NetApp (NTAP) 21 Nov 242025 Q2 Earnings call transcript

Good day, and welcome to the NetApp Second Quarter of Fiscal Year 2025 Earnings Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Kris Newton, Vice President, Investor Relations. Please go ahead.

everyone. Hi, us. joining for Thanks me today Mike Kurian; CFO, CEO, are our Berry. George and With is and This for webcast being call live our at replay will website netapp.com. on available be

may projections and future including, we forward-looking will third During for our prospects, to year quarter today's outlook These risks revenue, statements and to and other and which without call, strategies. returns and results profitability fiscal and various growth to financial our with guidance shareholder statements our and future subject differ regarding expectations make are actual the limitation, respect cause uncertainties, initiatives our materially. XXXX,

and please information, XX-Q. obligation any update and more time our We to our documents with to and projections. forward-looking refer For XX-K we on file most from Form to the our website, disclaim SEC the including statements time Form recent

will all George. website. unless to estimates are presented During available of the the over indicated. measures turn GAAP our be call, Reconciliations now call non-GAAP non-GAAP on financial otherwise I'll to

Thanks, was and Kris. with We Revenue performance storage first-party Thank performance. strong us storage joining cloud operating XX% QX our extremely of for growth I and you am expectations. achieved ahead by increase today. record our in pleased a in year-over-year and all-flash Good services. QX margin marketplace driven afternoon, everyone. EPS

these new bolstered all Our both existing solutions across for secular both by customers. and of to are focus AI and solid our NetApp company-specific the which growth strength differentiated uniquely We proposition markets in flash, storage areas, block, and address value tailwinds. experienced affirming cloud strategic

commitment demonstrates only but not data infrastructure underscores platform. execution, momentum also This intelligent our and customers' confidence our strong to positive our

our growth. pace at stage innovation history, success the and delivering continued our the in are We fastest setting for

data hybrid to and hurdles the QX, and them of as challenges by held competitive returning recognize are many navigating new they strategy, value witnessed recognize among intelligent asset pressing cohesive customers investing a intelligent as NetApp's genuine data-driven overcome address how empowers customer accomplish uniquely NetApp infrastructures. These this, businesses problem how a of To the to platform. data fuel Insight solving. face adopting to cutting-edge complexities in these IT. enterprise-wide architecture valuable agile the showcasing drive a building the enthusiasm proactively multi-cloud I leveraging the NetApp founded in they data In that Organizations strategies data require conference, we infrastructure personally we our attendees data to advantage. on

data-driven robust expertise product Cloud and strength grew With notable solutions, become year-over-year confidently again storage. We are by to in state-of-the-art NetApp's our performance delivered driven grew their X%, X% leaders. customers all-flash Hybrid revenue way and paving in Revenue segment.

array success the up $X.X all-flash teens consecutive of across year-over-year, the run high high revenue quarter Broad-based XX% our annualized all-time billion, percent portfolio of low an to XXs to rate growth. propelled fourth annual

gain both the continue competition. in rates all-flash outpacing and market, We far growth share our of the to industry all the of

consecutive Our XXXX primary recognition year. platform for a Magic with Gartner leadership further of XXth as was Quadrant for NetApp the the leader underscored storage the in

all-flash block quarter, the of innovation QX and AFF more our in the hybrid family In updated FaaS new we A-Series array the introduction building ASA optimized delivered of products on high-end families, with flash high-performance all-flash arrays.

reaching share close We industries, with expanding new new customers seen workloads. multiple and wallet have already ASA deals new and regions across our

of message partners growing as with our simple, and customers. resonates is affordable powerful pipeline The and

between need and in continued systems software advanced With advancements their make storage. no customers affordability capabilities trade-offs simplicity, these operational to new platform, to our and longer

can into We deliver QX hybrid Keystone's on-premises to storage, integrated Cloud view and to Keystone, Only cloud our NetApp with gain machines enabling control in virtual Insights experience and agile model. added a model, the from a an across year again to growing Storage-as-a-Service subscription ago true an network infrastructure cloud. revenue approximately their with from offering, single flexibility in quarter customers strong delivered ago. another XX%

unveiled Organizations in dominated era intelligence. are vision actively we discussions evaluating for expansive how to use and our the their AI. of with data corporate AI where Insight, data These

between through Just as data. that help their is empowering on-premises to secure. and leading their and AI of intelligent, with positioned we or utilize application the bridge we regardless clouds, data the to divide are between well data AI bring customers dynamic an the systems customers approach We location gap public method any and bridge anywhere, enterprise to

them their and data we By Customers features array effortlessly such a their silos, directly AI training data unify This can for benefiting explore, for view empowers highly to understand, their model also versioning, AI applications. NetApp's inferencing. tools data efficient their ecosystem on of assets. as while prepare retrieval from eliminating give customers structured unified and model and existing leverage data and traceability integrated data AI

AI Our includes includes life cycle. date to and comprehensive This data data the context. classification, detection measures change data automated precise and keep up solution to accompany policy-based AI and throughout updates every that governance in security

AI momentum the ahead we of are of today. us, is believe already enterprise we opportunity While large still seeing accelerating

and with of business well public in sector, wins. industries. notable financial QX early with ahead services, AI modernization lake our sciences over wins geographies These and data life health span expectations and manufacturing, momentum Our XXX care performed AI industries in

and position leaders. strong development Gen with solutions on-premises to with of We cloud AI our partnership advance in continue industry the

a breadth general pod Domino reduce and GenAI across the environments. risks has NVIDIA solution releasing deepening ecosystem, its in the updates In truly version. and within software QX, the and and AI and platforms harnessing of availability with complex our Labs, NetApp Data services hybrid announced AI NetApp Lenovo is only increasingly to multi-cloud we with computing workload accelerated products resources AI partner complexity, partnership hybrid several our

and collaboration Cloud better Cloud efficiently for ONTAP storage number infrastructure other environments our expanded Google achieve foundational provide maintain regulated Cloud. while highly AI-ready can data their public with AI grid to further in unified a Distributed customers accelerating This available compliance. By file enhancing and has to resulted Distributed in storage object Google solutions, make their To industries. block the over the public industries, other data with and regulated readily sector and partnership control to to we storage Google early success global sector and scale regulatory workloads leverage our storage wins, security of helping and

Now turning public to cloud.

In differentiated rapidly, cloud leading storage $XXX services grow continue year-over-year Our and roughly focus highly Cloud total, X% services million. our first-party XX% remain to Public marketplace with and priority. segment to hyperscalers revenue These top grew increasing year-over-year. the

strong support, services, We continue rapidly workload broadening capabilities, further leadership performance and to position. in storage points, cloud price solidifying innovate our

ONTAP include our autonomous capabilities, many defend ransomware ransomware volumes our to cloud updated write once, protection advanced against strengthening and we to QX, In ability read customers' attacks.

generally we available remain all Additionally, on NetApp scale we disciplined regions of serve. XX the customer volumes which focused of execution is our volumes, Google number evolving with Cloud enhanced auto tiering, and to needs We the in meet petabyte workloads now Google further base. Cloud expanding growing

all-flash storage high-performance our and broadened flash with substantially capacity block products. have flash, updated optimized portfolio We

support. have range new and significantly storage our capacity capabilities data with more expanded increased and cloud We of points, vastly workload centers, in features cloud more price public

the in our We is with empowering have wherever it customers most storage intelligent they want, the to built services intelligent our of integrated build simplicity easy customers make with forefront make and they infrastructures. to data to want. we at for services to consume scale. NetApp products innovation, continue more And finally, how secure

Broad-based solutions outgrow future share a visionary has customer and approach from take enabled preference to market for our for us and data-driven the competitors.

growth. track management to of earnings yield strong continues disciplined Our operational record solid

In fuel confidence momentum call our customers' and to and thank Mike. shareholders. ability focus Our the results my outstanding our to turn in over to I success. now for NetApp dedication team closing, deliver want for I'll their customers ongoing the to

of and revenue We exceeding afternoon, and growth double-digit mid- progress guidance long-term quarter, hitting Investor executed average our 'XX. Thank fiscal ranges. good Day We George, everyone. to upper single-digit you, through year EPS strong toward all growth on our made a or targets

ranges. 'XX year expected to within Fiscal both is be

for Before key me quarter. financial let the through walk details, I the you into get themes the

numbers unless a reminder, non-GAAP noted. are all As otherwise discussed

year-over-year, margin of consecutive mid- XX% at product continuing while highs. X% was margin profit grew consolidated X% this to margin revenue, near gross and cloud operating revenue revenue, dollars year-over-year, QX services year-over-year, of the trend and operating above high line XX%. profit quarter. rate As QX leverage the strong drove of grew quarter fourth in grew expected, Gross revenue. professional operating with growth growing with dollars all double year-over-year rate discipline to the in XX%, single-digit all-time Gross

shareholders count X by We shares through 'XX fiscal returned year-over-year. repurchases. $XXX share million to QX dividends reducing share over million and

expectations our focus to revenue As the the the we to flow to up discipline intend and this deliver our strong management, outperformed operational continued we during the last return half expect quarter's XXX% quarter year. cash second free of year-over-year Due fiscal second call, to mid-single-digit execution solid year. discussed and in and growth of in

result, fiscal a raising expectations. we revenue As and are EPS 'XX year our

year-over-year. revenue year-over-year Now quarter revenue range. guidance million $X.XX year-over-year. of and Keystone. billings year-over-year, high million Billings driven grew Revenue increased grew million of of was the year-over-year Professional to by revenue of our our quarter. the the marks X% X% year-over-year. $X.XX services consecutive XX% increased $XXX up $XX $XXX mainly of growth. of billion of fourth This end details X% billion of towards X% Support Product revenue

and from $XXX storage a QX ago, of marketplace by X% Public first-party services. Cloud revenue year million hyperscaler increased driven

expect in market. revenues deferred cloud traction to in X% year-over-year Keystone, by cloud growth QX our billion, $X.X continues We offering, Storage-as-a-Service storage momentum up to double-digit beginning driven in was our return the to business. the QX, gain revenue year-over-year.

in mid- gross line were is Product QX high million, Growth QX, indicator We obligations XX% unbilled with performance was $X.X approximately up came that RPO revenue. consolidated to consolidated year-over-year was single both and future digits XX%. RPO margin key XX%. in highlight growth. of margin Keystone quarter-over-quarter. product profit in grew dollars in Remaining billion. gross gross Unbilled a at $XXX

the confidence of into second We we continues year 'XX. purchase in our lock strategic half of to in made which to as SSD us product XXXX, give rising year supply prices gross fiscal have mitigate majority calendar and in commitments move the margins

in guidance. forecast for consistent gross We 'XX product margins the half in full range prior but continue of XX% year, remain decline fiscal to year second to high the our slightly the compared first with the half, to as

margins gross be Our with of to XX%. profitable highly recurring business support continues

represent our XX% margins Our structure to prior support associated year. to from margin cloud public retention customers and the we the XX% QX continuing through in innovation ONTAP. rates improved gross deliver

the and X/X in gross was quarter. the of expansion profit margins proud in driven in particularly gross year-over-year are public cloud of We by public the total cloud improvement highlight that

up was cloud on XX%. up expect and gross our lower $XXX end the at We X% 'XX 'XX. long-term from Operating and margins further year XX% year-over-year progress make expenses QX our of fiscal to million to of of public exit target X%

guidance, QX the higher ago, $X.XX and operational strength Operating year forecast. end in and margins cash million our of to $XXX operating XX%, ahead our model $XX again by revenues was the margin EPS high free highlighted of compared cash year $XX of QX $XXX compared above compared million a ago. our business driven to gross of disciplined execution million of to expectations. was a flow higher million and initial was with flow

Our in quarter, lower payments purchases higher flow during DSOs of results the inventory to purchases, reduced These utilized QX. and primarily turns 'XX. with upfront QX fiscal increased only Xx year-over-year in inventory SSD XX, to driven much strategic forecasted were versus levels year strategic all seasonal for cash averages. fiscal be to year In which resulted 'XX line predominantly in by are in

quarter, dividends. and the we through During repurchases returned stockholders to million share cash $XXX

our million $XXX remaining on approximately have existing repurchase We authorization.

debt available in as quarter the in We million also with repaid planned. cash $XXX

with and Our billion ended in the balance cash short-term sheet investments healthy. remains We in $X against debt. quarter billion approximately $X.X

guidance, full Now with the turning to year. starting

year revenue billion full our between billion, to year-over-year $X.XX guidance We $X.XX X% and are representing raising the for approximately midpoint. growth at the

margin year expect XXXX We from prior gross fiscal be XX% unchanged to consolidated expectations. to XX%,

at gross cloud by the to across billion to and midpoint, product, expect increase support driven revenue. Importantly, growth dollars $X.XX margin we

to margin expectations. prior XX XX% at compared operating to to basis XX.X%, expect up the midpoint be We 'XX fiscal year points

our by expectations interest higher income income. raising are million, We net slightly to interest $XX driven

XX%. to We tax XX% expect full rate be our for the to year

strategic supply our of due of first in cost compensation As year-over-year to which commitments the timing the higher environment. Year-to-date, the year, and lower in free growth incentive implies be to the a trended of result, has year-over-year. have chain instrumental net midpoint strategy flow $X.XX expect a which been SSD revenue and to purchase management $X.XX, income commodity rising higher the in range we at our despite half XX% EPS our cash to

conversion The flow in our cash the change to cycle. a lower results cash due cash normalized not of are timing payments,

year the fiscal slightly in fiscal higher in lower improvement, cash We of these our expect of compared and versus cash the half timing grow year-over-year year the by to this now Even and year fiscal the half with flow the to second rest cash 'XX. free driven year SSD-related be expect be year-over-year, half of first second expect flow outflows we payments. the to cash 'XX in generation slow of to

Turning now to guidance. third quarter our

We expect midpoint $X.XX range between revenue billion implies billion, year-over-year. which QX the X% $X.XX to growth and at

QX be to approximately XX%. XX% operating XX% expect gross margin to consolidated to margin We and be

of the $XX to to interest million tax be to EPS to expected XX% $X.XX. be income range is in net the rate expect be XX%. We our in and $X.XX quarter to

EPS year's well for decline, record gross margin in low unusually an a as forecasts year-over-year high represented QX guidance that While QX a we as rate. tax last note product our

these Normalizing forecasts factors, year-over-year guidance EPS for EPS our QX growth.

In customers thank reminder, our EPS I fiscal cloud As I on this am investors is our for goals. track NetApp. 'XX average and their employees, successfully commitment double-digit want confident guidance expect from goal. to ability towards closing, and on year a in to growth in digital investment year to our transformation our year and we 'XX, achieve and fiscal fiscal their customers help 'XX

Kris? to turn open committed sustainable and value over are We Q&A. deliver to Kris for priority call aligned well investments to IT stockholders. are I'll the to our now the long-term

Q&A. Operator, the let's Mike. begin Thanks,

[Operator And question Merchant today first will from come with Asiya our Instructions]. Citigroup.

may, macro in kind George some on Mike, strong I past the uneven recovery results. talked and If certain Congratulations you've about and of verticals. across

that versus could much with X% year, a you all for relative macro that just you have to if storage fuller now predicated the how And on is of that addressing this needs. start is growth portfolio the maybe that. So external revenue full

has The macro relative unchanged in the quarters. been to prior quarter last past

aligned spending and, for data of applications, our the well exceptionally areas product portfolio and cloud data customers. are AI center strong. modernization, cyber We to our for new the deployment is of course, priority resilience and

outlook of We executing growth larger think that at And our are the for of I regardless year macro. competitors. on focused the the expense is

assuming are stays We it is. it that where

still when the can give seeing Great. And of about I side modernizing NetApp us. a data that this on be ahead your for insights will updates as if AI think storage of enterprises solutions I may, give talked past And things. AI Any you're us in deploying for various the relates any know to bigger can you is you've AI. it you you you to sort how factor guys. inferencing of

of AI have my as the we for of would large seeing not excellence, in number large-scale are a I hit in scale. infrastructure and those inferencing getting wins what of of stages today said I centers yet data are deployments. the say ready had call indicators We We your leading large multiple verticals, early across they prepared are remarks, AI. future they

with strong distributed their had public AI the Google have for deployments also with sector. some cloud in momentum We

at And so I of don't large, the prior have We going from it's an think forward. our still AI second of that update we're encouraged half business next prospects year. commentary. In

And so us. of for still us the opportunity is ahead growth

from Your next with question will Evercore. Amit come Daryanani today

and I'd speak think, about of for side, do the gains half you seeing just for growth that a fiscal of then really year array difficult right I kind you're that. go the do array where is new think understand And can as new versus like all-flash newer have just you. compares, now, of more theme, to guess on love the few A-Series and you're the bit little growth XX% into just you? folks all-flash how up that's a quarters or environments the what products array How the seeing that understand of to near for all-flash you much share I start workloads Mike, growth just now. just the you you think strength maybe back get with, to I'd talk of opening if to I had the to love start George durability you

consecutive We is operating teens can planet, or richest all the proposition, secure this from This a competitors. XX% and It and all-flash and a way system, of in multi-cloud you of plus from have single X of in clearly we technology of storage partners. because an most hybrid want value to quarters the complete high spending advanced data arrays. services, areas or consume you and the NetApp outpacing buy our the the in customer capability, the had set growth are market revenue is as as well aligned unique

We We A-Series. refreshed the moat fastest are the with that combining innovation durable competitive pipeline ever.

the are to you refreshed We us innovation quarters. in continued ASA products, over from focused our the distracted. of see opposed the coming executing will many next and competitors FaaS refreshed products. few We who as go-to-market our are we And on

leadership the feel of forward. very, position the and very opportunity I good about our So durability going

do And could prebuys? Got folks this is that then, right I Mike, now. it. in prebuying all essentially you inventory doing just think sequential the uptick of touch of you this memory is And guess, do longer are on I prebuying you it something you about term? at And consistent then you're basis? -- that look can is you on it think you inventory a changing going are to more talk --

Thanks the Amit. Sure. for question,

million, the that increase 'XX majority we've 'XX. prebuys while of the half are $XXX-plus certainly and in the the increase the at not it's inventories, negotiated amount of whole the in number, inventory yes, So of end the first the the -- is

more any prebuys at looking we've we're before, forward. point, this going do So said not to it

in covered the our we of We're expected good fiscal are. demand majority 'XX. where We've

in some We're Amit, point, NAND market. step a back. taken So starting to we've softening at the this see

out. to play let we're that So going

hey, day. at -- shouldn't through to look look we'll this But it expect it see something 'XX. in as market, changes the at we of year. more any prebuys rest fiscal go So of the fiscal you we rest We'll for do the every unless us

question Tim Your come of today from will Barclays. next Long

if could. I as Two well,

and the mentioned the else RPO strong down billings everything know you Mike, some there, with I pipeline. First, but there's sounded outlook pretty and the sequentially. in unbilled the

results the you public the was secondly, Q-on-Q down walk I touch in and if on could Pretty year-over-year. hoping then And RPO the through could So just strong us quarter? you sector.

and that given drove what curious business? for that Just the landscape type of that changing business, political for the what's outlook

the Yes. for Thanks Tim. question,

one. I'll it's Mike. So do the first

So thanks on RPO.

So portion two unbilled a RPO of balance of made you quarter-on-quarter is both things. short of sheet and on down Keystone term because on always the couple as to up is RPO deferred That's our revenue, up will then deferred sequentially, It's down came sheet. pieces. of the comes QX it's find made balance and which revenue QX. not commitments. where long because the expected

importantly, we year-over-year. is grew in total the term, Now number at short including deferred look revenue,

flat It was QX second year. being the in after in half down of slightly last

great really sign that that to point, the us. billings for So follows your great that's growth had. we've a

deferred. watch George versus to sector hand quarter-on-quarter, by it just driven always see though, Keystone. follows grow the to for a We the And to RPO, public on what's Deferred do question. hey, I'll continue So unbilled expect unbilled pattern. sequential largely

despite business public the continuing resolution. performed well U.S. Our sector

are in by of long-term large is that spending we've of number which is As cycles. program business approved annual a past, said budget supported public part the from projects, sector a our across

Public from globe the across performance Sector strong saw segment. also our We

priorities. our bring regard With listen, new new administration the expectations new for -- to administration

across can We and is One legislature implemented encouraging that is means how hopefully policies play will sign that which wait quickly. there executive, alignment be to out. they see

today next will with And come Jason question from Blair. Ader your William

you ask as reevaluate to specifically to seeing less any guys about wanted on-prem have plans or you are from VMware just projects, that effects I George, on customers maybe the potential storage Broadcom ripple infrastructure budget acquisition, Yes. their and strategies. look

anything seen material have We not yet.

to so Broadcom by moving the footprint it And our We virtual That to machine paths move One moving also pay storage at could be estate. flexibility them don't layer. that three their are the gives in look other seeing storage to directions forward. existing forward. tax from on optimize is external they hyperconverged customers

The second to is architectures. to new move

And alternative seen those cloud. in are We multiple benefited have a then clients to of the hypervisors. have group deploy integration and there into from customers public hypervisors we who moved different cases our

some strong with and have hyperscalers We solutions that the with our from this benefit and cloud VMware public quarter. saw business

for And you does Keystone the offering, maybe you, the services product then Mike, just heard the that professional or that Is Keystone go line? I Okay. in what say?

professional goes a Jason, that Yes, Mike. where That's is in reported it's service. Yes. because revenue the it is services.

professional in it's support, it's So product in or services. not

that we model, -- the professional becomes we of Keystone as part forward we would the And next because in see I couple mean, Okay. bigger of a Flex growth years? in look over services should mix

grow that quarter-on-quarter, and largely So Professional you of Keystone. business. a did see is stable services was due it piece relatively to

continued majority you as that of the Keystone, So up we growth, and move Jason. revenue forecasted that see have due to is

Your Leopold next James. with Raymond come from question Simon will today

if you cloud. outlook? terms First, quarter the from of in I'm stopped in But in particular hardware anything or there's that might within margins gross the I software business either software between mix your affecting wondering the of recent on know product and disclosing be going the split hardware in hybrid

are specific see customers you enterprise. any quick in follow-up, just of if applications there as the wondering experimenting the then characteristics I'm And a AI with

financial a something that For you're do Any observing? of example, towards kinds services or see industries? certain bias you patterns like

and that. So talked we software hardware anymore. in pulled breakout Mike. why first Yes, terms disclose we it's Simon, don't I'll the that take of on the about one. We back

it of rest there. what is relates big versus flash the margin, gross I you of really to focus the That's driver mix As the the business. on

always margin been and the capacity and non-flash products. then flash highest then has percentage about high-performance As the A-Series, we've talked it, flash gross

they to a and more software is part gross into of mix the That issue. not and to playing that Hardware we're purpose. is So on really and continue we replacement hybrid of It's to as our our installed that. continue of keep expect where what sell flash doing margins is are. base, more product that we

trend had large care With question of on if had the more draw in your our of think maybe services broad-based public manufacturing, business, we and a and AI, more of geographies wins. to of I industries wins science. across all sector, line, industries presence book to there's were life regard number Pretty financial health and a those you

Your come next today JPMorgan. Chatterjee will Samik from question with

that This is an muted is a just driving environment, Chatterjee. just for question Joe you seeing peer Cardoso And with on or Samik challenging macro. first of we an get see on Can Curious this competitive a here. another Maybe update -- group? the quick this quarter prolonged particularly to across just I macro have intensity then your just follow-up. is increasing you

a in No the is competition, the a the advantaged system of competition competitive across of trend there landscape. representation the the which pricing long-term remains say, would rational. than always donors are industry, following and fundamental been the the I specialists of It's are share lots industry. more change environment, integrated the vendors

to outperform. we positioned are well So

no We position. have change for and multiple that in outperforming been see quarters now we

In feel in felt fact, than we I the past. even better today

trends product through our to us. demand customer many as for years unique well that competitive we customer our meet built cycle, is playing Our as and ability have over moat

the you new thinking on how like know a around real coming And touched follow-up specifically, but cetera, that any any efficiency the taxes, et color then you tailwinds? are should should tell you government tariffs, new thus in. maybe that implications on headwinds? investors potential administration U.S. we you just it I about too initiatives, quickly, areas guys are potential about on Appreciate Where -- be Any Where are far. that you be seeing wary any essentially? are to early front. talked has of? administration seeing Or

being from on well We China. considered protected tariffs are any

that. business Our and protected has from supply of book been vastly chain

don't to on to have until we rest once out. So to are new material see If any We'll in, on And the that once how of we it. plays can see is you impact that January. were the wait clarity sworn business that. we update policies, from administration I going we think our occur, the

And question Oppenheimer. will your with Param from next come today Singh

then changes I to all, that to that of growth that's revenue in what First that of improve a segment? to implemented starting your teens growth? recovery a in wanted public get public And again the cloud good think can see revenue back again. a cloud some of sense we recently you follow-up. driving I a have And to are do when get is you that then

as think done the things said business, I times. have X multiple we in we've

The first focused engine the a hyperscalers. go-to-market together was to build with

The second the hyperscaler to cloud subscription with was the in business. broaden first-party restructure in And our stabilization storage. to offerings for was marketplace push third or the and

progress. of those good made have All

strength, half this part our in the the fiscal year. which year-on-year strong services, double-digit past think storage and second seen I quarter, we said, you've Mike of continued cloud a as business. really are ever-increasing expect the first-party to the quarter, hyperscaler XX% from And an of to return in growth

gross margin performance. strong That coupled with is

'XX. cloud business tell, upward hit of and year less from we fiscal end and the As and by to gross you depreciation increased has caused us expect terms amortization headwinds the the in of the gross track better plus targets margin, of margin long-term can utilization to our

can I out, about if run you would growth And QX. be double-digit own that fiscal 'XX. don't hit not We growth models. in talked starting run all you guidance the surprised Sorry, if teens your in you

Got want to then And on focus Keystone. a little as my follow-up, it. bit Perfect. I

overall terms unbilled Keystone RPO do a customers? in on feedback you a million the NAP then What $XXX are think X-ish typical the years, when much part story? of you of And small pretty of start hearing you're from side. Keystone about the to and still become can about talked assuming meaningful You duration more

the from -- has been feedback customers It's stellar.

Keystone. customer a We single to churn on have yet see

an been customers has it So we service have. like product. the incredibly rock-solid and flexibility

to of field seeing them and we broaden partners can continue our educate are the who partners Keystone. more We transacting sell, teams, number

time, over grow should in customers new faster business, right? growth workloads. than us I'm winning growth of terms that And see an new It percentage aid it. about and we'll product so And is excited to our but

with come from America. today Wamsi question next Mohan Your of Bank will

I storage like quarter, today. year, accelerated party headwinds wanted this on said, that subscription Wamsi the actually have in part, Can year-on-year Mike, to hyperscaler first last services the your you were It's question. you for XX% seeing. marketplace year. Ruplu just XX% comment cloud you public segment growth last services, the Bhattacharya follow up filling XX% on

think said how lessening 'XX. next quarters And this couple the over of should fiscal had of the Any about it's I next headwinds? we quantification fiscal over course the year? you on into going think the that

Sure.

all have numbers So those let's go them. back through again so we just up and

folks that a So marketplace -- X%. so to grew about about half we've cloud last revenue little this. business, -- by and talked the it. at of portion Total less of Financial We about good size the by Analyst XX%. first-party cloud than services, That we total quarter grew revenue, you talked a and of Day,

are X from being purpose, the full wonderful away seeing with of have customers their On important with to We've that we hyperscalers. partnerships first-party and the we a and is able to big subscription. conversion in them marketplace, talked the terms down all then how our marketplace of about commits burn

day growth gets business smaller first-party So of is a be about of the because subscription and XX% of to marketplace. revenue. It the piece every

it going to XX-plus That the very purpose. on over and next it probably large but consumption some the is, do grow majority for be declining business several was forward. flattens the the we At plan. to of is will point, expect it out, quarters part So it the from continue percent of

piece. the subscription quantify So we won't

You of by it's your is to to own really all part numbers, And rights, marketplace. seen plan in push party first we've can working. run strategic the that but

driving margin this The I'll better George a other margins. add, thing that's really helped perspective well, up, gross and brought much as from

rest well of it's going for the up really 'XX setting of like into 'XX. all So feels us this

a now the mix the now flash to flash of How all-flash. converted Maybe George. I mean, you existing has have what from what's customers? business moving versus follow-up QLC? much to And for new is what Okay. of seen of customers benefit percent QLC? your And

which with same think XX%. as our the I quarter, number remains to at it installed base, regard is last

is base installed Our growing.

and is So growing, very the even total base it growing fast, is flash large. is if installed

So indicator. that's the first

our market of and The second competitors are substantially. outperforming listen, is, the all quite we

wallet to within saw well conference. net new our lot as we winning existing customers. NetApp a them are of we new well as that Insight existing customers clear is as it at And wallet So as

with And tell so to It's of of that book that I the balanced. going about I out. And break to TLC flash versus just can our we're families product then did feel business. all really regard not you well. good QLC, really

today next question Your will Stanley. from Meta with Morgan come Marshall

I This had momentum question on a AI on that you're Meta. is for seeing. Mary the

Or a they than XXX You mostly those Have quarter. of look wins two? noted sense primarily you premise? like? public a deals of give the Can combination the been more they cloud are us what during

are These are about XXX the wins the under segment cloud And public the on-premise wins. we cloud talked we revenue. public wins AI disclosed

there the There on-premises and clients some geography. pilots on mode. are side, in size, of call a were base in pilots. was broad that industry others that are early of product, think are we I proof-of-concept wins preproduction terms large There what that are

it across that fact as talked Like broad-based mix geos we a it's the the place. about all across was the broad-based industries. as well over So

And Great. on cash flow. follow-up a free just

the next You do year. on free dynamics think how year? the and you're that flow cash for change had any But trajectory you flow takes seeing cash this noted this the of free year about puts

you. Thank question. Great

as the So to that we've inventory. of and this We're big compensation working and the prebuys or going the year X are annual talked incentive capital issues, 'XX yet. changes we seen call payment not about, guide around the

are from year. that I perspective, an we we What normalizes in do where would is say think on incentive the based

think that will issue working be year. capital the is So don't it we nearly this

on into not? next That prebuys. see is year be going where we are or remaining will those do to Do we seen. We

guide comp going when incentive year. next perspective, an But into talk normalize year. that we we'll from will that the about So

from David question today come next Your with Vogt will UBS.

really margin George, given one block the portfolio you're any of its in sort maybe and dynamic new color start. revenue targeting as share sort a what for Can on you quarter to in flash you offering that maybe market you potential of the numbers on new the sort the well the impact for was aggressively. as in of of success some

And you Mike. for I'll one the second give also then

mean purchase the sort You of of effect remind this balance some see mentioned NAND. taking you in obviously not us commitments longer you that year as over if NAND, pricing for would it soften the for again lag softening product Can the and any of more that does framework? market affect the bit, revenue roll term a would relative your growth what in over how to and

of product. customers. expansions existing within the with as ASA bunch of pleased net us are the performance We a It is bringing customers our well new as

I to we versus the regard out of think we margin implications And that, good that very going excited. seeing It's product listen, -- just are so break are but the other to with say ASA overall momentum families. we're in good cycle, not gross I'll early

flash, gross is of as time. our think continue a I business to margins tailwind more move and overall, to more the to over our that should view we be mix

of And executing we strategy. about where are the terms we're good we're our We federal going the feel to stay portfolio, in to and metal. so overall

related question the a look, environment. pricing, in been number pricing there have the on David, And of on changes

we this customers' along, is, we're dollars, prices. we've revenue budget higher in forward, not of change look as assuming you So what on said and because we any tell all significant

from to not bit 'XX. it have prebuys rest going perspective, see in the We our We're we'll that hey, into terms little it looks at A of good So the about but every 'XX, will fiscal really. how day. looking forward. drift of feel of that

on closer view So the we'll get update as 'XX. you the we view revenue margin to and

Fox Advisors. with next Fox from Steven your come question today And will

the George, What into little I around over business ramp only with that you had high on more time? was the one business. highly that's -- indicators? are customer a How sector public question. can partnership driving Google bit and if and sector more quickly and regulated the you do Cloud comments expand more wondering how early I

And Google their clients see with Our the then Google centers. we wanted public environments. with work started data their to stack, with together cloud years, but Google Cloud that over years in ago, X X.X started about

with wins momentum. set customer a Cloud. earlier of And Distributed We architecture announced an this seeing Google good so are with broader we and year, called partnership we to Google on them started work as well the as

It's expanding for still technology set and but that full are us entirely still offers, capability pleased early, we super stack is deployments. the wallet These both It's large-scale the that early. it are data the well a centers that is private unique with clients the and environments experience clouds on-premises cloud as their customers Google as or we value public that have. bring to consistent between

Fargo. Your next Wells question from with today Rakers come Aaron will

earlier I bit. Yes. first-party think that I services, XX%. about think, Storage guess your you -- is grew little I last marketplace. just make a hyperscale clear and and to to question back my back maybe quarter, talked Is push point, was of north going

I think in piece that, business. public of that contribution context, X/X to about you was that had cloud that alluded of

right, right? I be there. as Why I lack now else accelerate start significantly declining mid-teens become want is it that's higher just you've if to of it the see growth like in understanding, wouldn't I'm sure would got -- or so, maybe it much make did cloud that if I'm understand to we conservatism if really now business something public it of XX% the about growth smaller. there's So today, hear trying sounds why -- to business? it's And

Mike. Yes. Aaron, it's

it. if I sorry So confused

we more good and I percentage day. there in just growing was piece a was point, half we of the cloud smaller marketplace every than referred that consumption your forward is more did first-party XX% first-party June. To So it's Day to not part every of Analyst than and includes less feel gets the little and gets why which day. marketplace. There's business That revenue, when more about out really day. number that's revenue The increases the bigger total The growth the every number, going other products that, as well. in

year we unfolds. the We'll rest the see how do So forward. about going feel good growth of the

Louis today with Daiwa. from will Miscioscia come Your next question

looks two me one. stronger was Europe. I guess, into little Well, the It Americas like, let a blend, questions bit obviously, just from

comment trying So can could AI on bit And Europe. maybe doing deploy is that It European applications the seems just economies there. the demand? then little a actually to you are be comparison better, U.S. in the slower difference to

in I has our team Listen, outperformed. think Europe

regard the has Americas done in outperformed. is parts choppy of world. We With It and you're listen, European to have the our outperform good largest still in business, ability really team -- really Europe. team job, has about leadership market excited the some the the in yes, the macro correct I'm super a economy. at to our But and in new

was think think anything that fundamental. don't our I book of I there business,

was think of across well a just segments, different America performed but across demand. exceptionally there fundamentally range America I North more execution wins was business Yes, think overall were it North in our AI, for broad I it and don't customer in all

come from with will today Baruah Loop question next Capital. your And Ananda

George, clarification. guess, little a I and a question maybe

directly -- the the acquisition? as about remarks, here's call. high-end of the has question, that those to products to Or Is How a which So that's actually customer the in is on acquisition, new comments then times led that -- related the guess, kind ASA end ASA new little to I new high me. few new high-end sort customer it degree a And And what new you prepared introduced you high-end the midrange customer as product new to products? referenced big a the is the impact. ago, the new for important really while product. the product made it important of that line, have

the flash I refreshed unified portfolio seen the has These think -- products, and our reception. we then have products. ASA refreshed AFF strong we

I customers. the customers us market, regard products think with share NetApp to customers, new you wallet to within the but net the high-end are from midrange see over time, new smaller, to win come enabling existing will bring of new the logos majority because commercial

optimized new sold is before. entirely block product wallet Block NetApp. to We've share never a

us. for all net wallet it's new So

of to those in so customers And our continued motion at who unified the more NetApp. The reception classic sales to excited strengthen product consolidated products. infrastructure, has positions center want we're the data a of

really, flash, year-on-year board, XX% the super in quarter fourth our It's have well. of is of our And altitude. so think consecutive the products a I mean, really I number. kind all And that across done strong

I'm So about really excited year ahead. the

Your question come TD from Sankar today Cowen. Chris with next will

is This Eddie Chris. for

party Just question. hyperscale a clarification regarding the first service

growth XX% like about talked You rate.

contributing services to conversion hyperscale is that make in material taking to like XX% the place way any that's want subscription sure number? from to Just --

well. customers conversion. of a some all existing well the not new expansion There's a as significant extremely of hyperscaler customers percentage. There's net It's NetApp number large did modest significant as of services to and

there but to were it was not a few, material So yes, number. the

infrastructure they Was that them using they more topic. Got the on today equipment? you it an from example, GenAI new maybe as a it? more is super to so to existing just about helpful, it. That's And data just upgrade AI storage? up need these and customers their like Or lakes talked follow-up GPU buy deals an clusters the new pushed setting George. And storage it what see can

kind and from was together, scattered power NetApp the lakes that GPU a where high-performance wanted building combination. number good data so their systems were to bring were Both clusters. GPUs base the against building There of to because it that we running chose file infrastructure some data super data were of lay. them and and that were they pads It's saw a pods they that essentially our they

work early with availability, example, their some and them. doing NVIDIA we're ODX, a to for of call So that cycle. with with of our Lenovo, brought yesterday. software referred mix around their on in just the Interesting to general stack Jensen full We creative

today Your come next with Capital Markets. Northland Chokshi Nehal question from will

expensive, Congrats on has At introduced and a product result. guys developments. which quite is strong your believe forward-looking some INSIGHT, you that vision, I AI

development, compute product it's believe, One me decoupling if I the I'm the wrong, of management Is that scaling correct is and those of storage. data -- data correct?

you could the repeat question? sorry, I'm

Yes.

the far management storage components. of the as the the evolve management data forward-looking may scaling of decoupling of the and One of correct? NetApp's the is vision how AI Is that data portfolio compute elements as

the elements. is right. of That's That one

correct. You're

like And took to you for Or more how took that? how really optimize this to to go it you lifted it the more ONTAP. the lift before introduce Is long And this? flash. like expect clustered have lift can Yes. is do it to you

on right? We lift near years, anywhere clustered so over have our many been working ONTAP. architecture scaling many, not And is of out this the

deployed have end customers by calendar expect in As to solutions we next we of said, year. the these

excited. we're So

make when you good progress We'll We tell generally are making Stay on tuned. available. really those we it. solutions are

Terjanian today question from final Research Company. will Ari Your with come Cleveland

Congrats on results. good the

SSD then quarter? XXX, drove AI deals doubling result. that of pricing the the That any and that as whatnot, in your to pull extent any pricing First, forward demand? potentially that are any so, the to anticipate actions you pertains strong you deals. just to pretty it's from And it XX last -- pricing Or the just products, impact do changes? quarter, do think there a And there the what like was a if any on clarification is from

With right? broader These regard while. large deals, a our just sales cycle, deals are have the So engagement customers. Listen, take on AI a it's deals these for with to been teams working long are --

And accelerate so we just pipeline. engagement partner base saw our broader the field to across our teams and

question. and for a second the it of I'm the to have that prospects I'll for outlook Mike business, We hand it. excited about good

Nice well. to as meet you

I well. So mind revenue as there there's pricing have work from would to say pull push quarter, of though. material, perspective, take and us tend that pipeline our What while always a nothing the say, some a to products. every keep on is, in through forward those some been And changes

have impact to how we'll see rest have going we to So forward, expect do some the goes. but 'XX of

over your some it to Well, right. Ari. and to for turn appreciate going All thanks, I George I'm question, comments. final

Thanks, Kris.

both for our growth address share. which with biggest bolstered on uniquely build fuel customers market infrastructures are opportunities tailwinds We storage AI. cloud are by to block, and These increase and enabling data flash, secular solutions revenue company-specific solutions and focused intelligent and represent markets to our differentiated

innovation has stronger. never of been pace Our

market all our each competition executing are of in markets. well, of key We the our outgrowing clearly and growth

disciplined and Our for operational management customer success. continued us positions well shareholder focused and

The conference presentation. today's Thank for concluded. now has attending you

may You disconnect. now