer orders in the region on a timely basis. The company is exposed to significant supply chain risks, having experienced inflationary pressure and supply chain constraints beginning in the second half of fiscal 2026 resulting in increased costs for memory and other components that adversely affected gross margins, and relies on a limited number of suppliers for critical components including some single-source suppliers. NetApp faces intense competition from many companies including established public companies, newer public companies focused on flash storage, new market entrants targeting the AI opportunity, and cloud service providers offering storage on demand without requiring capital expenditure, with the emergence of artificial intelligence workloads introducing additional competitive dynamics. The company's business is concentrated with two major customers, each a distributor, accounting for 43% ²⁵ of net revenues in fiscal 2026, and the loss, cancellation, or delay of purchases from these customers could materially adversely impact operating results. NetApp is subject to cybersecurity risks, with its information systems and data having been specifically targeted by various threat actors including nation-state affiliated threat actors, and increasing use of AI in techniques employed by threat actors will continue to increase the risk of successful attacks.

Management's message emphasizes NetApp's position as a global leader in Intelligent Data Infrastructure, empowering organizations to manage, protect, and leverage data across on-premises, hybrid, and multi-cloud environments, with a strategic focus on modernizing data infrastructure, enabling resilient and secure operations, optimizing cloud strategies, and accelerating AI adoption. The tone is forward-looking and confident, highlighting the company's deep integration with all major public cloud providers, decades of data management leadership, and strong ecosystem partnerships as enduring competitive advantages. Management emphasizes three strategic priorities for the period ahead: driving relentless innovation through sustained commitment to hardware and software innovation and deep cloud integration, delivering a strong customer experience through lasting relationships and a full range of expertise, and maintaining operational excellence and financial discipline resulting in strong margins, robust cash flow, and the ability to invest in future growth while delivering consistent value to shareholders.