NTAP 10-Q
NetApp, Inc. (NTAP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification No.) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 28, 2026, there were
TABLE OF CONTENTS
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Item 1 |
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Item 2 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 |
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Item 4 |
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Item 1 |
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Item 1A |
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Item 2 |
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Item 3 |
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Item 4 |
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Item 5 |
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Item 6 |
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TRADEMARKS
© 2026 NetApp, Inc. All Rights Reserved. No portions of this document may be reproduced without prior written consent of NetApp, Inc. NetApp, the NetApp logo, and the marks listed at http://www.netapp.com/TM are trademarks of NetApp, Inc. Other company and product names may be trademarks of their respective owners.
2
PART I — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
NETAPP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
(Unaudited)
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July 31, 2026 |
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April 24, 2026 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable |
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Inventories |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Purchased intangible assets, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Current portion of long-term debt |
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Short-term deferred revenue |
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Total current liabilities |
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Long-term debt |
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Other long-term liabilities |
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Long-term deferred revenue |
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Total liabilities |
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Stockholders' equity: |
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Common stock and additional paid-in capital, $ |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
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Three Months Ended |
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July 31, 2026 |
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July 25, 2025 |
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Revenues: |
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Product |
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$ |
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$ |
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Services |
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Net revenues |
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Cost of revenues: |
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Cost of product |
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Cost of services |
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Total cost of revenues |
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Gross profit |
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Operating expenses: |
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Sales and marketing |
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Research and development |
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General and administrative |
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Restructuring charges |
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Total operating expenses |
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Income from operations |
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Other expense, net |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Shares used in net income per share calculations: |
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Basic |
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Diluted |
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See accompanying notes to condensed consolidated financial statements.
4
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
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Three Months Ended |
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July 31, 2026 |
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July 25, 2025 |
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Net income |
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$ |
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$ |
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Other comprehensive (loss) income: |
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Foreign currency translation adjustments |
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Unrealized losses on available-for-sale securities: |
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Unrealized holding losses arising during the period |
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Unrealized gains (losses) on cash flow hedges: |
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Unrealized holding gains (losses) arising during the period |
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Reclassification adjustments for (gains) losses included in net income |
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Other comprehensive (loss) income |
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Comprehensive income |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
5
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
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Three Months Ended |
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July 31, 2026 |
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July 25, 2025 |
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Cash flows from operating activities: |
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Net income |
$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Non-cash operating lease cost |
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Stock-based compensation |
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Deferred income taxes |
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Other items, net |
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Changes in assets and liabilities: |
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Accounts receivable |
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Inventories |
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Other operating assets |
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Accounts payable |
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Accrued expenses |
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Deferred revenue |
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Other operating liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of investments |
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Maturities, sales and collections of investments |
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Purchases of property and equipment |
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( |
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Acquisition of business, net of cash acquired |
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Other investing activities, net |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Proceeds from issuance of common stock under employee stock award plans |
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Payments for taxes related to net share settlement of stock awards |
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( |
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( |
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Repurchase of common stock |
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( |
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( |
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Repayments and extinguishment of debt |
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( |
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Dividends paid |
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( |
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( |
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Net cash used in financing activities |
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( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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Net change in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash: |
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Beginning of period |
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End of period |
$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
6
NETAPP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except per share amounts)
(Unaudited)
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Three Months Ended July 31, 2026 |
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Accumulated |
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Common Stock and |
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Other |
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Additional Paid-in Capital |
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Retained |
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Comprehensive |
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Shares |
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Amount |
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Earnings |
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Loss |
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Total |
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Balances, April 24, 2026 |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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( |
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( |
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Issuance of common stock under employee stock award plans, net of taxes |
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( |
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— |
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— |
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( |
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Repurchase of common stock |
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( |
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( |
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( |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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Cash dividends declared ($ |
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— |
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( |
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— |
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( |
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Balances, July 31, 2026 |
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$ |
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$ |
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$ |
( |
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$ |
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Three Months Ended July 25, 2025 |
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Accumulated |
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Common Stock and |
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Other |
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Additional Paid-in Capital |
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Retained |
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Comprehensive |
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Shares |
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Amount |
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Earnings |
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Loss |
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Total |
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Balances, April 25, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
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Net income |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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Issuance of common stock under employee stock award plans, net of taxes |
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( |
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— |
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— |
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( |
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Repurchase of common stock |
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( |
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( |
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( |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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Cash dividends declared ($ |
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— |
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( |
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— |
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( |
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Balances, July 25, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
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See accompanying notes to condensed consolidated financial statements.
7
NETAPP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business and Significant Accounting Policies
NetApp, Inc. (NetApp, we, us, our, or the Company) empowers organizations to realize the full potential of their data in a rapidly evolving digital world. NetApp delivers innovative solutions that enable seamless data management, protection, and mobility across on-premises, hybrid, and multi-cloud environments.
Basis of Presentation and Preparation
Our fiscal year is reported on a 52- or 53-week year ending on the last Friday in April. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal months with calendar months. Fiscal 2027, ending on April 30, 2027, is a 53-week year, with 14 weeks included in its first quarter and 13 weeks in each subsequent quarter. Fiscal 2026, which ended on April 24, 2026, was a 52-week year, with 13 weeks in each quarter.
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company, and reflect all adjustments, consisting only of normal recurring adjustments, that are, in the opinion of management, necessary for the fair presentation of our financial position, results of operations, comprehensive income, cash flows and stockholders’ equity for the interim periods presented. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information. Accordingly, these statements do not include all information and footnotes required by GAAP for annual consolidated financial statements, and should be read in conjunction with our audited consolidated financial statements as of and for the fiscal year ended April 24, 2026 contained in our Annual Report on Form 10-K. The results of operations for the three months ended July 31, 2026 are not necessarily indicative of the operating results to be expected for the full fiscal year or future operating periods.
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, revenue recognition, reserves and allowances; inventory valuation; valuation of goodwill and intangibles; restructuring reserves; employee benefit accruals; stock-based compensation; loss contingencies; investment impairments; income taxes and fair value measurements. Actual results could differ materially from those estimates, the anticipated effects of which have been incorporated, as applicable, into management's estimates as of July 31, 2026.
2. Recent Accounting Pronouncements
In September 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, with early adoption permitted. Adoption of this ASU can be applied prospectively; or following a modified transition approach that is based on the status of each project and whether software costs were capitalized before adoption; or retrospectively. We are currently evaluating the effect of this pronouncement on our consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of the nature of expenses included in the income statement. The standard requires disclosures about specific types of expenses included in the expense captions presented in the income statement as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The requirements can be applied on a prospective or retrospective basis. We are currently evaluating the effect of this pronouncement on our disclosures.
3. Business Combination
DataPelago, Inc. Acquisition
On
8
The preliminary acquisition-date values of the assets acquired and liabilities assumed are as follows (in millions):
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Amount |
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Cash |
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$ |
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Developed technology |
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Goodwill |
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Other assets |
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Total assets acquired |
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Liabilities assumed |
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( |
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Total purchase price |
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$ |
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The acquired net assets of DataPelago were recorded at their estimated values, which we determined with the assistance of valuations performed by third party specialists. The acquisition resulted in the recognition of a developed technology intangible asset with an estimated useful life of
The purchase price allocation is preliminary and subject to revision as additional information about the fair value of acquired assets and liabilities assumed becomes available during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Similarly, the allocation of goodwill among our reporting units is subject to revision.
The results of operations related to the acquisition of DataPelago have been included in our condensed consolidated statements of income from the acquisition date. Pro forma results of operations have not been presented because the impact from the acquisition was not material to our consolidated results of operations.
4. Goodwill and Purchased Intangible Assets, Net
Goodwill activity by reportable segment is summarized as follows (in millions):
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Hybrid Cloud |
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Public Cloud |
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Total |
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Balance as of April 24, 2026 |
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$ |
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$ |
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$ |
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Additions |
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Impact of foreign currency translation |
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( |
) |
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( |
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Balance as of July 31, 2026 |
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$ |
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$ |
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$ |
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Purchased intangible assets, net are summarized below (in millions):
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July 31, 2026 |
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April 24, 2026 |
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Gross |
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Accumulated |
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Net |
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Gross |
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Accumulated |
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Net |
|
||||||
|
|
Assets |
|
|
Amortization |
|
|
Assets |
|
|
Assets |
|
|
Amortization |
|
|
Assets |
|
||||||
Developed technology |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Customer contracts/relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Other purchased intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Total purchased intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
5. Supplemental Financial Information
Cash and cash equivalents (in millions):
The following table presents cash and cash equivalents as reported in our condensed consolidated balance sheets, as well as the sum of cash, cash equivalents and restricted cash as reported on our condensed consolidated statements of cash flows:
9
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
||
Inventories (in millions):
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Purchased components |
|
$ |
|
|
$ |
|
||
Finished goods |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
Property and equipment, net (in millions):
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Property and equipment, at cost |
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Accrued expenses (in millions):
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Accrued compensation and benefits |
|
$ |
|
|
$ |
|
||
Income tax payable |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Accrued expenses |
|
$ |
|
|
$ |
|
||
Deferred revenue:
Deferred revenue represents unrecognized revenue related to undelivered product commitments and other product deliveries that have not met all revenue recognition criteria, as well as customer payments made in advance for services, which include software and hardware support contracts, certain public cloud services and other services.
During the three months ended July 31, 2026 and July 25, 2025, we recognized revenue of $
Remaining performance obligations
As of July 31, 2026, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that are unsatisfied or partially unsatisfied was $
Statements of cash flows additional information (in millions):
Non-cash investing activities and other supplemental cash flow information are presented below:
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Non-cash Investing Activities: |
|
|
|
|
|
|
||
Liabilities incurred to former owners of acquired business |
|
$ |
|
|
$ |
|
||
Supplemental Cash Flow Information: |
|
|
|
|
|
|
||
Income taxes paid, net of refunds |
|
$ |
|
|
$ |
|
||
Interest paid |
|
$ |
|
|
$ |
|
||
10
6. Financial Instruments and Fair Value Measurements
The accounting guidance for fair value measurements provides a framework for measuring fair value on either a recurring or nonrecurring basis, whereby the inputs used in valuation techniques are assigned a hierarchical level. The following are the three levels of inputs to measure fair value:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs that reflect quoted prices for identical assets or liabilities in less active markets; quoted prices for similar assets or liabilities in active markets; benchmark yields, reported trades, broker/dealer quotes, inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3: Unobservable inputs that reflect our own assumptions incorporated in valuation techniques used to measure fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
We consider an active market to be one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis, and consider an inactive market to be one in which there are infrequent or few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, our own or the counterparty’s non-performance risk is considered in measuring the fair values of liabilities and assets, respectively.
Investments
The following is a summary of our investments at their cost or amortized cost as of July 31, 2026 and April 24, 2026 (in millions):
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
U.S. Treasury and government debt securities |
|
$ |
|
|
$ |
|
||
Money market funds |
|
|
|
|
|
|
||
Certificates of deposit |
|
|
|
|
|
|
||
Mutual funds |
|
|
|
|
|
|
||
Total debt and equity securities |
|
$ |
|
|
$ |
|
||
The fair value of our investments approximates their cost or amortized cost for both periods presented. Investments in mutual funds relate to the non-qualified deferred compensation plan offered to certain employees.
11
As of July 31, 2026, all our debt investments are due to mature in one year or less.
Fair Value of Financial Instruments
The following table summarizes our financial assets and liabilities measured at fair value (in millions):
|
|
July 31, 2026 |
|
|||||||||||||
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Money market funds |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
U.S. Treasury and government debt securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury and government debt securities |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total short-term investments |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Total cash, cash equivalents and short-term investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Other items: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mutual funds (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Mutual funds (2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Foreign currency exchange contracts assets (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Contingent consideration liability (3) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
12
|
|
April 24, 2026 |
|
|||||||||
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|||
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
|||
Cash |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Money market funds |
|
|
|
|
|
|
|
|
|
|||
Certificates of deposit |
|
|
|
|
|
|
|
|
|
|||
U.S. Treasury and government debt securities |
|
|
|
|
|
|
|
|
|
|||
Total cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|||
U.S. Treasury and government debt securities |
|
|
|
|
|
|
|
|
|
|||
Total short-term investments |
|
|
|
|
|
|
|
|
|
|||
Total cash, cash equivalents and short-term investments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other items: |
|
|
|
|
|
|
|
|
|
|||
Mutual funds (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Mutual funds (2) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency exchange contracts assets (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency exchange contracts liabilities (3) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Our contingent consideration liability is related to the acquisition of DataPelago and was valued using a probability-weighted discounted cash flow model. See Note 3 – Business Combination for further details of the acquisition and contingent consideration.
Fair Value of Debt
As of July 31, 2026 and April 24, 2026, the fair value of our long-term debt, including the current portion, was $
7. Financing Arrangements
Long-Term Debt
The following table summarizes information relating to our long-term debt, which we collectively refer to as our Senior Notes (in millions, except interest rates):
|
|
Effective Interest Rate |
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
2.375% Senior Notes Due June 2027 |
|
|
|
|
|
|
|
|||
2.70% Senior Notes Due June 2030 |
|
|
|
|
|
|
|
|||
5.50% Senior Notes Due March 2032 |
|
|
|
|
|
|
|
|||
5.70% Senior Notes Due March 2035 |
|
|
|
|
|
|
|
|||
Total principal amount |
|
|
|
|
|
|
|
|
||
Unamortized discount and issuance costs |
|
|
|
|
( |
) |
|
|
( |
) |
Total senior notes |
|
|
|
|
|
|
|
|
||
Less: Current portion of long-term debt |
|
|
|
|
( |
) |
|
|
|
|
Total long-term debt |
|
|
|
$ |
|
|
$ |
|
||
Senior Notes
Our Senior Notes, which are unsecured, unsubordinated obligations, rank equally in right of payment with any existing and future senior unsecured indebtedness. Interest on our Senior Notes is payable semi-annually.
We may redeem the Senior Notes in whole or in part, at any time at our option at specified redemption prices. In addition, upon the occurrence of certain change of control triggering events, we may be required to repurchase the Senior Notes under specified terms. The Senior Notes also include covenants that limit our ability to incur debt secured by liens on assets or on shares of stock or indebtedness of our subsidiaries; to engage in certain sale and lease-back transactions; and to consolidate, merge or sell all or substantially all of our assets. As of July 31, 2026, we were in compliance with all covenants associated with the Senior Notes.
13
Credit Facility and Commercial Paper Program
We have a senior unsecured credit agreement with a syndicated group of lenders. The credit agreement, which was amended in March 2025, provides for a $
We also have a commercial paper program (the “Program”), under which we may issue unsecured commercial paper notes. Amounts available under the Program, as amended in July 2017, may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the Program at any time not to exceed $
8. Stockholders’ Equity
Equity Awards
We granted
Stock Repurchase Program
Under our common stock repurchase program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management.
The following table summarizes activity related to the stock repurchase program for the three months ended July 31, 2026 (in millions, except for per share amounts):
Number of shares repurchased |
|
|
|
|
Average price per share |
|
$ |
|
|
Stock repurchases allocated to additional paid-in capital |
|
$ |
|
|
Stock repurchases allocated to retained earnings |
|
$ |
|
|
Remaining authorization at end of period |
|
$ |
|
On May 21, 2026, our Board of Directors authorized the repurchase of an additional $
Dividends
The following is a summary of our activities related to dividends on our common stock (in millions, except per share amounts):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Dividends per share declared |
|
$ |
|
|
$ |
|
||
Dividend payments allocated to additional paid-in capital |
|
$ |
|
|
$ |
|
||
Dividend payments allocated to retained earnings |
|
$ |
|
|
$ |
|
||
On August 27, 2026, we declared a cash dividend of $
14
9
We use derivative instruments to manage exposures to foreign currency risk. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. The maximum length of time over which forecasted foreign currency denominated revenues are hedged is 12 months. The program is not designated for trading or speculative purposes. Our derivatives expose us to credit risk to the extent that the counterparties may be unable to meet their obligations under the terms of our agreements. We seek to mitigate such risk by limiting our counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We also have in place master netting arrangements to mitigate the credit risk of our counterparties and to potentially reduce our losses due to counterparty nonperformance. We present our derivative instruments as net amounts in our condensed consolidated balance sheets. The gross and net fair value amounts of such instruments were not material as of July 31, 2026 or April 24, 2026. All contracts have a maturity of less than 12 months.
The notional amount of our outstanding U.S. dollar equivalent foreign currency exchange forward contracts consisted of the following (in millions):
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Cash Flow Hedges |
|
|
|
|
|
|
||
Forward contracts purchased |
|
$ |
|
|
$ |
|
||
Balance Sheet Contracts |
|
|
|
|
|
|
||
Forward contracts sold |
|
$ |
|
|
$ |
|
||
Forward contracts purchased |
|
$ |
|
|
$ |
|
||
The effect of cash flow hedges recognized in net revenues is presented in the condensed consolidated statements of comprehensive income.
The effect of derivative instruments not designated as hedging instruments recognized in other expense, net on our condensed consolidated statements of income was as follows (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
|
Gain (Loss) Recognized into Income |
|
||||||
Foreign currency exchange contracts |
|
$ |
( |
) |
|
$ |
|
|
10. Restructuring Charges
In the first three months of fiscal 2027, management approved a restructuring plan to redirect resources to the highest return activities and reduce costs. Charges related to the plan consisted primarily of employee severance-related costs. The activities under the plan are expected to be substantially complete by the end of fiscal 2027.
Activities related to our restructuring plans are summarized as follows (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Net charges |
|
|
|
|
|
|
||
Cash payments |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
||
Liabilities for our restructuring activities are included in accrued expenses in our condensed consolidated balance sheets.
11. Income Taxes
Our effective tax rates for the periods presented were as follows:
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Effective tax rates |
|
|
% |
|
|
% |
||
15
Our effective tax rate reflects the impact of a significant amount of earnings being taxed in foreign jurisdictions at rates below the United States (U.S.) statutory rate which is offset by non-deductible stock-based compensation and state taxes. Our effective tax rate for the three months ended July 31, 2026 includes an increase in discrete tax benefits related to stock-based compensation compared to the corresponding period of the prior year.
On July 4, 2025, the reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act (OBBB), was signed into law in the United States. The OBBB contains several changes to corporate taxation including the extension of key provisions of the 2017 Tax Cuts and Jobs Act and modifications to the international tax framework. The legislation has multiple effective dates, with certain provisions effective in our fiscal 2026 and others phased in through our fiscal 2027. The OBBB did not have a material impact to our income tax provision for the three months ended July 31, 2026.
The Organisation for Economic Co-operation and Development (“OECD”) introduced an international tax framework under Pillar Two that provides for a global minimum tax of 15% for large multinational companies. We are currently subject to Pillar Two rules enacted in certain foreign jurisdictions in which we operate. As of July 31, 2026, Pillar Two taxes did not have a significant impact on our financial statements, particularly due to the safe harbor relief during the transition period. On January 5, 2026, the OECD issued administrative guidance outlining a framework under which U.S.-parented groups may be excluded from the application of Pillar Two rules through a “side-by-side arrangement.” Each member jurisdiction will need to adopt this guidance into local law, and the timing and manner of adoption may vary. We will continue to monitor U.S. and international legislative developments, including further announcements on the side-by-side arrangement, to assess any potential impacts to our financial statements.
We are currently undergoing various income tax audits in the U.S. and audits in several foreign tax jurisdictions. Transfer pricing calculations are key topics under these audits and are often subject to dispute and appeals.
We continue to monitor the progress of ongoing discussions with tax authorities and the impact, if any, of the expected expiration of the statute of limitations in various taxing jurisdictions. We engage in continuous discussion and negotiation with taxing authorities regarding tax matters in multiple jurisdictions.
12. Net Income per Share
The following is a calculation of basic and diluted net income per share (in millions, except per share amounts):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Denominator: |
|
|
|
|
|
|
||
Shares used in basic computation |
|
|
|
|
|
|
||
Dilutive impact of employee equity award plans |
|
|
|
|
|
|
||
Shares used in diluted computation |
|
|
|
|
|
|
||
Net Income per Share: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
||
The following table presents the number of potential shares of common stock from outstanding employee equity awards that have been excluded from the computation of diluted net income per share, as their inclusion would have had an anti-dilutive effect, for the periods presented (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Employee equity award plans |
|
|
|
|
|
|
||
13. Segment, Geographic, and Significant Customer Information
Our operations are organized into
16
segments certain cost of revenues which we manage at the corporate level. These unallocated costs include stock-based compensation and amortization of intangible assets. We do not allocate assets to our segments.
Hybrid Cloud offers a unified data storage portfolio of storage management and infrastructure solutions that helps customers modernize their data centers. This portfolio accommodates both structured and unstructured data with unified storage optimized for flash, disk, and cloud storage, capable of handling data-intensive workloads and applications. Hybrid Cloud includes software, hardware, and related support, along with professional and other services.
Public Cloud offers a portfolio of products delivered primarily as-a-service, including related support. This portfolio includes cloud storage, data services, and operational services. Public Cloud includes certain reseller arrangements in which the timing of our consideration follows the end user consumption of the reseller services.
Segment Revenues and Gross Profit
Financial information by segment is as follows (in millions):
|
Three Months Ended July 31, 2026 |
|
|||||||||
|
Hybrid Cloud |
|
|
Public Cloud |
|
|
Total |
|
|||
Product revenues |
$ |
|
|
$ |
|
|
$ |
|
|||
Support revenues |
|
|
|
|
|
|
|
|
|||
Professional and other services revenues |
|
|
|
|
|
|
|
|
|||
Public cloud revenues |
|
|
|
|
|
|
|
|
|||
Net revenues |
|
|
|
|
|
|
|
|
|||
Cost of product revenues |
|
|
|
|
|
|
|
|
|||
Cost of support revenues |
|
|
|
|
|
|
|
|
|||
Cost of professional and other services revenues |
|
|
|
|
|
|
|
|
|||
Cost of public cloud revenues |
|
|
|
|
|
|
|
|
|||
Segment cost of revenues |
|
|
|
|
|
|
|
|
|||
Segment gross profit |
$ |
|
|
$ |
|
|
$ |
|
|||
Unallocated cost of revenues1 |
|
|
|
|
|
|
|
( |
) |
||
Operating expenses |
|
|
|
|
|
|
|
( |
) |
||
Other expense, net |
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
|
|
|
|
|
$ |
|
|||
1 Unallocated cost of revenues are composed of $ |
|
||||||||||
|
Three Months Ended July 25, 2025 |
|
|||||||||
|
Hybrid Cloud |
|
|
Public Cloud |
|
|
Total |
|
|||
Product revenues |
$ |
|
|
$ |
|
|
$ |
|
|||
Support revenues |
|
|
|
|
|
|
|
|
|||
Professional and other services revenues |
|
|
|
|
|
|
|
|
|||
Public cloud revenues |
|
|
|
|
|
|
|
|
|||
Net revenues |
|
|
|
|
|
|
|
|
|||
Cost of product revenues |
|
|
|
|
|
|
|
|
|||
Cost of support revenues |
|
|
|
|
|
|
|
|
|||
Cost of professional and other services revenues |
|
|
|
|
|
|
|
|
|||
Cost of public cloud revenues |
|
|
|
|
|
|
|
|
|||
Segment cost of revenues |
|
|
|
|
|
|
|
|
|||
Segment gross profit |
$ |
|
|
$ |
|
|
$ |
|
|||
Unallocated cost of revenues1 |
|
|
|
|
|
|
|
( |
) |
||
Operating expenses |
|
|
|
|
|
|
|
( |
) |
||
Other expense, net |
|
|
|
|
|
|
|
( |
) |
||
Income before income taxes |
|
|
|
|
|
|
$ |
|
|||
1 |
|
||||||||||
17
Hybrid Cloud Segment Net Revenues by Storage Category are as follows (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
All-flash revenues |
|
$ |
|
|
$ |
|
||
Hybrid-flash and other revenues |
|
|
|
|
|
|
||
Hybrid Cloud segment net revenues |
|
$ |
|
|
$ |
|
||
Geographical Revenues
Revenues summarized by geographic region are as follows (in millions):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
United States, Canada and Latin America (Americas) |
|
$ |
|
|
$ |
|
||
Europe, Middle East and Africa (EMEA) |
|
|
|
|
|
|
||
Asia Pacific (APAC) |
|
|
|
|
|
|
||
Net revenues |
|
$ |
|
|
$ |
|
||
Americas revenues consist of sales to Americas commercial and U.S. public sector markets. Sales to customers inside the U.S. were $
Significant Customers
Two customers, each of which is a distributor, accounted for 10% or more of our net revenues:
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Customer A |
|
|
% |
|
|
% |
||
Customer B |
|
|
% |
|
|
% |
||
One customer, which is a distributor, accounted for 10% or more of accounts receivable:
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Customer B |
|
|
% |
|
|
% |
||
Purchase Orders and Other Commitments
In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. A significant portion of our reported purchase commitments arising from these agreements consist of firm, non-cancelable, and unconditional commitments. As of July 31, 2026, we had $
In addition to inventory commitments with contract manufacturers and component suppliers, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. As of July 31, 2026, we had $
Of the total $
Legal Contingencies
When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. However, the likelihood of a loss with respect to a particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the information available and the potential effect of future events and decisions by third parties that will determine the ultimate resolution of the contingency.
18
We are subject to various legal proceedings and claims that arise in the normal course of business. We may, from time to time, receive claims that we are infringing third parties’ intellectual property rights, including claims for alleged patent infringement brought by non-practicing entities. We are currently involved in patent litigation brought by non-practicing entities and other third parties. We believe we have strong arguments that our products do not infringe and/or the asserted patents are invalid, and we intend to vigorously defend against the plaintiffs’ claims. However, there is no guarantee that we will prevail at trial and if a jury were to find that our products infringe, we could be required to pay significant monetary damages, and may cause product shipment delays or stoppages, require us to redesign our products, or require us to enter into royalty or licensing agreements.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements also can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the actual results of NetApp, Inc. ("NetApp," “we,” “us,” "our," or the “Company”) may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those described in our Annual Report on Form 10-K for the year ended April 24, 2026 ("2026 Annual Report on Form 10-K"), including under the heading “Risk Factors” and discussed in this Form 10-Q under the heading “Risk Factors,” which are incorporated herein by reference. The following discussion should be read in conjunction with our consolidated financial statements as of and for the fiscal year ended April 24, 2026, and the notes thereto, contained in our 2026 Annual Report on Form 10-K, and the condensed consolidated financial statements and notes thereto included elsewhere in this Form 10-Q. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.
20
Overview
Our Company
NetApp is a global leader in intelligent data infrastructure, empowering organizations to realize the full potential of their data in a rapidly evolving digital world. Headquartered in San Jose, California, and serving customers in approximately 150 countries, NetApp delivers innovative solutions that enable seamless data management, protection, and mobility across on-premises, hybrid, and multi-cloud environments.
Our flagship ONTAP® data management software, together with a comprehensive portfolio of all-flash, hybrid-flash, and cloud-native offerings, forms the foundation for customers’ digital transformation initiatives. NetApp’s deep integration with all major public cloud providers—Amazon Web Services (AWS), Microsoft Azure, and Google Cloud—enables our customers to run critical workloads anywhere, with consistent performance, security, and governance.
NetApp's strategic focus is on modernizing data infrastructure, enabling resilient and secure operations, optimizing cloud strategies, and accelerating artificial intelligence (AI) adoption. Our portfolio includes advanced AI-ready infrastructure, Storage-as-a-Service (Keystone), and robust cyber resilience solutions, and we continue to invest in innovation. Our partnerships with leading technology companies and a global ecosystem of channel partners further extend our reach and solution capabilities.
Our operations are organized into two segments: Hybrid Cloud and Public Cloud.
Hybrid Cloud offers a unified data storage portfolio of storage management and infrastructure solutions that helps customers modernize their data centers. Our Hybrid Cloud portfolio accommodates both structured and unstructured data with unified storage optimized for flash, disk, and cloud storage, capable of handling data-intensive workloads and applications. Hybrid Cloud includes software, hardware, and related support, along with professional and other services.
Public Cloud offers a portfolio of products delivered primarily as-a-service, including related support. This portfolio includes cloud storage, data services, and operational services. These services are generally available on the leading public clouds, including AWS, Microsoft Azure, and Google Cloud.
Global Business Environment
Supply Chain
Inflationary pressures and global supply chain constraints continued to impact our operations during the first quarter of fiscal 2027. We have experienced increased costs for memory and other components, which have affected our gross margins, and we expect costs will remain elevated, or continue to increase, in the near term. Additionally, the tight supply environment for specific products, which is anticipated to persist, could pose challenges in meeting customer demand for those products.
To address these challenges, we have implemented several strategic actions:
These actions are part of our ongoing efforts to mitigate the impact of inflation and supply chain constraints on our operating results. We will continue to monitor these trends and uncertainties and adjust our strategies as needed to maintain our financial performance.
Stock Repurchase Program and Dividend Activity
During the first three months of fiscal 2027, we repurchased 1.5 million shares of our common stock at an average price of $133.32 per share, for an aggregate purchase price of $200 million. We also declared aggregate cash dividends of $0.52 per share in that period, for which we paid $102 million.
21
Acquisition
On July 16, 2026, we acquired all the outstanding shares of DataPelago, Inc., a privately-held company recognized for its innovative approach to eliminate data processing bottlenecks for AI and analytics workloads, for $193 million. Of this amount, $87 million was paid in cash at closing, and the remainder will be paid in a future period if certain criteria as defined in the merger agreement are achieved.
Restructuring Event
In the first quarter of fiscal 2027, we executed a restructuring plan to redirect resources to highest return activities and reduce costs. Aggregate restructuring charges recorded during the first quarter of fiscal 2027 totaled $56 million.
Results of Operations
Our fiscal year is reported on a 52- or 53-week year that ends on the last Friday in April. An additional week is included in the first fiscal quarter approximately every six years to realign fiscal months with calendar months. Fiscal 2027, ending on April 30, 2027, is a 53-week year, with 14 weeks included in its first quarter and 13 weeks in each subsequent quarter. Fiscal 2026, which ended on April 24, 2026, was a 52-week year, with 13 weeks in each quarter. Unless otherwise stated, references to particular years, quarters, months and periods refer to our fiscal years ended in April and the associated quarters, months and periods of those fiscal years.
The following table sets forth certain condensed consolidated statements of income data as a percentage of net revenues for the periods indicated:
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Revenues: |
|
|
|
|
|
|
||
Product |
|
|
49 |
% |
|
|
42 |
% |
Services |
|
|
51 |
|
|
|
58 |
|
Net revenues |
|
|
100 |
|
|
|
100 |
|
Cost of revenues: |
|
|
|
|
|
|
||
Cost of product |
|
|
22 |
|
|
|
19 |
|
Cost of services |
|
|
8 |
|
|
|
10 |
|
Gross profit |
|
|
70 |
|
|
|
70 |
|
Operating expenses: |
|
|
|
|
|
|
||
Sales and marketing |
|
|
25 |
|
|
|
30 |
|
Research and development |
|
|
14 |
|
|
|
16 |
|
General and administrative |
|
|
5 |
|
|
|
5 |
|
Restructuring charges |
|
|
3 |
|
|
|
— |
|
Total operating expenses |
|
|
46 |
|
|
|
51 |
|
Income from operations |
|
|
24 |
|
|
|
20 |
|
Other expense, net |
|
|
— |
|
|
|
— |
|
Income before income taxes |
|
|
24 |
|
|
|
19 |
|
Provision for income taxes |
|
|
5 |
|
|
|
5 |
|
Net income |
|
|
19 |
% |
|
|
15 |
% |
Percentages may not add due to rounding
Discussion and Analysis of Results of Operations
Net Revenues (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Net revenues |
|
$ |
2,025 |
|
|
$ |
1,559 |
|
|
|
30 |
% |
The increase in net revenues for the first quarter of fiscal 2027 compared to the corresponding period of the prior year was driven by higher product revenues and, to a lesser extent, an increase in services revenues. The extra week in the first quarter of fiscal 2027 contributed approximately $65 million of additional services revenues to that period. Product revenues as a percentage of net revenues increased by seven percentage points in the first quarter of fiscal 2027 compared to the corresponding period of fiscal 2026.
22
Product Revenues (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Product revenues |
|
$ |
987 |
|
|
$ |
654 |
|
|
|
51 |
% |
Hybrid Cloud
Product revenues are derived through the sale of our Hybrid Cloud solutions and consist of sales of configured all-flash array systems (including AFF A-Series and AFF C-Series with capacity flash) and hybrid systems (including FAS), which are bundled hardware and software products, as well as add-on flash, disk and/or hybrid storage and related OS, StorageGrid, OEM products, and add-on optional software.
Total product revenues increased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year primarily due to higher revenues from sales of all-flash array systems, supported by the price increases we implemented in the fourth quarter of fiscal 2026.
Services Revenues (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Services revenues |
|
$ |
1,038 |
|
|
$ |
905 |
|
|
|
15 |
% |
Support |
|
|
720 |
|
|
|
647 |
|
|
|
11 |
% |
Professional and other services |
|
|
112 |
|
|
|
97 |
|
|
|
15 |
% |
Public cloud |
|
|
206 |
|
|
|
161 |
|
|
|
28 |
% |
Hybrid Cloud
Hybrid Cloud services revenues are derived from the sale of: (1) support, which includes both hardware and software support contracts (the latter of which entitle customers to receive unspecified product upgrades and enhancements, bug fixes and patch releases), and (2) professional and other services, which include customer education and training.
Support revenues increased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, primarily due to an additional week in the current year period, which contributed approximately $50 million of additional revenues and, to a lesser extent, a higher aggregate support contract value for our installed base.
Professional and other services revenues increased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year primarily due to an increase in revenues from our Keystone storage-as-a-service offering.
Public Cloud
Public Cloud revenues are derived from the sale of public cloud offerings delivered primarily as-a-service, which include cloud storage, data services and operational services.
Public Cloud revenues increased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, due to higher customer demand driven by overall growth in the cloud market, and an additional week in the period, which contributed approximately $15 million of additional revenues.
Hybrid Cloud Segment Net Revenues by Storage Category (in millions, except percentages):
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Hybrid Cloud segment net revenues |
|
$ |
1,819 |
|
|
$ |
1,398 |
|
All-flash revenues as a percentage of Hybrid Cloud segment net revenues |
|
|
72 |
% |
|
|
64 |
% |
Hybrid-flash and other revenues as a percentage of Hybrid Cloud segment net revenues |
|
|
28 |
% |
|
|
36 |
% |
Percentages may not add due to rounding
The increases in all-flash revenues (comprised of all-flash product and related service revenues) as a percentage of total Hybrid Cloud segment net revenues in the first quarter of fiscal 2027 compared to the corresponding period of the prior year is primarily due
23
to growing customer demand for our all-flash storage solutions, supported by price increases we implemented in the fourth quarter of fiscal 2026.
Net Revenues by Geographic Area:
|
|
Three Months Ended |
|
|||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
United States, Canada and Latin America (Americas) |
|
|
48 |
% |
|
|
51 |
% |
Americas Commercial |
|
|
37 |
% |
|
|
40 |
% |
U.S. Public Sector |
|
|
11 |
% |
|
|
11 |
% |
Europe, Middle East and Africa (EMEA) |
|
|
33 |
% |
|
|
32 |
% |
Asia Pacific (APAC) |
|
|
19 |
% |
|
|
17 |
% |
Percentages may not add due to rounding
Sales to United States (U.S.) public sector markets includes revenue from the U.S. federal government and U.S. state governments, local municipalities and education institutions. While revenues attributable to all geographies increased on a dollar basis in the first quarter of fiscal 2027 compared to the prior-year period, APAC and EMEA revenues grew at a higher rate than Americas revenues (primarily due to slower Americas Commercial growth), resulting in a minor shift in geographical revenue mix.
Cost of Revenues
Our cost of revenues consists of:
(1) cost of product revenues, composed of (a) cost of Hybrid Cloud product revenues, which includes the costs of manufacturing and shipping our products, inventory write-downs, and warranty costs, and (b) unallocated cost of product revenues, which includes stock-based compensation, and;
(2) cost of services revenues, composed of (a) cost of support revenues, which includes the costs of providing support activities for hardware and software support, global support partnership programs, and third-party royalty costs, (b) cost of professional and other services revenues, constituting the cost of delivering such services which includes depreciation expense, (c) cost of public cloud revenues, constituting the cost of providing our Public Cloud offerings, which includes depreciation and amortization expense and third-party datacenter fees, and (d) unallocated cost of services revenues, which includes stock-based compensation and amortization of intangibles.
Cost of Product Revenues (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Cost of product revenues |
|
$ |
450 |
|
|
$ |
302 |
|
|
|
49 |
% |
Hybrid Cloud |
|
|
448 |
|
|
|
301 |
|
|
|
49 |
% |
Unallocated |
|
|
2 |
|
|
|
1 |
|
|
|
100 |
% |
Hybrid Cloud
Cost of Hybrid Cloud product revenues represented 45% of Hybrid Cloud product revenues for the first quarter of fiscal 2027, compared to 46% for the corresponding period of the prior year. Materials costs represented 94% of cost of Hybrid Cloud product revenues for the first quarter of fiscal 2027, compared to 89% for the corresponding period of the prior year.
Materials costs increased by $152 million in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, primarily reflecting the increase in product revenues and higher component costs.
Hybrid Cloud product gross margins were relatively flat in the first quarter of fiscal 2027 compared to the corresponding period of the prior year primarily reflecting higher selling prices offset by higher component costs.
Unallocated
Unallocated cost of product revenues were relatively flat in the first quarter of fiscal 2027 compared to the corresponding period of the prior year.
24
Cost of Services Revenues (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Cost of services revenues |
|
$ |
156 |
|
|
$ |
159 |
|
|
|
(2 |
)% |
Support |
|
|
49 |
|
|
|
50 |
|
|
|
(2 |
)% |
Professional and other services |
|
|
71 |
|
|
|
68 |
|
|
|
4 |
% |
Public cloud |
|
|
28 |
|
|
|
32 |
|
|
|
(13 |
)% |
Unallocated |
|
|
8 |
|
|
|
9 |
|
|
|
(11 |
)% |
Hybrid Cloud
Cost of Hybrid Cloud services revenues, which are composed of the costs of support and professional and other services remained relatively flat in the first quarter of fiscal 2027 compared to the corresponding period of the prior year. Cost of Hybrid Cloud services revenues represented 14% of Hybrid Cloud services revenues for the first quarter of fiscal 2027, compared to 16% for the corresponding period of the prior year.
Hybrid Cloud support gross margins increased marginally in the first quarter of fiscal 2027 compared to the corresponding period of the prior year. Hybrid Cloud professional and other services gross margins increased by seven percentage points in the first quarter of fiscal 2027 compared to the corresponding period of the prior year primarily due to the mix of services provided.
Public Cloud
Cost of Public Cloud revenues decreased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year. Cost of Public Cloud revenues represented 14% of Public Cloud revenues for the first quarter of fiscal 2027, compared to 20% for the corresponding period of the prior year.
Public Cloud gross margins increased by six percentage points in the first quarter of fiscal 2027 compared to the corresponding period of the prior year. The decrease in cost of Public Cloud revenues and improved gross margins were primarily due to cost optimization that included a decrease in fixed assets depreciation.
Unallocated
Unallocated cost of services revenues were relatively flat in the first quarter of fiscal 2027 compared to the corresponding period of the prior year.
Operating Expenses
Sales and Marketing, Research and Development and General and Administrative Expenses
Sales and marketing, research and development, and general and administrative expenses for the first quarter of fiscal 2027 totaled $879 million, or 43% of net revenues, reflecting a decrease of seven percentage points, compared to the corresponding period of the prior year, primarily due to the increase in net revenues.
Compensation costs represent the largest component of operating expenses. Included in compensation costs are salaries, benefits, other compensation-related costs, stock-based compensation expense and employee incentive compensation plan costs.
Total compensation costs included in sales and marketing, research and development and general and administrative expenses increased by $75 million, or 15%, in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, primarily attributable to higher incentive compensation expense and the impact of one additional week in the first quarter of fiscal 2027.
The extra week in the first quarter of fiscal 2027 contributed approximately $22 million of additional sales and marketing, research and development and general administrative expenses in that period.
Sales and Marketing (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Sales and marketing expenses |
|
$ |
507 |
|
|
$ |
461 |
|
|
|
10 |
% |
25
Sales and marketing expenses consist primarily of compensation costs, commissions, outside services, facilities and IT support costs, advertising and marketing promotional expense and travel and entertainment expense.
The increase in sales and marketing expenses in the first quarter of fiscal 2027 compared to the corresponding period of the prior year was primarily due to higher compensation costs. This increase in compensation costs was primarily driven by higher incentive compensation expense and the impact of the extra week in the first quarter of fiscal 2027.
Research and Development (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Research and development expenses |
|
$ |
274 |
|
|
$ |
242 |
|
|
|
13 |
% |
Research and development expenses consist primarily of compensation costs, facilities and IT support costs, depreciation, equipment and software related costs, prototypes, non-recurring engineering charges and other outside services costs.
Research and development expenses increased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, primarily due to higher compensation costs. This increase in compensation costs was primarily driven by higher incentive compensation expense and the impact of the extra week in the first quarter of fiscal 2027.
General and Administrative (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
General and administrative expenses |
|
$ |
98 |
|
|
$ |
84 |
|
|
|
17 |
% |
General and administrative expenses consist primarily of compensation costs, professional and corporate legal fees, outside services and facilities and IT support costs.
General and administrative expenses increased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, primarily due to higher compensation costs. This increase in compensation costs was primarily driven by higher incentive compensation expense and the impact of the extra week in the first quarter of fiscal 2027.
Restructuring Charges (in millions, except percentages):
|
|
Three Months Ended |
||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
||
Restructuring charges |
|
$ |
56 |
|
|
$ |
2 |
|
|
NM |
NM – Not Meaningful
In the first three months of fiscal 2027, management approved a restructuring plan to redirect resources to the highest return activities and reduce costs. Charges related to the plan consisted primarily of employee severance-related costs. The activities under this plan are expected to be substantially complete by the end of fiscal 2027.
Other Expense, Net (in millions, except percentages)
The components of other expense, net were as follows:
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Interest income |
|
$ |
33 |
|
|
$ |
36 |
|
|
|
(8 |
)% |
Interest expense |
|
|
(29 |
) |
|
|
(29 |
) |
|
|
— |
% |
Other, net |
|
|
(4 |
) |
|
|
(12 |
) |
|
NM |
|
|
Total |
|
$ |
— |
|
|
$ |
(5 |
) |
|
NM |
|
|
NM – Not Meaningful
Interest income decreased in the first quarter of fiscal 2027 compared to the corresponding period of the prior year, primarily due to lower average cash and investment balances.
26
The difference in Other, net in the first quarter of fiscal 2027 compared to the corresponding period of the prior year is primarily due to fluctuations in foreign exchange gains and losses year-over-year.
Provision for Income Taxes (in millions, except percentages):
|
|
Three Months Ended |
|
|||||||||
|
|
July 31, 2026 |
|
|
July 25, 2025 |
|
|
% Change |
|
|||
Provision for income taxes |
|
$ |
109 |
|
|
$ |
71 |
|
|
|
54 |
% |
Effective tax rate |
|
|
22.5 |
% |
|
|
23.4 |
% |
|
NM |
|
|
NM – Not Meaningful
Our effective tax rate reflects the impact of a significant amount of earnings being taxed in foreign jurisdictions at rates below the United States (U.S.) statutory rate which is offset by non-deductible stock-based compensation and state taxes. Our effective tax rate for the three months ended July 31, 2026 includes an increase in discrete tax benefits related to stock-based compensation compared to the corresponding period of the prior year.
Liquidity, Capital Resources and Cash Requirements
(In millions) |
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Cash, cash equivalents and short-term investments |
|
$ |
3,576 |
|
|
$ |
3,584 |
|
Principal amount of debt |
|
$ |
2,500 |
|
|
$ |
2,500 |
|
The following is a summary of our cash flow activities:
|
|
Three Months Ended |
|
|||||
(In millions) |
|
July 31, 2026 |
|
|
July 25, 2025 |
|
||
Net cash provided by operating activities |
|
$ |
503 |
|
|
$ |
673 |
|
Net cash used in investing activities |
|
|
(674 |
) |
|
|
(181 |
) |
Net cash used in financing activities |
|
|
(319 |
) |
|
|
(1,157 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
|
(6 |
) |
|
|
7 |
|
Net change in cash, cash equivalents and restricted cash |
|
$ |
(496 |
) |
|
$ |
(658 |
) |
Cash Flows
As of July 31, 2026, our cash, cash equivalents and short-term investments were $3.6 billion, relatively flat compared to April 24, 2026. During the first quarter of fiscal 2027, we used $200 million for the repurchase of our common stock, $102 million for the payment of dividends, $102 million for purchases of property and equipment, and $78 million, net of cash acquired, for the acquisition of DataPelago Inc., partially offset by $503 million provided by operating activities. Our working capital was $1.1 billion as of July 31, 2026, a decrease of $651 million compared to April 24, 2026, primarily due to the reclassification of $550 million principal amount of our 2.375% Senior Notes due in June 2027 from long-term to current liabilities in the first quarter of fiscal 2027.
Cash Flows from Operating Activities
During the first three months of fiscal 2027, cash provided by operating activities reflected net income of $375 million which was increased for non-cash depreciation and amortization expense of $33 million and non-cash stock-based compensation expense of $98 million. During the first three months of fiscal 2026, cash provided by operating activities reflected net income of $233 million which was increased for non-cash depreciation and amortization expense of $51 million and non-cash stock-based compensation expense of $83 million.
27
Significant changes in assets and liabilities in the first three months of fiscal 2027 included the following:
We expect that cash provided by operating activities may materially fluctuate in future periods due to a number of factors, including fluctuations in our operating results, shipping linearity, accounts receivable collections performance, inventory and supply chain management, vendor payment initiatives, and the timing and amount of compensation, income taxes and other payments.
Cash Flows from Investing Activities
During the first three months of fiscal 2027, we used $494 million for purchases of investments, net of maturities and sales, and paid $102 million for capital expenditures, as compared to the same period of fiscal 2026, in which we used $143 million for purchases of investments, net of maturities and sales, and paid $53 million for capital expenditures. Additionally, during the first three months of fiscal 2027, we paid $78 million, net of cash acquired, for the acquisition of DataPelago, Inc.
Cash Flows from Financing Activities
During the first three months of fiscal 2027, we used $200 million for the repurchase of 1.5 million shares of common stock, and $102 million for the payment of dividends. During the first three months of fiscal 2026, we used $750 million for the principal repayment upon maturity of our 1.875% Senior Notes due in June 2025, $300 million for the repurchase of 3.0 million shares of common stock and $104 million for the payment of dividends.
Key factors that could affect our cash flows include changes in our revenue mix and profitability, our ability to effectively manage our working capital, in particular, accounts receivable, accounts payable and inventories, the timing and amount of stock repurchases and payment of cash dividends, the impact of foreign exchange rate changes, our ability to effectively integrate acquired products, businesses and technologies and the timing of repayments of our debt. Based on past performance and our current business outlook, we believe that our sources of liquidity, including cash, cash equivalents and short-term investments, cash generated from operations, and our ability to access capital markets and committed credit lines will satisfy our working capital needs, capital expenditures, investment requirements, stock repurchases, cash dividends, contractual obligations, commitments, principal and interest payments on our debt and other liquidity requirements associated with operations and meet our cash requirements for at least the next 12 months and thereafter for the foreseeable future. We may choose to periodically raise additional debt capital based on certain conditions, including the refinancing of upcoming maturities and/or for potential strategic acquisitions and investments. Our ability to obtain this, or any additional financing that we may pursue or need, will depend on, among other things, our business plans, operating performance and the condition of the capital markets at the time we seek financing. We may not be able to obtain such financing on terms acceptable to us or at all. In the event our liquidity is insufficient and we are unable to enter into new financing arrangements, we may be required to curtail spending and implement additional cost saving measures and restructuring actions. We cannot be certain that we will continue to generate cash flows at or above current levels. For a discussion of risks related to our cash flows and liquidity requirements, see Item 1A. Risk Factors.
Liquidity
Our principal sources of liquidity as of July 31, 2026 consisted of cash, cash equivalents and short-term investments, cash we expect to generate from operations, and our credit facility and commercial paper program.
Cash, cash equivalents and short-term investments consisted of the following (in millions):
|
|
July 31, 2026 |
|
|
April 24, 2026 |
|
||
Cash and cash equivalents |
|
$ |
1,573 |
|
|
$ |
2,070 |
|
Short-term investments |
|
|
2,003 |
|
|
|
1,514 |
|
Total |
|
$ |
3,576 |
|
|
$ |
3,584 |
|
As of July 31, 2026 and April 24, 2026, $2.5 billion and $2.3 billion, respectively, of cash, cash equivalents and short-term investments were held by various foreign subsidiaries and were generally based in U.S. dollar-denominated holdings, while $1.1 billion and $1.3 billion, respectively, were available in the U.S.
28
Our principal liquidity requirements are primarily to meet our working capital needs, support ongoing business activities, fund research and development, meet capital expenditure needs, invest in critical or complementary technologies through asset purchases and/or business acquisitions, service interest and principal payments on our debt, fund our stock repurchase program, and pay dividends, as and if declared. In the ordinary course of business, we engage in periodic reviews of opportunities to invest in or acquire companies or units in companies to expand our total addressable market, leverage technological synergies and establish new streams of revenue.
The principal objectives of our investment policy are the preservation of principal and maintenance of liquidity. We attempt to mitigate default risk by investing in high-quality investment grade securities, limiting the time to maturity and monitoring the counterparties and underlying obligors closely. We believe our cash equivalents and short-term investments are liquid and accessible. We are not aware of any significant deterioration in the fair value of our cash equivalents or investments from the values reported as of July 31, 2026.
Our investment portfolio has been and will continue to be exposed to market risk due to trends in the credit and capital markets. We continue to closely monitor current economic and market events to minimize the market risk of our investment portfolio. We routinely monitor our financial exposure to both sovereign and non-sovereign borrowers and counterparties. We utilize a variety of planning and financing strategies in an effort to ensure our worldwide cash is available when and where it is needed. We also have an automatic shelf registration statement on file with the U.S. Securities and Exchange Commission (SEC). We may in the future offer an additional unspecified amount of debt, equity and other securities.
Senior Notes
The following table summarizes the principal amount of our Senior Notes as of July 31, 2026 (in millions):
|
|
Amount |
|
|
2.375% Senior Notes Due June 2027 |
|
$ |
550 |
|
2.70% Senior Notes Due June 2030 |
|
|
700 |
|
5.50% Senior Notes Due March 2032 |
|
|
625 |
|
5.70% Senior Notes Due March 2035 |
|
|
625 |
|
Total |
|
$ |
2,500 |
|
Interest on the Senior Notes is payable semi-annually. For further information on the underlying terms, see Note 7 – Financing Arrangements of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Credit Facility and Commercial Paper Program
We have a senior unsecured credit agreement with a syndicated group of lenders. The credit agreement, which was amended in March 2025, provides for a $1.0 billion revolving unsecured credit facility, with a sublimit of $50 million available for the issuance of letters of credit on our behalf. The credit facility matures on March 5, 2030, with an option for us to extend the maturity date for two additional 1-year periods, subject to certain conditions. The proceeds of the loans may be used by us for general corporate purposes and as liquidity support for our existing commercial paper program. As of July 31, 2026, we were compliant with all associated covenants in the agreement. No amounts were drawn against this credit facility during any of the periods presented.
We also have a commercial paper program (the “Program”), under which we may issue unsecured commercial paper notes. Amounts available under the Program may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the Program at any time not to exceed $1.0 billion. The maturities of the notes can vary, but may not exceed 397 days from the date of issue. The notes are sold under customary terms in the commercial paper market and may be issued at a discount from par or, alternatively, may be sold at par and bear interest at rates dictated by market conditions at the time of their issuance. The proceeds from the issuance of the notes are used for general corporate purposes. No commercial paper notes were outstanding as of July 31, 2026.
Material Capital Expenditure Requirements
We expect to fund our capital expenditures, including our commitments related to facilities, equipment, operating leases and internal-use software development projects for at least the next 12 months through existing cash, cash equivalents, investments and cash generated from operations. The timing and amount of our capital requirements cannot be precisely determined and will depend on a number of factors, including future demand for products, changes in the enterprise storage and data management industry, hiring plans and our decisions related to the financing of our facilities and equipment requirements.
29
Dividends and Stock Repurchase Program
On August 27, 2026, we declared a cash dividend of $0.52 per share of common stock, payable on October 28, 2026, to shareholders of record as of the close of business on October 9, 2026.
Under our common stock repurchase program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. On May 21, 2026, our Board of Directors authorized the repurchase of an additional $1.0 billion of our common stock under our stock repurchase program. As of July 31, 2026, the remaining authorized amount for stock repurchases under this program was $1.3 billion.
Purchase Commitments
In the ordinary course of business, we make commitments to third-party contract manufacturers and component suppliers to manage manufacturer lead times and meet product forecasts, and to other parties, to purchase various key components used in the manufacture of our products. In addition, we have open purchase orders and contractual obligations associated with our ordinary course of business for which we have not yet received goods or services. These off-balance sheet purchase commitments totaled $2.3 billion as of July 31, 2026, of which $2.1 billion is due in the next twelve months, with the remainder due thereafter.
Legal Contingencies
We are subject to various legal proceedings and claims which arise in the normal course of business. See further details on such matters in Note 14 – Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates as described in our 2026 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in our market risk exposures for the three months ended July 31, 2026, as compared to those discussed in our Annual Report on Form 10-K for the year ended April 24, 2026.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The phrase “disclosure controls and procedures” refers to controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act), such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (SEC). Disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of July 31, 2026, the end of the fiscal period covered by this Quarterly Report on Form 10-Q (the Evaluation Date). Based on this evaluation, our CEO and CFO concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information required to be disclosed in our SEC reports (i) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with our evaluation that occurred during the first quarter of fiscal 2027 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
30
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
For a discussion of legal proceedings, see Note 14 – Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Item 1A. Risk Factors.
Our future business, operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in our 2026 Annual Report on Form 10-K, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common and capital stock. Except to the extent updated below or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, Item 2, "Management's Discussion and Analysis of Financial Conditions and Results of Operations), there have been no material changes to the Company’s risk factors since our 2026 Annual Report on Form 10-K.
Risks Related to Our Operations
We often incur expenses before receiving related benefits and make purchase commitments based on forecasted demand. It may be difficult to reduce expenses or adjust commitments quickly, or at all, if demand declines, and we may be committed to purchasing components at prices that exceed prevailing market prices.
We base our expense levels and purchase commitments partly on future revenue expectations, and a significant portion of our expenses are fixed. Reducing these fixed costs and purchase commitments quickly, or at all, can be challenging, and if our revenue falls below expectations, our operating results could be adversely impacted. During periods of uneven growth or decline, we may incur costs before realizing the anticipated benefits, which could also harm our operating results.
We have made, and will continue to make, significant investments in engineering, sales, service and support, marketing, and other functions to support and grow our business. The costs associated with these investments are likely to be recognized earlier than some of the related anticipated benefits, such as revenue growth. Additionally, the return on these investments may be lower or may develop more slowly than we expect, which could harm our business, operating results, financial condition, and cash flows.
A significant portion of our reported purchase commitments consists of firm, non-cancelable, and unconditional commitments with contract manufacturers and component suppliers. These commitments may require us to purchase materials and components at prices established in advance of delivery. If market prices for such materials or components decline, we could be obligated to acquire inventory at costs that exceed prevailing market prices, which could adversely affect our gross margins, inventory valuations, operating results, cash flows, and competitiveness. In addition, if demand for our products is lower than anticipated, we may experience excess or obsolete inventory and incur additional charges related to these commitments.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered sales of equity securities
On July 16, 2026, we issued 28,706 shares of our common stock to a former holder of shares of DataPelago in connection with the acquisition of DataPelago, which closed on July 16, 2026, in reliance on an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof and/or Rule 506 of Regulation D promulgated thereunder.
Purchases of equity securities
The following table provides information with respect to the shares of common stock repurchased by us during the three months ended July 31, 2026:
|
|
|
|
|
|
|
|
Total Number of Shares |
|
|
Approximate Dollar Value |
|
||||
|
|
Total Number |
|
|
Average |
|
|
Purchased as Part of |
|
|
of Shares That May Yet |
|
||||
|
|
of Shares |
|
|
Price Paid |
|
|
Publicly Announced |
|
|
Be Purchased Under The |
|
||||
Period |
|
Purchased |
|
|
per Share |
|
|
Program |
|
|
Repurchase Program |
|
||||
|
|
(Shares in thousands) |
|
|
|
|
|
(Shares in thousands) |
|
|
(Dollars in millions) (1) |
|
||||
April 25, 2026 - May 22, 2026 |
|
|
901 |
|
|
$ |
115.00 |
|
|
|
391,691 |
|
|
$ |
1,398 |
|
May 23, 2026 - June 26, 2026 |
|
|
495 |
|
|
$ |
160.14 |
|
|
|
392,186 |
|
|
$ |
1,319 |
|
June 27, 2026 - July 31, 2026 |
|
|
104 |
|
|
$ |
164.44 |
|
|
|
392,290 |
|
|
$ |
1,302 |
|
Total |
|
|
1,500 |
|
|
$ |
133.32 |
|
|
|
|
|
|
|
||
31
(1) In May 2003, our Board of Directors approved a common stock repurchase program. Under this program, which we may suspend or discontinue at any time, we may purchase shares of our outstanding common stock through solicited or unsolicited transactions in the open market, in privately negotiated transactions, through accelerated share repurchase programs, pursuant to a Rule 10b5-1 plan or in such other manner as deemed appropriate by our management. For further information, see Note 8 – Stockholders' Equity of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
Insider Adoption or Termination of Trading Arrangements
On
On
No other directors or executive officers of the Company
Amended Change of Control Severance Agreements
On August 28, 2026, the Company entered into Change of Control Severance Agreements (the Change of Control Agreements) with George Kurian, Cesar Cernuda, Syam Nair, Beth O’Callahan and Wissam Jabre. The Change of Control Agreements amend and replace the prior Change of Control Severance Agreements between the Company and each such executive officer.
The Change of Control Agreements provide certain payments and benefits in the event of a termination of the executive's employment by the Company without “Cause” or by the executive for “Good Reason” within the twenty-four-month period following a “Change of Control” (as those terms are defined in the Change of Control Agreements). In such event, the executive would be entitled to receive (i) a lump sum payment equal to 150% (or, in the case of the Chief Executive Officer, 200%) of the executive's annual base salary plus the applicable percentage of the executive’s target annual bonus, based on the greater of the rate in effect immediately prior to termination or immediately prior to the Change of Control; (ii) a pro-rated lump sum payment equal to the greater of the executive's target annual bonus or the bonus based on actual performance accrued at the time of termination; (iii) accelerated vesting of the executive’s outstanding equity awards with performance-based equity awards vesting at target unless the award agreement provides otherwise; and (iv) Company-paid COBRA continuation coverage for up to 18 months (or, in the case of the Chief Executive Officer, 24 months) following termination.
The payments and benefits under each Change of Control Agreement are contingent on the executive signing and not revoking a release of claims.
The foregoing description of the Change of Control Agreements is qualified in its entirety by reference to the full text of the form of Change of Control Severance Agreement, which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and incorporated by reference herein.
32
Item 6. Exhibits.
The following documents are filed as exhibits to this report.
|
|
|
|
Incorporation by Reference |
||||||
Exhibit |
|
Description |
|
Form |
|
File No. |
|
Exhibit |
|
Filing Date |
|
|
|
|
|
|
|
|
|
|
|
10.1 |
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|||||
31.2 |
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|||||
32.1 |
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|||||
32.2 |
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|||||
101 |
|
The following financial statements from the Company’s 10-Q for the fiscal quarter ended July 31, 2026, formatted in iXBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Stockholders’ Equity, and (vi) Notes to Condensed Consolidated Financial Statements |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|||||
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
— |
|
— |
|
— |
|
— |
33
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NETAPP, INC. |
(Registrant) |
|
/s/ WISSAM JABRE |
Wissam Jabre |
Executive Vice President and Chief Financial Officer |
Date: September 2, 2026
34
Exhibit 10.1
NETAPP, INC.
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the “Agreement”) is made and entered into by and between _____________ (“Executive”) and NetApp, Inc. (the “Company”), effective as of ____________________ (the “Effective Date”).
RECITALS
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:
Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by a nationally recognized certified public accounting firm or other professional organization that is a certified public accounting firm recognized as an expert in determinations and calculations for purposes of Section 280G of the Code that is selected by the Company prior to a Change of Control for purposes of making the applicable determinations hereunder and is reasonably acceptable to Executive, which firm shall not, without Executive’s consent, be a firm serving as accountant or auditor for the individual, entity or group effecting the Change of Control (the “Accountants”), whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5. The Company will bear all costs the Accountants may incur in connection with any calculations contemplated by this Section 5.
For purposes of this definition, persons will be considered to be acting as a group under the rules, regulations and guidance set forth by the U.S. Securities and Exchange Commission.
Further and for the avoidance of doubt, a transaction will not constitute a Change of Control if: (x) its primary purpose is to change the jurisdiction of the Company’s incorporation, or (y) its primary purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
The notification and placement of Executive on administrative leave pending a potential determination by the Board that Executive may be terminated for Cause will not constitute Good Reason.
Executive will not resign for Good Reason without first providing the Company with written notice within sixty (60) days of the event that Executive believes constitutes “Good
Reason” specifically identifying the acts or omissions constituting the grounds for Good Reason and a reasonable cure period of not less than thirty (30) days following the date of such notice.
[Signature Page Follows]
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.
COMPANY
NETAPP, INC.
By:
Title:
Date:
EXECUTIVE
By:
Title:____________________________________
Date:
Exhibit A
Separation Agreement and Release of Claims
[NETAPP LETTERHEAD]
[DATE]
[NAME]
[Street Address at termination]
[City, State & Zip at termination]
Dear [NAME]:
This letter confirms the agreement between NetApp, Inc., (the “Company” or “NetApp”) and you regarding the terms of your separation from the Company as of [insert date] ________ (your “Termination Date”).
Notwithstanding the generality of the foregoing, you do not release the following claims:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
BEING AWARE OF SAID CODE SECTION, YOU HEREBY EXPRESSLY WAIVE ANY RIGHTS YOU MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
If the above accurately reflects your understanding, please date and sign the enclosed copy of this letter in the places indicated below and return it to Human Resources.
Respectfully,
_________________________
[Name]
[Job Title]
Accepted and agreed to on ___________________________.
(Date)
[NAME]
_________________________________________________________________________
Current Mailing Address (Severance check(s) will be mailed to this address and NetApp will update your records to reflect this address if it is different than the address on file).
Encl.
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, George Kurian, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of NetApp, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ GEORGE KURIAN |
George Kurian |
Chief Executive Officer and Director |
(Principal Executive Officer and Principal Operating Officer) |
Date: September 2, 2026
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002
I, Wissam Jabre, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of NetApp, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ WISSAM JABRE |
Wissam Jabre |
Executive Vice President and Chief Financial Officer |
(Principal Financial Officer) |
Date: September 2, 2026
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, George Kurian, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of NetApp, Inc., on Form 10-Q for the quarterly period ended July 31, 2026 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of NetApp, Inc.
/s/ GEORGE KURIAN |
George Kurian |
Chief Executive Officer and Director |
(Principal Executive Officer and Principal Operating Officer) |
Date: September 2, 2026
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Wissam Jabre, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of NetApp, Inc., on Form 10-Q for the quarterly period ended July 31, 2026 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of NetApp, Inc.
/s/ WISSAM JABRE |
Wissam Jabre |
Executive Vice President and Chief Financial Officer |
(Principal Financial Officer) |
Date: September 2, 2026